All posts by RWZ - 224. page

NetEase recently reported that, on November 1, 2012, HSBC released the PMI (Purchasing Managers Index) number for the Chinese manufacturing industry. The October number is 49.5, which is higher than last month’s figure of 47.9. This also indicates that the Chinese manufacturing sector is on the decline for the year. In October, manufacturing production output was still slipping. However total new orders had a slight increase due to more new customers. Meanwhile new export orders declined for the sixth consecutive month. Inventory was also shrinking, while ten percent of the manufacturers surveyed were reducing the size of their workforce. For the first time this year, the average price of manufacturing sector products saw a 9 percent increase. This was widely believed to be caused by the increased cost of material. Qu Hongbin, HSBC Chief Economist for the China Region, commented that the HSBC PMI number demonstrated that the Chinese manufacturing sector is showing signs of stabilization, which is largely the result of the earlier government “easing” measures. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.

Source: NetEase, November 1, 2012

http://money.163.com/12/1101/09/8F7ES76J00252G50.html

China Review News (CRN) recently reported that, based on the numbers released by the National Bureau of Statistics, consumer spending contributed 55 percent to the economic growth in the third quarter of this year. However, government operational consumption is also considered part of the final consumer spending. Between 2000 and 2010, the Chinese government’s consumption grew from RMB 1.57 trillion to 5.36 trillion. Government operational spending takes about twenty percent of the annual government income. The same ratio number for the United Sates is 9.9%; it is five percent for the European Union and 2.8 percent for Japan. This indicates that it takes substantially more money to sustain the Chinese government. The statistical data also reflects a lowered quality of consumer spending because the government’s operational consumptions eats a large slice of the “consumer spending” pie.

Source: China Review News, November 3, 2012

http://www.zhgpl.com/doc/1022/8/2/7/102282777.html?coluid=53&kindid=0&docid=102282777&mdate=1027073850

People’s Daily recently reported that the Chinese government is planning to invest in the domestic solar industry. The planned total investment will be around 70 billion RMB. This plan is in response to the fact that both the United States and the European Union are filing anti-dumping and countervailing cases against China. The Chinese solar industry relies heavily on exports. Sixty percent of the production output goes to the European Union, while 30 percent goes to the United States. With the coming trade wars, the entire Chinese solar industry faces the possibility of total bankruptcy. The Chinese government’s plan is to establish a large domestic market that will be funded mainly by government investment. Meanwhile the government is also coordinating an effort to lower the cost of delivering solar-generated power to national networks.

Source: People’s Daily, October 27, 2012

http://energy.people.com.cn/n/2012/1027/c71661-19407371.html

Xinhua recently reported that the Hong Kong government just extended the real estate stamp duty for another three years. It also added a 15 percent duty for buyers, which will apply to local businesses and to non-residents. According to the Hong Kong government, the new requirement will help lower the cost that local permanent residents have to pay to purchase real estate. Another goal of the new policy is to place a more substantial restraint on the recent speculation in the housing market. Large outside capital has been targeting Hong Kong real estate. However, the government suggested that this new tax is a temporary measure designed to reduce the number of external buyers. Eventually the policy will expire. The background of this recent change in real estate policy is the loss of balance between demand and supply. The influx of capital has resulted in a sharp increase on the demand side of the housing market. If the new policy is not strong enough to improve stability, the government is determined to do more.

Source: Xinhua, October 26, 2012

http://news.xinhuanet.com/fortune/2012-10/26/c_113513933.htm

on October 19, 2012, Xinhua reported that the rate of exchange of China’s RMB to the U.S. Dollar hit record highs for the past six consecutive days. China’s central bank released the interbank foreign exchange market’s central parity rate at RMB 6.3021 to USD $1 on October 18. It is widely believed that the primary cause of this increase is that the U.S. Dollar weakened after the Federal Reserve kicked off QE3. Another possible cause is the RMB appreciation pressure from China’s neighboring countries. Experts are worried about the negative impact this round of RMB appreciation has had on China’s exports. However the RMB futures market also demonstrated an expectation that the RMB will be devalued in the long run. This means the probability of a major RMB fluctuation is unlikely. 

Source: Xinhua, October 19, 2012

http://news.xinhuanet.com/finance/2012-10/19/c_123842468.htm