Chinese energy firms to invest $14 bln in Indonesia's oil and gas sectors

A senior Indonesian energy and mining official revealed last week that Chinese oil giants plan to invest as much as $14 billion in the southeast Asian country's oil and gas exploration sectors, state media reported last Friday.

Chinese investment interest in the country has arisen alongside increased interest from South Korea, Waryono Karno, the secretary-general of Indonesia's Ministry of Energy and Mineral Resources, told China Newswire. As revealed during Indonesian President Susilo Yudhoyono's recent visit to South Korea, South Korean energy firms plan to spend $8.5 billion in Indonesia's oil and gas sectors.

In addition to oil and gas, investment from the Chinese energy consortium, which includes the China Petroleum & Chemical Corp. (Sinopec), the China National Petroleum Corp., the China National Offshore Corp. (CNOOC) and Sinochem Corp., will also target the rich coal-bed methane resources of East Kalimantan.

The official said that Japan, China and South Korea are currently leading investment in the country's energy-related sectors, and that India's interest in the country is mounting. Out of all non-Asian countries, the United States is the largest investor in Indonesia's energy-related sectors.

The official added that during the first half of the year, Indonesia attracted around $27.8 billion in oil and gas exploration and development investment.

Indonesia has approximately 188 trillion cubic feet of proven natural gas reserves and has emerged as one of the world's largest exporters of liquefied natural gas (LNG) amid strong demand for the cleaner fuel, especially from China.

The country will transport 2.6 million tons of LNG a year for a period of 25 years to China's southeastern Fujian terminal beginning in 2007. The operator of the Fujian terminal, CNOOC, also holds a 16.96 percent stake in the project that supplies the gas for the terminal, the Tangguh LNG project.

PetroChina, the listed arm of CNPC, also holds stakes in at least six oilfields in the country.

Sinosteel extends Midwest iron ore sales agreement timeframe

China-owned Sinosteel Corporation Group has extended a sales agreement for 1.6 million tonnes of iron ore with Midwest Corporation Ltd to March 31, 2009, the West Perth-based company announced today.

The full text of a Midwest announcement is pasted below

Midwest Corporation Limited ("Midwest") is pleased to announce that the Sinosteel Corporation Group ("Sinosteel") has extended its sales agreement with the company to 31 March 2009 for 1.6 million tonnes (mt) of iron ore.

The 1.6mt of lump and fines will come from Midwest's Stage 2 operation at the Koolanooka/Blue Hills DSO project.

The price is aligned to the Mt Newman benchmark.

To date Midwest has shipped 1.1mt of iron ore fines to Sinosteel as part of the existing contract.

The company expects to negotiate lengthier contracts with Sinosteel in 2008 in conjunction with discussions on the Weld Range joint venture ore.

Commenting on the agreement, Midwest chief executive officer, Mr Bryan Oliver said, "This extension further confirms the strength of our relationship with Sinosteel as a customer and joint-venture partner."

The extended sales agreement with Sinosteel follows a significant recent increase in iron ore reserve to 8.4mt at an average grade of Fe 58% for Koolanooka-Blue Hills.

This upgrade in reserves provides a substantial basis for the proposed expansion of hematite iron ore sales to Sinosteel from 1mtpa to 2mtpa. This expansion is expected to coincide with the transition to open pit mining production at the Koolanooka-Blue Hills DSO project and the completion of the new shiploader at Berth 5 at the Port of Geraldton.

The company is currently seeking various statutory approvals for Stage 2 and expects to commence operations in early 2008 once these approvals have been granted. Tenders have closed for mining crushing and screening operations.

Sinosteel is involved in the management and funding of significant studies joint venture programmes with Midwest at the much larger Weld Range Hematite and Koolanooka Magnetite Projects.

Sinosteel is one of the largest steel industry trading organisations in China. In 2006 it imported in excess of 21mt of iron ore.

China to construct sizeable iron and steel base in coastal area

Preparation for building a 10-million-ton iron and steel production base is well under way in Fangcheng Port in the Guangxi Zhuang Autonomous Region in South China.

The Wuhan Iron and Steel (Group) Corporation in Central China's Hubei Province and the Liuzhou Iron and Steel (Group) Corporation in Guangxi are building the project jointly with an investment of more than 60 billion yuan.

According to Hu Wangming, deputy general manager of Wuhan corporation, specialists' evaluation of a report on the use of offshore area and influence of oceanic environment is completed and submitted to the State Oceanic Administration for approval.

Such base will make full use of the geographic advantage of the coastal area and the deep-water port, which is conducive to exploit foreign ore resources and optimize the layout of Chinese iron and steel industry, Hu said.

He noted that the base would focus on the production of steel products with high technology and high added value, such as hot rolled sheet and hot rolled wide plate.

Construction of this base will bring domestic and foreign markets and resources into full use, said Yan Kaiyong, director of the equipment management department of Liuzhou corporation.

Yan predicted that the output of this base would meet the iron and steel demand of southwestern and southern China, and narrow the supply and demand gap of iron and steel in some ASEAN countries.

The steel consumption in southwestern China will reach 62.80 million tons by 2010 and the current annual output of steel in this area is less than 26 million tons. The self-supplying ratio is only 60 percent in southwestern China consisting of the Guangxi Zhuang Autonomous Region, Chongqing municipality and Sichuan, Yunnan and Guizhou provinces.

Yan forecast that the consumption of steel in ASEAN countries by 2010 will reach 64 million tons and their current production capacity is 18 million tons and their capacity of rolling steel is 30 million tons.

Located at the Qisha peninsular of Fangcheng port, the base enjoys sound infrastructural facilities and natural conditions.

China Holdings buys Chalinhe plant

China Holdings has bought the 72MW Chalinhe hydro plant on the Lishui river in Hunan province, China, through the purchase of Hunan Zhangjiajie Chalinhe Electric Power Co.

Financing and terms of the acquisition were not immediately disclosed. The purchase was made via China Holdings' subsidiary China Power, and Hunan Zhangjiajie Chalinhe Electric Power Co wholly-owned the hydro plant.

The Chalinhe plant will have four 18MW units fed by a reservoir impounded behind a 95m high dam. By the end of this year the first stage of the plant should be completed, which will provide 54MW of installed power capacity.

China Holdings said it anticipated that current annual revenues from the first phase should be approximately US$12M and net income was expected to be about US$11M. The plant has full legal approved rights for credits under the Clean development Mechanism (CDM) for both the first phase and the planned additional 18MW capacity.

In May, China Holdings announced its plan to build an investment portfolio in hydro in China and internationally over the next one to four years via China Power. The company invests in a number of industrial sectors.

Macao's Exports Drop, Imports Rise

Macao's exports saw a year-on-year drop of 10.8 percent while imports saw a year-on-year rise of 9.5 percent in June, according to official statistics issued on Monday.

The figures released by the government-run Statistics and Census Services (SCS) showed that textile and garment exports, which accounted for 63.4 percent of Macao's total export value in the month, witnessed a year-on-year drop of 21.9 percent.

The United States and the European Union remained as Macao's major export markets in the period, jointly making up 57.0 percentof the total export value, the figures showed.

Meanwhile, the region's major suppliers of imported goods remained mainly in Asia, the statistics displayed.

Wuhan Iron Buys Kunming Iron

Wuhan Iron & Steel Corp, China's No 5 steel mill based on 2006 production, will buy the smaller competitor Kunming Iron & Steel Group, a much-needed move for the country's mammoth but fragmented steel sector.

The company, based in the central city of Wuhan, will announce a deal tomorrow to acquire Kunming, which is based in the southwestern city by the same name, Luo Bingsheng, vice-chairman of China Iron & Steel Association, said yesterday.

A press official from Wuhan, surnamed Bai, confirmed the deal. But he declined to confirm the timing and reveal how much Wuhan will pay.

Wuhan produced 13.8 million tons of crude steel last year. Kuming's 2006 production stood at 4.8 million tons, 23rd biggest in China.

The move came after Baoshan Iron & Steel Corp, China's top steelmaker, last month took control of Bayi Iron Steel Group in Xinjiang Uygur Autonomous Region in the northwest.

However, Luo said the pace of mergers in the steel sector remains too slow because so many steel mills in China are too small to compete globally.

Steel Export Growth to Slow Down

Growth of steel exports from China, the world's top steel producer, will slow to 20 percent for the full year due to government efforts to curb breakneck growth in the first half of the year, according to an industry body.

Overseas shipment of finished steel products will hit 51.6 million tons in 2007, up from 43 million tons last year, Luo Bingsheng, vice-chairman of China Iron & Steel Association, said in Beijing.

The forecast growth rate would be the slowest since 2003, according to steel association data.

From January to June this year, steel products exports surged 97.7 percent year-on-year to 33.8 million tons.

However, Zhou Xizeng, a steel analyst with CITIC Securities Co in Beijing, said the pace of exports will not slow as much as Luo's estimate because demand and price in the international market remain strong.

Zhou said steel products exports will grow by 30 percent this year from 2006.

China has adopted measures since last year to control steel exports as part of its drive to tame the trade surplus and prevent trade conflicts with other countries. In the first six months of this year, the nation's trade surplus jumped 84 percent to $112.5 billion.

On July 1 China slashed export tax rebates for more than 160 steel products to 0 or 5 percent from 11-13 percent.

"As a result, steel products exports in the second half will be much less than in the first half," Luo said.

He said July-December exports will plunge by 40 to 50 percent from those in the first six months.

"But the policy doesn't mean the less steel exports the better. We should keep it at a proper level," Luo stressed.

He said exports should account for one-tenth of China's steel production.

In the first half of this year, crude steel production in China rose 18.9 percent to 237.6 million tons.

Luo predicted full-year production will climb 14 percent to 480 million tons.

The expected export slowdown in the second half will add supply in the domestic steel market, which could generate a glut and cause price tumbles at home, he said.

"Steel companies should cut excessive production to keep the domestic market stable," he said.

At the end of last month, international steel prices were 35.9 percent higher than in the domestic market on average, according to the steel association's data.

According to a government plan, steel production capacity of 35 million tons will be removed in China this year.

January-June crude steel consumption in the country climbed by 9.6 percent to 206.9 million tons. Luo said consumption will total 446 million tons this year, up 12 percent.

Shanghai-Luxembourg Cargo Airline to Be Opened

Yangtze River Express Airlines is to start the country's first Sino-European cargo airline in August, in a move to explore the overseas freight market and secure a financial turnaround.

The company received a new Boeing 747-400 aircraft on Friday and plans to fly it on the Shanghai-Luxembourg air route four times a week.

