China Economic Headlines
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In this Issue
Coming Events
General News on Chinese Economy
Consumer Goods
Environment & Energy
Telecom & IT
Medical & Healthcare
Other Sectors
Coming Events
Mid-Jan 2009: Chinese Minister of Commerce to visit Israel
Chinese Minister of Commerce will pay a formal visit to Israel in the middle of January to hold official disscusion with the Deputy Prime Minister and Minister of Industry, Trade & Labor, Mr. Eliyahu Yishai, on issues of both concerns. A business delegation of representatives from leading Chinese firms from various sectors, such as IT & Telecom, Water & Energy, Medical and Pharmaceutical and so on, will be accompanying his visit.
General news on Chinese economy
China's social investment to total 18 trln yuan in 2009
China's total social investment is predicted to reach 18 trillion yuan (2.64 trillion U.S. dollars) in 2009, the National Development and Reform Committee (NDRC), the country's top economic planner, announced here on Thursday. "China's total social investment exceeded 13 trillion yuan in 2007 and is expected to top 16 trillion yuan this year," said NDRC head Zhang Ping. "The 4 trillion stimulus package is only part of the whole picture." Zhang said the central stimulus package was roughly divided into seven parts, with 1.8 trillion yuan going towards large-scale infrastructure projects such as railways, roads, airports and the national grid. (Nov 27, Xinhua)
Think tank wants RMB devaluation
China needs to depreciate the renminbi against the US dollar to cushion the greenback's sharp appreciation versus other major currencies over the past months as part of the macro-control measures, Pei Changhong, director of the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences (CASS), said at a press conference held in Beijing. Pei's comments came on the heels of the renminbi's largest one-day fall against the dollar on Monday. Some analysts say the fall is a sign that the government may have decided to use depreciation to bolster the struggling export sector and alleviate unemployment. (Dec 3, ChinaDaily)
Renminbi exchange rate drops by the maximum limit for two consecutive days
A trend has emerged where for two consecutive days the exchange rate of the renminbi against the dollar has dropped by the maximum amount permitted. Experts in the industry believe that the renminbi depreciation is a normal event, and although there was recently speculation that the renminbi would devalue, there is still no evidence that the renminbi has already made a u-turn onto the path to devaluation. (Dec 3, People’sDailyOnline)
China's economy expands at 9.8% in 2008
China's top think tank, the Chinese Academy of Social Sciences(CASS), says that the countr's economy is expected to slow down to 9.8% in 2008 and further decline to 9.3% in 2009. In its annual Blue Paper on China's economy, which was released on Tuesday, CASS noted the Chinese economic downturn is mostly attributed to the global financial crisis. The Blue Paper also notes that housing prices will fall dramatically in a short period of time, and subsequently enter a rather long adjustment period in 2009. (Dec 2, CRI)
China Industrial Output Growth 'Slid to 13-year Low in November'
Growth in China's industrial production is likely to have slowed to a 13-year-low of 6 percent in November, China International Capital Corp. (CICC) said in a research note on Monday. The slowdown reflects weak domestic and external demand, which led more companies to cut production, said the domestic investment bank. (Dec 2, Xinhua)
China announces $586 billion 'Radical' Stimulus Package
China's massive stimulus package is its "biggest contribution to the world," Premier Wen Jiabao said Monday, as hopes rose that heavy spending on construction and other projects would help support global growth by fueling demand for imported machinery and raw materials. With Sunday's announcement of the 4 trillion yuan ($586 billion) package, China staked out a bold position as President Hu Jintao prepared for next weekend's Washington meeting of leaders of 20 major economies to discuss a response to the global financial crisis. (Nov 10, AP)
Industrial growth slows to a crawl
China's industrial growth saw a pronounced slowdown last month as the global credit squeeze and declining orders began to bite. The index of overall industrial growth - which covers value-added production from all enterprises earning at least 5 million yuan ($733,000) last year - rose 8.2 percent year on year in October, plunging 9.7 percentage points from a year earlier. It was also down 3.2 percentage points from September, according to figures released by the National Bureau of Statistics (NBS). (Nov 14, China Daily)
October fiscal revenue drops as slowdown bites
China's fiscal revenue fell 0.3 percent in October from a year earlier, the Ministry of Finance said on Thursday, a sharp decline from earlier in the year as a slowing economy weighs on the government's tax intake. It was the first such decline in fiscal revenue for a non-holiday month since 1996, according to economists at investment bank China International Capital Corp. The drop also marked an abrupt reversal from last year, when the government's earnings surged by 32.4 percent. As recently as July, fiscal revenues were up 16.5 percent on a year earlier. (Nov 13, ChinaDaily)
China to Launch Tax Reform to Boost Growth in 2009
China's government on Monday announced it would extend its VAT reform to all industries nationwide from Jan. 1, 2009, to reduce the tax burden on companies by more than 120 billion yuan (17.6 billion U.S. dollars) next year. As part of a stimulus package of 4 trillion yuan to be spent by the end of 2010, the reform was aimed at a shift from the existing production-based to a consumption-based VAT regime, which would enable companies to get tax deductions on spending on fixed assets. (Nov 10, Xinhua)
$14.7 bln Additional Loans As Exports Growth Slows
The People's Bank of China, the country's central bank, said in Beijing Tuesday it would guide policy banks to make additional 100 billion yuan (14.7 billion U.S. dollars) of loans by the end of 2008. The money would go to the construction of key projects and the purchase of agricultural products, the central bank said, without elaborating. It also encouraged commercial banks to provide supporting loans for projects covered by the central government's investment of 100 billion yuan before the year end. (Nov 12, CRI)
China Reports $ 35.2 bln Trade Surplus in Oct.
