RURAL PROSPERITY: A farmer in Mengcun Village of Nanning, Guangxi Zhuang Autonomous Region shows off a bumper grape harvest. The added value of Guangxi's primary industry grew 3.9 percent year on year in the first half of 2010 to reach 47.2 billion yuan ($7 billion) (YU XIANGQUAN)
Numbers of the Week
Revenues of China's software industry rose by 29.1 percent year on year to 604.8 billion yuan ($89.34 billion) in the first half of 2010, said the Ministry of Industry and Information Technology.
Profits of China's industrial enterprises climbed 71.8 percent year on year to hit 1.61 trillion yuan ($237.5 billion) in the first six months, said the National Bureau of Statistics.
To THE POINT: Chinese automakers cash in on a sales boom in the first half, but signs emerge that pothole-filled path lies ahead. China maintains appeal to foreign investors as the June FDI surged nearly 40 percent year on year. The steel-makers stand on wobbly legs as June profits shrink due to weak demands. The China Banking Regulatory Commission said Chinese lenders extended 7.66 trillion yuan ($1.14 trillion) of loans to local financing vehicles, arousing concerns over the financial black hole. The gold industry has been bursting with vitality as risk-aversion came to the fore as inflation fears and stock market volatility rattled investors.
By HU YUE
China's auto market continues to thrive, though the sales boom is losing some shine.
Vehicle sales nationwide totaled 9 million units, skyrocketing nearly 48 percent from one year earlier, said the China Association of Automobile Manufacturers (CAAM). The auto output was 8.9 million units, a growth of 48.8 percent year on year.
Sales of China's home-made passenger vehicles hit 3.18 million units during the first half, accounting for 47.35 percent of the market.
Sales in June reached 1.41 million units, up 23.48 percent compared to a year ago, but down by 1.83 percent compared to May. This was widely seen as a signal that the market is topping out.
The explosive growth last year was in part inflated by a low comparison base, said Jia Xinguang, a renowned independent auto analyst.
Weighing down market confidence were also uncertainties of the macro-economy and withdrawal of some stimulus measures, said Jia.
The Chinese Government has raised the sales tax on small cars to 7.5 percent this year after halving it to 5 percent in 2009.
Demand may continue to weaken in the rest of the year, mounting pressure on dealers to clear inventories, said Zhao Hang, President of China Automotive Technology & Research Center
But the slowdown is helpful with health of the industry, and a deep market gloom is less likely, he said.
Inward foreign direct investment (FDI) of China stood at $12.5 billion in June, soaring 39.6 percent year on year. The figure for the first half of the year was $51.4 billion, and newly approved foreign companies numbered 12,400, said the Ministry of Commerce.
Among the world's major FDI recipients, China was the second largest in 2009 with around $95 billion after the United States, said the World Investment Report recently issued by the United Nations Conference on Trade and Development (UNCTAD).
China's economic rebalancing and industrial upgrade are expected to create new opportunities for foreign investors, those with cutting-edge technology and research prowess, in particular, said James X. Zhan, Director of Davison of Investment and Enterprise under the UNCTAD, on release ceremony of the report.
Meanwhile, outward investments are also on the rise with the economy gaining strength, said Zhan. The report said outward FDI of China at $48 billion in 2009, ranking at the sixth place in the world.
As Chinese companies head overseas, they face daunting challenges of protectionist restrictions, as well as political risks like riots and wars. This has enhanced the need to build a reliable investment insurance system to protect interests of Chinese investors, said Zhan.
Global FDI witnessed a modest, but uneven recovery in the first half of 2010. The gradual improvement of macroeconomic conditions, corporate profits and stock market valuations observed in early 2010 is expected to continue, supporting renewed business confidence, said the report.
Developing and transition economies attracted half of global FDI inflows, and invested one quarter of global FDI outflows, it said.
Reeling from weak demands and overcapacity, Chinese steelmakers are caught on a tight spot.
The China Iron and Steel Association (CISA) said 77 large and medium-sized domestic steelmakers raked in a combined profit of 6.25 billion yuan ($922 million) in June, a sharp drop from 10 billion yuan ($1.5 billion) in May.
Demands for steel remain lackluster in part due to deep downturn on the real estate market. Domestic steel prices have been on a downward trend since April until a timid rebound in middle July.
More disturbing, though, was the problem of overcapacity that has cast an ominous shadow over prospect of the industry, said Xu Xiangchun, a senior analyst at the mysteel.com, a steel information service company based in Shanghai.
On top of the worries came the government order to cancel tax rebate for exports of 406 items, including some types of steel products. This is expected to rub salt into wounds of the steelmakers, said Xu.
In response, Chinese plants have cut back on their output to shore up prices and also weaned off reliance on imported iron ores to save costs. While domestic production of iron ores hit a record high of nearly 102 million tons in June, the imports have been declining for three consecutive months since April, said the National Bureau of Statistics.