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
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.
March 2009: Israeli IT/Telecom business delegation to Chengdu and Chongqing.
The Israeli Trade Mission to China will organize a delegation of Israeli IT/Telecom Companies to Beijing, Chongqing and Chengdu, exploring "Second Tire" which have rapidly developed in the last few years and now offer verity of worthwhile business opportunities for both large and medium-scale companies. The delegation will enable Israeli Telecom companies to better understand the current drastic changes in the It/ Telecom sectors. Companies interested participating in the delegation may contact Ms. Luo Xia at luo.xia@israeltrade.gov.il or Tel: 86-10-85320664.
General news on Chinese economy
China property stimulus plan targets low-income housing, ownership
The State Council, or Cabinet, on Wednesday announced a new real-estate stimulus package emphasizing low-income housing and home ownership. It was unveiled at an executive meeting of the Council, presided over by Premier Wen Jiabao. The government said the package will benefit 7.5 million low-income urban families and 2.4 million households in shantytowns in the next three years. Rural homes in dangerous condition will also be renovated. (Dec 17, Xinhua)
China to focus investment on five major sectors in 2009
China will put the bulk of its investment on the development of agriculture, low-cost housing project, infrastructure, energy conservation and social welfare next year, People's Daily, the mouthpiece of the Communist Party of China, reports on Sunday. Explaining the use of the central government investment, Zhang Ping, minister in charge of the National Development and Reform Commission, said the country will pump more investment into construction of key water control projects, repair of reservoirs in danger and building of more water-saving facilities at major irrigation areas. (Dec 15, PeopleDailyOnline)
China's industrial output growth hits record low
China's industrial growth slowed more sharply than expected in November on declining orders and investment stagnancy both at home and abroad, with some sectors like electricity and auto slipping into the red further. The National Bureau of Statistics (NBS) Monday said industrial growth last month rose 5.4 percent year-on-year, plunging 11.9 percentage points from a year earlier. The November figure is the country's weakest in the last ten years. The shrinking figures have also caused concern for the central government as industry accounts for nearly half of China's economy. Zhang Ping, minister of the National Development and Reform Commission, said over the weekend: "The too rapid and broad slide of industry has posed a threat to the stable development of China's economy." (Dec 15, ChinaDaily)
China money supply growth slows on economic slowdown
China's money supply grew at a slower-than-average pace in November as the economy continued to weaken, the central bank said. The M2, the broad measure of money supply covering cash in circulation plus all deposits, rose 14.8 percent to 45.86 trillion yuan ($6.72 trillion) by the end of November. The growth rate was down 0.22 percentage points from a month ago.
(Dec 15, Xinhua)
Central SOEs see profits drop by 26% in first 11 months
China's state-owned enterprises (SOEs) directly under the central government reported a sharp profit decline of 26 percent in the first 11 months this year, figures released Monday showed.
