China Economy - News & Updates

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China Postel inks $2.3bn deal with Motorola

BEIJING: A major Chinese firm announced on Wednesday it had signed a $2.3 billion deal to buy mobile phones from Motorola of the United States, a week ahead of high-level Sino-US trade talks.

China Postel Mobile Communication Equipment Co Ltd, the country’s largest mobile phone distributor, said it would buy 16 million handsets from Motorola this year worth $2.3 billion, according to a statement on its website.

China Postel said the deal, inked in the United States on Monday, was one of the most important to be signed in the lead-up to the China-US Strategic Economic Dialogue in Washington next week.

The twice-yearly dialogue aims to ease tensions between the two economic giants, amid sustained concerns in Washington over the huge US trade deficit with China, which hit $232 billion last year according to US data.

However, the last meeting in December ended with little progress in ironing out trade disputes ranging from restricted access to Chinese markets to US accusations that China keeps the value of its currency artificially low to boost exports.

In a bid to showcase its willingness to cut its yawning trade surplus with the United States, China has sent buying missions to America from time to time.

Chinese state press previously reported that a Chinese delegation had signed $4.3 billion worth of deals ahead of this year’s dialogue.

Last week, the delegation, led by Vice Minister of Commerce Ma Xiuhong, sealed 27 contracts in San Francisco with a raft of American firms, in a hope to create a favourable environment for the looming trade talks.

As part of the deals, Chinese computer giant Lenovo Group inked orders for $1.3 billion with Microsoft Corp to buy Windows, Office and other software suites for its personal computers.

The 21st Century Business Herald said on Wednesday the China Postel-Motorola deal was also included in the $4.3-billion-dollar package, although the company’s statement did not give exact details.

The paper cited sources as saying that China Postel, which holds more than 30 per cent of the Chinese market, also signed last Friday a mobile phone deal for $2.5 billion with Finnish phone maker Nokia.

http://www.thenews.com.pk/daily_detail.asp?id=56251

 

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Thursday, May 17, 2007

Expanding storage capacity: Sinopec building more than 100 oil tanks

SHANGHAI: China’s Sinopec Group, the largest refiner in Asia, is building more than 100 large oil tanks to increase its commercial storage capacity, the government said.

Currently Sinopec has nearly 400 large oil tanks in operation, each with storage capacity above 30,000 cubic metres (1.05 million cubic feet), the State-owned Assets Administration and Supervision Commission said.

“Another 100 large oil tanks are in construction as the group speeds up building commercial storage facilities,” the agency under the cabinet said in an undated statement on its website, citing Sinopec. It did not say when the construction of new oil tanks will be completed or where they will be located. In March, Sinopec conducted safety inspections on 339 existing tanks to prevent any leaking, fire or explosion, the statement said.

State media has reported in February that China is drafting an Energy Law requiring state-owned energy companies to set up corporate oil reserves to supplement national reserves currently being built up. China began building four strategic oil reserves sites in 2004 to secure energy supplies for its booming economy. afp

http://www.dailytimes.com.pk/default.asp?page=2007\05\17\story_17-5-2007_pg5_16

 

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China takes steps to curb its surging economy
By Keith Bradsher
May 18, 2007

HONG KONG: The Chinese central bank announced Friday that it would allow its currency, the yuan, to fluctuate more during daily foreign exchange trading, but again rebuffed demands from the United States and Europe for a sustained rise in its value.

The central bank also raised interest rates and demanded that commercial banks set aside more of their assets as reserves that cannot be lent.

The two moves are aimed at tightening credit and reducing the risk of overheating in an economy that is growing at more than 11 percent a year and in mainland Chinese stock markets that have more than tripled since the beginning of last year.

The currency announcement came as top U.S. and Chinese economic policy makers prepared to meet Tuesday through Thursday in Washington in an effort to head off growing complaints from the U.S. Congress to address the widening U.S. trade deficit. But the policy shifts, announced Friday and taking effect Saturday, are unlikely to have any practical effect on soaring Chinese exports, economists said.

