Chinese Economics Thread

[escobar]

Marine sector reports 10-pct growth in 2011

The gross production value of China's marine sector surged to 4.557 trillion yuan (about 711,153 million U.S. dollars) last year, marking a 10.4 percent jump year-on-year, new figures from the State Oceanic Administration (SOA) show.

Of the gross, 2.65 trillion yuan was generated by added value, and the rest from marine-related industries, SOA spokesman Shi Qingfeng said Friday.

"In 2011, the country's marine electric power industry reported a relatively sharp increase as many coastal wind power plants were put into operation. Emerging industries such as marine biological medicines and the utilization of sea water also saw fast development," according to Shi.

The spokesman said the country's marine-related industries had 34.2 million employees last year, some 700,000 more than in 2010.

Last year, the Chinese government approved pilot programs for the development of the marine economy in the coastal provinces of Shandong, Zhejiang and Guangdong.

China has abundant marine resources, with its 3 million square km of offshore waters and 32,000 km of coastline. It also has a proven marine oil reserve of 24.6 billion tonnes and natural gas reserves of 1.6 billion cubic meters.

[escobar]

ASEAN, promising market for Chinese firms

"The trade volume between China and the Association of Southeast Asian Nations (ASEAN) increases by 25 percent on average annually, and it means a huge commercial opportunity for enterprises of both sides,” the secretary-general of the China-ASEAN Center Ma Mingqiang said, “As long as Chinese enterprises find their orientations and bring their advantages into effect, they will be able to accomplish much in ASEAN markets.”

"Since the friendly dialogue mechanism was established more than 20 years ago, the trade volume between China and the ASEAN countries has been growing by 25 percent annually, indicating that the products of China and the ASEAN complement each other very much." Ma said that this complementarity is the major force promoting the growth of the bilateral trade.

According to data from the Ministry of Commerce of China, the trade volume between China and the ASEAN reached 362.33 billion U.S. dollars in 2011, setting a new high record and up 24 percent compared to that of 2010. In January of 2012, the ASEAN exceeded Japan for the first time to be the third largest trade partner of China.

Ma said that the force that drives the trade boom between China and the ASEAN comes from four aspects.

First, both China and the ASEAN are having rapid economic developments, and both of them are demanding more from external markets.

Second, the establishment of the China-ASEAN Free Trade Area has further released the economic complementarity between China and the ASEAN, and it is a major force driving the bilateral trade to increase.

China needs to import mechanical and electrical products, electronic components, palm oil, rubber and oil and gas from the ASEAN, and the bloc needs to import huge amounts of mechanical and electrical products, daily commodities and textile raw materials. Currently, both sides are important links of the international economic integration and international industrial chain and have found their orientations.

Third, the good political relations and cooperative mechanisms of various levels between China and the ASEAN are reliable political and systemic guarantees for the bilateral trade between the two sides and can make sure the smooth development of the trade.

Fourth, China and the ASEAN connected by both the water way and land way, and the geo-political advantage is a great convenience for the trade between the two sides.

[Norfolk]

There really almost ought to be a news-aggregating sub-forum just for escobar's posts (they're everywhere, and on everything)- "The Escobar Report", anyone?

The World Bank proposes tough medicine for China, by Michael Pettis, China Financial Markets, 10 March 2012:

Contrary to some recent research reports cited in the press I do not think we have seen any substantial rebalancing of the economy towards consumption in 2011. This is largely an argument being made by economists who did not see why Chinese consumption repression was all along at the heart of the growth model. These economists are now too quick, I think, to hail evidence of a surge in consumption, but I find the evidence very weak and more importantly I am convinced that there cannot be a sustainable surge in consumption as long as the investment-driven growth model is maintained and as long as debt continues to rise unsustainably.

and:

It is unquestionably a good thing, in my opinion, that Beijing is made aware of how difficult, and urgent, the transition is likely to be, but it is also a little disheartening that it has taken so long to warn about what should have been deeply worrying us five or six years ago. China’s growth model was clearly unsustainable even back then, and was just as clearly heading to a debt crisis, and the longer it took to address the problems the more severe they were likely to get.

Pettis is usually worth a thorough read, and this article is one he parsed from one of his recent newsletters. Much more at the link.

