IEBW 112

China Economic Headlines

In this Issue:

Coming Events

General News on Chinese Economy

Consumer Goods

Environment & Energy

Telecom & IT

Medical & Healthcare

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 will organize 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.  For more info: tian.hong@israeltrade.gov.il.

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

GDP growth slowed down to 9% in Q3
China's economy grew 9.9 percent year-on-year in the first three quarters of this year, according to official figures released on Monday, showing a trend of a slowdown amid the current global financial crisis. In the third quarter, the GDP growth rate slowed down to 9 percent, the lowest in five years, from 10.6 percent in the first quarter, 10.1 percent for the second quarter and 10.4 percent in the first half of 2008. (Oct 20, ChinaDaily)

China's CPI rises 4.6% in Sept
China's consumer price index (CPI) rose 4.6 percent in September over the same period last year, the National Bureau of Statistics said on Oct 20. The figure, compared with 7.1 percent in June, 6.3 percent in July, 4.9 percent in August and a nearly 12-year-high of 8.7 percent in February, was broadly in line with most forecasts. An official with the Ministry of Commerce who declined to be named told Xinhua that the declining CPI growth was within the government's expectation, and it was likely to continue a declining momentum in the future. (Oct 20, ChinaDaily)

China announces new policy to boost property sector 
China announced late on Wednesday an array of policies, including tax exemption and mortgage deposits reduction, to boost the falling real estate sector amid the global economic downturn. The People's Bank of China, the central bank, said in a website circular late on Wednesday that the down payment for an initial purchase of housing with a floor space of more than 90 square meters for self use could not be less than 20 percent. Previously, the figure was 30 percent. The new practice will take effect Oct. 27. (Oct 22, Xinhua)

Agricultural Bank Gets 130 Bln Yuan Recapitalization
China's central government has endorsed a long-awaited restructuring of the Agricultural Bank of China, the country's 4th largest, in an attempt to invigorate rural financing to aid the farmers. The bank is the last of China's four major commercial banks to be restructured in preparation for a share listing, later possibly next year in Shanghai. (Oct 23, China Daily)

Israel – China Bilateral Trade & Economy

Consumer Goods

50% of toy firms 'gone in 2 years
As many as half of all toy manufacturers in the Pearl River Delta could go out of business within the next two years, an industry expert said, following the closure of the Smart Union toy factory in Dongguan last week. Speaking in an interview with Guangzhou Daily, Wang Zhiguang, vice-chairman of the Dongguan Toy Industry Association, said: "Of the 3,800-odd toy firms in Dongguan, no more than 2,000 are likely to survive the next couple of years." His pessimistic forecast is based on analysis of the rising cost of raw materials, soaring overheads, the global market slowdown and deprecation of the US dollar. Companies with good financials and their own brands will find it easier to survive, while others, such as those dependent on OEM (original equipment manufacturing), are more likely to fail, he said. (Oct 21, China Daily)

China's first petty commodity coding standard released
Needles, fasteners, even lighters can now be traded through e-commerce as China releases a code standard for small commodities in Yiwu. It's the first country to have such a code standard which covers 1.7 million varieties of small commodities. The code, jointly compiled by the Ministry of Commerce, the General Administration of Customs and national standardization research institutes, will be officially put in use as a national standard on Nov. 1. (Oct 20, Xinhua)

Dairy firms facing a chilly winter
Inner Mongolia's Yili Industrial Group and Shanghai's Bright Dairy Group, two major dairy firms hit by China's scandal over contaminated milk, estimated they would post net losses for the third quarter. Dairy firms are suffering a combined hit from sales drops and increasing costs. Domestic diary producers would experience a "chilly winter" due to shrinking demand and increasing watchdog pressure. Broad losses in the industry are inevitable, although the recall and compensation costs will not damage long-term operations. (Oct 15, Shanghai Daily)

