December 30, 2011 Filed under Outlook
By Huang Daohen
For the world’s second largest economy, 2011 was filled with many ups and downs – not just related to the declining stock market or the sluggish real-estate sector, but for everyone. Expats, for example, may now want to reconsider their future in China after a recent mandatory social welfare tax was enacted for foreigners.
Inflation has been the focus of the country’s economic policy this year, and as of now the policy looks successful. Figures from the National Statistics Bureau show that inflationary pressure has continued to fall in the last two months.
November’s consumer price index (CPI) was 4.2 percent, down from 6.5 percent in July.
Cracking down on rising housing prices was another major government initiative.
The campaign, according to Xinhua, also seems to have worked. In November, the price for a new home in 49 out of 70 cities dropped from the previous month, Xinhua reported.
There remains strong demand for quality and high-end homes as the middle class grows.
In the annual central economic conference held recently in Beijing, the government ruled that a continuing slowdown for the property industry may be needed, as well as an adjustment to new construction.
Real-estate developers aren’t the only ones who might have to scale back. Medium- and small-sized enterprises in the private sector have been through a tough time due to decreasing exports this year.
Currently, the EU accounts for about 20 percent of the country’s total exports. If the euro debt crisis on the continent boils over into an economic collapse, then China will clearly suffer.
Declining exports are the greatest risk to the country’s economy, and already China has been affected by weaker sales to Europe.
There was a debate throughout this year among global economists whether China would face the risk of a hard landing as its exports to EU and the US decline and if real estate adjustments come too fast.
The government is already feeling the effects of the global slowdown. In late November, the People’s Bank of China, the central bank, cut the reserve requirement for its banks by half a percent.
2012 will see some monumental changes in the country, foremost of which is the election of new leaders in March.
Big changes will take place, as the Party’s top officials and several ministry leaders are expected to retire.
According to the country’s law, minister-level workers must retire by age 65. This has already led to the retirement of several of the country’s financial regulators last month.
Shang Fulin replaced Liu Mingkang as the new banking regulator, Guo Shuqing became the new securities regulator and Xiang Junbo was named insurance regulator.
The country will see a new set of senior officials who are much younger than their predecessors.
How this affects the country’s economy remains unclear, but Zhao Xiao, a local economics professor, said since the current 12th Five Year Plan is already underway, it’s unlikely for the new regime to introduce any unexpected legislature in the early stages.
Still, it’s important for those who do business in China to be aware of the changes, Zhao said.
Zhao said the country’s economic growth is expected to fall in 2012 due to the sluggish global economy.
Yu Bin, head of macroeconomic research at the Development Research Center of the State Council, agreed. Yu was quoted by China Daily as saying that the country’s economic growth is likely to dip below 9 percent next year.
Yu said the cities in the country’s eastern coastal area saw obviously slower economic growth this year, which is a signal that the potential for economic growth has started to decline.
But will the real-estate market collapse in 2012? Zhao doesn’t think so. He said the current weakness was largely caused by the government’s tightening measures, including purchasing curbs, higher mortgage down payment requirements and price restrictions.
“We should be surprised that sales and prices have held up at current levels after more than a year of policy tightening,” Zhao said. “We had expected worse.”
But Zhao said the CPI may increase again next year because of rising labor and energy costs.
Jenny Chou, 25, sees her short-lived career in China coming to an end after New Year’s.
The Chinese American came to Beijing in April and became an English teacher at a local school expecting to stay long-term, but recent changes in the country’s tax policy has forced her to reconsider.
As employers have to make social welfare contributions for foreigners, Chou’s boss became nervous and was faced with two options: cut the payroll or find a local teacher instead.
The new rule is expected to result in a decline of expats working in the country. A Xinhua report put the number of expats at 660,000, of which only 250,000 are paying taxes.
“Come the new year, it may be hard for new expats to gain employment in the country, at least legally,” said Liu Yan, consultant at FESCO, a local HR services company.
Liu said as the country tries to move up the value chain, it simply does not need foreigners with little or no actual skills. Chinese returnees can fill many positions.
“Essential expats will remain, but recent graduates will be replaced, or simply asked to work on tourist visa to keep them off the welfare payroll,” Liu said.
Chou will leave Beijing after Spring Festival. But since the economy in the US isn’t much better, she’s decided to try out other parts of Asia, like Vietnam.
