Sinomania!

While 2009 saw a decrease overall in the near $1 billion (US dollar) exports of California wine the outlook for 2010 is looking good according to data from the Wine Institute of California. China (including Hong Kong which re-exports wine to the mainland) accounted for $83 million in exports and is by far the fastest growing market at over 70% overall. China currently ranks number 8 globally in terms of wine consumption but the number of Chinese drinking and enjoying wine is set to grow immensely according to Vinexpo the international wine and spirits association.

Figures for 2008 show that imports accounted for 11.8% of Chinese wine consumption with France the largest supplier. By contrast imported wines account for almost 1/3 of wine consumption in the USA. Always adept at developing new business Chinese are ramping up wine production around China. But as California well knows it takes a lot of work and time to grow vineyards and create good wines. In the interim Chinese imports could grow to a level similar to that in America and be a real opening for California wines in the immediate future. The Wine Institute says it is making progress introducing its wines to Tier 2 cities. My recommendation is to focus instead on select lower tier cities.

Download the 2008 China Wine Market report from the USDA Agricultural Trade Office. The report indicates that USA wines are losing to Europe, Australia, and Chile. The report says the key is to create brand awareness of the US as a premier wine producer. This is wrongheaded thinking. Better to focus on creating brand around California wines - clearly the leader in US wine exports. Notice the ugly USA banners showcased at a trade fair in the report. That sort of marketing will not be effective in the more nationalistic Tier 2 cities and less developed parts of China....

Online payment business PayPal (wholly owned by Ebay) announced that it will form a partnership with China UnionPay the number 1 electronic payment processer and ATM network of China. PayPal said the arrangment means China is open for business as an import market. There are over an estimated 100 million online shoppers in China and the number may swell to 300 million by 2013 according to PayPal's China manager Alien Tien. This is a big win for an American business over Chinese ecommerce rival Taobao and its proprietary payment system. Using PayPal will allow Chinese to buy direct from millions of online merchants from Amazon to Walmart....

The overseas crude oil production of China's oil majors is expected to almost double by 2020 to 2 million barrels/day according to data from the energy consulting group Facts Global Energy. A new report on Chinese oil & gas investment shows Chinese investments around the world accounting for 25% of China's crude oil imports although their percentage of China's total oil consumption - 12.5% - is still relatively low. China National Petroleum Corp. and listed subsidiary PetroChina (NYSE:PTR) have several major new investments planned this year particularly in Iran and Iraq. Other Chinese oil majors such as CNOOC and Sinopec will pursue international oil deals as well as smaller firms such as Yanchang Petroleum owned by the government of Shaanxi Province.....

Beijing's Ministry of Commerce imposed anti-dumping duties for an additional five years on Toluene Diisocyanate (TDI) raw materials used in the making of polyurethane products with wide applications across different industries. The duties are also imposed on TDI imports from (South) Korea and Japan. The ruling comes from a complaint filed back in 2003 by domestic Chinese producers Hebei Cangzhou Dahua, BlueStar Chemical, and Gansu Yinguang and Yantai Juli Polyurethane Co., Ltd.....

The quasi-independent US International Trade Commission (ITC) sided unanimously today with US Steel Corp. (NYSE: X) and co-petitioner United Steel Workers union to allow the US Commerce Department to continue its work toward determining anti-dumping and countervailing duties on imports of Chinese "seamless SLP pipe". Determination of anti-dumping duties must be reported by February 23, 2010.

If duties are imposed it will show Beijing that the Obama administration remains Janus-faced in its trade relations particulary as this news comes a day after important advances were made by the Commerce Department in China.

The pipe is primarily used for pipelines by the oil and gas industries. The ITC says Chinese manufacturers are subsidized and claim US producers are under threat from the imports. American companies imported $412 million worth of the pipes last year. How many America jobs are stake? The number is withheld by the trade commission as "proprietary information."

Prior to President Obama's first visit to China in November the US-China Joint Commission on Commerce and Trade (JCCT) will meet in Hangzhou, Zhejiang Province, for its 20th session. The JCCT is one of the oldest high level forums between Beijing and Washington - established under President Reagan to coordinate trade and foreign direct investment. Will the JCCT address Obama's tire tariff and the long list of Chinese products America's unions want anti-dumping duties? ....

Beijing's National Development and Reform Commission has approved an expansion of the Aoshan Strategic Petroleum Reserve site in coastal Zhejiang Province.

China finished the first phase of its strategic reserve program already this year, stocking 102 million barrels in four locations in Zhejiang, Shandong, and Liaoning provinces, all along China's vulnerable coastline. The second phase will move strategic locations inland and fill an additional 170 million barrels. Work is underway and the new locations are rumoured to be in Caofeidian, in northern Hebei Province, Shanshan, in western Xinjiang, Lanzhou, in Gansu Province, and Wanzhou, in Chongqing Municipality.

