annual inflation rate of china

ISBC Newsletter (April, 2008) Microsoft eyes doubling of mobile shipments to China....................................................... - 2 Number of foreign-funded enterprises continue to rise in Guangzhou ................................ - 2 Supplies to get boost from subsidies .................................................................................... - 3 China's trade of machinery, electronic products up 20.3 in Q1 ........................................... - 4 CSR guideline spurs sustainable development..................................................................... - 5 Balancing act needed on inflation ........................................................................................ - 6 Chinese textile firms struggle to survive in 2008................................................................. - 7 Long-term investment urged for Chinese insurers in stock ................................................. - 8 CASS: 2008 house price growth to slow ............................................................................. - 9 Engine makers mull price rise............................................................................................ - 10 Electricity tariffs 'will not rise' ........................................................................................... - 11 Contact us........................................................................................................................... - 12 - Israel China Business Center Newsletter -1Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 News Bites Microsoft eyes doubling of mobile shipments to China BEIJING, April 1 -- Microsoft Corp expects that shipments to China of handsets with its software will more than double in the next year amid an expected boom in demand for Web access once the country launches 3G wireless services. About 2 million mobile devices installed with Microsoft operating systems were shipped to China in the last year, about 10 percent of the software giant's global total, Benjamin Tan, business group director for China at Microsoft's Mobile Communications Business. "Microsoft's shipment into China has basically doubled (in the past year). In the next one year we are aiming to more than double our shipments into China," Tan said on Monday. Microsoft's mobile communications business division provides operating systems for smart-phones and other mobile devices based on the Windows Mobile platform. Microsoft works with device manufacturers including LG Electronics Inc, Motorola Inc, ASUSTeK Computer Inc and Lenovo Group Ltd. (April 1, China Daily) Israel China Business Center Newsletter Number of foreign-funded enterprises continue to rise in Guangzhou GUANGZHOU, April 4 (Xinhua) -- Foreign-invested enterprises have grown in number in Guangzhou, capital of the southern Guangdong Province. The number of new foreign-funded enterprises in Guangzhou was 959 in 2007, nearly triple the number of foreign companies that closed or left the city, according to the latest report released on Tuesday from the municipal foreign trade and economic cooperation bureau. The bureau said that 675 foreign companies increased their investment in Guangzhou last year, which demonstrated the confidence that some foreign investors have in the southern business hub. -2Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 The report said that 347 foreign firms closed, most of which were in the labor-intensive textile, clothing, shoe and plastics industries. An earlier report from The Wall Street Journal said more than 1,000 shoe factories and related suppliers were closed in Guangdong province last year and 10 percent of the 60,000 to 70,000 Hong Kong-owned factories in the delta region would close this year. The report from the bureau said the foreign reports over-exaggerated the influences of normal factory shutdown and relocation. The trade department of Guangdong said only 244 overseas-invested enterprises had moved out of the province in 2007. The total number of registered foreign enterprises in the province was 66,789, 6.62 percent more than the previous year. New labor laws, the rising yuan valuation and raw material costs and the shrinking European and U.S. markets hit by the sub-prime credit crisis are forcing labor-intensive companies to close down their factories or move to lower-cost inland provinces, the report said. Guangzhou intends to create an environment to keep research and development, designing and marketing departments of the labor-intensive firms in the city when steering the low-end sections of the firms to move out, the report said. (April 4, Xinhua net) Israel China Business Center Newsletter Supplies to get boost from subsidies BEIJING, April 8 -- China, the world's biggest meat consumer, will extend subsidies to large-scale producers of hogs, chickens and milk this year as part of its measures to boost food supplies and control inflation. Qualified hog or chicken breeders may get as much as one million yuan (143,000 U.S. dollars) each in financial assistance, while each milk-producing district may get as much as 1.5 million yuan, the National Development and Reform Commission said in two statements on its Website Monday. Inflation in China soared to 8.7 percent in February, as the worst snowstorms in half a century helped raise costs