China frees more labor with farm machinery subsidies Xinhua reported on February 17 that the government said it will continue to subsidize farmers’ machinery purchases this year to free up more rural labor and boost grain production nationwide. The government has slated at least RMB 13 billion (US$2.1 billion) in subsidies for agricultural machinery purchases this year.
The new funding for 2012 came after the government allocated RMB 52.97 billion to subsidize about 14.89 million rural households to purchase 16.72 million machinery units over the past eight years.
In 2004, the government launched the agricultural machinery purchase subsidy program to help farmers and boost the country’s grain output. The program has been a success, contributing to eight consecutive years of growth in grain output, which hit a record high of 571.21 million tonnes in 2011.
Over the years, subsidy program has boosted domestic demand and driven the agriculture machinery industry with an average annual growth of more than 20 percent, according to the statement. Agricultural machines are now used in 54.5 percent of Chinese farming, or 2.2 percentage points higher than that of 2010. No doubt it would be good news for farm machinery industry. In the meantime, more labor will be freed from agricultural production to support China’s manufacturing industry in the context of labor shortage.
China Signs US$4.3b of Soybean Deals With U.S.
According to Bloomberg on February 16, China, the world’s biggest soybean importer and consumer, signed agreements in Iowa to purchase 8.62 million metric tons of the oil seed from U.S. suppliers in a deal valued at US$4.3 billion.
Soybeans will be supplied by companies including Cargill Inc., Archer Daniels Midland Co. (ADM), Bunge Ltd. (BG) and CHS Inc., Iowa Soybeans Association Chief Executive Office Kirk Leeds said today in Des Moines, Iowa, during a U.S.-China trade cooperation conference.
“It would take half of the Iowa soybean crop just to feed China’s fish,” said Leeds, who will be traveling to China in March on a sales-promotion trip for the producer-funded organization. “Soybean profitability depends on international demand, especially from China.”
Additional sales agreements may be announced in Los Angeles on Feb. 17. The 2011 deals involved 21 purchase agreements valued at US$6.7 billion.
Iowa farm exports to China in 2010 were 13 times larger than in 2000, data from Iowa Department of Agriculture show. Agriculture and related industries contributed 27 percent to the state economy in 2010 and 17 percent of Iowa workforce is employed in producing food.
Soybeans have jumped 5.1 percent this year on the Chicago Board of Trade, partly as hot, dry weather damaged crops in Brazil and Argentina, the two biggest exporters after the U.S. last year. Today, the price reached US$12.765 a bushel, the highest since Sept. 27, on speculation that China may increase purchases from the U.S. to rebuild inventories and cushion against any additional adverse global weather later this year.
Earlier, the government reported U.S. exporters sold China 116,000 tons of soybeans for delivery before Aug. 31.
“The conference will help to improve relationships to achieve mutually beneficial development in the future,” Bill Northey, Iowa’s secretary of agriculture, said in a telephone interview on Feb. 13. “At the end of the day, it’s all about getting business done company to company rather than government to government.”
China became the largest buyer of U.S.
farm products in 2010, and last year boosted purchases to US$22.17 billion. The nation purchased 20.6 million metric tons of soybeans from the U.S. last year, or 60 percent of the total shipped overseas. China probably will increase purchases from all suppliers by 62 percent in the next decade to 90 million tons from a projected 55.5 million this year.
China eyes overseas metal bases
China will de-
velop overseas nonferrous metal bases and phase out obsolete smokestack domestic industries during its 12th Five-Year Plan(2011-2015), the Ministry of Industry and Information Technology (MIIT) said on January 30, according to China Daily report.
“In overseas markets, China will encourage capable Chinese enterprises to explore copper, aluminum, zinc, nickel and titanium resources and speed up the process of setting up overseas nonferrous metal supply bases,” the ministry said.
Last year, the conglomerate CITIC Group signed a strategic cooperation agreement with Bolivia to jointly explore lithium resources in Bolivia’s Coupasa salt flats.
