China Economy Weekly: Southeast Asia’s Robust Trade; High-Speed Railways; China Becomes Hydro Superpower

China-ASEAN Trade Rises:  Trade value between China and the Association of Southeast Asian Nations (ASEAN) rose 49.6% year-on-year in the first seven months to $161 billion, with ASEAN enjoying a surplus of $7.54 billion.

High-speed Railways in South China to:  China will complete 5,000 kilometers of high-speed railways in the mainland's southern region by 2012 to accelerate ieconomic integration with Hong Kong and Macao.

The railways, to be laid in the sprawling pan-Pearl Delta region of eight provinces and an autonomous region of the mainland, will account for nearly 40& of the country' total in the next three years.

Chinese Coal Mines:  The Chinese Government has stressed the need for the country's coal mine enterprises to continue with mergers and acquisitions for the healthy development of the industry.

The statement was issued following an executive meeting of China's State Council, chaired by Premier Wen Jiabao.

The government will also introduce preferential measures on finance and taxation to support the upgrade of safety technologies of the merged enterprises, and it said it will protect workers and investors' rights by law during the merger and acquisition process.

Government Expenditure up 134%:  China's government expenditure surged 134.3% in the first seven months of 2010 as compensation for land purchases grew rapidly.

From January to July, the spending was 1.32 trillion yuan ($194 billion). Total revenue reached 1.8 trillion yuan, up 146%.

Chinese Economy to Stabilise?:  The Chinese economy will start to stabilise in the fourth quarter after the recent marked slowdown due to government measures, but it might face risks next year as external demand weakens, Ben Simpfendorfer, chief China economist at the Royal Bank of Scotland (RBS) has.

China's purchasing managers' index (PMI), a leading indicator of economic health, has fallen for two consecutive months to 51.2% in July, barely above the expansive baseline of 50%.

State Enterprises to Hire Overseas Managers:  More than a dozen State-owned enterprises will hire new managers by the end of the year after a worldwide recruitment campaign, the States Assets Supervision and Administration Commission (SASAC) announced.

Four general managers and eight assistant managers will join during the eighth and largest global hiring programme.

The new hires are part of the nation's "1,000-talent" initiative offering high salaries and attractive funding to overseas employees who want to work in China.

China Becomes Hydro Superpower:  As all generating units began running at Xiaowan Hydropower Station in the southwestern Yunnan province, China's capacity became the world's largest.

The new 700,000 kilowatt-unit at Xiaowan sent China's installed hydropower capacity just above 200 million kilowatts and marked the completion of the 4.2 million-kilowatt project, China's second-largest hydropower plant after the Three Gorges.

With a total investment of 40 billion yuan ($5.86 billion), Xiaowan can produce 19 billion kWh of electricity every year.

China This Week: China-Japan Economic Dialogue; Move on North Korea Talks; Partnership with South Africa and Vietnam

Third China-Japan Economic Dialogue: Chinese Vice Premier Wang Qishan said Saturday that bilateral trade between China and Japan has recovered and exceeded the level before the global financial crisis.

Wang made the remarks at the opening of the third China-Japan high-level economic dialogue, which he chaired with Japanese Foreign Minister Okada Katsuya.

The two countries had maintained sound cooperation in energy-saving, environment protection, food safety, product quality and the construction of China-Japan-ROK Free Trade Area, Wang said.

China, South Africa “Strategic Partnership”: President Hu Jintao and his South African counterpart Jacob Zuma on Tuesday raised bilateral ties to a "comprehensive strategic partnership", opening more avenues to expand trade and strengthen relations between Beijing and the largest African economy.

In the Beijing Declaration, the two sides based a comprehensive strategic partnership  on equality, mutual benefit, and common development. They agreed to provide mutual technical support in the areas of the green economy, skills development, and industrial financing.

Chinese, S Korean Nuclear Envoys Meet: China's special representative for Korean Peninsula affairs Wu Dawei on Thursday met with South Korea's top nuclear envoy Wi Sung-lac for talks on restarting the long- stalled six-party discussions on denuclearisation of the Korean Peninsula.

Wu visited North Korea from 16 to 18 August, meeting Foreign Minister Pak Ui Chun and Vice Foreign Ministers Kim Kye-gwan and Kim Song Gi.

