China 2015 Trade Surplus Reaches $594.5 Billions

[Shotgunner51]

Entertain this behaviour? Is this some kind of joke?

China is currently the largest manufacturing base in the world, without equal. Its economic activities are determined by both foreign and domestic demands. Even if it's only growing at 4%, it would still be a more substantial real growth than India growing at 10% due to its sheer size. Money talks.

Very well said bro! The overall summary China 2015 trade:

• Exports was $2.284 trillion
• Imports was $1.689 trillion
• Total trade was $3.973 trillion
• Balance was +$0.5945 trillion (surplus).

We have mentioned exports, now briefly look at imports and trade deficit with certain countries:

• The top economy that have trade surplus against China was Taiwan, followed by South Korea in 2nd place. China's massive infra and gigantic manufacturing base consumes about half of world's total supply of chipset, however 80-90% was imported valued at ~$200 billion, making chipset the single largest import item surpassing even oil. Taiwan also exports machine tools, Korea exports advanced LNG carriers.

• Followed by Australia which is a commodity supplier e.g. iron ore, coal, natural gas.

• Germany, and Japan. The two countries export CNC machines, industrial robots, precision tools, electronic components (e.g. SONY optic sensors), consumer electrics, mid to high-end branded automobiles (e.g. Mercedes).

• Smaller deficits were recorded with oil exporting countries (KSA, Venezuela), mineral exporting countries (Chile, Peru), for large imports were partially offset by industrial exports.

According to status quo, China Mainland will likely to continue (at least within immediate future) recording trade deficit with the Taiwan, South Korea, Japan, Germany, as well as with some (not all) resources exporting countries.

Looking ahead, China Inc (Mainland plus Taiwan) needs to reduce imports from the most competitive three: South Korea, Japan & Germany. Pragmatic actions for strategic development:

1. Continue to increase Mainland-Taiwan synergy especially on chipset.
   
2. Continue to increase R&D, stay focused on the 10 sectors as per "Made in China 2025", reduce imports of composite materials, CNC machines, tools, sensors, industrial robots, LNG carriers.
3. Increase outbound FDI to resources exporting countries, influence/control resources prices, offset trade deficit by ODI earnings.

@Martian2 @TaiShang

 

[Shotgunner51]

I am still awaiting for 2015 merchandise trade surplus data of South Korea, Japan & Germany for comparison. For Japan it's more complicated because of massive FDI (hence trade from massive overseas manufacturing in their ownership) which goes into current account surplus. Well I can compare current account surplus, but for simplicity I will go directly to check 2015 year-end results of their net international investment positions which have factored in all elements of external interactions during the year.

I just checked Deutsche Bundesbank, Ministry of Finance Japan and SAFE China, end-2015 results were not yet available. For the time being check these:

• At end 2015 Q2, Japan's international investment position was Yen +347.543 trillion
  
• At end 2015 Q3, Germany was Euro +1.4594 trillion
• At end 2015 Q3, China Mainland was USD +1.5399 trillion
• At end 2015 Q3, China Hong Kong was HKD +7.7904 trillion

http://www.mof.go.jp/international_policy/reference/iip/201512a.pdf
http://www.bundesbank.de/Redaktion/...rmoegen_quartal.en.pdf?__blob=publicationFile
http://www.safe.gov.cn/
http://www.statistics.gov.hk/pub/B10400012015QQ03B0100.pdf​

I didn't check exchange rate for 31st March or 30th Sep 2015, but Japan's international investment position should be roughly in +$3 trillion level, China Mainland and Germany were about the same, China Hong Kong in the 4th place. I will update my comparison when data are available for the world's top 4 creditor economies.

I will exclude deficit or debtor economies from comparison, for example the US, of which net international investment position at the end Q3 of 2015 was -$7.2698 trillion (preliminary), further deteriorated from end Q2 when position was -$6.743.1 trillion (revised).

News Release: U.S. Net International Investment Position​

 

[LowPost]

@Shotgunner51 Mate, can you give us a detailed post or a separate thread about China's top trading partners of 2015?

 

[j20blackdragon]

As for paying for oil, yes, even China needs dollars for that, because its currency isn't mature and widely traded. Rather, even AIIB, a Chinese Bank is denominated in dollars.

You're right about China requiring US Dollars to import oil, but only from OPEC. Russia and Iran are perfectly willing to take RMB. Also oil is not China's primary import.

China's largest imports come from these countries:
The World Factbook

And now I want you to read this:

RMB used by S.Korea and Taiwan for majority of payments with China and HK | FinTech | Enterprise Innovation

 

[Shotgunner51]

@Shotgunner51 Mate, can you give us a detailed post or a separate thread about China's top trading partners of 2015?

Sure I will consider this bro!

