Ken Davies' Chinability blog

2012-01-23T20:26:00.001+01:00

Wishing you all a very Happy New Year of the Dragon!

新年快樂！ 恭喜發財！

Production input inflation moderates slightly

2011-12-12T20:18:00.000+01:00

As China prepares to withstand the shock of a deteriorating situation in Europe, it is clear that there is not much room for manoeuvre. A repeat of the CNY 4 trillion stimulus package is not possible, since this would damage both government finances and the banks' non-performing loan ratios. The recent slight downward move in interest rates can not be taken much further because the threat of inflation persists. Food price inflation, which, along with fuel price inflation, is the main factor behind this year's rise in consumer price inflation, has hit the headlines, but also important are the rises in prices paid by producers, which have been at unsustainable rates for much of this year. The overall coporate goods price index fell sharply from 8.4% year-on-year in September to 5.9% in October, though major component indices show continuing double-digit year-on-year increase rates.

Corporate Goods Price Indices
2011	Overall	Agricultural products	Mining products	Coal, oil & electricity
Jan	8.0	18.2	12.7	6.2
Feb	8.7	19.5	15.0	6.5
Mar	9.3	20.2	14.5	8.3
Apr	8.5	16.8	12.3	9.1
May	8.8	15.2	10.8	9.6
Jun	9.5	17.8	12.6	10.9
Jul	9.7	16.8	13.4	11.8
Aug	8.9	13.5	14.8	11.9
Sep	8.4	14.5	14.6	11.7
Oct	5.9	11.0	10.2	10.3
Source: People's Bank of China.

Hu's answer to Europe

2011-12-05T13:58:00.001+01:00

Cartoon by Christian Adams in The Telegraph.

Hong Kong still thriving 10 years after I left...

2011-12-03T14:43:00.001+01:00

I left Hong Kong ten years ago. It was a great place to live and work (I was then Chief Economist for Asia and Bureau Chief at the Economist Intelligence Unit, EIU), but my lungs couldn't stand the air pollution, which has since got worse. After spending a fortune on medication and short breaks in cleaner climates, I moved back to the UK briefly before being enticed to Paris, where I ended up as Head of Global Relations in the Investment Division of the OECD, working mainly with China on the country's investment policies.

Yesterday I attended a seminar in New York organised by the Hong Kong Trade Development Council (HKTDC) to present Hong Kong as "America's Bridge to Asian Growth". As always with HKTDC events, the presentations were authoritative, informative and wholly persuasive.

Hong Kong has, as the EIU predicted many years ago, prospered from closer integration with the Chinese mainland following the 1997 handover, despite a bad start caused by the Asian economic crisis of 1997-1998.

The presentations focused on Hong Kong's development as an Asian financial centre, emphasising the opportunities for US business in China arising from the continuing internationalisation of the renminbi/Chinese yuan.

Hong Kong has for many decades successfully promoted itself as the gateway to China, but in the past decade it has also been marketing itself as a world city and a bridge between the whole of East Asia and the rest of the world. This was a major theme of the seminar.

At the same time, opportunities for US companies to sell to Hong Kong itself were highlighted, for example in a presentation by Raytheon on its successful bid to supply air traffic control equipment to the "new" airport at Chek Lap Kok, which was opened in 1998 but is already starting to upgrade its infrastructure in line with traffic expansion. Unlike many other major players in the world economy, Hong Kong has sound finances and therefore real money to spend.

As ever, no opportunity was lost to describe Hong Kong's advantages, including rule of law, clean government, free movement of capital, free trade, ultra-low taxes and so on, which contrast so strongly with the situation in mainland China. The claim that Hong Kong has excellent corporate governance went unchallenged, which it might not have done if the seminar had been held in Hong Kong, but then complaints of minority shareholders are not exactly unique to Hong Kong.

Hong Kong has lost none of its strong advantages as a business centre for China and East Asia, despite the rise of Shanghai and other cities up the Chinese coast. But it needs to keep improving to maintain that advantage. As informal conversations during lunch demonstrated, people in Hong Kong remain proud of the SAR's tremendous economic success, but would like to do more to render their home more attuned to global culture and make the air safe to breathe.

