China Economy - News & Updates

[Neo]

Fifteen Chinese brands on world’s top 500 list ​

Saturday, November 08, 2008

LAHORE: The Chinese products have flooded the world market in last few years outclassing products from other economies due to cheaper rates and variety.

China is now the second-largest economy in the world with GDP of over $6.9 trillion (2007), measured on purchasing power parity (PPP) basis.

Chinese goods are in demand throughout the world, popular in developed as well as developing economies, because of their low cost and good quality.

From roadside vendors to uptown shopping malls Chinese products fill the shelves.

Success of Chinese products is due to range of prices offered for particular product to different buyers. A Chinese company selling a particular product in the USA for $10 would be supplying similar product of lower quality to Pakistan and Bangladesh for $2 to $3, these products may look alike but there quality would be different. Better quality, good material and durability would definitely mean higher price.

Traders in developing economies mostly import low quality Chinese products keeping in view the low purchasing power of consumers. In developed economies Chinese products have to comply with strict health, quality and safety standards.

The World Brand Lab, Chaired by Robert Mundell, 1999 Nobel Prize laureate in Economics, ranked the top 500 brands and announced in July of these fifteen Chinese brands were listed among the world’s top 500 brands in 2008, based on their market shares, brand loyalty and global leadership.

The three newcomers on the list were China National Petroleum Corporation, China Merchants Bank and Tsinghua Tongfang, while 12 Chinese brands retained their position from the previous year. The 12 brands include Haier, Lenovo, Industrial and Commercial Bank of China, State Grid, Bank of China, China Life, Changhong, China Railway Group, Air China and Sinopec. Also, in the 2008 list, China ranked the seventh in terms of the number of listed brands. This shows that the Chinese products popularity across the globe.

Bilateral trade between China and Pakistan was more than $7 billion in year 2007 and the two sides have set a target of $15 billion annually by 2011. An increasing number of Chinese manufacturers are operating in Pakistan such as white goods maker Haier, telecommunications firm ZTE, electronic giant SVA and a number of motorcycle companies. The demand for Haier’s quality electrical appliances exists all over the world.

The IMF predicts that China would grow by more than 11 percent and India at around 9 percent this year, with almost equal rates in 2008. To get advantage of Chinese growth the Pakistan needs closer ties with China.

During the recent visit of the president Asif Zardari Chinese leaders vowed to enhance bilateral economic cooperation between industrial and business communities. China will launch a telecommunication satellite, PakSat-1R for Pakistan in year 2011. China Mobile has invested $800 million in its first international venture Zong and plans to expand Zong network in Pakistan.

Huawei Technology a telecom solution provider is the only vendor serving all the mainstream telecom operators of Pakistan including PTCL, Ufone, Mobilink, Telenor, Warid and Zong etc. Also, San Ya Fang has donated equipment valued at one million dollars for establishing e-Government project initiative taken by the government of Pakistan.

 

[pkpatriotic]

China unveils stimulus plan to battle economic crisis
Monday, November 10, 2008

BEIJING:China unveiled a multi-trillion yuan economic stimulus plan Sunday aimed at boosting domestic consumer demand in the face of flagging exports, as foreign markets contract in the global financial crisis.

The measures were approved at a cabinet meeting chaired by Premier Wen Jiabao on Wednesday, state media said, and would increase spending on infrastructure and a range of other sectors amid slowing domestic growth.

"China has decided to adopt an active fiscal policy and moderately easy monetary policies to foster fast but steady economic growth by expanding domestic demand," said a statement posted on the Cabinet's website.

The spending package would total four trillion yuan (586 billion dollars) by the end of 2010, including monies already earmarked this year, it said.

The measures come amid slackening overseas demand for China's manufactured goods -- the mainstay of the Chinese economy -- and the statement said they were aimed at spurring domestic consumption to take up that slack.

 

[Neo]

China plans to counter financial crisis​

BEIJING, Nov 9: China unveiled a multi-trillion yuan economic stimulus plan on Sunday aimed at boosting domestic consumer demand in the face of flagging exports, as foreign markets contract in the global financial crisis.

The measures were approved at a cabinet meeting chaired by Prime Minister Wen Jiabao the other day, state media said, and would increase spending on infrastructure and a range of other sectors amid slowing domestic growth.

