Slowdown But not Downturn !
September 4, 2008
Inflation topping at %8.7 at February, snowstorms hitting Guandong , earthquakes devastating Sichuan, Amerikan credit crisis cutting orders, tight monetary policy tightening credits,and finally global economic slowdown…  all those touch the brakes of the chinese economy. But still there is no gloomy picture, here is why  :
CHINA is experiencing a temporary economic slowdown rather than a downturn, said Cheng Siwei, former vice chairman of the Standing Committee of the National People’s Congress, raising the prospect that adjustments might be necessary.
“The domestic inflation, severe winter weather, devastating earthquakes and the weakening global economy in the first half year have pushed the country’s economy to the edge of decline, but it is getting better,” Cheng said in a China Central Television talk show aired on Tuesday night.
He said according to the business cycle theory, an economy develops in cycles, and 10 years constituted a cycle for China’s economy.
The decade from 1990 to 2000 saw a near 14-percent growth in gross domestic product in the first two or three years and then a slowdown to about 8 percent in the remaining period. Economic growth continued rising from about 7.3 percent per annum in 2001 to 11.4 percent in 2007.
The estimated GDP growth rate in 2008 may slow to around 10 percent. Worry over a downturn for the Chinese economy reemerged.
However, he didn’t agree with the view that the Chinese economy faced a watershed, noting that this year’s growth rate, compared with 2007, meant only a temporary slowdown lasting two or three years.
The country’s decision makers now face the problem of combating inflation while at the same time boosting economic growth in the rest of the year to ensure a steady and fast economic development.
Source:China Daily
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Recent Economic Facts on China’s Economy
August 7, 2008
Beijing, the capital of China — one of the world’s fastest growing economies — is hosting the Olympics Games from Aug.8 to 24 and the Paralympic Games from Sept.6 to 17.
Some facts about the economy:
GDP: gross domestic product(GDP) totalled 13.0619 trillion yuan (1.9062 trillion U.S.dollars) in the first half of 2008, a 10.4 percent increase year on year.
GDP was 24.6619 trillion yuan in 2007, ranking fourth in the world.
FOREIGN TRADE: Over 230 countries and regions trade with China. Foreign trade was 1.2342 trillion U.S.dollars in the first six months of 2008, up 25.7 percent year on year. 2007′s total was 2.1738 trillion dollars.
Export volume was 1.2180 trillion U.S. dollars, and import volume was 955.8 billion dollars in 2007.
FOREIGN EXCHANGE RESERVE: 1.8088 trillion U.S.dollars by the end of July 2008.
PEOPLE’S INCOME: China’s urban per capita disposable income was 8065 yuan in the first half of 2008, up 14.4 percent year on year; that of rural residents 2528 yuan, up 19.8 percent year on year.
2007′s urban per capita disposable income was 13786 yuan in 2007, and of rural residents 4140 yuan.
FISCAL REVENUE: totaled 5.13 trillion yuan in 2007, growing about 32.4 percent year on year.
ECONOMIC STRUCTURE: manufacturing and tertiary industry are the driving force behind economic growth.
Tertiary industry is the new fast-growing sector of the economy and is playing a leading role in creating jobs.
DOMESTIC TRADE: retail sales of consumer goods totaled 8.921 trillion yuan in 2007, growing 16.8 percent year on year. Urban retail sales were 6.0411 trillion yuan, up 17.2 percent; rural sales were 2.8799 trillion yuan, up 15.8 percent.
CONSTRUCTION INDUSTRY: increased 1.4014 trillion yuan in 2007, up 12.6 percent year on year.
Fixed asset investment in 2007 was 13.7239 trillion yuan, a year-on-year increase of 24.8 percent. Urban investment was up 25.8 percent to 11.7414 trillion yuan; rural investment 1.9825 trillion yuan, up 19.2 percent.
TAX REVENUE: 49.449 trillion yuan (7.2719 trillion U.S.dollars) in 2007, up 11.813 trillion yuan, or 31.4 percent year on year.
GRAIN OUTPUT: China’s grain output in 2007 totaled 501.5 million tonnes, growing about 3.5 million tonnes compared with last year, up 0.7 percent. Summer grain output was 115.34 million ton, up 1.3 percent; autumn grain 354.2 million tonnes, up 0.6 percent.
TOURISM: China is the world’s fourth largest country for inbound tourism. The number of oversea tourists was 131.87 million in 2007. Foreign exchange income was 41.9 billion U.S. dollars, the world’s sixth in 2007. The number of domestic tourists totaled 1.61 billion, with a total income of 777.1 billion yuan.
According to the World Tourism Organization, in 2020, China will become the largest tourist country and the fourth largest for overseas travel.
Source: Xinhua
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Rising FDI reflects inflow of hot money
July 13, 2008
July 13 — Foreign direct investment (FDI) in China rose 45.5 percent in the first half of the year, deepening worries that the inflow of “hot money” could lead to higher inflation.