By building its strategic petroleum reserves some analysts maintain China causes price spikes in crude oil.....

The latest product demanding protection from Chinese imports is the tire or more accurately the many millions of Chinese made tires sold in the USA. Once again the challenge is brought by the United Steelworkers union representing some 15,000 tire manufacturing jobs. Businesses that import and sell tires from outside America counter with the reality that US manufacturing capacity is nowhere near capable of supplying the giant requirements for tires nationwide.

The hearings before the quasi-federal International Trade Administration allow Democratic Party delegations from Congress including newly minted Dem Arlen Specter of Pennsylvania a chance to talk tough on China for their constituents. A ruling is expected at the end of the month....

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...

In a few weeks the special safeguard provision protecting textile production in the USA will expire on 12/31/2008. The safeguard on textiles allows Washington to put quotas and other restrictions on textile imports from China. It was put into the US-China trade agreement, codified into law as the China Trade Relations Act, in order to placate political interests of Congressmen and Senators from mill town districts where unskilled textile jobs predominate. The textile industry in the USA has had seven years to prepare stategies, improve products, and make adjustments in response to textiles imported from China by American businesses seeking the best price and quickest production. Many if not all USA textile manufacturers will not survive competition from China in a true free trade environment. The American consumer will benefit from even lower prices for textile products. The mill towns of the South and Midwest will either adapt or die out. And that is not a bad thing.

Containerized cargo shipments from China to the USA, around half of all US container imports, is forecast down 8% in 2008. Container shippments from Hong Kong will be down 19% already.

Westward shipments from America are suffering even more. Wastepaper exports have collapsed and that means containers may sail back to the China coast empty.

The USA Food & Drug Administration issues an import alert:

"DETENTION WITHOUT PHYSICALEXAMINATION OF ALL MILK PRODUCTS, MILK DERIVED INGREDIENTS AND FINISHED FOODPRODUCTS CONTAINING MILK FROM CHINA DUE TO THE PRESENCE OF MELAMINE AND/ORMELAMINE ANALOGS"

Measures such as this are a dangerous sign of renewed protectionism in America and it is no surprise that the FDA announced the alert as the USA racked up a record $27.8 billion trade deficit with China last month.

Beijing will allow key price increases in the energy sector giving oil and gas majors approval for close to 18% price hikes, the second double digit increase in less than a year. Fuel remains subsidized in China and undervalued to world markets.

The announcement brought down the spot price for a barrel of oil more than $4 today.

Electric utilities will also get a rate hike - something sought after before last Winter's devastating snow storms -- to increase kilowatt hour charges just under 5%.

Anyone who has lived or traveled in China on a budget and taken chances eating from street vendors or dicey restaurants knows that a certain amount of mystery comes with your dish.

Usually what is not readily identifiable you simply eat around but sometimes you are hungry enough to ingest something that doesn’t really resemble food in the normal sense of the word. A plate of meat and veggies in Xi’An once worked my jaw with the meat’s leather like consistency and odd tastelessness but it did me no harm. After reading this expose about steam buns in Beijing made from pork-flavored cardboard I wonder if the meat was indeed leather, perhaps left over bits from a belt factory?

The cardboard steam buns highlight a blizzard of reporting on food safety problems inside China and with Chinese food exports. Many Americans are discovering that Chinese imports fill up both sides of the WallMart super center and make up a growing share of daily groceries. The meme on China food is that the problem is not the USA’s incompetent food inspection services (spread across numerous regulatory agencies and extremely understaffed) but with – you guessed it – China!

Beijing is responding in its usual heavy-handed way: the party boss of the Chinese equivalent of the USA Food and Drug Administration was executed and the national government is putting in place new regulations, outlawing classes of chemicals, and promising to publish daily reports of food safety during next year’s Summer Olympics.

In Washington, Anti-China blowhard Senator Charles Schumer (D-NY) has added China’s “filthy” food imports to his list of all things bad and Chinese. Schumer’s response is to call for an “import Czar” to join the ineffective battalion of “czars” sitting in Washington offices and fretting about foreigners.

So would it surprise you to know that China is NOT the number 1 source of bad food imports? For the year ending June the FDA rejected the greatest number of shipments from India followed by Mexico according to the New York Times today. Indian food including shrimps and spices contained potentially lethal salmonella while a variety of Mexican food imports were considered “filthy.” China was number three on a list of the top 10 rejected source countries that included Denmark and Italy.

And the most serious case of food poisoning this week happened not in China but at the Taste of Chicago street fair where over 100 people are sickened and 10 hospitalized from possibly salmonella tainted cucumbers and hummus from a Persian food stall.