February 27, 2009

Beijing Readies Logistics Stimulus

The latest (and tenth) Chinese economic sector to get a central government stimulus package will be logistics specifically tax breaks and infrastructure development in the areas of energy, metals, automobiles, farm products and medicine. Despite the global slowdown and correction in trade flows, logistics development is accelerating in China. UPS recently opened a new hub in Shanghai that links all China to its international network, FedEx just opened its new Asia Pacific hub (see my post on that) in Guangzhou, and Nike will soon break ground on its largest logistics center outside Suzhou...

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February 26, 2009

400,000 Empty Containers Sit at ShenZhen Port

A dramatic illustration of the collapse occurring in the great rebalance of global trade can be found at Yantai port, ShenZhen, China, one of the top 5 container ports in the world: 400,000 empty container boxes.
A similar story is heard from Hong Kong and Shanghai where the drop in activity is the worst on record...

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February 25, 2009

PetroChina Delays New Refineries

Oil and gas refinery projects, long in planning, are underway all over China with at least two planning production this year - an ExxonMobile joint venture between Sinopec and Saudi Aramco along the Fujian coast and CNOOC's first major refinery at Huizhou in Guangdong. Even more capacity is planned including a multi-billion dollar value Saudi-Chinese refinery inked in China's recent state visit to Saudi Arabia.

With the global correction underway, however, PetroChina announced it will delay two big (10 million ton capacity) refinery projects in the Xinjiang and Guangxi autonomous regions...

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February 24, 2009

Taiwan-China Trade Slump Continues

January export orders from China (including Hong Kong, SAR) of Taiwan goods were down almost 55%, a sign that the big slump in Chinese manufacturing continues. Taiwan and South Korea are both dependent on China for export growth. Both are also open economies (by Asian standards). As such, they are hard hit by the global correction in trade...

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February 23, 2009

Gwadar Port Advances

The largely Chinese developed deep water port at Gwadar, Pakistan, continues to move forward with new roads and an agreement for dredging by a Chinese entity signed while Pakistan President Zardari is in China...


February 20, 2009

Chery Reveals Plug-In Electric Car

Privately owned Chinese auto giant Chery announced that it is producing an all-electric car, the S18, that can go twice the anticipated range of GM's delayed Chevy Volt. Unlike BYD Auto's electric, currently on sale in China, Chery's car is not a gas (petrol) hybrid...

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February 19, 2009

Energy Security: Brazil - China Oil Deal, Possible Petrobras Loan

Brazil will supply China with up to 150,000 barrels of oil per day under an agreement signed today in Brasilia. And China may invest $10 billion (US dollars) in Petrobras to develop the giant new Santos Basin offshore oil fields. Details would be finalized before Brazilian President Lula goes to Beijing in May...

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February 18, 2009

NATIONALISM: Aussie Greens Say NO to China

Chinese metal giant Minmetals is offering $1.7 billion (US dollars) for Australian zinc miner OZ Minerals. OZ's shares are up 17 percent today. The news comes just after Chinese conglomerate Chinalco offered near $20 billion to iron ore producer/supplier Rio Tinto. All this activity is too much for the Australian Green Party which is objecting to the deals...

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February 17, 2009

Energy Security: Russia China Oil Deal On

When first announced last October by PM Wen Jiabao $25 billion in loans was proposed from China National Petroleum Corp. to Roseneft for a pipeline directly from the emerging eastern Siberia oil fields to connect with China's oil pipeline and refinery centers. As announced today Roseneft will get $15 billion (US dollars) and Transneft - Russia's pipeline monopoly - $10 billion. When complete, China will get a steady supply of crude oil for 20 years. This is a major blow to the Japanese government which tried for years to prevent a pipeline direct to China...

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February 16, 2009

Shipping Woes

The great global correction in trade continues to hit shipping companies hard. Barely a year old, Great Ocean Container Lines of Hong Kong will file for bankruptcy. And New Econ Line of Singapore is suspending operations. Also ceasing operation is Shandong Yantai International Marine Services. The China-Japan route has rates as low at $30 per TEU according to the SeaTrade Asia website...