The Ministry of Commerce said on Friday that foreign investors spent 52 billion U.S. dollars in China between January and June. In the same period last year, FDI increased only 12 percent.
The ministry did not provide figures for June, but based on data published for the first five months, the June figure is estimated at 9.6 billion dollars, up from 6.6 billion dollars a year ago.
Gene Ma, macroeconomic analyst at Beijing-based economic research firm China Economic Business Monitor, said: “The inflow increase is fast, but we don’t know where the money has gone.” [Read more]
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China Logistics Industry 2007-2008
July 4, 2008
China’s total value of logistics in 2007 reached CNY75.2282 trillion, up 26.2% year on year, boosted by continuous rapid growth in China’s economy. According to the conservative estimation by the China Federation of Logistics and Purchasing, China’s logistics industry is expected to have a compound annual growth rate of 16 percent in the forthcoming three years.
In 2007, the added value of China logistics industry was CNY1.7 trillion, up 20.3% year on year, accounting for 17.6% of the total of China service industry and 6.9% of China’s GDP.
Source: China View
In 2007, China’s total cargo transport volume was 22.53 billion tons and its turnover volume of freight transport was 10.1 trillion tons/kilometers, up 10.7% and 11.8% year on year respectively. As for the distribution by modes of transportation, water transportation occupied 67 percent of China’s turnover volume of freight transport, railway transportation 22.5 percent, road transportation 10.5% and aviation transportation 0.1 percent.
This report is based on the authoritative statistics from the China Federation of Logistics and Purchasing, the National Development and Reform Commission, the Logistics Association of China, the China Auto Logistics Association of CFIP, the General Administration of Customs, the State Information Center, and the National Bureau of Statistics. The report makes an in-depth analysis on the current situation, segmented markets and main companies of China’s logistics industry, and also makes the forecasts on the development trend of China’s logistics industry in 2008
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World Bank raises China 2008 growth forecast to 9.8%
June 20, 2008
BEIJING, June 19 (Xinhua) – Reflecting strong service sector activity, the World Bank raised its forecast for China’s 2008 economic growth to 9.8 percent, from 9.4 percent, in a report released on Thursday.
In April, the bank downgraded its forecast to 9.4 percent from the 9.6 percent prediction made in the beginning of 2008 and 10.8 percent made in mid-2007.
The upward revision this time largely reflected data showing stronger service sector growth in revised gross domestic product (GDP) data, said the World Bank Beijing Office in its Quarterly Update for China.
China’s National Bureau of Statistics (NBS) has raised the country’s 2007 GDP growth figure by 0.5 percentage point to 11.9 percent, the fastest since 1994. The NBS cited service industry growth in its revision.
The bank’s report said that most developing and emerging markets, like China, would outperform high-income countries as they were less directly exposed to the financial turmoil and would see a modest, orderly slowdown.
China’s economic growth had slowed to a more sustainable pace, which in part reflected less buoyant investment, but the country’s domestic economy was holding up well, it said.
Exports, backed up by strong international competitiveness and a robust domestic economy, would support China’s 2008 growth amid weak, uncertain global prospects, it claimed.
It noted that although damage from the earthquake that hit southwestern China in May to the affected area was huge, the macroeconomic impact was likely to be modest as the affected area accounted for only a small part of .
The report pointed out that headline inflation was receding while non-food price pressures emerged.
Some spill-over from higher food prices was flowing into wages and some other prices, while the impact of recent industrial commodity and oil price hikes was in the pipeline.
However, generalized spill-over to consumer prices had remained limited and headline consumer price inflation was expected to recede gradually, it said.
China’s consumer price index (CPI), a major gauge for inflation, eased by 0.8 percentage point month-on-month to 7.7 percent in May. In April, it rose 8.5 percent after hitting a 12-year high of8.7 percent in February.
The producer price index, which measures the value of finished products leaving the factory, rose 8.2 percent year-on-year in May. The rise was 0.1 percentage point higher than in April.
The World Bank report suggested that there was no need to ease the overall macroeconomic stance, but it called for vigilance and flexibility, given global uncertainties.
“If there is a more serious slowdown than we currently envisage, fiscal easing could be considered,” said Louis Kuijs, the report’s main author.
Containing the spill-over of raw material price pressures and inflation expectations would require relatively tight monetary policy. China’s current macroeconomic situation called for good coordination between fiscal and monetary policy, according to the report.
“Bringing prices of fuel closer to levels that reflect the scarcity of energy is important for rebalancing and to reduce distortions,” Kuijs said.
China imposes price caps on gasoline and other refined oil products. Since the caps mean the country’s major oil companies can’t pass on costs to consumers, the government provides subsidies to cover most of their losses.
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