New Development Zone to Take Shape Near Beijing
January 31, 2009
China’s port construction, steel and power giants will pour 192.9 billion yuan (28 billion U.S. dollars) for infrastructure construction in Caofeidian, an island-turned development zone in the Bohai Bay in north China, according to the city government of Tangshan, which administrates the zone.
Xinhua’s source with the government said on Wednesday that 65 billion yuan of the investment will be used for 105 infrastructure projects this year.
The 50-sq km development zone in Hebei Province is 220 km to the east of Beijing. It has been designated as a model of China’s environment-friendly industrial base.
The projects under construction this year will equip the zone with 200 million tons of port handling capacity and an initial industrial production condition for key companies, such as the Beijing Capital Iron and Steel Group’s steel plant, which moved from the capital city’s urban area to Caofeidian in 2007.
The Caofeidian industrial zone was put on China’s list of pilot areas for recyclable economy in October 2005. Chinese President Hu Jintao and Premier Wen Jiabao both paid visits to the zone. They expect it to become a demonstration area for scientific development and recyclable development.
Caofeidian has been mapped to become the country’s largest steel production base by 2010. An evaluation by the country’s environmental watchdog shows the steel plant will ensure 99.5 percent of solid waste and 97.5 percent of waste water are recycled.
State-owned giants like Petro China and Huadian Power Group have also made the zone their energy base.
Caofeidian, once a small sand spit in the Bohai Bay, has extended into a land of more than 50 square km through sea fillings since 2003. The frame of a modern city is beginning to take shape here as crowds of elite technicians and industrial workers swarm to the zone.
Source: Xinhua News Agency
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Export tax rebates increased for machinery products
December 29, 2008
 Just today we have underlined totally 3-phase the tax rebate hikes put into effect phase by phase. Very same day, the forth phase of tax rebate increases has been published.
The new 4th phase adjustments covering machinery products. Here is the news: BEIJING, Dec. 29 (Xinhua) — China will increase the export tax rebates for some machinery products as of Jan. 1, 2009, in a bid to alleviate cost burdens on exporters, the country’s taxation watchdogs said Monday. The rebate hikes will involve 553 types of high-tech and high value-added mechanical and electrical products, the Ministry of Finance (MOF) and the State Administration of Taxation announced. Export tax rebate rates for industrial robots and inertial navigation systems for aviation use will be increased to 17 percent, from 13 percent and 14 percent respectively. The rebate rates for exported motorcycles and sewing machines will rise to 14 percent. Their current rebate rates stand at 11 percent and 13 percent respectively. “The move will help ease the sufferings of Chinese exporters and boost the country’s confidence in fighting the financial crisis,” the MOF said in a statement. It was China’s fourth rebate hike on exported products this year, and one of several government’s measures to counter the global economic downturn that has dampened foreign demand. The most recent increase took effect on Dec.1, covering 3,770 items of labor-intensive, mechanical and electrical products, or 27.9 percent of the country’s total exports. The previous two rebates were made in August and November. Official data showed China’s November exports declined year-on-year by 2.2 percent to 115 billion U.S. dollars, the first monthly decline since June 2001. Before that, export growth slowed from 21.5 percent in September to 19.2 percent in October. China levies value-added tax on most products, but refunds varying amounts of that tax on goods that are exported. The government usually adjusts the size of export tax rebates for different types of goods when it is trying to encourage or discourage growth in particular industries. |
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Qi says hard times for steel to continue
December 8, 2008
For the buyers importing steel from China or having domestic demand to Chinese suppliers must keep on suppliers. Here is the latest news from Chinese supliers:
CHINA’S steel industry has entered a hard time after seven years of rapid expansion, and a turnaround is unlikely until the second quarter of next year, according to Qi Xiangdong, deputy secretary with China Iron and Steel Association.
Slackening demand at home and overseas has hit the country’s 71 major steel makers, said Qi.
Their profit totaled 126.8 billion yuan (US$18.5 billion) during the January-October period, down 0.93 percent from a year earlier.
Forty-two large or medium-sized steel companies posted losses in October. The combined losses reached 7.8 billion yuan.
The proactive fiscal policy and moderately loose monetary policy as well as the central government’s efforts to boost domestic demand and fixed asset investments would all have a positive impact on the development of the steel manufacturing industry in 2009, Qi said.
Last month, China unveiled an estimated 4-trillion-yuan stimulus package as part of its bid to offset adverse global economic conditions by boosting domestic demand.
The money is to be spent over the next two years to finance programs including low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding from several disasters, most notably the May 12 earthquake.
Although the elimination of export duties on 67 types of steel from December 1 would help cut the cost of exports, Qi expected steel exports to slump next year due to dwindling global demand.
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China’s ICBC opens first subsidiary bank in Middle East
October 22, 2008
DUBAI, United Arab Emirates, Oct. 20 (Xinhua) — The Industrial and Commercial Bank of China (ICBC), the world’s largest bank by market capitalization, opened Monday its first Middle East subsidiary bank in Dubai, the commercial and financial hub of the United Arab Emirates (UAE).
