英国前首相丘吉尔曾说，在他父亲生活的１９世纪后半叶，“世界是少数人的……极少数人的”。他所指的不是今天这个世界，甚至也不是西方。他所说的“世界”是指英国，当时地球上最富有的国家。
自二战结束以来，我们业已见证了经济“奇迹”改变欧洲、日本以及其他亚洲国家。少数人已变成了许多人。但是，你绝不会料想到上海当前所发生的一切。人类历史上也许从未有过在如此短的时间内，造出如此多的建筑；人类的历史上也许从未有过如此多的人，能如此迅速地发家致富。
当美国人提到中国时，大多数人想到的是为了微薄工资而苦干的工人大军，他们生产出的产品不仅质量低劣而且经常造成危险，并且总是很便宜。我们觉得中国人偷走了我们的工作，并向我们出售常常被召回的垃圾产品。但在上海待个数日，就能使这些想法一扫而光，并获得另一种全新的视角。
上海在进行人类历史上最庞大的建筑活动。高楼大厦拔地而起，其数量比笔者在其他任何地方看到的都要多。上世纪７０年代，美国纽约市长纳尔逊·洛克菲勒重建纽约州首府奥尔巴尼，这个浩大的工程甚至改变了整个美国的建筑业。据一些专家称，上海如今对世界有着类似的影响。
一些建筑属于典型的“国际风格”现代派，一些则是“后现代”建筑。在西方人看来，许多建筑都有些怪异。这可能是某种建筑宣言，或者与风水有关。
许多人仍生活在旧式的“鸽子笼”和狭小的巷子里，那里洗完的衣服都是挂在横挑的竹竿上的。它们看上去整洁干净，据说许多居民不愿意搬到离市中心较远的新的楼房里。
街道和高速路上挤满了汽车。令人震惊的是，中国如今是世界第二大汽车市场，并且也是全球增长最快的汽车市场。路上跑的许多都是美国生产的别克车，偶尔会有福特车和雪佛兰车，更多的是中国生产的大众汽车。
在１９世纪，美国的商人梦想着进入中国的市场——向中国销售灯油，他们知道那里的人很穷，但人口众多，哪怕能分到市场的小小部分都能发大财。如今，有钱的中国人很多很多。所以，别以为中国人只会生产廉价货，我们应该想到他们是一切产品的消费者。
忘记灯油吧。我们错过了那个机会，他们如今都用上电了。但是，所有那些亮锃锃的浴室的管道呢？还有中国厕所的马桶呢？
Wednesday, October 31, 2007
中国反垄断法将动真格？
经过长期讨论，中国全国人大常务委员会周二通过反垄断法，新法定于2008年8月1日起施行。
据说中国的方便面生产厂家私下商定价格、垄断市场，损害消费者利益，引发群众不满，最终促成了反垄断法的制定和通过。新苏黎世报认为，其实中国食品业总体竞争激烈，而中国国家操控的行业垄断问题最为严重：
“中国大部分经济领域都处于严重的垄断或寡头卖主垄断状况。这些领域带有战略性国有企业的印记，与政府和无所不在的共产党紧密结合。尽管这些企业已登上股市，但它们多数仍然为国家所有，其业务活动受政治考虑和欲望的左右。许多这样的大集团提供的服务没有什么竞争力，但却收取超高的费用，它们的工作不透明，是政界及其干部的重要收入来源。
这个国家资本主义的‘中国股份公司’控制了中国股市的大多数资本。属于这个股份公司的有石油和天然气领域、整个电信和金融服务行业。国家保护银行，一再向银行提供大笔补贴，因为这些银行往往不是从经济、而是从政治角度做出决定，经常资助不能赢利的面子工程。银行为客户提供的服务很差，存款人获得的利息实际上是负数。”
正是由于国家控制的企业坚持垄断地位，反对自由竞争，中国的反垄断法经过千呼万唤才得以出台。那么，新出台的反垄断法将保持还是打破原有体制呢？新苏黎世报的文章最后写道：
“现在通过的法律版本给两者都留下了余地。法律规定禁止有损竞争的行为，必须实行市场价格，国有企业也须遵守这一法律。但是，法律又包括一些为了保护’国家利益’的例外规定，这样实际上可以随意巩固现有状况。规定中表达不清的地方是，外资参与的企业是否违反国家利益的问题有待从新做出解释。另外，法律提出，要按照竞争法原则审查专利保护。这两条都有可能被滥用，使外国竞争对手吃亏并把他们排挤出中国市场。
新的竞争法能否及如何改变中国的企业景观，取决于新法的执行情况。由于国家及其干部在经济界依然存在，所以难以想象，目前结构并不强大的反垄断部门在没有强有力的政治影响的条件下能够有效执法。驻北京的外国企业家联合会一致认为，中国的竞争环境带有至今仍不明确的政治意志烙印。但是，明年夏天毕竟有了竞争法和反垄断部门，外国投资者表示欢迎，不过他们也异口同声地希望中国政府能遵循国际做法，明确统一地贯彻法律规定。”
据说中国的方便面生产厂家私下商定价格、垄断市场，损害消费者利益，引发群众不满，最终促成了反垄断法的制定和通过。新苏黎世报认为，其实中国食品业总体竞争激烈，而中国国家操控的行业垄断问题最为严重：
“中国大部分经济领域都处于严重的垄断或寡头卖主垄断状况。这些领域带有战略性国有企业的印记，与政府和无所不在的共产党紧密结合。尽管这些企业已登上股市，但它们多数仍然为国家所有，其业务活动受政治考虑和欲望的左右。许多这样的大集团提供的服务没有什么竞争力，但却收取超高的费用，它们的工作不透明，是政界及其干部的重要收入来源。
这个国家资本主义的‘中国股份公司’控制了中国股市的大多数资本。属于这个股份公司的有石油和天然气领域、整个电信和金融服务行业。国家保护银行，一再向银行提供大笔补贴，因为这些银行往往不是从经济、而是从政治角度做出决定，经常资助不能赢利的面子工程。银行为客户提供的服务很差，存款人获得的利息实际上是负数。”
正是由于国家控制的企业坚持垄断地位，反对自由竞争，中国的反垄断法经过千呼万唤才得以出台。那么，新出台的反垄断法将保持还是打破原有体制呢？新苏黎世报的文章最后写道：
“现在通过的法律版本给两者都留下了余地。法律规定禁止有损竞争的行为，必须实行市场价格，国有企业也须遵守这一法律。但是，法律又包括一些为了保护’国家利益’的例外规定，这样实际上可以随意巩固现有状况。规定中表达不清的地方是，外资参与的企业是否违反国家利益的问题有待从新做出解释。另外，法律提出，要按照竞争法原则审查专利保护。这两条都有可能被滥用，使外国竞争对手吃亏并把他们排挤出中国市场。
新的竞争法能否及如何改变中国的企业景观，取决于新法的执行情况。由于国家及其干部在经济界依然存在，所以难以想象，目前结构并不强大的反垄断部门在没有强有力的政治影响的条件下能够有效执法。驻北京的外国企业家联合会一致认为，中国的竞争环境带有至今仍不明确的政治意志烙印。但是，明年夏天毕竟有了竞争法和反垄断部门，外国投资者表示欢迎，不过他们也异口同声地希望中国政府能遵循国际做法，明确统一地贯彻法律规定。”
美国制造业价值领先世界 远超中国
尽管中国有世界工厂之称，但美国研究人员发现，美国制造业所创造的产品价值在世界上仍然处于领先地位，大幅度领先于中国制造业。
研究人员指出，制造业工作岗位减少是全球范围的普遍现象，其主要原因是生产力显著提高，美国制造业近年来的大批裁员并不像一些批评人士所说的那样单纯是由于生产项目外包所致。
美国财经刊物福布斯杂志报导说，美中贸易的巨大逆差并不能说明美国制造业生产力的全貌。报导指出，中国只是在生产运动鞋、塑料玩具和服装等低成本和劳动密集型产品方面超过美国，而美国工厂的总产量实际上远远超过中国工厂，而且在价钱方面，美国产品远比中国产品值钱。
*美国制造业生产高增值产品*
美国智囊机构卡托研究所贸易政策研究中心副主任丹.艾肯森(Dan Ikenson)对美国之音表示，他从美国政府、联合国以及世界银行获得的数据中研究发现，美国制造业在世界上制造出来的产品总价值中占21%，跟 1995年的21.3%几乎持平，处于全球第一的地位没有改变。
他说，中国制造业在世界产品总价值中所占的份额正在增大，但是只有8%。
他说：“从中国工厂里每生产出来价值一美元的产品，美国工厂就生产出价值两美元50美分的产品。其主要原因是，美国工厂现在生产的是高增值的产品。你知道，我们生产飞机，我们生产价格高昂的通讯设备、人造卫星等成本较高的产品。从重量来看，中国工厂生产的东西多，但是以价值来计算的话，美国仍然在世界上是最多产的制造国。”
*生产力提高制造业就业人数下降*
他说：“在整个世界，制造业的就业人数都在下降，在中国也是如此。事实上，中国制造业丧失的工作机会比美国制造业还多，其原因也是因为生产力提高。而这并不是坏事。”
美国卡托研究所的研究员艾肯森说，随著生产力的大幅度提高，人们的生活水平和生活质量也在逐渐提高。他表示，人们可以通过高效率的生产把更多的人力物力节省下来投入到其他方面。
有专家指出，目前服务业在美国经济中所占的比例高达80%到85%，而侧重于生产技术含量高和资本密集型产品的美国制造业仍然在美国和世界经济中发挥重要作用。
研究人员指出，制造业工作岗位减少是全球范围的普遍现象，其主要原因是生产力显著提高，美国制造业近年来的大批裁员并不像一些批评人士所说的那样单纯是由于生产项目外包所致。
美国财经刊物福布斯杂志报导说，美中贸易的巨大逆差并不能说明美国制造业生产力的全貌。报导指出，中国只是在生产运动鞋、塑料玩具和服装等低成本和劳动密集型产品方面超过美国，而美国工厂的总产量实际上远远超过中国工厂，而且在价钱方面，美国产品远比中国产品值钱。
*美国制造业生产高增值产品*
美国智囊机构卡托研究所贸易政策研究中心副主任丹.艾肯森(Dan Ikenson)对美国之音表示，他从美国政府、联合国以及世界银行获得的数据中研究发现，美国制造业在世界上制造出来的产品总价值中占21%，跟 1995年的21.3%几乎持平，处于全球第一的地位没有改变。
他说，中国制造业在世界产品总价值中所占的份额正在增大，但是只有8%。
他说：“从中国工厂里每生产出来价值一美元的产品，美国工厂就生产出价值两美元50美分的产品。其主要原因是，美国工厂现在生产的是高增值的产品。你知道，我们生产飞机，我们生产价格高昂的通讯设备、人造卫星等成本较高的产品。从重量来看，中国工厂生产的东西多，但是以价值来计算的话，美国仍然在世界上是最多产的制造国。”
*生产力提高制造业就业人数下降*
他说：“在整个世界，制造业的就业人数都在下降，在中国也是如此。事实上，中国制造业丧失的工作机会比美国制造业还多，其原因也是因为生产力提高。而这并不是坏事。”
美国卡托研究所的研究员艾肯森说，随著生产力的大幅度提高，人们的生活水平和生活质量也在逐渐提高。他表示，人们可以通过高效率的生产把更多的人力物力节省下来投入到其他方面。
有专家指出，目前服务业在美国经济中所占的比例高达80%到85%，而侧重于生产技术含量高和资本密集型产品的美国制造业仍然在美国和世界经济中发挥重要作用。
Is China's stock rally about to burst?
The bull that stands outside the Shanghai stock exchange could not be more apt.
The Chinese market has almost tripled in value this year as investors clamour for a slice of the world's fastest growing economy.
And if the shares of PetroChina soar when it lists in Shanghai next week, there's a chance the Chinese oil giant could become the world's most valuable quoted company, stealing the crown from ExxonMobil.
