US should ease hi-tech export bar

By Xin Zhiming (China Daily)
Updated: 2008-01-10 09:55

A top Chinese official yesterday said the United States should make its export policy more open to help balance the Sino-US trade gap.

The strict regulation on hi-tech exports from the US is one of the reasons for the country’s trade deficit with China, Wang Chao, assistant minister of commerce, said at the US-China Clean Energy Dialogue. Expanded hi-tech exports from the US will ease the gap, he added.

Yao Wenping, vice-president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), agreed. “Every year, many Chinese enterprises want to import hi-tech materials and equipment from the US, but encounter obstacles.”

The US complains about the huge trade deficit with China – in the first 11 months of 2007, it amounted to $142.22 billion. This has put pressure on China to take various measures, such as appreciating the yuan, to narrow the gap.

China has taken a series of measures, such as reducing and abolishing its export tax rebates for many products, to dampen exports and encourage imports.

Analysts said if the US is more open in its hi-tech export policy, things will improve. The US, instead, alleges that China might have “dual uses” for some hi-tech products and made a new rule in June that expanded licensing requirements for a longer list of items.

Analysts say the US overreacted since many of the products that China wants are simply for civilian purposes.

Clean energy could be a field where the US can make more efforts to ease its export controls to help balance Sino-US trade and promote healthy economic and trade exchanges between the two sides, said CCCME’s Yao. “Products in this field are purely for civilian use.”

Every year Chinese enterprises import huge amounts of solar-energy materials, equipment and technologies from the US, she said.

China’s solar photovoltaic companies have grown fast in recent years. There are 50 to 60 such firms, mostly privately owned, said Yao.

Yao estimated that this year, the value of clean-energy technology procurement and cooperation between Chinese and US firms could amount to $10 billion if “they did not encounter obstacles”. It could be even higher.

She said China is ready to introduce more clean-energy technologies and products from the US. In the upcoming China Import and Export Fair to be held in April, the organizers are planning to open a special area for exhibiting new clean-energy technologies and equipment from the US.

A US delegation led by David Bohigian, US assistant secretary of commerce, is now visiting Beijing. It is composed of some 17 US energy enterprises and is scheduled to meet China’s National Development and Reform Commission officials today before they leave for Guangzhou in Guangdong Province and Hong Kong.

 

China agrees to open up financial service industry

(Xinhua)
Updated: 2007-12-13 16:30

BEIJING — China and the United States have agreed upon specific steps for foreign companies to enter China’s financial service industry following two-day high-level economic dialogues.

China said it would complete a study of foreign equity participation in the banking sector by the end of 2008 and make relevant policy recommendations.

Foreign-invested companies including banks will be allowed to issue RMB denominated stocks and bonds, while mutual funds administered by Chinese banks will be allowed to invest in the US stock market, according to a statement from the US government.

This has created new opportunities for US firms in a variety of securities business, said the statement.

But China will resume licensing of new joint-venture securities companies and allow foreign securities firms to expand their operations in China to include brokerage, proprietary trading and fund management.

Several foreign firms, including some US firms, are already in advanced stages of establishing new joint ventures, says the statement, without elaborating.

Shortly before the dialogue, China raised the quota for qualified foreign institutional investors, which allow foreign mutual funds to invest in China’s domestic stock market, from 10 billion US dollars to 30 billion US dollars.

U.S. Treasury Secretary Henry Paulson called this progress “moderate”, affirming that opening China’s financial markets to foreign competition strengthens the financial backbone of the Chinese economy. “It’s critical to China’s goals of spreading the benefits of growth to all Chinese people,” he said.

A statement from the Chinese side said the policies should be carried out in accordance with relevant prudential regulations.

