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Serious Inflation Threat is a Reality

Fast rising food prices and continued expansion of capital investment and consumer spending are a real threat for serious inflation across-the-board in China’s economy, according to this article published in Outlook Weekly, a subsidiary of Xinhua News. In the first two months of 2008, the prices of meat related products have risen 43.3%, with 70.3% on pork meat alone, on top of the already high 31.6% and 53.9% increases in year 2007. Other products such as vegetable oils and oil-bearing crops have also seen 40-50% price increases over the same two month period. The grain price, in the mean time, has only risen 5.9% during the same period but is expected to catch up soon as pressure is mounting from the double digits monthly rise in the prices of agricultural materials since December 2007. Capital investment that has been growing at a fast pace of a 25% annual increase for the past five years, coupled with the recent rapid increase in consumer retail spending, 18% and 20.6% for two recent quarters respectively, means that all-out inflation has become a serious reality.

Source: Outlook Weekly, April 29, 2008

Chinese Suppliers Hit by Anti-French Sentiment

Boycotting Carrefour, the French supermarket chain in China, has started to affect the Chinese suppliers who provide 95 percent of products to Carrefour. One supplier in Shanghai disclosed that their order volume has dropped 20 percent in the past few days. The potential increase in sale returns, food products in particular, is also a concern. Carrefour recently announced the cancellation of the sales promotion scheduled for the upcoming May 1, Chinese Labor Day.

Demonstrations against French supermarket chain Carrefour erupted in cities across China on Saturday April 19, caused by anger over the disruption of the Olympic torch relay when it went through Paris on April 7.

Source: China Business, April 28, 2008

Three Provinces to Install Third Generation Nuclear Power Stations

According to the Changjiang Daily, Ouyang Yu, an academician of China Academy of Science and also known as the “Father of Nuclear Power,” disclosed a plan to build third generation nuclear power stations during the period of “Twelfth Five-year Plan.” The new generation nuclear power stations, to be constructed in Hubei, Hunan, and Jiangxi Province, are said to be more secure and economical. Ouyang said that China is capable of second generation nuclear power technology. At the present, there are 11 large scale nuclear power stations with a total capacity of 9.11 million kilowatt.

Source: China Central Television, April 24, 2008

Angola to Become China’s Largest Supplier of Crude Oil

According to the recent statistics from General Administration of Customs, Angola is replacing Saudi Arabia as the largest oil exporter to China. In the first quarter of 2008, China imported 8.48 million tons of crude oil from Angola, a year-over-year growth of 55.1%, while the purchase from Saudi Arabia was 8.18 million tons, with a daily average of 0.68 million barrels. In the past 6 years, Saudi Arabia has been the leading provider of crude oil to China. In 2007, Saudi’s oil export was 26.33 million tons, or 0.528 million barrels. Although China is the second largest energy consumers around the world, it still heavily relies on coal as the main energy source. The crude oil consists 20% of the country’s total energy needs.

Source: Oriental Morning Post, April 23, 2008

China Loses Over 600 Billion Yuan (US$85.7 Billion) in Overseas Gambling Each Year

The most recent issue of Jiuding magazine (Macao) revealed that over 600 billion yuan (US$85.7 billion) goes overseas from China in casino, Internet, and underground gambling each year. The amount is 15 times that of the whole country’s welfare and sports lotteries in 2003. The number was quoted from data released by the Chinese Public Security Ministry. The article was widely posted on many Chinese websites including state media Xinhua and China News Agency.

Source: Xinhua, April 21, 2008

Top Power Companies Post Huge Losses

For the first time, four out of five of the largest power companies are suffering from huge losses due to an increase in the price of coal, said Xinhua. The four are state-owned Datang Corporation, China Power Investment Corporation, Huadian Corporation and Guodian Corporation. All these power companies are state-owned.

According to official statistics released in April 2008, of the 4,773 power companies in China, 1,990 (41.69%) were in the red in the Jan-Feb period, which was 6.35 % higher than last year. The losses reached 13.79 billion yuan in the Jan-Feb period, a 218% increase over the same period last year.

In February 2008, Guandong Yudian Group Co., a Chinese power cmpany, purchased 7.5% stakes in Australia’s Whitehaven Coal Ltd (WHC) to ensure a consistent supply of coal.

Xinhua, April 8, 2008
China News, April 20, 2008

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