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May 2009 Two high-tech companies have decided to set up operations in Wuxi, Jiangsu province.
The US-based circuit protection products company Littelfuse is to consolidate its Taiwan wafer fabrication facility into Wuxi. The Taiwan plant was acquired as part of Littlefuse’s acquisition of Concord Semiconductor in 2006 and the move is part of a global consolidation and job reduction exercise. These restructuring activities are expected to be fully complete by the end of 2010 and will realise savings of about US$7m a year. Across its worldwide operations, the company is looking to reduce the number of its sites, shift activities to low-cost locations and move to a leaner and flatter organisational structure.
Meanwhile, the Korean semiconductor company Hynix has announced plans to build a semiconductor back-end joint venture in Wuxi with Wuxi Industrial Development Group.
In 2005, Hynix established a joint venture, Hynix-Numonyx Semiconductor, with STMicroelectronics. With the founding of the back-end plant in Wuxi, Hynix will have a complete product range from front-end to back-end facilities in China, which is expected to yield significant production and distribution cost savings.
Hynix Semiconductor is one of the world’s leading memory semiconductor manufacturers, supplying dynamic random access memory chips, flash memory chips and CMOS image sensors.
Zhengzhou-based frozen food company Sanquan Foods plans to invest Rmb500m to build its southwestern manufacturing base in Chengdu, Sichuan province, reported China Retail News. The wholly-owned subsidiary will be mainly engaged in the production and sale of frozen food, instant food and fresh food.
Sanquan Foods said that the reason for building the manufacturing base in Sichuan is to cut the distance between its manufacturing base and the local market.
Sanquan, Synear and Longfong are the top three frozen food brands in China, with a combined market share of some 60 per cent.
Fast food franchising giant Subway has opened its third restaurant in southwest China. The outlet in Hongyadong, Yuzhong district, Chongqing, complements one in Chengdu and another in Chongqing.
Subway said it decided to open the restaurant at Hongyadong because of the strong performance of a Starbucks outlet in the same area. Two more restaurants in Chongqing will open before the end of this year.
Ikea is to close its sourcing offices in Chengdu, Wuhan and Xiamen as part of a plan to better integrate its sourcing businesses in China. The Swedish retailer plans to lay off about 70 employees in the three offices and it will also shed staff in Shanghai, Guangzhou and Qingdao.
Currently, Ikea sources 30 per cent of its 9,500 products from Asia, led by China with 21 per cent. It has seven retail outlets on the mainland.
China had set aside Rmb53.87bn for the huge south-to-north water diversion project by the end of April, according to the head of the project office Zhang Jiyao. That figure was Rmb8.2bn more than the previously announced total of Rmb45.67bn given last November.
Zhang said several key projects along the eastern route had already been completed. The Danjiangkou Dam in Hubei province, the source of diverted water along the central route, is still under construction. About 330,000 people in the reservoir area will be relocated to neighbouring places.
The huge water diversion project is designed to divert water from the Yangtze River and its tributaries to the dry north. It consists of an eastern, central and western route; the eastern and central routes are already under construction, while the most controversial western route is still at the planning stage.
Construction on the eastern route began in December 2002, and on the central route in December 2003. The eastern route should be ready for water diversion to Jiangsu and Shandong provinces in 2013, and the central route will be ready to pump water to Beijing a year later, according to the project office.
Nanjing Iron & Steel plans to issue 2bn shares in a private placement to finance a proposed Rmb8.6bn asset acquisition. The new shares will be placed with parent Nanjing Iron & Steel Union, although the plan still needs regulatory and shareholder approval. Proceeds will be used to buy stakes in 10 companies.
The company’s net profit plunged 94 per cent in the first three months of the year to Rmb12.4m on weak demand and falling prices.
Wuhan North Marshalling Yard, one of the largest yards in Asia, has started operations in Hubei province.
Nearly 10,000 rail freight cars will be diverted to the yard every day instead of travelling across the city centre via the Wuhan Yangtze River Bridge. The yard is capable of separating and classifying 22,000 cars daily from Jingguang line, Hewu line and other trunk routes.
Urban rail transit construction is to be accelerated following a decision by the National Development and Reform Commission to approve the plans of 19 Chinese cities. Some 2,100km of lines will be laid and operational by 2015 in these cities at a cost of at least Rmb800bn, according to Mr Dou Hao, deputy general manager of China International Engineering Consulting Corporation (CIECC), which has been tasked by the NDRC to assess the cities’ metro planning.
The urban rail projects are bigger than anticipated last year, when 15 cities were given approval to build railway systems, totalling about 1,700km at a cost of Rmb600bn. The decision to increase spending is a result of government measures to boost the economy.
Currently, 14 cities are building 46 urban rail lines, totalling 1,212 km, said Jiao Tongshan, vice-chief of China Communications and Transportation Association. Ten cities — Beijing, Shanghai, Guangzhou, Tianjin, Chongqing, Nanjing, Wuhan, Changchun, Shenzhen and Dalian — now have 29 urban rail routes, with a combined operational length of 778km.
China’s central government has allocated Rmb270bn for infrastructure investment so far in 2009, according to an official from the country’s top economic planning body, the National Development and Reform Commission (NDRC).
That amount is part of a planned total of Rmb367.6bn in this year’s central budget. Adding a further Rmb30bn from the 2008 budget means that the country had already allocated Rmb300bn to infrastructure investment since the fourth quarter of last year, NDRC vice director Mu Hong was quoted as saying by China Daily.
