Vice PM Wang Qishan: Distant Neighbors

The most pressing task facing all countries in the world today is to restore global economic growth as soon as possible. Yet it is worrisome to note that the surge of trade protectionism has made the prospects of the already fragile world economy even worse.

China and the European Union, two major economies and stakeholders in the world, should take a responsible attitude and demonstrate their common, clear commitment against trade protectionism at the second China-E.U. high-level economic dialogue.

Trade liberalization is the engine of economic growth. It has served as a strong propeller of economic globalization and benefited people around the world. On the contrary, trade protectionism — featuring the pursuit of benefits for one country at the expense of others — will only lead to retaliation. It serves the interest of no one.

The world economy paid a heavy price for the prevalence of trade protectionism during the Great Depression in the 1930s, which led to the contraction of global trade by two thirds. We should make sure that the same mistake is not repeated.

Europe is the birthplace of free trade theory, and the E.U. is the product of successful free trade practices. The removal of trade barriers promoted formation of a single European market and enhanced development and prosperity in Europe. As a result, the E.U. has grown into the largest economy in the world today.

China is firmly committed to reform and to opening up. Since its accession to the World Trade Organization, China’s market has become much more open and its trade greatly liberalized. The current overall tariff level of China is only 9.8 percent. Its average tariff on industrial products is only 8.9 percent, the lowest among all developing countries. Its tariff on imported agricultural products is only 15.2 percent, which is not only lower than other developing countries but also far below that of many developed countries.

The openness of China’s trade in services has reached a level close to that of an average developed country. China has taken steady steps to improve its market economic system and legal system. In particular, it has made remarkable progress in intellectual-property rights protection, product quality and food safety, environmental protection and labor security. China has also taken concrete actions against trade protectionism — the Chinese government recently sent Chinese enterprises on procurement missions to Europe and the United States.

The economies of China and the E.U. have much to offer each other and our two-way trade holds a huge potential. The E.U. is now China’s largest trading partner and China is the second largest trading partner of the E.U.

China and the E.U. should make full use of the platform presented by the high-level economic dialogue to strengthen communication and cooperation and jointly oppose trade protectionism. This would better enable us to tackle the current crisis and promote economic recovery and growth. It would also reinforce the trend of economic globalization and facilitates a further growth of two-way trade.

The two sides should work actively to put in place the agreement reached at the G-20 summit in London, promote early, comprehensive and balanced outcome in the WTO Doha round negotiations and uphold an open, fair and equitable international trading regime. An early conclusion of the Doha round is of symbolic significance to curbing protectionism.

The two sides should further open markets to each other. China will continue to lower the threshold for market access, improve trade and investment environment and encourage Chinese enterprises to increase procurement and imports from Europe.

We hope the E.U. will relax restrictions on the exports of high-tech products to China, enhance cooperation with China on the development and application of clean energy, new energy and renewable energy and support cooperation among our small and medium-sized enterprises. Meanwhile, our two sides should step up efforts to update the E.E.C.-China Trade and Economic Cooperation Agreement.

The two sides should work in a cooperative spirit and properly resolve trade differences and disputes. Each side needs to take proper care of its own interests. Yet, more importantly, both sides should accommodate the concerns of the other, taking into full account national conditions and their stage of development, and steadily broaden the scope of our common interests.

We should strengthen dialogue and consultation, refrain from taking protectionist measures and avoid politicizing trade issues. China hopes that the E.U. will evaluate the conditions of the Chinese economy in an objective and unprejudiced manner and recognize China’s full market economy status as soon as possible.

Trade liberalization was, is and will continue to be the only way to global economic prosperity. The Chinese side is ready to work with the E.U. and take effective measures to oppose trade protectionism, promote better growth of China-E.U. trade and jointly move the world economy out of the current difficulties at an early date.

Argentina, China reach currency swap agreement

MEDELLIN, Colombia, March 31- Argentina's central bank considers its recent currency swap agreement with China as a contingency measure and the South American country does not need it for now, Argentine central bank president, Martin Redrado, said on Tuesday.

"This is a standby swap. At this moment Argentina does not need it," Redrado said during an investment conference on the sidelines of the Inter-American Development Bank annual meeting.

"It could be used to do operations for monetary and currency operations," he said.

The two governments signed a memorandum of understanding, creating a framework for the 70 billion yuan ($10.2 billion) swap on Sunday. The news was distributed by the official Xinhua news agency on Monday.

Zhou Xiaochuan, Governor of the People's Bank of China said on Monday that but both sides needed to work out final details.

The swap is the sixth that the PBOC has signed with central banks since December in a drive to free up trade-finance channels that have been clogged by the global credit crunch.

"The fact that China represents such a small share of Argentina's total trade (less than 12 percent) suggests limited impact on FX, but is an important political gimmick at this time (convertibility will remain an issue)," RBS wrote in a research note issued on Tuesday.

"Indeed, we have been talking out the view that it is in the government's best interest to maintain a stable exchange rate into the elections as a strong currency has been the pinnacle of the Kirchner's economic plan and is essential for moderating capital flight," RBS said.

This is China's first currency swap line into Latin America. China's bilateral trade with the region has grown from $15 billion in 2001 to roughly $140 billion in 2008, Zhou told delegates to the IADB meeting.

The PBOC has signed six bilateral currency swaps in recent weeks, totaling 650 billion yuan ($95 billion). The other five central banks that have signed agreements with the PBOC since mid-December are South Korea, Malaysia, Indonesia, Hong Kong, and Belarus.