“China has decided to adopt an active fiscal policy and moderately easy monetary policies to foster fast but steady economic growth by expanding domestic demand,” said a statement posted on the cabinet’s website.

The spending package would total four trillion yuan ($586 billion) by the end of 2010, including monies already earmarked this year, it said.

The measures come amid slackening overseas demand for China’s manufactured goods, the mainstay of the Chinese economy, and the statement said they were aimed at spurring domestic consumption to take up that slack.“Although we face many difficulties, domestic spending power remains strong,” the statement said.

The move is the latest in a series of recent steps by China to counter the global financial crisis.

Economic growth in China eased to nine per cent in the third quarter of this year, the lowest in around five years, partly due to slowing exports.

The central bank has already cut interest rates three times since September and taken other steps to loosen monetary policy.

Those measures marked an about-face from a policy of steadily raising interest rates to cool the economy amid growing inflation and fears of overheating.

The cabinet, or state council, also recently approved a plan to spend two trillion yuan on construction of new railways from now until 2020.—AFP

 

[allbestmessages]

I have read on net about econmy
Economy:
An economy is the realized social system of production, exchange, distribution, and consumption of goods and services of a country or other area. A given economy is the end result of a process that involves its technological evolution, civilization's history and social organization, as well as its geography, resource endowment, and ecology, among other factors.

Economy of china:

Now a day economy of china is gowing on very boob.Because china as like population first largest country in the world and all people working people are hardworking.China enter in every country.China has the 2nd-largest economy in the world with a GDP of over $6.9 trillion (2007) when measured on a purchasing power parity (PPP) basis. In November 2007, it became the third largest in the world after the US and Japan with a nominal GDP of US$3.42 trillion (2007) when measured in exchange-rate terms.[4] Since free market reforms in 1978 China's GDP has grown an average 9.9 percent a year.[5] China's per capita income has grown at an average annual rate of more than 8% over the last three decades, drastically reducing poverty, but this rapid growth has been accompanied by rising income inequalities.[6] The country's per capita income is classified as in the lower middle category by world standards, at about $2,000 (nominal, 107th of 179 countries/economies), and $7,800 (PPP, 82nd of 179 countries/economies) in 2006, according to the International Monetary Fund.

Since the late 1970s and early 1980s, the economic reforms initially began with the shift of farming work to a system of household responsibility to start the phase out of collectivized agriculture, and later expanded to include the gradual liberalization in of prices; fiscal decentralization; increased autonomy for state enterprises that increased the authority of local government officials and plant managers in industry thereby permitting a wide variety of private enterprise in services and light manufacturing; the foundation of a diversified banking system; the development of stock markets; the rapid growth of the non-state sector, and the opening of the economy to increased foreign trade and foreign investment. China has generally implemented reforms in a gradualist fashion, including the sale of equity in China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in mid-2000s. As its role in world trade has steadily grown, its importance to the international economy has also increased apace. China's foreign trade has grown faster than its GDP for the past 25 years.[7] As of 2007, most of China's growth came from the private sector instead of exports. Particularly the smaller public sector, which was dominated by about 200 large state enterprises concentrated mostly in utilities, heavy industries, and energy resources.[8]

China has emphasized raising personal income and consumption and introducing new management systems to help increase productivity. China has emphasized raising personal income and consumption and introducing new management systems to help increase productivity. The government has also focused on foreign trade as a major vehicle for economic growth. China's GDP has increased tenfold since 1978, largely due to economic reforms including liberalization of their economy. [9] Some economists believe that Chinese economic growth has been in fact understated during much of the 1990s and early 2000s, failing to fully factor in the growth driven by the private sector and that the extent at which China is dependent on exports is exaggerated.[10] Nevertheless, key bottlenecks continue to constrain growth. Available energy is insufficient to run at fully-installed industrial capacity,[11] the transport system is inadequate to move sufficient quantities of such critical items as coal,[12] and the communications system[13] cannot yet fully meet the needs of an economy of China's size and complexity.

The two most important sectors of the economy have traditionally been agriculture and industry, which together employ more than 70 percent of the labor force and produce more than 60 percent of GDP. The two sectors have differed in many respects. Technology, labor productivity, and incomes have advanced much more rapidly in industry than in agriculture. Agricultural output has been vulnerable to the effects of weather, while industry has been more directly influenced by the government. The disparities between the two sectors have combined to form an economic-cultural-social gap between the rural and urban areas, which is a major division in Chinese society. China is the world's largest producer of rice and is among the principal sources of wheat, corn (maize), tobacco, soybeans, peanuts (groundnuts), and cotton. The country is one of the world's largest producers of a number of industrial and mineral products, including cotton cloth, tungsten, and antimony, and is an important producer of cotton yarn, coal, crude oil, and a number of other products. Its mineral resources are probably among the richest in the world but are only partially developed. China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites.

 

[Neo]

China’s economy to grow 8-9% in ’09: central bank​

BEIJING: The Chinese economy is expected to grow by between eight and nine percent next year, state press reported Monday, citing central bank governor Zhou Xiaochuan. China’s steady growth would help the international financial markets go “back to normal”, Zhou said on the sidelines of a meeting of key financial officials of the Group of 20 in Sao Paulo, according to the Xinhua news agency. He said the central bank was closely monitoring the developments in the global financial markets to decide its next interest rate policies, the report said. Growth of the heavily export-dependent Chinese economy eased to nine percent in the third quarter of this year, the lowest in more than five years. The nation’s trade surplus dropped 2.6 percent in the first nine months of 2008, making it very likely that overall economic growth this year will slip into single digits for the first time since 2002.

 

[Neo]

Gigantic stimulus package ‘biggest contribution’ to world: China​

BEIJING: China’s massive stimulus package is meant to help support global growth by boosting Chinese investment and consumer spending, Premier Wen Jiabao said Monday.

“We must implement the measures to ensure a fast and stable economic development,” Wen, the country’s top economic official, said at a meeting of government leaders, according to a report read out on the state television evening news. “They are not only the needs of the development of ourselves, but also our biggest contribution to the world.”

Beijing joined moves by governments around the world to cushion the blow of the global slowdown. The plan calls for higher spending on roads, airports and other infrastructure, tax deductions for exporters and more aid to the poor and farmers.

Wen said China must increase investment and consumer spending, maintain export growth, enhance corporate competitiveness, reform financial industries and improve the health development of the real estate industry, according to the state television report. It gave no other details.

China’s announcement came as economic officials from the Group of 20 leading economies, which includes major, wealthy and developing nations, called Sunday for increased government spending to boost the troubled global economy. At a meeting in Brazil, G20 finance ministers and central bank governors also said emerging economies deserve a prominent role in talks to overhaul the world financial system. China’s move follows an unexpectedly sharp downturn in economic growth that has raised the prospect of job losses and unrest. Exporters say orders have fallen sharply, leading to an increase in factory closures and layoffs. Chinese economic growth fell to 9 percent in the latest quarter, its lowest level in five years, and analysts expect export growth to fall as low as zero in coming months as global demand weakens. The plan represents another drastic step away from lending curbs and other anti-inflation measures that Beijing imposed over the past three years but has been rolling back since mid-2008 as government alarm about slowing economic growth mounts.

Economists noted that the plan depends on corporate investment and promises bank lending for rural projects, smaller companies and consumers.

“I don’t believe a fiscal stimulus alone is enough to keep growth going. I see it as the jump-starting of a car. Corporate investment and bank lending are the fuel that will be necessary to keep it going,” said UBS Securities economist Tao Wang.

Beijing might supply one-quarter of the announced spending, or 1 trillion yuan ($145 billion), with the rest coming from increased investment by Chinese state companies, bank lending or bond sales by local authorities for individual projects, said Ting Lu, a Merrill Lynch economist.

China’s wholesale inflation eased in October, which gives authorities more leeway to stimulate the economy without the threat that they might ignite new price rises. Producer prices rose 6.6 percent in October from the year-earlier period, down from August’s 12-year high of 10.1 percent.

