China strains to see light at end of tunnel
February 11, 2009
China strains to see light at end of tunnel
By Geoff Dyer at Financial Times
China to the rescue? There has been a surge of hope in the markets over the past 10 days that China’s struggling economy has already turned a corner.
The Baltic dry shipping index – the much-watched measure of the cost of shipping raw materials around the world – has jumped more than 50 per cent in a week on hopes of rising demand for commodities from China, while the prices of several metals have also risen sharply. The Chinese stock market is up 13 per cent in the 10 days since the end of the Chinese new year holiday.
Such optimism might seem strained given the avalanche of downbeat economic news that has come out of China over the past three months. Yet some government officials have started to sound a similar tune.
Official newspapers on Tuesday quoted Su Ning, deputy governor of the People’s Bank of China, as declaring that the first signs of recovery had become visible at the end of last year and that China could be the first big economy to recover.
Investors betting on a Chinese rebound are confident that the government’s huge package of fiscal and monetary stimulus measures is beginning to bite and there is some evidence to back them up.
In recent days local media have reported that new loans issued in January reached Rmb1,200bn ($176bn, €135bn, £120bn) following big increases in lending in November and December. If the figure is confirmed, it would be more than three times the average in the first nine months of last year. (Reuters reported that the figure was even higher at Rmb1,600bn.)
The strong credit growth is an indication that the government is succeeding in using state-owned banks to push money through the door.
“Unlike their counterparts in the rest of the world, China’s banks should be an effective transmission mechanism for the ongoing loosening of monetary policy,” says Paul Cavey at Macquarie Research.
Rising prices for iron ore, steel and other metals are being interpreted as signs that China’s big infrastructure spending plans are being implemented quickly. A senior Chinese official told the Financial Times last week that the Rmb4,000bn of projects in the government’s fiscal stimulus had already been approved.
Source: Financial Times
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Chinese power output in 2008 up by 5% YoY
February 9, 2009
According to data released by the China Electricity Council China’s installed power capacity reached 792.53 million kilowatts by the end of 2008, an increase of 10.34% from the previous year, while China’s power output hit 3,433.4 billion kilowatt per hours in 2008 an increase of 5.18%YoY. Power consumption in China totaled 3,426.8 billion kWh in 2008 an increase of 5.23%.
In 2008, China increased power capacity by an additional 90.51 million kilowatts, including 20.1 million kilowatts in hydro power and 4.66 million kilowatts in wind power. During the same period, China shut down small thermal power units with a total power capacity of 16.69 million kilowatts. Standard coal consumption for thermal power units with a power capacity of over 6,000 kilowatts fell to 349 grams per kWh, below the level of 355 grams per kWh required in the Eleventh Five-Year Plan. China’s power imports and exports totaled 20.455 billion kWh in 2008, an increase of 5.61%YoY. Of which, power exports reached 16.859 billion kilowatts, an increase of 10.25%YoY.
The CEC also made projections about the state of power in 2009. Power investment is expected to maintain high levels of as much as CNY 650 billion. China’s power capacity is expected to increase by an additional 80 million kilowatts in 2009, with the total power installed capacity to reach 860 million kilowatts by the end of this year. China’s power supply capacity is sufficient considering its power demands. Growth in China’s power output for the whole year is expected to be 5%.
(Sourced People’s Daily Online)
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Beijing’s total imports and exports were up 40.8 percent
February 1, 2009
BEIJING, Jan. 30 (Xinhua) — Beijing’s total imports and exports were up 40.8 percent to a record 271.7 billion U.S. dollars in 2008 mainly thanks to the Olympic Games, Beijing Customs said Friday.
Exports hit 57.4 billion U.S. dollars, up 17.4 percent, and imports 214.3 billion U.S. dollars, up 48.7 percent, making the city China’s 4th largest international trade region after Guangdong, Jiangsu and Shanghai.
Beijing Customs attributed the growth to the Olympic Games, which boosted demand and government procurement, particularly in urban infrastructure, venue construction, materials, machines and equipment.
