Industrial Production to Decline in China

Chandrasekhar Atreya
08 Sep, 2010
New York City

Stocks in China region fell after renewed sovereign debt concerns escalated in Europe. Yanzhou Coal plans to take 51% stake in Inner Mongolia-based coal miner. M&A loans rose to touch 10 billion yuan by the end of June in Shanghai.

[R]5:00 PM Hong Kong, China – Stocks in China region fell after renewed sovereign debt concerns escalated in Europe. Yanzhou Coal plans to take 51% stake in Inner Mongolia-based coal miner. M&A loans rose to touch 10 billion yuan by the end of June in Shanghai.[/R]

The benchmark stocks index in Shanghai traded lower and in Hong Kong dropped 2%, after renewed sovereign debt crisis from Europe stoked investor concerns.

The CSI 300 Index in China retreated 0.1% to 2,980.97. The Hang Seng Index in Hong Kong fell 2.18% or 312.93 to close at 21,088.86.

Sales of passenger cars in China may continue to rebound for the rest of the year because of subsidies but auto dealers may resort to a price war toward the end of this year.

The market saw combined sales of autos, including sedans, sports utility vehicles and multi-purpose vehicles, at 856,269 units in August, an increase of 21.6% from a year earlier, China Passenger Car Association said Tuesday at a media meeting.

Industrial production growth in China may drop to about 10% in the second half of the year, compared to an average increase of 17.6% in the first half, according to Xin Guobin, a department head at the Ministry of Industry and Information Technology.

Xin said his forecast was based on the slowdown in the country’s manufacturing sector, whose output registered its smallest increase in 11 months in July at 12.8%.

Zijin Mining Group dropped its plan to acquire a Congolese copper miner, the second time this year it withdrew from an overseas investment strategy. An agreement to acquire Platmin Congo Ltd expired August 31, as the company failed to complete the purchase, Zijin said in a statement to the Shanghai Stock Exchange Tuesday.

China National Offshore Oil Co Ltd announced Tuesday that Chevron China and BP China will explore three deepwater oil and gas blocks in the South China Sea by acquiring shares from Devon Energy Corp.

China National Offshore Oil Co, the nation’s largest oil and gas producer, signed amendment agreements to the production sharing contracts with Chevron, BP and Devon for deepwater blocks 42/05, 64/18 and 53/30 in the South China Sea with the approval of the center.

Yanzhou Coal Mining Co said it plans to buy a 51% stake in an Inner Mongolia-based company for 6.649 billion yuan in order to acquire more reserves of the commodity. The stake in Inner Mongolia Haosheng Coal Mining Ltd will give Yanzhou an additional 838.4 million tons of coal resources.

Yanzhou will buy 35.5% of Haoshang from two sellers for 4.63 billion yuan and 15.5% from Shanghai Huayi (Group) Co in an open bidding process, the coal miner said in a filing to the stock exchange.

Loans for mergers and acquisitions in Shanghai rose to 10 billion yuan at the end of June, because banks were encouraged to help facilitate companies to integrate in order to boost economic upgrading.

Thirty three loans were given for M&A deals in the city by the end of June, the Shanghai Bureau of the China Banking Regulatory Commission said Tuesday.

Huang Hai, a former Chinese Assistant Commerce Minister, said Monday in Beijing that retail sales in China may outstrip those of United States, reaching 34 trillion yuan 2016.

Still China is considered a developing country because of its low per capita GDP of $3,910 is spread over a vast population similar to that of Japan in 1974. Today Japan’s per capita GDP stands at $39,000.

Chery Automobile Co Ltd, the largest private automaker in China, will recall 3,200 vehicles from today due to a flawed design that could affect tire safety, the quality regulator General Administration of Quality Supervision, Inspection and Quarantine said on its Web site Tuesday.

Dongfeng Automobile Co said it will invest between 400 million yuan and 500 million yuan to launch five models of pure electric vehicles in the next three years, a top company official said.

“Electric vehicles have a huge potential in short-distance city transport and special purpose transport and we’re studying the commercialization of the new models,” said Lu Feng, General Manager at the company.