Alarmed at falling growth, the government switched its official goal in mid-2008 from a single focus on fighting inflation to a dual target of ensuring fast economic expansion while also containing price rises. It has cut interest rates three times in recent weeks and lifted limits on how much each Chinese bank can lend. ap

 

[Neo]

China’s package to be felt around the world: economists​

BEIJING: China’s announcement of a stimulus package that will pour more than half a trillion dollars into its economy will have repercussions far beyond its borders in a time of global crisis, economists say.

The package, decided at a recent meeting chaired by Premier Jiabao, calls for tax cuts and increased spending corresponding to about 7% of China’s GDP over the next two years.

“This is really China’s Big Deal, which dwarfs all the previously announced monetary and fiscal measures as little drops,” JPMorgan economist Frank Gong said in a research note.

Reflecting China’s growing economic muscle, the four-trillion-yuan ($590 billion) stimulus package could send ripple effects across the globe, to countries as far away as Latin America.

“It may possibly help stabilise the economies of smaller countries like South Korea which export a lot to China.”

The package comes amid rapidly worsening predictions for the impact of the financial turmoil on China’s export-dependent economy.

The nation’s trade surplus dropped 2.6 percent in the first nine months of 2008, making it very likely that overall economic growth this year will slip into single digits for the first time since 2002.

“For the central government, the impact of the crisis on China was apparently more serious than it had expected,” said Chen Manjiang, a Beijing-based economist with Bank of China International.

The timing of the package, before a major annual work conference on the economy that usually takes place in November or December, was significant, she said.

“The reason for the early announcement is that the government wants to promote confidence in China’s economy both domestically and among the international society,” she said.

Judging from early reactions abroad, the outside world had taken note, with the package welcomed by Jim Flaherty, the finance minister of Canada, a supplier of raw materials to China.

British Prime Minister Gordon Brown said in a statement: “It is vital that all countries play their part in stimulating growth in the world economy at this time.”

This is a message that China may get to hear more often in the coming days and weeks, with advanced economies expected to contract next year for the first time since World War II, according to International Monetary Fund forecasts.

China has the world’s largest foreign exchange reserves, at 1.9 trillion dollars, facing it with growing calls to play a part in boosting global growth.

However, Beijing’s counter-argument has been that it serves the world best by helping along its own economy, forecast by the IMF to expand by 8.5 percent in 2009. afp

 

[Neo]

China posts another record trade surplus ​

Wednesday, November 12, 2008

BEIJING: China said on Tuesday its trade surplus hit a monthly all-time high of $35.2 billion in October, on the back of rising exports despite the global economic turmoil.

The surplus, up 29.9 per cent from a year ago, reflected China’s strong export markets outside the United States and Europe, but it was also the result of a marked slowdown in imports. Experts said China’s trade would soon show more clearly the impacts of global woes, with export growth set to continue to slow. “It is not very likely that such fast growth in the surplus will be sustained,” said Qi Jingmei, a researcher with the State Information Centre, a Beijing-based government think tank.

Exports in October rose 19.2 per cent from a year ago to $128.3 billion, compared with 21.5 per cent growth in September, the figures said. “The destination of China’s exports is diversified. So the demand from Africa, Latin America and Russia is still strong although exports to Europe weakened,” Qi said.

Imports last month increased by a narrower margin, rising 15.6 per cent from a year earlier to $93.1 billion, according to Customs. The more moderate rise in imports mainly reflected sharp declines in the price of oil and other commodities, observers said.

 

[Nihat]

In China, OPEC’s nightmare comes true
Web posted at: 12/6/2008 0:45:18
Source::REUTERS
By John Kemp

China’s decision to link domestic fuel prices indirectly to the international crude oil market, subject to a price cap, while hiking the consumption tax on petrol and diesel and phasing out a variety of road tolls and other fees shows Saudi Arabia’s worst fears about high prices are demand destruction are starting to come true.

It seems likely to confirm the kingdom’s determination to see prices stabilise around $75 per barrel, well below recent price peaks, and far below the level sought by some other OPEC members, as well as international oil companies and advocates of alternative energy.

China is among the world’s most inefficient users of energy, measured in terms of BTUs consumed per dollar of GDP produced. Since China’s economy is one of the largest and fastest growing, and heavily reliant on imported crude oil, China has been hit harder than any other country by the recent surge in oil and energy prices.

