Economy Growth Remains High

Something I learned from Auto China 2006, held in Beijing on
November 19-27, is that China’s economy is being pushed by the
strongest motor and is becoming the market with the largest
attracting power to the world. More than 600 000 people attended
the show. Nearly all of the world’s leading auto manufacturers
showed their excellent autos, and they designated China as one
of the most important auto markets, with the largest consumption
capability in the world.
   Another voice from the government continues to warn people
of overheated growth. The growth of China’s GDP for the first
three quarters this year was recently announced as 10.7%,
compared with 10.9% in the first two quarters this year and 9.9%
in the same period of 2005. That may be the reason for the release
of a new policy to restrict credit. The latest news from the
central government discloses that the GDP growth for 2007 is
targeted at 8%, which is thought to be a difficult target by the
economists, who forecast the GDP growth will remain around 10%.
Investment in high pollution industries and high
energy-consumption industries will be moderately reduced. The
chemical industry again becomes the first sector to be subjected
to controls.
   A biomass energy alternatives forum was held in Beijing on
November 28-29, which attracted more than 250 attendees. The
number of attendees discloses what an energy situation China is
facing!
   Today is another scheduled date for China to open up the crude
oil and oil products business to foreign companies, according
to the WTO accession agreements. The current central government’
s control of the crude oil business and Sinopec Group’s and CNPC’
s monopoly of the wholesale of oil products will be broken up.
Once local private firms cooperate with foreign firms, China’
s petroleum trade will certainly change a lot. Products,
management and service principles from oversea will have a
positive impact on the local market, therefore local refineries
will merge with each other to improve their competitive edge in
the new business environment.


Merry Christmas and Happy New Year!

Zhong Weike
December 11th, 2006