Sun Hongxiang, the new president of Yangtze River Express, said the company wanted to become more competitive through exploring international cargo routes, especially to Europe and the United States.

As the first cargo airline to fly Sino-American air routes, Yangtze River Express has already flies to Los Angeles and New York. Another two Boeing 747-400 aircraft will be delivered in May and November 2008, enabling the company to add more flights to Chicago.

Forty-six airlines in Shanghai provide cargo services, but most engage in domestic services. The lack of orders often force Chinese aircraft to return empty load after shipping cargo abroad, raising costs on international services.

Statistics from the International Air Transport Association show the market share of Chinese cargo airlines dropped from 65.6 percent in 1995 to 23.8 percent in 2005.

Sun said operation costs would remain a challenge in the short term. "The situation will improve after we expand our fleet and start more international services," he said.

Yangtze River Express is China's first airline with investment from both mainland and Taiwan companies. In September 2005, Hainan Airlines, its largest stakeholder, sold 49 percent of its shares to four Taiwan companies, including China Airlines, but the company's balance sheet remained in the red.

The China-U.S. aviation service agreement requiring both countries to fully open their freight market in 2011 had given
Yangtze River Express a boost.

Sun said that the company aimed to build a fleet of 11 large aircraft by 2011 and expand its business to the peripheries of Asia, North America and Europe.

"I hope we can make up the deficits and notch up a surplus at the end of this year," he said.

Tyson Says to Continue Its Business in China

Tyson Foods Inc. said on Monday that it will continue to do business in China, while noting it was working with both U.S. and Chinese government to get the tainted food matter resolved.

Tyson's Chief Executive Richard Bond spoke highly of the business in China on a conference call, saying: "They are an excellent trading partner."

But Bond gave no details about trade with China other than to say that Tyson had achieved growing exports of chicken leg quarters to China, as well as other Asian countries, The Dow-Jones News reported.

Meanwhile, a Tyson spokeswoman said the company was investigating the tainted chicken claim by China's quality watchdog.

"We will work with the U.S. and Chinese governments to get this matter resolved," the spokeswomen was quoted by the U.S. media as saying.

Earlier this month, China's General Administration of Quality Supervision, Inspection and Quarantine said that frozen poultry from Tyson was contaminated with salmonella.

Guangdong to cap grain prices

Guangdong will implement an emergency price control plan on August 1 this year to prevent prices of grain from growing too fast, according to the Price Control Administration of Guandong Province, the Information Times reported today.

The price control measure will apply to various grain products such as rice and flour in both wholesale and retail markets.

If the price of grain grows more than 50 percent in a seven-day period, the supply is in shortage, and the panic grain buying lasts for more than 15 days, the profit margin and price differentials in grain processing will be controlled.

If the price of grain increases by more than 100 percent during a seven-day period, the grain is in a serious shortage, and the panic buying is severe and grain is out of stock in some areas, the government will control the price differentials in both wholesale and retail.

The price control administration will offer the emergency plan to the provincial government for approval.

A source close to the emergency plan said that the measure doesn't signal expectations that the price of grain will see a dramatic increase in the near future.

Imports of wine doubled in Ningbo

The statistics from Ningbo customs showed that the imports of wine were 770 kiloliters in volume and 2.36 million dollars in Ningbo port in the first half of this year. It increased separately 1.9 times and 2.4 times compared to that of the same period of last year. It had been growing for 8 months. Since 2005, our country's duty of imported bottled wine and bulk wine was separately cut from 43% to 14% , 43% to 20%.

China's coke export price up in 1st half

China's coke export price rose slightly from 240~250 US dollars in June to 245~260 US dollars in July, according to sources from Steel Business Briefing (SBB).

A further coke export price growth is expected due to the rise in production costs in the rests of 2007.

Statistics from China Customs showed that China's coke export dropped from 1.61 million tons in May to 1.3 million tons in June.

In the first half of 2007, China exported 8.05 million tons of coke, increasing 22.4 percent year on year.

China National, Reliance Win Australia Drill Permits

China National Offshore Oil Corp., the nation's largest offshore oil producer, Total SA and India's Reliance Industries Ltd. won oil and gas exploration permits in Australia.

Hess Corp., Santos Ltd. and Woodside Petroleum Ltd. also won offshore licenses in the bidding auction, which will result in an investment of more than A$800 million ($688 million) on exploration over the next six years, Industry Minister Ian Macfarlane said today in an e-mailed statement.

Australia awards oil and gas exploration permits depending on the amount of exploration work bidders pledge to carry out. China National Offshore, a customer of the country's North West Shelf liquefied natural gas venture, hasn't until now explored in Australia.

"It's good to see new players in the market," Macfarlane said in the statement. Twenty-one bids were received for the 11 licenses, he said.

China National Offshore's CNOOC Australia E&P Pty unit won a license in the Bonaparte Basin off northern Australia, to the west of ConocoPhillips's producing Bayu-Undan gas and condensates field. The company, which beat two rivals, pledged to spend A$162.1 million over six years, including drilling five wells in the first three years and five wells in the subsequent period, the government said in the statement.

Total Bid

Paris-based Total, Europe's third-biggest oil company, beat three other groups for two permits also in the Bonaparte Basin, to the south of the CNOOC license. It pledged to spent A$72.6 million in one permit, and A$151.6 million in the other. Total is a partner in Inpex Holdings Inc.'s proposed Ichthys LNG project in the Browse Basin, further to the west.

Reliance, owner of the world's third-biggest refinery, also won a license in the Bonaparte Basin, beating one rival bidder. It proposed to spend A$29.8 million over six years, including drilling one well.

Woodside, Australia's second-biggest oil and gas producer, won a permit in the Carnarvon Basin with a pledge to spent A$196.2 million in the first three years, including drilling nine wells. Four other groups bid. Santos, the nation's third-biggest producer, won a permit in the Sorell Basin near Tasmania, with a pledge for A$38.1 million of work over six years.

Samson International (Australia) Pty won two permits in the Northern Arafura Basin off the northern coast, while Gerald Nelson won two permits in the Carnarvon Basin and Goldsborough Energy won a license in the Bonaparte Basin, the government said.

Sinopec inks leading stake in Sudan oil site

China National Petroleum Corp (Sinopec)<386>, leading mainland energy and chemical company, has announced its latest deal with Sudan to acquire 40% in the Block 13 exploration site off the Red Sea coast, a senior Sudanese oil official reported.

The exploration site of 38,200 square kilometers will demand an initial exploration investment of US$25 million in the first three years. The deal was signed at the end of last month, upon the approval by Sudan's National Petroleum Commission. This leaves just two blocks which have yet to be assigned“ Block 12b in the war-torn Darfur region and Block 10 in the east.

As a result of large land area in Sudan's blocks, most contracts include a clause that relinquishes a percentage of the block area of the controlling group within a specific time frame.

The development of Sudan's oil industry has blossomed despite US sanctions with investments by Asian firms, though still lacking transparency as a result of its participation in the north-south civil war.

Sudan produces about 500,000 barrels a day of crude oil. The remaining stake is 15% held for both the Indonesian state oil company Pertamina and its Sudanese counterpart Sudapet; 10% each will taken by Nigeria - the Express and AfricaEnergy companies and Dindir Petroleum International of Sudan.

The Gas Delivery Interconnection Project Will Begin From Northeast to West Sichuan

Sinopec Southwest Oil and Gas Field Company is about to construct the Interconnection Project from Northeast to West Sichuan.

Such project is from its first station Puguang, by way of Pingchang and Yuanba—its division stations, to the terminal station Deyang, covering 6 cities and 13 counties, which is altogether 430 kilometer with 1016mm pipe diameter.

Besides, it is about 52 kilometer from Tong Jianghe bay to Pingchan division station, with 610mm pipe diameter, 10Mpa average press, incuding 19 tunnels, 2 station yards and 6 pipeline cut-off valves. This project plans to begin before August 30. Presently, it's in intense preparations.

Huaneng Will Invest on DME Project in Ningdong Energy Base

Huaneng Group and the Government of Ningxia Hui Autonomous Region recently signed a framework agreement on strategic cooperation in the field of energy in Yinchuan.

In the next years, Huaneng will develop energy projects such as coal-electricity integration and coal chemical industry in Ningxia, with its advantages in capital and technology.

According to the agreement, Huaneng and Ningxia Power Group will jointly establish a company and invest on coal deep processing projects including a 1mil. t/yr DME project as well as a large coal-fired power plant.

Laoying Cliff Alternative Fuel by Coal Gasification Project (PhaseⅠ) Started in Guizhou

The 150,000t/yr Methanol project, PhaseⅠ of Laoying Cliff Alternative Fuel by Coal Gasification Project recently started in Liupanshui, Guizhou province.

Project name: Laoying Cliff Alternative Fuel by Coal Gasification Project (PhaseⅠ) Project Owner: Guizhou Xingsheng Coal Chemical Co., Ltd. Project investment: Total investment over RMB1.328 billion Project period: 2007-2009 Project content: It could produce methanol 200,000t/yr and DME 150,000t/yr. Project phase: It is being constructed.

The Xuzhou Coal Mine Furnishment Research & Development & Manufacture Base Begins to Be Constructed, with Total 1.4 Billion Yuan Investment

At the morning of Jul. 30, the coal mine furnishment research & development & manufacture base in Xuzhou Economic Development Zone lays the foundation for construction, which covers an area of 22mu and the total investment is 1.4 billion Yuan.

It is known that the manufacturing capacity of Xuzhou Coal Mine Furnishment Research & Development & Manufacture Base for the series products like cola mine machine will be 3000 sets annually after has been constructed well by Xuzhou Mining Group, the industrial production value will be 2 billion Yuan annually and the paid tax will be 120 million Yuan.

It will be a comprehensive coal mine furnishment research & development & manufacture base leading in the Province and top-ranking in the Country.

China Coal Will Develop Resources in East Zhangnan Mining District

It is said that China National Coal Group Corp. and Xinjiang Production & Construction Group signed a strategic cooperative agreement on developing Huaidong East Zhangnan Mining District in May.

According to the agreement, two sides will construct a large coal chemical base under guideline of related national policies as well as industrial and regional plans, and develop resources in the district in term of coal-electricity-chemistry integration.

China to promote qualification standards on steel exporters

China will work out qualification standards on iron and steel export enterprises.

China Iron and Steel Association (CISA) and its member enterprises have put forward concrete proposals and suggestions on improving qualification standards on enterprises engaging in iron and steel exports, export tax items of iron and steel products, and preferential tax policy on import of steel products for processing trade enterprises.

Relevant departments of China are working on the three.

