China Economy - News & Updates

[wangrong]

China Jan-Nov tax revenue at 5.2 trln yuan($759 billion)
China's tax revenue in the first 11 months of the year rose 20.2 percent year-on-year to 5.2 trillion yuan ($759 billion), the Ministry of Finance said.

In a statement published on its website, the ministry said the growth rate was 14.4 percentage points lower than the year-earlier level, mainly due to a slowdown in the economy.

Growth rates of value-added tax and enterprise income tax eased, while growth of other tax revenue declined sharply or turned negative.

In the first 11 months, value-added tax revenue was up 18.2 percent at 1.674 trillion yuan, 3.2 percentage points lower than the year-earlier growth rate.

Consumption tax revenue rose 16.3 percent year-on-year to 238.25 billion yuan, while business tax revenue rose 16.6 percent to 703.35 billion yuan, 13.1 percentage points lower than a year earlier.

Corporate income tax was up 26.7 percent year-on-year at 1.162 trillion yuan, 12.5 percentage points lower than a year earlier, while individual income tax rose 18.5 percent to 345.06 billion yuan, down 11.6 percentage points.

Tariff revenue rose 28.7 percent from a year earlier to 169.68 billion yuan, while stamp tax revenue fell 48.1 percent to 96.49 billion yuan mainly due to a reduced tax rate and weak transaction volume, the ministry noted.

The ministry said that tax revenue in November fell 11 percent from a year earlier, following the negative growth in tax revenue in October. It did not give absolute data.

Value-added tax revenue fell 2.3 percent year-on-year, the first decline in years, while consumption tax revenue rose 10.9 percent to 18.09 billion yuan, and business tax booked a growth rate of 2.3 percent in November, 21.1 percentage points lower than a year earlier.

In November, corporate income tax fell 7.2 percent year-on-year to 18.82 billion yuan, well off the growth rate of 561.3 percent a year earlier.

Tariff revenue last month fell 18.5 percent year-on-year to 2.597 billion yuan, while stamp tax revenue was down 91.5 percent to 1.572 billion yuan.

Daily transaction volume on the stock market in November averaged 50 billion yuan, down over 80 percent from a year earlier, it added.

 

[Neo]

China’s economic outlook still healthy: official ​

Sunday, January 11, 2009

BEIJING: The world economic crisis is clearly having an impact on China, but the country’s fundamental prospects remain bright, deputy central bank governor Yi Gang said on Saturday.

Chinese industrial output growth has slowed sharply in recent months and exports fell in November as the reverberations of the global financial meltdown hit the country’s manufacturers. But Yi struck a note of confidence, telling a forum that he expected the economic situation to be “relatively stable” this year.

The government launched a 4 trillion yuan ($585 billion) stimulus package and the People’s Bank of China has repeatedly cut interest rates to prop up domestic demand. “China’s basic outlook is good,” Yi said. He said businesses were increasing inventories of commodities and raw materials, a process that would continue this quarter and possibly next.

“This may indicate that the Chinese economy will have a change in the second or third quarter,” Yi said. In contrast to other countries that had suffered financial crises, China’s banks, overall, were enjoying “their best period”, Yi said.

 

[Nihat]

China tops world in Internet users

BEIJING, China (CNN) -- China surpassed the United States in 2008 as the world's top user of the Internet, according to a government-backed research group.

Nearly 91 percent of China's Internet users are surfing the Web with a broadband connection.

Nearly 91 percent of China's Internet users are surfing the Web with a broadband connection.

The number of Web surfers in the country grew by nearly 42 percent to 298 million, according to the China Internet Network Information Center's January report. And there's plenty of room for growth, as only about 1 in every 4 Chinese has Internet access.

The rapid growth in China's Internet use can be tied to its swift economic gains and the government's push for the construction of telephone and broadband lines in the country's vast rural areas, the report says.

The Chinese government wants phone and broadband access in each village by 2010.

Nearly 91 percent of China's Internet users are surfing the Web with a broadband connection -- an increase of 100 million from 2007. Mobile phone Internet users totaled 118 million by the end of 2008.

