Finance

Financial performance remained sound and stable in October, said the People's Bank of China (PBC), the country's central bank.

In October, the money supply increase quickened (see graph 1). During this month, a total of 72.3 billion yuan of cash was withdrawn from circulation, 34.3 billion yuan more than that in the same period last year.

At the end of October, the outstanding renminbi and foreign currency loans among all financial institutions stood at 23.39 trillion yuan, up 14.4 percent compared with the year-earlier period (see graph 2). Among the total renminbi loans, those from households and non-financial institutions increased 19.1 percent and 14.4 percent, respectively, year on year.

In October, 17 billion yuan of renminbi loans were added to the balance, 9.4 billion yuan less than the figure in the same period last year. Of them, newly increased medium- and long-term loans stood at 83.8 billion yuan, 31.9 billion yuan more than in the same period last year, while short-term loans and paper financing saw a decline of 70.5 billion yuan.

The month-end outstanding renminbi and foreign currency deposits of all financial institutions arrived at 34.21 trillion yuan in October, gaining 16.3 percent over the year-earlier period. Of this total, deposits from households and non-financial institutions reached 16.95 trillion yuan and 15.3 trillion yuan, increasing 14.5 percent and 15 percent, respectively, over the year-earlier period.

Among the total renminbi deposits, savings deposits arrived at 15.8 trillion yuan, a year-on-year increase of 15.5 percent, 0.5 percentage points lower than the rate in the previous month and the lowest since April 2005. In October, renminbi savings deposits dropped 7.6 billion yuan, decreasing for the first time since June 2001. With active transactions in the stock market, part of the savings deposits were invested into the stock market.

The month-end renminbi deposits from corporations registered an increase of 15.6 percent to 10.7 trillion yuan. The growth was 0.2 percentage points higher than the rate a year ago. From January to October, demand deposits from corporations increased 704.6 billion yuan, 601.5 billion yuan more than the figures in the same period last year.

In October, transactions in the inter-bank market amounted to 3.37 trillion yuan. Every day, transactions stood at 187.3 billion yuan, soaring 73.6 percent, or 79.4 billion yuan, compared with the same period last year.

Price

CPI In October, the consumer price index (CPI) was 1.4 percent higher than that in the same period last year, said the National Bureau of Statistics (NBS). The CPI rose 1.4 percent in urban areas and gained 1.3 percent in rural areas year on year. On a monthly basis, the CPI inched up 0.1 percent from September. From January to October, the CPI rose 1.3 percent compared with the same period last year.

By category, the price of food increased 2.2 percent while that of non-food products went up 1 percent from a year ago. Prices of consumer goods and services grew 1.4 percent and 1.5 percent, respectively, year on year (see graphs 3 and 4).

PPI In October, the producer price index (PPI) for manufactured goods increased 2.9 percent from a year ago, said the NBS. Of the total, purchasing prices of raw materials, fuels and power jumped 5.6 percent year on year.

Producer prices of capital goods registered a growth rate of 3.8 percent over the year-earlier period, while those of consumer goods inched up 0.6 percent compared with the same period last year (see graph 5).

In October, producer prices of crude oil went up 9.2 percent over a year ago. Among refined oil products, prices of gasoline, kerosene and diesel edged up 14.7 percent, 13.2 percent and 11.7 percent, respectively, year on year.

During this month, producer prices of raw coal climbed 2.7 percent from a year ago. Prices of smelting and pressing of ferrous metals saw a decline of 0.8 percent compared with the same period last year, while those of smelting and pressing of non-ferrous metals went up 27.1 percent year on year.

In October, purchasing prices of fuel power, non-ferrous metal materials and chemical materials grew 6.9 percent, 37.4 percent and 3.4 percent, respectively, year on year, while those of ferrous metal materials slid 0.8 percent from a year ago.

In the first 10 months, the PPI went up 2.9 percent compared with the same period last year and purchasing prices of raw materials, fuels and power climbed 6.2 percent over a year ago.

Beijing-HK Cooperation

The 10th Beijing-Hong Kong Economic Cooperation Symposium was held on November 15-16 in Hong Kong to further boost development of economic relations between the two parties.

Hong Kong has been the largest overseas investment source to Beijing. By the end of June 2006, 8,370 Hong Kong-invested enterprises had been established in Beijing with the paid-in capital of $7.68 billion. Meanwhile, Beijing has invested 63 enterprises in Hong Kong with the commitment of $290 million.

Hong Kong is also the second largest export destination of Beijing. In 2005, trade volume between Beijing and Hong Kong stood at $4 billion, soaring 94.3 percent year on year. Of the total, Beijing exported $3.15 billion worth of goods to Hong Kong, 1.4 times the figures in the previous year.

In the tourism sector, there were 313,900 Hong Kong tourists visiting Beijing in 2005 and at the same time, the number of Beijing tourists to Hong Kong kept double-digit growth.

The symposium also aimed to promote cooperation between the two parties in the financial industry.

Heavy Oil

China produced 23.86 million tons of heavy oil last year, representing 13.2 percent of the country's oil output, said Jia Chengzao, Member the China Academy of Sciences.

Heavy oil, a catchall term for oil shale, oil sand, natural asphalt and natural gas hydrate, is becoming an increasingly important substitute for conventional energy resources in China. Production is increasing and technological advancement is helping to reduce exploitation costs.

New policies will be formulated to encourage the exploitation of unconventional oil and gas resources to ease China's energy shortages, said Ma Kai, Chairman of the National Development and Reform Commission. Developing unconventional oil and gas resources has been included into the country's 11th Five Year Plan (2006-10) as a necessary measure to meet a voracious demand for energy.

China boasts abundant heavy oil resources and "has discovered a total of 70 heavy oil fields in 12 basins after 50 years of exploration," said Zhao Xianliang, an official with the Ministry of Land and Resources.

Zheng Hu, Vice President of the China National Petroleum Corp., said that China has 19.8 billion tons of onshore heavy oil and asphalt reserves, which account for 20 percent of the country's total petroleum reserves.

Meanwhile, the country has 47 billion tons of oil shale reserves, with 16 billion tons exploitable, and has 6 billion tons of oil sand reserves, with half of them exploitable.