The People's Bank of China said in a statement posted on its Web site that it would allow the yuan to rise or fall as much as 0.5 percent in daily trading. The daily limit was 0.3 percent. But the central bank gave a clear signal that the new policy should not be interpreted as Chinese willingness to allow a run-up in the value of the yuan. The bank said it would continue to "keep the exchange rate basically stable at an adaptive and equilibrium level based on market supply and demand with reference to a basket of currencies."

The bank issued a separate statement quoting an unidentified spokesman as saying that the decision did not mean that the exchange rate would "see large ups and downs, nor large appreciations."

The People's Bank has not allowed the yuan to move the maximum allowed percentage on any day since it broke the yuan's peg to the dollar July 21, 2005. The Chinese government allowed the yuan to rise 2.1 percent then, and has let it inch up only by an additional 5 percent over the nearly two years since.

By contrast, members of the U.S. Congress from manufacturing states that have lost jobs during the Chinese export boom have been calling for China to revalue by 25 percent or more. If China were to allow the yuan to rise more quickly against the dollar, this would make Chinese exports more expensive in foreign markets and would make foreign goods more competitive in China.

Liang Hong, an economist at Goldman Sachs, said that the wider trading band represented "a symbolic, but laudable development in China's foreign exchange reform."

The initial reaction from Congress was chilly. "To widen the band is well and good, but if they don't use the band, nothing will happen," said Senator Charles Schumer, the New York Democrat who has repeatedly called for steep U.S. tariffs on goods from China unless Beijing officials let the yuan rise.

The Bush administration was also cautious but a little more welcoming.

"This is a useful step towards greater flexibility and an eventual float of the currency," the Treasury said. "It's important now that Chinese authorities use the wider band and allow greater currency movement within each day and over time."

Stephen Green, an economist in the Shanghai office of Standard Chartered Bank, said that China was likely to allow slightly faster appreciation in the next few days but that the long-term rate of appreciation would not change. There have been just two single-day rises of 0.16 percent and two single-day drops of 0.17 percent in the past two years, while the rest of the trading has fallen within an even narrower range, he added.

Widening the daily trading band is the latest in a long series of steps by Chinese officials to awaken Chinese businesses gently to the risks that fluctuating currencies can pose. China pegged the yuan at 8.27 to the dollar from 1997 to 2005, lulling some businesses and entrepreneurs into ignoring currency risk.

During interviews last month at the Canton trade fair, in Guangzhou, exporters from all over China said that they were paying much closer attention to exchange rates. While Chinese export contracts are still denominated mainly in dollars, Chinese companies increasingly ask their foreign customers to agree to provisions requiring the buyer to pay extra if the dollar starts falling faster against the yuan.

Chinese officials have acknowledged that there are economic arguments for faster appreciation of the yuan, but contend that this could threaten what they describe as "social stability" - the risk that Chinese workers and farmers who lose their jobs as a result of currency appreciation might protest against the government.

Two-thirds of the population still lives in rural areas, and the agricultural sector is barely competitive with imports at current currency levels, raising the prospect of increased rural unemployment if the yuan were to rise sharply and food exports drop as a result.

The People's Bank of China raised the benchmark regulated rate for one-year bank deposits by 0.27 percentage point to 3.06 percent, and increased the benchmark rate for one-year bank loans by 0.18 percentage point to 6.57 percent.

By raising deposit rates more than lending rates, the government showed confidence that the banks have put enough of their bad loan problems behind them to survive on slightly narrower profit margins.

But raising lending rates could actually make it harder for China to allow further appreciation of the yuan. That is because the central bank borrows yuan, by issuing bonds, so as to pay for its massive interventions in currency markets, where it has accumulated $1.2 trillion in foreign exchange reserves, mainly dollars.

The central bank earns a higher interest rate on U.S. Treasury securities than it pays on yuan-denominated bonds at home. The authorities use this profit on the difference in interest rates to cover losses on the foreign exchange reserves, which are worth less and less in yuan as the yuan appreciates.

The semiofficial China Business News newspaper reported on Friday that the government had entrusted $3 billion to the Blackstone Group to invest abroad. Blackstone declined to comment; the company is in a "quiet" period before a planned initial public offering on the New York Stock Exchange.