“I learned that enterprises there are crying out for expatriates who know their way around management and related services,” Chou said. “As one door closes, another opens.”
For those who stay and do business in China, Liu said it’s vital to know the importance of being inland.
“The reason is rather simple: when a city like Shanghai has two airports, and all the global brands are filling the shopping malls, how much more can you grow?” Liu said, adding that second-tier cities like Wuhan, Changsha and Chengdu are growing at a faster rate.
Besides, the cost for labor and raw materials inland are relatively lower, Liu said.
By Huang Daohen
For the world’s second largest economy, 2011 was filled with many ups and downs – not just related to the declining stock market or the sluggish real-estate sector, but for everyone. Expats, for example, may now want to reconsider their future in China after a recent mandatory social welfare tax was enacted for foreigners.
It seems likely that this coming year will see the end of many China expats' careers in China due to the new tax policy. Zhu Chunyan/IC Photo
2011 economic overview
Inflation has been the focus of the country’s economic policy this year, and as of now the policy looks successful. Figures from the National Statistics Bureau show that inflationary pressure has continued to fall in the last two months.
November’s consumer price index (CPI) was 4.2 percent, down from 6.5 percent in July.
Cracking down on rising housing prices was another major government initiative.
The campaign, according to Xinhua, also seems to have worked. In November, the price for a new home in 49 out of 70 cities dropped from the previous month, Xinhua reported.
There remains strong demand for quality and high-end homes as the middle class grows.
In the annual central economic conference held recently in Beijing, the government ruled that a continuing slowdown for the property industry may be needed, as well as an adjustment to new construction.
Real-estate developers aren’t the only ones who might have to scale back. Medium- and small-sized enterprises in the private sector have been through a tough time due to decreasing exports this year.
Currently, the EU accounts for about 20 percent of the country’s total exports. If the euro debt crisis on the continent boils over into an economic collapse, then China will clearly suffer.
Declining exports are the greatest risk to the country’s economy, and already China has been affected by weaker sales to Europe.
There was a debate throughout this year among global economists whether China would face the risk of a hard landing as its exports to EU and the US decline and if real estate adjustments come too fast.
The government is already feeling the effects of the global slowdown. In late November, the People’s Bank of China, the central bank, cut the reserve requirement for its banks by half a percent.
December 30, 2011 Filed under Outlook
Will the world end in 2012? The supposed Mayan prediction has many scared.
But while the real world probably won’t be rocked by floods and huge blizzards, economists and market agencies point to a disaster of another sort: recession in Europe, anemic growth in the US and a looming slowdown in emerging economies.
2012 may be another year of muddling along.
The year began with a prediction.
“We have to save the euro over the next six months,” said Hungary’s Prime Minister, Viktor Orban, when the country started its half-year turn heading the EU in January.
Europe went through the year with a flurry of high-level meetings, where leaders made bold promises to forge deeper ties and integrate the EU budgeting process.
But EU leaders failed to give the European Central Bank more power, and it’s been reluctant to snap up government bonds as the large-scale lender of last resort.
Italy, Spain and other troubled European nations faced high borrowing costs, making it harder for them to dig out of their problems.
In March, the world’s economy got another shock: an earthquake and tsunami crippled the Japanese financial markets.
Meanwhile, having spent the run-up to the financial crisis insisting there was nothing risky about stuffing sub-prime mortgages into collateralized debt obligations, the credit ratings agencies finally woke up.
Moody’s slashed Greece’s rating by three notches to B1, while also downgrading Spain’s to Aa2. In April, Standard & Poor’s downgraded the US debt outlook from stable to negative for the first time since the Pearl Harbor attack of 1941.
Borrowing costs for weaker members of the eurozone continue to rise, fueling fears that further rescue packages will be needed.
In May, while the world was looking for firm financial leadership, Dominique Strauss-Kahn was arrested in New York on sexual assault allegations, forcing his resignation as the head of the International Monetary Fund.
Relief came in October as European leaders hammered out a new deal to save the euro: Merkel and Sarkozy held emergency talks in Frankfurt to cement a deal while Sarkozy flew to Germany rather than stay with his wife, Carla, for the birth of their first child.
But the much-heralded October eurozone victory suffered a setback: Greek Prime Minister George Papandreou proposed a referendum on the deal.
He was not alone. Italian Prime Minister Silvio Berlusconi also announced his opposition when he learned the deal would raise interest rates on Italian bonds above 7 percent.
