Business

China generated about 1.64 trillion kwh electricity in the first half of this year, according to the Country’s economic planner on Sunday.

The figure represented a decline of 1.7 percent over the same period last year, compared with a growth rate of 12.9 percent in the same period last year, said the National Development and Reform Commission (NDRC) in a report on its website.

As a result of economic growth slowdown, power consumption of the whole society down 2.24 percent in the first half over the same period last year. Industry power consumption alone dropped 5.9 percent year on year.

The NDRC figures also showed, China’s power industry saw profits stand at 19.1 billion yuan (US$2.80 billion) in the first five months, up 12.5 percent over the same period last year.

(Xinhua News Agency July 27, 2009)

BMW has followed Audi and Mercedes to become the “official car” in China. BMW cars are on the government’s purchase list for 2009-2010.

But unlike the quiet entry made by Audis and Mercedeses, BMWs have kicked up a minor storm, especially on the Internet.

Chinese-language search engine Baidu.com on Friday got about 150,000 entries on the “BMW procurement”, with many of them opposing their use by the government.

Photo taken on May 19, 2009 shows a BMW police van displayed at the China (Beijing) International Exhibition on Police Equipment and Anti-Terrorism Technology. BMW cars are on the Chinese government’s purchase list for 2009-2010.[Asianewsphoto]

“All government officials should drive Chinese brand cars,” said a netizen on Sina.com, one of China’s largest news portals. The anonymous netizen (as most Chinese netizens are) from Hefei, Anhui province, said: “Given the global financial crisis, China should encourage the use of non-luxurious domestic auto brands.”

More than 600 messages followed the entry within 10 hours, and most of them were angry with the government for using BMW cars.

“Why not ride the made-in-China Red Flag car that Chairman Mao used to use? That’s a high-end sedan, too,” said a netizen from Beijing. “Chinese should be proud of their home brands such as Red Flag.”

Why is BMW evoking such a strong reaction? Hui Yumei, auto market researcher with Sinotrust Co, said Chinese consumers see the three German cars differently. Audi has a solemn image and has long been a popular official car brand, while Mercedes has always been considered a classic car.

“But BMW,” she said, “is a brand that Chinese often associate with the nouveau riche. It does not fit into the simple and prudent style the government is supposed to follow.”

“Personally though, I am not against using BMWs as official cars,” she said.

Cheng Yuan, senior auto analyst with Chinese-language newspaper Economic Daily, agreed with Hui. “The decision can help the development of China’s auto industry because BMW models made in this country are on the government purchase list.”

Audis account for the lion’s share of the official cars because they were the first luxury cars to be assembled at home way back in 1988. The government today buys almost 20 percent of all Audi cars sold in the country. In fact, China is the only market where Audi sells more than its German rivals BMW and Mercedes.

According to China National Radio, the government spent 80 billion yuan on buying vehicles last year. “Nobody can ignore such a big cake,” Cheng said.

He agreed with the netizens that the “government should encourage the use of homemade vehicles”. But he said there are no domestic brands that could compete with foreign ones in the premium car segment.

The segment of cars with 2.0- to 3.0-liter engines and priced below 450,000 yuan isdominated by the joint ventures such as Volkswagen, Daimler Benz and BMW.

(China Daily June 13, 2009)

China’s coal production continued to ease in the first half of this year on flat domestic demand amid the economic slowdown.

The crude coal output increased 8.7 percent year on year to 1.36 billion tonnes in the first six months, but 6.1 percentage points lower than the same period a year ago, data released by the National Development and Reform Commission (NDRC) has shown.

The industry reaped a revenue of 67.8 billion yuan through Jan-May, up 4.2 percent year on year, but the growth rate was almost half of the figure for the first two months.

The coal inventory at the northern China’s Qinghuangdao port, a major Chinese port, was 6.47 million tonnes at the end of June, up 730,000 tonnes from the beginning of the year.

The thermal coal reserve remained at normal level, with 33.08 million tonnes in storage, up 11.34 million tonnes year on year, according to the NDRC data.

But there are also signs that the demand is gradually recovering as customs figure has shown China’s net coal import was 36.60 million tonnes in the first half, which is in contrast with a net export of 3.94 million tonnes a year earlier.