Environment & Energy

Beijing to Cut License Plate Numbers Issuance
Beijing is expected to substantially cut its annual issuance of car license plates by two thirds to only 100,000 every year in a continual bid to harness its existing air pollution following the Beijing Olympic Games. This is the latest news coming from a recent seminar on the prospect of Beijing's automobile market that began on October 15 in Beijing, the sohu.com reports. It is believed to be part of the city's new series of car flow control measures to follow suit to the situation during the Olympics, when Beijing's sky was fortunately brought back to a historic blue and cleanly fresh in history. (Oct 23, CRI)

Telecom & IT

Telecom

China Netcom, China Unicom merger completed, biggest in country's history 
China Netcom Group Corporation (Hong Kong) Limited was fully incorporated into China Unicom Limited here on Wednesday, creating the new China Unicom (Hong Kong) Limited. Netcom's shares on the Hong Kong Stock Exchange and its American Depositary Shares on the New York Stock Exchange were delisted. The merger marked the end of the country's telecom restructuring in the capital market since numerous ministries jointly decided in May to reorganize the telecom industry. (Oct 15, Xinhua)

Handsets remain top obstacle -- TD-SCDMA Forum
TD-SCDMA is stilling lagging behind in handset development, and greater participation from leading international handset makers would help resolve the issue, says the TD-SCDMA Forum. The lack of international support has put TD-SCDMA at a disadvantage in terms of quantity and quality compared with CDMA and W-CDMA, he says. These technologies have support from 100 handset makers worldwide and have 500 models and 1,000 models available in the market, respectively. (Oct 23, TelecomAsia)

New CMMB Tuner Developed By Sharp
Sharp is jumping into the Chinese mobile video broadcasting sector with a new mobile TV tuner that supports China Multimedia Mobile Broadcasting. China's efforts to provide digital mobile broadcast services intensified in anticipation of the Beijing Olympics, and broadcasts under the CMMB system, a standard advanced by the State Administration of Radio, Film and Television (SARFT), began in 37 cities in July 2008. By the end of this year, SARFT plans to expand CMMB network coverage to more than 300 additional cities. (Oct 22, ChinaTechNews)

84.5 million Chinese uses mobile phones to surf Internet
About 84.5 million Chinese were using their mobile phone to log onto the Internet, which accounted for nearly 30 percent of the country's total netizens. Yang Zemin, director of the Telecom Research Institute under the Ministry of Industry and Information Technology, said China registered 68.7 million new cell phone users in the first eight months, which brought country's mobile phone user population to about 616 million. He estimated the number of Internet users had reached 275 million by the end of September and 85 percent were broadband users. (Oct 15, Xinhua)

Chinese telecom companies ordered to share, co-build infrastructure 
A circular jointly issued by the Ministry of Industry and Information Technology (MIIT) and the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council required China Mobile, China Telecom and China Unicom to promote the sharing and co-construction of infrastructure and avoid repeat building in the industry overhaul and the new round of network construction starting this month, according to the circular. The existing telecom towers and lines must open to rivals. (Oct 7, Xinhua)

3G & Beyond

Carriers

Operators Support WAPI in Wireless City Construction
A recent report from the "Wireless City Operating Models" Seminar co-chaired by the Guangdong 3G Industry Development Alliance and the Hong Kong Wireless Development Center says that China Mobile and China Telecom are currently preparing large-scale Wi-Fi hotspot deployment, and are clearly stipulating that all access point (AP) bidding for contracts must be compatible with WAPI (WLAN Authentication and Privacy Infrastructure), China's home-grown wireless LAN standard. (Oct 20, Xinmin Evening News)

China Telecom to Begin CDMA2000 Testing in Beijing
At the P&T/Expo Comm 2008 currently underway in Beijing, China Telecom announced that it has basically completed preparations for the upgrade of its CDMA networks to CDMA2000, and plans to begin internal testing in Beijing by the end of the year. CDMA2000 equipment for the Beijing network is entirely provided by Huawei and other domestic brands. Most CDMA handsets in use already have CDMA2000 functionality, meaning that subscribers won't have to purchase new handsets after the upgrade. (Oct 23, BeijingDaily)

Details of China Telecom CDMA Bidding Results
A source at a telecommunications equipment firm confirmed today that China Telecom has finalized the results for its joint first and second rounds of CDMA equipment bids. Combining the two rounds expanded the scope of the tender from 81 cities to 342 cities throughout China, and increased the number of base stations ordered from nearly 90,000 to 130,000. China Telecom has requested equipment manufacturers complete all necessary network construction work by the end of this year. The newly added orders for radio transceivers were distributed to manufacturers as follows: 25% for Huawei, 25% for ZTE, 19% for Alcatel-Lucent, 16% for Motorola, 14% for Nortel and 2% for Samsung. The breakdown by cities was as follows: 157 cities for ZTE, 53 cities for Alcatel-Lucent, 47 cities for Huawei, 44 cities for Motorola, 41 cities for Nortel and 13 cities for Samsung. (Oct 20, China Business News)

China Telecom unlikely to compete with China Mobile in mobile service
China Telecom is unlikely to compete with China Mobile in mobile business in an all-round manner and instead, the company would tap some distinctive businesses through integrating mobile resources and its fixed network, said Si Furong, vice general manager of Integrated Telecom Department of China Telecom. Quoted by Beijing News, Si said the CDMA users only account for five percent of the total mobile business in China, in comparison with the 500 million users of China Mobile, so the company would launch some fresh businesses that neither China Mobile nor China Unicom ever tried. China Telecom has completed the merger of CDMA network on October 1 and vowed to keep the CDMA business to guarantee the continuity. (Oct 22, Xinhua)

SK Telecom to partner with Unicom on W-CDMA
SK Telecom will be working with China Unicom on developing new services and applications for the Chinese operator’s upcoming W-CDMA network, according to a company executive. Lee Suk-hwan, CEO of SK Telecom China Holding, said both companies have reached consensus [to cooperate on W-CMDA] and will soon start studying the details of partnership. The partnership with Unicom is one of the three major focuses of SK Telecom’s strategy in China. The Korean operator will also continue its technical cooperation on TD-SCDMA with the Chinese government and Datang Mobile, and focus on the development of new applications and services for TD-SCDMA. The company will also explore opportunities in TD-LTE, Lee added. Another focus is internet and content, which Lee said has a huge potential in China, especially in areas like telematic, e-commerce and payment, which are still in initial stages. SK Telecom has invested over 1.1 trillion won ($777 million) since it entered the China market in 2006. (Oct 23, Telecomasia)

Unicom launches W-CDMA tender
China Unicom has launched its first round of bidding for W-CDMA equipment. Ericsson, Huawei Technologies, ZTE, Nokia Siemens Networks, and Alcatel-Lucent are all reported to be participating in the bid. Although the Chinese regulators have not yet formally awarded 3G licences, the country’s newly reorganised carriers are all actively planning their UMTS network roll-outs; China Telecom has completed its first round of bidding for CDMA2000 EV-DO equipment, while China Mobile is in the process of holding a second round of bidding for TD-SCDMA apparatus. (Oct 15, Xinhua)

Shandong Unicom to Reinvest CNY2bn Building Base Stations
Shandong Unicom, a subsidiary of China Unicom, is to reinvest CNY 2 billion by 2008-end building 3,000 GSM base stations, in a bid to drive the total number of China Unicom's base stations in the eastern province to hit 10,000. The expansion project will improve the quality of further coverage in cities across the province, particularly the 1,800M continuous coverage in Jinan, Qingdao, Yantai, and Weifang, with a view to making preparations for upgrading of the entire network. (Oct 21, Sinocast)

China Mobile posts earnings jump, but growth is slowing
China Mobile announced a 26% jump in quarterly earnings as the world's largest wireless carrier grabbed market share from foe China Unicom, but disappointed investors with a sharp drop in growth. China Mobile's third-quarter performance lagged expectations as the Chinese economy slows and competition heats up, pressuring margins. Its showing also paled in comparison to the 51 percent growth chalked up in the second quarter. Global markets are reeling from their worst financial crisis since the Great Depression, helping take the shine off telecoms operators' bottom lines. Singapore Telecommunications announced cost cuts this month to try and mitigate the anticipated fallout. Some analysts warn that China Mobile, one of the largest companies by value in Hong Kong, may cede its dominant position in China - the world's largest telecommunications market - with Unicom and China Telecom expected to battle aggressively for third-generation, or 3G, mobile customers. (Oct 21, Reuters)

