world growth

world growth

Wednesday, April 29, 2009

China's economic growth slows to 6.1 percent in 2009 first quarter

BEIJING (AP) — China's economy grew at its slowest pace in at least a decade in the first quarter as the global financial crisis battered trade, but the government said the performance was better than expected amid huge stimulus spending.

The world's third-largest economy grew 6.1 percent from a year earlier, down from the previous quarter's 6.8 percent expansion, the government reported Thursday.

"The overall national economy showed positive changes, with better performance than expected," Li Xiaochao, a spokesman for the National Bureau of Statistics, said at a news conference. But Li warned that the economy still "faces pressures to slow in the coming period."

The quarterly growth appeared to be lowest in at least a decade though China has repeatedly revised its historical data, making comparisons difficult. Analysts said the 6.8 percent rate in the fourth quarter was the lowest since 2001 and possibly earlier.

The economy has shown tentative signs its slump might be bottoming out, with bank lending and investment rising and auto sales hitting a new monthly high in March. But the government has cautioned that a possible rebound is still fragile and not yet certain, and has called for renewed efforts to boost growth.

Beijing is carrying out a 4 trillion yuan ($586 billion) stimulus package to shield the country from the global slump. It hopes to reduce reliance on slumping trade by boosting domestic consumption.

The collapse in global demand for Chinese goods threw at least 20 million people out of work as factories closed. It is unclear how many of those workers might have found new jobs in projects financed by the stimulus package.

Chinese exports fell 17 percent in March, the fifth straight monthly decline, but that decline was less severe than February's 25.7 percent plunge. Analysts said that suggested trade was stabilizing, though they said exports should remain weak this year.

Consumer spending rose 15 percent in the quarter, the bureau reported, though that rate was slightly lower than growth reported for previous months.

Consumer prices fell by 1.2 percent in March, the data showed, leaving Beijing room to cut interest rates further to boost growth while avoiding fueling pressure for prices to rise.

Industrial production rose 5.1 percent in the quarter, though that was 11.3 percentage points lower than the growth for the same period of 2007.

Investment in factories and other fixed assets during the quarter grew by 28.6 percent from the year-earlier period, the bureau reported. Li said that was higher than the growth rate for the same period of 2008, though he gave no details.

http://www.google.com/hostednews/ap/article/ALeqM5j1FZRNA_nf7XY7YePH-Od-tdunFAD97JAD281

Saturday, April 25, 2009

China now 5th largest gold holder



China earned $82.5 billion from nearly $2 trillion in foreign exchange reserves last year, and is now the fifth largest holder of gold, the State Administration of Foreign Exchange (SAFE) said on Friday.

Hu Xiaolian, head of SAFE, said the $82.5 billion return was an increase of 8 percent on the year before, and dismissed foreign media reports that China had lost "tens of billions of dollars" on the value of its reserves during the economic crisis.

"Not only has China managed to keep its foreign exchange reserves secure and in liquid investments, but it has also made a profit," she said.

Hu also revealed that China had boosted its gold reserves by 76 percent since 2003, making it the fifth largest holder of gold.

Beijing now has 1,054 tons of gold in its reserves, 454 tons more than it did in 2003.

Discussing the economic data, Hu said "a considerable proportion" of China's earnings on its reserves were from diversified investment activities but she gave no further details.

Hu said that SAFE managed the nation's reserves well last year when many overseas investment funds were incurring huge losses.

The high returns were from diversification in multiple assets and holding various currencies, she added.

"On the whole, we at SAFE have been able to keep the valuation of assets under our management generally stable - by making different currencies and assets complement each other."

Commenting on China's foreign exchange reserve portfolio, David Jiang, Asia-Pacific CEO of BNY Mellon Asset Management, said China should diversify its investment and move from US treasury bonds to inflation-proof notes and other assets.

"The economic recession may cause the depreciation of many currencies, especially the US dollar, and trigger a new round of inflation once the economy starts to recover".

Fan Haibo, analyst of China Cinda Securities, said the central bank could increase its gold reserve considering the depreciation risk of some foreign currencies.

"It is necessary to boost the proportion of gold holdings because China has only 2.28 percent of the global reserves and the United States has 31 percent."

Thursday, April 23, 2009

Goldman Sachs:China 2009 GDP growth forecast to 8.3%

BEIJING, April 22 (Reuters) - Goldman Sachs on Wednesday raised its forecast for China's GDP growth this year to 8.3 percent from 6.0 percent, crediting the government's aggressive policy easing and better-than-expected results from its stimulus spending.
Goldman also raised its forecast for 2010 growth to 10.9 percent from 9.0 percent, saying that the economy will be driven by stronger investment, especially from the private sector.
Goldman's revision follows upgrades last week by several other international banks based on signs in China's economic data for March that suggested the economy was starting to recover.
UBS raised its forecast for gross domestic product growth this year to 7-7.5 percent, from 6.5 percent, while leaving its 2010 forecast unchanged at 7.5 percent.
Royal Bank of Scotland lifted its 2009 forecast to 7 percent from 5 percent. It forecast 8 percent expansion next year.
Barclays Capital raised its 2009 forecast to 7.2 percent from 6.7 percent.

http://www.guardian.co.uk/business/feedarticle/8466930

Saturday, April 18, 2009

China loans $10 billion to Kazakhstan

SHANGHAI (AFP) — China has extended 10 billion dollars in loans to oil and gas-rich Kazakhstan, according to the Kazakh state news agency, in the latest Chinese deal locking up access to foreign resources.

China National Petroleum Corp, or CNPC, said Friday it had signed an agreement to give financial support to the resource-rich central Asian country's national oil and gas company.

Under the agreement signed on Thursday, CNPC will loan up to five billion dollars to KazMunaiGas, the Chinese firm said in a statement.