[Equation]

I like the "Escobar Report" it keeps me updated on China economic current events. I get so caught up with work that I don't have time to even read and research all the news.

[escobar]

Pettis is usually worth a thorough read, and this article is one he parsed from one of his recent newsletters. Much more at the link.

Yep, like always his articles are very interesting.

[escobar]

Reserves may aid buyouts - Business News - SINA English

China is gearing up to channel more foreign reserves toward overseas acquisitions, a top banker has said.

Li Ruogu, chairman and president of the Export-Import Bank of China, said the next two years would be a key period for Chinese enterprises to buy overseas assets from European and North American companies.

"We expect the State Administration of Foreign Exchange will set a higher foreign currency quota for us to support enterprises' overseas purchases," he told China Daily in an exclusive interview.

The Export-Import Bank of China is one of two major non-commercial banks, along with the China Development Bank, supporting Chinese enterprises going overseas.

Li said last year about one-third of the bank's total loans were in foreign currency, and he expected the ratio would rise to almost one half in 2012.

"In the next two years, Chinese enterprises have very good opportunities to purchase more national resources and financial institutions in emerging markets and Australia," Li said. "But that would be from the hands of players in Europe or the United States, as they've been severely influenced by the economic slowdown and debt plague," he said.

Li, also a member of the National Committee of the Chinese People's Political Consultative Conference, made the remarks on the sidelines of the annual session of China's top political advisory body.

The Export-Import Bank of China is prominent in the African market while the Chinese Development Bank stands out in Latin America and Central Asia through backing local acquisitions by Chinese companies.

"We are planning to broaden overseas networks in Europe, US and Africa to strengthen support for increasing overseas acquisitions by Chinese enterprises," Li said.

It now has offices in France, Russia and South Africa.

According to Pricewaterhouse-Coopers, mergers and acquisitions by Chinese companies continued to be active in 2011, with transactions during the year increasing 5 percent to a record high 5,364.
It said more Chinese mainland enterprises will be seeking overseas acquisitions in 2012.

"We have noticed a rising demand from our clients to borrow foreign currency, especially dollar-denominated loans to make overseas purchases. But given that China still has restrictions for exchanging the yuan into other currencies, we could only lend out very limited loans in foreign currency," he said.

"The foreign exchange watchdog should not set any quota in that regard, given that the currency exchange with the non-commercial banks will not pose any investment risk to the foreign exchange reserves."

Li Jie said the move will reduce the central bank's yuan-denominated debts, and cut into the country's $3.2 trillion in foreign reserves, a result that China would like to see.

The large amount of foreign reserves will be increasingly challenging for China's asset management, said Yi Gang, deputy governor of the central bank and head of the State Administration of Foreign Exchange.

He said as companies and individuals generate more willingness to obtain foreign currencies for overseas investment and purchases, the foreign reserves will decline naturally and the investment dilemma for the government will be eased.

Guo Tianyong, an economist at the Central University of Finance and Economics, said earlier that China should use its foreign reserves to back investment by domestic enterprises in the real economy overseas, rather than focusing on stable returns and risk control.

[escobar]

Early year property sales retreat - Business News - SINA English



Home sales and property investment in China both slowed in the first two months of the year, as the correction in the real estate market deepened because of the government's continuing curbs on the property market.

Home sales were down 14 percent year-on-year, while the value fell 20.9 percent to 414.5 billion yuan ($65.8 billion), according to the National Bureau of Statistics on Friday.

Property investment rose 27.8 percent in the first two months to 543.1 billion yuan, but the rate of growth fell 0.1 percentage point from the same period in 2011. The growth rate of investment in the residential sector was down 7 percentage points, according to the NBS.

"Despite the slowdown in property sales and investment, China should continue its property curbs at this time," said Pan Jiancheng, deputy head of the China Economic Monitoring and Analysis Center, a research center affiliated with the NBS.

Most economists estimated that investment would fall by less than 3 percent this year.

"Such a dip in investment, which is within our expectations, could be offset by growth in domestic consumption and is in line with our target for restructuring the economy," said Pan.

Meanwhile, the index for property development stood at 97.89, down by 1 percentage point from December 2011, according to the NBS.

