China Economy - News & Updates

[Neo]

China growth poised to slowdown, heading into 2009​

BEIJING: Stiffening headwinds from the global financial crisis will drag Chinese economic growth down into single digits this year for the first time since 2002, a Reuters poll shows. The hit to Chinese exports from weakening demand in the main industrial economies comes on top of a slowdown in the property sector due to tight credit and difficulties facing industry from rising labour and energy costs.

Forecasts of economists polled by Reuters last week centred on gross domestic product growth of 9.9 percent this year — down a notch from 10.0 percent in the two previous quarterly polls — and 9.0 percent in 2009. “The Chinese economy is slowing. But China will not follow the US and much of Europe into the economic abyss,” said Andy Rothman, a CLSA economist in Shanghai. “Overall, the impact of the export slowdown on the domestic economy will not be severe.” reuters

 

[Neo]

Hong Kong 2008 economic growth forecast cut to 4.4%​

HONG KONG: Hong Kong’s economic outlook has worsened in the past few months, as exports and consumption have slowed, and turbulence in financial markets threatens to exacerbate an economic slowdown, a Reuters quarterly poll shows. That has prompted analysts to cut their GDP growth forecast for 2008 to 4.4 percent, according to the median estimate of 10 economists, from 5 percent in a similar poll in July and well below average annual growth of 7.3 percent over the past four years.

The territory continues to benefit from China’s economic boom, which has boosted tourism, demand for financial services and trade through Hong Kong. But China’s economy is slowing even though it remains strong while demand from the United States for goods from Hong Kong is declining. Data last week showed exports from Hong Kong grew just 1.9 percent in August from a year earlier.

 

[gpit]

China can withstand financial crisis: Wen

BEIJING (AFP) - China's economy is strong enough to withstand the impact of the global financial crisis and may even help the world by maintaining fast growth, Premier Wen Jiabao was quoted as saying Sunday.

"Our economic fundamentals haven't changed, and the economy is moving in the direction we expected," Wen was quoted as saying by the state-controlled Xinhua news agency.

"The strength of our financial institutions has generally increased, and their ability to make money and withstand risk has risen. Market liquidity is ample and the financial system is stable and safe," he said.

"This will help us withstand any negative external impact. We're full of confidence in the development of the economy, and in the stability of the financial system."

Wen, who made the remarks during an inspection tour to south China's Guangxi Zhuang region, said the best way his nation could help would be by ensuring fast economic growth at home.

"If a large country of 1.3 billion people can keep up stable and relatively fast economic growth, that's a big contribution to the world," he said, according to Xinhua.


China can withstand financial crisis: Wen - Business - eNews.ma

 

[Neo]

UBS lowers China 2009 GDP growth forecast to 8%​

BEIJING: UBS on Monday lowered its forecast for China’s gross domestic product growth in 2009 to 8% from 8.8%, citing a much weaker global growth outlook and forecasts of a deeper and longer US recession. It is the second time in less than three months that UBS has lowered its forecast for Chinese GDP growth next year. The bank’s China economist, Tao Wang, also lowered her forecast for GDP growth this year to 9.6 percent from 10 percent. “We expect growth of exports and real estate investments to slow significantly in the coming months, but think that the government’s counter-cyclical fiscal and monetary policy measures could help stimulate domestic demand and partially offset the negative external shock,” Wang said in a report.

 

[su-47]

crap! the effects of US recession are already showing. China's growth was forecast to be above 10% for 2008, before the crisis started. i'm sure india is facing a similar decrease in growth rate.

i think pulling US troops out of Iraq itself will put US economy back on track.

 

[kallu_be]

crap! the effects of US recession are already showing. China's growth was forecast to be above 10% for 2008, before the crisis started. i'm sure india is facing a similar decrease in growth rate.

i think pulling US troops out of Iraq itself will put US economy back on track.

The effects on India due to US recession is much lesser than it is on China. China's growth is mainly due to its exports to US and EU, as US and EU are going to tighten the economy for atleast next 2-3 years the growth of chinese exports are going to reduce or even recess in the worst conditions. Where as Indian economy growth is due to increase in domestic consumption and so the effect will be much lesser. Infact i was thinking there will increase in shifting of jobs to India (mainly technical) by american companies as there is an enoromous pressure on them to show the growth in profits for their investors. I was doing my post graduation in top university in India and i am seeing lot of new american and japanese companies coming for Preplacement talks this year.

