China Economy - News & Updates

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China poised to set up $200 billion investment fund ​

BEIJING: China took a big step on Wednesday towards establishing a fund that will invest $200 billion of the country’s $1.2 trillion in foreign exchange reserves in assets around the globe.

The embryonic agency has already spent $3 billion on a 10 percent stake in Blackstone, a US private equity group, as part of a drive by Beijing to earn higher returns by making riskier investments.

Lawmakers started to review a proposal that would authorise the Ministry of Finance to issue 1.55 trillion yuan ($203.5 billion) in special treasury bonds to buy foreign exchange to fund the start-up of the agency, Xinhua news agency reported. The bond plan, submitted by the State Council, China’s cabinet, is almost certain to be approved.

The finance committee of parliament endorsed the proposal and commended it to the full standing committee, which is in session until Friday, Xinhua reported.

It said the tenor of the book-entry bonds would be at least 10 years; the interest rate would depend on market conditions.

Xinhua did not say whether the bonds would be issued directly to the People’s Bank of China, which controls China’s reserves, or sold in the domestic market with the proceeds used to buy foreign exchange from the central bank.

The latter method would drain cash from the banking system and call for careful management by the central bank to avoid a destabilising spike in interest rates, economists said.

Growing unease: China currently invests the bulk of its reserves in safe but relatively low-yielding US bonds.

Officials have cited Singapore’s state investment funds as a model for its as-yet unnamed agency, suggesting it will in future be buying stakes worldwide in publicly quoted companies and real estate as well as making private equity investments.

The Middle East is one area of interest. Dubai and Chinese officials have already begun talks on cooperation between their respective state investment agencies, a senior Dubai executive said on Wednesday.

“The Chinese will be looking at investments that we already have in the Middle East and in Western regions of the world,” Yu Lai Boon, chief investment officer at state-holding company Dubai World Group, told Reuters in Singapore.

Investment funds managed by governments control an estimated $2.5 trillion in global wealth, outstripping hedge funds.

The Chinese agency will become one of the biggest such funds, which are coming under growing scrutiny in developed countries whose assets are likely to be on their shopping list.

Clay Lowery, the US Treasury’s acting undersecretary for international affairs, called last week on the International Monetary Fund and the World Bank to draft a best-practices guide to monitor the investment policies of sovereign wealth funds.

“It is hard to dismiss entirely the possibility of unseen, imprudent risk management with broader consequences,” he said.

Kuwait and the United Arab Emirates set up rainy-day funds years ago in the form of state-owned investment vehicles to manage periods of low oil export earnings. Russia has a fund for future generations, as does Norway.

Germany is especially concerned by the rapid growth of sovereign funds, which Morgan Stanley says could have assets of $12 trillion by 2015, roughly the size of the US economy.

“We are watching closely how state-controlled investment firms from Russia, China and the Middle East buy or sell stakes in companies,” Germany’s Deputy Finance Minister Thomas Mirow told Handelsblatt newspaper this week.

China has said its investment in Blackstone was crafted in such a way as to allay political suspicions. Its stake was small enough not to need US approval, it surrendered its voting rights and it agreed to keep its investment for four years.

IMF chief economist Simon Johnson said on Tuesday that policy makers must cast a careful eye over state-run funds.

“What is the investment strategy of these funds and what is their leverage? I don’t know,” he said. “People are beginning to feel uncomfortable about this.” reuters

http://www.dailytimes.com.pk/default.asp?page=2007\06\28\story_28-6-2007_pg5_23

 

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Distrust of US, Russia and China growing around world​

WASHINGTON: Unease with American foreign policy and President George Bush has intensified in countries that used to be the closest US allies, while Russia and China also face growing international wariness, a survey released on Wednesday said.