Rising energy prices have worsened the country’s terms of trade, and threaten the viability of much of the industrial base (including the power-intensive steel and aluminium industries). The central government has made reductions in energy consumption per unit of output a top priority. Policymakers have used investment controls and other administrative measures to try to limit the expanion of energy-intensive industries aimed at producing primarily for export. At the same time, export taxes have been introduced on a wide range of low-value added semi-manufactured products (such as unwrought aluminium) and VAT rebates scaled back to encourage the manufacturing sector to concentrate on exporting higher value-added items in which energy is a smaller fraction of the overall unit cost.

But efforts to increase energy efficiency have been only partially successful, because the government continued to hold prices for gasoline, diesel, thermal coal and on-grid electricity below international levels, using a combination of price controls and subsidies. The government’s strategy for improving energy efficiency came into conflict with the priority on economic and social stability.

Extensive price controls and subsidies largely insulated households and businesses from the rise in international oil and energy prices, blunting the incentive to improve energy efficiency.

Eventually, the rise in global oil prices became overwhelming. The resulting pressure on the current account of the balance of payments and need for growing subsidies to the country’s oil refiners forced the government to raise administrated petrol and diesel prices almost 20 percent earlier this year.

One welcome effect of the rise in oil prices and the decision to increase domestic gasoline and diesel charges was that it sharpened incentives for energy efficiency considerably. But as the economy has slowed sharply and international oil prices have tumbled, the government has come under pressure to cut fuel charges.

Instead, the National Development and Reform Commission (NDRC) has introduced a carefully integrated package of measures designed to provide short-term economic relief while maintaining the pressure for greater energy efficiency in the medium term.

By linking domestic prices indirectly to the international oil price, NDRC has ensured that consumers and businesses will benefit from the current easing in the oil market, helping stabilise the economy, but that domestic prices will move up again if the market picks up, reducing the subsidy burden and maintaining market-based incentives to limit energy consumption.

More importantly, the government has taken advantage of the (possibly temporary) reduction in oil prices to introduce a (probably permanent) increase in the energy consumption tax. The key point is that the consumption tax is not linked to variations in the oil price and will sharpen the incentives for using energy more efficiently at any level of international prices.

In effect, China has started to emulate the successful conservation strategies used in Europe and Japan, where heavy fuel taxes have spurred the use of much more fuel efficient vehicles and much lower energy consumption per unit of output than in the United States and the rest of the world.

Europe and Japan took advantage of relatively low oil prices during the late 1980s and 1990s to raise substantial excise taxes on the consumption of gasoline and diesel. China’s decision to boost the consumption tax on gasoline and diesel looks like it could be the first in a series of phased increases over time, similar to the United Kingdom’s “fuel duty escalator.”

OPEC has long complained about the massive “wedge” these fuel taxes have driven between the pump prices paid by motorists in Western Europe and the net revenue which oil exporting countries actually receive for their crude, but they are widely cited as the most effective conservation strategy.

Saudi Arabia expressed consistent concerns that the recent surge in oil prices would lead to the long-term loss of demand even if prices subsequently fell back. Those fears are now being realised. China’s decision to raise the fuel consumption tax is one of a number of measures adopted around the world to promote conservation and aimed at the volume of oil consumed for any given level of prices. It is consistent with the massively increased bio-ethanol blending requirements introduced in the United States last year designed to displace oil consumption.

By pushing energy conservation to the top of the policy agenda, the frenzied escalation in oil prices during 2006-2008 is set to have long-lasting effects, even if prices eventually stabilise at much lower levels. President-elect Barack Obama has made clear that improving energy efficiency and cutting dependence on oil imports will be a top priority in the next four years. Neither the incoming Obama administration, nor top planners in Beijing, will quickly forget the harsh lessons about reducing energy dependence taught in the last two years, even if prices now settle much lower.

China’s decision to raise fuel taxes will increase Saudi Arabia’s determination to stabilise prices at a much lower level than most other members of the organisation are comfortable with, to try to limit the long-term damage to oil demand. The kingdom’s worst fears about the long-term damage wrought by high and volatile prices are now being realised.
__________________

I'll post the link when I find it but I find this to be an excellent step by China.

 

[solid snake]

^^ Excellent move by China indeed.