Beijing hosts the multilateral talks that include both Koreas, the US, Japan, and Russia. Pyongyang unilaterally pulled out of the discussions in April 2009.

China Aid to Flood-hit Pakistan: More relief supplies, worth 20 million yuan ($2.94 million), have been sent from China to flood-hit Pakistan, the Ministry of Commerce said in a statement Wednesday.

China was one of the first countries to respond delivering 10 million yuan on 4  August. Beijing indicated it will offer an additional 60 million yuan of supplies to Pakistan, Ministry of Commerce official Chong Quan announced while meeting with Masood Khan, Pakistani ambassador to China.

Chinese Defense Minister meets Greek Air Force Chief: Chinese Defense Minister Liang Guanglie on Monday met with Vasileios Klokozas, chief of the General Staff of the Greek Air Force, as the two sides pledged to boost military exchange and cooperation.

Vietnam, China Vow to Enhance Trade: Vietnamese Minister of Industry and Trade Vu Huy Hoang and Chinese Minister of Commerce Chen Deming and China declared Monday that the two countries would enhance trade and investment cooperation

Hoang asked China to encourage more imports and to create favorable conditions for Vietnamese companies. He also encouraged big Chinese firms to invest in Vietnam. Chen offered agreement and said Beijing will help Vietnam in training officials,

Trade between Vietnam and China was more than $20 billion in 2009 and has exceeded $13 billion in the first seven months this year.

Vietnam welcomes China's Military Development: Vice Defense Minister Nguyen Chi Vinh said Wednesday Vietnam welcomes China's military development. The Chinese military can contribute to disaster relief efforts in the region, he said.

Vinh is in Beijing for consultations with Chinese defense ministry officials ahead of the first ASEAN Defense Ministers' Meeting Plus to be held in the Vietnamese capital Hanoi  in October.

China, Japan Support Climate Talks: China and Japan are willing to push forward international climate change talks, said Zhang Ping, minister of the National Development and Reform Commission, on the sidelines of the third China-Japan high-level economic dialogue.

He said China and Japan regard energy-saving and environmental protection as important areas, linked to the growth of economic cooperation between both countries.

The two countries agreed to hold the fifth China-Japan forum on energy-saving and environmental protection in late October in Tokyo to promote green economy and cooperation on low-carbon technologies.

Enquiry into Deadly Plane Crash: Chinese Vice Premier Zhang Dejiang has ordered a thorough probe into Tuesday night's plane crash in Northeast China's Heilongjiang province.

At least 42 people died while 54 others survived when the Brazilian-made Embraer E-190 jet crashed as it approached Lindu Airport in Yichun city.

Amendments to Hong Kong's Basic Law: China's top legislature on Saturday approved an amendment to the Basic Law of the Hong Kong Special Administrative Region regarding the method of selecting Hong Kong's Chief Executive.

Hong Kong, Philippines to Exchange Hostage Probe Info: Hong Kong Police will investigate the deaths of Hong Kong tourists slain in Monday's hostage tragedy in Manila and will exchange information with the Philippine authorities through Interpol when necessary, Under Secretary for Security Lai Tung-kwok said Saturday.

Hong Kong has sent two Police officers to Manila to assist in the investigation, and Lai said more officers will be sent if necessary.

Deaths Up in Industrial Accidents: The death toll from major industrial accidents jumped 50 percent in the first seven months of this year, the State Administration of Work Safety said on Friday.

From January to July, 53 major incidents in the country killed 904 people. In a hot and rain-plagued August, there have been 13 major incidents and 210 people killed or missing.

The accidents included the deadly explosion in a firecracker factory and this week's plane crash that ended Chinese civil aviation's 2,000-plus days of flight safety. Both incidents occurred in Yichun City in northeast China's Heilongjiang province.

China's Crackdown on Illegal Labour Export: Chinese authorities are intensifying their crackdown on the illegal outsourcing of labour in a bid to protect the legal rights of overseas workers.

The Ministry of Commerce and the Ministry of Foreign Affairs issued an emergency circular prohibiting illegal labuor agencies from dispatching labourers abroad.

The circular also bans the subcontracting of overseas labour service by domestic contract engineering firms.

China has been exporting labourers as fishermen, construction workers, or farmhands. More than 340,000 Chinese people worked abroad in 2009, according to statistics from the Ministry of Commerce.

