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

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

Postby winston » Thu May 08, 2008 9:07 am

If you want to invest directly in the Chinese markets, there are these two ETF listed in HK:-
1) A50Chinatracker 2823
2) WISECSI300 2827

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Group fears triple whammy may shut 10,000 HK-owned factories

Bonnie Chen, The Standard

Thursday, May 08, 2008

A drastic drop in US orders, yuan appreciation, and an anticipated slowdown in souvenir demand following the Beijing Olympics may result in the closure of about 10,000 Hong Kong-owned factories in the Pearl River Delta, the Federation of Hong Kong Industries warns.

"Around 15 percent of the 70,000 Hong Kong- owned factories in Guangdong may be forced to close," federation chairman Clement Chen Cheng- jen said yesterday, after attending the Young Industrialist Awards of Hong Kong.

Chen said up to one million mainland workers may be affected. "The federation has been keeping in touch with the mainland authority and the Hong Kong government to keep our members updated on the situation," he said, adding the government has been helping industrialists find a way out.

"I heard Chief Executive Donald Tsang Yam- kuen may lead a delegation to a few cities in Guangxi province next month to see whether Hong Kong factories can move their manufacturing plants there."

The Hong Kong companies in Guangdong employ more than 10 million workers.

Following the severe weather earlier this year, some factories are reported to have closed down "secretly" to avoid paying compensation to workers, Chen said.

"I have not heard of any of our members closing down, but some have told me their suppliers have closed shop," he said.

Earlier this year, Chen predicted that up to 14,000 Hong Kong factories could close.

"Members told us American orders have been dropping as they could not transfer the rising cost to buyers," said Chen, adding inflation, the rising cost of raw materials and yuan appreciation have put pressure on production costs.

He said any further tightening of the monetary policy in the mainland could only worsen matters.

"They need to deposit sufficient funds in the bank in order to borrow, something like depositing 10 yuan just to borrow five yuan," Chen said.

He said a new labor contract law and changes in the policy for the processing trade this year have only added to the problems of Hong Kong-owned factories. "Once a factory closes down, it will be hard to restart its operations even if the economy picks up in the future."
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Re: HK & China Economic News

Postby kennynah » Thu May 08, 2008 6:53 pm

China to let private lenders make small loans on a trial basis in rural areas
BEIJING (XFN-ASIA) - The China Banking Regulatory Commission (CBRC) has released guidelines to allow for the establishment of private lending businesses on a trial basis to improve lending in rural areas.

According to the guidelines, farmers and small companies will be eligible for loans, and no one loan may exceed 5 pct of the lender's net capital assets.

Small-loan firms that are founded as limited liability companies should have registered capital of no less than five mln yuan, according to the guidelines, while lenders that are joint-stock companies should have capital of more than 10 mln yuan.

The lenders will be allowed to raise funds from shareholders, including no more than two existing banking institutions.

The guidelines were posted on the official website of the banking regulator today but dated May 4.

Until now, most private lending businesses -- which usually escape the control of the CBRC -- have been considered illegal.
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Re: HK & China Stocks

Postby winston » Fri May 09, 2008 12:19 pm

China Is Preparing for Margin Trading, CSRC Says (Update2) By Zhao Yidi

May 9 (Bloomberg) -- China is preparing to allow margin trading and short selling, Shang Fulin, chairman of the China Securities Regulatory Commission, told a conference in Shanghai today, without providing a timeline.

China, the world's fastest-growing major economy, wants to introduce more investment tools to allow investors to earn higher profits and hedge against market risks. Investors can borrow money to buy stocks in margin trading if they expect share prices will rise. They can also short sell individual stocks by borrowing them from brokerages.

Individual and institutional investors can make margin trades and short-sell an unlimited amount of stocks under rules issued in August 2006. Brokerages with three years trading history and net assets of no less than 1.2 billion yuan for the past six months will be allowed to handle margin trades, according to the rules.

