(China Daily) Baosteel’s plan to buy a minor stake in an Australian iron ore miner, would in no way impact the ongoing iron ore price negotiations, the steelmaker said on Friday.

The company had earlier said it plans to invest $240 million to purchase a 15 percent stake in Aquila Resources, the Western Australian-based iron ore miner, to develop its iron ore, coal and manganese projects.

“Baosteel, as a large-sized State-owned enterprise, is also a steelmaker with independent business operations, and the move will in no way impact the price-setting talks,” Zhang Chi, spokesperson, Baosteel, told China Daily on Friday.

The deal, pending regulatory approvals both in Australia and China, will help Baosteel become the second largest shareholder in Aquila.

Baosteel will also have a preferential opportunity to directly invest in and co-develop most of Aquila’s projects, according to an Aquila statement on Thursday. It also said that Dai Zhihao, vice-president, Baosteel, has been nominated to the Aquila Board.

In a statement filed on Friday, Shanghai-based Baosteel said the purchase has been made through standard operation in the international capital market, adding that the management has immense faith in the growth potential of Aquila assets. It said the stake buy was an “important and solid step forward” in its internalization drive. Read the rest of this entry »

(CNBC) The Baltic Dry Index, not exactly a phrase that rolls off an investor’s tongue, is signaling plenty of caution these days about the global economy.

As a gauge of shipping activity along 20 of the world’s busiest routes, the BDI is a leading economic indicator used by market insiders to gauge demand for goods.

But while it remains a somewhat arcane measure, the recent sharp drop in the index has drawn increased attention, despite the dramatic rise in US equity markets and the accompanying hopes for economic recovery.

“It’s not the leading barometer that’s going to make you move all your money. But with a host of other indicators, it’s important, particularly when it comes to China,” says Quincy Krosby, general market analyst with Prudential Financial. “That’s where the linkage fits in.”

It’s been a rough summer for the index, which is not a measure of activity in the Baltics but rather an instrument that traces its name to 1744 and the Virginia and Baltick coffeehouse in London’s financial district. The index is weighted toward activity in the Pacific. Read the rest of this entry »

(Australian) CHINA’S cabinet will once again try to impose control on the nation’s chaotic steel sector — one of a fresh list of industries ready for extra “guidance” from the state.

The country’s state council, led by Premier Wen Jiabao, has admitted that overcapacity — much of it triggered by the government’s 4 trillion yuan-plus stimulus package — has emerged across the nation in the steel and cement industries.

The council also believes there is too much speculation in wind power and polysilicon.

“Overcapacity and redundant projects remain prominent because of slow progress in industrial restructuring in some of these sectors,” the council said in a statement after its bi-monthly meeting, according to state run news agency Xinhua. Read the rest of this entry »

(WSJ) The Baltic Dry Index, already down 26% this month, is likely to fall further during the rest of the quarter as China continues to cut back on commodity purchases.

The BDI, a barometer of shipping costs for commodities such as iron ore, coal and grain, may rise in the fourth quarter as other major world economies are expected to increase imports. However, a record number of ships scheduled to come on line this year and in 2010 will keep freight rates under pressure even as the global economy recovers, analysts say.

The BDI is often seen as a key leading indicator for global economic growth and production, and the August decline has been the sharpest since October’s 72% skid, when freight rates were heading below break-even levels and the shipping industry was gripped with uncertainty.

Read the rest of this entry »

(Business Week) In the casinos of Macao, the only city in China with legalized gambling, the most popular games have long been baccarat, blackjack, and roulette. Matt Savage wants to get Chinese betters focusing on straight flushes and full houses instead. Savage is director of the Asian Poker Tour, which recently completed a 12-day poker tournament for local and Western players at Macao’s StarWorld Hotel & Casino. He says poker is growing rapidly in the former Portuguese colony—albeit with a different atmosphere. “You see a lot more people jumping up and getting very excited, which you don’t see in the U.S. all the time,” says Savage. “It has become more exciting for the players to play here.”

Think of gambling, and Las Vegas comes first to mind. But recession has hurt America’s longtime casino hub: Revenues on the Strip dropped 15% in the first half of the year, following a record-setting 11% drop in 2008. Macao is hurting, too: For the first half of 2009, gaming revenues dropped 12%, to $6.5 billion. But big-name gaming companies like Las Vegas Sands (LVS) and Wynn (WYNN) are counting on Macao for growth. In 2008, the city’s casinos reported revenue of $16 billion, compared with $12 billion for Vegas and $5 billion for Atlantic City. Read the rest of this entry »

(Economist) THE surge in China’s bank lending this year partly explains why its economy has recovered much faster than other big economies. If, as many investors fear, the government has already turned off the credit tap, that could hurt economic growth. A closer look at the figures, however, suggests otherwise.