 

[pkpatriotic]

ADB to provide $116.9 m loan to China
Wednesday, October 08, 2008

BEIJING: Asian Development Bank (ADB) will provide a loan of $116.9 million to stop wastage of energy and its better utilization in China.

This has been said in an announcement issued from the ADB Beijing that a limited guarantee would be given to the programme for saving of energy and better utilization through the proposed amount.

The project will promote the construction of green buildings in China.

The Standard Chartered Bank has been selected as the first financial institution and the Johnson Control as the first technology company for investment in the project.

China is the second biggest country in the world to utilize energy and 20 to 40 per cent electricity is wasted here.

 

[pkpatriotic]

China's economy | Slower boat from China
Oct 20th 2008 | GUANGZHOU

Growth slows in China, as the global economic slump takes its toll

PERHAPS it should not be considered surprising. On Monday October 20th China’s National Bureau of Statistics announced that economic growth in the third quarter was 9% year-on-year, heady by American or European standards, but down from 10.1% in the previous three months (which itself was lower than the quarter before that), and the worst overall since early 2003. Consensus predictions had been for a more modest decline amid fading hope that China’s economy was fundamentally “decoupled” from the West. It is now becoming necessary, on a near daily basis, to re-evaluate just how much independence its economy enjoys.

It is growing harder to say that China is relatively immune from global financial and economic problems. This month alone, two big companies, Smart Union Group, a toymaker, and FerroChina, a steel producer, have gone into liquidation. For the rare company whose closing receives publicity, thousands, if not tens of thousands, shut without a sound. Early this year, southern China suffered from shortages of workers and shoe factories were discouraging orders of boots or any other product that required lots of work and materials. All of that has now reversed. There is a surplus of workers and an absence of orders, with no sign of any recovery.

One of the most important events in the sales calendar for China is the historic Canton Trade Fair, which brings together a vast number of the country’s manufacturers with swarms of buyers from around the world. The first part of the autumn session ended on October 19th and there was little happy news to report. In a good year hotels will double rates and turn away guests. This time around, rates were high but rooms were abundant. The fair itself was far from empty but the crowds, by usual standards, were thin, with a notable absence of Americans and Europeans, and many complaints about a lack of orders. A year ago sellers demanded escalation clauses in their contracts because of rising commodity prices. This time a buyer from an Oman construction-materials company said that he was receiving a similar benefit from any price decline, and prices, he added, were falling much faster now than they had been rising then.

China’s slowing cannot, however, be blamed on exports alone. There were warning signs all over the place, says Stephen Green, an economist at Standard Chartered, pointing to investment, consumption (despite a nominal, year-on-year rise in retail sales in September of 23%) and government spending. Sales of cars, clothing, air tickets and property have all fallen; production of steel has declined too. A bit, but only a bit, of this could be attributed to planned shut-downs at the time of the Olympics.

If there is any cause for optimism it is that some of the drag was the result of the government’s own efforts in the past year—a different era, in hindsight—to prevent overheating. In this, there is some hope. China’s financial position is not perfect, as non-performing loans are rising and some city banks are suspected of having problems, but there appears to be substantial room to relax fiscal and monetary policies. Inflation is declining. The big national banks appear to be in good condition, with abundant liquidity because of lending caps that have become increasingly stringent over the past two years. China’s government is in a strong financial position. Savings rates for the Chinese are high.

As a result, there is abundant room for more aggressive fiscal policies, continuance—if not expansion—of credit, and domestic growth in consumption. Rumours of the potential government response are widespread. Export-targeted tax rebates that were repealed last year will be resumed. Also in the pipeline is the removal of transaction fees on sales of property. Bigger government spending on water and transport projects is also expected. All this should stimulate demand, if not immediately. Collectively, these actions should mitigate some of the impact of the global downturn, but mitigate is not the same as offset. If the global panic has done nothing else, it has been brilliant at revealing the collective dependency of even the fastest developing economy on the developed world’s prosperity.

 

[Neo]

China set for ‘reasonably high’ growth in 2009: WB​

TOKYO: The Chinese economy is expected to see slower but still “reasonably high” growth of about eight to nine percent next year, the World Bank’s chief economist predicted Monday. China’s economy is expected to grow by about nine to 10 percent this year as the authorities take steps to stimulate the economy, Justin Yifu Lin said at a seminar here. Lin said China and other developing countries may have to lower borrowing costs to spur economic growth in the face of a global credit crunch. With falling commodity prices set to dampen inflation, “one possibility is to use monetary policy” to prop up growth, he said. afp

 

[Neo]

China to shed millions of jobs​

DONGGUAN, Oct 24: At least 2.7 million factory workers in southern China could lose their jobs as the global economic crisis hits demand for electronics, toys and clothes, according to industry estimates.