of meat and other food items, Bloomberg News said. -3Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 The government has targeted support to large producers to reduce the risk of disruptions to supplies from individual farmers with smaller less stable operations. The country will "assist breeders and standardized large-scale farms with their expansion, especially those damaged by the snowstorms this year," said the commission, the country's planning agency. Hog raisers with annual output of more than 3,000 head may also receive 800,000 yuan from the central government, the commission said. (April 8, Shanghai Daily) Israel China Business Center Newsletter China's trade of machinery, electronic products up 20.3 in Q1 BEIJING, April 9 (Xinhua) -- China's trade of machinery and electronic products grew at an annual rate of 20.3 percent to 306.6 billion U.S. dollars in the first quarter, the Ministry of Commerce (MOC) said on Wednesday. The growth was two percentage points lower than that in the January to March period last year as the global economic slowdown reduced overseas orders for China-made goods. Exports rose 23.1 percent to 181.4 billion U.S. dollars, accounting for 59.3 percent of China's total exports. The rate was5.4 percentage points lower than a year ago and 1.7 percentage points higher than the growth of the nation's total exports from January to March. Imports climbed 16.4 percent to 125.3 billion U.S. dollars, accounting for 47.4 percent of the total imports. The rate was 1.5percentage points higher than the previous year, but 12.2 percentage points lower than the growth of the total imports in the first three months. During the period, the trade value of the country's new- and high-tech products was up 15.5 percent to 172.9 billion U.S. dollars, the MOC stated. Among the total, exports rose 17.4 percent to 92.7 billion U.S. dollars and imports jumped 13.4 percent to 80.1 billion U.S. dollars. (April 9, Xinhua net) -4Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 CSR guideline spurs sustainable development The guidelines for CSR (corporate social responsibility) were released earlier this month, which urge industrial corporations and related institutions to shoulder social responsibilities to obtain sustainable development. The guidelines are issued by 11 national industrial federations and associations, including the CFIE (China Federation of Industrial Economics), a group of federations and associations engaged in iron, steel, oil, chemicals, light industry, textiles, building materials, non-ferrous metals, electric power and mining industries. According to the guidelines, all industrial companies and industrial federations of China should establish a CSR system in four sectors: management, execution, information and supervision in order to run business in a methodical and regulatory way. For industrial federations or associations, the system, in addition to the above four sectors, also involves establishing executive bodies in charge of promoting, coordinating and supervising related companies in fulfilling their social responsibilities. They also act as service providers for the enterprises, the industries and the government. It is intended to provide communication channels between companies and the public in order for the public to better observe the company's social and ethical stance. Xu Kuangdi, CFIE chairman, points out that domestic industrial companies have already made a remarkable contribution to China's economic and social development. "On the other hand, we must note that the industrial sector is a key consumer of natural resources and greatly influences the environmental balance," says Xu. Xu explains that when an enterprise melds its CSR with its business development strategy and corporate culture, it benefits the companies' technological innovation, management system, staff quality upgrading and creates a positive public image . "It will also pave the way for Chinese industrial enterprises to build their brands in the international market and go abroad for further expansion," Xu adds. (April 14, China Daily) Israel China Business Center Newsletter -5Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 Balancing act needed on inflation While the latest economic figures are pointing to a slowdown, growing "external uncertainties" have prompted the country's policymakers to take a more cautious approach in their battle against inflation, officials and analysts said yesterday. Over the past half a year, policymakers have named inflation and overheating as their top concern, using tightening measures to cool the economy and curb inflation. But with the outbreak of the subprime crisis in the United States, an increasing number of analysts are sounding warning bells for a sudden economic downturn, largely due to weak export demand in the US. The authorities are seeking to balance economic growth with controlling inflation amid the latest economic developments, the State Council said yesterday. The world's fourth-largest economy grew by 10.6 percent in the first three months from a year earlier, down from 11.2 percent of the fourth quarter last year. Most analysts say weakening export demand triggered by the subprime crisis was a key cooling factor. China's exports grew 21.4 percent in the first quarter, down 6.4 percentage points from the same period