New bank lending did indeed slow sharply in July, to 356 billion yuan ($52 billion) from 1.53 trillion yuan in June. “China’s bank lending fell by 77%,” screamed the headlines. But bank lending always slows in the second half of the year; the 12-month pace of growth is therefore a better measure. On a year-on-year basis bank lending grew by an impressive 34% in July, roughly the same pace as in June. Moreover, the drop in new loans in July largely reflected a fall in short-term bills; medium and long-term loans to firms and households continued to grow briskly. And a large chunk of lending to firms earlier in the year has been parked in deposit accounts. Thus, despite falling profits, corporate deposits have soared by 35% over the past 12 months (see chart). This leaves firms with plenty of money to finance investment, and so sustain the recovery, even if the government tightens up. Read the rest of this entry »

(Peoples Daily) Zhu Hongren, chief engineer at the Ministry of Industry and Information Technology (MIIT) warned on August 26 that under the impact of the international financial crisis, the issue of severe overcapacity has become more serious in some of China’s industries.

Repetitive construction in solar, wind energy and other emerging industries and overcapacity in steel, chemical and other traditional industries have become increasingly serious.

“Industries representing new economy, especially those representing environmental protection and energy-saving, seem to be very aggressive. At present however, these emerging industries are rushing into mass action without orderly development, which may lead to a new round of overcapacity,” Zhu warns. Read the rest of this entry »

(Guardian) It seems likely now that China will reach its annual economic growth target of 8%, dwarfing most of the other countries in the world. In the second quarter of 2009, its GDP growth spiked to 7.9%, from 6.1% in the first quarter. If all goes well, the Middle Kingdom will see its economic growth rise to an even higher rate in the remaining two quarters, making it one of the few countries still enjoying a nascent economic growth in spite of the severe impacts of the global financial crisis.

However, looking only at the handsome official figures and rushing to the simple conclusion that China’s stimulus economic package has worked successfully would be wrong. In China, official figures don’t always tell the true story. Furthermore, the economic growth curve might develop into a “W” shape, rather than the more exciting “V” shape. This means China’s economy still faces the danger of nose-diving when the stimulus effects fade away. Read the rest of this entry »

(CEN) Job seekers in China will face an uphill battle in the coming months and as many as 12 million may not find work this year even if the country hits its 8 percent growth target, the nation’s top employment official said on Friday.

Yin Weimin, minister of human resources and social security, said China will be able to provide openings for about half of its 24 million job hunters, if it meets the growth target for 2009.

“The shortfall between supply and demand (in employment) will become larger than last year due to the failure to create enough job opportunities,” he said in a report carried in People’s Daily.

The country is trying to meet the “very tough” challenge of finding enough jobs for workers at a time when the global financial crisis is biting deep into the Chinese economy and the employment rate within export-oriented enterprises is falling sharply, he said.

Yin noted that China had hoped the service industry would play a larger role in creating employment, but that has not happened.

According to ministry statistics, 6.6 million people in urban areas found jobs between January and July, some 74 percent of the target of 9 million jobs during the period. Read the rest of this entry »

(Reuters) CHINA has authorised 16 airlines to operate regular direct flights to Taiwan, a sign that the Dalai Lama’s upcoming visit to the island is unlikely to spoil warming ties.

Direct flights between mainland China and self-ruled Taiwan, which Beijing regards as a breakaway province, have become increasingly frequent since the first one in 2005.

But they were still technically considered charter flights.

The Civil Aviation Administration of China on Friday said that starting on Monday, 270 direct flights will take place along 32 regular flight routes. Read the rest of this entry »

(FT) China’s exports narrowly edged ahead of those from Germany in the first six months of the year, new figures showed on Monday, in a fresh sign that the latter’s status as the world’s leading exporter is at risk.

China exported goods worth $521.7bn (€364.9bn, £318.1bn) in the first six months of this year, while Germany’s total was $521.6bn, the Geneva-based World Trade Organisation reported.

Such export figures are closely followed in Germany, Europe’s largest economy, which has national elections next month.

Sales of its industrial products have largely powered the economic growth in recent years, and throughout the economic crisis the government of Angela Merkel, chancellor, has strongly defended the country’s export-driven economic model.

Germany has long been braced for the much faster-growing Chinese economy to assume its “world export champion” title. Read the rest of this entry »

(China Daily) The Chinese economy will grow by more than 8 percent in 2010, despite lingering uncertainties in the global market, a leading Chinese economist predicted.

Fan Gang, director of the China National Economic Research Institute and a member of the money policy committee of the People’s Bank of China, is confident that the country can meet its GDP growth target of 8 percent this year and will keep the momentum of the economic recovery next year.

He attributed the strong economic growth to the government stimulus package, rising investment in property and industrial sectors as well as a growing trade surplus.

China’s 4-trillion-yuan ($585 billion) stimulus package, mainly on domestic investment and consumption, is shoring up the economy, with manufacturing showing more signs of recovery, according to the State Council, or Chinese cabinet . Read the rest of this entry »