world growth

world growth

Monday, December 3, 2012

Sino-Africa trade expected to surpass 200 billion dollars in 2012

JOHANNEBSURG -- The South Africa's biggest bank, Standard Bank, on Monday said the Sino-Africa trade is likely to be over 200 billion U.S. dollars this year.

The bank said in a report written by its economists that "this year it is expected the Sino-Africa trade will go beyond 200 billion U.S. dollars from 166 billion U.S. dollars last year."

Today China accounts for 20 percent of Africa's trade and Africa has become China's fastest-growing export destination and trade partner. China's trade with Africa has grown nearly twice as fast as its trade with Latin America, which is the second strongest performer, according to the report.

The bank estimated that 18 percent of Africa's imports were sourced from China this year so far, up from 16.8 percent in 2011.

The report also said China's imports from Africa has increased by 26 percent this year.

"Chinese firms have recognized the importance of selling goods to the large emerging economies, especially the highly populated and increasingly wealthy ones in Africa," said the report.

Demand from African countries, especially the largest ones such as Kenya, Egypt, Angola, Nigeria and South Africa (KEANS), has simply become even more important to Chinese firms, according to the report.

"China is the right partner for Africa in the development in the manufacturing sector," said the bank.

The Standard Bank is the largest bank on the African continent with its branches in 18 African countries. It is still operating in 12 countries and regions outside Africa.

Thursday, November 1, 2012

China to import rice from US

Good news for US farmers !

Most of rice grown in US is from California. More export to China may help to balance US's trade

American farmers will soon be exporting rice to China. Chinese supermarkets could stock US rice as early as next year, alongside other imported western goods that are popular with the country's burgeoning middle classes.

In mid-October, the USDA's Animal and Plant Health Inspection Service received a draft protocol from the Chinese government on requirements for importing US rice. Now American mills are poring over the document. China is the biggest consumer of rice in the world, accounting for 30% of global consumption - as well as the largest producer.

Greg Yielding, head of the Arkansas Rice Growers Association, told the Western Farm Press: "The Chinese shoppers want to buy US rice, are ready to pick it off the shelf, and are willing to pay more for it as long as it's high-quality. We're this close to providing that product."

Chinese government recently opened up its market to British pork exports. Well-off Chinese shoppers are hungry for western goods, from fashion to food - and have developed a taste for things like frozen salmon, chocolate, crisps and cereals.

Yielding says it's important to get a deal done quickly. "US rice farmers need that market opened up. Farmers just want to sell their crop." China is the biggest rice consumer in the world.

The bulk of the draft protocol deals with the danger of pests and how to prevent them being shipped to China with the rice. Yielding think it's not really an issue with milled, pre-packaged rice. In any case American mills already have traps set up for pests.

The slowdown of China's runaway economy is already being felt by American exporters. Companies such as equipment maker Caterpillar to engine maker Cummins have been hit, along with the rest of the US machinery and scrap metal industries which previously benefited from the Chinese boom. This has led to thousands of jobs being lost in US manufacturing.

According to the latest GDP figures, US economic growth in the third quarter was held back by the first drop in exports in more than three years. The onset of American rice exports to China could help counteract this worsening in the US trade position.

Tuesday, October 16, 2012

China's online trade hits $45 billion in the second quarter

China's e-commerce market is growing at an amazing rate:

China's e-commerce industry grew 45 percent year-on-year in the second quarter to reach 278.84 billion yuan ($44.5 billion) in transaction volume, with Alibaba Group's Taobao capturing 76 percent of the market, an Internet research firm said on Tuesday.

The amount of trade conducted on the market leader, Taobao Mall and Taobao Marketplace exceeded 200 billion yuan in the April-June quarter, far surpassing rivals Tencent Holdings and 360buy, which had 4.5 percent and 5.5 percent of the market, respectively, Analysys International said in a report.

China's e-commerce market is becoming increasingly cut-throat with firms launching price wars and promotions to capture users' attention.

Recently, local media reported that China's top planning body was investigating Suning Appliance, GOME Electrical Appliances Holding and 360buy for an e-commerce price war that may have resulted in customers being cheated. The firms have since said they are cooperating with the investigations.

Among smaller players, Inc had 0.8 percent of the market, E-commerce China Dangdang Inc had 0.7 percent and Suning 1.2 percent, the Analysys International report showed. Yihaodian, China's top online supermarket in which Wal-Mart Stores Inc owns more than 50 percent, accounted for 0.3 percent of transaction volume.

E-commerce represented just 4 percent of China's retail sales in 2011, but the transaction value jumped 30 percent to 5.8 trillion yuan ($925 billion), equivalent to 12.5 percent of China's GDP, China's vice minister of commerce, Jiang Yaoping, said in May.

Tuesday, September 11, 2012

Malaysia-China trade to exceed US$100 billions in 2012

PETALING JAYA, Sept 8 -- Bilateral trade between Malaysia and China are guaranteed to exceed US$100 billion despite economic slowdown in China and uncertainty in the global environment, said Minister in the Prime Minister's Department Tan Sri Dr Koh Tsu Koon today.

"For the first six months of this year, total trade between both nations amounted to US$88 billion, nearly what we achieved last year of US$90 billion.

"This upward performance is expected to continue into the second half of this year and I'm optimistic we will surpass last year's record although the Chinese are facing volatility in their market currently," he said.

He said this at the media briefing on the sidelines of the Malaysia-China Entrepreneur Conference 2012 (MCEC), jointly organised by the Malaysia-China Chamber of Commerce (MCCC) and TNT Express Malaysia.

Also present were MCCC president Datuk Bong Hon Liong, TNT managing director Chong Siang Chung and the vice-president of The China Chamber of Commerce Cheng Chung Hing.

Themed "Success and You," the one-day event is a platform to exchange knowledge and experiences, promote economic operation as well as to develop communications.

MCEC organising president, Lim Heng Ee, said the conference attracted over 1,300 participants.

Thursday, August 16, 2012

China, North Korea sign economic zone deal

China has signed agreements with North Korea to push forward their joint development of economic zones.