According to the top state asset watchdog, most of the loss came from petroleum and electricity industries, which suffered from government, capped pricing system. (Dec 15, Xinhua)
China November Consumer Inflation Eases to 2.4 Pct
China's consumer price index (CPI), the main gauge of inflation, rose at a slower annual rate of 2.4 percent in November, the National Bureau of Statistics (NBS) said in Beijing on Thursday. Rises in the consumer price index (CPI) slowed for seven straight months because of the sharp fall in commodity prices on the world market and sluggish global demand amid the financial crisis. (Dec 11, Xinhua)
China Nov. exports down 2.2% in first fall since June 2001
China's exports totaled 115 billion U.S. dollars last month, down 2.2 percent year-on-year in the first monthly decline since June 2001, the General Administration of Customs (GAC) said on Wednesday. The previous decline, a much smaller 0.6 percent, reflected slumping U.S. demand after the tech bubble burst. November's exports also fell 10.4 percent month-on-month. In October, exports were up 19.2 percent year-on-year. Sharp declines were recorded on the import front last month. (Dec 10, Xinhua)
Consumer Goods
China's retail sales of consumer goods exceed 10 trl yuan
China's total retail sales of consumer goods in early November exceeded the entire total for last year, and by mid-December, it had exceeded the 10-trillion yuan mark for the first time, according to the Ministry of Commerce (MOC). (Dec 18, People’s Daily)
Yum To Open 500 New Restaurants In China In 2009
According to a report from Reuters, the restaurant giant Yum is still optimistic about the prospects for China's catering industry and the group plans to open 500 new restaurants in China in 2009 with profit growth targets of 15% to 20%, despite the global slowdown. (Dec 17, ChinaRetailNews)
Best Buy Opens Lifestyle Store In Shanghai
The international electronics retailer Best Buy has announced the opening of a lifestyle store in the Laya Plaza in the Pudong district of Shanghai. As Best Buy's first small store, the new Laya Plaza store only covers a business area of 77 square meters. Unlike other Best Buy stores that sell a variety of products including appliances, computers, mobile phones, office supplies, video products, and software with a philosophy or offering a large and comprehensive range, the smaller store will focus on just over 100 kinds of digital products. (Dec 16, ChinaRetailNews)
Wal-Mart Cut Price in China
Following the precept of Sir Jack Cohen, the founder of British retail colossus Tesco, Wal-Mart has announced massive price cuts for essential items in more than 100 of its retailing stores across China. The price cuts are said to be the deepest ones ever made by Wal-Mart since its entry into the country. Most of the goods prices are reduced by up to 20% and a few items have their prices cut by over 40%. These price cuts will last until the end of the Chinese Spring Festival. The price cuts involve over one hundred categories of goods, including food, clothing and household items. (Dec 16, ChinaRetailNews)
Chinese Ministries Crack Down On Abuse Of Food Additives
China has initiated a nationwide campaign on the illegal use of non-edible substances and food additives. The campaign, which is jointly launched by nine Chinese ministries, will last four months during which the food industry will initially be self-regulating, a complete reorganization will then be carried out and a long term mechanism will be put in place. This campaign is to learn lessons from the Sanlu milk powder incident and take stringent action on the illegal use of non-edible substances and the abuse of food additives. In September, a number of Chinese dairy companies were found to have added melamine to their dairy products following the discovery of contaminated products from Sanlu. This has caused urinary system problems for over 290,0000 children throughout the country. (Dec 15, ChinaRetailNews)
ParknShop To Close Outlet In Shanghai
After being open for two-years ParknShop's Shanghai Guohe store will be closed at the end of 2008 for financial reasons. The ParknShop Guohe store is the first large comprehensive supermarket to close in Shanghai since the start of the global financial crisis. (Dec 10, ChinaRetailNews)
KKR To Invest USD300 Million In China's Milk Industry
According to reports in local media, Kohlberg Kravis Roberts & Co., a private equity firm, has announced plans to invest about USD300 million in China's milk industry. The report said the investment would be realized through USD100 million equity capital and USD200 million debt financing from Chinese banks. So far, KKR has not revealed that which Chinese milk company will become its partner and the transaction will be formally announced later this month. (Dec 5, ChinaRetailNews)
Environment (water & renewable energy)
China, U.S. agree to further cooperate on energy, environment
Mr. Zhang Xiaoqiang, vice minister in charge of NDRC said that China and the US have reached consensus in five major areas to step up energy and environmental protection cooperation during the on-going fifth round of the Strategic Economic Dialogue (SED). The SED completed preparations to start cooperation in five areas: electricity, clean water, clean transportation, clean air and the conservation of forest and wetland ecosystems, mapping out plans and roadmaps. China and the US signed a 10-year energy and environmental protection cooperation framework in June during the fourth SED held in Washington, with these five areas as initial goals. Both sides agreed that energy efficiency would be the sixth initial goal. (2008-12-4Xinhua)
NDRC: 350b yuan to pour into environmental industry
Among the country's 4-trillion-yuan financial stimulus plan, 350 billion yuan will be spent on improving the ecological environment and treating pollution, Zhang Ping, Minister of NDRC, told a press conference in Beijing. The four-trillion-yuan investment will not be spent in the energy and resource-intensive industries or high-pollution industries. Minister of environmental protection, said earlier that the main targets of environment investment will go to beef up rural environmental efforts. China's fledgling green industries, such as those involved in the development of renewable energies and pollution treatment, will also benefit from the investment plan.
