China’s inflation cools at last
October 14, 2008
Inflation rates are crucially important for China’s economy. To me, it is the most decisive indicator in shaping government policies on economy, finance, trade etc.
For example, the soaring inflation at the beginning of the year was the main reason behind the tightening monetary policy which squeezes credits for factories, makes trade policies restrictive, quickens the appreciation of chinese currency. So every company making business with China needs to follow the inflation gadget to foresee possible risks and opportunities.
China’s inflation cools at last
By Lydia Chen (Sanghai Daily)
CHINA’S inflation rate dropped to the slowest pace since June 2007 with smaller gains in food prices, a boost to policy makers working on adjusting macroeconomic policies to support the country’s economic growth.
The consumer price index, a broad measure of inflation, rose 4.9 percent in August from a year earlier, after gaining 6.3 percent in July, the National Bureau of Statistics said this morning.
Food costs, accounting for a third of the CPI basket, surged 10.3 percent year on year last month. Within the category, meat and poultry prices soared 8 percent in August.
The cost of pork, the nation’s staple meat, increased 1 percent last month from a year ago while cooking oil prices rose 22.7 percent. Vegetable prices were down 0.5 percent last month from a year ago. Grain prices gained 8 percent in the period.
The combined CPI grew 7.3 percent from January to August, the bureau said.
Consumer-price inflation has slowed for four months. February’s 8.7 percent pace was the fastest in 12 years. The central bank’s target for the year is 4.8 percent, the same as the actual rate in 2007.
But producer-price inflation advanced 10.1 percent in August after rising 10 percent in July. The August jump was the fastest pace since at least 1996, according to the bureau today.
The faster producer inflation rate may lead policy makers to introduce more balanced measures to boost growth against the risk that inflation will accelerate again.
China may adopt tax cuts, a slower pace of yuan appreciation and more easing of lending restrictions to protect jobs and avoid an economic slump as export demand falters.
China’s economy expanded 10.1 percent in the second quarter from a year earlier, slowing for a fourth straight quarter, as exports cooled. Many economists said the growth may ease to 9 percent this year.
Profit growth for listed companies slumped in the first half, helping push the key stock index in the Shanghai market down nearly 60 percent so far this year. Weaker overseas demand, rising costs and a strengthening currency have put pressure on exporters of shoes, toys and clothes.
Economists expect China’s monetary policy will steadily turn more growth-friendly, given the concerns and moderating inflation.
In July, the central bank eased restrictions on how much banks can lend. It raised the 2008 loan quotas for national banks by 5 percent and for regional lenders by 10 percent, according to reports by the Goldman Sachs Group Inc, BNP Paribas SA, and the China Merchants Bank Co.
The People’s Bank of China has kept interest rates unchanged this year and hasn’t increased the reserve ratio for banks — the proportion of deposits that lenders are required to set aside — since June.
The Chinese yuan has climbed only 0.2 percent against the dollar this quarter after a 6.5 percent advance in the first half. Gains hurt exporters by making their products more expensive and less attractive in overseas markets.
The government has already cut taxes on exports of textiles and garments and encouraged more lending to small and medium-sized businesses. Officials are working on a plan for as much as 400 billion yuan (US$58 billion) in tax cuts and spending to prevent an economic slump, according to economists and reports in domestic news media.
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China Machine Tool Industry Research 2008
October 13, 2008
China Machine Tool Industry Research 2008
http://www.reportlinker.com/p091023/China-Machine-Tool-Industry-Research-2008.html
China’s machine tool industry plays an important role in world machine tool industry in recent years. In the aspect of output value, China has accounted 1/4 of the world machine tools. Therefore, the healthy development of China’s machine tool industry will promote the world machine tool industry continues to maintain a rapid development.
According to the National Bureau of Statistics data of whole machine tool industry, in 2007 the 4291 manufactories achieved RMB 274.77 billion in industrial output value, up 35.5 per cent year-on-year; RMB 268.1 billion of sale revenue, an increase of 36.2 per cent year-on-year; throughput of 97.6 per cent, an increase of 0.5 per cent year-on-year.
In 2007, the output of metal-cutting machine tool was 606,835 sets, an increase of 11.7 per cent year-on-year, among NC metal-cutting machine tool 123,257 sets, an increase of 32.6 per cent year-on-year; forming machine tool 172,766 sets, an increase of 9.2 per cent year-on-year, among NC forming machine tool 3,011 sets, an increase of 53.7 per cent year-on-year; Woodworking machinery production and casting machinery 19.2 per cent and 15.4 per cent year-on-year respectively, metal cutting tools fell 0.4 per cent year-on-year.