The agreements cover the setting up and operation of management committees in the zones in North Korea, electricity supply in one of them, and agricultural cooperation, China's commerce ministry said in a statement.

They were signed as part of a high-level meeting between the two sides presided over by China's commerce minister Chen Deming and Jang Song-Thaek, a top North Korean official who is the uncle of leader Kim Jong-Un.

On monday Mr Jang lead a delegation to Beijing for a third round of talks on the Hwanggumphyong and Wihwado Economic Zone and the Rason Economic Trade Zone.

North Korea and China are jointly developing the former on two islands in the estuary of the Yalu river that marks their border. Ground was broken in December.

The Rason zone is in the northeastern part of North Korea near its borders with China and Russia.

China's commerce ministry says the Hwanggumphyong and Wihwado will focus on sectors including information and tourism to "gradually become an intelligence-intensive emerging economic zone of North Korea."

The Rason zone, meanwhile, will focus on areas including raw materials, equipment manufacturing, high-tech, apparel and high-efficiency agriculture.

Rason will "gradually develop into an advanced manufacturing base for North Korea and an international logistics centre and regional tourist centre for Northeast Asia," the ministry said.

China is the only major ally as well as main trade partner of North Korea.

North Korea's reliance on China, with which it shares a border, has increased as international sanctions over its missile and nuclear programmes tighten its ability to secure international credit and trade.

Thursday, July 19, 2012

Fitch Sees ‘Soft-Landing’ for China

Though a hard landing is still a possibility.

A leading credit-rating agency says the Chinese economy will likely see a “soft-landing” as its growth continues to slow, but warns Beijing against relying too heavily on investment to stimulate growth.

Fitch Ratings said in a report Tuesday it does not foresee China's economy slowing sharply in the upcoming period, despite official figures last week showing economic growth slumping to a three-year low.

But Andrew Colquhoun, Fitch's head of Asia-Pacific sovereigns, tells VOA there are worries that China's renewed reliance on investment is unsustainable. He says investment spending in China now makes up nearly 50 percent of its GDP — a rate that is much larger than other large developing countries.

“We think that growth that involves or is driven by an ever-rising share of investment in GDP is inherently unsustainable … Investment is already less efficient in China than it is in these other countries, which could be storing up problems for the future.”

Recent statements by Chinese officials, including Premier Wen Jiabao, have suggested that promoting investment is a main priority in supporting growth in the remainder of the year.

That would represent a change for Chinese leaders, who in recent years have said they are trying to rebalance China's growth model towards greater dependence on consumption, and less on investment and exports.

Colquhoun said he still sees reason for optimism despite China's slowdown, noting that a “quite resilient” labor market has kept incomes growing and has led to a surplus of vacancies in China's cities. He said Fitch maintained its eight percent projection for Chinese growth in 2012.

Even though China's 7.6 percent growth rate in the second quarter of 2012 was its lowest figure since 2009, China's economy – the second largest in the world – is still growing faster than every other leading economy.

Tuesday, July 10, 2012

China and Brazil in $30bn currency swap agreement

China has been trying to push the yuan as an alternative global reserve currency

China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.

It will allow their respective central banks to exchange local currencies worth up to 60bn reais or 190bn yuan ($30bn; £19bn).

The amount can be used to shore up reserves in times of crisis or put towards boosting bilateral trade.

China is Brazil's biggest trading partner. (and Brazil is China's biggest trading partner in Latin America)

"As international credit remains scarce, we will have enough credit for our transactions," Brazil's Finance Minister, Guido Mantega, said.

In March this year, it signed a swap deal with Australia worth up to A$30bn ($31bn; £20bn) to promote bi-lateral trade and investment.

It has also inked currency pacts with Hong Kong and Japan.

Analysts said that Beijing has been trying to push for trade to be settled in yuan, rather than in US dollars, as part of its plans to seek a more global role for its currency.

"The motivation is to be less reliant on the US dollar," Sean Callow, chief currency strategist at Westpac, told the BBC.

"We will see firms in the two countries settle their accounts in local currencies," he added.

Mr Callow added that with an increasing number of economies signing such agreements with China, its plans for a more global role for the yuan had received a major boost.

"It is a big positive for China on that account."
Closer co-operation

While trade between China and Brazil has surged, relations between the two economies have soured in recent times.

In Brazil, there have been concerns that increased imports of low-cost goods from China were hurting the local manufacturing industry.

Beijing, on the other hand, has accused Brazil of raising taxes on Chinese goods in a bid to protect the local industry, a move it says hurts its exports.

Brazil has also levied similar allegations against China.

Despite these tensions, the two countries have agreed to co-operate in various sectors to boost bi-lateral trade.

They said they will work closely in mining, industrial, aviation and infrastructure development.

The agreement also comes at a time when growth in China, the world's second largest economy, has been slowing.

China's economy grew at an annual rate of 8.1% in the first quarter, the slowest pace in almost three years. There are concerns that growth may slow further in the coming months.

However, Brazil's Finance Minister, Mr Mantega said "China will keep being the place where to do business".

Tuesday, July 3, 2012

China economy will grow 7.5% in 2012

 China's cooling economy should stabilize in the third quarter and the government is confident it can meet its growth target of 7.5 percent for the year, the chief researcher at the finance ministry said on Thursday.

Beijing is "cautiously optimistic" about China's economic prospects because it has scope to loosen monetary and fiscal policies to shore up activity, said Jia Kang, director of the Research Institute for Fiscal Science at the Ministry of Finance.

"Looking at the second half of the year, we are still confident we can meet the growth target of 7.5 percent," Jia said at a financial forum in Shanghai. "We should see stabilization (in economic activity) in the third quarter."

Analysts believe economic expansion of under 7.5 percent in China is risky as it flirts too closely with a 7 percent growth threshold seen to be the minimum needed to create enough jobs.

Concern has been growing that slowing exports, factory production and investment would lead China to miss its 2012 growth target, a level many had thought Beijing would comfortably beat when it was announced in March.

