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BEIJING, Feb. 22 -- The Chinese central government plans to implement a new policy in the first half of this year to encourage auto industry consolidation and further the development of Chinese-brand passenger vehicles, an official from the Ministry of Industry and Information Technology said at a recent news conference.According to sources with knowledge of the new policy, it intends that Chinese-brand passenger vehicles will comprise at least half of vehicle sales by 2015 and sedans made by entirely domestic automakers will have about 40 percent of the nation's car market.Statistics from the China Association of Automobile Manufacturers (CAAM) show that 4.58 million Chinese-brand passenger vehicles were sold last year, some 44.3 percent of the total. Through an acquisition deal with Aviation Industry Corp last year, Chang'an Auto closed the biggest asset deal between State-owned auto enterprisesSales of domestic sedans hit 2.22 million units, almost 30 percent of the segment.The new policy will also focus on accelerating consolidation between automakers and could lead to a new round of reshuffling, industry insiders said.China became the world's largest auto producer and market last year with both production and sales surpassing 13.5 million vehicles due in part to government incentives.There are now more than 130 carmakers across the country, but most of them are small enterprises with annual production and sales of fewer than 10,000 units.Only five had sales of more than 1 million units last year as the country's top 10 carmakers moved a total of 11.89 million vehicles to account for 87 percent of overall sales, according to market data.Consolidation movesLast year, Chang'an Motor Corp acquired two minivan makers - Hafei and Changhe - as well as engine producer Dong'an Auto from the Aviation Industry Corp of China (AVIC), marking the biggest asset deal ever between State-owned auto companies.Chang'an is the fourth-largest motor group in China and the local partner of US carmaker Ford Motor and Japan's Mazda and Suzuki. After the acquisition, Chang'an's 2009 sales were only 30,000 units behind Dongfeng, the country's third-largest motor group.Guangzhou Automobile Group Corp, the country's sixth-biggest automaker, bought a 29 percent stake of Shanghai-listed SUV maker Changfeng Motor Co Ltd for 1 billion yuan in May last year.Beijing Automobile Industry Holding Corp, China's fifth-largest carmaker, reportedly finalized a deal last month to buy a 40 percent stake in Daimler AG's van joint venture with Fujian Motor Industry Corp.By 2012 policymakers hope consolidation will result in two to three large-scale auto groups, each with annual production capacity surpassing 2 million units, and four to five companies with annual output of more than 1 million vehicles, according to the national auto industry revitalization plan released in March last year.The current top-four Chinese motor groups are SAIC Motor Corp, FAW Group, Dongfeng Motor and Chang'an Motor. Carmakers including Beijing Automobile, Guangzhou Automobile, Chery, Geely and Sinotruk form the second tier in the country's auto industry.Going globalLi Yizhong, minister of Industry and Information Technology, said recently that in addition to fueling industry consolidation, the government will also implement measures to encourage domestic automakers in reaching overseas this year through investment, acquisition of foreign brands, building research and development facilities and developing sales networks.Industry sources said that the new policy calls for 20 percent of overall sales by major auto groups to be generated overseas in the next few years.In the wake of the financial crisis, China's vehicle exports fell sharply by 45.7 percent to 369,600 units last year, according to statistics from the General Administration of Customs. Industry analysts generally expect a rebound in car shipments this year as the foreign markets begin to recover.Despite the poor export performance, Chinese companies were aggressive in acquiring overseas assets in 2009.Homegrown carmaker Geely's bid for Swedish luxury brand Volvo received a lot of media exposure in 2009. The Zhejiang-based company will reportedly close the deal soon.Beijing Automotive bought some of Swedish carmaker Saab's core assets and technologies for 0 million last year.Li noted that along with encouraging acquisitions and consolidation, the government will restrain overcapacity in the auto industry.Li also said that the ministry will accelerate the development of new energy vehicles, including hybrid, pure electric and fuel battery models.The new policy will reportedly stipulate that Chinese partners hold at least a 50 percent share in newly built Sino-foreign joint ventures that produce core parts for alternative-energy vehicles.
