We can expect forceful measures as Chinese President Hu Jintao has vowed to curb rising food prices and address a booming real estate market.

Hu Jintao said, ‘The central government attaches great importance to commodity prices and has made it an important task to stabilize them. A series of forceful measures have been taken and will continue to be taken to ensure the normal life of the masses.’

According to official statistics inflation hit an 11-year high of 6.9% in November. This was mainly caused by an 18.2% rise in food prices with pork up a staggering 56%.

Hu Jintao also vowed to curb rising housing prices to help low-income families and to provide them with better health care benefits, two other top concerns of ordinary Chinese.

He said, ‘The Party and government are very much concerned about the housing problem of the low-income masses.
‘The central government has made arrangements to speed up the low-rent housing system, improve the affordable housing system and ease the housing difficulties of urban low-income families.’

Hu made the comments as he visited a family at their small rental home in Tianjin and a retirement facility in the city.
Source: AFP

The National Development and reform Commission (NDRC), China’s top economic planning body, has urged local authorities to watch out for the effects of inflation.

Bi Jingquan, deputy minister of NDRC at a national meeting on the price supervision held Friday in this capital of south China’s Guangdong Province, said, ‘When the price of a certain product increases sharply, measures should be made immediately to curb its spreading effects. The rising margin of the price should be strictly controlled, when it surpasses the increasing range of its cost.’

He said that the combination of price rises on the global market and the exorbitant money supply on the domestic market will make it difficult to totally contain inflation next year.

Yao Jingyuan, chief economist of the National Bureau of Statistics and seen here, said the consumer price index, a major gauge of inflation, is likely to climb 4.7% in 2007.

Bi Jingquan said price supervision by market regulatory authorities will be one major way of stabilizing market prices.

He warned local price regulatory authorities to watch out for situation which might encourage inflation such as the Spring Festival (China’s Lunar New Year, which will start on Feb. 6, 2008), the Olympic Games in August and the National Day holiday in October.

He asked local authorities to check irregular price rises,
Source: China View

China’s inflation rate reached the highest level in more than a decade in November, while the country’s trade surplus continued to soar.

The government said the country’s consumer prices — a key indicator for inflation — went up 6.9% compared to a year earlier. This is the highest inflation level since December, 1996.

Andrew Freris, chief economist for the Asia Pacific region at BNP Paribas Bank in Hong Kong, says the reason the consumer price index was so high in November was not a further increase of food prices. Rather, he says, the government had raised state-set prices for diesel and gasoline by 10% in an effort to curb demand amid a fuel shortage.

He said, ‘Meat prices are now stationary in the sense that they stopped accelerating and I expect that the December prices will show that they are now coming down.’

And he expects the inflation rate to come down to about 5% in December.

Inflation has surged in recent months — mainly because of double-digit increases in food prices especially of pork, China’s staple meat. This is due to shortages after a disease killed millions of pigs and because of the rising cost of feed grains.

China’s trade surplus, meanwhile, remained high in November, totaling more than $26 billion.

The numbers suggest that the demand for goods made in China remains strong, despite mounting worries over product safety and several recalls by foreign toy companies this year.

The country exported goods worth more than $117 billion — up 22% from the same month last year.
Source: China Confidential

Chinese officials held a high-profile meeting in Beijing to review economic strategies for the next year. Window of China reported that the primary concerns of Chinese people with the future economy are reflected in the following catchphrases:

CPI. China’s consumer price index, an inflation indicator, was pushed up to 4.4% in the first ten months. Monthly CPI was above 6% for three straight months from to August to October. The National Bureau of Statistics has forecast the annual CPI at 4.5 to 4.6% this year.
Energy conservation and emission reduction. China has earmarked RMB23.5 billion (US$3.18 billion) to save energy and reduce emission. Concrete measures are paying off, as the energy consumption per GDP unit fell by 3% in first three quarters.
Low rent housing. The housing prices of 70 large and middle-sized cities in China surged 9.5% year-on-year in October alone.
Interest rate rises. China raised the benchmark interest rates by 27 basis points to 3.87% and 7.29% respectively for deposit and loan from September 15, the fifth time the country has done so this year. The move did not end China’s negative real interest rate, but it helped to offset the influence of high inflation on people’s money in bank.
Renminbi appreciation. The Chinese renminbi hit a new high of 7.3872 against the U.S. dollar on November 27.
Shanghai Composite Index.China’s benchmark Shanghai Composite Index rocketed to over 6,000 points by October this year from below 3,000 points in January.
Property income. Property income refers to the capital gains from bank deposits, securities, real estate, automobiles and collections. Currently, China’s per capita property income contributed only 2% to the country’s per capita disposable income on average after it rose 26.5% to RMB240 (US$32) last year.
Unified company income rate. The enterprise income tax law, adopted by Chinese legislature on March 16, set unified income tax rate for domestic and foreign companies at 25%. The new tax on foreign firms is still a moderate one compared with many other countries.