The central bank also ordered banks to hold 11.5 percent of assets as reserves, up from 11 percent. Many banks already have even larger reserves, however, as they have been swamped with deposits from the brisk Chinese economic growth and large trade surplus, and have had trouble finding ways to lend this money.

The announcement can be seen at http://www.pbc.gov.cn/english/detail.asp?col=6400&id=837

http://www.iht.com/articles/2007/05/18/business/yuan.php

 

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Wednesday, May 23, 2007

China sets up nuclear power technology firm

BEIJING: China has set up a firm tasked with introducing and developing cutting-edge nuclear technology, state media reported Tuesday.

Wang Binghua, the former general manager of China Power Investment, a state-owned holding corporation, has been appointed the chairman of the State Nuclear Power Technology Co Ltd, the Xinhua news agency said.

The firm was established as part of China’s effort to deliver the most advanced nuclear technology into commercial use, according to the Shanghai Securities News.

The technology, often referred to as third-generation, boasts improved safety systems, lower construction costs and higher efficiency.

The Shanghai newspaper said China planned to invest around 50 billion dollars by 2020 to build 30 nuclear reactors. The installed capacity of nuclear power stations would improve from the current 8,000 megawatts to 40,000 megawatts.

At the end of 2006, only 1.9 percent of China’s total energy needs were produced by nuclear power but this is set to increase to 4.0 percent by 2020.

As part of the plan to promote the third-generation nuclear technology, China signed in March a framework agreement with US power plant maker Westinghouse for four nuclear power plants.

http://www.dailytimes.com.pk/default.asp?page=2007\05\23\story_23-5-2007_pg5_18

 

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China suspends magnetic train project

SHANGHAI: Radiation fears have prompted China to shelve a $4.3-billion extension of its high-speed magnetic levitation train in Shanghai, a state press report said Saturday.

The official Xinhua news agency cited unnamed officials as saying construction, due to begin this year, had been suspended amid concerns the German technology could contaminate residents.

“The government is working on the issue,” said an official attending this week’s Communist Party congress in Shanghai.

A spokesman from the Minhang district of Shanghai, said: “The project has been suspended in line with the arrangements of the municipal government.”

The green light was given in March 2006 and officials expected the new line that would link the eastern cities of Shanghai and Hangzhou, 170 kilometres (105 miles) apart to begin operating in 2010, when Shanghai will host the World Expo and some 70 million visitors are forecast to visit.

However, the project has been dogged by controversy over Chinese demands for technology transfers in exchange for the contract to build the train, which can hit speeds of up to 430 kilometres (270 miles) per hour.

According to German media reports last June, Berlin officials refused to meet China’s demands for access to sensitive technology.

http://www.thenews.com.pk/daily_detail.asp?id=57811

 

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Microsoft to boost China R&D unit

HONG KONG: Microsoft Corp plans to add 1,200 staff for research and development in mainland China this year at an estimated cost of $60 million, the South China Morning Post reported on Saturday.

The world’s largest software company has also bought land to set up corporate campuses in Beijing and Shanghai,Zhang Yaqin, Microsoft’s head of mainland R&D operations, told the newspaper.

The article said Microsoft, which has about 3,000 employees on the mainland, last year invested about $150 million “in just people costs” in China and will “add probably 40 per cent in people” this year.

Much of the new spending will be on Microsoft’s mobility software, including Web services, digital entertainment and media applications for mobile telephones, the article said.

With the land purchases in Beijing and Shanghai, Microsoft will have the capacity for 8,000 people in 2-3 years time, the report quoted Zhang as saying.

http://www.thenews.com.pk/daily_detail.asp?id=57813

 

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Wednesday, May 30, 2007

‘China may see $300b trade surplus in 2007’

BEIJING: China’s trade surplus will probably hit 250 billion dollars to 300 billion dollars in 2007 boosted by strong global demand and low export prices, the top economic planning agency said Tuesday.

The country’s trade surplus has been expanding dramatically since 2005 and is unlikely to dwindle in the short term, the National Reform and Development Commission said in a statement.