Home prices in China fell for the sixth consecutive month in February, according to SouFun Holdings Ltd, the country's largest real estate website. Property prices nationwide fell 0.3 percent, the biggest drop since September 2011.

China Vanke Co, the country's largest publicly traded developer, said contracted sales in the first two months fell 27 percent from a year earlier to 19.05 billion yuan.

"Many developers in China may be at an increased risk of refinancing because of weaker property sales, high funding costs and tightened liquidity," said Bei Fu, a credit analyst at Standard & Poor's.

"Some small and medium-sized companies may find it increasingly hard to maintain their competitive positions when lenders and investors become cautious about higher-risk credit. But large and well-capitalized developers will continue to grow by acquiring land at deflated prices and by accessing funding."

[escobar]

China's rising demand attracts foreign firms


Luke Gakstatter believes that all John Deere has done in China over the past 36 years was not
miss any opportunities in the fast-changing and increasingly competitive market.

Luke Gakstatter believes that all John Deere has done in China over the past 36 years was not miss any opportunities in the fast-changing and increasingly competitive market.

The U.S. agriculture and construction machinery manufacturer plans to greatly expand its presence in China and move its cotter picker production to the world's second-largest economy.

John Deere's expansion plan in China includes a new factory for large agricultural equipment in the city of Harbin, Heilongjiang province, two new factories in the city of Tianjin, and a harvester manufacturing unit in Ningbo, Zhejiang province.

"The market in China is advancing very quickly and we as a company need to continue to get very good at moving quickly, reacting and developing and planning for that rapid change," said Gakstatter, president of John Deere China.

Gakstatter's sense of urgency was shared by Zhang Monan, a deputy research fellow with the Economic Projection Department of the State Information Center.

According to Zhang's observations, China's long-held model that built its economic success over the past three decades has been under greater pressure to transition since the onset of the global financial crisis.

Weak demand in Europe and the United States -- China's two largest trading partners -- would slow down China's economy that formerly relied on cheap labor and low-cost land to boost exports, analysts said.

To achieve steady growth, China will continue to expand domestic demand and develop the real economy to stabilize economic growth this year, according to a government work report delivered by Premier Wen Jiabao on March 5, setting the tone for policies this year.

Zhang expected external demand to remain weak for a very long period of time, while rising costs domestically would press China's manufacturers to accelerate industrial restructuring.

"I think capital inflow to the low-end manufacturing sector will slow when the country decides to focus on the real economy," Zhang said, adding that advanced manufacturing and high-tech foreign-funded enterprises are more likely to benefit from China's industrial restructuring.

Data from the Ministry of Commerce showed that China attracted 116.01 billion U.S. dollars in foreign direct investment (FDI) last year, up 9.72 percent year-on-year despite external uncertainties.

Although rising labor costs may have had an impact on attracting FDI, the government's moves to expand domestic demand amid rapid urbanization would make China very attractive to foreign companies like John Deere, said He Shushan, a deputy to China's top legislature from northern Tianjin municipality.

Premier Wen said in his report to the parliament that expanding domestic demand -- consumer demand, in particular -- is essential to ensuring China's long-term, steady, and robust economic development and will be the focus of government work this year.

"We will move faster to set up a permanent mechanism for boosting consumption," said the premier.

Spurring demand in rural areas is one of the government's prioritized policies, which include subsidies for agricultural production.

The Chinese central government spending on agriculture, rural areas and farmers exceeded 1 trillion yuan (158.73 billion U.S. dollars) last year, or 183.9 billion yuan more than a year before, according to Wen's report.

"All of that is a clear indication to us at John Deere that the prospects for agriculture here in China are tremendous," said Gakstatter.

He noted that the Chinese government understands China will continue to undergo significant urbanization and be very focused on food security and the overall development of agriculture.

What differentiates China from any of the other markets is not only the speed of change, but the pace of growth, Gakstatter said, adding, "Pace of growth is very phenomenal in China over the past couple of years."

"That's really what causes us to continue to be optimistic about the future of China and how we should continue to be aggressive in investing in people and processes and new products and in new facilities," he added.

