e-magazine
The Hot Zone
China's newly announced air defense identification zone over the East China Sea aims to shore up national security
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Science/Technology
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Hot Links

cheap eyeglasses
Market Avenue
eBeijing

Market Watch
Business> Market Watch
UPDATED: February 3, 2008 NO.6 FEB.7, 2008
MARKET WATCH NO.6 2008
The biggest blizzard in 50 years hit south and southeast China hard, adding more fuel to the already serious inflation pressure
 
Share

 

TO THE POINT China's financial markets remained stable in 2007, the central bank said, but the stock market stumbled on the heels of international market fluctuations. Food supplies were in shortage as the blizzard in southern provinces blocked transportation and destroyed farm produce. China Minmetals moved abroad to Canada for gold and copper, while the South Korean Lotte Shopping looked to China for the supermarket boom.

By LIU YUNYUN

Blizzard Aftermath

The biggest blizzard in 50 years hit south and southeast China hard, adding more fuel to the already serious inflation pressure. The 2007 consumer price surge was largely due to pork price increases, while this year, vegetables might become another trigger.

Starting from mid-January, heavy snows swept across 14 provinces such as Jiangsu, Hunan and Anhui, affecting 77.86 million people and claiming 24 lives by January 29.

The Relief Department under the Ministry of Civil Affairs said that 4.21 million hectares of farmland were affected and direct economic losses by January 29 had totaled 22.09 billion yuan ($3.01 billion).

Because roads, airports and train stations were closed, northern provinces, which were not hit by the disaster, underwent a period of supply shortage of various vegetables normally transported from the south.

Moreover, the February 6-13 period marks the 2008 traditional lunar New Year for the Chinese people, a time when demand for food is large. The supply shortage further adds pressure to food prices during the holiday season.

Forging a Supermarket Giant

South Korea-based Lotte Shopping Co. Ltd. bought a 51-percent stake in CTA Makro Commercial Co. Ltd. on January 23, thus becoming the 100-percent owner of the supermarket.

The Makro supermarket was formerly held by China National Cereals, Oils, and Foodstuffs Import and Export Corp., which controlled a 51-percent stake. The Netherlands-based SVC Holdings, which held the remaining portion, sold its stake to Lotte Shopping at 640 million yuan ($88.9 million), and the other 51 percent was sold at the same price.

Challenged by strong rivals like the U.S.-based Wal-Mart and the French-based Carrefour, Makro hardly struggled for profits in recent years. It suffered losses in 2005-06 though did not reveal the exact figures. In 2007, it made a profit of 20 million yuan ($2.78 million). But the original two shareholders were reportedly disappointed about the performance and both were determined to retreat.

The new supermarket is set to open 100 stores in five years and the number will reach 300 by 2012. Right now, it has eight stores on the mainland.

Mining Abroad

China Minmetals announced on January 29 that it had bought a majority stake in Northern Peru Copper (NPC) of Canada, and had acquired the property of EL Galeno copper and gold mine and Hilorico gold mine in northern Peru.

The majority of NPC shareholders responded positively to the acquisition. The acquisition was conducted by Copper Bridge Acquisition Corp. (CBAC), jointly established by the China Minmetals and Jiangxi Copper Corp. A total of 31,761,682 shares, or 93.92 percent of NPC's total stakes, have been transferred to the buyer's account, according to China Minmetals' announcement.

CBAC paid 436.7 million Canadian dollars on January 28 for the purchase, and according to Canadian law, the remaining part of the purchase will be completed within two months through compulsory buying.

The latest statistics available show that NPC's total resource volume includes 8.05 million tons of copper and 198 tons of gold. The development of the Galeno project needs an investment of some $1.5 billion and is expected to begin operation in 2012.

Consumption Boom

For the first time in China's economic history, domestic consumption contributed the most to gross domestic product (GDP) growth.

Yao Jingyuan, Chief Economist with the National Bureau of Statistics, stated that of the 11.4-percent GDP growth rate in 2007, exports made up 2.7 percent, 4.3 percent came from investment, and consumption contributed 4.4 percent.

Yao said the major problem in the economy currently is the over dependence on the secondary industry, while agriculture is still fragile and the proportion of tertiary industry is too low.

The Chinese economists and experts have been calling for expanding domestic consumption, so the economy will not be too dependent on the international markets or foreign investment in times of international market crisis.

Checking Capital Flow

The State Administration of Foreign Exchange, the country's foreign exchange regulator, vowed to strengthen the supervision over cross-border capital flows as well as short-term bank borrowing in 2008.

The use of foreign currency converted into yuan will be under strict monitoring of the administration.

China has faced pressure from its increasing foreign exchange reserves as the trade surplus has boomed. At the end of 2007, the foreign exchange reserves were $1.53 trillion, up 43.3 percent year on year.

The government has taken measures to address the trade imbalance. It has also encouraged companies and individuals to hold foreign currencies and invest abroad to reduce the reserve pressure.

Last August it scrapped limits on companies converting current account foreign exchange holdings into yuan. They can now hold all foreign currency revenue from trade instead of converting it into yuan.

1   2   Next  



 
Top Story
-Protecting Ocean Rights
-Partners in Defense
-Fighting HIV+'s Stigma
-HIV: Privacy VS. Protection
-Setting the Tone
Most Popular
 
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved