Chinese Economics Thread

[Martian]

Shenzhen's $13,600 U.S. dollars per capita GDP in 2009

Shenzhen celebrates its 30th anniversary as China's first SEZ

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"Shenzhen's new beginning on 30th anniversary
Wed, Aug 04, 2010
China Daily/Asia News Network

SHENZHEN, CHINA - Shenzhen, China's first special economic zone (SEZ), plans to explore new economic development methods as well as improve its citizens' happiness index in its future, Shenzhen Party Chief Wang Rong said on the eve of preparing for the SEZ's 30th anniversary.

The economic zone will restructure its economic pattern and take the scientific development path to build itself into an international metropolitan, capable of competing with Hong Kong, Singapore as well as big cities in the US and Europe, Wang told reporters Tuesday at a news briefing.

He also said making Shenzhen people feel happier is another important goal besides maintaining GDP growth, admitting that compared with some inland cities, Shenzhen has not done as well in offering security for young people working in the city.

Shenzhen, which was originally a coastal village, took off economically after it was approved to become an SEZ on August 26, 1980. Now the city is among China's most developed regions and boasts a per capita GDP of $13,600 in 2009.

It is also home to some leading Chinese enterprises such as telecommunication giants Huawei, ZTE, internet company Tencent and electric car maker BYD.

Wang said he is confident that these companies will remain in Shenzhen despite rumors that some of them will move their headquarters. He believed the city still has great potential as long as its economic pattern is successfully transformed."

 

[Martian]

"China will remain a leading manufacturing economy for the next 100 years"

Chongqing, China

Chongqing at night

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"Economist Intelligence Unit: Chinese Manufacturing's Real Strength Will Be Higher End Products The West Loves To Make
Vincent Fernando, CFA | Jul. 19, 2010, 5:05 AM

The Economist Intelligence Unit (EIU, of The Economist magazine) believes China wage inflation fears are overdone relative to manufacturing competitiveness.

Despite massive wage inflation, China will remain a leading manufacturing economy for the next 100 years due to the economies of scale set up within the nation, the huge domestic market, plus the ability of manufacturers to move up the value chain.

The key point is that China already has more expensive labor costs than Vietnam; its real bread-and-butter of the future won't be the low-end manufacturing many people like to imagine is the heart of China's competitive advantage.

China Daily:

"A lot of people tend to think when you can just head further inland you start hitting upon these bottomless pools of surplus labor enabling you to hold costs down indefinitely. We really don't see that happening," said van Kemenade.

The analyst added that the manufacturing emerging in the major inland cities such as Chongqing did not tend to be companies seeking ever cheaper labor but often those looking to set up advanced manufacturing facilities aimed at producing goods for the China market.

"The major investment, much of it foreign, that you have seen in these inland cities has not been the type that typically follows the cheapest sources of labor. It has been fairly high value-added advanced manufacturing," he said.

They'll move into ever-higher value products, and already are."

I believe the Economist Intelligence Unit is correct in their assessment. Manufacturing plants that produce notebook computers need to move to inland cities like Chongqing. As I understand it, Shanghai has higher aspirations of becoming the financial center of China.

 

[Martian]

China is the 3rd largest and fastest-growing export market for U.S. products

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"Exports to China surge...
by Sheridan Prasso, contributing editor
August 3, 2010: 10:20 AM ET

FORTUNE -- U.S. exports to China remained surprisingly resilient throughout the recession, holding steady last year while dropping nearly 20% to the rest of the world.

Even better news? U.S. exports to China rose 39% in the first five months of this year, to $38.5 billion, according to a new study [see

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] from the US-China Business Council (USBC), which tracks exports by state. Those numbers put the value of U.S. exports on track to exceed a record $90 billion this year. U.S. exports to China totaled $69.6 billion in 2009, more or less equal to the 2008 figure of $69.7 billion. They've already risen 330% since 2000, when China joined the World Trade Organization, compared to rising only 29% to the rest of the world.

California, Washington, Texas, and Louisiana topped the list of exporting states, sending primarily computers and electronic equipment, farm crops, and chemicals to Chinese shores, according to the USBC report. Transportation equipment and waste and scrap materials rounded out the list.

