China Economy - News & Updates

[solid snake]

Chinese trade surplus soars to record in 2007​

BEIJING, Jan 11: China's trade surplus surged nearly 50 per cent last year to surpass 260 billion dollars, official data showed on Friday, a stunning rise certain to see more global pressure for Chinese currency reform.

A surplus of 22.69 billion dollars in December lifted the 12-month figure to 262.2 billion dollars, up 47.7 per cent from 2006, the customs administration said.

The surplus has climbed more than 10-fold since 2003, stoking concerns among China's major trading partners about the Asian nation's export juggernaut.

EU officials are talking about it in each visit to China. It is a serious problem,” said Ma Qing, a Beijing-based economist with CEB Monitor Group.

US, European and other critics complain that China keeps its currency, the yuan, artificially weak, which they argue gives Chinese exporters an unfair advantage.

China has responded by allowing the yuan to appreciate gradually, and slightly faster in recent weeks, but it has refused to scrap its controls completely.

The data showed exports rose 25.7 per cent year-on-year to hit 1.218 trillion dollars in 2007, providing more fuel for critics who say the yuan is still too weak. Imports climbed by 20.8 per cent to reach 955.8 billion dollars.

Meanwhile state media said the country's foreign exchange reserve, already the world's biggest, had soared to 1.53 trillion dollars by the end of 2007, due mainly to the giant trade surplus.

On Friday, the yuan closed at another record high of 7.262 yuan to the dollar, which marked an appreciation of about 12 per cent since the currency's peg to the greenback was loosened in July 2005. The yuan is likely to appreciate by around eight to 10 percent against the dollar in 2008, according to Qiu Qingdong, a Beijing-based economist with Guodu Securities, whose estimate was similar to those given by other analysts.—AFP

Chinese trade surplus soars to record in 2007 -DAWN - Business; January 12, 2008

 

[gpit]

Slow appreciation of Yuan is good for both the Chinese and the Americans.

 

[Neo]

China attracted record $82.7bn FDI in 2007 ​

Tuesday, January 22, 2008

BEIJING: Foreign firms invested a record 82.7 billion dollars in booming China last year, the government said on Monday, with analysts adding the tide of money had undermined efforts to slow economic growth.

The 2007 figure for foreign direct investment, or FDI, was up 13.8 per cent from a year earlier, the commerce ministry said in a statement. China has been striving to cool its economy over concerns that it could overheat and shudder into a sharp slowdown, but analysts said the nation’s still-explosive growth continued to lure foreign firms.

“Inbound FDI is in no way helping the government’s efforts to cool the economy, it is actually doing the opposite,” said Feng Yuming, a Shanghai-based analyst with Oriental Securities. Experts estimate China’s economy probably grew about 11.5 per cent in 2007, the fifth consecutive year of double-digit percentage growth. Official figures are due on Thursday, with many forecasters optimistic that China will grow reasonably strongly this year too despite the prospect of a sharp economic slowdown or even recession in the US.

Foreign investment may continue to rise at a fast pace in 2008 due to the rising value of China’s currency, the yuan, Feng said. China drew a then record 69.46 billion dollars in FDI in 2006. The government has been trying to channel the money away from real estate, resources and export-linked sectors in the interest of economic stability.

China attracted record $82.7bn FDI in 2007

 

[Neo]

China’s economic growth seen exceeding 11.5% in 2007​

BEIJING: China’s 2007 economic growth figures to be released Thursday are expected to show a stunning expansion of around 11.5 percent that could be the highest annual rate in 13 years, analysts said.

The pace of growth is seen topping even 2006’s sizzling 11.1 percent on the strength of surging foreign investment and exports, but is expected to moderate in 2008 as the government tightens monetary policy, they said.

“GDP is likely to have grown the fastest in more than a decade, by 11.4 percent, led by brisk investment demand and a record-breaking contribution of net exports,” Wang Tao, a Beijing-based economist with Bank of America, said in a research note.

According to data from the National Bureau of Statistics, growth in that range would be the fastest since 1994, when the economy expanded by 13.1 percent.

The numbers also look likely to bring China, the world’s fourth-largest economy, even closer to overtaking No. 3 Germany, analysts said.

“I’m not sure what the 2007 figure will reveal on that, but I am sure China’s GDP will surpass Germany in 2008,” Feng Yuming, a Shanghai-based economist with Oriental Securities, told AFP.

Created 12 million jobs in 2007: China’s stunning economic growth created 12 million new jobs in 2007 — more than the population of Greece and easily exceeding a government target.

The increase helped shave urban unemployment to four percent, down 0.1 percentage point, but employment pressures remain as 10 million more people enter the workforce in the world’s most populous nation annually, the China Daily quoted a top official as saying.

