chinese news

BEIJING (AFP) – China said Tuesday its trade surplus hit a monthly all-time high of 35.2 billion dollars in October, as exports remained strong despite the global economic turmoil.

The surplus, up 29.9 percent from a year ago, reflected demand for China’s exports outside the United States and Europe, but it was also the result of a marked slowdown in imports.

Experts said China’s trade would soon show more clearly the impacts of the global economic woes, with export growth set to slow following reports already of many factories dependent on overseas sales facing deep difficulties.

“It is not very likely that such fast growth in the surplus will be sustained,” said Qi Jingmei, a researcher with the State Information Centre, a Beijing-based government think tank.

Exports in October rose 19.2 percent from a year ago to 128.3 billion dollars, compared with 21.5 percent growth in September, according to the data from the Customs Administration.

Qi highlighted the diverse markets for China’s exports as one reason for the continued solid performance despite problems selling to the struggling developed markets.

“The demand from Africa, Latin America and Russia is still strong although exports to Europe weakened,” Qi said.

China’s state-run Xinhua news agency also gave prominence to the diversification cushion, reporting that exports to Latin America grew 52 percent in the first nine months to 111.5 billion dollars.

A slowdown in import growth, rising 15.6 percent in October from a year earlier to 93.1 billion dollars, was another important factor.

“Import growth fell by large margins, which made the trade surplus look high,” said Li Huiyong, a Shanghai-based economist with Shenyin Wanguo Securities.

Since a large portion of China’s imports are of input that get assembled and then re-exported, the trend could also signal further declines in exports in the months ahead, according to observers.

The more moderate rise in imports was also seen to reflect sharp declines in the price of oil and other commodities.

In the first 10 months, the trade surplus — long a source of friction with Europe and the United States — totalled 216 billion dollars, according to the customs authorities’ data.

This marked a slight increase from 212.4 billion dollars in the same period last year, according to previously released Customs figures.

The previous monthly record surplus was 29.4 billion dollars in September.

Qi of the State Information Centre said the latest figures offered some momentary relief for the Chinese government as it battles to limit the impacts of the global economic crisis at home.

“A large trade surplus is what the government currently would like to see,” she said.

“It can reduce some pressure on the government’s policy making if exports rebound.”

However the widening trade surplus could put pressure on China to raise the value of its currency, the yuan, which has stayed at roughly the same level against the dollar since April.

US president-elect Barack Obama said during his campaign that China’s huge trade surplus with the United States was related to its manipulation of its currency.

LONDON – Tesco PLC, the world’s third-biggest retailer, said Tuesday it plans to expand its presence in China by opening new stores in the eastern coast provinces of Shandong and Fujian next year.

Tesco also said it has a “strong opening program” next year in the northeast province of Liaoning, where it already has 11 stores.

“We are targeting expansion in all 14 cities in the province and have strong support from the province level government,” the company said in a statement on its web site.

Tesco posted the update on its China plans as it took analysts and investors on a tour of its operations in South Korea, China and Malaysia this week.

The company’s shares took a hit on Monday when it reported a fall in underlying sales in South Korea, its biggest market outside Britain.

Tesco said same-store sales in the 10 weeks to Nov. 1 dropped 2 percent, compared to flat growth in the first half of the year.

Sales growth in China also slowed to an 8 percent gain over the same 10 weeks, compared to a 14 percent rise in the first half. Only Malaysia reported an improvement, with sales growth of 2 percent in the period, compared to 1 percent.

Shore Capital analyst Clive Black noted that the Chinese economy continues to grow rapidly despite the global economic downturn.

“While maybe not at double-digit percentage annual growth, high single digit GDP advancement on its ever rising base — likely to over take Japan by 2015 and maybe the U.S.A. before 2050 — is material and anticipated,” Black said in an analyst note posted from the trip.

Tesco’s entry into Shandong, which has a population of 94 million people, will give it a presence in four separate regions. The Fujian province is home to some 34 million people.

The Liaoning province, where Tesco is concentrating most of its growth, has a population of 42 million people. Growth in GDP, disposable income and retail sales in the province have outstripped China’s urban average in recent years.

Black said Tesco remains sub-scale in China where it trades against both low-cost, local operators and strong international players in France’s Carrefour, Taiwan’s R.T. Mart and U.S.-based Wal-Mart.

But he added that progress by the company had been substantial since Tesco’s entry into China.

“Management structures and the infrastructure are in place to drive a sustained step up in store openings and activities with the opening program rising from circa 10 outlets per annum to circa 30 over an unspecified time frame — we assume by 2013-15,” Black said.

