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US Chamber China Trade & Investment News
May 28, 2008
Trade
May 28: MAPI finds Chinese trade surplus declined despite rise in manufacturing exports.
China Trade Extra
May 28: Yuan dips after four-day rally.
China Trade Extra
May 28: Hong Kong's export value rose to Yuan 216.544 billion in April, an unexpected
rise of 14.5 percent from a year earlier on robust trade with the mainland, according to the
latest statistics released by the Hong Kong government. Meanwhile, the city also saw the
value of its imported products increased by 11.3 percent to Yuan 259.6 billion. Mainland
still acted as the major booster for Hong Kong's export growth and the mounting need in
Asian and EU market contributed.
China Knowledge
May 28: Natural rubber imports by China, the world's largest consumer, may increase to
2.07 million tons in 2010, according to Wang Yixin, president of Hainan Natural Rubber
Industry (Group) Company. China will rely on imports to meet 70 percent of its natural
rubber demand for at least the next three years, said Wang of Hainan Natural Rubber, the
country's largest producer of the commodity. Rubber imports were 1.75 million tons 2007,
according to the China Rubber Industry Association.
Bloomberg
May 27: The European Union's top trade official said he would "push back hard" against a
global trade deal that would give China more time to shield its economy from foreign
imports. A draft World Trade Organization agreement would offer China up to 15 years
before it had to obey all trade liberalization rules. China was offered special treatment
because it only joined the WTO in 2001. However, the world's most populous nation is
different from many other emerging economies because it is a major exporter that has won
sizable market share for its goods in the US and Europe.
The Wall Street Journal
Political and International News
May 28: Beijing and Seoul will upgrade their relationship from a "comprehensive
cooperative partnership" to a "strategic cooperative partnership" while intensifying
cooperation in security, trade and people-to-people exchanges. The announcement was
made by President Hu Jintao and his Republic of Korea (ROK) counterpart Lee Myungbak. The two also agreed to establish a strategic dialogue mechanism between the two
foreign ministries to coordinate on key issues of common concern. Hu said the further
development of ties requires the two countries to expand and deepen their partnership.
The two countries will enhance collaboration in sectors ranging from telecommunications
and logistics to energy and environmental protection, they agreed.
China Daily
May 28: A Senior official of the Communist Party of China (CPC) He Guoqiang said China
is ready to deepen cooperation with Laos to raise bilateral ties to higher level. He, a
member of the Standing Committee of the Political Bureau of the CPC Central Committee,
said in a meeting with his Lao counterpart Asang Laoly that China has always attached
great importance to developing relations with Laos. He said China hopes to make joint
efforts with Laos to deepen cooperation and continuously raise bilateral ties to higher
level. He, hailed the friendly exchanges between the discipline inspection departments of
the two parties.
Xinhua
May 28: Renewing the US-China human rights dialogue after a six-year cutoff, a senior
US official urged the Chinese government to improve its rights record as a way to sweeten
the atmosphere for the upcoming Olympic Games in Beijing. At the same time, he
acknowledged that the State Department's own annual human rights assessment rates,
China's record as "poor. In addition, the Chinese government has come under heavy
criticism abroad for its crackdown in Tibet following the eruption of anti-Chinese rioting in
March.
Washington Post; The New York Times
May 28: China and the United States have restarted the human rights dialogue after years'
of suspension. The 14th China-US human rights dialogue was held in Beijing from May 24
to 28, the first such dialogue between the two countries since 2002, according to the
Chinese Foreign Ministry. During the five-day dialogue, the two sides briefed each other
on the progress in the human rights field, and exchanged extensive and in-depth views on
such issues as freedom of speech, religious freedom, anti-racial discrimination and United
Nations human rights cooperation. The two sides agreed that the candid and frank
dialogue was constructive and helped enhance mutual understanding and reduce
divergence, said a release from the ministry.
