Construction Underway

Construction Underway

Technicians work on the construction site of a high-speed railway project linking north China’s Zhangjiakou of Hebei Province and Hohhot of Inner Mongolia Autonomous Region, which is expected to be completed in 2018.

Inflation Further Eases

China’s consumer price index (CPI), a main gauge of inflation, grew 1.8 percent year on year in July, down from June’s 1.9 percent, the National Bureau of Statistics (NBS) announced on August 9.

The July data dropped for the third consecutive month from 2.3 percent in April, when the CPI reached its highest level since July 2014.

On a month-on-month basis, the CPI rose 0.2 percent in July.

NBS statistician Yu Qiumei attributed the moderate inflation mostly to eased food prices.

The price of pork rose 16.1 percent year on year in July, slowing from the 30.1-percent rise recorded in June.

Since January, the CPI has been calculated using a new comparison base and has included more products and services, while slightly reducing the weighting of food.

Meanwhile, China’s producer price index (PPI), which measures costs for goods at the factory gate, dropped 1.7 percent year on year in July, the NBS said.

The PPI decline narrowed from a 2.6-percent decrease in June thanks to stronger industrial product prices for nonferrous metal smelting and rolling, ferrous metal ore mining, and ferrous metal melting and rolling, said the NBS.

However, the July reading continued a 52-month declining streak as China’s economic slowdown and industrial overcapacity hampered prices. On a month-on-month basis, July’s PPI edged up 0.2 percent.

Foreign Trade Tumbles

China’s exports climbed at a faster pace in July, while a decline in imports accelerated, in a sign of continued weakness in the country’s economy.

Exports in yuan-denominated terms rose 2.9 percent year on year in July, an improvement from June’s 1.3-percent increase. Imports fell 5.7 percent, accelerating from a decline of 2.3 percent in June, according to figures from the General Administration of Customs (GAC) on August 8. Total foreign trade in the month declined 0.9 percent year on year.

Liu Liu, an analyst from China International Capital Corp., said that a 6-percent depreciation of the yuan against a basket of currencies over the past year has boosted exports to some extent, but there is still significant uncertainty about external demand. Export growth may stay low in the second half of the year, Liu said.

Foreign trade in the first seven months was 3 percent lower than a year before, with exports down 1.6 percent and imports down 4.8 percent.

Trade with the EU, China’s biggest trade partner, climbed 1.8 percent year on year in the first seven months, GAC data showed. In the same period, trade with the United States, China’s second-biggest trade partner, fell 4.8 percent, and trade with the Association of Southeast Asian Nations (ASEAN), its thirdlargest trade partner, declined 2.2 percent.

Forex Reserve Stabilizes

China’s foreign exchange (forex) reserves dropped slightly in July as downward pressure eased thanks to a stronger yuan, the Chinese currency, official data showed on August 7.

Forex reserves stood at $3.201 trillion at the end of July, down from June’s $3.205 trillion, according to data released by the People’s Bank of China (PBOC), the central bank.

The data was basically in line with market forecasts.

The reserves have been stable as a stronger yuan meant that the PBOC did not have to resort to using foreign exchanges to prop up the currency, and capital outflow also lessened, analysts said.

The yuan strengthened against a basket of currencies in July.

China’s forex reserves had been on a losing streak since November 2015 due to concerns over a weak yuan and capital flight, even slipping to an almost-five-year low of $3.19 trillion in May. But the trend quicklyreturned to growth as signs of stabilizing economic growth relieved market concerns. In June, there was an unexpected rise of $13.43 billion.

Robotic Investment

China’s home appliance manufacturer Midea announced on August 8 that it was taking a 95-percent holding in German robotics maker Kuka.

Midea will take 37,605,732 shares, 94.55 percent of Kuka after the bid is settled. Kuka shareholders who have not yet tendered their shares will be unable to sell their stake to Midea now as the bid has expired, according to a statement from Midea.

Midea announced the bid on June 16, offering to pay 115 euros ($127) per share. It held a 13.5-percent stake in Kuka before the bid.

To alleviate concerns over the takeover, Midea has pledged to maintain Kuka’s independence, and has no plans to seek a domination agreement or to delist the company. It will not change the headquarters nor reduce the workforce.

One of the world’s top robot makers, Kuka, founded in 1898 and based in Augsburg, has a workforce of 12,000. Its 2015 revenue was nearly 3 billion euros ($3.34 billion).

New Destination

Dubai-based international carrier Emirates Airline announced on August 9 that it will operate its flagship Airbus A380 “Superjumbo”for services between Dubai and Guangzhou, one of China’s largest cities, from October 1.

Guangzhou, capital of south China’s Guangdong Province, will join Emirates’ extensive A380 global network covering more than 40 destinations, including Beijing, Shanghai, Hong Kong, Taipei, London, Paris, Sydney, Toronto, Auckland, Bangkok and Seoul.

Guangzhou is an important tourism and trade partner of Dubai, as the vast majority of more than 300,000 Chinese nationals living in the United Arab Emirates (UAE) are from Guangdong.

Moreover, the UAE has over 4,000 Chinese companies and in 2014, China became Dubai’s biggest trade partner.

Since the route’s opening in 2008, the airline has been flying a Boeing 777-300ER aircraft on its daily flights between Guangzhou and Dubai.

The Superjumobo service will increase the flight capacity by 15 percent to meet the growing travel and trade demand from south China to Dubai and beyond.

Emirates Airline currently operates flights to five destinations on the Chinese mainland, including Beijing, Shanghai, Guangzhou, Yinchuan of northwest China’s Ningxia Hui Autonomous Region, and Zhengzhou of central China’s Henan Province. The last two routes were opened on May 3.

Guangzhou will be the third destination on the Chinese mainland to which the airline deploys its flagship aircraft.

Refrigerated Freight Line

China’s first refrigerated-container train left for Moscow from Dalian of northeast China’s Liaoning Province on August 8, marking the opening of a new transport link between the two countries.

The new refrigerated-freight line is 8,600 km long, with trains taking about 10 days to reach Moscow. The train is carrying products worth $150,000, including pears from north China’s Hebei Province, grapefruit from south China’s Guangdong Province and garlic from east China’s Shandong Province.

After crossing the border, goods will switch to a Russian freight train in Baikal, Siberia.

The new transport link will shorten the journey time by 60 percent as the old route used both sea and rail travel. China’s refrigerated-product exports to Russia have been on the rise.

Bumper Harvest

Farmers harvest wheat in Heihe, northeast China’s Heilongjiang Province, on August 9.

Rapid Growth

Chen Xiaoyan (first right), a lock seller at the Yiwu China Commodity Market, checks orders with two Burmese clients in Yiwu, east China’s Zhejiang Province, on August 7.

The total sales volume of the market grew 12.2 percent year on year in the first half of 2016.