After growth sank to near three-year lows of 8.1 percent in the first quarter, China surprised many in the market by cutting interest rates by 25 basis points earlier this month.

It has also lowered banks' reserve requirements twice this year by a total of 100 basis points to 20 percent, a level analysts say is still too high and which they expect to be reduced by another 100 basis points before the year end.


Indeed, an executive director at the Bank of Communications , China's fifth-largest bank by assets, said it would be "very risky" if China's economic growth slips under 7.5 percent.

That would spark a broad downturn across all major business sectors, raise loan losses for banks, and amplify risks around China's local debt problems, Qian Wenhui said.

China has a 10.7 trillion yuan ($1.7 trillion) debt mountain incurred by local governments after the 2008/09 financial crisis, when they answered Beijing's call to spend their way to growth. Many see the debt overhang as a big threat to banks.

On that, Jia criticized the government's recent decision to tentatively retract support for local Chinese governments to sell municipal bonds directly to investors.

The turnabout is problematic because local Chinese governments were supposed to sell municipal bonds to raise much-needed cash to pay down debts.

The government's reversal in stance was revealed when the top legislative body removed a legal provision that would have backed the change.

"If you scrap the provision just because you see real conflicts, that means you won't be bringing about any change," Jia said. "I do not understand such a course of action."

Without giving details, Jia said some in the government had opposed the change, but he still expects China to continue with its pilot test to allow local governments to sell bonds.

Economists have said any change China tries to bring to its financial system would be an arduous process as different groups would wrangle to protect their own interests.

Tuesday, June 19, 2012

Trade between China and Brazil heading toward US$100 billion

China’s Prime Minister, Wen Jiabao said Friday in Beijing that he expected trade with Brazil to total over US$100 billion in 2012, according to Chinese news agency Xinhua.

Wen Jiabao was speaking after welcoming the President of the Brazilian Parliament, Marco Maia, who is visiting China as the head of a Brazilian parliamentary delegation.

Prime Minister Wen Jiabao said that relations between Brazil and China were developing steadily and called for greater cooperation in industry, infrastructure, energy, mining, finance, and technology.

China is Brazil’s biggest trading partner with two-way trade totalling US$77 billion in 2011.

In the first quarter of 2012 trade between Brazil and China totalled US$17.9 billion.

Chinese investment in Brazil in 2010 totalled US$30 billion in the oil, iron ore, and soy sectors.

Monday, June 11, 2012

China's Trade Surplus unexpectedly rose in May

China is probably using export to offset the weakness in domestic demand.

China's exports and imports both rose sharply in May, a hopeful sign for the world's second-largest economy, especially after alarmingly weak trade data in April.

Exports rose 15.3% in May from a year earlier, China's General Administration of Customs said in a statement on Sunday. That is up from growth of just 4.9% in April, and also well above expectations for a 6.9% rise, according to an earlier Dow Jones poll of economists.

Imports rose 12.7%, compared with April's 0.3% increase, and economists' expectations for a 3.0% rise.

Economists reacted cautiously to the data, warning against reading too much into the strong figures.

"The fact that it is stronger than expectations is relatively positive news, but that should be caveated by the fact that monthly trade data is very volatile from month-to-month," said IHS Global Insight economist Alistair Thornton.

He warned that exports could fade in the coming months on economic turbulence in Europe, China's largest trading partner.

"It is doubtful that growth in exports and imports can keep up such a fast pace in the coming months," said Li Huiyong, an economist at Shenyin & Wanguo Securities, a local brokerage.

The monthly trade surplus rose slightly, to $18.7 billion in May compared to $18.4 billion in April. Economists had expected the surplus to decline to $17.8 billion.

Sunday, June 3, 2012

China and Japan start direct yuan-yen trade

For both countries, there will be lesser need for US dollars.

The launch of direct trading between the Chinese yuan and the Japanese yen is expected to considerably facilitate bilateral trade and investment. The move also marks another step to raise the yuan's international role.

Giving fresh impetus to the world's second and third biggest economies, the yen, after the dollar, is now the second major direct trading currency of the yuan.

Japanese Finance Minister Jun Azumi announced the decision in Tokyo, and stressed the cost benefits behind the move.

Jun Azumi, Japanese Finance Minister, said, "It will enhance the usability of both countries' currencies and reinvigorate the Tokyo market."

Experts say it's an important step towards the internationalization of China’s yuan currency.

Prof. Ding Zhijie, dean of School of Banking & Finance, UIBE, said, "It raises the convertibility of the yuan. And I believe the yuan trading will be accepted by more Asian economies as well as the international markets. It will also push forward the internationalization of the yuan."

The direct trading could save the two countries some 3 billion dollars of transaction fees annually. (I wonder who collects this transaction fee)

Zhu Yan, professor of political science & economics, Takushoku University, said, "The new mechanism means trade between the two nations can be settled directly, bypassing the US dollar."

China is Japan's largest trading partner, and bilateral trade reached as high as 300 billion US dollars in 2010. About 60 percent of Japan-China trade is conducted in dollars.

The direct trading will boost bilateral investment, as well as imports and exports. It will bring convenience in business and lead to considerable reduction of risks caused by fluctuation of the dollar's exchange rates on the world market.

Saturday, May 19, 2012

China to become world's top gold consumer

Chinese purchases of gold rose 10 percent to a record 255.2 metric tons in the first quarter, defying a global slowdown and putting China, already the top producer, on pace this year to overtake India as the biggest buyer of the precious metal, the World Gold Council reported Thursday.

"China and India have seen continuing economic growth and while China's economy is expected to slow, it will nonetheless surpass the rates of growth in the West," said Marcus Grubb, managing director for investment at the industry-funded council based in London.

The council, reiterating its February forecast, said it expects China to become the biggest source of demand for gold this year.

Spurred by investors' concerns over high inflation and limits on real estate holdings, demand from China between Jan 1-March 31 increased 7 percent from the previous three months - the second consecutive quarter in which Chinese gold buying topped India's, the council reported. Indian demand fell 29 percent, to 207.6 metric tons, from the first quarter of 2011 due to a strike by jewelers, the weak rupee and government measures to reduce gold imports and the country's current account deficit.

