China Continues to Control High Pollution Project

On May 31st China's Ministry of Industry and Information Technology (MIIT) announced an order to continue controlling calcium carbide projects, in response to the overcapacity in the high pollution sector. The order required the provincial, municipal and regional governments to supervise the calcium carbide manufacturers that have not got the production permit to submit applying information. MIIT has checked three groups of calcium carbide manufactures and issued the qualified with production permit, since the Permit for Calcium Carbide Industry was announced in 2006.  To protect the qualified manufacturers to reduce cost by cutting input in treating pollution, MIIT required the local governments to supervise and check these manufacturers.
    In order to spur the investment from firms, the State Council of China recently decided to adjust the proportion of capital in the current fixed asset investment. This proportion was cut down for the new projects in encouraged industries such as the rail transit, coal, airport, railway, highway, housebuilding, potash, while it was increased for the new projects in high pollution and high energy consumption industries such as calcium carbide, ferrous alloy, caustic soda, coke, yellow phosphorus, electrolysis aluminum and corn deep processing. This policy aimed to increase the permit conditions entering into the unfavorable industries.
    The National Bureau of Statistics (NBS) recently disclosed the production data for 69 kinds of major industrial products in April. Fifteen products witnessed a double digit growth, including large tractor (65.5%), medium tractor (43.7%), equipment for treating air pollution (19.9%), gasoline (19.6%), automobile (17.9%), pesticides (14.1%), cement (12.9%), and compound fertilizers (10.5%). The April output of other 18 products including coal, chemical fibers, crude oil, sulfuric acid and pig iron also grew ranging 0.4% to 9.9%. Thirty six products posted a decrease, including sugar (57.7%), integrated circuit (17.7%), fabrics (0.9%), plastic resins (1.2%), power (3.5%), crude steel (3.9%), computer (5%) and washing machines (5%).  
   NBS also announced the production value added and the profit for the totaled 39 industrial sectors in the first four months of 2009. The petroleum processing and coking sector recorded a profit of RMB26.66 billion, up 181.3% year over year. The chemical fiber manufacture sector suffered a drop of 57.6%, narrowed from a drop of 87.5% in the first quarter this year. The iron and steel sector reported a 97.5% drop. The production value added of the petroleum and natural gas exploration sector annually increased 10% for January-April, and 15.7% for April alone. The growth of the pharmaceuticals manufacture sector was 12.5% in April and 14% for January-April. The plastic product sector reported a growth of 10.3% and 8% respectively for April and Jan-Apr. The chemical raw materials and product manufacturing sector accumulated a growth of 5.2% for the first four months, 9.5% in April alone. The rubber product sector increased 5.1% in April and brought an accumulative growth of 1.1% for Jan-Apr compared to a 0.6% drop in the first quarter. The production value added of the chemical fiber manufacture increased 4.4% in April, cutting the accumulative drop from 4.3% in the first quarter to 1.8% in the first four months.  The production value added of the petroleum processing and coking sector decreased 5.1% accumulatively between January and April, and 5.0% in April.
　　CPI and PPI in May dropped 1.4% and 7.2% respectively over one year earlier.


Zhong Weike
June 11th, 2009