MIIT said that during the next four years, China will reduce pollution and curb capacity in energy-intensive nonferrous metal processing industries.
Energy consumption for each unit of industrial output is forecast to drop 21 percent from the levels at the end of 2010, and water consumption should slide 30 percent. Carbon emissions for each unit of industrial output should be cut by 18 percent.
China has started to put priority on
overseas nonferrous metal base development compared with domestic facilities. The nation is actively developing bilateral relationships for resource extraction with other countries.
China ready for rare earth challenges
China is preparing to address increasing foreign pressures
on its export restrictions of rare earth following a failed appeal against a World Trade Organization (WTO) ruling on other raw materials, a Ministry of Commerce official said on January 31.
Endorsing a previous finding, the WTO’s appellate body declared on January 30 that export limitations by China on nine raw materials, including zinc, coke and magnesium, through quotas and tariffs broke WTO rules.
Although rare earths, crucial ingredients in many high-tech products, were not part of the ruling, a number of Washington lawmakers urged the US to use the decision to launch a case to force Beijing to lift rare earth export restrictions.
It is “regretful” that the ruling has been upheld, the ministry said in a statement on its website.
But “the result is better than we expected as the WTO still supports many of our arguments,” said Yu Fang, deputy director of the department of treaty and law under the Ministry of Commerce of China.
The US, EU and Mexico said in 2009 that China’s export restrictions on raw materials discriminated against foreign manufacturers and gave an unfair advantage to Chinese producers.
A dispute settlement panel ruled in July 2011 that export duties and quotas on raw materials contradicted China’s WTO commitments. China later lodged an appeal to the WTO appellate body.
Yu expressed her concern that developed nations will now demand that China compromise on rare earth exports.
“They will probably request that China loosen export restrictions on rare earth in the coming months” and even present their case to the WTO, she said. “But we don’t fear this because we are fully prepared.”
China is the largest producer of rare earths and controls 95 percent of global supplies. Rare earths are a group of 17 elements used in industries like hybrid cars. The government began to control output in recent years, citing resource depletion and environmental degradation.
The US and the EU have repeatedly asked China to loosen the restrictions on rare earth exports.
The Ministry of Commerce statement reiterated that China has tightened administration of energy-consuming and polluting resources in recent years.
China will evaluate the WTO ruling and continue to enhance scientific administration of resource products based on WTO rules to realize sustainable development, it said.
“The raw material ruling will not come into effect until the end of this month, and China will decide how to implement the ruling then,” Yu said. The WTO should not only uphold free trade but also allow member nations to take necessary steps to protect the environment and natural resources.
China to promote shale gas exploration
The Ministry of Land and Resources (MLR) said on Feb.
12 that China will increase efforts to explore shale gas in 2012, a move expected to help restructure the country’s energy supplies, Xinhua reported.
The government will strengthen the survey and appraisal of shale gas this year to speed up the development of the shale gas industry, MLR Vice Minister Wang Min said at a national geological survey conference.
The move comes after the recent approval of the State Council, or the Cabinet, to list shale gas as an independent mineral resource, making the total number of mineral resources discovered in China to 172.
Realizing scale production of shale gas will help ease the country’s natural gas shortage and even change its entire energy supply structure, Wang said.
China has a rich reserve of shale gas resource, which is estimated at 31 trillion cubic meters, equivalent to the total amount of conventional natural gas, according to Wang.
If developed properly, the country’s shale gas output will exceed 100 billion cubic meters in 2020, Wang said.
Shale gas, a clean and high-efficiency energy resource, is produced from shale through a complicated process called hydraulic fracturing, or “fracking”.
Currently, China has no commercial shale gas production, but shale gas has become an increasing important source of natural gas in the United States and Canada.
The MLR said in December that it will formulate a series of supporting policies to bring in diversified investment in shale gas exploration to push forward large-scale extraction of the resource. In the context of energy shortage, exploring shale gas can be a solution as it is a high-efficiency source of natural gas.
