Chinese Economics Thread

[Martian]

Germany's ContiTech AG (20 billion Euros in sales) Opens New Plant in China

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"ContiTech Opens Forward-Looking Plant in China
March 15, 2010
From Gasgoo.com

Changshu, March 10, 2010. At a festive ceremony, Hanover, Germany-based ContiTech AG inaugurated its recently completed plant "ContiTech China Rubber & Plastics Technology Ltd." in Changshu (Jiangsu Province, China); 100 kilometers northwest of Shanghai.

ContiTech China Rubber & Plastics Technology Ltd., Contitech's new plant in China

Initially, three business units – Air Spring Systems (air suspension systems), Fluid Technology (hoses and hose line systems) and Vibration Control (including acoustic insulation) – are commencing operations here. An almost €40 million investment, the facility will produce mainly for the Chinese and other Asian markets. A further phase of expansion and erection, including a rubber compounding center for the location, are slated for the future.

Mr. Wang Xiang, Party Secretary of Changshu CPC Committee and Heinz-Gerhard Wente, CEO of ContiTech AG, officiated at the ribbon-cutting ceremony. The plant opening marks a key milestone for the future of the company in China. In his welcoming remarks, Wente highlighted the importance of the location for customers in China and for ContiTech itself, one of the world’s leading specialists for rubber and plastics technology: “Changshu is the new productive heart for our customers in China. We are creating here a forward-looking strategic center for our long-term operations in Asia. Our roots may be in Germany, but we have long since made ourselves at home here as well and see a key portion of our future viability in China.”

Long-term and successful engagement for and in China

ContiTech has been active in China already for 30 years. With components and systems – such as hose lines, vibration components, air springs, soft trim, conveyor belts, drive belts and coated fabrics – produced within the country at currently nine modern production plants, ContiTech very successfully services the needs of the automotive industry, machine and plant engineering and construction, mining, the printing industry and rail transportation. The company presently has 1,200 employees in China, with its workforce growing virtually by the day. In the face of a severe global economic crisis, ContiTech was able to up sales in China 34 percent in fiscal 2009. The long-range target is to more than double current sales volume in China by 2014; boosting it from €133 million at present to approximately €300 million.

Unique advantages for Chinese industry

China is viewed as one of ContiTech's key markets in the coming decades. “The country’s need for technological innovations and advanced developments matches up perfectly with our more than 130 years of mature production and development know-how. We offer high-tech products made of rubber and plastic that provide our Chinese industrial partners immense effectiveness in developing solutions in the areas of mobility, energy production and efficiency, and environmental protection,” notes Wente, underscoring the advantages for Chinese industry.

About the company

ContiTech AG is a division of the international automotive supplier Continental. With sales of approximately €20 billion in 2009, Continental is among the leading automotive suppliers worldwide. As a supplier of brake systems, systems and components for powertrains and chassis, instrumentation, infotainment solutions, vehicle electronics, tires and technical elastomers, Continental contributes enhanced driving safety and global climate protection. Continental is also a competent partner in networked automobile communication. Continental currently employs approximately 134,500 in 46 countries.

The ContiTech division holds a global market leadership position for many non-tire rubber products and is a specialist in plastics technology in the non-tire rubber sector. The division develops and produces functional parts, components and systems for the automotive industry and other important industries. The division has a workforce of approximately 22,000 employees. In 2009, it achieved sales of approximately €2.4 billion."

 

[Martian]

China's machinery and electronic exports rank 1st worldwide

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"China's machinery and electronic exports rank 1st worldwide
16:50, September 27, 2010

The export volume of China's machinery and electronic products exceeded Germany for the first time and ranked first worldwide in 2009, but the proportion of high-tech products is small; according to a report released during the ongoing 11th China International Machinery and Electronic Producers Exposition held in Wuhan, capital of central China's Hubei Province.

The report, co-issued by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products and the office of the organizing committee of this exposition, says China's share of export volume of the world total rose from 3.4 percent during the Ninth Five-Year Plan (1996-2000) period to 8.5 percent during the Tenth Five-Year Plan (2001-2005) period.

