China’s auto sales continue to rise on robust demand

China’s auto sales rose 72 percent year on year to 1.22 million units in October on the back of strong domestic demand boosted by government stimulus measures.

The figure was the second highest within the year, 7.64 percent lower than that of September, according to a report posted on the website of China Association of Automobile Manufacturers (CAAM) on November 9.

Auto sales broke the 10 million mark to 10.89 million units between January and October, up 36.23 percent from a year ago.

In January, China cut the purchase tax on vehicles with engines of 1.6 liters or less from 10 percent to 5 percent to promote the sales of energy-saving vehicles.

It also offered subsidies for auto buyers in rural areas.

Passenger car sales surged 76 percent to 946,400 units in October 2009, bringing the total sales to 8.19 million units in the first ten months.

The CAAM predicted the sales would continue to rise steadily in December 2009 and January 2010.

China’s agricultural product prices down 0.1%

Prices of agricultural products in 36 large and medium-sized Chinese cities dipped 0.1 percent in the week of Nov. 2 to 8, compared with the previous week, according to figures released by the Ministry of Commerce (MOC) on November 10.

Twenty-six out of 57 kinds of farm produce saw week-on-week price slump, while the prices of 20 types saw an increase, said a report on the MOC website.

Vegetable prices climbed 2.2 percent due to supply shortage caused by sharp temperature drop.

Aquatic product prices dropped 0.9 percent and egg prices went down 0.4 percent.

The wholesale prices of pork and mutton dropped 0.5 percent and 0.1 percent, while that of beef went up 0.2 percent.

Production materials prices rose 0.3 percent week on week.

Fifty-four out of 112 kinds of production materials saw week-on-week price increase including steel, construction materials and energy, while prices of 22 types saw a slump including non-ferrous metal.

HSBC facilitates trade settlement using Chinese’s Renminbi currency

The Hong Kong Shanghai Banking Corporation (HSBC) launched trade transaction service with Chinese currency Renminbi here, makes Indonesia the sixth country in ASEAN countries enjoying the service, a senior HSBC official said here on on November 12.

China will continuously play an important role as the main trade partner for Indonesian businessmen. “The Chinese government’s policy to allow Renminbi as trade payment currency would improve the trade between the two countries,” Head of Trade and Supply Chain HSBC Indonesia Vincent C. Sugianto said.

Citing the results of its Trade Confidence Index survey for the fourth quarter of 2009, he said the Indonesian businessmen wish to improve their businesses with their Chinese counterparts.

The commencement of HSBC’s trade payment with Chinese Renminbi currency service in Indonesia was marked with a transaction conducted by one of HSBC Indonesia’s customers PT Duta Permata Murni with its business counterpart in Shanghai, China recently.

The other ASEAN (Association of Southeast Asian Nations) countries served with HSBC’s Renminbi Trade Settlement service are Malaysia, Thailand, Singapore, Vietnam and Brunei Darussalam.

According to Vincent, the Renminbi trade settlement service can only be conducted with Chinese firms authorized to make transactions with their counterparts in ASEAN countries. Those appointed Chinese firms were listed in Chinese government’s Mainland Designated Enterprises (MDE) scheme.

According to Vincent, direct transaction using Renminbi with Chinese firms would reduce transaction cost as it would avert the exchange currency risk.

Vincent said that HSBC provides various transactions with Renminbi currency that comprised of trade financing, currency exchange from Indonesian Rupiah to Renminbi and likewise and export/import financing with countries included in MDE.

Luxury carmaker enters used-car market

Luxury carmaker Mercedes-Benz has entered the premium used-car market with its StarElite Pre-Owned Program, in a bid to garner more market share and support its businesses in China, China Daily reported on November 12.

StarElite offers multi-brand trade-in, certified pre-owned vehicles and premium after-sales service, in a transparent, reassuring, and convenient one-stop shopping experience, the newspaper said, citing Bjoern Hauber, general manager of sales and marketing, Mercedes-Benz (China) Ltd.

The StarElite facility would be available in 11 cities and 15 showrooms. The carmaker intends to add another 10 to 15 StarElite dealerships in 2010, and going forward, it plans to have StarElite pre-owned vehicle showrooms at all its dealerships, according to Hauber.

He expected used-car sales to cross 3 million units in 2009 and grow further in the next few years, the newspaper said.

China’s BAIC launches new energy auto subsidiary

Beijing Automotive Industry Holdings Co (BAIC), China’s major carmaker, launched a new energy company in Beijing on November 14 to produce pure electric and hybrid cars.