(2008-11-28 China Daily)
$41b flows into county sewage facilities
Some 280 billion yuan ($41 billion) will be spent on sewage treatment in 90 percent of counties nationwide as part of the central government's 4-trillion-yuan economic stimulus package. About 2,600 counties will benefit from the building or upgrading of facilities, Qiu Baoxing, vice-minister of the Ministry of Housing and Urban-Rural Development, told a forum recently. This is the first time that there is a nationwide sewage treatment program. The completion of the program is planned for three years. (2008-11-18 China Daily)
GE Water expands it Chinese manufacturing operations
GE Water & Process Technologies has unveiled its newly expanded water filtration manufacturing facility in Wuxi New Zone, China. The company invested $US9m (around $A13.9m) into the 10,000 square metre facility to enhance its ability to provide Chinese industries and municipalities with advanced water technologies. The plant will be able to assemble reverse osmosis filtration systems and ultra-filtration equipment for water purification, utilities optimisation and wastewater treatment applications. According to the manufacturer, the factory will partner with GE’s China Technology Centre in Shanghai to create products like the rapidly-deployed packaged wastewater membrane bioreactor system and the ultra-low energy reverse osmosis system. (2008-12-5 Fluidhandling.com)
ITT Completes First Rural Drinking Water Safety Project in China
ITT and China’s Ministry of Water Resources announced the completion of two new rural water treatment plants, part of a pilot project to tackle rural drinking water issues in China. The two plants, which utilize leading water treatment technology, will supply more than 10,000 local residents with purified water that meets or surpasses the national standards. Both plants were designed and donated by ITT-- a global leader in systems and solutions for the movement and treatment of water --under an agreement with the Center for Rural Drinking Water Safety of China's Ministry of Water Resources. The ITT project was conceived in 2005, with company and the China Ministry of Water Resources signing a cooperation agreement in April 2008.
(2008-12-3 MarketWatch)
Reuters: China to accelerate south-north water project
China will accelerate construction of the south-to-north water diversion project next year, the Xinhua news agency quoted the head of the project office, Zhang Jiyao. The project, criticized by some environmentalists for encouraging the wasteful use of water, will divert water from the Yangtze River in western and central China to arid northern regions through three channels: eastern, middle and western. A number of projects along the eastern and middle routes would start next year, drawing on investment of up to 254.6 billion yuan ($37.20 billion) authorized by the State Council. About one billion cubic meters of water could be diverted to Beijing annually, when that part of the project is completed in 2010. (2008-12-16Reuters)
Toray in 2010 China water-filter JV
Toray Industries Inc., which controls the third-largest share of the global market for water treatment membranes, will start producing water-filtering membranes in China in April 2010 with China National BlueStar (Group) Co. and may open a ￥7.5 billion factory there, the company said. The factory will be capable of producing membranes that can treat 3.5 million cu. meters of water a day, which should be enough to meet the needs of 14 million people.