In 2006, the export volume surpassed Japan to take the third-place ranking; only next to Germany and the United States and it was bumped up to second, after Germany, in the end of 2008.

By Liang Jun, People's Daily Online"


For 2009, due to the Great Recession worldwide, China's top two high-tech exports for "Electrical machinery & equipment" and "Power generation equipment" dipped to $537.1 billion US dollars. However, if we add in the $38.9 billion from "Optics and medical equipment" then the overall high-tech exports for 2009 are $576.0 billion U.S. dollars. See "Table 5: China's Top Exports 2009 ($ billion)" in the newslink below.

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[Martian]

Imports Auto Expo Beijing 2010 kicks off

A model presents a vehicle during the Imports Auto Expo Beijing 2010 in Beijing, capital of China, on Oct. 2, 2010. The auto expo kicked off here on Saturday. (Xinhua/Gong Bing)

A model presents a vehicle during the Imports Auto Expo Beijing 2010 in Beijing, capital of China, on Oct. 2, 2010. The auto expo kicked off here on Saturday. (Xinhua/Gong Bing)

A model presents a vehicle during the Imports Auto Expo Beijing 2010 in Beijing, capital of China, on Oct. 2, 2010. The auto expo kicked off here on Saturday. (Xinhua/Gong Bing)

A model presents a vehicle during the Imports Auto Expo Beijing 2010 in Beijing, capital of China, on Oct. 2, 2010. The auto expo kicked off here on Saturday. (Xinhua/Gong Bing)

Newslink:

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[Martian]

Foxconn staff in China get 66 percent pay hike

Most Foxconn workers are housed in on-site tower-block dormitories.
Photograph: Ed Jones/AFP/Getty Images

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"Foxconn to raise wages again at China plant
BEIJING | Fri Oct 1, 2010 8:42am EDT

Employees work inside a Foxconn factory in the township of Longhua in the southern Guangdong province in this May 26, 2010 file photo.
Credit: Reuters/Bobby Yip

BEIJING (Reuters) - Electronics maker Foxconn Technologies, under fire for its working practices after a string of worker suicides, has decided to up salaries by two-thirds at its Shenzhen factory, state media said on Friday.

News agency Xinhua quoted company spokesman Liu Kun as saying the roughly 66 percent pay rise for assembly line workers, the second this year, would bring salaries to 2,000 yuan ($298.9) per month. It starts from this month.

The increase will benefit about 85 percent of workers at the Shenzhen factory, the report added.

Foxconn increased salaries by 30 percent in June, from 900 yuan to 1,200 yuan per month, for its Shenzhen employees.

Eleven suicides this year at the sprawling manufacturing base has brought intense scrutiny of Taiwan's Hon Hai Precision Industry Co Ltd, the owner of Foxconn, which makes the iPhone and other products for Apple and also counts Dell and Hewlett-Packard among its clients.

The company has tried addressing the problem by improving living conditions for workers, organizing activities to boost moral and bumping up wages.

Hon Hai said in August it would have as many as 1.3 million workers in China by the end of 2011, up from 920,000 now, but would focus the expansion away from its increasingly expensive Shenzhen plant.

Foxconn is expanding aggressively inland, away from Shenzhen which is in the Pearl River Delta area, where wages are lower and workers are more plentiful..

(Reporting by Ben Blanchard; Editing by Valerie Lee)"

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"Foxconn to take over Dell factory in Poland
30 September 2010

EU approves Taiwanese company’s acquisition of assembly plant in Łódź, 18 months after PC maker moved work there from Ireland

The European Union has approved the acquisition of a Dell factory in Poland by Taiwanese electronics manufacturer Foxconn.

The EU ruled that the deal would not affect competition in Europe. "The overlaps between Foxconn and [Dell’s] Polish subsidiary in the assembly of electronic products are not so important as to significantly strengthen Foxconn's competitive position," the EU said in a statement.

In 2009, PC maker Dell closed its manufacturing facility in Limerick, Ireland, and moved the work to Łódź. It was later revealed that the Polish government subsidised the move with the approval of the EU.

