Asian economies are suffering under a sharp drop in Chinese imports as a result of the economic slowdown. Taiwanese and South Korean exports to China fell 50 and 33 percent year-on-year respectively. Most Asian countries became heavily dependent on Chinese imports for their economic growth and a regional supply chain pattern developed with China in its center. The drop in Chinese imports dashes the hope of Asian export nations that domestic Chinese demand could help bolster the drop in Western demand. Analysts are expecting the situation to become worse in the following months but are confident about a regional rebound in the second half of the year.
Top Chinese bankers urged the authorities to strengthen control over the country’s rating and credit guarantee systems. A lack of uniform industry standards and regulatory supervision allow many rating companies to operate in an unprofessional and nontransparent way. In 2007 there were about 100 rating agencies operating in China, many of them with close ties to banks and credit guarantee firms.
The second session of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) started today in Beijing. The country’s major political advisers expressed their concerns with China’s economic stimulus package and warned of “overlapping construction”. Detailed expenditures of China’s 4 trillion Yuan ($585.5 billion) will be listed on the website of the National Development and Reform Commission for public enquiry.
Aluminium Corporation of China (Chinalco) Chairman Xiong Weiping tried to downplay Australian authorities’ concerns about the company’s new investment in Australia’s Rio Tinto Group. Chinalco, already Rio’s largest shareholder, plans to invest another $19.5 billion in the Australian mining group as part of China’s $25 billion international commodity investment strategy. The Australian reaction on the Chinese investment plans highlights many countries’ concerns about increasing Chinese control of national companies and resources.
China is using the current low price in crude oil to build up its strategic petroleum reserves. A recently published plan by China’s National Energy Administration announced the construction of nine large refining bases in coastal areas over the next three years. China will also build eight new strategic petroleum reserve bases until 2011 in addition to the existing four bases. Upon completion these measures will increase China’s crude oil reserves to 281 million barrels. As the world’s second largest oil consumer China relies on imports for about half of its oil demand and is expected to import 60 percent of its oil consumption by 2020.
