Economy/Resources - 191. page

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

China Review News (CRN) reported that recent research showed that China is the fourth largest country in the world in the consumption of natural gas. In 2011, China consumed 130 billion cubic meters of natural gas. That was four times the volume of the level in the year 2000. According to the research, China’s consumption may double in the period from 2011 to 2015. Next to the United States, China is the second largest natural gas consumer among all member countries of the Organization for Economic Co-operation and Development (OECD). Based on China National Petroleum Corporation’s (CNPC) estimate, China will need 350 billion cubic meters by the year 2020. China is becoming one of the largest natural gas importers in the world; a quarter of its demand relies on imports. The research report expressed the belief that the increased demand for imported natural gas is only accelerating. 

Source: China Review News, October 19, 2012

http://www.chinareviewnews.com/doc/1022/7/4/0/102274067.html?coluid=45&kindid=0&docid=102274067&mdate=1019174636

China Review News (CRN) recently published a commentary discussing a major economic turning point in that China will no longer be able to rely on an overabundance of residents’ savings. China’s past economic growth heavily relied on cheap capital provided by the savings people had in the bank. Because of these savings, China had a very low investment cost to subsidize its globalization effort. China’s growth also relied on an extremely low costs for labor, land, natural resources, and environmental protection. However, the prices of these factors of production have been increasing and are about to reach a point where a revaluation will be inevitable. Chinese society is aging, which will result in a decline in the size of the labor force. China is also facing a bottleneck in the area of natural resources, along with a seriously declining living environment. Low efficiency and pollution are raising serious questions about the sustainability of China’s growth. The recent global downturn is causing a heavy decline in market demand. The global capital flow is experiencing a process of re-balancing. China’s current export-oriented model will have to face the challenge of a major adjustment.

Source: China Review News, October 11, 2012

http://www.zhgpl.com/doc/1022/6/3/9/102263933.html?coluid=53&kindid=0&docid=102263933&mdate=1011065658

Xinhua recently reported that eighty large and mid-sized Chinese steel companies suffered losses in sales that totaled RMB 3 billion (around US$ 478 million) in the first eight months of this year. The month of August was the lowest point of the year. The numbers are based on statistics that the China Steel Association provided. As of September, steel prices had dropped for thirteen consecutive months. This was the longest cycle for dropping prices in the past decade. With the planned start of some new infrastructure construction projects, it is expected that the steel market will see some relief in the fourth quarter. Experts hope that the situation will not get worse and that a slight rebound may be possible.

Source: Xinhua, October 13, 2012

http://news.xinhuanet.com/energy/2012-10/13/c_123818147.htm

Xinhua recently reported that the just finished “Golden Week” holiday season (the eight day Mid-Autumn holiday) did not give the housing market a boost. Golden Week used to be the time when a large number of real estate transactions closed. According to statistics based on numbers from fifty-four major cities across the country, the housing market suffered a seventy percent decline in real estate sales compared to the same period last year. A national survey showed that only 12.5 percent of the 9,000 people questioned were considering buying real estate during the holidays. At the same time, housing developers are not seriously planning on lowering prices either. The government is still insisting on maintaining the current tight policies regulating the housing market. It is expected that the housing market will remain flat. No major fluctuations are expected in the near future.

Source: Xinhua, October 13, 2012

http://news.xinhuanet.com/house/2012-10/13/c_123818299.htm

China Review News (CRN) recently published a commentary that discussed the action plan developed to fight the apparent global exchange rate war. After the United States announced its QE3 plan, Japan, Britain, European Union, India, and Australia all followed suit and announced more liberal currency policies. The commentary offered a five-point plan on how China should handle the situation: (1) Speed up the process of internationalizing the Chinese currency (RMB) in order to establish a better position in the world economy; (2) Improve the reliability of the supply of strategic energy and resource materials, which will help build up the national reserve and lower the pressure of currency appreciation; (3) Construct China’s own new financial marketplace to improve financial risk management; (4) Sell a certain amount of U.S. bonds, which will suffer devaluation after QE3; (5) Expand the scale of importing U.S. high-tech goods, including intellectual property.  

Source: China Review News, October 10, 2012

http://www.zhgpl.com/doc/1022/6/2/7/102262784.html?coluid=53&kindid=0&docid=102262784&mdate=1010070949

China Review News (CRN) recently reported that U.S. 10-year and 30-year bond prices are dropping. The price drop occurred just at the time when the Federal Reserve announced its QE3 policies, which caused a lot of concern about inflation. The Federal Reserve is scheduled to release its September meeting minutes. The difference between the yields of the inflation-indexed bonds and the regular 10-year bonds is commonly used to measure expected consumer prices. That difference is 2.48 percent, which is higher than the same number collected at the end of last year (1.95 percent). Some experts expressed the belief that the U.S. economy may slow a little bit but won’t fall. The Federal Reserve is to ensure growth and it should monitor inflation. However this may weaken the demand for long term bonds.

Source: China Review News, October 5, 2012

http://www.zhgpl.com/doc/1022/5/8/1/102258102.html?coluid=148&kindid=7551&docid=102258102&mdate=1005174237