China Economic Scan: Jun 24, 2009

25-June-2009

China Economic Scan - Your daily update on the Chinese economy.

In this edition: OECD raises China growth forecast to 7.7%, China defends export limits and counters with own complaints, more Chinese investment in Australia said to be inevitable, S&P signs MoU with Shenzhen stock exchange, Chinese stocks rally on Wednesday.

Top 5 headlines

OECD Raises China Growth Forecast to 7.7% on Stimulus Measures

The Organization for Economic Cooperation and Development raised its forecast for China’s economic growth and said stimulus measures may spark the biggest boom in urban investment since the early 1990s.
China’s economy will grow 7.7% from a year earlier, up from a 6.3% forecast in March, the Paris-based group said in a report today. Gross domestic product will climb 9.3% next year, up from an 8.5 percent estimate, it said.
“In the last two to three months China has turned its economy around,” said David Cohen, an economist with Action Economics in Singapore. “Government officials are increasingly confident that they’ll get closer to their 8 percent growth target than many feared a few months ago.”

China Defends Export Limits, Highlights Its Own Trade Complaint

China’s government said it will contest complaints to the World Trade Organization from the European Union and the U.S. that the nation unfairly limits exports of raw materials such as magnesium, coke and zinc.
The policy aims to protect the environment and natural resources and “is in accordance with WTO rules,” the Ministry of Commerce said in a faxed statement today.
The EU and U.S., which yesterday lodged their third joint complaint against China, allege that the nation’s export taxes keep material costs lower for domestic steel and manufacturing companies. Today, China called for a WTO probe of U.S. restrictions on poultry imports and the trade body’s former chief, Mike Moore, warned that the world is in “dangerous waters” as protectionism increases.

More Chinese investment in Australian resources "inevitable"：Australian expert

Australia and China both have the need to enhance cooperation in trade and capital flows and there is "inevitably" going to be more investment from China in Australia's resources industry, said Owen Hegarty, G-Resources Group Ltd., senior Australian expert in mining industry Monday in Hong Kong.
As a country with a relatively small GDP, Australia has the need to enhance cooperation in capital flows with China, said Hegarty in a gold investment forum held in Hong Kong.
Hegarty considered it inevitable to have further Chinese investment in Australia's resource industry, despite the cancelled tie-up deal between Chinalco and Rio Tinto recently.

S&P joins forces with Shenzhen Stock Exchange

Standard & Poor's is joining up with the Shenzhen Stock Exchange (SzSE) in China to cooperate on index development and product listings.
The index provider today signed a memorandum of understanding, which authorises S&P to use its securities information to create and launch a series of investable and benchmark indices in China to meet the growing needs of global investors.
It will also license the S&P 500 to allow the SzSE to develop a listed open-ended fund through its Qualified Domestic Institutional Investor program, which allows Chinese institutional investors to access overseas markets.

Chinese Shares Up On Ore Discovery

The Shanghai stock market climbed to one-year high on Wednesday. Commodities stocks led the rally after a huge iron ore deposit, which is said to be Asia's biggest, was found in China's northern province of Liaoning.
While Chinese steel markers are in tough price negotiations with major iorn ore miners, China said Wednesday that it had discovered Asia's biggest iron ore deposit in Liaoning province. Local officals estimated the mine has reserves of at least 3 billion tonnes and could start production next year.
The newly discovered mineral deposit boosted the stock of China's biggest Baoshan Iron & Steel up 3.0% to 7.20 yuan ($1.05). The country's No.2 Angang Steel Co rocketed 7.4% to 14.18 yuan ($2.08). The Shanghai Composite Index as a result surged 1.0% to 2,922.30, the highest since July last year.

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