12/07/2009 Source: Xinhua

China’s economic recovery is alluring back overseas investors who had withdrawn from the country under the tide of the global financial crisis.

In Qingdao, an eastern China port city, the number of overseas investors coming to make investment in the Chengyang District has been on the rise since June, said deputy head of the district government Li Guixi.

Li said, the district approved 146 foreign-funded projects in the first ten months, and involved contracted foreign investment totalled 280 million U.S. dollars, up 2.2 percent year on year.

Li said Swarovski, the world’s leading producer of precision-cut crystal, invested more than 100 million U.S. dollars in Chengyang to build its first factory outside Europe in July.

However, just one year ago, foreign investors were busy evacuating from the district, leaving thousands of workers jobless and their wages unpaid.

Speaking of his ex-employer’s evacuation, Cao Kejun, 59, still broods over his unpaid wage.

“Had I found that boss from the Republic of Korea (ROK), I would like my 600 yuan (about 87.8 U.S. dollars) back,” he spoke with a strong Shandong accent.

His ex-employer, a ROK investor of a suitcase and bag factory in Qianwangtuan Community, Chengyang District, northern Qingdao, took an overnight evacuation back to his home country ahead of the financial crisis, abandoning DeBest, his factory, with 500 jobless workers.

Two more ROK investors in the community left without a notice about 11 months ago, leaving 420 more people jobless, said Qi Xide, who was in charge of management of enterprises in the community.

Due to the global crisis, the inflow of foreign direct investment (FDI) to China began to slow down in the fourth quarter last year, and as of July this year, the FDI China received had decreased year on year for 10 consecutive months, according to the Ministry of Commerce.

In November last year, the Chinese government adopted a massive economic stimulus package, including raising export tax rebate and other measures, to halt the drastic FDI decline and combat the crisis, which turned out to be effective in boosting economy.

The country’s gross domestic product (GDP) grew 8.9 percent year on year in the third quarter, accelerating from 7.9 percent in the second quarter and 6.1 percent in the first. In the third quarter last year, it increased 9 percent year on year.

With favorable policies and the economy picking up, investors that once had doubts in China’s economy and business environment had come to discuss investment with the local governments, said Li Guixi.

Nationally, the latest data had shown that China saw a third consecutive monthly increase in FDI in October by attracting 7.1 billion U.S. dollars, up 5.7 percent from the same period last year.

Young-Su Park, the China president of a ROK company, expressed great confidence in further growth of China’s economy, which he said means greater demand for infrastructure investments.

His company, Leading Solution, which mainly produces air-conditioners and farm machineries, had just invested 48 million U.S. dollars for a new farm machinery factory in Chengyang, capital of northeastern Liaoning Province.

“Investors have reasons to leave, and now they find reasons to come back,” said Park.

In Qianwangtuan of Qingdao, the old building of DeBest is now taken by a new ROK-funded factory.

“With three new foreign-funded factories going into operation this year, workers are starting to work overtime again,” said Qi, the administrator.

Cao, just like his ex-colleagues, has found a new job. He is now working as a cleaner in the Qianwangtuan community and earns 600 yuan a month.

12/01/2009 Source: www.chinaview.cn

After four years in office, Canadian Prime Minister Stephen Harper will visit Beijing this week — a trip many influential Canadians believe is long overdue.
To gauge Canadians’ views of the Prime Minister’s trip to China, Xinhua recently interviewed leading Canadian academics, former politicians and other opinion shapers.

A SIGNIFICANT TRIP

All the interviewees agree that this is a very significant trip, for both China and Canada, given China’s stature on the world stage continues to grow.

“I think it is extremely important that China and Canada reenergize their relationship,” David Emerson, Canada’s former International Trade Minister, told Xinhua during a phone interview. He called the visit “an important milestone.”

Former Foreign Affairs and International Trade Minister Pierre S. Pettigrew said the delay in making the visit was a bad start but the prime minister was correcting his mistakes.

“It took the prime minister a long time, almost four years in office before visiting China,” he said.
However, Barbara McDougall, Canada’s former Secretary of State for External Affairs in the early 1990s, said the timing of the Prime Minister’s visit was good. “I think it will be a comfortable and productive meeting,” McDougall said.