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February 13, 2009

Clinton Signals China Policy Back at State Department

USA Secretary of State Hillary Clinton will make her first state visit to East Asia starting Sunday. She will visit the "allied democracies" (satellites) Japan and South Korea, Indonesia, and China (not in that order). Clinton has already made it clear that in the Obama administration China policy will be a "comprehensive dialogue" believed by some to be a stab at the George Bush and Hu Jintao founded Strategic Economic Dialogue. Indications are the SED will continue as an important series of meetings but not dominate US-China relations. Various competiting interests want to guide Clinton in her China focus. The prestigious Asia Society wants climate change to be the focus. Taxpayer funded "human rights" groups want to press Beijing's feet to the fire on "democracy" and Tibet.

But Clinton's remarks at the Asia Society gathering today in Manhattan indicate that she and her boss President Obama are starting off with a pragmatic and positive note on China. Earlier today Clinton said: "Now, some believe that China on the rise is, by definition, an adversary. To the contrary, we believe that the United States and China can benefit from and contribute to each other’s successes," adding:

"Even with our differences, the United States will remain committed to pursuing a positive relationship with China, one that we believe is essential to America’s future peace, progress, and prosperity. "

Watch Clinton's remarks at the Asia Society...

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February 12, 2009

GM Sell Off to China

As GM races to put together a restructure plan for Uncle Sam the company is in talks with Shanghai Automotive to sell a major share of its 50-50 Shanghai GM joint venture - the one bright spot in GM's global sales and revenue. And word is back that an unnamed Chinese company is interested in buying the Hummer brand...

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February 11, 2009

FedEx Opens Huge New Hub in China

FedEx opened its new Asia-Pacific hub at the international airport outside Guangzhou, Guangdong Province, with 136 weekly flights and capacity on opening day to process 24,000 packages an hour. Of particular importance, the $150 million facility can manage and control the movements of its own planes. The hub is key to FedEx's plans to be a global logistics facilitator. Logistics cost in China have traditionally run high - as much as twice global averages. The FedEx hub will lower logistics costs and ensure that the Pearl River Delta continues to be one of the world's great workshops, despite increased labor costs and the shuttering of thousands of manufacturing plants over just the last few months...

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Stewart Parnell, owner of Peanut Corp. of America, the company at the center of a salmonella outbreak in peanut products, refused to testify to Congress today citing his 5th Amendment right not to self incriminate.
Reports are the company knew about salmonella tainted peanuts dating back to 2006 yet continued to process the peanuts. Mr. Parnell runs his company from offices behind his home in Lynchburg, Virginia. According to company "officials" the salmonella came from "organic Chinese peanuts." This should be a relatively easy claim to prove unless "family owned and operated" Peanut Corp.'s purchasing records are as flimsy as its quality assurance.
China was the number 2 supplier of peanuts to the USA in 2006 accounting for just under 17% of all peanut imports valued at almost $23 million...

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February 10, 2009

GM Forms New China Venture, Cuts Jobs Worldwide

As GM announced a further 10,000 jobs reduction worldwide it is reportedly in talks with the Chinese FAW (First Auto Works) conglomerate on a new joint venture to build light commercial vehicles. It would be FAW's first foreign venture in the commercial vehicle sector. GM is not denying reports but saying they are "inaccurate" and the JV is far from being finalized...

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February 09, 2009

China Shipbuilders Want Bailout

The National Development and Reform Commission has readied a bailout for Chinese shipbuilders that is before the State Council in Beijing. According to varying reports from the China Association of National Shipbuilding Industry shipbuilding orders have plummeted since the second half of 2008 by some metrics down almost 100%. The industry saw tremendous expansion over the last few years and now - according to the bailout plan - plans consolidation. The bailouts of Chinese industrial sectors seem to have as their focus the creation of two to three solid 'brand' companies, part of Beijing's desire to have an American style economic oligarchy with Chinese characteristics...

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Futures Up on China Wheat Crop Threat

No rain for months in parts of north China and Beijing says 60% of Henan's wheat crop and 70% of the crop in Anhui may be threatened. Still official word is that China will have enough to avoid imports. Last year's wheat crop at over 112 million tons was a record. Futures have been up in China on the news and in Chicago too (briefly) but there is little indication for now that imports will be needed. But if so, it could have a major impact on world markets. In 2008 China was the world's top importer of pork and pork products - a single year record of almost 2 million metric tons. The USA exported around $700 million worth of pork to China in 2008...

