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

[winston]

Subtle change in policy direction. It is no longer an inflation fight..

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China's priority is steady, fast growth -Hu

BEIJING, Aug 1 (Reuters) - China's priority is to maintain steady, fast growth while containing prices pressures, President Hu Jintao said on Friday. Speaking to a select group of foreign reporters at the Great Hall of the People in Beijing, Hu said Beijing would continue to strengthen and improve macroeconomic controls that have produced five straight years of double-digit growth.

He also said China would press ahead with political and economic reforms after the Olympic Games, which open in Beijing next Friday.

China's economy grew 11.9 percent in 2007, but the pace of expansion slowed to 10.4 percent in the first half of this year as demand for China's exports softened and credit curbs kicked in.

The leadership of the ruling Communist Party signalled last Friday that the slowdown was too sharp for comfort by saying its economic priority was to maintain stable growth, while fighting inflation. Previously, the party had stressed the need to prevent the economy from overheating.

[winston]

Hu cautions against over-estimating Olympic benefits

Chinese President Hu Jintao cautioned against over-estimating the benefits to the economy from the Beijing Olympic Games.

"Undoubtedly, hosting the Olympics has boosted the economic and social development of Beijing but Beijing is a small part of the national economy,'' Hu said at a briefing for some foreign journalists in Beijing.

Hu reiterated government goals of maintaining steady and fast growth in the world's fourth-biggest economy and controlling inflation.

BLOOMBERG

[winston]

This news caused Shangai to turned positive and added 100 points to HK..

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China to increase 2008 loan quota by 5pc

China's central bank has raised commercial banks' lending quotas by 5 percent, banking sources said.

The People's Bank of China, at a meeting with commercial banks on Thursday, told lenders to direct the extra loans they can now make mainly towards small firms and the agricultural industry, the sources said. This year's loan quota was previously understood to be no more than the 3.63 trillion yuan (HK$4.15 trillion) lent in 2007.

The latest increase means that about 180 billion yuan in fresh loans could be made by banks. China's central bank has strictly implemented the loan controls this year to slow credit growth and prevent the economy from boiling over after it grew by 11.9 percent last year.

REUTERS

[millionairemind]

China gets powers to block takeovers between foreign companies
By Malcolm Moore, Shanghai Correspondent
Last Updated: 12:30am BST 01/08/2008

The Chinese government will be able to block mergers between foreign companies with operations in the Middle Kingdom under a new anti-monopoly law which comes into force today.

The law, which has been 14 years in the drafting, raises Beijing to the same level as Brussels or Washington DC when it comes to reviewing anti-competitive practices.

The new law gives mandarins the power to conduct "national security reviews" if foreign companies try to acquire Chinese companies. The regulations were based loosely on existing European and American law, and were greeted warmly by the American Chamber of Commerce in Beijing.

Some aspects of the law remained vague, including how it will be enforced, but it could technically give China the power to intervene in relatively small foreign deals, even if local competition was unaffected.

It could also be used to advantage local companies over foreigners in deals within China. Zhao Xiaoguang, the head of the Department of Industry, Communication and Commerce, said companies would have to seek approval for their M&A deals if the two companies had a combined global turnover of £665m in the previous fiscal year.

Roman Abramovich's Evraz Steel became the first company to be entangled in the new law, after its bid for Delong Holdings, a Singapore-listed steel maker, was put on hold until the law became clear.

The law gives the Chinese government powers to carry out checks on businesses and their bank accounts. Companies found to have abused a dominant market position will be fined up to 10pc of their sales income.

Until now, foreign companies have been allowed to operate under minimal scrutiny because of China's desire for foreign investment. Only deals worth more than £50m were required to have approval from the Ministry of Commerce.

The number of Chinese companies with more than £5m of foreign investment is now above 38,000. Chinese state-owned companies are likely to be exempted from the anti-monopoly regulations, as well as strategic areas such as defence, power, telecoms and transport.

[kennynah]

smart

[winston]

China Tightens Share Sale Approvals to Revive Market
By Zhao Yidi

Aug. 1 (Bloomberg) -- China is restricting approvals for share sales to arrest a decline in the world's worst-performing major stock market, two people familiar with the matter said.

The China Securities Regulatory Commission is delaying the issuance of written approval documents, the final regulatory stage, to companies preparing initial public offerings, said the people. They declined to be identified because they aren't authorized to speak publicly on the matter.