Peter Harder, President of the Canada-China Business Council, said it was an interesting moment for Harper’s visit, given he was the chairman of the upcoming G8 and co-chairman of the G20 summits. Harder said the most important “deliverable” of this visit was that it took place.

“Traditionally, China and Canada have had very good relations, and this goes back a long time,” said Gregory Chin, who served in Canada’s embassy in Beijing from 2004 to 2006. This is an opportune moment for Prime Minister Harper and Chinese leaders to strengthen their personal relationship.

Jean Michel Laurin, Vice-President for Global Business Policy at Canadian Manufacturers & Exporters, said he expected the PM’s visit to help “Canadian companies and Chinese companies do more business.”

TRADE, CLIMATE CHANGE, ENERGY

The observers said trade, climate change, and energy cooperation were likely to be among the major areas of discussion.

Nevertheless, given the world economic turmoil since late last year, the state of the global economy would also be on the agenda of both leaders.

“China has been leading Asia into economic recovery, and is becoming a more important partner to both the United States and Canada. The economy will certainly be the (most) important topic (during the visit),” said Pettigrew.

Further fuelling these discussions of the economy is the fact that next summer, as Peter Harder noted, Canada will host two key international summits, the G8 and G20. China is an influential member of the G20.

Dr. Alan Alexandroff at the University of Toronto said it would be important for Prime Minister Harper to ask for President Hu’s views about what ought to be on the agenda at the G20, so Canadians could learn more about China’s priorities and interests.

THIS IS NOT A ONE-OFF VISIT

One question that always hovers over trips such as Harper’s is what evidence will observers weigh in order to judge whether the visit was successful?

“No doubt, the Chinese leaders and the Canadian government will do everything they can to make this meeting successful,” said Harder of the Canada China Business Council. “I hope they would commit to the idea that this is not a one-off visit but the first in a series of visits. The two leaders can instruct their ministers and government staff to enhance the Canada-China investment relationship.” This could be a theme for further interactions and talks at future meetings.

“If I were planning this trip, I wouldn’t have high expectations in terms of particular accomplishments. I would have expectations about rebalancing bilateral relationships in a positive way, so that the two countries can work together on global issues,” said McDougall, who used to hold a variety of ministerial level positions in Canadian government.

Emerson said the meeting sent a signal that Canada and China were continuing to build on their friendship and partnership that had existed between the two countries for many years. He said: “Ties cooled down in recent years. And it’s time to get back down to building up friendship again.”

In April, Canada’s Minister of International Trade, Stockwell Day, announced that Canada would open new trade offices this year in Nanjing, Qingdao, Shenyang and Wuhan.
China-Canada economic ties have evolved from small, simple-item commodity trade into an all-dimensional cooperation covering trade in commodity and services, capital flows and personnel exchanges.

According to Chinese statistics, two-way trade increased more than 100 times from 150 million U.S. dollars in the early days of China-Canada diplomatic relations to 15.5 billion dollars in 2004.

11/24/2009 Source: Xinhua

China’s banking regulator on Monday asked the country’s commercial banks to better manage risks and avoid year-end volatility in lending.

Commercial banks should ensure that lending increase was kept in a stable and sustainable pace, the China Banking Regulatory Commission (CBRC) said.

Financial institutions with low capital adequacy ratio and no practical remedy plans would face restrictions in various sectors such as overseas investment, branch increase and business expansion, it said.

The CBRC called for enhanced inspections in financial system to detect problems after surging loan extends between the fourth quarter last year and the second quarter this year.

In October, new yuan-denominated loans in October were down 51 percent from September, according to statistics from the People’s Bank of China, the central bank.

China’s yuan-denominated loans in the first 10 months this year totaled 8.92 trillion yuan (1.31 trillion U.S. dollars), far exceeding the government’s target of 5 trillion yuan for this entire year.

The CBRC denied media reports which claimed that the banking regulator would impose lending controls on commercial banks and require big lenders to increase the capital adequacy ratio to 13 percent, compared with the current 11 percent on average.

“There is no such requirements from the CBRC,” it said in a statement on its website.

