world growth

world growth

Monday, October 26, 2009

Africa heading for 2009 growth due to China

All African economies bar South Africa will grow this year because of China's demand for their raw materials, a leading South African analyst said on Monday.

Out of 53 African states only the continent's biggest economy, South Africa, will not grow this year, Martyn Davies, executive director of Stellenbosch University's Centre for Chinese Studies, told a conference.

"Chinese demand is underpinning African growth," he told the conference on China, organised by the International Centre for Trade and Sustainable Development (ICTSD).

Africa is already exporting 1 million barrels per day of oil to China, accounting for 25 percent of China's foreign energy supplies, said Davies, who is also chief executive of emerging market investment strategist Frontier Advisory.

These links are based on strong support by African leaders for Chinese investment in extractive industries -- in contrast to objections raised to Chinese investment in sensitive sectors in developed countries, he said.

China's engagement in Africa -- where it is the biggest trading partner -- reflects both state enterprises benefiting from preferential capital from state banks, and private entrepreneurs, of whom around 1 million may now be in Africa, he said.

China's export prowess has so far failed to provoke much protectionism in Africa, except, again, in South Africa, where sensitive labour-intensive sectors such as textiles and light industry compete with Chinese firms.

Chinese imports from Africa come in at an average tariff of 0.64 percent -- almost the duty-free level sought by developing countries in rich markets -- because of China's eagerness to facilitate imports of African energy and commodities.

Conversely, China faces considerable protectionist sentiment outside Africa, said Simon Evenett co-director of St Gallen University's Centre for Economic Policy Research.

According to Global Trade Alert, a website run by academics that Evenett co-founded, China is now the most targeted country for trade measures such as anti-dumping duties and safeguards, a trend likely to increase as the global economy and international trade recover, Evenett told the conference.

"They can expect to be targeted even more. Now that world trade flows are increasing is perversely going to make it easier to demonstrate that Chinese imports are causing injury," he said.

Monday, October 19, 2009

China GDP grows more than 7 percent in first nine months 2009

SHANGHAI — China's economy expanded more than 7 percent in the first nine months of the year and will certainly surpass the 2009 growth target of 8 percent, a top economic official said Monday.

China is due to release official third quarter economic data on Thursday. But in a briefing Monday in Beijing, Xiong Bilin, a top economic planner, told reporters the growth rate for January-September would be a bit above 7 percent.

"Achieving a growth rate of 8 percent for the year is basically no problem," Xiong, a deputy director of the National Development and Reform Commission, told reporters.

Statistics for September showed improving trade, housing sales, manufacturing and car sales. The data suggest that resilience in retail sales and industrial production are helping offset the blow from falling exports to China's economy.

Separately, Yu Bin, a senior researcher with the Cabinet-affiliated Development Research Center told a conference over the weekend that growth was forecast to exceed 9 percent in the second half of the year, the financial magazine Caijing reported Monday.

"The internal and external environment for China's economic growth will be better next year," Yu said.

The upbeat comments helped push China's main share benchmark, the Shanghai Composite Index, to a one-month high on Monday of 3,038.27, up 61.64 points or 2.1 percent.

"All the data released were better-than expected, so investors are optimistic that Chinese economy has gathered pace in the third quarter," said Zhou Lin, an analyst for Huatai Securities in the eastern city of Nanjing.

Xiong, of the NDRC, pointed to the government's 4 trillion yuan ($586 billion) stimulus package, announced late last year, as a key factor in helping the economy bounce back from the global financial crisis.

But he noted that the stimulus package, which is focused mainly on construction projects, had also worsened China's chronic problems with overcapacity in important industries such as cement and steelmaking.

"The economic rebound is at a critical stage and our focus must be on stable growth and structural adjustments," said Xiong, whose remarks were posted on the government's Web site.

The government issued a notice Monday ordering tighter curbs on six industries following an initial announcement in late September. The industries include steel, cement, flat glass, coal chemicals, polysilicon and wind power equipment production. In a move to cut off financing for redundant projects, the country's mostly state-controlled banks were ordered not to lend to projects that violate government guidelines.

Such projects also are forbidden to raise funding by issuing bonds, shares or other financial instruments, the NDRC said in a statement.

"Many sectors are still reporting serious problems of overcapacity and redundant construction, and some problems are even getting worse," said the statement by 10 government ministries led by the NDRC.

The aluminum and soybean crushing industries are also under scrutiny but are not yet included among the industries facing the strictest curbs, it said.