The job growth surpassed an official target of nine million set at the beginning of last year, Zhai Yanli, vice-minister of Labor and Social Security, was quoted as telling a press conference.

By comparison, just 1.3 million jobs were created in the United States, the world’s largest economy, according to US Bureau of Labor Statistics.

Job growth in China has brought unemployment down from a high of around six percent in the late 1990s, when economic restructuring eliminated millions of jobs, it said.

The report did not specify whether the 2007 urban jobless rate included the massive floating population of migrant workers seeking work in the cities. The number of such migrants is believed to be around 150 million. afp

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Don't fear China's success, fear its failure ​

By Bruce Anderson

Although the chaos at Heathrow was an inauspicious start, it is important that the Prime Minister's mission to China should not crash-land. A formidable array of businessmen accompanied Mr Brown to pay economic homage, and rightly so. By the middle of this century, China could be the world's largest economy, and many of the greatest questions thrown up in the course of the century will be answered in Chinese characters.

Chinese goods have controlled American inflation while Chinese savings have financed American consumption. China's demand for raw materials is not only underpinning world commodity prices: as the Chinese do not care whom they buy from and are happy to pay their cheques straight to Swiss bank accounts, it is also undermining the quest for good government in Africa. We can only hope that in private - megaphone diplomacy would be worse than useless - Mr Brown has tried to persuade his hosts that well-run countries can still produce oil and minerals.

But Britain needs China almost as much as China needs Africa. Free trade is in our DNA, so we should do everything to cultivate the Chinese market, while understanding the risks. Mr Brown's offer of London as a base for China's $200 billion sovereign wealth fund is a good start.

China is not a country at ease with itself. Apart from the inevitable strains associated with rapid growth and development, there are at least three others: anger, sex and fear.

The anger arises from historic humiliations. The Chinese, who think in millennia, are well aware that a century or so ago, British entrepreneurs had a different demeanour. Backed by the Royal Navy, they occupied ports, extorted concessions and forced the Chinese to buy opium.

Other great powers also trampled on China. This culminated in Japan's attempts to ravage the mainland and turn the Chinese into coolies and comfort-women. This explains the anger of the Chinese over Taiwan. To them, it is a part of China, which was turned into a Japanese colony, then an American one. We should be grateful that the Taiwanese government is now behaving more sensibly, because if it ever declared independence, China would probably go to war.

The Chinese see themselves as the greatest race on earth. They used to dismiss the Japanese as obscure fisherfolk, the product, according to legend, of the union between a Chinese princess and a sea-monster. The knowledge that China has been the least successful Asian nation for about 150 years, easily surpassed by the Japanese, is an open wound.

So is the one-child policy, intended to control population growth, which has created the sexual problem. In a society, which values male children, there has been female infanticide on a vast scale. In some age cohorts, there are 20 million more males than females. How will the spare men behave, especially as many of them are being bought up as "little Emperors"? Traditionally, peasants regard their offspring as their pension fund, the only hope of a meal ticket in old age. So these only children have been anxiously watched over, cherished and spoiled. Even so, there may not be enough of them to support the non-working population. China might grow old before it grows rich. The one-child policy is a fascinating sociological experiment. It is unlikely to have a benign outcome.

Finally, fear: the government's fear of its people. The peaceful death of Chinese communism has removed the regime's sole claim to legitimacy and the number of protests and demonstrations has been increasing. Thus far, the government has tried to offer a substitute for democracy; econ-ocracy - using higher living standards to buy acquiescence. This is not a futile tactic. Only 40 years ago, tens of millions of Chinese were trying to survive on bark and grass. Now, most have enough to eat. That is a great leap forward, and will buy the government some time.

Yet econ-ocracy is only an interim solution. The Chinese are an individualistic race; they do not share the Japanese tendency to a group mentality. Eventually, the demand for rights and votes will become irresistible except by the most brutal repression. It is vital that such a conflict is avoided, but we have no means of influencing developments in China except by indirect attempts to promote goodwill.

Cultural and intellectual exchanges can reinforce economic ones. Oxford and Cambridge have scholarship programmes for Chinese students. One trusts that the businessmen on the Brown mission will all be tapped for donations on their return.

At best, however, this will have a marginal effect on the long march of Chinese history. We can only hope that it goes in the right direction. If China succeeds, there will be a price. The West would lose power. But Chinese success is much the lesser evil. Imagine what would happen if that huge and powerfully armed nation became a failed state.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

China to boost rural spending by $14bn ​

Friday, February 01, 2008

BEIJING: China will spend over $70 billion on rural development this year, a quarter more than in 2007, as Beijing races to patch up crumbling dams, provide clean water and help narrow the yawning economic gap with its coastal boomtowns.