last year. The export slowdown came as the US, which accounts for 23 percent of China's exports, is on the verge of a recession and may slash its order for Chinese products. If the US economy falls into a deep recession and China's exports growth to the nation ends up in negative territory, the nation will have to "sacrifice" one percentage point in economic growth, said Fan Gang, an advisor to the central bank's monetary policy committee, in a forum held earlier this month. But analysts said soaring consumer prices is still the primary concern for policymakers for the time being, as rising costs of materials and labor are expected to push inflation even higher in the coming months. The country's inflation hit an 11-year high of 8.7 percent in February and dipped slightly to 8.3 percent last month. This presents a difficult task for the government to achieve a full-year inflation target of 4.8 percent, analysts said. (April 17, China Daily) -6Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 Israel China Business Center Newsletter Chinese textile firms struggle to survive in 2008 Textile firms, once an export engine of China, are fighting for their survival this year with rising costs and dismal overseas market hit by the subprime crisis. Those firms wooing foreign buyers at the 103rd China Import and Export Fair, the largest trade fair in the country also called the Canton Fair, felt the pinch. Few buyers visited their exhibition stall, and fewer still signed contracts. The Chinese currency has ventured below the seven yuan mark since the government loosened the unit's peg to the dollar in 2005. The yuan has gained about 18 percent since then. This has made Chinese textile products more expensive and its price advantage has almost vanished compared with products from Vietnam and India. The yuan appreciation, together with the rising material and labor costs, has driven some textile firms to the brink of bankruptcy. The Lanyan Group, the largest denim products manufacturer based in the eastern Shandong Province, received only one million-meter cloth order this year, one fifth last year's total. In the area where Lanyan is, only 70 out of over 100 textile factories are working normally. Even those still operating are finishing their previous orders, said Zhang Meng, a manager with the Lanyan Group. Anyway, the textile firms are finding ways to survive. Changing the price tag is sure to be the first choice for many of the textile exhibitors on the fair. However, the price rise has made foreign buyers hesitate before making their decision. Those companies with their own brand were less affected. Busen Group, a major men's wear manufacturer in Zhejiang Province, received normal orders this year. Some 70 percent of products for export from the company belonged to its own brands so it had the right to fix the price, said Wu Yongjie, deputy executive manager of the company. Israel China Business Center Newsletter -7Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 However, to Yang Hongchang, maintaining the factory to operate is his goal. He is ready to receive orders without profit. "As a saying goes, only by breaking your arm can you survive. As long as our factory is working, opportunity will definitely come," he said. Israel China Business Center Newsletter (April 19, Xinhua net) Long-term investment urged for Chinese insurers in stock Chinese insurers, a major institutional investor sector, were urged on Wednesday to make long-term investments in the stock market and fend off risks amid price fluctuations. Insurers should "stick to the idea of long-term value investment" and "strengthen their confidence in economic and financial development in the long term", said Yuan Li, spokesman for the China Insurance Regulatory Commission (CIRC). Chinese insurers had 568 billion yuan ($81 billion) invested in stocks, equities and securities funds at the end of March, about 21.4 percent of their total investment capital, said Yuan. They were down from the 683.1 billion yuan, or 26 percent, at the end of October last year. China's main market index, the Shanghai Composite, reached a high of 6124.04 points on October 16 and has since tumbled by almost half. The stock plunge drove insurers' capital to the bond market, with their investment in bonds rising to 1.3 trillion yuan, or 49.4 percent of the total invested capital, at the end of March from 40.9 percent in October, according to figures provided by Yuan. Market talk over a large-scale retreat of institutional investors from the stock market has intensified investor fears of weak performance. It was a market-oriented act by insurance companies to adjust their investment in stocks and the CIRC would not intervene too much, said Yuan. The market rallied to see the composite index rise by 4.15 percent to 3,278.33 on Wednesday, still 46.5 percent lower than the peak in October. Institutional investors in China's stock market include securities funds, qualified foreign institutional investors, insurance capital, corporate annuities, social security funds and others. -8Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 The government allowed insurance companies to directly invest in the stock market from 2005. Chinese insurers had a total investment capital of 2.7 trillion yuan at the end of March, from which returns totaled 31.13 billion yuan in