China to Spend Millions on Disaster Prevention: China plans to spend 2.23 billion yuan ($328 million) to improve disaster prevention systems in a mountainous northwest China town devastated by a landslide earlier this month.

The plan is scheduled to be carried out in three phases from 2010 to 2012..

China Green Belt to stop Deserts merging: China has started an ambitious project to plant a green belt between the country's third and fourth largest deserts to stop them converging, said Wang Xiaodong, a forestry official in northern Inner Mongolia autonomous region.

"It is the first time in China that a green belt is being planted between two deserts. The project is expected to take five years to plant a 202-km (125 miles) long and 5 to 15-km wide stripe of vegetation between Badain Jaran Desert and Tengger Desert," said Wang.

China Economy Weekly: Foreign Reserves; Investment and Trade Surges; Co-operation with India and with General Motors

China's Foreign Exchange Reserves: China has diversified its foreign reserves by cutting US Treasury bond holdings and increasing Japanese debt holdings.

According to data released by the US Treasury Department, China held nearly $843.7 billion of US debt at the end of June, $94.6 billion less than the peak of $938.3 billion it held in September 2009. Despite the fall, China is still the largest US debt holder, followed by Japan and the United Kingdom.

China This Week: Geological Disasters; US-Chinese Relations; Carbon Emissions

As the nation trims its US exposure, it has been expanding its Japanese debt buys. China has purchased $20 billion worth of Japanese treasury debt for six consecutive months, almost five times the total increase of its holdings during the past five years.

China has alsodoubled South Korean debt holdings and bought more mortgage bonds of Fannie Mae and Freddie Mac, the two largest US home funding companies.

South Korean treasury bonds held by Chinese investors rose 111 percent to 3.99 trillion won ($3.4 billion) in the first half of the year, while mortgage bond holdings, including those of Fannie Mae and Freddie Mac, by nearly $5.6 billion in June.

China Moves to quell concerns over Foreign Innovation: Addressing concerns about local bias in government procurement, Minister of Commerce Chen Deming said innovation by foreign-invested companies enjoys equal support if at least 50 percent of a product's added industrial value comes from operations in China.

Chen made the remarks during a meeting in Beijing with Doris Leuthard, president of the Swiss Confederation and minister of Swiss Economic Affairs.

In November, China's Ministry of Science and Technology, National Development and Reform Commission, and Ministry of Finance jointly announced that China-made innovation would be given priority in government procurement. The policy stirred unease among foreign investors concerned they could be locked out of China's vast government purchases.

China-Related Mergers and Acquisitions Rebound:  Most China-related merger and acquisition deals have rebounded strongly in the first half of the year, and set the scene for robust activity for the remainder of 2010 and into 2011, accounting firm PriceWaterhouseCoopers (PwC) reported.

Chinese outbound merger and acquisition deals for the first six months of 2010 reached record levels, up by more than 50% over the same period last year.

Natural resources are the main industry target for Chinese investors overseas. Though Australia is identified as the main target destination, Africa is growing in prominence for Chinese resource investors.

"Although natural resources continue to be the priority industry target for Chinese investors overseas, we are seeing other industries starting to get increased attention, including technology, manufacturing and services industries," said Andrew Li, Transaction Services Partner at PwC. "Meanwhile, investors are broadening their target regions to include the United States, Japan and the European Union."

India aims to Double Trade with China: India is striving to double bilateral trade with China, its largest trading partner, within four years, according to Subas Pani, chairman of the India Trade Promotion Organization.

Bilateral trade between India and China has risen dramatically over the last decade. From a modest $3 billion at the turn of the century, annual trade reached $42 billion in 2008-09. The level reached $32 billion in the first half of 2010 and is expected to exceed $60 billion for the year.

China's Trade Surplus to Shrink: The Ministry of Commerce on Tuesday said China's trade surplus is expected to shrink gradually in the next few months, as the government adopts more stimulus measures to boost imports.

China's trade surplus for July surged unexpectedly to an 18-month high of $28.7 billion as exports grew 38.1% year on year to a record high of $145.5 billion. Growth in imports fell to 22.7% from 34.1% in June.

The slower growth in imports is the latest sign that China's curbs on the real estate sector are affecting demand, and many economists said the trade surplus will remain high as import growth continues to decelerate.

