China Watch Blog

China’s exports expanded 45.7% in February for the third consecutive month of growth and at the fastest pace in three years. Imports increased 44.7% in their fourth month of growth, according to government data. The expansion in exports represents a pick-up from January’s 21% gain, though the reading also reflects a low comparison base as exports had their steepest decline of the financial crisis in February 2009. Investors around the world look at China’s export data for cues on the health of external demand. The increase in exports was above the 38% expansion forecast by 11 economists polled earlier by Dow Jones Newswires. Analysts said the export figures reflected improving demand for Chinese-made products, even though it was inflated by the low base of comparison in February 2009 when shipments plunged 25.7% due to the global crisis. “It’s obviously impacted by the low base effect but there were five fewer days in February this year than last year which makes this number pretty impressive,” Royal Bank of Canada senior strategist Brian Jackson told AFP. On a seasonally adjusted basis, exports in February fell 2.2% from January, but rose 59.1% from a year earlier, data from the General Administration of Customs showed. The increase in imports, a gauge of the strength of China’s domestic demand and its appetite for commodities, was bigger than the poll’s median forecast of a 38% rise, but below January’s 85.5% growth, which was boosted by a low comparison base. On a seasonally adjusted basis, imports rose 6.3% in February from January, and rose 74.7% from a year earlier.

You may or may not have missed this piece of news that Beijing plans to invite 8 to 10 world-reputed logistics companies and 15 to 20 leading domestic logistics providers to set up their headquarters or branches in the city.  This is part of the Chinese government’s plans to develop Beijing city’s logistics industry development scheme. The city has set a target of 7 trillion yuan (US$1.03 trillion) by 2011 for the total value of cargoes using logistics service. Beijing is also aiming at an average annual growth rate of 12 percent in the added value logistics industry.  The city plans to reach 60 billion yuan in its logistic industry value by 2011, according to a Logistics Week report. The city government will also speed up the development of five major logistics facilities respectively at the Shunyi Airport, Tongzhou Majuqiao, Fangshan Liangxiang, Pinggu Mafang and Daxing Jingnan. Beijing also aims to achieve an annual growth of over 30 percent in the sales revenue of these five logistics bases. The sales revenue is expected to reach 50 billion yuan by 2011 according to the plan. Logistics professionals should make their way to Beijing if they want to grab this opportunity.

Logistics and container industry groups in 10 mainland cities have reportedly filed a request to the Ministry of Transportation to investigate into international ocean carriers charges of equipment management fees, container seal fees and document printing fees, which they have described as “unreasonable demands”.  The groups are from Shanghai, Shenzhen, Guangzhou, Xiamen, Dalian, Tianjin and Qingdao. Industry protesters claim ocean carriers collected fees amounting to nearly 30 billion yuan (US$4.4 billion) a year during container transportation. In Shenzhen alone, the document printing fee totalled to 300 million yuan in 2008 based on the port’s annual throughput of 21 million TEU. Shenzhen Container Trailer Association secretary general Xu Xiaoming was quoted as saying that road carriers were the same as ocean carriers and that it was unreasonable that they be charged fees for moving cargo to the terminal. Large ocean carriers like Maersk should not bully road carriers into paying such fees, they said. A lawyer was quoted as saying by local press that he had examined the related cases and found that Maersk was trying to transfer the risk of offering low rate in order to remain competitive by charging such fees to cover its loss, and that the shipping line was not charging such fees at overseas ports. This was happening because there were still loopholes in the related laws in China. When GCTL8.com’s attempted to contact Maersk for comments about the article, the shipping line’s officials did not reply to the enquiries. Big boys do not like being called bullies, when they really are bullying people.  They just ignore the Press hoping they will go away. Of course, we cannot do anything. They are big boys.

China overtook Japan as the world’s second-largest producer of manufacturing output, trailing behind only the United States, according to China, citing a report released in Vienna on Wednesday by the United Nations Industrial Development Organization (UNIDO). The report says China produced 15.6% of the world’s total manufacturing value added (MVA) in 2009, compared with 15.4% for Japan, while the US clinched its first rank with 19%. These three countries combined produce half of the world’s manufacturing output, the report said, adding that despite the lead of China in absolute amount of production. Japan remains the world’s most industrialized country in terms of MVA per capita. Japan’s MVA per capita for 2008 was almost $9,000 compared with about $700 in China. The report also suggests that the effect of the recent financial crisis on industrial growth was severe for industrialized countries, but relatively mild for developing countries. Of the top 10 countries in manufacturing production, two more are from the developing world, India and Brazil, ranking 9th and 10th respectively.

China’s central bank pledged on Saturday to keep the yuan’s exchange rate basically stable in 2010 and said it will enhance coordination with its foreign counterparts on major policy issues, China Daily reported citing reports by agencies. The People’s Bank of China will continue to push forward multi-polarization of the international money system, according to a statement issued ahead of a news conference on the sidelines of the annual session of parliament. The central bank said it would keep sufficient liquidity in the banking system and further encourage domestic banks to issue yuan bonds in Hong Kong. China’s stimulus package not only spurred up domestic demand, but also benefited world economic recovery and global policy coordinating, Chen Deming, minister of commerce, in remarks made on the sidelines of the annual session of the National People’s Congress (NPC), the country’s top legislature. China will face the issue of withdrawing its economic stimulus package sooner or later, central bank governor Zhou Xiaochuan said.  China will closely monitor the trend of the US dollar against other currencies, the central bank governor Zhou Xiaochuan said at a press conference here on Saturday. China will further improve the formation mechanism of exchange rate of the renminbi, or the country’s currency yuan, to keep the exchange rate basically stable at an adaptive and balanced level, the People’s Bank of China said.