11/20/2009 Source: Xinhua

Low interest rates, especially the deposit rate, would discourage financial institutions from providing adequate financing to the real economy, Zhou Xiaochuan, governor of the People’s Bank of China (PBOC) said Friday.

He told the 2009 Business Week CEO Forum in Beijing that low interest rates would reduce pressure on financial institutions, removing incentives to actively provide financial services to the real economy.

“China has set the interest rate at about 2 percent to press Chinese financial institutions to lend money to real economy for gains and reduce cash stockpiles,” he said.

Zhou was referring to the low-interest policies of some countries and regions to fight the lingering economic downturn, said Tan Yaling, an expert with the China Institute for Financial Derivatives at Peking University.

U.S. Federal Reserve chairman Ben S. Bernanke said last week that U.S. interest rates had remained very low for an extended period and would likely stay that way for some time.

He reaffirmed the Federal Reserve’s stance of keeping rates low for an “extended period” to sustain economic growth.

The Federal Reserve has kept its benchmark rate near zero since last December to spur an economic rebound and combat the worst financial crisis since the 1930s.

The central banks of Europe and Japan also said that they would keep their key interest rates at 1 percent and 0.1 percent, respectively.

China’s monetary policy should be in line with its long-term economic strategy and focus on the domestic development, said Tan.

The one-year benchmark deposit rate stands at 2.25 percent among Chinese banks. The rate has been unchanged since December last year when China’s central bank cut loan and deposit rates by 0.27 percentage points.

In efforts to stimulate the economy following the global financial crisis, the central bank cut the interest rates five times in four months from September to December last year.

U.S. Ambassador to China Jon Huntsman and Nobel Economics Prizelaureate Robert A. Mundell attended the forum.

11/17/2009 Source: Xinhua

China and the United States singed a joint statement in Beijing Tuesday after talks between Chinese President Hu Jintao and his U.S. counterpart Barack Obama, agreeing that “the transition to a green and low-carbon economy is essential.”

Both China and the United States believed the clean energy industry will provide vast opportunities for citizens of both countries in the years ahead, said the statement signed during Obama’ s first visit to China since taking office in January.

According to the statement, the two sides welcomed significant steps forward to advance policy dialogue and practical cooperation on climate change, energy and the environment, building on the China-U.S. Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy and Environment announced at the first round of China-U.S. Strategic and Economic Dialogues in July and formally signed during Obama’ s visit.

The statement said both sides recognized the importance of the Ten Year Framework on Energy and Environment Cooperation (TYF) and are committed to strengthening cooperation in promoting clean air, water, transportation, electricity, and resources conservation.

Through a new China-U.S. Energy Efficiency Action Plan under the TYF, both countries “will work together to achieve cost-effective energy efficiency improvement in industry, buildings and consumer products through technical cooperation, demonstration and policy exchanges,” said the statement.

Noting both countries’ significant investment in energy efficiency, the two Presidents underscored the enormous opportunities to create jobs and enhance economic growth brought by energy savings.

The two countries welcomed the signing of the Protocol Between the Ministry of Science and Technology, National Energy Administration of the People’s Republic of China and the Department of Energy of the United States of America on a Clean Energy Research Center, according to the document.

The Center will facilitate joint research and development on clean energy by scientists and engineers from both countries. It will have one headquarters in each country, with public and private funding of at least 150 million U.S. dollars over five years split evenly between the two countries. Priority topics to be addressed will include energy efficiency in buildings, clean coal (including carbon capture and sequestration), and clean vehicles.

The two sides welcomed the launch of China-U.S. Electric Vehicles Initiative designed to put millions of electric vehicles on the roads of both countries in the years ahead, the statement said.

Building on significant investments in electric vehicles in both the United States and China, the two governments announced a program of joint demonstration projects in more than a dozen cities, along with work to develop common technical standards to facilitate rapid scale-up of the industry, the statement said, adding that the two sides agreed that their countries share a strong common interest in the rapid deployment of clean vehicles.

About 21st century coal technologies, the two countries agreed to promote cooperation on large-scale carbon capture and sequestration (CCS) demonstrations projects and begin work immediately on the development, deployment, diffusion and transfer of CCS technology. The two sides welcomed recent agreements between Chinese and U.S. companies, universities and research institutions to cooperate on CCS and more efficient coal technologies.