Polysilicon production curbed 30%
China’s polysilicon industry, the biggest supplier to solar
panel manufacturers worldwide, has idled almost onethird of production and may keep the plants closed until prices recover from a 60 percent plunge, reported China Daily.
The price tumble spurred the smallest producers including units of Baoding Tianwei Baobian Electric Co and Dongfang Electric Corp to halt plants, according to Xie Chen, an analyst from the China Nonferrous Metals Industrial Association, a trade group that advises the government. China has about 45 percent of global production capacity to purify silicon into polysilicon.
The suspensions may be short-lived because the average spot price for the most expensive ingredient in making solar panels rose by 9 percent since mid-December from a decade low. A recovery would boost margins for the biggest makers such as GCL-Poly Energy Holdings Ltd, China’s largest, and Hemlock Semiconductor Corp of the United States, which is No 1 in the world by capacity.
“The freeze in production won’t last too long,” Xie said in an interview. “Many companies have said they will return to manufacturing if prices rise to $47 a kilogram” from the current level of about $28.80.
Xie forecast prices will jump to $40 to $50 a kilogram this year. That’s enough to prompt are turn to production in the first half of most of the halted plants, which he estimated were about 30 percent of the total. Xie’s view was shared by Lian Rui, a senior analyst in Beijing for New York-based research company Solarbuzz.
Polysilicon will average about $30 this year, and companies including the units of Baoding Tianwei and Dongfang Electric will probably resume production as early as May, Lian said in an interview.
Two phone calls placed to Gong Dan, spokesman for Dongfang Electric, and an e-mail sent to Yin Xiaonan, Baoding Tianwei’s spokesman, weren’t answered.
The rebound from polysilicon’s 10-year low of $26.31 a kilogram in mid-December coincideswith increased interest by China to install photovoltaic devices on its own soil.
Chinese producers will double the number of panels that will be installed this year from the 2.2 gigawatts erected in the country in 2011, according to predictions from manufacturers Suntech Power Holdings Co and Trina Solar Ltd. That would absorb some of the industry’s excess inventory, which led to the drop in prices and profits.
Demand for solar products is recovering and is expected to shift from Europe to Asian and US markets, Renewable Energy Corp ASA, a Sandvika, Norway-based maker of polysilicon, said in its earnings presentation on Feb. 8.
The increase in panel demand in China “sucks up some of the excess supply”, Pavel Molchanov, an analyst for Raymond James & Associates Inc in Houston, said by e-mail on Feb9.
The expectation that China will increase installations this year has led some solar companies to keep plants running. GCL-Poly, LDK Solar Co and Asia Silicon (Qinghai) Co have continued to operate their plants, according to Xie. His association acts as a conduit between the Chinese government and solar companies, advising both ministers and executives.
The excess supply and price tumble in
the polysilicon industry urges rational
development, though the situation is better off due to expected increasing demand.
Monetary policy to remain prudent
According to Xinhua on February 19, China’s central bank
said it will maintain a prudent monetary policy as the country faces pressure in supporting growth and containing inflation.
The remarks, made by an official with the People’s Bank of China (PBOC), was quoted in a PBOC press release a day after the central bank announced a reserve requirement ratio(RRR) cut to ease a liquidity shortage and secure growth amid weak external demand.
The PBOC announced a cut in the amount of cash that lenders must set aside as reserves, the second of its kind in three months. The RRR will drop by 50 basis points to 20.5 percent for large commercial banks and 17 percent for midand small-sized banks, effective on Feb. 24, the PBOC said.
The central bank lowered the RRR in December by 50 basis points after hiking the RRR six times last year to cool inflation. It was the first cut since December 2008.
China’s economy expanded by 9.2 percent year-on-year in 2011, while its GDP growth rate dropping to a 10-quarter low of 8.9 percent in the fourth quarter. The current international economic situation remains complicated and grim, while China’s economic development is still not balanced, coordinated or sustainable enough, which makes it necessary to introduce some policy responses.
