China Targets Lower Growth; U.S. Files WTO Case for Wind Energy

Chandrasekhar Atreya
24 Dec, 2010
New York City

Shanghai stock indexes dropped on liquidity concerns and China targeted economic growth of 8% and inflation at 4% for next fiscal year. Profits at government controlled companies surged 50% in the first 11 months. U.S. files WTO complaint against China

[R]5:00 PM Hong Kong, China – Shanghai stock indexes dropped on liquidity concerns and China targeted economic growth of 8% and inflation at 4% for next fiscal year. Profits at government controlled companies surged 50% in the first 11 months. U.S. files WTO complaint against China’s wind energy policy.[/R]

Shanghai index had its sixth weekly drop in seven weeks on liquidity concerns and worries that new measures may be released to tighten housing market. Resource stocks closed higher as copper hovered near record and crude oil topped $91 a barrel in New York trading.

The Shanghai Composite Index fell 0.70% or 20.06 to close at 2,853.16 and for the week the index fell 2.02% for the sixth week of drop in seven. Similarly the CSI 300 Index dropped 0.8% or 25.65 to close at 3,162.96 and for the week dropped 1.94%.

China said it aims to steer a middle path next year by moderating economic growth and keeping inflation under check in its proposal for the 12th Five-Year Plan for the period 2011-15.

“The target for expansion gross domestic product next year will be 8% and the ceiling on inflation will be set at 4%,” said Zhang Ping, Head of the National Development and Reform Commission, China’s top economic planning agency in Beijing today.

The Obama administration filed a case against China on Wednesday with the WTO, accusing the country of illegally subsidizing the production of wind power equipment, and requested consultations.

China’s Ministry of Commerce defended its wind power policies saying that the measures are helping save energy and also protect the environment, adding that the policies are in accordance with WTO principles.

China practices the policy of demanding foreign companies to set up a factory in China and working with local parts maker to supply wind turbines and mills to government controlled companies. The policy has led to a rise of local makers at the expense of foreign companies and widespread technology transfer with no corresponding benefits.

The supply of new homes in Shanghai is likely to drop in January as the Spring Festival occurs slightly earlier in 2011 and developers wait to evaluate market reaction of tighter measures imposed by the government.

Seven villa developments and 12 apartment projects maybe released in the local market in January, a drop of 70% from December 2010 and down 69% from January 2010, according to a latest research finding posted on the Web site of Soufun.com.

China is planning to further boost its already surging trade with Africa, the government said on Thursday, adding that its presence on the continent is “mutually beneficial.”

A Chinese government white paper released on Thursday said that in the first 11 months of 2010, China-Africa trade volumes reached $114.81 billion, up 43.5% from a year ago, following a decline in 2009, due to the global financial crisis.

The Industrial and Commercial Bank of China Ltd, after raising 33.67 billion yuan in November from the Shanghai rights issue, has raised HK$13.04 billion from the Hong Kong rights issue, the bank said in its filing to the Shanghai Stock Exchange.

The bank sold 3.74 billion H shares at HK$3.49 per share in the rights issue, which was 99.05% subscribed.

The government of Beijing City netted a record 151.7 billion yuan in land sales till now this year, the Municipal Bureau of Land and Resources said in a statement. The city sold 252 plots of land this year as against 247 plots for 92.8 billion yuan in the year before, the bureau said.

Profits at China’s state-owned enterprises administered by the central government surged 50.1% annually between January and November as they benefited from the country’s economic expansion.

The SOEs together earned 802.3 billion yuan in profits in the first 11 months of 2010 with revenues climbing 34.7% to 14.9 trillion yuan, the State-Owned Assets Supervision and Administration Commission said.

Stock Movers

SAIC Motor Corp fell to its lowest level in four months after the government announced measures to restrict sales of new vehicles in Beijing to decongest the roads. It lost 2.3% to 15.63 yuan.

Baoshan Iron & Steel fell 0.2% to 6.61 yuan and Wuhan Iron & Steel Co lost 0.5% to 4.45 yuan on the concern that lower sales of new vehicles will curb demand for steel.

Aluminum Corp of China fell 2.6% and Yunnan Aluminum Co dropped 1.7% to 12.14 yuan on power supply shortage worries during winter months.

Property stocks edged up after a local broker estimated that the sector will boom once again from mid January in the absence of further measures to rein home prices.

China Vanke Co gained 1.9% to 9.01 yuan and Glendale Corp climbed 5% to 6.58 yuan.