China - Economic Data & News 01 (May 08 - Oct 08)

[winston]

Vice minister: China's employment to maintain stability after Olympics

BEIJING, Aug. 15 (Xinhua) -- China's employment situation would maintain stable development after the Olympic Games, a senior official said here Friday.

Hu Xiaoyi, vice minister of Labour and Social Security, told a press conference that nearly 10 million urban people were newly employed each year in the past few years, with the figure rising to 12 million last year.

He said the Olympics did help promote industrial development, but "the Games were just for a while, and the employment development should be judged in accordance with the overall economic situation."

With the fluctuating global economic situation, some industries created fewer jobs, he said, noting that despite the pressure, the Chinese government would continue working hard to propel employment development forward.

Statistics show that during the first half of this year, 6.4 million urban people were newly employed in China, accounting for 64 percent of the projected 10 million for the whole year.

As of the end of June, registered urban unemployment stood at 8.35 million, up 100,000 from the end of the first quarter. Authorities attributed the rise to the 8.0-magnitude earthquake that rocked southwest China on May 12.

[millionairemind]

China's Economy Slows on Weaker Production, Olympics Closures
By Kevin Hamlin

Aug. 16 (Bloomberg) -- China's growth is cooling and may spur the government to ease lending restrictions, provide more export-tax rebates and stall yuan appreciation, analysts said after economic reports this week.

Industrial production grew in July at the weakest pace in 16 months amid faltering orders for Chinese exports. Consumer prices rose the least in 10 months, giving policy makers room to boost the economy without fueling inflation.

The slowdown in China, which powered almost 30 percent of the global expansion last year, may be exacerbated by factory closures aimed at cutting pollution during the Beijing Olympics, according to Goldman Sachs Group Inc. The central bank yesterday said it would ``fine-tune'' monetary policy as weaker overseas demand for the nation's goods poses risks to the economy.

Full story
http://www.bloomberg.com/apps/news?pid= ... refer=home

[millionairemind]

In China, outsourcing is no longer cheap

As China makes big moves to improve its environmental and labor conditions, U.S. companies that manufacture there face soaring costs.

(Fortune Small Business) -- Jason and Rodney Carr hate to raise their prices. Their Gardena, Calif.-based distributor of curtains and home fabrics, Softline Home Fashions, usually keeps its costs low by sourcing materials overseas: 100% of their raw goods and 80% of their finished products come from China. But recently, China hasn't paid off the way it used to. In the past five months, the Carrs have seen their manufacturing expenses rise 20%.

"It's a battle every day," says Rodney Carr. "We are not going to cut salaries, staff or any other assets that are important to the company. Sometimes we compensate by raising prices, but mostly we're just eating the additional costs."

Once the epicenter of low-cost manufacturing, China is becoming an increasingly expensive place to do business, thanks to a series of sweeping mandates introduced to pacify discontented Chinese citizens and global critics. This month's Olympics will be a coming out party 10 years in the making. Aware that the world is watching, China has intensified its efforts to clean up its domestic affairs by enacting stricter environmental and labor controls, increasing its land and commodity prices, and slashing the export-tax rebates that helped create the country's giant trade surplus.

Environmentalists, economists and labor watchdogs praise these initiatives as critical steps in the right direction for both China and the global economy. But coupled with the falling dollar and the rising yuan, these movements have put the pinch on many small U.S. outsourcers struggling to keep up with China's rapid changes.

Melanie Corpstein, CEO of Adorable Originals, a Phoenix firm that manufactures toys and clothing, has seen the profit margins for her line of dolls shrink since she began manufacturing them in China in 2003.

"In this economy we are in no position to ask the customer to pay more," she says. "Though my company continues to grow, China's shift has made me closely monitor other expenses, such as how many hours my team works and how much our office supplies cost."

What's driving the cost spike? No one change bears primary responsibility for the sharp increase, but added together, a complex web of adjustments have altered the economics of doing business in China.


Full story
http://money.cnn.com/2008/08/11/smallbu ... 2008081612

[millionairemind]

The Shanghai Stock Exchange
Re-enter the dragon
Aug 14th 2008 | HONG KONG
From The Economist print edition

After almost 70 years, Shanghai’s stock exchange is reopening to the world

FROM the 1860s until the Japanese invasion of China in 1941, Shanghai’s bustling stockmarket listed not only domestic companies but also foreign firms, such as those now known as HSBC and Standard Chartered Bank, which operated out of the international concession. When trading resumed in 1992, only domestic firms could list. But many foreign ones have been eager to join them, and after a change in securities laws announced on August 6th, some may now have the chance.

The New York Stock Exchange (NYSE) hopes to be the first foreign firm to list in Shanghai, and may have the blessing of the regulators, according to Chinese press reports. But there is competition. HSBC and Standard Chartered are also reportedly angling to return, and other big banks have put out feelers.

Had the opening come in 2007 when the Shanghai market was riding a wave of euphoria for much of the year, the motivation for a listing by any Western company would have been self-evident: money—and lots of it. Conditions, however, have nosedived. Corporate profits may have risen since but share prices are down by half, and there is little appetite left to provide capital to domestic companies.