The money is part of the Rmb4,000bn, two-year stimulus plan announced late last year in response to the economic downturn.
Zhangjiagang terminal, part of the Suzhou port, reported a 29.7 per cent increase of throughput in April to 13.57m tons, up nearly 21 per cent over March. Throughput during the first four months exceeded 44m tons, up 3.4 per cent over the same period last year. Foreign trade-related throughput hit 13.67m tons, representing a year-on-year growth of 32.9 per cent.
The five major types of cargo handled by the terminal continued to grow in the first four months, with iron ore at 14.61m tons, iron and steel products at 6.8m tons, chemicals at 3.7m tons, timber at 1.64m tons and grain at 1.51m tons. They accounted for 60 per cent of the total throughput. Chemicals recorded the largest sector increase, rising 35.5 per cent over the same period last year.
Zhangjiagang, Changshu and Taicang all fall under the administrative umbrella of Suzhou port.
Mr Song Dexing, Director of the Waterway Department of the Ministry of Transport, said in an interview with China Waterway Newspaper on 25 May that companies involved in international shipping business and registered at Yangshan Bonded Terminal in Shanghai will be exempt from business tax as part of government measures to help the sector survive the current worldwide economic downturn.
The ministry will ban any international vessels from entering the domestic market. He didn’t spell out the definition of ‘international vessels’ but was most likely referring to Chinese vessels plying international routes. He predicted that the downturn in the international shipping market, particularly in the container sector, would continue for the foreseeable future but that the domestic shipping market would recover much faster due to a basket of measures that the central government is taking to keep this year’s GDP growth level at eight per cent.
Jiangyin Yangtze Vessel Strip Yard is reporting record business due to the continued downturn in the shipping market. The strip yard dissembled 44 vessels in the first quarter of 2009, with nine more in the process of being stripped. Another five vessels were scheduled to enter the yard by the end of May.
The vessels that have been taken to pieces were largely large bulk carriers, container carriers, ro-ro vessels and oil tankers from Europe and Japan. In normal circumstances they might have had another three to five years of service but they were withdrawn early because of severe lack of cargo in the international market and the high cost of anchoring and maintenance.
The Jiangyin yard in Jiangsu province currently has 11 teams working extra shifts to cope with the high workload. Local marine safety authorities have vowed to increase the number of inspections to the yard and tighten the monitoring of the entire stripping process to ensure that the booming business will not lead to any pollution.
Regular container services to Taiwan could start by end of this year according to the general manager of Wuhan International Container Transhipment Corporation, the operator of Wuhan’s Yangluo container terminal. A few shipping lines have already performed their site visits, said Xie Bingmu. Last year, Wuhan sent 40,000 teu to Taiwan via Shanghai.
A shuttle service between Yangluo, Wuhan and Yangshan in Shanghai was resumed only two months ago, which has reduced the journey time from seven days to five days. The regular service from Yangluo to Shanghai’s Waigaoqiao terminal takes longer due to the unreliable shuttle service between Waigaoqiao and Yangshan.
The three provincial capital cities of Jiangsu (Nanjing), Anhui (Hefei) and Jiangxi (Nanchang) signed a memorandum on 22 May to forge a strategic regional development alliance. According to the memorandum, the cities will plan intercity expressway and rail networks and co-ordinate industrial development.
A degree of inter-dependence already exists, according to Nanchang’s vice mayor Zeng Guanghui. “Some of the copper parts needed by the major domestic appliances manufacturers in Hefei are produced in Nanchang and the aeroplane industry in Nanchang relies on research and development capabilities in Nanjing,” he was quoted as saying. The alliance will also allow Hefei and Nanchang, the two major cities in central China, to be the preferred destinations for Shanghai and Nanjing to transfer some of their non-core industries further away from the coast.
In a separate move, Nanjing government announced on 25 May that the city would issue residence cards to Chinese scholars returning from abroad, either with a foreign citizenship or an overseas permanent residence. These people will have access to a special innovation and enterprise fund that encourages them to settle in the city. They will also enjoy the same treatment as local residents in terms of social security and housing subsidies, and their children will have free education up to secondary school level.
Some 20,000 cubic metres of mudstone fell into the Yangtze River on 18 May after a landslide on a section of the river’s bank in Wushan county, Chongqing. The slide overturned a beacon and narrowed the navigation course by 100 metres, resulting in the closure of this section of river for five hours.
Taiwan-based food and beverage group Uni-President plans to produce dairy products in Wuhan, Hubei province, reported China Retail News.
Xiao Fengshi, the general manager of Uni-President Central China, said Wuhan was attractive because of its central location, low costs and human resource skills. The company will also relocate its training and research centres to the city and invest US$15m to expand its beverage production lines in Wuhan by the end of 2009.
However, it ruled out for the time being the prospect of raising cows in the area.
A total of Rmb83.1bn will be invested in nine petrochemical projects in Jiangsu over the next three years, according to a statement by the provincial government.
CNOOC Ltd, an arm of China’s largest offshore oil company China National Offshore Oil Corp, plans to launch a refining project this year with a potential annual output value of Rmb15bn. It will be located in Taizhou, a city on the lower reaches of the Yangtze River. The first stage of the project will be operational in 2011.