[Norfolk]

Equation wrote:

I like the "Escobar Report" it keeps me updated on China economic current events. I get so caught up with work that I don't have time to even read and research all the news.

Even when I don't have work to do, there's just no way I could possibly keep up with him. He's a one man news-feed! Perhaps he should start his own internet-based newswire service?

China Has Biggest Trade Shortfall Since 1989 on Europe Turmoil, by Zheng Lifei, et al., Bloomberg News, 10 March, 2012:

China had its largest trade deficit since at least 1989 last month as Europe’s sovereign-debt turmoil damped exports and imports rebounded after a weeklong holiday.

The shortfall was $31.5 billion, the customs bureau said yesterday. Imports rose 39.6 percent from a year earlier, after a 15.3 percent slump in January, while exports increased 18.4 percent, the bureau said. Data in the first two months are distorted by the timing of the Lunar New Year holiday, which fell in January this year and February in 2011.

More at the link. Gotta love daisy-chain economics.

[escobar]

Official's Kobe comment sparks ire on role of SOEs

A former top official has come under fire after equating the role of China's State-owned enterprises (SOEs) to the role of Kobe Bryant in the NBA. Li Rongrong, former Chairman of the State-owned Assets Supervision and Administration Commission of the State Council, made his comment at a recent CPPCC meeting during discussions about the coordinated development of SOEs and non-SOEs.

The growth of SOEs and the subsequent shrinking of non-SOEs in the national economy has been a heated topic of discussions at the conference. However, Li expressed the opposite view, stating that in recent years, private enterprises have actually grown faster than SOEs. In support of his view, he indicated the following statistics: From 1998-2010, the proportion of the number of SOEs dropped from 39 percent to 4.5 percent; the proportion of their total assets declined from 68.8 percent to 41.78 percent; the proportion of their main business revenues almost halved, falling from 52 percent to 27.8 percent; the proportion of their total profits decreased from 36 percent to 27.8 percent; and their workforce fell from 60.5 percent to 19.2 percent.

Li said that the SOEs and non-SOEs should work in tandem in the global marketplace, but that "the former should take the starring role, like Kobe does for the Los Angeles Lakers in the NBA." He continued: "By using only substitutes rather than using Kobe, the Lakers would not be able to win the game; by relying only on private enterprises, China simply cannot be competitive in the global marketplace."

Li's analogy aroused debate among people from all walks of life, especially among microbloggers. Most disputed Li's assertion, claiming that Kobe and the SOEs are not comparable. Famous economist Xu Xiaonian retorted: "The difference between Kobe and the SOEs is that Kobe is not the eldest son of the referee." The co-founder of the New Oriental School Xu Xiaoping also took issue with Li, commenting: "When Kobe is dribbling, others can challenge for the ball; when Kobe is shooting, others are allowed to block the shot." Property tycoon Ren Zhiqiang was more forthright: "If the SOEs compete with the private enterprises on the same platform, can they [SOEs] still be the star?"

People's criticisms of Li's comments mainly focused on two points. One is the unfair competition between SOEs and private enterprises, especially in certain monopolized sectors such as oil and banking. Ge Wenyao, a former CPPCC member who also sits on the board of directors of Shanghai Jahwa United Co. Ltd., also denounced the present system in which SOEs still keep official government status. He emphasized that addressing this would be a central part of the CPPCC's next reforms, and also suggested that legislation be implemented to prevent the loss of State-owned assets.

The second criticism centers on the argument that assessing SEOs by revenues and profits from their main lines of business is an unfair measurement, as a number of SOEs are often engaged in other profitable businesses, such as real estate, telecommunications and energy. However, private enterprises do not have this option.

Hong Kong scholar Wu Muluan claimed that the blind expansion of SOEs impedes the development of private enterprises, and even threatens the market economy in China. "In reality the SOEs are not strong enough, but they consume a large amount of financial resources, while the private economy is merely struggling for survival," said Wu. "To boost the development of the market economy, private enterprises should become the major driving force."

Financial commentator Yang Chunyang concurred, commenting that it is the private enterprises, not the SOEs that are the real stars, yet they are constantly relegated to the role of "substitute". He stated his belief that such a situation is bad for China's economic development and emphasized his view that the future lies in the private sector. "The private economy will be the most promising and vigorous economy in China," he declared.