(Reuters)

China To Actively Support IMF, Zhou said

MEDELLIN, Colombia--People's Bank of China Governor Zhou Xiaochuan said Saturday that China is ready to actively join in the international effort to enhance the results of the International Monetary Fund and other multilateral lenders.

In a speech before the Inter-American Development Bank meetings being held in Medellin, Zhou outlined the need to emphasize greater regulatory reform.

He also called for a better balance of savings on a global level and for "greater responsibility for the banking sector."

In the wide-ranging speech, Zhou also said that China is ready to boost economic, trade and other ties between his nation and those in Latin America.

"We see huge potential for economic ties and trade between Latin America and China," he said, noting that China has a free-trade pact with Chile, has concluded negotiations for such a pact with Peru and could have one with Costa Rica.

"The potential for China to make foreign direct investment in the region is huge," he said, adding that some sectors of special interest are in pharmaceuticals, computer software, aeronautics and biological products.

He added that there was also potential in the finance, tourism and transportation sectors.

"We have every reason to believe that with joint efforts we can overcome the current difficulties and bring our cooperation to a new level," he added.

(Dow Jones)

Locke’s China Deals may draw scrutiny

Feb. 26 -- Gary Locke, President Barack Obama’s pick to be commerce secretary, persuaded Chinese President Hu Jintao in 2006 to visit Seattle, where he was feted at the mansion of Microsoft Corp. founder Bill Gates.

Both sides benefited from the trip, arranged by Locke as an attorney specializing in China trade. Before Hu arrived, China agreed to require computer makers to load legal software on new machines, a key to unlocking the $3 billion market to the maker of Windows software. Days later, Redmond, Washington-based Microsoft announced plans to invest $3.7 billion in China.

Earlier, when he was governor of Washington state, Locke, now 59, helped lumber-company Weyerhaeuser Co. and aircraft maker Boeing Co. win business with China. As he seeks the new post, and as secretary should he be confirmed, Locke may find his deals seen in a different light by lawmakers, unions and U.S. factory owners who say trading with China poses more peril than promise.

“Locke understands the benefits of trade up close and personal,” said Christopher Padilla, a former undersecretary of commerce and a managing director of C&M International, a trade and investment consulting firm in Washington. “But the question will be how he reacts to the enormous protectionist pressures he will face.”

Obama named Locke yesterday to head the Cabinet department responsible for adjudicating trade disputes, compiling economic data, overseeing the Census Bureau and providing help to exporters. The president said Locke, a Chinese-American, will be an “influential ambassador” for U.S. businesses in global markets.

U.S.-China Relations

At stake is the commercial relationship between the U.S. and China, the world’s largest and third-largest economies respectively. Many of the biggest U.S. companies see China as a rare export opportunity amid the global recession. U.S. exports to China grew 10 percent last year, and China is now the U.S.’s third-largest export market.

“We need a guy at Commerce who both understands the importance of trade and has the political know-how to get things done,” said Myron Brilliant, the senior vice president of the U.S. Chamber of Commerce, the largest business lobbying group. “Locke knows the importance of international engagement, with China as a key part of it.”

Some manufacturer groups point to China’s record trade surpluses with the U.S. as evidence that the pro-trade policies of Locke and Ron Kirk, Obama’s nominee for U.S. trade representative, need to be realigned.

‘Different World’

“We are in a different world now, and we need a total rethinking of our economic models,” said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents American-based manufacturers. “I hope Locke will be more flexible, but the jury is out.”

Obama pledged on the campaign trail to push China to raise the value of the yuan and said he would consider caps on certain Chinese imports.

Members of Congress, steelmakers and unions say China’s export subsidies and its refusal to float its currency are running up the U.S. trade deficit and putting Americans out of work.

Lawmakers such as Ohio Democratic Representative Tim Ryan are pushing a measure that would allow steeper tariffs on imports to compensate for what they say is China’s undervalued currency.

“We have every intention to push it this year,” Ryan, the bill’s sponsor in the House, said in an interview this month. “Any change in China’s currency means investment in American jobs.”

Steel companies and textile makers may bring new trade complaints against Chinese imports to the commerce secretary’s office.

Born in Seattle

Locke’s grandfather arrived in Olympia, Washington as a houseboy for a family there, according to a biography on the state governor’s Web site. Locke was born in Seattle, attended Yale University and received a law degree from Boston University in 1975. He served in the Washington state House and then as King County executive before being elected nation’s first Chinese-American governor in 1996.

As governor, Locke promoted Boeing airplane sales to China. He served his state well through his “global knowledge, balanced approach to business issues” and a “focus and energy on solving problems,” Boeing said in a statement yesterday.

China is the second-largest market for commercial jet-maker Boeing, a former Seattle-area company that still has factories in Washington state. The company, now based in Chicago, predicts China’s airlines may buy 3,400 aircraft over the next 20 years, worth $340 billion.

After leaving the governor’s mansion in 2005, Locke joined the law firm Davis Wright Termaine LLP as a partner in Seattle, working on behalf of U.S. companies trying to invest in China, among other issues.

In that role he helped convince Hu to stop in Seattle and visit with Gates on his way to a summit in Washington, D.C. Later, Microsoft hired Locke’s law firm to help it in China, according to spokeswoman Ginny Terzano.