BASF-YPC, a large-scale petrochemical joint venture in Nanjing between BASF and Sinopec, will expand its second-stage ethylene project to meet market demand.
Jiangsu Chengxing Phosph-Chemical, located in Jiangyin city on the southern bank of the Yangtze downstream of Taizhou, currently specialises in making phosphoric acid, phosphate products and yellow phosphorus. It now plans to set up a terephthalic acid (PTA) plant with estimated annual output of 600,000 tons. The new project will be completed in March 2010.
Another petrochemical company, based in Xuzhou, in the northwest of Jiangsu, will start a methyl alcohol project with predicted yield of 1.5m tons a year.
Chongqing is to spend Rmb300bn by 2012 on improving its transportation facilities, said Huang Qifan, executive vice-mayor of the municipality.
Some Rmb100bn will be used to improve its railways, river ports and Jiangbei International Airport. Another Rmb100bn will be channelled into building new inter-regional expressways, including those linking Chongqing with Hunan, Shanghai and Yibin and Luzhou in Sichuan province. By 2012, the total length of such inter-regional expressways in Chongqing will reach 2,100km.
The final tranche of Rmb100bn will be spent on improving the transportation system within the municipality. About 1,000km of expressways will be built connecting all districts and counties in Chongqing, while the light rail system will be extended to a total length of 116km.
Mr Huang said that travel to any place inside the city centre would take less than 30 minutes when the upgraded urban network is completed. He also said that the construction of high-speed railways will enable a four-hour trip to a number of cities such as Chengdu, Nanning and Guiyang in neighbouring provinces and regions by 2015.
Dow Chemical is to spend US$200m on creating a logistics centre in Tianjin. It will cover 50 hectares in Nangang Industrial Zone.
The centre will provide liquid chemicals storage services and is designed to handle 9m tonnes of liquid chemicals a year. Two large liquid chemical tank areas will be built along with areas for road and railway tank loading and unloading.
Toll Holdings, Australia’s largest logistics services company, has acquired the remaining 49 per cent of Shenzhen-based ST-Anda Logistics it does not already own. It purchased the shares from China Merchants Group for an undisclosed sum.
As a wholly-owned subsidiary of Toll, St-Anda’s operations will now be integrated into those of Toll in China.
The acquisition remains subject to Chinese regulatory approvals, which are expected to take three to six months to obtain.
Five more mainland ports have been approved for direct shipping with Taiwan, reported Xinhua. The addition of Tongling, Shidao, Laizhou, Taizhou Damiyu and Ningbo-Zhoushan brings to 68 the total number of approved ports.
During a meeting on cross-Straits direct shipping in Xiamen, the PRC also agreed to exempt Taiwan shippers from business and corporate taxes on profits earned in the mainland from direct shipping. The exemption is effective as of 15 December last year.
Approval has been granted for the construction of a regional airport in Chizhou, Anhui province. Building work will start later this year and will take two-and-a-half years to complete, said Xinhua.
The airport will be located in Meilong township, some 20km from Mount Jiuhua, one of China’s four most renowned Buddhist mountains.
The project will cost Rmb734m and passenger throughput has been estimated at 500,000 a year.
Construction work started in late April on western China’s largest steel marketing centre.
Longgang Steel Marketing Centre will be located in Longtan Industrial Park in Chengdu’s Chenghua district. The Rmb500m project will cover an area of 47,000 sq metres and should be completed in 2010.
Ford Motor Co has approved a plan to build a second assembly plant in Chongqing to meet fast-growing demand for its cars in China, Xinhua reported.
Through its joint venture Changan Ford Mazda, Ford will build the plant almost next to its existing assembly plant in the city. The new plant is designed to assemble more than 300,000 vehicles a year, most of them existing Ford SUV models. An auto engine manufacturing plant will be constructed nearby.
Ford’s first China plant, built with Mazda and Chongqing Changan Auto, produces about 250,000 vehicles annually. It has another plant in Nanjing, Jiangsu province, which has an initial capacity of 160,000 vehicles a year.
Tunnelling work on the Nanjing Yangtze Tunnel was completed on 20 May, according to China News Service. More than 3,000 metres long and with a diameter of 15 metres, it is technically the most challenging project in China. The project was carried out 65 metres under the water and is expected to start operation by June next year.
According to a research report released by Hubei provincial job centres association, the average pay offer available in April at Wuhan job centres was Rmb1,322 a month, up 2 per cent over March. The biggest demand was for sales and marketing executives, accounting for 32 per cent of all offers in the job centres. Demand for building engineers, landscape architects and surveyors increased steadily over the first four months due to increasing investment in infrastructure projects in Wuhan. Demand for advertising executives fell by 11 per cent over March as companies across the board have cut back on their advertising budgets in the current economic downturn.
Separate figures show that take-home pay for residents of 16 cities in the Yangtze River Delta continued to rise in the first quarter. The largest increase was for those living in Hangzhou, Zhejiang province, where wages grew 18.2 per cent over the same period last year. Other cities that recorded a double digit increase included Yangzhou (12.8 per cent), Nantong (12 per cent), Zhenjiang (11.3 per cent), Taizhou (11.1 per cent), Suzhou (10.7 per cent) and Nanjing (10.5 per cent). Residents of Suzhou earned average an quarterly wage of Rmb7,792, the highest in Jiangsu province.