You can read more about Hong Kong's advantages as a business centre in an HKTDC booklet at: http://portaluat.tdctrade.com/bread/US_SuccessStories/index.html

Consumer Prices for October 2011

2011-11-14T05:10:00.001+01:00

National Bureau of Statistics of China　9 November 2011

In October, the consumer price index went up by 5.5 percent year-on-year.
The prices grew by 5.4 percent in cities and 5.9 percent in rural areas.
The food prices went up by 11.9 percent while the non-food prices increased by 2.7 percent.
The prices of consumer goods went up by 6.6 percent and the prices of services grew
by 2.8 percent. In October, the month-on-month change of consumer prices was up
by 0.1 percent. Of which, prices in cities went up by 0.1 percent, and rural remained
the general level. The food prices down by 0.2 percent while the non-food prices
increased by 0.2 percent. The prices of consumer goods rose by 0.1 percent,
and the prices of services went up by 0.2 percent.

I. Year-on-Year Changes of Prices of Different Categories

Food Prices went up by 11.9 percent year-on-year, contributing nearly

3.62 percentage points to the overall growth. Of which, the prices of grain

rose by 11.6 percent, meaning 0.32 percentage point growth in the overall price level;

meat, poultry and related products, surged 26.1 percent, contributing 1.72

percentage points (price of pork was up by 38.9 percent, contributing

1.12 percentage points); fresh eggs, up 12.6 percent, contributing

0.11 percentage point; aquatic products, up 12.4 percent, contributing

0.28 percentage point; fresh vegetables, dropped 6.8 percent, fresh fruits, up

11.1 percent, contributing 0.19 percentage point, grease, increased 15.8 percent,

contributing 0.18 percentage point.

Prices for tobacco and liquor went up by 3.7 percent year-on-year, of which,
that for tobacco was up by 0.4 percent and liquor 8.7 percent.

Prices for clothing rose by 3.7 percent year-on-year. The clothes prices went up
by 4.0 percent while the shoes prices increased by 2.5 percent.

Prices for household facilities, articles and maintenance services went up by
3.1 percent year-on-year, of which, prices for durable consumer goods was up by
1.0 percent, and household services and processing, maintenance services, up
by 11.9 percent.

Prices for health care and personal articles grew by 3.5 percent year-on-year.
Of which, prices for western medicine went down by 0.6 percent; Chinese medicinal
materials and patent medicine, up 13.0 percent; and health care services, up 0.5 percent.

Prices for transportation and communication rose by 0.8 percent year-on-year.
Of which, prices for vehicles dropped by 0.3 percent; fuels and parts for vehicles,
up 12.2 percent; vehicles use and maintenance, up 4.6 percent; transportation fares
between cities, up 2.9 percent; public transport fares in cities, up 1.9 percent; and
communication, down by 13.7 percent.

Prices for recreation, education, culture articles and services remained the general level
year-on-year. Of which, education went up by 0.9 percent; recreation and culture,
up 1.5 percent; traveling, up 2.3 percent; and durable goods and services for recreation
and culture, down by 6.6 percent.

Prices for housing went up by 4.4 percent year-on-year. Of which, prices for water,
electricity and fuel rose by 3.5 percent; houses building and decorating materials, up
4.5 percent; and housing rental prices, up 3.6 percent.

According to estimation, in the 5.5 percent growth in October, the carryover effect of
last year’s prices rising accounted for 1.5 percentage points, while new prices rising
factors in this year accounted for 4.04 percentage points.

II. Month-on-Month Changes of Prices of Different Categories

In October, food prices down by 0.2 percent month-on-month, contributing
0.06 percentage point to the month-on-month growth of consumer prices. In October,
price for fresh vegetables continued to decline 3.4 percent month-on-month, affecting
0.09 percentage points decrease in the overall price level, price for meat, poultry
and related products decreased 0.6 percent (that for pork declined 1.8 percent,
while resulted in 1.2 percentage point up month-on-month.), price for fresh eggs
dropped 3.8 percent (caused 2.4 percentage points increase month-on-month),
price for aquatic products continued to decline 1.5 percent month-on-month, Prices
growth of the above mentioned three items triggered 0.13 percentage points decrease
of the overall prices. Price for grease climbed 0.5 percent, narrowed 1.0 percentage
points month-on-month, price for fresh fruits increased 5.7 percent month-on-month,
expanded 2.6 percentage points over September, price for grease and fresh fruits
affecting 0.11 percentage points increased in the overall price level.