For some, this is a natural extension of China's economic rise.
For others, it's evidence of a massive stock market bubble that parallels the height of the dotcom boom.
Too hot?
China's market is displaying many of the classic warning signs of a bubble.
Cab drivers, college kids and Buddhist monks are making small fortunes in a frenzy of "chao gu" or stir frying stocks - Chinese slang for trading.
Internet chatrooms are abuzz with investment tips and reports say that millions of stock trading accounts are being opened each month.
People have a bullish feeling before the Olympics
Professor Yao Shujie, China Policy Institute at the University of Nottingham
Investment guru Warren Buffett, who recently sold his Hong Kong-listed PetroChina shares for a huge profit, warned last week that China is too hot to buy.
By most conventional yardsticks, valuations of many of China's largest shares do look stretched.
China's main stock index trades at more than 50 times projected earnings of the companies listed on it, almost triple that of major European and US stock markets.
Different standards
Shanghai-based fund manager Chris Ruffle says China's market cannot be judged by the same standards as other exchanges.
Inflation exceeds the return on bank deposits and real estate has lost its appeal following measures taken by Chinese authorities.
Strict investment rules forbid Chinese households from putting their $2.3 trillion savings in overseas assets, leaving China's stock market the only option.
"If it was a normal market it would be overheated, but it's a closed system here," says Mr Ruffle, who manages a $3bn fund for Martin Currie, an investment management business with its headquarters in Edinburgh.
Mr Ruffle says that companies have enjoyed explosive profit growth of 30% in recent years and this could pick up pace as management techniques at state-run firms improve.
"Attitudes are changing. Managers regard themselves as executives rather than civil servants," says Mr Ruffle.
He plans to steer clear of big-name Chinese companies like PetroChina, but says he can still find good value firms in sectors such as healthcare, where the Chinese government is channelling investment.
Record listing
One factor behind the market's white-hot rally has been a slew of stock market listings. In the third quarter alone, China hosted 75 share offerings.
Many recent debuts have been household names in China and a big draw for local investors' cash.
BIGGEST FIRMS BY MARKET VALUE
ExxonMobil
PetroChina
General Electric
China Mobile
ICBC
Gazprom
Sinopec
AT&T
BP
China Life
Source: Reuters
PetroChina, which is also listed in Hong Kong and New York, said this week it raised almost $9bn from its share sale, the largest amount raised in Shanghai to date.
"Prior to 2006, there were few big heavyweight firms listing in Shanghai," says Professor Yao Shujie, at Nottingham University's China Policy Institute.
"If prices continue to rocket when it's smaller firms doing [initial public offerings], to me that's a much clearer sign of a bubble."
Chinese authorities have taken some steps to cool the market but investors have so far paid little heed.
There is a strong conviction that the government will not allow a huge crash in share prices.
"People have a bullish feeling before the Olympics," says Professor Yao.
"They believe the government will do what it can support the market in case of difficulty therefore they are not so cautious about protecting their investments."
Political fallout
A crash would have political ramifications for China's leaders, who have staked their legitimacy on maintaining a breakneck pace of economic growth.
Ordinary urban Chinese would be the biggest victims of any crash, with foreign investment in the Shanghai market still subject to limits.
"When it does fall it will be the middle classes marching on the streets," says Kerry Brown, associate fellow at international affairs think tank Chatham House.
"It would cause unease among those that have kept out of politics for the past two decades and dent confidence in the Communist Party's economic management."
The stock market boom has given China five of the world's 10 biggest companies by market value.
For now this is a source of pride for China's government, but it is an honour that could turn into a big headache.
The Chinese market has almost tripled in value this year as investors clamour for a slice of the world's fastest growing economy.
And if the shares of PetroChina soar when it lists in Shanghai next week, there's a chance the Chinese oil giant could become the world's most valuable quoted company, stealing the crown from ExxonMobil.
For some, this is a natural extension of China's economic rise.
For others, it's evidence of a massive stock market bubble that parallels the height of the dotcom boom.
Too hot?
China's market is displaying many of the classic warning signs of a bubble.
Cab drivers, college kids and Buddhist monks are making small fortunes in a frenzy of "chao gu" or stir frying stocks - Chinese slang for trading.
Internet chatrooms are abuzz with investment tips and reports say that millions of stock trading accounts are being opened each month.
People have a bullish feeling before the Olympics
Professor Yao Shujie, China Policy Institute at the University of Nottingham
Investment guru Warren Buffett, who recently sold his Hong Kong-listed PetroChina shares for a huge profit, warned last week that China is too hot to buy.
By most conventional yardsticks, valuations of many of China's largest shares do look stretched.
China's main stock index trades at more than 50 times projected earnings of the companies listed on it, almost triple that of major European and US stock markets.
Different standards
Shanghai-based fund manager Chris Ruffle says China's market cannot be judged by the same standards as other exchanges.
Inflation exceeds the return on bank deposits and real estate has lost its appeal following measures taken by Chinese authorities.
Strict investment rules forbid Chinese households from putting their $2.3 trillion savings in overseas assets, leaving China's stock market the only option.
"If it was a normal market it would be overheated, but it's a closed system here," says Mr Ruffle, who manages a $3bn fund for Martin Currie, an investment management business with its headquarters in Edinburgh.
Mr Ruffle says that companies have enjoyed explosive profit growth of 30% in recent years and this could pick up pace as management techniques at state-run firms improve.
"Attitudes are changing. Managers regard themselves as executives rather than civil servants," says Mr Ruffle.
He plans to steer clear of big-name Chinese companies like PetroChina, but says he can still find good value firms in sectors such as healthcare, where the Chinese government is channelling investment.
Record listing
One factor behind the market's white-hot rally has been a slew of stock market listings. In the third quarter alone, China hosted 75 share offerings.
Many recent debuts have been household names in China and a big draw for local investors' cash.
BIGGEST FIRMS BY MARKET VALUE
ExxonMobil
PetroChina
General Electric
China Mobile
ICBC
Gazprom
Sinopec
AT&T
BP
China Life
Source: Reuters
PetroChina, which is also listed in Hong Kong and New York, said this week it raised almost $9bn from its share sale, the largest amount raised in Shanghai to date.
"Prior to 2006, there were few big heavyweight firms listing in Shanghai," says Professor Yao Shujie, at Nottingham University's China Policy Institute.
"If prices continue to rocket when it's smaller firms doing [initial public offerings], to me that's a much clearer sign of a bubble."
Chinese authorities have taken some steps to cool the market but investors have so far paid little heed.
There is a strong conviction that the government will not allow a huge crash in share prices.
"People have a bullish feeling before the Olympics," says Professor Yao.
"They believe the government will do what it can support the market in case of difficulty therefore they are not so cautious about protecting their investments."
Political fallout
A crash would have political ramifications for China's leaders, who have staked their legitimacy on maintaining a breakneck pace of economic growth.
Ordinary urban Chinese would be the biggest victims of any crash, with foreign investment in the Shanghai market still subject to limits.
"When it does fall it will be the middle classes marching on the streets," says Kerry Brown, associate fellow at international affairs think tank Chatham House.
"It would cause unease among those that have kept out of politics for the past two decades and dent confidence in the Communist Party's economic management."
The stock market boom has given China five of the world's 10 biggest companies by market value.
For now this is a source of pride for China's government, but it is an honour that could turn into a big headache.
Tuesday, October 30, 2007
China Netcom to open London headquarters
China Netcom, China's second largest fixed-line telephone company, will on Thursday open a London office that will be its European headquarters.
China Netcom is looking to use its global telecoms network to serve the voice and data needs of Chinese companies with operations in Europe, said one person familiar with the situation. It also wants to serve the telecoms needs of European companies with operations in China.
The move by China Netcom is part of efforts by Chinese companies to expand overseas under the Beijing government's "go global" policy. The government wants to ensure that Chinese companies can compete with US, Japanese and European companies.
China Netcom's telecoms network extends to cities in Asia, Europe and the US, and it is looking to expand it further, said the person familiar with the company's plans.
The London office will be opened by Jidong Zhao, China Netcom's senior vice-president.
Its efforts to serve the voice and data needs of multinationals will pit it against European and US telecoms companies such as BT, AT&T and Verizon Communications (NYSE:VZ).
China Netcom is not the first Chinese telecoms company to open a London office. China Telecom, China's largest fixed-line company, opened a London office in 2005. Like China Netcom, China Telecom is looking to serve the telecoms needs of Chinese companies with operations in Europe.
Huawei and ZTE, the increasingly powerful Chinese telecoms equipment makers, opened London offices in 2002 and 2004. They were initially sales offices but now also focus on financing.
Telefónica, the Spanish telecoms company with a leading presence in Latin America, on Tuesday said it hoped to increase its minority stake in China Netcom to 10 per cent by the end of the year. Vodafone, the UK mobile phone group, has a 3 per cent stake in China Mobile, China's largest mobile operator, which plans to open a London office early next year.
China Netcom is looking to use its global telecoms network to serve the voice and data needs of Chinese companies with operations in Europe, said one person familiar with the situation. It also wants to serve the telecoms needs of European companies with operations in China.
The move by China Netcom is part of efforts by Chinese companies to expand overseas under the Beijing government's "go global" policy. The government wants to ensure that Chinese companies can compete with US, Japanese and European companies.
China Netcom's telecoms network extends to cities in Asia, Europe and the US, and it is looking to expand it further, said the person familiar with the company's plans.
The London office will be opened by Jidong Zhao, China Netcom's senior vice-president.
Its efforts to serve the voice and data needs of multinationals will pit it against European and US telecoms companies such as BT, AT&T and Verizon Communications (NYSE:VZ).
China Netcom is not the first Chinese telecoms company to open a London office. China Telecom, China's largest fixed-line company, opened a London office in 2005. Like China Netcom, China Telecom is looking to serve the telecoms needs of Chinese companies with operations in Europe.
Huawei and ZTE, the increasingly powerful Chinese telecoms equipment makers, opened London offices in 2002 and 2004. They were initially sales offices but now also focus on financing.
Telefónica, the Spanish telecoms company with a leading presence in Latin America, on Tuesday said it hoped to increase its minority stake in China Netcom to 10 per cent by the end of the year. Vodafone, the UK mobile phone group, has a 3 per cent stake in China Mobile, China's largest mobile operator, which plans to open a London office early next year.
State funds and banks lead China's hunt
China's National Council for Social Security Fund is an unlikely candidate to buy into US private equity groups, but the disclosure in Tuesday's Financial Times that it has held preliminary talks about buying stakes in companies such as Carlyle and Kohlberg Kravis Roberts underlines how dramatically China's global ambitions have grown.
The fund joins a number of large state institutions investing overseas, such as China Investment Corp, the newly-established sovereign fund, and China Development Bank, a specialist lender for infrastructure projects.
Industrial & Commercial Bank of China, the country's largest lender, last week struck a deal to pay $5.56bn for a stake in Standard Bank in South Africa, and Citic Securities recently bought into the troubled US firm Bear Stearns. Other big Chinese commercial banks are hunting for deals.
The sudden flood of overseas deals runs parallel with a wave of foreign equity investment by Chinese entities through mandates issued by the securities regulator.
Since September, $37bn (£17.9bn, EU25.6bn) in subscriptions has been received by four funds each approved to raise $16bn. JPMorgan says it expects Beijing to approve another $20bn by mid-December and a total of up to $90bn by the end of next year.
The broad framework allowing investment overseas has been laid down gradually by the central government in the last three years or so, with a variety of policy objectives in mind.
The portfolio investment is driven by a need to gain greater returns and spread risks away from the domestic market, as well as relieve the pressure on the financial system from huge capital inflows.
CDB, meanwhile, is heading overseas with a quite different mandate - to support Chinese investment in Africa and to test its ambitions to become a force in global development finance.
The drive offshore by China's big state banks, although under the wary eye of the regulators, is more driven by their commercial ambitions than acentral government plan.
