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China Macro Headlines
• Asian stocks decline for third week on mounting Korean tensions. Asian stocks fell for a third consecutive week after North Korea fired artillery shells into South Korea, swelling concern that tensions will escalate. Korean Air Lines Co., the nation’s biggest line by market value, declined 5.4 percent in Seoul. Hyundai Motor Co., South Korea’s largest carmaker by market capitalization, dropped 6.9 percent. Sun Hung Kai Properties Ltd., the world’s biggest developer by market value, slid 6.1 percent in Hong Kong after the government unveiled new measures to prevent a bubble in real-estate prices. Honda Motor Co., Japan’s second-largest carmaker by sales, sank 1.9 percent.
• China steps up effort to contain economy. China's top economic planner blamed speculators for some of the recent surge in food prices, while the central bank asked local financial institutions to curtail lending, as Beijing stepped up its effort to keep the surging Chinese economy in check. With the country's consumer price index hitting a 25-month high last month, policy makers are worried high food prices will flow through to broader inflation. The index rose 4.4% in October, driven by a 10.1% rise in food prices, which account for one-third of the CPI basket.
• China faces pivotal test - rising power holds key diplomatic role, but sticks to its familiar caution. China offered no sign it's ready to abandon gentle diplomacy with North Korea, even as pressure mounts on Beijing to use its unique leverage to rein in Pyonyang's belligerent behavior. In a test case of how China handles its growing prominence on the global stage as U.S. influence wanes, Chinese officials and state media initially followed their well-worn paths. Any strong wording on the episode was conspicuously absent.
• China’s central bank pledges to strengthen liquidity management. China’s central bank pledged to strengthen liquidity management and “normalize” monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that’s at a two-year high. The nation will use quantitative and price tools to manage liquidity, Hu Xiaolian, a deputy governor of the People’s Bank of China, said in a statement posted to the central bank’s website this week. China will also control the pace of bank lending for the remainder of this year as it will be difficult to stay within the government’s 7.5 trillion yuan ($1.13 billion) target for new loans in 2010, she said.
• China, Russia quit dollar. China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday. Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
• China 6-month finance ministry deposits sold at 4.93%. China's central bank auctioned 40 billion yuan of six-month finance ministry deposits to commercial banks on Tuesday at a rate of 4.93 percent, traders said. The result is up from 4.70 percent for deposits with the same tenor auctioned on Oct 21.
• China commodity bourses raise fees to curb speculation. China, where the world’s four biggest agricultural contracts are traded, will raise costs to buy and sell farm-product and metals futures as part of a government effort to limit speculation and tame inflation. The Dalian Commodity Exchange said this week it will scrap a measure that lets some investors pay half the normal fees for contracts bought and sold on the same day and will cease all other discounts as of Jan. 1. The Zhengzhou Commodity Exchange and Shanghai Futures Exchange said they will extend fees now levied on some contracts to other products.
• China to carry out property inspections, Daily says. China will carry out a nationwide property inspection on the implementation of the government’s real estate measures, the China Daily reported this week, citing unidentified people from the property industry. The “large-scale” inspection will focus on local government efforts to ensure land supply, construction of affordable housing, and the cleanup of idle land parcels, the official English language newspaper reported. The Ministry of Housing and Urban-Rural Development and the Ministry of Land and Resources will carry out the inspections, it said, without giving a timeframe.
• China energy intensity down 3% in Jan-Sept. China's energy consumption used to make each unit of national income fell about 3 percent in the first three quarters versus a year earlier, the country's top climate change official Xie Zhenhua said on Wednesday. This cut compared with a rise of 0.09 percent in energy intensity in the first half of the year, implying tougher government measures to curb energy intensive sectors took effect in the third quarter.
• Foreign firms eye wind power sector - Companies eager to increase their market share in nation's rapidly growing industry. Governments and companies from around the globe are keen to get a piece of the action in China's booming wind power market, which is set to surpass the United States as the world's largest by the end of the year. China's wind turbine output in 2009 accounted for one-third of the world's total with a newly installed capacity of 13.8 gigawatts, representing 100 percent growth year-on-year, according to the China Wind Power Outlook 2010.
