Slowest growth for India in 4 years
August 30, 2008
India’s economy in big trouble due to inflation and slowing growth caused by higher oil and food prices.An article written by Cherian Thomas publidhed in Shanghai Daily takes a look at India’s economic outlook :
INDIA’S economy grew at the slowest pace last quarter since 2004 as the fastest inflation in a decade and increased borrowing costs damped consumer spending.
Asia’s third-largest economy expanded 7.9 percent in the three months to June 30 from a year earlier, following an 8.8 percent gain in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi yesterday. Analysts expected gross domestic product to increase 8 percent.
Inflation has almost tripled this year to 12.4 percent amid higher fuel and food prices, forcing the central bank to raise interest rates three times since June.
While growth is almost double, the average pace since India’s independence in 1947, it is slowing along with the other so-called BRIC economies of Russia, Brazil and China.
“We don’t expect India’s slowdown to be too dramatic,” said Philip Wyatt, a senior economist at UBS AG in Hong Kong. “There will be a gradual slowdown in GDP growth throughout this year – the industrial side of GDP is already slowing.”
India’s benchmark sensitive index, which has declined by a third this year, rose 3.7 percent to 14564.53 yesterday in the Bombay Stock Exchange. The rupee gained 0.4 percent to 43.935 against the US dollar. Finance Minister Palaniappan Chidambaram said yesterday that growth for the year to March 31, 2009, will be close to 8 percent.
India risks being overtaken by Russia as the world’s fastest expanding major economy after China this year. Russia’s economy may grow 7.1 percent in 2008, surpassing India’s 7-percent expansion this year, according to World Bank estimates.
Industry concerns
“High inflation and interest rates are issues that are bothering the industry as they have an impact on consumer demand and hurt corporate profitability,” said KV Kamath, chief executive officer at ICICI Bank Ltd, India’s second-largest lender. “Until we see inflation easing, it would be unrealistic to expect an easing of monetary policy.”
Services including banking, transportation and hotels grew 10 percent in the second quarter from a year earlier, slowing from an 11.2-percent gain in the previous three months, according to yesterday’s report. Agriculture increased 3 percent from an earlier advance of 2.9 percent.
Inflation can win or lose elections in India, where about 456 million people live below the World Bank’s poverty line of US$1.25 a day. Prime Minister Manmohan Singh’s Congress Party lost ground in nine of 11 state elections since January 2007 because of rising prices. General elections are scheduled to be held before May.
Singh said this month he doesn’t want growth to suffer in the battle against inflation.
In February, Singh wrote off US$17 billion of farm loans and this month increased salaries of about 5 million government employees by 21 percent to spur consumer demand.
The central bank’s forecast of 8-percent economic growth in the year to March 31 will be weakest expansion since 2003 and comes after Singh presided over record average annual growth of 8.9 percent since 2004.
The June-September monsoon, which accounts for four-fifths of the nation’s annual rainfall, was 39 percent below average in the week ended August 27, according to the weather office. A normal monsoon will help the country’s 234 million farmers harvest a bigger crop and boost rural incomes.
“Agriculture will hold the key for both industry and overall growth,” said Tushar Poddar, a Mumbai-based economist at Goldman Sachs.
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China’s Baosteel Lowering Prices
August 30, 2008
Baosteel Group Corp. (SSX:600019), China’s largest steelmaker by output, has cut prices in response to low off-season sales in July and August and a cooling economy that has dented demand.
The cuts would apply to October and perhaps the entire fourth quarter, depending on demand. Steel prices cuts aren’t unusual in China at that time of year, however, and the reductions might only be temporary.
As the industry leader, the Shanghai-based company often sets price trends for the sector. It said the move was its first price reduction this year. It raised prices in each of the previous three quarters.
Price cut amounts and percentages vary by the type of steel, but cold rolled steel prices were cut by 300 yuan ($43US.81) per tonne, according to a price report released by the company on Tuesday.
The price of 1mm by 1,250 mm steel on Tuesday was 7,350 yuan per tonne. [Read more]
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China slowdown in auto, appliance demand to pressure flat steel prices
August 30, 2008
BEIJING (XFN-ASIA) – Prices for some flat steel products in China are likely to fall soon on slowing demand from auto manufacturers, appliance makers and other end-users, said Sun Jianliang, managing director of metals trading firm Shanghai J. Sun Trading Consultants Ltd.
“There is growing pressure to cut CRC (cold-rolled coil) prices due to slower demand from some plants, and some smaller mills probably have already begun reducing prices for some products,” Sun told XFN-Asia.