The Yangtze Waterway blueprint, compiled by the Ministry of Transport, the State Development and Reform Commission, the Ministry of Water Resources and the Ministry of Finance, has recently received approval from the State Council.
According to the blueprint, the central government will spend Rmb43bn on dredging projects across the entire trunkline between now and 2020 to increase the Yangtze’s cargo-carrying capacity. By 2020, the Chongqing-Chenglingji section will be able to accommodate barge fleets of 6,000-10,000 dwt; 3,000 dwt ocean-going vessels should be able to sail between Chenglingji and Wuhan; 5,000 dwt ocean-going vessels should be able to sail from Wuhan to Nanjing; ocean-going vessels of 30,000-50,000 dwt should be able to sail all the way from the Yangtze mouth to Nanjing and vessels of 100,000 dwt can sail on tide, according to the blueprint. Every extra metre in water depth typically allows the passage of another 1,000 teu, therefore reducing shipping costs significantly.
The cost of these ambitious plans, while substantial, is dwarfed by government expenditure plans on road and railway projects. This year alone, the central government has budgeted Rmb103.5bn to spend on roads and Rmb73.2bn on railways.
Mr Song Desing, Director of Inland Waterway Department under the Ministry of Transport, said in an interview published on 19 May that the growth of domestic container volumes would fall below 20 per cent for the first time in recent years, but it would still grow at the relatively healthy pace of 10-15 per cent for the year.
While foreign trade-related container traffic will continue to slide as a result of the current worldwide economic downturn, he said, containers for domestic trade will become the new driving force for China’s shipping market.
He cited Guangzhou as an example of this trend. The port in Guangdong province reported a domestic trade-related container throughput of 7.69m teu in 2008, up 22.4 per cent year-on-year, while the growth in foreign trade-related boxes was only 2.7 per cent. On a national level, he said, the proportion of domestic containers among container traffic across Chinese ports has risen from eight per cent, or 2.21m teu in 2001, to 24 per cent, or more than 30m teu in 2008.
Chongqing Municipal Statistics Bureau said that the city showed strong signs of recovery in April, with industrial output up by 13.3 per cent over the same month last year and 6.6 percentage points higher than March.
Industrial output for the first four months increased 7.4 per cent year-on-year to Rmb176.6bn, up 2.6 percentage points over that of the first quarter. The city’s pillar industries — automobiles and motorcycles, natural gas and petrochemicals, and machine engineering — accounted for nearly 60 per cent of this total.
Investment in fixed assets during the first four months of the year rose by 32 per cent to Rmb98.1bn. Investment in agriculture posted the biggest surge of nearly 183 per cent to Rmb2.7bn. Local government revenues increased by 34 per cent over March to Rmb7.82bn due to improved output and collection levels.
Officials from the bureau believe that the city’s economy has now bottomed out and is starting to climb once again.
PYI Corporation, the Hong Kong-based bulk cargo port and infrastructure operator, has proposed to raise HK$362m (US$46.7m) from a rights issue to fund its stake in Yichang Port Group, reported Lloyd’s List. Last September, PYI signed an agreement to take a 51 per cent stake in Yichang Port Group, an important transhipment hub in the middle reaches of the Yangtze.
PYI has an established presence in the Yangtze ports sector, being the largest shareholder in Nantong Port Group in Jiangsu province.
Many Yangtze port cities, however, are increasingly concerned about ceding majority control to outside parties. They appreciate that port development plays a vital role in rejuvenating local industries but that the commercial interests of outside majority shareholders can sometimes hinder rather than facilitate industrial expansion.
China Clean Energy Inc, a manufacturer of fuel and specialty chemical products, said that the construction of its plant in Jiangyin, Jiangsu province will now be completed in September 2009. This will be three months later than originally scheduled.
The company blamed the rainy season and delays resulting from a construction accident suffered by one of its contractors.
The plant should reach full capacity in the second quarter of 2010.
China’s iron ore imports in April jumped 33 per cent year-on-year to 57m tons, according to the General Administration of Customs. The country imported a total of 188.5m tons of iron ore in the first four months, up 22.9 per cent year-on-year.
Copper and related products imports surged at an even higher rate, rising 62 per cent to 399,833 tonnes and beating the previous record set in March.
Analysts said the data did not indicate a recovery in real demand, but that purchase decisions were driven mainly by government stockpiling and arbitrage to take advantage of higher Chinese domestic prices for some goods.
Zhu Bin, head of research at Nanhua Futures, warned that it might be difficult for the country to digest these record import levels, especially of copper, and that a price correction might follow.
China has started revamping a railway from Baoji in Shanxi province to Sichuan province’s capital Chengdu to enhance the line’s capacity and support rebuilding activities in the earthquake zone.
More than 5,000 workers and 150 oversize vehicles have been deployed on the project, which is expected to take 50 days to complete.
Last year’s earthquake in Sichuan destroyed the southern section of the railway and the No. 109 tunnel in Gansu province. The new tunnel, which will be made of steel-reinforced concrete, will allow trains to reach speeds of 80 kph, up from 60 kph previously.
The Baoji-Chengdu line is as an important transportation route from north China to Sichuan, and it played a significant role in carrying relief goods to places badly affected by the earthquake.
First Automobile Works (FAW) and Volkswagen have officially started construction of its joint venture in Chengdu, Sichuan province, Xinhua reported.
With an annual output of 150,000 cars, the Chengdu plant will assemble the Volkswagen Jetta model and is expected to help the automaker to gain a larger market share in China’s western regions.