With Europe a principal destination for exports of emerging markets like China, its recession posed a serious risk for Asian economies.
A Chinese slowdown hit US companies operating here, as well as US exporters to China. It also hurt the big developing countries that export raw materials, such as Brazil, taking a further bite out of US exports.
This month, the year ended with a “happy new year” message from the IMF: the world is at serious risk of sliding into a 1930s-style slump.
The most likely outcome for 2012, economists say, is not optimistic.
What’s most troubling about that forecast is that many economists warn that if they’re wrong, it’s most likely to be because they were overly optimistic.
“Unfortunately, right now most of the risks are on the downside. There’s the possibility of a meltdown in the eurozone that would drag the US into recession, and probably other parts of the world as well,” said Nariman Behravesh, the chief economist for forecaster IHS Global Insight.
That’s not what Behravesh expects.
He puts the odds at one in five or one in four. But what happens in Europe will absolutely affect how the US economy performs next year.
Economists at Bank of America Merrill Lynch are more pessimistic than most. They put the chances of a much deeper European crisis at 40 percent.
“If it really does reach that kind of stage of distress, we will see a mild global recession. So there is quite a risky year ahead,” said Ethan Harris, the bank’s co-head of economic research.
Even without a European meltdown, Harris sees the US economy slowing sharply. He projects strong growth in the final three months of 2011, well above 3 percent, but sees that braking to just 1 percent annualized growth by the final three months of 2012.
Latin America will be exposed to lower commodity prices. Central and Eastern Europe are exposed to the eurozone. And turmoil in the Middle East is causing serious economic risks – both there and elsewhere – as geopolitical risk and oil prices remain high and constrain global growth.
“We think next year will be a slow year. It’s not a 2009, unless Europe blows up. It’s not a global recession, but it’s not back to 2004 to 2007, when we were at about 5 percent,” said Jay Bryson, an economist at Wells Fargo Securities in Charlotte, North Carolina.
The globe has experienced relative calm for the past 24 months. But that stability won’t last much longer. The following are the things that might happen, according to Bloomberg News.
– Global food inflation will continue to be a problem. Global growth will advance by 3 percent, but the cost of feeding ourselves will increase by 5 percent. Asia – India in particular – will bear the biggest brunt of the increasing cost of food.
– Europe’s economic problems will not be solved. The EU banks will struggle and there will be discussions about the scale of the governments’ involvement, which will be recognized as unsustainable.
– For the US, modest economic activity and inflation above 2 percent will tie the Federal Reserve’s hands for the first part of the year. Politics will prevent it from acting prior to the election. In late 2012, the Fed is likely to initiate another round of QE.
– Keynesian economic thinking will be further discredited in 2012. The pump-priming Keynesians had their day in the sun, and now people will want a different approach. Paul Krugman will write a total of 100 blogs decrying this development.
– Gold will be very volatile. It will fall to below $1,400 at one point. It will end the year above $2,000. Silver will follow gold up and down. It will underperform gold and won’t hit $50.
– The summer of 2012 will bring the largest polar ice melt in history. The Mayan calendar will end with no consequence.
(Beijing Today/Agencies)
Will the world end in 2012? The supposed Mayan prediction has many scared.
But while the real world probably won’t be rocked by floods and huge blizzards, economists and market agencies point to a disaster of another sort: recession in Europe, anemic growth in the US and a looming slowdown in emerging economies.
2012 may be another year of muddling along.
Residents walk past decorations for the upcoming New Year 2012 celebrations in Bangkok. Pornchai Kittiwongsakul/IC Photo
2011 overview
The year began with a prediction.
“We have to save the euro over the next six months,” said Hungary’s Prime Minister, Viktor Orban, when the country started its half-year turn heading the EU in January.
Europe went through the year with a flurry of high-level meetings, where leaders made bold promises to forge deeper ties and integrate the EU budgeting process.
But EU leaders failed to give the European Central Bank more power, and it’s been reluctant to snap up government bonds as the large-scale lender of last resort.
Italy, Spain and other troubled European nations faced high borrowing costs, making it harder for them to dig out of their problems.
In March, the world’s economy got another shock: an earthquake and tsunami crippled the Japanese financial markets.
Meanwhile, having spent the run-up to the financial crisis insisting there was nothing risky about stuffing sub-prime mortgages into collateralized debt obligations, the credit ratings agencies finally woke up.