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February 06, 2009

Energy Security: China - Saudi Arabia Official Visit

Chinese President Hu Jintao and a 100 person delegation will make an official visit to Saudi Arabia next week and meet with King Abdullah on a variety of issues including oil supplies (Saudi Arabia is China's number 1 supplier), Chinese-Saudi investments in both countries, and rebuilding Gaza. It will be Hu's second official visit to Riyadh and it will be followed by a tour of African nations - Mali, Tanzania, Senegal, and Mauritius...

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Former Number 2 China Securities Regulator Charged in Corruption Probe

Wang Yi, was Vice President of China Development Bank until last June when he was "detained" in a corruption investigation. Earlier Wang was Vice Chairman of the China Securities Regulatory Commission in the years before the first big Shanghai bubble. He is accused of taking 10 million Yuan in bribes and other crimes. The Communist Party's corruption probe appears to be intensifying...

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February 05, 2009

Deflation: McDonald's Cut Prices 1/3 in China to Boost Sales

McDonald's has cut prices up to 33% in its over 1,000 locations in China according to reports bringing its "best value meal ever" down to 1999 prices. Will thrifty urban Chinese bite before profits McPuff away..?


February 04, 2009

Air Tanzania Gets Chinese Cash to Buy Planes

The announcement today that Air Tanzania would sell a 49 percent stake to a private Chinese investor - China Sonangol International - was in the works since last August. The company plans to use the cash to buy 9 planes, renovate its airport terminal, and fund operations (the airline was grounded recently). The interesting speculation to me is what planes will it buy - Airbus A320 assembled in Tianjin? The smaller domestic Chinese jet the ARJ21 (first deliveries are expected this year) or made in Europe or USA Airbus or Boeing? The financing is by the China Development Bank which was shored up not to long ago by China's Soverign Wealth Fund the China Investment Corp. Could this be one way of funding your own nation's production and export?

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February 03, 2009

China Auto Sales Higher than USA for First Time

Sales volume in auto sales fell so far in the USA that they are now behind China for the first time making China - for the time being at least - the number one auto market in the world...

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USA, China Now Lead in Wind Energy

The new top markets for wind energy installation are the USA and China according to wind energy associations, replacing Germany and the EU generally. In 2008, China doubled installed wind energy generating capacity to over 12 Gigawatts. The USA topped 25 GW in installed capacity - 42% installed last year alone...


February 02, 2009

Bangka: A New Pearl On the String

An obscure developer called the "Fujian Mining Company" will develop a waterfront city in Ketapang on the island of Bangka off the coast of Sumatra (Indonesia) strategically located south of Singapore. The development will allow the company to extract tin ores (the area is very rich in tin and has been mined by Chinese for centuries) in exchange for hotels and quays and other tourism related facilities. The quays will most likely be large enough for bulk carriers and other big ships. Tin prices are up regionally but could the real motive behind this development be to create a "pearl" in the so-called "String of Pearls" China is establishing to protect its sea route through the Strait of Malacca? The location could also protect the Strait of Sunda to the south.

As recently as 1975, Chinese made up close to 5% of the population of Bangka Island and as far back as 1867 Chinese were so numerous the Dutch allowed them to conduct their own affairs there...

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China 1 Wales 0 in Airbus Deal?

In the presence of the Chinese and UK Prime Ministers, Airbus and Xi'An Aircraft (division of the AVIC conglomerate) signed today a new deal to move final assembly and testing of A320 wings to the new factory in Tianjin. According to EADS (Airbus parent) the A320 wing will now be 'fully completed and tested' in China.

This development seems to contradict the prediction last year by the MP for Broughton, Flintside in Wales (just south of Liverpool) that the new Chinese Airbus assembly plant would not affect jobs in his district. Broughton is home to an Airbus plant that had sole monopoloy on final wing assembly. The plant is the largest industrial employer in Wales. MP Mark Tami had said that wings would still be shipped to Broughton from Tianjin for final assembly and testing. Now it appears all that will occur in China. How does this impact the 7,000 or so jobs in Broughton?

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