Non-food prices climbed 0.2 percent in October, affecting 0.15 percentage points

increased in the overall price level. Of this total, prices for tobacco and liquor, clothing,

household facilities, articles and maintenance services, recreation, education, culture

articles and services, and housing rose by 0.5, 1.6, 0.1, 0.2 and 0.1 percent respectively,

while that of prices for health care and personal articles, and transportation and

communication dropped 0.1 and 0.3 percent, respectively.

Consumer Prices in October
Item	October		Jan-Oct
Item	M/M (%)	Y/Y (%)	Y/Y (%)

Consumer Prices	0.1	5.5	5.6
Of which: Urban	0.1	5.4	5.5
Rural	0.0	5.9	6.2
Of which: Food	-0.2	11.9	12.4
Non food	0.2	2.7	2.8
Of which: Consumer Goods	0.1	6.6	6.5
Services	0.2	2.8	3.7
Commodity Categories
Food	-0.2	11.9	12.4
Tobacco, Liquor and Articles	0.5	3.7	2.6
Clothing	1.6	3.7	1.8
Household Facilities, Articles and Maintenance Services	0.1	3.1	2.3
Health Care and Personal Articles	-0.1	3.5	3.4
Transportation and Communication	-0.3	0.8	0.5
Recreation, Education, Culture Articles and Services	0.2	0.0	0.4
Housing	0.1	4.4	5.9

Notes:

1. Explanation of Indicator. Consumer Price Index (CPI) is an index measuring changes
over time in the price level of consumer goods and services purchased by residents,
which reflects comprehensively changes of price level.

2. Statistical Coverage. Consumer Price Index (CPI) covers the prices of goods and
services of eight categories and 262 basic divisions which cover the living consumption
of urban and rural residents, including food; tobacco, liquor and articles; clothing; household
facilities, articles and maintenance services; health care and personal articles;
transportation and communication; recreation, education, culture articles and
services and housing. Data are collected from 63,000 prices collection units in
500 cities and counties of the 31 provinces (autonomous regions and municipalities),
which cover grocery stores, department stores, supermarkets, convenience stores,
professional markets, franchise houses, shopping centers, open fairs and service
consumption units etc.

3. Data Collection. Original data of consumer prices are collected by specific person in
fixed place at fixed time.

4. From January 2011, the CPI calculation in China began to take 2010 as the base year.
It was the second routine adjustment since the adoption of fixed-base price index in 2001.
The first round base year was 2000, as changing every five years, the second round
base year was 2005.

5. In accordance with the data of national survey of urban and rural household
consumption expenditure in 2010 and data of other surveys conducted by relevant
departments, the National Bureau of Statistics made a routine adjustment of the weights
of CPI from January 2011. By using the new weights, the consumer price index in October
went up by 5.495 percent year-on-year, or 0.093 percent month-on-month, while it was
up 5.606 percent year-on-year, or 0.106 percent month-on-month if the former weights
were used.

Investment in Fixed Assets from January to October 2011

2011-11-14T04:58:00.001+01:00

National Bureau of Statistics of China　10 November 2011

From January to October, the investment in fixed assets (excluding rural households)
reached 24,136.5 billion yuan, up by 24.9 percent year-on-year, remained the general
level over the first nine months of this year. Of which, state-owned and state-holding
enterprises invested 8,393.8 billion yuan, surged 12.4 percent. The investment in
fixed assets (excluding rural households) in October climbed 1.34 percent month-on-month.
In terms of different industries, from January to October, investments of primary,

secondary, and tertiary industry amounted to 565.6, 10,560.5 and 13,010.4 billion yuan,

expanded 28.2, 26.9 and 23.3 percent respectively, year-on-year. The investment in industry

reached 10,286.9 billion yuan, increased 26.6 percent; of which, the investment in mining

of ores, manufacture, production and supply of electric power and heat power was 876.7,

8,276.9 and 1,133.3 billion yuan, respectively rose by 18.4, 31.6 and 3.8 percent.