 

[gpit]

BBC NEWS | Business | Chinese exports drop in slowdown

China has reported a fall in exports for the first time in seven years.

Chinese exports declined in November from the same period a year ago for the first time since June 2001, data shows.

But China still reported a record monthly trade surplus of $40.1bn (£26.7bn), as the fall in imports was even bigger than the fall in exports.

Exports dropped by 2.2%, while imports shrank by a massive 17.9% as Chinese consumer spending slumped - a sign of the impact of the global downturn.

October had seen China's exports rise by 19.1% and analysts had expected further growth of at least 13% in November.

However, they failed to anticipate a dramatic decline in foreign demand.

China is expected to show growth of about 9% this year. However, the World Bank has cut its China growth forecast for 2009 from 9.2% to 7.5%, the lowest since 1990.

Economists have been watching China closely, amid worries that global growth could be hit further if China follows the US into the downturn.

Weakening demand

In November, China announced a huge investment plan to kick-start its slowing economy.

About $586bn is to go into housing, infrastructure and post-earthquake reconstruction in China over the next two years.

However, it is unclear whether it will be enough to have an impact, while analysts see tough times ahead.

"It's just a start. Exports and imports will continue to fall in the coming months, probably until next June," said Zhang Shiyuan at Southwest Securities in Beijing.

"China's export sector will begin to show signs of stabilisation only with global recovery," said Jing Ulrich at JP Morgan.

The trade surplus in the 12 months till the end of November rose to $278.7bn from $265bn in a year to the end of October.

Meanwhile, Chinese aviation authorities are urging local airlines to postpone or cancel 2009 plane deliveries amid falling demand for air travel.

The move could hurt aircraft makers Boeing and Airbus, which have hoped to weather weakening demand in their home markets by relying on growth in emerging markets, such as China.

 

[pkpatriotic]

China growth rate to continue to decelerate until at least 2009 3Q
2008-12-15

Special Report: Global Financial Crisis
BEIJING, (Xinhua) -- Wang Luolin, a renowned Chinese economist, forecast on Monday that the rate of China's economic growth will continue to decelerate until at least the third quarter next year, when it may begin to increase.

Wang, who used to serve as the deputy head of the Chinese Academy of Social Sciences, also said the country's growth could be expected to stay between eight and nine percent, "which remained the highest growth of all economies", over the following two or three years after the pick-up.

He made the forecast on the expectations that the global crisis would be eased by then, and also on the effect of direct support from government measures to stimulate the economy.

China announced a four trillion yuan (584.8 billion U.S. dollars) stimulus package last month to boost the economy, followed by more specific policies such as raising export rebates and the latest pledge of more new loans next year.

The Chinese economy cooled sharply as growth in exports and property investment slowed. The growth pace was 9 percent in the third quarter, down from 10.4 percent in the first half.

Economic data released this week showed further risks of a slowdown in the economy. Exports in November slid 2.2 percent year on year, the first monthly decline since June 2001.

The fourth quarter this year and the first quarter next year would be the toughest time for Chinese economy, Wang said. However," there is no financial crisis in China, and no economic recession is ahead for the country."

He also said the worst would be over for the world economy in the second half of next year, or in the fourth quarter at the latest, but he foresaw a prolonged "recession" period.

Wang explained that in the so-called "recession" period, major economies would post no declines in growth, but would expand at around one percent or less.

Gong Fangxiong, chief economist with JP Morgan Chase, echoed his view. Gong said last week that the rate of decline in China's economy was likely to bottom out in the second quarter of 2009.

 

[pkpatriotic]

Leading academy: China to face increasing employment pressure next year
2008-12-15

BEIJING, China will face increasing employment pressure next year due to slowed economic growth, decline in export and an increasing number of bankruptcies, a top academic institution says on Monday.

The Chinese Academy of Social Sciences(CASS), China's leading academic institution, said in its 2009 blue book that the country's employment would be affected in spite of a planned 4 trillion yuan (584.8 billion U.S. dollars) stimulus package to boost economy.

The slowed economic growth rate, estimated at eight to nine percent by the academy, would affect the employment rate compared with China's previous double-digit growth rate, according to CASS.

Large economic entities and major importers of China-made products such as the United States and the European Union have been affected by the global economic crisis, and could lead more to more job losses in export-oriented enterprises, it said.

