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Business> Market Watch
UPDATED: November 5, 2010 NO. 45 NOVEMBER 11, 2010

NEW RAIL CORRIDOR: The 377-km Yichang-Wanzhou Railway, linking Yichang of Hubei Province and Wanzhou District of Chongqing Municipality, is expected to come into operation before the end of November. Construction on the railway started in 2004 with an investment of 22.5 billion yuan ($3.4 billion) (YANG SHUN)

 Numbers of the Week


Chinese industrial profits rose 53.5 percent year on year in the first nine months of 2010, said the National Bureau of Statistics.

12.3 trillion yuan

The total operating revenue of companies listed on the Chinese mainland totaled 12.3 trillion yuan ($1.8 trillion) in the first three quarters, said the financial data provider Shanghai Wind Information Co. Ltd.


TO THE POINT: Chinese banks reap juicy returns as interest income widens. The manufacturing sector warms up, as evidenced by the PMI's continued growth. Foreign trade regains its lost ground and is estimated to grow 25 percent this year, but the road ahead is filled with challenges. Consumers click away as China's e-commerce sector booms with a transaction volume totaling $180 billion in the third quarter this year. International hot money remains a concern since an increased amount may be pouring into China.


Bank Profits

The banking industry of China is getting into full swing, but not without worries from investors and experts.

In the first three quarters this year, the country's 16 listed commercial banks raked in combined net profits of 529.3 billion yuan ($79 billion), surging 34 percent from a year ago. Of this, around 74 percent went to the "big four" lenders—the Industrial and Commercial Bank of China (ICBC), China Construction Bank, Bank of China and Agricultural Bank of China (ABC).

ICBC retained its position as the world's most profitable bank by generating 127.8 billion yuan ($19.1 billion) in net profits in the January-September period, soaring 27.2 percent year on year. ABC, the last of the "big four" to go public, earned 70.2 billion yuan ($10.5 billion) in the first three quarters, a growth of 36.3 percent from one year earlier.

Total domestic assets of Chinese banks increased 20.4 percent year on year to 90.6 trillion yuan ($13.1 trillion) by the end of September, said the China Banking Regulatory Commission.

The growth was largely driven by expanding interest income as their net interest margins widened, said Huang Can, a senior analyst at the China Cheng Xin International Credit Rating Co. Ltd (CCXI).

A cause for concern is the slight slowdown in intermediary businesses as regulations are tightened, he said.

Short-term risks facing the banking industry remain subdued because the government stepped up its handle over housing mortgages and the financing vehicles of local governments, said a report by the CCXI.

But longer-term challenges remain as non-performing loans might rebound in the future, the report said.

Manufacturing Strength

The Purchasing Managers' Index (PMI), a barometer of manufacturing activities, reached 54.7 percent in October, up 0.9 percentage points from last month, said the China Federation of Logistics and Purchasing.

October's figure marked the 20th straight month that the index was above 50 percent. The PMI includes a package of indices to measure manufacturing sector performance. A reading above 50 percent indicates economic expansion.

The PMI's increase signals that the economic slowdown from torrid growth earlier this year will be mild, said Zhang Liqun, a senior researcher at the Development Research Center under the State Council.

Lu Ting, an economist from Bank of America-Merrill Lynch, said that the PMI's rebound since July, after declining for a few months beginning in April, shows the limited impact of the property tightening measures on developers' construction activities, and the government's big push on public housing.

Trade Outlook

The Ministry of Commerce (MOFCOM) on November 1 released the Report on China's Foreign Trade Situation (Autumn, 2010), providing an overview of the country's trade landscape.

After braving serious fallout last year, both imports and exports have returned to a steady growth course.

Looking ahead, foreign trade will maintain a promising course in the coming months as the world economy recoups its strength, said the MOFCOM report.

The report predicts that China's foreign trade will stand at $2.8 trillion in 2010, up 25 percent from the previous year.

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