Regulators rejected Great Wall Motor Co.'s planned share sale last month, and about a third of IPO applications were turned down, compared with 8.3 percent when stocks peaked in October, based on data from the watchdog's Web site. CSRC Chairman Shang Fulin is trying to cushion a market that plunged 47 percent this year, making the CSI 300 Index the worst performer among the 20 biggest benchmarks.

``Controlling share sales is an important tool for CSRC, and it's effective in the short term,'' said Leo Gao, who helps manage the equivalent of $2.3 billion at APS Asset Management Ltd. in Shanghai. ``More stock sales in a bear market is bad news'' for investors.

There were 91 billion yuan ($13.3 billion) of IPOs in China in the first half, a 26 percent drop from the same period a year earlier, according to data compiled by Bloomberg. The CSI 300 closed 1.3 percent higher today.

Great Wall, China's largest maker of sport-utility vehicles, had its application for a secondary sale in Shanghai rejected by regulators on July 14.

Olympic Jitters

Olympic jitters may have added to the urgency of supporting the stock market, said Leslie Phang, Singapore-based head of investment at the private-client unit of Schroders Plc, which oversees about $260 billion globally.

``The CSRC is trying to stabilize the market ahead of its hosting of the Olympics this summer for reasons of face,'' Phang said. ``But these measures can only provide a short-term boost and it's fundamentals, such as higher oil prices and production costs, that will affect China's stock market.''

The Olympics, China's $70 billion coming-out party, kick off on Aug. 8 with the opening ceremony. The run-up to the games has been marked by complaints about air pollution and restrictions on press freedom.

Shang vowed July 30, during the regulator's semiannual supervision working meeting, to make the market more stable. He said in June that he will ``rationally balance supply and demand in the capital market and adjust the pace of financing in an orderly way,'' without elaborating.

A CSRC spokesman, who declined to be identified, said he had no comment.

Share Sale Queue

Stock markets around the world have been falling as global growth faltered, a 60 percent gain in the price of crude oil in the past year fanned inflation, and the subprime crisis led to about $470 billion in losses and writedowns at financial firms.

The Chinese government has implemented measures to curb inflation and rein in liquidity. The government capped the amount banks are allowed to lend this year, and the central bank raised the proportion of deposits banks must set aside in reserve five times in 2008 to a record 17.5 percent.

There is a queue of companies waiting for written approval documents from the CSRC's general office before they can proceed with share sales, and no timetable for giving them the go-ahead, said the people. The watchdog applies these internal controls based on its perception of market performance and the outlook.

Still, the CSRC is open to letting smaller share sales proceed, one of the people said.

Tepid Demand

On top of delays to the final approvals process, the CSRC has also stepped up scrutiny of share sale clearance given by the Public Offering Review Committee, one step before the final document that allows the sale to go ahead is issued.

CSRC's listing panel on April 14 rejected the IPO application of Jincheng Blue Flame Coal Industry Co., according to a statement posted on the regulator's Web site. China's second-largest anthracite coal producer by 2006 output had planned to sell shares to help fund 9.5 billion yuan of investments.

China State Construction Engineering Corp. has yet to obtain the green light to start its Shanghai IPO after gaining the CSRC listing panel's approval June 5.

Sales that were approved have met flagging demand. Haitong Securities Co. ended up the biggest shareholder of Shanghai Pudong Road & Bridge Construction Co. last month after failing to sell three-quarters of a stock offering it underwrote.

Citic Securities Co., China's second-biggest brokerage by market value, had to buy 407.4 million yuan of shares in Shanxi Taigang Stainless Steel Co. this week that it couldn't sell in an additional stock offering.

[millionairemind]

This is going to drive the cost of operating in China way up. Back in my corporate days, I have young engineers reporting to me in Shanghai that was paid around 75% of what Singapore engineers are paid but the annual increment was 15%... go figure.

Even Walmart has given in...surprise surprise. We are already seeing signs of MNCs leaving China cos' the quality of work is poor.. I recently bot 2 remote control cars for my son and nephew.. darn... works only for a day!

Trade unions in China
Membership required
Jul 31st 2008 | HONG KONG
From The Economist print edition

Global firms operating in China are being pressured to sign up with a government-affiliated union now, or pay more later

Now welcoming union representatives, too. RATHER than deal with trade unions, Walmart, the world’s biggest retailer, has reconfigured its operations around the world, even pulling out of some markets altogether. But, in a reflection of just how different operating conditions are in China, Walmart signed collective-bargaining agreements with workers in two provinces in July. Further agreements covering all 50,000 of its local employees in China are a foregone conclusion.