According the Wirtualna Polska portal, the Polish government was so keen to attract US company Dell’s manufacturing business named a road leading up to the Łódź plant the “Avenue of the Terror Victims of September 11".

In December 2009, when the Foxconn deal was first proposed, the Wall Street Journal reported that just 1,600 of the 3,000 workers at the Łódź facility would be transferred to the Taiwan company. This has not been confirmed or denied.

Dell has been selling off manufacturing facilities around the world as it discontinues its strategy of assembling its computers itself."

 

[Martian]

Taiwan's Compal to build $500 million laptop plant in Chengdu, China

Compal Headquarters

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"Taiwan's Compal to build laptop plant in Chengdu

Sep. 30, 2010 (China Knowledge) - Compal Electronics Inc, a Taiwanese computer and electronic product manufacturer, will set up a notebook plant in Chengdu, and the ground breaking ceremony was held on Sept. 27, according to a local media.

The new plant will be built in Shuangliu County of Chengdu and the headquarters will be established in Wuhou District of the city.

The Chengdu plant will produce PC and electronic 3C related products, including notebook, all-in-one PC, PAD flat panel PC, television, monitor, mobile communication and wireless network. Total investment of the project may reach US$500 million. The construction of the plant is scheduled to be completed on Apr. 1, 2011.

The plant could make 10 million notebooks by the end of 2011, and produce 20 million notebooks in 2013.

Compal, the world's biggest contract manufacturer of notebooks, realized revenue of US$20.4 billion in 2009, ranking 431 among the world's top 500 enterprises."

 

[Martian]

Taiwan to approve AU Optronics $3 billion China flat-screen plan this month

AU Optronics, Suzhou Industrial Park, China

AU Optronics LCD manufacturing facility

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"Taiwan to approve China flat-screen plan this month
Agence France-Presse
First Posted 16:10:00 10/03/2010

TAIPEI – Taiwan is expected to approve a flat-screen maker's huge Chinese investment plan this month in another sign of the island easing high-tech controls on its formerly bitter rival, a report said Sunday.

The economic ministry has completed much of the screening for AU Optronics' application to build a $3 billion flat-screen plant in China's eastern Kunshan city, the state Central News Agency said.

The plan has drawn special attention as it is seen by many as a barometer of the government's relaxation of long-standing restrictions on high-tech investment by local companies in China.

"Only some tiny issues remain to be solved," an economic ministry official was quoted as saying, adding that the application is expected to be approved this month if the company provides required documents soon.

AU Optronics, a leading liquid crystal display manufacturer, filed the application to the government six months ago, and rumors of a government go-ahead have circulated for some time.

But last week the company was not on the list of local high-tech companies seeking official approval for their China-bound investments, touching off complaints from AU Optronics Chairman K.Y. Lee.

Taiwan relaxed the rules earlier this year, but local high-tech firms such as AU Optronics still need to keep more advanced technologies at home when applying to invest in China.

Taiwan's opposition, which favors independence from Beijing, has repeatedly warned against easing controls, fearing closer economic integration will mean job losses as the island loses out to China's relatively cheaper workforce.

But Taiwan's high-tech businesses have increasingly called for the rules to be relaxed, pointing out that their competitors from South Korea and Japan have been stepping up activity in China."

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"AU Optronics Corporation with its branches on three continents (Asia, Europe and the U.S.) operates 13 factories for TFT-LCD panel production (G3.5, up to G8.5 fabrications), 10 factories for TFT –LCD module production and 2 technology centers. In 2007 it reached sales in total volume of 10 billion Euros and nowadays it employs over 42,000 employees in its global branches in Taiwan, China, Japan, Singapore, the Republic of Korea, the U. S. and Europe. In 2008 its sales volume reached 12.9 billion USD. AU Optronics Corporation is the first pure TFT-LCD manufacturer to successfully list at the New York Stock Exchange (NYSE)."

 

[Martian]

China's economic miracle

Qingdao, China: Golden City
(By Steven in Qingdao Life)

Let's put my posts into the proper context of China's economic miracle. These are my top ten reasons that China's economy will continue to boom at 8 to 10% a year for the foreseeable future.