While China's Internet usage has been growing in leaps in bounds, the government limits the Web sites its citizens can visit.


Earlier this month, China released a blacklist of 19 major online portals and Web sites, including Google and Baidu, that it claims provide and spread pornographic or obscene content. The move came as several Chinese government agencies, including the Ministry of Public Security, launched a month-long campaign to clean up the Web, according to the state-run Xinhua news service.

China has come under criticism for restricting Web access to ordinary citizens as well as on local and foreign media covering last year's summer Olympics in Beijing. The U.S. State Department noted in a 2008 report that China had increased its efforts to "control and censor the Internet, and the government had tightened restrictions on freedom of speech and the domestic press" and bloggers.
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In an interview with CNN's Fareed Zakaria in September 2008, Chinese Prime Minister Wen Jiabao said, "the freedom of Internet in China is recognized by many, even from the West."

"Nonetheless, to uphold state security, China, like many countries in the world, has also imposed some proper restrictions. That is for the safety, that is for the overall safety of the country and for the freedom of the majority of the people."

 

[gpit]

BBC NEWS | Business | China's economy leapfrogs Germany

The Chinese government has increased its estimate of how much the economy grew during 2007.

The revision means China's economy overtook Germany's to become the world's third largest in 2007.

Gross domestic product expanded 13%, up from an earlier estimate of 11.9%, to 25.7 trillion yuan ($3.5 trillion).

The figures underscore China's emergence as an economic superpower, although the country's growth rate is expected to have dropped to 9% in 2008.

China's government is taking measures to try and ease the slowdown.

The government has launched a 4 trillion yuan ($586bn) stimulus package and has promised measures to help struggling exporters and vehicle and steel makers.

Individually, most of China's more than one billion people remain poor.

Germany's GDP per person was $38,800 in 2007 compared with $2,800 in China, which has wide disparities between rich and poor.

China's economy has grown tenfold in the past 30 years.

Merrill Lynch economist Ting Lu predicted that it will overtake Japan as the world's second largest economy in "only three or four years".

 

[gpit]

China tops world in Internet users

Good news.

Freedom of speech can only be implemented in a true and mutual-responsible sense when the overwhelming majority of the citizens are literate.

In China, due to its uniqueness, it will start from internet world, as I repeatedly said/predicted many times.

 

[Neo]

China Internet users soar to 298m​

BEIJING: The number of Internet users in China jumped nearly 42 percent to 298 million by the end of 2008 from the previous year, cementing the country’s position as the world’s largest Internet population, the China Internet Network Information Center (CNNIC) said.

The number of mobile Web surfers surged 113 percent to 117.6 million in 2008 and mobile Internet is expected to grow explosively in the next few years after the recent issuance of third-generation (3G) licenses, the state-run agency said. The Internet penetration rate in China has risen to 22.6 percent, slightly higher than the world’s average of 21.9 percent, CNNIC said in a report on Tuesday.

In addition, the number of Internet news readers has risen to 2.34 million and websites have become a crucial area for publicity, the report said. News portals in China, such as Sina Corp and Sohu.com Inc, are the major sources of information for a large number of Internet users across the country. Wary of threats to its grip on information, Beijing launched a crackdown on ‘vulgar’ Web content this month after conducting numerous censorship efforts targeting pornography, political criticism and web scams in the past.

 

[Nihat]

China's economic growth slows


BEIJING, China (CNN) -- China's economic growth slumped to 9 percent for 2008, according to numbers released by the government Thursday -- in line with expectations, but still the slowest rate the nation has seen in seven years.
People shop for the Lunar New Year Wednesday in Beijing, China.

People shop for the Lunar New Year Wednesday in Beijing, China.

Economists are concerned about what the slowdown means for investment in the future, whether new projects will be undertaken in manufacturing companies and in factories. If not, it will translate into more job losses and erase any optimism about a rebound in 2009.