“The trade surplus may last for a long time during (China’s) industrialisation process,” it said.

In 2005, the trade surplus more than tripled from a year earlier to 102 billion dollars and last year it further widened to 177.5 billion dollars.

In the first four months of the year, the aggregate trade surplus reached 63.3 billion dollars, rising nearly 90 percent from the same period in 2006.

The yawning trade surplus has led to considerable friction with China’s main trading partners, especially the United States.

The government has taken a series of measures including cutting export rebates and raising export duties on a number of products in a bid to curb the momentum of surplus growth.

http://www.dailytimes.com.pk/default.asp?page=2007\05\30\story_30-5-2007_pg5_29

 

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June 06, 2007
Chinese overseas investment

BEIJING, June 5: China's overseas investment is expected to grow at least 30 per cent in 2007, as the government continues to encourage local companies to expand abroad, state media said on Tuesday.

This year overseas investment made by Chinese enterprises is likely to exceed $20.9 billion dollars, said Chen Jian, assistant minister of commerce, according to the Shanghai Securities News.

The ministry's 11th five-year plan, starting from 2006, also forecast the aggregate direct overseas investment by Chinese companies will top $60n by 2010, he added.

China's direct overseas investment started to boom from 2005, when the figure jumped 123pc from 2004 to $12.3 billion.

Last year, Chinese companies, excluding banks, insurers and security firms, invested $16.1 billion abroad through mergers and acquisitions.

The government encouraged companies to make investment abroad, Chen said, as Beijing steps up measures to reduce the excess liquidity in the financial system.

China's forex reserves hit $1.2 trillion by the end of March, bolstered by soaring trade surplus and strong investment inflows.—AFP

http://www.dawn.com/2007/06/06/ebr9.htm

 

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China's inflation hits 27-month high

BEIJING (June 13 2007): Surging food prices boosted China's annual consumer price inflation in May to a 27-month high, extending a rising trend and reinforcing expectations that interest rates will go up further.

Inflation quickened to 3.4 percent from 3.0 percent in April, the National Bureau of Statistics said on Tuesday, as food prices, which make up a third of the consumer basket, rose 8.3 percent from a year earlier and a shortage of pork caused meat prices to jump 26.5 percent.

The overall inflation figure was in line with the median forecast in a Reuters poll of economists, but Shanghai's benchmark stock market index fell as much as 2.1 percent at one point on expectations of tighter monetary policy. Continuing the market's roller-coaster ride of late, prices then recovered and the index closed 1.9 percent higher.

In an illustration of the effects of rising inflation, bank deposits held by households dropped by 278.4 billion yuan ($36.4 billion) in May, the largest fall in at least five years, as millions of Chinese shifted their savings into the booming stock market in search of higher returns. The withdrawals reduced banks' total deposit base of 36 trillion yuan by 0.78 percent.

"We expect tighter monetary policy in the coming months, given heightened inflation risks and negative real interest rates," economists at Goldman Sachs said in a note to clients.

Non-food inflation remained subdued, with prices up just 1.0 percent from a year earlier, but economists said the data reinforced the case for further central bank tightening. Yi Xianrong, an economist with the Chinese Academy of Social Sciences (CASS), the government's premier think tank, agreed that a third interest rate increase this year was inevitable as real deposit rates were being pushed into negative territory.

Savers earn 3.06 percent on 12-month certificates of deposit, meaning that after a 20 percent tax is deducted the value of their money is failing to keep pace with inflation.

"The real rate in China is negative by about 1 percentage point, so I think the current benchmark needs to go up by at least that much," Yi said. On May 18 China's central bank raised deposit rates by more than its lending rate to encourage people to keep money in the bank and not pour it into the red-hot stock market.

The drawback is that that policy narrows the still fragile banking sector's lending margins. The price of pork, China's staple meat, soared last month as a result of pig disease and a spike in the price of feedcorn. Aside from the special factors affecting pork, Yi at CASS said the leap in food prices was inevitable.