China and India together make up about 54 percent of the world's purchases of gold, although India has long been the top buyer.

Gold demand in China could jump by as much as 30 percent, to between 900 and 1,000 metric tons this year from 769.8 metric tons in 2011, Albert Cheng, the council's Far East managing director, told Bloomberg News. Indian usage may fall within the range of 800-900 metric tons, from 933.4 metric tons, he said.

"Investors are selling gold now to seek cash and rebalance their investment portfolio because of concerns about the euro zone sovereign-debt crisis," he added. "The fundamental reasons for investing in gold remain very strong, so these investors will return."

Globally, demand for gold fell 5 percent during the first three months of 2012, to 1,097.6 metric tons. Gold prices during the quarter were on average 22 percent higher than a year ago though well off their all-time high set in early September 2011.

Reduced demand from the world's central banks as well as the jewelry and technology sectors outweighed an increased appetite from investors.

In China, however, both areas saw growth. Gold demand from jewelers in China rose to 156.6 metric tons, about 30 percent of the global total for the category, while investors' consumption rose 13 percent year-on-year to 98.6 metric tons.

"Further growth is expected in China," the gold council forecast in Thursday's report. "Investors remain wary of high inflation rates, and property market restrictions continue to drive demand."

Thursday, May 3, 2012

iPhone Sales Could Reach 35 Million In China In 2013

The growth future for Apple is in China. The U.S. market for iPhone is more or less saturated (i.e. pratically anyone who wants to get a smartphone already has one).

Recent reports have pointed out that China, an under-served Apple market, will help the company boost its business. Apart from the enthusiasm of Chinese users for Apple devices, Chinese mobile phone networks have a huge subscriber base.

Every month, 10 to 12 million new users subscribe to China's 3G networks, and some of them could be easily convinced to buy an iPhone. Chris Whitmore of Deutsche Bank, had the most pessimistic prediction about Apple's sales, in the last quarter.

He predicted that the company would announce that 26 million iPhones would be sold. The analyst, who is focussed on Apples' business, has taken a closer look at the situation and has tried to redeem himself. "If Apple reaches 20-25 per cent penetration of this subscriber base by the end of 2013, we estimate iPhone unit sales in China would approach ~25M units in 2012 and ~35M units in 2013", says Whitmore.

He only refers to Apple's partnership with China Unicom and China Telecom. Apple might close the deal with China Mobile, the top carrier in the country, and gain even more iPhone customers. Whitmore has upped his prediction, just days after the note to investors was published.

He believes that 26 million iPhones shipped to China this year would define a conservative approach. The actual shipments might reach 33-34 million units.

Tuesday, April 24, 2012

China to import basmati rice from India

It will be interesting to see if basmati rice sells in China, given the different taste for Chinese comsumers compared to Indian consumers.

Chinese authorities have finally given the green light for Indian exports of basmati rice following a long and tortuous six-year process that has been seen as underscoring the difficulties of navigating the complex bureaucratic hurdles that bar entry into the China market.

China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) announced last week it would allow imports of basmati rice from India. Negotiations were on since at least 2006, when President Hu Jintao visited India. It took another visit from Mr. Hu six years later, when he travelled to New Delhi last month for the BRICS Summit, to give the final push to a long-running process.

Indian exporters can begin shipping basmati rice to China after both countries agree on a mutually satisfactory quarantine protocol. Once a quarantine certificate is agreed by both sides, China will have to
circulate the certificate to all its ports and customs authorities before imports can begin entering the country.

Indian industry groups have estimated between $50-100 million potential trade, which is not signficant in term of overall China India trade. The move will have little impact on the overall trade relationship: the trade deficit between both countries reached $27 billion last year in China’s favour, with bilateral trade reaching a record $74 billion.

Two substantial barriers Indian exporters will face when entering this market are the established presence of Pakistani basmati rice brands and the niche demand for the product, largely from international five-star hotels and the small number of Indian restaurants in China.

More sticky rice varieties, which can be eaten with chopsticks, are popular in China and basmati rice is likely to remain more a novelty than become a staple.

“There is a long way to go, but this is still a welcome move,” an official said. “We hope to start with five-star hotels and restaurants, and there is sure to be growing demand with the increasing number of Indian businessmen who are now travelling to China.”

The long, six-year process that began in 2006 has underscored both the difficulties of gaining entry into the China market and the reluctance of Chinese authorities to allow agricultural and food products from India. India is still waiting for the green light for more than a dozen other agricultural products.

Wednesday, April 11, 2012

China consolidates rare earths production

It's about time China to create an industrial group for rare earth minerals.

CHINA has created an industry group to co-ordinate its rare earths sector, amid a growing trade war over its export restrictions on the resources.

China accounts for about 95 per cent of global output of the 17 rare earth materials, substances used in the manufacture of a wide range of technology products, including mobile phones, DVDs and hybrid cars.

The US, Europe and Japan have accused China of unfairly limiting exports of the resources, and last month lodged a formal complaint with the World Trade Organization.

Beijing has now established a rare earths industry association to consolidate the sector, promote international exchanges and help its 155 members deal with trade disputes. The association will report to the Ministry of Industry and Information Technology, which regulates production.

Su Bo, an industry vice-minister, said the Chinese government wanted to phase out small smelters, give bigger companies greater stakes and improve environmental policies.

''China will continue to clean up the rare earth industry, expand rare earth environmental controls, strengthen environmental checks and implement stricter rare earth environmental policies,'' he said.

The international trade dispute centers on Beijing's imposition of export quotas for rare earths and an effective tax rate of 42 per cent on the exports.

Critics argue that the policies give Chinese companies an unfair competitive advantage by keeping domestic prices far lower than those faced by international companies.

''China's restrictions on rare earths and other products violate international trade rules and must be removed,'' EU trade commissioner Karel De Gucht said.

''These measures hurt our producers and consumers … including manufacturers of pioneering high-tech and green business applications.''