The region has seen massive export-driven expansion in recent years by supplying the world with cheap consumer goods, but rising production costs and falling US and European demand have marked a swift end to the boom.

Now 9,000 of the 45,000 factories in the cities of Guangzhou, Dongguan, and Shenzhen are expected to close before the Chinese New Year in late January, the Dongguan City Association of Enterprises with Foreign Investment estimates.

By then, the association expects overseas demand for products from the three manufacturing hubs to have shrunk by 30 per cent, as the knock-on effects of the US housing market collapse and credit crunch filter down to Chinese workers.

“I am afraid it is not going to look good on the Chinese government if the decline of the export-led industries and the unemployment problem continue to worsen,” Eddie Leung, the association’s president told AFP.

Leung, also a member of the Chinese Manufacturers’ Association, said the estimate of 2.7 million job losses was conservative, given that many of the larger factories in Guangdong province employ thousands of workers.

One of them, Hong Kong-listed Smart Union, a major toy manufacturer in Dongguan supplying US giants Mattel and Disney, closed its doors last week, leaving 7,000 workers out of work and with several weeks of back pay owed.

Clement Chan, chairman of the Federation of Hong Kong Industries, said a quarter of the 70,000 Hong Kong-owned companies in southern China, 17,500 businesses, could go to the wall by the end of January.

Describing the likelihood as a “worst case scenario,” he said Hong Kong firms in the region employed a total of 10 million workers, but did not want to speculate on the extent of possible job losses.

While small and medium-sized factories are especially prone, the threat of lay offs looms just as large over the region’s manufacturing giants, further squeezed by the appreciation of the yuan.

Harry To’s Mansfield Manufacturing is a classic example of the spectacular growth in China’s industrial heartland over the last three decades.

Started a metal business from a small room in Hong Kong in 1975, in 1991, he joined hundreds of other Hong Kong entrepreneurs moving their production across the border into China to take advantage of cheap labour and land.

He now employs 8,500 workers in 11 factories in China and Europe. His six factories in Dongguan cover 140,000 square meters (1.5 million square feet).

To’s company, which is now a subsidiary of Singapore-listed InnoTek Ltd supplies metal components for cars, plasma televisions, printers and other electrical appliances to Japanese brands including Canon, Toshiba, Epson, Minolta and Fuji-Xerox.

Business for the company, among the largest in its field in China, has grown by 40 per cent annually in recent years, but with credit being harder to come by, no manufacturer is safe, he said.

“With banks being so tight on their lending policies now, bringing down a factory overnight has now become very easy.”

All his expansion plans have had to be put on hold.

“Some of our long-time Japanese and European clients have asked us to stop producing for them in the next two to three weeks,” he said.

“They said they did not want to have too much stock piled up in their warehouse as demand continues to dwindle.”

To recently started building a new 70,000 square metre factory in Dongguan and was planning to hire 2,000 more workers later this year. But now, all work on the unfinished factory has stopped until more orders roll in.

“No one would expand their business when the prospects for the entire manufacturing industry look so grim,” he said.

Instead of hiring more workers, To is looking at cutting 1,000 employees across his operations.

But far from being downhearted, he is shifting part of the company’s export-led production to developing energy-saving electrical appliances for the domestic market, which he sees as weathering the current financial turmoil.

“In the long run, I am confident that mainland Chinese consumers’ purchasing power will keep rising as their Western counterparts continue to lose out.”—AFP

 

[pkpatriotic]

China's land reform aims to revolutionize 750 million lives
Beijing hopes the policy will improve farming and free peasants to seek a better livelihood.

By Peter Ford
October 27, 2008

Mijian, China - Zhang Xiaosui is the very model of a modern Chinese peasant.

Farming a field 10 times larger than any of his neighbors' in this scruffy village in central China, he is on the front lines of a new government drive to transform Chinese agriculture, and with it the lives of 750 million country dwellers.

If the land reform announced last week works as officials hope it will, many peasants will emulate Mr. Zhang's effort to turn family plots into a modern farm, and help bang one of the last nails into the coffin of Mao Zedong's collectivist dream.