Shang also said that the collapse of the U.S. subprime mortgage market that has led to more than $300 billion in asset writedowns and credit losses worldwide ``mandates'' closer oversight. Regulators will review asset-backed securities, Shang said.
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Re: HK & China Economic News

Postby winston » Fri May 09, 2008 4:34 pm

China Producer Price Gains Fastest Since Nov. 2004 (Update3)

May 9 (Bloomberg) -- China's producer-price inflation accelerated at the fastest pace in more than three years on rising energy, commodity and labor costs.

Factory-gate prices rose 8.1 percent in April from a year earlier, the National Bureau of Statistics said today, after gaining 8 percent in March. That compared with the 8.4 percent median estimate of 20 economists surveyed by Bloomberg News and was the quickest since November 2004.

China is trying to cool inflation while avoiding a slump in the world's fastest-growing major economy as global demand fades. Surging raw material prices and a new labor law have added to company costs that may be passed on to consumers.

``Inflation is the first priority as economic growth is still pretty strong,'' said Eric Fishwick, head of economic research at CLSA Asia-Pacific Markets in Singapore.

For the first four months, China's producer prices rose 7.2 percent from a year earlier, the statistics bureau said. Purchasing prices jumped 11.8 percent in April from a year earlier and gained 10.3 percent in the first four months.

Producer prices of ferrous metals jumped 24.8 percent in April from a year earlier, after rising 21.2 percent in March, the statistics bureau said. Gasoline prices climbed 10.8 percent after gaining 9.9 percent and clothing costs increased 2.3 percent after climbing 2 percent.

Higher wages and energy and commodity costs led a third of manufacturers to raise prices in April, according to a survey by CLSA of more than 400 purchasing managers. Bright Dairy & Food Co., China's second-largest listed dairy company, said in April it would raise prices.

Wage Increases

The Labor Contract Law, imposed on Jan. 1, mandates minimum wages and limits overtime work. The average wage in Chinese urban areas climbed 18 percent in the first quarter from a year earlier to 6,524 yuan ($932).

China has allowed the yuan to gain almost 10 percent versus the U.S. dollar in the past year to cool inflation. A higher currency reduces import costs and the trade surplus by making exports more expensive.


The People's Bank of China has ordered lenders to set side more deposits as reserves three times this year, pushing the requirement to a record 16 percent.

Consumer prices probably rose 8.2 percent in April from a year earlier, compared with 8.3 percent in March and the 11-year record high of 8.7 percent in February, the Bloomberg News survey showed. The statistics bureau will release the figure on May 12.
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Re: HK & China Stocks

Postby winston » Fri May 09, 2008 9:02 pm

Last week, the Economic Observer reported that China expects to launch margin trading trials this month with three brokerages chosen for a pilot program - CITIC Securities, Haitong Securities and China Jianyin Investment Securities.

The news had led to consecutive days of gains in the brokerage sector.
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Re: HK & China Economic News

Postby winston » Fri May 09, 2008 9:07 pm

IMF has trimmed its 2008 growth forecasts to just above 9% for the Chinese economy and below 4% for global economy.
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Re: HK & China Economic News

Postby winston » Sat May 10, 2008 12:17 pm

China bracing for slower economic growth

Pace of export growth from labour-intensive industries is slowing and contribution to GDP of investment is also on the decline. By Umesh Pandey

In a report issued by China's Ministry of Commerce, exports to its three largest trade partners - Europe, the United States and Japan - slowed in the first quarter. Exports to the US were also down 15% over the same period last year.

Meanwhile, exports to emerging markets and neighbouring countries grew in the first quarter. The volume of exports to South Korea rose 33.4% year on year, while exports to Brazil were up 77.6%, the report said.

The first quarter trade surplus was $41.4 billion, down 10.6% on the same period of last year, the report said.

The value of China's exports in the first three months grew 21.4% to $305.9 billion year on year. In contrast, the value of imports rose 28.6% to $264 billion in the first quarter.

The ministry said that during the first quarter of the year, the value of clothing exports rose 14.7%, less than the 17.6% growth reported for the same period of last year. Similarly, the value of shoe exports rose 11.2%, compared with 16.7% last year, and toy exports grew 3.3%, down from 29.9%.

Total foreign trade was worth $570 billion in the first quarter, up 24.6% on the same period of last year, the report from the ministry said.