Tesco shares were flat at 323 pence (US$5.02) at midday.

BEIJING – China’s trade surplus set to a new record in October but export growth weakened, adding to pressure on the economy as Beijing launches a multibillion-dollar stimulus package, according to data reported Tuesday.

China’s October global trade gap swelled by 30 percent to $32.5 billion, hitting a new high for a third straight month, the national customs agency reported. The surplus with the United States rose 13.6 percent to $17.5 billion, while that with Europe rose 12.2 percent to $15.6 billion.

But that masked a drop in export growth and an even sharper fall in import growth, which widened the trade gap and reflected limp Chinese domestic demand.

“The global financial crisis has had a considerable impact on China’s export growth, which will continue to show weakness with recession in the U.S. and Europe,” said a report by Jing Ulrich, JP Morgan & Co.’s chairwoman for China equities.

Beijing’s 4 trillion yuan ($586 billion) stimulus plan unveiled Sunday is aimed at shielding the world’s fourth-largest economy from the global downturn by boosting domestic consumption with higher spending on construction and social programs.

China’s government is trying to reduce reliance on exports by encouraging the country’s own consumers to spend more. Retail sales have been growing at annual rates of over 20 percent but are still small as a share of the economy.

Exports rose 19.1 percent to $128.3 billion, but that growth rate was down from September’s 21.5 percent and sharply lower than the recent peak of 26.9 percent in July.

The unexpectedly sharp downturn in demand for Chinese goods has caused a wave of factory closures and layoffs in the export-driven southeast. Exporters say customers are cancelling orders and trying to renegotiate contracts.

Weaker demand for Chinese goods is expected to cause economic ripples to spread worldwide as China’s manufacturers buy less imported factory machinery, industrial components and raw materials such as steel made with foreign iron ore.

The government’s stimulus plan includes tax cuts for exporters to help struggling producers of textiles and other goods.

China’s imports in October rose 12.4 percent to $93.1 billion, compared with September’s 21.3 percent growth rate.

For the first 10 months of the year, China’s trade surplus was $215 billion, but that was an increase of just over 1 percent compared with the year-earlier period, according to customs agency data.

“As the contribution of trade to China’s economic growth dissipates, we expect further measures to be introduced aimed at stimulating consumption and investment in the domestic economy,” Ulrich said.

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China Customs: http://www.customs.gov.cn

BEIJING – Preparing for a Washington summit to discuss a response to the global financial crisis, China indicated Tuesday its focus will be its own economy — not paying to bail out others.

Officials have yet to say what President Hu Jintao will propose at the weekend meeting of leaders of 20 major economies. But Beijing made the outlines of its strategy clear with the announcement of a multibillion-dollar package to stimulate its economy with more spending on construction, tax cuts and social programs, with no mention of efforts abroad.

British Prime Minister Gordon Brown wants Beijing to use its nearly $2 trillion in reserves to help top up an International Monetary Fund emergency loan facility. But a Chinese Foreign Ministry spokesman said Beijing’s priority is to “put our own house in order” and ensure domestic stability.

“I believe this is the most effective contribution China can make to tackling this financial crisis. It will help to maintain the sound and steady development of the world economy,” said the spokesman, Qin Gang.

Qin said Beijing was ready to make “concerted efforts” with other governments but gave no indication what that would include.

Beijing’s banks and financial industries have avoided the turmoil that has paralyzed Western markets. But the government says its resources are limited and it has to focus on domestic economic challenges.

Chinese leaders are alarmed at a sharp drop in economic growth, which fell to 9 percent in the most recent quarter. That is the highest for any major economy, but below last year’s 11.9 percent and dangerously slow for a government that needs robust growth to satisfy a public that has come to expect steadily rising incomes.

On Tuesday, the government’s challenges were highlighted by the release of trade data that showed growth in foreign sales fell in October, adding to damage for struggling exoprters that already are suffering from weak foreign demand.

China’s global trade surplus rose to a new monthly high of $35.2 billion but that masked a slowdown in export growth. Exports rose 19.1 percent — down sharply from July’s 26.9 percent before the slowdown hit in earnest. Import growth also fell sharply, reflecting weakening domestic demand.

The politically sensitive trade gap with the United States widened by 13.6 percent to $17.5 billion, according to the national customs agency. But its figures showed the global surplus for the first 10 months of the year is only about 1 percent bigger than for the same period last year.

A downturn in export orders already has led to layoffs and factory closures.

“The global financial crisis has had a considerable impact on China’s export growth, which will continue to show weakness with recession in the U.S. and Europe,” said a report by Jing Ulrich, JP Morgan & Co.’s chairwoman for China equities.

