China strengthens its position in world market

Politics Materials 1 November 2007 12:05 (UTC +04:00)

The number of the Chinese 'blue dibs' in the ten of the largest companies in the world increased up to ten, but the American dibs decreased up to three. It took place after the cost of assets of the insurance giant China Life Insurance Co. exceeded $259bln. Thus, on 27 October the assets of China Life increased by 6.7% in Shanghai stock exchange and 1.1 in Hong Kong. Thus, China Life went ahead of the leading US operator AT& T Inc. ($253.7bln) and joined the top-list of the most expensive companies in the world.

In addition to China Life, the ten included four more Chinese companies: PetroChina Co. ($451.7bln), China Mobile Ltd. ($14.2bln), Industrial and Commercial Bank of China Ltd. ($343bln), and China Petroleum and Chemical Corp., or Sinopec ($265bln).

The increase in the cost of Chinese companies took place due to the continuing agiotage in Shanghai stock market, of which index increased by 196% since the beginning of the year, as well as in Hong Kong - 57%. The Chinese people are concerned of the increasing inflation which have already exceeded planned level of 3.5% and therefore, allocate their monies in purchasing assets.

In addition, the amount of the investments into the Chinese enterprises, real estate and other assets increased by 25.7% in the first fine months of 2007 as compared to the same period of the last year.

The head of the Country tries to maintain the growth of the investments into real estate and other spheres of the economy, including machine-building and light industry. The Chinese government considers that the rate of the investment growth is very high and it may bring to the financial crises in the Country. However, the taken measures still can not cope with the money flows coming to the country from the export of the Chinese commodities.

In addition, China intends to decrease the dependence of its economy from the export and increase the expenses of the consumers in order to decrease the large surpluses of the payment balance, said the President of China, Hu Jintao said. Hu approves China's efforts for more flexible currency rate and gradually refusal from the State instruments controlling the capital movement. To ensure the balance of economic growth, China needs to rapidly acquire new technologies and to increase the consumption of raw materials, Hu said.

The Chinese yuan increased by 7.9% in relevant to dollar since the 2.1% revaluation in July 2005. According to the governments of the Eurasian countries, the current rate of the Chinese yuan presents large problems for the single European currency. Therefore, Europe decided to go in the way beaten by the USA and require China to increase the cost of their national currency. The Eurasian countries state that the Chinese national currency strongly jeopardizes the exports of the EU countries.

After the Euro was put into operation in 1999, it increased by 25% in relevant to Japanese yen and 21% in relevant to USD. However, after the Chinese government toughened its currency policy in 2005, the growth of Euro in relevant to yuan made up only 8% and the USD maintained its ratio to yuan at 7%.

The forecasts regarding China testify that by 2015, China will be the second country after the USA for the amount of the consumer market, the reporters of Boston Consulting Group consider. According to the searches, the most perspective commodities of China are electric and home appliances.

Thus, in 2010 the Chinese market will exceed all European markets and will stay at the third place after the USA and Japanese and by 2015 China will press Japan to the third place. According to the data by Euromonitor, the amount of the consumer market of China in 2006 totaled almost $529bln and by 2011 it will increase up to $690bln. However, less active dynamic will be observed during this period in Japanese and German markets (from $970bln to $1trln in Japan and from $558bln to $585bln in Germany).

Some 67% of the questioned Chinese people mostly purchase televisions, tape-recorders and players. The hope appliances take the second place. Almost half of the questioned Chinese people plan to increase their expenses, but not less than 20%.

As regards to the Chinese production for export, since spring the officials and companies from the USA and Canada made many claims on the commodities exported from China. The Canadian Menu Foods refused to purchase feeds for the animals. In May the USA imposed a ban on the export of toothpaste from China.

In its turn, China stated that they do not like the quality of the US products. China's Quality Inspection (Aqsiq) made clear that the US commodities do not meet security standards.

China imposed a ban on use of several hazardous substances and toughened control on the security standards of the commodities exported to the USA. It was made clear that not producers, but maker-companies from the USA are guilty for defects with Chinese toys. Holding an inspection, in July the Chinese control department made clear that some 20% of the commodities in the internal market is dangerous.

Data of RBK daily, Bloomberg, k2kapita

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