CISA held that drafting of qualification standards on iron and steel export enterprises is good to raising contract implementation capability of export enterprises, and standardizing export order.

It said that the present export tax items of iron and steel products, which was formulated several years ago, is now hardly to keep pace with the development of China's iron and steel industry. It suggested all-round adjustment of the present tariff.

At the same time, CISA also suggested the country to carry out screening of processing trade enterprises using imported steel materials, revoking preferential policy on steel products that can be made domestically.

Guangdong nuclear power developer signs equipment purchasing deals

China Guangdong Nuclear Power Holding Co. Ltd. (CGNPC) has signed seven equipment purchasing agreements with several suppliers regarding the construction of two nuclear power projects, according to a statement released yesterday on the Web site of the State-owned Assets Supervision and Administration Commission.

Australia's Arrow Energy, PetroChina sign intent on Xinjiang coal project

Australia's Arrow Energy N.L. said it has signed a letter of intent with China's largest oil and gas producer, PetroChina Co Ltd ( HK 0857), to seek an alliance on a coal bed methane (CBM) project in northwestern China's Xinjiang region.

Under the letter of intent, the two parties will negotiate a production sharing contract covering natural gas, including CBM in Xinjiang, the company said.

The CBM site is part of the Dajing Block in the Junggar basin of the Xinjiang region, it said.

The Dajing Block contains substantial coal resources estimated at over 250 bln tons, with seams of up to 70 meters thick.

Preliminary data indicated that the rank of the coal is ideal for CBM development, Arrow Energy said.

Based on preliminary geological data, the gas in-place exploration target could be as much as 35 trln cubic feet, the company said.

'This is a very important step forward in Arrow's China strategy. We have carefully selected an area that we consider to be very prospective for CBM that is close to strong local markets, including the provincial capital of Urumqi a city of over 4 mln people, and within 70 km of the East-West pipeline.' Nick Davies, Arrow's chief executive officer, said in the statement.

Following completion of the negotiations on a production sharing contract, Arrow plans to drill up to 20 exploration wells over the following eighteen months to define the reservoir extent and refine the gas in-place estimates, the statement added.

China Longyuan Power, Electricite de France sign carbon credit deal

China Longyuan Power Group Co said it has signed an agreement with Electricite de France, under which the French group will buy carbon credits for 9 mln tons of carbon dioxide equivalent.

The credits will be purchased from Longyuan's wind power operations, which have an installed capacity of 945,000 kilowatts.

As a theoretical alternative to a coal fired generator with similar output, the wind unit saves about 9 mln tons of carbon dioxide equivalent a year.

Under the Kyoto Protocol's Clean Development Mechanism (CDM), clean energy projects in the developing world are permitted to sell credits to companies in developed countries, enabling the latter to meet their Kyoto commitments to reduce greenhouse gases.

A total of 62 CDM projects have been registered in China after the mechanism was launched in the country in 2005. They are expected to reduce emissions by the equivalent of 400 mln tons of carbon dioxide, and earn 2.5 bln usd should they all win approval from the United Nations Development Program, according to figures from China's National Development and Reform Commission.

Yongqing Wang's Ethane Project will be approved within this year

As the largest project invested by Taiwan, Yongqing Wang's dream of "Ethane Project" that has been incubated for over ten years will be come true. This is the core of Yongqing Wang's investment program in mainland.

It was divulged that this project will be approved by government without doubt. If Formosa Ningbo Plant grants by government charter, it will restart Yongqing Wang's unfinished Haichang Project. Formosa Plastics Group will on equal terms with Sinopec and both become the Top Ten Ethane Plant in the world.

IBM To Explore China's Medium Enterprise Market

Dah-Chuen Chien, CEO of IBM (IBM) Greater China Group, says IBM will continue to integrate its comprehensive resources and fully expand the medium enterprise market of China.

Chien made the remarks at IBM's Greater China Software Partner Summit 2007. Meanwhile, Zhong Haoyi, vice president of the Chinese mainland marketing department of IBM, has emphasized that IBM will continue to offer support to software channel partners and based on this it will further advance the software channel's strategic positioning.

At present, the medium and small enterprise market is the second largest market for IBM. According to local media, the company expects the medium enterprise market growth to increase by 15% this year.

China plans to restrict imports of petrochemical equipment

China's top economic planning agency is planning to limit imports on petrochemical equipment to secure local machinery producers a larger market share.

According to a proposal by the National Development and Reform Commission (NDRC), no less than 75 percent of the equipment used in the petrochemical industry should be sourced from domestic producers by the end of the 11th five-year-plan period (2006-2010), the Shanghai Securities News reported Friday.

The NDRC is soliciting advice from local petrochemical companies including the China National Petroleum Corporation (CNPC) and the China Petrochemical Corporation.

The proposal may bring 75 billion yuan worth of orders for domestic machinery producers as the petrochemical industry spends around 100 billion yuan in equipment procurement annually, an official with the CNPC said, declining to give his name.

The proposal on further promoting home-made large-scale petrochemical equipment requires petrochemical firms to submit a list of equipment they plan to buy for new projects.

It said China will ban the import of equipment that can be made by domestic producers and is already widely used, while limiting those that can be made in China but are not widely used, with tax policies.

On the banned list are hydrocrackers with an annual production capacity ranging from 800,000 tons to 2 million tons, 700,000-ton-charge gas compressors, and 300,000-ton-propylene compressors.

Also on the restriction list are one-million-ton-charge gas compressors and 600,000-ton-PTA air compressors.

Chinese manufacturers have the ability to produce world-class petrochemical equipments, said an unnamed expert who participated in the formulation of the proposal, adding the petrochemical industry lags behind the power, metallurgy and steel industries in buying domestic-made production facilities.

China has imported 18 large-scale items of equipment for ethylene projects and PTA projects in the past 20 years. Currently most of the equipment for the ethylene projects with a production capacity of more than one million tons comes from imports, the expert added.

Tibetan Railroad Proves A Boon to Area Economy

Tibet Autonomous Region officials said over the weekend that a 33-billion-yuan (US$4.2 billion) railway linking it to neighboring Qinghai Province has helped its economy develop.

Tibet's economy this year grew with contributions from trade and consumption, instead of relying solely on investments, Hao Peng, vice chairman of the local government, told reporters in Lhasa on Saturday. Tibet's economy grew 14.7 percent to 14 billion yuan (US$1.8 billion) in the first half of this year, with consumption accounting for 37 percent of total gross domestic product, he said.

Developing Tibet is part of the government's 5.77 trillion yuan investment in west China to help boost the country's poorest regions, according to the National Bureau of Statistics. The Qinghai-to-Tibet railway spans 1,956 kilometers and started operating on July 1 last year.

"It's a dream come true to have the railway link built," Nima Ciren, who is also vice chairman of the autonomous region, said at the same briefing. "We've not seen any negative side-effects, ecologically or economically, arising from the Qinghai-Tibet railway, only benefits."

Freight such as sundries, construction materials and beer transported to and from Lhasa via the Qinghai-Tibet railway link totals about 500 metric tons a day, Chen Zhanying, station master at the Lhasa Cargo Station in the western part of the capital city, said on Saturday. The link brings four passenger trains a day to Lhasa, each carrying about 700 people.

"I get more variety of provisions like instant noodles and bottled drinks, because the trains carry more items than trucks," said Drolkar, a provision shop owner at Caibalang village in the outskirts of Lhasa, who goes by one name. "The produce is fresher, cheaper too, cutting my costs."

Tibet has vowed to place protection of its glaciers, wetlands and grasslands as a priority ahead of development of industries such as tourism and manufacturing in its economic planning.

"We don't want to make the mistake of accelerating economic development at the expanse of eroding the environment," Nima said. "We're not going to just develop all the mineral resources without close scrutiny. The projects must first be environmentally friendly."

China Shares Higher in Early Trade; Auto Makers Gain

China shares were higher in early trade, with limited impact seen from weakness in overseas markets, dealers said.

Automakers led the gains, spurred by M&A activity in the sector.

At 9:41 am, the index rose 26.73 points to 4,372.08, after opening up 3.25 points.

Shanghai Automotive Co Ltd rose 0.90 yuan to 27.74, after its parent, Shanghai Automotive Industry Corp (SAIC), and Nanjing Automobile (Group) Corp signed a letter of intent Friday for a strategic alliance. They also announced exploratory talks for a possible 'complete union' of the two major auto groups.

Anhui Jianghuai Automobile Co Ltd added 0.31 yuan to 8.94.

(1 usd = 7.57 yuan)

Hitachi Sets US$12b Target for Revenue from Mainland

Hitachi, the largest Japanese electronics manufacturer, aims to boost annual revenues in the mainland to more than US$12 billion over the next three years by claiming top market share in the key segments of financial systems, information technology and construction and building systems.

"We're seeing increasingly robust growth, so we expect China to contribute 10 per cent to overall group revenues before 2010," said Minoru Tsukada, Hitachi's chief executive for mainland operations.

Hitachi, which has about 140 offices and factories in the mainland, also plans to generate around US$1 billion of export revenue from its mainland operations by 2010.

For its financial year ended March 31, Hitachi reported that the mainland accounted for about 8.7 per cent - or about 889 billion yen (HK$58.66 billion) - of its total revenue of 10.25 trillion yen.

Mr Tsukada said continued investments were planned for the mainland but declined to give details.

However, for the 2004-2006 period Hitachi estimated its total new investment in the mainland reached more than US$1 billion.

The group has more than 60,000 staff in the mainland and has targeted further facility expansion and spending on research and development.

Hitachi's optimism over its mainland business operations is closely tied to the group's determined bid to return to profitability this year. It posted a one-off 32.8 billion yen loss in the year to March due to depressed electronics prices and repairs made on faulty power turbines in Japan. It recorded a net profit of 37.8 billion yen the previous year.

Mr Tsukada said the group intended to be the top supplier of automated teller machines in the mainland by 2010. It commands a 50 per cent market share as it is estimated to have about 10,000 units installed in most of the country's leading banks as of this month.

Its strongest competitors in the mainland's ATM market include NCR and Diebold.

ATM unit sales on the mainland should grow at an annual rate of 8 per cent over the next four years, according to Retail Banking Research.

Hitachi is poised to jump to No1 in three years in the mainland's highly competitive elevator and escalator market, Mr Tsukada said. The top brands in the country are Mitsubishi, Hitachi, Otis, Kone and Schindler.

He said Hitachi was building an elevator factory in Shanghai to increase output and cope with growing demand from commercial and residential building developments nationwide.

The US$60 million plant is to be completed next year and will grow Hitachi's output to more than 35,000 units by 2010.