(2008-12-1 Japan Times)
Telecom & IT
Telecom
China to issue 3G licenses at year end or early next year
Li Yizhong, minister of industry and information technology, said at the press conference recently held by the State Council Information Office that China will issue third generation mobile telecommunication licenses at the end of this year or early next year. The license of the home-grown 3G mobile telecommunications standard, TD-SCDMA, will be granted to China Mobile, while the newly-established China Unicom will get the WCDMA license and China Telecom will be granted the CDMA2000 license. (Dec 15, People's Daily Online)
Chinese 3G Investment to Top $29 Billion
The Chinese government expects that the country's three mobile phone networks will spend at least 200 billion yuan (US$29 billion) on its 3G networks as soon as the licenses are formally awarded - although this is lower than had been expected by some analysts. "Once the licences are issued, it is estimated the three companies, with strong financial resources, will invest at least 200 billion yuan in 3G-related investments," the minister of industry and information technology, Li Yizhong told a press conference in Beijing. "The indicated capital expenditure of 200 billion yuan is smaller than the rumoured 300 billion, which may have some negative impact on equipment vendors like ZTE, which may have less orders than expected." Marvin Lo, an analyst at Daiwa Institute of Research told the South China Morning Post. (Dec 15, scmp)
Carriers
China Mobile speeds up TD plan
At the "China Mobile TD-SCDMA Industrial Chain Conference" held recently, Wang Jianzhou, president of China Mobile, announced its TD-SCDMA nationwide networking outline: by 2011, the TD network will cover the commercial hot areas of 95% of prefecture-level cities, with 145,000 planned base stations. Wang revealed the results of the TD-SCDMA trial run over the past eight months. By December 3, China Mobile had already put 17,672 base stations in operation, creating a network that covers 9.5 million users. (Dec 17, People’s Daily)
China Mobile ratings maintained at 'A+' - Fitch
Fitch Ratings said it maintained the long-term foreign currency issuer default rating of China Mobile at 'A+', with an 'A+' local currency issue default rating. It said that the ratings reflect China Mobile's leading market position. The company's subscriber base increased by 24.7 pct in the first three quarters of the year, with 50 pct of new subscribers coming from China's rural areas. (Dec 10, c114)
Local Branch of China Mobile Launches Medical Information Service
Chengde Mobile in Hebei province has held an opening ceremony for Hebei Mobile's Model Healthcare Information Industry base and the launch of a new medical information service. For the service, Chengde Mobile has signed agreements with 15 organizations and has integrated hospital information systems (HIS) with pharmacy sale systems and the vaccination system of the Chinese Center for Disease Control and Prevention (China CDC). The service will make use of mobile networks to provide a medical information communication platform that links medical facilities to each other and to patients. (Dec 10, c114)
China Telecom Expected to Target Mid-to-High End 3G Subscribers
Fitch Ratings has affirmed China Telecom's Long-term foreign currency Issuer Default Rating (IDR) at 'A-'. The Outlook is Stable. The ratings reflect China Telecom's evolution into a full-service operator able to diversify its revenue sources following recent government-initiated industry restructuring. The company started offering CDMA mobile services in Q408, and accordingly CT is now able to provide triple bundled service offerings of fixed-line, broadband and mobile which should help the company secure current subscribers and attract new ones. CT has been suffering from revenue declines in its voice business, owing to subscriber loss, lower pricing and volume declines, all of which have been driven by the ongoing strong substitution to mobile services in China. (Dec 16, c114)
China Unicom Budgets RMB 80 Bln for WCDMA in 2009
A source at China Unicom familiar with the situation says the operator has already passed a budget of RMB 80 bln for WCDMA network construction next year, and asked province-level executives for their 2009 WCDMA investment plans in a phone conference. Earlier reports in August estimated that Unicom would spend RMB 100 bln on its 3G expansion in 2009 and 2010. (Dec 9, c114)
Manufacturers
Chinese telecom equipment suppliers to outdo overseas companies in 3G era
Chinese telecom equipment suppliers, who lagged behind their foreign rivals in the 2G era, are set to dominate China's 3G market, industry analysts told Interfax recently. "The take-off of 3G is bringing domestic telecom equipment suppliers, in particular system and network coverage equipment suppliers, more opportunities to beat their foreign rivals and capture more market share," Shi Hong, an industry analyst with Industrial Securities, said. (Dec 17, Interfax)
