Everything about China and it's culture

Everything about China and it's culture

  • Category Archives Chinese Economy
  • Shanghai auto show 2011

    Global automakers are bringing their flashiest SUVs, luxury sedans and electric concept cars to Auto Shanghai, China’s biggest auto show of the year, as the industry reels from disruptions caused by the massive earthquake and tsunami in Japan last month.

    The show has become one of the industry’s most important as automakers look to booming China to drive profits. China overtook the United States in 2009 as the biggest auto market and growth stayed strong through the global crisis.

    General Motors, Toyota, BMW and others, including China’s own small but fast-growing brands, are working hard to woo China’s newly prosperous buyers. World premieres are planned for a new Chevy Malibu, a BMW luxury coupe and other models, putting Shanghai on a par with auto shows in Detroit, Tokyo and Frankfurt as a global platform for new products.

    Illustrating China’s rise in the auto world, French automaker Peugeot will show off its SXC, which was conceived at its Shanghai design studio. The futuristic concept car features a conventional gasoline engine driving the front wheels and an electric motor powering the rear, sleek narrow headlights and rear-hinged doors.

    The 14th Shanghai International Automobile Industry Exhibition opens Tuesday to reporters and to the public on Thursday.

    “Nobody wants to lose out here and everybody wants to play a key role,” said Johan Willems, a Shanghai-based spokesman for GM International Operations.

    “Yes, the sales growth is a little bit slower than before, but it’s still growing. This is the biggest market in the world,” he said, adding that he’s optimistic the auto industry will bounce back from production disruptions. “Companies will deal with it, but I don’t think there’s any long-term impact on vehicles sold.”

    The global industry is struggling to rebound from the loss of components caused by Japan’s March 11 earthquake and tsunami, which killed some 25,000 people, caused power shortages and forced factories to shut down. Shortages of crucial parts have forced automakers to temporarily idle some production lines or cut back output at factories in Europe and the U.S.

    Toyota Motor Corp., the world’s No. 1 automaker, has announced temporary production halts in Europe and North America due to parts shortages. The company, which has shut down all output in Japan except at three plants, will resume some limited production at its other plants in the near term.

    Nissan Motor Co. is suspending production for several days in April at plants in the U.S. and Mexico. Ford Motor Co. also says several North American plants would be closed for part of April.

    Chrysler Group LLC is cutting overtime at plants in Canada and Mexico to conserve parts.

    China’s market is crowded with global brands, which usually operate through joint ventures with local partners, and fledgling Chinese producers such as Geely Holding Group, the new owner of Sweden’s Volvo Cars, and Chery Automobile Co.

    Automakers have been silent about the possible impact of last month’s disaster in Japan on their China operations.

    “Normally, China is very self-sufficient in auto production because you have a lot of spare parts locally produced. However, there also are some critical parts, like electronics, like transmissions systems, that are imported from Japan,” Klaus Paur, chief analyst for China and South Korea at Synovate Motoresearch, told The Associated Press in Shanghai.

    With carmakers typically holding six to eight weeks’ worth of Japanese parts in their inventories, “we are coming now, by the end of April and the middle of May, into the critical phase,” Paur said. “If in Japan, production cannot be resumed, then the stock runs out here in China, which means car production cannot be continued.”

    Auto companies have been forced to take a close look at their supply chains to see how well they would stand up to a similar disaster, said Ivo Naumann, managing director of Alix Partners.

    “It will not be so easy in the short term to move that production somewhere else, but certainly it’s a moment in time when companies reassess their global supply chains,” Naumann said in Shanghai.

    China’s auto industry had a banner year in 2010, with 13.7 million passengers vehicles sold, up a third from 2009. It’s unlikely such robust performance will be repeated this year, as tax incentives for some vehicle purchases expire and cities renew efforts to bring traffic under control.

    So far this year, car sales have grown much slower than the monthly double digit percentage increases seen last year. Sales rose 5.4 percent in March over a year ago to 1.8 million vehicles, up from 4.6 percent in February.

    Still, Naumann and other analysts expect China’s overall passenger vehicle market to grow 10-15 percent a year for the next five years.

    Automakers in Shanghai will give buyers a first glimpse of new models that will be sold around the globe, a sign of how the balance of power in the auto industry has shifted eastward.

    General Motors Co. promises the global debut of an all-new Malibu, a midsize car that was GM’s biggest seller last year and which it plans to sell in nearly 100 countries. In a sign of the company’s global ambitions for the car, it will also be simultaneously revealed on Facebook.

    Other GM products on display will include the Cadillac CTS Coupe, Chevrolet Camaro and a Buick concept SUV.

