Foreign Trade

China's foreign trade volume is expected to hit $1.7 trillion in 2006, a year-on-year increase of more than 20 percent, said Fu Ziying, Assistant Minister of Commerce

According to Fu, the country's foreign trade volume has risen from sixth to third in the world during the past five years, with import and export volume growing at an average annual rate of 24.6 percent.

China has set the goal to keep foreign trade volume at $2.3 trillion in 2010, with a balance between imports and exports. The growth rate will be maintained at 10 percent annually, according to the 11th Five-Year Plan of the Ministry of Commerce.

"China has reported a robust growth in foreign trade in recent years, but only achieved meager profits due to low added value in export products," said Fu, adding that it is time to shift the growth mode from quantity-oriented to quality-oriented.

China should also "moderately increase its imports," said Fu.

Coal Price

China's coal price continued rising while exports declined in September, according to the latest reports from the National Development and Reform Commission (NDRC).

The two reports on coal supply conditions released by the NDRC showed that in coal-consuming coastal areas, the price of coal went up 5 yuan per ton on average in September.

The per-ton price of coal for power plants increased to 515-525 yuan in Guangzhou and 505-515 yuan in Shanghai and Ningbo by the end of September, the report said.

As the price increased, coal exports fell in September, according to the report. Coal exports fell 9.1 percent year on year, or 491,000 tons, to 4.93 million tons in September and those in the first nine months stood at 47.22 million tons, a decline of 12.8 percent, or 6.95 million tons, from the same period last year.

The NDRC attributes the price hikes to rising transportation costs and market demand, fueled by heavier dependence on coal by power plants and preliminary stockpiles for heating supply in the coming winter season.

China's coal output in the first nine months totaled 1.57 billion tons, a year-on-year increase of 8.4 percent, or 121.9 million tons, over the same period last year. The government abolished the export tax rebate on coal as of September 15.

Auto Industry

Production. China's auto industry posted a 63.87 percent profit growth year on year to reach 22.004 billion yuan during the January-August period, outpacing the 29.87 percent growth in sales revenue, said the China Association of Automobile Manufacturers (CAAM).

The latest figures released by the CAAM showed that the auto industry ended profit declines it had experienced since 2004.

The turning point comes as domestic demand for automobiles surged while steel prices dipped, say industry insiders.

Truck exports in the first eight months jumped 52.2 percent to reach 95,600 vehicles worth $604 million. Passenger car exports reached 14,400 units valued at $296 million.

Up to 97.4 percent of the automobiles produced in the first eight months have been sold, CAAM figures showed.

Researchers warn, however, that oversupply could still plague the industry, which also faces the prospect of rising steel prices. The future of the auto sector remains complex, they say.

Imports. China imported $5.43 billion worth, or 165,000, automobiles in the first three quarters, up 55.4 percent year on year, according to statistics released by the General Administration of Customs.

Imports from Europe and the United States totaled 88,000, compared with 49,000 from Japan and 26,000 from South Korea.

Auto analysts attributed the strong growth in auto imports to the revived market demand, reduced tariffs and appreciation of the renminbi.

Deposit Reserve Rate

The People's Bank of China (PBC), the country's central bank, announced that it is to raise the deposit reserve rate of commercial banks, excluding rural cooperative banks and credit cooperatives, by 0.5 percentage points beginning November 15. It will be the third rise in the deposit reserve rate this year, which had been raised 1.5 percentage points in total.

The move is aimed at tightening the banks' liquidity management, ensuring stable growth of the money supply and credit and maintaining the sustained, coordinated and healthy development of the economy.

"It is the way for the government to squeeze credit and relieve the pressure on the currency," said Wang Xiaoguang, an economist at the NDRC.

The hike will bring the reserves that most banks are required to deposit with the central bank to 9 percent. The PBC raised the bank deposit reserve rate by the same margin of 0.5 percentage points in July and August. The previous two hikes helped take around 300 billion yuan out of commercial banks.

Hotel Industry

The Ministry of Commerce (MOFCOM) predicted that sales of the hotel industry would hit 1.07 trillion yuan this year.

The latest data published by the MOFCOM showed robust growth during the first nine months, with retail sales reaching 749.3 billion yuan, up 102 billion yuan over the same period last year.

Retail sales of the hotel industry accounted for 13.6 percent of the country's total retail sales of consumer goods from January to September, said MOFCOM spokesman Chong Quan.

He said the industry contributed 15.6 percent to the overall growth of the country's retail sales of consumer goods in the third quarter.

During the January-September period, 804 new foreign-invested hotels were established, down 6.2 percent. The paid-in capital arrived at $550 million, a rise of 38 percent over a year ago.

QDII

China's first qualified domestic institutional investor (QDII) fund, managed by Hua An Fund Management Co. Ltd., has begun operating, the firm announced.

The subscription stood at $197 million from 16,652 subscribers between September 13 and October 20.

China started the QDII scheme in July, allowing domestic institutions and residents to buy financial products overseas via mainland commercial banks and other financial institutions.

Following eight Chinese and foreign-funded commercial banks, Hua An Fund was awarded a QDII license in August and raised more than $6 million on the first day of subscription.

The fund will be invested in stocks, bonds, real estate investment trusts and other mainstream financial products in international markets such as New York, London, Tokyo and Hong Kong.

Investors can only withdraw their money from the fund six months after their contracts take effect, said Hua An Fund Management Co. Ltd.

Established in June 1998, Hua An set up China's first open-ended fund and now manages nine securities investment funds valued at 35 billion yuan, including four close-end funds and five open-end funds.

By the end of September, altogether 11 Chinese and foreign-funded commercial banks had acquired QDII licenses, with eight granted quotas totaling $10.3 billion.

China-ASEAN Trade

Bilateral trade between China and ASEAN will grow more than 20 percent in 2006, said Bo Xilai, Minister of Commerce, at the opening ceremony of the China-ASEAN Expo.

Bo pointed out that over the past 20 years since China's reform and opening up, ASEAN has been very positive in investing in China, which promoted economic development of China. With the development of China's economy, more and more Chinese enterprises will invest in ASEAN and bilateral cooperation will be further broadened.

Bo said that the proposed China-ASEAN Free Trade Zone would be a free trade zone integrating the largest population of the world, which would be substantial for the development and prosperity of an integrated Asia.