1. In the last five years, China has signed free-trade-agreements (i.e. FTAs) with ASEAN, Pakistan, Chile, New Zealand, Singapore, Peru, Costa Rica, and Taiwan (e.g. technically ECFA). China is currently negotiating FTAs with the Gulf Cooperation Council, Australia, Iceland, Norway, and Southern African Customs Union. China has joint feasibility studies for a FTA under way with India, Korea, Japan, and Switzerland. See

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FTAs are important because they lower tariffs (e.g. lower cost for importers), increase imports and exports (which generates more jobs), and increase customs revenue.

2. The posts regarding Ford's $500 million engine plant or AU Optronics $3 billion LCD investment show the importance of foreign direct investment (i.e. FDI) in bringing new technologies, creating new jobs, and/or generating more tax revenue for China.

3. China has tacitly permitted workers to engage in strikes. Within the last six months, Foxconn has doubled the wages paid to its employees. In my view, wealthy foreign companies in China should have paid a living wage (i.e. sufficient to cover rent, utilities, food, transportation, health insurance, reasonable entertainment, cell phone service, internet connection, etc.) much earlier.

With greater disposable income, Chinese consumers will increase their consumption and help boost China's domestic economy.

4. China's $585 billion stimulus program is providing the funds to build new high-speed railways, highways, airports, dams, bridges, ports, 45% efficient super-ultracritical coal-fired power plants, wind farms, etc. China's stimulus creates jobs and the new infrastructure lays the foundation for a more efficient economy with reduced transportation and energy costs.

5. China's passenger rail traffic is being moved onto the expanding high-speed rail network. This allows the existing rail system to be used exclusively for freight cargo transportation. This reduces the constraints and bottleneck for an efficient freight transportation system. The practical effect is lower shipping costs.

6. As the world's largest exporter of machinery and electronics, China has attained tremendous economies of scale. Basic economics state that the distribution of a fixed cost (e.g. rent, employee wages, utilities, insurance, capital investment, etc.) over a higher volume of products will result in a lower marginal cost per additional item. Though the variable cost will increase slightly, the additional increase in material cost is usually minor.

7. China's manufacture of complex offshore oil platforms, liquefied natural gas carriers, and 300,000 ton oil supertankers demonstrates the increasingly sophisticated and high-value-added nature of China's exports.

8. China is fortunate to modernize now and employ the latest technologies. For example, LCDs (i.e. liquid crystal displays) are significantly thinner and lighter than CRT (i.e. cathode ray tube) television sets. LCDs require less energy and material to fabricate. Also, LCDs consume less energy to operate.

Another example is mobile phones. China avoided the need to build a time-consuming and cumbersome copper-wire landline phone system to connect every home and business. Instead, China leapfrogged to mobile phones that require only a few base stations.

The continuous use of new technologies has resulted in significant savings of national resources and energy efficiency.

9. China spent $15 billion on a program to induce consumers to buy new cars, which are more fuel-efficient and less polluting. A similar program was enacted to help consumers buy new and more energy-efficient appliances (e.g. refrigerators, washing machines, and air conditioners). Greater energy efficiency lowers fuel cost and increases disposable income. See

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10. China's expanding pursuit of clean energy (e.g. wind turbines, solar, geothermal, bio-fuel, and nuclear) will reduce the external cost of pollution and gradually result in cleaner air and water. This will reduce the health care cost and improve the quality of life for a healthier population.

