It is expected that pork prices will continue to rise ahead of the Mid-Autumn Festival (September 25) and National Day Holiday (October 1-7).

Housing Prices Surge

In sharp contrast to the nose-diving stock market, the Chinese real estate market, especially in big cities like Beijing, is surging at an unprecedented rate.

In Beijing, the average housing price in June stood at 10,280 yuan per square meter, surging 20.4 percent compared with that in May.

The National Bureau of Statistics revealed that in the first five months this year, real estate investment reached 802.834 billion yuan, up 29.7 percent year on year.

The Chinese property market has gone into a strange pattern of “the more the government controls, the faster the property price grows.”

Experts argue that less land supply has led to the rising property price. Moreover, the recent stock market slump has discouraged people from investing in stocks, and many who earned a fortune from the stock market are turning their investments into real estate, thus jacking up housing prices in cities.

Oil Price Blues

The Chinese refined oil price, which is fixed by the government, might be forced to rise due to soaring international crude oil prices.

On July 2, crude oil was sold at $71 per barrel on the New York Mercantile Exchange, the first time the price has climbed over $71 in the past 10 months.

Experts believe that oil refineries will be heavily affected by the oil price surge. In addition, transportation, aviation and fertilizer industries will also be impacted.

From the perspective of listed companies, “the rising crude oil prices will greatly damage the profitability of big oil refineries like China Petroleum & Chemical Corp. (Sinopec) and Shanghai Petrochemical Co. Ltd.,” said Yang Wei, oil analyst with China Securities Research Co. Ltd.

Last year, the refined oil output of Sinopec reached 146 million tons, but its crude oil output was only 40 million tons. This means that most of the crude oil processed by Sinopec was imported, making Sinopec vulnerable to international oil price fluctuations.

It is estimated that if the international crude oil price is to rise by $1, the Chinese GDP growth rate will be 0.043 percentage points lower.

Jiang Xinmin, energy expert with Energy Research Institute under the National Development and Reform Commission, said if the international oil price remains above $70 per barrel, the domestic refined oil price will have to be increased.

Switching to Gold

While the previously white-hot Chinese stock market is now “Killing Me Softly,” Chinese individual investors will be relieved soon. As of late July, they will be able to trade gold--instead of shares, according to the Shanghai Gold Exchange (SGE).

The SGE said it will open the physical gold market--so far limited to professional traders--to individual investors in addition to paper gold trading.

The minimum starting point, or lot, for trading is set at 100 grams, based on the closing price of 161 yuan per gram for Au100g and 159.3 yuan per gram for Au99.99 on the SGE on July 3, and each lot is valued at about 16,000 yuan. This is believed to be a low threshold, allowing individual investors to participate.

A prospective individual investor must first open a trading account with a qualified commercial bank. The SGE stated that the Industrial Bank of China would be the first to transact the trading of physical gold for individual investors.

Analysts believe the trading of physical gold would attract many individual investors.

“The increasing need of hedging risks by individual investors spurs the launch of physical gold trading,” said Tang Mingrong, an analyst with Ling Rui Gold Investment Co.

People tend to believe that buying gold is an effective way to reduce risks in an investment portfolio, as gold prices stay relatively stable in times of economic uncertainty and amid market fluctuations. Worries over inflation also make it more important to invest in gold.

“The further opening of the gold market to individual investors would provide them with more investing channels and alleviate the excess liquidity in the nation’s financial market,” said Wang Lixin, General Manager of World Gold Council, Greater China.

Most Favored Investment Nation

The latest Ernst & Young survey shows that China is the most attractive destination for foreign investment.

The survey was conducted between February and March this year and nearly half of the 809 managers from European, American and Asian companies stated that China is one of their top three preferred business locations in 2007.

They are attracted by China’s low labor costs and high productivity. The country’s infrastructure, quality of research and development, workforce education and political stability were cited as major advantages.

However, the survey also shows that China still lags behind in quality of workforce. The United States was found to be the second most attractive country, finding favor with 33 percent of the respondents.