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Li Keqiang: China’s Strategic Growth Point is Domestic Demand

China Review News (CRN) recently reported that Li Keqiang, China’s Deputy Premier, delivered a speech at the Third China-Arab States Economic and Trade Forum about the strategic direction in which China is heading. Li is widely expected to be the next Chinese Premier. Li suggested that, facing the challenge of the global downturn, China has made a strategic decision to expand domestic demand. The strategy emphasizes three focal points: industrialization, urbanization, and agricultural modernization. Li also made a strong point that opening up to West China and countries neighboring West China is a very important step in the overall openness strategy. He also called for better cooperation among emerging markets, especially with the Arab world. China welcomes investments from Arab countries, and China encourages capable Chinese companies to participate in the development of manufacturing and industries in the Arab world that do infrastructure construction . 
Source: China Review News, September 13, 2012
http://www.zhgpl.com/doc/1022/3/2/6/102232668.html?coluid=151&kindid=0&docid=102232668&mdate=0913092030
Briefings | | |   Economy/Resources

China to Launch 8 Satellites to Strengthen Maritime Surveillance

According to an article in Xinhua on September 7, 2012, by 2020, China will be able to monitor its maritime territories completely through remote satellite sensing. The article reported that China plans to launch eight new satellites in the next 8 years so as to strengthen its maritime surveillance of the South and East China seas including the Diaoyu islands (also called the Senkaku Islands) in the East China Sea and Huangyan Island (Scarborough Shoal) in the South China Sea.

Source: Xinhua, September 7, 2012
http://news.xinhuanet.com/mil/2012-09/07/c_123687799.htm

Briefings | | |   Economy/Resources

People’s Daily: HSBC August Chinese Manufacturing PMI Suffered a Big Drop

People’s Daily recently reported that the August PMI (Purchasing Managers Index) number for China’s manufacturing industry dropped to 47.6, down from 49.3 in July. The number of new orders for exports dropped to its lowest level in nine months. Average invested cost was at its lowest point for the last 41 months. The level of inventory was the highest its been since HSBC started collecting PMI data. Over the the last 10 consecutive months, China’s manufacturing sector has declined in overall performance. For the past four months, the demand for raw materials has weakened and average supplier preparation time has shown improvement. According to the HSBC report, the main cause of the slowdown in the manufacturing industry is the low volume of new orders. 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: People’s Daily, September 3, 2012
http://finance.people.com.cn/money/n/2012/0903/c42877-18903596.html
Briefings | | |   Economy/Resources

CRN: China’s Top 500 Make Low Profits

China Review News (CRN) recently published a financial commentary that analyzed why profits among the top 500 Chinese enterprises have declined considerably. The commentary started by comparing the ROE (Return On Equity, which measures a firm’s efficiency at generating profits from every unit of shareholders’ equity) of China’s Top 500 enterprises with the USA500, finding it was 2.1 percent less. China’s top 500 companies have high total sales, but are very low on the profit side. The commentator expressed the belief that this is related to the fact that 310 out of China’s top 500 are state-owned and the top 30 are all large state-owned enterprises. China’s top 10 are either state-owned banks or companies that enjoy monopoly power. Most of these companies are not interested in promoting, innovation, or in cutting costs. Instead, they focus on making sure that government policies are biased in their favor. With the downturn of both the global and the domestic markets, labor costs, leasing costs, and resource costs are all rising. The growth pattern that the China 500 follow is no longer applicable for generating a profit. The commentary called for a “reform of the system.”
Source: China Review News, September 7, 2012
http://www.zhgpl.com/doc/1022/2/5/8/102225811.html?coluid=53&kindid=0&docid=102225811&mdate=0907072127
Briefings | | |   Economy/Resources

The Era of High Profits Is Ending

On August 30, 2012, China Reviews published an article titled “China’s Enterprises Have Left the Era of High Profits Far Behind.” From January to July 2012, the accumulated profits of state-owned enterprises (excluding state-owned financial enterprises) fell by 13.2 percent compared to the same period last year. Of these state-owned enterprises, the total accumulated profits of the central state-owned enterprises declined 10.7%, while the total accumulated profits of local state-owned enterprises declined 18.3%. The profits made by China’ state-owned enterprises have decreased in each of the past seven consecutive months.

“At present, an average of nearly 28 percent of China’s manufacturing industry’s capacity remains idle; 35.5 percent of manufacturing enterprises’ capacity utilization is at 75% or less.”

Source: China Reviews, August 30, 2012
http://www.zhgpl.com/doc/1022/1/7/0/102217016.html?coluid=53&kindid=0&docid=102217016&mdate=0830043155

Briefings | | |   Economy/Resources

China Secutimes: Tishman Speyer, a Leading US Real Estate Firm, Is Fleeing China

On August 31, 2012, China Secutimes published an article titled, “The Largest U.S. Real Estate Firm Is Fleeing China’s Real Estate Market; What Signal It Discloses.” Tishman Speyer, a U.S. real estate developer, is trying to sell its properties in China. The two plots of land that Tishman Speyer currently has for sale are in New Jiangwan in Shanghai. One plot is worth 1.6 billion yuan (US$252 million) and the other one is worth 3.2 billion yuan (US$505 million).

Tishman Speyer started developing real estate in China in 2005. Over the last 7 years, it has expanded its real estate projects in several cities such as Shanghai, Beijing, Tianjin, and Chengdu. However, Tishman Speyer has begun the process of withdrawing from China. According to China Secutimes, “In 2012, foreign capital invested in China’s real estate market will probably decrease by 50 percent,” bringing foreign capital invested in China’s property market to the lowest amount in the last seven years.

Source: China Secutimes, August 31, 2012
http://news.stcn.com/content/2012-08/31/content_6797642.htm

Briefings | | |   Economy/Resources

COSCO Suffers Huge Financial Loss: Nearly 4.9 Billion Yuan in First Half of 2012

According to China Ocean Shipping (Group) Company’s semi-annual report, COSCO lost 4.872 billion yuan in net profit (US$767.3 million) in the first half of 2012, a decline of 79.72 percent compared to last year. COSCO’s loss even exceeds China Aluminum’s huge loss of 3.2 billion yuan. Expecting to lose more money this year, Wei Jiafu, COSCO’s Chairman and CEO, has applied for financial support from the relevant departments in China.

Source: http://www.nbd.com.cn/, August 31, 2012
http://www.nbd.com.cn/articles/2012-08-31/678379.html

Briefings | | |   Economy/Resources

Qiushi: Six Rules behind Adjustments to the U.S. Dollar

Qiushi Journal, a bi-weekly magazine published by the Central Committee of the Chinese Communist Party, recently republished an article discussing the hidden rules behind each major U.S. dollar adjustment made since the Second World War. The author claims that six rules have been discovered: 1) the U.S. dollar became stronger before a global financial crisis and declined afterwards; 2) each time the U.S. dollar appreciated, it brought “a catastrophic blow” to the emerging economies at that time; 3) each time the U.S. dollar depreciated, somewhere in the world an economy would have bubbles, such as Japan in the 1980s; (4) the U.S. dollar obeys “political cycles” which correspond to U.S. presidential elections; (5) the U.S. dollar follows different strategies against “capital surplus” nations (like Europe) and “trade surplus” nations (like China); (6) the U.S. dollar is used to manipulate commodity prices. The author also offered some ideas on how to take advantage of these findings.
Source: Qiushi, August 23, 2012
http://www.qstheory.cn/jj/hqsy/201208/t20120823_177320.htm
Briefings | | |   Economy/Resources