IEBW 113
China Economic Headlines
In this Issue:
Coming Events
General News on Chinese Economy
Consumer Goods
Environment & Energy
Telecom & IT
Other Sectors
Coming Events
November 10-13: Water Expo China
Water Expo China will be held 10-13 November 2008 at the National Agricultural Exhibition Centre, Beijing. The Israel Trade Mission to China and IEICI is organizing leading Israelis companies to participate in this event, to demonstrate the latest water technologies from Israel at the national pavilion and attend professional activities to explore opportunities in the local market.
Dec 1 - 3: IT/Telecom Delegation to Shandong
Israel's Trade Mission to China is now planning an IT/Telecom business delegation to China in the first week of December. The visit shall include Beijing and East China's Shandong Province (including two major cities there: Jinan and Qingdao). The tentative plan shall include meetings with local telecom carriers (both mobile & fixed lines) and matchmaking event with local companies (agents, distributors, manufacturers, R&D institutions, system integrators).
General news on Chinese economy
China's GDP to Slow to 9.4 Pct in 2008: Report
China's GDP growth is expected to slow to 9.4 percent in 2008 from last year's 11.4 percent as the shrinking exports will cool the world's fourth largest economy. The fundamentals of the economy are sound, but falling export orders would take a toll on the national economy in the short term, and domestic consumption needed time to play a bigger role, said the report released by the China Chengxin International Credit Rating Co. (CCXI), a joint venture of China's first rating agency China Chengxin Credit Management Co. Ltd. and U.S.-based Moody's Corporation. The changing external economic environment and the burst of domestic asset bubbles would exacerbate the slowing economy, said the report. (Nov 2, Xinhua)
China cuts rates for third time in 6 weeks
China yesterday announced its third interest rate cut in six weeks. The move was seen as part of a widely expected new round of global rate cuts. China will lower both one-year benchmark lending and deposit rates by 0.27 percentage points starting today, the People's Bank of China said yesterday on its Website. The cut means the one-year deposit rate drops to 3.6 percent while the one-year lending rate decreases to 6.66 percent. The public housing fund rates were untouched. (Oct 30, Shanghai Daily)
China's housing prices expected to fall 10% on average in next two years
China's housing prices are expected to fall 10% on average in the coming two years with the highest drop reaching 30%, according to a recently-released research report by the Institute of International Finance of the Bank of China (BOC). The report indicates that the domestic real estate market will shift from the current state of stagflation to a downturn as a result of cyclical factors. By 2010, the real estate market will re-enter the upturn stage. (Oct 31, People's Daily Online)
Chinese SMEs warned of hard times ahead
China Association of Small and Medium Enterprises president Li Zibin has called for greater government assistance in a warning to members that tough economic circumstances will begin to bite this month. "The global financial crisis is set to affect the real world economy, including the Chinese economy, and small and medium-sized enterprises (SMEs) will bear the brunt," he said. (Oct 28, Xinhua)
Chinese Shares Break 1800-point Mark
Chinese stocks broke the 1800-point mark to 1795.54 points and hit the two year low three minutes after the opening at 9:30 local time on Monday. The Shanghai Composite Index opened at 1809.22 points, down 30.4 points or 1.65 percent from the previous closing. The index then continued to fall and hit 1795.54 points, the lowest level since Oct. 24 of 2006 when the index closed at 1805.18. Monday's fall came one day after the country scrapped the tax levied on the interest income of individual stock account balance. The Ministry of Finance said on Sunday the decision, effective Oct. 9, aimed at maintaining a stable and healthy development of the capital market. (Oct 27, Xinhua)
China Accounts for 6 Pct of World's GDP by 2007: NBS
China's share of the world's combined gross output rose to 6 percent at the end of 2007, compared with just 1.8 percent in 1978 when its reform and opening-up began, the National Bureau of Statistics (NBS) announced on Monday. Fast economic growth over the last 30 years had lifted China's GDP ranking in the world from 10th in 1978 to fourth after the United States, Japan and Germany. It stood at 3.28 trillion U.S. dollars in 2007, about 23.7 percent of that of the U.S., 74.9 percent of Japan's and 99.5 percent of Germany's. (Oct 27, Xinhua)
China ranks 2nd with 8.8% of world's exports by 2007
China's share in world's exports reached 8.8 percent by 2007, making it the world's 2nd largest exporter, only after Germany, said the National Statistics Bureau (NBS) on Tuesday. According to a statement released on NBS website, China's foreign trade has been growing at an average annual rate of 17.4 pct to 2,173.7 billion U.S. dollars from 20.6 billion U.S. dollars since 1978 when its reform and opening-up began. (Oct 28, Xinhua)