the first quarter with an average yield of 1.2 percent, said Yuan. The country's insurance premiums in the first quarter soared 51.6 percent year on year to 297.9 billion yuan, he said. (April 24, Xinhua net) Israel China Business Center Newsletter CASS: 2008 house price growth to slow The Chinese Academy of Social Sciences has issued a blue paper pinpointing key trends in China's real estate sector. It's predicting a significant slowdown in the growth rate for the rest of this year. But the report also warns that continued high demand means a definite downtrend in prices may well be decades away. The Chinese Academy of Social Sciences has issued a blue paper pinpointing key trends in China's real estate sector. The report calls for stronger macro-control policies concerning the property market. These include more measures to tighten money supply, improve social welfare, and curb speculative buying. The blue paper also warns of continued high prices for property prices in some cities due to heavy demand, rising costs and supply shortage. -9Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 Niu Fengrui, Chinese Academy of Social Sciences said "The supply is far from enough to meet the actual demand. This is the fundamental reason." For these reasons, the report says a nationwide turning point for the market is unlikely for many years to come, though price growth is likely to be slower compared to last year. Niu Fengrui said "A turning point needs the support of basic elements. For example, when the the supply can meet the demand, or China finishes its urbanization and industrialization. So I think the possibility of a downward trend for the entire property market will be very small for decades." Experts also say the development of the real estate sector should correspond to GDP growth. Figures for last year show that Shanghai's investment in property development only increased 2.5 percent, much lower than the GDP growth rate. And experts think the pressure on price hikes will increase if the city's real estate investment remains low in the coming years. And this will have a negative impact on the overall economy. (April 28, CCTV 9 net) Israel China Business Center Newsletter Engine makers mull price rise "Soaring raw material prices are pressuring engine makers, and most of them are mulling price raises," said Liu Tiezhuang, deputy general-manager of Dalian Diesel Engine Sales Co Ltd owned by FAW Jiefang Truck Co Ltd. "We may raise product prices between 10 and 15 percent. Steel comprises 98 percent of an engine. Skyrocketing iron ore prices will undoubtedly affect engine makers' purchasing costs," echoed Wu Changhong, deputy sales manager of Shanghai Diesel Engine Co Ltd. "At least a 10 percent rise in engine prices could offset engine makers' rising costs," believes Jia Guiqi, chief designer for Dongfeng Chaoyang Diesel Engine Co Ltd. "We are exchanging opinions with auto factories, who are under great price pressure, and hope to reach common ground with them, but not until now," Jia added. Yuchai is distinct from average engine makers confronted with the raw materials price hike. Early in 2007, the engine maker had set up an independent budget department in an effort to control costs from inside and strengthen internal supervision. "We are able to - 10 Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 digest current cost rises," said a Yuchai insider with confidence. "However, Yuchai may follow the market tide and change its prices." (April 29, China Daily) Israel China Business Center Newsletter Electricity tariffs 'will not rise' The government will not increase the price of refined oil or electricity until inflation is brought under control, a senior official from the National Development and Reform Commission (NDRC) said yesterday. Xu Zhimin, director of the NDRC's economic operations department said the commission is in discussions with several cabinet departments on a range of measures to deal with inflation, rising energy prices and the plight of power companies. Economic growth in the first quarter of this year was 10.6 percent, slower than the 11.9 percent reported for the same period of last year. However, the consumer price index - the key indicator of inflation - was up 8.3 percent year-on-year last month, and up 8 percent year-on-year for the quarter. The government last month told the National People's Congress that it will spare no effort to keep the annual inflation rate under 4.8 percent. Also at yesterday's press conference, NDRC spokesman Li Pumin ruled out the possibility of increasing the price of refined oil, saying that "lowering the inflation rate is the top priority" despite global oil price rises. China's oil-refining companies have relied on subsidies from the government to offset rising costs as central authorities attempt to bring the country's crude oil prices in line with the global market. "We are determined to deregulate the prices of resources, but timing has not been on our side so far," Li said. (April 30, China Daily) - 11 Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13 Contact us For further contacts, please send email to or via phones of: Nicole Yu: +86 21 3220 0908, email address: nicoleyu@jpi.cn Israel China Business Center Newsletter - 12 Email: Yvonnefeng@isbc.org.cn; nicoleyu@jpi.cn Tell: +86 21 3220 0908 Fax: +86 21 32200908-13