China Economy Forum

[shuttler]

Service sector drives up growth

Updated: 2013-08-06 01:06
By Chen Jia in Beijing and Yu Ran in Shanghai ( China Daily)


Service sector drives up growth |Economy |chinadaily.com.cn

The service sector is tipped to replace the manufacturing industry and become the strongest driver of the Chinese economy.

Economists said China seems to be moving toward a more environmentally sustainable and less resource-intensive growth pattern, as the faster improvement of the service sector is in stark contrast with a sluggish manufacturing industry.

The British financial group HSBC reported on Monday that July's service purchasing managers index was 51.3, signaling a modest increase in business activity in the service sector.

New order growth in the sector rose to a five-month high as market demand increased. Employment in the sector also improved slightly, HSBC said.

The HSBC index reinforces the findings of the official non-manufacturing PMI data, released on Saturday — a reading of 54.1 in July, up from 53.9 in June.

"The current indicators suggest that non-manufacturing growth is stable and sound, providing a solid foundation to the overall economy," said Cai Jin, vice-chairman of China Federation of Logistics and Purchasing, which compiles the official non-manufacturing PMI data.

"It is a good start to the second half. We are confident of stabilizing growth and achieving the year's target, although there will be more challenges," he said.

Qu Hongbin, chief economist in China and co-head of Asian economic research at HSBC, showed more concerns about sustainable service growth in the near future.

"Although the service sector has maintained stable growth so far, the profit margin continues to be squeezed, given the divergence between input prices and prices charged."

"Without a sustained improvement of demand, service growth is likely to remain lackluster, putting downside pressures on employment growth," Qu said.

In contrast to the service sector, the HSBC manufacturing PMI stood at 47.7 in July, down from 48.2 in June, reaching an 11-month low and indicating an increasing rate of contraction of industrial businesses that face excessive production capacity.

The official manufacturing PMI data increased to 50.3 in July from 50.1 in June.

Chang Jian, a senior economist with Barclays Capital, said that despite the disappointing industrial performance, the service sector is becoming China's new growth engine and it has been "the bright spot" in the first half.

According to the National Bureau of Statistics, the service industry — the biggest employer in China — grew 8.3 percent from a year earlier in the first half, which was faster than the GDP growth rate. However, the manufacturing sector's growth was 7.6 percent.

Overall GDP growth slowed to 7.5 percent in the second quarter from 7.7 percent in the first, due to a slowdown in exports, factory production and investment.

Fixed-asset investment in the service sector increased 23.5 percent year-on-year for the first six months, faster than the 15.6 percent growth in the manufacturing sector, the NBS showed.

In the first six months, the service sector accounted for 45.3 percent of the GDP, while the manufacturing industry contributed 47.2 percent.

The government has set a target to lift the share of services in nominal GDP to 47 percent in the 12th Five-Year Plan (2011-15) from 43 percent in 2010.

Millions of businesses will see new opportunities during the period.

For instance, SAL Tours, a Shanghai travel agency, is benefiting from the fast expansion of the tourism market. All of the company's tours during the summer holiday were fully booked before the end of July, with an increase of more than 10 percent on cruises.

Ding Zhenyi, a sales manager at the travel agency, said that the demand for relaxing tours such as cruises, in-depth trips to specific destinations and booking services for individual tourists increased as Chinese people who get richer want to take it easy.

On July 30, top policymakers vowed to promote the development of emerging services and consumer services and accelerate the industrial structural transformation.

The central government announced a cut in production capacity in 19 industries in July, including steel, cement, copper and glass.

That suggests policymakers are prepared to restructure the economy and tolerate the necessary pain, analysts said.

"We believe service sector development is the supply side of the Chinese rebalancing equation," said Chang with Barclays Capital.

The development of the service sector is expected to strengthen domestic demand, particularly private consumption, and it can create more employment opportunities, particularly at the skilled and higher-income level, she said.

R ur feelings hurt?

Its not a vis-a-vis competition..We already know and realize that a lot of policies needed to be changed to stimulate growth.I can counter-post more China specific economy issues,but i wont drop myself to ur level..

hurt what? you are just another pathetic cheerleader at the bottom of the food chain!

 

[shuttler]

Beijing to Shenyang in 2 hours

Updated: 2013-08-02 14:09 ( chinadaily.com.cn)

http://www.chinadaily.com.cn/china/2013-08/02/content_16866420.htm

The long-overdue Beijing-Shenyang super high speed railway is expected to start construction with Xinghuo railway station as the starting point.

