News Briefs

 

 

87 mln Chinese shopping online in 2009

More than 87 million Chinese bought goods on the Internet in 2009, about 24 million more than 2008 and an increase of 38.9 percent year-on-year, the Beijing Times reported, citing a recent report by the China Internet Network Information Center (CNNIC).

Most online shoppers are students or white-collar workers between the ages of 18 and 30, with a monthly income of 1,000 yuan (USD 146) to 3,000 yuan (USD 439). More women shop online than men, and clothing and home-use products are the most popular goods bought online.

According to the “Report on China’s Online Shopping 2009”, the total sum of national online consumption for the first half of the year was 119.5 billion yuan (USD 17.5 billion), 89 percent of which through consumer to consumer websites like Taobao.com.

CNNIC estimates the total sum of annual online shopping will reach 250 billion yuan (USD 36.6 billion) in 2009.

 

China leads the world in auto sales, production

 China’s passenger vehicle production and sales in November 2009 both more than doubled from a year earlier, continuing the robust growth and causing China’s auto market to lead the global industry for the whole year of 2009.

It’s also the first time the domestic monthly production and sales broke the 1 million units barrier.

Sales of passenger vehicles, including cars, multi-purpose vehicles (MPVs), sports-utility vehicles (SUVs) and minivans, reached 1.01 million in November 2009, surging 103.7 percent year-on-year, and increased 9.5 percent from October, Rao Da, secretary-general of China Passenger Car Association, said on December 12, 2009.

The total output of the sector hit 1.08 million units, 101 percent higher than that of November 2008.

“It is strong evidence of how hot automobile sales are in China, despite the oil price hike and bad snow which had an impact on logistics in November,” said Rao.

He predicted that the market performance of the passenger vehicle segment would continue to hit record highs in December, with production and sales figures 80,000 to 10,000 units more than those in November.

 “And the sales peak is coming in January,” he added.

 “It will be unprecedented in any country’s auto industry that the monthly sales continued to break records for seven months in a year,” said Rao.

China’s total vehicles sales exceeded 12 million in the first 11 months, retaining its lead as the world’s top auto market since January, reported Xinhua News Agency, citing the China Association of Automobile Manufacturers.

The association is going to release the details this week.

Boosted by government stimulus measures such as tax cuts and subsidies for trade-ins, sales of all automobiles for the whole year are set to break the 13 million barrier, compared with 9.38 million units in 2008.

 

Cross-border yuan settlement picks up

The volume of cross-border business transactions settled in the Chinese yuan has started to increase significantly, but experts fear the rising trend is unsustainable due to the de facto pegging of the currency to the US dollar.

The aggregate yuan settlement amount in Shanghai alone was estimated to have surpassed 300 million yuan (USD 43.9 million) as of November, China Business News (CBN) reported on December 10, 2009. As of November 20, the Shanghai branch of Bank of China had handled 120 million yuan (USD 17.6 million) in the settlement, according to the bank.

An unnamed person in charge of international business in a Chinese bank in Shanghai told CBN that the increase was due to the completion of related regulations on such issues as customs claims and tax rebates, but the acceptance of the yuan by overseas companies remains a problem.

Tan Yaling, a Beijing-based foreign exchange expert, told the Global Times that firms in Southeast Asia are willing to accept the yuan because they expect it to appreciate. If the yuan starts to decline, the settlement volume is at risk of going down.

Bank of America Merrill Lynch said in a research report on December 9 that they expect the yuan to appreciate gradually in 2010 and the short-term inflation risks and a longer-term orientation toward the consumer argue for ending the artificial weakening of the currency.  

Calyon, the investment bank arm of Credit Agricole, a major French bank, forecast the dollar-to-yuan exchange rate would rise to 6.50 by 2010 and 6.20 by 2011.      

The Chinese mainland began testing cross-border settlement in the yuan with Hong Kong and Southeast Asian countries first in Shanghai on July 6, followed immediately by four other cities in South China’s Guangdong Province, involving 365 companies in the five cities.

However, ever since they made the first settlements on July 8, 2009 many of the companies stopped settling accounts in the yuan, China News Service reported in August. One of the reasons was that there was no measure to give tax rebates to the exporters which adopted the currency.   

Tan said that the current foreign exchange regime does not effectively support the broadening of the settlement. 

She said that the internationalization of the currency should rely on the country’s economic fundamentals and the yuan targeting a basket of foreign currencies.

 

China launches venture capital foundation for small businesses

A venture capital foundation aiming to raise money for China’s small businesses was launched on December 12, 2009 to help relieve their financing hardships.

The China Association of Small and Medium Enterprises and the Shenzhen Junsheng Capital, a leading private equity and asset management company, will jointly operate the foundation.

In the initial phase, the fund aims to raise 1 billion yuan (USD 147 million), with 2 billion more to be collected after the road show completed, said Li Zibin, chairman of the association.

The money will be raised through private offering. Subscription should be no less than 50 million yuan, Li said.

The foundation will help push private capital to finance the growth of small businesses, said Wang Liming, head of the small business department of the Ministry of Industry and Information Technology.

Li Zibin said the initial fund is expected to come from some government agencies such as the Ministry of Finance and Ministry of Science and Technology. Banks, insurance and securities companies are also invited to join the mission.

Small businesses in China have suffered limited financing sources as the nation’s commercial lenders preferred state-owned enterprises and large key projects.