China's General Administration of Customs announced a record monthly trade surplus of 35.2 billion U.S. dollars in October. It was the fourth consecutive monthly rise since July. Though exports growth further slowed to 19.2 percent from 21.5 percent in September, which might have led to smaller trade surplus, the trade gap continued to widen on sharply declining imports. China's exports reached 128.3 billion U.S. dollars, while its imports registered 93.1 billion U.S. dollars in October. (Nov 11, Xinhua)
Consumer Goods
Grain production set for new high
China's grain yield this year will "definitely" hit a record high despite shortages in the world, a senior agricultural official said. It will be the fifth consecutive year of high grain yield. The output this year is likely to break the record of 512 million tons established in 1998. Last year, the yield was 501.5 million tons. (Nov 25, CCTV)
China to Overhaul Dairy Industry
Chinese government on Wednesday launched a major campaign to reform its dairy industry in an attempt to restore consumer confidence. The State Council wants to upgrade the entire industry from cow breeding to final sales. The tainted milk powder scandal was a major food security incident. It not only damaged the health of babies and children, but also hurt China's national image, said an official with the National Development and Reform Commission (NDRC). (Nov 20, Xinhua)
Environment & Energy
Funds for energy and pollution control
China’s central government has earmarked 2.5 billion yuan (US$363 million) in energy conservation and pollution control projects as part of a national plan to stimulate economic growth. The funds will be spent in projects such as upgrading coal-fired boilers, water conservation and industrial waste management. (Dec 4, Shanghai Daily)
China promotes new energy vehicles
China aims to boost the number of new energy vehicles owned to 60,000 by 2012 with the nation's policy support, said Wan Gang, minister of science and technology, during the inauguration ceremony for the nation's large-scale application project to promote energy saving and new energy vehicles held in Chongqing on November 27. Chongqing Municipality will become China's first large city to launch this project. (Nov 28, People’s Daily)
Nuclear and Wind Power Get Energy Subsidy
The central government has decided to allocate 800 million yuan (US$11.76 million) by the end of this year to subsidize China's top nuclear and wind power providers. The improvement is part of the government's 100 billion yuan additional fiscal package, which should be spent by the end of this quarter, to prevent an excessive economic slowdown. The subsidy is mainly targeted at key technology for national nuclear power and wind turbine producers. (Nov 26, CRI)
China, US to Collaborate on Solar Energy Technology
China and the United States have agreed to work together on research into advanced solar energy technologies. The Institute of Electrical Engineering (IEE) under the Chinese Academy of Sciences (CAS) and the US National Renewable Energy Laboratory (NREL), which is affiliated with the Department of Energy, signed a memorandum of understanding over the weekend. Under the pact, they'll share research on photovoltaic (PV) power generation technologies. (Nov 18, Xinhua)
Telecom & IT
Telecom
Telecom Investment to Soar upon 3G Licenses
The Ministry of Industry and Information Technology yesterday required telecom carriers to issue 3G licenses to TD, WCDMA, and CDMA 2000 telecom networks operators within this year.