Xinhua
May 27: South Korean President Lee Myung-Bak held talks with Chinese leader Hu Jintao
as Beijing urged Seoul to loosen its "outdated" military ties with the US. Lee met President
Hu shortly after arriving for a four-day visit, the two discussed regional security, and other
issues, China's state news agency reported. "As a close neighbor of the peninsula, and a
friend of both sides, China will, as always, firmly support the process of reconciliation and
cooperation between the North and the South (of Korea)," Hu told Lee. "China will play a
constructive role in safeguarding the peace and stability of the peninsula and in achieving
eternal peace in North-East Asia."
The Wall Street Journal
Economy
May 28: China's economic growth may have peaked in 2007, but the upward pressure on
prices may last through 2009, said Xu Xianchun, deputy director of the National Bureau of
Statistics. "The growth rate of 2007 may be the peak for this economic cycle," Xu said. In
2007, China's economy grew 11.9 percent. According to Xu in the past economic cycle in
the early 1990s, price pressures remained for a couple of years even after gross domestic
product growth began to slow down.
The Wall Street Journal
May 28: China's economy can maintain a steady growth above 8 percent for a relatively
long period because of a stable society, a vast market and ample capital, said Cheng
Siwei, an economist and former vice chairperson of the Standing Committee of the
National People's Congress. "China's economy can stay in the fast developing track if we
work hard and pay enough attention to existing problems," Cheng said at a three-day
forum with the theme of "Economic globalization and the choice of Asia: transition, growth
and welfare" in Shanghai.
Market Avenue
May 28: Ten percent of the municipal budget will be set aside, and the purchase of new
official vehicles is forbidden in 2008, in order to support quake-hit areas, announced Han
Zheng, mayor and deputy secretary of the Shanghai Municipal committee, who presided
over a routine government meeting on May 26. He said that every penny saved would be
provided for the relief work in quake-hit areas; and calls on the city's 19 districts and
counties to set aside 5 percent of regular government expenditures for earthquake relief.
People's Daily Online
May 27: During the first three decades after 1949 China’s economy slid very rapidly
relative to its neighbors (Japan, South Korea, Taiwan and Hong Kong), and in the
subsequent three decades it began the long process of narrowing the gap. China switched
from having a rapidly deteriorating dependency ratio during the first two-and-a-half
decades after 1949 to a rapidly improving dependency ration since then. After 2010-2015,
conditions will change again, and China’s dependency ratio begins to deteriorate quite
dramatically. All of this necessarily affects per capita income growth.
Sampa
May 27: Unofficial estimate of direct damages of China’s earthquake estimated at over
Yuan 500 billion far exceeding the Yuan 151.7 billion reported losses from the devastating
blizzard. The six regions that were identified as "severe disaster areas" in the blizzard
account for around 14.3 percent of China's GDP, while Sichuan only accounts for around 4
percent of the country's GDP but direct damage in human life and disruption of production
is higher. Negative effect of the Sichuan earthquake could be transmitted to the national
economy through food supply, labor supply and exposure of real estate markets.
RGE Monitor
Foreign Investments
May 28: Bank of America Corporation is raising its stake in China Construction Bank
Corporation by about $1.86 billion, a reflection of how profitable its initial investment three
years ago has been and a signal of confidence in the Chinese bank's prospects. Bank of
America paid $3 billion for a 9 percent stake in CCB in June 2005 and retained the option
to increase that stake gradually to 19.9 percent. The value of the investment ballooned,
and Bank of America said late 2007 that it had a paper gain of about $30 billion. Over
time, an increase in CCB shares brought Bank of America's relative stake down to about
8.2 percent. The new investment would bring that stake to 10.75 percent. Bank of America
is buying six billion shares at 2.42 Hong Kong dollars, or about 31 US cents, set under a
formula in the existing agreement.