(Bloomberg)

EU, China Sign Cooperation Agreements

Europe and China signed a series of agreements Friday worth nearly $80 million, as they sought to improve cooperation, including in confronting the financial crisis. The deals, which came during a visit to Brussels of Chinese Premier Wen Jiabao.

The visit by China's premier Wen Jiabao to the European Union Friday marks his first visit to Brussels in five years and signals Europe and China are ready to turn the page after China canceled a China-European Union summit last month.

Beijing did so apparently to express displeasure at the meeting between the Dalai Lama and President Nicolas Sarkozy of France, which held the rotating European Union presidency at the time.

But on Friday, the atmosphere was resolutely positive as Europe and China signed nine agreements worth about $78 million. And EU Commission head Jose Manuel Barroso announced Europe and China had agreed to hold a new summit in the near future.

"Europe and China can only benefit from this intensive cooperation between us," he said. "I believe not only Europe and China but also the global international community. To consider the global challenges we are facing, none of them will be solved without the strong cooperation between China and the European Union.

"Those international challenges include global warming, and Europe was to push Beijing to join the fight against climate change ahead of critical international talks in Copenhagen, in December. China is one of the world's leading polluters, while the European Union is at the forefront of reducing heat-trapping carbon emissions.

The two sides also talked about the economic and financial crisis and the European Commission announced Beijing has agreed to work in collaboration with Europe on this issue.

(Voice of America)

China may expand Africa zero import tariff policy

BEIJING, Jan 25 - China is considering including more African goods in a list of products excluded from import tariffs as a way of further boosting trade with the continent, state media said on Sunday.

China already levies no import tariffs on more than 10 types of goods imported from 31 African countries, including textiles, machinery and farm products, the official Xinhua news agency said.

"On the basis of offering zero tariffs for goods from 31 least developed African countries, we will actively consider further expanding the beneficiary scope of African products, and encourage enterprises to favour African goods under the same conditions," it quoted Commerce Minister Chen Deming as saying.

China has pumped billions of dollars into Africa in recent years in search of natural resources for its booming economy. That has unnerved Western donors, who worry that it is ignoring human rights abuses.

But China says its aid comes with no strings attached and that its trade with the continent is good for economic development.

(Reuters)

Germany Suffers as US Buys Less From China

MUNICH — When American consumers stop buying, companies around the world suffer — even those that do little business in the United States.

Hawe Hydraulics, a manufacturer in Munich, had five years of growth through 2007, but it has laid off temporary workers and expects sales to fall next year.

Take Hawe Hydraulics, which makes valves and conduits here in southern Germany. Its sales have boomed in recent years, driven largely by demand from China and the rest of Asia. But in the last few months, new orders have virtually dried up, almost overnight.

Only 5 percent of Hawe’s products are sold directly to the United States, but sales dropped suddenly as American companies stopped importing products from China that used its components.

“It used to be that it took years,” said Karl Haeusgen, Hawe’s chief executive, who propelled the company’s global expansion. “But now the global link works very quickly.”

The United States, with its credit-driven economy, has long ensured that others, notably China, Germany and Japan, have been able to pile up trade surpluses. That dynamic has shifted, with Americans paring purchases at a ferocious rate.

“As the American consumer now capitulates, the export bubble is the next to go,” the chairman of Morgan Stanley in Asia, Stephen Roach, said. “Export-led economies around the world are in for a very tough rebalancing.”

In Germany, the world’s largest merchandise exporter since 2003, sales to other countries drove growth for the last five years. But in the third quarter, the slump in exports helped push Germany into recession.

Virtually all economists expect 2009 to be a lost year for Germany, which will pay a heavy price for the downturn. The retrenchment bears out what Mr. Haeusgen is seeing, that there is a strong correlation between the Chinese prosperity that rested in part on American profligacy, and German sales to China and elsewhere. Germany’s industrial exports feed a Chinese economy that itself is fed by American demand for goods.

Jacques Cailloux, chief Europe economist at Royal Bank of Scotland in London, has established a strong correlation between Chinese exports to the United States and German exports to China. The American trade deficit in 2007 was $708.5 billion; Germany’s $288.5 billion surplus and China’s $262.2 billion excess represent much of the other side of that equation.

Already, overall manufacturing orders in Germany have dropped significantly. In September, they fell by the largest monthly amount since 1990, when the economy of East Germany was disintegrating. October was nearly as bad.

Hawe, founded by Mr. Haeusgen’s grandfather after World War II, belongs to the group of German companies known as the Mittelstand — medium-size businesses, almost always family-owned. Their products are as ubiquitous as they are invisible to consumers.

With metal shavings littering parts of its shop floor and employees grinding blocks of steel by hand and manually assembling components, Hawe looks like the sort of company that modern economics textbooks suggest would better exist in places with low labor costs.

In fact, skilled Hawe employees are able to mill crucial parts of its hydraulic systems to tolerances of one micron. Hawe has not been able to find any machine — to say nothing of an ill-paid worker — that can manage the feat. It manufactures solely at sites in and around Munich, the capital of Bavaria.

But for all its success, Hawe is by no means immune to the global economic sickness.

Hawe generated revenue of 238 million euros last year, capping five years of growth. But sales are now flat and it is bracing for a slight dip in 2009.

The rapid slowdown in global growth over the last three months means Hawe’s traditional Christmas break has been extended, to varying degrees depending on the product. Several hundred temporary workers have been let go. Other idled employees are drawing full paychecks by tapping accounts in which they stored overtime hours during the fat years.