Ohio, Pennsylvania, Illinois, and Michigan also remained among the top 15 exporting states to China. "Even with a global recession, American businesses and American workers continue to benefit from expanding opportunities to sell high-value manufactured goods to the China market," says USCBC President John Frisbie. "China is the only major trading partner to which U.S. exports are growing fast enough to meet the President's goal of doubling exports in the next five years."

China is now the third-largest export market for U.S. products and the fastest-growing by far. Export growth to the other top U.S. export markets in the 2000-2009 period -- Canada, Mexico, Japan, and Britain -- has been significantly slower, the USCBC says."

 

[Martian]

China to Have World's Second-Largest Fiscal Revenue

At current exchange rates, China's fiscal revenue for this year will total approximately $1.28 trillion U.S. dollars.

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"China to Have World's Second Largest Fiscal Revenue
By Xi Si
Published: 2010-07-02

News, Page 4, Issue 475, June 28
Translated by Tang Xiangyang

China is expected to collect a government revenue of eight trillion yuan this year, giving it the second largest fiscal revenue in the world. America has the largest.

While the growth rates of fiscal revenues of developed countries have been around one percent or even negative in the first five months of this year, China's growth rate has been 30.8 percent.

By June, many provinces had already gained half of their planned annual fiscal revenue, one month ahead of schedule. "China should not have a problem in achieving a revenue growth of 10 percent in the second half of this year," an official with the State Administration of Taxation (SAT) said.

Ensuring that the increasing fiscal revenue will be used to improve the livelihood of ordinary people is an issue the Chinese government must deal with.

Eight Trillion Yuan!

China collected a government revenue of 3.547 trillion yuan in the first five months of this year, 836.2 billion yuan more, a 30.8 percent increase, from that of the same period last year, and 200 billion yuan more than the total amount of the first half of last year. The world has been taken by surprise by the huge amount of fiscal revenue China has managed to gain despite the financial crisis.

The amount of fiscal revenue China earned in June is not known. But, according to an official with the SAT, based on statistics from the first half of June, June's growth rate will decrease, but will not reach zero.

Officials with the Ministry of Finance said fiscal revenue would experience a high growth rate in the first half of this year and growth would slow in the second half.

Based on conservative estimates, China will gain a fiscal revenue of over 4.3 trillion yuan in the first half of this year and its total revenue for the year will exceed eight trillion yuan. Earlier this year, China released its budget which showed its plans to collect 7.4 trillion yuan in fiscal revenue.
...
Cutting the Cake

The cake is getting bigger and bigger; there has been continual discussion on how to divide up the slices of China's fiscal revenue. Though the government has been putting more into social security, health care and education, people are still not satisfied with the growth rate of these types of investments.

The first task of the income distribution reform project drafted by the National Development and Reform Commission (NDRC) is to increase the amount of fiscal revenue that is spent on improving China's social security system."

 

[pla101prc]

not sure y this is happening. China's GDP is growing by 10% at the best, yet its revenue has been expanding with some incredible pace even inspite of the economic downturn. did some research, says in 2003 China's revenue was about 2 trillion Yuan. quadrupled in 7 years...that's some scary numbers

 

[antiterror13]

not sure y this is happening. China's GDP is growing by 10% at the best, yet its revenue has been expanding with some incredible pace even inspite of the economic downturn. did some research, says in 2003 China's revenue was about 2 trillion Yuan. quadrupled in 7 years...that's some scary numbers

Perhaps law enforcement is much much better now

 

[Martian]

China's ICBC is world's most-profitable bank

From left: Bank of China, ICBC, and Citibank towers in Hong Kong

China Construction Bank is world's second most-profitable bank

World's most-profitable banks for 2009

World's-largest bank market-capitalization

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"Chinese banks turning into modern global financial giants
Updated Tuesday, July 20, 2010 1:12 pm TWN, By Grace Ng, The Straits Times/Asia News Network

BEIJING -- Chinese folklore claims the world's first modern bank — complete with credit issuance and central bank regulation — originated in the early 11th century, amid flourishing cross-border trade during the Yuan dynasty.

Almost a millennium later, a rising dragon economy wants to show off to the world its modern banking giants, just as it did with other inventions from the printing press to gunpowder — which the Middle Kingdom claims credit for and which the West capitalized on.

And everyone is watching in awe.

