China pledges more financial support for outsourcing industry

The Chinese government has pledged more aid from the country’s financial institutions to boost its outsourcing industry, a circular on the web site of the country’s central bank said on September 9.

The circular asked banks to develop more policies and credit products tailored to the outsourcing business, especially for firms in the 20 pilot cities for the industry including Beijing, Tianjin, Chongqing and Shanghai.

Insurance companies were also ordered to improve policies and create more insurance products for outsourcing firms.

Outsourcing companies were encouraged to go listed in equity markets both at home and abroad to raise fund to increase their competitiveness.

Local financial authorities should roll out measures in details in line with local situations by the end of September and put them into place, according to the circular.

The statement was jointly issued by the People’s Bank of China, the Ministry of Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission and the State Administration of Foreign Exchange.

As of June this year, China had 6,673 outsourcing firms employing 1.215 million people, Lin Zheying, director of the department of treaty and law of the Ministry of Commerce, said at a conference on September 9 in Xiamen, Fujian Province.

China’s crude steel output to hit record high in August

China’s crude steel output will probably hit another record high of around 51.65 million tons for August, statistics from the China Iron and Steel Association (CISA) show.

The CISA estimated the August daily output at 1.67 million tons.

China posted a record crude steel production this July, producing 50.68 million tons, with a daily output of 1.64 million tons, according to figures from the National Bureau of Statistics.

CISA data shows 71 of China’s large-scale steel producers yielded 39.43 million tonsof crude steel in August, up 1.97 percent compared to July; and daily production was 1.27 million tons.

Rising steel prices and increased orders in July are considered the cause for the increase in output, said Zhang Ping, an analyst with Umetal.com.

But crude steel output is likely to decrease in September because of a fall in its price, and because of an increase in inventory in August, said Zhang.

China urban fixed-asset investment up 33% in first eight months

Fixed-asset investment in China’s urban districts rose 33 percent in the first eight months of 2009 from a year earlier to 11.3 trillion yuan (USD 1.65 trillion), the National Bureau of Statistics said on September 11.

The growth was 5.6 percentage points higher than the rate in the same period last year, up 0.1 percentage point compared to the first seven months of this year.

Analysts attributed the buoyant confidence 0.1 percentage point rise to the strong investment growth in the real estate market.

The growth rate in the primary sector for the first eight months - including farming, fishing and forestry - jumped 60.4 percent from a year earlier.

The industrial sector investment rose 27 percent, while the tertiary sector which covers commerce, finance and services, registered a 37.3-percent increase.

Li Xiaochao, spokesman of the NBS, said he was confident that the country’s fix-asset investment would see a stable increase in the remaining four months.

China unveiled a 4-trillion-yuan stimulus package last November to boost investment in factories, property, roads and other facilities to counter falling exports and fuel growth of the world’s third largest economy.

New efforts help Chinese SMEs meet investment funds

The China Association of Small and Medium-Sized Enterprises (SMEs) is scheduling a series of “speed dating” sessions in 14 cities this year to introduce SMEs to new financing sources.

A pilot event was held in Shiyan, known as China’s motor city, in central China’s Hubei province, in May. Contracts of nearly 1.8 billion yuan (USD 257 million) were signed in the city. Another pilot matchmaking event was held in northeast China’s Jilin Province in August, the newspaper said.

Preliminary agreements for 2.4 billion yuan (USD 351.6 million) in investments were reached involving more than 100 SMEs and 20 funds in Jilin.

The difficulty of SME financing has been highlighted during the economic slowdown. In 2008, more than 700,000 SMEs went bankrupt, the newspaper said, citing Li Zibin, head of the Chinese Association of SME (CASME).

Li said equity financing can become a major resolution to the problem, given that SMEs usually don’t have enough credit or guarantees to obtain bank loans.

Apart from money, attendees mentioned the advantage of value-added service by tying the knot with funds.

