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Business Tianjin Magazine - Business English Magazine in China
Trade surplus 'to decrease more' in 2011
Tuesday, 08 March 2011 11:06
Targeted imports will rise while export growth set to slow down.
BEIJING - The trade surplus will decrease further this year and may even go into deficit for a few months, Minister of Commerce Chen Deming said on Monday.
This will be due to increased imports of high-tech products, green technology, resource-related goods (such as iron ore) as well as simplified procedures and tariff cuts on certain items, he said.
But grain imports will not rise sharply, to prevent volatility on global markets, he added.
The surplus has been in decline in recent years. In 2010 it decreased by 6.4 percent, from a year earlier, to $183.1 billion. This followed a 34 percent fall to $196.1 billion in 2009, from a year earlier.
In January, the surplus dropped by 53.5 percent year-on-year to $6.46 billion.
"The surplus will further drop in 2011. While export growth will decelerate, import growth will accelerate," Chen said at a news conference on the sidelines of the annual session of the National People's Congress.
"The main target this year is to cut the trade surplus through stabilizing exports and expanding imports."
Import growth outmatched the increase in exports in recent months as global demand remained fragile and commodity prices surged.
In 2010, exports grew by 31.3 percent, compared with 38.7 percent for imports.
In January, exports rose 37.7 percent, compared with 51 percent growth for imports.
During the November meeting of G20 finance ministers and central bank chiefs in Seoul, the United States proposed a ratio of trade surplus or deficit to a nation's GDP be set at 4 percent, in a bid to solve global trade imbalances. But a number of countries rejected the proposal.
Last year, the surplus-deficit ratio of GDP in the current account was 3.2 percent for China, but "it's hard to say whether the figure will drop to below 3 percent or not, but it will definitely get smaller", Chen said.
Zhou Shijian, a senior trade expert, described China's commitment to boost imports to balance trade as "wise" as it reduces friction with other nations.
The US has asked China to appreciate its currency to reduce the trade deficit, but Chen reiterated that reform of the exchange rate will be "gradual" and "controllable", and it's unreasonable to accuse China of keeping the yuan undervalued, he said.
According to some foreign media reports, the Ministry of Commerce is considering a tariff reduction on high-tech products and resource-related goods and is seeking opinions from other ministries.
"Simpler import-related procedures are a priority, and we are also considering reducing import tariffs on some goods," Chen confirmed.
Jia Kang, head of the institute of fiscal science, a think tank affiliated to the Ministry of Finance, said "we should firstly consider resource-related and high-tech goods when it comes to import tariff reduction. Relevant policies will probably come out soon. But it's not time to consider luxury and high-end goods."
Chen said at the news conference that China will "probably allow some of the made-in-China luxury goods to be directly sold in China", which is currently prohibited.
In three years, China will exempt import tariffs on more than 95 percent of categories of goods from the least-developed nations, he said.
Chen also urged the developed nations, including the US and European Union countries, to loosen restrictions on high-tech exports to China.
China to force internet companies to help in probes
Friday, 30 April 2010 16:05
April 29 (Bloomberg) -- China passed amendments to its state secrets law that requires the nation’s telecommunications carriers and internet companies to assist authorities with investigations of leaks.
Transmission of state secrets over public information networks must be stopped immediately once discovered, according to a copy of the amendment distributed at a press briefing in Beijing today. Network operators must also keep records of transmission and report possible leaks to authorities.
The new requirements may be an additional challenge to foreign technology companies in China such as Yahoo! Inc., Microsoft Corp. and Cisco Systems Inc., which have been criticized by U.S. lawmakers who say they help the Chinese government censor information. Google Inc. shut its China search site in March after saying it was no longer willing to censor content as required by Chinese law.
“Foreign companies may have some difficulties with these requirements on an ethics front,” said Edward Yu, chief executive officer of research company Analysys International. “It won’t have much of an impact on Chinese companies and users because it’s something they don’t have a choice about it.”
Changes to the law are aimed at making people, companies and organizations more responsible for protecting state secrets, according to the amendments that were passed by Chinese legislators today.