"I don't really see [the banks] as being driven by the state pushing people out the door, overseas," said Jonathan Anderson, of UBS, in Hong Kong. "This is primarily being driven by the corporates themselves."
For deal-hungry global investment banks, the Chinese institutions they once chased for overseas stock market listings are now becoming valuable merger and acquisition clients.
"Chinese companies are being assiduously courted by dealmakers - and no wonder. They are cash-rich and the beneficiaries of a bull market," said Jing Ulrich, of JPMorgan, in Hong Kong.
However, one common challenge facing the Chinese institutions is the lack of global experience, both in investing overseas and running enterprises in foreign countries.
In the case of the social security fund, its most experienced global manager, Gao Xiqing, who has extensive experience on Wall St, has been shifted in recent months to a senior post at the sovereign fund.
The fund's talks with US firms surprised some market observers, who say they would not have expected it to tie up money in large, illiquid investments.
However, the fund might be being driven by a sense of competition with other Chinese state investors and may have pressed to be allowed access to similar investment opportunities.
For all the headlines, the wave of Chinese capital heading overseas is at an early stage and its impact on markets, perhaps aside from Hong Kong, is limited in terms of investments flows. "They are very small players at the moment," said Mr Anderson.
Politically and psychologically, however, the impact is much larger.
Background
Established in 2000, the National Council for Social Security Fund was part of China's strategy to fill the gaping holes left in its pension policies by the collapse of large swathes of state industry.
The NCSSF does not attempt to cover the entire country's pension needs, but is a kind of national pension fund of last resort, with no designated members eligible for benefits. It has assets Rmb460bn ($62bn, EU43bn, £30bn).
Much revenue came from the offshore initial public offerings of state companies, which had to put 10 per cent of money raised into the fund.
The fund joins a number of large state institutions investing overseas, such as China Investment Corp, the newly-established sovereign fund, and China Development Bank, a specialist lender for infrastructure projects.
Industrial & Commercial Bank of China, the country's largest lender, last week struck a deal to pay $5.56bn for a stake in Standard Bank in South Africa, and Citic Securities recently bought into the troubled US firm Bear Stearns. Other big Chinese commercial banks are hunting for deals.
The sudden flood of overseas deals runs parallel with a wave of foreign equity investment by Chinese entities through mandates issued by the securities regulator.
Since September, $37bn (£17.9bn, EU25.6bn) in subscriptions has been received by four funds each approved to raise $16bn. JPMorgan says it expects Beijing to approve another $20bn by mid-December and a total of up to $90bn by the end of next year.
The broad framework allowing investment overseas has been laid down gradually by the central government in the last three years or so, with a variety of policy objectives in mind.
The portfolio investment is driven by a need to gain greater returns and spread risks away from the domestic market, as well as relieve the pressure on the financial system from huge capital inflows.
CDB, meanwhile, is heading overseas with a quite different mandate - to support Chinese investment in Africa and to test its ambitions to become a force in global development finance.
The drive offshore by China's big state banks, although under the wary eye of the regulators, is more driven by their commercial ambitions than acentral government plan.
"I don't really see [the banks] as being driven by the state pushing people out the door, overseas," said Jonathan Anderson, of UBS, in Hong Kong. "This is primarily being driven by the corporates themselves."
For deal-hungry global investment banks, the Chinese institutions they once chased for overseas stock market listings are now becoming valuable merger and acquisition clients.
"Chinese companies are being assiduously courted by dealmakers - and no wonder. They are cash-rich and the beneficiaries of a bull market," said Jing Ulrich, of JPMorgan, in Hong Kong.
However, one common challenge facing the Chinese institutions is the lack of global experience, both in investing overseas and running enterprises in foreign countries.
In the case of the social security fund, its most experienced global manager, Gao Xiqing, who has extensive experience on Wall St, has been shifted in recent months to a senior post at the sovereign fund.
The fund's talks with US firms surprised some market observers, who say they would not have expected it to tie up money in large, illiquid investments.
However, the fund might be being driven by a sense of competition with other Chinese state investors and may have pressed to be allowed access to similar investment opportunities.
For all the headlines, the wave of Chinese capital heading overseas is at an early stage and its impact on markets, perhaps aside from Hong Kong, is limited in terms of investments flows. "They are very small players at the moment," said Mr Anderson.
Politically and psychologically, however, the impact is much larger.
Background
Established in 2000, the National Council for Social Security Fund was part of China's strategy to fill the gaping holes left in its pension policies by the collapse of large swathes of state industry.
The NCSSF does not attempt to cover the entire country's pension needs, but is a kind of national pension fund of last resort, with no designated members eligible for benefits. It has assets Rmb460bn ($62bn, EU43bn, £30bn).
Much revenue came from the offshore initial public offerings of state companies, which had to put 10 per cent of money raised into the fund.
Nufarm Surges on Report of Blackstone, China's BlueStar Bid
Oct. 31 (Bloomberg) -- Nufarm Ltd. surged the most in nine years after the South China Morning Post said Australia's biggest supplier of farm chemicals may receive a takeover bid from Blackstone Group LP and China National BlueStar Group Corp.
The companies may make a revised bid after Melbourne-based Nufarm rejected an offer at $2.7 billion, or A$17.10 a share, the newspaper said, citing sources it didn't identify. The stock surged A$1.81, or 13 percent, to A$15.67 at 12:24 p.m. in Sydney, its biggest gain since July 1998.
The new bid, to be lower than A$20 a share, would be the first acquisition for closely held BlueStar, according to the newspaper.
Nufarm missed its profit forecast in September as Australia's worst drought dented demand. Net income rose to A$148.8 million ($137 million) in the year ended July 31, from A$117.2 million a year earlier. The company forecast full-year profit of A$160 million in March.
The drought is reducing water supplies used for fruit, grape and cotton crops, and forcing forecasters and farmers to cut expectations for wheat and barley output.
A spokeswoman for Nufarm wasn't immediately able to comment on the report when contacted by Bloomberg.
The companies may make a revised bid after Melbourne-based Nufarm rejected an offer at $2.7 billion, or A$17.10 a share, the newspaper said, citing sources it didn't identify. The stock surged A$1.81, or 13 percent, to A$15.67 at 12:24 p.m. in Sydney, its biggest gain since July 1998.
The new bid, to be lower than A$20 a share, would be the first acquisition for closely held BlueStar, according to the newspaper.
Nufarm missed its profit forecast in September as Australia's worst drought dented demand. Net income rose to A$148.8 million ($137 million) in the year ended July 31, from A$117.2 million a year earlier. The company forecast full-year profit of A$160 million in March.
The drought is reducing water supplies used for fruit, grape and cotton crops, and forcing forecasters and farmers to cut expectations for wheat and barley output.
A spokeswoman for Nufarm wasn't immediately able to comment on the report when contacted by Bloomberg.
China's Africa Dream
Oct. 31 (Bloomberg) -- It's rare that a business deal intrigues investors and political scientists alike. Industrial & Commercial Bank of China Ltd.'s move to buy 20 percent of Africa's largest bank is such a transaction.
It's the biggest overseas investment by a Chinese company, in this case the world's No. 1 bank by market value. ICBC's $5.6 billion purchase of the Standard Bank Group Ltd. stake is the largest in South Africa since apartheid ended in 1994.
Yet there's something even bigger at play here. This is arguably the first Chinese investment in Africa that doesn't carry a whiff of political strategy. Nor is it directly related to China's desire for resources, which can often help despots more than African households.
ICBC's Standard Bank deal may be the watershed that begins propelling China's designs on Africa from talk to just plain business, and smart business at that.
``From the regulators' point of view, this kind of diversification is a great idea,'' says Michael Pettis, a finance professor at Peking University. ``Chinese banks are too highly concentrated in China and it's not in their best interest that banks depend exclusively on Chinese growth. That kind of dependence is highly pro-cyclical and can feed booms and busts.''
Standard Bank has offices in 18 African countries, including Nigeria and Kenya, and 21 other nations such as Argentina and Taiwan. The Johannesburg-based bank has 713 branches in South Africa and 240 throughout the continent. The deal is a sign that even if the Chinese Communist Party has strategic reasons for investing in Africa, companies are heading there for the economic potential.
See No Evil
Until now, China's Africa push has raised warning flags around the globe, and rightfully so. To get resources to feed its 11.5 percent growth, China has hopped into bed with some of Africa's most unsavory regimes, such as Sudan's and Zimbabwe's. That see-no-evil-hear-no-evil approach is raising eyebrows.
Warren Buffett can deny it all he wants, but it's hard to believe that his Berkshire Hathaway Inc. would have dumped its entire holding of PetroChina Co., Asia's biggest oil company, without the public criticism over China's support of Sudan.
PetroChina's state-controlled parent is the biggest foreign investor in Sudan. PetroChina's stock gained more than 11-fold since Buffett first bought it in 2003. And yet he recently abandoned what he says is ``absolutely a first-class company.''
Buffett was under increasing pressure from human-rights groups over accusations that the Sudanese government supports genocide. There was even a role for actress Mia Farrow, who helped publicize the worldwide campaign to dub next year's games the ``Genocide Olympics.''
No Baggage
ICBC's stake in Standard Bank comes without that kind of baggage. It's a state-controlled China bank, making it hard to figure out where politics end and business begins. Yet the deal shows China is now making bets on Africa's economy.
Standard Bank is gaining access to the fastest-growing major economy and fattening its capital base. China is getting a foothold into Africa's nascent investment-banking and insurance industries. It's also a way for China to use its growing cash piles overseas rather than making fresh domestic loans that may go bad or fuel inflation.
All this is stellar news for Africa, which usually suffers from the ``paradox of plenty.'' All too often, inhabitants of resource-rich nations fail to prosper while corrupt politicians and their cronies get wealthy and ignore the development needs of the struggling masses.
That has been Africa's experience for far too long. And the failure of Western efforts to reverse the dynamic left the region's leaders open to Chinese investment.
Investment, Not Aid
One interesting element of ICBC's deal is how different it is from the usual overture from Western banks. It didn't come laden with demands about how much control ICBC will have over Standard Bank. It didn't require pledges for financial change. It's merely one bank buying a piece of another with transparent terms and conditions. It's a sign Chinese managers are willing to treat Africans as peers.
The West hasn't learned that lesson with its aid programs and lecturing. By trying a new tack, China may be testing what development economists have argued for years: Africa doesn't need more aid, it needs more genuine investment and trade.
Bono and Columbia University's Jeffrey Sachs will keep plugging away, and thank the gods for that. But Chinese companies appear to see something in Africa many in New York, London and Tokyo don't. Africa represents huge and lucrative business opportunities if it gets its act together.
That's a big ``if.'' With the exception of Botswana and Ghana, Africa's biggest consistency seems to be to pull the rug out from under wide-eyed investors. China's interests are offering Africa a rare opportunity to boost its economies.
China's Money
Another interesting angle here concerns investors. Looking at ICBC along with other Chinese deals of late -- like Citic Securities Co. buying a stake in Bear Stearns Cos. -- it's clear something transformational is afoot.
In recent years, China sought foreign investments in financial firms to shore up capital and gain expertise. Now, cash-rich from trade, stock offerings and surging share prices, China no longer needs Wall Street's money. Increasingly, it's foreigners who want a cut of China's money.
``Getting access to China's market may no longer require putting money in China,'' says Brad Setser, director of research at Roubini Global Economics LLC in New York. ``It may instead require accepting investment from China.''
China may have just found a way to tame its own pressures and tap Africa without the baggage of the past.
It's the biggest overseas investment by a Chinese company, in this case the world's No. 1 bank by market value. ICBC's $5.6 billion purchase of the Standard Bank Group Ltd. stake is the largest in South Africa since apartheid ended in 1994.
Yet there's something even bigger at play here. This is arguably the first Chinese investment in Africa that doesn't carry a whiff of political strategy. Nor is it directly related to China's desire for resources, which can often help despots more than African households.
ICBC's Standard Bank deal may be the watershed that begins propelling China's designs on Africa from talk to just plain business, and smart business at that.