The first foreign firms to list may be luckier, however, because they offer Chinese investors a rare opportunity to diversify into non-Chinese shares. With lower portfolio risk, local investors would also theoretically be able to pay more for Chinese companies, says William Goetzmann, a professor at Yale University who has published a rare paper on the pre-war ties between China’s financial markets and the rest of the world.

For the newcomers, there would be many potential benefits including, above all, in marketing themselves to the Chinese. For example, just as a listing by the NYSE would confer some status on Shanghai, so would it also encourage Chinese firms to use New York’s main exchange as their market of choice. (The big state-owned ones have largely ignored the Big Board since a listing in 2003 by China Life, an insurance firm, was met by a barrage of American lawsuits, partly because of poor disclosure.) The NYSE’s own members may also find it easier to list in China. As a fringe benefit, it may be able to sell China its trading technology. For other companies, the shares issued in China could be used as a form of currency to provide performance-linked pay to local employees, as well as to buy Chinese companies.

But there are pitfalls. Exchange rules may permit the Chinese authorities to attend the board meetings of listed companies, something that might not bother the NYSE, which does not face competition from Chinese exchanges in its home markets of Europe or America, but would probably horrify a global bank. More importantly, the financial barriers that surround China’s economy, such as its closed capital account, restrictions on currency trading, and prohibition on short-selling, mean that shares in China trade at different prices from those with identical rights listed on other overseas exchanges.

That kind of trading inefficiency looks bad for China and would be an embarrassment for the NYSE, which prides itself on its ability to price shares cleanly. To solve it, the potential entrants are considering how to issue other types of shares known as depository receipts—but that is complicated by China’s trading and capital restrictions. To find a solution, they may have to help China to liberalise its financial markets even further. That would not only benefit the foreigners, but China too—which is probably the main reason it is courting them in the first place.

http://www.economist.com/finance/displa ... d=11921712

[ishak]

Economist: Olympics not necessarily a boost to stocks
Xinhua, Updated: 2008-08-18 09:22

The persistent woes of the country's equities market may not be linked to the ongoing Olympics, a Chinese economist said on Sunday, echoing voices from securities regulators.

Corrections of China's stock market had actually started as early as the second half last year, Yang Kaizhong, head of the Beijing Municipal Institute for Economic and Social Development, said at a press conference.

He went on to argue that the Olympics may not necessarily improve the performance of equities, taking previous Games as a precedent.

There were indeed countries, such as the United States and the Republic of Korea, that saw a booming market in the year they hosted the Olympics, but there were also cases when the equities fell or went flat, such as during the 1992 Barcelona Games and the 2000 Sydney Games, Yang said.

The benchmark Shanghai Composite Index edged up 0.56 percent to 2,450.61 points on Friday, and the key index has tumbled nearly 60 percent from its peak in October.

The heavy slump was a result of many factors, including the global credit crisis that led to a worldwide economic slowdown, price rises of resources such as oil and grain, and investor concerns over market liquidity following huge fundraising, Yang said.

However, he believed the Chinese economy maintained a steady growth, and expectations of half-year reports of many listed companies, which are due soon, remained good.

Values of some stocks might have been underestimated after this round of downward adjustment, and the market may take on a more upbeat performance later as investor confidence improved with the fall of crude prices and domestic inflation rate, he added.

An unidentified spokesman for the China Securities Regulatory Commission blame on Friday the heavy slump on a need for internal correction, increasing uncertainties on the global markets and frequent natural disasters in China.

He also said the unsophisticated mechanism and structure of the country's equities market had worsened the situation and widened the range of the correction.

[Blackjack]

China's economy could slow to single-digit growth over 5 years
By Leslie Tang, Channel NewsAsia | Posted: 18 August 2008 1748 hrs

HONG KONG : Financial services firm JP Morgan said China's economy could slow to single-digit growth over the next five years.

But the lender said the slowdown is not related to a post-Olympics hangover.

The staging of the Beijing Olympics cost China at least US$40 billion, according to some conservative estimates. No recent host city has spent even half that amount.

Preparations for the Olympic Games have seen scores of mega construction projects and new jobs created. But there are concerns that when the games end, the Chinese economic bubble may burst.

JP Morgan argued that China's economic woes have little to do with the Olympics, which it said accounts for only 3.8 per cent of the country's GDP.

Said Jing Ulrich, managing director & chairman of the China Equities team at JP Morgan: "Now, the Chinese economy has already slowed in the months leading up to the Olympic Games. But that slowdown has little to do with the Olympic Games itself. The slowdown in China has to do with the global economy, rising import prices and a slowdown in exports."

But according to JPMorgan, these negative factors could be offset by China's ambitious infrastructure expansion plans.

The investment banking giant expects China's GDP growth to range between 8 and 9 per cent, and inflation to hover around 4-5 per cent in the next five years.

JP Morgan also believes that things will improve and has recommended investors put their money in fundamental stocks.

"The leading banks in China will be relatively insulated from the credit problems elsewhere. Coal prices have gone up by 72 per cent so far this year, but share prices have gone down 50 per cent. What is going on? You talk to any buyers of coal and they will tell you, that supply is tight," said Ulrich.