Economist: China's economic growth rate may reach 8-9% next year
China's economic growth rate is expected to be 8-9% next year. The contribution of China's rapid economic growth will be the greatest to the world, which is suffering from the current financial crisis, said Lin Yifu, World Bank Chief Economist and Senior Vice President. Lin added, strong consumer expenditure and investments in fixed assets will continue to be the force driving the Chinese economy forward into 2009. "When compared with the double-digit growth during the past several years, there will be an adjustment of 2-3%. But as for the whole world, China is still a country with fast economic growth." (Oct 27, People’s Daily Online)
Consumer Goods
Chinese commodities distribution center in Europe completes construction
The Chinese Commodities Distribution Center in Europe has completed construction and held a ceremony to mark the occasion in Hague. The distribution center, which began construction five years ago, lies in the business area on the outskirts of the Hague, and is only 25 km away from Rotterdam, the largest port in Europe. The center's convenient location makes it easy to transport Chinese shipping goods to major European markets using the developed Dutch roads and railways. (Oct 29, Xinhua)
Melamine scandal costs major Chinese dairy maker millions
The Bright Dairy & Food Co., Ltd, traded in Shanghai, reported its losses and added costs by the end of Sept. amounted to 344.59 million yuan (about 50 million U.S. dollars), in sales, refunds and recalls in the melamine contamination scandal. "The melamine incident threw the whole dairy industry into a difficult situation and has caused rather big impacts on the company," said Bright Dairy. (Oct 30, Xinhua)
Nestle sets up second R&D center
Despite the global economic slow-down and the impact of the recent tainted milk crisis, China will remain one of the fastest-growing markets with the biggest growth potential for Swiss food and beverage giant Nestle. The European food giant established a research and development (R&D) center in Zhongguancun Environmental Protection Park, a hi-tech industrial park in Beijing. With approximately 70 million yuan of investment, the Beijing R&D Center will be a new branch of the company's global R&D network, which includes 24 centers. The Beijing center was the second one in China, after its Shanghai R&D center which was built in 2001. Nestle China is expected to see double-digit growth in its sales revenue this year. (Nov 1, Xinhua)
Environment & Energy
Intel buys into cleantech company
Intel Capital, the chip giant's venture capital arm, yesterday made its first foray into the nation's clean technology sector, purchasing a $20 million stake in local solar energy firm Trony Solar Holdings Co Ltd. "China's renewable energy industry is experiencing rapid development," said Cadol Cheung, managing director of Intel Capital Asia Pacific. "We believe these investments will be a catalyst to drive local clean tech innovation." Trony Solar, established in 1993, is one of China's biggest manufacturers of thin-film solar energy equipment, with sales in more than 20 nations. The Shenzhen-based company will use the investment to ramp up its production capacity as well as strengthen its R&D capabilities. (Oct 29, ChinaDaily)
Telecom & IT
Telecom
SARFT fines China Telecom for operating IPTV illegally
A local bureau of China's State Administration of Radio, Film and Television (SARFT) has fined China Telecom's Yichang City branch in Hubei Province for illegal IPTV operations, according to the report by SARFT.net, a SARFT-supported Web site. Under Chinese laws and regulations, companies are required to obtain four licenses before starting IPTV operations. The most important license is the IPTV license, which covers program publication via the Internet and other information networks, such as television. The other three licenses are the Internet content provider license and mobile value-added service provider license, both granted by the Ministry of Industry and Information Technology (MIIT), and the Internet culture business license, granted by the Ministry of Culture. In addition, local telecom operators like China Telecom's Yichang City branch are only allowed to offer IPTV in cooperation with national IPTV license holders. (Oct 28, INTERFAX-CHINA)
China's satellite application industry to be worth 300 billion yuan
With the development of the Compass Navigation Satellite System, the total output of China's satellite application industry will be 300 billion yuan by 2015, demonstrating the massive potential of the market, according to Cao Chong, the director of Compass Civil Application Market and Industrialization Expert Commission, at the recent 2008 China (Hefei) Forum on Compass Navigation Technology and Industrial Development. The Compass System is a satellite navigation system independently developed by China. It boasts navigation, positioning and timing functions. The Compass System, US's GPS, Russia's GLONASS and the EU's GALILEO are regarded as the four major global navigation satellite systems. (Oct 30, People's Daily Online)
Carriers
China Unicom to Appoint New Executive Team
