While most countries would be rapturous with a 9% GDP growth, this number indicates a slowing trend for China that is wor
risome; China has been growing at double-digit rates for several years and used the rapid economic growth to absorb its huge workforce.
In an effort to inject new vigor into the slumping economy, China this week announced several stimulus measures targeting the export and real estate sectors. For exporters of more than 3,000 types of products--including toys, clothing, and textiles--China will raise the export tax rebate starting this November, making good on its promise to help these enterprises survive the profit squeeze caused by rising costs and a more expensive yuan. To help the ailing real estate industry, the government also decided to cut the deed tax on home transactions to 1% and temporarily scrap the stamp duty. The down payment requirement will also be reduced to 20% from the current level of 30%, and mortgage rates will likely come down as well.
Market Recap
The Chinese market remained relatively stable this week compared to some overseas markets, thanks to economic stimulus measures to the export and real estate industries announced this week. For the past five days, the Shanghai Composite Index retreated 4.7% to 1839, while the Shenzhen Composite Index dropped 0.8% to 6159.
Financials
Citic Pacific Warns About $2 Billion Loss From Currency Bet
The Hong Kong unit of China's largest investment company made the disclosure this week claiming that certain employees did not obtain approvals for transactions or follow the appropriate hedging policy. Due to a wrong bet on the Australian dollar, this firm may incur the largest currency exchange-related loss ever for a Chinese company.
Agricultural Bank Reform
Agricultural Bank of China, the last major State-owned bank to go public, will receive a $19 billion capital injection from the government to help it solve its bad loan problems. The government is mulling a public offering in Hong Kong and Shanghai late next year.
Consumer
More Chinese Travel Overseas
Chinese outbound visitors reached 34.4 million in the first nine months of this year, up 14.8% year over year. In September alone, about 3.7 million Chinese people crossed the borders, up 9.04% from the year-ago period, according to the National Tourism Administration. Industry analysts said they expect a surge in outbound tourism, owing to the appreciation of the renminbi and possible falls in hotel and flight prices due to the global financial crisis.
Industrial
New routes for China Southern Airlines
The airline, which ranks as Asia's largest carrier by passenger numbers, will add 18 new routes next week, as the country's travel demand recovers following the end of curbs imposed during the Olympics.
Steel and Aluminum Makers Cut Prices and Production
China's largest steelmaker, Baoshan Iron and Steel, has cut prices for December by as much as 20% in a bid to attract more orders amid a slowing economy. Meanwhile, Aluminum Corp of China, the nation's biggest producer, will slash annual production capacity by 18% and may consider further cuts because of falling metal prices and weak demand.
Iris Tan, Peter Liu, and Feliz Li contributed to this article.
