world growth

world growth

Monday, June 29, 2009

World Bank raises China 2009 GDP growth to 7.2 percent

BEIJING (AP) — The World Bank raised its 2009 economic growth forecast for China from 6.5 percent to 7.2 percent due to its stimulus-driven investment boom but cautioned Thursday it was too soon to say a sustained recovery was on the way.

The stimulus impact is bigger than expected and will "strongly support growth," said Ardo Hansson, the bank's lead China economist. The 4 trillion yuan ($586 billion) plan is aimed at shielding China from the global slump by pumping money into the economy through spending on building airports and other public works.

"Growth in China should remain respectable this year and next, although it is too early to say a robust recovery is on the way," Hansson said at a news conference.

Trade and private investment will remain weak, consumption will slow and a full-fledged recovery has to wait for the global economy and export demand to rebound, the Washington-based lender said in a quarterly report.

China's economy grew 6.1 percent in the first quarter from the same time last year, the strongest rate of any major country but below the government's 2009 target of 8 percent and far from 2007's explosive 13 percent.

Thursday was the first time the bank has raised its outlook for China since November, when it slashed its 2009 forecast from 9.2 percent to 7.5 percent. The bank cut that again in March to 6.5 percent. The bank said the growth rate should rise slightly in 2010 to 7.7 percent.

Hansson expressed surprise at Beijing's "Buy China" order, reported this week by state media, for stimulus projects to use domestically made goods. Foreign business groups appealed to the government Wednesday to avoid protectionism, warning it might hurt Chinese and foreign companies at a time when cooperation is needed to revive global growth.

"China had earned an enormous amount of goodwill and was leading the charge globally to make sure protectionism did not take off," Hansson said. "I think that position, that leadership reflected an understanding that China, relative to many other economies, has a lot more to lose from protectionism given the importance of the export sector."

The World Bank report highlighted China's dependence on government spending to support growth.

The stimulus will supply up to 6 percentage points of this year's expansion, with private activity producing 3.6 percentage points, according to Louis Kuijs, a World Bank economist. He said the contraction in exports will be severe that trade will subtract 2.4 percentage points from this year's growth, resulting in the forecast total of 7.2 percent.

"We see very little growth coming out of the market-based economy in 2009," Kuijs said. "We do expect a nice pickup in exports next year, so that will help."

Government spending boosted domestic investment in factories, real estate and other fixed assets by 32.9 percent in the first five months of the year.

The World Bank cautioned there was a limit to how much China could buck global trends through stimulus spending while exports are weak.

May retail sales rose 15.2 percent from a year earlier, but the growth rate is falling, indicating Beijing has yet to spur a rebound in private spending. May exports plunged by a record 26.4 percent from the same month of 2008.

"We think that this surge in government-influenced investment is unlikely to lead to rapid growth and a recovery in China in the current global environment," Kuijs said.

The World Bank estimates each percentage point of lost growth in China's non-agricultural gross domestic product growth means 5.4 million fewer jobs.

Nevertheless, Kuijs said the bank sees no need for more stimulus plans this year because Beijing already has spent so heavily.

"It would be good to have some fiscal firepower left next year," Kuijs said.

Tuesday, June 23, 2009

Asia's biggest iron ore mine (3 billion tons) found in Benxi China

Benxi - A huge iron ore resource with more than three billion tons of proven reserves has been found in China's Benxi, Benxi Municipal Government said on Tuesday, making it one of the biggest iron ore mines in Asia.

It’s reported that this iron was found during the second exploration of the city, which is based on the city's fifteen years of geological data. After it was reported to the China Geological Survey, it was perambulated by a team of geologists.

The team made 17 exploratory holes to explore the mine. Iron ore was found in 12 of the holes, covering an area of four kilometers long, three kilometers wide.

According to antecedent survey, a complete core of iron ore has been detected 1,100 to 1860 meters. High-grade resources can even be found underground 2015 meters. The bottom and border zones haven’t been reached, said the team. The identified reserves available are more than three billion tons.

Meanwhile, the Dataigou mine has features of deep-buried depth, wide-spread ore body, steep obliquity and big scale of ore body. The iron deposit is a giant mixture of magnetite and hematite, with iron ore grade between 25% to 62%.

Shaoshi Xu, head of Minister of Land and Resources, paid a site visit there, urging the local government to do their best to make full use of Asia's largest iron ore mine for the nation and local as soon as possible.

Thursday, June 18, 2009

China lowers holding in US government bonds

China does not feel confident in holding so much US government bonds, especially when US is running a huge budget deficit to finance the stimulus package, time for China to diversify. Chinese economy depends too much on international trade.