    BMW, one of the top brands in status-conscious China, is planning the world premiere of a new 6 Series luxury coupe in Shanghai, along with a concept M5 executive sport sedan. Mercedes-Benz will reveal its entry-level A-Class concept car while Audi is set to unveil a new Q3 crossover.

    Many automakers will also be showing off electric cars, an industry segment that China is trying to position its domestic brands to dominate.

    Among the 17 models Ford is bringing to the show is the Focus Electric, a battery-powered version of its popular compact that can be recharged in four hours. Also on display will be the C-Max plug-in hybrid, which can go 500 miles (800 kilometers) on one charge.

    BMW and joint venture partner Brilliance China Automotive Holdings Ltd. will show off a plug-in hybrid sedan based on the 5 Series sedan that is set to go into production in 2013.

    Toyota will feature several versions of its popular Prius hybrid, including the newest model and a plug-in version that is still in the concept stage.

  • Shanghai Stock Exchange to expand ETF trading

    The Shanghai Stock Exchange (SSE), which marked its 20th anniversary of trading on Friday, is planning to boost the market of Exchange-Traded Funds (ETF), a relatively new breed in China’s securities market, to cater for the growing appetite of Chinese investors.

    Zhou Qinye, vice-president of the SSE, recently said that the bourse is planning to introduce more cross-market and cross-border ETF products. It recently signed agreements on index authorization with nine international index companies and five exchanges.

    Industry players and analysts are positive about the outlook for ETFs in China, saying that their introduction will offer investors more asset allocation products, given the current shortage of investment tools in China.

    "The potential of the Chinese ETF market is huge," said Zhang Qi, an analyst at Haitong Securities. "The trend is that ETF-related products will also expand to the commodities market, providing fund companies with more products to sell and giving investors wider investment choices."

    The indexation investment market on the Shanghai bourse has seen remarkable growth over the past few years. Twelve ETFs are currently traded in Shanghai, boasting an asset size of up to 50 billion yuan ($7.5 billion).

    The bourse is also vigorously promoting the innovation of indexation investment, and will launch a new index, the SSE 380 Index, on Nov 29.

    It will target emerging and growing blue chips to mirror the overall performance of an array of medium-sized listed companies. The index, in conjunction with the SSE 180 and SSE 50, will constitute the major blue-chip indices of the Shanghai market.

    The rapidly growing ETF industry in China has also helped fund managers rise as significant players.


  • China’s green industry boosts inward investment

    Partly as a response to the global climate challenge, China’s booming green industry has become the engine that boosts global economic cooperation and encourages investment into the country.

    "We are vigorously seeking international cooperation in various fields of green technology," said Jiang Yaoping, vice-minister of commerce.

    So far, China has signed Memoranda of Understanding with many countries, including the United Kingdom, Switzerland, Italy, Finland, Canada and Germany, to co-develop the country’s green economy, Jiang said.

    He said the ministry is working with relevant government agencies on the revision of the catalog for the encouragement of foreign investment industries, so that overseas investments will be encouraged to flow into emerging and energy-conserving industries, such as the advanced manufacturing sector, and participate in the transformation and upgrading of China’s traditional industries.

    "We can see China is taking very serious steps in developing clean technologies. The prospect for China’s (green technology) market will be very bright and Finnish companies’ know-how will be quite profitable," said Erkki Virtanen, permanent secretary of Finland’s Ministry of Employment and Economy.


  • What luxury rides say about their drivers in China

    Especially here in Shanghai, one look out onto any main street and you’ll see luxury car after luxury car roll by. Anyone with half a brain could deduce that the Chinese have money and love to show it off by their choice of ride; that’s certainly not rocket science. That the top three luxury car brands are all German–Audi, BMW, followed by Mercedes-Benz — is not news either. We could’ve guessed that one too. However, where the market research from J.D. Power & Associates becomes interesting is its demographic breakdowns on who’s buying these cars.

    According to their data, Audi buyers tend to be government officials who incidentally are the leading consumers of luxury cars in China. BMW, of which the most popular model is the 5 series, attracts young business people, usually entrepreneurs who have hit the pay dirt. Good ol’ Mercedes-Benz is the preferred choice of senior (in age and rank) businessmen and government officials.

    So while younger BMW drivers usually will drive themselves, Mercedes and Audi owners typically have a chauffeur. Though regardless of whether they are driving themselves or being driven, most Chinese prefer an extended wheelbase or basically their car to be extra big. All three German car makers have launched larger models exclusive to the Chinese market to cater to that.