"You just look around - many things are getting pricey and liquidity is flooding into China, so why wouldn't food prices go up?" Central bank governor Zhou Xiaochuan, who is aiming to keep inflation below 3 percent in 2007, has said he wanted to see May's CPI to help him decide whether to raise rates again.

Zhou Wangjun, a deputy director in the price department of the National Development and Reform Commission (NDRC), went further, saying in a Web cast that rate rises would be necessary if consumer price inflation continued to outstrip deposit rates.

Central banks usually do not respond to shocks to the supply of food and energy as long as they do not push other prices and wages higher. In China's case, economists said Zhou faced a tricky decision, given the ******** of cash pouring into the banking system from the country's record trade surplus.

"Earlier this year it was eggs and poultry and now it's maybe the pork prices, and monetary conditions are simply too loose to prevent these supply shocks from spiking prices," Tim Condon with ING Financial in Singapore said.

The rise in pork prices would probably prove transitory, but the central bank would remain on the alert, Condon said. Other data released on Tuesday showed annual growth in the broad M2 measure of money supply eased to 16.7 percent in May from 17.1 percent in April under the impact of earlier tightening steps.

But the central bank would take only limited comfort from the slowdown, given its focus on keeping lending growth in check, said Paul Cavey, an economist with Macquarie Securities in Hong Kong. Yuan lending grew 16.5 percent in May from a year earlier, the same pace as in April.

http://www.brecorder.com/index.php?id=576850&currPageNo=1&query=&search=&term=&supDate=2007-06-13

 

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Mandelson warns China over exports

BRUSSELS (June 13 2007): European public opinion could pressure Brussels to restrict access to Chinese exports, Europe's trade chief warned Beijing on Tuesday. After talks over the European Union's ballooning trade deficit with China, Trade Commissioner Peter Mandelson said Chinese Commerce Minister Bo Xilai had shown sensitivity to concerns about soaring Chinese exports such as steel products.

"I thought the discussion we had was for the first time as frank, concentrated and prolonged a discussion as was necessary for such a serious topic as the growing trade deficit between the EU and China," Mandelson told reporters. "I felt I heard for first time at such a political level a clear recognition by China, in the words of Bo Xilai, that 'something must be done'."

No solutions were reached at the meeting but the two men agreed to work to present joint proposals on the issue to an EU-China summit in November, he said. The EU racked up a trade deficit of 128 billion euros with China in 2006 and the shortfall could hit 170 billion euros this year, according to European Commission estimates.

Mandelson is under pressure from some EU capitals to take a tougher line with Beijing. "As I said to Bo Xilai, if European public opinion is not satisfied that the Chinese authorities are making all the necessary changes ... then impatience and anger is going to rise and pressure is going to come on us here in the Commission to start to limit the access that Chinese producers have to our market," Mandelson said.

China is producing increasingly sophisticated goods that compete with EU manufacturers. Mandelson is under pressure to justify his softer approach to Beijing than the United States, which has launched more World Trade Organisation litigation. French President Nicolas Sarkozy has said he will not allow the EU to be a "Trojan horse" for the threats of globalisation.

Mandelson reaffirmed his view that China is doing too little to tackle intellectual property theft and allow foreign investment in the giant Asian economy. Intellectual property theft showed signs of growing out of control and unpunished piracy on a grand scale would also harm legitimate Chinese businesses as Beijing's economy develops, he said.

On steel, an area of concern for many European governments, China and the EU will meet in June or July to consider action beyond measures recently taken by China to slow exports, the EU trade chief said.

http://www.brecorder.com/index.php?id=576851&currPageNo=1&query=&search=&term=&supDate=2007-06-13

 

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Chinese investment quickens, fuels monetary tightening talk

BEIJING: China’s spending on fixed assets such as roads and power plants accelerated in the first five months of the year, prompting predictions of imminent monetary tightening to slow the world’s fourth-largest economy.

Fixed investment in urban areas rose 25.9 per cent from a year earlier, picking up from 25.5 percent growth in the January-April period, the National Bureau of Statistics said on Friday.

The median forecast of economists polled by Reuters was for a rise of 25.7 per cent, although a government source familiar with the data had said it would be 25.9 per cent.