Hitachi is eyeing the No1 spot in the mainland by 2010 for its fast-growing construction and resource development systems, which include construction equipment.

According to a report by analyst Tsutomu Kijima of Lehman Brothers Equity Research, Hitachi construction equipment sales in the mainland were up 50 per cent year on year during the first six months of the year, thanks to infrastructure work in Shanghai and elsewhere across the mainland.

Hitachi is also aiming for top market share in the mainland for advanced materials and components used in semiconductors, information technology hardware such as personal computers and digital consumer electronics products.

The group is already one of the world's leading hard disk drive manufacturers, second worldwide to market leader Seagate Technologies.

A US$500 million investment has been committed to build up Hitachi Global Storage Technologies' complex inside the Futian Free Trade Zone in Shenzhen. The site will eventually manufacture 50 per cent of Hitachi's total hard disk drive output worldwide.

Hitachi also supplies liquid crystal displays used in televisions, mobile phones and PC monitors produced by manufacturers in the mainland and it supplies semiconductor components and materials at joint ventures with NEC Corp and Mitsubishi Electric Corp in the mainland.

China E-commerce Firm Alibaba Confirms Seeking IPO in HK

Alibaba.com, China's largest e-commerce company, confirmed on Monday that it is making preparations for an initial public offering, as it seeks to raise capital to expand its international presence.

Alibaba, which has long been rumoured as an IPO candidate, is preparing to list its business-to-business unit in Hong Kong in the third quarter of this year, the official China Securities Journal reported on Monday.

"We have started preparations for an IPO," Alibaba spokeswoman Christina Splinder said, but declined to comment to CRI on details.

Alibaba had filed an application with the Hong Kong Stock Exchange for an IPO, which was expected to raise HK$7.8 billion (US$1 billion), the newspaper added, citing unnamed sources. The company had also chosen Goldman Sachs and Morgan Stanley to handle the deal, the newspaper said, adding that investment bank Rothschild was also advising Alibaba on the listing.

B2B business is Alibaba's major profit source, statistics show that the company's B2B service has accounted for 80 percent in the mainland market.

Industry believes that Alibaba's B2B bisuness has a market value of 4 to 5 billion US dollars, with its businesses of Taobao.com and Paypal, the overall value of the company may reach over 10 billion US dollars. The listing of Alibaba's B2B unit in Hong Kong may create the biggest ever technology stock in Hong Kong Stock Exchange.

China 2007 Steel Products Exports Seen at 51.6m Tons

China steel product exports in 2007 are expected to hit 51.6 mln tons, up 20 pct, the China Iron and Steel Association (CISA) said, reflecting a projected slowdown in the second half compared to the first.

China exported 33.79 mln tons of steel products in the first half, up 97.7 pct from a year earlier, while June exports stood at 6.36 mln tons.

Imports of steel products in the first half totaled 8.69 mln tons, down 7.6 pct from a year earlier, while June imports totaled 1.41 mln tons.

Output of crude steel is expected to rise 14 pct year-on-year to 480 mln tons in 2007, while consumption of crude steel is seen at 446 mln tons, up 12 pct, the CISA said.

The CISA added that market demand for crude steel in 2010 is expected to rise to 476-536 mln tons.

Paulson Arrives for Trade Talks with China

United States Treasury Secretary Henry Paulson arrived in Xining in northwest China last night, kicking off a four-day visit to China.

He is due to visit local environmental protection programs in Qinghai Province, home to Qinghai Lake, the largest salt water lake in China.

He will also visit rural households in the remote province on the Qinghai-Tibet Plateau, dubbed the "roof of the world."

Collaborating on energy and environmental challenges is one of the key focuses of the US-China Strategic Economic Dialogue launched by US President George W. Bush and Chinese President Hu Jintao last year.

Paulson will also hold talks with President Hu over tensions arising from China's swollen trade surplus and other issues. The secretary also is to meet Vice Premier Wu Yi, who leads the Chinese side of the dialogue.

The last formal meeting of the economic dialogue in May ended with no progress.

Since then, China has announced measures to rein in surging export growth. It repealed rebates of value-added taxes on more than 2,000 types of goods ranging from cement to plastic products in June.

Last week, the government said it would limit the growth of its "processing trade," a big but low-profit segment of the economy that imports components and exports finished goods.

HK luxury fashion retailer to tap market in Beijing

Hong Kong fashion retailer Lane Crawford said today it will open a three-story shop in Beijing that sells more than 600 designer brands like Prada and Stella McCartney, tapping the growing demand for luxury goods in China.

The 300 million Hong Kong dollars (US$38.3 million) store, encompassing 7,200 square meters, will open in October, Lane Crawford President Jennifer Woo said at a press conference.

"With the ever increasing number of high net worth individuals and affluent customers supported by an inspirational market of approximately 4 million in Beijing, we believe there are exciting opportunities for Lane Crawford in this market," she said.

The number of affluent Chinese customers is growing by 19 percent a year, said Bonnie Brooks, president of Lane Crawford Joyce Group, the parent company of Lane Crawford owned by property tycoon Peter Woo.

The parent company operates more than 450 stores in the Asian region, including 233 stores in China. The group forecasts sales in 2007-08 to exceed HK$7.8 billion.

"The customers in China, in terms of our experience, are more and more fashion-conscious," Brooks said.

Lane Crawford, the group's key business driver, is currently the leading designer fashion store in Hong Kong, with four outlets in the territory.

Woo said Lane Crawford also expects to add stores in Shanghai and the southern Chinese gambling enclave Macau within five years. She declined to provide details.

Shanghai Auto and Nanjing Auto contemplate merger

Shanghai Automotive Co.<600104>, China's biggest car maker, and Nanjing Automobile are contemplating a merger to compete against bigger multinational car makers in China and overseas.

Shanghai Auto said last Friday that both companies have signed a Memorandum of Understanding in which they will discuss future co-operation and a possible merger of their auto operations. At present, both companies have been competing against each other in the domestic market.

According to industry experts, China's officials are supportive of this move as a way to promote Shanghai Auto as an all-rounded auto maker to compete with foreign car makers in China, and ultimately overseas.

Analysts said the government is stepping up its efforts to enforce a consolidation of China's fragmented auto industry, which currently houses over 100 players, into an industry with three to four main players. With Shanghai Auto being first in the domestic car market, a merger with Nanjing Auto would boost its competitiveness, sources said.

However, Shanghai Auto has not revealed details on the merger, stressing that the merger is still uncertain. Industry sources have also said both companies remain undecided on terms of any tie-up, and any decision could take months.

While Shanghai Auto has been insisting on the final control of any alliance, Nanjing Auto has been calling for equal control. State media reported that Nanjing Auto has long been seen as an acquisition target for Shanghai Auto.

Sources predict that with the government's backing of the merger, together with the commercial benefits to a merger, there will eventually be some form of cooperation between both companies at the minimum.

Telecom Venezuela and Huawei team up

Telecom Venezuela and Chinese company Huawei Technologies Co. Ltd. will be embarking on a joint venture to produce up to 2 million mobile phones annually, AP reported.

Venezuela's top telecommunications authority announced Sunday that the Venezuelan-Chinese company will be producing mobile telephones in Venezuela come 2008, the report said.

Jesse Chacon, the telecommunications minister of Venezuela, said the mobile phones will be using GSM, the global standard for mobile communications. This use of GSM will allow the mobile phone users to access services around the world.

China and Venezuela have been establishing ties ever since President Hugo Chavez was elected in 1999. According to AP, Venezuela has been forging closer relations with Asian countries, while distancing itself from the U.S. because of political differences.

Previous deals include Venezuela's purchase of a Chinese satellite that would grant the South American nation autonomy in its telecommunications.

Shenzhen-based Huawei Technologies specializes in the research, development, manufacture and marketing of telecommunications equipment.

United Airlines opens new routes into China's rapid growth

The increasingly lucrative route between U.S. and the world's fastest growing economy has spurred United Airlines to double its flights into China in the next five years.

United currently offers five daily flights to Beijing and Shanghai from North America, but is looking to double this number to 10 by 2010, senior vice-president, Michael Whitaker, told the South China Morning Post. Expansion plans will be rolled out once the new air service agreement inked between the U.S. and the mainland allowing 13 new daily passenger flights operated by U.S. carriers to and from the mainland by 2012 is in place.

Four U.S. airline companies – American, Continental, Northwest and United – will have to vie with each other for the new flights offered under the agreement. Three of the 13 additional flights are reserved for newcomers and one is limited to Guangzhou where currently no U.S. carrier is in operation, the South China Morning Post reported.

Sources from the Guangzhou Baiyun International Airport revealed last week that United is applying to open a daily non-stop service between Guangzhou and San Francisco in April 2008. It also applied for a Los-Angeles-Shanghai route due to be operational in 2009, which will be the first non-stop service proposed by a U.S. airline between the two cities.

U.S. government statistics show that visitors from the mainland and Hong Kong to the U.S. rose to 152,849, a 16.2% increase in the first half of the year, and the first "capital to capital" route between Washington and Beijing filled 80% of seats within four months of operation. Mr Whitaker also said that the airlines will shift aircraft from other existing routes, mostly from domestic services, to the mainland market to meet the increasing demand.

Nevertheless, barriers to U.S.-China traffic growth still remain; the lengthy visa application times required by the U.S. government for mainlanders being one of them.

SGCC inks deal to set up power company in Tibet

China's largest electricity transmission company—the State Grid Corp of China (SGCC) has signed an agreement with the Tibet Autonomous Region government to set up a power company there, namely the Tibet Power Co. Ltd.

The new company will be jointly invested by SGCC and the local government. Being the larger stake holder, SGCC will invest more than RMB 200 billion this year to help promote hydropower development, develop new energies, and expand the grid network and power supply coverage in the region.

The company is also said to enjoy the preferential policy support from both the central and local governments, so as to achieve the goal of providing electricity to every rural household in the country by 2010, the end of the 11th Five-Year Plan.

Formerly know as "State Power Corporation", SGCC operates both the electric grid and power plants all over mainland China. Currently, it focuses on connecting and expanding the power networks around the country.

Guanghui Benefits From LNG Projects

Sources from Xinjiang Guanghui Industry Co., Ltd. said that, thanks to the increased profits of LNG businesses, its gross margin increased from 20.35% to 25.23%. PhaseⅡ Project will construct a 3mil. m3/d liquefaction plant, which will increase total capacity of PhaseⅠ and PhaseⅡ projects to 5.5mil. m3/d.