The financial terms of the contract are of only minor importance. Far more important are the other implications of Walmart’s new ties to the All-China Federation of Trade Unions (ACFTU), a monopoly that claims 193m members and is deeply intertwined with China’s government and Communist Party. Like it or not, Walmart now has a business partner, and if it wants to close stores, lay off employees, or change other aspects of its business such as operating hours and work quotas (what employees are expected to accomplish), that partner must be consulted.

The history of the ACFTU is, in many ways, the recent history of China. Founded in 1925, it was crushed by the nationalist government in 1927, rose with the Communist Party’s ascension in 1949, and was crushed again in the Cultural Revolution before being revived in the general opening following Mao’s death in 1976. Competing unions are not allowed and by discouraging any sign of dissent, including strikes, the ACFTU has often been accused of failing to act in its members’ best interests. This point was made with particular vehemence in the 1980s and 1990s, as China emphasised growth and business investment at the expense of workers’ rights.

With the change of political leadership in 2003 and many highly publicised reports about poor working conditions, there has been a shift in emphasis in China, and a corresponding shift in the union. Walmart, with its prominence, served as an early test case for the union’s rise, with accreditation (but no contract) achieved in 2006. Two foreign fast-food chains, Yum! Brands and McDonald’s, agreed to worker representation in 2007 after being slammed in the Chinese press for breaking the law in their payment of students (the charges turned out to be false). Agreements were also reached with other companies well known for resisting unions elsewhere, notably FedEx, a logistics firm. The process is now accelerating.

In January, China imposed one of the most far-reaching labour laws in the world. It included provisions requiring firms to consult employees on “material” work-related issues. Some companies responded by forming in-house workers’ groups, but the ACFTU objected, claiming that this amounted to the creation of an alternative labour union, and was thus illegal. Instead, it has used the new law as the basis for a huge registration drive by the ACFTU that began in June and is intended to sign up 80% of the largest foreign companies by the end of September. And that, in turn, is a prelude to the stated goal of having trade unions in all of China’s non-state-owned companies by 2010.

Unrelenting pressure is applied to convince companies to sign up. Many are visited every two weeks by union representatives. Firms that are willing to co-operate receive two critical benefits: the ability to influence who their union chairman will be, and some negotiating freedom around a 2% payroll “tax” to the national union, much of which is remitted back to the municipal and company branches and, in the best circumstances, may then be used to pay for social functions, medical benefits and bereavement leave.

These two benefits are far more important than they sound. The union chairman is typically tied to the government and the Communist Party, must be consulted on critical issues and, in effect, cannot be fired. The union chairman is therefore critical to a firm’s management. And the ability to negotiate on the payroll levy can mean, for example, that expatriate salaries are excluded from the payroll figure, or that a smaller figure from a previous year is used as the basis of the calculation.

By contrast, companies that resist, according to a senior union official quoted in the China Daily, a government newspaper, will be blacklisted. They will not face pickets and strikes, as they might in the West. Instead they will be subject to endless audits, tax examinations and, as in the cases of McDonald’s and Yum!, accusations of employment-law violations. It is also possible, given the wording of the new labour law, that resisting unionisation is illegal. So it is difficult to imagine that any company will choose to resist.

With a over a billion people and rising prosperity, China is an irresistible market for the world’s largest manufacturers, distributors and retailers. Even so, the impact of higher labour costs and more cumbersome work rules should not be underestimated. For companies aspiring to sell in China, the intervention of what is, essentially, the state into their management is probably unavoidable. For those using China as a production hub, there is yet another reason to search for an alternative.

[kennynah]

mm : wah.....cho taokay liao....hor say lah....

remember to bai toh lim jiu ah....ok ....

congrats !!!!! a lot of hardwork to reach this...i know..hahaha..

[millionairemind]

K Da Ge - Did not even realize I was promoted liao

HUAT AR HUAT AR..

I buy you kopi next time..

[gladiator]

Top official sees no need to tighten further

China has tightened enough but needs to fine-tune its policy settings in the second half of this year to protect small and labour-intensive firms, a senior government official said in remarks published today.

Liu He, deputy head of the Communist Party's central financial and economic leading group, said weaker exports and investment over the rest of 2008 would lower economic growth to between 9.5 percent and 10.4 percent for the whole year from 11.9 percent in 2007.

"The macro control policies have basically been strong enough, and there's no need to strengthen them further,'' Liu told the People's Daily. He said China should direct more loans to small firms and allow them to raise more money from the bond market.

REUTERS