Buoyant M&As

The number of China's domestic mergers and acquisitions (M&As) jumped in the first half of the year as funds raised in the buoyant equity markets were put to use to consolidate fragmented industries.

Domestic deal volumes grew from 317 in the first six months of 2006 to 454 in the first half of 2007, according to data by the industry journal M&A Asia.

"With all the attention on China's overseas acquisitions, it is often forgotten that many Chinese companies have attractive and immediate acquisition opportunities at home at the moment," said Gabriel Wong, a corporate finance partner of PricewaterhouseCoopers, an international accounting firm.

M&A Asia statistics also show that combined incoming and domestic deals in China increased by 20 percent to 808 in the first six months of 2007.

China's economic planner has forecast slower export growth for paper products in the second half of 2007 after export tax rebates for energy-consuming products were cut from 13 to 5 percent.

Dampened Paper Exports

China's economic planner has forecast slower export growth for paper products in the second half of 2007 after export tax rebates for energy-consuming products were cut from 13 to 5 percent.

The reduction, which took effect on July 1, would reduce the sector's profit margin by 5 to 7 percent as exporters were expected to lose $73 million in tax rebate revenues, said the National Development and Reform Commission in a report.

The export rush triggered by anticipation of the tax rebate reduction in the first half had also contributed to the slowdown, it said.

Customs figures revealed that the export growth for paper products had been hovering at a high level, with the rise in February surging to the highest 54.18 percent.

The reduction would also have a serious impact on the profitability of the paper-making industry as paper products, such as napkins, packaging paper and cartons, accounted for 37 percent of last year's total exports of paper-related products.

Non-corn Material for Bio-fuel

China will shift its dependence from corn to sorghum, cassava and sweet potato plants to make bio-fuel in the next five years.

Part of the government's efforts to develop bio-fuel without harming general food supply and security, the shift will ensure a healthy supply of corn both as food and fodder.

Cassava and sweet potato both are high-yield plants, and though edible, they are not used as staple food in China. So their use as raw material, as opposed to that of corn, won't create any artificial shortage of food products.

Xiong Bilin, Deputy Direc-tor of the National Development and Reform Commission's Industry Department, said that the conversion of China's four major ethanol production centers, which have a combined output of 1 million tons, will neither be too complicated nor costly.

Pork Price Soars

The wholesale price of pork in China surged 74.6 percent in June compared with the same month last year, the Ministry of Agriculture announced recently.

The wholesale prices polled by the Ministry of Commerce in 36 large and medium-sized cities averaged 18.57 yuan per kg on July 11, up nearly 30 percent from the 14.25 yuan on May 11. The average retail price for lean pork has exceeded 22 yuan per kg.

The price hikes in feedstuff and the outbreaks of the blue ear disease are mainly blamed for the pork price surge.

The pork price will continue to rise in the second half of the year as the supply shortfall can hardly be eased in a short period of time, said Huang Hai, Assistant Minister of Commerce.