China Economy Weekly: Economic Restructuring; Interest Rates Rise Amidst Inflation Worries

China Restructuring Economy:  China is seeking breakthroughs in economic restructuring while maintaining stable and relatively fast economic growth, the central committee of the ruling Communist Party of China (CPC) said on Monday.

"China will further boost people's incomes, enhance social construction and deepen reform and opening-up," said the Party's communique. This would facilitate "substantial progress in transforming the economic development pattern, and markedly promote China's comprehensive national strength, international competitiveness and better shield against risks.

China's Goal for New Strategic Industries: Beijing has announced plans to develop new strategic industries, saying their value-added output of would account for 8% of the country's gross domestic product (GDP) by 2015 and 15% by 2020.

The industries include alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, alternative-fuel cars, and energy-saving and environmental protection.

China Raises Interest Rates for 1st time since 2007:  The People's Bank of China raised interest rates for the first time in nearly three years in an attempt to combat inflation and soak up excessive market liquidity.

The bank said it was raising benchmark rates by 25 points, taking one-year deposit rates to 2.5% and one-year lending rates to 5.56%.

China's inflation accelerated to 3.5% in August, the highest level in 22 months. Higher food prices pushed up the consumer price index, butbut officials said China could still achieve the 3% target for the year.

US-China Treasury Talks:  Vice-Premier Wang Qishan held talks with US Treasury Secretary Timothy Geithner on economic ties on Sunday after a meeting of the Group of 20 finance ministers in South Korea vowed to avoid a global currency war.

The impromptu meeting between Wang and Geithner also covered preparations for the Seoul G20 summit, scheduled for 11-12 November.

China Co-operation with IMF:  China on Tuesday vowed to enhance coordination with the International Monetary Fund for reform of the global economic and financial systems.

"Currently the world economy is recovering slowly, but the outlook still remains uncertain," Chinese Premier Wen Jiabao said while meeting with visiting IMF Managing Director Dominique Strauss-Kahn in Beijing.

Praising China's counter measures against the crisis as "correct", Strauss-Kahn said the IMF values China's position and role and would like to build closer ties with the country.

China Adds US Treasury Bonds:  China continued to increase its holdings of US Treasury bonds in August amid growing global demand for US debt, but economists said the move will not alter Beijing's strategy of diversifying its foreign exchange basket.

China remained the biggest foreign holder of US Treasury bonds, after its holdings climbed to $868.4 billion in August, up $21.7 billion from July, according to data released on Monday by the US Treasury Department.

It is the second straight month that China increased its holdings of US Treasury bonds, but the total amount is still below the September 2009 peak of $938.3 billion.

China's Growth Drops:  China's economic growth continued to decelerate in the third quarter as the government weans the economy from the stimulus, but rising inflation posed new challenges.

The gross domestic product grew 9.6% in the third quarter compared to the same period last year, the National Bureau of Statistics said.

The growth rate slowed down from 11.9% in the first quarter and 10.3% in the second quarter.

China Cut Rare Earth Exports:  China will further reduce quotas for rare earth exports by up to 30% next year to protect the precious metals from over-exploitation, said an official from the Ministry of Commerce.

He added that the country is  facing the possibility that reserves of medium and heavy rare earths might run out within 15 to 20 years if the current rate of production is maintained.

China's Customs Revenue Tops 1 Trillion Yuan:  China's customs revenue for 2010 hit 1 trillion yuan ($150.4 billion) on 14 October, a surge of 46.1% from one year earlier, the General Administration of Customs announced.

The administration attributed the growth to strong import expansion as the nation's economic stimulus measures  boosted domestic demand.

Chinese Companies to Tap Aussie Coal Reserves:  Two Chinese coal firms have teamed up to explore and develop coal resources in an area in Australia that has forecast reserves of 10 billion tons.

China Coal Geology Engineering Corp and Wanbei Coal-Electricity Group Co Ltd, based in East China's Anhui province, inked an agreement for the project. The two companies will carry out a five-year exploration and development in the area in Queensland.