Foreign Direct Investment Surge: The Ministry of Commerce reported that the foreign direct investment (FDI) rose by 29.2% year-on-year to $6.92 billion in July, the 12th consecutive monthly gain and the fourth month this year that the increase was above 20 percent.

The high growth was buoyed up by larger volume of foreign funds into the service sector and China's western and northeastern regions, and the trends will continue, analysts said.

"No systemic risk" for local borrowings: The Chinese government said risks related to borrowing by local government-backed investment units are "controllable" and would not cause systemic damage to the economy, as it worked out detailed measures to clean up financing of these vehicles.

Some economists are concerned that the problem of local government debt could destabilize the financial system of the world's fastest-growing major economy if not managed properly. They especially cite the central government's tightening of the housing market, which could affect local fiscal revenue and make debt repayment more difficult.

Local governments are not allowed to borrow directly from banks or issue bonds to fund deficits and support infrastructure construction. In consequence, many have set up investment vehicles by using land and fiscal revenue as collateral.

Alliance Promotes Electric cars: An alliance of sixteen of the largest State-owned companies wants to accelerate development of electric vehicles in China, a move which underscores the country's ambition to be a world leader in new energy vehicles.

The alliance, formed on Wednesday, is gearing up to invest 100 billion yuan ($14.7 billion) on electric vehicles by 2012. Guided by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), it was formed by almost all the major players in related sectors, including the country's top three oil majors, top two power grid operators, and two major automakers --- China FAW Group Corp and Dongfeng Auto Corp.

SAIC, GM Form New Business Model: China's biggest automaker SAIC Motor Corp Ltd and General Motors Co announced plans to jointly develop fuel-efficient engines and transmissions on Wednesday.

Under the agreement both sides will together develop a new small-displacement gasoline engine family and an advanced transmission, which will be used by GM and SAIC in China and future vehicles worldwide.

"The cooperation kicks off a new business model for China's automobile industry", said Hu Maoyuan, chairman of SAIC.

Chinese "Investor Immigrants" Inject Money Into Canada: Billions of yuan may be transferred to Canadian banks every year from China after the media reported that Chinese are now the top seekers of permanent residency in the country.

In 2009 alone, Canada admitted more than 25,000 permanent residents from the Chinese mainland. Around 2,000 applicants moved there after being wooed by Canada's immigration policies for overseas investors, which require a minimum net personal worth of C$800,000 ($771,395) and investment of C$400,000.

Both before and after arrival in Canada, applicants can transfer at least C$500,000 to Canadian banks for living expenses, according to sources familiar with the immigration industry.

Total yuan deposits in Canada may reach 6.7 billion yuan this year if another 2,000 Chinese investor immigrants enter.

E-Commerce Surges: China's e-commerce industry is expected to see rapid growth in the next few years, with the average annual increase surpassing 35%.

Qian Xiaoqian, deputy director of the State Council Information Office, said online shopping is become more and more popular in the nation. "E-commerce sales volumes surged to 3.6 trillion yuan ($530 billion) last year," said Qian. He said the Internet industry is also changing from an entertainment-oriented approach to a more balanced structure offering diversified services.

China This Week: Geological Disasters; US-Chinese Relations; Carbon Emissions

Geological Disasters Spike: China recorded more than 26,000 geological disasters in the first seven months of this year, nearly 10 times the number in the same period last year, Minister of Land and Resources Xu Shaoshi said on Friday.

The disasters, ranging from landslides to ground subsidence, left 843 people dead or missing and led to direct economic losses of more than 3.34 billion yuan ($491 million), Xu said.

Xu attributed the disasters to frequent extreme weather such as severe droughts and rainstorms, as well as to the impact of seismic activities.

Four dead, 88 missing after mudslides: Four people have been confirmed dead and 88 others are still missing Thursday after mudslides hit a remote mountain town in southwest China's Yunnan Province.



Days of torrential rain triggered the mudslides, local officials said.

Torrential rains have wreaked havoc across China this summer, with the worst flooding and landslides in decades. Massive mudslides on 8 August 8 in Zhouqu county, in Gansu Province in northwestern China, have left 1,287 people dead and 457 missing.

China “Not a Threat” in Latin America: The US does not view China as a threat in Latin America and Washington is in talks with Beijing on cooperation in the region, long considered America's backyard, a senior US official said on Wednesday.