The Olympic effect brought about a year-on-year increase of 55.8 percent in imports and exports in the first half of last year.
However, foreign trade began to slow in the second half of 2008with the increase rate dropping to 28.5 percent, due to the sluggish global economy.
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Weak Economy Cuts China’s Ansteel 2008 Net Profit 55%
January 31, 2009
China’s Angang Steel Co. Ltd. (Ansteel) said Wednesday net profit fell 55 percent last year to an estimated 3.42 billion yuan (about US$500 million) Ansteel prices plunged.
Ansteel, one of the country’s top three steel producers, issued the estimate in an unaudited statement to the Shenzhen Stock Exchange, where it is listed.
The final figure indicates a loss of 4.83 billion yuan in the fourth quarter, as previous company data show net profits in the first three quarters totaled 8.25 billion yuan.
The decline reflected steep falls in steel prices and slow inventory movement starting in the second half, said the northeast-based company.
Steel prices in China plummeted in the second half as the deepening world economic slowdown weakened industrial growth and steel demand in the country.
The price of 6.5 mm carbon steel wire rods, a major steel product, was down more than 40 percent since June, Jia Yinsong, a Ministry of Industry and Information Technology official, told a forum earlier in January. Market data show the product was sold at about 3,400 yuan per ton.
The company also attributed the weak performance to the costs of buying raw materials and fuel at high prices earlier in 2008.
World crude oil prices are down more than 70 percent since peaking at 147 U.S. dollars per barrel in July. Earnings per share were estimated at 0.47 yuan in 2008, down 58 percent from in 2007, Ansteel said.
The company didn’t give a date for the release of its audited results, which under Chinese rules must be done within six months.
Source: Xinhua News Agency
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Industrial output grows less than 2007
January 25, 2009
CHINA’S industrial output rose 12.9 percent year on year in 2008, or 5.6 percentage points less than the previous year, the National Bureau of Statistics said yesterday.
Output climbed 5.7 percent in December, up slightly from the 5.4-percent growth rate in November. However, the December figure was 11.7 percentage points lower than a year earlier, and it was also much lower than any of the first 10 months of 2008.
Output of state-owned enterprises and shareholding companies rose 9.1 percent and 15 percent, respectively. These figures include companies with annual sales of at least 5 million yuan (US$731,283), the point at which companies in China are classified as medium to large-scale.
Output of companies funded by foreign investors or investors from Hong Kong, Macau and Taiwan rose 9.9 percent.
Heavy industrial output rose 13.2 percent, while that of light industry gained 12.3 percent.
The bureau’s data showed aggregate industrial profits hit 2.4 trillion yuan in the first 11 months of last year, up 4.9 percent compared with the same period in 2007. However, the growth rate fell a sharp 31.8 percentage points from a year earlier.
Of 39 industries surveyed, 31 reported year-on-year profit growth. The five fastest growth rates were recorded by petroleum and natural gas extraction, coal mining, transport equipment manufacturing, chemical production and metals processing.
Industrial production growth slowed along with a weakening global economy, which reduced market prices as well as domestic and foreign demand, analysts said.
“Weakening demand, especially overseas, was a major cause of China’s slowdown, as more than 30 percent of GDP comes from trade-related industries,” said Tang Min, deputy secretary of the China Development Research Foundation.
He forecast the economy would begin to improve in the second or third quarter as a national 4-trillion-yuan stimulus package took effect and boosted domestic demand for industrial products.
Ma Jiantang, the bureau’s head, called the December rebound a “positive sign” for China’s industrial production.
“The growth rate of industrial output was 0.3 percentage point higher than November. Small as it is, it’s an important change in industrial activity” and could help China’s economy to rebound, he said.
Ma said 16 of the 39 industries surveyed had shown a month-on-month rise in output growth.
A survey conducted by the bureau earlier this month showed steel, coal, ferrous metal and chemical product prices began to rebound after prolonged declines during the second half of 2008, Ma said.
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