China's software industry jumps 30% in 1H

2008-09-08

XIAMEN, Sept. 8 (Xinhua) -- The revenue of China's software industry exceeded 345 billion yuan (50.8 billion U.S. dollars) in the first half of 2008, a 30 percent increase over the same period last year, an official said here on Monday.

China's share in the global market had increased from 1.3 percent in 2000 to 8.7 percent last year, ranking fourth in the world, said Zhao Xiaofan, an official in charge of the software industry with the Ministry of Industry and Information Technology.

"The environment is favorable for the development of the software industry," Zhao said at the ongoing 12th Xiamen International Trade and Investment Fair in the southeast Fujian Province.

China's software industry growth rate had exceeded 30 percent in each of the last seven years.

Zhao said Chinese software enterprises were still weak against the global competition and more efforts needed to be made to promote innovation and personnel training to achieve a sustainable development of the industry.

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so the 2008 annual software output is 100bn USD? it's a good news and 7-yr straight 30+% growth is an achievement.

It's time for China to boost growth


2008-9-15


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IN the first eight months of the year, the government's top priority, while framing macro economic policies, was the fight against inflation. But there has been a slight shift in emphasis.

Last Monday when Vice Premier Wang Qishan delivered a speech at the 12th China International Fair for Investment and Trade in Xiamen, Fujian Province, he said the current goal of the government was to "realize a stable and relatively fast economic growth" and "put the rising inflation under control."

This is possibly the first time that "spurring growth" has been put higher on the agenda than "curbing inflation" by a heavy-weight government official during a formal business occasion this year.

Policy makers are usually very circumspect while commenting on policy issues in public. So is Wang's public stance an indication that top decision makers could be considering the odds of adjusting macroeconomic policies? This may well be so.

Economists and analysts have been urging the government to shift focus from taming inflation to supporting growth.

The newly released economic data show China's gross domestic product has slowed to 10.1 percent in the second quarter, down from 10.6 percent in the first three months and 11.9 percent last year.

The Consumer Price Index, the main gauge of inflation, grew at 4.9 percent in August - the slowest pace in 14 months. It has been on the decline for four consecutive months and the speed at which inflation eased went beyond economists' boldest expectations.

Industry slowing

In contrast to the softening inflationary pressure, the risk of slower economic growth is intensifying.

In August, industrial production grew 12.8 percent, the slowest since February last year.

Among the sectors which dragged down output was the automobile industry, which used to be a major growth driver. The automobile sector fell 3.3 percent last month.

Exports, another key element of overall economic expansion, rose 21.1 percent in August, cooling down from a 22.9-percent jump a month earlier.

The slower growth came despite the government increasing export tax rebates for textiles and garments - the two sectors hardest hit by yuan appreciation and weaker demand from developed markets.

China's urban fixed-asset investment increased 27.4 percent in the first eight months, keeping a stable growth momentum. But analysts said this was mainly bolstered by the demand created by the May 12 earthquake in Sichuan Province.

On the other hand, domestic consumption looks robust. Retail sales in August jumped 23.2 percent, slightly up from the July figure which saw the fastest rise since 1996.

However, the rest of the year may see a downturn with no new strong selling points, like the housing and automobile sectors of the past, to boost growth.

All figures now seem to point in one direction °?- that the government should take concrete steps to sustain economic growth. Huang Yiping, an economist with Citigroup, said the CPI which fell below 5 percent in August could help shift the balance of policy concerns toward growth.

Sops may work

"The probability of a policy reversal may rise significantly in the coming months, as global economic conditions continue to deteriorate and domestic corporate sectors increasingly feel the impact of growth slowdown," said Huang.

"Although the People's Bank of China has so far maintained its bias toward tight monetary policies, it has introduced a number of measures to fine-tune trade policies as well in recent months," he added.

The analyst said that the central bank's steps include expansion of credit quota, slowdown of currency appreciation and increases in export tax rebates.

"This shift in policy concerns should be reinforced to keep the CPI at a healthy level," Huang noted.

But there is a major hurdle in the way of a complete turnaround as producer prices, the factory-gate inflation measure, also keep going up.

The Producer Price Index in August soared to 10.1 percent, the highest in 12 years. Rising factory-gate costs are generally passed on to the end users, but this may in turn affect consumer prices, analysts said.

Economists suggest China should continue with its fine-tuning measures for the time being. Relaxing the credit quota, slowing down yuan appreciation and selected reduction of tax burden could go a long way to boost the economy.

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China's Commerce Ministry to hold hearing on Coke offer for Huiyuan

2008-09-15


BEIJING, Sept. 15 (Xinhua) -- China's Ministry of Commerce will hold a hearing on Coca Cola's 2.4 billion-U.S. dollar offer to buy China's largest juice maker Huiyuan, a local newspaper said Monday.

Domestic juice producers will jointly submit to the ministry three new acquisition plans for Huiyuan to replace the Coke deal, the Beijing Morning Post cited an unnamed source as saying.

