China International Political Economy

The Chinese government has cut its share of US bond holdings by as much as $34 billion according to China Daily.

Japan now retakes the number one spot as the Chinese government’s holdings now stand at $755.4 billion in short and long term US bonds.

Key drivers of the reduction are likely a result of the US pressure on the Chinese government to revalue the China’s currency, recent US China trade spats, and an overall concern about the size of US debt.

The China Central bank, the People’s Bank of China, expects M2 in the Chinese economy to grow 17 percent in 2010 according to Dow Jones.

The announcement is a sign that the China Central bank will likely tighten liquidity as the report issued by the People’s Bank of China stated that M2 was up 26 percent at the end of January.

M2 is the measure of money supply typically comprised of M1 (money held outside banks, plus checking accounts, plus travelers checks minus federal reserve float) plus savings deposits, plus retirement accounts plus time deposits less than $100,000. How China defines M2 is still being researched.

China trade of exports overtook Germany as the number one exporter in 2009 according to AP.

The China trade news estimates that China exports in 2009 hit more than $1.2 trillion.

Germany exports however have declined the most in 60 years and now places Germany as only the fifth largest exporter in the world. [Read more →]

US firms Disney and Google have announced they will both invest in China’s media firm Bus Online according to VentureBeat.

The China investment is estimated to be worth $100 million and would give the two firms between 30 and 40 percent of Bus Online with Google’s stake to be slightly lower.

Bus Online has received as much as $80 million in venture funding since 2004 and produced $46.07 million in 2009 revenue. [Read more →]

In a response to a proposed US arms sale deal to Taiwan, the Chinese government has threatened to boycott China trade with US aerospace firms such as Boeing and McDonnell-Douglas according to BBC News.

The China trade spat is over a proposed $6.4 billion worth of arms to Taiwan and if the Chinese government acts on its threat then the US stands to loose hundreds of millions of dollars of business it currently does with China.

Over half of China’s Airlines fleet is either Boeing or McDonnell-Douglas jets and over a third of Boeing’s its major parts are made or assembled in China. [Read more →]

Beijing Automotive Industry Holding Co (BAIC) has announced it has acquired Saab intellectual property assets in order to produce 9-5 and 9-3 sedans according to Reuters.

The China investment news did not disclose the amount of the asset purchase, but the Chinese investment by BAIC is an important step in paving the way for BAIC to establish its brand in the China auto market.

BAIC is currently China’s fifth largest China producer of cars and is state owned. [Read more →]

Western stock markets have expressed concern over the continued reported growth of car sales in the Chinese economy according to The New York Times.

The conspiracy theory has it that while car sales in the Chinese economy continues to climb, gas prices are essentially flat leading to the thought that the Chinese government is secretly buying cars and parking them.

Interviews with Chinese locals suggest otherwise as higher fuel prices may be to blame as car buyers simply choose not to drive. [Read more →]

Manufacturing output in the China economy continues to grow as the official China PMI (Purchasing Managers Index) remained unchanged in November according to Dow Jones.

While unchanged, the key to the upbeat China economic news was the rise in the HSBC China Manufacturing PMI which hit 55.7 in November compared to the 55.4 in October.

Some of the bigger winners from the positive Chinese economy news included shares relating to automobile production, steel and mining. [Read more →]

US based Pharmaceutical Product Development Inc. (PPD) will invest in China through an acquisition of BioDuro according to AP.

The Chinese investment news will allow PPD to extend its capabilities into China through BioDuro’s 110,000-square-foot laboratory located in Beijing.

1,000 Chinese worker will be employed by PPD as a result of the China investment in BioDuru. [Read more →]

BMW has announced it will add to its China investment by opening another plant in 2012 according to the Wall Street Journal.

The China investment is expected at $836 million through BMW’s joint-venture partner Brilliance Automotive Holdings Ltd. and will add 100,000 units of capacity a year up from BMW’s current capacity of 41,000.

China overall cars sales rose 34.2% in 2009 for a year earlier thus far. [Read more →]

Auto sales in the Chinese economy rose 76 percent in October according to the China Association of Automobile Manufacturers and Bloomberg.

The key driver to the positive China economic news is Chinese government stimulus measures such as cuts in vehicle taxes and rural area subsidies.

Total car sales in the China economy hit 10.9 million units in the first 10 months of 2009. [Read more →]

The World Bank has revised its forecast for the growth of the Chinese economy to 8.4 percent in 2010 up from a previous 7.2 percent according to the China Daily.

Despite the positive revision, the World Bank is still cautious about the future growth of the Chinese economy considering the impact of the global recession and the decline in demand for Chinese goods. It warned that without a focus on domestic consumer spending, growth in the China economy could slow dramatically. [Read more →]

US based networking giant Cisco Systems will invest in China $44.5 million to buy DVN according to AFP.

The key driver for the Chinese investment in the Hong Kong based leader in digital receiver boxes is a Chinese government mandate to require full digitization by 2015.

The Chinese economy currently offers a cable market worth 160 million subscribers estimated to grow to 200 million in the next three to five years. [Read more →]

China Federation of Logistics and Purchasing announced that the official China Purchasing Managers Index (PMI), covering manufacturing activity in the Chinese economy, rose to 55.2 in October according to Dow Jones.

The increase marks a gain from a reading of 54.3 in September and accounts for the eight consecutive month showing a reading above 50, which indicates that the manufacturing sector in the Chinese economy is expanding.

Another PMI reading, the HSBC China PMI, also rose to 55.4 in October from last months 55.0. [Read more →]

The China government has agreed to relax restrictions on US produced wind power parts and to allow pork imports according to The Financial Times.