Huawei Holds 30.5% Share in Global DSL Market
Huawei Technologies' DSL shipment hit 6.6 million lines in the third quarter of 2008, ranking the first place in the global digital subscriber line market with a 30.5% share, according to a report by industry consulting firm Broadband trends. The Chinese networking and telecommunications equipment supplier also kept a leading position in the IP DSL and MSAP segmented markets, stanching market shares of 28.5% and 34.5%. (Dec 12, c114)
Software
Dalian Opens Software Park In Tokyo
Established by Dalian Municipal Government, Dalian Software Park Japan has been opened in Tokyo, marking the birth of China's first overseas software park. More than 300 Chinese and Japanese guests attended the opening ceremony and over 40 companies have officially entered the software park. In 2008, Dalian expects to make revenue of over CNY30 billion from the software and software outsourcing industries while its exports will be over USD1 billion. The opening of the Dalian Software Park Japan is an important measure of Dalian to assist small and medium enterprises in seeking new developments in the new economic situation. (Dec 8, ChinaTechNews)
Internet
China's netizens total 290 mln by November
The number of netizens in China totaled 290 million by the end of November, up 14.6 percent from the figure for the end of June, according to the Ministry of Industry and Information Technology (MIIT). More than 80 percent of the netizens surf the Internet by broadband, of which about half use ADSL. (Dec 18, NewsGD)
Alibaba To Invest CNY300 Million In Yahoo Koubei
Chinese e-commerce giant Alibaba has announced plans to invest CNY300 million in the newly merged Yahoo (YAHOO) Koubei Company in 2009 to develop the lifestyle services business of the company. A representative from Alibaba told local media that Yahoo Koubei's development strategy is to further focus on the e-commerce areas of lifestyle services to provide Chinese consumers with a platform with the lifestyle service market as its core and Yahoo's social networking site website Yahoo Relations as its support. (Dec 12, ChinaTechNews)
Beijing's Wireless Network To Cover All Areas Within Three Years
Zhang Yuhang, vice director for the Application Promotion Department of the Municipal Informatization Office of Beijing, said during the Wireless City Summit 2008 held in Beijing that the capital city's wireless city construction will cover all of Beijing's urban and suburban areas before the end of 2011. (Dec 10, ChinaTechNews)
NetDragon And Disney Will Launch MMORPG In China
Chinese game developer NetDragon Websoft announced that it is working with The Walt Disney Company's Interactive Media Group to launch the massively multiplayer online role playing game "Disney Fantasy Online" in spring 2009. (Dec 4, ChinaTechNews)
Other
Telematics Company Focuses On China Expansion
Airbiquity plans to offer its full suite of telematics and connectivity solutions to the Chinese telematics market through its newly-formed mainland company Ai Bi Ke Communications Technology Company. With its new office in Beijing, and a recently established a satellite office in Chengdu, the company plans to offer full support to its Chinese customers and partners. "China is the next frontier for the connected services and telematics markets. We believe that the country is well positioned for continued long-term growth," said Kamyar Moinzadeh, president and CEO of Airbiquity. (Dec 15, ChinaTechNews)
Medical & Healthcare
CCB to Build Medical, Healthcare Investment Fund
Sources said that state-owned commercial lender China Construction Bank (CCB) intended to build China's first medical and healthcare investment fund through its investment arm CCB International (Holdings) Co., Ltd. After raising CNY 5 billion or USD 730 million from December 18, 2008, CCB International will operate this fund together with an American firm. In the near future, the new fund will serve the domestic pharmaceuticals and medical equipment producers as well as medical service suppliers, and its annual return on investment (ROI) is predicted to top 20%. (14 Dec 2008 BioNews.com.cn)
Syneron Medical sets up Chinese joint venture
Israel-based Skin treatment device maker Syneron Medical Ltd. said on Wednesday it inked a joint venture deal with partner EverCare Medical Group to expand its footprint in China. EverCare, which owns a chain of aesthetic hospitals, has been Syneron's distributor in China for two years. The companies formed Syneron China. (24 Nov 2008 BioNews.com.cn)
U.S. opening food inspection office in Beijing
The United States on Wednesday opened a Beijing office of the Food and Drug Administration. The office is the first FDA inspection agency outside the United States, and similar FDA operations in Shanghai and Guangzhou are scheduled to begin soon. All three will work with Chinese counterpart agencies to inspect products bound for the United States. They also will certify third-party inspectors who can approve the quality and safety of exports to the US.