A construction trading information website sponsored by Beijing municipal government published a notice on Tuesday calling for bids to build the line.

The notice said the railway, with Xinghuo station as the departure station, is set to pass Chengde in Hebei province, Chaoyang and Fuxin city in Liaoning province on its way north before it turns to east heading for Shenyang, Liaoning's provincial capital city in two hours.

The section form Xinghuo to Chengde is expected to go along the Beijing-Chengde expressway, passing stations of Shunyi West, Huairou South, Miyun East and Xinglong West, the notice said.

The planed route in the notice is preliminary, and the final decision will be nailed down by Development and Reform Commission of China, The Beijing times reported Friday citing government source form China Railway Corporation.

Officials are considering incorporating Xinghuo station, which is located next to Jiuxianqiao Bridge, Chaoyang district, into the Beijing Railway Line 3 expected to start construction in 2014, the report said.

The construction project of Beijing-Shenyang high speed railway has been delayed for four years as it faced a black-lash from residents along the planed route over concerns about noises and electromagnetic radiation.

 

[SR-91]

We'll find out who really is pathetic,in a few years.Keep waving that china flag,n keep lying to ur public how well china is doing

 

[shuttler]

Huawei expands in London
Planned center to handle firm's global financial matters

Updated: 2013-08-06 00:10 By SHEN JINGTING ( China Daily)

Huawei expands in London |Economy |chinadaily.com.cn


Chinese telecom equipment giant Huawei Technologies Co Ltd said on Monday that it plans to open a London-based center later this year to deal with financial matters, despite a recent probe it faced in the United Kingdom.

The company will establish a financial team in London to handle international finance, including treasury and risk management issues, according to a Financial Times report on Monday.

Huawei Technologies Co Ltd plans to set up a financial center in London as part of its 1.3 billion pound ($1.98 billion) investment in the UK market.Provided to China Daily


The office will likely support Huawei's relationship with the global banks and financial institutions that fund many of its largest customers, the paper said.

The center will also deal with the company's financial matters, for example, by monitoring the company's financial situation, the report added.

Huawei confirmed to China Daily that it plans to set up the center in London, saying that it's part of its 1.3 billion pound ($1.98 billion) investment in the UK market.

"A number of roles have already been recruited and we plan to open the center later this year," Huawei said in a text message.

Zhao Hailin, an analyst at research firm IHS iSuppli, said that it's necessary for Huawei to set up a global team to handle financial matters, as about 70 percent of its revenue comes from overseas markets and may be in different currencies.

Huawei's rival ZTE Corp, which posted a 68 percent net profit drop in the first half of 2012, attributed part of the losses to currency turmoil.

"Currency volatility imposed a devastating blow on ZTE and ate away our profits," Liu Peng, ZTE's vice-president, said in an interview last year.

Huawei seemed to have done a better job handling financial issues than ZTE and it secured a stable profit increase last year.

Li Yue, an employee with a State-owned company in Beijing, said that his company even sent a team to learn from Huawei's experience in managing its global financial matters.

Huawei has been actively expanding to the European market recently, especially to the UK, since major countries such as the United States and Australia reject the Chinese telecom equipment maker's entry into their markets, citing national security concerns.

Huawei opened its new UK headquarters on June 11, and it plans to nearly double the number of its UK employees to 1,500 by 2017.

In September 2012, it said it will invest 650 million pounds and spend a further 650 million pounds on procurement in the UK over the next five years.

Earlier, it even hired John Suffolk, the former chief information officer for the UK government, as a cyber security official in 2011, in a bid to reassure customers who were concerned that it has links to the Chinese government.

However, Huawei's efforts to provide local job opportunities, as well as offering generous investment packages, still failed to gain it full acceptance in the UK.

In July, the UK government said it would conduct a probe into Huawei's Cyber Security Evaluation Center.

The center's major task is to monitor Huawei's participation in the UK's telecommunications infrastructure, but it is run and funded by Huawei itself, according to a Wall Street Journal report.

The decision to investigate the center came after the UK parliament's Intelligence and Security Committee said in June that the country might have left itself vulnerable to potential cyber attacks by allowing Huawei to play major roles in the telecom sector.