Policymakers hope that boosting spending on roads, health, education and agricultural subsidies to 520 billion yuan ($72.40 billion) will temper China’s growing income imbalance and help stem the flow of labour to its thriving cities that has drained some rural areas of more than half their workforce.

The rise comes after China last year spent 420 billion yuan, exceeding its budget by 30 billion yuan as it subsidised seeds and equipment for farmers and extended rural infrastructure, Chen Xiwen, director of the Office of the Central Leading Group on Rural Work, which guides agricultural policy, said on Thursday.

“As far as I know, the growth in 2008 will be larger than in 2007; it will be a growth of 100 billion yuan,” Chen, who is also deputy director of the Office of Central Leading Group on Financial and Economic Affairs, told reporters.

After decades of supporting its cities at the expense of the countryside, Beijing has changed tack in recent years to address the growing disparity between urban and rural incomes. China’s State Council, or cabinet, on Tuesday issued a pledge to increase investment and make access to financing easier in the countryside, where incomes and economic growth have lagged that of the booming coastal cities. In the last few years, China cancelled a two-millenia-old grains tax, removed other arbitrary fees, and reinstated free grammar school education.

China to boost rural spending by $14bn

 

[gpit]

ICBC Deposes Citigroup as Chinese Banks Rule in New World Order

By Aaron Kirchfeld


Feb. 4 (Bloomberg) -- There's a new world order for banks, and the Chinese, for the first time, are the biggest, with a market capitalization that has made perennial No. 1 Citigroup Inc. a distant also-ran behind Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd.

``The tables have been completely turned,'' said Daniel Yergin, the Washington, D.C.-based chairman of Cambridge Energy Research Associates Inc. during an interview at the World Economic Forum in Davos, Switzerland.

The reversal of fortunes is the clearest sign yet that shareholders are betting on banks in the emerging markets rather than the U.S. institutions that dominated the financial landscape for most of the past century. As recently as 2003, there were 13 American banks ranked in the top 20 and not a single Asian rival, data compiled by Bloomberg show. Now, there are four Asian and six U.S. institutions. The collapse of the subprime mortgage market wiped out almost $100 billion of value from the three biggest U.S. banks in the past six months.

It was just a year ago that Citigroup was the world's biggest bank by market value, and ICBC was beginning its fourth month as a publicly traded company.

Today, Beijing-based ICBC is the largest financial-services firm and Citigroup has tumbled to seventh on growing concern that the 196-year-old company is no match for a bank based in the world's fastest-growing major economy that has more customers than the combined populations of France, Spain and the U.K.

``As far as the financial industry is concerned, in August you went from one world to another almost overnight, especially in the U.S.,'' said Yergin, whose book ``The Prize: The Epic Quest for Oil, Money & Power'' won the Pulitzer Prize in 1992.

New Champions

Citigroup, Zurich-based UBS AG and Royal Bank of Scotland Group Plc in Edinburgh, names that headed the list of largest companies five years ago, are today's laggards.

The new champions are ICBC and Beijing-based China Construction Bank, as well as Bank of America Corp. in Charlotte, North Carolina, and London-based HSBC Holdings Plc, two companies criticized by shareholders for relying on consumer banking networks rather than securities units that propelled profits at competitors until the second half of last year.

Investors have piled into Chinese banks to participate in an economy that expanded 11.4 percent in 2007, the fastest in 13 years. ICBC, China Construction Bank and Bank of China, the country's three biggest, are valued at $608 billion, compared with $496 billion for Bank of America, JPMorgan Chase & Co. and Citigroup. ICBC is worth about 1.99 trillion yuan ($277 billion), $82 billion more than Bank of America, its closest rival.

Housing Recession

At the same time, the biggest western banks are enduring the worst U.S. housing market in a quarter century, which has led to more than $145 billion of subprime mortgage-related losses and investment markdowns and sparked concern about a possible U.S. recession. The value of American banks has been further dented by declines in the dollar during five of the past six years.

``There's the rise of China, challenges faced by multibusiness banks and the subprime shock,'' said Charles Whitehead, associate professor of corporate law at Boston University, in an interview. ``These trends changed the banking landscape.''

Citigroup, the world's biggest bank since the merger of Citicorp and Travelers Group Inc. in 1998, slumped 47 percent in New York trading in the past year, losing the top spot. In the fourth quarter, the New York-based company replaced Chief Executive Officer Charles Prince, posted a record loss and wrote down $18 billion.

`Key Components'

Market value shows where investors see future growth, said Christopher Sur, a Frankfurt-based senior manager in the financial services unit at PricewaterhouseCoopers LLP, the biggest accounting firm.

``Key components like return on equity and cost-income ratios are all reflected in the share price,'' he said.