CNPC and KazMunaiGas also signed a separate agreement to buy a stake together in Kazakhstan-based MangistauMunaiGas from Indonesia's Central Asia Petroleum Ltd.

Kazakhstan's state news agency Kazinform said the five-billion-dollar loan would help pay for the MangistauMunaiGas deal and the construction of the Beineu-Bozoi-Akbulak gas pipeline, which will serve southern Kazakhstan.

The Export-Import Bank of China, a policy lender, also signed an agreement to lend five billion dollars to the state-owned Development Bank of Kazakhstan, Kazinform reported.

From Calgary to Caracas, China has hammered out an unprecedented series of agreements over the past two months as plummeting energy and commodity prices have left once mighty producers over-extended and short on funds.

A 25-billion-dollar loan locked in 15 million tonnes of petrol a year for 20 years from Russia's Rosneft and Transneft. And for 400 million dollars, CNPC agreed to buy a Canadian firm's promising Libyan oil field.

China has also signed multi-billion-dollar deals to secure more oil from Venezuela.

http://www.google.com/hostednews/afp/article/ALeqM5gVmB7pH0nMJqMN5UYXbVlgT2dqrA

Wednesday, April 15, 2009

China's growth slows to 6.1 pct in first quarter

BEIJING (AP) — China's economic growth slowed to 6.1 percent in the first quarter from a year earlier, hit by the global slump, but the government said conditions were better than expected.

"The overall national economy showed positive changes, with better performance than expected," Li Xiaochao, a spokesman for the National Bureau of Statistics, said at a news conference Thursday.

The economy slowed from 6.8 percent growth reported in the previous quarter but beat forecasts by some private sector economists.

Beijing is carrying out a multibillion-dollar stimulus in an effort to shield China from the worst global economic slowdown since the 1930s.

The collapse in global demand for Chinese goods threw at least 20 million people out of work as factories closed. It is unclear how many of those workers might have found new jobs in projects financed by the stimulus package.

Consumer spending rose 15 percent in the quarter, the bureau reported, though that rate was slightly lower than growth reported for previous months. The government is hoping to boost domestic consumption to reduce reliance on falling exports.

Consumer prices fell by 1.2 percent in March, the data showed, leaving Beijing room to cut interest rates further to boost growth while avoiding fueling pressure for prices to rise.

Industrial production rose 5.1 percent in the quarter, though that was 11.3 percentage points lower than the growth for the same period of 2007.

http://www.google.com/hostednews/ap/article/ALeqM5j1FZRNA_nf7XY7YePH-Od-tdunFAD97J9SE03

Thursday, April 9, 2009

5 Chinese Cities to Offer a Yuan-Settlement Program

Yuan trade settlement gets the nod
By Wang Xu (China Daily)



Five major trading cities have got the nod from the central government to use the yuan in overseas trade settlement - seen as one more step in China's recent moves to expand the use of its currency globally.

Shanghai and four cities in the Pearl River Delta - Guangzhou, Shenzhen, Dongguan and Zhuhai - have been designated for the purpose, said a State Council meeting chaired by Premier Wen Jiabao yesterday. The Pearl River Delta boasts the country's largest cluster of export-oriented manufacturing operations.

The move is aimed at reducing the risk from exchange rate fluctuations and giving impetus to declining overseas trade, according to a statement posted on the government website.

Analysts said the experimental use of the yuan in trade settlement also reflects policymakers' rising concern over the shaky prospects of the US currency, of which China has large reserves from previous trade growth, and their willingness to gradually expand the yuan's use globally.

"The trial is the latest move toward making the yuan an international currency," Huang Weiping, professor of economics at Renmin University of China, said. "The prospect of a weaker US dollar is making the transition more imperative for China."

The mainland is trying to promote the use of the yuan among trade partners and, in the past four months, has signed 650 billion yuan ($95 billion) worth of swap agreements with Argentina, Indonesia, South Korea, Malaysia, Belarus and the Hong Kong Special Administrative Region. The agreements allow them to use their yuan reserves to directly trade with the Chinese mainland within a set limit in volume.

Stephen Green, head of China Research of Standard Chartered Bank, said the swap deals would help encourage the use of the yuan as the currency of choice for international trade.


"In the longer term, if countries around the region and beyond start pricing their trade in yuan, this will also lead to increased internationalization and status for China's currency," Green said.

China now uses the US dollar to settle most of its international trade but the drastic swings in the greenback have become a risk for Chinese exporters in recent years.

Dong Xian'an, economist with China Southwest Securities, said: "For many exporters, the dollar's fluctuation is a serious concern. The ability to settle trade in the yuan would reduce such risk," he said.

Chen Xianbin, chairman of Guangxi Sanhuan Enterprise Group, told China Daily that his company lost more than 150 million yuan in the past three years from international trade due to the exchange rate changes between the yuan and the greenback. Chen's company, a ceramic tableware exporter, relies on Southeast Asian markets for 15 percent of total sales.

China's foreign trade has been on a continuous decline amid the current global financial crisis. Exports plunged 25.7 percent year on year in February, one of the sharpest falls ever, while imports dived 24.1 percent.

Analysts said the US Federal Reserve's decision to buy long-term Treasuries, which means printing new money, may also lead to a depreciation of the US dollar. That is also one reason for China to reduce the use of the dollar in trade so that the value of its US1.95 trillion foreign exchange reserves does not depreciate.

Zhou Xiaochuan, the central bank governor, said last month that in the long run, it may be ideal to replace the dollar with a new international reserve currency under the mechanism of the International Monetary Fund.

http://www.chinadaily.com.cn/bizchina/2009-04/09/content_7660085.htm

Sunday, April 5, 2009

The current IMF voting structure

USA, UK, France and Japan all have more voting power than China within IMF.