world growth

world growth

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.