``From the regulators' point of view, this kind of diversification is a great idea,'' says Michael Pettis, a finance professor at Peking University. ``Chinese banks are too highly concentrated in China and it's not in their best interest that banks depend exclusively on Chinese growth. That kind of dependence is highly pro-cyclical and can feed booms and busts.''
Standard Bank has offices in 18 African countries, including Nigeria and Kenya, and 21 other nations such as Argentina and Taiwan. The Johannesburg-based bank has 713 branches in South Africa and 240 throughout the continent. The deal is a sign that even if the Chinese Communist Party has strategic reasons for investing in Africa, companies are heading there for the economic potential.
See No Evil
Until now, China's Africa push has raised warning flags around the globe, and rightfully so. To get resources to feed its 11.5 percent growth, China has hopped into bed with some of Africa's most unsavory regimes, such as Sudan's and Zimbabwe's. That see-no-evil-hear-no-evil approach is raising eyebrows.
Warren Buffett can deny it all he wants, but it's hard to believe that his Berkshire Hathaway Inc. would have dumped its entire holding of PetroChina Co., Asia's biggest oil company, without the public criticism over China's support of Sudan.
PetroChina's state-controlled parent is the biggest foreign investor in Sudan. PetroChina's stock gained more than 11-fold since Buffett first bought it in 2003. And yet he recently abandoned what he says is ``absolutely a first-class company.''
Buffett was under increasing pressure from human-rights groups over accusations that the Sudanese government supports genocide. There was even a role for actress Mia Farrow, who helped publicize the worldwide campaign to dub next year's games the ``Genocide Olympics.''
No Baggage
ICBC's stake in Standard Bank comes without that kind of baggage. It's a state-controlled China bank, making it hard to figure out where politics end and business begins. Yet the deal shows China is now making bets on Africa's economy.
Standard Bank is gaining access to the fastest-growing major economy and fattening its capital base. China is getting a foothold into Africa's nascent investment-banking and insurance industries. It's also a way for China to use its growing cash piles overseas rather than making fresh domestic loans that may go bad or fuel inflation.
All this is stellar news for Africa, which usually suffers from the ``paradox of plenty.'' All too often, inhabitants of resource-rich nations fail to prosper while corrupt politicians and their cronies get wealthy and ignore the development needs of the struggling masses.
That has been Africa's experience for far too long. And the failure of Western efforts to reverse the dynamic left the region's leaders open to Chinese investment.
Investment, Not Aid
One interesting element of ICBC's deal is how different it is from the usual overture from Western banks. It didn't come laden with demands about how much control ICBC will have over Standard Bank. It didn't require pledges for financial change. It's merely one bank buying a piece of another with transparent terms and conditions. It's a sign Chinese managers are willing to treat Africans as peers.
The West hasn't learned that lesson with its aid programs and lecturing. By trying a new tack, China may be testing what development economists have argued for years: Africa doesn't need more aid, it needs more genuine investment and trade.
Bono and Columbia University's Jeffrey Sachs will keep plugging away, and thank the gods for that. But Chinese companies appear to see something in Africa many in New York, London and Tokyo don't. Africa represents huge and lucrative business opportunities if it gets its act together.
That's a big ``if.'' With the exception of Botswana and Ghana, Africa's biggest consistency seems to be to pull the rug out from under wide-eyed investors. China's interests are offering Africa a rare opportunity to boost its economies.
China's Money
Another interesting angle here concerns investors. Looking at ICBC along with other Chinese deals of late -- like Citic Securities Co. buying a stake in Bear Stearns Cos. -- it's clear something transformational is afoot.
In recent years, China sought foreign investments in financial firms to shore up capital and gain expertise. Now, cash-rich from trade, stock offerings and surging share prices, China no longer needs Wall Street's money. Increasingly, it's foreigners who want a cut of China's money.
``Getting access to China's market may no longer require putting money in China,'' says Brad Setser, director of research at Roubini Global Economics LLC in New York. ``It may instead require accepting investment from China.''
China may have just found a way to tame its own pressures and tap Africa without the baggage of the past.
Monday, October 29, 2007
GM sets up clean fuel research lab in China
US giant General Motors said Monday it would launch a 250-million-dollar alternative fuel research centre in China, as it looks to dramatically ramp up production of more environmentally friendly cars.
The new centre in Shanghai, which will conduct research into fuels and vehicles, will be launched in conjunction with the firm's Shanghai auto partner, SAIC, GM's chief executive Rick Wagoner told reporters.
GM also said it would begin selling a hybrid vehicle model in China next year using locally made engines.
"GM is proud to be announcing one of the most important and far-reaching collaborative strategies to promote energy efficiency and environmentally friendly transportation in China and around the world," Wagoner said.
GM expects hybrid and biofuel vehicles will comprise around 10 percent of its worldwide production of 9.2 to 9.4 million units this year.
"(But) if you look out five years or so, I think that number is going to be significantly higher. It could be 50 percent of global production," Wagoner said.
The first phase of construction, in which the Chinese government is a partner, will be completed next year.
The centre will focus on developing bio and other alternative fuels, and the engines for them, Wagoner said.
An additional agreement with SAIC and Beijing's Tsinghua University will establish a five-million-dollar clean fuel research laboratory in the Chinese capital.
"The centre is responsible for reducing China's dependence on petroleum-based fuels," Wagoner said.
"China has the potential to become the market leader in the adoption of alternative propulsion systems."
With climate change and pollution in the global spotlight, China's auto industry, one of the main engines of its booming economy, has come under scrutiny.
A recent report from the State Environmental Protection Administration said car fumes caused 79 percent of air contamination in China's highly polluted cities on bad days.
Auto sales in China, the world's second largest car market after the United States, soared in the first nine months of 2007 to 4.58 million units, a 23.84 percent increase from a year ago, Chinese state media said.
Detroit-based General Motors expects to sell more than one million vehicles in China for the first time this year, compared with 876,747 units in 2006.
For his part, SAIC chairman Chen Hong said his company planned to produce 10,000 hybrid fuel vehicles a year by 2010, as it steps up a commitment to find cleaner ways to power vehicles.
The global automobile industry is in the process of movoing production away from highly-developed countries and into emerging markets.
Sales in countries like China, India, Russia and South Africa have taken off. GM said in August these markets will account for a quarter of its new car sales, exceeding North America.
The new centre in Shanghai, which will conduct research into fuels and vehicles, will be launched in conjunction with the firm's Shanghai auto partner, SAIC, GM's chief executive Rick Wagoner told reporters.
GM also said it would begin selling a hybrid vehicle model in China next year using locally made engines.
"GM is proud to be announcing one of the most important and far-reaching collaborative strategies to promote energy efficiency and environmentally friendly transportation in China and around the world," Wagoner said.
GM expects hybrid and biofuel vehicles will comprise around 10 percent of its worldwide production of 9.2 to 9.4 million units this year.
"(But) if you look out five years or so, I think that number is going to be significantly higher. It could be 50 percent of global production," Wagoner said.
The first phase of construction, in which the Chinese government is a partner, will be completed next year.
The centre will focus on developing bio and other alternative fuels, and the engines for them, Wagoner said.
An additional agreement with SAIC and Beijing's Tsinghua University will establish a five-million-dollar clean fuel research laboratory in the Chinese capital.
"The centre is responsible for reducing China's dependence on petroleum-based fuels," Wagoner said.
"China has the potential to become the market leader in the adoption of alternative propulsion systems."
With climate change and pollution in the global spotlight, China's auto industry, one of the main engines of its booming economy, has come under scrutiny.
A recent report from the State Environmental Protection Administration said car fumes caused 79 percent of air contamination in China's highly polluted cities on bad days.
Auto sales in China, the world's second largest car market after the United States, soared in the first nine months of 2007 to 4.58 million units, a 23.84 percent increase from a year ago, Chinese state media said.
Detroit-based General Motors expects to sell more than one million vehicles in China for the first time this year, compared with 876,747 units in 2006.
For his part, SAIC chairman Chen Hong said his company planned to produce 10,000 hybrid fuel vehicles a year by 2010, as it steps up a commitment to find cleaner ways to power vehicles.
The global automobile industry is in the process of movoing production away from highly-developed countries and into emerging markets.
Sales in countries like China, India, Russia and South Africa have taken off. GM said in August these markets will account for a quarter of its new car sales, exceeding North America.
Friday, October 26, 2007
China will pursue exchange rate reform: deputy central bank head
MADRID (AFP) - China will pursue exchange rate reform, the deputy head of the Chinese central bank pledged here Friday in the face of mounting pressure in the West for Beijing to ease restrictions on its currency.
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"We will continue to promote exchange rate reforms," Liu Shiyu told the closing session of a Spanish-Chinese financial forum.
The United States and other key trading powers have repeatedly complained that the Chinese currency, the yuan, has been artificially undervalued by Beijing's relatively inflexibile exchange rate policies, giving Chinese exports an unfair advantage.
Group of Seven finance chiefs meeting in Washington last week hailed China's stated willingness to allow the yuan to float more freely but said that "in view of its rising current account surplus and domestic inflation we stress its need to allow an accelerated appreciation of its effective exchange rate."
US Treasury Secretary Henry Paulson on Tuesday reiterated the G7 appeal, arguing that "prospects for achieving sustained, balanced growth in China and in the world economy (would be) much greater, if the Chinese increase the pace of appreciation in the short term and implement a fully market-determined currency in the medium-term."
The following day the yuan broke through the key 7.5-to-the-dollar level for the first time in Wednesday trade but there was little expectation the rise would allay concerns in the United States.
"Psychologically this has a rather large impact, but technically the impact isn't huge," said Cai Sijuan, a forex dealer with Guangzhou Commercial Bank.
Speaking in Madrid Friday, Liu Shiyu also insisted that "China doesn't deliberately look for a trade surplus."
China routinely records large trade surpluses with the United States, which are seen in some of its trading partners as contributing to imblances in the global economy, notably in light of Washington's huge trade deficit.
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"We will continue to promote exchange rate reforms," Liu Shiyu told the closing session of a Spanish-Chinese financial forum.
The United States and other key trading powers have repeatedly complained that the Chinese currency, the yuan, has been artificially undervalued by Beijing's relatively inflexibile exchange rate policies, giving Chinese exports an unfair advantage.
Group of Seven finance chiefs meeting in Washington last week hailed China's stated willingness to allow the yuan to float more freely but said that "in view of its rising current account surplus and domestic inflation we stress its need to allow an accelerated appreciation of its effective exchange rate."
US Treasury Secretary Henry Paulson on Tuesday reiterated the G7 appeal, arguing that "prospects for achieving sustained, balanced growth in China and in the world economy (would be) much greater, if the Chinese increase the pace of appreciation in the short term and implement a fully market-determined currency in the medium-term."
The following day the yuan broke through the key 7.5-to-the-dollar level for the first time in Wednesday trade but there was little expectation the rise would allay concerns in the United States.
"Psychologically this has a rather large impact, but technically the impact isn't huge," said Cai Sijuan, a forex dealer with Guangzhou Commercial Bank.
Speaking in Madrid Friday, Liu Shiyu also insisted that "China doesn't deliberately look for a trade surplus."
China routinely records large trade surpluses with the United States, which are seen in some of its trading partners as contributing to imblances in the global economy, notably in light of Washington's huge trade deficit.
Monday, October 22, 2007
Why Beijing Maintains Its Hearty Thirst for Crude
By NATALIE OBIKO PEARSON and DAVID WINNING
The Wall Street Journal Online
LONDON -- Most of the world winced as crude-oil prices tiptoed above $90 a barrel, yet China -- the world's second-largest oil consumer behind the U.S. -- appears set to continue sucking up oil at ever higher prices.
Experts say the country isn't entirely immune to oil's price, but a timely combination of robust finances, strong political incentive to uphold costly fuel subsidies, and less exposure to world oil-price fluctuations than many realize is keeping China's oil demand seemingly insatiable.