While China's trade share in Latin America is small, the potential is huge and there are many areas of possible cooperation, said Arturo Valenzuela, Assistant Secretary of State for Western Hemisphere affairs, as he arrived in China for a five-day tour. However, Valenzuela added, "We are talking generally we haven't come up with any concrete steps".

The Obama Administration's top diplomat for Latin America said he regarded China's accession to the Inter-American Development Bank (IDB) as well as official observer status at the Organization of American States (OAS) as positive moves.

China Criticises US Military Report: China on Wednesday lashed out at a Pentagon report on Beijing's defense capabilities. "Issuing this report is not beneficial for the improvement and development of China-US military ties," Senior Colonel Geng Yansheng, spokesman for the Ministry of National Defense, said.

The report, issued on Monday after a five-month delay, devoted a whole chapter to blaming the current impasse in China-US military contacts on Beijing. Military contacts were frozen in January after Washington pressed for a $6.4-billion arms deal with Taiwan.

In June, China rejected a proposed visit by US Secretary of Defense Robert Gates.

China envoy visits North Korea: Wu Dawei, China's special representative for Korean Peninsula affairs, visited the Democratic People's Republic of Korea from 16-18 August, the Chinese Foreign Ministry said Thursday.

Wu exchanged views with the North Koreans on maintaining the peace and stability of the Korean Peninsula and on restarting the six-party talks on North Korea's nuclear programme.

China, Mongolia Military Co-operation: The Chinese andMongolian militaries should continue exploring new areas of co-operation, said Ma Xiaotian, deputy chief of the General Staff of the Chinese People's Liberation Army, as he meeting Bor Baatar, Secretary of State of Mongolia's Defense Ministry, on Friday.

The two sides also exchanged views on regional security.

China Maritime Hotline with Japan?: China has proposed establishment of a maritime emergency hotline with Japan to prevent civilian and military clashes in the East China Sea and other waters, sources from both governments have said.

The measures raised by Beijing include an annual meeting, a conference to discuss emergency situations, and sharing of frequencies and signals used by ships and airplanes during emergencies.

Beijing has already established hotlines with Seoul and Washington.

China, IAEA to Ink Nuclear Safety Deal: China and the International Atomic Energy Agency (IAEA) are expected to sign an agreement on nuclear safety as the UN nuclear watchdog's chief, Yukiya Amano, visits China.

The two sides will boost cooperation in personnel training and nuclear safety in East Asia and across the world, according to a draft of the agreement.

Carbon Reduction Locations: The National Development and Reform Commission (NDRC), China's top economic planning body, said on Wednesday that it has selected pilot carbon cities to address the nation's carbon emissions issues.

The NDRC has selected five provinces --- Guangdong, Hubei, Liaoning, Shaanxi, and Yunnan --- and the cities of Tianjin, Chongqing, Hangzhou, Xiamen, Shenzhen, Guiyang, Nanchang, and Baoding.

Each area is required to draft a plan to reduce carbon emissions and develop a green economy for China's 12th Five-Year Plan (2011-2015).

The country pledged to reduce its 2005 carbon intensity rate --- the amount of carbon dioxide produced per unit of GDP --- by 40 to 45% before the end of 2020.

China to Spend Billions on Forestation: China's government will earmark a total 200 billion yuan ($30 billion) to forestation schemes to the end of 2021, the State Forestry Administration (SFA) announced Wednesday.

China had 195 million hectares of forests by the end of 2008, according to the most recent survey.

China Economy Weekly: Rail Projects, Inflation, International Trade Links

China Clears Inter-city Rail Projects: The National Development and Reform Commission on Friday approved inter-city rail transit networks covering more than 2,000 kilometres to accelerate regional integration.‬

The network runs across central China, mainly in Henan province, and is expected to link nine cities with its 496 kilometres.‬ It also includes alterations to railways across the Pearl River Delta region, with a length of 1,478 kilometres, and to metro lines in Xi'an, the capital city of northwest China's Shaanxi province.