Support for the US-led war in Iraq, the NATO military action in Afghanistan and worldwide American efforts against terrorism has dropped since 2002, according to an international survey by non-partisan Pew Research Centre. Views of the US in much of the Muslim world remain particularly negative, the poll discovered. In one instance of Bush’s unpopularity, the poll showed he is less trusted on foreign policy than Russian President Vladimir Putin by allies Britain, Germany and Canada, even though faith in Putin himself has also plummeted. About half in the US say they have little or no trust in either leader’s conduct of foreign affairs.

Bush’s sagging numbers partly reflect widespread opposition to the US war in Iraq. Of the countries surveyed, including the US, only people from Israel, Ghana, Nigeria and Kenya do not favour the removal of American forces from Iraq. The State Department declined to comment on the report, which covered 46 countries including the Palestinian territories.

However, the US is still seen favourable in most countries surveyed, including India, Japan, Italy, Israel and many African countries. American culture is widely admired and many believe moving to the US can lead to a better life. Yet, a majority believe the US does not consider their interests when formulating its foreign policy, worry that US customs are hurting their countries and think the US contributes to the gap between poor and rich nations. The US’ continuing battle against terrorism has worsened its overall image as well. It was 75 percent favoured in Britain in 2002 to 51 percent now, has dropped from 60 percent to 30 percent in Germany and from 64 percent to 56 percent in Mexico.

Views of the US have also slipped in Russia, Indonesia, Canada, China and India. The US is, however, seen favourably by 9 percent in Turkey, 13 percent in the Palestinian territories, 15 percent in Pakistan and 20 percent in Jordan.

Though Putin is popular in Russia, his worldwide image has declined. Only in China, Ukraine and a handful of African nations did most express trust in his foreign policy. Views of Russia are mixed, with slightly favourable opinions in the US, China, India and South Korea. Though more than half the nations polled have positive views of China; its image has widely worsened. Countries in Africa, Latin America and Asia see China most favourably, although two-thirds in Japan view it negatively.

Unease with Beijing’s military was widespread, with majorities in most countries surveyed expressing worries, including Japan, South Korea, much of Europe and the US.

The report also found concern over environmental issues has grown more than any other global problem the poll tested. However, only 37 percent in the US view it as a major concern – less than in any other advanced nation surveyed. The spread of nuclear weapons and ethnic hatred were the two most often cited worries in the Middle East. Iran’s potential acquisition of nuclear arms is only favoured in majorities in Pakistan, Bangladesh and the Palestinian territories.

The polling was conducted lat April and May and the number of people in each country ranged from 500 to 2,026. The margin of sampling error ranged from plus or minus 2 to 4 percentage points. ap

http://www.dailytimes.com.pk/default.asp?page=2007\06\28\story_28-6-2007_pg7_50

 

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China’s GDP expected to grow 10.8% in 2007 ​

SHANGHAI: Growth in China’s economy is expected to expand at a rapid rate in 2007, with inflation ticking higher to 3.2 percent, state media reported Friday, citing the central bank. The nation’s gross domestic product (GDP) should expand 10.8 percent this year, slightly higher than the 10.7 percent in 2006, the fourth consecutive year of double-digit growth, according to the bank’s research report published in the China Securities Journal.

It said that after the blistering 11.1 percent growth recorded in the first quarter, the second quarter pace of growth should slip to 10.9 percent followed by 10.7 percent and 10.6 percent in the third and fourth quarters respectively. “The trend in the high growth of gross domestic product should suggest an adjustment, but the extent of a pull-back is unlikely to be large,” the bank said. Recent inflation pressure was expected to ease in the second half, the report said, but was still above the official target of 3.0 percent. The consumer price index, a key measure of inflation, hit a two-year high of 3.4 percent in May.