    As if that wasn’t pimp enough, Yang Jian, editor of Shanghai trade paper Automotive News China, says that when they purchase a vehicle, Chinese drivers will pay hard cash for it too. “Chinese people don’t lease cars. They can certainly get a loan, but these buyers all have the cash.”

  • China Yuan Fixed At New High For 4th Day In Row

    The People’s Bank of China set the yuan’s central parity rate at another record high of 6.7250 to the U.S. dollar on Wednesday.

    The fixing marked the fourth straight record high for the Chinese unit against the greenback, beating Tuesday’s 6.7378. The string of new highs comes as the United States has increased pressure on Beijing in the last week to allow the yuan to rise faster.

    The yuan finished at 6.7463 against the U.S. dollar on the over-the-counter (OTC) market Tuesday, higher than Monday’s close of 6.7618.

    The yuan has seen increased volatility in the trading days since the PBOC’s June 19 pledge to increase exchange rate flexibility. The yuan has risen by 1.48% since that pledge was made.

    Based on today’s parity, the yuan is up 1.52% from a year earlier against the dollar, according to Market News International calculations.

    The yuan fell 0.06% in 2009 as the government continued to hold the Chinese unit virtually pegged to the U.S. dollar, despite growing international criticism about its exchange rate policy. It fell 0.48% in August and has risen 1.49% so far this year.

    Last year marked the first that the yuan has fallen against the dollar since being depegged in 2005. The paltry move against the dollar last year compares with the 7.05% rise in 2008 and the 6.86% jump seen in 2007.

    Today’s fixing brings the yuan’s gains against the greenback to 23.06% since currency reforms were announced on July 21, 2005, including that day’s one-off 2.1% revaluation.

    The yuan was set weaker against the euro and the yen today.

    The PBOC set the yuan parity against the euro at 8.7499 today, down from the 8.6561 fixing the previous trading day. The yuan is up 12.47% y/y against the euro based on today’s fixing.

    The yuan depreciated 1.41% against the euro last year, a dramatic shift from its 10.43% jump in 2008.

    The yuan was also fixed at 8.0941 to the Japanese yen, down from the previous session’s 8.0833. The yuan is down 7.92% y/y against the yen based on today’s fixing.

    The Chinese currency rose 2.53% against the Japanese yen in 2009, a turnaround from 2008’s 15.32% depreciation.

    The People’s Bank of China started setting a daily central parity rate on Jan. 4, 2007.

    On July 21, 2005, China freed the yuan from its longstanding peg to the dollar in favor of a managed float with reference to a basket of currencies.

    On May 21, 2007, the PBOC widened the daily fluctuation band for the yuan-dollar exchange rate to 0.5% from 0.3% on either side of the central parity rate.

  • Chinese officials now required to report marital status, location of families

    China issued a new anti-corruption regulation Sunday to require officials to report changes in their marital status, the whereabouts of their spouses and children if they have moved abroad, personal incomes, housing as well as their family’ s investments.

    The new regulation was issued by the General Office of China’s State Council and the General Office of the Communist Party of China (CPC) Central Committee.

    The regulation defines "officials" as those leaders holding official ranks of and above county level in government agencies, democratic parties, public institutions, state owned enterprises and state holding enterprises.

    The new regulation requires officials to report changes in their marital status and the location of their spouses and children if they have moved abroad, within 30 days after such a change takes place.

    Specifically, officials should report their ownership of passports or visas and their children’s marital status if they are married to foreigners or residents of Hong Kong, Macau, and Taiwan.

    Officials should also report any businesses their spouses and children are involved in, both within China and abroad.

    The new regulation also requires officials to report their ownership of property, including property in their spouses’ or children’s names, their family’s investment in financial assets and in enterprises.

    According to the regulation, if officials fail to report honestly or in a timely fashion, they would face punishment to various degrees, even as harsh as removal of official ranks.

    The regulation also ordered party organizations at all levels to strengthen management and supervision over officials to guarantee the implementation of the regulation.

    This regulation is considered an important measure to ensure strict self-discipline for Party and government officials and to improve the intra-Party supervision system.

  • China’s housing market makes moving abroad cheaper than buying at home

    In June 2010, the average price for buying an apartment in Shanghai rose to RMB 20,733 per square meter, according to Anjuke.com, one of the city’s most popular real estate websites. This means that to own a 100 square meter apartment in Shanghai, you need to fork out more than RMB 2 million (and that’s before taxes).

    The notoriously high property prices in China’s big cities like Shanghai and Beijing have turned netizens’ attention to a seemingly unrelated issue: emigrating. 