Moody’s slashed Greece’s rating by three notches to B1, while also downgrading Spain’s to Aa2. In April, Standard & Poor’s downgraded the US debt outlook from stable to negative for the first time since the Pearl Harbor attack of 1941.
Borrowing costs for weaker members of the eurozone continue to rise, fueling fears that further rescue packages will be needed.
In May, while the world was looking for firm financial leadership, Dominique Strauss-Kahn was arrested in New York on sexual assault allegations, forcing his resignation as the head of the International Monetary Fund.
Relief came in October as European leaders hammered out a new deal to save the euro: Merkel and Sarkozy held emergency talks in Frankfurt to cement a deal while Sarkozy flew to Germany rather than stay with his wife, Carla, for the birth of their first child.
But the much-heralded October eurozone victory suffered a setback: Greek Prime Minister George Papandreou proposed a referendum on the deal.
He was not alone. Italian Prime Minister Silvio Berlusconi also announced his opposition when he learned the deal would raise interest rates on Italian bonds above 7 percent.
With Europe a principal destination for exports of emerging markets like China, its recession posed a serious risk for Asian economies.
A Chinese slowdown hit US companies operating here, as well as US exporters to China. It also hurt the big developing countries that export raw materials, such as Brazil, taking a further bite out of US exports.
This month, the year ended with a “happy new year” message from the IMF: the world is at serious risk of sliding into a 1930s-style slump.
December 23, 2011 Filed under Outlook
“Stable” is going to be a keyword for the country’s economy next year, if voices from the annual Central Economic Work Conference last week are to be believed. The three-day conference, one of the most important economic events in the country, has set the tone for next year’s economic development.
The Central Economic Work Conference concluded on December 14. The gathering, which brought together high-ranking Chinese officials, was the last major economic policy meeting this year, and observers were looking for evidence of the central government’s intention.
London-based Financial Times said the meeting signaled the government’s concern over the slowdown in growth.
Figures from the National Statistics Bureau show that the country’s growth has slowed for three quarters in a row. Some economists predict it could further fall below 9 percent next year.
The government will focus on maintaining fast economic growth in the midst of what it described as an “extremely grim and complicated” global outlook, Financial Times reported.
“Growth has replaced inflation as Beijing’s top policy concern,” the report quoted Qu Hongbin, co-head of Asian economics research at HSBC. “The economy is likely to slow further, calling for more aggressive easing measures.”
Another key message from the conference was to maintain stability.
China’s goal next year will be “making progress while maintaining stability,” Reuters reported. Stability means to maintain basically steady macroeconomic policy, relatively fast economic growth, stable consumer prices and social stability.
BBC said the conference laid out “prudent” plans for the year against an uncertain economic outlook.
“The trend in the global economy on the whole is grim and complicated. Uncertainties are rising around a recovery,” the conference statement said.
But it added: “China will ensure that macroeconomic regulation policies and overall consumer prices will remain basically stable and will guarantee the steady growth of the economy and maintain social stability.”
(Agencies)
By Huang Daohen
To many observers and economists, the central government is trying to take steps to stimulate the economy.
The policy next year will be more pro-growth, said Chen Gucun, researcher at China Academy of Social Sciences.
Chen said the trend is evidenced by the People’s Bank of China’s recent moves. In November, the central bank cut the reserve requirement ratio (RRR) by a half-point for major state banks.
This month, the move was further followed by half-point reductions in RRR for both large and small banks.
“That is a signal for the country’s monetary policy,” Chen said. Not surprisingly, bank loans last month were up from forecasts, and an easing policy is now in effect.
But Chen said a change in monetary policy can be only minor.
These days, nothing is headed in the right direction as exports, domestic consumption and industrial orders are declining. And since Europe is falling apart while the rest of the world stumbles, Chen said the problems will get worse.
The country has to revive its real economy, he said.
Real economy, Chen said, refers to economic activities related to the actual production of goods and services, like agriculture, manufacturing and the service industry.
“They are the foundation of a nation’s economic strength and require a long-term mechanism to support their development,” he said.
Since earlier this year, many small- and medium-sized companies in the country’s south – mostly privately owned – have been through a difficult time due to rising costs.
Wenzhou, a symbol of the economic hub in Zhejiang Province known for its entrepreneurs, was hit by a severe debt crisis this year. Many private firms were forced to turn to the underground lending market, as they failed to get funds from state banks.