State-Owned Carriers
All of China’s telecommunications carriers are state-owned. China Mobile Ltd., the nation’s biggest wireless carrier with 539 million users, has more subscribers than the combined populations of the U.S. and Japan. China had 384 million Web users at the end of 2009, the most of any nation, according to the China Internet Network Information Center.
The amendments passed today also require network operators to keep records of transmissions and report possible leaks of state secrets to authorities. They must also delete information from networks upon government request.
“In my opinion, it is likely that we will witness an actual tightening of the state’s grip on information,” Flora Sapio, a lecturer on Chinese legal institutions at the University of Naples L’Orientale, wrote in an e-mail. “Given the broad definition of state secrets, another consequence may be a restriction of privacy rights in the name of security.”
The amendment’s definition state secrets includes items that damage the country in fields ranging from defense and diplomacy to “national economic and development” projects and technology. The government also has the power to label anything else a state secret, it said.
State Secrets
“State secrets without protection are not allowed to be spread on the public internet,” Du Yongsheng, deputy director of the National Administration for Protection of State Secrets, said at today’s briefing in Beijing. “This is a universal regulation all over the world.”
Google began redirecting traffic from its Chinese home page to its unfiltered Hong Kong site last month, after saying in January that the company would stop censoring search results. The Mountain View, California-based company opened its Google.cn Web site in China in 2006, agreeing to exclude links to content banned by the government.
China censors pornographic, gambling and political content by shutting locally based sites and blocking access to foreign ones such including those of Facebook Inc. and Google’s Youtube. The government control content in traditional media through state ownership of all newspapers, television and radio stations.
Former Yahoo Chief Executive Officer Jerry Yang apologized to the mother of an imprisoned Chinese dissident during a 2007 Congressional hearing looking into the company’s decision to give Chinese officials the man’s e-mail records. Executives from Yahoo, Google, Microsoft and Cisco were called to testify in 2006 before U.S. lawmakers on their activities in China.
Yahoo, which sold its Chinese business to Alibaba Group Holding Ltd. in 2005, is “committed to protecting our users’ right to freedom of expression and privacy,” said Dana Lengkeek, a spokeswoman for Yahoo.
China defines commercial secrets, tells firms to protect them
Tuesday, 27 April 2010 15:16
SHANGHAI—China's government on Monday offered broad examples of what constitutes a commercial secret, following criticism during a recent trial of Rio Tinto PLC executives that its framework lacked transparency.
The trial highlighted the issue as a major vagary of doing business in China. Even after the four men were found guilty, almost nothing was known of what commercial secrets they allegedly stole, offering little guidance for companies moving forward.
However, the fresh parameters offered in a Monday statement by the state-owned Assets Supervision and Administration Commission were wide-ranging and vague, and may have done little to clarify matters.
The government mainly emphasized how companies hold responsibility. Chinese companies "should attach great importance to the protection of trade secrets," said the commission, which oversees the government's holdings in more than 120 of the country's biggest business groups.
In its 34-clause notice, the commission said secrets range from financial information to strategic plans, from technology to mergers, procurement to restructuring—virtually anything that hasn't been publicly disclosed and could hold economic value to the company.
China's government traditionally has characterized secrets in broad terms, as both commercial information that it fears undermines the interests of its corporations and as state secrets that may put the nation's sovereignty at risk. Information in foreign hands is regarded as particularly sensitive. Chinese courts have been known to convict citizens on secrets charges for mailing newspaper clippings overseas.
China's obsession with secrets was highlighted at the recent trial of the executives of Anglo-Australian miner Rio Tinto. The salesmen were detained last July on allegations of taking state secrets, and later formally arrested, tried and convicted on charges they stole commercial secrets.
The rules, announced Monday, are dated March 25, the day after the trial ended. It is unclear whether they had any bearing on the trial, which also included bribery charges. In sentencing the four men to terms of seven to 14 years on March 29, the judge made no reference to any new guidelines.