China Mobile May Expand TD-SCDMA Applications To Video, Gaming
China Mobile is considering expanding TD-SCDMA handset applications to include services like video blogs, online gaming and instant video messages, reports TechWeb quoting company vice president Sha Yuejia at a TD-SCDMA summit on Wednesday. China Mobile is targeting 400,000 TD-SCDMA users in ten trial cities before the end of 2008. (Oct 10, Pacificepoch)

Manufacturers

Lenovo, Alibaba.com, Intel Jointly Launch E-commerce PC For SMEs
China's leading PC manufacturer Lenovo, e-commerce platform Alibaba.com and the chip maker Intel have jointly launched an e-commerce PC that is tailored for small and medium enterprises in China. The e-commerce PCs includes desktop and notebook products under Lenovo's brands Yangtian series and ThinkPad SL with price at about CNY3,000. Lenovo's Yangtian series products are specially designed for e-commerce. With applications related to the e-commerce sector, the computers can assist the corporate users in setting up websites, displaying their products, conducting business communications, and monitor traffic so as to simplify the process of e-commerce and cut costs. (Oct 23, ChinaTechNews)

Intel teams up with China Mobile for TD-SCDMA netbook development
Intel is set to collaborate with China Mobile in launching netbooks targeted at the mainland China market. The netbooks will bundle TD-SCDMA 3G services from China Mobile. The TD-SCDMA netbook will add to Intel’s lineup of wireless Internet access-enabled ultramobile PCs (UMPCs). Intel has previously teamed up with Hasee Computer Co. Ltd, a mainland-China based PC maker, in marketing its Centrino 2 laptops using China Telecom Corp. Ltd’s Wi-Fi services on the mainland. (Oct 16, globalsources)

HP to expand PC manufacturing in China
Hewlett-Packard Co plans to operate a computer manufacturing plant in China's Chongqing municipality, expanding its presence in Western China in order to better serve the local market. The Chinese government will build the 20,000-square-metre facility in Chongqing, HP said. The company plans to make notebook and desktop PCs, according to the terms of a memorandum of understanding with Chongqing municipality. China, the world's second-largest personal computer market by unit sales, is dominated by Beijing-based Lenovo Group. (Oct 10, Reuters)

Electronics

Inspur To Invest CNY3 Billion In Semiconductor Lighting Production Base In Jinan
Inspur Group, one of China's biggest server manufacturers and server solutions providers, has signed a construction contract with the management committee of Jinan High-tech Industrial Development Zone to build a first-class semiconductor lighting research and production base in the next five to eight years. Inspur Group will invest CNY3 billion in this project. As a province that has an early start in the research and development of semiconductor lighting technologies, Shandong's research and development capabilities in this sector provide it a leading position in China's semiconductor lighting industry and some of its products even reach the international advanced level. (Sep 12, ChinaTechNews)

Software

Internet

Report: More Chinese Children Using The Internet
According to a report on Chinese minors' use of the Internet jointly conducted by the China Youth Social Service Center, the Youth Center of the Chinese Academy of Social Sciences and the China Youth University for Political Sciences, about 85.6% of Chinese minors that participated in the investigation have accessed the Internet and about 66.7% of them access the Internet at least once a week. (Oct 22, ChinaTechNews)

China Still A Top Email Spam Location
A new mail spam report from Commtouch says China is a top location for zombie IP addresses. The "2008 Email Threats Trend Report" is based on the automated analysis of billions of email messages and covers the third quarter of 2008. Spam levels throughout the third quarter averaged 77% around the world, as in the previous quarter, ranging from a low of 61% to a peak of 94% of all email. Legitimate sites and senders were used by spammers to cloak their illicit activity, and over half of zombies and bots change their IP address daily. Germany has the fastest rate of zombie IP address turnover, at approximately 79% per day, and China is a close second at 78% turnover per day. New spam tactics during the quarter included links to Flash files,
ASCII art spam, and hidden Bayesian poisoning text combined with HTML tricks. (Oct 17, ChinaTechNews)