“A year ago, this would have been full of employees,” Michael Knobloch, Hawe’s director of marketing, said as he stood between dormant sorters. “Every machine would have been running.”

With machines at Hawe and so many other plants silent, other economic activity in Germany has fallen off.

Deutsche Bahn, the railway operator, has rented space at ports to store train cars this winter for lack of freight. It expects shipments to drop about 40 percent in December over the period a year ago. Specialized manufacturers like Hawe are part of that, but so are iconic automakers like BMW, Daimler, Porsche and Volkswagen, which all extended holiday shutdowns.

Deutsche Post, the German logistics giant that owns DHL, has been hit by a 15 to 20 percent drop in its freight forwarding business. It is trying to corral new business by cutting rates, just as many of its competitors are.

Hawe, which makes valves, has extended its holiday break to cope with the economic slowdown.

“We are trying to gain market share,” said Hermann Ude, who runs the freight business. “That doesn’t necessarily mean you gain volume.”

Recognizing that they must sell more at home to compensate for the drop in overseas sales, many export-driven countries have embraced domestic stimulus programs aimed at halting the slide.

Last week, Japan announced a $250 stimulus program, while China is planning a $586 billion investment over two years in infrastructure and other projects. The Obama administration is talking about spending at least $500 billion and perhaps as much as $1 trillion over two years in a bid to revitalize the rapidly contracting United States economy.

Not so Germany.

The bitterest political dust-up in recent memory has erupted in Europe over Germany’s unwillingness to pump larger amounts of cash into its economy. Content, at least so far, with one modest package and another on the way, German officials are wary of spending programs that would bust a nearly balanced budget.

The country’s economy minister, Michael Glos, fought for more stimulus to spur Germany’s traditionally weak domestic demand but lost to the finance minister, Peer Steinbrück. That prompted Mr. Glos to say laconically that maybe other countries’ packages “will help our export economy.”

This perspective resonates at companies like Hawe.

“My fear is that the Chinese are reacting more strongly, in a psychological sense, than other countries,” Mr. Haeusgen said. “Our hope is that someone decides to turn on the lights again in the next few months.”

Indeed, German companies, not expecting growth at home, are using the current crisis to reassess how to tap the most lucrative export business. Hawe product designers, executives said, are using the lull to ramp up their efforts; their floor of the Munich headquarters throbs with energy.

A new pattern of trade may ultimately emerge. In place of American consumers, Germany companies say, they look forward to Chinese customers saving less and spending more as Beijing encourages domestic-led growth.

“I could imagine that a future boom comes from the countries that have big savings, particularly in Asia,” Mr. Ude of Deutsche Post said. “We shouldn’t lose sight of that.”

(NYT)

Beijing attacks EU anti-dumping duties

A senior Chinese official criticised the EU on Tuesday for resorting to protectionism to keep competitive imports from China out of Europe, as European business representatives working in China gave warning of rising economic nationalism.

Cheng Yongru, a senior official at the Chinese ministry of commerce, attacked the European Union for its use of “anti-dumping” duties – taxes levied on imports it deems to be priced unfairly low.

The use of anti-dumping duties by the EU and some other large trading partners, such as the US, has been rising over the past year, though still remains low by historical standards.

“The trend of trade protectionism in the European Union is very strong. EU companies should adjust their mindsets to adapt to the globalisation trend,” said Mr Cheng.

In a report released by the European Union Chamber of Commerce in China, European companies said they remained “generally optimistic” about their businesses in the country, but complained of a lack of market access, poor transparency and inadequate protection of intellectual property rights.

“Economic nationalism basically shows up in protectionism in China,” said Joerg Wuttke, president of the European Chamber. He said that in China, European and other foreign companies were often excluded from government procurement contracts and that major acquisitions by foreign businesses were “very difficult”, despite the ease with which Chinese companies were able to acquire companies in Europe. He highlighted the steel and automobiles sectors as examples.

The European Chamber is closely following Coca-Cola’s $2.4bn (€1.7bn, £1.35bn) bid to buy Huiyuan, China’s biggest juice manufacturer. If the deal – which was announced last week – receives government approval, it will be the biggest foreign takeover.

The bid has stirred up strong nationalist sentiment among Chinese internet discussion group users, who warn of foreign domination and accuse Huiyuan’s owners of being “country-selling thieves”.

Huiyuan’s chairman said he would be happy whatever the outcome because if the deal were rejected by the government it would show how valuable the company was to the nation and many more Chinese would drink its products for patriotic reasons.

The European Chamber’s report estimated non-tariff barriers erected by the Chinese government cost EU operators €21.4bn ($30.2bn, £17.1bn) in 2006 in lost business opportunities and pointed to a growing perception in Europe that China did not always trade fairly.

European exports to China grew 12 per cent last year to €72bn, but China’s exports to Europe rose 18 per cent to hit €230bn, accounting for 20 per cent of all Chinese exports.

● The failed foreign takeovers

Carlyle/Xugong

Carlyle Group, the US private equity firm, admitted defeat in July after three years of political opposition to its bid to buy China’s biggest construction machinery company.

In 2005, Carlyle agreed to buy an 85 per cent stake in Xugong Group Construction Machinery for $375m.

However, the government’s refusal to approve the deal turned it into China’s longest-running cross-border corporate saga.

Danone/Wahaha

Nationalist rhetoric has also been a key factor in a heated legal battle between Danone, the French food group, and Wahaha, its Chinese joint venture partner.

The Chinese founder of Wahaha has framed himself as a patriot defending his nation’s honour from rapacious foreign invaders.