China's telecom industry has slipped into recession as a result of the global financial crisis. The ministry originally planned to issue three 3G licenses to China Mobile, China Telecom and China Unicom in this September, but it put it off later to the first half of 2009. As the Chinese government lately came up with a big economic stimulus plan, the ministry just hoped to issue the 3G licenses in advance to spur telecom infrastructure construction. (Nov 21, SinoCast)
MIIT: Revenue Of China's Telecom Industry Up 8.1% In First Ten Months Of 2008
The Ministry of Industry and Information Technology has published a report on China's telecom industry for the first ten months of 2008, which says from January to October 2008, China's telecom industry realized revenue of CNY679.79 billion, a year-on-year increase of 8.1%. Revenue from the mobile phone sector saw a year-on-year increase of 15.7% and the revenue accounted for 54.8% of the total revenue of China's telecom industry; revenue from the data traffic business enjoyed a year-on-year increase of 38% and the revenue accounted for 9.7% of the total income; revenue from the fixed-line business saw a year-on-year decrease of 7.9% and the revenue accounted for 21.1% of the total. (Dec 3, ChinaTechNews)
3G Struggle Approaches in China
China has dangled a carrot in front of telecom-equipment makers for years: billions of dollars for third-generation mobile networks. With the rollout finally on the horizon, though, foreign competitors could miss the lion's share just as revenues flatten out elsewhere. Beijing could hand out 3G licenses to telecom operators as soon as mid-December. They in turn plan to spend at least $44 billion over three years upgrading to the new technology. Ericsson, Alcatel-Lucent and Nokia Siemens Networks have all worked hard to build relationships in China. But Chinese firms reportedly took the biggest share of a recent tender by China Mobile for 3G equipment. Ericsson, which had hoped for 10%, took just a 5% share. (Dec 3, DowJones)
China poised to take FTTx lead
China is on par to become the world's leading nation in terms of fiber subscribers by as early as 2009, attracting up to 18 million new subscribers in 2009 alone, and outpacing current leaders Japan and South Korea. According to Ovum analyst Lynn Hutcheson there will be around 6 million FTTH/FTTB subscribers by the end of the year, with China Telecom capturing 80% of the market and China Unicom the remaining 20% - but that figure will more than double next year. (Nov 25, TelecomAsia)
Carriers
China Mobile pursues its own cellphone software platform
China Mobile, the largest cellco in the country, has been vocal in complaining about being stuck with the homegrown 3G standard, TD-SCDMA, and is in a rush to migrate to LTE to make up for its shortcomings. But the operator is now looking to increase its influence over the handset business by creating its own semi-proprietary cellphone software platform. This will be based on Google Android, say insiders, but will feature significant enhancements that China Mobile hopes will, in the first phase, give it tight control over the development agendas of its handset suppliers; and in the second phase, enable it to influence global mobile internet standards. (Dec 3, c114)
China Mobile Researches New 2G/3G Exchange Technology
China Mobile has revealed that the company is currently cooperating with chip and terminal manufacturers to research and develop new interoperable 2G and 3G technology, and is now conducting tests of the technology. No problems currently arise when TD-SCDMA mobile phones transfer to the GSM network, however when GSM mobile phones transfer to the TD-SCDMA network, phones must be restarted before they can operate correctly. China Mobile has stated that, once developed, the new technology will allow for smooth transitioning between the GSM and TD-SCDMA networks. Once the new technology is launched, current interoperable software will also need to be upgraded. (Nov 24, SOHU IT)
China Mobile Plans 3rd round Deployment Of TD-SCDMA
Although the final result for its second-round TD-SCDMA tender has not come out yet, China Mobile has now started its planning for the third-round TD-SCDMA deployment and the company will reportedly set up TD-SCDMA networks in 162 Chinese cities. According to local media reports, China Mobile has already handed in its third-round TD-SCDMA construction report to the Science and Technology Department of the Ministry of Industry and Information Technology. The report says that China Mobile will construct TD-SCDMA networks in 162 Chinese cities before the end of 2009. The company may invest approximately CNY55.8 billion to construct 57,421 base stations. Of those funds, about CNY39 billion will be used in wireless network construction, including CNY20.2 billion in wireless equipment purchases, and CNY18.8 billion in other expenditures. (Nov 13, ChinaTechNews)
China Telecom Selects Alcatel-Lucent for USD 230 Million Upgrade for CDMA Mobile Network
Alcatel-Lucent today announced that it has been selected by China Telecom, China's leading telecom operator, to provide end-to-end communication solution for China Telecom and increase the capacity and coverage of its mobile voice and data network throughout the country. The contract was secured through Alcatel Shanghai Bell, Alcatel-Lucent's Chinese flagship company. With this USD 230 million contract, Alcatel Shanghai Bell will provide its unparalleled end-to-end CDMA wireless networking solutions for China Telecom in 56 cities of 9 provinces in China. (Dec 3, c114)
China Telecom, China Unicom Sign First Resource Sharing Agreement
China Telecom Qinghai branch and China Unicom Qinghai branch have formally signed a Framework Agreement on Joint Construction and Sharing of Telecom Infrastructure Resources, marking the birth of China's first telecom sharing agreement since the Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission of China's State Council issued a notice to promote infrastructure sharing in the Chinese telecom industry. On September 28, 2008, MIIT and the SASAC jointly published a notice to limit the redundant network constructions of Chinese telecommunications operators and to avoid the waste of resources caused by the redundant systems. (Nov 14, ChinaTechNews)
China Unicom to Launch 1st WCDMA Trial Network on Dec 31
China Unicom is scheduled to launch its first WCDMA trail network on December 31, 2008 and users in Wuxi now can apply to participate in the experiment by sending shortage messages.