Bank of America has retained its second-place spot worldwide by market value since 2005; HSBC held on to third place ahead of China Construction Bank; and San Francisco-based Wells Fargo & Co., the biggest bank on the U.S. West Coast, rose to eighth from 11th last year. All three companies rely on retail business such as deposits, loans and fees for about two thirds of revenue, according to Bloomberg data on 2006 figures.

By contrast, Citigroup generated a little more than half of its revenue from global consumers and about a third of revenue from investment banking-related operations including complex securities such as collateralized debt obligations, Bloomberg data show.

`Relearn the Basics'

``Citigroup doesn't have the broad consumer business and deposit base to fall back on,'' in the U.S. like Bank of America, JPMorgan and Wells Fargo, said Graham Tanaka, president of New York-based Tanaka Capital Management Inc., which sold its Citigroup shares about a month ago. ``Periodically we go through cycles where banks have to relearn the basics.''

UBS, the biggest European bank by assets, declined to 16th place from eighth after posting the biggest ever loss by a bank in the fourth quarter. Morgan Stanley and Barclays Plc fell out of the top 20, and Washington-based Fannie Mae, the largest U.S. mortgage finance company, and Freddie Mac of McLean, Virginia, sunk furthest. Goldman Sachs Group Inc. is the highest-ranking securities firm, and places 15th in the world among financial- services companies.

Italy's two-biggest banks, UniCredit SpA and Intesa Sanpaolo SpA, have climbed to 12th and 13th, respectively, after almost quadrupling their market value in the last three years through acquisitions at home and in central and eastern Europe. Both companies weren't even in the top 20 three years ago. They dwarf Frankfurt-based Deutsche Bank AG, the world's 27th biggest bank despite its being the No. 1 financial company in the third- biggest economy.

Regionals Outpace Universals

Deutsche Bank and Credit Suisse Group, Switzerland's second- biggest bank, are both smaller than China's Bank of Communications Ltd., the Asian country's fourth-largest bank by market value. ABN Amro Holding NV, the Dutch bank, which climbed to 11th this year, will lose that spot as it is broken apart by a group led by RBS, which bought it for 72 billion euros ($107 billion) in October in the industry's biggest-yet acquisition.

``If you take out the Chinese, the main disturbance in the rankings is between large universal banks and regional-oriented banks,'' said Roy Smith, a finance professor at New York University's Stern School of Business and a former partner at Goldman. ``The universal banks have been harder hit by subprime.''

Share price declines, writedowns and rising borrowing costs forced firms, including Citigroup and UBS, to raise at least $84 billion, mostly from investors in the Middle East and Asia, to shore up balance sheets.

Sovereign Funds

``The dominant economic theme is how deep are the problems and the crisis in the financial system, and what's the impact of the appearance on the world stage of the sovereign wealth funds, which really represent a tremendous transfer in global income,'' said Yergin of Cambridge, Massachusetts-based Cambridge Energy Research during the interview in Davos.

UBS, whose debt was 48 percent of assets, and Citigroup, at 47 percent, were more vulnerable than competitors with more customer deposits, such as Bank of America, where debt accounted for 39 percent of assets, and HSBC, where it was 19 percent, according to Bloomberg data based on 2006 figures.

Investors rewarded European banks that relied on growth in emerging markets. HSBC generated half of its pretax profit in emerging markets in the first six months of 2007. Spain's Banco Santander SA, placing ninth, generated about one third of its profit in Latin America in the first nine months and paid 20 billion euros for a unit of Amsterdam-based ABN Amro last year to more than double its presence in Brazil.

High Chinese Valuations

``Banks like HSBC and Santander that have higher exposure to emerging markets than traditional developed-market banks are attracting more investors because those markets are flying despite the U.S. slowdown,'' said Ronny Rehn, a London-based analyst at Morgan Stanley.

Chinese banks raised more than $73 billion in share sales since June 2005 and extended 3.6 trillion yuan of new loans in 2007. ICBC has almost doubled in Beijing trading since the record $22 billion initial public offering of almost 15 percent of its shares in October 2006. It has about 180 million customers.

``I always joked with my colleagues that it's not that we are doing well, it's just that our rivals overseas are doing badly,'' ICBC Chairman Jiang Jianqing said in a Nov. 29 interview. ``Being the world's largest bank by market value is not our goal. What we want to become is the most profitable.''

Chinese banks are now among the most expensive in the world relative to earnings, assets and revenue. Investors pay 28 times estimated full-year profit for ICBC shares in Shanghai and 19 times in Hong Kong, Bloomberg data show. That compares with about 11 times for New York-based JPMorgan and 10 for HSBC.

Difficult to Compare

ICBC expects to report net income of more than $10 billion for 2007, trailing Bank of America's $15 billion and exceeding Citigroup's $3.6 billion. China Construction Bank estimated on Jan. 17 that earnings rose 48 percent last year to about $9.5 billion. ICBC's return on assets was 0.71 percent in 2006, compared with 1.27 percent for Citigroup.