Experts expect slower export growth in the textile sector, as the yuan appreciates and raw material and labour costs increase,
Li Yushi, vice-president of the Chinese Academy of International Trade and Economic Co-operation was quoted as saying in China Daily.

The report also said that exports of high energy consuming and high-polluting products have all been in decline and during the first quarter of this year, the volume of corn exports fell 97.2% year on year. The export volume of steel products fell 19.3% compared with the same period 12 months ago.

Exports of machinery and electrical products, however, recorded a year-on-year rise of 23.1% in the first quarter.

But some analysts say that China's economy is set to slow.

During 2007, China's economic growth was mainly driven by private consumption, investment and exports. Retail sales, which account for about 95% of household consumption, expanded 16.8% in 2007. In comparison, retail sales grew by an average 12.3% from 2003 to 2006.

Household consumption is estimated to have contributed 30-35% to China's economic growth in 2007 and this was supported by the robust private consumption growth and a double-digit increase in household income. Urban households' per capita disposable income surged 17.2% in 2007, while that of rural households expanded 15.4%.

Investment has been a major contributor to China's economic growth in the last few years, with its share in the economy surpassing 40%. However, due to measures to curb investment, growth has slowed down. Last year, urban fixed asset investment increased 25.8%. In comparison, urban fixed asset investment expanded by an average 26.4% from 2004 to 2006.
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Re: HK & China Economic News

Postby winston » Mon May 12, 2008 2:56 pm

Chinese Manufacturers Shun Low-Wage Inland for Vietnam, India
By Kevin Hamlin

May 12 (Bloomberg) -- Edward Kang spent 15 years building textile maker Ever-Glory International into a symbol of China's world dominance in cheap clothes, shoes and toys. With $70 million in annual sales, the company has won customers including Levi Strauss & Co. and Tesco Plc.

With rising labor costs and the yuan's appreciation against the dollar threatening profits, Kang, 45, considered moving from Nanjing, near China's Pacific coast, to the interior to take advantage of a government program to entice businesses into lower-wage provinces. He decided instead to shift 40 percent of his manufacturing capacity to a new plant in northern Vietnam's port city of Haiphong within five years.

The provincial Chinese workers didn't have the appropriate experience, and transportation to distant ports was too expensive, Kang says: ``If we cannot meet customers' price expectations, they will say `Bye-bye, Ever-Glory.'''

Thousands of companies are arriving at similar conclusions. With Vietnam, India and other Asian nations mounting aggressive campaigns for foreign investment, a third of the manufacturers in Guangdong province -- which produces 30 percent of China's exports -- will be closed in three years, according to an April 29 report by Tao Dong, chief Asia economist at Credit Suisse in Hong Kong.

``The end of an era in terms of China's mighty export industry has just begun,'' he said.

Foreign Shores

The factory closures and departures to foreign shores aren't likely to dampen growth in the world's fastest expanding major economy, as China increases its production of higher- value goods -- computer chips, electronic gadgets, automobiles.

What it does, in the world's largest Communist country, is increase the disparity between residents in the wealthy coastal areas and the more than 700 million people in inland provinces -- more than half China's population -- who may find themselves excluded from the country's success story.

``It is absolutely key that China push its development model westward,'' says Stephen Roach, chairman of Morgan Stanley's Asia division in Hong Kong. ``The jury's out on whether they will pull it off.''

China's shipments of higher-technology products surged 412 percent since 2002 to 347.8 billion yuan ($47.6 billion) last year, or 28.5 percent of total exports, fueling 11.9 percent growth in gross domestic product. The economy is forecast to expand 10 percent this year and 9.5 percent in 2009, according to 21 economists surveyed by Bloomberg.

Cheap Labor

Growth is concentrated mainly in four provinces on China's southeastern coast: Guangdong, Jiangsu, Fujian and Zhejiang. Clothing, shoe and toymakers there sparked China's manufacturing boom, with much of the initial push coming from foreign companies attracted by cheap labor, easy access to ports and special economic zones that offered duty-free imports and other tax incentives.