Since 2001, China has been used to double-digit growth as consumers buy Chinese goods. However, the export sector was hit hard in late 2008, with December exports down 2.8 percent.

Consumer spending has mostly held up in China, as people there do not carry as much debt as their American counterparts and can continue to spend.

Consumer confidence, however, is a problem, said Dong Tao, Asia chief economist for Credit Suisse. Infrastructure is the only thing driving the Chinese economy, Dong said.

Tens of thousands of Chinese factories have closed, millions of people are looking for jobs and an untold number of migrants who can't find work may be leaving cities for good because of the slowdown, which would have been unheard-of six months ago. Video Watch as migrants head home for the Lunar New Year »
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Fourth quarter numbers showed growth at 6.8 percent. Goldman Sachs predicted 6.5 percent, down from 9 percent in the third quarter.

For all of 2008, Goldman Sachs had predicted 8.8 percent, down from 11.9 percent in 2007.

China's economic growth slows - CNN.com

 

[Neo]

China’s economic growth slows sharply​

* Bank of Japan cut its growth forecasts and predicts two years of deflation​

BEIJING/TOKYO: China’s economy slowed sharply in the fourth quarter and Japan’s central bank on Thursday predicted two years of deflation as Asia’s largest economies buckle under the strain of the financial crisis.

Leading companies also bore the scars of the downturn, with top cellphone maker Nokia reporting a greater-than-expected dive in fourth-quarter earnings and warning that market volumes would shrink 10 percent this year as consumers feel the pinch.

Indicating a return of the deflation which ravaged the Japanese economy in the 1990s, the Bank of Japan cut its growth forecasts, predicting the world’s number-two economy would contract for two full years until March 2010. Earlier data showed Japanese exports plunged a record 35 percent in December from a year before.

The figures showed a collapse in demand across the board with record falls in shipments to the United States, Europe and Asia. The Bank of Japan said it was holding interest rates just above zero and said it would buy corporate bonds to ease a severe funding squeeze which threatens to deepen the recession.

In China, the world economy’s main growth engine in recent years, data showed economic growth slowed to a seven-year low of nine percent in 2008. China’s statistics bureau said the financial crisis was spreading and China would aim to stimulate domestic demand.

The global economy has deteriorated relentlessly since the credit crunch took a turn for the worse in September with the collapse of investment bank Lehman Brothers.

South Korea said its economy suffered its second-largest contraction on record in the fourth quarter, pushing Asia’s fourth-largest economy closer to its first recession since the regional financial crisis a decade ago.

Underlining the gloom sweeping east Asia’s export-driven economies, Sony Corp forecast an operating loss of nearly $3 billion for 2008/09, while in South Korea Hyundai Motor Co’s profits fell and LG Electronics posted its first net loss in seven quarters.

In France, consumer spending, the driving force behind the country’s growth last year, fell by a larger-than-expected 0.9 percent on the month in December.

Separately, the Bank of France said it expected negative inflation in the euro zone and the United States for one or several months this year, but this did not amount to deflation.

A newspaper report said the German government was working on a new rescue plan for ailing banks, which could remove hundreds of billions of euros of bad assets from their books. reuters

 

[wangrong]

China's textiles and garments export growth slowing

The growth in China's exports of textiles and garments fell to 8.2 percent last year from 18.9 percent the year before, according to the Department of Foreign Trade of the Ministry of Commerce.

Total textiles and garments exports amounted to 185.17 billion U.S. dollars in 2008, according to the General Administration of Customs.

The Department of Foreign Trade said export growth would slow further this year, but it gave no estimates.

Exports would be hit by sagging demand in major markets, rising labour costs, and appreciation of the yuan, China's currency, which has gone up 27.4 percent against the U.S. dollar in the past three and half years.

The Department of Foreign Trade said China's imports of garments in the first 11 months of 2008 totaled 2.09 billion U.S. dollars in value, up 16.6 percent over the same period the previous year.

 

[aimarraul]

China finally awards telecom operators 3G licences

Chinese government today officially awarded the long-awaited licenses for third generation (3G) mobile network to the country's three telephone operators.