The People’s Bank of China also went on to add that growth in the trade surplus would fall gradually amid faster growth in imports and a decline in exports. It said this was partially due to cuts or the removal of tax rebates for exports and imposing a tax on energy intensive export products. China’s trade surplus for May hit $22.45 billion, up nearly 73 percent from a year earlier and was the second-highest ever behind February’s figure of $23.7 billion. afp

http://www.dailytimes.com.pk/default.asp?page=2007\06\30\story_30-6-2007_pg5_30

 

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Secret of China's economic revolution ​

LAHORE (July 05 2007): Chinese people are well-mannered and very friendly. Hard work and dedication is the secret of their revolutionary economic and industrial development and they do every job with dedication devotion and hard work.

They preferred mega projects for development and consider education as the basis of development that's why they focused a lot on education and implement it in their practical life.

These observations were expressed by the students and teachers who came from China after completing their educational visit during a meeting with Acting Vice Chancellor Punjab University Professor Dr Muhammad Arif Butt here on Wednesday.

The language is the basic problem for foreigners in China, but now the Chinese government has initiated many language courses to overcome this issue. They focused on science and technology instead of educated social science. Their students are well-mannered and they are very serious about their studies.

Their institutions compete at the international level despite minimum facilities and sources. It is said that Chinese uses bicycles but this concept is not true. At present, there are also two groups of society in China, one is worker and other is entrepreneur, having all facilities but the main aim of both are to serve their country and nation.

The history of Chinese civilisation is of thousands years-old and they developed their civilisation a lot which were also adopted other nation in the world, they expressed. The delegation left for China on June 2 under the leadership of Professor Muhammad Azhar Ikram and returned on June 29. The delegation visited Beijing and other Universities and other educational institutions of China during their visit.

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China trade surplus to have risen again ​

BEIJING: China’s trade surplus in June is likely to have risen from the near-record high of a month earlier, as businesses rushed to ship goods ahead of new export curbs, state press reported on Friday.

The rise is expected to have pushed the trade surplus for the first six months of 2007 up 60 per cent from a year earlier to $110 billion, Xinhua news agency said, citing a senior analyst at the customs administration.

The reason for the June surge, the report said, is that manufacturers rushed to complete orders ahead of a rule that took effect from July 1 that aimed to slow exports. The government announced on June 19 that it would cut or remove export tax rebates for 2,831 commodities, or a third of total exports, from the beginning of this month.

The move came after China imposed extra export tariffs and slashed import duties as of June 1, which led to a similar export boom and lifted May’s trade surplus by 73 per cent on year to $22.45 billion, the third-highest ever.

China’s huge trade surplus, which soared 74.2 per cent to $177.5 billion last year, has been a constant source of friction with its major trading partners, mainly the United States and the European Union.

Beijing has been constantly accused of keeping the Chinese currency artificially low to make exports cheap, giving its exporters an unfair competitive edge.

Huang Guohua, the senior official from the General Administration of Customs who Xinhua cited, said the trade surplus for the rest of 2007 would remain high but the growth rate should slow. For the first five months, the surplus jumped 83.2 per cent from a year earlier to $85.72 billion, according to official data.

http://www.thenews.com.pk/daily_detail.asp?id=63433

 

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China’s trade surplus soars 85.5pc to record ​

BEIJING: China’s trade surplus soared 85.5 per cent to hit an all-time high in June, official data showed on Tuesday, setting the stage for an enormous full-year figure that is sure to inflame tensions with the United States and Europe.

The surplus hit a monthly record of $26.91 billion as exporters rushed to beat new curbs that went into place on July 1. Exports for June totalled $103.27 billion and imports were $76.36 billion, the customs administration said in a statement on its website. China posted a trade surplus of $112.53 billion in the first six months of 2007 it said, without giving comparative data.

But based on previously released figures, the June surplus was 85.5 per cent higher than the same month last year and the six-month figure was 83.1 per cent larger than the corresponding period in 2006. The June surplus far exceeded the previous monthly record high of $23.83 billion set in October last year.

Although the June figure was partly due to businesses rushing to beat the new curbs on exports, analysts said China would inevitably come under more global pressure as the surplus ballooned throughout the rest of the year. China’s top economic planning said in May that the trade surplus was likely to hit $250-300 billion in 2007, up from a record $177.5 billion last year and a massive increase from $31.98 billion in 2004.