Zhang Yuanda, vice secretary-general of CASME, said the critical problem is with the SMEs themselves because irregular management and an unclear development direction often discouraged banks and funds from supporting them.

In August, a State Council executive meeting adopted a decision urging more active measures to help SMEs overcome financing difficulties to achieve sound, rapid development.

China’s accumulative power consumption rises for first time this year

China’s total power consumption in the first eight months rose 0.36 percent to 2.34 trillion kilowatt hours from the same period last year, said China’s National Energy Administration (NEA) on September 14.

This is the first time that accumulative power consumption to grow year on year in 2009, said NEA.

Power consumption in August rose 8.22 percent to 346.22 billion kilowatt hours from the same period last year. The figure was 1.23 percent more than that of June.

China’s power consumption resumed a month-on-month pick-up in April.

The year-on-year growth rate was 2.22 percentage points up from that of July, but the month-on-month growth rate was 9.67 percentage points down from that of July.

Power consumption of the primary industry which covers agriculture, animal husbandry and fishery, added 6.29 percent to 64.14 billion kilowatt hours in August year on year and that of the service sector climbed 10.70 percent to 255.52 billion kilowatt hours in August year on year. But the power use of industry dipped 2.84 percent to 1.72 trillion kilowatt hours in August year on year.

“It’s not surprising to see China’s power use climb. Chinese August economic data released on September 7 showed the country’s economy has been recovering. Chinese enterprises are adding investment to expand production and thus have used more power,” said Zhuang Jian, a senior economist with the Asian Development Bank.

“It also provided evidence that China’s economy is recovering,” he said.

China’s credit card debt continues to grow: central bank

Credit card debt in China at least six months overdue rose 131.3 percent year on year in the second quarter of 2009 to 5.77 billion yuan (USD 845.24 million), the People’s Bank of China, the central bank, said on September 16.

Debts overdue by six months or more accounted for 3.1 percent of the total outstanding credit card debt at the end of June, or 0.7 of a percentage point more than in the same period last year.

The bank warned of potential risks of increasing overdue credit card debt as banks expanded the business.

By June 30, China’s banks had issued 162.62 million credit cards, or 0.12 per person, up 32.9 percent from a year earlier.

In the first quarter this year, credit card debt at least six months overdue rose 133.1 percent from a year earlier to 4.97 billion yuan (USD 728.1 million).

China’s SOE revenues down 3.5 pct in 1st 8 months

Business revenues of China’s state-owned enterprises (SOEs) dropped 3.5 percent in the first eight months from the same period last year, the Ministry of Finance (MOF) said on September 18.

Business revenue stood at 13.68 trillion yuan (USD 2.00 trillion) in the first eight months, with profits at 813.51 billion yuan (USD 119.11 billion), down 19.6 percent year on year.

The rate of decline in profits was 3.2 percentage points lower than the January-July figure.

The firms include SOEs directly controlled by the central government and SOEs supervised by local governments, but exclude state-owned financial enterprises.

China’s auto exports decline for 12 consecutive months

China’s auto exports have declined for 12 consecutive months since August last year because of a big contraction in the international auto market due to the financial crisis.

Starting from the second half of last year, China’s foreign trade experienced a sharp decline, with auto exports from January to July plunging 56.9 percent to 191,000 units, compared to the same period last year, said Commerce Ministry official Zhou Ruojun on September 22.

China’s January-August exports this year were also down 22.2 percent to 730.74 billion US dollars.

Zhou said China’s auto exports were facing an increasingly tougher situation as there was an apparent rise of protectionism in international trade during the period.

But there were also quality and after-sale service problems frequently found in China-made autos in overseas markets, said Zhao Hang, President of China Automotive Technology and Research Center (CATRC).

He said one important reason was domestic auto exporters lacked knowledge about overseas demand, government policies, regulations, and certification.

To help auto makers gain correct information about major overseas auto markets, the CATRC launched a training session in Beijing on September 22 attended by 12 domestic auto and parts makers.