China Mobile, the world's largest mobile phone carrier, got a license to deploy 3G networks based on TD-SCDMA, a home-grown 3G standard. Smaller rivals China Unicom and China Telecom were granted licences for WCDMA and CDMA2000 respectively.

The Chinese government hopes the new telecom investment following the 3G licensing would help stimulate the country's slowing economy and create more jobs.

Li Yizhong, minister of industry and information technology, said at an industry conference in December that China will spend 280 billion yuan on 3G networks in 2008 and 2009.

Chen Jinqiao, chief engineer from China Acedemy of Telecommunication Research under MIIT, further estimated the 3G network construction would attract 1.8 to 2 trillion yuan related investments.

China's 3G licensing has long been postponed due to the government's support of TD-SCDMA, which was believed less mature than its foreign rivals WCDMA and CDMA2000.

 

[Nihat]

Deflation alarm as prices weaken further in China

BEIJING: Chinese inflation slowed further in January as activity in the world’s third-largest economy weakened, government data showed Tuesday, prompting economists to warn deflation was imminent.

The consumer price index, the main gauge of inflation, was one percent in January, down from 1.2 percent in December, the National Bureau of Statistics said Tuesday. January’s inflation figure was the lowest since July 2006, when consumer prices also rose 1.0 percent from a year earlier.

Inflation was dropping speedily towards zero on a mixture of precipitous declines in global crude prices and a lack of momentum at home, economists said.

In an ominous sign of things to come, producer prices, which measure trends at the wholesale level, fell 3.3 percent in January, the second straight drop after a 1.1 percent drop in December, the state-run Xinhua news agency said.

The key figure that analysts look at in most economies is core inflation, which does not include food and energy prices, because they are considered too volatile. China does not have a precise equivalent for core inflation, but the index that comes closest — for non-food prices — was down 0.6 percent in January from the same month a year ago.

China started 2008 with rapidly rising inflation, and the consumer price index hitting a near 12-year high of 8.7 percent in February.

Leaders in Beijing made inflation control the top objective in the first half of last year, but priorities changed as the global economic crisis started having an impact.

Food prices were a major factor behind the spike in inflation at the start of 2008 but costs began to fall in the second part of the year.

There was continued relief for consumers in January. Although food inflation stood at 4.2 percent in January, the price of pork, the most important meat in China, was down by 13.3 percent.

China’s economy grew by 9.0 percent in 2008, slipping back into single digits for the first time in six years, with expansion in the final quarter just 6.8 percent. Compared with December, consumer prices in January rose 0.9 percent, the statistics bureau said.

Since part of the deflationary trends creeping into China have overseas origins, such as energy prices, there are limits to what the government can do about it. In an attempt to boost China’s rural economy, the government has already introduced subsidies to help farmers buy more durable consumer goods.

Reflecting this, inflation in January was up 1.5 percent in the countryside, compared with a 0.7 percent rise in the cities. afp

Daily Times - Leading News Resource of Pakistan


A very similar scenario emerging in India too , deflation causes more damage to Growth prospects than Inflation.

 

[wangrong]

China's basic medical insurance system covers 1 bln people

China's basic medical insurance system covers more than 1 billion of the country's 1.3 billion population, a report issued by the Ministry of Health said Monday.

The rural cooperative medical insurance system, launched in 2003 to offer basic health care to rural residents, covered 814 million, or 91.5 percent of its target population as of the end of last September, up 12.1 percent and 5.3 percentage points from the previous year's figures, the report said.

Rural medical cooperatives have expanded by 278 from the 2007 figure to 2,729 counties, county-level cities and city districts.

The government expanded the fund pool by doubling its share in 2008.

Under the original scheme, a participant paid 10 yuan (about 1.46 U.S. dollars) a year, while the state, provincial, municipal and county governments supplied another 40 yuan to the fund.

At present, the fund pool has been raised to 100 yuan, with a split of 20 yuan from the participant and 80 yuan from the governments.