The new China Unicom has fixed a new executive team recently, disclosed people briefed on the matter on October 29, 2008. In detail, the new team is made up of four previous vice presidents for China Unicom and seven previous vice presidents for China Netcom, according to the people. In addition, of all the appointed 28 departmental chiefs at Unicom Group, 15 are from China Unicom and the rest 13 from China Netcom. 13 previous Netcom Group executives and 18 prior Unicom Group executives will take the posts at the 31 China Unicom provincial branches, according to the people. (Nov 3, Sinocast)
China Unicom and China Telecom to challenge China Mobile with Internet and FMC
The new China Unicom and China Telecom will focus their businesses on broadband Internet and fixed mobile convergence (FMC) to take on China Mobile, an industry official told Interfax on Oct. 30. "With the construction of FTTx (Fiber to the x) networks and the development of integrated fixed-line and mobile services, the new China Unicom and China Telecom will be competitive among other operators," Tang Xiongyan, a top engineer from former China Netcom Group Broadband Service Applications Co. Ltd., said. (Nov 3, INTERFAX-CHINA)
China Mobile Starts TD-SCDMA Antenna Bidding
Results for China Mobile's second round of TD-SCDMA bidding are set to be released in the near future, and the company has begun seeking bids on related products from equipment manufacturers. A source from a manufacturer that participated in the bidding revealed that on October 24 China Mobile announced that it would begin soliciting bids on antennae for its TD-SCDMA base stations. Between 5-8 manufacturers are believed to be participating in the bidding. China Mobile requires that all products participating in the bidding first receive the recommendation of a provincial-level China Mobile company. (Oct 30, C114)
New Unicom Announces Company Structure
Sources have revealed that the organizational structure of the new China Unicom has been released. The design calls for 28 departments under the main headquarters, plus an additional vertically managed company. Former department managers at China Unicom and China Netcom will assume positions as general managers for the 28 new departments. (Oct 29, c114)
China Telecom to Expand CDMA Capacity to 70M
At a China Telecom press meeting held recently, deputy director for network development, Xu Sui, revealed that construction on CDMA networks in 342 cities throughout the country will be completed by the end of this year, after which China Telecom's CDMA network capacity will reach 70 mln users. A major area of focus in China Telecom's development plans is to satisfy the wireless Internet needs of 82 'developed' cities. Hou Chunyu, director of China Telecom's technology department revealed that China Telecom plans to merge and connect its CDMA450 network with its newly obtained 800 MHz CDMA network. Afterwards, China Telecom will introduce dual-frequency CDMA handsets, however at the moment it is still waiting for dual-frequency mobile chips. The Ministry of Industry and Information Technology (MIIT) has stipulated that CDMA450 may only be used in rural connectivity projects in developing rural areas, and may not be used to develop mobile services. (Oct 29, China Business News)
Manufacturers
China's Datang to win major share of China Mobile TD-SCDMA orders
Datang Mobile is expected to win the largest share of China Mobile's contracts to build TD-SCDMA networks in 28 cities, the China Business news reported. ZTE Corp and Huawei Technologies are also expected to win significant contracts. China Mobile announced the tender to help expand commercial trials for its TD-SCDMA 3G service to 38 cities on the mainland, from the current 10. (Oct 30, XFN-ASIA)
Huawei launches professional service centre in Jordan
Huawei Technologies, provider of next generation telecommunication solutions to operators, has officially announced the launch of the new Professional Services Competence Centre (PSCC) in Jordan. This centre will extend Huawei services to the operators across the Middle East region. Jordan PSCC complements the recent openings of Egypt Global Technical Assistance Centre GTAC and Bahrain Regional Global Technical Service (GTS). Huawei established a Middle East Centre for Engineering and Deployment Services in Saudi Arabia in 2008. Inauguration of the new PSCC in Jordan took place on 19 October. (Nov 5, Digitalmediaasia)
Huawei, ZTE Won Most Base Station Contracts
Chinese telecom equipment makers Huawei Technologies and ZTE won 43% and 25% of the 67 base station contracts signed and unveiled in the third quarter of 2008 globally, according to latest report released by market research firm EJL Wireless Research. The number of base station contracts unveiled in the second quarter was 68. Plus the 48 contracts that had not been unveiled officially, the total number of contracts clinched in the third quarter was 115, 58 of which were gained by Nokia Siemens. Huawei Technologies was ranking the second place. EJL Wireless Research says in the report that demand for base stations was mainly coming from Asia-Pacific and Africa during the period. And 90% of the CDMA 2000 contracts were seized by Chinese telecom equipment makers. (Oct 29, Sinocast)