Chinese consumers, though less energy-efficient than their Western counterparts, are shielded from the impact of surging oil prices by hefty government subsidies. The burden falls primarily on Chinese oil companies China National Offshore Oil Corp. and PetroChina Co., which are obliged to pay a windfall oil tax whenever the price rises above $40 a barrel. In the first half, the companies shelled out more than $2.3 billion. "There will be at some point a limit to that, unless [the companies] get additional funds from the Chinese government," said Simon Wardell, an energy analyst at Global Insight in London.
The Chinese government is comfortably positioned to offer such funds, sitting on $1.43 trillion in foreign-exchange reserves as of the end of September.
The Paris-based International Energy Agency said in its monthly oil-market report this month, that Beijing was likely to take whatever steps necessary to maintain stability. Talk of rolling back subsidies or imposing a fuel tax on consumers, "should probably not be taken at face value," it said.
Zhu Zhixin, a vice minister with the National Development and Reform Commission -- China's economic planning agency -- indicated last week that China was comfortable with record oil prices, hoping they would aid its drive to increase energy efficiency.
While the dollar hit a new low against the euro Friday, oil surged to an intraday record of $90.07 before closing down 87 cents at $88.60 on the New York Mercantile Exchange.The dollar's weakness has supported high oil prices because a lower dollar makes oil cheaper in countries paying in other currencies.
China hasn't benefited from the currency cushion as much as other nations because its currency is pegged to trade in a narrow band with the dollar. That is offset by the stimulus a low exchange rate gives its roaring exports. The yuan's depreciation against the euro in recent months has made Europe China's largest export market.
China's export sector could face weaker demand from the U.S. and Europe because of subprime-credit woes and market turmoil. But "this pessimistic scenario is far from certain," as the government would be likely to step in, the IEA said.
China also isn't as exposed as some might think: It still depends overwhelmingly on coal for energy, while 10% of its energy consumption comes from domestically produced oil. That means only about 10% of its energy consumption is exposed to world oil-price fluctuations -- though that is still a sizable 3.3 million barrels a day.
Meanwhile, imports from less traditional sources, such as the 50.5 million barrels of oil provided by Sudan between January and August, have offered some protection. Sudan's Dar Blend crude is highly acidic so it trades at a substantial discount to market prices and reduces China's need to tap more expensive sources.
Yet China isn't impervious to oil prices. Demand is expected to have grown a relatively sluggish 3%-5% in September from a year earlier. China also is more exposed to sudden disruptions because its stockpiles are lower than those in major industrialized countries, about 21 days' worth compared with 53.5 days for members of the Organization for Economic Cooperation and Development.
The Wall Street Journal Online
LONDON -- Most of the world winced as crude-oil prices tiptoed above $90 a barrel, yet China -- the world's second-largest oil consumer behind the U.S. -- appears set to continue sucking up oil at ever higher prices.
Experts say the country isn't entirely immune to oil's price, but a timely combination of robust finances, strong political incentive to uphold costly fuel subsidies, and less exposure to world oil-price fluctuations than many realize is keeping China's oil demand seemingly insatiable.
Chinese consumers, though less energy-efficient than their Western counterparts, are shielded from the impact of surging oil prices by hefty government subsidies. The burden falls primarily on Chinese oil companies China National Offshore Oil Corp. and PetroChina Co., which are obliged to pay a windfall oil tax whenever the price rises above $40 a barrel. In the first half, the companies shelled out more than $2.3 billion. "There will be at some point a limit to that, unless [the companies] get additional funds from the Chinese government," said Simon Wardell, an energy analyst at Global Insight in London.
The Chinese government is comfortably positioned to offer such funds, sitting on $1.43 trillion in foreign-exchange reserves as of the end of September.
The Paris-based International Energy Agency said in its monthly oil-market report this month, that Beijing was likely to take whatever steps necessary to maintain stability. Talk of rolling back subsidies or imposing a fuel tax on consumers, "should probably not be taken at face value," it said.
Zhu Zhixin, a vice minister with the National Development and Reform Commission -- China's economic planning agency -- indicated last week that China was comfortable with record oil prices, hoping they would aid its drive to increase energy efficiency.
While the dollar hit a new low against the euro Friday, oil surged to an intraday record of $90.07 before closing down 87 cents at $88.60 on the New York Mercantile Exchange.The dollar's weakness has supported high oil prices because a lower dollar makes oil cheaper in countries paying in other currencies.
China hasn't benefited from the currency cushion as much as other nations because its currency is pegged to trade in a narrow band with the dollar. That is offset by the stimulus a low exchange rate gives its roaring exports. The yuan's depreciation against the euro in recent months has made Europe China's largest export market.
China's export sector could face weaker demand from the U.S. and Europe because of subprime-credit woes and market turmoil. But "this pessimistic scenario is far from certain," as the government would be likely to step in, the IEA said.
China also isn't as exposed as some might think: It still depends overwhelmingly on coal for energy, while 10% of its energy consumption comes from domestically produced oil. That means only about 10% of its energy consumption is exposed to world oil-price fluctuations -- though that is still a sizable 3.3 million barrels a day.
Meanwhile, imports from less traditional sources, such as the 50.5 million barrels of oil provided by Sudan between January and August, have offered some protection. Sudan's Dar Blend crude is highly acidic so it trades at a substantial discount to market prices and reduces China's need to tap more expensive sources.
Yet China isn't impervious to oil prices. Demand is expected to have grown a relatively sluggish 3%-5% in September from a year earlier. China also is more exposed to sudden disruptions because its stockpiles are lower than those in major industrialized countries, about 21 days' worth compared with 53.5 days for members of the Organization for Economic Cooperation and Development.
Bear Stearns, China's CITIC Securities forge alliance
US investment bank and brokerage Bear Stearns and China's CITIC Securities Co. Ltd announced a strategic alliance Monday in a deal involving investments of at least two billion dollars.
Under its terms, the two securities firms will seek new business opportunities in China's rapidly-growing economy while forging a joint venture company to combine the existing businesses of both groups in Asia.
Bear Stearns will invest one billion dollars in CITIC, and the Chinese company will invest one billion dollars in the storied Wall Street investment firm giving it a six percent shareholding in Bear Stearns.
The firms said CITIC could potentially raise its shareholding in Bear Stearns to 9.9 percent. Bear Stears is seeking Chinese regulatory approval to acquire a similar stake in CITIC for around one billion dollars.
"This groundbreaking alliance will give Bear Stearns a unique footprint in one of the world's fastest-growing economies," Bear Stearns chairman and chief executive James Cayne said in a statement.
Wang Dongming, the chairman of CITIC Securities, praised the deal's prospects, saying the tie-up would enable the Chinese firm to expand its securities, investment banking and asset management operations.
China's government is CITIC's biggest shareholder through the CITIC Group.
As part of the accord, which has won approval from both companies' boards of directors, Bear Stearns and CITIC will form a new Hong Kong-based company which they said would offer "a broad range" of capital markets services on a pan-Asian basis.
Executives plan to market the companies' services to international companies seeking access to Asian capital markets as well as to Chinese companies looking to expand internationally.
The alliance was unveiled days after CITIC sought to squash market rumors Thursday that it had entered talks to buy a stake in Bear Stears.
Bear Stearns, which traces its history to 1923, has had a troubled year.
Earlier this month, it was forced to merge two mortgage subsidiaries and eliminate 310 jobs due to the downturn in the US housing market.
The job cuts came after Bear Stearns in late July disclosed hefty losses endured by two hedge funds it managed for wealthy clients.
It was forced to close down its Enhanced Leverage Fund following losses of hundreds of millions of dollars tied to risky bets in mortgage-backed securities.
A separate fund that Bear Stearns ran, the High-Grade Fund, also floundered because of similar wagers tied to subprime mortgages.
Such mortgage loans, granted to Americans with stretched finances, have been plagued by late payments and a rising tide of home foreclosures.
Bear Stearns overhauled its top management ranks in the wake of the hedge fund losses.
Investment funds controlled by British billionaire Joseph Lewis earlier this year amassed a seven percent stake in Bear Stearns for over 860 million dollars.
The tie-up between Bear Stearns and CITIC is subject to regulatory approvals in the United States and China.
Under its terms, the two securities firms will seek new business opportunities in China's rapidly-growing economy while forging a joint venture company to combine the existing businesses of both groups in Asia.
Bear Stearns will invest one billion dollars in CITIC, and the Chinese company will invest one billion dollars in the storied Wall Street investment firm giving it a six percent shareholding in Bear Stearns.
The firms said CITIC could potentially raise its shareholding in Bear Stearns to 9.9 percent. Bear Stears is seeking Chinese regulatory approval to acquire a similar stake in CITIC for around one billion dollars.
"This groundbreaking alliance will give Bear Stearns a unique footprint in one of the world's fastest-growing economies," Bear Stearns chairman and chief executive James Cayne said in a statement.
Wang Dongming, the chairman of CITIC Securities, praised the deal's prospects, saying the tie-up would enable the Chinese firm to expand its securities, investment banking and asset management operations.
China's government is CITIC's biggest shareholder through the CITIC Group.
As part of the accord, which has won approval from both companies' boards of directors, Bear Stearns and CITIC will form a new Hong Kong-based company which they said would offer "a broad range" of capital markets services on a pan-Asian basis.
Executives plan to market the companies' services to international companies seeking access to Asian capital markets as well as to Chinese companies looking to expand internationally.
The alliance was unveiled days after CITIC sought to squash market rumors Thursday that it had entered talks to buy a stake in Bear Stears.
Bear Stearns, which traces its history to 1923, has had a troubled year.
Earlier this month, it was forced to merge two mortgage subsidiaries and eliminate 310 jobs due to the downturn in the US housing market.
The job cuts came after Bear Stearns in late July disclosed hefty losses endured by two hedge funds it managed for wealthy clients.
It was forced to close down its Enhanced Leverage Fund following losses of hundreds of millions of dollars tied to risky bets in mortgage-backed securities.
A separate fund that Bear Stearns ran, the High-Grade Fund, also floundered because of similar wagers tied to subprime mortgages.
Such mortgage loans, granted to Americans with stretched finances, have been plagued by late payments and a rising tide of home foreclosures.
Bear Stearns overhauled its top management ranks in the wake of the hedge fund losses.
Investment funds controlled by British billionaire Joseph Lewis earlier this year amassed a seven percent stake in Bear Stearns for over 860 million dollars.
The tie-up between Bear Stearns and CITIC is subject to regulatory approvals in the United States and China.
China halts probe on U.S. exports
GENEVA, Switzerland (AP) -- China blocked the establishment of an investigation by the World Trade Organization into its restrictions on the sale of American movies, music and books that the United States requested Monday.
Under WTO rules, China has the right to block the investigation once. But it cannot delay the panel's establishment a second time, meaning the investigation will most likely be authorized next month.
The U.S. requested the probe at a meeting of the WTO's dispute settlement body, trade officials said.
The case is seen as concerning American filmmakers, online music providers and other U.S. media suppliers who claim to be suffering from what the U.S. calls "less favorable distribution opportunities" in China.
The WTO is already investigating three trade disputes between China and the United States. Washington accuses China of illegally hindering the import of foreign auto parts, providing government subsidies to a number of Chinese industries, and effectively providing a safe haven for product piracy and counterfeiting through excessively high thresholds for criminal prosecution.
China has filed its own complaint over the antidumping duties the United States applies on Chinese paper imports, the first case initiated by Beijing against Washington in five years.
U.S. consultations with China have failed to resolve the differences.
"Those consultations provided some helpful clarifications but unfortunately did not resolve the dispute," said the U.S. delegation to the WTO in its written communication to the chairman of the body.
Washington first brought the case to the WTO in April alongside its complaint over rampant product piracy in China, alleging that Beijing had failed to remove import and distribution restrictions on copyrighted U.S. goods including newspapers, magazines, CDs, DVDs and video games.
For some products, distribution is limited to Chinese state-owned companies, the U.S. said. For others, foreign companies face censorship rules that do not extend to Chinese competitors.