China has the world's most profitable bank, four of the world's top 10 banks by market value, some of the world's largest bank loan books — and now, one of its newly listed banks may claim the title of the world's largest initial public offering.

With the debut of Agricultural Bank of China (AgBank), which raised US$19.2 billion, in Hong Kong and Shanghai last week, China's five state-owned listed behemoths are now squarely dominating the global banking domain.

By their sheer asset size, these lenders have ruled the roost for a few years.

The combined assets of Industrial and Commercial Bank of China (ICBC), China Construction Bank Corp (CCB), Bank of China (BOC), Bank of Communications and AgBank totaled 43 trillion yuan (US$6.3 trillion) as of the end of March.

This accounts for half of the domestic banking sector and is roughly the size of China's gross domestic product last year.

Their meteoric rise has confounded market watchers worldwide.

In just two decades, they have transformed themselves from debt-ridden basket cases financing wastrel state-owned enterprises, into some of the world's most profitable outfits.

ICBC, for instance, topped The Banker's annual rankings as the world's most profitable bank, with pre-tax earnings of US$24.5 billion last year, followed by CCB with US$20.3 billion.

It is an impressive show of earnings power, even if their internal controls and systems may still not be on a par with those of the West.

“The irony is that 10 years ago, China's banks were among the weakest in the world and today they are among the strongest, however primitive their system,” Pieter Bottelier, an economics professor at Johns Hopkins University and former World Bank official, told Newsweek last year.

Chinese banks have also become significantly more sophisticated in recent years.

While retail lending activities still make up the bulk of revenue — up to about 80 percent for the rural-focused banks — they are moving into areas like corporate and investment banking by recruiting aggressively and occasionally poaching whole teams from Western banks.

ICBC recently recruited banking star Zhang Hongli — former chairman of Deutsche Bank's China operations — as deputy president, to beef up its investment banking operations.

Meanwhile, BOC's investment bank is making a name for itself in Hong Kong. It was one of eight underwriters for Hong Kong-listed UC Rusal's US$2.55 billion flotation in January.

And five Chinese banks — both state-owned and state-linked ones — are in the top 10 core investment banking revenue earners in Asia excluding Japan, according to data tracker Dealogic.

The only area in which these state-owned banks have no foothold or state-boosted advantage is private banking.

“Which rich person in China is so stupid that he would let a state-owned bank manage his money?” asked one Hong Kong banker who declined to be named.

“But for investment and corporate banking, some of the bigger players like ICBC may well be keen rivals to Goldman Sachs and JP Morgan for Asian mandates in the next five to 10 years,” he added.

For foreign investors, Chinese bank stocks may look like a must-have part of their portfolios, to tap China's heady economic growth over the coming years.

Chinese Academy of Social Sciences research fellow Yi Xianrong said: “Chinese banks are profitable and they are a much safer bet than Western bank stocks

“At the very least, when you say the Chinese banks are too big to fail, you know it's true — the Chinese government will never let them fail.”

Yet even with China's top-three listed banks all posting record first-quarter earnings, and AgBank saying before its IPO that it expects a 40 percent jump in first-half net profits compared to last year, to 46 billion yuan, Chinese bank shares have had a rough year in the stock markets.

Some are hovering near 52-week lows, while their price-to-book ratios have fallen to less than two since April.

This is lower than other Hong Kong-traded bank shares such as Hang Seng Bank, which are trading at more than three times their book value.

It is because of this that some analysts have turned bullish on Chinese bank stocks. CCB's attractive valuation has won it “buy” or “overweight” ratings from the majority of analysts recently polled by Starmine, a company that tracks the performance and calls of equity analysts.

But others are worried about the risks of rising non-performing loans at Chinese banks.

“The banks lent heavily to the property sector and to fund local government projects in the stimulus measures last year. These areas may face problems this year, and the banks will face significant risks,” said finance professor Mei Jun of Renmin University.

As the big state-owned banks push on with their ambitions to expand operations abroad, especially in emerging markets from Africa to Latin America, there are also concerns about whether they are overstretched and overly exposed to global financial sector risks.

“Chinese banks are now shielded because they are focused on the domestic market, where the government can help protect their market share,” said Professor Li Jiming of Zhejiang University City College's business school.