``China's capital market is a closed one, and that's why it's hard to compare valuations with overseas peers,'' said Zheng Jie, a Shanghai-based bank analyst at Industrial Fund Management Co., which manages 38 billion yuan. At Bank of China, for example, 67 percent of stock is locked up.

China's Banking Regulatory Commission is clamping down on loan growth after the nation's cabinet identified overheating and inflation as two major risks facing the economy in 2008.

Comparisons With Japan

The rally in Chinese banks has also drawn comparisons with the Japanese stock market bubble of the 1980s and subsequent collapse. Tokyo-based Nomura Holdings Inc.'s market value climbed in 1987 to $76 billion, the largest of any financial institution, and 18 times bigger than New York-based Merrill Lynch & Co., the largest U.S. brokerage. The biggest Japanese bank is now Mitsubishi UFJ Financial Group Inc., placing 10th in the world.

Loans outstanding in China are equivalent to 111 percent of gross domestic product, a larger ratio than in Japan during the bubble era, KBC Securities Japan analyst Kristine Li wrote in a Jan. 15 report to clients. Market values relative to loans outstanding jumped to 64 percent in China, compared with a maximum 40 percent in Japan before shares tumbled, she said.

``It's a well-known secret that the Chinese banks have a bad loan problem,'' said Whitehead of Boston University. ``But part of the presumption among investors may be that the Chinese government will step in if something bad happens.''

The following is a table of the world's biggest banks by market capitalization in current U.S. dollar terms, showing their rank at the end of January 2008, 2007 and 2003.



1/31/08 Mkt cap ($bln) 1/31/07 1/31/03

1 ICBC 277.514 4 NA
2 Bank of America 195.933 2 2
3 HSBC Holdings 176.788 3 3
4 China Construction 165.234 7 NA
5 Bank of China 165.087 6 NA

6 JPMorgan Chase 159.615 5 9
7 Citigroup 140.698 1 1
8 Wells Fargo 112.365 11 4
9 Banco Santander 109.862 12 23
10 Mitsubishi UFJ Financial 105.412 9 22

11 ABN Amro+ 103.643 34 29
12 UniCredit 97.591 15 32
13 Intesa SanPaolo 89.954 16 46
14 BNP Paribas 88.487 14 15
15 Goldman Sachs 87.602 18 18

16 UBS 84.878 8 7
17 BBVA 78.302 19 25
18 Sberbank 77.713 31 109
19 Royal Bank of Scotland 76.023 10 6
20 Wachovia 75.401 13 8

+ RBS, Santander and Fortis agreed to buy ABN Amro in 2007.
To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

Last Updated: February 3, 2008 19:03 EST
Bloomberg.com: News

 

[Neo]

China gaining in technology sector​

WASHINGTON: China is capturing most of the growth in high-tech manufacturing among developing countries, with Latin America the main loser, according to a study released Wednesday.

The study by Kevin Gallagher at Boston University and Roberto Porzecanski at Tufts University said China’s surge in the technology industries pose a major risk to Latin America, which has failed to remain competitive.

“The competitiveness of Latin American countries in high tech is stagnating or rapidly deteriorating for an overwhelming majority of high-tech products,” the researchers said in a paper released by the Center for Latin American Studies at the University of California.

“This finding is particularly striking in comparison with China’s impressive performance.”

The researchers noted that “although we don’t speculate about a causal link ... our findings undeniably show that China’s efforts to develop endogenous technological capacity and competitiveness have been by far more successful” than those in Latin America.

They wrote that China’s success is especially stunning since in 1980 it was ranked 99th among all countries in technology exports. By 2005, China was nearly even with the world leader, the United States, with about 12.4 percent of global exports.

The study said a large amount of high-tech manufacturing has moved from wealthier developed countries to the developing world since 1980, and that “China has captured the majority of those gains.”

The report said 95 percent of technology exports from the Latin American countries “are under some type of threat from China, the majority of which are direct threats.” This represents about 12 percent of all exports from Latin America.

“This is most pronounced in Mexico and Costa Rica, where over 87 percent of all high-technology exports are under threat and where such exports represent over 24 percent of total exports in both countries,” the study concluded. afp

Daily Times - Leading News Resource of Pakistan

 

[gpit]

China January Trade Surplus Up 22.7 Pct

By JOE McDONALD – 16 hours ago

BEIJING (AP) — China's trade surplus grew by 22.7 percent in January over the same month last year as foreign demand for exports stayed strong despite worries about slowing global growth, according to data reported Friday.

The latest figures appeared likely to fuel demands by China's trading partners for action on trade barriers and currency controls. Some American lawmakers are calling for punitive tariffs on Chinese goods if Beijing fails to act quickly.

