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Losing Low Cost Advantages – China’s Auto Parts Industry to Lose Trillions in Orders

The latest research results released by AlixPartners, an international consulting firm, suggest that as the value of the yuan and the price of raw materials have increased, the cost of China’s auto parts have gone up 16 percent. Foreign buyers are thus losing interest in China’s auto parts market because of the rise in cost and are gradually reducing their orders. It was estimated that China will lose US$16 trillion in auto parts orders by 2010.

Source: China Stock Daily, June 6, 2008 http://www.cnstock.com/paper_new/html/2008-06/06/content_61922543.htm

China Establishes Large Commercial Aircraft Enterprise

Commercial Aircraft Corporation of China,Ltd. (CACC) announces its formal kick-off on May 11 in Shanghiai, Xinhua reports. The company is approved by the State Council and is owned by the State. The new company has an equity of 19 billion yuan (US$2.71 billion) It is responsible for the development and manufacture of large commercial aircrafts. Zhang Dejiang, deputy premier and member of politic-bureau, attended the opening ceremony.

Source: Xinhua, May 11, 2008
http://news.xinhuanet.com/newscenter/2008-05/11/content_8144814.htm

April CPI Up 8.5 Percent; Inflation Expectations On the Rise

National Bureau of Statistics (NBS) announced on May 12 that April CPI were up 8.5 percent compared with the same period last year and was a 0.2 points increase from March. Food price increase was 22.1 percent, the highest of all.  The increase came after 8.1 percent increase in April PPI, Producers’ Price Index, among which crude oil up by 37.9 percent, coal mining and washing up by 20.9 percent. Peng Zhilong, Deputy Director General of the Department of National Accounts at the NBS said the Inflation expectations are rising and would be hard to bring CPI down to the targeted 4.8 percent in the short run.

Zhou Xiaochuan, governor of the People’s Bank of China spoke at Shanghai Lu Jia Zhui Forum on May 10 admitting “anti-inflation is the biggest concern in China’s currency policy.”

Source:
National Bureau of Statistic of China, May 12, 2008 http://www.stats.gov.cn/tjfx/jdfx/t20080512_402479287.htm
Xinhua, May 12, 2008
http://news.xinhuanet.com/fortune/2008-05/12/content_8149854.htm
Xinhua, May 10, 2008
http://news.xinhuanet.com/fortune/2008-05/10/content_8140766.htm

Consumer Price Index at 11-Year High

National Bureau of Statistics issued its forecast alerts for the past 12 months on April 30, 2008. Consumer price index (CPI) has been yellow for the seventh consecutive month. CPI was 6.2% in September 2007 and hit 8.3% in March 2008. Consumer price index is now at 11-year high. Fiscal Income has been red for the 11th consecutive month.

Source:
National Bureau of Statistics of China, April 30, 2008
http://www.stats.gov.cn/tjsj/jdsj/hgjjjqzs/t20080429_402477229.htm
Xinhua, April 30, 2008
http://news.xinhuanet.com/newscenter/2008-04/30/content_8082313.htm

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
http://news.xinhuanet.com/fortune/2008-04/29/content_8068646.htm

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
http://www.cb.com.cn/News/ShowNews.aspx?newsId=16610

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

http://news.cctv.com/china/20080424/100458.shtml

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
http://epaper.dfdaily.com/dfzb/html/2008-04/23/content_52909.htm