Huawei Overtakes Cisco
The global financial crisis has brought a good opportunity for Chinese telecom equipment supplier Huawei Technologies Co., Ltd. to overtake international telecom giant. Recently, Analysys Mason, the world's premier adviser in telecom, IT and media, released a report, saying that Huawei had jumped to the fourth largest network management software supplier, while Cisco Systems Inc. fallen to the fifth. Analysys Mason Analyst Roz Roseboro reveals that Huawei has gained rapid growth in the past five years, and is heading toward the world's top three suppliers. Currently, telecom carriers are looking forward to next-generation services, which is likely to boost their revenue growth. Equipment suppliers play an important role in deploying the services efficiently. (Oct 29, Sinocast)
ZTE To Build LTE, 4G Team
Chinese telecom equipment provider ZTE plans to build a research and development team for LTE and 4G projects with over 2,000 employees, reports Sohu. The company has partnered with 4G research including those housed at Tsinghua University, Southeast University and Beijing Jiaotong University, said Hu Jian, chief of ZTE's Communications Standard Department. (Nov 5, Pacificepoch)
Electronics
Software
IT Outsourcing Giant to Set up New Center
US software outsourcing company CSC, one of the world's largest IT outsourcing firms, said Tuesday it will launch a new delivery center in China as the global financial crisis may force more Western companies to outsource their business to the country. CSC's new delivery center, located in Tianjin, will open next spring. It will serve both CSC's domestic and multinational clients in China and will have 500 employees within the next three years. (Oct 29, China Daily)
Internet
40 million online game players spend 400 yuan each on average
China has had about 40 million people who frequently play online games through major portals, with an average annual spending of each player at 400 yuan (58.8 U.S. dollars). Chinese online game players are continuing increasing in years to come and their average expenditure on online games and related service will also be swelling. (Nov 1, Xinhua)
Other Sectors
China allocates one bln yuan to support enterprise financing
China has allocated one billion yuan (146.41 million U.S. dollars) in credit guarantee for small and mid-sized enterprises, said the Ministry of Finance (MOF). This move aimed to ease financing tension of such kind of enterprises, and support their development. The money will be used to compensate potential losses and risks of financial institutions that provide credit to these enterprises. (Oct 30, Xinhua)
Profits of China's SOEs fall in first 3 quarters amid slowing economy
Profits of China's state-owned enterprises (SOEs), excluding financial institutions, dropped in the first three quarters amid the economic slowdown, according to the latest data released by the Ministry of Finance. SOE profits in the first nine months were 1.11 trillion yuan (162.63 billion U.S. dollars), down 2.9 percent year on year. The January-August profits were 1.3 percent less from a year ago, the ministry has said in a report. (Nov 2, Xinhua)
Listed companies' reports show big gains
Chinese listed companies which have so far completed their periodic reports have shown a rising trend in the first three quarters of this year, with a growth rate of 30 percent, the Shanghai Securities News reported on Monday. Among companies that have reported, 557 gained and 375 performed better than the previous year, accounting for 86.36 percent and 58.14 percent respectively of the total. Though maintaining a year-on-year growth trend, these companies' quarter-on-quarter growth rates declined in the third quarter. (Oct 27, ChinaDaily)
Financial Crisis Cuts Number of Foreign Tourists
As the world economy continues to be overshadowed by the global financial crisis; the tourism industry in China is also being adversely affected. Many Chinese travel agencies remain disappointed as they traditionally welcome a boost in tourism around this time of year. Most visitors have to cut down on their expenses. The number of foreign tourists arriving in China has continued to fall during the past month. Statistics show the number of foreign visitors in China has decreased 0.3 percent in the last three quarters of this year, and fell 6 percent in September, compared with the same period last year. (Oct 27, CRI)
Trade Volume down Five Percent at Yiwu Int'l Commodities Fair
Trade volume at the Yiwu International Commodities Fair, one of China's major foreign trade platforms, dropped by 4.9 percent year on year, with total trade volume reaching 10.4 billion yuan (1.5 billion U.S. dollars). More than 105,000 traders attended the fair, among whom were 16,107 overseas buyers, 5.3 percent lower than last year. The bestseller included appliances, stationeries, electronics and hardware, according to statistics from the fair organizers. The fair has been held for 14 successive years. Yiwu, 300 kilometers away from Shanghai, has the world's largest wholesale market for small commodities. (Oct 26, Xinhua)
