The steady price increase in China-made goods has come to an end and bargaining power has shifted back to overseas buyers, according to executives at Li & Fung, the world’s largest trade sourcing company. After almost four years of steadily increasing prices for goods made in China a deflationary price trend emerged over the last months. According to analysts, prices fell between 5 and 10 percent in 2008 and are expected to drop further in 2009.
As global commodity prices have tumbled and political instability is on the rise in Africa, Chinese investors have become more hesitant. Until very recently China has filled the vacuum left by Western companies unwilling to invest in unstable or politically denounced countries. China will continue to play an important role in Africa’s investment growth, but new projects in the planning stage might face a tighter scrutiny as the economic factors around commodities have changed significantly.
Peng Sen, deputy director of the National Development and Reform Commission (NDRC), announced China’s plans to loosen the government grip on investment project approval. In an effort to increase enterprise confidence when making investments, China is willing to give companies more power in investment decisions. The measures could include granting private capital wider access to more sectors, and reducing the number of enterprises that need government approval on investment projects.
In its annual report on the Chinese military, the Pentagon urged China to be more transparent about its defense spending and military build-up. The report further criticized a continuing deployment of more missiles across the coast from Taiwan, which the Pentagon fears could be used to apply pressure on Taipei towards a settlement of the dispute between both countries. The release of this year’s report sparked strong criticism in China.