The Wall Street Journal
May 28: Korea Electric Power Corporation, an integrated electric utility company in Korea,
plans to spend a total of Yuan 1.1 billion ($158 million) in 2008 to acquire 14 Chinese
power plants in the neighboring country's Shanxi province, according to sources. The
Korean company will purchase the 14 power plants through a joint venture Gemeng
International Energy Company, the official said. It has received go-ahead to take over two
wind-power plants and two power plants, and is still awaiting regulatory approval for
another wind-power plant and nine coal-fueled power plants.
China Knowledge
May 27: Colombia's largest cement company, Cementos Argos SA, borrowed $150 million
from the Andean Development Corporation and China Development Bank to finance part
of its new cement plant in the Caribbean port of Cartagena, according to the company.
Andean Development Corporation, known as CAF and the state-owned Chinese bank will
each lend $75 million, the statement said. The loan is part of the financing for the
construction of the $300 million Cartagena plant, which will start operations in mid-2009.
The Wall Street Journal
May 27: Chinese foreign asset growth – counting central bank reserves, the CIC, and
funds managed by the state banks – in 2007 was over two times the global increase in
reserves in 2000 or 2001. China saw a phenomenal surge in hot money inflows at exactly
the same point that it was holding USD/CNY around the Yuan 7 level, indicating that
pressure on the RMB continues. China’s reserve growth now exceeding at a fast pace of
H107 (approximately $40 billion/month), much faster than H207 ($32 billion/month) or
2006 (approximately $20 billion/month). Transfers to CIC, increase in foreign exchange
held by state banks to meet reserve requirements may have contributed to slower pace in
Q4. But on-shore foreign exchange lending has fallen sharply since February. With CIC,
reserve growth would reach $60-65 billion/month for the past six months- higher than
average $45 billion/month in H107. Falling dollar increases the value of Chinese reserves
in dollar terms.
RGE Monitor
Energy & Environment
May 28: Asia's largest oil refiner China Petroleum & Chemical Corporation said the import
tax rebate could not offset even half of the losses from its refining business amid surging
costs and China's caps on domestic oil product prices, according to its board chairperson
Su Shulin at the annual shareholders' meeting held in Beijing. Su said Sinopec's refining
units are still in red after the prices of crude oil have climbed to $130 per barrel.
China Knowledge
May 28: Eleven enterprises under Sinochem Corporation suffered great losses to date
from the Sichuan earthquake, making it the biggest victim among the central governmentowned enterprises, according to sources. The above 11 enterprises had a total asset of
Yuan 7 billion and total profit of Yuan 150 million, accounting for 5 percent of Sinochem's
total asset and profit respectively. Three of the most seriously damaged enterprises may
cost Yuan 1.28 billion for reconstruction while the others need approximately Yuan 1 billion
for recovery works.
China Knowledge
May 28: Dongfang Electric Corporation Limited, China's largest electric power generating
equipment producer and vendor, has obtained loans totaling Yuan 30 billion ($4.32 billion)
from the Bank of China after the catastrophic earthquake, according to sources. The
Sichuan province-headquartered company, whose steamer business was heavily
destroyed in the quake, will use this loan to restore its manufacturing facilities and resume
production as soon as possible. It aims to restore 80 percent of the production capacity at
its main plant in six months.
China Knowledge
May 28: SK Energy Company, South Korea's largest refiner by capacity, said it has
agreed to form a joint venture with China Petroleum & Chemical Corporation, or Sinopec,
to build a petrochemical plant in China. SK Energy said it would hold a 35 percent stake in
the joint venture, which will build the ethylene facility with a capacity of 800,000 metric tons
a year. The plant - to be located in Wuhan, Hubei province - will mark the first large
investment in China for SK Energy, which has shown interest in the country's
petrochemical sector for years.
The Wall Street Journal
May 28: China Power International Development Limited, a unit of the fifth-largest Chinese
power producer, rose in Hong Kong trading after it announced a plan to buy 63 percent of
Wu Ling Power Corporation from its parent. The company signed a memorandum of
understanding to buy the shares from CPI Group, which paid Yuan 2.2 billion ($320
million) for the stake, Hong Kong-based China Power said in a statement.