China lowers holding in US government bonds

BEIJING (AFP) — A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday.

The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction.

"China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," He Maochun, a political scientist at Tsinghua University, told the Global Times.

According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March.

It was the first month since June 2008 that Beijing failed to purchase more US T-bills.

Zhang Bin, a researcher at the Chinese Academy of Social Sciences, said China's move showed a more cautious attitude.

"It is unclear whether the reduction will continue because the amount is so small. But the cut signals caution of governments or institutions toward US Treasury bonds," Zhang told Xinhua news agency.

China's foreign ministry said Tuesday that its purchases of US Treasuries remained based on "security, liquidity and value preservation".

For Zhao Xijun, deputy director of the Finance and Securities Research Institute of People's University, China may have reduced its holding of US Treasuries simply because it needed the money.

Zhao said the sell-off could have been in order to pay for its own economic stimulus package.

"The reduction was a result of composite factors, such as the investment need and the market change," Zhao told Global Times.

Saturday, June 13, 2009

China's GDP growth for 2009 estimated at 8%

TOKYO (MarketWatch) -- Chinese economic data released Friday reinforced the growing perception of an economy picking up steam, with retail sales and industrial production for the month of May coming in stronger than expected, while new bank lending continued at a torrid clip.

Friday's data capped a week of relatively robust news that dispelled some of the skepticism surrounding China's recovery, with the world's third-largest economy now on track to meet its growth targets this year, analysts said.

"Most likely industrial production growth will trend upward, supporting our 8% gross domestic product growth call for 2009," wrote Merrill Lynch economist Ting Lu in a research note Friday.

In March, Chinese Premier Wen Jiabao also said the country would expand its economy 8% this year, although it's not clear that a formal growth target has been set.
Industry reviving

Industrial output climbed 8.9% in May, the National Bureau of Statistics said Friday. The result was above expectations for a 7.8% rise, as reported by Dow Jones Newswires, but it matched exactly forecasts by the 21st Century Business Herald and Ming Pao newspapers, whose projections Merrill Lynch said appeared to be "whispered" leaks of the data. See full story on so-called 'whispered numbers.'

The more upbeat figures follow a fall of 26.4% in China's exports in May from a year earlier and an import decline of 25.2%, according to Statistics Bureau data released Thursday. Both figures marked their seventh-straight on-year decline. See story on Chinese trade.

"While improving this month, China's industrial production growth data has been in contrast with expansion in the Purchasing Managers Index," said J.P. Morgan's China equities chief, Jing Ulrich.

"China's May PMI of 53.1 represented a third-successive month of expansion in the manufacturing sector, suggesting that managers are cautiously optimistic in their outlook," he said.

The Statistics Bureau also reported Friday that retail sales were up 15.2% in May, compared to a 14.8% rise in April.
Bank lending up

Separately, data from the People's Bank of China reported that new yuan-denominated bank lending in China totaled 664.5 billion yuan ($97.2 billion) in May compared to 591.8 billion yuan in April.

Money supply, as measured by M2, climbed 25.74% at the end of May from a year earlier, roughly in line with a 25.9% rise anticipated by analysts as reported by Dow Jones Newswires.

"The stabilization in money supply is as expected, considering the record rate of growth at the beginning of the year," said Ulrich. "The rapid pace of credit creation in recent months has had a stirring impact on China's corporate sector, housing and stock markets."

Sunday, June 7, 2009

China, Turkmenistan seal $3 billion energy loan


ASHGABAT, Turkmenistan (AP) — China will lend energy-rich Turkmenistan $3 billion to develop its vast South Yolotan natural gas field, Turkmen state media reported Saturday.

The loan marks a key step in Chinese efforts to secure long-term energy supplies from ex-Soviet Central Asia and will likely loosen Russia's grip over Turkmenistan's gas exports.

Work on a 4,300-mile (7,000-kilometer) pipeline from Turkmenistan to China with the capacity to deliver 52 billion cubic yards (40 billion cubic meters) of gas per year is expected to be finished by the end of the year.

An audit last year by British company Gaffney, Cline and Associates found that the Yolotan field near the Afghan border likely holds 7.85 trillion cubic yards (6 trillion cubic meters) of gas, making it one of the five largest deposits in the world.

"The deposits at Southern Yolotan alone, if it produces 50 billion cubic meters of gas annually, could provide enough gas to supply any state for 100 years," Turkmen President Gurbanguli Berdymukhamedov told a Cabinet meeting Friday.