China argues that the export controls are justified by the need to limit environmental damage and conserve its resources. It also highlighted the fact that its rare earths export quota for 2011 was not used up.

Tuesday, April 3, 2012

China GDP growth estimated at 8.4% in Q1, slowest since 2009

China GDP growth estimated at 8.4% in Q1, slowest since 2009

Only in China, a 8.4 percent growth rate is considered "slow".

China's economy may have expanded about 8.4 per cent in the first quarter, the slowest pace since early 2009, according to an estimate given by a government official 10 days before the data is due, adding to expectations of policy easing by Beijing.

Mr Zhang Xiaoqiang, vice-chairman of the National Development and Reform Commission, cited "relevant China research institutes' initial figures" for the estimate and predicted a gain of about 3.5 per cent in consumer prices. He spoke yesterday during a panel discussion at the Boao Forum for Asia, a gathering of government and business leaders on China's tropical island of Hainan.

The growth figure compares with the 8.3 per cent median estimate of 28 economists surveyed by Bloomberg. The fifth straight slowdown in quarterly growth will underscore concerns that weakness in the Chinese economy - the world's second-biggest - is set to limit a global expansion already capped by Europe's austerity measures.

"I believe growth will hit the bottom in the first quarter, but a sharp rebound in the following quarters is unlikely," said Mr Lu Ting, chief Greater China economist at Bank of America in Hong Kong. The weaker growth was caused by the impact of Europe's debt crisis, which hurt China's exports he added.

Chinese Premier Wen Jiabao last month pared this year's expansion target to 7.5 per cent from an 8 per cent goal in place since 2005, part of government plans to guide growth towards consumption and away from exports. In the fourth quarter of last year, growth was 8.9 per cent.

China had its largest trade deficit since at least 1989 in February as Europe's sovereign-debt turmoil damped exports and imports rebounded after the week-long Chinese New Year holiday. Exports fell for the first time in two years in January, while industrial production and retail sales have slowed this year.

Analysts widely expect the central bank to continue to cut the amount of cash that commercial lenders must hold as reserves to crank up credit expansion, but the chances of a near-term cut in benchmark interest rates remain limited.

Analysts in a Bloomberg survey last week unanimously said that bank reserve requirements will fall this year, while only nine of the 20 predicted lower benchmark borrowing costs.

Sunday, March 25, 2012

China plans to import more corn this year, as reserves are running low

China is going to spending a lot of dollars to import grain to combat food inflation, which hurts low income residents.
China's corn production in 2011/12 could be as much as 14 percent lower than current official estimates, according to Capital Economics.

As a result, China's imports are likely to be much higher than current USDA forecasts, which would squeeze global corn supplies further and put upward pressure on prices, says Capital Economics.

Despite reducing global end stocks by as much as 4 million tons since the beginning of 2012, many analysts consider the USDA's latest global corn production estimate to be optimistic. China's actual production is likely to be between 168-185 million tons, which is 5 to 15 percent lower than the USDA's current forecast of 191 million tons.

Corn inventory levels in China's state reserves are quite low, which is around 10 to 12 million tons, notes Capital Economics.

Though the USDA estimates that Chinese government will import 4 million tons of corn in 2011/12, twice the amount it imported a year earlier, yet many analysts believe that actual imports could be even higher, around 8 million tons. This in turn would create additional pressure on global supplies, causing prices to strengthen further.

China sold around 55 million tons of corn from 2009-11. China is reported to have purchased in total approximately 47 million tons in 2009 and 2011.

Capital Economics estimates the current inventory level at China's state reserves to be between 13.8 million to 22.8 million tons, which is still higher than the latest industry estimates.

Even if China's total corn imports increase to 9.5 million tons in 2011/12, the global stock-to-use ratio would decrease marginally, from 13 percent to 12 percents points out Capital Economics.

Capital Economics forecasts that prices will fall to 585 cents per bushel from current levels of around 650 cents by the end of 2012. That's still a very high price by historical standard.

Saturday, March 17, 2012

China is the largest market for smartphone in 2012

China to Ship Majority of World’s Smartphones in 2012

Chinese smartphone makers such as Huawei and ZTE should do well this year.
China is poised to become the world’s leader in smartphone shipments in 2012, according to recent research from IDC. With its sheer size, China nudged the US out of the lead by a hair, but is expected to continue to widen the gap as more of the developing country’s users sign on to the smartphone revolution.

The research firm predicted China will reach 20.7 percent of the world’s smartphone market this year, just ahead of the US’s 20.6 percent. While previous research had shown China taking the lead but then falling behind, IDC maintains this latest trend will only continue to snowball. By 2016, China is expected to leverage 20.2 percent of the global smartphone market, while the US will garner 15.3 percent.

“(China’s) smartphone shipments are expected to take a slim lead over the U.S. in 2012 before the gap widens in the coming years,” said Wong Tech Zhung, senior market analyst with IDC’s Asia/Pacific Client Devices team, in a statement. “There will be no turning back this leadership changeover.”

Meanwhile, India and Brazil are expected to be among the top 5 hottest smartphone markets by 2016, with India growing from its current position at seventh to become the third largest market, followed by Brazil, which currently ranks tenth.

The trends are clearly showing developing countries connecting to the Internet via the palm of your hand. The sheer size of these populations combined with a thirst for smarter technology creates a perfect storm of demand that will be close to rivaling the US.

“Demand for smartphones will also grow as urban and enterprise users mature in their handset preferences and usage,” says G. Rajeev, senior market analyst for mobile devices with IDC India. “Consumers are growing accustomed to higher data usage and using handsets for entertainment and other content, instead of just as a communication device.”

Yet costs will continue to be a challenge to these developing markets. The report notes that numerous industry heads at this year’s Mobile Conference in Barcelona stressed the need for affordable smartphones as low as $50 US to propel saturation. In Brazil, smartphones have dropped to below $300 with optional prepaid data plans, propelling the market with room to grow.

“Users in emerging markets seek more than simple voice telephony, and smartphones offer the ideal platform for mobile entertainment, social networking, and business usage as seen in developed markets,” said Ramon Llamas, senior research analyst with IDC.