More medium and small-sized enterprises will have to reduce production or go bust as the pay for workers has increased, it said. Lack of capital due to the sharp fall in export would further impact on the employment rate.

According to statistics released by China's National Development and Reform Commission, the country's top economic planning body, more than 10,000 medium and small-sized enterprises in the textile sector were eliminated in the first half of the year, and two thirds needed to be restructured.

About 150 million Migrant laborers, a major driving force of China's economy, have been hit hard by the bankruptcy of labor-intensive industries such as textile factories.

Most migrant workers did not register their unemployment after being dismissed, so accurate statistics cannot be reported, said CASS. The recent retreat of migrant workers from coastal provinces is a red flag that more job posts in labor-intensive industries inthe well-off coastal provinces have been lost.

The country also faces the difficult task of finding jobs for nearly 6.5 million college graduates next year, said the blue book.

Blue book often refers to an almanac or other collection of statistics and information.

 

[pkpatriotic]

China money supply growth slows on economic slowdown
2008-12-15

Special Report: Global Financial Crisis

BEIJING, China's money supply grew at a slower-than- average pace in November as the economy continued to weaken, the central bank said Monday.

The M2, the broad measure of money supply covering cash in circulation plus all deposits, rose 14.8 percent to 45.86 trillion yuan (6.7 trillion U.S. dollars) by the end of November. The growth rate was down 0.22 percentage points from a month ago, according to the People's Bank of China (PBOC).

Experts said the M2 growth slowed for the sixth straight month because of decreased incomes and weakened demand.

The M1, the narrow measure of money supply covering cash in circulation plus demand deposits, grew 6.8 percent to 15.78 trillion yuan (2.3 trillion U.S. dollars), down 2.05 percentage points from the end of October.

"This showed the sharp contraction of business activity as companies began to reduce stockpiles from October," said Liu Yuhui, a researcher at the Institute of Finance and Banking under Chinese Academy of Social Sciences.

Many companies, especially those in the industrial manufacturing and chemical industries, built up huge stockpiles on price bubbles last year and were forced to cut stockpiles after the bubbles busted on falling demand.

The slower M1 growth showed reduced production and investment on pessimistic views about the economic outlook, said Guo Tianyong, an expert of banking at the Central University of Finance and Economics.

China's economy grew 9 percent annually in the third quarter, down from 10.4 percent in the first half. Economic data for October and November indicated a risk of further decline.

Industrial output rose 5.4 percent annually in November, down from 8.2 in October and 17.3 percent a year earlier. In addition, exports slid 2.2. percent, compared to 19.2 percent growth in October and the first monthly decline since June 2001.

The State Council, or Cabinet, on Saturday said it targets a 17percent growth in M2 in 2009 in a bid to increase money supply to spur economic growth.

China needs more fiscal and taxation policies, including treasury bond sales, to meet the M2 growth target as monetary easing alone has failed to increase supply over the past few months, Guo said.

The PBOC has cut the lending rate four times since mid-September, with the latest reduction of 1.08 percentage points, and also lowered the reserve requirement ratio substantially.

MORE NEW LOANS

The outstanding yuan-denominated loans climbed 16.03 percent to 29.57 trillion yuan (4.3 trillion U.S. dollars), 1.45 percentage points higher than a month ago.

The newly-added yuan loans in November was 476.9 billion yuan (69.6 billion U.S. dollars), a rise of 389.5 billion yuan from a year earlier.

The divergence in behaviour between M2 and bank credit suggests a reduced contribution to broad money expansion from foreign exchange reserve accumulation by the central bank, Barclays Capital economists headed by Peng Wensheng said in research note.

The increase was due to a low base in November last year and rises in bank credit in coordination with the massive 4 trillion yuan (584 billion U.S. dollars) stimulus package to avert an economic slump, Guo said.

New loans was at low levels late last year as lenders were faced with credit quota restrictions designed to prevent an economic overheating and curb inflation.

Provided stable foreign exchange reserves, bank credit would need to grow by 27 percent next year to achieve the M2 growth target, Peng wrote in another note.