The pledge of financial support from China comes amid a strain in relations between Turkmenistan and Russia, which has bought most of the Turkmen gas for onward sale in Ukraine and Europe.

Earlier this year, Russia moved to reduce its gas imports from Turkmenistan because of plunging demand and prices in Europe.

The spat with Russia will likely encourage Turkmenistan to diversify its exports to China and the West.

Turkmenistan has committed to exporting 65 billion cubic yards (50 billion cubic meters) per year to Russia under a 25-year contract, and it also has agreed to provide China with 52 cubic yards (40 billion cubic meters) annually beginning late next year. An additional 10 billion cubic yards are sold annually to Iran.

Some international experts voiced doubt that Turkmenistan could meet all its supply obligations, but Berdymukhamedov said the nation has enough gas to supply all buyers.

He said Friday that Turkmenistan currently produces 105 cubic yards (80 billion cubic meters) of gas per year, and Malaysian company Petronas and other foreign companies produce another 26 cubic yards (20 billion cubic meters) of gas in the Turkmen sector of the Caspian Sea.

Turkmenistan estimates its total reserves at more than 26 trillion cubic yards (20 trillion cubic meters), but international experts have questioned that figure.

Tuesday, June 2, 2009

China to Invest $14.6 Billion in Wind Power by 2010

China, the world’s second-biggest energy consumer, will invest about 100 billion yuan ($14.6 billion) to more than double its wind power capacity by 2010 from last year, a government official said.

The country’s wind power capacity will rise to 30,000 megawatts from 12,000 megawatts, Shi Lishan, deputy director of renewable energy at the National Energy Administration, said in Rudong city in the eastern province of Jiangsu today. China’s wind power capacity was the fourth-largest in the world last year, according to Shi.

Investment in alternative energy may exceed 2 trillion yuan by 2020, the National Development and Reform Commission, China’s top economic planner, said in 2007. Wind power is “vital” as it is the cheapest form of renewable energy, Shi said. About 80 percent of the country’s power is produced from coal.

“The on-grid price for wind power is about 0.5 to 0.6 yuan per kilowatt-hour compared with about 0.2 to 0.4 yuan per kilowatt-hour for coal,” Shi told reporters.

China Longyuan Electric Power Group, which accounts for about a quarter of the nation’s wind-power capacity, plans to boost capacity to 6,000 megawatts by next year and to 20,000 megawatts by 2020, Vice President Huang Qun told reporters.

Longyuan, the renewable-energy unit of China Guodian Corp., one of the country’s five state power producers, was capable of generating 2,630 megawatts of electricity using wind turbines last year, he said.

Huang was accompanying a delegation of media, industry and government representatives on a tour of the 100-megawatt Rudong wind farm operated by Longyuan.

Government Spending

The government has allocated 210 billion yuan for energy- saving and carbon-reduction projects under its 4 trillion-yuan economic stimulus package, the planning commission said in May.

China is separately drafting a long-term plan to develop renewable energy to replace coal and oil with cleaner-burning fuels. Details will be released “soon,” Han Wenke, head of energy research at the commission, said last month.

The stimulus plan will accelerate the upgrading of power grids, Shi said today. There will be no new preferential policies for wind power projects, he said.

The Asian nation became the world’s biggest emitter of greenhouse gases from burning fossil fuels in 2006, followed by the U.S., Russia, India and Japan, according to U.S. Department of Energy data on Bloomberg.

Private Investment

China Resources Power Holdings Co., the third-biggest Hong Kong-listed mainland electricity supplier by market value, said today it received government approval for two wind projects in Gansu and Guangdong provinces totaling 221 megawatts in capacity.

It will cost about 8,000 yuan to add 1 kilowatt of wind capacity in China, about 30 to 50 percent less expensive than in Europe, Shi said.

“It normally takes 10 years for local developers to see returns on their investments in wind farms,” Chen Tao, an adviser at China Energy Conservation Wind Power Investment Co., said by mobile phone from Beijing.

The world’s third-largest economy will increase its wind power capacity by fivefold to 100,000 megawatts by 2020 from at least 20,000 megawatts next year to help fight climate change, Zhang Guobao, director of the energy administration, said May 26.

About five megawatts is sufficient to power about 1,000 households in China on average, Hu Zhaoguang, vice president of the State Power Economic Research Institute, said by telephone from Beijing today.

China could pass Europe, Japan and the U.S. to become the world’s biggest renewable energy consumer by 2010, Washington- based researcher WorldWatch Institute said in November 2007.