China Internet Shopping Sales Doubled During Golden Week Holiday
According to statistics from online retail platforms such as Taobao.com and Eachnet.com, the average daily trading volume of Chinese online shops during the recent National Day weeklong holiday in China was about CNY300 million, a year-on-year increase of 200%, which also doubled compared with normal periods. On the website of Taobao.com, many products were sold with 50% off over the weeklong holiday and some even sold at 20% of their market prices. The promotion strength was almost the same as general markets and department stores. (Oct 9, ChinaTechNews)

Other

Nokia's VC invests in first Chinese firm
Nokia's $250 million venture capital arm invested in China's mobile advertiser Madhouse, marking its first deal in the mainland, executives said on Tuesday. Nokia did not disclose details of its investment in Madhouse, but China and India are two of its main focuses along with the United States and Europe. Shanghai-based Madhouse has been growing rapidly, benefitting from the world's largest wireless market in terms of users. China is also Nokia's largest market, and while much of its growth in the mainland is focused on lower-end handsets, Nokia says the potential for further growth is still large. (Oct 23, ChinaDaily)

Medical & Healthcare

Diabetes Threat to Rural People
Doctors are warning of new health risks to the rural population as their living conditions improve. "An increasing number of people have diabetes or are at risk to the disease in the rural areas, and at a younger age," Ning Guang, professor of endocrinology and vice president of Shanghai Ruijin Hospital, said at the third International Endocrine Symposium in Shanghai on Friday. The disease is grouped under metabolic syndrome - risk factors linked to overweight and obesity that increase a person's likelihood of suffering a heart attack, diabetes, stroke, and hypertension. (Oct 22, ChinaDaily)

China Launches US$50 Mln Rural Health Project
An over US$50 million pilot project to improve public health in rural areas was announced in Beijing on Monday. The pilot program is designed to seek ways for the improvement of rural health services and sustained improvement of health level of local people, according to the Ministry of Health. The country's Ministry of Finance is responsible for paying off 80 percent of the loan. Provincial departments of finance would undertake the remaining 20 percent. The Ministry of Health did not say when it will begin the program but once it starts it will be carried out in 40 counties in five years. Those counties are in eight provinces and municipalities, including Shanxi Province, Shaanxi Province, Qinghai Province, Heilongjiang Province, Gansu Province, Jiangsu Province, Henan Province and Chongqing municipality. (Oct 21, Xinhua)

Other Sectors

China to raise tax rebates for textile, garment products
China is raising tax rebates for certain exports to help producers cope with smaller profit margins as a result of slacking market demand, the yuan's appreciation and rising production costs. Those rebates will start from Nov. 1, according to a circular on the website of the Ministry of Finance (MOF) on Tuesday. The adjustment involves 3,486 items from labor intensive industries such as textile, garment, toy, hi-tech and high added value sectors like anti-AIDS drugs and tempered glass. Those items account for 25.8 percent of what's covered by the country's Customs Tariffs. (Oct 22, Xinhua)

China Sees 84 Pct VC Collection Decline in Q3
A new industry report shows venture capital fund collection in China fell 83.7% in the third quarter year-on-year, against the backdrop of the global financial turmoil and slower world economic growth. In total, 20 new venture capital funds with a combined 492 million U.S. dollars were set up from July to September, Zero2IPO Group, a service provider in the domestic VC and private equity industry, said over the weekend. The report revealed 16 new VC funds were established by domestic financial institutions which garnered a collective 391 million U.S. dollars, accounting for 79.3 percent of the total capital pool raised. The Beijing-based research company attributed the strong growth momentum to support and encouragement from local governments.    (Oct 19, Xinhua)