LNG Utilization Project Develops Smoothly in Nanan

The LNG utilization project in Nanan is now developing smoothly, with completed investment of RMB8.44 million, accounting for 56.26% of the planned investment in 2007. Completed MP pipeline network is 4.5km, and residential users are about 3888.

It also signed an agreement with Fujian Minfa Aluminum Co., Ltd. on providing gas 3487m3/d and equipment reformation, and will start to supply gas in the end of August.

China issues first licenses for crude oil sales - commerce ministry

The Ministry of Commerce said it has granted the first batch of licenses for companies seeking to engage in crude oil sales operations.

The first batch of firms includes PetroChina, Sinopec, CNOOC Refining, Sinochem International and China Arts Huahai Import & Export Corp, the ministry said in a statement.

According to the statement, six more companies have won rights for oil products wholesale operations, including China Arts Huahai Import & Export Corp, Xinjiang Zetian PetroChemical Co, Maoming Gangan PetroChemical Co and three other firms in Liaoning, Ningxia and Shandong province.

Maoming Gangan, Xinjiang Zetian and three other firms also secured licenses for oil products storage, it said.

China earlier released new rules governing oil product vendors early this year, allowing them to engage in wholesale operations if they obtain a license.

Foreign entities were not permitted to have controlling interests in firms engaged in the wholesale or retail operations of oil products.

Previously, only China National Petroleum Corp and Sinopec Corp were permitted to conduct oil product wholesale operations.

A Medium-Scale Coal Mine in Jinan, Shandong Begins to Produce Coal Formally

At the morning of Jul. 26, Xinyang Coal Mine, located at Cuizhai Town, Jiyang County, Shandong Province, began to produce coal formally.

It is known that as a medium-scale coal mine in Jinan, Xinyang Coal Mine is invested by Xinwen Mining Group Co., Ltd., and the planed investment is 700 million Yuan. The main well is located at Qianjie Village, Cuizhai Town, Jiyang County, the field has large area and the reserve is rich. The total reserve is 315.75 million ton, the exploitable volume is about 100 million ton and it can be exploited for 100 years continuously.

Lanhua Sci-Tech Venture: Limited Increase of the Coal Productivity in the Future Three Years

It is known that the coal price of Lanhua Sci-Tech Venture hasn't increased obviously, which is similar to that of last year. Due to the reasons of foreign partner, the supporting railway of Sino-American Daning Coal Mine has been delayed to operate again, and it is expected that it can't run through before the end of the year, and even in 2008, which affects the sales volume and sales price of the coal directly.

It is expected that the coal price of Daning Coal Mine will reduce at 40-50 Yuan/ton than the normal price before the run through. It is expected that the coal productivity of the Company won't increase at great scale in the future three years and the compound annual growth rate will be 5.9%.

China 2007 steel products exports seen up 20 pct after H2 slowdown

China's steel product exports are expected to reach 51.6 mln tons this year, up around 20 pct from the 2006 level, the China Iron and Steel Association (CISA) said, indicating a slowdown in the second half of the year after nearly 100 pct growth in the six months to June.

"China's steel product exports in the second half will 'evidently' decrease compared to the first as government's measure to curb exports will show results," said Luo Bingsheng, vice chairman of the association.

The government announced twice, in April and June, that it was cutting export rebates on steel products -- except for those on pipes for oilfield use which will be maintained at 13 pct -- to 5 pct from 13 pct, while removing tax rebates on another steel products.

China exported 33.79 mln tons of steel products in the first half of the year, up 97.7 pct from a year earlier.

Last year the country exported 43.0 mln tons of steel products, up 109.6 pct year-on-year.

Luo added that the industry association is considering implementing a licensing management system for exporters in order to further cool exports growth.

China has been trying to discourage exports of some products in a bid to avoid friction with its major trading partners.

Luo noted that steel producers face cost pressure from rising raw materials costs and fuel expenses.

China imported 187.91 mln tons of iron ore in the first half of the year, with average CIF (cost, insurance and freight) price at 74.64 usd per ton, up 13.23 usd per ton from a year ago, Luo said.

Luo told reporters that China's steel firms will hold iron ore price negotiations with Brazil's Companhia Vale do Rio Doce (CVRD) and Anglo-Australian miners BHP Billiton and Rio Tinto. He declined to give a forecast for import prices.

He expects Chinese supply and demand for iron ore from international markets to be basically balanced.

China's output of crude steel is expected to rise 14 pct year-on-year to 480 mln tons in 2007, while consumption is seen at 446 mln tons, up 12 pct, the CISA said.

The association added that demand for crude steel is expected to rise to 476-536 mln tons in 2010.

Chongqing Steel to construct 2 mln-ton hot-rolled plate facility

Chongqing Iron and Steel Group will soon commence construction on a 2 million-ton, 3,800-millimeter wide hot-rolled steel plate facility in Chongqing Municipality's Changshou district to supply the shipbuilding industry, a Chongqing steel official told Interfax today.

China's largest transformer core manufacturing base will be located Baoying

Bosheng Group and Italian Rova Company signed joint venture contract on transformer iron core project. The two sides will set up a joint venture Yangzhou Bo-sheng Yilaikete Iron Core Manufacturing Limited. The total investment of project is about 8 million euros. When the project is completed, it will become China's largest transformer iron core manufacturing base.

MWH in line for huge China project

Broomfield-based MWH, an international engineering and construction consulting firm, is expected to announce today that it will provide consulting services for construction of one of the world's tallest dams.

At 1,000 feet high, the Jinping I Hydropower project in China will be shorter than only the unfinished Rogun Dam in Tajikistan, which is expected to be 1,099 feet. The Jinping dam will have a generation capacity of 3,600 megawatts, or enough to power 6 million to 8 million Chinese homes, according to MWH estimates.

The project is one of many hydroelectric dams under construction in the People's Republic of China. It comes at a time when the world's most populous nation is trying to address looming energy woes, while also getting away from overdependence on less-sustainable and relatively dirtier fossil-fuel sources.

China, the world's second-largest energy consumer after the U.S., depends on coal-fired plants for 70 percent of its energy, according to estimates from the Economist.

In 2006, China passed a law to promote renewable-energy sources such as solar, wind and hydropower. The law has created opportunities for U.S. companies like MWH to work with Chinese companies including Ertan Hydropower Development Co., which is constructing the dam, MWH officials said.

Norm Bishop, MWH director of international engineering and water resources, said the involvement of experienced, international companies with the scores of dam projects planned in China bodes well for the structural and environmental security of the projects.

"We're not only assisting in terms of technology, but we're also assisting with information concerning our environmental rules and regulations - some of the environmental practices that are being done at various projects around the globe and in the U.S. in particular," Bishop said.

The dam will be constructed on the 900-mile Yalong River in south-central China's Sichuan province. Ertan has four other projects underway on the Yalong. The river is one of China's 12 major hydropower bases, according to Ertan's website.

The dam is expected to come online in stages beginning in 2011 and will be fully operational by 2014, Bishop said.

Taiwan introduces biodiesel fuel blend for cars

Taiwan has started selling biodiesel fuel on a trial basis as part of attempts to reduce oil imports and carbon dioxide emissions.

Gas stations in two counties, Taoyuan and Chiayi, began selling petroleum diesel mixed with 1 percent of biodiesel fuel over the weekend, the Economic Ministry said on its Web site.

The blended diesel will be sold all over the island by next year. By 2010, the mix of the biodiesel fuel will be increased to 2 percent, resulting in the consumption of an estimated 100,000 kiloliters (26 million gallons) of biodiesel fuel in total a year, it said.

The trial sale this year is aimed at encouraging farmers to grow more soybeans, sunflowers and rape plants that can produce the alternative fuel.

The government has made the production of biodegradable fuel one of its core policies to help cut oil imports, increase farmers' yield and reduce the output of carbon dioxide to help with the battle against global warming, the ministry said.

Heilongjiang Province Jixi City Baochuan Garbage Treatment Plant will be put into use recently

Heilongjiang Jixi environmental sanitation institute is full-hearted propelling the construction of city key project of Baochuan Garbage Treatment Plant.

Currently the first phase has been completed, and began to construct the second phase. It was known that Baochuan Garbage Treatment Plant will be put into use recently.

Ministry of Agriculture announced that 60million rural households will use biogas until 2015

According to the information office of Ministry of Agriculture: Ministry of Agriculture issued "development plan of agricultural biomass energy industry (2007-2015)",proposing the developing targets as followed : Until 2015 the total number of rural households using biogas will be up to around 60 million, with an annual biogas production capacity of 23.3billion cubic meters ; over 8000 large-scale raising farms and biogas projects of livestock zones will be built up, which will supply 670million cubic meters of biogas.

Meanwhile a group of application model stations of straw curing fuel and central gas supply station of straw gasification will be set up, utilizing marginal lands to moderately develop energy crops, satisfying the demand of liquefied fuel material of the country.

Hebei: Zhangjiakou Huada straw biothermal power project laid foundation

In the morning of 26, July, Huada straw biothermal power project, totally invested 310million Yuan, laid foundation in the Zhulu County industry zone. It was known that the project will burn over 300,000 tons straws each year to supply 300 million degrees of electric power.

Largest waste incineration and power generation project in Shandong Province will be set up at Zibo City

Zibo waste incineration and power generation project, which has drawn great attention, finally finished and ran on trial.

At present the first set has been grid-connected to generate power，steadily running, the second set is under final testing and is expected to ignite on 30th this month.

As largest waste incineration and power generation project in Shandong province, the construction of that project means that Zibo has taken the lead in the field of refuse harmless treatment.

75,000t Hexane Diacid Devices of Shandong Bohui Will Probably Be Put into Use in November

Knowing from Shandong Bohui, the company has finished the first stage infrastructure projects of hexane diacid devices with production capacity of 75,000t, and will start to produce in November as is planed.

As is known, the hexane diacid devices construction project is divided into 2 stages, the 1st will be finished in the middle of September, aiming at reaching the production capacity of 75,000t and will be debugged in October, and products will be available in November.

The 2nd is planed to be finished in June, 2008, when the total production capacity of hexane diacid of Shandong Bohui will reach 150,000t.

Great Change is Implicit in Carbamide Industry due to Falling of Price all the Way

As is known, all businesses in agricultural production goods are doing the same thing recently: selling carbamide at a loss! On a nitrogenous fertilizer meeting last year, an expert in the industry said that future of Chinese carbamide industry will be very dangerous if related authority do not take action about it.

Recently, to the situation of continuous price falling of carbamide in whole country, this expert said that the falling trend Chinese carbamide industry cannot be reversed and the industry is collapsing now.

Power play by Datang bonus for investors

DATANG International Power Generation Co, the biggest Hong Kong-listed Chinese electricity producer, plans to hand bonus shares to investors for the first time.