It will also be an important contributor to Volkswagen’s sales target of 2m units in China by 2013, said the German company’s China CEO Winfried Vahland.
Domestic air cargo and parcel post volumes in China increased 1.3 per cent in the first quarter of 2009, compared with sharp falls in the last quarter of 2008, according to Ministry of Transport data. Total air cargo volume for the first quarter declined 16 per cent year-on-year, but a smaller fall of 13.5 per cent was registered in March, reported Cargonews Asia.
Gross air cargo volume in the mainland stood at 8.83m tonnes in 2008, up 2.6 per cent over the previous year but 13 per cent down from the annual growth in 2007.
The China Air Transport Association said the statistics indicated that the domestic air transport sector was on its way to recovery.
The Suzhou-Nantong Yangtze Road Bridge, the world’s largest cable-stayed bridge, has been formally opened in Jiangsu province after five years of construction.
The bridge has a span of 1,088 metres and links the important industrial cities of Nantong and Suzhou, 32km apart. It has three lanes each way and it joins the national highway network on the both banks.
The journey between Shanghai and Nantong now only takes one hour, compared with four hours previously, including a ferry trip. Prior to the formal opening ceremony, the bridge has been operating on a trial basis for one month, when there was a daily flow of 20,000 to 30,000 vehicles.
People’s Daily reported that the bridge cost Rmb7.89bn to build and was the most complicated ever constructed in China, setting several technical records.
Jiangsu has built many bridges over the Yangtze in recent years as it strives to improve economic conditions in the relatively undeveloped northern part of the province.
China’s fixed asset investment surged again in April as a result of the government’s fiscal stimulus package, but exports dropped further, reflecting continuing weak demand in overseas markets.
Spending on fixed assets, particularly transport infrastructure and property, grew 30.5 per cent year-on-year in the first four months of 2009. That compares with a 28.6 per cent increase in the first quarter, said the National Bureau of Statistics.
April’s exports fell 22.6 per cent from a year earlier to US$91.94bn, Customs stated. This was steeper than March’s 17.1 per cent decline. Imports decreased 23 per cent in April, compared with a 25.1 per cent decline in March, which some analysts said was a sign that domestic investors were still unwilling to invest in new capacity.
Fixed asset investment is widely expected to be the biggest driver of GDP growth in 2009. JP Morgan predicted that it could account for 45 per cent of China’s economy this year, if it maintains a growth rate 25-30 percent for the next eight months.
The 12th China Chongqing International Investment and Global Sourcing Fair opened on 13 May. A total of 265 multinational and 3,600 domestic enterprises were set to take part in the fair, the highest number since the first fair in 1997.
Li Jianchun, chief of Chongqing Foreign Economic Relations and Trade Commission, said he expected a number of major investment and purchase contracts to be signed in the areas of equipment manufacture, automobiles, urban construction and consumer durables.
China’s leading trade fair, the Guangzhou Fair, concluded last Thursday with export orders down 17 per cent, which was attributed to the downturn in global trade.
Jiangxi provincial government recently announced a package of strategic measures designed to speed up Jiujiang’s industrial development. These measures cover infrastructure investment, financing, land allocation and project support. Jiujiang is the only major Yangtze port city in the province.
In addition to a number of highways, top priority infrastructure projects for the city include the Jiujiang Yangtze Bridge and the Jiujiang ring road, both of which will start construction this year. Preparation will begin on a new container terminal called Chengxi and a railway line leading into the terminal. An expansion project to allow the terminal to handle dangerous goods will be approved, as will a project to set up a recycled resources economic zone. Efforts will also be made to speed up the establishment of the Jiujiang customs clearance. The provincial government will support, among other things, the setting up of a shipbuilding industrial zone for medium-sized and small vessels.
According to statistics from the Nantong Maritime Authorities, Nantong recorded a 35.5 per cent year-on-year rise in foreign trade-related throughput in April to 3.02m tons. In the first two months of 2009, foreign trade-related throughput declined in Nantong as it did in most other Chinese ports due to the worldwide economic downturn. It started to rise in March on the back of the many infrastructure projects benefiting from the central government’s stimulus package. Increasing demand for iron ore and other imported metals contributed to a steady increase in Nantong’s throughput. In April, the volume of copper ore concentrates alone hit 200,040 tons, a record for a single month.
Opposite Nantong on the southern bank of the Yangtze River, Taicang terminal reported a 28 per cent year-on-year increase in cargo throughput to 14.15m tons and a 5.6 per cent rise in container throughput of 423,000 teu for the first four months of the year. This makes it one of the best performing ports along the entire navigable length of the Yangtze.
The Wuhan-Guangzhou high-speed passenger line will start operating by 20 December 2009, a year ahead of the original plan, according to a revised schedule from the Ministry of Railways. The 967km line from Wuchang Station in Wuhan to Guangzhou New Station in Guangzhou will allow a speed of 350 kph and reduce the journey time between the two cities from the current 11 hours to just four. At least 100 trains each way are scheduled to run daily once services begin, and the total will at least double by 2018. So far, 90 per cent of the project has been completed.
Costing nearly Rmb99bn and started in 2005, this line is part of the 2,230km Beijing-Guangzhou high-speed railway, which upon completion will reduce the travel time between Beijing and Guangzhou to 10 hours from the current 24 hours. The new high-speed line will run parallel to the existing Beijing-Guangzhou line, which will eventually be used only for cargo.