China This Week: Deadly Mudslides, Pollution Crackdown, Nuclear Weapons Promise

China, Switzerland to Ztart Free Trade Talks: China and Switzerland agreed on Friday to start discussions on a free trade agreement, as the two states celebrate their 60th anniversary of diplomatic ties.‬

‬ Chinese President Hu Jintao and his Swiss counterpart, Doris Leuthard, witnessed the signing of the memorandum of understanding. Switzerland has become China's major trade partner in Europe, and Leuthard said the two states should boost cooperation in finance, education, culture, environmental protection, tourism, and international affairs.

China's July Inflation: China's consumer price index (CPI), one of the main gauges of inflation, rose in July to its highest level since October 2008, boosted by rising food prices after widespread floods.

The CPI was up 3.3% in July from a year earlier, 0.4% higher than the rise in June. It has now exceeded the 3-percent full-year target ceiling the government set in March. However, economists said the acceleration in CPI growth was a temporary result of the floods.

The Producer Price Index, a major measure of inflation at the wholesale level, grew 4.8% year on year in July, 1.6% lower than June and 2.3% lower than May.

China's Consumer Confidence Edges Up : China's Consumer Confidence Index stood at 109 in the second quarter, up one point from the first quarter.The reading in the second quarter was the fifth consecutive quarterly rise.

China calls for more investment with ASEAN: Bilateral investment between China and the Association of Southeast Asian Nations (ASEAN) is low compared with trade, Yi Xiaozhun, vice minister of China's Ministry of Commerce, said Friday.

In 2009, bilateral investment between China and ASEAN nations totaled $10 billion, a sharp contrast with the $213 billion of bilateral trade, said Yi, attributing the low investment to the fragmented infrastructure within the China-ASEAN region.

Sri Lanka Co-operation China: Visiting Sri Lankan Foreign Minister G.L. Peiris, on his first official visit to China since taking office in April, pledged Thursday to boost economic and trade cooperation with China.

Sri Lanka appreciates China's support in constructing education and medical facilities, he said.

Sri Lanka's civil war ended in May 2009 after the the rebel Liberation Tigers of Tamil Eelam was defeated by government troops.

Zimbabwe Seeks Economic Links in East China: Zimbabwe hopes to further its economic and trade co-operation with east China's Anhui Province, said visiting Zimbabwean President Robert Mugabe on Thursday.

Zhang Baoshun, secretary of the Anhui Provincial Committee of the Communist Party of China, said that Anhui and Zimbabwe, which were economically complementary, had reached consensus on co-operation in agriculture, mining and infrastructure.

China Investment in Chile: China attaches great importance to economic cooperation with Chile and is committed to boosting mutual investment between the two countries, Lu Fan, the Chinese ambassador to Chile has said.

In the first half of this year, bilateral trade reached $10.9 billion, an increase of 58.9 percent compared with the same period of 2009, and Chilean exports amounted to $7.65 billion.

The Supplementary Agreement on Trade in Services of the Free Trade Agreement between China and Chile took effect on 1 August, and negotiations are underway on a supplementary agreement on investment.

Brazil Agricultural trade with China: Brazil wants to boost trade with China in agricultural products, and will export more pork to and import more fish from China in the next few years, Brazilian Agriculture Minister Wagner Rossi said Thursday.

Automobiles, Home Appliance Subsidies Spur Chinese Spending: Chinese government subsidies for purchases of automobiles and home appliances have boosted consumer spending and bolstered the national economy, the Ministry of Commerce said Thursday.

China rolled out the subsidy policies for rural consumers last year. In the first seven months of 2010, the government paid out 9.57 billion yuan ($1.41 billion), lifting sales in rural regions to 83.82 billion yuan (about $12.5 billion), up 240% from a year ago.

China State Enterprises Grow: The assets in China's centrally-administered state-owned enterprises (SOE) reached 2.01 trillion yuan ($297.40 billion) by the end of June, up 10.71% from 2008, China's state-owned assets regulator said on Thursday.

Nearly a quarter of the SOEs have state-owned assets over 10 billion yuan each, while six have state-owned assets over 100 billion yuan.

Housing Market Regulation to Continue: Chinese Vice Premier Li Keqiang said Friday that the government would continue to regulate the housing market and resolutely crack down on speculative property investment.

He said the government would continue to increase the supply of affordable housing for low-income families to consolidate the effects of the regulation over the past months.

Housing prices in major Chinese cities rose 10.3% year-on-year in July, slower than the 11.4% growth in June.