The sentences suggested the court considered the commercial-secrets violations as lesser offenses than bribery. Australian Stern Hu was sentenced to five years in jail for illegally obtaining commercial secrets and seven years for taking bribes, for a total sentence of 10 years plus fines.
But secrets were a particular concern for foreign businesses. Chinese prosecutors never publicly detailed what information the men—who were later fired by Rio Tinto—possessed. When they were sentenced, the judge said the secrets primarily involved how much Chinese steelmakers were willing to pay for iron ore, information executives at other companies considered routine market intelligence.
Under the newly published rules, details of negotiations involving government-owned companies—such as iron-ore pricing talks—are considered commercial secrets.
The Chinese steel industry previously paid more attention to core technology secrets, while business information was sometimes poorly protected, said Bai Fang, spokesman with Wuhan Iron & Steel Group. "The rules make the steel industry realize that some operating information constitutes commercial secrets, too," he added.
State companies now are required to classify commercial secrets internally, by their importance. In some cases, commercial secrets relating to operations and technology of state companies will be deemed national state secrets, the rules said.
Some secrets at central government-owned companies, the notice said, will have expiration dates. Employment contracts at the companies will now require confidentiality clauses, it stated.
The rules didn't offer details of how violations will be penalized, except to say breaches will be referred to judicial authorities.
U.S. and China make progress on beef, software trade
Thursday, 16 December 2010 10:28
(Reuters) - Top U.S. and Chinese officials said on Wednesday they had made progress on beef, software and other bilateral trade irritants, reducing some friction ahead of a presidential summit next month.
"The understandings that we reached today will help to protect American jobs and bolster America's competitiveness and help to grow our economy," U.S. Trade Representative Ron Kirk said at the conclusion of two days of talks.
Beef exporters hailed Chinese Vice Premier Wang Qishan's statement that China, in accordance with scientific principles and quarantine standards, would "resume the imports of American beef, both deboned and bone-in, under the age of 30 months."
Its market has been closed to U.S. beef since 2003, when the first case of mad cow disease was found in the United States. But some other countries, including South Korea, already buy U.S. beef with the 30-month age limit.
Reopening the Chinese market could mean "about $200 million in annual beef business," said Joe Schuele, a spokesman for the U.S. Meat Export Federation.
Agriculture Secretary Tom Vilsack said a U.S. team would travel to China in early January for technical talks on a staged reintroduction of U.S. beef into the market.
He also welcomed a Chinese decision to lift a ban on poultry from in Idaho and Kentucky, also imposed because of disease concerns.
The announcements came at the conclusion of the 21st U.S.-China Joint Commission on Commerce and Trade, an annual bilateral forum to resolve trade irritants.
U.S. EXPECTS CONCRETE RESULTS
Wang also promised China will actively fight copyright piracy by promoting greater use of legal software, and will submit a revised offer to join the World Trade Organization's government procurement pact, he said.
"We expect to see concrete and measurable results on issues like intellectual property rights, including increased purchases and use of legal software in China," Kirk said.
The two sides signed seven agreements, including one to promote cooperation and information sharing regarding Chinese investment in the United States.
Other pacts covered inspection and quarantine procedures for soybeans, energy grid standards, water monitoring and trade development programs.
Commerce Secretary Gary Locke said he expected further, broad trade deals when Chinese President Hu Jintao comes to Washington in January.
Some U.S. industry officials expect Hu to be accompanied by a large delegation of Chinese businesses announcing purchases of U.S. goods potentially worth tens of billions of dollars.
The U.S. Chamber of Commerce said the meeting yielded progress on several of their concerns, but urged the two governments to agree on "metrics" to measure results.
"We note that today's promises must be measured not by words on paper, but by tangible progress on the ground," said Myron Brilliant, the business group's vice president for international affairs.
U.S. officials welcomed a pledge that Chinese government procurement decisions would not discriminate against products containing intellectual property developed outside of China.
That addressed one major concern about China's "indigenous innovation" policies, the U.S. officials said.
BILATERAL INVESTMENT PACT
The two sides also agreed to take steps to promote bilateral investment. That's a priority for China, whose companies' attempts to invest in the United States have sometimes been challenged on national security grounds.