The report capped a strong set of monthly data. China’s trade surplus rose more than 80 percent in the first five months, industrial output surged 18.1 percent compared with a year earlier and consumer price inflation quickened to 3.4 per cent. Money and credit growth was also strong.

Chris Leung, a senior economist at DBS in Hong Kong, said the authorities could tighten policy at any time. “I think the possibility that they move today is actually high,” Leung said.

Premier Wen Jiabao served notice after a meeting of his cabinet on Wednesday that further monetary tightening and investment curbs were on the way. Leung said he expected the sixth half-point increase this year in the proportion of deposits that banks must hold in reserve as well as a 27 basis point increase in bank deposit rates and a rise of 18 basis points in benchmark lending rates.

China traditionally moves interest rates in increments that are divisible by nine.

The People’s Bank of China, the central bank, has already raised interest rates twice this year to rein in an economy that is on course to grow by double digits in 2007 for the fifth year in a row.

The Shanghai stock market took the speculation in its stride. The main index recouped early losses to show a gain of 0.67 per cent in afternoon trading.

Companies fund more than half their capital spending from their own resources. But they also have strong incentives to borrow: bank loans cost only around 7 per cent even though the economy is expanding at close to 15 percent in nominal terms and industrial profits are growing by over 40 per cent a year.

Chen Jijun, an analyst at CITIC Securities in Beijing, said the cost of capital was simply too low.

“I think the government will take swift measures in the near term,” he said. “A rate increase could even happen today.”

The quality of the investment figures, as with many other Chinese statistics, frustrates market economists. They are nominal, not inflation-adjusted; they include land purchases; and they include sales of second-hand capital equipment.

But analysts said the robust trend was clear enough to be of worry to policy makers who are determined to reduce wasteful investment, especially in sectors that consume a lot of energy and create a lot of pollution.

The details of the report contained both good news and bad news for China’s planners.

Investment in non-metal minerals, including cement, leapt 52.6 per cent in the first five months, up from 48.3 per cent in the January-April period, suggesting an unwelcome acceleration in construction in coming months.

The tempo of real estate investment was barely changed in May, up 27.5 per cent in the first five months after a gain of 27.4 per cent in the January-April period.

By contrast, the pace of investment in ferrous metals slowed markedly, hinting at success for the government in its campaign to consolidate the steel industry, according to Qian Wang, an economist with J P Morgan Chase in Hong Kong. Capital spending in non-ferrous metal smelting and processing also slowed, she noted in a circular for clients.

“The fast pace of investment in several non-ferrous metal sectors early this year, such as aluminum, has triggered a series of targeted administrative measures, including strict scrutiny of investment projects and loan applications, which have likely helped curb investment growth in these sectors.”

http://www.thenews.com.pk/daily_detail.asp?id=60678

 

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China mining major around the corner

LONDON: China may yet target a mining major as it scours the world for new sources of natural resources to feed booming domestic demand for raw materials to satisfy infrastructure needs.

Its strategy may also speed the emergence of Chinese mining companies big enough to compete with major Western counterparts, analysts say.

China is the world’s top producer and consumer of many metals and has bought into numerous mine projects or smaller companies in recent years, including copper, bauxite and iron ore, to feed its voracious demand for “There’s definitely a short-term strategic requirement, but there’s a wider political dimension,” independent consultant Angus MacMillan said.

“There’s an element of central planning, China is looking to control a large proportion of natural resources on a long-term basis.”

He said the country was looking at where it stood in the global picture and deciding where it wanted to be. “We’re seeing the next global empire,” he added.

Magnus Ericsson, senior partner at Stockholm-based consultancy Raw Materials Group (RMG), said current consolidation in China’s metals industry would ultimately create big companies there, which in turn would look overseas.

“This is the first ripple on the surface of a big wave,” he said.

Most saw the buys as symptomatic of China’s tendency to plan, looking to feed its needs in the long term.

Last week, Aluminium Corp. of China Ltd (Chalco) bought Peru Copper, giving it an option on a big copper project in Peru that may start up around 2010.

