China Economy Weekly: Trade Battles with US, Power to Tibet, Investing In General Motors

Beijing Buys More US Debt:  China slightly increased its holdings of US Treasury debts in July, to $846.7 billion, after two months of net sales.

The news allayed concerns that Washington's largest creditor was moving away from investing in dollar assets.

Coincidentally, the debt data came out as two US Congressional hearings were being held on China's exchange rate policy. 

The hearings were attended by Treasury Secretary Timothy Geithner, who acknowledged that the two countries "have significant economic interests" in their relationship and highlighted the importance of the Chinese market on the US economic recovery. However, he expressed dissatisfaction with the pace of the yuan's appreciation.

China responding by warning that obsessing over yuan appreciation would not solve trade problems in the US and "might make things even worse". Foreign Ministry spokeswoman Jiang Yu said, "Adding pressure will not resolve trade issues between China and the US the country's exchange rate reform will only be pushed forward in accordance with economic conditions and balance of international payments," Foreign Ministry spokeswoman Jiang Yu.

Premier Wen Assures Foreign Firms:  Premier Wen Jiabao assured foreign investors  that China is still committed to creating an open and fair environment for them, amidst recent complaints by some executives of multinational firms.

"I wish to reiterate here that all enterprises registered in China according to Chinese laws are Chinese enterprises. Their products are made-in-China products," Wen said at the opening ceremony of the World Economic Forum Annual Meeting of the New Champions in the northern port city of Tianjin.

Sino-EU Summit Debate over Currency:  The European Union is likely to pressure China on currency appreciation at the upcoming Sino-EU summit in Brussels.

The EU hinted in a document released at the end of a one-day summit that currency policy was high on the list of strategic interests to be pursued when Chinese and EU leaders meet in October.

China to Boost Co-operation with World Bank:  China wishes to take its cooperation with the World Bank to higher levels, Vice Premier Li Keqiang said on Monday, the 30th anniversary of China's relationship with the bank.

"Both sides should seize the new cooperation opportunities as China strives to restructure the economy, improve people's livelihood, and maintain sustainable development," Li said during his meeting with Robert Zoellick, President of the World Bank.

APEC economies to Promote Job Growth:  Member economies of the Asia-Pacific Economic Cooperation (APEC) have warned against lingering unemployment as they continue to reel from the global financial crisis.

APEC members affirmed their commitment to promote free and open trade and investment and to oppose all forms of protectionism, in order to realize economic growth and job creation, their statement said.

The joint statement will be submitted to the 18th APEC Economic Leaders Meeting, to be held in Japan in November.

China To Maintain "Moderately Easy" Monetary Policy:  The People's Bank of China announced Friday it would continue a moderately easy monetary policy, making it better-targeted and more flexible in the coming months of this year.

China's central back said that it needed to skillfully handle the relationship between maintaining steady and rapid economic development, restructuring the economy. and managing inflation expectations.

Cross-Straits Trade up 56%:   Trade between the Chinese mainland and Taiwan totaled $81.91 billion in the first seven months of the year, up 55.9% from 2009, Sun Yafu, vice director of the State Council's Taiwan Affairs Office, said on Wednesday.

From January to July, the Chinese mainland approved more than 1,600 Taiwan investment projects worth $1.42 billion, a rise of almost 42%. More than 50 mainland enterprises have invested $133 million in Taiwan since July last year.

China Opposes US Steel Pipe Duties:  China resolutely opposes the US Commerce Department's decision to impose anti-dumping and countervailing duties on Chinese steel products, said Yao Jian, spokesman with the Ministry of Commerce, on Wednesday.

Yao said the US side disregarded the fact that China is a developing country and had hurt the interests of Chinese industries by applying the trade remedies repeatedly.

The US Commerce Department said that it would impose final anti-dumping duties ranging from 48.99% to 98.74% to offset below-market pricing by Chinese exporters. It also said it would levy final countervailing duties of 13.66% to 53.65% to offset Chinese government subsidies.

US Cases against China to WTO: The US had filed two cases against China at the World Trade Organization, the US trade representative Ron Kirk announced on Wednesday.

One case requests dispute settlement consultations, the first step in litigation, on China's imposition of duties on US steel imports, while the other case requests consultations in a dispute over US suppliers of electronic payment services.

China Power to Tibet:  China's National Development and Reform Commission approved a construction plan to transmit power from Northwest China's Qinghai Province to Tibet by connecting Qinghai and Tibet's power grids on Wednesday.

China will spend 16 billion yuan ($2.37 billion) in connecting the grids during the next two years.

The transmission line will run 1038 km from Golmud to Lhasa. About 900 km of the line will be built on lands that are at least 4,000 meters above sea level, making it the longest power transmission line constructed at such high altitudes.

Tibet's grid is not currently linked to any others. During the dry season, the region lacks power because about 80 percent of it- supply comes from hydro power stations, while in flood season, there is too much power.

China to Cut Fossil Fuels:  Prominent economist Cheng Siwei said China should reduce the proportion of fossil fuel in total energy mix from the current 91% to 85% in 2020.

China is committed to promoting carbon trade, he said, but “the critical problem now is to find the most suitable carbon trading market.”

The economist also proposed a carbon tax to promote sustainable growth.

Green Goals:  The Chinese government will impose more severe punishments on companies that fail to meet the green goals set by the state and will provide more education to the general public to drive the country's sustainable growth.

"By the year's end, factories that do not meet the energy-efficiency requirements will be shut down and their bosses will be punished," said Cheng Siwei, former vice chairman of the standing committee of the National People's Congress.

SAIC approached GM about IPO stake:  China's top automaker SAIC Motor Corp has reached out to the US car giant General Motors to explore the prospect of taking a stake in the automaker when it goes public this fall, sources have said

The contact between SAIC, which has a 13-year relationship with GM, and the US company has been informal and the expression of interest by the Chinese automaker could hit a quick dead-end if the US government objects to the move, sources added.