Chinese regulators are likely to issue 3G licenses at 2008-end. China Unicom, which expects to obtain the WCDMA license, has kicked off works on WCDMA trail networks. The mobile carrier plans to initially build WCDMA trail networks in seven Chinese cities, including Shanghai, Shenzhen, Foshan, Liuzhou, Zhengzhou, Baoding, and Wuxi. (Nov 26, c114)
Manufacturers
Datang To Invest CNY10 Million To Build Branch In Tianjin
The board of directors at Chinese telecom equipment maker Datang has approved the proposal for building a Tianjin communications terminal manufacturing plant, in which Datang Telecom will invest CNY10 million. According to the decision of the twenty-fourth meeting of the fourth board meeting of Datang, the company will invest cash capital of CNY10 million to register a wholly-owned subsidiary named Datang Telecom Tianjin Communications Terminal Manufacturing Company in Tianjin Airport Industrial Park. The new communications terminal manufacturing plant will be committed to terminal and access businesses. The company has already been approved by the Tianjin Administration for Industry and Commerce. (Nov 21, ChinaTechNews)
Huawei to build 40G WDM transport network for China Unicom
Huawei announced that it has been selected to build a 40Gb/s (40G) optical transport network for China Unicom across five major cities in Northern China, centred on Beijing. The company said that the 40G wavelength division multiplexing (WDM) transport solution will substantially increase China Unicom's network capacity and enable it to meet the increasing demand for high-bandwidth broadband from China's business and residential customers using new multimedia services. Huawei also said that its 40G WDM solution can achieve ultra-long haul transport without electrical regeneration, reducing investment costs and enabling efficient and scalable deployments in countries like China where dense urban centres are often separated by vast distances. (Dec 3, TelecomWorldWire)
Ericsson to Invest more in China
Ericsson has got ready for the 3G era and will not scale back investment in China due to the global financial crisis. Instead it is likely to bet more in this fast growing economy in the coming years, according to vice president of Ericsson China. Johan Bergendah, chief executive officer of Ericsson, says that so far the impact posed by the financial turmoil on the telecom industry is still unpredictable. But one thing is for sure: everybody is shifting their focus from the West to Asia Pacific, especially toward China and India. (Nov 29, c114)
Electronics
SMIC to gain TD-SCDMA orders on partnership with Datang
Semiconductor Manufacturing International Corporation (SMIC) is expected to receive a positive sales contribution from its strategic partnership with Datang Telecom Technology & Industry Holdings for the first quarter of 2009, according to sources in the China semiconductor market. The sources believed that Datang will likely beat out other major telecom equipment suppliers to win orders for a government project for TD-SCDMA wireless network equipment, and SMIC is likely to be a direct beneficiary. (Dec 3, DITITimes)
Microsoft spending $1b to boost R&D in China
Software giant Microsoft said it will spend $1 billion on R&D in China over the next three years, reiterating its long-term investment after the company's recent anti-piracy effort angered many users in the country. Zhang Yaqin, chairman of China Research and Development for Microsoft, said the spending is mainly targeted at staffing and resources for R&D. He said the investment does not include the $300 million the firm is spending on its new research center in Beijing. The investment plan came along with Microsoft's appointment of Simon Leung, a former executive at Motorola Inc, as the new chairman and chief executive of the firm's China operations. (Nov 14, China Daily)
Other
Baidu CEO Tops 2008 Hurun China IT Rich List
According to the 2008 Hurun China IT Rich List published on November 26, 2008 in Hangzhou, Li Yanhong "Robin", CEO of the Chinese Internet search engine Baidu.com (BIDU), topped the list with net worth of CNY13 billion, followed by founder of Tencent Ma Huateng and founder and CEO of NetEase (NTES) Ding Lei with CNY12.5 billion and CNY9.8 billion, respectively. (Nov 28, ChinaTechNews)
China sees mounting number of IPR cases in first ten months
China's courts had handled more than 20,000 cases related to intellectual property rights (IPR) in the first ten months of 2008, a year-on-year rise of nearly 40 percent. It was revealed by a senior court official on Friday at a national seminar on IPR trials held in southwest China's Chongqing Municipality. (Nov 29, Xinhua)
Medical & Healthcare
Rural Clinics to Get New Investment for Better Equipment
