TO THE POINT: The United States took further protectionist moves against "made-in-China" products by levying preliminary countervailing duties on potassium phosphate salts and coated paper from China. China's rich are becoming an ever-important purchasing power for the world's luxury products. January sales for the nation's 100 key retailing enterprises made large increases from last December's figures. Foreign distiller Diageo's attempt to control the well-known domestic liquor brand Swellfun has come to fruition. High domestic coal prices forced power plants to turn to international coal supplies. The 14th China International Fair for Investment and Trade will be held September 8-11 in Xiamen, Fujian Province.

 By LIU YUNYUN

Trade Frictions

The U.S. Commerce Department said on March 2 that it would impose preliminary countervailing duties on potassium phosphate salts and coated paper imported from China, a move that may escalate tensions between the two countries. The two products will be levied 109 percent and up to 13 percent duties, respectively. The final decision will be made in July.

Potassium salts are used in industrial cleaning products, fertilizers and food additives, while coated paper is used in printing corporate annual reports and high-end catalogues and magazines.

The new case followed a recent decision by the U.S. International Trade Commission to impose punitive tariffs on imported Chinese steel pipes for unfair subsidies. The Chinese Government denounced the move as "protectionist".

Economists warned the protectionist moves by the Obama administration will ultimately hurt China-U.S. trade relations, which are playing an important role in global trade after the 2008 economic turmoil.

Luxury Boom

China's rich demographic bought 27.5 percent of total worldwide luxury goods worth $9.4 billion by the end of 2009, second only to Japan, according to figures from the World Luxury Association.

The association estimated China will spend $14.6 billion in luxury items in the next five years, topping other countries throughout the world.

China has 51,000 individuals worth more than 100 million yuan ($14.6 million) and 825,000 individuals worth more than 10 million yuan ($1.46 million), according to Hurun, a research company that has tracked China's rich for 11 years. The company also calculated wealthy Beijingers spent 6.88 million yuan ($1 million) in a year.

Data has shown that the rich have directly helped hold up luxury brands in the aftermath of the global market meltdown.

"In other countries, buyers of luxury goods are mostly celebrities or business elites. But in China, ordinary salary earners are also a big purchasing power of those products," said Tong Minqiang, Vice President of Hangzhou Plaza in south China's Zhejiang Province.

However, those robust figures cannot conceal the widening gap between the rich and the poor. The vast number of migrant workers, who have produced most of the world's "made-in-China" products, were paid minimum wages of 800-2000 yuan ($117-$293) a month.

Bridging the gap has become an important task for the Chinese Government.

Alcohol Co. Takeover

For the first time in history, a foreign distiller took control of a domestic alcohol producer, breaking regulatory barriers.

Diageo Plc. is the maker of a number of liquors well known in China, such as Smirnoff, Johnnie Walker whisky and Baileys. Sichuan Swellfun Co. is a popular Chinese baijiu or white spirit producer.

The foreign distiller bought a controlling stake in Swellfun over a period of three years. Diageo Plc. initially paid 202.9 million yuan ($29.7 million) for a 43-percent stake in Chengdu Quanxing Group, the owner of the Swellfun brand, in 2007, later increasing its holdings to 49 percent in July 2008. The company offered to pay 14 million pounds ($21 million) for an additional 4 percent stake in Quanxing on March 1, raising its stake to 53 percent.

Chinese policy forbids a foreign company from controlling famous huangjiu (or rice wine) and baijiu brands. But Diageo was able to circumvent restrictions to reach its target.

Baijiu is traditional Chinese liquor produced from sorghum and commonly served at business meetings or family gatherings. Foreign brand liquor such as whisky, gin and wine are mostly served in bars and entertainment venues.

Retail Sales Up

The 100 key retailing enterprises monitored by the Central Government sold 34.56 billion yuan ($5.06 billion) worth of products in January, up 10.03 percent compared to December 2009, according to figures released by the Ministry of Industry and Information Technology (MIIT).

Food sales in January fell 17.44 percent year on year; sales of daily commodities slid 5.69 percent; while sales of garments and cosmetics dropped less than 2 percent.

Jewelry, home appliance and furnishing sales increased 1.91 percent, 6.29 percent and 7.49 percent, respectively, driven by a shopping spree for the Spring Festival, which fell in February this year, according to a statement posted on the MIIT website.

In spite of the month-on-month increase, this year's January sales of the 100 retailers were down 7.11 percent from last year. But MIIT explained the drop was because the country's Spring Festival shopping last year was in January, making the comparison base larger.

Soaring Coal Imports

China imported a total of 16.078 million tons of coal in January, surging 438.3 percent from the same month last year. The amount was the second largest after the 16.385 million tons of imports last December, according to figures from the General Administration of Customs.

While China's coal reserves rank first in the world, companies still seek coal from abroad. Insiders attributed the import surge to domestic coal giants' unwillingness to lower prices, thus forcing thermal power plants to find alternative sources.

Southern regions like Guangxi Zhuang Autonomous Region and Guangdong Province prefer to import coal from the Philippines or Malaysia as the shipping fee from the southeast Asian nations to south China is less than from the Qinhuangdao Port in the coal-abundant north China.

Li Chengren, a senior researcher at the State Grid Energy Research Institute, said the high coal prices put enormous pressures on power companies, while the latter are already in a weakened position. Li said coal importing will become a trend.

Xiamen Trade Fair

Organizers for the 14th China International Fair for Investment and Trade (CIFIT) announced on February 2 at the first preparatory work conference for the 14th CIFIT that the upcoming fair will feature new highlights. The fair will be held from September 8 to 11 in Xiamen, Fujian Province.

The organizing committee will increase its efforts to arrange a number of specialized exhibitions for tourism, real estate, cultural creative industries, energy efficiency and environmental protection.

A number of provinces and cities will expand the usual size of their exhibitions and host matchmaking symposia, briefings on their investment environment and major industries and projects, and host cultural shows.

The year's CIFIT will also feature a sharper focus on Taiwan. The organizing committee will hold talks with Taiwan investors, host the sixth Straits Travel Fair, the West Taiwan Strait Cities' Development and Cooperation Forum and the third Cross-Straits (Quanzhou) Agricultural Products Procurement Fair. The committee will also stage exhibitions for Taiwan investment projects and commodities and host industry-specific matchmaking symposia for Taiwan-funded enterprises, in addition to continuing to stage the Cross-Straits Economic and Trade Cooperation and Development Forum. Various other events will be organized to foster ties between the mainland and Taiwan.