China’s Power Generation Dropped 3.5% in May

China’s power generation total was 289.7 billion kWh in May, down 3.54 percent from a year earlier, the State Grid Corporation of China said on June 3.

The decline failed earlier market expectation that the country’s power output was to recover soon. April’s fall had been 3.55 percent.

China’s power generation total has continued to fall since late 2008, signaling national economic slowdown amid global economic downturn.

Power generation tumbled 9.6 percent year on year in November, the biggest fall in a decade.

The rate of decline has begun to stabilize, with the year-on-year monthly fall between 3 and 4 percent since the beginning of the year, said Wang Yonggan, chief secretary of China Electricity Council.

However, it was still too early to conclude power generation has already “bottomed out”, said Wang, and both power output and consumption were likely to keep falling year on year in the first half of 2009 before an expected increase in demand from the coastal regions kicks in.

China Unveils Stimulus Measures for Biological Industry

The State Council, China’s cabinet, has publicized measures to boost biological industry, said an announcement posted on China’s central government website on June 5.

The measures, Policies to Accelerate Biological Industry Growth, consist of 33 items in ten parts, involving targets of the policies, key fields in biological industry, technology innovation, attracting talents and providing fund support.

The new policies have been made to implement China’s medium- and long-term bio-industry development plan and the 11th five-year plan (2006-2010) for biological industry growth, said the announcement posted on www.gov.cn.

The measures aim to foster bio-industry as a pillar industry in high technology and a booming strategic industry in China, the announcement said.

The key fields for modern biological industry include bio-medicine, bio-agriculture, bio-energy, bio-products and biological environmental protection technology.

China’s Tea Exports Expected to Hold Firm in Global Economic Downturn

China’s tea exports in 2009 are expected to remain stable or grow slightly, said Huo Jianguo, chairman of China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products, in Chengdu on June 7.

China’s tea export increased by 4.5 per cent year-on-year in the first four months, while total exports dropped more than 20 percent over the same period.

“Tea is a daily food item, and there is still considerable demand for China’s tea amid the global downturn. As tea stockpiles in the international market reduce, China’s tea exports will see further growth in the second half,” said Cai Jun, secretary general of the association.

China exported 297,000 tons of tea valued at 682 million US dollars in 2008, accounting for a fifth of the total international tea trade.

China has exported to more than 120 countries, and 80 million people work in the mainland tea industry.

“As the largest tea production country and the third largest tea export country, China still faces challenges in building a standard production and quality control system, and fostering and promoting its own tea brand in the international market,” said Huo.

China Auto Sales Increase in First Five Months

Sales of China’s domestically made automobiles topped 4.96 million units in the January-May period, up 14.29 percent from a year earlier, said the China Association of Automobile Manufacturers (CAAM) on June 9.

Both output and sales of domestically made automobiles in May exceeded 1.10 million units. It was the third month in a row that topped the million unit mark, said the CAAM.

The association attributed the increases to a series of government stimulus measures.

China’s auto industry suffered in 2008 because of state macro control and the global downturn. Yearly output and sales grew 5.2 percent and 6.7 percent in 2008, the lowest growth in ten years, according to the CAAM.

China is expected to sell 10.2 million vehicles in 2009, up 8.7 percent year on year, the CAAM said in April.

Tengzhong’s Executive Expresses Confidence on Hummer Takeover

China’s Sichuan Tengzhong Heavy Industry Machinery Co Ltd, which is reported having reached a tentative agreement on purchase of General Motors (GM) Hummer brand last week, said it has the financial resources and expertise to clinch the bid, China Daily reported on May 12.

“The mergers and acquisitions we did in the recent years have provided us with rich experience to integrate resources in different industries or tap into a new industry,” Yang Yi, general manager of Tengzhong, quoted by the newspaper as saying.

The little-known Sichuan-based heavy machinery maker signed a preliminary agreement with the bankrupt General Motors to acquire its gas-guzzling Hummer brand for an undisclosed price.

“The public should not judge a private company’s financial capability from its registered capital,” said Yang, “we have the financial resources for the Hummer deal from our own capital and also funding from some financial institutions”.

Yang declined to disclose the exact quantum of money that would be spent on the takeover, but said “it would be a very worthy deal with a reasonable price” in respond to the 100 million to 500 million US dollars speculation.