When many couldn’t repay their high-interest loans, they ran away. Chen said that will do great harm to the real economy.
The government has taken measures to help them weather the crisis, but Chen said there should be a long-term system to support the real economy, including creation of support policies and a stable business environment.
“Stable” is going to be a keyword for the country’s economy next year, if voices from the annual Central Economic Work Conference last week are to be believed. The three-day conference, one of the most important economic events in the country, has set the tone for next year’s economic development.
Fireworks at a steel factory in Anhui Province. The government hopes a more proactive fiscal policy will be more effective to spur growth next year. Wu He/CFP Photo
The Central Economic Work Conference concluded on December 14. The gathering, which brought together high-ranking Chinese officials, was the last major economic policy meeting this year, and observers were looking for evidence of the central government’s intention.
London-based Financial Times said the meeting signaled the government’s concern over the slowdown in growth.
Figures from the National Statistics Bureau show that the country’s growth has slowed for three quarters in a row. Some economists predict it could further fall below 9 percent next year.
The government will focus on maintaining fast economic growth in the midst of what it described as an “extremely grim and complicated” global outlook, Financial Times reported.
“Growth has replaced inflation as Beijing’s top policy concern,” the report quoted Qu Hongbin, co-head of Asian economics research at HSBC. “The economy is likely to slow further, calling for more aggressive easing measures.”
Another key message from the conference was to maintain stability.
China’s goal next year will be “making progress while maintaining stability,” Reuters reported. Stability means to maintain basically steady macroeconomic policy, relatively fast economic growth, stable consumer prices and social stability.
BBC said the conference laid out “prudent” plans for the year against an uncertain economic outlook.
“The trend in the global economy on the whole is grim and complicated. Uncertainties are rising around a recovery,” the conference statement said.
But it added: “China will ensure that macroeconomic regulation policies and overall consumer prices will remain basically stable and will guarantee the steady growth of the economy and maintain social stability.”
(Agencies)
December 23, 2011 Filed under Outlook
Police probing blast at Apple supplier
(AP) – Shanghai police are investigating the cause of an explosion over the weekend that injured dozens of people at the factory of a Shanghai supplier to Apple Inc.
The government formed an investigation group and ordered safety checks at the Riteng Computer Accessory factory, a wholly owned subsidiary of Apple supplier Pegatron, said Gan Shanjun, an official in the information office in Shanghai’s Songjiang District.
Critics have taken Cupertino, California-based Apple to task for alleged violations of labor and environmental standards by its China-based suppliers, and the company has said it is working to resolve such problems.
(AP) – Shanghai police are investigating the cause of an explosion over the weekend that injured dozens of people at the factory of a Shanghai supplier to Apple Inc.
The government formed an investigation group and ordered safety checks at the Riteng Computer Accessory factory, a wholly owned subsidiary of Apple supplier Pegatron, said Gan Shanjun, an official in the information office in Shanghai’s Songjiang District.
Critics have taken Cupertino, California-based Apple to task for alleged violations of labor and environmental standards by its China-based suppliers, and the company has said it is working to resolve such problems.
December 23, 2011 Filed under Outlook
Referee admits accepting bribes
(AP) – A Chinese soccer referee has admitted in court to taking bribes to fix local and international matches, including a 2007 friendly game involving Manchester United, Xinhua reported Tuesday.
The case of Huang Junjie, a referee for more than 20 years who has been nominated as one of the country’s best, is one of a number of hearings under way followed a probe into Chinese soccer corruption.
He accepted $245,000 (1.55 million yuan) of bribes to fix two international friendlies and admitted to taking 20 bribes from six Chinese clubs between 2005 and 2009, Xinhua reported.
The international matches included a 2007 exhibition between the English Premier League’s Manchester United and China’s Shenzhen. Huang took HK $100,000 (81,000 yuan) in bribes to let Shenzhen win the coin toss, Xinhua said.
(AP) – A Chinese soccer referee has admitted in court to taking bribes to fix local and international matches, including a 2007 friendly game involving Manchester United, Xinhua reported Tuesday.
The case of Huang Junjie, a referee for more than 20 years who has been nominated as one of the country’s best, is one of a number of hearings under way followed a probe into Chinese soccer corruption.