This will double the amount of stock available for trading, Bloomberg News reported.

Datang Power will issue 4.2 billion yuan-denominated A shares in Shanghai, and 1.6 billion overseas-listed H shares, the Beijing-based utility said in a statement to the Hong Kong Stock Exchange on Wednesday night.

Datang Power first unveiled the plan on April 2, saying it would give investors 10 shares for every 10 held to expand its share capital and increase liquidity.

China Cosco Holdings Co, owner of Asia's largest container-shipping line, and Hong Kong & China Gas Co, the city's only piped-gas supplier, are other companies that have announced similar plans this year.

"There's no surprise in the bonus share issue as investors have known about it for a long time," Zhang Wenxian, an analyst with Guotai Jun'an Hong Kong Ltd, said by phone from Shenzhen yesterday.

Correction time

The company's shares in Hong Kong climbed as much as 2.4 percent to HK$6.92 (88 US cents) and traded at HK$6.75 at 12:15pm yesterday. The Shanghai shares fell 2.7 percent to 36.37 yuan (US$4.81). Its Hong Kong-traded shares are up 66 percent this year, while its Shanghai stock has surged more than threefold.

"The A shares are falling partly due to a market correction as the stock rose too high previously," Zhang said. "The government's comments to delay a decision on a power price hike may also have affected the market."

The government will wait "some time" before raising power prices, Cao Changqing, head of the National Development and Reform Commission's pricing department, said on Wednesday. China controls electricity prices to limit their impact on inflation.

Trading in the bonus H shares starts on August 1, the company said in Wednesday night's statement. Trading in the bonus A shares begins on July 31, Datang Power said in a statement on its Website on July 24.

The register of H-share investors for the bonus stock was closed between July 19 and July 24, the company said.

"The bonus issue will reciprocate the shareholders' long-term support and expand the share capital base of the company," the statement said.

Steel association, four steel bases required

Four steel production bases should be created in China, according to Luo Bingsheng, deputy chief of the China Iron and Steel Association, Securities Times reported today.

These production bases should be located in Northeast China with Anshan Iron and Steel Group and Benxi Iron and Steel Group at the core, North China with Shougang Group and Tanggang Group at the core, East China with Baosteel Group and Magang Steel Group at the core, Southwest China with Wuhan Iron and Steel and Panzhihua Iron and Steel Group at the core.

Luo said that steel enterprises' size is of utmost importance if they want to improve competitiveness by optimizing productivity layout and labor division.

The industrial concentration of China's steel sector is very low. Currently, China has more than 760 steel producers with a total production of 400 million tons in 2006, ranking first all over the world. But only 21 producers have an annual output of more than five million tons.

Arcelor Mittal, the world's largest steel company, produced more than 120 million tons in 2006, more than five times that of China's biggest producer.

Shanghai bourse revises bonds trade rules

The Shanghai Stock Exchange (SSE) revised its bond trading regulations again and implemented the changes yesterday, as an effort to support the development of enterprise bonds and get prepared for the upcoming corporate bonds.

The rule made some changes on declaration of enterprise bonds and treasury bonds, and expanded the definition of bonds, reserving the possibility of introducing new bond types. In addition, terms of treasury bond repurchase also apply to enterprise bonds, according to the revised rule.

Since SSE started enterprise bond repurchase at the end of 2002, it has witnessed a trading boom. However, due to surging risks between 2004 and 2005, the exchange suspended repurchase of newly issued enterprise bonds after September 2004.

To minimize risks in bond repurchase, SSE requires that all the newly issued enterprise bonds must be highly credible. Specifically, the issuers must be institutes or businesses directly under the supervision of the central government, and otherwise the bonds must be unconditionally assured by State-owned banks.

OGDCL negotiating oil JV in China

Pakistan's Oil and Gas Development Co. Ltd. (OGDCL) is in talks for its first overseas joint ventures in China and is exploring forays into the Middle East, North Africa and Eastern Europe, its chief said on Thursday.

"We are still negotiating. There is an opportunity in China and our people are there to look into it," Chairman and Chief Executive Officer of the country's top listed state-owned firm, Arshad Nasar told Reuters in an interview.

OGDCL is also seeking joint venture possibilities in Oman, Yemen, Egypt, Libya and Hungary, he said.

"Much ground has been covered in this respect," Nasar said, without giving details. Another OGDCL official, who declined to be named, said the company was in discussions with Chinese companies such as China National Petroleum Corporation International (CNPCI) and Petro China Co. Ltd.

"We are exchanging data and negotiating with these companies and looking for commercially viable projects," said the official, who would not say when a deal was likely.

OGDC will be the first Pakistani oil firm to venture abroad, coming late into an arena led by Chinese, Indian, Japanese and South Korean companies competing to secure scarce energy resources, sparked by trebled oil prices and geopolitical uncertainty in the Middle East.

Chinese and Indian state firms have also agreed a series of cooperation pacts, but apart from a few small acquisitions, there is little evidence of multi-billion-dollar deals.

OGCDL had bid for a block in Qatar but did not succeed, the official said.

With a market capitalisation of about $9 billion on the Karachi Stock Exchange, OGDCL holds the largest share of the country's recoverable hydrocarbon reserves: 32 per cent of gas and 37 per cent of oil.

Pakistan produces about 69,000 barrels of oil and nearly four billion cubic feet of gas a day and spends more than $6.5 billion annually on petroleum imports to meet its growing energy demand.

The country's domestic gas production is forecast to decline after 2010 and it would have to import costly fuel beyond that.

Nasar said his company has a strong financial base to expand its exploration activities both at home and overseas. OGDCL reported a 4.3 per cent increase in net profit for the nine months to March 31 to 34.63 billion rupees ($571million), up from 33.2 billion rupees in the year-ago period.

In December, the company went for global listing and raised about $813 million through a global depositary receipt (GDR) issue on the London Stock Exchange.

OGDCL operates 37 wells and 17 exploration sites in Pakistan and has interests in 28 non-operated leases.

Nasar said after "record-breaking" achievements in 2006-07, OGDCL would adopt a more aggressive approach in financial year 2007-08 (July-June).

"For this year, OGDCL has set a target of 50 wells and is aiming to increase its gas output to over 1,000 million metric cubic feet."

Last year, OGDCL drilled 41 wells in Pakistan, 11 more than in the 2005-06 year, and made 10 new discoveries. Its average daily production of oil rose to 36,300 barrels versus 31,500 barrels in 2005-06, and gas output rose to around 900 million metric cubic feet, Nasar said.

OGDCL also plans to go offshore and is working on a project with Shell Pakistan, aiming to have a first spud in August.

Around 25 companies, 15 of them foreign, are engaged in oil and gas exploration in Pakistan. Officials hope to attract increased investment following a new Petroleum Policy announced last week.

A major initiative in the new policy is removal of a five-year cap on the wellhead price of gas, considered a major hurdle in luring foreign investment in the oil and gas sector.

Pakistan attracted $479.6 million in oil and gas exploration investments in the first 11 months of fiscal 2006-07.

Shandong to invest in deep prospecting projects

Shandong Province in East China is planning to invest 2.5 billion yuan in deep prospecting projects to search for iron ore, gold ore and coal, sources with the Shandong Land and Resource Bureau said recently.

The province plans to target 20-50 medium-sized mineral deposits in the next five years, and submit of 350 tons gold reserve, 10 billion tons of coal and 2 billion tons of iron ore. Total potential mineral resources will value 3.3 trillion yuan, according to recently drafted outline of deep prospecting by the bureau.

The required investment for deep prospecting projects will mainly from the provincial and financial departments, geological exploration units, mining enterprises and etc..

Prospecting projects carried out in Shandong was mostly surface prospecting, and insufficient available reserves are rather outstanding in large and medium mines.

Israeli Producers Eye China High-End Market

Producers of Israeli wines, food and cosmetics are hoping their high-end products can find a way into the homes of China's increasingly affluent consumers.

But they could face an uphill struggle in China, where consumers still know little about the Mediterranean country's consumer products.

At Experience Israel, a consumer goods promotional event at Beijing's posh LAN Club on Wednesday, Israeli companies offered Chinese buyers samples of products ranging from hand lotion from the Dead Sea to wines from the Golan Heights.

"Taste the wine, taste the bread, taste everything that can be tasted," said Yehoyahda Haim, Israel's ambassador to China, during the event's opening ceremony. "Maybe you think that as an Israeli and as an ambassador I am biased, (but) let me know if you think they are good. I think they're very good."

The event, sponsored by the Israeli Embassy, the Israel Export & International Cooperation Institute and other organizations based in China, was a packed house, a sign of growing trade between the two countries. In 2006, bilateral trade between China and Israel reached $3.3 billion, an increase of 28 percent from the previous year.

Response from Chinese buyers at the event was encouraging, Israeli company representatives told China Daily.

Amnon Siva, vice-president of marketing for Mehadrin Tnuport Export, Israel's biggest exporter of citrus fruits, sees a huge growth opportunity in the Chinese market.

"We are trying to analyze demand. I think there is a future (in China), because quality of life is improving and people would like to buy good-quality imported fruits," Siva said.

Avivit Turgeman was in Beijing with her husband promoting Stybel Ltd, a 72-year-old, third-generation family-owned flour milling business, Israel's largest.

The company is hoping to cash in on China's burgeoning middle class and their appetite for breads and other products that require high-quality flour. Stybel produces 80 different kinds of flour - including whole wheat, organic and enriched - each for a different purpose, ranging from baguettes to croissants to pizza dough.

"The use of flour (in China) is growing, and the use of bread will increase before the Olympics. We wanted to introduce to the Chinese market and we're having good feedback right now," Turgeman said.

In another dimly lit section of the LAN Club, Chinese buyers tasted wines from Israel's five grape-growing regions.

Because of the country's variety of wines, and the global reputation of Mediterranean wineries, Batia Levy, export director of Carmel Winery, Israel's largest producer of wines, grape juice and brandy, is optimistic her products will find a place in China, where demand for wine is growing.

Carmel already sells several brands in China through its Shanghai representative.

"We hope China becomes a major market for us," said Levy, whose company exports to 30 countries, including the US, UK, Canada and Russia.

But consumer products from Israel remain a mystery to many Chinese consumers. In 2006, just 3.3 percent of all Israeli exports to China fell into the food, beverage and tobacco category. Total exports to China were just $958.4 million.

"Although the wine is good, it will be difficult to open the Chinese market, because it's already occupied by French, Italian and Australian wines," said Guo Jie, a wine trade professional.