China Reduces Holdings of U.S. Treasuries to Lowest Level
Bloomberg reported on Febru-
ary 16 that China, the largest foreign lender to the U.S., reduced its holdings of Treasuries in December to the least since June 2010 amid efforts to assist Europe in addressing its debt crisis.
The world’s second-largest economy decreased its U.S. debt securities by US$31.9 billion from November, or 2.8 percent, to US$1.11 trillion, according to Treasury Department data released. Its position in longer-term notes and bonds also fell US$32.5 billion, or 2.8 percent, to US$1.1 trillion, the least since June 2010. Japan, the second biggest buyer, increased its holding by US$3.5 billion to US$1.04 trillion.
“We continue to see Chinese Treasury holdings trending lower as they are acting on their desire for diversification and as they may get more involved in the situation in Europe,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut.
“China will always adhere to the principle of holding assets of EU sovereign debt,” Zhou said in Beijing. “We would participate in resolving the euro debt crisis,” he said.
Chinese Officials, including central bank adviser Li Daokui, have urged diversification of the nation’s foreign exchange reserves. The Asian nation will “seek diversification in the management of reserve assets, strengthen risk management, and minimize the negative impacts of the fluctuations in the international financial market on the Chinese econo- my,” Zhou said in August. Foreign investors held 47.6 percent of outstanding public Treasury debt as of December, the smallest proportion since October 2006, Treasury data show. Net buying of long-term equities, notes and bonds totaled US$17.9 billion during the month compared with net purchases of US$61.3 billion the previous month, the Treasury Department said. Including short-term securities such as stock swaps, foreigners bought a net US$87.1 billion in December compared with net buying of US$42.9 billion the previous month.
China increased its position in shorter-term bills by US$600 million to US$2.9 billion. The U.S. updated data on Feb. 28, 2011 to show China’s Treasury investments in October 2010 were a record US$1.18 trillion, 30 percent more than the initial estimate of US$906.8 billion.
“Overall flows were weak for the U.S. and the Chinese tactical selling reflected that as Treasuries were giving back very little,” said Aaron Kohli, an interest-rate strategist BNP Paribas SA in New York, one of 21 primary dealers that trade directly with the Federal Reserve. “As yields rise, look for China to buy Treasuries again.”
Treasuries have lost 0.1 percent this year after returning 9.8 percent last year, according to a Bank of America Merrill Lynch index.
This is absolutely an important step for
China to diversify the nation’s foreign exchange reserves away from U.S. assets.省略.
The two companies may cooperate in sales of electronic devices and home appliances, and a deal may be reached if talk between them goes well, according to a source close to the matter, the newspaper said.省略, has put great pressure on other e-commerce websites.省略 had about 17 percent of RMB 240 billion of China’s e-commerce market in which businesses sell to consumers last year, while Gome’s online shop and Dangdang together only had some 3 percent, according to Chinese IT research company Analysys International. Dangdang has a strong advantage in selling books, while Gome is good at
selling electronic products, so it would be a winwin model for them.
Apple claims firm broke trademark agreement
China Daily reported on February 16 that after a number
of online stores suspended sales of Apple’s iPad, the US tech giant accused Proview Technology of not honoring its agreement to transfer the rights to use the trademark for the product in China.
Many Chinese online stores, including Amazon China and Gome, pulled the iPad after local administrations of industry and commerce seized loads of the popular tablet computers from a second-tier city.
“We bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago,”according to a statement Apple sent to China Daily.
“Proview refuses to honor their agreement with Apple, and a Hong Kong court has sided with Apple in this matter,”according to the statement, which also said the case is still pending on the Chinese mainland.
Gome, a major electronic appliance store in China, is the latest to suspend sales of the iPad online, though it said its stock is abundant.
“We will not stop selling iPad in brick-and-mortar stores until the final verdict on Apple’s case is out,” said a public relations worker with Gome.
Over the past few weeks, Apple has been uncommunicative, while the Shenzhen company has reached out to the media about its repeated complaints to market regulators and sent pleas to customs officials to impose an embargo on the iPad 3, which is expected later this spring.