He accepted $245,000 (1.55 million yuan) of bribes to fix two international friendlies and admitted to taking 20 bribes from six Chinese clubs between 2005 and 2009, Xinhua reported.
The international matches included a 2007 exhibition between the English Premier League’s Manchester United and China’s Shenzhen. Huang took HK $100,000 (81,000 yuan) in bribes to let Shenzhen win the coin toss, Xinhua said.
December 23, 2011 Filed under Outlook
China becomes world patent leader
(Reuters) – The country became the world’s top patent filer in 2011, surpassing the US and Japan as it steps up innovation to improve its intellectual property rights track record, a Thomson Reuters research report showed on Wednesday.
The report said the world’s second-largest economy aimed to transform from a “made in China” to a “designed in China” market, with the government pushing for innovation in sectors such as automobiles, pharmaceuticals and technology.
However, legal experts said the country would need to do more before it can lead the world in innovation as the quality of patents needed to improve.
The government provided attractive incentives for domestic companies to file patent applications, regardless of whether a patent was eventually granted, they said.
“The idea of subsidizing patents is not bad in itself, however it is a blunt instrument because you get high figures for filings, but it does not tell you anything about the quality of the patents filed,” said Elliot Papageorgiou, a Partner and Executive at law firm Rouse Legal in China.
(Reuters) – The country became the world’s top patent filer in 2011, surpassing the US and Japan as it steps up innovation to improve its intellectual property rights track record, a Thomson Reuters research report showed on Wednesday.
The report said the world’s second-largest economy aimed to transform from a “made in China” to a “designed in China” market, with the government pushing for innovation in sectors such as automobiles, pharmaceuticals and technology.
However, legal experts said the country would need to do more before it can lead the world in innovation as the quality of patents needed to improve.
The government provided attractive incentives for domestic companies to file patent applications, regardless of whether a patent was eventually granted, they said.
“The idea of subsidizing patents is not bad in itself, however it is a blunt instrument because you get high figures for filings, but it does not tell you anything about the quality of the patents filed,” said Elliot Papageorgiou, a Partner and Executive at law firm Rouse Legal in China.
December 16, 2011 Filed under Outlook
China’s decade in the World Trade Organization (WTO) thrust the country into the top spot in industries ranging from textiles to cars.
Now, through trade surpluses, the nation has become the world’s largest holder of foreign exchange reserves, now exceeding $3 trillion, up from about $212 billion in 2001.
President Hu Jintao, speaking in Beijing at a special forum marking the 10th anniversary, stressed the country would push ahead with economic reform and openness.
Hu said reform and opening of the country’s economy to other nations will continue to underpin the country’s development.
Xinhua, in a special report, said the country’s admittance to the organization heralded unprecedented economic growth, making the country the world’s second-largest economy after the US and the largest commodity exporter.
Hu said China will implement a more proactive strategy and open more areas to the outside world. He called the country’s entry into the WTO a decade ago a major event in the development of the policy.
Joining the WTO and the introduction of international rules helped China improve its socialist market economy, said Long Guoqiang, director of the State Council’s Development Research Center.
(Agencies)
When the country wrapped up 16 years of hard bargaining to secure long-awaited membership to the WTO on December 11, 2001, Chinese firms were probably more alarmed than relieved.
With tariffs to be slashed and restrictions on foreign rivals to be eased, a shaky future seemed to loom for some of the country’s least competitive industries, notably banking, agriculture and auto making.
Ten years later, those industries are holding up well, if not thriving.
The country’s lenders are among the most profitable banks in the world and were barely hurt in the financial crisis. But back in 2001, having just survived the Asian financial crisis and freed of some of their massive bad loans with government aid, the state’s four major state-owned banks remained insolvent as a whole.
Today, those banks are healthier than 10 years ago and have passed the test of the global financial crisis with good asset quality and profitability, said Ba Shusong, an economist with the Development Research Center under the State Council.
Ba attributed the success to the government-sponsored reforms, limited market openness and its position in the global value chain.
In the manufacturing sector, one of its weakest links was the car industry, which had been protected by high tariffs and offered few choices for Chinese consumers before entry to the WTO.
High costs and weak brands and technology were among the biggest disadvantages of his company compared with foreign rivals, said Hu Maoyuan, chairman of the Shanghai Automotive Industry Corporation (SAIC), the country’s leading auto maker.
By July 2006, China had lowered the tariff on imported finished automobiles to 25 percent from 70 to 80 percent before WTO accession.