    A group of Internet users have suggested in a recent article on the popular news website QQ.com that it is cheaper to file for immigration to developed countries like Canada, Australia or the United States than to buy property in China. 

    “An investment of RMB 2.35 million gets you a green card for Canada, RMB 4.54 million for Australia, RMB 9.62 for Singapore and RMB 3.42 million for the United States,” asserts the article. It continues that this amount of money would be what you’d need to “buy an apartment in Shanghai or Beijing.”

    Many immigration agencies are using the real estate market to attact a new group of post-1980s Chinese consumers, asking them, “If you’re considering buying a house, why not just immigrate abroad?”

    An article on QQ.com titled “Why spend RMB 800,000 to immigrate?” asserts that there are many reasons people consider emigrating from China, but the group now affected by the real estate market price climb are a different demographic than earlier generations. They are “middle class people who want to plan a better future for their children,” the piece says. Being able to afford a home is just one part of this issue. 

    The post puts together a list of benefits that migrating to the United State (theoretically) offers. The list spans issues from fines for a second child in China (approximately RMB 240,000 according to the piece) and the availability of student loans in the United States, to cheaper property price and bluer skies outside China’s borders.

    “The reason so many Chinese people choose to emigrate,” writes the article, “is because no one would want their child to drink tainted milk, fight to go to university or queue for jobs at Foxconn.” And more importantly, a U.S. passport gives you freedom to travel anywhere in the world, adds the article. Real estate prices are now just the newest marketing slogan.


  • What to make of the strikes in China?

    Around this time of year, the topic of social unrest in China is never far from the fore. The recent spate of strikes at the Honda plant in Foshan and slew of suicides at Foxconn’s Shenzhen factory has provided recent evidence that not only disenfranchised sections of society are willing to show their defiant colours, but also the greater need for the government to address China’s wealth distribution.

    The Foxconn saga, in which at least twelve workers jumped to their deaths, has raised questions over the nature of factory life in China. The Guardian and The Telegraph have both looked into why the spate occurred. The seven-day weeks and 15-hour days of silent and repetitive manufacturing of products these workers may never be able to afford has taken its toll. Chinese paper Southern Weekend also sent one of its interns to work in Foxconn’s factory for one month, who said,

    If you have no links, other than on the production line, then you become one single and unconnected knot. Then you get suicidal facing a machine all day and with no way of releasing your anxiety like normal people.


  • China means business with first-ever carbon emissions targets

    China could regret setting its first carbon target. Even if the impact on the economy proves manageable, the country’s negotiators have now condemned the world’s most populous nation to jargon-filled number crunching and climate geekery for decades to come.

    During the past six years in China, I can count the number of times I have heard locals talk about carbon offsetting on one finger. They didn’t need to: under the Kyoto protocol, China and other developing nations were not obliged to do anything to reduce emissions. That will all change with yesterday’s announcement, which paves the way for China to establish carbon trading, carbon taxing and, perhaps one day, carbon offsetting.

    What it will not mean is an overall reduction of greenhouse gases from the world’s biggest emitter. The new target is a 40-45% reduction in carbon intensity (emissions per yuan of economic activity) between 2005 and 2020. That means slowing the rate of increase rather than cutting back.

    China’s emissions will increase by between 90% and 108% between 2005 and 2020 if the economy grows at 8% per year, according to Arthur Kroeber of Dragonomics Research & Advisory.

    But it could be a lot worse. According to the Worldwide Fund for Nature, China’s new target will prevent more than 4 gigatons of carbon entering the earth’s atmosphere between 2010 to 2015, in addition to the 1.5 gigatons already saved by the energy efficiency drive during the current five-year plan.


  • China’s outbound tours to top 51 million in 2010

    China’s outbound tours in 2010 were expected to top 51 million, up seven percent year on year, said Shao Qiwei, director of China’s National Tourism Administration (NTA), on Monday.

    The 2010 World Expo to be held in Shanghai would attract 3.5 million overseas visitors to the city, Shao said at a national meeting at Nanning, capital of the southern China’s Guangxi Zhuang Autonomous Region.

    For the whole year, 132 million inbound trips would be made, up five percent year on year and among them, 54.5 million would stay overnight, up seven percent year on year, Shao said.

    China’s total tourism revenue in 2010 was expected to top 1.44 trillion yuan ($210.83 billion), up 12 percent year on year and about 500,000 new jobs would be created in this sector, Shao said.

    Domestic tourism was expected to pocket 1.15 trillion yuan in 2010, up 13 percent year on year as domestic tours to top 2.15 billion, also up 13 percent, Shao said.

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