"They need to know how to build an Israeli wine brand and how to promote the wine industry as a whole in China."

Still, Guo believes Israeli wine, and other consumer goods, can find a home in the country. "Anything can have a market in China," he said.

Indonesia coal production estimated to exceed target

Coal production in Indonesia is estimated to hit 215 million tons this year, or above the initial target of 205 million tons, due to demands from new markets of China and India, local press said Wednesday.

Indonesia sells 76.7 percent of total coal output to the export market, equivalent to about 165 million tons, reported leading economic daily Bisnis Indonesia.

"China and India are new buyers for Indonesia. The largest (coal) export goes to Japan and South Korea...," the newspaper quoted Indonesian Coal Mining Association (APBI) Chairman Jeffrey Mulyono as saying.

"These (new markets) offer an opportunity for Indonesian coal producers. If they can't meet the demand, buyers will find other suppliers, such as Australia and South Africa."

INTERVIEW - Pakistan OGDCL aims for first overseas oil foray

Pakistan's Oil and Gas Development Co. Ltd. (OGDCL) is in talks for its first overseas joint ventures in China and is exploring forays into the Middle East, North Africa and Eastern Europe, its chief said on Thursday.

"We are still negotiating. There is an opportunity in China and our people are there to look into it," Arshad Nasar, Chairman and Chief Executive Officer of the country's top listed state-owned firm, told Reuters in an interview.

OGDCL is also seeking joint venture possibilities in Oman, Yemen, Egypt, Libya and Hungary, he said.

"Much ground has been covered in this respect," Nasar said, without giving details.

Another OGDCL official, who declined to be named, said the company was in discussions with Chinese companies such as China National Petroleum Corporation International (CNPCI) and PetroChina Co. Ltd.

"We are exchanging data and negotiating with these companies and looking for commercially viable projects," said the official, who would not say when a deal was likely.

OGDC will be the first Pakistani oil firm to venture abroad, coming late into an arena led by Chinese, Indian, Japanese and South Korean companies competing to secure scarce energy resources, sparked by trebled oil prices and geopolitical uncertainty in the Middle East.

Chinese and Indian state firms have also agreed a series of cooperation pacts, but apart from a few small acquisitions, there is little evidence of multi-billion-dollar deals.

OGCDL had bid for a block in Qatar but did not succeed, the official said.

AGGRESSIVE APPROACH

With a market capitalisation of about $9 billion on the Karachi Stock Exchange, OGDCL holds the largest share of the country's recoverable hydrocarbon reserves: 32 percent of gas and 37 percent of oil.

Pakistan produces about 69,000 barrels of oil and nearly four billion cubic feet of gas a day and spends more than $6.5 billion annually on petroleum imports to meet its growing energy demand.

The country's domestic gas production is forecast to decline after 2010 and it would have to import costly fuel beyond that.

CEO Nasar said his company has a strong financial base to expand its exploration activities both at home and overseas.

OGDCL reported a 4.3 percent increase in net profit for the nine months to March 31 to 34.63 billion rupees ($571 million), up from 33.2 billion rupees in the year-ago period.

In December, the company went for global listing and raised about $813 million through a global depositary receipt (GDR) issue on the London Stock Exchange.

OGDCL operates 37 wells and 17 exploration sites in Pakistan and has interests in 28 non-operated leases.

Nasar said after "record-breaking" achievements in 2006-07, OGDCL would adopt a more aggressive approach in financial year 2007-08 (July-June).

"For this year, the OGDCL has set a target of 50 wells and is aiming to increase its gas output to over 1,000 million metric cubic feet."

Last year, OGDCL drilled 41 wells in Pakistan, 11 more than in the 2005-06 year, and made 10 new discoveries.

Its average daily production of oil rose to 36,300 barrels versus 31,500 barrels in 2005-06, and gas output to around 900 million metric cubic feet, Nasar said.

OGDCL also plans to go offshore and is working on a project with Shell Pakistan, aiming to have a first spud in August.

Around 25 companies, 15 of them foreign, are engaged in oil and gas exploration in Pakistan. Officials hope to attract increased investment following a new Petroleum Policy announced last week.

A major initiative in the new policy is removal of a five-year cap on the wellhead price of gas, considered a major hurdle in luring foreign investment in the oil and gas sector.

Pakistan attracted $479.6 million in oil and gas exploration investments in the first 11 months of fiscal 2006-07.

China steps up measures to ensure farm produce safety

The Ministry of Agriculture is also focusing on food safety. Official stress that Chinese farm produce is generally safe for consumption. But they also say they're looking at more measures to target specific food safety problems.

Officials from the Ministry of Agriculture say stepped-up measures will focus on fishing produce and livestock.

Specifically, they will crack down on hard on practices such as making and selling banned pesticides as well as animal medicines. They will also set up punitive measures for firms or individuals found breaking the law.

Zhang Yuxiang, Dept. director Chinese Ministry of Agriculture, said, "We will also carry out measures to crack down on activities such as illegally producing and selling farming materials. We will enhance supervision of the production of green food and organic food. Inspections on agricultural production environments and farming produce market access procedures will also be reinforced."

Inspections carried out by the Ministry of Agriculture in April show that the proportion of farm produce able to meet quality standards has gone up slowly but steadily over the last few years. More than 97 percent of fishing and livestock produce have met stringent safety standards for the last three years.

According to China's Quality Inspection Administration, 99.1 percent of the food that China exports to the US in the first half of the year also met requisite standards. And for food exported to Europe and Japan, the figure was as high as 99.8 percent.

Japan carried out an inspection on all food imported into the country in 2006. 99.4 percent of the food from China was up to grade, higher than average quality levels, and also higher than those of food from the US and Europe.

The steel deal

THE Shanxi Taigang Stainless Steel Co, China's biggest maker of the metal, said first-half profit probably quadrupled from a year earlier after it bought assets from its parent, boosting output and sales.

Net income in the six months ended June 30 probably surged between 280 percent and 330 percent, the company said in a statement to the Shanghai Stock Exchange yesterday. The company earlier estimated that profit may jump as much as 250 percent. Taigang made a profit of 676.2 million yuan (US$89 million), or 0.254 yuan per share, in the first half of 2006. It will report this year's first-half profit on August 27.

China Unicom To March Into Hong Kong 3G Market

According to Hong Kong media reports, Chinese mainland's telecom restructuring has not affected China Unicom (CHU) in expanding CDMA service and the company may get Hong Kong's CDMA2000 based 3G license as early as the end of this year.

The reports say that China Unicom has offered such big incentives as providing an annual minimum HK$30 million roaming fee income and reducing its outsourcing equipment costs by half to invite Hong Kong local operators to be its bidding partners for this license. China Unicom has invited Hutchison, Chengdian Group and Wharf T&T to submit a cooperation plan after Office of the Telecommunications Authority in Hong Kong formally issues a detailed rule on CDMA2000 license issuance.

CDMA2000 will be the fifth 3G license for Hong Kong. At present, the existing four 3G licenses of the SAR are respectively held by GSL, PCCW, SmarTone and Hutchison.

IBM To Explore China's Medium Enterprise Market

Dah-Chuen Chien, CEO of IBM (IBM) Greater China Group, says IBM will continue to integrate its comprehensive resources and fully expand the medium enterprise market of China.

Chien made the remarks at IBM's Greater China Software Partner Summit 2007. Meanwhile, Zhong Haoyi, vice president of the Chinese mainland marketing department of IBM, has emphasized that IBM will continue to offer support to software channel partners and based on this it will further advance the software channel's strategic positioning.

At present, the medium and small enterprise market is the second largest market for IBM. According to local media, the company expects the medium enterprise market growth to increase by 15% this year.

Lower rebates to slow China's exports of paper products

China's economic planner has forecast slower export growth for paper products in the second half of 2007 after export tax rebates for energy-consuming products were cut from 13 to five percent.

The reduction, which took effect on July 1, would reduce the sector's profit margin by five to seven percent as exporters were expected to lose 73 million U.S. dollars in tax rebate revenues, said the National Development and Reform Commission in a report.

The export rush triggered by anticipation of the tax rebate reduction in the first half had also contributed to the slowdown, it said.

Customs figures revealed that the export growth for paper products had been hovering at a high level, with the rise in February surging to the highest 54.18 percent.

The reduction would also have a serious impact on the profitability of the paper-making industry as paper products, such as napkins, packaging paper and cartons, accounted for 37 percent of last year's total exports of 4.58 billion U.S. dollars.

Export rebates for the remaining exports -- categorized as paper pulp and paper -- were scrapped from Jan. 1, 2006.

Enterprises manufacturing coated paper noticed problems after the United States slapped duties of 10.9 to 20.4 percent on imports of Chinese coated paper in April.

"Some paper-making companies might go bankrupt or will have to turn to other business," said the report.

China's diamond trade double in first half

Diamond trade through the Shanghai Diamond Exchange soared by 119.5 percent to reach 443 million U.S. dollars in the first half of this year, the Shanghai diamond trading authorities said on Friday.

Diamond imported or exported under general trade totaled 419 million U.S. dollars, up 115.7 percent year on year.

Diamonds traded as bonded goods shot up by 215.9 percent to reach 24.54 million U.S. dollars.

In April, diamond import and export in general trade on the exchange hit a monthly new high of 92.73 million U.S. dollars.

The Shanghai Diamond Exchange is the only legal channel for general trade of diamond on the Chinese mainland.

Vietnam exports many fruits, flowers to China

Vietnam has exported a large volume of tropical fruits and fresh flowers to China via its Mong Cai border gate in northern Quang Ninh province since early this month, according to a local trade agency on Friday.

Vietnamese firms export some 40 tons of rambutans a week to China's southern region, the Trade Information Center under the Trade Ministry said, predicting that the volume can reach 50 tons a week soon.

Besides rambutans, Chinese consumers are favoring Vietnamese jackfruits and some kinds of melons.

In the first week of July, Vietnam exported 10,000 twigs of flowers totaling over 25,000 yuan (some 3,300 U.S. dollars) to China via the border gate. The Vietnamese flowers, mainly daisy, rose and lily, are selling well in Guangdong, Guangxi and Fujian, said the center.

Vietnam earned 323.7 million dollars from exporting different kinds of products to China via the border gate in the first half of this year. Meanwhile, it spent 105.4 million dollars importing Chinese items, the center said.

Mandelson to face calls from EU importers to end Chinese textile quota

The European Union (EU) Trade Commissioner Peter Mandelson is facing calls on Friday from the bloc's importers not to extend quota restrictions beyond this year on Chinese textiles.

Mandelson will meet with representatives from European textile importers on Friday, hearing industry views on the transition to free trade in textiles and clothing with China in 2008, the European Commission said on its website.