Sun was responding to reports that Baosteel would cut prices for cold-rolled steel products in the fourth quarter by 300 yuan. He added that he had not heard of any such plans by Baosteel.
Sun said domestic prices for long products remain buoyant on continued demand from the construction sector.
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China to overtake US as largest manufacturer
August 13, 2008
Published at the Financial Times By Peter Marsh .
China is set to overtake the US next year as the world’s largest producer of manufactured goods, four years earlier than expected, as a result of the rapidly weakening US economy.
The great leap is revealed in forecasts for the Financial Times by Global Insight, a US economics consultancy. According to the estimates, next year China will account for 17 per cent of manufacturing value-added output of $11,783bn and the US will make 16 per cent.
Last year the US was still easily in the top slot and accounted for a fifth of the total. China was second with 13.2 per cent.
John Engler, president of the National Association of Manufacturers, a Washington-based trade group, played down the effect of the projections. It was “inevitable” that China would take over on account of its size, he said. “This should be a wholesome development for the US, for it promises both political stability for the world’s largest country and continuing opportunities for the US to export to, and invest in, the world’s fastest-growing economy.”
As recently as last year, Global Insight economists predicted that the US would retain the top position until 2013, but a large downward revision in likely output this year and next is expected to cause the US to slip more quickly than had been expected.
The data underline the surge of China’s manufacturing-led economy in the past 20 years. In 1990, before economic reforms began to work, it accounted for a meagre 3 per cent of global manufacturing. Manufacturing accounted for just 17.5 per cent of global gross domestic product in 2007, but much activity in the considerably larger area of services, for instance in retailing, distribution, transport and communications, depends on it.
The expected change will end more than a 100 years of US dominance. It returns China to a position it occupied, according to economic historians, for some 1,800 years up to about 1840, when Britain became the world’s biggest manufacturer after its Industrial Revolution.
Global Insight counts manufacturing production for countries – including the activity of foreign-owned companies and local ones – as value-added output.
Value-added data are arrived at by subtracting “inputs” – such as purchases of materials, parts and services – from raw “gross output” as measured by the sales of individual companies. The data also use current-year figures.
If inflation adjustments are used to put the numbers in constant prices, the expected US position looks better, because its inflation over this period is predicted to be lower than China’s.
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China Gear, Transmission and Drive Parts Manufacturing
August 3, 2008
ResearchInChina releases its new report: China Gear, Transmission and Drive Parts Manufacturing Industry Report, 2008, for more information, see http://www.researchinchina.com/Pre-sale/ShowPre-sale.aspx?id=19
Gear, transmission and drive parts refer to mechanical transmission device like basic parts and articulated chain used to transmit power, achieve mechanical conveying and hoist heavy objects. They play a very important role of transmitting power, achieving conveying and adjusting torque in numerous industrial equipment like machine tool, automobile, engineering machinery, agricultural machinery and construction machinery.
Gear, transmission and drive parts
can be divided into three big categories: gear drive parts, chain drive device and other drive fasteners. As an intermediate link between power source and operation device, drive equipment’s precision, stability, service life and vibration noise will all have a direct impact on the ultimate quality of mechanical products.
China’s increasingly progressive industrialization has brought a fast development of machine building industry and a great progress of manufacturing industry of gear, transmission and drive parts. In 2007, China has a total number of 887 companies above designated size (with annual sales revenue over five million yuan) in the gear, transmission and drive part manufacturing industry with a combined output value of CNY49.77 billion.
From January to May 2007, the total industrial output value of China’s gear, transmission and drive part manufacturing industry amounted to CNY17.91 billion, the accumulated sales revenue reached CNY17.39 billion and the accumulated profit hit CNY1 billion, up 31.79%, 33.26% and 37.62% year on year respectively.
At present, homemade products occupy the majority of low-end product market. As for the medium- and high-end products, foreign-invested companies take up a big proportion in the market. Foreign-invested companies continuously increase their investment in the Chinese market by virtue of their advanced technology and sufficient capital, which will make local producers exposed to increasingly fierce market competition. However, with increasingly improved R&D capability of local producers, they hold a positive attitude towards this increasingly fierce competition.
Based on the authoritative statistics from the National Bureau of Statistics, the General Administration of Customs, China Machinery Industry Association and some related industry associations, this report makes an in-depth analysis on the production, sales, market conditions, industry structure, products and import & export of China’s gear, transmission and drive part manufacturing industry and also makes forecasts on the development trend of the industry by taking reference to the development trend of related industries.
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