The Chinese Central Government fully supports Hong Kong’s strategy to promote traditional pillar industries and develop six economic areas where the city enjoys clear advantages, Chief Executive Donald Tsang says. Speaking to reporters in Beijing today Mr Tsang said he is pleased to learn Premier Wen Jiabao expressed his full support for Hong Kong’s economic development strategy in his annual work report. He agreed with the premier’s suggestions of enhancing economic ties with the Mainland, and fostering more co-operation between Hong Kong, Macau and Guangdong. Tsang exchanged views on global economic prospects with Vice Premier Wang Qishan yesterday. Both agreed the international economic environment is complicated and there are still many uncertainties ahead. “While we are cautiously optimistic about this year’s economy, we will monitor the development closely and carefully.” Reiterating Hong Kong’s status as an international financial centre is irreplaceable, Mr Wang said follow-up works are underway to implement measures to consolidate Hong Kong’s role as a testing ground for the country to launch financial reforms. A new round of negotiation on more liberation measures under the Closer Economic Partnership Agreement has also started. At another meeting yesterday, Tsang called on Minister of Foreign Affairs Yang Jiechi who backed Hong Kong’s development of external relations. Thanking the Central Government for its support for setting up the Hague Conference on Private Law’s Asia-Pacific Office in Hong Kong, Mr Tsang said the proposal, if implemented, will help Hong Kong enhance its status as a regional legal service centre.

Top Chinese legislator Wu Bangguo has urged Shanghai to take the opportunity of hosting the World Expo to pioneer the country’s  transformation of economic development mode. Wu, chairman of the Standing Committee of the National People’s Congress, China’s top legislature, was quoted as making these remarks during his visit to the country’s economic and financial hub from Jan. 28 to Feb. 1 by Xinhua. Accompanied by Yu Zhengsheng, secretary of the Shanghai Municipal Committee of the Communist Party of China, Wu visited the Expo Site as well as some high and new tech enterprises in the city. Shanghai must spare no effort in hosting the Expo and seize the opportunity to promote economic restructuring and industrial structural upgrading, to boost the development of modern service industry, and to speed up fostering emerging strategic industries, Wu said.
“Wu must make technological breakthroughs, speed up industrialization process, and develop emerging industries such as smart grid, low-carbon technology and biomedicine, so as to make sure the country can have the initiative in the new round of international economic competition,” Wu said.
The 2010 World Expo was scheduled to be held from May 1 to Oct. 31 in Shanghai, expected to attract a record total of 70 million visitors from home and abroad.

China expects its economy to grow around 8% in 2010 from a year earlier, Xinhua reported, citing Premier Wen Jiabao at the annual parliament session Friday, expecting a “crucial but complicated” year for economic recovery. Setting the 8% target mainly “aims at ensuring the quality of economic growth, focusing on transformation of economic growth pattern and adjustment of economic structure,” said Wen in his government work report to the National People’s Congress (NPC). The increase of consumer price index, a main gauge of the country’s inflation, will be held around 3%, the premier said, adding that although the development environment this year may be better than 2009, China “will still face a complicated situation”.
The year of 2010 will see China continue fighting against the global financial crisis while maintaining a stable and comparatively fast economic growth and accelerating transformation of growth pattern, he said. Observers, however, said they are sure China will hit the growth target. Transport Logistics professionals are also optimistic about China’s economic growth.

Part II of Hong Kong Air Mail Centre Scandal is featured in February issue of GCTL Insights. Hong Kong Legislator Albert Chan lashes out at the Government for trying to cover up its mistakes related to the Hong Kong Air Mail Centre scandal. Millions of dollars were invested in the facility, but when it was completed, many of the equipment were left idle and the workers at the centre are still sorting many of the packages manually. Any simple Hong Kong person can understand that if millions of dollars of tax payers money had been invested in a facility to cut down manual labour, then the result should just be that. And when the results don’t show that, the tax payer has a right to know why nobody was punished for this scandal which was uncovered by the Director of Audit. Let’s hope this state of affairs is not repeated through ensuring less hanky panky takes place.

As China’s foreign trade recovers and the unemployment rate in the US and Europe remain high, trade remedy measures against China will increase this year, bringing bigger pressure on China, ambassador to the WTO Sun Zhenyu said Thursday, according to a China Daily report. Sun said the world had high expectations that the WTO Doha Round would be completed this year. However, the US is concentrating on how to increase their exports and employment, and Doha is not a priority. So it is unlikely that the talks would be completed this year. China hopes to bring about a conclusion to the talks as soon as possible, lest the delay in talks reduce the function and image of the WTO, Sun said. China hopes to play a more important role in the WTO. As for Sino-US relations, the ambassador says, the US should handle its relations with China properly so that neither side is hurt. But the tensions between the two countries are under control, he says.