The surplus has been a constant source of friction with its major trading partners, mainly the United States and the European Union.

Beijing has been routinely accused of keeping the Chinese currency artificially low to make its goods cheaper, giving its exporters an unfair competitive edge. “This level of trade surplus is unprecedented for China or any other major economy in the world,” Goldman Sachs economist Hong Liang said.

“This again highlights the ineffectiveness of the policy tinkerings that have so far failed to tackle the root cause of China’s bloating trade surplus: the significantly undervalued currency.” Last month China escaped being branded a currency manipulator in a US Treasury report. If it had been so accused, then the Asia giant would have become subject to a legal process that can trigger sanctions under US law.

US lawmakers critical of China’s trade and foreign exchange policies have in the meantime also unveiled legislation that could make it easier to impose sanctions on Beijing. Ping An Securities analyst Sun Fanghong agreed that the larger surplus would again pressure the currency but was unlikely to affect Beijing’s stated policy of maintaining the slow but steady rise of the yuan. “The surplus absolutely will impact the yuan’s appreciation but I don’t think the Chinese government will change its slow and steady pace (of adjustment) easily,” she said.

A senior analyst at the customs administration said last week that one of the reasons for the then anticipated June rise was that manufacturers had rushed to ship orders before the end of export tax rebates on July 1. The government announced on June 19 that it would cut or remove export tax rebates for 2,831 commodities, or a third of total exports, from the beginning of this month in another effort to bring some balance to the trade account.

Although analysts said exports could fall in the months ahead as result of the curbs, Tuesday’s data also showed a troubling fall in imports — precisely the opposite of what China needs to narrow the surplus. “The composition surprised us — export growth was not as strong as we had expected.

Part of the reason for that record trade surplus is because import growth was weaker than it has been in recent months,” said Robert Subbaraman, analyst at Lehman Brothers in Hong Kong.

http://www.thenews.com.pk/daily_detail.asp?id=63933

 

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China revises up economic growth ​

BEIJING: China’s white-hot economy expanded even faster than originally thought last year, the government said on Wednesday in revising 2006 the growth number to 11.1 per cent from 10.7 per cent. The economy last year was worth 21.09 trillion yuan, the National Statistics Bureau said, or about $2.65 trillion based on average 2006 exchange rates.

The original 10.7 per cent growth figure was already an 11-year high and the revision puts the Asian giant even closer to surpassing Germany as the world’s third-biggest economy, which economists had initially forecast to happen in 2008.

In what has become an almost routine mid-year adjustment, the total economic growth for 2006 was raised from an original January estimate of 20.9 trillion yuan. The bureau said in a notice posted on its website that the upward revision was made due to a continuing assessment of last year’s economic activity, and the figures could grow still based on a final assessment later this year. The initial January economic figure underestimated growth in the industrial and services sectors, the bureau said.

The country’s double-digit growth, fuelled by investment and exports, has led to concern that the temperature might be too hot and Beijing has introduced a series of measures aimed at cooling things down, to little effect.

However one impact of the upward revision will be to make the first-half 2007 growth figures smaller due to the higher 2006 base of comparison, said Qi Jingmei, a researcher with the State Information Centre, a government economic think tank. “This will reduce the pressure on this year’s figures. The direct impact will be that this year’s economic growth rate will seem slower,” Qi told AFP. The first-half numbers of 2007 are due to be released next week.

Past re-assessments have vaulted China higher in the world economic rankings. In late 2005, economic activity for the previous year was revised upward by a hefty $284 billion, moving China up several spots to the current number four.

http://www.thenews.com.pk/daily_detail.asp?id=64107

 

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China’s forex reserves top $1.33 trillion​

BEIJING: China’s foreign exchange reserves, already the world’s largest, surpassed $1.33 trillion at the end of June, the central bank said Wednesday.

