China GDP Growth Maintains its pace.

China’s economy maintained its rapid growth in the third quarter, expanding by 11.5 per cent, leaving it on track to grow by its fastest annual rate since the 13.1 per cent pace achieved in 1993.The third quarter represented a slightly slower pace than the second quarter, when output rose by 11.9 per cent.

The marginally slower pace was largely due to a series of government tightening measures, including successive interest rate rises, directives to state banks to cool lending and tighter enforcement of environmental rules.

Even with the slower pace in the third quarter, the central government’s tightening measures are expected to continue until at least the end of this year.

The National Bureau of Statistics, which released the growth figures on Thursday, confirmed a disclosure by a senior official last week that annual consumer inflation slowed to 6.2 per cent in September from 6.5 per cent in August. Inflation is still more than double the central bank's annual target of 3 percent and higher than the key one-year deposit rate of 3.87 percent, encouraging speculation in stocks and property.

The benchmark CSI 300 Index of stocks fell the most in six weeks on speculation that the central bank will raise interest rates for the sixth time this year, curbing company earnings. President Hu Jintao is trying to tame the flow of cash into the economy from record exports without triggering a sudden slowdown.

The yuan rose to as much as 7.4834 versus the dollar from 7.4926 yesterday, heading for the biggest weekly gain in five weeks. It has climbed more than 10 percent versus the U.S. currency since the end of a fixed exchange rate in July 2005 and fallen 7 percent against the euro.

China's trade surplus surged 69 percent in the first nine months from a year earlier to $185.7 billion, topping the record total for all of 2006 and fueling investment. Factory and property spending in urban areas climbed 26.4 percent, the statistics bureau said today. That's up from the 24.5 percent pace for all of 2006.

Investment accounted for 42 percent of GDP growth in the first nine months, versus the 37 percent share for domestic consumption, the statistics bureau said, while ``External demand'' accounted for 21 percent.

Industrial production increased 18.9 percent in September from a year earlier, the fastest pace in three months and up from 17.5 percent in August. Retail sales climbed 17 percent after gaining 17.1 percent.

A spokesman for the National Bureau of Statistics said at a press conference announcing the latest growth figures that the “institutional, systemic and structural problems existing in economic performance are still pronounced.”

“These problems include rapid economic growth, price rises, high pressure on energy consumption and pollutant emission reduction, and the uncertainty of world economic growth.”

According to the office,China has taken six years to achieve 40 percent of a 20-year target of quadrupling per-capita GDP by 2020, with an increase to 16,084 yuan this year.

Ali Baba IPO

Chinese e-commerce portal Alibaba.com could raise up to $1.5 billion (€1 billion) in its Hong Kong listing next month, the company said Monday, describing it as the biggest Internet IPO since Google.

Alibaba Group, the company that controls the business-to-business commerce Web site, said it plans to sell 858.9 million shares at an indicative price range of 12 to 13.50 Hong Kong dollars each, up from an earlier initial price of HK$10-HK$12.

Alibaba's charismatic founder Jack Ma, a former English teacher who set up the company in 1999, told reporters the profits would help build a "world-class infrastructure and ecosystem for e-commerce, which will contribute to the sustained growth of the Chinese economy."

Ma was speaking by video phone from the United States where he is drumming up support for the IPO.

Alibaba -- which allows companies in both China and overseas to trade with one another online -- is one of China's fastest growing Internet companies.

It has seen its registered members soar from 6 million in 2004 to 24.6 million in 2007. Paying members increased from 77,000 in 2004 to 255,000 by June 2007.

The company recorded a net profit of 295.2 million Chinese yuan ($39.2 million; € 27.5 million) in the six months ended June 2007.

It expects its net profit to more than triple to 622 million yuan ($83 million; €58 million) from 219.9 million yuan, on strong growth in revenue from both its international and Chinese Web sites.

Unlike other offerings in which most of the shares on offer are newly issued shares, nearly three-quarters of the shares in the IPO are existing shares held by Alibaba.com's parent, Alibaba Group.

About 85 percent of the shares are marked for institutional investors with the rest open to retail investors.

Already, the shares are in high demand, with the South China Morning Post newspaper reporting the institutional tranche was already 50 percent subscribed before the price was raised Yahoo! Inc., which holds a 39 percent stake in Alibaba.com's parent, Alibaba Group, had already agreed to subscribe to about $100 million worth of shares.