Facing drastically tougher competition, SAIC Group managed to reduce its production costs 30 percent within the five-year grace period after WTO entry, while investing heavily to improve quality, technology and services, Hu said.
In 2010, SAIC Group ranked eighth in world auto sales, selling 3.58 million units. (Xinhua)
Vehicles in Shanghai harbor to be exported to foreign markets. CFP Photo/Hua Xiaer
China’s decade in the World Trade Organization (WTO) thrust the country into the top spot in industries ranging from textiles to cars.
Now, through trade surpluses, the nation has become the world’s largest holder of foreign exchange reserves, now exceeding $3 trillion, up from about $212 billion in 2001.
President Hu Jintao, speaking in Beijing at a special forum marking the 10th anniversary, stressed the country would push ahead with economic reform and openness.
Hu said reform and opening of the country’s economy to other nations will continue to underpin the country’s development.
Xinhua, in a special report, said the country’s admittance to the organization heralded unprecedented economic growth, making the country the world’s second-largest economy after the US and the largest commodity exporter.
Hu said China will implement a more proactive strategy and open more areas to the outside world. He called the country’s entry into the WTO a decade ago a major event in the development of the policy.
Joining the WTO and the introduction of international rules helped China improve its socialist market economy, said Long Guoqiang, director of the State Council’s Development Research Center.
(Agencies)
December 9, 2011 Filed under Outlook
The country has issued new rules for vehicles purchased by public servants following its car reform in May.
The new regulation, signed last month by several ministries, requires government bodies across the country to spend less and buy more fuel-efficient vehicles, the Wall Street Journal reported.
Many government officials are allowed to purchase luxury cars like the Audi A6 and Mercedes-Benz E-Class. The new rules require that they can only buy vehicles that are priced below 180,000 yuan with not more than 1.8 liters in engine displacement.
The central government came out with similar regulations in 2004 while capping the maximum price for an official car at 250,000 yuan.
Earlier this year, the State Council carried out “the strictest official car reform in history” to regulate the use of government cars, which has long been seen as one of the biggest sources of waste and corruption.
It requires all government agencies above the county level to publish the figures of their spending on cars.
The third eye: New policy to benefit domestic brands
By Huang Daohen
While local officials are known to pursue imported luxury vehicles instead of homemade cars for their official use, the government’s latest moves are expected to change this tendency, said Damon Zhang, an analyst with Auto Home, a local automobile news portal.
According to a survey by the site, German vehicle brand Audi tops the government departments’ official car purchase list, followed by Volkswagen and the local brand Hongqi.
Global brands, the Audi A6 in particular, have even become the symbol of official cars in the country as more such cars bear the “official entry pass” on the road, Zhang said.
In February, news hit the cover of local media while a finance department in Ningxia Hui Autonomous Region was exposed to have allocated 9 million yuan from public funds for the purchase of 25 Audi cars.
And that’s only the tip of the iceberg.
Incomplete statistics show that governments at all levels across the country spent about 100 billion yuan on cars in 2010.
“It’s not only about waste or corruption, but a huge market we’re talking about, for both Chinese and foreign car makers, and the local GDP as well,” Zhang said.
The central government knows it. In 2009, a proposal by the State Council required that local governments buy homemade vehicles when replacing their old official cars, and require that no less than 50 percent of the vehicles be domestic brands, Xinhua reported previously.
However, it’s still hard for local carmakers like BYD, Geely and Chery to secure orders from the government, Zhang said.
But we should applaud the government’s recent move to further cut the budget, Zhang said. “Though it aims to curb emissions and reduce government expenses, it also prohibits the purchase of luxury vehicles.”
Zhang said there will be more standards and price guides for the government in the future.
For local brands, Zhang said efforts should be made toward new and green energy vehicles.
“Electric vehicles, which often get about 200 kilometers per charge, are suitable for official use, since they travel short distances within cities,” he said.
A Volkswagen AG Audi A6 sits outside Beijing's Great Hall of the People. Zhang Heping/CFP Photo
The country has issued new rules for vehicles purchased by public servants following its car reform in May.
The new regulation, signed last month by several ministries, requires government bodies across the country to spend less and buy more fuel-efficient vehicles, the Wall Street Journal reported.