Under WTO rules, China has the right to block the investigation once. But it cannot delay the panel's establishment a second time, meaning the investigation will most likely be authorized next month.
The U.S. requested the probe at a meeting of the WTO's dispute settlement body, trade officials said.
The case is seen as concerning American filmmakers, online music providers and other U.S. media suppliers who claim to be suffering from what the U.S. calls "less favorable distribution opportunities" in China.
The WTO is already investigating three trade disputes between China and the United States. Washington accuses China of illegally hindering the import of foreign auto parts, providing government subsidies to a number of Chinese industries, and effectively providing a safe haven for product piracy and counterfeiting through excessively high thresholds for criminal prosecution.
China has filed its own complaint over the antidumping duties the United States applies on Chinese paper imports, the first case initiated by Beijing against Washington in five years.
U.S. consultations with China have failed to resolve the differences.
"Those consultations provided some helpful clarifications but unfortunately did not resolve the dispute," said the U.S. delegation to the WTO in its written communication to the chairman of the body.
Washington first brought the case to the WTO in April alongside its complaint over rampant product piracy in China, alleging that Beijing had failed to remove import and distribution restrictions on copyrighted U.S. goods including newspapers, magazines, CDs, DVDs and video games.
For some products, distribution is limited to Chinese state-owned companies, the U.S. said. For others, foreign companies face censorship rules that do not extend to Chinese competitors.
Friday, September 21, 2007
China could be top wind market in three years: Vestas
China could become the world's top wind power market in three to five years but will grow faster if it reforms its subsidy system, executives of major wind turbine maker Vestas said on Friday.
Chief Executive Ditlev Engel, in China to open the second and third in a series of seven plants due to come on line by the first quarter of 2008, said he was convinced Vestas could compete with cheaper local rivals on quality.
But the company, the world's biggest wind turbine manufacturer, made its $80 million investment with an eye on both Chinese and export markets. Turbines not sold in China could be integrated into Vestas' global supply chain, he added.
"China will keep growing now, as a very important part of the wind power business, not just on the sales side but also on the sourcing," Engel said in a group interview.
Asked when Beijing would become the top market, he said: "Within three to five years, we estimate."
He declined to estimate the speed of demand growth, but pointed out that China, with its 1.3 billion population, had less installed wind power than Denmark, with fewer than 6 million people.
But Engel also stressed that the European Union's push to get 20 percent of its energy from renewable sources by 2020, and growing support in the United States for greener power, meant China was not guaranteed the top place.
PRICING HURDLES
Currently the world's number two consumer of oil and top producer of coal, Beijing is keen to boost the amount of energy it gets from renewable sources to clean its skies and improve energy security.
But it has chosen to subsidize wind power through a bidding system that analysts and industry figures say pushes prices too low to fuel the rapid development China could enjoy.
The current system asks firms to submit bids stating how much they would charge for wind power from potential sites. Instead many would like to see a feed-in tariff system, which guarantees wind farms a fixed premium above regular prices.
"It is an issue we are also pushing whenever we have the chance of discussing it with authorities," Vestas' China Managing Director Lars Andersen said.
"We think one way to create a very sustainable industry is to have a feed-in tariff system," he said, adding that some provinces were already looking at changing the system.
A lack of roads and aging or inadequate grid networks also hamper development in some areas with good wind power potential.
But the industry is still booming. Most analysts think Beijing's target of 30 gigawatts (GW) of installed capacity by 2020 is too modest, as China is already nearing its 2010 goal.
Chinese firms have been piling into the sector, with around 30 companies risking a glut of turbines and the potential for price wars before an expected consolidation.
But Vestas says experience gives it a competitive edge.
"The most important issue for our clients over a 20-year period, which is the lifetime of the turbine, is reliability," Engel said.
"There are many firms in China trying to get involved in the business but our experience from around the world is that it is not as easy as it looks," he added.
The Jutland based firm has plants around the world, including in Germany, India, Spain, Australia and China, and 99.9 percent of its revenue originates outside Denmark, Engel said.
It is aiming for full-year sales of about 4.5 billion euros ($6.35 billion), and an operating margin of 7 to 9 percent.
Chief Executive Ditlev Engel, in China to open the second and third in a series of seven plants due to come on line by the first quarter of 2008, said he was convinced Vestas could compete with cheaper local rivals on quality.
But the company, the world's biggest wind turbine manufacturer, made its $80 million investment with an eye on both Chinese and export markets. Turbines not sold in China could be integrated into Vestas' global supply chain, he added.
"China will keep growing now, as a very important part of the wind power business, not just on the sales side but also on the sourcing," Engel said in a group interview.
Asked when Beijing would become the top market, he said: "Within three to five years, we estimate."
He declined to estimate the speed of demand growth, but pointed out that China, with its 1.3 billion population, had less installed wind power than Denmark, with fewer than 6 million people.
But Engel also stressed that the European Union's push to get 20 percent of its energy from renewable sources by 2020, and growing support in the United States for greener power, meant China was not guaranteed the top place.
PRICING HURDLES
Currently the world's number two consumer of oil and top producer of coal, Beijing is keen to boost the amount of energy it gets from renewable sources to clean its skies and improve energy security.
But it has chosen to subsidize wind power through a bidding system that analysts and industry figures say pushes prices too low to fuel the rapid development China could enjoy.
The current system asks firms to submit bids stating how much they would charge for wind power from potential sites. Instead many would like to see a feed-in tariff system, which guarantees wind farms a fixed premium above regular prices.
"It is an issue we are also pushing whenever we have the chance of discussing it with authorities," Vestas' China Managing Director Lars Andersen said.
"We think one way to create a very sustainable industry is to have a feed-in tariff system," he said, adding that some provinces were already looking at changing the system.
A lack of roads and aging or inadequate grid networks also hamper development in some areas with good wind power potential.
But the industry is still booming. Most analysts think Beijing's target of 30 gigawatts (GW) of installed capacity by 2020 is too modest, as China is already nearing its 2010 goal.
Chinese firms have been piling into the sector, with around 30 companies risking a glut of turbines and the potential for price wars before an expected consolidation.
But Vestas says experience gives it a competitive edge.
"The most important issue for our clients over a 20-year period, which is the lifetime of the turbine, is reliability," Engel said.
"There are many firms in China trying to get involved in the business but our experience from around the world is that it is not as easy as it looks," he added.
The Jutland based firm has plants around the world, including in Germany, India, Spain, Australia and China, and 99.9 percent of its revenue originates outside Denmark, Engel said.
It is aiming for full-year sales of about 4.5 billion euros ($6.35 billion), and an operating margin of 7 to 9 percent.
Mattel Apologizes to China Over Recalls
Mattel Apologizes to China Over Worldwide Recalls of Chinese-Made Toys
BEIJING (AP) -- U.S.-based toy giant Mattel Inc. issued an extraordinary apology to China on Friday over the recall of Chinese-made toys, taking the blame for design flaws and saying it had recalled more lead-tainted toys than justified.
The gesture by Thomas A. Debrowski, Mattel's executive vice president for worldwide operations, came in a meeting with Chinese product safety chief Li Changjiang, at which Li upbraided the company for maintaining weak safety controls.
"Our reputation has been damaged lately by these recalls," Debrowski told Li in a meeting at Li's office at which reporters were allowed to be present.
"And Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Debrowski said.
The carefully worded apology, delivered with company lawyers present, underscores China's central role in Mattel's business. The world's largest toy maker has been in China for 25 years and about 65 percent of its products are made in China.
The fence-mending call came ahead of an expected visit to China by Mattel's chairman and chief executive, Robert A. Eckert. Following the massive recall, Eckert told U.S. lawmakers he wanted to see Mattel's mainland inspections first hand.
Mattel ordered three high-profile recalls this summer involving more than 21 million Chinese-made toys, including Barbie doll accessories and toy cars because of concerns about lead paint and tiny magnets that could be swallowed.
The recalls have prompted complaints from China that manufacturers were being blamed for design faults introduced by Mattel.
On Friday, Debrowski acknowledged that "vast majority of those products that were recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in China's manufacturers."
Lead-tainted toys accounted for only a small percentage of all toys recalled, he said, adding that: "We understand and appreciate deeply the issues that this has caused for the reputation of Chinese manufacturers."
In a statement issued by the company, Mattel said its lead-related recalls were "overly inclusive, including toys that may not have had lead in paint in excess of the U.S. standards.
"The follow-up inspections also confirmed that part of the recalled toys complied with the U.S. standards," the statement said, without giving specific figures.
The co-owner of the company that supplied the lead-tainted toys to Mattel, Lee Der Industrial Co. Ltd., committed suicide in August shortly after the recall was announced.
Li reminded Debrowski that "a large part of your annual profit ... comes from your factories in China.
"This shows that our cooperation is in the interests of Mattel, and both parties should value our cooperation. I really hope that Mattel can learn lessons and gain experience from these incidents," Li said, adding that Mattel should "improve their control measures."
Li, the head of China's General Administration of Quality Supervision, Inspection and Quarantine, also expressed his appreciation for Debrowski's "objective and responsible attitude toward the recent toy recall."
Chinese food, drugs and other products ranging from toothpaste to seafood are under intense scrutiny because they have been found to contain potentially deadly substances.
But China has bristled at what it claims is a campaign to discredit its reputation as an exporter. It accuses foreign media and others of playing up its product safety issues as a form of protectionism.
Beijing insists that the vast majority of its exports are safe but has stepped up inspections of food, drugs and other products in response to the concerns.
Li told reporters after meeting with Debrowski that the government had taken swift action against Lee Der, shutting down its operations and revoking its business license. Four people from the company also face criminal charges, he said, without giving details.
Since this summer's recalls Mattel has announced plans to upgrade its safety system by certifying suppliers and increasing the frequency of random, unannounced inspections. It has fired several manufacturers.
Tests had found that lead levels in paint in recalled toys were as high as 110,000 parts per million, or nearly 200 times higher than the accepted safety ceiling of 600 parts per million.
Mattel's shares fell from the mid-$23 level following the first recall in early August, reaching as low as $20.97 on Sept. 10. They have since rebounded, and rose 63 cents to 2.7 percent to $24.19 in early trading Friday.
China has become a center for the world's toy-making industry, exporting $7.5 billion worth of toys last year.
BEIJING (AP) -- U.S.-based toy giant Mattel Inc. issued an extraordinary apology to China on Friday over the recall of Chinese-made toys, taking the blame for design flaws and saying it had recalled more lead-tainted toys than justified.
The gesture by Thomas A. Debrowski, Mattel's executive vice president for worldwide operations, came in a meeting with Chinese product safety chief Li Changjiang, at which Li upbraided the company for maintaining weak safety controls.
"Our reputation has been damaged lately by these recalls," Debrowski told Li in a meeting at Li's office at which reporters were allowed to be present.
"And Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Debrowski said.
The carefully worded apology, delivered with company lawyers present, underscores China's central role in Mattel's business. The world's largest toy maker has been in China for 25 years and about 65 percent of its products are made in China.
The fence-mending call came ahead of an expected visit to China by Mattel's chairman and chief executive, Robert A. Eckert. Following the massive recall, Eckert told U.S. lawmakers he wanted to see Mattel's mainland inspections first hand.
Mattel ordered three high-profile recalls this summer involving more than 21 million Chinese-made toys, including Barbie doll accessories and toy cars because of concerns about lead paint and tiny magnets that could be swallowed.
The recalls have prompted complaints from China that manufacturers were being blamed for design faults introduced by Mattel.
On Friday, Debrowski acknowledged that "vast majority of those products that were recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in China's manufacturers."
Lead-tainted toys accounted for only a small percentage of all toys recalled, he said, adding that: "We understand and appreciate deeply the issues that this has caused for the reputation of Chinese manufacturers."
In a statement issued by the company, Mattel said its lead-related recalls were "overly inclusive, including toys that may not have had lead in paint in excess of the U.S. standards.