(23 Nov 2008 BioNews.com.cn)
German Bayer Schering to help China build 40 haemophilia treatment centers
German pharmaceutical company Bayer Schering on Thursday pledged 13 million yuan (1.9 million U.S. dollars) to help China build 40 haemophilia treatment centers in the next five years. Bayer Schering Pharma. plans to set up the centers in 30 major cities and provide medical equipment and supplies, and educational materials for patients. Ruan Changgeng, President of the Chinese Society of Hematology (CSH), said the project would make professional haemophilia treatment accessible in provincial cities and help Chinese patients receive more timely medical care. The program included upgrading another seven treatment centers and training sessions for patients, doctors and nurses. China has around 100,000 hemophiliacs, approximately a quarter of the world's total, CSH statistics show. (17 Nov 2008 BioNews.com.cn)
China to Be No. 5 Pharmaceutical Market in 2012
Chinese pharmaceutical market is expected to reach USD 50 billion in 2012, ranking No. 5 worldwide, thanks to its healthcare system reform and huge economic stimulus plan, said Ray Hill from IMS Health Incorporated. China will still be a major contributor to the growth of global pharmaceutical industry in the foreseeable future. And many global pharmaceutical giants expect their Chinese business would grow strongly to fuel their global development, which would be impacted by the global economic downturn. (01 Dec 2008 BioNews.com.cn)
Other Sectors
BYD zooms past Toyota, GM in electric car race
Chinese automaker BYD Co yesterday launched the first commercial dual-mode electric car in the world, giving it an edge in the green car race over other rivals like Toyota Motors and General Motors Corp. The new car, known as the F3DM equipped with both pure and hybrid electric driving systems, is priced at 149,800 yuan. Toyota and GM, the two other global competitors in the electric car market, had planned to launch similar models in 2010 and 2011 respectively. (Dec 16, ChinaDaily)
Beijing's office market faces growing pressure
Beijing's office market will witness sustained pressure from the discrepancy between immense new supply and the slow-down of market demand for 2009, a report from the CB Richard Ellis said. Due to the worsening global economy, plans for moving and expansion were postponed on request from corporate headquarters, while companies from industries severely influenced by the crisis began to cut their office budgets. (Dec 12, ChinaDaily)
Mainland's Tallest Tower Cuts Rental Price by Half
Shanghai World Financial Center, the tallest office tower on the Chinese mainland, has slashed its rental price by half in an effort to retain its tenants amid the global financial crisis and gloomy property market. Shanghai-based Oriental Morning Post reported that the present transaction price of the office space at Shanghai World Financial Center is as low as 10 yuan per square meter a day, half the price in August. (Dec 10, CRI)
Property Slows Further
Growth in China's property prices continued to slow in November. Prices in 70 major cities grew just 0.2 percent year on year, 1.4 percent lower than in October and the lowest since July 2005. In 56 cities prices actually declined in November. Compared with October, new home prices dropped 2.4 percent, 2.2 percent and 2.9 percent in Shenzhen, Nanjing and Xiamen respectively. (Dec 10, Caijing Magazine)
China urges domestic airlines to cancel, delay plane purchases for next year
China's civil aviation authority urged state-owned airlines to cancel or delay orders for new aircraft next year in an effort to keep carriers out of financial trouble during the current global economic crisis. The Civil Aviation Administration of China (CAAC) also encouraged airlines to return rented aircraft from overseas firms and ground or sell some planes to cope with weaker demand. The administration said it would also be very cautious of approving new orders for aircraft next year. Also on its website, it said no new airlines would be approved for operation before 2012 and airlines have been instructed to retire large numbers of old aircraft. (Dec 10, Xinhua)