Tuesday, October 13, 2009

China's September Car Sales Rise 84%, Top 1 Million

Oct. 13 - China’s monthly passenger-car sales passed 1 million units for the first time, signaling that the government may ease stimulus measures in the world’s largest auto market so far this year.

September sales of cars, sport-utility vehicles and multipurpose vehicles climbed 84 percent to 1.015 million, the China Association of Automobile Manufacturers said in an e- mailed statement today. Overall vehicle sales, including trucks and busses, rose 78 percent to 1.33 million units.

General Motors Co. Chief Executive Officer Fritz Henderson said today that China’s auto sales will continue growing at “a very significant pace” as the nation’s recovering economy spurs demand. The pace of growth may prompt the government to halt tax cuts and subsidies to prevent overcapacity.

“It may end them to prevent the industry from growing too quickly,” said Chen Liang, Nanjing-based analyst of Huatai Securities Co. The government is “probably worried that strong auto demand would put pressure on energy and raw-material supplies.”

The government cut vehicle taxes and introduced auto subsidies in rural areas earlier this year after demand plunged on the global recession. Industrywide car sales have now risen more than 35 percent for six straight months, including a 90 percent jump in August.

GM Sales Double

GM, the largest overseas automaker in China, more than doubled September sales from a year earlier to 181,148 vehicles. In the first nine months, it sold 1.29 million, surpassing the tally for the whole of 2008.

“I don’t think for a second that it’s a blip,” Henderson told reporters today in Shanghai, referring to the overall market growth. “China will continue to grow at a very significant pace.”

Bayerische Motoren Werke AG’s sales in China rose 32 percent to 62,394 during January-September, with the BMW brand’s deliveries reaching 59,400 and the Mini division’s sales reaching 2,934, according to a company statement. China is now BMW’s biggest market after Germany, the U.S. and the U.K., it added.

A credit boom and a 4 trillion-yuan ($586 billion) stimulus package helped China’s economy grow at a 7.9 percent annual rate in the second quarter. The country will stick to a “moderately loose” monetary policy and guide reasonable loan growth to further cement its economic recovery, the People’s Bank of China said in a Sept. 29 statement. It will also continue to implement stimulus measures to boost domestic demand, the bank said.

Full-year vehicle sales may rise 28 percent to 12 million, based on a forecast made by Chen Bin, chief director of the industry coordination department at the National Development and Reform Commission, last month.

Chen also said that carmakers should “keep their heads” to prevent overcapacity as it was unclear whether growth was sustainable in the longer term.

For the first nine months, China’s passenger-vehicle sales rose 42 percent to 7.2 million units, while industrywide vehicle sales rose 34 percent to 9.7 million. By contrast, U.S. sales fell 27 percent to 7.8 million vehicles.

Wednesday, October 7, 2009

Amid the global economic crisis, China rises

BEIJING — The auto-parts maker Delphi Corp. is headquartered in Troy, Mich., in the heart of the region that made the United States the car capital of the world. It's a place where the phrase "buy American" is right at home.

Now the 3,000 employees of Delphi's brake and suspension unit are getting a new boss. Battered by weak sales, Delphi is selling the unit to investors led by a company named Shougang Corp.

Shougang is a steel maker owned by the government of China — a government that calls itself communist but espouses a "socialist market economy" as it marches down globalization's road toward a capitalistic future.

"Everyone's so desperate for cash that the Chinese show up with a checkbook and people say, `Yes, please'," says Arthur Kroeber, managing director of Dragonomics, a Beijing research firm.

Explosive growth in China and India, coupled with Japan's clout as the world's No. 2 economy, has long been expected to shift economic power from the United States to Asia as this century progresses. The financial crisis and resulting Great Recession are accelerating that process.

"China certainly comes out of the crisis stronger rather than weaker, and it's the opposite for the United States," says Stephen Roach, chairman of Morgan Stanley Asia.

Even some Americans have begun declaring this the "Chinese century" since it began nearly a decade ago. But while they and others fear the rise of China in international relations and the global economy, the reality is less dramatic: Beijing is still getting its own sprawling, chaotic house in order and is in no position to supplant the United States as global leader in the near future.

At the same time, Beijing's power remains undefined: On an unfamiliar global stage, it is unsure what role it wants to play.

For decades, China followed the dictum of its late supreme leader, Deng Xiaoping, to keep its head down abroad and focus on development at home. But earlier this decade, emboldened by success and mindful that their globalized economy needs stability, communist leaders started pressing for a place among the nations that manage world affairs.

These days, Beijing is claiming a bigger voice in global economic forums such as the Group of 20 and is getting more deference in the United Nations, which could mean protection for friends such as Iran and Myanmar. Its military spending is the world's second-highest, behind that of the United States.

