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Growth of China exports to US slows

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The growth of China exports to the United States, the country's second-largest trading partner, slowed in the first half of the year, the General Administration of Customs said on its website Thursday.


China's exports to the US in the first six months totaled $116.79 billion, up 8.9 percent from the same period last year. The growth rate was 9 percentage points lower than a year earlier.


China Customs said the slowdown was partly due to economic problems sparked by the US subprime mortgage crisis. A stronger Chinese currency, the renminbi, also contributed to the declining export volume.


The central parity rate of the renminbi was 6.86 yuan to one dollar Thursday. The renminbi had appreciated more than 20 percent against the greenback since its peg to the US dollar was removed in July 2005.


The appreciation raised the cost of the country's goods on the international market and impacted on Chinese products' competitiveness, China Customs said.


China's processing trade industry saw its US exports stand at $70.68 billion in the first half, up 5.7 percent over the same period last year. The growth rate was 3.2 percentage points lower year-on-year.


Exports of mechanical and electrical products, two of the country's major exports to the United States, hit $71.9 billion, up 8.6 percent over the same period last year. The growth rate declined 8.4 percentage points year-on-year.


China's export volume stood at $666.25 billion in the first half of this year, representing an increase of 21.8 percent over the same period last year.


According to government statistics, China has become a major export partner of the US, exceeding Japan and Canada to rank the third in export volume last year. Meanwhile, the US is China's largest export partner. In 2007, the total trade volume between China and the United States reached $300 billion.


The Chinese government is paying great attention to the expanding US subprime mortgage crisis and the falling dollar.


The Report on the Work of the Government, delivered to National People's Congress on March 5, said China must be fully prepared for changes in the international environment and become better able to tackle risks.

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Guest Mo Hong

Chinese Minister of Housing and Urban-Rural Development Jiang Weixin said on Thursday that the ministry would put boosting domestic demands on top of its agenda and ramp up efforts on urban infrastructure and public utilities construction.


"Local housing and urban-rural development agencies should also step up efforts on the construction projects for the low-rent and affordable apartments," Jiang said at an internal tele-conference held in Beijing.


China plans to invest 900 billion yuan (131.8 billion U.S. dollars) for housing construction in the coming three years, which would benefit 7.47 million low-income households.


Jiang also urged local industry watchdogs to continue pushing forward the energy-saving work in the construction sector.


The ministry called on more efforts to better regulate the real estate market and to encourage and support reasonable housing consumption.


In a similar development, the Ministry of Agriculture said on Thursday the country would add 5.15 billion yuan to improve agricultural infrastructure projects and farmers' living standards, part of the country's 4 trillion yuan economy stimulus package unveiled on Sunday by the State Council, or Cabinet.

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The State Grid Corporation of China (SGCC), the country's biggest power supplier, plans to more than double its investment for the next two years to a total of 1.16 trillion yuan (169.9 billion U.S. dollars) for grid construction nationwide.


"We decided to add about 500 billion yuan investment to the original 550 billion yuan scheduled for 2009 and 2010 in a bid to help stimulate domestic demand," said a statement on the corporation's website.


The planned investment is yet to be approved by the State Council, or China's Cabinet.


SGCC general manager assistant Lu Jian said the company had already arranged 12 billion yuan in the fourth quarter for the development of urban and rural power supply in the country's central and western regions.


"We got 2.73 billion yuan from the central government. The rest was from bank loans and company funds," he said.


The State Council announced on Thursday a 100-billion-yuan package to accelerate national economic development in the fourth quarter. SGCC was granted 68.2 percent of the 4 billion yuan that went to support grid building.


Experts said power construction could directly benefit industries such as metallurgy, building materials, electricity and machinery manufacturing, as it would promote investment, consumption and trade.


Industry statistics show that the construction of every 100 kilometers of power lines of a 500-kilovolt grid project consumed 5,000 tons of steel, 2,000 tons of aluminum and 7,000 cubic meters of cement.


In 1998, the government invested more than 300 billion yuan in grid building projects to stimulate the domestic economy and fend off the financial crisis in the southeast Asia, according to the SGCC announcement.

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Guest Just Watch

They are going down...


GUANGZHOU -- In a sign of the slowing global economy, more than 1,300 companies shut down, suspended business or moved their factories out of the Pearl River Delta in the first nine months of this year, a senior government official has said.


"About 627 firms in Dongguan and more than 700 in Shenzhen closed, suspended or moved their factories from January to September," Wu Jun, deputy director-general of the department of foreign trade and economic cooperation of Guangdong province, told China Daily over the weekend.


The number of affected businesses in the province is probably "much larger" since many other cities have not reported their figures, Wu said.


The financial crisis that has been afflicting the world has also seriously affected the economic development of Guangdong, whose economy relies significantly on import and export, he said.


The negative impact of the slowing global economy emerged as early as the beginning of last year, he said.


In the delta region, about 30 percent of overseas-invested firms, including ones from Hong Kong, Macao and Taiwan, are losing money, Wu said. About half of them can barely balance their income and expenses, with only 20 percent seeing slight profit.


This compared with as many as 90 percent of the firms making considerable profit during good times, he said.


The increase margin of export volume of the first nine months already dropped by 13 percent from the same period last year, he said.


The reduction of export volume directly caused foreign investors to lose confidence and desire to invest in Guangdong.


Similarly, from January to September, contractual foreign investment in the province fell by 12 percent from the same period of the previous year.


Wu said he expects the negative economic impact will last till the end of next year.


Provincial and municipal authorities are rolling out a slew of measures to help affected companies with the crunch.


In Dongguan, which has more than 15,000 overseas-invested companies, local authorities have allocated 4 billion yuan ($588 million) to help firms cope with the financial fallout.


"The authorities not only provide support to the affected firms, but also give them money to persuade them to stay in the city," Wu said.


Measures are also being taken to help workers affected by the economic woes.


Smart Union Group (Holdings) Ltd, a leading toy manufacturer in Hong Kong, had to close down its two factories in Dongguan last month, causing thousands of workers to lose their jobs and be owed months of salary.


The local government had to spend 24 million yuan to cover the defaulted wages of the company, Wu said.


Michael Wu, chairman of the Association of Enterprises with Taiwan of Guangzhou, said part of the firms' difficulties come from the overly tight policies, such as those under the labor law and taxation.


Wu Jun said: "I appeal to the central government to implement some looser and more favorable policies to help the overseas-invested SMEs survive in the recession."

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Guest T. Petroski

China has 2-trillion dollars in foreign reserves and "they're about to start spending it in a big way" in a $585 billion-dollar stimulus package concentrating on "infrastructure.&... This is not supposed to be good for foreigners, because the Chinese are going to attempt to push their consumers along to spend this money domestically because those foreigners aren't buying the "cheap stuff" as much as they used to.

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