Bloomberg
Insurance & Finance
May 28: Hong Kong, Dubai signs MOU on financial services.
China Trade Extra
May 28: Qiming Venture Partners announced the closing of its second fund, Qiming
Venture Partners II, raising $320 million for Chinese investments in the healthcare,
technology, media, and Internet and consumer sectors. The fund will continue to make
early stage and select growth and expansion stage investments in the healthcare,
technology, media, Internet, and consumer sectors.
China Tech News
May 28: Agricultural Bank of China's net profit more than doubled 2007 partly on strong
growth in its intermediary business, but its bad loan ratio remained high, the bank said.
The rural lender said in its annual financial report for 2007 that its net profit jumped to
Yuan 11.87 billion 2007 from Yuan 5.23 billion in 2006. Operating revenue rose 31 percent
to Yuan 114.8 billion from Yuan 87.5 billion. Agricultural Bank, the only one of China's Big
Four state-owned lenders yet to be listed, said revenue from intermediary business rose
68 percent to Yuan 23.44 billion from Yuan 13.98 billion, and accounted for 14.7 percent of
total revenue.
The Wall Street Journal; Bloomberg
May 28: A8.com, which mainly sells ring tones and other digital music to mobile phone
subscribers in China, has filed for an initial public offering on the Hong Kong exchange to
raise about $28 million, sources reported. The company, which was founded in China in
2000, has raised two rounds of financing previously from IDGVC, TDF, Intel Capital and
JAFCO. The company sells ring tones, ring back tones, mobile games and other digital
content to subscribers of China Mobile and China Unicom.
Washington Post
May 28: Beijing is emerging as a financial hub in China. China's top stock exchange, the
bond market and the money market are in Shanghai, the coastal city. Shanghai has been
booming, with its role expanding to play host to a dozen foreign banks that have been
allowed to incorporate in China. However, Shanghai is now facing a rival from China's
north - Beijing. An area known as Financial Street has emerged as a financial center in its
own right. Global bankers from New York, Frankfurt and Paris are putting their China
headquarters in the capital, drawn at least in part by the huge advantage of greater
proximity to China's decision makers.
The Wall Street Journal
May 28: China's central bank said it plans to sell up to Yuan 20 billion worth of threemonth bills and Yuan 33 billion worth of three-year bonds in its regular open market
operation. The planned offering is bigger than the Yuan 37 billion worth of bills and bonds
the central bank sold on May 22. It sold Yuan 34 billion worth of bills and repurchase
agreements on May 27. If it does not sell any repos, the PBOC will inject a net Yuan 1
billion into the money market, as Yuan 88 billion worth of bills and repos mature.
The Wall Street Journal
May 28: The Chinese government has not set a ceiling on bids by China Merchants Bank
Company and Industrial & Commercial Bank of China Limited for Wing Lung Bank Limited,
sources said. Bloomberg News reported that the Chinese government had capped China
Merchants Bank's and ICBC's bids for Wing Lung Bank at 2.85 times book value. Wing
Lung's owners, the Wu family, are seeking to sell their 53.12 percent stake for at least
three times book value.
The Wall Street Journal
May 28: China's real estate-to-medicine conglomerate Shanghai Industrial Holding Limited
(SIHL) said it plans to sell out a technique investment subsidiary to parent, Shanghai
Industrial Investment (Holding) Company, for HK$775 million. SIHL said in a filing with the
Hong Kong Stock Exchange that it would sell out all its interest in Shanghai Information
Investment Inc, in which it holds a 20 percent stake through a wholly owned unit of Active
Service Group.
China Knowledge
May 28: Aluminum Corporation of China Limited, or Chalco, said it would sell Yuan 5
billion worth of three-year bonds on June 04 and Yuan 5 billion worth of five-year bonds in
the fourth quarter of 2008 . China's biggest aluminum and alumina producer by output said
in a statement that it would use the proceeds from the bond sales to repay loans and
supplement its working capital.