In my view, the most important development is China's fourth-generation fast-breeder nuclear reactor. There are five major implications:

a) The fast-breeder reactor will help China achieve energy independence. The fast-breeder is 60% efficient in utilizing uranium fuel. Current nuclear reactors are only 1% efficient. A ten-year supply of nuclear fuel today can power fast-breeder reactors for 600 years.

b) The 60% efficient fast-breeder will eliminate nuclear fuel scarcity. Instead, there will be plenty of nuclear fuel for everyone. This will result in a dramatic drop in the cost of nuclear fuel.

c) Since a fast-breeder is 60% efficient, there is less nuclear waste. In fact, current nuclear waste may be reprocessed and burned in a fast-breeder to generate electricity.

d) A fast-breeder can also use thorium as fuel. Conventional reactors can only use uranium.

e) There is no theoretical impediment to a fast-breeder reactor. China already has a functional CEFR (i.e. China Experimental Fast Reactor). The obstacles lie purely in the engineering. China must solve the problems of scaling up the CEFR to commercial levels (e.g. 1 GW) of energy output.

If China can solve the engineering and safety problems then energy independence is within China's reach.

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"Enjoy these photos of a metropolis on the move, the Sailing City going forward full speed ahead."

"Qingdao is one of the most important success stories of China’s economic miracle. This ever-growing city is home to one of the top ports in the country, two of China’s largest appliance makers (Haier and Hisense), the most recognizable consumer brand in China (Tsingtao Beer), a massive oil refinery project and strategic oil base in the Huangdao Development Zone, highly successful exporters, manufacturers, importers, and a large number of thriving multinational corporations either producing or operating offices here (such as Durex, Ikea, Nike, Lucent, Nestle, Stihl and many more). It’s no wonder the World Bank has honored Qingdao as one of China’s six “Golden cities”. The US Commercial Service agency had these good things to say about doing business in Qingdao:

Located on the southern tip of the Shandong Peninsula, Qingdao is one of eastern China’s major economic centers. Nestled between mountains and ocean, Qingdao’s unique cityscape is studded with lovely beaches, classic European architecture and ample green landscape. The city is well known for its historic and scenic tourist attractions, as well as being one of the best places in China to live and do business.

The World Bank honored Qingdao as one of China’s six “Golden cities” (a measure of investment climate, harmoniousness, governance and other measures). In recent years, the city has attracted billions in foreign direct investment and engages in trade with virtually every country on the planet. Among the city’s 17,854 foreign investment projects, 76 Fortune 500 companies have established projects in Qingdao."

 

[Martian]

IMF says China's 2010 GDP is $5.745 trillion U.S. dollars

There are only two months left in this year. The IMF has entered the data for the first nine months of this year into its econometric models and they are confidently predicting a China 2010 GDP of $5.745 trillion U.S. dollars.

Now that another year is almost over, there are only five left until 2015. The IMF has updated its sophisticated computerized model with the latest economic data and they project China will have a $9.982 trillion GDP by 2015. If you're willing to round up then China's GDP in 2015 will be $10 trillion dollars!

If you're willing to loosen the definition of GDP a little bit and consider foreign exchange earnings from China's $2.43 trillion dollar hoard or foreign remittances then China's GDP in 2015 will be $10 trillion dollars! If China's 2015 GDP comes in at exactly $9.982 trillion then you only have to wait until the first quarter of 2016 for China's GDP to be $10 trillion dollars!

Pick your option. The IMF guarantees a $10 trillion dollar GDP for China by 2015 or Q1 2016!

Click on this link:

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and near the page bottom, click on "Nominal...Future"

Nominal GDP table (sortable; amounts in billions of US$)
Country ↓ 2010 ↓ 2011 ↓ 2012 ↓ 2013 ↓ 2014 ↓ 2015 ↓

China 5,745.133 6,422.276 7,169.679 8,000.516 8,935.686 9,982.076

 

[Martian]

Italy bathes Colosseum in red to welcome Premier Wen of China

The facade of the Colosseum is bathed in red light and decorated with Chinese words during an economic summit in Rome on October 8, 2010.

The words on the Colosseum read, "Sino-Italian friendship."

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"China seals 2.25 bln euro business deals with Italy
by Dario Thuburn Dario Thuburn – Thu Oct 7, 9:26 am ET

AFP – Italy's Prime Minister Silvio Berlusconi and China's counterpart Wen Jibao shake hands at Palazzo.

ROME (AFP) – Chinese Premier Wen Jiabao sealed Sino-Italian business deals worth 2.25 billion euros (3.15 billion dollars) on Thursday, after fending off European pressure to raise the value of the yuan.