Clinics and hospitals in China's rural areas and state farms will get 4.8 billion yuan (US$702 million) this year to improve infrastructures, a Ministry of Health spokesman said on Sunday. The money is part of a 21.7-billion-yuan investment plan announced by the government in 2006 with aims to overhaul the nation's rural health care network by 2010. The investment will be spent on new buildings and medical equipment in more than 13,000 clinics and hospitals in villages, townships, and state farms and forestry farms. (Nov 23, Xinhua)
Other Sectors
Vacancy rate up for Grade A offices
The vacancy rate at Shanghai's Grade A office buildings has more than doubled from a year earlier amid unprecedented supply and slackened demand. The latest report from Savills, the UK property services company, concluded that the Grade A vacancy rate had risen from less than 5 percent at the beginning of 2008 to the current 11 percent. The imbalance between supply and demand has dampened the momentum for rental growth, leaving the figure almost unchanged as compared to the previous quarter, a rare scenario in the city over the past few years, according to industry insiders. (Dec 4, Shanghai Daily)
Products Not Meeting Energy Efficiency Standard Must Not Be Produced Or Sold
The General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ) disclosed that from March 1, 2009, six categories of products must be affixed with an energy efficiency logo and those that do not meet the relevant energy efficiency standard must not be produced, sold or imported into China. According to the fourth issue of the "Catalog of Products Applying Energy Efficiency Logo" jointly released by AQSIQ, China's National Development and Reform Commission (NDRC) and the Certification and Accreditation Administration of China, the catalog contains six kinds of products such as variable speed air conditioners, multi-connected air conditioning units, electrical water heaters, household electromagnetic cookers, computer monitors and photocopiers. (Nov 17, ChinaTechNews)
$730b Infrastructure Plan on Table
The transport ministry is considering a plan to spend 5 trillion yuan ($730 billion) on road and port infrastructure projects over the next three to five years, in a bid to stimulate domestic demand, the Shanghai-based China Business News reported on Wednesday. An anonymous source with the ministry was quoted as saying that the massive spending was being considered as "such investment can produce an immediate effect (on domestic demand)". The 5 trillion yuan figure includes funds the government had already earmarked for highway construction projects, the report said. (Nov 6, China Daily)
Shandong Feels Pinch of Global Financial Meltdown
Shandong Province, China's leading economic powerhouse on the east seaboard, announced on Sunday both its number of enterprise employees and of those actually employed were on the wane. A source from the Shandong Provincial Federation of Trade Unions said employees with enterprises and institutions in urban areas totaled 9.14 million by late September, a year-on-year decrease of 38,000 workers. Shandong is the second largest economic province in terms of gross domestic product (GDP) in China, just after Guangdong. (Nov 25, ChinaDaily)
Cotton Imports down as Textiles Demand Slows
China, the world's largest cotton consumer, reduced imports by 30 percent in October from a year earlier as demand for clothing and textiles slowed, according to China Cotton Association estimates. Textile mills made purchases in a "hand-to-mouth fashion" as exports of textiles and apparel slowed for a third straight month and domestic demand remained weak, said the association, which is made up of farmers, ginners, mills and industry researchers. Sales of raw cotton were "almost stagnant" in October, as farmers were dissatisfied with prices and ginners were careful with purchases. (Nov 24, CEI)
IPO dreams dashed amid global turmoil
Chinese IT companies' hopes of hitting the IPO jackpot have evaporated amid hefty falls in global stock markets in the past few months. Last month, global stock markets suffered a 20 percent loss, a record monthly fall that saw domestic entrepreneurs becoming more cautious in taking their companies public both at home and overseas. Gone with the IPO dream are the hundreds of millions of new capital that venture capitalists and private equity funds once bet on IT companies promising to become cash cows. (Nov 13, China Daily)
GM seeks to raise stake in China vehicle JV
General Motors is seeking to raise its stake in its commercial vehicle venture with SAIC Motor, China's biggest automaker, China Business News said on Wednesday. GM wants to increase its 34 percent stake in SAIC-GM-Wuling, a three way tie-up between the US automaker, SAIC and Liuzhou Wuling Automobile, the newspaper said, citing SAIC chairman Hu Maoyuan. Hu, addressing an industry forum, did not elaborate on the additional stake GM was asking for. Foreign holdings of Chinese auto joint manufactures is capped at 50 percent. (Nov 12, ChinaDaily)