The government has tried to reduce China’s reliance on exports by encouraging its own consumers to spend more. Retail sales are growing at annual rates of more than 20 percent but are still small as a share of the economy.

Exporters and the companies that supply them employ tens of millions of people.

Weaker demand for Chinese goods is expected to cause economic ripples to spread worldwide as China’s manufacturers buy less imported factory machinery, industrial components and raw materials such as steel made with foreign iron ore.

In a positive sign, the government reported Tuesday that October’s inflation rate eased to 4 percent, down from September’s 4.3 percent. That will ease the risk of new price rises as Beijing tries to boost growth by pouring money into the economy.

The 4 trillion yuan ($586 billion) stimulus plan includes higher government spending on airports, highways and other projects, tax cuts for exporters and more aid to farmers and the poor. Few details have been released, but economists expect it to depend on increasing investment by Chinese state companies. The government has promised more bank lending for small businesses and consumers.

“As the contribution of trade to China’s economic growth dissipates, we expect further measures to be introduced aimed at stimulating consumption and investment in the domestic economy,” Ulrich said.

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Associated Press Writer Anita Chang in Beijing contributed to this report.

LONDON (AFP) – Global stocks got a boost Monday from a massive Chinese stimulus package as investors bet that governments were ready to make the hard choices to tame the financial crisis, but the gloss faded later.

Dealers said the advance was positive overall, with the markets well off the lows seen as the financial turmoil reached a fresh pitch in October on hopes that measures taken so far were beginning to ease some of the strains.

However, there were also more signs of damage in the wider economy, with data in France and Italy showing them sliding into recession. German logistics giant Deutsche Post warned of losses to come and announced 9,600 more job cuts.

After initial sharp gains, Wall Street began to falter around midday as investors digested news of massive third quarter losses of 29 billion dollars at bailed out mortgage finance provider Fannie Mae.

Coupled with news that the US government had had to nearly double to 150 billion dollars the rescue package for key insurer American International Group and fears that General Motors stock was worthless, sentiment went into reverse.

“A solid finish on Wall Street last week and the announcement of a stimulus package to sustain the Chinese economy… combined to shore up stock markets,” said CMC Markets dealer Matt Buckland early in the day.

Dealers said investors were hopeful that a November 15 Group of 20 summit bringing together the world’s major economic powers in Washington will see more progress made in tackling the financial crisis.

The Chinese government announced over the weekend plans to spend four trillion yuan (586 billion dollars) on projects by the end of 2010 to help boost its flagging economy, hit hard by the global financial crisis.

As a result, hard pressed Shanghai soared 7.27 percent while Tokyo, for whom China ranks alongside the United States as a key market, jumped 5.81 percent as Hong Kong gained 3.5 percent and Sydney rose 1.4 percent.

“Markets seem to have priced in a lot of bad news already so that actions like China’s stimulus package could prop up the bounce in sentiment,” said Dresdner Kleinwort analyst Valentin Marinov.

“The upcoming global summit in Washington could sooth investors’ concerns,” Marinov said, adding however that “global recession risks loom large… and fundamental disappointments could (test) the recovery in risk appetite.”

On Wall Street, the Dow Jones Industrial Average was down 0.12 percent at around 1700 GMT.

The Chinese package “fueled big gains in foreign markets that have set a bullish tone for the US market,” said Patrick O’Hare at Briefing.com of an early New York advance of nearly two percent.

In Europe, London’s FTSE 100 index of leading shares closed up 0.89 percent at 4,403.92 points as it gave up gains of more than two percent.

In Paris, the CAC 40 index gained 1.06 percent at 3,505.75 points and in Frankfurt, the DAX was up 1.76 percent to 5.025.53 points.

Elsewhere in Europe, Brussels finished up 1.54 percent, Madrid was down 0.53 percent, Amsterdam rose 0.53 percent, Milan gained 0.86 percent and Swiss stocks put on 1.37 percent.

China’s multi-trillion yuan economic stimulus plan unveiled on Sunday was aimed at boosting domestic consumer demand in the face of flagging exports as the country’s foreign markets contract in the global financial crisis.

The measures were approved at a cabinet meeting chaired by Premier Wen Jiabao on Wednesday, state media said, and would increase spending on infrastructure and a range of other sectors amid slowing domestic growth.

“Given the magnitude of the plan, this will likely have a significant impact in buffering the current (Chinese) deceleration,” said Calyon analyst Sebastien Barbe.

“However, let’s keep in mind that the global shock is quite strong and that the package is unlikely to reverse the Chinese economic deceleration — it will only slow its pace.”