In term of different regions, the growth of investments in eastern, central and
western regions was 22.2, 29.7 and 29.6 percent respectively.

In terms of jurisdiction of project management, from January to October, the
central investment reached 1,426.0 billion yuan, and the year-on-year fell was 8.5 percent,
while that of the local investment was 22,710.5 billion yuan, up by 27.9 percent.
In terms of status of registration, from January to October, the investment by
domestically-funded enterprises was 22,499.9 billion yuan, up by 25.8 percent;
investment by funds from Hong Kong, Macao and Taiwan was 752.2 billion yuan,
up by 20.6 percent; and the investment by foreign funds was 771.9 billion yuan, up by
13.7 percent.

In terms of projects under construction and newly-commenced, from January to October,
the total planned sum of investment in project under construction stood at
58,307.0 billion yuan, climbed 19.8 percent, total planned investment of
newly-commenced projects was 20,168.8 billion yuan, a rise of 24.1 percent year-on-year.

In terms of paid-in funds, from January to October, investment in urban areas hit
27,386.6 billion yuan, a year-on-year rise of 22.9 percent. Of which, the growth of
government budgetary funds went up by 13.1 percent, the volume of positioned funds of
domestic loans, foreign investment, self-rising funds and other funds rose by 6.7, 29.4,
12.7 and 16.7 percent respectively.

From January to October, the investment in real estate development was 4,992.3 billion yuan,
a year-on-year growth of 31.1 percent. Of which, the investment in residential buildings
reached 3,583.2 billion yuan, up by 34.3 percent. The floor space of commercial
buildings sold reached 796.53 million square meters, a year-on-year growth of
10.0 percent. Of which, the growth of residential buildings was up by 9.0 percent.
The sources of funds for real estate development enterprises from the current year
reached 6,842.9 billion yuan, up by 20.2 percent year-on-year. In October, the national
real estate climate index was 100.27.

Investment in Fixed Assets for October 2011
Indicators	January-October
Indicators	Absolute Value	Year-on-year Increase rate (%)

1. Investment in Fixed Assets (Exclude Rural Households) (100 million yuan)	241365	24.9
Of which: State-owned and State Holding	83938	12.4
Grouped by Jurisdiction of Project Management
Central Investment	14260	-8.5
Local Investment	227105	27.9
Grouped by Types of Industry
Primary Industry	5656	28.2
Secondary Industry	105605	26.9
Tertiary Industry	130104	23.3
Grouped by Industrial Sectors
Extraction of Petroleum and Natural Gas	1911	3.2
Ore Mining, Smelting and Pressing of Ferrous Metals	1029	17.4
Ore Mining, Smelting and Pressing of Non-Ferrous Metal	1004	21.1
Ore Mining, Processing of Non-Metallic Minerals	1003	28.1
Manufacture of Non-metallic Mineral Products	8434	29.6
Smelting and Pressing of Ferrous Metals	3136	18.9
Smelting and Pressing of Non-Ferrous Metal	3134	33.2
Manufacture of General Purpose Machinery	6331	32.0
Manufacture of Transport Equipment	6849	28.8
Manufacture of Electrical Machinery & Equipment	6412	48.2
Manufacture of Telecommunications Equipment, Computers and Other Electronic Equipment	4224	37.7
Production and Supply of Electric Power and Heat Power	9055	3.3
Railway Transportation	3986	-21.9
Road Transportation	10826	9.9
Management on Water Resource	2605	28.0
Management on Public Facilities	15836	16.8
Grouped by Registration Type
Domestic Funded	224999	25.8
Funds from Hong Kong, Macao and Taiwan	7522	20.6
Foreign Investment	7719	13.7
Grouped by Construction and New Projects
Total Investment in Construction Project	583070	19.8
Total Planned Investment in New Projects	201688	24.1
Funds in Place for Investment (Exclude Rural Households)	273866	22.9
Government Budgetary Funds	11621	13.1
Domestic Loans	37182	6.7
Foreign Investment	4206	12.7
Self-Raising Funds	181709	29.4
Other Funds	39148	16.7
2. Investment in Real Estate Development (100 million yuan)	49923	31.1
Of which: Residential Buildings	35832	34.3
Floor Space under Construction (10,000 sq.m)	474786	28.4
Of which: Residential Buildings	363712	26.8
Floor space of houses newly started (10,000 sq.m)	160362	21.7
Of which: Residential Buildings	124115	19.1
Floor Space of Buildings Completed (10,000 sq.m)	49721	18.5
Of which: Residential Buildings	39953	17.6
Floor Space of Commercial Buildings Sold (10,000 sq.m)	79653	10.0
Of which: Residential Buildings	70971	9.0
Office Buildings	1473	14.4
Buildings for Commercial Business	5270	17.6
Sales of Commercial Buildings (10,000 sq.m)	43826	18.5
Of which: Residential Buildings	36417	16.3
Office Buildings	1958	27.1
Buildings for Commercial Business	4607	32.1
Sources of Funds for Real Estate Development Enterprises (100 million yuan)	68429	20.2
Of which: Domestic Loans	10552	1.0
Foreign Investment	714	32.4
Self-raising Funds	28201	30.8
Other Sources	28961	18.8
Of Which: Deposits and advantage payments	17520	25.6
Personal mortgage loans	6755	-4.9