Sunday, March 11, 2012

China posts biggest trade deficit yet

Clearly, China is aiming for a soft landing, probably a 6 percent to 7 percent growth for this decade, as compared to double digit growth in the previous decade.

China has posted a trade deficit of $31.5 billion in February 2012, the biggest in at least a decade as imports increased faster than exports.

Exports expanded by 18.4 per cent year on year to $114.4 billion in February, recovering from the retreat of 0.5 per cent in January, while imports surged by 39.6 per cent to $145.9 billion, rebounding from a slump of 15 per cent in January.

Taking seasonal factors into consideration, export and import growth in February should be 4 percent and 9.4 percent respectively, the General Administration of Customs said in a report Saturday.

The results were welcomed by many economists after China Friday reported a slowdown in other key economic data, including industrial production, fixed-asset investment and retail sales in the first two months, the Shanghai Daily reported.

"Trade performed better than expected and thus eased pressure for the government to release growth-supportive policies," said Xue Jun, an analyst at CITIC Securities Co.

"If exports can continue such growth momentum, it may delay cuts in the reserve requirement ratio," said Xue.

Li Maoyu, an analyst at Changjiang Securities Co, said such a big trade deficit may also slow the appreciation of the yuan.

"It's not rare for China to report a trade deficit in February but it's very uncommon for the country to register such a large trade deficit," the daily quoted Li as saying.

"It will weaken claims by some other countries that the value of the yuan gives Chinese export firms an unfair advantage," he added.

China may "appropriately" widen the yuan's trading band to better reflect market supply and demand, said Zhou Xiaochuan, governor of the People's Bank of China, the country's central bank, during the annual session of the National People's Congress this month.

In the first two months of 2012, China's trade expanded by 7.3 percent from a year earlier to $533 billion with a deficit of $4.2 billion.

Trade with the European Union improved by an annualized growth of 4.7 percent between January and February, and deals with the US increased by 9.2 percent. Both were negative in January, the Customs data showed.

China's trade with emerging markets improved as shipments to Russia surged by 31.9 percent in the first two months.

Saturday, March 3, 2012

China is the first country to have 1 billion mobile phone users

China is still the largest market for mobile phones.

China has become the first country in the globe to have more than 1 billion mobile phone subscribers, according to government statistics. It has reached 951.6 million October last year with additional 39 million users per quarter. Based on that and recent growth rates, the total number of users has surpassed a billion sometime during this month. We can say it’s around 74 percent of its total population — 1.35 billion people — owns a mobile phone.

One of the first customers who queued up to purchase a new smartphone iPhone 4S show his new phone at an Apple Store Friday Jan. 13, 2012 in Shanghai, China. Mobile subscribers in China have breached the 1 billion mark, although the country is still said to have room to grow, in terms of mobile broadband speeds and penetration.

China Has the World’s Top Mobile Phone Population

The figures underscore the soaring rate of mobile phone adoption in the country. In March three years ago, the country had 670 million mobile phone users. During the same period in 2010, that number reached 776 million. China Mobile, the country’s largest telecommunications company, has the biggest market share with 67.3 percent, followed by China Unicom with 20.1 percent and China Telecom, the smallest of the three operators, have 12.6 percent share.

A point to note is that China Mobile has been listed in the Dow Jones Sustainability Index (DJSI) marked them as the first company from China to be included in the list. In 2004, International Telecommunications Union (ITU) ranked China Mobile first among the top ten mobile operators by proportionate subscribers.

India Catching Up

While China maintains itself as the country with the most mobile phone users, India is catching up, with the growth rate of telecommunication sector continued to enjoy an impressive growth. The wireless subscription base has recorded an increase of 227.27 million, thus makes it a total base of 893.84 million connections according to a recent report from the Telecom Regulatory Authority of India. The overall teledensity registered an increase from 52.74 at the end of March 2010 to 70.89 at the end of March 2011.

China’s 3G networks, which launched three years ago, added around 15 million new subscribers over the first two months of 2012. This puts them on track to surpass its 2011 3G network growth rate, which made around 135 million subscribers in the nation by now. Many analysts and parties have concluded that China’s smartphone sales have driven the force in the increase of 3G subscribers in the country.

And at the end of last year, China had 440 million users who used mobile devices to go online, an increase from 305 million a year before, as stated by China Internet Network Information Center.

Still Plenty of Room for Growth?

The countries with the most phones per person tend to be small, with lots of borders or numerous foreign workers and visitors, as stated by Susan Teltscher, an analyst at the ITU. If there is a question which country has the most cell phones per person? United Arab Emirates (UAE) with two for each citizen is the answer. Second place goes to Montenegro. Why? Because the visitors tend to buy local phones to use during their stay either for vacation or business trip. With the UAE as a benchmark, mobile phone market in China surely appear to have plenty of room to grow.

Sunday, February 26, 2012

China's CITIC to join Venezuela's huge gold project

Venezuela will develop its huge Las Cristinas gold project in partnership with Chinese state investment company CITIC, President Hugo Chavez announced on Friday.

The government last year cancelled Toronto-based Crystallex International's permit to develop the long-troubled mine project south of the Orinoco river.

Russian-Canadian miner Rusoro Mining, based in Vancouver, had hoped to partner with Venezuela in what could be Latin America's largest gold deposit. Las Cristinas has estimated reserves of 17 million ounces.

In a meeting with Chinese investors, Chavez said he was firming "an agreement with CIT-IC for the joint development of Las Cristinas." He gave no more details.

Chavez, who was speaking at his last meeting before flying to Cuba for cancer treatment, has brought Venezuela ever closer to China in terms of business and political ties during his 13-year rule of the South American OPEC member.

Development of the Las Cristinas mine, near a town bearing the name of the mythical golden city of El Dorado, has dragged for decades due to a mixture of bureaucratic, political and financing issues.

Some locals say the mine is cursed.

