newsroundup

econoMics & traDe

China’s GDP growth slipped to 7.4% year-over-year in the third quarter, the seventh consecutive quarter of declining growth. Consumer prices rose just 1.9% in September, the slowest pace in two years, while producer prices hit a threeyear low. However, the pace of retail sales, industrial production and fixedasset investment growth each picked up in September, triggering speculation of a coming recovery. Industrial production expanded 9.2%, up from 8.9% in August, while retail sales grew 14.2%. Growth in fixed-asset investment, excluding rural households, improved to 20.5%. Trade figures also surpassed expectations, with exports reaching a monthly record of US$186.4 billion, a 9.9% gain on the previous year, and imports increasing 2.4%. The World Bank lowered its projected full-year 2012 growth rate for China from 8.2% to 7.7%. “China’s slowdown this year has been significant, and some fear it could still accelerate,”the World Bank report stated.

consUMer

Retail sales growth during the October National Day holiday slowed compared to last year, climbing 15% during the eight-day break, down from 17.5% growth during a seven-day holiday a year earlier. Nike reported a 12% decline in fiscal firstquarter profits, and its futures orders in China dipped for the first time since 2009. In comparison, Yum! Brands increased its annual profit forecast as a result of higher-than-anticipated earnings in the third quarter. Strong growth in China continued to drive sales and operating profits for the parent company of KFC, Taco Bell and Pizza Hut. China’s Lenovo overtook Hewlett-Packard as the world’s largest personal-computer maker. The company’s shipments accounted for 15.7% of the world’s PC shipments last quarter, ahead of the former No. 1 at 15.5%, figures from market research firm Gartner showed. Bain & Co predicted that growth in China’s sales of luxury goods will slow to 8% this year from 30% last year, triggering a global slowdown in the market.

Finance & Markets

The Shanghai Composite Index fell below 2,000 points for the first time since 2009, as the economic downturn weighed on stocks. Chinese banks lent US$99.5 billion in September, according to the central bank, down from US$112.5 billion in the month before and missing analysts’expectations of roughly US$111.6 billion. M2, the broadest measure of money supply, jumped 14.8% year-on-year at the end of September. Reports citing anonymous bank officials said China’s top four banks were resisting government instructions to decrease lending rates in an attempt to maintain profitability during the economic downturn.

property

Housing prices in 100 Chinese cities rose by 0.17% month-on-month in September, according to research agency China Real Estate Index System, slightly less than in August as government restrictions on housing purchases aimed at dampening the market continue. The data came amid recent evidence of market strength. Landtransfer revenues in 10 major cities grew 49% month-on-month to US$7.7 billion in September, the highest growth of the year, according to data by the E-House China R&D Institute. Transferring lease rights to developers is a major revenue source for local governments, and the September figures suggest the market has warmed.

tensions With japan

Tensions continued to intensify in China’s territorial dispute with Japan over the Diaoyu/Senkaku Islands in the East China Sea. Senior Chinese financial leaders including central bank governor Zhou Xiaochuan and Finance Minister Xie Xuren cancelled trips to the IMF and World Bank annual meetings held in Tokyo in a seemingly retaliatory snub to Japan. The dispute hurt state-run China Eastern Airlines, which announced an 18% month-on-month drop in international passenger numbers in September, due in part to lower Japan sales. China and Japan announced they would enter into formal talks with the aim of easing tensions, though no date was specified.

laW & regUlation

A uS House Intelligence Committee said attempts by Chinese telecom equipment makers Huawei and ZTE to expand in the US could threaten national security and may have violated US law. The committee urged US lawmakers to block the companies’ mergers and acquisitions, and suggested that US firms avoid using Huawei or ZTE products. The Canadian government also said it would bar Huawei from taking part in large government communications projects due to security concerns. Huawei and ZTE have routinely denied allowing the Chinese government to use their equipment for surveillance.

energy & coMMoDities

Asia’s largest refiner Sinopec and ENN Energy Holdings abandoned their US$2.2 billion plan to acquire piped-gas distributor China Gas, citing failure to obtain government approval. CNOOC’s proposed US$15.1 billion takeover of Canadian energy company Nexen suffered a setback when the Canadian government extended a review of the deal by 30 days.