With regard to joint efforts on tackling the climate change, the two sides welcomed the signing of the Memorandum of Cooperation between the National Development and Reform Commission of China and Environmental Protection Agency of the United States to Build Capacity to Address Climate Change.

The statement said the two sides welcomed the launch of a China-U.S. Renewable Energy Partnership, through which the two countries will chart a pathway to wide-scale deployment of wind, solar, advanced bio-fuels and a modern electric power grid in both countries and cooperate in designing and implementing the policy and technical tools necessary to make that vision possible.

Shared confidence on the bilateral cooperation in this field was expressed by the statement, which said that given the combined market size of the two countries, accelerated deployment of renewable energy in China and the United States can significantly reduce the cost of these technologies globally.

On the promotion of the peaceful use of nuclear energy, the two sides agreed to consult with one another in order to explore such approaches–including assurance of fuel supply and cradle-to-grave nuclear fuel management so that countries can access peaceful nuclear power while minimizing the risks of proliferation.

11/13/2009 Source: Xinhua

China would not let the yuan gain against the U.S. dollar in the short term, experts said Thursday when commenting on the latest quarterly report of China’s central bank.

People’s Bank of China (PBOC), the central bank, said Wednesday in its quarterly report of monetary policy, for the first time, that the bank would improve the mechanism of the exchange rate determination “based on international capital flows and movements in major currencies”.

“The new wording showed that China would reduce speculation and strengthen risk control in the future, but it did not necessarily suggest a change in the yuan’s exchange rate policy,” said Tan Yaling, an expert with the China Institute for Financial Derivatives at Peking University.

“The future mechanism would reflect China’s own concerns and status,” she said.

China’s foreign exchange reserves surged to a record 2.27 trillion U.S. dollars as of the third quarter of 2009, up 19.26 percent year on year, PBOC reported in September.
According to Yin Jianfeng, a researcher with the Chinese Academy of Social Sciences (CASS), a government think tank, it is natural for the central bank to pay more attention to increasing international capital inflows.

“Excessive liquidities are pouring into China as the country is witnessing rapid recovery while the economic condition is still weak in the western world,” he said.
Zuo Xiaolei, chief economist with Galaxy Securities, said the central bank’s report indicated the government had raised concerns that such inflows would put China under huge external pressure for yuan appreciation.

Zuo predicted that as the U.S. dollar depreciates further, excessive liquidity will be a global issue in future, which would in turn pull up China’s foreign reserve to a new level.

China has been facing calls to let its own currency gain against the dollar since it recovered quickly from the financial crisis, especially after it reported the positive economic data of last month, however, experts had expressed different opinions.

“Sudden upward movement in the yuan would slow China’s economic growth when the country’s exports just showed signs of recovery, “Tan said, “All in all, the exchange rate policy should not be subjected to other countries but serve our own economy.”

Also, the pace of yuan’s appreciation should be determined not only by the foreign trade surplus, according to Zuo Xiaolei.

The balance of China’s internal development should also be taken into consideration, including the massive stimulus package and the accumulated liabilities of local governments, she said.

China’s exports slid 13.8 percent year on year to 110.76 billion U.S. dollars in October, said the National Bureau of Statistics Wednesday. The decline rate was 1.4 percentage points lower than that of September.

11/10/2009 Source: People’s Daily

Liu Xiaodong, deputy general manager of Shanghai Stock Exchange (SSE), said at the 8th China Financial Markets Conference that the formulation of rules for foreign companies’ domestic listing was still in progress, and that the international board would be realized after pilot programs.

Liu said that listing mechanism for foreign companies would take some time to complete. Some renowned international companies are probable candidates. According to his introduction, the SSE had already conducted a survey, many foreign companies wanted to be listed in the domestic market, but the international board will certainly start with pilot programs, which currently has no time table or list of the companies to be included.

The launch date of the international board depends on the market environment. Many companies that were once profitable are not running well nowadays. Due to fluctuations in the international market, profits of foreign enterprises were also not stable. So foreign companies’ listing in China would rely on market circumstances, said Liu.

He also denied the rumor that hundreds of foreign companies are in line with the listing requirements of the international board.