The Wall Street Journal
May 27: The Bank of East Asia became the first international lender to issue RMB debit
cards in Mainland China after signing an agreement with China UnionPay in Beijing. The
bank also plans to issue RMB credit cards by the end of the year once approved by
Chinese regulators. BEA’s RMB debits cards can be used at 800,000 merchants with
UnionPay point of sales machines, UnionPay’s designated merchants overseas in 29
countries and regions and UnionPay’s automatic teller machine in 48 overseas countries
and regions.
China Briefing
Science & Technology
May 28: The Shanghai IT commission has been awarded by the United Nations for its
improved IT infrastructure and smart IT applications developed by the municipal
government, according to state news agency. During a forum held in Shanghai on City
Information in the Asia-Pacific Region, Fu Wenbiao, the director of the Shanghai Municipal
Informatization Commission received the UNPAN Knowledge Management Award from
the UN Under-Secretary-General for Economic and Social Affairs Sha Zukang. ICT has
become the most important factor for Shanghai’s industrial development in the past four
years, contributing 14 percent to the city’s total gross domestic product (GDP), according
to Yang Xiong, the executive vice mayor.
China Knowledge
May 28: Microsoft Corporation expects sales of mobile phones with its software in China
to double in the next fiscal year beginning July from close to 2 million units estimated for
the year ending June 30, a company executive said. Benjamin Tan, Director of Microsoft's
Mobile Communications Business in China, told the company is also teaming up with local
retailer D.Phone to open retail stores in China selling various phones using the Windows
Mobile software. Microsoft has opened nine such stores with D.Phone since October 2007
and plans to open 50 by July of 2009. In addition, Microsoft has opened 21 retail outlets
selling mobile phones with electronics distributor Digital China Holdings Limited.
The Wall Street Journal
May 27: Gurango Software Corporation, a Microsoft partner headquartered in the
Philippines, plans to extend into China and the Middle East this year, with an aim to be the
leading Microsoft Dynamics partner in the world by 2011, according to sources. The
company may make its presence in the emerging markets through acquiring local
companies, which will give them more control of the business in those markets. The
company noted that the expansion would be based on where Microsoft sees positive
market opportunities, sources said.
China Knowledge
Cross - Straits
May 27: The leader of Taiwan's new ruling party is scheduled to meet with Chinese
President Hu Jintao and other senior Communist Party officials in Beijing, during his sixday visit to promote economic engagement between the rivals. Wu Poh-hsiung held
discussions with Jia Qinglin, the fourth-most-powerful person in the Communist Party,
after arriving in Beijing. Though mainland China has threatened to attack Taiwan if the
self-ruled island seeks a permanent break, the rhetoric has become decidedly more
amiable since Nationalist Ma Ying-jeou took office as Taiwan's president less than a week
ago. China's official News Agency cited Mr. Jia as saying the two sides should peacefully
develop relations by shelving their differences and seeking common views.
The Wall Street Journal; The New York Times
General News
May 28: Geely Automobile Holdings Limited, the listed unit of China's largest privately
owned carmaker, will land Turkey after Chery, one of the top carmakers in China,
according to sources. Geely automobiles are expected to be put on for sale in Turkey from
August 2008, at a minimum price of about $12,800. Anadolu Group Company, one of the
famous companies in Turkey, have obtained the power of attorney of Geely, and applied
for licenses for the sales and after-sales services to the Ministry of Industry and
Commerce of Turkey.
China Knowledge
May 28: The first international passenger train left Astana, capital of Kazakhstan for
Urumqi, capital of northwest China's Xinjiang Uygur Autonomous Region, providing a
faster link between western China and central Asia. The new rail service is expected to
improve the passageway of the new Euroasia continental bridge, which starts from east
China and through central and western regions and other parts of Asia and continental
Europe before it ends at Rotterdam in the Netherlands.