Danone accuses him of setting up copycat operations outside its joint ventures to sell competing Wahaha-branded products.

(FT)

China-Britain trade tops 2 billion pounds

LONDON, Aug. 20 - Trade figures released by UK Trade &Investment (UKTI) show that business between Britain and China is booming.

Between January and May this year, Britain exported more than 2 billion pounds (about 2.94 billion U.S. dollars) of goods and services to China, an increase of 44 percent on the same period in 2007, whereas Chinese imports for the same period to Britain grew 10 percent to 7.763 billion pounds.

The figures were announced on Wednesday as Digby Jones, minister for trade and investment, heads to China as it prepares to pass the Olympic baton to London to mark Britain's tenure as the next Olympic host.

British firms have been involved in preparations for the Beijing Olympics, from designing Beijing Airport's new terminal three, helping the design and construction of many Olympic landmarks, such as the Birds Nest stadium and the Olympic swimming pool, to supplying power and temperature controls as well as pumps for waste-water treatment plants to cope with the influx of visitors and athletes.

British Prime Minister Gordon Brown and Chinese Premier Wen Jiabao agreed in January this year to set a trade target of 60 billion U.S. dollars between the two countries by 2010.

The increase in exports to China is mostly obvious in power generating machinery and components for road vehicles.

"As China opens its markets, fabulous opportunities will present themselves for UK companies. Exports have grown impressively in our services sector where we now export more than 1.5 billion pounds and where the balance of trade is two to one in our favor," said Jones.

To capitalize on this, UKTI, which is Britain's international business development organization, is holding a series of seminars in China for companies interested in buying power transmission equipment for vehicles later in the year.

The seminars will follow several key business events during the Games period, promoting British business capability and foreign investment, as well as partnership opportunities -- in general and around Olympic Games and global sporting events.

Digby Jones will also be leading a trade mission of Britain's creative industries businesses, one of the country's most successful sectors, to China.

"International sporting events offer huge opportunities for UK businesses. As all eyes turn to Beijing it is essential that British business is there to promote our expertise and capabilities on the international stage," said the minister.

According to him, over 11 percent of the total Chinese investment in Europe has come to London. He wishes to see more British firms trading in China.

"The trade figures show our relationship with China is going from strength to strength. The Olympics are an excellent opportunity to maintain the momentum of business relationships and ensure they continue to grow and prosper," Jones added.

China has been the fastest growing exports market for Britain since 2002 and the largest Asian export market for Britain since 2007. (1 U.S. dollar = 0.6803 pound)

(Xinhua)

Alibaba launches Export-to-China service

HANGZHOU, China, Aug 02, 2008 -- Alibaba.com today announced the beta launch of Export-to-China, a new service which will enable international entrepreneurs and small and medium-size enterprises (SMEs) to sell direct to China's growing number of buyers.

Export-to-China will provide international suppliers with a Chinese-language online storefront on Alibaba.com's China marketplace, which has an active community of over 25 million buyers and suppliers. It is an easy-to-use, direct channel to connect global sellers with millions of buyers in China. Export-to-China members will also benefit from Alibaba.com's professional translation services and promotion at more than 40 major trade shows in China every year.

China's role in the global market is evolving from a top manufacturing hub and exporter into a powerful global buyer as well. China's growing demand for imported goods is being fueled by a booming economy, an emerging middle class, the rising Chinese Yuan and favorable government measures promoting imports. China's most recent trade figures indicated a continued rise in exports by 18% from a year ago to US$121.53 billion, while imports soared 31% to US$100.18 billion, shrinking the nation's trade surplus for the month. China currently ranks third in the world in trade volume and is expected to become the world's biggest import market within 10 years.

"While China will continue to grow as the world's largest supplier, its emerging role as a major importer is creating opportunities for companies around the world, especially SMEs," said David Wei, Chief Executive Officer, Alibaba.com. "Chinese buyers are not just looking for luxury goods, natural resources and high end machinery, they are also interested in more basic items such as food and beverages, home supplies and health and beauty products. Alibaba.com can help equalize the trade imbalance by connecting domestic buyers with international suppliers and promoting imports into China."

He continued, "Until now, foreign companies have found it difficult to break into the China market because of language and cultural barriers and the high cost of developing a new market and setting up a sales network. Export-to-China is a cost effective tool to help SMEs enter the China market quickly and access a huge pool of potential buyers." According to Alibaba.com's estimates, around 64% of its international suppliers are interested in selling into China and 52% of its Chinese members require imported goods.

Gene Rumley, International Marketing Manager of Florida-based Bell Performance signed up for Export-to-China in July 2008. "In a time of rising fuel costs and increasing pollution, China represents a huge business opportunity for our company," said Mr Rumley. "Our range of fuel and oil treatment products helps to reduce the running and maintenance costs of automobiles, trucks and boats as well as lowering pollution levels in industrial power plants. As an Alibaba.com TrustPass member we have had great success finding new customers around the world and now Export-to-China can give us a direct channel to buyers in China."

Alibaba.com began marketing the Export-to-China service on its website on June 20 and has already signed up over 1,600 companies. During the beta testing phase launched today, Export-to-China storefronts will be displayed on Alibaba.com's China marketplace and the service will be offered for free trial to all qualified Alibaba.com paid members for a limited period.