At $1.3326 trillion, the reserves were up 41.6 percent from 12 months earlier, the People’s Bank of China said in a statement on its website. A total of $266.3 billion have been added to the reserves total in the first half of 2007, 144 billion more than a year ago, the bank said.

The announcement came one day after China said that its trade surplus for June had soared 85.5 percent to hit a record monthly high of $26.91 billion.

China’s soaring trade surplus is one of the main factors contributing to the bulging forex reserves. China’s top economic planning agency said in May that the trade surplus was likely to hit $250-300 billion in 2007, up from a record $177.5 billion last year and a massive increase from $31.98 billion in 2004.

The surplus has been a constant source of friction with its major trading partners, mainly the United States and the European Union. A large proportion of China’s forex reserves are believed to be tied up in relatively low-yield US Treasury bonds. As part of its efforts to maximise returns, the government is preparing to set up a state-controlled investment firm, which will reportedly manage a fifth of the forex reserves. afp

http://www.dailytimes.com.pk/default.asp?page=2007\07\12\story_12-7-2007_pg5_20

 

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China’s roaring economy set to overtake Germany ​

SHANGHAI: China’s economy grew so rapidly in the first half of 2007 that it is likely to overtake Germany as the world’s third-largest by the end of this year, analysts say. China’s sizzling economy expanded even faster than originally thought last year, with the government revising 2006 growth domestic product (GDP) to 11.1 per cent from 10.7 per cent.

Data released by China’s statistics bureau last week showed the economy was worth 21.09 trillion yuan in 2006, about $2.65 trillion based on last year’s average exchange rate of 7.97 yuan to the dollar. The revision puts China in striking distance of Europe’s largest economy within months. “With this upward revision, it is highly likely that China will bypass Germany to become the third-largest economy in the world in current US dollar terms by the end of this year,” said Hong Liang, an economist at Goldman Sachs.

According to the World Bank, Germany’s economy was worth $2.9 trillion at the end of 2006. Economists expect GDP in the second quarter to near or equal its breathtaking January to March pace of 11.1 per cent growth. JP Morgan Chase Bank economist Wang Qian put the second-quarter acceleration at 10.6 per cent, and said it would pick up speed in the second half of the year. The torrid pace of development means that China’s economic czars will once again have to devise fresh ways to prevent the export powerhouse from the kind of overheating that could trigger a slide into financial crisis. Regulators have already taken this year introduced a slew of piecemeal administrative measures to slow the economy, including two interest rate hikes, five increases in bank reserve requirements and new export curbs.

Exports, one of Beijing’s biggest headaches given the friction it causes with its two largest trade partners, the European Union and the United States, have continued to flood international markets. The widening trade gap is on route to becoming the globe’s largest ever after Beijing announced last week that its surplus had jumped more than 85 per cent in June to $26.91 billion. Although the June figure was partly due to factories rushing to beat new curbs on exports that took effect July 1, the huge global demand for Chinese goods means the surplus will expand through the rest of the year, analysts said. “China has become the world’s factory for manufactured consumer goods,” said Qu Hongbin, a senior economist at HSBC in Hong Kong. “If global consumer demand remains then Chinese exports will grow. There is not a lot that government policy can do about that.” Washington and Brussels believe one step to staunching the tide of Chinese goods would be greater appreciation in the currency, which trade partners say is artificially low and boosts China’s business competitiveness. But China’s autocratic leadership fears that could destabilise its financial system, making such a step highly unlikely, in keeping with the government’s repeated position of allowing the yuan to rise slowly.

Earlier this month the nation’s top economic planner said China had to further tighten macroeconomic controls in the second half in the face of growing financial risks. “The trend is of an economy that is moving from a bias of fast growth to overheating,” said a research arm of the National Development and Reform Commission.