China said in March it was creating an investment vehicle to diversify part of its $1.2 trillion in foreign reserves.

Part of the $200 billion fund, which will allow it to take on sizeable interests, is expected to be invested in commodities given China’s lack of many key resources including oil.

Chinese firms have already invested heavily in Australia, Africa, Latin America and parts of Asia, often in countries shunned by Western miners due to perceived high political risk.

http://www.thenews.com.pk/daily_detail.asp?id=61215

 

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China urges US not to tighten high-tech exports

BEIJING: Beijing urged on Tuesday the United States to make “positive efforts” to resolve the bilateral trade imbalance after Washington decided last week to tighten controls on high-tech exports to China.

“If you want to promote positive progress (in bilateral trade), you need the two sides to make joint efforts, especially on the issues that the US side hopes to resolve, the trade deficit,” Foreign Ministry Spokesman Qin Gang said.

“We hope the two sides can make positive efforts one point is to relax the control of US high-tech products to China,” he told reporters.

With US concerns growing that Beijing is using high-technology imports from the United States to accelerate a massive military buildup, Washington on June 15 slapped new controls on high-technology exports to China.

It also moved to create a pool of so-called “trusted customers” within the Chinese business community who will be rewarded for compliance with US guidelines.

However, China sees such worries, which will lead to the requirement of US government licences on exports of 20 product categories ranging from avionics to computer software, as an “excuse” that might undermine normal trade.

“We do not hope that by this excuse the obstacles impede the normal trade between the two sides,” Qin said.

“China can buy the products that China is interested in, instead of the beans, beef and planes,” he said.

“But if you want to change the trade balance between the two sides, on the high-tech products exports the US side should take complete actions.”

China’s Ministry of Commerce on Tuesday also expressed “regret” at the US decision, saying China preserves the right to take corresponding measures.

“It is not appropriate for US to issue the new rules without fully considering China’s views,” Commerce Ministry Spokesman Yao Shenhong said in a statement posted on the ministry’s website.

“The new rules increased the costs and will severely affect the confidence for companies from both countries to carry out high-technology and strategic trade.”

http://www.thenews.com.pk/daily_detail.asp?id=61214

 

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Hermes aims to triple China outlets

SHANGHAI: French luxury goods maker Hermes International aims to more than triple its number of stores in China over the next five years to tap rapid growth in luxury goods spending, its China chief said on Tuesday.

The company aims to have 25 stores in China in five years, up from seven now, with plans to add three stores this year and up to five next year, Leo Lui, president of Hermes China, told Reuters on the sidelines of a media event.

Most Hermes stores are now located along China’s affluent eastern coast, but will be spread across the country as the expansion proceeds, he said.

“China is our fastest growing market in the world,” he added.

Hermes, a maker of trademark silks and leather goods, competes with other foreign houses such as LVMH Moet Hennessy Louis Vuitton in China’s luxury goods market, which is growing at 10 to 20 per cent a year as the ranks of wealthy consumers swell.

A Shanghai resident recently bought a Hermes crocodile-skin bag for 1.6 million yuan ($210,000), Lui said, equivalent to 65 times the city’s average annual wage.

http://www.thenews.com.pk/daily_detail.asp?id=61216

 

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China eyes Airbus plants

SHANGHAI: One of China’s major state-run aircraft makers may be interested in buying some of Airbus’s plants in Europe, state press said on Wednesday, citing a senior company official.

“If a Chinese aerospace company could successfully buy or take a stake in (Airbus plants), it would contribute hugely to the development of our industry,” the China Business News quoted AVIC I general manager Lin Zuoming as saying at the Paris air show. “China would become a very competitive supplier.”

AVIC I, more formally known as China Aviation Industry Corp One, was not immediately available to confirm the report.

However, a source close to the matter attending the Paris air show told AFP the chances of a Chinese firm buying an Airbus base were extremely thin.

“The chances of the Chinese being considered are very limited,” said the source.

Airbus wants to sell at least three of its 16 factories as part of major restructuring efforts to swing the struggling aerospace giant back to profit.

http://www.thenews.com.pk/daily_detail.asp?id=61294