January's trade gap totaled $19.5 billion, the government's Xinhua News Agency said, citing data from the Chinese customs agency.

Exports in January rose 26.7 percent to $109.7 billion, while imports grew by 27.6 percent to $90.2 billion, according to Xinhua.

But compared to previous months, the surplus shrank. It was the first time since April that China reported a monthly trade gap below $20 billion. In December, it totaled $22.7 billion, and in October it reached an monthly record of $27 billion.

China has continued to rack up multibillion-dollar monthly surpluses despite government efforts to rein in exports of steel, plastics and other goods that it deems too dirty or energy-intensive.

Economists say a slowing American economy might cut demand for Chinese goods slightly, but they still expect China to continue to run a large surplus with the United States.

Friday's trade data suggested that China could expect strong growth this year despite a possible slowdown in the United States, a key export market.

The managing director of the International Monetary Fund said Friday that China might be affected by a U.S. slowdown but its economy still should expand by about 10 percent this year. That would be down from 11.4 percent growth in 2007.

"While we are experiencing a decrease in growth in advanced economies, it is even more necessary than before to have a high level of growth in China," said Dominique Strauss-Kahn, who was in Beijing for meetings with Chinese leaders.

Beijing also has tried to rein in exports of wheat and other grains in order to increase domestic supplies and cool an inflation spike blamed on shortages of pork and grain.

Chinese leaders say they are not actively pursuing large surpluses.

The multibillion-dollar influx of export revenues has strained Beijing's ability to restrain pressure for prices to rise. The central bank drains billions of dollars a month from the economy through bond sales and has piled up $1.53 trillion in reserves.

No monthly figures on China's trade with the United States or other individual partners were immediately reported.

On Thursday, the U.S. Commerce Department said the annual U.S. trade deficit with China rose by 10.2 percent in 2007 to a new all-time high of $256.3 billion. Trade figures in the U.S. and China are calculated differently.

Critics of China's trade record are pushing Beijing to ease barriers to imports and currency controls that they say keeps the country's yuan undervalued. They say that gives China's exporters an unfair advantage and adds to its surpluses.

Strauss-Kahn said he urged Chinese leaders to ease currency controls, saying a more flexible exchange rate would help to achieve their goal of reducing reliance on exports.

"More domestic demand growth will be what China needs, not export-driven growth," he told reporters.

Pressure on China for action is expected to increase as the American presidential election campaign progresses, with the Democrats arguing that the U.S. trade deficit with China has contributed to the loss of more than 3 million manufacturing jobs since 2000.

China says its trade surplus with the world last year rose 47.4 percent to $262.2 billion.

The Associated Press: China January Trade Surplus Up 22.7 Pct

 

[Neo]

China’s FDI doubles​

BEIJING, Feb 18: Foreign direct investment into China more than doubled in January, up 109.8 per cent from a year ago, the commerce ministry said on Monday.

Foreign companies invested $11.2bn in the country last month, the ministry said in a statement posted on its website.

Last year, China attracted $82.7 billion in foreign direct investment, rising 13.8 per cent from a year earlier.

Foreign direct investment, along with booming exports, are among the top factors resulting in China’s massive build-up in foreign exchange reserves.

China’s foreign exchange reserves, already the world’s largest, hit $1.53 trillion by the end of 2007, up more than 40 per cent from the previous year, state media reported earlier.

China’s FDI doubles -DAWN - Business; February 19, 2008

 

[mujahideen]

China to emerge as world power in shipbuilding capabilities in 2020: report

BEIJING, Feb. 23 (APP): China’s shipbuilding capabilities in 2010 will reach 21 million tons and in 2020 the country would become a world power in the sector, said a report on China’s marine development.
The throughput of major sea ports will also surpass 5.6 billion tons in 2010, with “a relatively complete port transportation system being established,” according to report released by the State Oceanic Administration (SOA).

It said that China’s seas will contribute 3.16 trillion yuan (US$ 433), or more than five percent of the country’s gross domestic product (GDP), in 2010, also predicted the country’s offshore crude oil output would exceed 50 million tons. “China’s development of ocean crude oil will enter into a speedy period,” it said, adding that at the time, the country’s natural gas development would grow quickly with key technologies greatly helping exploration.

It pointed out that China’s current offshore oil and gas exploration was “still in an infant stage”, with 80 percent of oil and gas resources yet to be tapped.