Li Huiyong, chief analyst at Shenyin Wanguo Securities in Shanghai, said the government had to get cracking. “At the moment, there is no obvious change to the overheated economy, with inflation and investment (levels) likely to jump,” said Li. “Under such circumstances, the major task is to prevent further overheating and strengthen controlling measures.”

http://www.thenews.com.pk/daily_detail.asp?id=64678

 

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Is China’s economy overheating or not?​

BEIJING: The debate over whether China’s economy is overheating is, well, overheating.

Conventionally, if demand for a country’s goods and services outstrips its capacity to supply them, the result is a current account deficit, rising inflation and squeezes in areas like transport.

By those measures, some economists contend, China is hardly boiling over: its current account is in surplus by about 10 percent of GDP and non-food inflation is just 1.0 percent.

But Zhu Jianfang, chief economist at CITIC Securities in Beijing, argues that traditional benchmarks alone are a poor gauge for judging whether China can keep growing at the 11.9 percent annual pace it chalked up in the second quarter.

“If we take into consideration the economy’s sustainability, the intensity of energy consumption and environmental protection, China’s economy now is indeed overheated,” Zhu said.

“It’s true that we see no serious bottlenecks in transport and energy supplies, but we are seeing environment constraints nationwide, which is an alternative sign of economic overheating,” he added.

Li Huiyong, chief economist at Shenyin and Wanguo Securities in Shanghai, agreed that the economy was already overheated.

Tightness everywhere: China’s annual consumer inflation, which accelerated to a 33-month high of 4.4 percent in June, was mainly driven by a spike in the price of meat and eggs.

But Li said this did not make it any less pernicious because higher food prices have in the past often triggered broader inflation.

In addition to a 11.3 percent rise in food prices in the year to June, consumer goods prices rose 5.2 percent and residential costs 4.4 percent.

The central bank’s corporate goods price index, which measures the prices paid by companies for inputs, is also rising. It was up 5.4 percent in the year to June, a two-year high.

Hong Liang, chief China economist at Goldman Sachs in Hong Kong, said that 11.9 percent GDP growth is clearly above the economy’s potential, which she estimates at 9-10 percent. The World Bank puts it at 10-11 percent.

Although domestic demand is still lacklustre, Liang cited several factors pointing to very high overall capacity use.

— The power sector is running very tight despite significant capacity expansion in recent years. The power production growth rate is now approaching its 2004 peak.

— Demand for coal is strong; China became a net coal importer in the first quarter for the first time in history.

— The inventory-to-sales ratio for industrial enterprises is at historical lows.

— Nominal and real wages have been increasing rapidly, suggesting tightness in the labour market.

“In our view, the authorities would need to tighten macro policies significantly in the near term to reduce overheating pressures in the overall economy,” she said in a note to clients.

Is it really that bad? Other economists are less worried. Jonathan Anderson with UBS said he does not expect a draconian policy response.

“With the exception of the official GDP figure itself, we can’t find a single alternative data point in the economy that suggests egregious overheating, and most point to a stable or even slowing economy,” Anderson said in a report.

JP Morgan Chase economists added that non-food inflation remains well contained and strength in capital spending enjoys fundamental support from growing profits.

So policy makers can take some comfort that the overheating risks may not be as severe as in past cycles, they wrote. reuters

http://www.dailytimes.com.pk/default.asp?page=2007\07\27\story_27-7-2007_pg5_40

 

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China’s Politburo vows to tackle econ overheating ​

BEIJING: China’s ruling politburo agreed at a meeting on Thursday that its biggest economic priority is to avoid overheating, Xinhua News agency reported. The meeting, chaired by President Hu Jintao, reaffirmed the tightening bias to China’s monetary policy and promised action to rein in rapidly rising prices. Fixed-asset investment is still high, money and credit are growing fairly fast, the trade surplus is widening and structural adjustment of China’s economy is not proving to be effective enough, Xinhua reported the meeting as concluding. Energy-saving is proving an acute challenge, the agency added. reuters

http://www.dailytimes.com.pk/default.asp?page=2007\07\27\story_27-7-2007_pg5_41

 

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China stock market at record high​

SHANGHAI: China’s stock market rose 0.52 percent to a record high close on Thursday, boosted by strong corporate earnings for the first half of the year. But trading turnover was moderate and the benchmark index came well off highs hit earlier in the day, as many investors remained wary of pushing prices up sharply because of concern about high valuations and government policy.

