China Economic Scan - Your daily update on the Chinese economy.
In this edition: Chinese vehicle sales surge 34% in May, Chinese government increases export subsidies, NBS to add 10 000 CPI survey locations, Tsingtao to buy Shandong's Jinan Beer for 250m yuan, Chinese stocks close up on Tuesday.
Top 5 headlines
China’s May Vehicle Sales Surge 34% on Subsidies, Tax
- China vehicle sales surged 34% in May on tax cuts and government subsidies, extending the country’s lead over the U.S. as the world’s largest auto market this year.
- Chinese drivers bought 1.12 million vehicles last month, the China Association of Automobile Manufacturers said in a statement today. Passenger-vehicle sales jumped 47% to 829,100.
- “Sales of small cars have been driving growth,” said Ricon Xia, an analyst with Daiwa Institute of Research (H.K.) Ltd. in Shanghai. “Whether automakers could reverse profit declines this year will depend on demand for big cars and heavy duty trucks that carry bigger profit margins.”
Exporters get sops to fight crisis
- The government has raised tax rebates for more than 600 export items, some up to the maximum level possible, as it stepped up efforts to provide succor to businesses battling the global economic slowdown.
- The Ministry of Finance said yesterday that it had increased tax rebates ranging from 5% to 17% on export products, including ethanol, toys and sewing machines, effective June 1.
- The export tax rebate scheme allows enterprises to get back part or all of the money they have paid in value-added tax, which stands at up to 17%, for items that have gone into the production of export goods.
NBS to add 10,000 CPI survey locations
- China will add 10,000 new consumer price index (CPI) survey locations in an effort to make the statistics more reliable.
- Liu Jianwei, vice dean with the department of urban social and economic survey of the National Bureau of Statistics (NBS) said Tuesday that it is planning to have a total of 60,000 survey spots.
- Currently, the NBS has 3,000 people who gather prices from almost 600 items of commodities and services from roughly 50,000 survey spots at more than 550 counties and cities across the country, said Liu.
Tsingtao to buy Shandong's Jinan Beer for 250m yuan
- Tsingtao Beer, China's second largest brewer, said yesterday it would buy Jinan Beer, a beer producer from Shandong province, for 250 million yuan ($36.66 million).
- Tsingtao said it had signed a contract with Shandong Commercial Group to buy its subsidiary, which has an annual beer output of 300,000 kiloliters and 1.08 billion yuan in total assets.
- Jinan Beer has 30-40% market share in Jinan, the provincial capital of Shandong, and the deal, when finalized, would help push up the share that Tsingtao Beer has in Shandong to 80%, analysts said.
Hong Kong Stocks Fall on Valuation Concerns; Foxconn Tumbles
- Mainland stocks closed up on Tuesday with the Shenzhen Component up +1.21% to 10,740, and the Shanghai Composite up +0.71% to 2,788, but the Hang Seng closed down -1.07% at 18,058, and the TAIEX continued it's 6 day losing streak down -3.22% and about 7% week on week at 6,414.
- Foxconn International Holdings Ltd., the world’s largest contract maker of mobile phones, lost -4%. Citic Pacific Ltd., a specialty-steel maker, lost -6.2%.
- China Huiyuan Juice Group Ltd. plummeted -8.3% after Warburg Pincus LLC pulled out of an investment in the company. Pacific Basin, Hong Kong’s largest bulk shipper, slumped -3.9%. The company was also hurt by a 4.3% slide in commodity cargo rates.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 18,058 | -194.9 | -1.07% |
| Shanghai Composite | 2,788 | 19.55 | 0.71% |
| Shenzhen Component | 10,740 | 128.34 | 1.21% |
| TAIEX | 6,414 | -213.63 | -3.22% |
| CNY/USD | 6.8354 | -0.0019 | -0.03% |
Source: China Economic Scan