"The follow-up inspections also confirmed that part of the recalled toys complied with the U.S. standards," the statement said, without giving specific figures.
The co-owner of the company that supplied the lead-tainted toys to Mattel, Lee Der Industrial Co. Ltd., committed suicide in August shortly after the recall was announced.
Li reminded Debrowski that "a large part of your annual profit ... comes from your factories in China.
"This shows that our cooperation is in the interests of Mattel, and both parties should value our cooperation. I really hope that Mattel can learn lessons and gain experience from these incidents," Li said, adding that Mattel should "improve their control measures."
Li, the head of China's General Administration of Quality Supervision, Inspection and Quarantine, also expressed his appreciation for Debrowski's "objective and responsible attitude toward the recent toy recall."
Chinese food, drugs and other products ranging from toothpaste to seafood are under intense scrutiny because they have been found to contain potentially deadly substances.
But China has bristled at what it claims is a campaign to discredit its reputation as an exporter. It accuses foreign media and others of playing up its product safety issues as a form of protectionism.
Beijing insists that the vast majority of its exports are safe but has stepped up inspections of food, drugs and other products in response to the concerns.
Li told reporters after meeting with Debrowski that the government had taken swift action against Lee Der, shutting down its operations and revoking its business license. Four people from the company also face criminal charges, he said, without giving details.
Since this summer's recalls Mattel has announced plans to upgrade its safety system by certifying suppliers and increasing the frequency of random, unannounced inspections. It has fired several manufacturers.
Tests had found that lead levels in paint in recalled toys were as high as 110,000 parts per million, or nearly 200 times higher than the accepted safety ceiling of 600 parts per million.
Mattel's shares fell from the mid-$23 level following the first recall in early August, reaching as low as $20.97 on Sept. 10. They have since rebounded, and rose 63 cents to 2.7 percent to $24.19 in early trading Friday.
China has become a center for the world's toy-making industry, exporting $7.5 billion worth of toys last year.
Tuesday, September 11, 2007
China bans lead paint on US toy exports
China signed an agreement Tuesday to prohibit the use of lead paint on toys exported to the United States.
Unveiled at the second joint U.S-China summit on consumer product safety, the pact was negotiated in the wake of the recalls of millions of playthings decorated with paint containing the toxic metal.
China has faced stiff pressure this year after an array of its exports, including toys, pet food ingredients, fish and jewelry, have been recalled over health and safety concerns.
In the pact, Beijing also pledged to step up inspections of its exports and take other steps to ensure that those products meet U.S. standards, said Nancy Nord, acting head of the U.S. Consumer Product Safety Commission. That will include joint efforts by the two countries to increase understanding of those standards among manufacturers and exporters.
The absence of such an understanding allowed paint suppliers to provide lead paint to companies making toys sold by Mattel Inc. and other companies, said Chuanzhong Wei, vice minister of China's General Administration of Quality Supervision, Inspection and Quarantine. Lead paint has been banned on toys made in the U.S. since 1978.
"That's why we decided we should intensify the exchanges between importers and exporters in the field of standards," Wei said, speaking through a translator.
U.S. and Chinese regulators also agreed to hold regular product safety talks, including monthly discussions of recall activity and trends, Nord said. China also will help the CPSC trace products to their source when problems do arise.
The United States and China also agreed to cooperate on improving the overall safety of the latter country's toy exports, as well as fireworks, cigarette lighters and electrical products.
"This is an important signal from the Chinese government that it is serious about working with CPSC to keep dangerous products out of American homes," Nord said.
But Wei stressed that most Chinese exports are safe, echoing a line that Beijing repeatedly has used in defending the quality of its products. While acknowledging more could be done, Wei said that 100 percent safety was impossible and warned against overemphasizing what he characterized as limited problems.
"We should not over-propagandize the problem," Wei said.
Unveiled at the second joint U.S-China summit on consumer product safety, the pact was negotiated in the wake of the recalls of millions of playthings decorated with paint containing the toxic metal.
China has faced stiff pressure this year after an array of its exports, including toys, pet food ingredients, fish and jewelry, have been recalled over health and safety concerns.
In the pact, Beijing also pledged to step up inspections of its exports and take other steps to ensure that those products meet U.S. standards, said Nancy Nord, acting head of the U.S. Consumer Product Safety Commission. That will include joint efforts by the two countries to increase understanding of those standards among manufacturers and exporters.
The absence of such an understanding allowed paint suppliers to provide lead paint to companies making toys sold by Mattel Inc. and other companies, said Chuanzhong Wei, vice minister of China's General Administration of Quality Supervision, Inspection and Quarantine. Lead paint has been banned on toys made in the U.S. since 1978.
"That's why we decided we should intensify the exchanges between importers and exporters in the field of standards," Wei said, speaking through a translator.
U.S. and Chinese regulators also agreed to hold regular product safety talks, including monthly discussions of recall activity and trends, Nord said. China also will help the CPSC trace products to their source when problems do arise.
The United States and China also agreed to cooperate on improving the overall safety of the latter country's toy exports, as well as fireworks, cigarette lighters and electrical products.
"This is an important signal from the Chinese government that it is serious about working with CPSC to keep dangerous products out of American homes," Nord said.
But Wei stressed that most Chinese exports are safe, echoing a line that Beijing repeatedly has used in defending the quality of its products. While acknowledging more could be done, Wei said that 100 percent safety was impossible and warned against overemphasizing what he characterized as limited problems.
"We should not over-propagandize the problem," Wei said.
China had "unique role" in Darfur peace bid: envoy
China's Darfur envoy said on Tuesday Beijing had played a "unique role" in efforts to bring peace to the Sudanese region and defended its policy of economic ties with Sudan without political strings.
Although China has been criticized for watering down U.N. resolutions on Darfur, Liu Guijin said it backed the world body's approach that will culminate in the dispatch of a "hybrid" 26,000-strong U.N.-African Union peacekeeping force.
"The Chinese side has made a huge effort," Liu told a news conference. "Particularly on the hybrid peacekeeping operation the Chinese side has utilized all kinds of channels and talked to the Sudanese government and persuaded them as an equal partner to accept the ... plan."
"On the resolution of the Darfur issue, we have played a very constructive and even unique role," he said, speaking through an interpreter.
"We say that ... if you only utilize the exertion of pressure, sanctions, and even military power, that is not conducive to the settlement of the issue."
China is to send more than 300 engineering troops to Darfur next month to help prepare for the peacekeeping force.
China, however, has been seen as the main opponent on the U.N. Security Council of the argument by Western countries that sanctions should be held in the background to force Khartoum to comply with peace moves.
Liu was speaking after U.N. Secretary-General Ban Ki-moon announced in Khartoum last week that Sudan's government and rebel groups from Darfur would start peace talks on October 27.
International experts estimate some 200,000 have died and over 2 million have been driven from their homes during 4-1/2 years of fighting in Darfur. Sudan puts the death toll from the conflict at just 9,000.
In New York, the Chinese envoy has met top U.N. political and peacekeeping officials. Last week he met U.S. lawmakers and pressure groups in Washington over threats that China's Sudan policy could affect next year's Beijing Olympic Games.
Asked about Beijing's provision of assistance without political conditions, Liu said this was its standard policy towards what it considers fellow developing nations.
Energy-hungry China is a major investor in Sudan's oil industry at a time when Western majors are holding back because of Darfur, but Liu described oil ties between the two countries as "transparent, mutually beneficial and non-exclusive."
To say that China's oil exploration in Sudan was tantamount "to supporting the Sudanese government to kill people in Darfur is not justified," he said.
Although China has been criticized for watering down U.N. resolutions on Darfur, Liu Guijin said it backed the world body's approach that will culminate in the dispatch of a "hybrid" 26,000-strong U.N.-African Union peacekeeping force.
"The Chinese side has made a huge effort," Liu told a news conference. "Particularly on the hybrid peacekeeping operation the Chinese side has utilized all kinds of channels and talked to the Sudanese government and persuaded them as an equal partner to accept the ... plan."
"On the resolution of the Darfur issue, we have played a very constructive and even unique role," he said, speaking through an interpreter.
"We say that ... if you only utilize the exertion of pressure, sanctions, and even military power, that is not conducive to the settlement of the issue."
China is to send more than 300 engineering troops to Darfur next month to help prepare for the peacekeeping force.
China, however, has been seen as the main opponent on the U.N. Security Council of the argument by Western countries that sanctions should be held in the background to force Khartoum to comply with peace moves.
Liu was speaking after U.N. Secretary-General Ban Ki-moon announced in Khartoum last week that Sudan's government and rebel groups from Darfur would start peace talks on October 27.
International experts estimate some 200,000 have died and over 2 million have been driven from their homes during 4-1/2 years of fighting in Darfur. Sudan puts the death toll from the conflict at just 9,000.
In New York, the Chinese envoy has met top U.N. political and peacekeeping officials. Last week he met U.S. lawmakers and pressure groups in Washington over threats that China's Sudan policy could affect next year's Beijing Olympic Games.
Asked about Beijing's provision of assistance without political conditions, Liu said this was its standard policy towards what it considers fellow developing nations.
Energy-hungry China is a major investor in Sudan's oil industry at a time when Western majors are holding back because of Darfur, but Liu described oil ties between the two countries as "transparent, mutually beneficial and non-exclusive."
To say that China's oil exploration in Sudan was tantamount "to supporting the Sudanese government to kill people in Darfur is not justified," he said.
China fund to invest abroad
China Southern Fund Management will this month become the first Chinese fund house to invest its clients' money in overseas stocks, as the liberalisation of China's domestic funds continues.
The company, one of the three biggest fund managers in China by assets, is the first to take advantage of a June decision by Chinese regulators to expand the scope of the Qualified Domestic Institutional Investor (QDII) scheme, which allows capital outflows through banks, brokerages and fund houses.
Fund managers with QDII quotas were previously only allowed to invest in bonds and fixed-income products, which made it difficult to generate high returns given China's policy of steadily appreciating the yuan. Some commercial banks were earlier given QDII quotas that allow them to launch products that invest up to 50 per cent of proceeds into stocks.
This expansion of the QDII scheme will encourage a further $10bn-$15bn outflow of capital in its initial stages, said Citi Investment Research China strategist Xue Lan. Four other fund firms, including JPMorgan's China asset management venture, are setting up similar funds.
China Southern Management's fund will invest in 10 overseas equity markets, including the US, Japan, India and Hong Kong. "By investing in 10 countries we can spread risk and reduce losses related to the appreciation of the Rmb," said chief executive Gao Liangyu.
"The government has given us complete freedom when it comes to the size of this fund, as they want as much money to leave the country as possible," he added. "The level of interest will decide how big this fund is." The fund will be launched on September 12 and subscription closes on September 28.
Beijing has been stepping up measures to encourage greater outflows and give more investment alternatives for domestic investors as liquidity continued to pour into the Shanghai stock market. It last month announced a pilot scheme giving retail investors direct access to Hong Kong's stock market, which has been inaccessible because of China's currency controls.
Ms Xue said domestic investors would likely use QDII stock funds like China Southern's to diversify their investments. "One doesn't always invest just for returns. This fund offers different angles and exposure to investors," she said.
The company, one of the three biggest fund managers in China by assets, is the first to take advantage of a June decision by Chinese regulators to expand the scope of the Qualified Domestic Institutional Investor (QDII) scheme, which allows capital outflows through banks, brokerages and fund houses.
Fund managers with QDII quotas were previously only allowed to invest in bonds and fixed-income products, which made it difficult to generate high returns given China's policy of steadily appreciating the yuan. Some commercial banks were earlier given QDII quotas that allow them to launch products that invest up to 50 per cent of proceeds into stocks.
This expansion of the QDII scheme will encourage a further $10bn-$15bn outflow of capital in its initial stages, said Citi Investment Research China strategist Xue Lan. Four other fund firms, including JPMorgan's China asset management venture, are setting up similar funds.