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China, US work out new tasks after SED

(Xinhua)
Updated: 2007-12-13 16:07

US Treasury Secretary Henry Paulson shakes hands with Chinese Vice-Premier Wu Yi (L) during the opening of The Third Strategic Economic Dialogue in Xianghe, near Beijing, December 12, 2007.  [Agencies] 

– Further intensify dialogue and exchanges in the areas of product and consumer safety, including food, feed, and drug and medical products, through new and existing bilateral cooperation mechanisms.

– Conduct extensive cooperation over a ten-year period to address energy and the environment, advance technological innovation, adoption of highly-efficient, clean energy technology and technology in addressing climate change, and promote the sustainability of natural resources. A working group will be started in order to start planning as soon as possible.

– Meet early next year and work together to jointly promote the negotiation in the WTO on the reduction or, as appropriate, the elimination of tariffs and non-tariff barriers to environmental goods and services to achieve results as soon as possible, recognizing the urgency of environmental challenges.

– Expand cooperation on development of a detailed plan to gradually reduce the sulfur content in fuels to 50 ppm or lower and introduce corresponding advanced vehicle pollution control technology, for incorporation into China’s 12th Five Year Plan (2011-2015).

– Strengthen cooperation on construction and management of strategic oil stocks through the exchanges of information and technologies, as well as training, including cooperation with the International Energy Agency.

– Begin a high-level exchange of investment policies, practices, and climates. Intensify ongoing discussions regarding the prospects for negotiating a Bilateral Investment Treaty.

– Continue consultations in a cooperative manner on China achieving market economy status. Continue cooperation through the High Technology and Strategic Trade Working Group under the Joint Commission on Commerce and Trade by positively implementing “Guidelines for U.S.-China High  Technology and Strategic Trade Development” and taking appropriate  constructive measures and working out an action plan to expand and facilitate bilateral high-tech and strategic trade. Relevant departments of the two sides have agreed to meet or hold a digital video conference (DVC) in the field of rules of origin.

– Explore the scope of respective international obligations on transparency. Continue to exchange information on reviewing and responding to comments received during the rulemaking process. Establish a communication mechanism to exchange information regularly on the conditions, procedures and timeframes for granting administrative licenses in areas of the Chinese market of interest to the United States and areas of the  U.S. market to China.

                                                                                                                        source from Chinadaily

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Yuan gains vs greenback after US interest rate cut

By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-11-01 13:05

China’s currency rose to a new record against the greenback on Thursday after the US Federal Reserve cut the key interest rate the previous day.

Before Thursday’s trading started, the People’s Bank of China (PBOC) set the yuan central parity rate at 7.4552 relative to the US dollar. The new midpoint marked an appreciation of 0.6 percent in the past seven trading days and a 4.6 percent rise since the beginning of the year.

The hefty rise of 140 basis points over the previous session came after the Fed slashed the federal funds rate, an overnight lending rate between banks, by 25 basis points on Wednesday to prevent a slowdown in the economy.

“The rate cut further reduces the appeal of dollars and will facilitate the capital flow to emerging markets, including China,” Professor Guo Tianyong of the Central University of Finance and Economics (CUFE) told chinadaily.com.cn Thursday morning.

The weakening dollar makes China’s yuan and other world major currencies face rising pressure for appreciation.

However, China’s exchange rate formation system is still a managed floating one, Guo said, adding that the central bank has to take various factors into consideration when deciding whether to allow a faster appreciation in the coming days.

In addition to the exchange rate pressure, China faces other fallouts from the Fed move. Before Wednesday, there was wild speculation in China that the PBOC was mulling a sixth interest rate hike this year to keep the world’s fastest growing major economy from overheating.

The country’s gross domestic product grew 11.5 percent year-on-year in the third quarter, while inflation jumped 6.2 percent in September, the National Bureau of Statistics said last week.

However, “the Fed move increases the difficulty for the central bank [to raise interest rates],” said Professor Song Guoqing of Peking University. Song anticipates another rate increase this year.

Guo of CUFE shared Song’s view, saying the pressure on the central bank is growing.

But Guo deemed that the central bank has the room to raise rates, as there is still a difference between benchmark interest rates in China and the United States.