The affiliated Beijing New Energy Automotive Company is responsible for the R&D, manufacture and sales of key auto parts, electric cars, hybrid cars and charging systems, according to BAIC.

The company is expected to have an annual output of 20,000 to 40,000 new energy cars in 2011 with its own brand “Beijing.”

BAIC displayed a “Beijing” electric car numbered “BE701”at the launching ceremony. The maximum speed of the car is 160 km per hour and it can run 200 km once charged up to its full, which takes one to 10 hours depending on the charging mode.

The “Beijing” electric car costs 12 kilowatt-hour electricity every 100 km. It can save more than 5,000 yuan (USD 732) fuel costs every 15,000 km compared with the gasoline-driven cars.

BAIC is expected to have annual sales revenue of 15 billion yuan (USD 2.2 billion) from the new energy cars in 2015, accounting for 5 to 10 percent of its total sales revenue.

China speeds up railway building in its vast west regions

China would extend railways to more than 50,000 kilometers in its vast western regions by 2020, a senior railway official said here on November 23.

More investment will be made in railway construction in the west regions in the coming several years to serve local economic and social development, said Yan Hexiang, deputy director of the development planning department of the Ministry of Railways.

The ministry will step up building of major railways currently under construction and push construction of more projects such as the Chengdu-Guiyang railway, Chongqing-Guiyang railway and Kunming-Nanning railway to start at an early date, Yan told a meeting on railway development in western China.

China launched the “West Development Strategy” in January 2000 to help underdeveloped western regions catch up with the more prosperous eastern regions.

The western regions comprise 12 provinces, autonomous regions and municipality, which have a combined population of about 370 million and account for 71.4 percent of the country’s total land area.

Since the implementation of the strategy, the operating mileage of railways in the western regions jumped 50 percent from 20,000 kilometers to nearly 30,000 kilometers at the end of 2008, accounting for 36 percent of China’s total operating mileage.

China’s total railway length will top 120,000 kilometers by 2020, Yan said.

Poor irrigation may cost 18 bln yuan in China by 2030

A new report by a US consultancy showed on November 25 that the country’s major grain-growing regions could suffer substantial agricultural losses due to drought brought on by climate change in the coming years.

Known as the “bread basket,” the Northeast and the North China together produced as much as 25 percent of China’s total grain output of 528.7 million tons in 2008, close to the total grain production of Brazil.

In February 2009, severe drought damaged 4.5 million hectares in eight provinces in North China, a region encompassing half of China’s total wheat growing area. In May, Heilongjiang suffered its worst drought in nearly 60 years, with 6 million hectares affected.

Even a “moderate” climate change scenario is to result in reduced precipitation in the Northeast and North, leading to a loss of as much as 18 billion yuan (USD 2.64 billion) by 2030, down from an expected 14 billion yuan (USD 2.05 billion) in income without the impact of climate change, McKinsey’s analysts wrote in the report.

The Northeast is especially vulnerable to drought due to its undeveloped irrigation infrastructure, and will lose 50 percent of its total output by 2030, the report said.

“Without sufficient measures in place, China’s long-term food security, and indeed social stability, could be put at serious risk,” said Martin Joerss, a partner at McKinsey who leads the firm’s climate change initiative in China.

Investment into irrigation measures, together with expanded insurance coverage, could help cut agricultural losses from drought in Northeast and North, the study showed.

China spends around 10 billion yuan (USD1.46 billion) annually nationwide on irrigation and technology to mitigate the effects of drought.

In North and Northeast China alone, China will need to spend up to 5 billion yuan (USD 732.25 million) annually on measures including drip and sprinkle irrigation, soil conservation, seed engineering, reservoirs and water storage. Through such measures, the study shows, China could avert as much as a 50 percent, or 9 billion yuan (USD1.32 billion), loss of crops in 2030.

In addition to the irrigation measures, partial losses could be covered by agricultural insurance. Nowadays, only 25 percent of China’s farmland is covered by agricultural insurance, compared with 75 percent in the US, Joerss said.

“It’s the role of the government to educate the users about the value of agricultural insurance, and provide regulatory incentives for insurance companies to do that,” as the majority of farmers in China do not have the financial means and prefer the government to help.

The Beijing municipal government is encouraging rural insurance programs. Currently it gives 10 percent premium subsidies to insurers providing such services, and subsidies at all levels to farmers are as high as 80 percent of the premium, according to the China Insurance Regulatory Commission.