China Watch Blog

China Watch Blog has learnt that China’s imports and exports fell 7.8 percent year-on-year to reach $272.6 billion in January this year, due to the economic downturn and Spring Festival holiday. The festival results in a distortion of the trade figure as most factories in China shut down operations for a week or two, and in some other cases, for even longer periods.

According to a Global Times report citing data from the General Administration of Customs of China, imports fell 15.3 percent year-on-year to $122.66 billion in January and exports slumped 0.5 percent to $149.94 billion. The trade volume hit the lowest point since March last year.

Analysts said the data this January is lower than expectation, but a single month of data cannot reflect the real economic situation.

“The European debt crisis and the US’s economic downturn are both the main events which lead to the export slump in January. In addition, the effect of the Spring Festival and continual property restriction policies cause domestic demand to decrease,” Li Jian, a research fellow at the Research Institute under the Ministry of Commerce (MOC), told the Global Times Friday.

It’s more reasonable to assess January and February data combined to judge whether the current economic policies need to be adjusted or not, Li noted.

Customs figures showed Chinese trade with European, US, Japanese and Association of Southeast Asian Nations (ASEAN) markets all decreased in different degrees in January. However, trade with emerging economies such as Brazil and Russia still kept growing.

“Trade with European, American and Japanese markets decreased from last year due to the economic downturn, and people from ASEAN countries also take Spring Festival holidays,” He Weiwen, co-director of China-US/EU Studies at the China Association of International Trade, told the Global Times Friday.

The decline in trade left China with a trade surplus of $27.3 billion in January, the highest in six months. The Chinese currency strengthened by 72 basis points to 6.2937 against the US dollar on Friday, a new record high, according to the China Foreign Exchange Trading System.

“When the trade surplus rises, people expect the yuan to increase in value, but this pressure will slow gradually,” Li said.

Chen Deming, China’s minister of commerce said Thursday that January’s data would not look pretty, and a stable yuan was needed to help Chinese exporters, Shanghai Securities News reported Friday.

Due to the global economic downturn, Chinese trade growth will continue to be sluggish in the short term, Li added.

China Watch Blog has learnt that India’s largest industry group Tata will establish a service subsidiary in Panyu District, Guangzhou.

GDNews.com cited sources from Panyu as saying that the district recently held a signing ceremony with Tata Information Technology (China) Co., Ltd., concluding the Cooperation Agreement and the Agreement on Construction and Demonstrative Applications of Intelligent Public Health Service Platforms in Panyu District.

This is definitely interesting news because both India and China are growing dragons, and when companies from both sides, combine their strengths, they will be unstoppable.

Tata is India’s largest industry group and one of the world’s top 500 enterprises. Tata Information Technology (China) Co., Ltd. is a joint venture established by Tata Consultancy Service (TCS) in China.

The company is specialized in IT services, business solutions and outsourcing services, and offers customers a series of consultation-oriented general IT products, support, infrastructure, engineering and QA services through its unique “global network delivery mode”.

China Watch Blog has learnt that a senior economist of Detsche Bank (Asia China) was quoted as saying in a China Daily report that the China Railway investment target for 2012 may be too conservative.

In December 2011, the Ministry of Railway (MOR) released a 2012 railway fixed-asset investment target of 500 billion yuan ($79.27 billion), below Detsche Bank (DB) analyst’s estimate of 630 billion yuan and much lower than market expectations of between 650 and 670 billion yuan.

Ma Jun, chief economist of the bank, was quoted as saying that he believed the railway investment target may be revised up in a few months.

“However, we believe that the current MOR budget is based on a conservative expectation of the national government budget, which will not be finalized until the National People’s Congress in March,” said Ma.

Given that real economic indicators will likely worsen in the coming months, DB believes the government will get a bit more aggressive in budgeting its fiscal expansion two months from now.

“We will not be surprised if the fixed asset investment target of the MOR is revised up again to 600 billion yuan for 2012,” Ma said.

China Watch Blog has learnt that Kodak has announced it is getting out of the digital camera business in the first half of this year.

The move comes as a cost savings measure after filing for bankruptcy protection last month.

Kodak will license its brand to other camera makers and focus on manufacturing printers instead.

It is such a shame that Kodak, which used to be the foremost brand related to photography when this writer was growing up, has ended up like this.

What we can say is the management of Kodak should have read the book “Who moved my cheese?” by Spencer Johnson M.D. reveals profound truths about change that give people and organizations a quick and easy way to succeed in changing times. Alas, it is too late since they have to give up their camera business.

On the other hand, it may still not be too late to say other parts of the Kodak business if they pick up the lessons of change and how to deal with it from Johnson’s book.