You're right about China requiring US Dollars to import oil, but only from OPEC. Russia and Iran are perfectly willing to take RMB. Also oil is not China's primary import.

China's largest imports come from these countries:
The World Factbook

And now I want you to read this:

RMB used by S.Korea and Taiwan for majority of payments with China and HK | FinTech | Enterprise Innovation

Yes these are for 2014 est, while the picture for 2015 is about the same.

Very accurate bro, oil is not the largest imports, it's chipset. While oil imports was diversified over many sources, chipset imports was concentrated in Taiwan, Korea. These two economies also export other high-tech capital goods (like Japan & Germany do) to China Mainland, and that's why China (Mainland) recorded biggest trade deficit versus these two economies.

On trade settlement currency:

it's important for China Mainland to expand offshore RMB hubs (HK and others) for convenience of import partners from top industrialized economies like Taiwan, South Korea, Germany. For geopolitical constraint (US factor) currency arrangement with Japan lags behind other industrialized economies, but it's still progressing forward in small steps.​

Also, Australia being a top commodity supplier is a priority. Followed by Russia, Chile, etc.​

Other nations are of lesser importance. Despite China has bilateral trade surplus, US does exports massive amount of agricultural produce to China, oilseeds & grain (e.g. soybeans) being the top largest category. Other major categories include cotton, chicken, beef and packaged foods & drinks. China should look into US agricultural subsidy policies like the Farm Bill and counter such imports.​

http://www.hkma.gov.hk/media/eng/do...mb-business-in-hong-kong/hkma-rmb-booklet.pdf
http://www.ft.com/cms/s/0/f31c63da-b742-11e3-bf30-00144feabdc0.html#axzz3xZbmy1bE
Deutsche Bundesbank - RMB Clearing in Frankfurt - Renminbi clearing in Frankfurt​

 

[Shotgunner51]

EU loses WTO case, China could seek trade sanctions - Yahoo News

By Tom Miles 23 hours ago

GENEVA (Reuters) - China could demand trade sanctions against the European Union after winning an appeal on Monday in a dispute at the World Trade Organization over EU tariffs imposed on Chinese imports of screws, nuts and bolts made of iron or steel.

China has never before asked the WTO to impose trade sanctions since it joined the organization in 2001, but the end of the seven-year battle leaves the way open to a claim for compensation.

"The measures have negative effect on exports from China around $1 billion and more than 100,000 jobs from thousands of fastener producers in China," China's Ministry of Commerce said in a statement.​

"It has resulted in huge economic losses to the Chinese industry, which has expressed strong dissatisfaction and firm opposition to the measures."​

The EU must now comply with the ruling and remove its illegal tariffs or China would take further steps", the statement said.​

The value of China's exports of the products to the EU peaked at over $1 billion in 2008, but averaged about $200 million after the EU imposed punitive tariffs on the Chinese exports in 2009, according to a Reuters analysis of data from the International Trade Centre, a UN-WTO joint venture.

Under WTO rules, countries are allowed to punish "dumping" - or exports priced at an unfairly cheap level - to stop one country deliberately undermining its foreign rivals by artificially undercutting their prices.

But the use of anti-dumping tariffs is subject to strict rules and, in this case, China complained that the EU had not applied the rules correctly. WTO arbitrators agreed.

The EU appealed and lost, and said it had reduced the tariffs. But China complained that the EU had not done enough to comply with the ruling, and again it won.

The EU's final appeal appears to have backfired, with the WTO judges reversing points that previously went in the EU's favor and toughening the ruling against it.

An EU trade official declined to comment.

A key part of the EU argument was the use of an Indian proxy for Chinese prices, since China is not considered to be a "market economy" under WTO rules and therefore its prices do not need to be taken at face value.

But China says that it will have the right to "market economy status" from December 2016, 15 years after it joined the WTO, which will force the EU to take Chinese export prices at face value, or risk more WTO disputes from China.

Though Beijing says the designation should be automatic, a debate is brewing in the EU over whether to grant it.

Fu Donghui, managing partner at Allbright Law Offices, told reporters at a briefing by Chinese business chambers in Beijing that the ruling announced Monday would be a boon for China's position.

"Actually, this is a decision that overturns the EU's substitute country system. I think it will be a major boost for Chinese market economy status at the end of the year," Fu said.​

(Reporting by Tom Miles; Additional reporting by Michael Martina in BEIJING; Editing by Janet Lawrence and Sam Holmes)

 

[TaiShang]

Resilient, sustainable growth expected for China


Innovation, coordination, green development, opening up and sharing are the five cornerstones proposed by President Xi Jinping for China to secure resilient and sustainable growth.