Machine tool export has continued to grow rapidly. In 2007 it made $5.2 billion, up 36.2 per cent year-on-year, including metal processing machine tool $1.65 billion, increased 39.2 per cent year-on-year, NC metal processing machine tool $500 million , an in crease of 48.2 per cent year-on-year, accounting for 30 per cent of the metal processing machine tool, metal-cutting machine tool $1.22 billion, up 31.6 per cent year-on-year, forming machine tool $430 million, up 66.5 per cent year-on-year.
In 2007, the imports of machine tool was $11.77 billion, an increase of 5.7 per cent year-on-year, among metal processing machines tool $7.07 billion, a decrease of 2.4 per cent year-on-year. China’s foreign trade deficit of metal processing machine tool reached $5.42 in 2007, lower than the same period last year $6.06 billion.
Considering the overheated economy and higher inflation, the central government has tied the monetary policy, which has already affected on some investments, particularly small and medium-sized machine tool investors. China’s machine tool industry is expected to slow down, but, on the other hand, high-value-added products such as NC machine tool, large and heavy machine tool will still keep a strong growth, especially the state key projects and 16 major science and technology projects will boost the domestic demand for high-technical NC machine tool. China is expected to maintain a strong demand for NC machine tool in the next three to five years; in particular the large-scale NC machine tools will remain a 30 per cent growth.
Contents1 The Circumstance of Global Machine tool industry1.1 Production1.2 Consumption1.3 Import and Export1.3.1 Export1.3.2 Import1.3.3 Total Amount of Imports and Exports1.4 Summary2 The Circumstance of China’s Machine Tool Industry2.1 The Performance of the whole Industry2.2 The Products of Metal-Cutting Machine Tool2.2.1 Output2.2.2 Value of output2.2.3 Value of output/per unit2.3 Import and Export of Machine Tool Industry2.3.1 Import and Export Amount2.3.2 Export destination2.3.3 Import region2.3.4 Export Products2.3.5 Import Products2.4 The competition pattern in Machine Tool Industry2.4.1 Types of Ownership2.4.2 Concentration of Machine Tool Industry2.5 Impact of Policy3. The future development trend3.1 The Domestic Products will Gradual Substitute Overseas Products3.2 Upgrading of Product Structure and high-technical Products3.3 Expansion of Export3.4 The Rising Price of Cast Iron and Increasing Cost4 key Companies4.1 Kunming Machine Tool4.1.1 Brief4.1.2 Performance4.1.3 The main Business-machine tool4.2 Zhejiang Tianma Bearing Co., Ltd / QIQIHAR HEAVY CNC EQUIPMENT CORPORATION LIMITEDFigure IndexThe Proportion of China’s NC Machine Tool of Metal-cutting Machine Tool 2000-2007The Output Value and Year-on-Year Growth of World Major Manufacturing Countries of Machine ToolsThe value of Output of World Major Manufacturing Countries of Machine tools 2002-2007The Market Share of World Major Manufacturing Countries of Machine Tools 2007The World Machine Tool Consumption of Major Countries 2002-2007The World Machine Tool Export of Major Countries 2002-2007The Output and Growth of China’s Metal-Cutting Machine Tool and NC Machine Tool 2000-2007The Output and Proportion of various products of China’s Metal-cutting Machine ToolThe Output and Proportion of various products of China’s NC Metal-cutting Machine ToolThe Output Value/per unit of China’s machine tool Metal-Cutting tool ProductsForeign Trade Deficit of China’s Machine Tool IndustryThe Amount of Export and Import and Growth rate of China’s Metal-working Machine Tool 1995-2007Foreign Trade Deficit of China’s Metal-working Machine Tool 1995-2007The Export Destinations and Growth of China’s Metal-working Machine Tool 2007The Share of Import Countries of China’s Metal-working Machine Tool 2007The Share of Export Countries of China’s Metal-working Machine Tool 2007The Amount of Exports and Growth of China’s Metal-Cutting Machine Tool Products Jan-Oct 2007The Amount of Imports and Growth of China’s Metal-Cutting Machine Tool Products Jan-Oct 2007The Ownership of Machine Tool IndustryThe Impact of tax policies on Machine Tool listed companiesComparison of Market Share Between Import and Domestic Metal-working Machine Tool 2001-2007The Amount of Foreign Trade Deficit and Growth of China’s Metal-cutting Machine Tool ProductsThe Output, Import and Growth of China’s Machining CentreThe Value of Output of Machining Centre and Proportion of Total Metal-Cutting Machine Tool of Major Countries 2006The Amount of China’s Metal-Cutting Machine Tool Exports and the proportion of Output Value and compared with the world average LevelThe Price Index of