Apple’s statement did not specify from which company underneath the Proview umbrella it had acquired the iPad trademark.
Xie Xianghui, a lawyer representing Proview Technology Shenzhen, said Apple’s “partial” reply is meant to confuse the public.
He added that the verdict in Hong Kong will not have any influence on other trials on the mainland, where the two companies also sued each other for the copyright, because of the different legal frameworks.
Xie countered Apple’s claim that the Hong Kong court sided with it in the dispute.
“Apple is worried the iPad trademark will be resold before the hearing is finished, so it asked the Hong Kong court to forbid Proview Shenzhen from doing that,” he said, adding that the court’s decision to prevent the trademark from being transferred cannot be seen as showing that it has ruled in favor of Apple.
It is uncertain at this time when exactly the trial will begin in Hong Kong, and the lawyer said the evidence exchange has begun and will last until March.
Yu Guofu, a Beijing-based lawyer specializing in intellectual property rights, said the verdict of the Hong Kong trial or that of the mainland will not have any influence on one another or vice versa.
The root cause of the dispute is Apple’underestimation of the legal complications in China, and the case also serves as a warning to companies in China to think twice about risks before going abroad.
China examining Google’s bid for Motorola Mobility
China’s Ministry of Commerce (MOC) said on February
16 that its antitrust bureau is still examining Google’s bid to purchase phonemaker Motorola Mobility.
“The investigations and reviews are still under way. Any news will be disclosed in a timely manner,” MOC spokesman Shen Danyang said at a press conference.
The remarks came just days after the case won government approval from the United States and the European Union, bringing Google a step closer to completing the deal.
Search engine giant Google Inc. announced last year that it would buy Motorola Mobility Holdings, Inc. for approximately $12.5 billion.
Under China’s anti-monopoly laws, multinational companies have to seek government approval before consolidating if their combined global revenues exceeded 10 billion yuan($1.59 billion) and if two or more parties involved in the deal reported more than 400 million yuan in sales revenues respectively during the previous fiscal year.
An anti-monopoly review is also necessary if the firms’revenues in China exceeded 2 billion yuan during the previous fiscal year and if two or more parties involved in the deal reported more than 400 million yuan in sales revenues respectively.
Google’s purchase of Motorola Mobility is clearly driven by Google’s perceived need to establish a strong portfolio of patent rights in an attempt to ward-off patent attacks by competitors in the fiercely competitive and growing smartphone market.
Telecom giant accelerates to explore America
CT Americas, the largest international subsidiary of
China Telecom, decided to explore the US retail market in 2012 after more than 10 years of development in the US, according to China Daily report.
During the Chinese Spring Festival in January, CT Americas launched its branded mobile service in Chicago.
Later, the service will be promoted in Los Angeles and New York - major destinations for Chinese visitors and where the majority of Chinese-Americans live.
The cell phones with this service will carry one SIM card with two numbers: one Chinese and one US cell number.
The new service is targeting frequent business travelers, long-term visitors and students. The international calling rate will be lower than US local operators, but slightly higher than a calling card, Tan said.
Set up in 2002, CT Americas has focused on serving multinational companies, providing leased-line services, Internet services, Internet data centers, managed services and voice wholesale service.
Relying on its resources in China, its major clients are Chinese enterprises in the US such as Bank of China and Sinopec, and US corporations with investment in China, including Microsoft and Bank of America.
In addition, CT Americas will further expand its business in Central and South America, forging strategic partnerships with local operators and providing service to public users. Witnessing the booming tourism and business exchanges between China and the United States, China Telecom Americas has began to tap into this huge market potential in mobile and data communication service.
China’s Huawei wins UFB contract in New Zealand
Chinese telecommunications maker Huawei has scored a
second major contract in the New Zealand government’s scheme to bring ultrafast broadband (UFB) to most of the country, according to Xinhua.
Enable Networks, owned by the council in New Zealand’s second city of Christchurch, announced on February 8 that Huawei New Zealand would supply the fiber equipment for the city’s UFB network, and for services to manage operations and maintenance.
