Dec. 2 - This is a regular series of relevant industry news from around China.

Air transport

Hainan Airlines Co Ltd.’s Grand China Air will launch flights between Yinchuan, Shijiazhuang and Hefei starting December 10.

The Taiwanese government has approved a fourth rate cut for fuel surcharges of 14.3 percent on short- and long-haul lines beginning December 10.

Mandarin Airlines and its parent company China Airlines Ltd. will open a new route between Kaohsiung, Taiwan and Seoul, South Korea, starting today.

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Dec. 2 - U.S. Treasury Secretary Henry Paulson is on his way to Beijing for the U.S.- China Strategic Economic Dialogue to begin on Thursday. One of his main goals include convincing Beijing to allow Wall Street greater access to the Chinese market, reports the Wall Street Journal.

Mr. Paulson is calling for more market access for American companies entering China. He will have a tough time arguing that Western investment banks, insurance companies and other financial firms will bring economic growth to the country.

According to the Business Cycle Dating Committee of the National Bureau of Economic Research, the United States has been in recession since December 2007. This is in addition to the U.S. markets currently saddled by its mortgage-backed securities.

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Dec. 1 - China is likely to gain in increased FDI as a result of last week’s terrorist attacks on India says Chris Devonshire-Ellis, senior partner of Dezan Shira & Associates. “If foreign investors have been looking at India as a financial benchmark to China’s increasing manufacturing costs, then a slightly higher China price will not affect the decision in India’s favor,” he says. “Global manufacturers want stability and China will benefit from India’s security problems in the short term.”

His comments come as India begins its mop up operations in the wake of last week’s attacks. Several key ministers have resigned, along with the nation’s head of security. “I believe India will now adopt a stricter approach to security similar to the Homeland Security Agency that the United States deployed after the September 11 attacks. It is remains difficult in India right now to enact legislation – state elections are being held at the moment with a national election due in May,” Devonshire-Ellis says. He thinks that the past few administrations have been hampered by not having a clear mandate to work - recent governments have been coalitions – and this has “slowed down Indian progress and made the country overly bureaucratic. Problems obviously exist on a basic security level and it will take a while for these to be put right, they need assistance and advice both from the U.S. and Chinese administrations in this regard.” (more…)

Nov. 28 - China’s senior railway official said that the country’s national rail network will expand by 41,000 kilometers by 2020 and funded by a RMB5 trillion government spending plan.

Lu Dongfu, vice-minister of railways, told media during a press conference in Beijing that by 2020, China’s rail network will total 120,000 kilometers.

This should cut journey times between capital cities into half and make the railway network accessible to 90 percent of the population. The increased spending on infrastructure is part of China’s overall railway plan.

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Nov. 28 - A chief economist at the National Bureau of Statistics said during a forum that China’s inflation rate is forecast to drop below 4 percent in November and December.

Yao Jingyuan’s forecast contrast from a report from the Bank of Communications which predicted that consumer price index (CPI) in November would decrease to 2.8 percent, its lowest level in 17 months.

According to the bank report, decreasing food prices should lead the slide in the CPI and that the index may drop further to 2 percent in December.

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Nov. 27 - China’s central bank has announced that one-year lending and deposit rates will be reduced on Thursday by 108 basis points; four times the usual margin of 27 basis points.

This is the country’s deepest rate cut since October 1997. One-year lending rates in the country will now be pegged at 5.58 percent and one-year deposit rates at 2.52 percent.

The government has been aggressive in implementing measures to buffer its economy from the global financial crisis. The latest interest rate cut is its fourth one since mid-September. “It means the government is moving on more fronts to stimulate growth,” Stephen Green, a Shanghai-based economist with Standard Chartered told AFP.

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Nov. 26 - The World Bank’s latest China Quarterly Update forecasts that the country’s GDP growth rate should reach 7.5 percent next year, down from 9.4 percent.

The report also says that China’s export growth is estimated to reach 3.5 percent from 11 percent. It said that China’s domestic economy and the government’s stimulus policies will be vital in maintaining growth.

“In terms of the effect of China’s slowdown on the world, there’s good news and bad news,” said David Dollar, World Bank Country Director for China, in a press release. “China’s recently announced stimulus package is good news because it will keep China’s growth rate up at a pretty healthy rate and so imports will continue to go into China at a fairly good rate.”

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Nov. 25 - By the end of the year, the China Association of Small and Medium Enterprises (CASME) will establish a RMB3 billion venture investment fund to aid SMEs gather capital.

CASME’s efforts also include the joint issue of an SME corporate bond with the northeastern Liaoning provincial government and starting up a bank with a planned registered capital of RMB10 billion.

“Upon its establishment, the bank will provide loans only for the small and medium sized enterprises. Companies may get as much as 5 million yuan each for their investment and development,” CASME head Li Zibin told China Daily.

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Nov. 24 - China’s leading economist said that the government has decided to increase the individual income tax threshold to spur domestic consumption.

Peking University professor Zhou Qiren told China Daily that the aggressive tax-reduction measures at corporate and personal levels aims to stimulate slowing domestic demand caused by the global economic crisis.

“As far as I know, the National People’s Congress has already reached the consensus to do that (increase the benchmark of individual income taxation),” said Zhou during a management forum held in Beijing.

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Nov. 21 - A top Chinese official has warned that the country is facing critical unemployment problems brought about by the global credit crisis.

China’s social security minister, Yin Weimin, announced measures to control rising unemployment.These include providing information on job vacancies and offering additional training for workers going back home.

Government agencies will also to asked to encourage graduates to seek employment in the private sector or offer better packages for jobs located in underdeveloped regions in the country.

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