The editor for this splendid piece was Yan Liang. Click on Source to read a much fuller version.
Source: Window of China

The People’s Bank of China has said on its web site China will raise the reserve requirement ratio by half a percentage point for commercial banks in an effort to cool the booming economy.

The move, which will take effect from November 26, will push the ratio to a ten-year high of 13.5%.

It is the ninth hike this year aimed at ’strengthening liquidity management in the banking system and checking excessive credit growth.’ This according to the central bank on its Web site.

The move came shortly after the central bank announced earlier this week its prediction that China’s economy would expand more than 11% for the whole of 2007, with inflation rising 4.5%.

To ensure rational credit growth, the central bank also said it would continue to implement a tightened monetary policy and take a variety of measures to strengthen the macro-control.

By the end of September, the M2, which covers cash in circulation plus all deposits, grew by 18.45% from a year ago to RMB39.3 trillion (US$5.2 trillion.)

China’s commercial banks lent out RMB3.36 trillion in the first nine months of this year, surpassing the full-year figure of 2006.

Although one knew of the growth and growth of China and its exports it comes as a surprise to read that China Life Insurance has passed AT&T in market value, giving China five of the world’s 10 largest companies. The United States only has three.

Allowance must be made for the fact that many, most?, of the world’s financial analysts says China’s stock is overvalued but it it nevertheless astounding to see that in the area by which the United States judges the rest of the world — the stock market — China reigns supreme.

China’s stock rally has almost tripled its benchmark index this year. China’s households are pouring more of their $2.3 trillion savings into shares to beat inflation, which exceeds the return on bank deposits, and to profit from the world’s fastest growth among major economies.

Beijing-based China Life, the nation’s largest insurer, gained 1.1% in Hong Kong and added 6.7% in Shanghai valuing the company at RMB1.94 trillion yuan, or $259.1 billion.
China Life, PetroChina Co., China Mobile, Industrial and Commercial Bank of China and China Petroleum and Chemical are now in the list of the world’s 10 biggest companies by market value.
However, as an indication to the skew in valuations only two of those are in the top 50 by sales.

The CSI 300 Index, which tracks shares traded on the Shanghai and Shenzhen stock exchanges, has risen 170% this year, the best performance among 90 global benchmarks tracked by Bloomberg. Hong Kong’s Hang Seng Index, which is dominated by Chinese companies, has gained 58%.

Only China Petroleum and Chemical, or Sinopec, and PetroChina are among the world’s biggest 50 companies by revenue.

Investors pay 78 times estimated full-year profit for China Life in Shanghai and 42 times in Hong Kong. That compares to 9.3 times for New-York-based American International Group, the biggest U.S. insurer, and 8.4 times for Europe’s largest, Munich-based Allianz.

China’s CSI 300 benchmark is valued at 43 times estimated earnings, compared with the average 29 times for Chinese companies on the Hang Seng China Enterprises Index, according to data compiled by Bloomberg. In the U.S., home to the world’s biggest stock market, the S&P 500 Index is valued at 16 times.

Fraser Howie, co-author of the book Privatizing China: The Stock Markets and Their Role in Corporate Reform, said, ‘Chinese companies are far too expensive from any rational measure. It’s a bubble and in a bubble things are priced wrongly.”

Leslie Phang, who helps manage $1 billion at Commonwealth Private Bank in Singapore, said, ‘It’s pretty unnerving. It’s all building into one big bubble. The Chinese companies are trading on euphoria.”