 

CISA calls for resistance against Rio-BHP tie-up

China Iron and Steel Association (CISA) opposed the joint venture between Australian mining giants Rio Tinto and BHP Billiton, calling for resistance from all countries on the monopolistic alliance, China Daily reported on December 18, 2009.

The planned 116 billion US dollars joint venture would harm competition and push up global iron ore prices, and urged “customers across the whole world to oppose it as one”, the newspaper cited the statement as saying.

The two mining producers signed a binding agreement in early December to consolidate their iron ore operations in Western Australia. The proposal is awaiting for the regulatory’s nod.

The monopolistic nature of the global iron ore market is making it difficult for China to get a fair deal during annual contract price talks, according to the association.

China will face a serious threat if the Rio and BHP joint venture gains ground as their resource monopoly will help them in controlling capacities and prices, Zhang Ye, vice-general manager of China National Minerals, a subsidiary company under China Minmetals, was quoted by the newspaper as saying.

In 2009, the iron ore price negotiations reached an impasse in June after CISA insisted on a 45 percent discount over the prices in 2008. Before that, a 33 percent benchmark price reduction had been agreed by BHP, Rio and Vale with other Asian steel mills.

 

Shanghai to overtake Hong Kong as king of IPOs in 2010

The Shanghai Stock Exchange (SSE) is expected to outplay Hong Kong as the world’s number one center for initial public offerings (IPOs) in 2010, the China Daily reported on on December 22, 2009.

The forecast is part of a report by accounting firm Ernst & Young, saying that the SSE will raise 380 billion yuan (USD 55.6 billion) in 2010.

“With the economy and the capital markets becoming more stable, coupled with a strong IPO pipeline and market liquidity... we forecast that for the SSE alone, IPO value will increase more than two fold in 2010,” said Philio Leung, regional managing partner of China Central, Ernst & Young.

The SSE raised 14 billion US dollars in the first 11 months of 2009, becoming the world’s third largest IPOs center after the Hong Kong Stock Exchange and the New York Stock Exchange.

IPOs in construction sector and financial sector lead the SSE, raising 71 billion yuan (USD 10.4 billion) and 22 billion yuan (USD 3.22 billion) respectively so far in 2009.

Ernst & Young predicted the SSE to raise 118 billion yuan (USD 17.3 billion) through 2009, up 62 percent from 2008’s 73 billion yuan (USD 10.7 billion).

 

China imposes anti-dumping measures on EU fasteners

China’s Ministry of Commerce (MOC) announced on December 23, 2009 that it was to impose temporary anti-dumping measures against imports of EU carbon steel fasteners.

The preliminary ruling requires importers of certain types of carbon steel fasteners such as screws and bolts to pay deposits from December 28, 2009. the MOC said in a statement on its website.

China’s carbon steel fastener industry had suffered material damages due to the dumping, the statement said following a probe.

According to the most recent figures, China imported 21.3 thousand tonnes of carbon steel fasteners in the first nine months of 2008, taking up 9.74 percent of the Chinese market, said the ministry.

Companies will have to pay a deposit to China Customs based on the margins – ranging from 16.8 percent to 24.6 percent – between the normal value of the products and the dumping price, according to the ministry.

Carbon steel fasteners are widely used in making products like cars, electronic and electrical equipment and machinery.

 

Private sector plays greater role in China’s economy

The weight of private enterprises in the overall economy is on the rise and that of State-owned enterprises (SOEs) on the decline, Ma Jiantang, minister of the National Bureau of Statistics, said on December 26, 2009.

The number of private firms rose by 81.4 percent from 2004 to 2008 to reach 3.6 million and SOEs dropped by 20 percent to 143,000, Ma said at a press conference where China’s second economic census results were released.

China has made great efforts over the past 30 years to restructure its economy. It has gradually raised the proportion of private enterprises after the market-oriented reform began in the early 1980s. As a result, the private sector has contributed an ever-growing value to the country’s GDP and provided most of the jobs.

But in recent years, some major acquisitions have seen SOEs buying into private companies, sparking concern that the State may be strengthening its control over the private sector. 

Ma said the census figures do not suggest SOEs are buying into private enterprises.  

In terms of asset value, SOEs saw their proportion in the nation’s total drop by 8.1 percentage points from 2004 to 2008 to 23 percent. In contrast, private enterprises’ assets rose by 3.3 percentage points to 12.3 percent.

 

Board and fund help small mining companies in China

Tianjing Equity Exchange launched China’s first mining board on December 28, 2009 to help finance smaller mining companies which have difficulties in listing on the country’s stock markets.

Meanwhile, a China Mining and New Energy Fund was launched to raise 10 billion yuan (USD1.46 billion) to invest in precious and nonferrous metals as well as energy minerals globally.

Less than 0.1 percent of the country’s more than 110,000 mining companies are able to launch initial public offerings on the two main stock exchanges and ChiNext, a Nasdaq-style bourse. So the new board and the fund will help meet the financing demands of these companies.

The Tianjin board simplifies procedures for mining companies to exchange equities to facilitate investors and financiers. It will also draft special rules as massive investments, high risks, long period of funding and slow return of cash flow are features of the mining industry. It, however, didn’t specify what it meant by special rules.

Institutional investors qualified to finance firms traded on the Tianjin exchange must have a registered capital of more than 1 million yuan.

The fund, managed by China Mining United Investment Management, has already raised 500 million yuan (USD 73.24 million) in the first phase. The money will be used to help domestic mining companies to acquire overseas assets whose prices have declined amid the global financial crisis.

The fund will invest in mining, new energy and clean energy sectors, and advise clients on equity mergers and initial public offerings.