"China is very likely to be the second-most-powerful country — if it isn't now, then within a decade," says Kenneth Lieberthal, director of the Brookings Institution's John L. Thornton China Center in Washington.

For the United States, it's a mixed blessing. The American and Chinese economies are intertwined, and the success of one depends on the health of the other.

The United States is China's biggest trade partner. China sent $338 billion in goods here last year. Beijing is Washington's biggest creditor, with more than $800 billion invested in government debt. American automakers look to China's growing market to propel future sales.

The financial crisis set back U.S. growth by years and will add trillions to the federal debt over the next decade. But China avoided the worst of the crisis. Its banks are healthy and, with the help of a 4 trillion yuan ($586 billion) stimulus, this year's economic growth is on track to top 8 percent.

Already, demand from China can affect oil prices, and it is starting to influence what products are available worldwide. Western jobs are tied to Chinese spending, from British auto factories to Australian iron mines. Chinese money is financing development of oil fields from Venezuela to Central Asia.

And China's role as Washington's lender-in-chief is altering the dynamic of the countries' relationship.

At a meeting in London in April, President Barack Obama assured his Chinese counterpart, Hu Jintao, that Washington would cut its budget deficit — a promise no American leader ever had to make to a Soviet leader.

Washington's three-year-old strategic dialogue with Beijing has long been dominated by U.S. trade grievances. But the latest round in July, overshadowed by America's need for China to keep buying its debt, became a discussion between equals.

China, a major destination for foreign investment, was starting to reverse the flow and invest abroad before the financial crisis. The crisis accelerated that and has led to a flurry of deals. In some cases, Chinese companies have stepped in to save Western jobs — a notion unthinkable a decade ago.

In Britain, China's Nanjing Automobile Group plans to reopen the Longbridge factory idled by the collapse of MG Rover to make limited-edition MGTF sports cars. And in Sweden, Beijing Automotive is joining a bid to buy Saab from General Motors, while Geely Automobile wants to acquire Ford's Volvo unit.

"It's better to be part of the race than to watch it from the stands," says Paul Akerlund, a union representative at Saab. "We see advantages in gaining access to the Chinese market, which is the fastest-growing auto market in the world."

In diplomacy, China is only starting to stake out positions on a wide array of global issues. It has used its influence in the United Nations to help allies such as Sri Lanka resist Western pressure on human rights. But Chinese leaders have yet to decide what overall political and military role they want abroad.

"They clearly want to be a country of some gravitas both regionally and globally," Lieberthal says. "But there are a lot of aspects of the American approach — too ready to interfere, to tell others what to do — that the Chinese criticize as `hegemonic.'"

Even as it is on track to overtake the American economy in size as early as 2030, China is burdened by enormous problems of corruption, poverty and pollution. Measured by income per person, China ranked 130th out of 210 economies in a World Bank survey last year, behind most of Latin America and parts of Africa.

"China's foreign currency reserves are huge. But that does not mean we are a rich country," says Cho Tak Wong, chairman of Fuyao Group, which produces glass for Chinese and global automakers. "We are about 100 years behind the United States."

China also has become a fast-growing market, and the financial crisis has only increased its importance to global companies. Chinese demand affects everything from global steel prices to the design of consumer goods. Cadillac created its 2008 CTS with China in mind, adding a deeper back seat for Chinese buyers driven by chauffeurs.

Other countries' urgent need for cash has created opportunities for Beijing to make deals for resources to drive its booming economy. State companies have struck oil deals in Brazil, Venezuela, Russia and Africa and bought stakes in Australian and Canadian miners.

Delphi turned to Chinese buyers for its remaining brake and suspension operations after it sought bankruptcy court protection four years ago. The buyers are Shougang and two partners — the Beijing city government and an auto-parts maker, Tempo Group. Delphi says the $90 million sale should close in November, seven months after it was announced.

Contrast that with 2005, when Chinese oil company CNOOC Ltd. tried to acquired Unocal Corp. CNOOC offered to pay more than a rival American bidder but withdrew after critics in Washington said the sale might threaten U.S. energy security.

Still, the United States has many strengths that China lacks. The U.S. remains the world center for innovation in many areas and a magnet for smart, ambitious immigrants.

"Europeans may hope that the U.S. has been knocked down a peg or two, but even if that is so, they could be in for a nasty surprise," says Howard Wheeldon, senior strategist at BGC Partners, a London brokerage. "Never underestimate the ability of the American people to rise to a challenge."