TO THE POINT: China adds to its holdings of U.S. Treasury securities for the first time in three months. China's auto market stages a significant comeback in August as vehicle sales grew 6.29 percent from July figures. The Anshan Iron & Steel Group Corp. concluded an agreement to invest in the United States, ending doubts about the feasibility of the deal. State-owned enterprises raked in juicy profits from January to August this year. China inches up on the global competitiveness ranking list. Global payment giant MasterCard Worldwide predicts China will replace the United States as the world's top credit card market by 2020.

By HU YUE

Increasing U.S. Assets

China resumed net purchases of U.S. Treasury securities in July after two consecutive months of net sales.

China's holdings rose by $3 billion to $846.7 billion in July, still ahead of Japan as the largest foreign holder of U.S. Treasury securities, said the U.S. Department of Treasury. Japan increased its holdings to $821 billion in July from $803.6 billion in June.

This news soothed worries Washington's largest creditor was looking to dump its dollar assets. China trimmed its holdings of U.S. Treasury securities by $51.1 billion in the first half of this year, amid concerns over the safety of its U.S. dollar assets.

China accelerated investments of foreign exchange reserves in part because of a run-up in the trade surplus, said Zhao Xijun, Deputy Director of the Financial and Securities Institute of Renmin University of China. The country's trade surplus hit an 18-month record high of $28.7 billion in July.

While clouds gather over the global economic landscape, the U.S. Treasury bonds are still considered a safe haven, said Bo Ruobai, an economics professor at the Central University of Finance and Economics.

Auto Upturn

After four straight months of decline, China's auto sales experienced a rally in August, a signal of an upturn in the world's largest auto market.

Vehicle sales in the country grew 6.29 percent month on month to reach 1.322 million units in August, said the China Association of Automobile Manufacturers (CAAM). This represented an increase of 16.14 percent from a year ago.

The August figure brought auto sales in the first eight months of this year to 11.58 million units, up 39.02 percent year on year.

Domestic auto market expansion had been tapering off since the second quarter in part due to a demanding comparison base with last year.

The rebound was expected as the effect of the government's program to subsidize energy-efficient vehicles starts to be felt, said Xu Yingbo, an analyst at the CITIC Securities Co. Ltd.

Meanwhile, the dealers have stepped up promotional offers to clear inventories, said Xu.

The bounce-back in demand could extend into the rest of the year as September and October have always been peak seasons for auto sales, said Dong Yaguang, an analyst at the Sinolink Securities Co. Ltd.

The CAAM even estimated China will retain its throne as the world's top car market and sales could exceed 17 million units this year. The number will skyrocket to 25 million by 2015, accounting for 30 percent of the world's total output, it said.

Steel Venture

China's Anshan Iron & Steel Group Corp. (Ansteel) has inked an agreement with the Mississippi-based Steel Development Co. to jointly build a steel plant in the United States, which could produce 300,000 tons of rebar annually.

The total investment in the plant was estimated at $168 million, with Ansteel taking a 14-percent interest. The plant has entered the pre-construction stage, and will start production by the first quarter of 2012.

Zhang Xiaogang, General Manager of Ansteel, said they planned to continue cooperation to build four other "technologically advanced and environment-friendly steel mills" if the first venture was a success.

The deal, first proposed in May this year, hit a bumpy road in the United States with 52 U.S. congressmen in early July urging the Obama administration to block the investment, claiming it would hurt U.S. jobs and threaten national security.

"The deal has support from the U.S. Government, and the joint venture will increase job opportunities and local tax revenue," said John Correnti, Chairman and CEO of Steel Development Co.

The national security concerns are unfounded, said John D. Watkins, Chairman of the American Chamber of Commerce in China.

"Steel Development will produce rebar from recycled steel, and while the company's approach is innovative, the process itself is low-tech," he said. "Ansteel will take no more than a 20-percent stake and have no management control."

SOEs' Profits

China's state-owned enterprises (SOEs) are faring well, drawing strength from strong economic recovery.

SOE profits jumped 46.7 percent to 1.26 trillion yuan ($186.6 billion) from a year ago in the first eight months of this year, said the Ministry of Finance.

Their business revenues totaled 19.4 trillion yuan ($2.9 trillion) in the period, up 37.6 percent from a year earlier.

In August, profits of power generation, petrochemicals, oil, non-ferrous metals and coal industries were higher than the July level. But machinery, iron and steel, commercial and trade, construction and real estate, and auto sectors saw their profits decline month on month, the ministry said, without giving reasons.

The downturn on the property market hurt the profitability of related industries like steel and machinery, but this is less likely to have enormous impact on the broader economy, said Xiong Peng, a senior analyst at the Financial Research Center of the Bank of Communications.

China's Ranking

The Geneva-based World Economic Forum (WEF) recently released the Global Competitiveness Report 2010-11, placing China in 27th place, two spots higher than last year.

The index analyzed 133 economies across the world, assessing many factors including institution, infrastructure, macroeconomic environment, health and primary education and higher education and training.

Switzerland remained in the top spot, followed by Sweden and Singapore. The United States, the world's biggest economy, fell two places to the fourth due to macroeconomic imbalances, weakening of its public and private institutions, and lingering concerns about its financial markets.

China's improvement in the overall ranking was mainly attributed to a better assessment of its financial market, which has historically been a notable weak point, said Jennifer Blanke, the lead economist of the WEF's Center for Global Competitiveness and Performance.

This is the result of easier access to credit and financing through equity markets, banks and venture capital, which has been accompanied by a slight improvement in the perceived soundness of the banking sector, she said.

Meanwhile, China is quickly catching up on infrastructure and market efficiency and will increasingly benefit from its expanding market size, said the report.

Credit Cards Surge

China is expected to overtake the United States as the world's biggest credit card market by 2020.

The country will have 800 to 900 million credit cards in circulation by 2020, the largest in the world, as accelerating urbanization and a wealth boom enable Chinese consumers to spend more using plastic, said MasterCard Worldwide, the world's second largest payment network.

China is experiencing a surge in the use of credit cards which are seen as a more convenient and safe payment vehicle. This is an anticipated boon for the country, which is pinning hopes on the consumer market to thrive and wean reliance on investments as a growth engine.

By the end of June 2010, Chinese banks had issued 207 million credit cards, extending credit worth 1.64 trillion yuan ($241.9 billion), said the People's Bank of China, the central bank.