The Shanghai Composite Index ended at 4,346.458 points, exceeding its previous all-time closing high of 4,334.924, hit on May 29. During the day it rose as high as 4,371.512 points, a fresh intraday record.

Gaining stocks outnumbered losers by 727 to 141. But turnover in Shanghai A shares totalled a moderate 130.8 billion yuan ($17.3 billion), well below daily levels around 200 billion yuan during rallies in May and June. Thursday’s close left the index up 11 percent over the past five trading days and up 62 percent since the start of this year.

This year’s bull run has sparked concern among Chinese authorities that stocks might be forming an unsustainable and dangerous bubble. After May’s record high was hit, the government hiked the stock trading tax to cool speculation, causing shares to plunge. But better-than-expected corporate profits announced in recent days have reignited the bull run.

The official China Securities Journal said the 80 listed firms which had released first-half earnings by Tuesday reported a leap in combined net profit of 82 percent. In addition, banks have released strong preliminary estimates for earnings.

Some traders are predicting a rise to at least 4,500 points in coming weeks. But a rapid climb above that level could prompt further official action to cool the market, many believe.

Other risks for the market include further monetary tightening, as inflation shows no clear sign of peaking, and a heavy supply of new shares in coming months as top Chinese companies list in Shanghai.

Haitong Securities, which has just obtained a backdoor listing by merging with Shanghai Urban Agro-Business Co., jumped its 10 percent daily limit to 52.11 yuan after saying first-half net profit soared more than nine-fold. But most financial stocks were weak, with Ping An Insurance sliding 1.46 percent to 81.02 yuan.

In another sign of concern about high stock valuations in Shanghai, the A shares of China Southern Airlines rose just 0.82 percent to 12.29 yuan after the airline said it expected to return to profit for the first half of 2007. Its Hong Kong-listed H shares performed much more strongly, rising 4.86 percent to HK$6.69, while its New York-listed shares soared 11.48 percent on Wednesday. reuters

http://www.dailytimes.com.pk/default.asp?page=2007\07\27\story_27-7-2007_pg5_26

 

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China on track to overtake US as No 2 exporter ​

BEIJING: China is on track to overtake the United States as the world’s second-largest exporter this year, Xinhua news agency quoted a senior official as saying on Saturday, and could top Germany as the world’s leading exporter next year.

Vice Minister of Commerce Yu Guangzhou told the China Economic Development Forum that China currently ranks third in export volume after Germany and the United States.

He said Beijing could overtake the US by the year-end if current trade trends continue, Xinhua reported.

In 2006, China’s export volume trailed US exports by less than $70 billion, while the pace of export growth was 7 percentage points faster than that of the US.

If that growth continues, China’s exports could exceed US exports by $50 billion this year, Yu said.

However, Beijing’s national safety watchdog has warned that China’s failure to improve the quality of some of its exported goods was undermining its trade strength.

Concern over potentially tainted products made in China has resulted in recalls or bans on such goods from Chinese toothpaste to toys and pet food.

“We may have entered the ranks of the big traders, but we’re still far, far from being a strong trade power, and the fundamental reason is that our product quality competitiveness is not strong,” Li Changjiang, head of the General Administration for Quality Supervision and Quarantine, was quoted as saying by the official People’s Daily on Thursday.

In terms of total foreign trade volume, China may surpass Germany to become the world’s No.2 this year or next, with only the United States ahead, according to the Xinhua report. Customs statistics show that China’s foreign trade volume reached $980.9 billion in January-June, up 23.3pc from the same period a year ago.