/Xinhua-PRNewswire via COMTEX/

China passes Japan as No. 2 crude importer in May

TOKYO, June 25 - China overtook Japan as the world's second-largest crude oil importer in May, according to data on Friday that showed an 8 percent rise in purchases by Japan, where power plants have been forced to burn more crude.

Japan's customs-cleared crude oil imports in May rose 8.0 percent to 18.525 million kilolitres (3.76 million barrels per day) from a year earlier, preliminary data of Japan's Ministry of Finance showed on Wednesday.

China, which surpassed Japan as the world's No. 2 oil consumer in 2003, imported 16,198,188 tonnes (118.25 million barrels, or 3.81 million bpd) of crude in May, up 25 percent from a year ago, customs data showed on Monday. [ID:nPEK328405]

"It's a symbol of the era," said Akira Kamiyama, derivatives trader at Mitsui & Co. "Japan's imports will be capped, but China's imports will grow fast, with no end in sight."

The increase in Japanese imports comes amid the prolonged shutdown of the world's biggest nuclear power plant, operated by Tokyo Electric Power Co <9501.t> (TEPCO), after a major earthquake last July. The shutdown doubled TEPCO's demand for direct-burning crude and fuel oil for thermal generation.

But overall, Japan's domestic oil sales have been shrinking at around 4 percent a year since 2006, and the government expects the slide to continue as record high prices spur industries to shift to electricity or alternative power sources.

China's imports are growing quickly as double-digit economic growth and low, state-set domestic fuel prices drive demand in the world's most populous nation.

Analysts expect China's crude imports to get support from this month onward after Beijing's surprise decision to raise gasoline and diesel prices by nearly a fifth last week revived refining margins, encouraging them to step up production.

China's announcement this month that it would speed up building commercial oil reserves to cope with turbulence in the oil market also helps support China's imports, Kamiyama added.

For the first five months of 2008, however, Japan held a comfortable lead over China. Both still lag far behind the United States, which imports some 10 million bpd of crude.

China's crude imports in the year through May are up 12.7 percent at 75,967,509 tonnes (3.65 million bpd), while Japan's imports rose 7 percent to 104.377 million kl (4.32 million bpd) in January-May, according to Reuters calculations.

The Middle East suppliers boosted crude exports to Japan by 5 percent in May to 16.393 million kl, the data showed. Saudi Arabia, the top oil exporter to Japan, has boosted its crude supplies to Japan to full contracted volumes since last November.

The value of May's crude imports increased 53.4 percent to 1.303 trillion yen ($12.09 billion) from a year earlier, following a 55.0 percent annual rise in April as prices soar.

While Japanese refiners are suffering from low domestic margins and falling demand, crude imports may not fall much further as many plants are reorienting themselves toward the export market, hoping to take advantage of Chinese demand.

The value of Japan's mineral fuel exports to China more than tripled to more than 70 billion yen in May from a year ago, helped by China's robust thirst for Japan's high-quality low-sulphur diesel used by trucks, ministry officials said.

(Reuters)

US, China sign whopping $13.6 bln deals

ANNAPOLIS, Maryland — American and Chinese firms signed deals worth 13.6 billion dollars ahead of a high-level meeting here Tuesday that could formally endorse talks for a bilateral investment treaty, officials said.

China said the agreements inked in Washington and St Louis, Missouri on Monday were part of plans by Chinese companies to increase imports from the trade deficit-ridden United States.

The deals gave a psychological boost to the two-day US-China cabinet-level "strategic economic dialogue" (SED) beginning Tuesday at the US Naval Academy in Annapolis, Maryland, east of Washington.

Thirty-five deals worth 8.3 billion dollars were signed by high-tech, manufacturing and telecommunication companies at the US Chamber of Commerce in Washington, the Chinese government said in a statement.

The chamber said among US firms linked to the deals were General Motors, Texas Instruments, Cisco, Ford, IBM, Oracle and Motorola. Chinese firms included dominant local cellphone operator China Mobile.

In St Louis, companies from the two nations signed contracts valued at 5.32 billion dollars for the purchase of soybeans as well as chemical, telecommunication and electromechanical products, the statement said.

The deals will contribute to the "healthy development" of US-China ties and signify "an important part of the series of programs taken by Chinese business people to increase imports from the United States," said Chinese Commerce Minister Chen Deming as he witnessed the signing of agreements in Washington.

The United States is saddled with a ballooning trade deficit with China, which hit a record 256.2 billion dollars last year.

"These partnerships will stimulate American jobs and contribute to our country's economic growth," said US Chamber of Commerce President Tom Donohue.

Also witnessing the Washington event was Chinese Vice-Premier Wang Qishan, who will lead the Beijing team to the Annapolis talks. The US side will be led by Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke.

With their economies in crisis, the top officials from the United States and China will grapple with wide ranging issues such as financial sector reforms, currency concerns, protectionist pressures, energy security, trade, product safety, and investment.

They are expected to announce the beginning of talks for a key investment pact at the end of the talks, business officials said.

"It is our understanding that one of the possible outcomes could be the launch of formal negotiations of a bilateral investment treaty," US-China Business Council President John Frisbie told AFP.

The United States had held initial talks with China throughout 2007 on the treaty and if the two powers decide to pursue the treaty negotiations, benefits could include enhanced and non-discriminatory market access for investments, more transparent laws, and guarantee of due process for investors.

Chinese investors are reportedly concerned about a US investment review process that Washington says is targeted to address acquisitions that raise real national security concerns.

