Invest China Focus Newsletter No

Invest China Focus Newsletter No.09 (March 10, 2010)

Edited by Dr. Cheng, Publisher: Greenway International Business

1, China will widen the deficit to 1 trillion RMB in 2010

China’s Premier, Mr. Wen Jiaobao said in the annual secession of Chinese legislation the deficits of the government of China would be 1050 billion Yuan in new fiscal year. The new deficits would be 100 billion Yuan more than that of last year, and the ratio of the deficits to the GDP would be 2.8%, which is the lowest one among the large countries all over the world.

2, China sets up the new macro economic targets for 2010

The government of China said the growth rate of GDP will be about 8%, and the CPI, 3%. In order to achieve the economic targets, the central bank of China will keep the growth rate of broader money at 17%, which is lower about 8 per cent point than that of year 2009 and same as that of year 2007. In 2009, the growth rate o the economy of China is 8.7%, which is the highest one all over the world, even the year of 2009 saw the financial crisis, during which the economies of most of developed countries contracted. When the markets got the news about the China’s high economic growth, the first reaction was that the prices of energies and industrial materials, like oil, copper, zinc and coal etc, went up.

3, China formally signed the climate change accord

The United Nation said China formally signed the climate change agreement; its official name is Copenhagen Agreement. This meant that China will reduce the emission of greenhouse in the future in accordance with the rules.

4, Chinese company invest the stake of the Canadian copper producer

The State Grid International Development Ltd. invested C$ 1 billion of the stake of the Canadian copper producer, Quadra. The project which the Chinese company invested in located at Chile. The Chinese company is a division of the State Grid Corp of China, which runs the electricity transmission in China.

5, Will China revalue its currency?

The hot topic in the annual secession of Chinese legislation is the foreign exchange rate of Yuan, or renminbi. The governor of the central bank of China, Mr. Zhou Xiaochuan, said, China has to implement a special foreign exchange rate system in the special time. I think it means that during the financial crisis of 2008-2009 China de facto pegged its currency value to the U.S. dollar at the rate of 6.82 Yuan per U. S. dollar. The deputy governor of the central bank of China, Mr. Su Ning, said China would benefit from gradually appreciating Yuan in the future, and another deputy governor of the central bank of China, Mr. Yi Gang, said that China would not revalue the Yuan by the lump sum, like the way of in 2005. All of the messages that the Chinese officials give are that China will release the quasi-fixed foreign exchange rate of Yuan, and the value of Yuan will go up gradually from the second half of the year.

6, Manufacture workers are shorted in Pearl River Delta of China

The manufacturing companies can not find more workers for their extending production after the Chinese New Year. This scene is total opposite to that of the year of 2008, during which lots of manufacturing companies shut down due to the reduce of demand of international markets. In the beginning of the year of 2010, the economies of most of the countries are rallying from the recession. There are more orders for the merchandises made in China.

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