MOFCOM refutes criticism of China-ASEAN FTA
May-30-2011 By : agxadmin
The China- ASEAN Free Trade Agreement (FTA) will not lead to job losses and lower profits in Indonesia’s five major industries ― electronics, furniture, metal, mechanicals and textiles, Jiang Jiqing, Director of the Department of International Trade and Economic Affairs of the Ministry of Commerce (MOFCOM) said. “The FTA has created more benefits than problems, and also, the benefits will be lasting,” she added, refuting criticism of the FTA in an Indonesian newspaper. She said the lack of competitiveness of some Indonesian companies has nothing to do with the FTA. Indonesia’s exports to China increased to USD20.75 billion in 2010 from USD9.61 billion in 2006, with an annual growth rate of 21%, 6 percentage points higher than the growth of the ASEAN nations’ exports to China during the same period. Indonesia has rich natural resources including coke, cocoa powder and palm oil, whose export to China reached USD14.1 billion in 2010. Chinese investment in Indonesia has also been on the rise. By the end of 2010, more than 1,000 Chinese companies had cumulatively invested USD6 billion, creating 30,000 jobs, in the country. The investments were mainly in the infrastructure and energy sectors. China ranked 13th in terms of foreign direct investment (FDI) in Indonesia, the China Daily reports.
Chinese exporters prefer EU to North America
By : agxadmin
Despite global concerns that Europe’s debt crisis is worsening, Chinese exporters still believe the EU will remain a favorable market and be their first export choice in the years ahead, according to the report from the University of International Business and Economics (UIBE) in Beijing. Based on interviews with 300 Chinese exporters, the report found that 52% of interviewees are planning to sell goods to European nations. The appreciation of the euro against the yuan makes Chinese goods competitive, but trade remedy cases against China launched by the EU have been rising during the past year. Only 29% of the respondents chose to export to North America. 57% disagreed with the statement that the appreciation of the currency has exposed them to increased operating risks.
Slowdown ‘won’t spin out of control’
By : agxadmin
China should not worry about slower economic growth because cooling measures will help to quell inflation in the second half of the year, Fan Jianping, Chief Economist at the State Information Center, said. “Such a slowdown is caused by the exit from the stimulus measures, which means it should be controllable,” the China Securities Journal cited Fan as saying. “It should be a good thing. In the short term, a slowing economy provides favorable conditions for a price drop in the second half of the year, and in the long run, it helps restructure the economy,” he said. His comments contrast with worries among some investors that China is heading for a sharp economic slowdown, or a “hard landing”, after data showed industrial activity moderating last month. Fan said the present cycle of policy tightening might end if the economy kept slowing in coming months. “We cannot rule out the possibility of rises in interest rates and the reserve requirement ratio (RRR), but overall, the policy should be pre-emptive and it is unnecessary to wait for a significant price drop before making any move,” Fan said. Zhang Yansheng, Director of the Economic Research Institute at the National Development and Reform Commission (NDRC), said the country might shed some economic growth momentum in years ahead because of a firmer yuan and rising input costs at factories.
China braces for power cuts
By : agxadmin
China’s power shortage this summer could be worse than in 2004. State Grid of China expects the 26 provinces and regions under its management to suffer a combined power shortage of 30 gigawatt (GW) in the coming months, or about 3% of the country’s generating capacity. This year’s power shortages began in March, well ahead of the peak summer consumption season, after surging coal prices eroded power generators’ profitability and also due to insufficient generation capacity and transmission problems. The shortfall has reportedly prompted the government to raise on-grid tariffs ― charged by power plants to grid firms ― in several provinces last month to encourage production, although analysts said the hike was too small to restore profitability of many coal-fired plants, which make up more than 80% of China’s power generation. China’s five major state power generating groups lost more than CNY10 billion in the first four months of this year. State Grid said at least 10 regions, including Beijing and Shanghai, will suffer a power shortage, but the company will first ensure supplies to residents, hospitals and schools. In 2004, China suffered its worst power deficit since the beginning of the 1990s as it imposed power cuts or limits in 27 of its 31 administrative areas. “The government regulates the prices of coal only for power generation, but not all types of coal. So the coal companies cut back on or stop selling thermal coal to the power plants because of the low price. As a result, some plants have difficulty purchasing coal for power production,” said Lin Boqiang, Director of the China Center for Energy Economics Research at Xiamen University.
Manufacturing activity drops to 10-month low
By : agxadmin
Manufacturing activities may ease for a second month in May, according to a preliminary reading of the HSBC Purchasing Managers’ Index, which stands at 51.1 for May, a 10-month low and down from April’s 51.8. “Manufacturers continued to reduce inventories amidst slowing new business flows, leading to slower production growth at a 10-month low,” said Qu Hongbin, Chief Economist for China at HSBC. “But we think there is no need to worry about a hard landing because the current level of the PMI is still consistent with around 13% industrial production growth and 9% gross domestic product (GDP) growth,” he added. Qu said the policy focus should still be on taming inflation, and he expected China’s tightening policies to continue. To curb inflation, China has lifted interest rates twice this year, together with five hikes of the reserve requirement ratio (RRR) that forced banks to set aside more money as reserves. Industrial production gained 13.4% annually in April, 1.4 percentage points lower than in March.
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