Although China's economic growth is expected to head towards the single-digit realm, JP Morgan is confident the country will remain one of the brightest spots in the global economy. It said strong domestic demand will fuel robust growth over the long term. - CNA /ls

http://www.channelnewsasia.com/stories/economicnews/view/369321/1/.html

[LenaHuat]

What growth means in China, from Bloomberg:

``China needs much faster growth than an average Western country as it has to generate 10 million jobs a year,'' said Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``Eight percent growth in China is equivalent to a recession.
Below nine percent would make the authorities quite nervous.''

If a 20% decline indicates a bear market, I wonder what would characterize SSE's Acapulco-cliff-like plunge

[winston]

Expected this to come after Olympics. Need to think what are the impact for Coal companies as there is still a cap on prices ..

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China raises on-grid power tariff by 5 percent

BEIJING, Aug 19 (Reuters) - China announced an earlier than expected 5 percent rise in on-grid power tariffs on Tuesday, the second hike in two months as Beijing seeks to aid thermal power generators who have cut output in response to soaring coal costs.

The 0.02 yuan per kilowatt hour price hike, effective from Wednesday, does not affect retail rates, said the National Development & Reform Commission on its website http://www.ndrc.gov.cn.

Beijing is scrambling to ease its worst power crisis in four years after coal-fired generators that account for four-fifths of China's electricity struggled to secure coal supplies or could not afford to buy more due to surging prices of the fuel.

At least two major power producers, Huaneng Power International (0902.HK: Quote, Profile, Research, Stock Buzz) and China Power International Development Ltd (2380.HK: Quote, Profile, Research, Stock Buzz), have warned investors they may have made losses in the first half of 2008.

"All the power grid operators and generating firms should strictly follow the state's power price policy...to ensure normal operations and guarantee safe and stable supply of power," NDRC said in the post.

The new price hike follows an increase by a similar margin of on-grid rates and retail tariffs from July 1.

"This power tariff increase is earlier than we expected. Previously we expected an increase in September," said Daisy Zhang of BNP Paribas.

"Together with the July hike, China's power tariffs were raised by a total 10 percent. But this can only offset 50-60 percent of the thermal coal cost of listed power producers. We expect more tariff hikes this year, each around a similar rate."

[kennynah]

after olympics...... hospital business cheong ah 9 months later...with all the extra babies

[winston]

China eyes 200-400b yuan stimulus plan

BEIJING - China's leaders are carefully considering an economic stimulus package of at least 200-400 billion yuan (US$29-58 billion) and may ease monetary policy by the end of the year, investment bank JPMorgan Chase said on Tuesday.

The possible stimulus package would be equivalent to 1.0 to 1.5 per cent of GDP.

'This will include tax cuts and measures to 'stabilise domestic capital markets' and support 'healthy development of the housing market',' Frank Gong, chief China economist for JPMorgan, said in a note to clients.

Mr Gong said the package would be in addition to projected spending of 500-600 billion yuan to rebuild the parts of Sichuan devastated by May's earthquake.

Beijing is already loosening its purse strings to help small firms. The Ministry of Finance said on Tuesday it would put 3.51 billion yuan this year into six schemes to encourage small business, up from two billion yuan on average in the past eight years.

It was the latest move by Beijing to help labour-intensive small firms, which are running into headwinds as a result of the government's credit tightening, a rising yuan and the soaring costs of raw materials and energy.

The finance ministry joined forces on Monday with the central bank and the labour ministry to encourage banks to lend more to small firms by allowing them to charge higher interest .

And last month the central bank raised banks' lending quotas by 5 per cent and instructed them to channel the extra loans to small firms and to the agricultural sector.

Expectations of fiscal pump-priming have been growing since the Communist party last month switched its economic policy priority from avoiding overheating to supporting steady growth.

Energy reforms

Beijing is moving ahead with plans for energy price reform and most fuel and power prices will be liberalised after the Games, Mr Gong added.

Hot money inflows into China are fading as the dollar strengthens, while inflation will continue to trend lower, he said.

This would provide a favourable backdrop for the central bank to reduce banks' reserve requirements, now at a record 17.5 per cent, and ease monetary policy later in the year, he added.

On the perpetual debate of how China should manage its US$1.81 trillion of foreign-exchange reserves, Mr Gong said Beijing may have intensified sales of some dollar assets.

But it aims to keep the bulk of its reserves in dollars - even if they are not invested in the debt of US mortgage agencies Fannie Mae and Freddie Mac - because it favours a strong US currency.

Mr Gong said it was unlikely that China would diversify into the euro, yen or commodity currencies in a big way as these currencies may already have peaked.

Instead, policy makers were studying a number of suggestions put forward by government researchers, including:
- repatriating the money and investing it in on physical and social infrastructure to boost consumption;
- using some of the money to set up a fund to stabilise the stock market, which is down 62 per cent from October's record high;
- diversifying into dollar-bloc currencies such as the Hong Kong dollar and other Asian markets. However, the biggest question for Asian and other emerging markets would be liquidity, Mr Gong said. -- REUTERS