 

[rcrmj]

We'll find out who really is pathetic,in a few years.Keep waving that china flag,n keep lying to ur public how well china is doing

toilet value currency, 90% people living under $1.5 perday, hyper inflation, a virtual open toilet, foreign institutional funds hijacked market, primitive manufacturing and technological level, lazy nature combined with lower IQ, yeah sure India is 'developing'``

you don't have to wait to see who is pathetic, because that word alone with delusion is well defined by Indians' incompetence

 

[shuttler]

China's Top Five Vendors Account for 20% of the World's Smart Phone Shipments

Published on: 5th Aug 2013

News link

Just over 238 million smartphones were shipped in Q2, an impressive 50% year-on-year increase, according to analysis by Canalys. And *while Samsung and Apple grew their shipments by 55% and 20% respectively to maintain first and second place, both lost share to Chinese vendors.

Lenovo, Yulong and Korean vendor LG completed the top five vendors.

Collectively, the five Chinese vendors shipping the most devices worldwide (Lenovo, Yulong, Huawei, ZTE and Xiaomi) made up 20% of the total market, up from less than 15% a year ago.

Apple's market share fell to its lowest level since Q1 2009, but its numbers were buoyed by the performance of its older models after a price cut. "The high end of the market continues to grow but there is no doubt that the explosive growth will come from the low end of the market," said Chris Jones, VP and Principal Analyst. "Apple needs to respond to this dynamic and it is evident from the performance of its older models this quarter that there is real demand for a new low-cost iPhone. The challenge that it faces is maintaining high margins on arguably the most important products in its portfolio."

Shipments in China grew 108% year-on-year, the second highest growth rate of the major markets, to 88.1 million. This represented over a third of all worldwide shipments. Lenovo took second place in China this quarter, where it shipped 10.8 million smart phones. 95% of its total 11.3 million shipments were in its home market, helping take it to third place in the worldwide smart phone market for the first time. "Lenovo has benefited from its large TD-SCDMA product portfolio, much of which is aimed at the low-end," said Nicole Peng, Research Director, China.

"China Mobile's strategy of continuously pushing TD-SCDMA smart phones to the mass market benefits local vendors, in particular Lenovo and Yulong. The critical task for these vendors now though is to reduce their reliance on their home market and grow their businesses internationally. To achieve this they will need to invest in patents, establishing local teams and channels as well as diversifying their product portfolios to attract a broader range of consumer segments."

The US was still in second place in terms of shipments, but geographically, India stood out this quarter with smart phone shipments there growing the fastest of the major markets by 129% to hit 9.0 million and make it the world's third largest smart phone market. But the dynamics of the market make it challenging for international vendors, besides Samsung, to succeed.

"Samsung has invested heavily in its brand and channel relationships over a number of years, which has given it a big advantage over many of its international competitors. Samsung took over a third of the Indian market this quarter, followed by local vendor Micromax at 22%. Karbonn, Sony and Nokia made up the top five," said Jessica Kwee, Canalys Analyst. "India is a market in transition, moving from feature phones to smart phones, and is a market that offers huge potential as hundreds of millions of users have yet to upgrade their feature phones. Domestic vendors, such as Micromax and Karbonn, are capitalizing on the popularity of their feature phones and are quicker to respond to local market demands, hence their current success."

Platform-wise, Android grew the fastest during the quarter, by 79% year-on-year. It powered 190 million, or 80%, of the smart phones shipped in Q2. Apple's iOS share fell to 13% as the vendor readies itself for anticipated new products in the second half of 2013.

Microsoft's Windows Phone shipments grew by 54% annually. This was driven by Nokia with 31% sequential growth in Windows Phone shipments, enabling Microsoft to retain a 3% share. BlackBerry's shipments grew sequentially by 15%, also helping it to retain a 3% share of the market. For the record, Q2 2013 represented another nail in the coffin for Symbian, as shipments slipped under the million mark for the first time since Q1 2003.

 

[shuttler]

Huawei and ZTE Win $1.6 Billion Network Upgrade Contract

Published on: 26th Jul 2013

link

Ethiopia's state-owned monopoly telecoms network has awarded a huge US$1.6 billion network expansion contract to be split between Huawei and ZTE.

According to reports, Huawei has been allocated a US$700 million contract, which by inference means that ZTE won a larger share worth US$900 million, although that hasn't been confirmed by either company.

The mobile network also has not issued a statement about the contract at the time of writing.

The contract is to boost capacity on the network to 56 million subscribers, reaching 85% of the population, and also deploy LTE services in the capital city, Addis Ababa.