The current one-year deposit rate in China stands at 3.87 percent while the US federal funds rate is 4.50 percent after Wednesday’s cut.

Moreover, the interest spread is not the major concern for the central bank, Guo said, adding that the domestic inflationary level and asset prices are more important factors to decide policy changes.

The US rate cut also gave rise to mounting worries in China about increasing liquidity, which has pushed up housing and equity prices in the country.

Guo downplayed those concerns, saying the interest spread is not the major target of outside capital. “Whether the liquidity will increase depends mainly on the expectation of rising prices in the housing and equity market, and the renminbi appreciation.”

Zuo Xiaolei, chief economist of Galaxy Securities pointed to the pressure of increasing liquidity as capital inflow might increase, and is urging the PBOC to tighten the curb on potential hot money influx.

The Fed should have been more cautious when deciding on the rate cut, said the female economist, citing inflation and red-hot crude oil prices in the global market.

“It [the Fed] should not just consider Wall Street,” Zuo said. “All factors should be taken into account.”

In an online vote on the Wall Street Journal website, by 14:29 Thursday (Beijing Time) only 33 percent of those surveyed thought the Fed had made the right move, while 49 percent believed the rate should be left unchanged.

 

Minerals sector opening up further

By Wu Jiao (China Daily)
Updated: 2007-10-20 09:48

China is gathering pace in opening its mineral sector to foreign investment, a top official said on Friday.

“Some pilot minerals have been recently designated for opening up and we are in the process of conducting surveys and evaluating their potential,” said Wang Min, vice-minister of land and resources.

Those pilot minerals, including metals in Yunnan Province and in the middle and lower reaches of the Yangtze River, will be open to public bidding a year later, according to Wang.

Wang added that due to high risks in oil and natural gas exploration, foreign investment is rare in those fields. But the country’s top three oil and gas giants are also cooperating with foreign businesses in exploiting some specific projects.

Wang made the remarks on the sidelines of the ongoing 17th National Congress of the CPC.

China has been preparing to open its minerals sector to foreign investment since 2005, but no breakthroughs have been made so far as the country’s mineral market is undergoing an overhaul to ensure a level playing field for firms from both home and abroad, according to Wang.

But he said that the country has made major progress in its oil and gas exploration in recent years and further advances continue to be made.

The country has so far proved up nine big gas fields with reserves of above 100 million tons each, and five big gas fields with reserves of above 100 billion cubic meters each, according to Wang.

The discovery of Jidong Nanpu Oilfield in the Bohai Bay, boasting proven reserves of more than 1 billion tons, or about 7.35 billion barrels, was announced in May.

It was the largest-ever discovery in the country in the past four decades.

Wang said that the outlook for oil and gas output has remains quite optimistic, adding that there should be a number of oil fields like Nanpu.

But he declined to reveal more information in order not to affect the stock market performance of listed oil companies.

According to Wang, China is expecting an average annual increase of about 900 million tons of oil and 450 billion cubic meters of natural gas in its newly added proven reserve amount before 2020.

“That figure may be conservative too,” Wang said, adding that more discoveries will be made.

Official estimates made last month said that the country may have 65 billion tons of oil reserves and around 25 trillion cubic meters of natural gas.

China is also expecting an annual output of 100 billion cubic meters of natural gas and 200 million tons of oil in 2010, while the figure is set to rise to 170 billion cubic meters of natural gas and 220 million tons of oil in 2020.

“By 2030, the market will be equally divided between oil and gas,” said Wang.

Wang also mentioned that China’s oil and gas pipelines and the transportation facility need further updating in order to better transport those energy products.

The nation has so far built over 80,000 km of oil and gas pipelines, ranking sixth in the world, according to figures from the China Petroleum Pipeline Scientific Research Institute.
 