---------- Post added at 11:01 PM ---------- Previous post was at 10:58 PM ----------

the comparison was pretty funny.

[escobar]

Consolidation to create rare-earth 'giants'

China will establish two or three large rare-earth enterprises by consolidating companies in the sector, said a top industry official on Sunday.

Miao Wei, minister of industry and information technology, said on the sideline of the annual national legislative session that China will retain limits on rare-earth export quotas after the industry rationalization.

Miao said the first large rare-earth enterprise had already been created in the Inner Mongolia autonomous region by consolidating 14 related companies under the leadership of Baotou Steel Rare-Earth Hi-Tech Co.

Miao didn't give a timetable for the nationwide restructuring, but a statement issued in February last year said that over a five-year period, China would regulate the industry to ensure "reasonable exploration and orderly production".

Export quotas were introduced to prevent smuggling and illegal exploration in the ill-regulated industry.

Although its rare-earth deposits account for only 35 percent of the world's total, China remains the world's largest rare-earth exporter. It accounts for more than 90 percent of global output of the 17 rare-earth metals, which are used in the electronics, defense and renewable energy industries.

The country said last year it would tighten up regulations on exploration, processing and environmental protection related to rare-earth exports, with officials saying that the move was primarily motivated by environmental concerns and was in compliance with World Trade Organization rules.

According to Miao, after the rationalization, export quotas will be set in accordance with the annual production amount, which is also in line with WTO rules.

Miao said that the rare-earth export quota in 2012 would be the same as in 2011. The full-year quota for 2011 was 30,184 tons, but actual exports amounted to just half of the quota.

Tougher regulations and a halt to illegal exploration meant rare-earth output declined last year and prices rose, leading to a sharp fall in consumption by foreign companies, Miao added.

"It is totally groundless to blame China for not selling or controlling rare-earth exports. The fact is that many foreign firms are cutting their usage," said Miao.

Miao said the industry regrouping will cover firms in more than 10 provinces, adding that the domestic industry's value stands at about 40 billion yuan ($6.35 billion).

Li Yizhong, former minister of industry and information technology, who is now a member of the Chinese People's Political Consultative Conference National Committee, said it's possible that large groups created in the restructuring might consider transnational operations.

In response to China's rare-earth regulations, foreign countries are stepping up new policies to cope.

Japan, the world's biggest importer of rare earths, will provide 5 billion yen ($65 million) in subsidies for projects that reduce the need for the elements as it aims to cut its reliance on imports to meet demand.

The funds will support projects that reduce the consumption of magnetic products that use dysprosium and neodymium, improve recycling and develop new technologies, according to a statement from the Ministry of Economy, Trade and Industry in February.

Apart from rationalizing the upstream segment of the rare-earth industry, it is also the "best time" to develop the downstream end, such as product processing, said Tu Hailing, vice-president of the Chinese Society of Rare Earths.

"For enterprises that made a lot of money from high prices last year, it's time to reinvest in research and development, to avoid falling to a passive market position again when prices decline," Tu said.

Tu suggested the government should also involve venture capital to facilitate a combination of financing and technology, as well as special funds to aid technology upgrades.

Tu was confident that these things would happen soon because "a hard lesson was learned from market volatility last year".

"Only a developed downstream could stabilize market demand and production for the upstream," Tu said.

These changes could be initiated by an "industrial association of rare earths", which will be established soon, he added.

[escobar]

China Economic Watch

China Records Biggest Deficit in a Decade
China, which has been running trade surpluses over much of the past 10 years, saw its trade deficit climb to a record $31.48 billion in February after imports, boosted by commodities, jumped 39.6% to $145.95 billion while exports were up 18.4% to $114.47 billion, customs figures show. In the first two months, the nation's bilateral trade grew 7.3% year on year to $533.03 billion, where exports were up 6.9% to $264.39 billion and imports were up 7.7% to $268.64 billion.

China's Feb Lending Totals ¥711b
China's banks extended ¥710.7 billion in Renminbi-denominated loans in February, ¥173 billion more than in the same month a year ago, according to figures from the central bank. Renminbi-denominated deposits increased by ¥1.6 trillion last month, ¥282.4 billion more than a year earlier.