The opening of ICBC Middle East, the first wholly-owned Chinese subsidiary bank in the region, marks a major step by the ICBC toward expanding overseas financial services and promoting its internationalization strategy.
Based on its financial resilience, advanced expertise and diversified business platform, ICBC Middle East will be committed to building a direct and accessible bridge for investment and trade among China, the UAE and other Middle East countries, said Jiang Jianqing, chairman of ICBC.
ICBC Middle East will make full use of the geographic advantage and financial resources of Dubai and will gradually expand the scope of business to the entire Middle East and North Africa, he added.
With the highest rating business license from local financial regulator, ICBC Middle East will provide a full range of financial services, including deposit, credit, trade finance, investment, asset management, consultation and custody.
As China’s largest commercial bank, the ICBC has been expediting the extension of overseas network and widening the field of business, in a bid to promote the strategy of internationalization.
The bank launched two branches in Sydney and New York in the past few weeks. It will open a new branch in Doha, capital of Qatar, on Tuesday.
By the end of June 2008, the ICBC has set up a total of 126 branches and subsidiary banks in 15 countries and regions, with another 1,360 correspondent banks in 122 countries and regions.
Source: China Daily
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As Inflation Falls,Time to Support Growth
October 19, 2008
As we frequently emphasized in our posts and told our clients, Chinese government was waging a war against inflation by tightening monetary policies which widely hurts exports of China. Now with the August inflation lowered to %4.9, China rapidly moved to support growth again:
It’s time for China to boost growth  (By Wang Yanlin, Shaghai Daily Newspaper)
IN the first eight months of the year, the government’s top priority, while framing macro economic policies, was the fight against inflation. But there has been a slight shift in emphasis.
Last Monday when Vice Premier Wang Qishan delivered a speech at the 12th China International Fair for Investment and Trade in Xiamen, Fujian Province, he said the current goal of the government was to “realize a stable and relatively fast economic growth” and “put the rising inflation under control.”
This is possibly the first time that “spurring growth” has been put higher on the agenda than “curbing inflation” by a heavy-weight government official during a formal business occasion this year.
Policy makers are usually very circumspect while commenting on policy issues in public. So is Wang’s public stance an indication that top decision makers could be considering the odds of adjusting macroeconomic policies? This may well be so.
Economists and analysts have been urging the government to shift focus from taming inflation to supporting growth.
The newly released economic data show China’s gross domestic product has slowed to 10.1 percent in the second quarter, down from 10.6 percent in the first three months and 11.9 percent last year.
The Consumer Price Index, the main gauge of inflation, grew at 4.9 percent in August – the slowest pace in 14 months. It has been on the decline for four consecutive months and the speed at which inflation eased went beyond economists’ boldest expectations.
Industry slowing
In contrast to the softening inflationary pressure, the risk of slower economic growth is intensifying.
In August, industrial production grew 12.8 percent, the slowest since February last year.
Among the sectors which dragged down output was the automobile industry, which used to be a major growth driver. The automobile sector fell 3.3 percent last month.
Exports, another key element of overall economic expansion, rose 21.1 percent in August, cooling down from a 22.9-percent jump a month earlier.
The slower growth came despite the government increasing export tax rebates for textiles and garments – the two sectors hardest hit by yuan appreciation and weaker demand from developed markets.
China’s urban fixed-asset investment increased 27.4 percent in the first eight months, keeping a stable growth momentum. But analysts said this was mainly bolstered by the demand created by the May 12 earthquake in Sichuan Province.
On the other hand, domestic consumption looks robust. Retail sales in August jumped 23.2 percent, slightly up from the July figure which saw the fastest rise since 1996.
However, the rest of the year may see a downturn with no new strong selling points, like the housing and automobile sectors of the past, to boost growth.
All figures now seem to point in one direction °?- that the government should take concrete steps to sustain economic growth. Huang Yiping, an economist with Citigroup, said the CPI which fell below 5 percent in August could help shift the balance of policy concerns toward growth.
Sops may work
“The probability of a policy reversal may rise significantly in the coming months, as global economic conditions continue to deteriorate and domestic corporate sectors increasingly feel the impact of growth slowdown,” said Huang.
“Although the People’s Bank of China has so far maintained its bias toward tight monetary policies, it has introduced a number of measures to fine-tune trade policies as well in recent months,” he added.
The analyst said that the central bank’s steps include expansion of credit quota, slowdown of currency appreciation and increases in export tax rebates.
“This shift in policy concerns should be reinforced to keep the CPI at a healthy level,” Huang noted.
But there is a major hurdle in the way of a complete turnaround as producer prices, the factory-gate inflation measure, also keep going up.
The Producer Price Index in August soared to 10.1 percent, the highest in 12 years. Rising factory-gate costs are generally passed on to the end users, but this may in turn affect consumer prices, analysts said.
Economists suggest China should continue with its fine-tuning measures for the time being. Relaxing the credit quota, slowing down yuan appreciation and selected reduction of tax burden could go a long way to boost the economy.
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