Alibaba said another seven "strategic" investors had agreed to take a stake, representing in total about HK$2.3 billion ($296 million; € 207 million)or 20 percent of the offering.

They include Cisco Systems International B.V., AIG Global Investment Corporation (Asia) Ltd., FoxConn (Far East) Ltd. and Industrial and Commercial Bank of China Ltd., as well as investment companies held by Wharf Holdings Ltd. Chairman Peter Woo, Malaysian tycoon Robert Kuok and the Kwok family of Sun Hung Kai Properties Ltd., the company said.

Strong demand from the public -- which can start buying the shares from Tuesday -- is also expected to trigger an extra allocation of 113.67 million shares to raise a total of $1.7 billion (€ 1.19 billion).

Net proceeds from the listing were expected to be about HK$2 billion ($335 million; € 234.46 million), the company said, which would be spent on strategic acquisitions and development initiatives to grow the company's business both in China and overseas.

Shares of the company, which claims to be the largest business-to-business e-trading site in China, will begin trading on Nov. 6

Chinese Manufacturing Continues To Accelerate

China's manufacturing activity expanded at a faster pace in September, according to a survey by CLSA Asia Pacific Markets.The Purchasing Managers' Index rose to a three-month high of 55 from 53.4 in August, CLSA said today in an e-mailed statement. A reading above 50 indicates an expansion.

Rapid manufacturing growth is becoming even more rapid it seems. Monetary policy is still extremely loose and China's economy is still accelerating.

The CLSA index is based on replies to questionnaires sent to purchasing executives at more than 400 industrial companies. The survey tracks changes in output, new orders, employment, prices, inventories and delivery times. The data is seasonally adjusted.

The output index rose to 58.3 in September from 54.6 in August, while the index of new orders climbed to 59.3 from 54.6. The index of export orders increased to 52.9 from 52.3.

A government PMI survey, released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics yesterday, also showed a higher reading. The index climbed to 56.1 in September from 54 in August.

Factory Investment Continues To Rise

China's spending on factories, equipment and property climbed 26.7 percent in the first eight months of 2007 according to the statistics bureau today.

The world's fourth-largest economy expanded 11.9 percent in the second quarter from a year earlier, the fastest pace since 1994. The trade surplus grew 33 percent in August to $24.97 billion. Inflation jumped to 6.5 percent.

From January to August, urban investment in fixed assets hit 6,665.9 billion yuan, a rise of 26.7 percent year-on-year. Of the total, state -owned and state controlled enterprises invested 2,877.7 billion yuan, surging 16.7 percent; real estate development enterprises valued at 1,427.7 billion yuan, rose by 29.0 percent.

In terms of jurisdiction of management, central investment stood at 643.5 billion yuan with growth rate of 13.2 percent as compared with previous year; that of local investment totaled 6,022.4 billion yuan, jumping 28.4 percent.

In terms of different industries, investments of primary, secondary, and tertiary industry amounted to 78.3, 2,962.6 and 3,625 billion yuan, expanding 42.9, 29.5 and 24.3 percent respectively, year-on-year.

In terms of different sectors, investments of mining and washing of coal stood at 90.8 billion yuan, a year-on-year rise of 22 percent; that of extraction of petroleum and natural gas grew to 108.1 billion yuan, increasing 10.5 percent; that of manufacture of non-metallic mineral products, smelting and pressing of ferrous metals, smelting and pressing of non-ferrous metals respectively valued at 162.1, 149.9 and 74.1 billion yuan, jumping 49.6, 12.9 and 29.2 percent; that of production and supply of electricity and heat, railway transport arrived at 460.7 and 119.3 billion yuan, climbing 11.5 and 3.4 percent year-on-year.

In terms of registration status, investments of domestic funds enterprises stood at 5,909.3 billion yuan, surging 27 percent over that in the same period last year; that of enterprises with funds from Hong Kong, Macao and Taiwan valued at 322.4 billion yuan, rising 32.5 percent; and that of foreign funded enterprises standing at 397.6 billion yuan, up 17.1 percent, year-on-year.