When rural residents fall seriously ill, the pooled funds cover part of their medical costs. Coverage varies by illness and actual expenses.

A total of 71 billion yuan was pooled by the fund in the first nine months last year, compared with only 42.8 billion yuan in 2007.

The fund paid out about 42.91 billion yuan over the first nine months in reimbursements, benefiting 370 million people, the ministry's figures showed.

China's soaring medical fees and low medical insurance coverage has prompted the government to set up a nationwide safety net of minimal medical insurance, which currently includes the rural medical scheme, the basic medical insurance for urban employees, and the unemployed, as well as medical aid for the poor in both rural and urban areas.

As of 2007, the basic medical insurance for urban employees covered 180 million people nationwide, the report said.

It noted the basic medical insurance for urban residents in general, which mainly targets unemployed urban residents, had been carried out on a trial basis in 79 cities, covering 42.91 million people by the end of 2007. As another 229 cities adopted the practice in 2008, the number of peopled covered by such insurance also grew significantly.

The government spent 1.83 billion yuan in medical aid to 4.47 million urbanites and 3.26 billion yuan to 48.69 million rural citizens with financial difficulties in the first three quarters of last year, according to the report.

The State Council, or Cabinet, promised earlier this year the country would increase the basic medical insurance coverage of rural and urban population to at least 90 percent by 2011. Each person covered by the system would receive an annual subsidy of 120 yuan from 2010.

 

[wangrong]

China Minmetals to buy OZ Minerals

Metal trader China Minmetals Corp is planning to buy Australian mining firm OZ Minerals Ltd for A$2.6 billion ($1.7 billion) in cash to ensure adequate supplies of non-ferrous metals.

The deal, scheduled for completion in June, is, however, subject to approval by Oz Minerals' shareholders and respective governments.

Minmetals is offering 82.5 cents for each share of OZ Minerals, a 50 percent premium over its last traded price on Nov 27, the Australian miner yesterday said in a statement.

The offer has been recommended by the board of OZ Minerals, which is also the world's second-largest zinc miner.

The acquisition of the Australian company, which owns copper, lead, zinc, gold and silver mines, is expected to help the Chinese company secure its supply of resources, said Jiao Jian, a senior Minmetals official.

The Melbourne-based OZ Minerals operates the Century and Rosebery zinc and lead mines in Australia, the Sepon copper and gold project in Laos and the Golden Grove copper, gold and zinc project in Western Australia. It also owns the Prominent Hill copper and gold mine in South Australia and the Avebury nickel mine in Tasmania.

The deal is expected to come as a boon to the debt-laden OZ Minerals. Its market valuation has decreased by A$6 billion since it was formed last July and is seeking to refinance A$1.2 billion of debt by Feb 27.

"OZ Minerals has been working with its financiers and progressing on various funding options to repay debt and maximize value for shareholders while providing greater certainty to employees and suppliers," Chief Executive Officer Andrew Michelmore said in the statement. "This offer can resolve investor uncertainty."

The company's shareholder meeting in May is expected to decide whether the deal would go ahead or not.

Minmetals' decision to bail out a troubled Australian miner comes close on the heels of Aluminum Corp of China's decision to invest $19.5 billion in Rio Tinto Group.

The company's sales revenue rose 28 percent year-on-year to $27.7 billion in 2008.

The deal is also subject to approvals from Australia's Foreign Investment Review Board and Department and China's National Development and Reform Commission, the Ministry of Commerce, the State Administration of Foreign Exchange and the State-owned Assets Supervision and Administration Commission.

OZ Minerals is being advised by Caliburn Partnership and Goldman Sachs JBWere. Minmetals is being advised by UBS Investment Bank.

 

[wangrong]

Chinese mining giant to inject $19.5 bln into Rio Tinto

China's mining giant Aluminium Corporation of China (Chinalco) announced here on Thursday it will inject 19.5 billion U.S. dollars in cash into Rio Tinto.

The cash injection is regarded as "firepower" for Rio Tinto, against the global economic downturn, Tom Albanese, chief executive of Rio Tinto, said.