Huiyuan can be split and sold to Chinese enterprises separately, or be purchased by a yuan-denominated fund jointly set up by domestic companies, according to the plans. Another proposal was to okay the Coke-Huiyuan union but retain the brand of Huiyuan andsell it to Chinese companies.

Xinhua's phone calls to the ministry were unanswered while no related information was published on its website.

Coca Cola said on Sept. 3 it has offered to buy China Huiyuan Juice Group Limited, a Hong Kong-listed company that owns the Huiyuan juice business throughout China, for the equivalent of 2.4billion U.S. dollars in cash. If successful, it would be the second-largest acquisition in the U.S.-based company's history.

Three major shareholders of Huiyuan are said to have accepted the offer. They held approximately 66 percent of the Huiyuan shares. But the offer needs to be approved by the ministry according to the newly-issued Anti-Monopoly Law.

Huiyuan vice president Wu Yuqiang said Wednesday Coco Cola was still preparing to file an application to the Ministry of Commerce.

The ministry would conduct the antitrust review after receiving the application, with an attitude against monopoly but supporting "normal economic activities", according to ministry spokesman Yao Shenhong.

Some domestic companies had called on their fellows to "actively take part in the ministry's hearing on the purchase", said Beijing Morning Post.

The deal sparked widespread worries from the country's juice industry and ordinary Chinese.

Hou Yali, Beijing Shunxin Qianshou Fruit Beverage Co., Ltd., another leading juice maker in China, told press last week he was "shocked" to hear Coke's move and concerned about Chinese home-grown brands.

Nearly 80 percent of more than 450,000 polled online by the major portal Sina.com voted against the acquisition by Monday, while a similar proportion believed the deal would verge on a foreign capital's attempt to wipe out domestic pillar brands.

Meanwhile, Huiyuan president Zhu Xinli said selling his company was a normal business act conducive to the company, employees and consumers, denying Huiyuan was facing management difficulties or bottlenecks.

Huiyuan sold 1.3 billion yuan (110 million U.S. dollars) of juice in the first half of 2008, 5.2 percent down from a year ago. Its net profit rose 7.1 percent to 367 million yuan.

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China's central bank reduces credit interest rate, reserve requirement ratio

2008-09-15


BEIJING, Sept. 15 (Xinhua) -- China's central bank said on Monday it will reduce the benchmark loan interest rate and the reserve requirement ratio for commercial banks to ensure a steady and rapid economic growth.

The benchmark interest rate for one-year yuan-denominated loans will be adjusted down 0.27 percentage points from Tuesday, while the ratio of deposit that lenders are required to set aside will be down 1 percentage points from Sept. 25, said the People's Bank of China.

However, the country's major lenders will be exempt from the reserve requirement ratio adjustment. They include the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications and the Postal Savings Bank of China.

The reserve requirement ratio will be reduced by 2 percentage points for local financing institutions at areas badly hit by the Wenchuan earthquake in May, said the central bank.

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China eases policy decisively to support economy


2008-09-15


BEIJING - China's central bank acted decisively on Monday to prop up the country's slowing economy by cutting the cost of bank loans for the first time since February 2002.

Against a background of acute stress in global financial markets, the People's Bank of China also lowered the reserve requirement for all banks, except the five largest and the Postal Savings Bank, by 1 percentage point.

Both cuts were unexpected.

It is the first time that the central bank has lowered the proportion of deposits that lenders must hold in reserve since November 1999.

"We all knew that there would be monetary policy relaxation in China, but we didn't expect the move would be so quick," said Gao Huiqing, an economist with the State Information Centre, a government think-tank in Beijing.

The 0.27 percentage point cut in benchmark lending rates lowers the cost of one-year bank loans to 7.20 percent as from Tuesday, the PBOC said on its website.

China adjusts interest rates in increments that are divisible by nine because it makes interest calculations easier for lenders, which work off a 360-day banking year.

With inflation still uncomfortably high, the central bank kept benchmark savings rates unchanged at 4.14 percent for one-year certificates of deposit, pointing to narrower lending margins for the vast majority of banks.

The central bank said it was acting to "maintain the stable, fast and continuous development of the national economy", the world's fourth-largest.

"It shows that the Chinese leadership has a very clear idea of where the economy is heading -- China's economy is moving into a period of adjustment," Gao said.

Quick Change

Gross domestic product expanded in the second quarter by 10.1 percent from a year earlier, slowing from 11.9 percent in all of 2007. The economic signals since then have been mixed.

Figures last week showed weakness in imports and industrial production in August, but exports held up well and retail sales barely slowed from July's record pace.

However, the property market, steel prices, car sales and airline traffic have all turned down, as have purchasing managers' indexes, a timely barometer of sentiment in the all-important manufacturing sector.

"This is a rapid change in stance: we had been expecting a gradual dismantling of lending quotas," said Stephen Green, head of China research at Standard Chartered Bank in Shanghai.

"I wonder if they're seeing worse data than anyone else and whether this will be enough to get the property market going again?" he asked.

The cut in reserve requirements, which takes effect on September 25, marks the beginning of a reversal of a string of 18 increases between July 2006 and June 2008 to mop up cash flooding into the banking system from China's balance of payment surplus.