American companies fear that China's interest in foreign investment is no longer as robust as before, and that foreign investment regulations are opaque and seem to be designed to favor Chinese "national champions," US officials said.

These concerns include Beijing's implementation of the new anti-monopoly law, protection of specific Chinese competitors rather than competition in general, and treatment of foreign firms more harshly than Chinese firms, they said.

"A bilateral investment treaty would provide additional protections to investors from each country and the other country and goes beyond what was in the World Trade Organization entry agreement, for example," Frisbie said.

Paulson said the dialogue this week would discuss "the best way to promote and protect bilateral investment and counter protectionist pressures."

In an indication of a possible US-China agreement on energy security, Chinese Vice Premier Wang said ahead of the talks that they should set up joint research and development centers to encourage new energy and environmental protection technologies.

The United States and China are the world's top two polluters as well as net importers of oil, but are not part of the Kyoto Protocol which limits emissions.

(AFP)

NZ reaches historic trade pact with China

New Zealand has signed a Free Trade Agreement with China, making it the first developed country in the world to strike such a deal.

Under the FTA, tariffs on lamb and beef will be phased out over the next nine years with New Zealand to be given a special wool quota, allowing it to undercut its Australian competitor.

New Zealand's kiwifruit and apple exporters will also benefit.

President of New Zealand's Federated Farmers, Charlie Pedersen, says the deal has been a long time coming and the country's dairy farmers will be the biggest winners.

"Dairy is the biggest exporter to China out of New Zealand by volume and by value," he says.

"So about $350 million of dairy exports to China a year, $160 million worth of wool exports and only about $70 million worth of meat exports, so dairy is the largest by far."

President of Australian Dairy Farmers, Allan Burgess, says China and New Zealand's agreement will put Australian dairy producers behind the eight ball.

Mr Burgess says he hopes the Australian Government will now fast-track its negotiations with China.

"We've opened up our own market, when we get put at a disadvantage we're not comfortable with that, and certainly now we're at a disadvantage with China," he says.

"So our farmers will expect us to be encouraging the Government to make sure we're in a stronger position in the future."

(ABC)

S Korean seeks trade zone with Japan, China

TOKYO — South Korea's new president, Lee Myung-Bak, has said he backs a vast free-trade zone with Japan and China to boost the competitiveness of the three economic powers.

"A free trade zone may be possible if each of the countries within the region works together," Lee said in an interview with foreign newspapers in Seoul, as quoted Monday by Japan's Nikkei business daily.

"By coordinating efforts, South Korea, China and Japan can maintain competitiveness in the global market. Japan should play a major role," Lee said.

South Korea has long been concerned that it is sandwiched between Japan, Asia's largest economy and a technological leader, and China, which is growing rapidly on its giant labour pool and manufacturing industry.

In a bid to secure South Korea's advantage, Lee's predecessor, Roh Moo-Hyun, negotiated a controversial free-trade deal with the United States.

Free trade talks between Japan and South Korea have been suspended since November 2004 as Seoul tried to open up Japan's agriculture market. Both countries heavily protect their farmers.
Lee, who took over last month, has sought to repair relations with Japan which were badly strained under Roh, who accused Tokyo of failing to atone for its 1910-1945 occupation of the Korean peninsula.

Lee, who is scheduled to visit Japan on April 20-21, suggested he may invite Emperor Akihito to pay the first imperial visit to South Korea since the two nations restored relations.

"It would be nice to have his visit here. It's time," Lee said.

Roh ended summits with Japan in anger at then prime minister Junichiro Koizumi's annual visits to the Yasukuni shrine, which venerates Japanese war dead including war criminals from World War II.

Prime Minister Yasuo Fukuda is an opponent of the shrine. He met with Lee in Seoul hours after his inauguration in a bid to improve relations.

Lee said he shared views with Fukuda "on strengthening diplomatic ties in Asia."

"The relationship is poised to take a step forward," Lee said.

(AFP)

China overtook US as Japan's largest trading partner in 2007

TOKYO-- China overtook the United States to become Japan's largest trading partner last year, a government-affiliated trade organization said Thursday.

Total trade with China excluding Hong Kong rose 12 percent to US$236.6 billion (€157.27 billion) in 2007, the Japan External Trade Organization, or JETRO, said. That marked the ninth straight year of growth, and was slightly higher than the 11.5 percent growth rate in 2006.

China accounted for 17.7 percent of Japan's total trade last year, JETRO said. The United States dropped to second place, with 16.1 percent of the total, it said.

Exports to China rose 17.5 percent last year to US$109.1 billion (€72.52 billion), as the Chinese economy's strength helped fuel increased demand for electronics, passenger cars, auto parts and materials for making synthetic resins and fibers, the organization said.

Meanwhile, imports from China rose 7.6 percent to US$127.6 billion (€84.82 billion). That's slower than the 8.5 percent growth in 2006, due in part to mounting concerns about Chinese food safety, JETRO said. Crude oil and coal imports also fell.

Although China has been Japan's largest import source since 2002, the import growth rate has been sliding since 2004 partly due to stagnant sales in personal computers, the organization added.

Japan's trade deficit with China shrank 27.9 percent to US$18.6 billion (€12.36 billion) from US$25.5 billion the year before, it said.

(The Associated Press)

China Passes Canada, Becomes Top U.S. Import Source

Feb. 14 (Bloomberg) -- China passed Canada to become the largest source of products shipped into the U.S. last year, capping a six-year period when its exports to the U.S. more than tripled.