Xi first presented these notions at the Fifth Plenary Session of the 18th Communist Party of China (CPC) Central Committee in October, saying there is a need to guard against risks and forge new development strategies.

Xi envisions an improved economic development pattern that relies more on domestic consumption, the service sector and eco-friendly innovation.

China's economic growth rate dipped to 6.9 percent 2015, a record low since the global financial crisis in 2008.

Faced with an increasing economic downward pressure amid complicated international conditions, China must readjust its economic structure while shifting the engines of growth during the 13th Five-year Plan period (2016-2020).

Xi reiterated these five notions at a symposium attended by ministers and provincial governors on Monday, saying that those in key positions must bear the national strategy in mind and spare no efforts to help realize a higher standard and more balanced development.

He said at the symposium that it is crucial to cut overcapacity, promote industrial regrouping, protect the environment, reduce costs for enterprises, develop strategic emerging industries and the modern service sector, and increase the supply of public goods and services.

Although China is the world's second largest economy, the lack of innovation capability is holding it back.

Scientific innovation has always progressed society, and should be made the pivot of China's economic development.

The world today is still stuck in the last boom of innovation, including the Internet, holding back new major breakthroughs, thus, a strong, yet limited window of opportunity is opening up for China.

As Cannikin Law points out, any shortcoming may impede the whole structure from performing its full function. China should focus not only on economic reform, but also on cultural progress, rule of law, orderly social governance and ecological protection.

The president urged officials to stabilize short-term growth and plan for longer-term development, and regionally coordinate development to achieve a well-off society.

China has been promoting supply-side structural reform since the end of 2015, which stresses both supply and demand.

The people will be given more say over social wealth distribution. This sense of sharing will surely encourage the people to do their job proactively and drive innovation.

To summarize, a well-coordinated and people-oriented reform package is the prescription both for China and the world to tap growth potential.

 

[Jlaw]

EU loses WTO case, China could seek trade sanctions - Yahoo News

By Tom Miles 23 hours ago

GENEVA (Reuters) - China could demand trade sanctions against the European Union after winning an appeal on Monday in a dispute at the World Trade Organization over EU tariffs imposed on Chinese imports of screws, nuts and bolts made of iron or steel.

China has never before asked the WTO to impose trade sanctions since it joined the organization in 2001, but the end of the seven-year battle leaves the way open to a claim for compensation.

"The measures have negative effect on exports from China around $1 billion and more than 100,000 jobs from thousands of fastener producers in China," China's Ministry of Commerce said in a statement.​

"It has resulted in huge economic losses to the Chinese industry, which has expressed strong dissatisfaction and firm opposition to the measures."​

The EU must now comply with the ruling and remove its illegal tariffs or China would take further steps", the statement said.​

The value of China's exports of the products to the EU peaked at over $1 billion in 2008, but averaged about $200 million after the EU imposed punitive tariffs on the Chinese exports in 2009, according to a Reuters analysis of data from the International Trade Centre, a UN-WTO joint venture.

Under WTO rules, countries are allowed to punish "dumping" - or exports priced at an unfairly cheap level - to stop one country deliberately undermining its foreign rivals by artificially undercutting their prices.

But the use of anti-dumping tariffs is subject to strict rules and, in this case, China complained that the EU had not applied the rules correctly. WTO arbitrators agreed.

The EU appealed and lost, and said it had reduced the tariffs. But China complained that the EU had not done enough to comply with the ruling, and again it won.

The EU's final appeal appears to have backfired, with the WTO judges reversing points that previously went in the EU's favor and toughening the ruling against it.

An EU trade official declined to comment.

A key part of the EU argument was the use of an Indian proxy for Chinese prices, since China is not considered to be a "market economy" under WTO rules and therefore its prices do not need to be taken at face value.

But China says that it will have the right to "market economy status" from December 2016, 15 years after it joined the WTO, which will force the EU to take Chinese export prices at face value, or risk more WTO disputes from China.

Though Beijing says the designation should be automatic, a debate is brewing in the EU over whether to grant it.

Fu Donghui, managing partner at Allbright Law Offices, told reporters at a briefing by Chinese business chambers in Beijing that the ruling announced Monday would be a boon for China's position.

"Actually, this is a decision that overturns the EU's substitute country system. I think it will be a major boost for Chinese market economy status at the end of the year," Fu said.​

(Reporting by Tom Miles; Additional reporting by Michael Martina in BEIJING; Editing by Janet Lawrence and Sam Holmes)

I don't think china will demand sanctions against EU

 

[Shotgunner51]

I don't think china will demand sanctions against EU

I agree with you bro, it's unlikely. Anyway holding a "option rights" to sanction is equally effective in negotiation. RMB might have advantage versus dollar but none against other currencies Euro included. And without such advantage China must at least demand for a level playing field.