On 13 May, a road tanker loaded with 21 tons of petrol collided with a truck on the Feng Guan Expressway near Lianyungang, Jiangsu province, killing the tanker driver and his assistant. China News Agency reported that the Lianyungang Fire Brigade dispatched 22 fire engines with more than a hundred firemen and that the fire took five hours to extinguish. The city’s Emergency Response Office dispatched another tanker to transfer the remaining petrol safely. The cause of the accident is still being investigated.
On the same day elsewhere in Jiangsu province, a leakage in Jiangyin Huangtu New Star Chemical Plant intoxicated students in a secondary school just 50 metres away. The leakage happened around 3pm during the production of Di-tert-butyl dicarbonate, a reagent widely used in organic synthesis. The students inhaled the toxic gas and 32 of them were rushed to the hospital.
The official spokesman for the National Office for Taiwan Affairs said on 13 May that representatives from the mainland and Taiwan had signed an agreement in Nanjing recently to increase air traffic between the two sides. Weekly passenger services will more than double from the current 108 flights to 270.
Another six mainland cities will start direct services, bringing the total to 27. These cities include Shanghai, Nanjing, Wuhan and Chongqing, all situated on the Yangtze trunkline, along with Changsha, Hefei and Nanchang on Yangtze tributaries. Shanghai and Guangzhou have been designated for regular air cargo services and both sides have also agreed to carry cargo on regular passenger services.
Transport authorities in Shanghai have announced that from 16 May, the section of the Shanghai-Hangzhou Expressway between Xinzhuang and Xinqiao will be closed for the second phase of a renovation project. This will be the first time Shanghai has ever shut down part of the expressway for renovation.
The renovation of the 18km stretch is designed to increase capacity and will involve road widening, the removal of certain toll stations and the addition of an underground tunnel. First phase work started at the end of last year and the whole project will take 15 months and Rmb2.2bn to complete. The section is scheduled to open again in time for the Shanghai Expo which will start in May 2010.
The decline in the Yangtze’s dry bulk market eased in April, with the Yangtze Dry Index closing at 803.79 on 30 April, according to the Yangtze River Administration under the Ministry of Transport. This represented an increase of 0.17 per cent over the previous month. The index for coal increased by 2.16 per cent to 655.94 compared with March. Shipping prices on the long haul routes from Sichuan and Chongqing to Nanjing and Shanghai rose to Rmb0.026 per ton km.
Imported iron ore levels increased on the low international shipping prices and rising demand for steel products such as rail tracks. But most steel plants are still utilising their stocks and are in no hurry to place iron ore orders with their trading partners, with the result that imports are piling up in ports along the Yangtze’s lower reaches. The index for metal ores declined by 2.93 per cent over the previous month to 832.90.
The index for building materials, however, rose sharply by 17.8 per cent over March to 1249.77 due to the increasing volumes of cargo going into the interior, particularly in support of continuing relief efforts for the Sichuan earthquake.
Among non-metal ores, phosphorite and sodium sulphate from the upper reaches have been in particularly strong demand. Shipping prices for other non-metal ores have been relatively stable with the index rising by 2.54 per cent to 958.46 compared with March.
The Yangtze port city of Huangshi is attempting to restore its shipbuilding glory by giving the go-ahead to Huangshi Jinzhou Shipyard. The new shipyard, located in Yangxin county, is to be built on a 229,000 sq metre plot of land with a total investment of Rmb500m. Upon completion, it will have an annual capacity to build 10 vessels of up to 20,000 dwt each.
In the 1970s and 1980s, the old Huangshi Shipyard employed more than 1,000 people and specialised in building dredgers, tugs and barges for clients in Hong Kong and Singapore. At the time, it was the second largest shipyard among the 18 located in Hubei province. The old shipyard started its decline in the mid 1990s under the pressure of rising steel prices and a shortage of funding. In December 2000, it was declared bankrupt.
China’s railways carried 382.1m passengers in the first quarter of 2009, up 3.8 per cent year-on-year, according to the Ministry of Railways.
Some 766.24m tons of freight was transported by train in first three months, with 265.21m tons transported in March alone, up 2.4 per cent over the previous month. Shanghai has launched feasibility studies into two new tunnels under the Huangpu River and an expansion project to increase capacity of the existing Xiangyin Road Tunnel. All three would link northern Pudong with northern Puxi districts including Yangpu and Hongkou.
The tunnels would help support the city’s port operations in nearby Baoshan district, where there are many container and freight terminals. Cross-river traffic in the city’s north relies largely on the Xiangyin Road Tunnel, which is heavily congested and would benefit from expansion. Traffic in the tunnel has soared from the nearly 6,000 vehicles a day in January 2006 when it opened to 80,600 at present.
When the Yangtze River Tunnel Bridge opens to traffic next year, Pudong will be connected by a fast motorway to the city’s Changxing and Chongming islands, which also house container terminals and port machinery plants.
Shanghai currently has five Huangpu River vehicle tunnels in service and a further eight are under construction. Wuhan Iron and Steel Group, China’s third largest steel producer, has agreed to buy a 50 per cent stake in Western Plains Resources’ Hawks Nest project in South Australia.