China Southern Management's fund will invest in 10 overseas equity markets, including the US, Japan, India and Hong Kong. "By investing in 10 countries we can spread risk and reduce losses related to the appreciation of the Rmb," said chief executive Gao Liangyu.
"The government has given us complete freedom when it comes to the size of this fund, as they want as much money to leave the country as possible," he added. "The level of interest will decide how big this fund is." The fund will be launched on September 12 and subscription closes on September 28.
Beijing has been stepping up measures to encourage greater outflows and give more investment alternatives for domestic investors as liquidity continued to pour into the Shanghai stock market. It last month announced a pilot scheme giving retail investors direct access to Hong Kong's stock market, which has been inaccessible because of China's currency controls.
Ms Xue said domestic investors would likely use QDII stock funds like China Southern's to diversify their investments. "One doesn't always invest just for returns. This fund offers different angles and exposure to investors," she said.
Sunday, September 9, 2007
Gas Deals Signal Shifts for China
BEIJING -- China's decision to sign two deals to import natural gas from Australia signals its willingness to pay more for cleaner energy and deepens economic ties with Australia as China shifts away from the Middle East for natural-gas supplies.
Last week, China's biggest oil-and-gas company, PetroChina Co., signed deals to import natural gas from Australian company Woodside Energy Ltd., which owns nearly half the Browse natural-gas field, and from Royal Dutch Shell PLC, owner of a stake in Australia's giant Gorgon gas field, which is half-owned by Chevron Corp.
Valued at about $37 billion over 15 to 20 years, PetroChina's deal with Woodside Energy to import liquefied natural gas, or LNG -- gas that is supercooled for transport on ships -- was hailed in banner headlines in Australia as the country's biggest single export ever. Woodside Energy is a unit of Woodside Petroleum Ltd.
"It's an affirmation for demand for cleaner fuels and a confirmation that Chinese companies believe that providing these fuels can be a profitable business in China," said George Gilboy, chief representative for Woodside in China and one of the negotiators of the deal.
Underscoring the importance of the agreement for the two nations, the deals were signed on the sidelines of the gathering in Sydney of 21 leaders from the Pacific rim for the Asia-Pacific Economic Cooperation summit, including Australian Prime Minister John Howard and Chinese Premier Hu Jintao.
Australia and China have been stepping up economic cooperation, especially in resources. Australia has agreed to supply uranium to China and already sells iron ore, nickel and other ingredients for steel essential for China's rapid urbanization and racing economic growth.
The China deals also help secure the future of two of Australia's biggest natural-gas projects. Development and environmental concerns had dogged the Gorgon project, in which Royal Dutch Shell and Exxon Mobil Corp. each own 25% stakes.
In part, the Woodside and Shell deals reflect a shift in China's domestic energy market. Though natural gas typically competes with coal to supply power plants, China's relatively low, state-set electricity rates and low prices of cheap -- but dirty -- domestic coal have made gas-fired power plants uneconomical. As a result, China's coal-fired power plants pollute the country's skies and make China the world's second-biggest producer of greenhouse gases after the U.S.
However, a major market for natural gas has emerged among China's growing urban middle class. Cities have switched to newly built natural-gas networks as a cleaner alternative to cheaper fuel such as coal-derived gas for cooking and heating. In an unregulated market, consumers in China's richest areas such as Shanghai or Shenzhen are willing to pay more for a cleaner fuel as incomes and aspirations rise.
China is also looking to import more pipeline gas from its neighbors, including Russia, and is trying to develop domestic fields. But until now, LNG had stalled because China was unwilling to pay more after international prices rose.
Because of that, analysts have expected China would turn to the Middle East, especially Iran, which has some of the world's biggest fossil-fuel reserves. But talks on a multibillion-dollar deal have dragged on for years. It is also unclear if Iran, which is under U.S. sanctions for allegedly sponsoring terror, could develop the fields.
China sees Australia as a safer option. "Security of supply is paramount," said John Harris, a Beijing-based LNG analyst at energy consultancy Cambridge Energy Research Associates.
Meanwhile, Woodside, in getting China to sign up at an early stage of the field's development, is helping protect its investment. "What's innovative for Woodside is to secure a foundation customer at an early stage, so Woodside and its partners can push forward development as quickly as possible," Woodside's Mr. Gilboy said.
Nonetheless, the deals with PetroChina, the Hong Kong-listed arm of China's state-owned China National Petroleum Corp., aren't final, and it will be years before any gas is delivered. PetroChina's American depositary receipts are traded on the New York Stock Exchange.
Last week, China's biggest oil-and-gas company, PetroChina Co., signed deals to import natural gas from Australian company Woodside Energy Ltd., which owns nearly half the Browse natural-gas field, and from Royal Dutch Shell PLC, owner of a stake in Australia's giant Gorgon gas field, which is half-owned by Chevron Corp.
Valued at about $37 billion over 15 to 20 years, PetroChina's deal with Woodside Energy to import liquefied natural gas, or LNG -- gas that is supercooled for transport on ships -- was hailed in banner headlines in Australia as the country's biggest single export ever. Woodside Energy is a unit of Woodside Petroleum Ltd.
"It's an affirmation for demand for cleaner fuels and a confirmation that Chinese companies believe that providing these fuels can be a profitable business in China," said George Gilboy, chief representative for Woodside in China and one of the negotiators of the deal.
Underscoring the importance of the agreement for the two nations, the deals were signed on the sidelines of the gathering in Sydney of 21 leaders from the Pacific rim for the Asia-Pacific Economic Cooperation summit, including Australian Prime Minister John Howard and Chinese Premier Hu Jintao.
Australia and China have been stepping up economic cooperation, especially in resources. Australia has agreed to supply uranium to China and already sells iron ore, nickel and other ingredients for steel essential for China's rapid urbanization and racing economic growth.
The China deals also help secure the future of two of Australia's biggest natural-gas projects. Development and environmental concerns had dogged the Gorgon project, in which Royal Dutch Shell and Exxon Mobil Corp. each own 25% stakes.
In part, the Woodside and Shell deals reflect a shift in China's domestic energy market. Though natural gas typically competes with coal to supply power plants, China's relatively low, state-set electricity rates and low prices of cheap -- but dirty -- domestic coal have made gas-fired power plants uneconomical. As a result, China's coal-fired power plants pollute the country's skies and make China the world's second-biggest producer of greenhouse gases after the U.S.
However, a major market for natural gas has emerged among China's growing urban middle class. Cities have switched to newly built natural-gas networks as a cleaner alternative to cheaper fuel such as coal-derived gas for cooking and heating. In an unregulated market, consumers in China's richest areas such as Shanghai or Shenzhen are willing to pay more for a cleaner fuel as incomes and aspirations rise.
China is also looking to import more pipeline gas from its neighbors, including Russia, and is trying to develop domestic fields. But until now, LNG had stalled because China was unwilling to pay more after international prices rose.
Because of that, analysts have expected China would turn to the Middle East, especially Iran, which has some of the world's biggest fossil-fuel reserves. But talks on a multibillion-dollar deal have dragged on for years. It is also unclear if Iran, which is under U.S. sanctions for allegedly sponsoring terror, could develop the fields.
China sees Australia as a safer option. "Security of supply is paramount," said John Harris, a Beijing-based LNG analyst at energy consultancy Cambridge Energy Research Associates.
Meanwhile, Woodside, in getting China to sign up at an early stage of the field's development, is helping protect its investment. "What's innovative for Woodside is to secure a foundation customer at an early stage, so Woodside and its partners can push forward development as quickly as possible," Woodside's Mr. Gilboy said.
Nonetheless, the deals with PetroChina, the Hong Kong-listed arm of China's state-owned China National Petroleum Corp., aren't final, and it will be years before any gas is delivered. PetroChina's American depositary receipts are traded on the New York Stock Exchange.
Monday, September 3, 2007
More Mideast-China investment 'hampered by culture'
Greater investment between the Middle East and China is being hampered by a lack of understanding between the two cultures, a conference in the United Arab Emirates heard on Monday.
The warning came despite trade between the two doubling since the year 2000 and projections of massive investment by some Middle Eastern states in Asia over the next five years -- with most of that money going to China.
"There is a cultural gap that acts as a barrier" to trade, the chairman of the Dubai-based Gulf Research Centre told delegates at the China-Middle East Investment Forum in Dubai.
Abdulaziz Sager said he feared the lack of a common language as well as a limited knowledge of business culture between both regions could prevent economic ties from developing further.
His concerns were echoed by China's Huang Xiaoxiang, the vice governor of China's Sichuan province, who called for greater interaction.
Huang told delegates that China had to do more to tap liquidity in the Middle East, particularly in the wealthy Gulf Cooperation Council states.
The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
"There is a lack of effective communication between both sides. We need to tighten understanding of cultural backgrounds and deepen our research on Middle East investment funds," Huang said.
Sager said the oil-rich GCC members in particular will have to increase their cultural understanding of China as the energy- and commodity-hungry colossus looks set to continue its phenomenal annual double-digit growth.
Annual trade between the Middle East and China has doubled to 240 billion dollars since 2000, the Dubai International Financial Centre (DIFC) said in a statement.
It added that banks were predicting that GCC states would invest as much as 250 billion dollars in Asia over the next five years, mainly in China.
In March, Saudi Arabia's state-owned oil firm Aramco announced it was undertaking two joint ventures in China worth about five billion dollars, alongside fellow oil giants Exxon Mobil and Sinopec.
And in April two Chinese companies signed a framework agreement to build two aluminium processing plants and related facilities worth nearly five billion dollars in Saudi Arabia.
Nasser Saidi, chief economist at the DIFC, said that he also believes that more needs to be done to bridge the cultural gap between the Middle East and China.
"These are very early days and there is a discovery process on both sides," Saidi told delegates. He urged governments to sponsor more cultural exchanges and encourage business figures to attend more joint trade fairs and conferences.
Sager said the Middle East should rely less on the West in economic and cultural terms and look more to China, which is home to millions of Muslims and has no recent history of interference in the region's political affairs.
The warning came despite trade between the two doubling since the year 2000 and projections of massive investment by some Middle Eastern states in Asia over the next five years -- with most of that money going to China.
"There is a cultural gap that acts as a barrier" to trade, the chairman of the Dubai-based Gulf Research Centre told delegates at the China-Middle East Investment Forum in Dubai.
Abdulaziz Sager said he feared the lack of a common language as well as a limited knowledge of business culture between both regions could prevent economic ties from developing further.
His concerns were echoed by China's Huang Xiaoxiang, the vice governor of China's Sichuan province, who called for greater interaction.
Huang told delegates that China had to do more to tap liquidity in the Middle East, particularly in the wealthy Gulf Cooperation Council states.
The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
"There is a lack of effective communication between both sides. We need to tighten understanding of cultural backgrounds and deepen our research on Middle East investment funds," Huang said.
Sager said the oil-rich GCC members in particular will have to increase their cultural understanding of China as the energy- and commodity-hungry colossus looks set to continue its phenomenal annual double-digit growth.
Annual trade between the Middle East and China has doubled to 240 billion dollars since 2000, the Dubai International Financial Centre (DIFC) said in a statement.
It added that banks were predicting that GCC states would invest as much as 250 billion dollars in Asia over the next five years, mainly in China.
In March, Saudi Arabia's state-owned oil firm Aramco announced it was undertaking two joint ventures in China worth about five billion dollars, alongside fellow oil giants Exxon Mobil and Sinopec.
And in April two Chinese companies signed a framework agreement to build two aluminium processing plants and related facilities worth nearly five billion dollars in Saudi Arabia.
Nasser Saidi, chief economist at the DIFC, said that he also believes that more needs to be done to bridge the cultural gap between the Middle East and China.
"These are very early days and there is a discovery process on both sides," Saidi told delegates. He urged governments to sponsor more cultural exchanges and encourage business figures to attend more joint trade fairs and conferences.
Sager said the Middle East should rely less on the West in economic and cultural terms and look more to China, which is home to millions of Muslims and has no recent history of interference in the region's political affairs.
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