Many government officials are allowed to purchase luxury cars like the Audi A6 and Mercedes-Benz E-Class. The new rules require that they can only buy vehicles that are priced below 180,000 yuan with not more than 1.8 liters in engine displacement.
The central government came out with similar regulations in 2004 while capping the maximum price for an official car at 250,000 yuan.
Earlier this year, the State Council carried out “the strictest official car reform in history” to regulate the use of government cars, which has long been seen as one of the biggest sources of waste and corruption.
It requires all government agencies above the county level to publish the figures of their spending on cars.
(Agencies)
November 25, 2011 Filed under Outlook
Many are afraid the property bubble may cause a crash. An Xin/CFP Photo
The country’s housing prices fell for the first time this year in October, a sign that efforts to cool the country’s surging property market are working, according to Reuters.
Statistics from the National Bureau of Statistics said that average new home prices across the country last month fell 0.2 percent from September, the first drop since Reuters started calculating the index in January.
In Shanghai, new home prices fell 0.2 percent in October from the previous month, the first drop in 13 months.
Across China, new home prices fell in 33 of 70 major cities. But the falling values of real estate investments sparked protests in recent weeks in Shanghai, Beijing and other cities.
(Agencie)
November 18, 2011 Filed under Outlook
The global press attending the annual Asia Pacific Economic Conference (APEC) may have been disappointed by this past weekend. They waited outside hoping to get a shot of leaders in casual wear, as in years past, state heads have been seen in ponchos or silk tunics.
This year in Hawaii? There wasn’t even a single floral lei.
The Chicago Sun Times reported the White House had a Honolulu designer craft a commemorative Hawaiian shirt, though leaders stuck with suits.
But that didn’t affect the leaders at APEC reaching consensuses. Xinhua reported the annual conference would promote economic integration and trade in the Asia Pacific region.
Green growth became a core element and represented the trend of economic and social development, the agency said.
At the meetings, Asia-Pacific leaders committed to cutting the aggregate energy intensity of the region by 45 percent by 2035. They also declared regulatory convergence and cooperation, encouraging all members to take steps by 2013 to implement good regulatory practices.
China voice: Country will play by rules
China will play by the rules of international agreements that it has been party to negotiating, Pang Sen, a deputy director-general of the Foreign Ministry, said last Sunday.
Pang’s remarks were a clear rebuttal to US President Barack Obama, who earlier said that China should play by the rules of the international community in economic affairs.
“We have to know whose rules we are talking about,” Pang said.
“If the rules are made collectively through agreement and China is a part of it, then China will abide by them. If rules are decided by one or even several countries, China does not have the obligation to abide by that,” Pang said at a news conference after the APEC summit in Honolulu.
Pang also said that the country would “earnestly study” the Trans-Pacific Partnership trade negotiations.
President Hu Jintao pledged on Sunday that China will boost both imports and domestic demand as the world’s second-largest economy embraces a more balanced economic structure.
He called on regional countries to change their growth model to better meet the challenge of a struggling global economy.
Addressing APEC leaders, Hu said sustainable growth was vital for economic recovery and long-term development.
“We should speed up the shifting of the growth model and adjust the economic structure,” he said.
Hu said that developed countries should adopt responsible macroeconomic policies and properly handle sovereign debt and fiscal risks. Emerging markets, he added, should boost domestic demand and promote growth through the combined forces of consumption, investment and exports.
Analysts said that Hu’s speech sent a clear message that China is committed to economic cooperation, both regionally and further afield.
(Agencies)
The global media expected more decorative dress from the leaders at the APEC Leaders' Summit. Getty Images/CFP Photo
The global press attending the annual Asia Pacific Economic Conference (APEC) may have been disappointed by this past weekend. They waited outside hoping to get a shot of leaders in casual wear, as in years past, state heads have been seen in ponchos or silk tunics.
This year in Hawaii? There wasn’t even a single floral lei.
The Chicago Sun Times reported the White House had a Honolulu designer craft a commemorative Hawaiian shirt, though leaders stuck with suits.
But that didn’t affect the leaders at APEC reaching consensuses. Xinhua reported the annual conference would promote economic integration and trade in the Asia Pacific region.
Green growth became a core element and represented the trend of economic and social development, the agency said.
At the meetings, Asia-Pacific leaders committed to cutting the aggregate energy intensity of the region by 45 percent by 2035. They also declared regulatory convergence and cooperation, encouraging all members to take steps by 2013 to implement good regulatory practices.