The country’s explored crude oil only accounted for 17.6 percent of the reserve at sea, and natural gas that was tapped out only made up 11.9 percent of the national sea reserve, it said.

app - China to emerge as world power in shipbuilding capabilities in 2020: report

 

[Neo]

Why is China booming? ​

By John Delury

A key question remains unanswered: why did China’s boom happen? This is one of the great questions of our time, relevant not only to China’s future, but to scores of other developing countries enthralled by China’s extraordinary, but still largely unexplained, success

China is now celebrating the 30th anniversary of the period officially known as “reform and opening”. Labelling time in this way echoes China’s imperial history. During moments of political transition — a military victory, for example — the emperor might designate a special “era name” to help celebrate the good news. Or the court might test out a new era name after a political debacle, in an effort to wipe the slate clean. The last emperor of the Tang Dynasty proclaimed seven era names in fourteen years, as he sought in vain to “re-brand” his reign and avoid his regime’s demise.

Deng Xiaoping began to champion “reform and opening” in 1978. “Reform” suggested a loosening of central controls on economic life, undertaken in a spirit of pragmatism and gradualism, as an antidote to Mao Zedong’s ideology of “revolution”. Similarly, “opening” heralded the PRC’s integration into the world community — especially the capitalist West. Deng’s principles still guide policy today.

One must go back to the Qing Dynasty (1644-1912) and its 60-year era of “heavenly flourishing” (Qianlong) in the eighteenth century to find a comparable period of coherent political and economic policy. The era of “reform and opening” has outlived its “emperor” by more than a decade, and has been the common thread running through transfers of political authority from Deng to Jiang Zemin and Hu Jintao. Even the largest popular challenge the Chinese Communist Party ever faced, the demonstrations of 1989, now looks like a blip that helped Deng consolidate support for his model of development.

If one factor undergirds China’s commitment to “reform and opening”, it is the extraordinary macroeconomic changes of the past 30 years. In China, people call it fazhan, or “development”, but in much of rest of the world, it is more commonly described simply as the “China Boom”, or the “China Miracle”.

The boom began in the countryside in the late 1970s and 1980s, and was followed by today’s urban, industrial-led growth. Indeed, there have been many smaller “booms” — in consumption, foreign direct investment, domestic stock markets, trade, travel, overseas study, military modernisation, and international diplomacy. There is also a boom in pollution and toxic waste, and booming interest in religion — from Buddhism to Pentecostal Christianity — and in Confucian philosophy. Little in China today speaks of moderation.

A leading fashion industry executive argues that a key engine driving the economic boom has been the influx of women into the workforce, particularly in the manufacturing zones of the south. Another compelling explanation comes from a venture capitalist who credits Chinese society with copious reserves of entrepreneurial energy that derives, he believes, from the fact that Chinese culture attaches very little shame to failing in a business enterprise. High tolerance for failure keeps everybody striving to succeed.

Whatever the cause, the boom seems an unlikely capstone to a century of war, ferment, and revolution, and only adds to the sense of discontinuity that characterises modern China. Certainly, few observers looking in 1978 at the smouldering embers of the Cultural Revolution, or at the seeming ruination of the post-1989 years, thought China would emerge as the lightning rod of the world’s developmental hopes.

Paradoxically, the apparently discontinuous and contradictory nature of the “era of reform and opening” may actually help explain how China’s boom came about. The tumult of the Maoist period instilled in a broad cross-section of people a profound appreciation for stability, and a yearning to be left alone. Deng capitalised on this revolution-weariness by diminishing the role of politics and the state in people’s private lives and freeing them to release their pent-up energy to pursue their own goals.

Revolutionary communism may well have cleared the path for the boom in other ways as well, suggesting that the shift from socialist utopianism to capitalist pragmatism was less a U-turn than a sequential process of “creative destruction”. After all, Mao’s Cultural Revolution against “feudal society” did raze much of the cultural landscape, denuding it not only of traditional values and institutions, but also of failed socialist efforts, leaving China ready for the seeds of capitalist development.

Mao’s revolution fuelled countless rectification movements and campaigns that inverted the once-inviolate primacy of ruler over ruled, scholar over worker, husband over wife, father over son, and family over individual. By the time of the reforms of the 1980s and 1990s, bonds tying individuals to culture, the state, the work unit, and household-registration systems, for example, had largely unravelled. The path had been cleared for a vast new population of atomised entrepreneurs and labourers, freed from fealty to family and Party, to storm the marketplace with newly liberated individual energy.

Of course, the boom’s costs should not be discounted. Environmental damage has been staggering, the gap between rich and poor has been growing, and urbanisation — with all its attendant problems — has surged. And, at least so far, the boom has not induced the systemic political changes for which many hoped.