Their risks will rise as they expand abroad, “but it is the price they must pay — and want to pay for world domination,” said Hong Kong-based analyst Charlie Chu."

 

[Martian]

Retail Sales of Consumer Goods in China Will Top $2.2 Trillion U.S. dollars in 2010

Shopping mall in Dalian, China

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"Retail Sales of Consumer Goods Will Top $2.2 Trillion in 2010
Cars Are Now a Leading Industry in China

by Normandy Madden
Published: June 09, 2010

BEIJING (AdAgeChina.com) -- Retail sales of consumer goods in China will maintain a 20% growth rate to exceed RMB 15 trillion ($2.2 trillion) in 2010, according to the Chinese Academy of Social Sciences.

The academy's latest China commercial development report said automobile sales have become a leading industry. In 2009, 13.6 million cars were sold in China and the figure may surpass 15 million units in 2010.

Online shopping is another bright spot, particularly for sales of home appliances. The value of online shopping accounted for 2% of total consumer goods sales in 2009, up from 1% in 2008. That figure is expected to double again by the end of this year to reach RMB 500 billion ($73.2 billion)

Source: Asia Pulse"

 

[Martian]

Intel USD $2.5 billion Dalian Chip Plant to Start Production in Q4

Dalian, China

Dalian at night

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"Intel Dalian Chip Plant to Start Production in Q4
Posted on: Thu, 25 Mar 2010 07:25:31 EDT

DALIAN, Mar 25, 2010 (SinoCast Daily Business Beat via COMTEX) --

Intel Corporation (Nasdaq: INTC | PowerRating), the world's No. One chipmaker, will put its 300-mm wafer fabrication plant in Dalian into production in the fourth quarter of 2010 as planned, said Dai Yulin, deputy mayor of Dalian, today.

The project, with a total investment of USD 6 billion, will include a USD 2.5 billion 12-inch chip production line in the first phase and USD 3.5 billion supporting facilities composed of a 12-inch chip production base, four assembling and testing plants, a R&D center, and a sales division in the second phase.

The first phase of the project is expected to bring in as much as CNY 20 billion sales revenue a year after starting operation at the beginning of 2009, according to Mr. Dai, noting that the Phase II project was scheduled to break earth in mid 2009. The chipmaker has hired more than 4,000 employees for its plant in Dalian since it entered into an agreement with the municipal government in the production base in 2007.

The Santa Clara, California-based company has a 90-nanometer chip assembling plant in Chengdu, Sichuan Province, western China.

Source:

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(March 25, 2010)"

300mm semiconductor wafer (Image Credit: Intel)

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"Intel on Track for 300mm Fab in China
Posted 06/09/09 at 08:28:30 AM by Paul Lilly

Things are all going to plan, said Intel, who is scheduled to begin operations at its 300mm fab in Dalian, China, in 2010. Manning the fabrication plant will be the first batch of graduates from the Semiconductor Technology Institute.

According to Intel, manufacturing with 300mm wafers has a dramatic effect on the company's ability to produce semiconductors at a lower cost. In addition, 300mm manufacturing consumes 40 percent less energy and water per chip than a 200mm wafer factory, the company said.

The site in question was first announced in 2007 as a $2.5 billion project in what would ultimately become the company's first wafer fab in Asia. It was the first time since 1992 with the construction of Fab 10 in Ireland that Intel had built a fab from the ground up."

 

[Martian]

TSMC begins construction of new USD $9.3 billion foundry

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"TSMC begins construction of new $9.3b foundry, wants to sate our constant hunger for chips
By Vlad Savov posted Jul 17th 2010 10:17AM

TSMC might not necessarily be a household name, but the product of its labors tends to be all over home electronics. Aiming to keep that trend going, the Taiwanese chipmaker has just broken ground on its third 300mm wafer plant, located in Taichung's Central Taiwan Science Park. The new Fab 15 will have a capacity of over 100,000 wafers per month -- earning it the prestige of being described as a Gigafab -- and once operational it'll create 8,000 new skilled jobs in the area. Semiconductors built there will also be suitably modern, with 40nm and 28nm production facilities being installed, and lest you worry about such trivial things as the environment, TSMC says it's doing a few things to minimize the foundry's energy usage and greenhouse gas emission. Then again, if you're going to spend nearly $10 billion on something, would you expect anything less?"