Talks with potential bidders for the expansion contracts started last December, and were understood to have been reduced to the two Chinese suppliers by last month. It was also recently reported that the contract would include the stripping out of decade old Nokia supplied equipment in the capital city.

The government recently rejected calls to break the state monopoly and allow competition into the market, citing the need for higher profits from the telcoms company to subsidise an unrelated railway project

 

[shuttler]

12-year-old Chinese golfer 叶沃诚 （Ye Wocheng） to play at European Masters in September
Updated: August 5, 2013 - 12:15 PM

link

Credit: sports.sina.com.cn
叶沃诚 Ye Wocheng

Credit: sports.com.uk
China's 关天朗 Guan Tianlang astonished the world when he made the Masters cut at the age of 14, but his record as the European Tour's youngest ever player is set to be ripped up by a boy aged only 12.


CRANS-MONTANA, Switzerland — Twelve-year-old golfer 叶沃诚 Ye Wocheng of China is set to play at the European Masters in September.

Tournament organizers say he has been accepted for the Sept. 5-8 event in the Swiss Alps, which is jointly sanctioned by the European and Asian tours.

Ye became the youngest player in a European Tour event after qualifying for the China Open in May. He missed the cut after shooting two rounds of 79.

Ye's record-setting appearance followed weeks after Chinese golfer 关天朗 Guan Tianlang made history at The Masters by playing at age 14.

 

[longyi]

Making cuts at The Master are not small achievements- especially for a 14 year old.

 

[shuttler]

Making cuts at The Master are not small achievements- especially for a 14 year old.

Yes indeed! Hope Ye can do better than Guan at the Masters - Augusta (#58; 73-75-77-75 - 300 (+12))

 

[cnleio]

China's Dominance in Manufacturing— in One Chart

Despite rising labor costs, the country still makes a lot of what we buy -- and that isn't going to change anytime soon.
MATT SCHIAVENZAAUG 5 2013, 11:33 AM ET

It doesn't take expertise in economics to know that China manufactures a lot of stuff -- just look at the label on your computer, floor lamp, and shoes. But it's remarkable just how, three and a half decades after Beijing first launched market reforms, the country's dominance in global manufacturing endures. This fantastic infographic from the International Business Times, based on economic data from 2011, puts it in perspective:

These aren't trivial goods, either. Think of computers, essential to business operations around the world. China manufactures over 90 percent of them. Or cell phones, which, in addition to being convenient, function as an essential tool in countries lacking traditional telecommunications infrastructure. China makes 7 out of every 10 of them. 12 and a half billion pairs of shoes -- enough for every man, woman, and child in the world to have two -- are built in China. And nearly half of the world's ships, the backbone of global trade, are made -- where else? -- in ... you get the idea.

How long will this last? The rising cost of land and labor, combined with stricter environmental regulation, is supposed to force manufacturers to shift operations to cheaper countries. This is indeed happening -- but to a limited extent. In fact, China still has advantages that cheaper countries don't: tight and well-sourced supply chains, efficient transportation logistics, modern ports, and an enormous domestic market that, if all goes according to plan, will start buying a lot more of the goods that China produces.

So while the "end of cheap China" may be on its way, the country's major role in global manufacturing isn't going to evaporate anytime soon.*

 

[navtrek]

China is great at manufacturing goods but now Chinese companies should give more importance to quality of their products. Then their products will be unstoppable.

Right now their products have very low reliability but users like me would like to by cheap electronics but would also like to use it for long durations without any repairs.

So Quality and Service should be the main improvement points

 

[Nike]

yups thats true, i hope Indonesia can learn something about Chinese manufacturing capabilities and solve the problem which hindered us for so long.

 

[Viet]

that is not fair! Thanks to your price dumping pratice such as in solar cells, nearly all European firms went burst, including formerly highly competitive German solar cell industry.

 

[StarCraft_ZT]

China is great at manufacturing goods but now Chinese companies should give more importance to quality of their products. Then their products will be unstoppable.

Right now their products have very low reliability but users like me would like to by cheap electronics but would also like to use it for long durations without any repairs.

So Quality and Service should be the main improvement points

Correct, we should focus on quality and creating. But low reliability is not a proper word here. I think people always get what he pays for. A rich peroson will always choose the expensive and highest quality product and they are willing to pay for it. While other people who are not so rich, would have to consider which product is of highest cost performance, because they want to pay less for product. Actually, Chinese mobile phones are welcomed at least in Africa, maybe India.