BEIJING, Jan. 13 (Xinhua) -- The decision of the People's Bank of China (PBOC), the central bank, to increase the deposit reserve requirement ratio has drawn worldwide attention and fluctuations in global markets. The PBOC decided on Tuesday to raise the deposit reserve requirement ratio by 0.5 percentage points as of Jan. 18, which analysts translated as a move to manage inflationary expectations and avoid a recurrence of the lending boom. This was the first time that the PBOC adjusted the ratio of deposit that lenders are required to set aside since the end of 2008 and the first increase for the ratio since June 2008. The PBOC cut the bank reserve requirement ratio four times in the second half of 2008 to stimulate growth as the global financial crisis started to weigh on the economy. The adjustment of the reserve requirement ratio, without changing benchmark interest rates, indicated the central bank was targeting inflationary expectations instead of inflation, said Zhao Qingming, a senior researcher at the China Construction Bank. Ma Jun, chief economist with Deutsche Bank (Great China), said that the rise in the reserve requirement ratio has ended the expansionary monetary policy and started a tightening cycle. Global markets took a hit after the Chinese attempt to cool the world's fastest-growing major economy. Chinese equities saw their sharpest dip in seven weeks on Wednesday after the central bank asked lenders to set aside more reserves as record bank lending last year ignited fears of inflation and asset bubbles. The benchmark Shanghai Composite Index went down 3.09 percent, or 101.31points, to close at 3,172.66 points. The Shenzhen Component Index lost 2.73 percent, or 364.69 points, to close at 13,016.56 points. Hong Kong stocks shed 578.04 points, or 2.59 percent, to close at 21,748.60 on Wednesday. The Hong Kong market was also dragged by overnight losses on the United States markets. The benchmark Hang Seng Index opened down 1.42 percent and widened its losses to 2.24 percent by lunch break, and further to 2.59 percent by market close. South Korea's financial markets on Tuesday reacted as the Chinese central bank raised the deposit reserve requirement ratio, with the stock markets and foreign exchange rate plunging from the last close. The benchmark Korea Composite Stock Price Index (KOSPI) and the Korean Securities Dealers Automated Quotations (KOSDAQ) jointly marked a plunge of 27.23 points and 3.65 points, respectively, from the last close. The report from China also affected the foreign exchange market, with the local currency also sliding against the U.S. dollar by 1.9 won. The New Zealand share market also fell on Wednesday after the Chinese move. The share market closed 0.43 percent lower with the benchmark NZSX-50 down 14.1 points at 3,276.2. Canadian stocks fell for the second day, weighed down by a metal and mining sector that was hit by the Chinese central bank's decision to cool economic growth. The S&P/TSX Composite Index declined 126.94 points, or 1.06 percent, to 11,820.18 on Tuesday. Earlier the index shed 173 points to 11, 774, the lowest level this year. U.S. stocks retreated Tuesday, with S&P falling for the first time in 2010, as disappointing Alcoa fourth-quarter results and rising U.S. trade deficit cooled optimism for a strong earnings season and a sustainable economic recovery. Crude tumbled the most in five weeks on concerns that demand from China, the world's second-largest oil consumer, will wane as the government moves to curb lending. Benchmark crude for February delivery fell 1.73 dollars to settle at 80.79 dollars a barrel on the New York Mercantile Exchange. It's the first time this year a barrel has closed below 81 dollars a barrel. Meanwhile, analysts widely hold that the Chinese central bank's decision is to cast only a short-term, instead of mid-term, stroke on the domestic stock market, as the impact would largely be psychological. Zhuang Jian, a senior economist with the Asian Development Bank, said the adjustment did not indicate a shift in the moderately easy monetary policy, but was an effort to control the pace of lending. Through the reserve requirement ratio increase, the central bank intended to call for balanced lending at commercial banks, which would support economic growth while avoiding higher inflationary expectations, Zhuang said.
BEIJING, March 5 (Xinhua) -- President Hu Jintao and other Chinese leaders on Friday joined deputies to the National People's Congress (NPC), China's top legislature, in deliberating the government work report, calling for efforts to facilitate the transformation of the pattern of economic development.The NPC kicked off its annual session Friday morning as about 3,000 deputies from across the country heard and deliberated the government work report delivered by Premier Wen Jiabao.BALANCED, COORDINATED AND SUSTAINABLE DEVELOPMENTWhen joining NPC deputies from the eastern province of Jiangsu in a panel discussion on Premier Wen's report, President Hu called for efforts toward balanced, coordinated and sustainable development in the transformation of its economic growth pattern. Chinese President Hu Jintao (C) talks with deputies to the Third Session of the 11th National People's Congress (NPC) from east China's Jiangsu Province, in Beijing, capital of China, March 5, 2010. Hu Jintao joined in the panel discussion of Jiangsu delegation in deliberating the government work report by Premier Wen Jiabao on the opening day of the Third Session of the 11th NPCHu said efforts should be made to cultivate new pillar industries and industries with features and advantages, and achieve the coordinated development of the first, second and third industries.The country needs to develop more core and key technologies to support its transformation of the economic growth pattern and the economic restructuring, Hu told the lawmakers.He called for the establishment of a market-oriented technological innovation system, in which enterprises play the leading role and which combines the efforts of enterprises, learning and research institutes.He said higher education and research institutes should play a more important role in scientific and technological innovation.The President also stressed the coordination of industrialization, urbanization, and agricultural modernization, so that the agricultural sector could be boosted by the industrial sector, while the rural areas could benefit from the urban areas.He said authorities should facilitate balanced allocation of public resources and the free flow of production factors between urban and rural areas.Hu pointed out that China is currently facing both opportunities and challenges at the same time, but the opportunities outweigh challenges.He urged officials in Jiangsu Province to push forward independent innovation, promote urban-rural integration of economic and social development, and deepen the reform and opening-up drive.
SINGAPORE, Feb. 16 (Xinhua) -- Singapore's Senior Minister Goh Chok Tong said on Tuesday that China will become even more important globally and Singapore must find opportunities to ride on China's growth.Speaking at the Business China spring reception on Tuesday night, Goh said that China has over the past year weathered the global economic downturn with exceptional resilience.Despite shrinking external demand and rising unemployment, China's timely and bold policy responses have enabled its economy to grow at a sizzling 8.7 percent last year, he said, adding that China is now reinforcing its role as the engine for growth in Asia, if not the world.Goh said that the city state recognized China's potential early, soon after China began to open up its economy in 1978.Because of the early efforts made by the Singapore government and Singaporeans, China is today the city state's third largest trading partner and top investment destination, Goh said.As for riding on China's growth, Goh said that the Singapore government will help its companies gain an even stronger foothold in China, and continue to catalyze business opportunities in China.The seven provincial-level business councils, as well as other high-level dialogues and platforms, help open opportunities for companies, reinforce the Singapore brand name and increase its mindshare in China, Goh said.