PBOC's Zhou Makes Case for Reserves Cut
China has much room to cut banks' reserve requirement ratio, and this will depend on factors like the international balance of payments, central bank governor Zhou Xiaochuan said during a press conference for the nation's annual parliamentary sessions. Zhou, the head of the People's Bank of China, stressed that the government would ramp up investment in debt-ridden Europe, and expected two-way movements in the Renminbi's exchange rate that will be increasingly subjected to market forces.

Banks Not Profiteering: PBOC's Zhou
It is an overstatement that China's banks have benefited from profiteering, instead, they will continue to face capital restraints this year, central bank governor Zhou Xiaochuan said during a press conference at the nation's annual parliamentary sessions, citing the facts that Chinese lenders reported ¥1.04 trillion in net profit out of ¥113.28 trillion in total assets in 2011.

Fiscal Revenue Nears ¥2.1t Through Feb
China's fiscal revenue and expenditures totaled ¥2.09 trillion and ¥1.39 trillion in the first month of 2012, up 13.1% and 32.8% respectively from the same period a year ago, the Ministry of Finance said.

Power Generation Industry to Receive ¥6.1t Investments
Investment in China's power generation industry is expected to total ¥6.1 trillion in the five years through 2015, up 88.3% from the previous five-year period, the China Electricity Council predicted.

Cartoon Industry Output to Top ¥100b by 2015
Output from China's cartoon and animation industry is expected to hit ¥100 billion by 2015, said Culture Minister Cai Wu, calling for catchup with Japanese and American counterparts.

[escobar]

Moutai aims high for global reach - China.org.cn

Having built a reputation as China's top liquor brand, Moutai is now aiming to become a world-famous drink.
Ji Keliang, the honorary chairman and chief technical adviser of China Kweichow Moutai Distillery, told China Daily that he was confident in the quality and unique flavor of the liquor, and the sophisticated technology used in its distillation.

But he admitted the sales of Moutai products outside of China is still quite limited.

This was due in part to the difference in drinking habits. There is a greater choice of alcoholic strengths and flavors in other countries.

Ji, 73, has worked for the distilling company for nearly 50 years. He became chairman in 1998 and retired from the position last year.

The group aims to further increase its output to about 100,000 tons by 2015, from about 60,000 tons in 2011, he said. It will bring the group an income of 50 billion yuan (US$7.9 billion). The company saw an income of 23.7 billion yuan last year.

"If Moutai succeeds in the international market, it can set a good example for other Chinese liquor brands," said Liu Yuan, secretary-general of the China National Association for Liquor and Spirits Circulation.

Moutai's strategy is to promote itself together with traditional Chinese culture.

"Instead of selling the liquor alone, we will combine our products with the Chinese culture," Ji said.

Yi Jigang, the former chairman of liquor maker Guizhou Dongjiu, backed the strategy.

"It's vital you exploit the culture behind the product," he said.

"Moutai will get more recognition from Western consumers when it allows them to also get a taste of the rich Chinese culture behind the brand."

But Yi warned that Chinese liquor producers did not currently have the international marketing capability and would be greatly restricted if they relied too much on foreign distributors.

In the market at home, although Moutai enjoys a high degree of recognition and popularity, its image has been tainted by being associated with lavish lifestyles, including that of government hospitality.

The price of a 500 ml bottle of ordinary Moutai liquor is more than 1,500 yuan after it saw a series of recent price rises. During the Spring Festival, the price of a bottle rose to 2,300 yuan, almost the basic monthly salary of a production worker.

But Li Zhanshu, Party chief of Guizhou province, where the Moutai company is located, argued the high price of the drink was due to the marketing strategy.

"The public and government are both consumers in the market. There is demand from the government and we should not oppose such demand," Li told a news briefing on Wednesday during the National People's Congress session.

He added that if Moutai was banned in government banquets, some places might offer Chateau Lafite Rothschild instead, an imported French wine that is even more expensive.

[escobar]

China's fiscal revenue up 13.1 pct in first two months - Business News - SINA English



China's national fiscal revenue rose 13.1 percent year-on-year to 2.09 trillion yuan ($330.27 billion) in the first two months, the Ministry of Finance said Monday.