The move by the China government to alter its China trade policy with the US comes three weeks prior to a planned visit by US President Barack Obama. [Read more →]

The China government has announced it will open a China trade investigation that could result in higher China imports duties on automobiles according to Reuters.

The China trade investigation will focus on possible dumping and countervailing duties by the big three US automakers Ford, GM and Chrysler, which import about 9,000 cars to China a year.

US and China trade relations have been strained lately as the global recession continues to take its toll on developed economies and raise protectionists from domestic pressures. [Read more →]

Gross domestic product (GDP) in the Chinese economy rose 8.9 percent in Q3 according to Chinese government’s statistics bureau and 123jump.com.

While the positive Chinese economic news is in line with the targets set by the Chinese government, the concern over higher inflation is starting to mount as Chinese government stimulus continues to grease China economic growth. [Read more →]

General Motors (GM) sales from its China investment are expected to exceed 1.6 million units in 2009 according to Dow Jones Newswire.

The increase in sales is approximately up by 47 percent from last year and has shown the GM investment in China is far exceeding that of it top competitor Toyota.

GM came out of US bankruptcy protection in July. [Read more →]

Automobile sales in the Chinese economy rose 78 percent for a total of 1.3 million units in September according to AP.

The jump in sales continues as Chinese government spending and tax cuts help drive continued auto sales growth in the Chinese economy.

China is on track to out pace the US in auto sales this year and is expected to overtake the US as the largest car market. [Read more →]

US Based Dunkin’ Donuts has open its first two store in China as part of a future China investment and expansion strategy according to AP.

The private donut firm plans to further invest in China by opening as many as 480 store over the next 10 years with as many as 150 store just in the Guangdong Province.

The amount of the Chinese investment was not disclosed. [Read more →]

The International Monetary Fund (IMF) has raised its growth forecast for the China economy to 9 percent according to Bloomberg.

The growth estimate by the International Monetary Fund (IMF) is up from its original 2010 estimate for the Chinese economy of 8.5 percent.

The key driver of the change in the IMF’s China economic growth forecast is domestic spending as the China government tries to offset declines in global demand for China exports. [Read more →]

The Chinese economy’s Purchasing Managers Index (PMI) hit 54.3 in September according to the China Federation of Logistics and Purchasing and Dow Jones.

PMI, the gauge of manufacturing activity in the Chinese economy, rose from 54.0 in August.

Despite the positive China economic news, only six of the eleven categories that compose the index actually rose while the other five declined. [Read more →]

The US Commerce Department has announced it will impose a 31 percent duty on Chinese imports of steel according to Bloomberg.

The key driver for the decision by the US is claims by the American steel industry that the China government is subsidising the industry in China.

While the move by the US may be justified, the China trade news is another sign of a protectionist trend by US and the Chinese government has already filed a complaint with the World Trade Organization (WTO). [Read more →]

US based Ecolab Inc, the cleaning and pest-control services firm, has announced it will invest in China $30 million according to AP.

Although Ecolab has been conducting business in the China market for the last twenty years, the Chinese investment will expand its operations by creating a holding company headquartered in Shanghai.

As business expands, Ecolab has indicated it will make further China investments. [Read more →]

China’s Purchasing Managers Index (PMI) hit 54 in August signalling continued strength in the China economy according to AP.

The positive China economic news continuous to help boost the China economy despite a few gap down days in the Shanghai index which sent fear of a continued global recession into the global markets.

August is the fifth consecutive month that the China economy saw the China’s Purchasing Managers Index (PMI) stay above a reading of 50 which signals expansion. [Read more →]

US automaker General Motors has announced a new China investment of $293 million to produce light trucks and vans to sell into the the Chinese market according to AP.

The Chinese investment is part of a joint venture between state-owned automaker FAW Group Corp and General Motors China and is expected to produce as many as 100,000 units by the end of 2010.

The joint venture Chinese investment will leverage two existing production facilities located in the northeastern city of Harbin and in a city in the southwestern province of Yunnan. [Read more →]

Premier Wen Jiabao set clear expectations about the impact of the Chinese government policies on the China economy in a visit to Zhejiang according to Wall Street Journal.

He stated that while short term policies will help prop the Chinese economy, he cautioned that its the China governments long term policies that will have the most impact in overcoming the drag on the economy from the global recession.

Even though statements by the premier suggest the China government will continue to back the Chinese economic stimulus package, it still caused mixed signals by investors as the Shanghai index sold off and then rebounded the following day. [Read more →]

The China government has decreased its China investment in US debt by more than 3 percent in June according to BBC.

The reduction in China investment of US debt is the largest decrease in nine years and is likely driven by concerns over the decline in the value of the US dollar.

Nonetheless, China investment in US debt increased by 52 percent over 12 months in 2008. [Read more →]

China foreign direct investment (FDI) declined by as much as 35.7 percent in July according to Bloomberg.

Key drivers of the decline in China foreign direct investment (FDI) include a slowing of expansion plans by global firms because of the global recession and concerns over the recent detention of four Rio Tinto Group employees on charges of bribery and trade secrets infringement.

Despite the negative China investment news, China still remains one of the most attractive foreign direct investment (FDI) destinations. [Read more →]

The Chinese government made arrest of four Rio Tinto employees for bribery and trade secrets infringement according to the New York Times.

While the arrest may or may not be warranted, the move by the China government is a cause for concern among foreign corporations and China investors.

Rio Tinto is a British-Australian mining giant. [Read more →]