China Daily
May 28: China, which may overtake South Africa as the world's largest gold producer, has
discovered five major bullion deposits, the China Gold Association said. The Yangshan
deposit in Gansu province, or northwestern China, has resources of 308 metric tons, the
largest in the country, according to a presentation by Hou Huimin, deputy director of the
association, at the 5th Shanghai Derivatives Market Forum. China's demand for gold
jumped 23 percent in 2007, making it the world's second-largest consumer, as a booming
economy spurs jewelery purchases. Bullion soared to a record $1,032.70 an ounce on
March 17, as a falling US dollar and declining equities led investors to buy alternative
assets.
Bloomberg
May 28: Pearson announced that it has agreed to acquire two privately-owned English
language school chains in China, together Learning Education Center (LEC) and Dell
English had sales of $10 million in 2007 and gross assets of about $6.2 million at the end
of 2007. Pearson plans to support the continued expansion of both schools, which will
operate under the 'Learning' brand. Pearson will develop new curriculum materials for
China, drawing on content from Penguin and Pearson Longman, one of the world's leading
publishers of English language training materials for teachers and students.
The Wall Street Journal
May 27: Dongfeng Motor Company, a Chinese joint venture with Nissan Motor Company,
plans to set up a plant to make light commercial vehicles in Zhengzhou with an annual
output of more than 120,000 units, company president Kimiyasu Nakamura said.
Nakamura said the plant in Zhengzhou, the capital of central China's Henan province, will
start production in 2010. The joint venture between Nissan and Dongfeng Motor
Corporation, China's third-largest automaker by sales volume, is aiming for annual
revenue of Yuan 100 billion by 2012, he said.
The Wall Street Journal; Bloomberg
May 27: The Chinese Ministry of Land and Resources has settled this year's tungsten
mining quota at the equivalent of 66,850 tonnes of tungsten dioxide grading 65 percent, up
12.79 percent from 2007 quota, the China Tungsten Industry Association (CTIA)
announced. The total consists of a 59,440-tonne tungsten ore-mining quota, up 8.45
percent year-on-year, and a 7,410-tonne tungsten recovery quota, up by a significant
66.14 percent on the 2007 recovery quota. China's tungsten concentrate output over the
first four months of 2008 amounted to 21,238 tonnes of tungsten dioxide equivalent, down
3.2 percent from the same period 2007.
Resource Investor
May 27: Decreasing nickel demand from stainless steel mills have raised market
speculation that domestic nickel prices will continue to slide, industry insiders told. Gansu
Jinchuan Group, China's largest nickel and cobalt producer, cut its price for 1# refined
nickel (nickel grade above 99.99 percent) by RMB 10,000 ($1,440.94) per tonne to RMB
208,000 ($29,971.63) per tonne on May 21. Jinchuan has dropped its nickel price three
times in May alone. China's major stainless steel producers are reducing production due to
weak consumption. LME nickel may see short-term support from nickel production costs at
around $22,000 per tonne in the near future.
Resource Investor
May 27: SOHO China Company Limited, a leading Chinese commercial property
developer, announced that it has entered into agreements for the acquisition of a largescale development site located in Beijing's Dongcheng District. SOHO China will obtain
the entire interests in Beijing Kaiheng Real Estate Company Limited (Kaiheng Company),
which presently owns the legal rights to develop and construct on the site. The total sum of
this transaction is RMB 5.5 billion, of which RMB 2.2 billion is equity consideration and
RMB 3.3 billion is debt between Kaiheng Company and other third parties.
China Knowledge
May 27: Henderson Land Development Corporation Limited, one of the largest real estate
developers in Hong Kong, announced its 5-year investment plan of RMB 63 billion in
Chinese mainland, according to sources. Under the expansion plan, RMB 11 billion will be
spent in first-tier cities and the rest in nine second-tier cities, such as Shenyang and
Chongqing. An 89-floor International Financial Center in Shenyang will be built at a cost of
RMB 10 billion.
China Knowledge
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