"Chinese businesses are very confident about investing in the United States" and would like the two countries to complete work on a bilateral investment pact to establish clearer ground rules, said Chin's Commerce Minister Chen Deming.
The United States also agreed to consider accelerating talks on China's desire to be designated a market economy under U.S. trade law, Wang said. Beijing believes that would lead to more favorable treatment in anti-dumping cases brought by U.S. companies against Chinese imports.
U.S. officials promised to consider China's interest in importing more high-technology products from the United States as the Obama administration continues its reform of national security export controls, Wang said.
A major irritant -- U.S. concerns about China's "undervalued" yuan currency -- was not on the official agenda for this week's meeting but lurked in the background.
Wang met on Tuesday with Treasury Secretary Timothy Geithner, who has been at the forefront of U.S. efforts to push China to let its currency rise more quickly in value as part of an effort to reduce global trade imbalances.
An effort in the Senate to pass legislation to pressure China to allow a faster appreciation of the yuan fizzled this week. That likely killed the effort for this year, although supporters may mount an uphill effort to attach the measure to other legislation before Congress adjourns.
China sets antidumping probe
Friday, 23 April 2010 16:56
BEIJING—China's Commerce Ministry launched antidumping inquiries into imports of a chemical product and optical fiber from the European Union and the U.S.—an apparent response to Wednesday's move by the U.S. to investigate Chinese aluminum.
China also finalized an antidumping ruling on some nylon imports. Analysts say the latest moves by both countries could possibly revive strains over trade and currency that had eased in recent weeks.
Beijing has recently become more aggressive in trade disputes, and the nylon ruling, stemming from an investigation that began a year ago, comes ahead of high-level bilateral talks between China and its two largest trading partners, the EU and the U.S.
In finalizing the ruling on imports of nylon 6, or polycaprolactam, from the U.S., the EU, Russia and Taiwan, China hit the U.S. with the highest duty for the material, which is used to make goods ranging from toothbrushes to gun frames to chiffon.
The ministry also launched probes into imports of two products: The first is caprolactam, a widely used synthetic polymer that the government was asked to investigate last month by two units of China Petroleum & Chemical Corp. The second is a kind of optical fiber used in telecom transmission. Several local manufacturers had asked the ministry to investigate the imports. Both investigations will last for 12 months and can be extended until October 2011 under special circumstances, the ministry said.
The measures come on the heels of the U.S. Commerce Department's move to launch an investigation into whether certain forms of aluminum made in China are being unfairly subsidized and dumped, or sold at less than the fair value, in the U.S. market. At issue are Chinese-made aluminum forms used in window and door frames as well as gutters and elements in cars, trucks and boats.
The U.S. investigation, sought by American makers of the aluminum products and the union representing their workers, could lead to imposition of duties on the Chinese imports as soon as June, if the Commerce Department finds evidence of unfair trade practices.
The U.S. manufacturers also alleged in their petition that the undervaluation of the Chinese yuan serves as an unfair subsidy. But Wednesday's decision to start an inquiry doesn't rule one way or the other on that allegation, and a U.S. Commerce Department official said, "We are still considering the specific allegation on currency manipulation."
U.S. companies previously petitioned the U.S. government—in 10 other cases over the past few years—to investigate whether an undervalued Chinese currency served as a de facto subsidy for its exports. U.S. government officials, in each of those cases, declined to pursue investigations, citing insufficient information.
Before the department makes a preliminary decision on whether to impose punitive tariffs, the U.S. International Trade Commission must first determine whether the increase in imports has harmed U.S. manufacturers. That "injury" determination is expected by May 17. If the ITC delivers an affirmative decision, Commerce could impose countervailing duties as early as June 24 and antidumping duties by Sept. 7.
The U.S. is already pursuing a separate investigation into allegations of unfair trade practices involving Chinese coated paper.
European Commission President José Manuel Barroso is leading a delegation of EU commissioners at the end of this month for talks with China Premier Wen Jiabao. In late May, the U.S. and China will hold their Strategic and Economic Dialogue in Beijing.
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