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Trade surplus likely to exceed $250b this year

(Agencies)
Updated: 2007-10-17 16:53

China’s 2007 trade surplus is likely to exceed 250 billion dollars while consumer inflation was likely to top four percent, said a central bank official.

“The major problems China’s economy is facing include overly rapid growth in investment and loan and a too-large trade surplus,” the Shanghai Securities News reported, citing Yi Gang, assistant governor of the central bank.

“To tackle the problems, we cannot solely rely on adjustments of the exchange rate,” Yi said.

The United States and other nations argue China’s yuan currency is being kept undervalued, giving Chinese exporters an unfair advantage.

China posted a trade surplus of 185.7 billion dollars for the first nine months of the year, more than the record 177.5 billion dollars for the whole 2006, according to official figures released last week.

Propelled by soaring food costs, China’s consumer price index rose 6.5 percent in August from a year earlier and was up 3.9 percent on year for the first eight months of the year.

The inflation rate for August was well above the official full-year target of 3.0 percent and the highest since December 1996.

Yi said the government would need a package of policies, including boosting domestic consumption, increasing imports, encouraging outbound investment, to resolve the imbalance in the economy.

Expanding a scheme that allows qualified domestic institutions to invest in overseas capital markets would also help address the problems, he said.

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FDI grows steadily this year

By Jiang Wei (China Daily)

Actual foreign direct investment (FDI) in China maintained steady growth in the first eight months and government agencies are investigating the latest batch of “Made in China” toy recalls, a senior commerce official said yesterday.

The Ministry of Commerce approved 24,848 foreign-invested enterprises in the past eight months, with actual spending rising 12.79 percent year-on-year to US$41.95 billion, ministry spokesman Wang Xinpei told a news conference.

For August alone, realized FDI in China jumped to US$5.02 billion, up 11.87 percent from a year earlier. The ministry did not release the statistics for contracted foreign investments.

Wang said the Ministry of Commerce had dispatched teams to Dongguan and Shenzhen in Guangdong Province after it learned about the latest toy recall case in the United States.

Toy giant Mattel recalled around 848,000 toys earlier this month – its third recall of Chinese products this summer – because of the high lead content in the paints used.

The latest recall follows a similar move last month, when the company recalled 18 million Chinese-made products worldwide over high lead levels and small magnets that have allegedly injured at least three children.

“Our initial investigation shows all the recalled toys are products under original equipment manufacturing and were exported in processing trade. Three companies in Guangdong were involved in Mattel’s third recall,” Wang said.

He said the products in question were made according to US specifications, adding that the government will conduct further investigations and punish whoever is accountable.

“These are stray cases, considering the fact that there are 8,000 toymakers in China and the quality of China-made toys in general is reliable,” Wang said. “As toys concern children’s health, we are treating each case seriously, regardless of whether the case is one out of a hundred or one out of a thousand.”

The government also urged toymakers to improve their quality control system to meet both Chinese quality standards and those set by importing countries.

Large-scale training courses on quality enhancement are being held in Jiangsu and other provinces famous for toy exports.

Canadian business professor Hari Bapuji recently said most recalls of toys made in China are due to design errors, not manufacturing flaws.

We should be asking the toymakers: ‘Are you guys learning from the errors you are making? What are your systems to test? What are your systems to make sure that an error doesn’t get repeated in the future?’” he said in an interview on Canadian Television recently.

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1st-half surplus to top $100b

(AP)
Updated: 2007-07-03 10:49

A senior government economist says China’s trade surplus for the first half of this year is expected to top $100 billion, Xinhua news agency said Monday, amid calls by US lawmakers for punitive action against China.Total trade with the United States for the first half is expected to top US$1 trillion, up 24 percent from the year-earlier period, Xinhua said, citing Yao Jingyuan, chief economist for the National Bureau of Statistics.

“The trade surplus reached $85.7 billion in January-May, and for the first half of the year will exceed $100 billion,” Xinhua said, citing Yao.