Wednesday, February 15, 2012

China's Huawei likely to become world's top telecom equipment maker this year

China's Huawei outmuscles Swedish rival

When Huawei Technologies posts its annual results in April, they will likely show the unlisted Chinese firm has overtaken Sweden's Ericsson as the world's top-selling telecoms equipment maker.

As with solar panel maker Suntech Power, another Chinese manufacturer that is a world beater yet little known beyond the Great Wall, it's been a rapid rise to the summit.

And, as the pace of global spending on telecoms equipment slows -- on the switches, hubs and base stations that connect networks -- Huawei has been building serious growth in new areas such as smartphones and its MediaPad tablet PC.

Globally, Huawei already ranks sixth in mobile phone sales.

Privately-owned Huawei was founded in the southern boomtown of Shenzhen by CEO Ren Zhengfei just 25 years ago, after he left the People's Liberation Army as part of a scaling down of the world's largest military force.

Now 68, Ren, who was named the fifth most powerful Asian executive by Fortune in 2011, was involved in military technology development for the PLA before setting up Huawei with just 20,000 yuan ($3,200).

Annual sales are forecast at around 200 billion yuan ($31.7 billion), around two-thirds of which, some $21 billion, are from telecoms gear, putting it ahead of Ericsson's 2011 network sales of $19.8 billion. Ericsson, which has a market value of more than $31 billion, has led the mobile telecom equipment market for at least the past decade.


Global spending on telecoms equipment is forecast to grow 6.9 percent this year to $444 billion, slower than last year's 7.7 percent growth, dented by Europe's debt crisis and the generally weak economy that has checked spending in the IT sector, according to IT research firm Gartner.

Ovum, a UK research firm, sees a similar trend, with growth in telecom operators' spending slowing to 5.5 percent in 2012 from 12.2 percent last year.

About two thirds of Huawei's revenues come from selling telecoms gear -- where it also competes against Nokia Siemens Networks GmbH, Alcatel Lucent and ZTE, another Chinese firm.

As well as consumer gadgets, Huawei has pushed aggressively into selling routers and switches to corporations in the so-called enterprise sector, a growing $35 billion market dominated by Cisco Systems and Hewlett-Packard.

"There's a lot of price pressure now (from the Chinese firms) and this is going be tough for Ericsson," said Bill Rojas, an analyst at research firm IDC.

Some analysts, however, say Huawei needs to build strong channel partners -- distributors and systems integrators -- over the next 3-5 years if it's to compete in the enterprise sector.

"The market is wide open, this is anybody's game," said Matt Walker, an analyst at Ovum, referring to the telecoms market. "I know some observers will see a conservative growth outlook, think it means a tight price climate, and conclude that this favors Chinese vendors. I don't see this."

"Huawei and ZTE are positioned well in both these markets, but so are others," he said. "Services may be a big part of it."

Ren's background with the Chinese military has often been cited as hindering Huawei's progress in telecoms technology in North America, though the company has repeatedly denied having links with the armed forces.

Last year, Huawei backed away from buying U.S. server technology company 3Leaf's assets, bowing to pressure from a U.S. government panel, and in 2008, it gave up on a bid for U.S. networking equipment company 3Com. In 2010, some Republican lawmakers raised national security concerns about Huawei's bid to supply mobile telecoms equipment to Sprint Nextel Corp.


The real future growth driver for Huawei, and ZTE, also based in Shenzhen, is likely to be in red-hot consumer gadget markets, helping take up some of the slack in telecoms.

Huawei's consumer devices -- dongles, mobile phones and tablets -- now bring in almost a fifth of its revenues and these sales are powering ahead at 40 percent, the company said last month, twice the growth seen in 2010.

Huawei had sales of $6.8 billion in its consumer business last year, and is moving up the value chain by selling more of its feature-filled IDEOS and Vision smartphones.

A key advantage here is price.

Huawei's new Ascend smartphone sells at around $400, much cheaper than the most basic Apple iPhone 4S, which costs around $650 in Hong Kong stores. The phones are increasingly available at stores in glitzy Chinese malls and have featured at a Milan fashion show.

"Chinese users prefer mid-range smartphones as they are more affordable than the expensive high-end ones, and have a much better user experience than low-end phones," microblogger Hu Yang wrote on Sina Weibo.

"Let's hope Huawei introduces more such mid-range smartphones in the future, (though) I hope Huawei improves its software capabilities in smartphones as mine still has some bugs that aren't resolved."

As sales grow rapidly, Huawei hopes margins won't be compromised.

Its overall gross profit margin rose to 41.9 percent in 2010, from 39.6 percent, while, at Ericsson, gross profit margin declined to 35.1 percent last year from 38.2 percent in 2010.

"We are trying to have a strategy that doesn't revolve around price," said a Huawei executive, who declined to be identified as he was not authorized to speak to the media.

"Over the last 2-3 years, we have been focusing more on value, like customization, support and systems integration."

Other new growth areas Huawei is looking at include fourth generation (4G) Long Term Evolution (LTE), an upgrade from 3G technology that promises faster data downloads.

"Huawei is very competitive in LTE products. They're going to take away more market share," said IDC's Rojas.

Huawei has clinched more than three dozen fourth generation LTE contracts globally with major operators such as Japan's Softbank Corp, and sees sales of LTE equipment doubling next year, a senior executive said in November.

The Chinese firm, which employs more than 110,000 staff worldwide, has been offering solutions to operators that will help ease network migration with its singleRAN (radio access network) technology.

As part of a branding and image drive, Huawei also bid, unsuccessfully, to set up a phone network in London's Underground during this year's Olympic Games.

Huawei's Asian base, particularly in its home market, may also prove beneficial, both for its telecoms gear business and device sales.

"The good thing is that Asia still needs to catch up with network deployment. The demand is there," said another Huawei executive, who also asked not to be named.

"It may not be the same growth rate as before, but it's still quite significant compared to other parts of the world."

Sunday, February 5, 2012

Iran-China trade exceeds 45 billion dollars in 2011

TEHRAN — Trade between Iran and China soared by 55 percent on year to exceed 45 billion dollars in 2011, Tehran's envoy to Beijing was quoted as saying on Wednesday.