The annual growth rate decelerated from 24.8 percent recorded last year, but higher than 10 percent recorded in the fourth quarter of last year.

The slowdown was caused by a combination of factors, including slowing industrial production, easing price growth, structural tax reduction, as well as sagging property and stock transactions, the Ministry of Finance said in a statement.

Of the January-February fiscal revenue, the central fiscal revenue rose 11.3 percent from a year earlier to 1.06 trillion yuan, while local governments collected 1.03 trillion yuan, up 15 percent, the ministry said.

Of the total, tax revenue increased 9.5 percent year-on-year to 1.85 trillion yuan during the period, and non-tax revenue surged 51.1 percent to 241.69 billion yuan, the ministry said.

In the first two months, the country's value-added tax (VAT) revenue climbed only 1.9 percent from one year earlier to 445.62 billion yuan, because of slower industrial production, mild price hikes and government tax reduction efforts, the ministry explained.

The industrial value-added output, which measures the final output value of industrial production, eased to 11.4 percent year-on-year in the first two months, down from 12.8 percent in December last year, official data showed.

Meanwhile, the Producer Price Index, which measures inflation at the wholesale level, grew only 0.4 percent year-on-year during the period, compared with 6.9 percent last year, according to official data.

As a result, VAT from sectors of oil products, steel products, general equipments, automobiles, and wholesale all dropped, the ministry said.

Furthermore, revenue from personal income tax fell 3.9 percent from a year earlier to 140.98 billion yuan in the first two months, as the country last year raised the monthly tax exemption threshold from 2,000 to 3,500 yuan.

Revenue from turnover tax increased 5.9 percent year-on-year to 293.5 billion yuan during the period, with that from the property sector down 22.7 percent due to sluggish sales.

Stamp duty on securities transactions dropped noticeably, down 37 percent to 4.71 billion yuan.

The growth country's fiscal expenditure accelerated to 32.8 percent in the first two months, in comparison to 21.2-percent growth last year, the ministry added.

[Norfolk]

From both Caijing Magazine and Caixing Online -

A few articles from the English-language edition of Caijing Magazine:

China has Ample Room to Cut Reserve Ratio: Central Bank Governor, 12 March 2012:

“In theory, there could be ample room to maneuver the RRR,” Zhou told a central bank news conference on the sidelines of the two sessions, “Now the RRR stands at more than 20 percent, but we have seen very low levels before, at 6 percent, say, in the late 1990s.”

China Trade (Feb): European Crisis Bites, 12 March 2012:

Facts

At 18.4%, February’s exports growth came in lower than our below consensus expectation (Bloomberg: 31%, HSBC 19%). It also spelt an end to the temporary contraction (0.5% y-o-y) of exports growth in January due to the Chinese New Year. However, combining January and February’s exports together (to eliminate the distortion of Chinese New Year), exports only expanded by 6.9% y-o-y, less than half the pace of 14.3% y-o-y recorded in 4Q 2011 and one third of that averaged for the whole year 2011 (20.3%).

and:

Exports to the EU contracted by 1.1% y-o-y in Jan-Feb, compared to 6.5% y-o-y in 4Q 2011.

China's CPI Rose 3.2%, PPI 1% in Feb, 9 March 2012.

Li Yining: 4Pct CPI Target "Hard to Come by", 6 March, 2012.

And from the English-language edition of Caixing Online:

Sea Change for China's Shipbuilding Business, by Wu Jing, 12 March, 2012:

But something's obviously wrong at Dongfang – and at other drydocks and shipyards around the country struggling these days after years of rapid expansion based on strong orders from overseas clients.

The shipbuilding industry is slumping, new orders are rare, banks are calling loans and companies are closing.

"Dongfang Shipbuilding is not the first private shipbuilding company to face difficulties, and it won't be the last," said an industry insider and former executive at heavy machinery manufacturer Zhenhua Heavy Industries Co. Ltd. "The question is, if there is a restructuring, what is the direction of the restructuring?"

Central Banker Says Monetary Policy Rests on Forex Flows, 12 March, 2012.