American lawmakers are calling for legislation to impose higher tariffs on imports of Chinese goods or take other punitive steps if Beijing fails to ease currency controls that some say are broadening the surplus.

China reported a global trade surplus last year of $177.5 billion.

The growing gap also is causing financial problems for the central government, which is forced to drain billions of dollars a month from the economy to reduce pressure for prices to rise.

Chinese government says it is not actively pursuing a surplus and has taken steps to slow exports, including revoked rebates of value-added taxes for exporters.

The trade surplus is likely to narrow in the second-half of 2007, as exporters finished their shipments ahead of a June 30 deadline for receiving rebates, Vice Commerce Minister Wei Jianguo said.

 

Foreign investment flows into alcoholic industry

Chinanews, Beijing, June 3 – In 2007, foreign merging activities are being kicked off in Chinese alcoholic industry, the International Finance News reported.

 Early in the year, one of the world leading drinking giants Diageo bought 16.64% of shares from Shuijingfang Group, a famous Chinese alcohol brand, making Diageo the second shareholder of Shuijingfang Group. In mid May, another world beverage giant Hennessy bought more than 50% of shares of the Sichuan Wenjun Alcoholic Company. Earlier, shares of the Anhui Gujing Distillery Company Limited, a famous alcoholic company in China that produces the Chinese top brand alcohol Gujing Royal Alcohol, were bought by the IBHL company in Thailand.

This is the third round of foreign merging and acquisition boom happening in Chinese beverage industry. In 2004, similar merging and acquisition deals happened in Chinese brewery industry and in 2005, such merging and acquisition boom occurred in Chinese wine industry.

Now, the merging activities have shifted to Chinese alcoholic industry. This time, the M&G boom is even larger than the previous two. On May 16, 2007, French Moet-Hennessy Beverage Company signed an agreement with Sichuan Jiannanchun Alcoholic Group. Based on the agreement, the French company bought 55% of shares of the Sichuan Wenjun Alcoholic Company, a subsidiary of the Sichuan Jiannanchun Alcoholic Group, with the parent company holding 45% of its shares.

The joint venture company thus becomes the French company’s first manufacturing base in China, even in Asia. In fact, more acquisition deals had occurred before this. In January, this year, world largest strong alcohol producer Diageo spent 203 million yuan to buy 43% of shares of Sichuan Quanxing Group through the local Chengdu Yingying Investment Company. After the deal, Diageo became the second shareholder of the Sichuan Quanxing Group.

In addition to this, Diageo also held 17% of shares of Shuijingfang Group. This is considered as the largest purchase deal in Chinese alcoholic industry. Foreign investors are very interested in Chinese alcoholic companies due to their continued high business growth. They are especially interested in those Chinese alcoholic companies that enjoy a famous brand and a large market share.

The business performance of these Chinese companies is usually good and is very likely to expand in future. In China, Shuijingfang, Wenjun and Gujing Royal Alcohol are all classified as top Chinese brands. Therefore, there is no doubting the fact that they are favored by foreign investors.

 

China predicts $2.1 tln of foreign trade in 2007

May 18 – China’s imports and exports of goods will likely amount to 2.1 trillion U.S. dollars for the whole year, a growth of 20 percent over the year-earlier level, according to a report released Thursday by the Ministry of Commerce.

The report says in 2006, China’s foreign trade stood at 1.76 trillion U.S. dollars, up 23.6 percent year-on-year, ranking third in the world. External trade has continued to grow rapidly since the beginning of the year, the report says. Foreign sales of machinery, electronics, textiles and clothing and footwear posted sustained growth. Trade with major partners, including the European Union, the United States and Japan, has increased continuously.

According to the report, China realized 457.7 billion U.S. dollars in foreign trade in the first quarter of this year, up 23.2 percent from a year earlier. The trade surplus soared 99.4 percent to 46.4 billion U.S. dollars. The report believes the overall environment is still favorable for China’s foreign trade.(Source: Xinhua)