China on track to overtake US as No 2 exporter

 

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China to invest $265bn in renewable energy​

BEIJING, Sept 4: China plans to invest 2 trillion yuan ($265 billion) in renewable energy by 2020, most of it corporate cash, to wean itself off polluting coal as it aims for cleaner growth, a top energy planner said on Tuesday.

Chen Deming, vice-chairman of the National Development and Reform Commission, added that China aimed to be using domestically made and designed equipment by then, which could cut prices for clean energy worldwide.

“We expect the majority of the funds to come from companies,” Chen said when asked about the 2 trillion yuan forecast.

The cash would help China meet its target to boost the portion of its energy that comes from renewable sources to 15 per cent by 2020, up from 7.5 per cent in 2005, as it wrestles with the legacy of decades of promoting growth at any cost.

Of around 1 trillion yuan slated for spending on pollution reduction and energy efficiency goals for 2010, 80pc would come from companies and just 10 per cent from central government with local authorities and others making up the rest, he added.

Over half the proposed investment will go into large dams, which environmentalists criticise and some scientists believe are a significant source of greenhouse gas methane.

But Chen said the benefits of dams outweighed their costs.

Beijing is also coming under increasing international pressure to curb its emissions of greenhouse gases, expected to overtake those of the United States this year -- although on a per capita basis these are far below developed world levels.

China to invest $265bn in renewable energy -DAWN - Business; September 05, 2007

 

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China’s economy edges closer to overheating​

(AFP)

18 October 2007

BEIJING - China’s inflation rate hovered at near 10-year highs in September as the economy edged closer to overheating, a top planning official said on Thursday, signalling that more cooling measures were on the way.

The consumer price index rose 6.2 percent in September and 4.1 percent for the first nine months of the year, National Development and Reform Commission vice chairman Zhu Zhixin told journalists.

The September figure was down slightly from a 6.5 percent rise in August, the highest inflation China had seen in more than a decade, but it ensured the government’s full-year target of 3.0 percent would be exceeded.

“We estimate the price level will remain high for quite some time,” Zhu said.

“There are a number of acute problems and difficulties in China’s economy. The trend of fast growth tending towards overheating has not been reversed.”

He said the economy had expanded by around 11.5 percent in the third quarter, further revealing a lack of bite to interest rate hikes and other measures taken by the government to cool the economy.

“The GDP (gross domestic product) growth in the third quarter will be similar to growth in the first half,” Zhu said. China will officially announce the third quarter economic statistics next week.

China’s gross domestic product expanded 11.5 percent in the first half, after recording a blistering 11.9 percent in the second quarter and 11.1 percent for all of 2006.

Zhu said that the economy had not yet overheated, citing a basic balance between supply and demand and pointing out that rising food and energy prices were the main reasons for the high inflation.

Taking food and fuel out of the equation, the consumer price index for the nine months would have been less than 1.0 percent, he said.

However Zhu flagged that further monetary measures would be taken to address the high inflation rate.

While Zhu declined to go into specifics on what cooling measures might be taken, economists said a sixth interest rate hike for the year was not far away.

Wang Tao, a Beijing-based economist with Bank of America, said next week’s official figures will show the economy had grown 11.5 percent or 11.6 percent in third quarter.

“(This) shows that economic growth has not fundamentally cooled and that the risk of overheating is still there,” Wang told AFP.

“This kind of situation means that the pressure on the central bank to raise interest rates continues to exist.”

Wang said the interest rate hike would likely come before the end of the month.

On Saturday, the central bank announced a 0.5 percent hike in the commercial banking reserve ratio, the eighth such rise this year aimed at mopping up the excessive liquidity that is fuelling the booming economy.

The most recent interest rate hike came on September 15.

Stephen Green, Shanghai-based economist with Standard Chartered, predicted one more interest rate hike this year, followed by another two in the first quarter of 2008.

Khaleej Times Online - China’s economy edges closer to overheating