Annotations:

1. Explanatory Notes on Indicators

Investment in fixed assets (excluding rural households) refers to the total workload on
construction and purchase for fixed assets during a certain period in the form of currency,
as well as the concerning expenses.

Paid-in fund: refers to all funds received by investment units used for fixed assets
during the reference period, including state budget, domestic loans, foreign investment,
self-raised funds, and others.

Newly started project: refers to all newly started construction projects during the reference
period.

Annual completed investment on real estate project: refers to the total investment on
building construction, land development, public welfare buildings and land purchasing, etc..
which is collected with accumulated data according to image progress principle.

Area of commercialized housing sold: refers to total contracted area of commercialized
housing (i.e. area of floor space as designated in the formal contracts signed by both sides)
during the reference time. It constitutes floor space of completed housing and floor space of
future housing.

Value of commercialized housing sold: refers to the total contracted value
(i.e. value of sales/purchase for selling/purchase of commercialized housing as
designated in the contract signed by both sides) during the reference time.

This indicator has the same coverage as the area of commercialized housing sold, which is also the accumulated data.

Sources of funds of enterprises for real estate development: refers to all funds dialing in
during the reference period used for real estate development. Including domestic loans,
foreign investment, self-raised funds and others. It is accumulated indicator.

2. Statistical Coverage

Refers to construction projects on fixed assets and real estates involving a total
planned investment of 5 million yuan and over.

3. Data Collection

The report of investment on fixed assets is collected monthly with complete enumeration (no report in January).

4. Classification on East, Central and West Region

Eastern region: including Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu,
Zhejiang, Fujian,Shandong, Guangdong and Hainan. Central region: including
Shanxi, Jilin, Heilongjiang, Anhui,Jiangxi, Henan, Hubei and Hunan. Western region: including Inner Mongolia, Guangxi,Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu,
Qinghai, Ningxia and Xinjiang.

5. The growth rate of fixed asset investment is nominal growth, investment in fixed assets
price is calculated quarterly, January to March January to June, January to
September, and January to December are calculate the actual growth rate, and
other months calculate the nominal growth rate only.

6.Revision on Month-on-Month Data

According to the auto-revision function of the seasonal adjustment model, the
month-on-month growth rate of investment on fixed assets from February to September
in 2011 has been revised.

The results and the data in October is as follows:

The Month-on-Month Growth Rate of Investment on Fixed Assets (Excluding Rural Households)
2011	Growth Rate (%)

February	1.34
March	2.07
April	2.64
May	0.98
June	-0.43
July	1.38
August	1.70
September	0.19
October	1.34