But still, a key question remains unanswered: why did China’s boom happen? This is one of the great questions of our time, relevant not only to China’s future, but to scores of other developing countries enthralled by China’s extraordinary, but still largely unexplained, success. —DT-PS

John Delury teaches Chinese history at Brown University and is the Director of the China Boom Project at the Asia Society

Daily Times - Leading News Resource of Pakistan

 

[Neo]

China to rein in oil majors ​

Wednesday, March 05, 2008

BEIJING: China on Tuesday unveiled a new set of fuel marketing rules that aim to revive and consolidate its wilting private wholesale and retail sector, by guaranteeing profit margins and reining in powerful oil majors.

The near-duopoly of Sinopec and CNPC will now be forced to sell fuel, at a viable price, to independent marketing firms that they had been slowly squeezing out of business. But in a reminder that stability still ranks above competition in Beijing’s priority list for the sensitive sector, the rules stipulate that only wholesalers with long-term supply and sales contracts would be guaranteed supplies.

The guidelines issued by the country’s commerce ministry and its top economic planner require China National Petroleum Corp (CNPC) and Sinopec to guarantee fuel costs for private wholesalers at 5.5 to 7 per cent below state-set retail prices.

They should also ensure private service stations can buy fuel for at least 4.5 per cent below retail prices, according to the document, which was published on Tuesday and confirmed what a source close to the situation told Reuters last week.

The two firms, which dominate China’s energy sector, have for several years taken advantage of the combination of their virtual monopoly on refining and low state-set retail prices to squeeze margins at independent competitors. But the National Development and Reform Commission (NDRC) is clearly not seeking a return to the era when non-branded stations supplied four-fifths of China’s motor fuel.

The document encourages CNPC and Sinopec to continue with takeovers, buyouts and joint-operation deals, and urges smaller marketing companies to consolidate and improve their service. Approval of new petrol stations will also be tightened.

And with inflation running at an 11 year high in January, it emphasises stability, with a strict ban on illegal price increases and measures apparently designed to ward off profiteering or too independent a market.

“CNPC and Sinopec can reduce supplies to private wholesalers that sell fuel to retail service stations that they do not either own or have a contract with,” the statement said. Independent refiners without fuel wholesaling rights must sell all their output to CNPC and Sinopec Group, the document added, without setting price guidelines. CNPC and Sinopec Group run most of their businesses through PetroChina and Sinopec their listed units.

China to rein in oil majors

 

[Neo]

China biggest recipient of FDI ​

Wednesday, March 05, 2008

LONDON: China retained its ranking as the top target for foreign direct investment (FDI) last year, attracting $90.4 billion, while India came second and the United States third in flows, a survey showed on Tuesday.

Overall, global cross-border FDI grew by 5.1 per cent in 2007 to $946.8 billion, consultants OCO Global said in an annual report. The group said China also remained top of the list for number of FDI projects, with 1,171. The amount of money it attracted, however, was a decrease from $116 billion a year earlier.

China was also number one for jobs, attracting 366,111 of the estimated 1.2 million new posts created in the Asia-Pacific region. India came second in investment flows, attracting $52.5 billion. It was third in number of projects with 676, which created 246,361 jobs.

The United States was third in the OCO Global list in terms of FDI inward flows, bringing in $46.8 billion to create 107,141 jobs. It was second in projects with 783. Within Western Europe, Germany attracted the most money with $22.8 billion followed by Britain with $18.7 billion. Britain also had the most projects for Europe with 622.

China biggest recipient of FDI

 

[Neo]

‘China losing competitive edge’​

SHANGHAI, March 4: More than half of foreign manufacturers in China believe the Asian giant is losing its competitive edge to other low-cost countries like Vietnam or India, a survey said on Tuesday.

Fifty-four per cent of respondents in 66 companies most of them foreign-owned firms in east China’s Yangtze River delta area, thought China’s competitiveness is waning, the joint survey said.

The survey by the American Chamber of Commerce in Shanghai and consulting firm Booz Allen Hamilton said seven out of 10 respondents cited appreciation in the Chinese yuan as a key reason for lost competitiveness.

A stronger local currency makes exports become more expensive.

Meanwhile, 52 per cent of respondents also attributed China’s decline to rising wage costs with average annual compensation for white-collar managers and blue-collar workers growing 9.1 per cent and 7.6 per cent respectively.

“The manufacturing philosophy employed by many foreign multinationals in China in recent decades is in need of an overhaul,” said Ronald Haddock, vice president of Booz Allen.

“If they don’t do anything differently and the yuan goes up, they are in trouble,” said Haddock, adding that foreign producers need to optimise their operational and marketing strategy in China to offset the impact.

However, only 17 per cent of the companies surveyed have concrete plans to relocate at least part of their Chinese operations or expand manufacturing capacity out of the country in the next five years.

The survey said 63 per cent of the firms planning to capture lower labour costs by shifting to other countries selected Vietnam as the top alternative while the remaining 37 per cent said India was their first choice.—AFP

‘China losing competitive edge’ -DAWN - Business; March 05, 2008