The “multi-million-dollar contract” covered the provision of all network equipment, including fiber ducting, fiber optic cables and open access layer two, or “bitstream,” network solutions.
Huawei would also provide the service expertise for the 3,500- km UFB network across Christchurch and neighboring Waimakariri and Selwyn districts, said a statement from the two companies.
Huawei won a similar contract late last year to build the UFB network in the Hamilton-Central North Island region.
The Enable Networks’ deployment will connect a total population of more than 380,000, including about 7,000 businesses, 1,000 medical centres and 170 schools, according to the government.
The roll out, which began in November last year, will be completed over an eight-year period.
Overall the government’s UFB initiative will see 75 percent of New Zealanders able to access speeds of 100Mbps or more before 2020 at a projected cost of 1.5 billion NZ dollars(1.25 billion U. S. dollars). Huawei won the contract thanks to its track record in delivering fiber infrastructure, reputation for quality products, commitment to New Zealand, professionalism and delivery timeframes.
China’s auto exports hit record high in 2011
China’s auto exports hit 849,000 units last year, the highest level seen since the onset of the global financial crisis, the automobile branch of the China Chamber of Commerce for the Import & Export of Machinery & Electronic Products (CCCME AUTO) said on February 8, according to Xinhua report.
Statistics from CCCME AUTO showed that China exported 849,900 vehicles, full sets of car spare parts and car chassis in 2011, up 49.96 percent from a year earlier and the largest figure seen since 2009. The exports were valued at $10.95 billion, up 56.72 percent from 2010.
China exported automobiles to 190 countries and regions last year, with Russia, Brazil and Iran accounting for most of China’s automobile export value, CCCME AUTO said.省略. For example, Chery managed to export 160,200 vehicles alone in 2011, increasing 73 percent from the previous year, manufacturer Spokesman Jin Yibo said. Meanwhile, Great Wall managed to export 83,117 vehicles last year, Shang Yugui, head of Great Wall’s media relations, said, while JAC saw its exports over double in the same period of time.
It is encouraging to witness Chinese auto export is growing impressively. China-made autos are finding their overseas market prosperous in emerging markets, such as South America. China’s Foreign Trade magazine has been organizing the China Auto International Exhibition Tour for 9 sessions in the recent decade. After-sales service will be the future focus.
Chinese automobile sales grow less than 3% in 2011
Growth in the Chinese automobile market finally slowed
down in 2011, with a year-on-year increase in sales of only 2.45 percent, the lowest figure the country has seen in 13 years. Ministry of Commerce statistics, as quoted by china.省略, reveal that 18.51 million vehicles were sold last year.省略, an industrial website, commented that the cooling down in the market in 2011 is attributed to a variety of factors, including new national macroeconomic planning, phasing out of policies stimulating consumer spending and the introduction of other policies aimed at curbing automobile growth in Beijing and other cities.
Growth in the market for passenger vehicles was above the industry average, with nearly 14.47 million passenger vehicles sold last year, increasing 5.2 percent from 2010. The minivan and SUV segments performed strongly, growing 11.7 percent and 20.2 percent, respectively.
Meanwhile, statistics from the General Administration of Customs show that automobile imports grew 27.3 percent, exceeding one million units.
CAAM statistics show that the industry is continuing to grow, with the overall value index increasing 16.8 percent from 2010. SAIC led the list of top ten manufacturers in 2011, followed by Dongfeng, FAW, Changan, BAIC, GAC, Chery, Brilliance, Great Wall and JAC. These ten manufacturers were responsible for 16.09 million sales last year.
It is like to win a lottery to get a qualification to buy a new car in Beijing. When you have a new car, you can’t drive it one day in a week in Beijing, since its restriction launched to driving. The traffic is getting worse in big cities in China too. Sometimes during the rush hour, it is even faster to walk on foot than driving a car. Also to find a proper place to park may take longer time than the real drive, and the parking price is criminal. The petrol price is always hiking... Who wants to drive in China? Bicycle will be a better choice.