China won more than 65 percent of the $792 billion in investment received by 21 Asian countries during the past five years, according to the Asian Development Bank. Such dominance prompted Singapore's founding father, Lee Kuan Yew, to say in 2002 that China is ``a vacuum cleaner for foreign direct investment.''

About 90 percent of the money has gone into the coastal southeast, which accounts for 60 percent of the country's total exports. That's helped to double average monthly pay in the Guangdong province city of Dongguan, China's largest manufacturing center, to 2,594 yuan in December 2006 from 1,284 yuan in 2001, according to New York-based CEIC Data, an economic-research firm.

Poorest Regions

So far, the rest of China hasn't shared in the prosperity. Incomes in western China's poorest regions are one-tenth those of the richest areas on the east coast. The average monthly wage for the city of Gansu in the northwest is 1,437 yuan.

To help encourage investment and narrow the disparity, the government adopted a ``Go West'' policy in 2000. It spent 1 trillion yuan through 2005 on 70 major infrastructure programs including a 1,140 kilometer railway to Lhasa, Tibet's capital, according to China's National Development and Reform Commission. In mid-2006, the government added 168 billion yuan for regional airports, hydropower stations and other projects.

Even with the improvements, power failures, substandard roads and congested railways reduced production in 2004 by 9.5 percent in Kunming, the capital of Yunnan province in the southwest, according to a World Bank report. Such issues cut output during the same period only 2.3 percent in Shanghai, on the Pacific coast.

`Fragmented and Inefficient'

The transportation industry remains fragmented and ``inefficient,'' Beijing-based World Bank economist Zhao Min wrote in a recent report. Better integration of rail lines, waterways and roads ``could considerably reduce'' costs and increase ``the competitiveness of the interior regions,'' she said.

Other disadvantages: The expense of setting up a business in the inland southwest is nearly three times higher than in the coastal southeast, and obtaining credit takes more than twice as long, according to the World Bank in ``Doing Business in China 2008.''

The yuan's 4.45 percent rise against the dollar in the first four months of 2008, nearly twice the rate of last year's appreciation, is also eroding profits because China's exports are priced in dollars. The currency climbed 7 percent in 2007.

Investment Intentions

Foreign companies announced last year that they intend to invest $11.6 billion in central and western China, up 30 percent from $8.9 billion in 2003, according to Belfast-based FDI Intelligence, a provider of data on foreign direct investment. That's well below companies' investment intentions for Vietnam, which totaled $40.1 billion in 2007, up 354 percent from 2003, and for India, which rose 174 percent to $52.6 billion, FDII said.

Zhejiang Hefeng Shoes Co., with one factory in Zhejiang province employing 1,000 people, is examining relocation options that include Vietnam, according to export manager Ray King. ``Customers say our prices are crazy,'' he says. ``They always say other suppliers in Vietnam and Thailand are cheaper.''

Vietnam and India have become more aggressive in luring low-cost industries. Vietnam joined the World Trade Organization in 2007, giving it greater access to world markets. PricewaterhouseCoopers last July ranked it as the most competitive destination for manufacturing businesses among the world's top 20 emerging markets; China was second.

Low Wages

Vietnam's laborers earn an average of 1.669 million dong ($104) a month, 41 percent less than China's lowest-paid workers in the central province of Jiangxi, according to World Bank data.

India's wages are lower than Vietnam's, averaging 3,843 rupees ($87) a month, according to CEIC. India is copying China's special economic zones, building more than 400 that will provide low-cost land and rents, five- to 10-year tax breaks and duty-free imports.

It has been a member of the WTO since Jan. 1, 1995, and ranked 7th in the PricewaterhouseCoopers report, behind Vietnam, China, Poland, Chile, Malaysia and Thailand.

The labor-cost comparison became even more favorable for Vietnam and India in January, when a new Chinese labor law required companies to pay minimum wages and severance pay. The law contributed to a 22 percent increase in labor costs during the past year, according to the Federation of Hong Kong Industries.

The absence of such laws ``anchored China's status as the world's factory,'' Tao said in the Credit Suisse report. That advantage ``has gone overnight.''
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Re: HK & China Economic News

Postby winston » Tue May 13, 2008 8:40 am

LenaHuat wrote:The Central Bank has raised the banks' reserve ratio once again.