"I wanted to farm more land before, but I didn't have the opportunity," Zhang says, sitting in his comfortably appointed front room. "Now I can, because the government is starting to support my idea."

In what the official news agency Xinhua called a "landmark policy document," the ruling Communist Party's Central Committee agreed last weekend to allow small farmers to sell their right to till the land. The plan is designed to consolidate landholdings, encourage uneconomic farmers to seek other employment, and boost rural incomes.

The decision did not privatize agricultural land, which remains collective property. But "it marks a huge improvement in tenure security for farmers and contains many, many good points," says Li Ping, a lawyer with the Seattle-based Rural Development Institute, which advocates wider land rights for peasants. "This new policy is really, really good."

President Hu Jintao has made improvements in rural living standards a key goal of his administration. The new reform comes a symbolic 30 years after the radical changes that Deng Xiaoping introduced, breaking up Soviet-style collective farms so that peasants could do as they liked with the plots they were allocated.

That is widely credited with kick-starting the economic reforms that have driven China's extraordinary economic growth over the past three decades. Peasant farmers, however, have not enjoyed the fruits of that growth anything like as much as their cousins in the cities: The urban-rural income gap is now more than 3 to 1.

Under the current system, village committees divide village land equally between residents who hold 30-year leases free of charge, and who can grow what they like and sell their harvests wherever they want.

This boosted productivity and incomes when it was first introduced, but 30 years later the system is beset by inefficiencies and waste. At the same time, 120 million peasants who have headed to the cities in search of work as migrant laborers no longer use their land to its full potential.

In recent years, many of those migrants have begun informally leasing their land-use rights to relatives and neighbors, a trend that the authorities tolerated. "We sincerely respect the creativity of peasants" says Zheng Jiandong, head of the economics department of the local Agricultural Administration that has been supervising land reform experiments in this district in Henan Province for the past 18 months.

"But disagreements can easily arise" from informal deals, he adds, "and that has a bad impact on social stability, so the government has stepped in."

Building on experiments around the country, like the one Mr. Zheng is supervising, the new decision sets a policy framework to "establish and improve a market for the transfer of land-use rights ... and allow farmers to transfer their rights by subcontracting, leasing, swapping, or using them to form a joint-stock company."

"This decision indicates that the government really wants to encourage the commercialization of scale agriculture," says Sally Sargeson, an expert in Chinese rural affairs at Australian National University in Canberra.

Zhang hopes to profit from the government's intentions after taking advantage of an experimental reform here. Last month he saw a notice at the village hall announcing the auction of rights to farm a 6-1/2-acre plot of village land on which 20 special short-term leases were about to expire.

A week later, he says, he won the public auction (the first of its kind in China) and paid two years' rent money as a down payment for an eight-year lease on the field. Within days, he planted it with wheat.

"I will earn more money farming if I can buy more land," Zhang says. "But I'm only interested in large plots. Farming on a big scale will be more efficient."

Many of his neighbors want to sell their land-use rights, says Zhang, because the profits from their family plots are so small. "They can save their energy to do other things," he adds, "like set up a small business or go into transport. Or they can go and work in the city and not have to worry about coming back to plant and harvest."

In the nearby village of Xiwan all 2,097 households leased their land-use rights to a company set up by the village committee and four local farmers. They were willing to do so, says Tian Baozhu, deputy village director, because "profits from traditional crops are so low and the economy here is well developed. There are jobs to be had, people don't live by agriculture here anymore."

"Xiwan is a special case," however, acknowledges Zheng, not least because an average family farmed only a tenth of an acre. "The situation there is ideal for land transfers." Elsewhere in his district, he says, where families have more land to farm and other jobs are scarce, "fewer people are transferring less land."
That makes it unclear how widely applicable the new system will be in other parts of China. "There are vast areas where lots of peasants are farming semisubsistence, and there is no demand for tiny plots of not very fertile land from agribusiness or anyone else," points out Dr. Sargeson.

Even where authorities judge the conditions to be ripe, they have taken only tentative steps. In the Qinyang district, for example, where Zheng works, farmers may transfer their land-use rights only to people from their own or neighboring villages, which rules out the creation of large agribusiness enterprises. So far 7.6 percent of the area's arable land has been transferred, Zheng says.

Nor is Zheng keen to see transfers of thousands of acres. "If tens of thousands of people have no farming jobs anymore and they move to the city and don't find a job there, what could they do?" he worries.

Such fears appear to be behind the government's reluctance to privatize agricultural land, or even to allow farmers to mortgage their land-use rights to raise money, in case they default and end up penniless.