Ambassador Mehdi Safari said in Beijing that the annual trade figures showed a 16 billion-dollar increase in commercial ties with China since 2010, the official IRNA news agency reported.

China is Iran's top trade partner, with economic ties expanding in recent years partly thanks to the withdrawal of Western companies in line with sanctions against the Islamic republic over its contentious nuclear drive.

The Asian economic giant has also significantly strengthened its presence in Iran's oil and gas sector by signing a series of contracts worth up to 40 billion dollars in the past few years, in place of Western firms.

Iran is the third largest provider of oil to China.

China defended its economic and oil trade with Tehran as legitimate after the European Union imposed sanctions on the oil exports of the Islamic republic, which provides 11 percent of China's oil imports.

Tuesday, January 24, 2012

ZTE, Huawei gaining smartphone market share in Europe

How China Ate Android

ZTE Blade smartphone

Google is now reporting a heady 700’000 Android device activations per day. How is it possible the mid-tier Android vendors cannot eke out revenue growth with that kind of global Android unit explosion still going on?

The most likely explanation is the rapid expansion of the low-cost Android phone vendors, particularly ZTE and Huawei. In 2010, Vodafone and Orange decided to give these Chinese companies a shot at becoming mainstream vendors in Europe. The experiment was a wild success – several of the models and particularly the ZTE Blade (which Orange named “San Francisco”) became bestsellers by pushing smartphone pricing to new lows.

The current state of the UK pre-paid market reflects the sea change gripping the European smartphone market. It demonstrates why Sony and HTC are being marginalized so rapidly. The Huawei Blaze is now selling for 60 pounds without contract – and it features a 3 MP camera and a 3.2 inch display. It’s only 11 mm thick; a far cry from the chunky low-end smartphones consumers are used to.

HTC Wildfire S costs 130 pounds. Blackberry Curve 9300 costs 145 pounds. Sony Ericsson Walkman Mix costs 65 pounds; but it features a smaller display, lower pixel density and is 3 mm thicker than the Blaze. Established smartphone vendors that have been in the handset business for more than two decades cannot match the price/quality ratio that the Chinese Android vendors offer.

ZTE is now targeting 80 Million handset volume in 2012 – and 100% smartphone volume growth. ZTE Blade became the second-best selling W-CDMA phone in China last summer and is now cruising towards 10 million units sold globally. The ZTE Skate is off to an even faster start. And ZTE is actually behind Huawei in China – these two combined are likely to hit 25% share of China’s handset market by summer. By elbowing out old champs like Motorola and LG in China, Huawei and ZTE are building production scale they can leverage to undercut rivals even more aggressively in the rest of the Asia.

ZTE and Huawei are in the process of crushing the mid-tier Android competition, but they are also eyeing other device segments. ZTE’s Windows model Tania is debuting in the UK at the monthly contract rate of 10 pounds – half of what the Nokia 710 will cost.

After strong gains in Europe and China, the Chinese vendors are now going to attack the US smartphone market in 2012. Squeezed between Apple and Samsung at one end, the Chinese low-cost vendors at the other, mid-tier vendors may be about to demolished. LG, HTC, Motorola, Sony – their bad 4Q11 performances are just a prelude to a devastating 2012. It would not be surprising if Google opts to wind down Motorola’s handset operations sometime over the next two years and Sony bails out entirely.

ZTE and Huawei demonstrated in the UK market last year just how little brand loyalty consumers have when they see a white label smartphone undercutting second-tier brands by 30-60%. We are likely to witness a US sequel to this phenomenon this year. Globally, the industry could well witness smartphone ASP erosion that is substantially faster than projected.

Saturday, January 14, 2012

XAIC delivers 2,000th vertical tail to Boeing Company

A company in northwest China's Shaanxi province has hailed a major milestone in its history of aircraft component production as a sign of its leading status in the market.

Xi'an Aircraft International Corporation (XAIC), a subsidiary of China Aviation Industry Corporation (AVIC), has turned over 2,000 737NG (Next Generation) vertical tails to the Boeing Company as of Friday.

"It means that XAIC has mastered international advanced airplane components manufacture techniques and is becoming a strategic partner of aircraft enterprises known around the world," said Jiang Jianguo, XAIC president.

The 737NG vertical tails are widely used by various kinds of airplanes, such as Boeing 737-700, 737-800 and 737-900.

Currently, about two-thirds of the vertical tails of the operating Boeing 737 aircraft in the world were made by XAIC, said Jiang.

XAIC signed its first production contract, for 1,500 vertical tails, with the Boeing Company in 1996.

XAIC has become the major supplier of some renowned aircraft manufacturers, and has turned over more than 8,000 aircraft components to Airbus, Bombardier and Alenia Aeronautica.

XAIC also turned over the first 747-8 vertical tails to the Boeing Company Friday, marking a great breakthrough in production of tails for large aircraft.

In recent years, the inland province of Shaanxi has beefed up its efforts in developing its aviation industry. Shaanxi is home to one of China's leading aircraft makers, AVIC Xi'an Aircraft Industry (Group) Corp.

Wednesday, January 4, 2012

Chinese producer wins Ford's biggest order for automatic press

Chinese machine tool companies are slowly moving up the value chain.


JIER Machine Tool Group Company, a leading manufacturer of machine tools in China, has won an order from Detroit-based Ford Motor Company for five large-scale automatic press production lines at two of its factories, the company's president Zhang Zhigang announced on Dec. 29.

It is the first time in nearly 20 years that Ford Motor has bought complete sets of press equipment from a country other than Germany.

JIER will finish the turnkey project, namely delivering the five production lines to Ford Motor in a ready-to-use condition by 2013.

The U.S. automaker's order is the single largest export order that Chinese machine tool producers have ever received.

Among the five press production lines, which will reach top-grade international level, one will be installed at Ford's new factory in central United States, and it will be the factory's only press line.

The other four will be installed at the Ford River Rouge Complex in Detroit, the oldest factory of Ford Motor and a symbol of the U.S. automobile culture, to replace its existing press lines.