Led by items such as flat-panel televisions and computers, household appliances, toys and clothing, imports from China surged to $321.5 billion in 2007, according to a Commerce Department statement today. Chinese trade is accelerating faster than imports from Mexico after the North American Free Trade Agreement took effect in 1994.

China's ascension may lead to a backlash in Congress, where lawmakers accuse China of undervaluing its currency, producing unsafe products and providing its industries with subsidies that allow them to undercut American-made goods.

``This is a surprise, and it will be a bit of a ding-dong for the Congress,'' said Gary Hufbauer, an economist at the Peterson Institute for International Economics in Washington.

Lawmakers are considering a variety of measures to encourage higher duties on Chinese imports to compensate for what they say is an undervalued Chinese currency. The record trade deficit announced today bolsters their efforts, they said.

``There is a more compelling case for our legislation than ever, given these new figures,'' said California Republican Representative Duncan Hunter, co-sponsor of a measure to allow companies to petition for duties on Chinese goods.

Yet, the burgeoning Chinese imports have benefited the U.S. by lowering prices and expanding choice, advocates say.

``Consumers are getting lower prices for a wider variety of goods,'' said former U.S. Trade Representative Rob Portman.

Chinese Currency
A stronger Chinese currency would mean higher prices for Chinese goods in U.S. markets and could impede consumer spending -- which makes up more than two-thirds of the U.S. economy -- just as the U.S. tries to avoid a recession.

A more expensive yuan is ``not a good thing for the U.S. -- it is only going to escalate inflation there,'' said Chen Xingdong, chief China economist at BNP SA in Beijing.

It would be ``silly'' for Congress to legislate against China's currency policies given the recent gyrations in financial markets, U.S. Treasury Secretary Henry Paulson told a Senate panel last week.

China has had the largest trade deficit with the U.S. since 2001, due largely to the relative low level of U.S. exports to the Asian trading giant. In 2007 it again hit a record, $256.3 billion.

Passes Mexico
China also passed Mexico last year to become the second- largest trading partner with the U.S. after Canada. As recently as 2002 Mexico sent more goods to the U.S. than China. Now, Chinese totals are 50 percent more than Mexican exports to the U.S. The rise of China doesn't mean trade with Canada is falling: imports from Canada increased 3 percent last year, despite the rise in the Canadian dollar. Imports from China jumped 12 percent compared with 2006.

Chinese exports to the U.S. were rising steadily through the 1990s. They spiked after China entered the World Trade Organization in December 2001 and after global caps on apparel trade expired at the end of 2004.

Even the architect of China's WTO entry is surprised by the speed of its ascent as an economic powerhouse.

``No one thought China's re-emergence would be as robust, rapid or consistent as it has been,'' former U.S. Trade Representative Charlene Barshefsky said in an interview. Barshefsky negotiated the U.S. side of China's WTO accession agreement during the Clinton administration. ``You will see China continue to rise, despite issues of product safety'' and criticisms by lawmakers, she said.

Negotiator
When Portman took over as the Bush administration's top trade negotiator in April 2005, he announced a ``top-to-bottom'' review of China's trade policies and vowed to take a tougher stand against China at the WTO.

``China needs to play fairer, and we've had to beef up enforcement,'' he said.

Critics say that the Bush administration hasn't done enough to get China to eliminate subsidies to its exporters, to make sure its products are safe for children and to raise the value of its exports. That's why two Senate panels passed legislation last year aimed at pushing China to raise the value of its currency, which would make its exports more expensive.

Lawmakers say the pressure from industrial states, presidential election dynamics and the growing trade imbalance with China make it likely that Congress will approve legislation this year aimed at China.

``This is a major issue in a lot of districts across the country,'' said Ohio Democratic Representative Tim Ryan, a primary co-sponsor of currency legislation. ``The more we make the case, this will crank up the pressure on Congress to get something done.''

(Bloomberg)

WTO Rules Against China for First Time

• centred on China's restrictions on the importation of foreign-made car parts.

China has had its first defeat at the World Trade Organization (WTO), in a case centred on restrictions on the importation of foreign-made car parts.

Upholding a complaint from the European Union, Canada and US, the preliminary WTO finding agrees that current Chinese practice is protectionist.

Under existing Chinese rules, its carmakers must use 60% Chinese-made parts - or pay higher taxes.

The ruling says China must end this policy to meet its WTO obligations.

'Less favourable'
"We can confirm that, in all major respects, the panel has agreed with the United States that China has acted inconsistently with its WTO commitments," a US trade official told the Reuters news agency.

The WTO report says that foreign-made car parts are currently in a "less favourable" position than their Chinese-made alternatives.

"The dispute settlement body requests China to bring these inconsistent measures as listed above into conformity with its obligations," says the ruling.

The WTO is now due to make its final report later this year, when the Chinese government will have the opportunity to appeal.

Western complaints
Based in Switzerland, the WTO is tasked with increasing global free trade, and rules on such disputes between countries.

China first joined the organisation in 2001, pledging to open up its domestic market to overseas firms and abide by WTO rules for international trade.

However, Western governments have repeatedly complained that China is not moving quickly enough.

The US announced last year that it was seeking a WTO inquiry over whether Chinese limits on imports of copyrighted US goods broke trade rules. America has also complained against continuing high levels of music and film piracy in China.

Separately, the EU said earlier this month that it was considering launching WTO action against Chinese restrictions on foreign financial news groups.

China in return has complained about EU limits on Chinese shoe exports.

(BBC)