The contracts included solar power and broadband Internet projects and were signed in the presence of Wen and Italian Prime Minister Silvio Berlusconi.

The two leaders also agreed to boost annual bilateral trade to 100 billion dollars by 2015 from around 40 billion dollars this year.

"Every year there will be more and more Chinese companies investing in Italy," Wen told business leaders after the talks.

He said that Italian entrepreneurs were the "Marco Polos of today" -- a reference to the famous 13th century Venetian merchant who travelled to Asia.

He also stressed that China was clamping down on intellectual property theft and would no longer tolerate "piracy" against Italian businesses.

Berlusconi said China was "a huge market" for Italian companies.

Wen also met Italian President Giorgio Napolitano on the third leg of his week-long trip across Europe. He will leave for Turkey later on Thursday.

Wen came to Italy after stormy talks in Brussels, where he told a Europe-China business forum on Wednesday: "I say to Europe's leaders -- don't join the chorus pressing (China) to revalue the yuan."

He warned such a move would bankrupt many Chinese companies and create social unrest, ultimately increasing global economic instability.

European and US leaders have said China should allow its currency to appreciate in value in order to right global trade imbalances.

An Italian government source told AFP that the currency dispute was not mentioned in the talks between Berlusconi and Wen.

"The tone of his visit to Rome is different," La Repubblica daily said.

"Relations between China and Paris, London and Berlin have cooled in recent months. Italy has not raised its voice over human rights or over the commercial and currency expansion of the Asian locomotive," it added.

The Italy-China business forum was attended by industry leaders and officials from both countries including Emma Marcegaglia, the head of Italy's employers federation Confindustria.

A document released by Confindustria listed the projects signed on Thursday, including an 800-million-euro solar energy project in southern Italy signed by China Development Bank and Italy's Global Solar Fund.

Chinese telecoms giant Huawei also signed a deal worth 700 million euros with Vodafone Italia to build broadband Internet infrastructure.

Shanghai Electric Group and China Development Bank also signed a 500-million-euro water desalination project with Italy's Impregilo.

"China is crucial for any future Italian business strategy," Marcegaglia said, adding: "We need greater protection of intellectual property rights in China. I think it's important to work on this."

Several speakers emphasised that Italy was lagging behind other European countries such as Germany in building business ties with China.

Chinese Commerce Minister Chen Deming said: 'Cooperation between Italy and China is very important ... We can help each other.'"

 

[Martian]

China reveals major geological findings over past 12 years

China's mineral resource exploration

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"China reveals major geological findings over past 12 years
21:53, October 09, 2010

During the past 12 years, Chinese scientists have discovered more than 900 locations containing mineral deposits which are estimated to hold 5 billion tonnes of iron ore, as well as a vast array of other resources, the country's geological authorities said Saturday.

The large number of discoveries, including newly found reserves of iron and copper ores, coal, gas, and other types of raw minerals, came after a major geological mapping was launched in 1999, officials with the China Geological Survey (CGS) said at a press conference held in Beijing Saturday.

The CGS is a government-owned non-profit entity directly under the Ministry of Land and Resources.

Among the discoveries, 152 locations were identified as holding huge amounts of deposits. These findings would pave the way for future development and reduce the risks for commercial prospecting for resources, a statement from the CGS website said.

Five deposits in the provinces of Liaoning, Hebei, Henan, Shandong and Shanxi in east and north China could potentially hold reserves of 5 billion tonnes of iron ore, according to officials.

Meanwhile, up to 38.5 million tonnes of copper ore reserves were also discovered in Tibet, Xinjiang and Yunnan. CGS Director and Vice Minister of the Land and Resources, Wang Min, said these findings would "effectively change" China's over-reliance on imports of copper ores.

Further, 450 million tonnes of bauxite deposits were discovered in China's Shanxi, Henan, Guizhou and Guangxi. Also, the Qaidam Basin in northwest China's Qinghai Province was estimated to hold up to 214 million tonnes of sylvite reserves.

Source: Xinhua"