As long as they are done in bite-sizes, things should be quite ok..

===================================

From an Investment house yesterday:-

The People's Bank of China (PBOC) raised the reserve requirement ratio (RRR) on May 12 by 50 basis points (bp) to 16.5%, effective May 20, 2008.

The RRR hike shortly after the release of April CPI data came at little surprise. We reiterate our view that while it demonstrates the central bank's tightening stance, small-scale hikes to the RRR are not sufficient to control monetary expansion and inflation.

With the excess reserve ratio likely standing at above 2%, a 50-bp increase in the RRR is not binding on banks capabilities to lend.

Going forward, we expect the central bank to implement further tightening measures including regular hikes to the RRR, hikes to benchmark interest rates, continued credit rationing in commercial lending, as well as faster appreciation of the currency.
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Re: HK & China Economic News

Postby millionairemind » Wed May 14, 2008 2:48 pm

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

China Industrial Output Growth Cools as Exports Slow (Update2)

By Kevin Hamlin

May 14 (Bloomberg) -- China's industrial production growth slowed by more than economists estimated in April as U.S. demand for exports weakened.

Output rose 15.7 percent from a year earlier, the statistics bureau said today, after climbing 17.8 percent in March. The median estimate of 27 economists surveyed by Bloomberg News was for a 17.5 percent increase.

The yuan fell on speculation that slowing output will prompt China to cap the currency's gains to protect export jobs. The yuan rose 4.2 percent against the dollar in the first quarter, the biggest gain since a fixed exchange rate ended in 2005, as the government sought to tame the fastest inflation in almost 12 years.

Weaker industrial output growth ``doesn't justify a change in the government's tight monetary policy stance,'' said Shuji Tonouchi, senior economist at Mitsubishi UFJ Securities Co. in Tokyo. ``Inflation is the biggest issue.''

The yuan fell 0.12 percent to 6.9970 against the dollar as of 11:47 a.m. in Shanghai from 6.9889 yesterday.

Cement output grew 11 percent in April, slowing from the 26 percent pace in March. Electricity production rose 13 percent, less than the previous 17 percent increase.

The May 12 earthquake in Sichuan province that killed more than 12,000 people will have a ``limited'' effect on output and exports because of the area's small manufacturing role, said Sun Mingchun, a Hong Kong-based economist at Lehman Brothers Holdings Inc.

Borrowing Costs

Policy makers have kept interest rates on hold this year and slowed yuan gains since April to try to avoid attracting unwanted overseas capital to a financial system already awash with cash. The yuan has climbed 0.2 percent against the dollar since March 31.

China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter, down from the 11.9 percent pace for all of 2007. Export growth slowed to 22 percent in April from 31 percent in March. Shipments to the U.S. climbed 11 percent, down from 16 percent.

The government has used price controls and lending curbs to combat inflation. China this week ordered banks to set aside a record 16.5 percent of their deposits as reserves after inflation accelerated to 8.5 percent, the fastest pace in the world's 10 biggest economies.

Central bank Governor Zhou Xiaochuan said May 5 that there's a possibility interest rates will rise.

Money Supply

Money-supply growth accelerated last month and retail sales gained by the most since at least 1999. Foreign direct investment in China in the first four months of this year increased 59 percent from a year earlier.

The weaker industrial expansion was ``mainly driven by slower export growth,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong.

The timing of holidays that trimmed the number of working days in April may have been a factor, said Song Yu and Liang Hong, economists at Goldman Sachs Group Inc. in Hong Kong.

``China's economy is still facing challenges this year including high inflation, investment growth that hasn't yet come down to a normal level and the global economic slowdown,'' Vice Premier Wang Qishan said May 9.

Growth in urban fixed-asset investment accelerated to 26 percent in the first fourth months from the 25.9 percent pace through March, according to the median estimate of 25 economists in a Bloomberg survey. That number, the final one in this round of data, is released tomorrow.

To contact the reporter on this story: Kevin Hamlin in Beijing at [email protected]
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