(Xinhua News Agency July 26, 2009)

Beijing Automotive Industry Holdings Thursday didn’t deny media reports that it is keen to buy Ford Motor Co’s Volvo Cars unit.

But its spokesman didn’t give further details.

The Wall Street Journal and Bloomberg News yesterday reported a team of executives from the Chinese auto firm is likely to visit Volvo’s headquarters in Sweden to meet with its executives and tour its research and development and manufacturing facilities.

Rumors also have been circulating that Geely Holding Group Co, one of China’s biggest private auto makers, was also keen to bid for Volvo. Industry sources have confirmed with Shanghai Daily that Geely has already made a similar tour but has yet to decide whether to make a formal offer. Geely’s officials were not available for comment yesterday.

But industry experts expressed caution over the expansion plans.

“China does not need big companies for now, but should focus on competitive enterprises,” said John Zeng, a senior analyst at Global Insight. “Merger and acquisition decisions should be based on the corporation’s market strategy, otherwise the acquired assets could be a burden to the firm.”

He obviously had in mind plans by Sichuan Tengzhong Heavy Industrial Machinery Co, to acquire General Motor Corp’s Hummer brand that has aroused wide attention and stirred criticism over blind expansion.

“The key question to ask is if an overseas investment can fit into the original business rather than if the price is affordable,” said Zhang Xin, an analyst at Guotai Jun’an Securities Co.

The National Development and Reform Commission, China’s top economic planner, has also pointed out to Chinese companies that it takes more than just money to make an overseas acquisition successful.

“There are great challenges to confront to keep a business afloat and enhancing it after the purchase,” Chen Bin, head of the commission’s industrial coordination department.

Beijing Auto, a Chinese partner of Hyundai Motor, was also reported to be keen to buy GM’s Opel unit.

(Shanghai Daily June 12, 2009)

China National Offshore Oil Corp (CNOOC), the country’s third largest oil company, has won oil product wholesale licenses, as the government opens the sector to greater competition.

With the licenses, the Beijing-based CNOOC will be able to sell products to other oil companies. The company is China’s leading offshore oil and gas producer but a newcomer to the refining and fuel sales sectors.

Analysts said the new refined oil wholesale licenses would facilitate CNOOC to sell products from its Huizhou refinery in southern Guangdong province and from smaller refineries it had acquired previously.

But as CNOOC now still plays a small role in domestic refined oil market, the move will not have any big impact on China’s two oil majors, PetroChina and Sinopec, they said.

According to the Ministry of Commerce, now among the companies that have oil product wholesale licenses, around three fourths are owned by PetroChina and Sinopec.

CNOOC earlier started its Huizhou refinery in Guangdong province. The project, which can process 12 million tons of crude oil annually, was CNOOC’s first refinery in China.

The company has also charted plans to further expand its new Huizhou oil refinery. It has signed a frame contract with the local government, under which it is expected to boost the capacity of the refinery to 22 million tons per year from the present 12 million during the 12th Five-Year Plan period (2011-15).

The Huizhou project is in the Pearl River Delta, one of China’s economic powerhouses. CNOOC has been focusing on the region to develop its downstream business, sources with the company told China Daily on Friday.

Fu Chengyu, president of CNOOC, had said earlier that the company would invest more than 300 billion yuan ($43.91 billion) in the southern Guangdong province over the next five years.

The investment will mainly go towards development of oil and gas fields in the South China Sea, construction of petrochemical projects in Huizhou, and the building of a natural gas pipeline in the region, said Fu.

Guangdong is a key base for CNOOC’s future development, said Fu. The company has invested over 120 billion yuan in the province, and in 2008 alone, it invested 33 billion yuan in the region.

A regulation, issued in December 2006, allows qualified domestic and foreign companies to sell crude and fuel in the world’s second-biggest energy-consuming nation. The move is part of China’s efforts to open up its market to meet obligations under the World Trade Organization, which the country joined in December 2001.

(China Daily July 25, 2009)

The combined volume of Chinese imported vehicles stood at 4.38 billion U.S. dollars from January to May, a decrease of 30.3 percent from a year earlier, the General Administration of Customs (GAC) said Thursday.