In terms of buildings under and new constructions, by the end of August, the cumulative number of urban construction projects over 500,000 yuan was 237,000, a year-on-year increase of 29,286; that of total investment planned in project under construction stood at 211,981 trillion yuan, climbing 17.9 percent; that of number of project started this year valued at 149,751, a year-on-year rise of 18,665; that of total planned investment of newly projects was 5,194.2 billion yuan, a rise of 16.7 percent.

In terms of volume of positioned funds, investment in urban areas hit 7,677.8 billion yuan, a year-on-year rise of 27.1 percent. Of which, domestic loans, foreign investment, and self-rising funds rising 12.7, 16.3 and 32.2 percent respectively, year-on-year.

People's Bank of China Raises Interest Rates

The People’s Bank of China raised interest rates for the fifth time since March today in an effort to curb the fastest inflation since 1996 and damp speculation in stocks and real estate.

The benchmark one-year lending rate will increase to a nine-year high of 7.29 percent from 7.02 percent, starting tomorrow, the central bank said today on its Web site. The rate has risen from 6.12 percent on March. here is the rather terse text of the communique:


"

In order to strengthen liquidity management in the banking system and check the excessive growth of monetary credit, the People’s Bank of China has decided to raise the RMB reserve requirement ratio for depository financial institutions by 0.5 percentage points as of September 25, 2007.

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Money supply grew 18.1 percent in August, exceeding the central bank's annual target of 16 percent for the seventh straight month. Urban fixed-asset investment climbed 26.7 percent in the first eight months of this year.

August Industrial Output Growth Slows

China's industrial production rose 17.5 percent in August, slowing for a second month after the government increased taxes on exports. The increase was down from an 18 percent gain in July.The slowdown may be insufficient to deter the central bank from raising interest rates for a fifth time this year after inflation surged to an almost 11-year high and the trade surplus widened to the second-highest on record.

China's trade surplus widened 33 percent in August from a year earlier to $24.97 billion.

Foreign direct investment in China climbed 12.8 percent through August from a year earlier. Spending rose to $41.9 billion, the Ministry of Commerce said today at a briefing in Beijing. The pace slowed from a 12.9 percent increase in the first seven months. For August alone, investment jumped 11.9 percent to $5.1 billion.

China was the world's fourth-largest recipient of foreign direct investment in 2006 after the U.S., U.K. and France according to the United Nations. Spending by overseas companies climbed 4.5 percent from a year earlier to $63 billion. Including the financial industry, investment fell 4.1 percent to $70 billion.

Disposable incomes among urban households climbed 14.2 percent in the first half from a year earlier.

Inflation Continues To Rise in August

Soaring food prices propelled China’s annual consumer price inflation to 6.5 per cent in August, the fastest pace in nearly 11 years, raising expectations that the central bank will defy the global trend and keep raising interest rates. The inflation rate published today, up from 5.6 per cent in July, was the highest reading since December 1996.

Also, according to the National Bureau of Statistics proucer prices keep rising too:

In August, Producers’ Price Index (PPI) for manufactured goods up by 2.6 percent from the same month last year; purchasing prices for raw material, fuels and power rose by 3.8 percent.

PPI for means of production increased 2.2 percent over last August. Of the total, PPIs for mining and quarrying industry increased 1.4 percent; that for raw materials industry and manufacturing industry correspondingly up by 3.9 and 1.5 percent; that for means of consumer goods grew 3.5 percent. Of which, price for foodstuff increased 8.6 percent; that of clothing and commodities rose 1.2 and 1.8 percent respectively, while that for durable consumer goods dropped 0.5 percent.

Fixed asset investment continues to be very high:

From January to July, urban investment in fixed assets hit 5,669.8 billion yuan, a rise of 26.6 percent year-on-year. Of the total, state -owned and state controlled enterprises invested 2,431.7 billion yuan, surging 16.5 percent; real estate development enterprises valued at 1,213.5 billion yuan, rose by 28.9 percent.

and In July, the total retail sales of consumer goods reached 699.8 billion yuan, a year-on-year increase of 16.4 percent.



While in August, according to a news release today China's retail sales grew at the fastest pace in more than three years, buoyed by higher prices and rising incomes in what must surely be the world's fastest-growing major economy. Sales climbed 17.1 percent in August from a year earlier to 711.7 billion yuan ($95 billion) after gaining 16.4 percent in July.