China hopes the U.S. will lift export restrictions
May-31-2010 By : agxadmin
China has asked the U.S. for a timetable to gradually lift restrictions on American high-tech exports to China, Vice Premier Wang Qishan said in Beijing. The Chinese government also wants to know how the U.S. plans to treat Chinese firms making investments in the country and when it plans to recognize China as a market economy. Bilateral trade reached USD298.26 billion in 2009, nearly 120 times the level in 1979 when the two countries established diplomatic ties. “With increasingly close links, our two economies have become inseparable, particularly since the outbreak of the international financial crisis”, Vice Premier Wang said. He described China-U.S. economic ties as “a cornerstone of the bilateral relationship.”
“Indigenous innovation” rule modified
By : agxadmin
Draft “indigenous innovation” government procurement rules have been modified to address concerns raised by foreign companies, and the revisions “basically resolve” their concerns over intellectual property (IPR) protection and other issues, Vice Minister of Science Cao Jianlin said. “We think that the different companies have agreed that the [latest] draft is non-discriminatory, market-oriented and also reflects the principle of IPR protection,” he added. The new regulations have not come into force yet.
- Trade Ministers from China, Japan and South Korea praised efforts to explore a potential joint free trade agreement (FTA) to boost commerce among three of Asia’s biggest economies, which represent 18.6% of the global economy as measured by gross domestic product (GDP). They have been holding trilateral meetings at the Trade Minister level since 2002. The tree Ministers said they hoped a study would be completed by 2012.
- According to WTO rules, China will automatically acquire “market economy status” (MES) in 2016, 15 years after joining the organization, but the Chinese government hopes the U.S. and the EU will agree to offer China MES earlier.
- Taiwan is scheduling a special legislative session in late July to approve, reject or change the Economic Cooperation Framework Agreement (ECFA) set to be signed with the Chinese authorities next month.
- A trade delegation headed by the Governor of Fujian signed deals worth NTD24 billion in Taiwan as a shipping line between Xiamen on the mainland and Kaoshiung in Taiwan was inaugurated. Fujian’s bilateral trade with Taiwan soared 97.9% to USD3.34 billion in the first four months of this year, with exports to the island up 1.8 times and imports from Taiwan up 2.4 times.
China and U.S. still disagree on yuan exchange rate
By : agxadmin
Fred Bergsten of the Peterson Institute for International Economics estimates that bringing the yuan’s value up by 40% could generate some 1.2 million U.S. jobs, going a long way towards meeting U.S. President Barack Obama’s recent pledge to create two million jobs, while doubling exports over the next five years. Chinese policymakers insist that adjustments in the yuan’s value will have little direct impact on the trade balance with the U.S., adding that its nearly 15% gain against the euro is already too great a burden. “A revaluation would not bring any good to our economy, as our exporters already are under heavy cost pressures. It would be dangerous to revalue,” said Yi Xianrong, Economist at the Chinese Academy of Social Sciences (CASS) in Beijing. Others are in favor of loosening exchange rate controls. “A more flexible currency rate will do good to both ourselves and the world economy,” said Economist Mao Yushi. Economist Zhang Bin forecast that a 10% rise in the yuan’s value would cause a 3.3% drop in exports, posing no great threat. Not all American companies favor pushing for a stronger yuan. Executives of multinationals with big operations in China tend to favor keeping currency rates steady. “The stable yuan is obviously easier for managers to cope with,” said Kevin Wale, President of General Motors China Group, which sources 85% of its parts locally. For many Chinese firms, adjusting to a stronger yuan would involve trying to climb the “value chain” to produce more expensive products or by selling more inside China. But for most exporters, going local is tough given the fierce competition from both Chinese and foreign companies fighting for a piece of the market, the South China Morning Post reports.
- China will levy a 5% resource tax on crude oil and natural gas sales and a 2% to 5% tax on coal in Xinjiang from June 1, raising over CNY2 billion for the region this year. The new tax levels, based on resource prices, will replace existing levies that charge CNY8 to CNY30 per ton on crude oil output, CNY0.02 to CNY0.15 per cubic meter on gas and CNY0.3 to CNY5 per ton on coal.
- Industrial profits in China rose 91.5% in the first four months of the year from the same period a year earlier, according to a wide sample of provinces, the National Bureau of Statistics (NBS) said. The data covered industrial companies operating in 24 of the country’s 31 provinces and accounting for 82% of nationwide industrial revenues.
Niche investors making inroads
By : agxadmin
Global private equity firms continue to dominate investments in Chinese companies, but smaller players are finding their way into the market, says Adam Bornstein, Hong Kong-based Vice President of private equity firm CDIB Capital. Fifteen out of 60 new China listings came to the market last year with the help of funding injected by private equity firms two to three years before their flotation on the Hong Kong stock exchange, including by big players such as the Carlyle Group and Bain Capital. Smaller firms such as CDIB, which has just a tenth of the capital managed by large funds, are beginning to find value in niche sectors in China. Bornstein is hoping CDIB Capital’s USD20 million investment in Dalian-based Chemphy, a manufacturer for pharmaceutical companies such as Japan’s Sumitomo Chemical and Germany’s Bayer, will meet this year’s financial budget so that its share sale will be on track. CDIB aims for a return that will double its investment. Data compiled by the Center for Asia Private Equity Research, a Hong Kong-based research company, show the amount of private equity funds raised for investing in Chinese companies peaked in 2008, reaching a total of USD17.6 billion. Investing was then hit by the liquidity crisis and as a result only USD9.6 billion was raised by private equity funds last year, the South China Morning Post reports.
- Australia has delayed a final decision on allowing China’s Bright Food Group to bid AUD1.62 billion for the sugar unit of Australia’s CSR, raising concerns the deal may be blocked. The Foreign Investment Review Board deferred a decision for at least 90 days while it considered the proposal.
Oil refining capacity to rise 50% in five years
By : agxadmin
China’s oil-refining capacity is expected to rise by 50% in the next five years to 750 million tons of crude oil, but overcapacity concerns should not be an issue considering the potential domestic demand, industry analysts said. China will be able to refine 500 million tons of crude oil by the end of this year, a rise of 6.4% from a year earlier. The capacity is likely to increase between 6% and 7% annually over the next five years if refineries under construction or being planned are completed on schedule, a Sinopec report said. It also noted that the country should control the pace of rising production to avoid excessive competition within the industry and supply surplus in the short term. The report encouraged the phasing out of outdated capacity. As much as 70% of the country’s crude oil will have to be imported from overseas in the next 10 years, and this will become the major bottleneck to the development of the industry. In 2009, China imported 189 billion tons of crude oil, or 51.3% of its crude oil supply, surpassing the 50% international alarm level. Sino-foreign joint ventures are expected to refine 31.5 million tons annually by 2015, up from 10.5 million tons now and accounting for 4.2% of China’s total refining capacity, the Shanghai Daily reports.
- Oil Search, Karoon Gas Australia and InterOil Corp are among potential acquisition targets as companies in China seek to snap up gas resources, research firm Sanford Bernstein said.
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