The CISA calculated that crude steel output in China, which accounts for one third of the world’s total, escalated 18.92 percent to 237.58 million tons in the first half compared with the same period last year.

Yet despite booming steel consumption, the Chinese Government has decided to further rein in steel exports and at the same time improve energy efficiency and reduce toxic emissions, according to the National Development and Reform Commission (NDRC).

The Chinese Government has been encouraging the restructuring and elimination of small and outdated steel firms and instead supports the creation of super steel carriers like Baosteel Group to save energy and improve international competitiveness.

On observing the strong growth of China’s steel industry, the United States alleged that China’s iron and steel industry was being subsidized by its government. But China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters argued that this allegation is groundless and claimed the rapid steel industry developments are driven by strong market demand. The chamber pointed out that the U.S. government has provided “long-term and all-round subsidies” as high as $100 billion to its steel industry over the past three to four decades.

Stock Market About-face

The Chinese mainland stock market has rebounded despite a staggering 3.81 percent drop on the first day of August. Many securities companies now optimistically estimate that the benchmark index will hit 6,000 points by the end of this year.

In July alone, the benchmark Shanghai Composite Index surged about 800 points to as high as 4,471 on July 31 from a low of 3,615 on July 5.

The anti-money laundering department of the central bank has said that large amounts of illegal and international hot money have flooded back into the Chinese stock market.

Chai Qingshan, chief analyst with the anti-money laundering department, said that about $121.9 billion in hot money flew into China, pushing up Chinese property asset prices as well as the stock market.

The Chinese stock market is very different from mature stock markets in other countries. Economists joked that Warren Buffett’s investment methodology of “value investment” cannot work well in China, since many Chinese stock traders tend to chase after fast-growing stocks with high investment yields over a short time. Some Chinese stocks even have a price/earning (P/E) ratio of more than 2,000. For instance, the P/E ratio of Harbin Aircraft Industry Group Co. Ltd. mounted to a shocking 5,331. In developed countries, the average P/E ratio is believed to be around 10 to 30, according to Tao Dong, Chief Economist of the Asia-Pacific region with Credit Swiss First Boston.

Noodle Inflation

Chinese food prices are soaring despite government efforts to bring them under control.

On July 26, the prices of instant noodles-the most convenient food in China-rose an average of 20 percent, with some even rising 40 percent. When news of the noodle spike surfaced, people crowded supermarkets and instant noodles soon sold out. Meanwhile vegetable prices are also increasing. 21st Century Business Herald reported that in central China’s Wuhan City, black swans were being fed watermelons instead of green vegetables. The swan raisers said that green vegetables were about 5 yuan per kg, too pricey for even the elegant swan. A few years ago, such vegetables were nearly worthless.

It is widely believed that pork prices have helped drive up the cost of other foods. In order to bring pork prices back to normal, the Ministry of Finance deployed 1.15 billion yuan of insurance money to female pig businesses, a dole out meant to ensure farmers’ confidence in raising pigs.

The nation’s top planner NDRC warned local governments not to intervene directly in market prices unless absolutely “necessary.”

NDRC said people should respect market rules and let the market decide the prices.

NumberS of the Week 31 % In the first half of this year, the profits of state-owned enterprises grew 31.5 percent to 753.5 billion yuan compared with the same period last year. The total sales revenue grew to 8.3723 trillion yuan, rising 20.9 percent. 241,200 China exported 241,200 automobiles in the first six months, an increase of 71.3 percent compared with the same period last year, according to the China Association of Automobile Manufacturers.