FDI Rises; April Trade Surplus of $17 B

123jump.com Staff
13 May, 2008
New York City

Foreing direct investment in China rose 60% in the first four months of the current year. Investors have been untilising the foreign investment approval but the number new manufacturing units declined. China is expected to impose minimum wage rule as of June 2008. A number of companies have also relocated to India and Vietnam as labor costs rise in China. Trade surplus in April declined 1% to $16.6 billion, a rise of 25% from March of this year.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in Hong Kong gain but in Shanghai decline. April trade surplus in China rises to $16.68 billion.[/R]

Market sentiment

In Hong Kong trading Hang Seng Index rose 1.95% or 489.60 at 25,552.77, and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, gained 2.31% or 315.33 to 13,997.91. In Shanghai trading CSI 300 Index fell 1.36% or 53.23 at 3,851.69

Daily turnover on main-board was HK$80.84 billion compared with HK$77.27 billion on Friday last week.

China’s FDI rise 59.32% year-on-year in first four months

China’s Ministry of Commerce reported yesterday that the country’s foreign direct investment rose 59.32% to $35.02 billion in the January through April period. But newly approved foreign-funded enterprises fell 23.15% to 9,490 in the January-April period.

There has been a steady increase in FDI utilization despite the decline in the number of newly approved foreign-funded enterprises.

The actual use of FDI in January jumped 109.78% from a year earlier, and investments increased 61.26% in the first quarter.

China has leveled the corporate income taxes for foreign companies with that for domestic companies and has published a new catalogue to encourage overseas investors to invest more in high-tech or environment-friendly projects.

Director of the Research Institute of Investment with the National Development and Reform Commission Zhang Hanya said China''s new policies on foreign investment and rising labor costs might have deterred the new manufacturing companies.

However, large companies could have accelerated their investment in China recently to beat the appreciation of the yuan. China will impose minimum wage requirements on manufacturing companies as of June of this year.

China trade surplus increase to $16.68 billion in April

Xinhua News Agency reported that the General Administration of Customs reported yesterday that China’s trade surplus rose 24.5% from March to $16.68 billion in April. The figure was down 1.14% from a year earlier, reflecting weakening demand caused by the turmoil on the global credit market.

Exports in April gained 21.8% year-on-year to $118.71 billion, while imports advanced 26.3% to $102.03 billion. Total trade in the first four months rose 24.4% on the year to $791.1 billion, driving the four-month trade surplus to $58, down $5.32 billion from last year. In addition, exports in the four-month period increased 21.5% to $424.6 billion, which is 6 percentage points less than a year earlier.

Also, imports rose 27.9% to $366.6 billion or 8.8 percentage points more than a year earlier.

Gainers & Losers

Hong Kong stocks rose limiting the effects of yesterday’s earthquake that rocked Sichuan province, China.

Companies based in Sichuan province and Chongqing city such as Sichuan Expressway, Dongfang Electrical Corp and Chongqing Iron & Steel Co Ltd were suspended from trading after the earthquake. In all, 66 companies from the region have not traded in the stock market.

China Mobile climbed 3% to HK$133.00.

HSBC Holdings advanced nearly 2% after the bank reported that it set aside the lower-than-expected $3.2 billion in provision for losses and recorded significant earnings, buoyed by emerging markets.

Insurer PICC Property and Casualty Co Ltd declined 3.2% to HK$7.00 on exposure to the earthquake, but China Life gained 1.5%.

Want Want China Holdings declined 2% after it reported that four of its production plants in Chengdu in Sichuan province would suspend production for a week for safety inspections.

Cement maker Anhui Conch rose 5.3% to HK$65.80 on expectations demand for the product will increase due to reconstruction projects in the aftermath of the earthquake.

Aluminum Corp of China Ltd gained 6.3%, while Tencent gained 8.8% after news that they will join Hong Kong''s blue-chip index.