The two companies will set up a 50-50 joint venture to develop the site, which has estimated iron ore deposits of 5.7m tons. The Chinese company will initially invest AU$25m in a feasibility study and then a further AU$20m for future operations, Western Plains said, adding that the stake will be capped at 50 per cent.
The transaction is subject to approval of government authorities in both countries.
China, the world’s top steel producer and consumer, is seeking to secure more long-term iron ore supplies overseas via acquisitions or by taking project stakes. China Railway Group, the country’s largest railway and highway builder, said first its quarter profit jumped 87 per cent year-on-year to Rmb982m. The upturn was attributed largely to China’s Rmb4,000bn economic stimulus package that includes a major focus on transportation infrastructure. Sales rose 71 per cent to Rmb60bn.
Construction equipment manufacturers are also benefiting from the infrastructure boom. During the first three months of the year, excavator sales in China totalled 24,024 units, down 10.6 per cent from the year earlier period. However the trend is improving, with more excavators were sold in March than were sold in the first two months of the year combined – 13,314 units in March versus 10,710 in January and February. Major cities in the Yangtze River Delta reported slower GDP growth in the first quarter of 2009 as the global downturn intensified, reported the Wuxi statistical bureau. Their aggregate GDP of Rmb1,200bn was up 7.9 per cent from a year earlier but 5.2 percentage points less than the same period in 2008.
Exports fell 22 per cent to US$91.6bn and industrial output of major companies in the cities declined 3.7 per cent. However, these contractions were more than offset by high levels of state spending and robust consumer confidence: fixed-asset investment rose 14.9 per cent to Rmb539.2bn and retail sales increased 14.6 per cent to Rmb491.3bn.
The cities studied in the analysis included Shanghai, Nanjing, Suzhou, Wuxi, Changzhou, Zhenjiang, Nantong, Yangzhou, Taizhou, Hangzhou, Ningbo, Jiaxing, Huzhou, Shaoxing and Zhoushan. A barge hit rocks and capsized in the Yangtze River near Longmentan in Chongqing municipality on 27 April, dumping 900 tons of coal into the water. The five crew members were rescued uninjured. The river accident management department dispatched a patrol to clear the shipping route and temporarily anchor the wreck to prevent it drifting. Salvage efforts were started immediately and were expected to take approximately one week.
River management officials said that the coal spill would have little impact on water quality. Air passengers entering China are now subject to tightened quarantine procedures against A(H1N1) influenza, which at Beijing Capital International Airport have extended average waiting times by 30 minutes.
Wang Yang, an officer at the airport’s inspection and quarantine bureau, told China Daily that it normally takes five minutes for 300 passengers to pass border quarantine, but now it takes at least 30 seconds per passenger
Starting on 2 May, all passengers entering the mainland need to complete a health declaration form and hand it for checking to quarantine officers.
The information is deemed necessary if the authorities need to trace anyone.
Passengers’ body temperatures are also checked by infrared machines. If the temperature is higher than 37 C, officers question passengers to ascertain whether they should be sent to an isolation room. There, a doctor conducts checks to determine if the passenger needs to be transferred to a designated hospital.
Ten passengers were sent to the hospital from the airport on 3 May for suspected symptoms. China’s major airlines made a combined profit of Rmb1.3bn in the first quarter of 2009 after posting a loss of nearly Rmb30bn last year.
Air China’s profits stood at Rmb981m in the first three months of this year, down just 5.7 per cent from a year ago, while China Southern Airlines posted a net profit of Rmb222m and China Eastern Airlines made Rmb40m.
Passenger numbers for all airlines increased by 14.6 per cent in the first three months, and average seat utilisation per kilometre was 75.9 per cent, up 0.5 per cent from a year earlier, according to Yang Guoqing, Deputy Director-General of the Civil Aviation Administration of China. A cut in jet fuel prices of Rmb460 per tonne since March has also helped.
In a separate development, Air China was reported to be looking to expand its market share in Wuhan having set up a branch in the city. It currently has a 5 per cent share compared with 25 per cent for China Eastern and China Southern’s 45 per cent. In future, there will be more intense competition in the local aviation market, according to a senior executive of Wuhan Tianhe International Airport.
Air China also announced that it would start to fly express routes from Beijing to Chengdu and Chongqing. Wal-Mart is speeding up its expansion plans in Chongqing, according to a municipal government website. In addition to a new store that opened at the start of this year, the world’s largest retailer will invest US$16.9bn to open a further four large stores, each covering an area of more than 10,000 sq metres.
Wal-Mart currently has five stores in Chongqing, and the number will expand to nine by the end of 2009. This will make Chongqing the company’s second largest market in China, after Shenzhen in Guangdong province. Wuhan started a direct express rail service to Shenzhen, Guangdong province on 6 May. The Z23 service starts from the city’s Wuchang station at 19:49 and calls only at Guangzhou before reaching Shenzhen the following morning at 7:21. Three categories of beds, hard, soft and super soft, are available for a price ranging from Rmb263 to Rmb933.
Wuhan’s daily direct service to Guangzhou and Shenzhen now stands at nine in total. Another special service to Guangzhou will be added by the end of the year. Wuhan also operates direct rail services to Beijing, Hangzhou, Shanghai and Ningbo.
