China’s economy grows by 11.9% for the first quarter

Filed Under (World Economy) by fred on 16-04-2010

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China’s economy revved into high gear during the first quarter of 2010, growing 11.9% compared with a year ago, a spokesman for the National Statistics Bureau said Thursday.

The nation’s gross domestic product — a broad measure of economic output — gained 1.2% from the fourth quarter of 2009.

“The momentum of national economic recovery has further expanded, which has laid a good foundation for reaching the targets set for the whole year,” spokesman Li Xiaochao said.

The growth was fueled by industrial growth — 22% for heavy industry and 14% for light industry — and a nearly 18% expansion in consumer retail sales.

The figures mark a return to double-digit economic growth for China, which saw its white-hot economy slump to merely robust in 2009. China was able to maintain moderate economic growth even as the U.S. and Japanese economies were in recession last year.

In 2007, China’s gross domestic product grew 13%.

China and the yuan: What’s at stake

Despite the explosive start to the year, Li tried to dampen expectations.

“This 11.9% is higher than the 8% target set by the National People’s Congress set for the whole year but the latter half of the year will definitely face challenges because the base GDP figure of late last year is higher,” Li said.

The high levels of economic growth China has been experiencing typically result in inflationary pressures, raising prices and ultimately slowing expansion.

“China’s drivers of economic growth should become more balanced as policymakers seek to transition from rapid growth to longer-term stability,” said Jing Ulrich, a China equities and commodities expert with J.P. Morgan. “Higher than expected inflation could necessitate more aggressive tightening, while global trade disputes could hinder the export recovery.”

“Despite China’s positive outlook, some risks remain to sustained economic recovery,” Ulrich said. “Excessive tightening in the property sector could dampen home sales, which would be negative for commodities, employment and housing-related consumption.”

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CNOOC to raise US$11.7bil to fund

Filed Under (Business News) by Fred Chan on 20-03-2009

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China National Offshore Oil Corp (CNOOC) aims to raise as much as 80 billion yuan (US$11.7bil) to finance aggressive expansion plans this year, a senior executive said yesterday.

The move comes as the company faces niggling cash flow problems and plummeting revenues following the collapse in world crude prices.

“We are currently preparing to issue mid-term notes. We have already submitted the application and we will make an announcement once we hear the result,” Wu Mengfei, the company’s chief financial officer, told reporters on the sidelines of an industry conference.

The debt financing would be carried out over several stages, he said, without providing further detail.

He said the move would help the company – the state-owned parent of Hong Kong-listed CNOOC Ltd – take advantage of falling steel and raw material costs and raise the pace of construction on a number of exploration projects along the Chinese coast.

CNOOC chairman Fu Chengyu revealed on the sidelines of the recent meeting of the National People’s Congress that the company would invest a total of US$16.5bil this year, 26% higher than in 2008.

Wu said that the company was currently looking into the possibility of expanding its 12 million-tonne refining joint venture with Shell in Huizhou in southeastern China’s Guangdong province, the first phase of which is scheduled to go into full operation later this year.

CNOOC is also looking at other potential refining projects across the country, and continues to eye a number of overseas acquisition targets, Wu said.

“The world economy (in its weakened state) will produce a great deal of opportunities,” he said.

“We will make our own preparations. After our attempt to acquire Unocal (in 2005) everyone knows CNOOC, and knows that CNOOC is a good buyer. We receive letters every day from people trying to sell something to us. We have a special team currently conducting research into the opportunities.”

Wu said that CNOOC has emerged from the world financial crisis relatively unscathed, but it was still struggling under the impact of last year’s rapid drop in the global price of oil.

“The oil price cut has had a bigger impact. Compared with last year, our cash profits are much lower. We are facing shrinking oil revenues and cash flow problems, but our financing ability remains very strong.”

“With oil prices at $40 a barrel, we can still make a profit,” he said. – Reuters

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Coke faces hurdle expanding into China market

Filed Under (Business News) by Fred Chan on 19-03-2009

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China’s Ministry of Commerce said Wednesday it has rejected a proposal by Coca-Cola Co. (KO) to take over China Huiyuan Juice Group Ltd. (1886.HK), because the deal could hurt competition in the local market.

The planned takeover has attracted wide attention for the light it sheds on Beijing’s stance toward overseas acquisitions of famous local brands.

The proposed deal could “restrict competition in the juice drinks market, force consumers to accept products with higher prices and reduce the types of products available,” the ministry said in a statement.

Kenth Kaerhoeg, group communications director for Coca-Cola Pacific Group, told Dow Jones Newswires Coca-Cola couldn’t immediately comment on the ministry’s decision.

The ministry said it made its decision after hearing opinions from all parties and also after Coca-Cola submitted an amendment to its original proposal based on the ministry’s requirement.

The decision came after the ministry began reviewing the deal in November. – Dow Jones

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