China Economic Scan - Your daily update on the Chinese economy.
In this edition: Geithner says China has confidence in US economy, China to speed up nuclear power development, China alocates $878m for low-rent housing, Goldman Sachs sells shares in ICBC for $1.91bln, Chinese stocks edge up on Tuesday.
Top 5 headlines
Geithner Says China Has Confidence in U.S. Economy
- Treasury Secretary Geithner said China, the biggest holder of U.S. Treasuries, has expressed confidence in the U.S. economy and the Obama administration’s actions to fight the recession.
- “China will be shooting themselves in the foot if they push this issue too hard,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “If they are too alarmist and contribute substantially to a dollar and Treasuries sell off, they are going to feel more pain than just about anybody in the world.”
- “You have established good working relationships with your Chinese colleagues and you are committed to increasing China-U.S. cooperation in tackling the international financial crisis,” President Hu Jintao said at a meeting at the Great Hall of the People. “I appreciate that.”
Official: China to speed up nuclear power development
- China's nuclear power capacity is expected to reach about 5% of the country's total power capacity by 2020, according to National Energy Administration (NEA).
- The target is higher than the original one set in 2007, which aimed for a nuclear power capacity of 40 million kw by 2020, taking up 4% of the total power capacity.
- At present, China's nuclear power takes up 2% of the total power generation, while coal-fired power covers more than 80% of the total. 15% of world power generation comes from nuclear energy.
China allocates $878 mln for low-rent house building fund
- China's Ministry of Finance (MOF) announced Monday that the central government had earmarked the second batch of 6 billion yuan (878 million U.S. dollars) as special fund for low-rent house building projects across the country this year.
- The central government allocated the first batch of 7 billion yuan fund for this purpose in April, thus completing the goal of providing 13 billion yuan of subsidy for this year.
- Figures released on May 21 by the National Development and Reform Commission, China's top economic planner, showed that 214,000 low-rent housing units had been built by April since the government launched the 4-trillion-yuan stimulus package last November, with construction on another 650,000 units underway nationwide.
Goldman Sachs Raises $1.91 Billion Selling Shares in ICBC
- Goldman Sachs Group, which wants to return $10 billion this month to the U.S. government, raised HK$14.8 billion ($1.91 billion) by selling shares of Industrial & Commercial Bank of China after the stock jumped 29% in two months.
- The New York-based firm sold 3.03 billion Hong Kong-traded shares, or a 0.9% stake in the Chinese bank, at HK$4.88 apiece.
- “It’s very opportunistic, and obviously they’re not the first to come to the market to do that,” said Douglas Ciocca, a managing director at Renaissance Financial Corp. “It’s a prudent reallocation of capital because they still have a big remaining stake in there.”
China’s Stocks Rise to 10-Month High; Developers Lead Advance
- Chinese stocks were mixed on Tuesday with the Hang Seng falling -2.64% to 18,389, but Shanghai Composite registered a small gain of +0.11% to 2,724, and Shenzhen Component rose +0.60% to 10,484.
- Huaxia Bank, partly owned by Deutsche Bank, dropped -1.1% to 10.08 yuan. The bank said 1.58 billion shares, or 32% of its share capital, will become tradable on June 8. The stock is owned by 25 of its biggest shareholders, it said.
- Anhui Jianghuai Automobile, China’s second- biggest light-truck maker, jumped +4.3% to 6.10 yuan after yesterday’s trading suspension. The company said it has no “immediate” plan for any restructuring that involves Chery Automobile Co. Ningbo Yunsheng Group lost -3.9% to 11.14 yuan. The company said its biggest shareholder sold 3.75 million shares, or 0.95% of the company’s total.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 18,389 | -499.51 | -2.64% |
| Shanghai Composite | 2,724 | 3.02 | 0.11% |
| Shenzhen Component | 10,484 | 62.98 | 0.60% |
| TAIEX | 6,949 | -5.02 | -0.07% |
| CNY/USD | 6.8355 | 0.0084 | 0.12% |
Source: China Economic Scan