On the other hand Marc Faber, who manages $300 million at Marc Faber Ltd. in Hong Kong, said, ‘European countries were also surprised at the beginning of the 20th century when American companies overtook European companies. The world better get used to it.’

Source: Bloomberg

Zhu Zhixin, vice minister of the National Development and Reform Commission, reported that China’s consumer price index, a major barometer for inflation, eased slightly to 6.2% in September after surging up to an 11-year monthly high of 6.5% in August. Some American newspapers saw that as the first prick in the bubble of inflation. It is not — but it made for strong headlines.

Zhu Zhixin ruled out sweeping price hikes in the future, but he did predict prices for farm produce, which triggered the CPI, would continue at a high level.

That September figure was a minor blip if you regard that consumer prices grew 4.1% year-on-year over the first nine months compared with 3.9% from January to August. About 86% of the rise, or 3.5 percentage points, was generated by food price hikes.

Zhu Zhixin said it is too early to say China’s economy has turned as the short supply of pork didn’t trigger ‘comprehensive, lasting and big price hikes’.

He predicted that the prices of grain crops will stabilize gradually as the summer grain crops harvest has surged 1.45 billion kilograms from the previous year to 115.35 billion kilograms this year while early rice output rose slightly to 31.95 billion kilograms.

Currently, most of the country’s industrial consumables remain in surplus. And the latest figures from the NDRC revealed that the average price of pork in Chinese shops has dropped 11% from its peak in August.

Zhu Zhixin warned against blind optimism, saying that the possibilities of an overheated economy remain while preventing the excess growth of consumer prices should be taken as a major task of macro-economic control.
Source: China.com

Despite a spate of product recalls from China this year (heavily reported in the press who went for the story like a starving dingo at a dead rabbit) and growing scrutiny over the quality and safety of its goods, the Chinese export boom continues to accelerate. Maybe buyers do not believe all they read in newspapers. The following figures are according to trade statistics released last week.

China exported $878 billion worth of goods through the first nine months of this year, up 27% from its record shipments a year ago.

The Chinese trade surplus with the rest of the world ballooned to $187 billion through September of this year, up from $177.5 billion for all of 2006.

Even in categories where China was hit by high-profile recalls earlier this year, like food and toys, exports rose sharply, according to data compiled by the World Trade Atlas. Much, much more in the excellent report in the International Herald Tribune. Well worth reading.
Source: International Herald Tribune

Fixed-assets investment is showing no sign of slowing, with year-on-year growth of 26.7% from January to August.

The National Bureau of Statistics said RMB6.6 trillion was pumped into new projects in the period, and more than one-fifth of the money was channeled into real estate.

Fixed-assets investment growth has slowed from around 30% last year to the current 26.7% in the previous eight months.

But it is still higher than the 25% set by economists as the warning line.

Property developers and local governments are still driving fast-paced growth. The central government has listed curbing fast investment, the trade surplus and high inflation as its major targets for macroeconomic control.

Meanwhile, property prices are still going up. The National Development and Reform Commission said the average housing price in 70 major cities had increased by 8.2% in August compared with the same period last year.

Property developers poured RMB1.42 trillion into the economy in the first eight months, 29% more than the same period last year.
Source: China Daily

The combined business revenue of China’s top 500 companies accounted for 83.5% of the gross domestic product in 2006, almost six percentage points higher than the previous year.

The China Top 500 Enterprises 2007 list — issued by the China Enterprise Confederation and China Enterprise Directors Association — states the top 500 took in RMB17.49 trillion ($2.3 trillion) of business revenue last year, up 23.7% over 2005.

Sinopec, which has many interests mainly in petrochemical areas and one of its rigs is our illustration, stayed at the pole position with business revenue of RMB1.06 trillion, up 29% year-on-year.

Second to fifth rankings went to China National Petroleum Corporation, State Grid, Industrial and Commercial Bank of China and China Mobile.

A total of 349 enterprises, or nearly 70% of the total in the list, are state-owned or state-controlled. Their combined assets reached RMB14.9 trillion at the end of 2006, accounting for 85% of the total.

The number of private-owned enterprises in the list rose to 89, with RMB1.4 trillion in business revenue.
Source: China.org.cn