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China’s New Strategy: Loan for Oil

China National Radio reported that China and Russia signed an intergovernmental agreement on oil cooperation in Beijing on Tuesday. Under the intergovernmental agreement, China will provide a $25 billion loan to Russia, Russia will use oil as collateral. Russia will sell China 15 million metric tons of oil from 2011 to 2030, using the East Siberia-Pacific Ocean (ESPO) pipeline.

Energy Resources are currently the number one target of China’s overseas investment. Since the beginning of 2009 China has signed several "loan for oil" cooperation agreements with other countries, including a $10 billion loan to Brazil on February 18, a $4 billion loan with Venezuela on February 21, and a $1 billion loan with Angola on March 13. On April 5, President Correa of Ecuador announced a possible deal of exchanging crude oil for a $1 billion loan from China.

On April 16, China National Petroleum Corporation signed a contract to provide a $5 billion loan to Kazakhstan’s KazMunaiGaz National Co. to jointly buy AO Mangistaumunaigas, an oil and gas company in Kazakhstan.

Source: China National Radio, April 21, 2009

Xinhua: Weighing International Settlement in Chinese Currency RMB

Outlook Weekly, a magazine by Xinhua News, reported on China’s effort to restructure its international financial strategies. The core strategy is to reduce the dependency on the US dollar. This strategy consists of three aspects: internationalization of RMB, currency and financial cooperation within East Asia and international currency system reform.

The Chinese State Council decided on April 8 that Shanghai and four cities of Guangdong Province will start a trial on international settlement in RMB. Another action taken by the Chinese government was currency exchange with six countries or administrative regions.

Source: Outlook Weekly, April 15, 2009.

Xinhua: Cautious about RMB Internationalization

Outlook Weekly, a magazine by Xinhua News, published an article suggesting that “there is a strongly rising public opinion that the Chinese currency RMB should become an international currency to match China’s world power status.”

The article cautioned that although the world suffered the damage brought by the US Dollar monopoly in recent years, there are still a great deal of risks for RMB internationalization. Risks mentioned in the article are: reduced capability for the central government to control Chinese macro economy, lowered stability of the economy, much heavier international responsibilities.

Source: Outlook Weekly, April 4, 2009.

China’s Steel Industry Set For Tough Times

Xinhua reported that China’s steel exports were a mere 1.91 million metric tons in January, a drop of 54.6% from a year earlier. Exports in February went down further to 1.56 million metric tons. China Iron and Steel Association warns that China may soon import more steel than export. Slack domestic demand, reduced international orders, trade barriers in the West and competition from other countries are said to have contributed to the downturn.

On April 8, 2009, seven US steel companies and trade unions filed an anti-dumping petition against Chinese steel products with the US government. On the same day, the European Commission announced its decision to impose anti-dumping duties ranging from 15.6% to 24.2% on Chinese seamless steel pipe.

Source: Xinhua, April 14, 2009

China’s Exports Declined 17% in March Compared to Last Year

China’s General Administration of Customs announced on April 10, 2009 that China’s total amount of imports and exports was $162 billion in March, 2009, a decrease of 20.9% from last year. Among that, exports were $90.3 billion, a decrease of 17.1% and imports were $71.7 billion, a of 25.1% decrease. The trade surplus was $18.6 billion, an increase of 41.2% over the previous year.

Source: BBC Chinese, April 10, 2009

More than Half of Australians against Chinese Acquisition of Australian Mining Industry Assets

BBC Chinese reported from Australia that according to a recent poll, more than half of Australians are against the Chinese acquisition of Australian mining assets. Yet, nearly an equal amount of people polled are for or against keeping close ties with China.

The media played an important role in bringing the heated debate between the ruling party and the opposition to the general public.

“Communist China” was frequently used in reference to China in the report.
Source: BBC Chinese, April 6, 2009.

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