The problem with EU is essentially about the Euro zone. Germany is highly competitive so there is no dispute, in fact China recorded trade deficit with Germany. The problem is with the other incompetitive (and indebted) economies, as long as they are pegged to a common currency, I don't see an end to trade dispute.

 

[TaiShang]

COSCO to pay 368.5m euros for control of key Greek port
China Daily, January 21, 2016

A container ship of COSCO. [Xinhua]


Chinese shipping giant COSCO consolidated its hold over the Greek port of Piraeus Wednesday, agreeing to pay 368.5 million euros for a 67 percent stake in the country's biggest harbor, after increasing its offer to clinch control over a key thoroughfare into Europe.

COSCO will pay 22 euros a share for the stake in Piraeus, according to the Athens-based Hellenic Republic Asset Development Fund. COSCO had been asked to submit a better offer last week after it emerged as the sole candidate bidding to buy the stake in Piraeus, an outcome that Greek officials called disappointing.

The offer accepted is a 70 percent premium to the closing share price of Piraeus Port of 12.95 euros Wednesday and values the entire business at 550 million euros. HRADF said the whole value of the COSCO agreement would come to some 1.5 billion euros, taking into account purchase price, investments, dividends and income from the concession agreement.

The result could provide Greek Prime Minister Alexis Tsipraswith some breathing space as he battles domestic opposition to state asset sales and tries to push through changes to pensions that have prompted strikes, including from seamen. Officials said last week the government would do its utmost to ensure Greece got the best possible price for a majority stake in Piraeus, a port that is key to China's plans to create a modern commercial empire pumping Chinese goods throughout the continent.

Hong Kong-listed, Chinese state-owned COSCO was the only confirmed bidder for the 67 percent stake in Piraeus, where COSCO already runs container operations at two piers. APM Terminals, owned by Danish shipping conglomerate AP Moller-Maersk A/S and Philippines-based port operator International Container Terminal Services Inc. were also short-listed but didn't put in a binding bid, dropping out at the last minute in the long-delayed sale.

Analysts see Chinese investment in Piraeus as a key part of China's Belt and Road initiative, which envisages creating the 21st century land and maritime equivalent of the Silk Road. Since the Chinese shipping behemoth started container operations in 2009, traffic has surged at Piraeus, making the harbor one of the fastest-growing ports in the world. Premier Li Keqiang called Piraeus China's gateway to Europe in a visit to Greece in June last year.

The Piraeus sale is also seen as a yardstick in Greece's lacklustre state asset sales program, a key revenue-raiser tied to the country qualifying for billions in rescue funds from its European partners and the International Monetary Fund.

HRADF said COSCO agreed to mandatory investments of 350 million euros in the next 10 years and the income accruing to the Greek state from the concession agreement of some 410 million euros. The amount includes expected revenue from dividends and additional investments up to the end of the concession agreement in 2052.

Of the mandatory investments, 300 million euros will be spent in the first five years, mainly in relation to cruise and ship repairing operations. Officials expect COSCO could spend another 270 million euros in investments up to 2052. They said COSCO had originally bid 17.5 euros a share for the stake.

The transaction will be two-step deal: COSCO will buy a 51 percent stake in Piraeus for 280.5 million euros and will acquire the additional stake in the next five years for 88 million euros on completion of the terms in the shareholder agreement, including investments.

Greece will initially retain a 23 percent stake in the company, with that dropping to 7 percent on conclusion of the two-step process.

COSCO's supremacy at Piraeus is thought to be a prerequisite to unleashing more Chinese investment in Greece, where unemployment has soared and foreign investment dried to a trickle amid six years of political turmoil and concerns of financial collapse. Xinhua reported yesterday that the Chinese Prime Minister called Tsipras yesterday to underline China's keen interest in bolstering ties with Greece.

Greek officials expect Chinese investment in projects such as a major freight and logistics center on the outskirts of the Greek capital and a new airport planned for the island of Crete.

The Piraeus sale will be the first state asset sale the Tsipras government can claim since the leftist prime minister came to power a year ago, vowing to halt privatizations and tear up the two bailout agreements that forced higher taxes and cuts in wages and pensions on Greeks. He has tempered his tone since being forced in July to accept a new, 86 billion euro bailout to keep Greece in the eurozone.

Last month, the government wound up previously agreed deals for the privatization of 14 regional airports and the sale of seaside resort in Athens. Both those deals had been halted when Tsipras came to power last year.

COSCO has seen five separate Greek premiers, not including caretakers, since it won the license to operate Pier II in 2008 for 30 years at a cost of 490 million euros. The deal has become a regular campaign issue as Greek politicians seek votes from union workers, such as those in the Piraeus docks, unhappy about austerity measures.