China imported a total number of 116,000 units of vehicles in the first five months this year, down 31.9 percent year on year.

For May alone, China imported less than 24,000 vehicles, about 2,000 units less from April.

The GAC attributed the trend partly to the purchase tax cut policy for Chinese consumers who buy small-capacity cars and the global economic slowdown.

China in January halved the purchase tax on passenger cars to 5 percent for models with engine displacements of less than 1.6 liters.

GAC figures showed that more than 60 percent of Chinese imported vehicles belonged to those with engine displacements of more than 2.5 liters.

China’s exports and imports shrank for the seventh month in a row in May as economic downturn continued to dampen global trade. Exports fell 26.4 percent in May from a year earlier to 88.758 billion U.S. dollars. Imports were down 25.2 percent to 75.37 billion U.S. dollars.

(Xinhua News Agency June 11, 2009)

China’s daily power generation in the second 10-day period rose 8.5 percent year on year, an big increase over the first ten days of the month, according to the latest figures from the power dispatch center of State Grid Corporation of China on Thursday.

The growth rate was three percent from a year ago in the first 10 days of July.

Wang Wei, analyst at the Guotai Junan Securities, attribute the big growth mainly to high temperature in the southern region and areas along the Yangtze River.

For example, Shanghai saw a rebound of power generation of 2.1 percent from a year earlier in mid-July from the 19.1 percent decline in the first ten days. Power generation in Zhejiang Province climbed 9.8 percent in the the day period from the 8.3 percent drop in the first ten days.

Analysts said growth of power generation would gradually become stable and continue to rise till the end of this year, boosted by the ongoing recovery of industrial production.

Power consumption and generation resumed growth in June, putting an end to eight consecutive months of decline since last October.

(Xinhua News Agency July 24, 2009)

A spokeswoman for Chrysler’s China unit said its China business is operating normally and will be merged into the new Chrysler Group LLC, based on the agreement with Fiat. Chrysler LLC said it was not consider changing its development plan for China until the ink had dried on the Fiat deal.

Chrysler sells sport-utility vehicles, multi-purpose vehicles and passenger cars under its Jeep, Dodge and Chrysler brands in China. The auto maker’s short-term plan in China focuses on imports, especially imports under the Jeep brand.

John Kett, vice president of Chrysler LLC and chief executive officer of Chrysler Asia Pacific said earlier the company’s capability to move forward in China has been hampered by the ongoing Fiat deal.

(Shanghai Daily June 11, 2009)

China’s quality watchdog said here Wednesday it has found certain models of vehicles made by French automaker Renault S.A. to have severe safety problems and decided to stop importing them.

The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) banned the Laguna Ph2, Scenic/Long Scenic, Megane Ph2 and Megane Ph2 Coupe-Cabriolet.

The AQSIQ said in a statement on its website the cars were not up to China’s mandatory standard requirements.

In March last year, Renault was warned by the AQSIQ for not reporting problems concerning its Megane models to the Chinese government when it recalled the model in Europe for transmission issues.

(Xinhua News Agency June 10, 2009)

China’s two oil majors will see robust growth in earnings this year, chiefly due to the new oil pricing system and more stable crude prices, analysts said.

When their interim reports for the half-year are released, PetroChina and Sinopec are expected to perform better, especially in their refining businesses, than during the same period last year, they said.

International crude oil prices will have the biggest impact on the two companies’ business performance, but other factors, such as domestic refined oil prices and windfall taxes will also play a role, said Liu Gu, analyst, Guotai Jun’an Securities.

China’s stimulus package for the petrochemical industry will also give the two companies a boost, Liu added.

According to Gordon Kwan with Mirae Assets, PetroChina is expected to see profits of 8 billion yuan in the first half. The company earlier said its refining business made record high profits in the period since it was listed, without providing details.

As for Sinopec, the country’s largest refiner, it would see over 100-percent growth in profit this year, said Liu.

According to the National Development and Reform Commission, China’s refineries made a combined profit of 45.4 billion yuan in the first five months, compared with a loss of 57.2 billion yuan in the same period last year.

(China Daily July 24, 2009)