Banks have become reluctant to lend amid the worsening growth outlook and an incentive system for loan officers that places more responsibility for non-performing loans, said Peng. He added it is important to increase banks' capacity and incentives to lend.

Guo noted the government should cut taxes for banks while the lenders need to strike a balance between sustaining economic growth and controlling risks.

Liu Mingkang, Chairman of the China Banking Regulatory Commission (CBRC), said on Saturday the agency targets a lower non-performing loan (NPL) ratio next year, but it will "scientifically tolerate" any increases in the stockpiles of bad loans.

The PBOC also said the outstanding yuan deposits jumped 19.94 percent to 46.24 trillion yuan (6.8 trillion U.S. dollars) by the end of November, 1.16 percentage points lower than a month ago.

The new yuan deposits was 403.8 billion yuan (59 billion U.S. dollars) last month, a decline of 298.6 billion yuan from a year ago.

 

[pkpatriotic]

Fuel tax reform needs more transparency
2008-12-15

BEIJING, According to the draft plan unveiled on Dec 5 by the National Development and Reform Commission (NDRC), the country's top economic planner, and three other government agencies on fuel taxes and the pricing of refined oil products, gasoline taxes will be raised to 1 yuan per liter from 0.2 yuan and diesel taxes to 0.8 yuan per liter from 0.1 yuan.

Taxes on other oil products will also be raised. The plan is due to be put into effect on January 1.

This is indeed a positive move. With the more workable taxation scheme in place, people's awareness of economical use of energy, and emission reduction, will be greatly enhanced.

The move will also help ease problems between the country's fast-growing economy and the wasting of resources.

At the same time, the reform will also help set up a resource pricing mechanism and make government revenues as well as their utilization more transparent.

The recent record low world oil prices, dipping to 40 U.S. dollars a barrel, has offered a rare opportunity for China to push ahead with its fuel taxation reform.

The reform has set the tone for the country's refined oil market: Future adjustment of the market will be led by taxation levies instead of administrative will.

It will give the market a larger role in pushing for energy conservation and environmental protection.

After the adoption of the new oil pricing standard, the controversial issue of unrestrained road toll fees is expected to be resolved as well. According to the NDRC draft plan, fuel taxation will replace the long-standing road maintenance and management fees.

However, the regulation has also provoked heated arguments that it failed to make public how the fuel taxation levels were set. Such an elusive attitude by the authorities has turned out to be a source of widespread speculation.

Different countries have varying energy consumption and fuel taxation policies. In Europe and Asia, most nations have resorted to higher taxation to mitigate pressures on their oil insufficiency.

Germany for example, the largest European economy, has adopted a 260 percent tax on fuel consumption. Such a high taxation has contributed much to the development of energy-efficient technologies and the popularity of lower-emission vehicles.

However, the United States has a completely different policy. In the world's largest economy, fuel tax is only 30 percent. As a result, the ratio of the country's use of oil-consuming vehicles has long been higher than other countries.

A recent online survey of China's new fuel taxation showed more than 77 percent of those polled believed the 1-yuan-a-liter gasoline taxation was too high and unacceptable.

However, some domestic energy experts have claimed that the new taxation level would not play an important role in promoting energy conservation and emission reduction unless it was raised to 3 and 4 yuan per liter.

Conflicting views on the reform needs an official voice to clarify.

The reform is expected to produce substantive influences on different industries and sectors.

It will have an immediate impact on the transport sector. According to the regulation, road maintenance and management fees will be included in the unified fuel taxation. This will result in increased costs to those who consume a lot of fuel than in the past.

Farmers' production costs are expected to rise drastically too. About 80 percent of fuel consumption in the rural areas goes to farming, irrigation and power generation.

The added burden on farmers, who are already in a disadvantageous position, should receive the attention of responsible State organs.

Some supplementary measures have yet to be taken to ease farmers' burdens in order to avoid possible social dissatisfaction.

The authorities need to clarify how the taxes will be used and ensure that some of it will go toward subsidizing affected industries and enterprises.

We should not expect the authorities to work out a perfect fuel taxation and refined oil pricing system, it takes time to get it right.

But what the government should do first is to further increase transparency in its information publications. A good communication channel between the government and the people will dispel misgivings.

The author is an anchorman with China Business Network, a TV station based in Shanghai