The EU and China reached an agreement in June 2005 to limit Chinese exports in 10 categories such as pullovers until 2008. As the quota restriction is set to expire at the end of this year, European textile producers and some EU member states are pressing hard for an extension of the cap on cheap textile imports from China.

Next Monday, Mandelson will hold a separate meeting with European textile producers association Euratex. The EU trade chief is expected to say that the European Commission will closely monitor developments in textile and clothing imports from China in2008, the Commission's website said.

Ahead of Friday's meeting with Mandelson, the Foreign Trade Association, which represents EU importers, called for assurances that no new restrictions will be imposed after the end of this year.

"The FTA is opposing any prolongation to this restrictive system," it said in a statement.

The association said the quota restriction creates uncertainty for retailers and importers, who have already placed orders for delivery in 2008 under the assumption that the cap will be removed.

The EU should "accept the reality that in today's global marketplace more and more products are imported from developing countries that offer good quality at good prices which drive down consumer prices," the statement said.

Restriction on Chinese textile products "simply serves to protect further those industries in the EU that have remained uncompetitive," it added.

Trade ministers from member states, who have the capacity to make a final decision, will meet Mandelson on the Chinese textile quota this Sunday at an informal dinner.

China's textile, apparel exports up 17% in first half of 2007

China's textile and apparel exports jumped to 73.5 billion U.S. dollars in the first half of 2007, up 17.47 percent from the same period last year, the nation's top economic planning agency said on Wednesday.

Exports reached 16.2 billion U.S. dollars in June, an increase of 24.49 percent, according to the National Development and Reform Commission (NDRC).

The NDRC noted the export value totaled 96.8 billion U.S. dollars between September last year and June this year.

The NDRC has predicted the nation's exports of textiles and apparel would grow at a slower rate of 16 percent to top 165 billion U.S. dollars this year.

The projected increase is 6.6 percentage points lower than the growth rate of last year, which the NDRC attributed to the surging prices of raw materials, lower export tax rebate rates, the rising yuan and trade frictions.

International cotton prices have risen rapidly due to the expectation of large increases in cotton exports by China and boosted by the price hikes in other agricultural products, said the NDRC.

China imported 1.18 million tons of cotton between January and June, 52.01 percent less than the same period last year, according to customs statistics.

The NDRC said local textile and clothing exporters would continue to lose their price advantages as the yuan was expected to continue to appreciate and squeeze profit margins for low-added-value textile exporters.

Meanwhile, export rebate rates for footwear and headgear dropped from 13 to 11 percent, and those for fabrics from seven tofive percent from July 1.

Estimates from the China National Textile and Apparel Council said a two-percentage-point decline in export rebates normally cost the industry 4.8 billion yuan in profits (634.4 million U.S. dollars) and drove down profit margins by 0.26 percentage points.

China adjusts tariff on aluminum products to cut energy consumption, pollution

China will impose export duties on some aluminum products from Aug. 1 in a bid to reduce energy consumption and pollutant emissions, according to the Ministry of Finance (MOF).

The government will levy a 15-percent export tariff on non-alloy aluminum rods and poles and scrap the five percent import duty on electrolytic aluminum, the MOF announced on Thursday.

It said the move aimed to "further restrict exports of high energy-consuming and polluting resources products and encourage imports of raw materials".

This is the latest measure to rein in rapid growth in the high energy-consuming and polluting industries, including metals. The government has already announced rises in the resources taxes on lead, zinc, copper and tungsten ore by three to 16 times from Aug.1.

Industrial output of the sectors, including metals, power, steel, oil refining, chemicals and construction materials, grew 20.6 percent in the first quarter, 6.6 percentage points higher than the same period last year.

The six sectors consume 70 percent of the nation's energy for industry and release the same percentage of sulfur dioxide.

The government has set the target of reducing energy consumption per unit of gross domestic product by 20 percent and major pollutant emissions by 10 percent by 2010.

Energy consumption per unit of GDP fell by 1.33 percent year-on-year in 2006, only one third of its four-percent target, Xie Fuzhan, head of the National Bureau of Statistics, said on July 12.

The aluminum sector expanded has rapidly in recent years despite a series of macro-control measures. In the first five months, the output of alumina surged 55.4 percent over the same period last year to 7.62 million tons and that of electrolytic aluminum jumped 36.1 percent to 4.68 million tons.

Sources with the MOF said the move followed the large-scale scrapping or cutting of export tax rebates for 2,831 commodities from July 1 aimed to curb the growth of energy-consuming industries and reduce the nation's rising trade surplus, which hit 112.5 billion U.S. dollars in the first half of 2007, an increase of 83 percent from the same period last year.

Toyota unveils big China plans

TOYOTA Motor Corp aims to boost sales by more than 50 percent in China this year from a year earlier.

As part of big-picture plans, it has added new products to attract more fuel-conscious Chinese customers.

The world's largest car maker, which just leapt over former leader General Motors Corp in the first quarter, expects to sell 450,000 units in China this year, the company said yesterday at an auto show in Changchun, in the country's northeast.

Toyota has joint ventures with both the Guangzhou Automobile Group and the First Automotive Works in passenger cars in China, manufacturing Vios, Reiz, Camry, Crown sedans, the Prius hybrid car and the latest Corolla sedan.

Toyota's sales in China still lag far behind rivals like GM and Volkswagen that made earlier starts in the nation.

Last year, Toyota sold a combined 308,000 vehicles in China, less than half that of GM and Volkswagen.

China only accounts for a small proportion of global achievement for the world's second-largest car maker, with an average 25 percent sales growth internationally.

Toyota is expanding its range of models, particularly those that are fuel-efficient.

Work began on a second plant in Guangzhou in June to meet rising demand.

The new plant, the seventh for Toyota in China, will boost total production capacity to more than 800,000 units when completed next year.

Bond sale has touch of steel

SHANXI Taigang Stainless Steel Co, China's biggest maker of the corrosion-resistant metal, plans to raise as much as two billion yuan (US$264 million) selling one-year bonds.

The aim is to replenish capital and reduce financial costs, Bloomberg News reported.

The Taiyuan, Shanxi Province-based company will sell bonds on Wednesday to institutional investors via the inter-bank market, the steel maker said in a statement yesterday posted on the Chinabond.com.cn Website.

China started allowing companies to sell short-term bills, or debt with maturity of one year or less, in 2005. The move was part of efforts to curb companies' reliance on bank lending and to develop the bond market.

Selling short-term securities can help companies raise extra funds and cut borrowing costs.

Shares of Shanxi Taigang declined as much as 3.3 percent to 19.35 yuan in Shanghai.

The shares have surged almost fivefold in the past year, making them the best-performer of the 23 steel companies tracked by the Bloomberg Asia Pacific Iron/Steel Index.

Japanese Companies Focus On China's Mobile Internet Advertising

NGI Group's CEO Satoshi Koike says his company is working with Japan's Fractalist to increase exposure in China's mobile Internet advertising sector.

Both NGI and Fractalist will acquire shares of Mediapro Technology, a company financed by Fractalist that is involved in mobile advertising services in China.

NGI will also underwrite the third-party allocation of shares scheduled for July 30, 2007 by Fractalist, thereby cementing the relationship between the two companies. Fractalist and NGI Mobile, a subsidiary of NGI Group, will then merge on December 1, 2007 and unify business activities.

Pending the merger, NGI will acquire 46.7% of aggregate issued shares of Fractalist, and will make Fractalist a consolidated subsidiary of NGI Group.

Economy set to overtake Germany

China's economy grew so rapidly in the first half of 2007 that it is likely to overtake Germany as the world's third-largest by the end of this year, analysts say.

The release Wednesday of January to June figures for Asia's second biggest economy will provide fresh evidence that Beijing's economic braking measures have had little effect.

China's sizzling economy expanded even faster than originally thought last year, with the government revising 2006 growth domestic product (GDP) to 11.1 percent from 10.7 percent.

Data released by China's statistics bureau last week showed the economy was worth 21.09 trillion yuan in 2006, about 2.65 trillion dollars based on last year's average exchange rate of 7.97 yuan to the dollar.

The revision puts China in striking distance of Europe's largest economy within months.

"With this upward revision, it is highly likely that China will bypass Germany to become the third-largest economy in the world in current US dollar terms by the end of this year," said Hong Liang, an economist at Goldman Sachs.

According to the World Bank, Germany's economy was worth 2.9 trillion dollars at the end of 2006.

Economists expect GDP in the second quarter to near or equal its breathtaking January to March pace of 11.1 percent growth.

JPMorgan Chase Bank economist Wang Qian put the second-quarter acceleration at 10.6 percent, and said it would pick up speed in the second half of the year.

"We don??t see any sector of the economy slowing down. It??s firing on all cylinders," said Wang.

The torrid pace of development means that China's economic czars will once again have to devise fresh ways to prevent the export powerhouse from the kind of overheating that could trigger a slide into financial crisis.

Regulators have already taken this year introduced a slew of piecemeal administrative measures to slow the economy, including two interest rate hikes, five increases in bank reserve requirements and new export curbs.

Exports, one of Beijing's biggest headaches given the friction it causes with its two largest trade partners, the European Union and the United States, have continued to flood international markets.

The widening trade gap is on route to becoming the globe's largest ever after Beijing announced last week that its surplus had jumped more than 85 percent in June to 26.91 billion dollars.

Although the June figure was partly due to factories rushing to beat new curbs on exports that took effect July 1, the huge global demand for Chinese goods means the surplus will expand through the rest of the year, analysts said.

"China has become the world's factory for manufactured consumer goods," said Qu Hongbin, a senior economist at HSBC in Hong Kong.

"If global consumer demand remains then Chinese exports will grow. There is not a lot that government policy can do about that."

Washington and Brussels believe one step to staunching the tide of Chinese goods would be greater appreciation in the currency, which trade partners say is artificially low and boosts China's business competitiveness.

But China's autocratic leadership fears that could destabilise its financial system, making such a step highly unlikely, in keeping with the government's repeated position of allowing the yuan to rise slowly.

Earlier this month the nation's top economic planner said China had to further tighten macroeconomic controls in the second half in the face of growing financial risks.

"The trend is of an economy that is moving from a bias of fast growth to overheating," said a research arm of the National Development and Reform Commission.

Li Huiyong, chief analyst at Shenyin Wanguo Securities in Shanghai, said the government had to get cracking.

"At the moment, there is no obvious change to the overheated economy, with inflation and investment (levels) likely to jump," said Li.

"Under such circumstances, the major task is to prevent further overheating and strengthen controlling measures."