Elsewhere on the national network, a direct service linking two of China’s most popular scenic spots, Nanchang and Kunming, opened just before the May Day Holiday with occupancy rates hitting more than 80 per cent every day. The 1235/1236 service on the 1,902km line stops at 21 stations in Jiangxi, Hunan, Guizhou and Yunnan provinces. The price for a hard seat is Rmb107 and for a hard bed Rmb230. Shanghai Dazhong Taxi, one of the best known taxi companies in Shanghai, launched its Shanghai Expo service on 5 May by presenting 100 new taxis whose drivers have been trained to speak foreign languages. By 2010, the company claims it will be able to supply 1,000 foreign language-speaking drivers. Shanghai Expo will be held between May and October 2010.
In another development, 46 taxi drivers in Shanghai have recently been suspended, fined or struck off for refusing customers on short journeys, tampering with their meter or deliberately taking detours to charge higher fares.
According to Nantong Inspection Bureau, a total of 200,040 tons of copper ore concentrates came through the port of Nantong in April, a record volume for a single month. The April imports, worth US$171m, accounted for 41.3 per cent of the total in the first four months of the year. The copper ore concentrates was sourced from Chile, Peru and Australia.
In February, the central government reinstated its policy to exempt import duty on copper ore concentrates. This boosted importers’ demand for the commodity and led to the surge in April imports. Demand for copper declined sharply last year due to the worldwide economic downturn and refineries cut back on imports of copper ore concentrates, which subsequently led to low stock levels. Now, with some companies in danger of running out of stock, Nantong expects a further rise in imports of copper ore concentrates in coming months.
The inspectors are also warning of cargo shortfalls. According to official statistics, between January and April, inspectors found that five loads out of 36 of copper ore concentrates had a total shortfall of 578.4 tons, worth a compensation figure of nearly Rmb4m. In January, the vessel Thia Matina from Peru had a shortfall of 165.34 tons, or 1.5 per cent of the load claimed on the official documentation. Inspectors believe that the shortage of that vessel alone amount to Rmb1.31m in compensation. Within three days of the May Day holiday, a total of 980 new flats exchanged hands in Nanjing, capital of Jiangsu province. Three major property developers in Jiangsu, Xincheng Real Estate, Xixia Construction and Suning Global were said to have done so well over the past four months that their shares have soared. Shares in Suning Global alone rose by more than 20 per cent over a six-day period in late April/early May.
As property sales rise, the three companies have restarted expansion strategies, by buying new land, raising sale prices and starting new building projects.
According to the Yangtze Waterway Bureau, the 882km section between Yichang and Luzhou has been upgraded to accommodate vessels of 1,000 dwt and barge fleets of 3,000 dwt. As a result, the Yangtze has become the main transport artery for companies in Sichuan and Chongqing.
Total freight volumes via the waterway from Chongqing, Luzhou and Yibing are reported to be greater than via rail. Last year, 68 per cent of the freight volumes to and from these major port cities carried via the Yangtze. Cargo throughput at China’s main ports totalled some 500m tons in April 2009, down 1.9 per cent from a year earlier, according to an estimate by the Ministry of Transport. However, daily throughput was expected to be 3.2 percentage points higher than in March.
Cargo throughput for domestic trade was put at 340m tons in April, up 0.1 per cent compared with the same period last year. This would be the first year-on-year growth in 2009, according to the ministry. The upturn was largely attributed to the government’s Rmb4,000bn stimulus package and support plans for key industries.
By contrast, cargo throughput for foreign trade was expected to fall nearly 6 per cent year-on-year in April to 160m tons due to falling international demand. According to a press conference at the Ministry of Transport on 5 May, 1,263 toll stations on Grade 2 highways have so far been abolished, covering 70,800 km of road and amounting to 65 per cent of the national total. Toll stations in Shandong, Jiangsu, Anhui, Fujian and Jiangxi provinces were among the first to be dismantled. During the recent May Day holiday, other toll stations in Heilongjiang, Jiling, Liaoning, Hebei, Henan, Hubei and Hunan were abolished.
The tolls were collected to pay back local government loans for building Grade 2 highways.
By 2012, all these toll stations will be abolished. In future, according to officials from the State Development and Reform Commission, Rmb26bn from the fuel consumption tax will be set aside each year to help pay back local government loans and maintain the roads.
The State Development and Reform Commission invited experts and scholars from the State Council Development Research Centre, China Academy of Social Sciences and State Macro Economy Research Institute to a seminar on 28 April on the transfer of industries from the coast to the interior.
Representatives from these influential national think-tanks discussed the importance and challenges of such large-scale industrial transfer and measures that the government should take to facilitate the transfer. The seminar concluded that a planned industrial transfer would further open up the interior and also give space for the coastal region to upgrade its industries and improve its competitiveness, thereby rationalising the country’s industrial landscape.
Foreign trade in the interior region in the first quarter declined by 20.8 per cent year-on-year in the first quarter of 2009 to US$17.4bn, 4.1 percentage points worse than the national average. Out of this total, exports slid by 16.2 per cent to US$10.3bn while imports declined 26.6 per cent to US$7.1bn.
The downturn was due primarily to the extremely low prices being fetched for primary products in world markets. Some companies exporting raw materials have either suspended production or completely shut down. Gansu province, for example, a major exporter of raw materials, recorded a decrease of nearly 52 per cent in foreign trade, the country’s biggest decline in the first quarter.
However, the interior region recorded a 46.2 per cent increase in fixed assets investment in the first quarter to Rmb504bn, 18.1 percentage points higher than the national average, largely due to the central government’s stimulus package that favours the interior.
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