China’s scrap, cast iron, cokeThe Cost of Machine Tool IndustryThe Incomes and Growth of Net Profit of Kunming Machine Tool 2002-2007The Revenue of Kunming Machine Tool Main Business 2004-2007The Revenue of Machine Tool Business of Kunming Machine Tool 2003-2007Comparison of the Gross Profit Among Major Machine Tool CompaniesTable IndexThe Operation of Metal-Cutting Machine Tool IndustryThe Top 10 Output and Value of Output of Metal-Cutting Machine Tool Manufactories 2006The Top 10 Output and Value of Output of NC Metal-Cutting Machine Tool Manufactories 2006Bain Model of Industrial ConcentrationCosts Constitute of HT250 Hot MetalThe Impact of Rising Costs of Cast Iron on the Machine Tool industry’s Cost and Gross ProfitTo order this report:
China Machine Tool Industry Research 2008
http://www.reportlinker.com/p091023/China-Machine-Tool-Industry-Research-2008.html
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China’s Zoomlion buys Italy’s construction machinery maker CIFA
October 8, 2008
Local construction machinery maker Changsha Zoomlion said yesterday it has completed its acquisition of Italy’s Compagnia Italiana Forme Acciaio SpA (CIFA), with Goldman Sachs and two other investors.
Changsha-based Zoomlion paid 163 million euros for a 60 percent stake in the Italian construction machinery maker from Italian private fund Magenta Fund and other CIFA shareholders in an all-cash transaction. Goldman, Mandarin Capital Partners and Chinese private equity firm Hony Capital will hold the remaining 40 percent.
The deal is expected to give Zoomlion a foothold in foreign markets and boost its overseas sales by “combining CIFA’s international brands, global sales and distribution network”, Zhan Chunxin, chairman and CEO of Zoomlion, said.
He said he expects the company to generate 40 percent of its sales outside China by 2010. Zoomlion recorded 1.02 billion yuan of exports in 2007, or roughly 11 percent of its overall sales.
CIFA, headquartered in Milan, has a 20 percent market share in Western Europe and ranks third in the global concrete machinery market.
Zoomlion is No 2 behind Sany Heavy Industry in the domestic concrete machinery sector and is expected to be in the top two in the global market after the acquisition.
“The deal will improve Zoomlion’s global sales and technology, which will make it the top Chinese concrete machinery maker by global sales. But Sany will still dominate the local market,” Xu Xingyue, an analyst at Beijing-based Changcheng Securities, said.
But some analysts warned of short-term risk, as concrete machinery is linked to the real estate industry and could be affected by current global economic woes.
The acquisition comes after Sany said it would invest in a new US plant.
China Daily
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Arbitration in China
September 7, 2008
China’s law system allow disputes to be resolved in mechanism of arbitration. Â Here you can read the basics of arbitration in China :
The Basics of Arbitration in China    (Source: China Briefing Magazine)
Arbitration on contracts involving a Chinese party is a concern for international counsel and overseas-based lawyers. Chinese parties will usually insist upon the clause in contracts, which can be a good thing, as no one wants to see disputes end up in courts if there is another way to resolve matters.
Moreover, arbitration is advantageous regarding the possibility for the parties to choose a judicial body with trusted arbitrators. The dispute can be solved by a simplified procedure on which the parties have influence. The chosen arbitrators can be experts, a competence ordinary courts sometimes lack. Arbitration is also less time consuming than court procedures and cases are normally resolved within 6 to 9 months.
An arbitration award once issued is considered final. It becomes enforceable and stable; subject to recourse only by court action. Arbitration is not restricted to national jurisdictions and gives the parties the possibility to avoid the disadvantages and expenses of going abroad.
It also has the advantage of being confidential which avoids souring relations between two parties and helps maintain good business relations given that they both submitted to this type of dispute settlement voluntarily.
Not surprisingly, some overseas lawyers have a marked distrust for Chinese based arbitration and want to see cases resolved in overseas jurisdictions instead. It is difficult to obtain the Chinese side’s mandate for this but there are also legal difficulties. Following the Chinese law, contracts in certain industries that involve a Chinese party must be heard by a specific Chinese arbitration body experienced in the field.