Xiao Yaqing, president of Chinalco, said following the signing of an agreement on investment that the investment is a show of confidence in both China and the world, adding that "the strategic partnership with Rio Tinto will prove to be valuable and successful."

As the leading Chinese diversified resources company, Chinalco's investment puts more emphasis on potential future values than on short-term returns, Xiao said.

The transaction will forge a pioneering strategic partnership through the creation of joint ventures in aluminium, copper, and iron ore as well as the issue of convertible bonds to Chinalco, which would, if converted, allow Chinalco to increase its existing shareholding in Rio Tinto to about 18 percent.

The transaction is still to be approved by shareholders of Rio Tinto, governments and other regulators.

Albanese said the transaction will position Rio Tinto to lead the resources industry into the next decade and beyond by ensuring the continuity of its strategy.

The new partnership with the Chinese company "will benefit from Chinalco's strong relationships within China, which Rio Tinto believes will continue to be the main driver of growth in commodity markets over the longer term," Albanese said.

He said the Chinalco relationship will also help Rio Tinto to seek project funding from Chinese financial institutions.

 

[wangrong]

Who's next to swap currency with China?

More countries and regions, especially China's trading partners in the Association of Southeast Asian Nations (ASEAN), will step up to sign currency swap agreements with China amid the global economic downturn, economic experts said.

The People's Bank of China (PBOC), China's central bank, had signed bilateral currency swap agreements with Malaysia, South Korea and China's Hong Kong Special Administrative Region in the past two months, totaling 460 billion yuan (67.3 billion U.S. dollars).

The move aimed to promote trade and investment to boost economic development, said the central bank.

ASEAN countries which "suffered from the 1997-98 Asian financial crisis" are more likely to be the next ones to establish a currency swap with China, said Zhao Xijun, professor of finance at the Renmin University of China.

Chai Yu, director of Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences, pointed out that a number of countries are willing to sign currency swap agreements with China," especially the eight neighboring countries that had signed currency settlement agreements with China", including Russia and Vietnam.

WHY CURRENCY SWAPS?

Many Asian countries and regions had started to focus on regional cooperation to avoid a repeat of the financial crisis that rocked the region in 1997, especially in times of global financial downturn.

In 2000, ASEAN members, together with China, Japan and South Korea, launched the Chiang Mai Initiative, a network of bilateral currency swap agreements to enhance monetary cooperation.

"Bilateral currency swap agreements help to keep a stable financial and monetary system and avoid exchange rate risk," said Zhao Xijun.

The two sides could provide financial aid to each other when facing "short-term liquidity needs", said an unidentified sources with the PBOC.

The agreements would also enhance bilateral trade by increasing import demand of commodities from the opposite side and saving the exchange cost for the exporters from both sides, said sources.

Conducting currency swap with other countries shows China's fulfillment of its responsibility amid the global crisis and its contribution to a stable regional currency system, said Zhang Yansheng, head of the International Economic Research Institute under the National Development and Reform Commission.

WHY CHOOSE CHINA?

"China's trading partners have been confident about the stability of both the yuan and China's economy," said Zhang, noting that China's economy is basically sound with adequate foreign exchange reserves and a stable currency.

China has been the world's top foreign exchange owner as its foreign exchange reserves climbed 27.3 percent in 2008 to 1.9 trillion U.S. dollars, according to PBOC figures.

China has also maintained its status as the fastest growing economy despite the fact that its economic growth slowed to nine percent last year, and economists believe that China will be the first to revive from the global crisis.

"Currency swaps have promoted the use of the yuan in international finance and trade through the recent agreements," Zhao said.

However, experts also point out that the yuan still has a long way to go to become a new world currency.

China would consider the current situation of bilateral trade, investment and economic cooperation, as well as the stability of the financial system when picking its next partner, said Chai Yu.

The three currency swap contracts have an effective period of three years, and both the scale and the length of agreements could be extended upon agreement by both parties, said Chai.