"For most Chinese peasants their plots of land and their houses are their lifeline, the last straws of their existence and livelihood," said Chen Xiwen, deputy head of the Communist party's "Leading Group on Rural Work" last week.

"The Chinese social security system is not very complete," he added. "The government does not allow peasants to use land-use contracts as collateral to avoid them losing their land, job, and house, which could affect social stability."

"Chinese land reform has to be done step by step. You can't make a leap forward that creates instability," agrees Li, the land reform lawyer. "But the new guiding principle will set up a platform for further reform in the future."

 

[dr.umer]

China to sell passenger jets to U.S. market ​

BEIJING, Nov. 4 (APP): China signed its biggest aircraft export agreement, in terms of both number of jets and contract value, Tuesday at the 7th China International Aviation and Aerospace Exhibition in Zhuhai city of southern Guangdong province. The Commercial Aircraft Corporation of China, Ltd. (COMAC) will sell 25 ARJ21-700 regional jets to GE Commercial Aviation Services of the United States under a deal worth $ 733.1 million.

The first jet will be delivered in 2013.

COMAC Chairman Zhang Qingwei told media persons that this was the first time Chinese-developed and manufactured regional jets have entered western airline markets.

ARJ21 (Advanced Regional Jet for the 21st Century) was developed independently by China. It has between 78-90 seats and a standard full-passenger flight can go 2,225 kilometers.

The regional jet will make its maiden flight in Shanghai within this month.

A total of 206 ARJ21-700s jets have so far been ordered.

 

[Neo]

China growth forecasts drop below 8 percent​

BEIJING: Credit Suisse on Tuesday lowered its forecast for 2009 Chinese economic growth to 7.2 percent, joining an expanding list of banks that anticipate a slowdown to below 8 percent, a level the government says it must maintain. Most countries would be pleased with 8 percent growth, but for rapidly urbanising China, experts say it represents a tipping point below which it may not be able to create enough new jobs or raise incomes by enough to maintain social stability. Annual GDP growth fell to 9 percent in the third quarter, setting the economy on track for its first year of less than double-digit expansion since 2002. The economy expanded 11.9 percent in 2007.

A pair of gloomy purchasing managers’ indexes (PMIs) for October, which showed the sharpest drops in factory output in years, have added to concerns that China may face a more serious slowdown than previously expected, potentially dashing hopes that it could step up to prevent global growth from slowing further.

 

[Neo]

‘Radical’ economic stimulus package in China soon​

BEIJING: A radical stimulus package to fight the impact of the global financial crisis on China could be announced this month as the economy enters an “excessive slowdown”, state media said Thursday. “Only a radical stimulus package can save the country from excessive slowdown,” a senior Cabinet official, who refused to be named, told the China Daily.

The official, who the paper said was close to China’s top decision-makers, said he had submitted a report to the central government urging it to implement an active fiscal policy to encourage government spending and investment. afp

 

[pkpatriotic]

China to increase policy support for exporters
Editor: eveguo
7 Nov 2008

BEIJING, Nov 7 - China will hammer out more measures to help its exporters get through next year, which is shaping to be even more difficult than 2008, a government think-tank said on Friday.

The Chinese Academy of International Trade and Economic Cooperation, run by the Ministry of Commerce, said China would encourage lending to small exporters and facilitate customs procedures.

A report obtained by Reuters said Beijing would also streamline taxes and foreign exchange policies to make exports and imports easier. It did not elaborate.

China has twice increased value added tax refunds for textile, garment and other exporters in the past four months as demand for Chinese goods has weakened due to the global financial crisis.

The think-tank said overseas demand would fall further in 2009 as the United States, Europe and Japan, which account for 60 percent of Chinese exports, tumble into recession.

"Looking at the external aspects, the global economic situation is going to be even more severe and complicated in 2009. There are growing uncertainties and destabilising factors," it said.

Rising loan defaults and settlement risks linked to the failure of financial firms, as well as escalating protectionism and fluctuating commodity prices, will further dim the global trade outlook, the report said.

However, China's keen export prices -- based on low labour costs and integrated supply chains -- will help manufacturers to weather the storm, according to the report.

Moreover, exporters can diversify by tapping the potential of other emerging markets such as Brazil and India, the think-tank said.

It forecast that China's imports and exports combined would rise 20 percent this year to $2.6 trillion. It did not give separate projections for exports and imports.