There are no exceptions to the rule. Parting from Chinese jurisdiction will be equal to breaking the law and will have far more serious consequences for the rest of the contractual agreement.
Some overseas lawyers are afraid that Chinese arbitration cannot be trusted and lacks impartiality. That attitude, although historically correct, is already outmoded. In the past five years, China’s arbitration courts have been filling with both lawyers and industry experts familiar with the field, thus dramatically improving basic dispute resolution. Disputes will arise as a matter of business and China’s arbitration mechanism has been coping well.
That said, there is still the question of dealing contractually with standard arbitration clauses – where should the hearings be based and who should hear them?
The settlement of a dispute via arbitration between domestic parties must be held in China. Under Chinese law, foreign-invested enterprises, even wholly foreign-owned one, are considered domestic. Therefore a dispute between FIEs or between a FIE and a domestically invested Chinese company is a domestic one and has to be arbitrated in the country.
A foreign arbitration clause in a contract between such entities will be deemed invalid and the award unenforceable in China. The People’s Courts will still have jurisdiction over the dispute.
While foreign parties prefer to arbitrate abroad; a compromise might be arbitration in Hong Kong instead with its reliable reputation among foreign and Chinese investors. Another alternative could be the International Chamber of Commerce (ICC) or the Beijing Arbitration Commission (BAC).
The ICC will be able to assist as it is an organization recognized by Beijing with an affiliate office in the city. In addition, the ICC has an Arbitration Commission, which is governed by dispute mediation protocols laid down according to international law.This arrangement can satisfy both ways: Chinese parties wanting arbitration based in the country and the foreign parties wanting an impartial internationally recognized body out of reach from perceived political interference.
On the other hand, the BAC is a permanent organization providing a forum for arbitration of disputes associated with contractual and other property rights based on its Arbitration Rules. It is established in accordance with the Arbitration Law of the People’s Republic of China and accepts domestic and foreign-related disputes.
China is also signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards which requires the courts of the contracting states to give effect to agreements to arbitrate and accordingly recognize and enforce arbitration awards from other contracting states.
The convention applies awards which are not considered to be domestic ones in the state where recognition and enforcement is sought. Although enforcement in China is not easy, a refusal to enforce a foreign arbitral award by a lower court requires the confirmation by the Supreme People’s Court to be effective. As for the special administrative regions of Hong Kong and Macau, awards are enforceable under special bilateral agreements similar to the latter.
The common arbitration route for foreign investors seeking to solve a domestic dispute is through the China International Economic and Trade Arbitration Commission (CIETAC). The CIETAC has headquarters in the capital and sub-commissions in Shanghai and Shenzhen while also being officially affiliated with the Chinese government.
CIETAC offers domestic, foreign-related and international arbitration. It administrates a panel of more than 250 approved foreign arbitrators including arbitrators from Taiwan, Hong Kong and Macau. Majority of them are experienced in China and their respective fields. Arbitration may be conducted in Chinese, English, or another language, although it might be difficult to convince a Chinese party to agree to conduct the process in another language other than Chinese.
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Privately-Owned Companies in China Plans to Enter Overseas Markets
September 5, 2008
Here is interesting survey conducted by Fudan University on behalf of HSBC. According to the Survey, more than 40 percent of private companies in China are planing to enter overseas markets by exporting their products:
Overseas markets a lure
MORE than 40 percent of Chinese privately-owned enterprises are planning to break into overseas markets in the next three years, an industry survey found yesterday.
Fudan University, on behalf of HSBC, surveyed 1,000 of these firms, mainly in the Yangtze River Delta and Pearl River Delta in the first half, HSBC said yesterday.
Based on survey data and related models, the research indicated that 700,000 POEs nationwide had overseas expansion plans.
The respondents are from manufacturing, wholesale and retail, and information technology industries.
The research showed that among the 43 percent surveyed POEs with overseas expansion plans, 63 percent intended to establish sales networks.
The survey also found 55 percent of respondents had overseas economic and trade activities, including exporting their own products, selling products overseas via trade agents and setting up joint ventures with overseas firms.
POEs still depend on domestic banks for lending needs when seeking finance.
The survey found about 60 percent of the respondents had no contact with foreign banks.
Respondents also showed increasing interest in foreign banks’ services, such as short-term yuan loans, hedging and merger and acquisition advice, the survey found.
The deciding factors for POEs when choosing a bank for international business are rates for services offered and borrowing costs, the bank’s global reach, brand reputation and specialist expertise.
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