The final result will be known in the next few weeks, and the transaction is also awaiting approval from the government, according to Yang.

Tengzhong said it will sign a long-term contract with GM on the assembly, spare parts and material supplies for the transferred Hummer. The company will also invest in research and development of a new power train system to help improve the gas guzzler’s fuel efficiency, said Yang.

China’s Top Power Producer Halts Two Plants over Environmental Assessments

China Huaneng Group (CHNG), the nation’s largest power producer, halted two projects on June 17 after they failed to pass all environmental impact assessments, the company said.

Work on the Long Kaikou hydropower station and the coal-fired Yimin power plant was suspended after the Ministry of Environmental Protection halted the assessments on the construction applications on June 11.

The company has set up a work group to investigate the projects and seek ways to correct the situation.

Work started on the hydropower station without environmental approval. Because of its location, in the upper reaches of the Yangtze River, its operation could affect people living downstream. Therefore, it requires an environmental assessment.

Work on the coal plant started with an environmental approval but was halted because the plant did not meet subsequent inspections, the ministry said on June 11.

The company has asked the plants’ designers to reassess their environmental impact.

State-controlled Listed Companies to Transfer Shares to China Social Security Fund

Some listed Chinese companies will have to transfer part of their state-owned shares to the National Social Security Fund as the country prepares for an aging society, the government said on June 19.

The measure applies to 131 state-controlled companies that have listed on domestic stock exchanges. Their current market capitalization is 63.93 billion yuan (USD 9.4 billion), according to the Ministry of Finance. No list of companies was released, however, nor was any date provided for the transfer.

Shares transferred to the national pension fund must amount to 10 percent of the total in the initial public offerings, under a State Council (cabinet) decision.

If the amount of state-owned shares is not sufficient to meet the 10-percent requirement, the company must transfer all state-owned shares that it holds, according to the Ministry of Finance and China Securities Regulatory Commission.

The move was part of the government’s effort to finance the country’s social security system and the retirement of the aging population, the government said.

The fund would not only inherit the lock-up period of the transferred shares, but also extend the period by another three years.

The extended lock-up period would boost investor confidence and aid the long-term stable and healthy development of the securities market, said the government.

China Cuts, Ends Export Tariffs on Grain and Other Products to Boost Exports

China will abolish export duties on some grains and industrial products and cut the duties for chemical fertilizers and nonferrous metals from July 1 to promote exports, the Ministry of Finance said in a statement on June 22.

The Customs Tariff Commission of the State Council will eliminate the export tariffs for wheat, rice, soybeans, vitriol and steel wire. Grains are now subject to a 3-percent export levy.

Special export tariffs of 50 percent on chemical fertilizer and fertilizer raw materials including yellow phosphorus, phosphate rock and phosphoric acid are expected to be canceled.

Export duties for some nonferrous metals including molybdenum, tungsten and indium will be halved to 5 percent, the statement said.

The move follows several increases in export tax rebates to support overseas sales amid the global downturn. Since last August, China has increased export tax rebates seven times.

Exports fell 26.4 percent in May from a year earlier to 88.758 billion US dollars, following a decline of 22.6 percent in April.

Exports in the five months to May totaled 426.14 billion US dollars, down 21.8 percent.

China’s Fiscal Revenue Tops 6.13 Trln Yuan Last Year

Chinese Finance Minister Xie Xuren said on June 24 that the government’s fiscal revenue reached about 6.13 trillion yuan (USD 900 billion) last year, 1 trillion yuan (USD 146.3 billion) more than 2007.

Xie revealed the figure in a report on last year’s fiscal situation to the ninth session of the Standing Committee of the 11th National People’s Congress (NPC), China’s top legislature.

He said the outstanding national debt reached 5.3 trillion at the end of last year, which was within the 5.5-trillion limit in the annual budget.

 The fiscal revenues in the first five months this year reached 2.7 trillion yuan (USD 400 billion), down 6.7 percent over the same period last year, Xie said.

In the first five months, fiscal expenditure nationwide amounted to almost 2.25 trillion yuan (USD 329.2 billion), up 27.8 percent over the same period last year, accounting for 30.7 percent of the budgeted figure.