Market Information

Property development near Olympic Village - Beijing, 2007 by Joe

FOREIGN developers and corporations will start to pay a land-use tax starting from next year in Shanghai, according to a notice issued by the city government yesterday. The land-use tax will range between 1.50 yuan to 30 yuan (US$4.06) per square meter, per year depending on the size and location of the property, the notice said. Foreign companies are exempted from the tax before the notice takes effect but they still need to pay certain fees for land use. Domestic companies have been paying the tax since 1988. Individuals are exempt from the tax on their residences. The new policy means that developers have to pay tax for the land approved by authorities for construction of property projects. The move is widely expected to add costs to developers which are hoarding land in order to fetch higher selling prices in the future. “The tax won’t affect the city’s housing prices since it has been imposed for many years,” said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service Co Ltd. “Foreign firms mainly use office buildings, which account for less than one percent of the city’s land,” Xue said. The notice ruled that land inside the Inner Ring Road will be levied 12 yuan to 30 yuan per square meter and land between the Inner Ring Road and Outer Ring Road will be levied six yuan to 20 yuan per square meter. China has imposed a variety of taxes on developers, such as a land value-added tax and land-transfer fees. The country will also levy a property tax in 10 regions on a trial basis next year, including Beijing, Shenzhen and Liaoning. Analysts said that the property tax can reduce the number of idle properties, boost supply and slash housing prices. Last month’s average housing price in the mainland’s 70 major cities jumped 9.5 percent on a yearly basis, compared with September’s 8.9-percent growth rate.

via Shanghai Daily: Business by Winny Wang on 11/29/07 Foreign firms to pay land-use tax next year

To build an “innovation-oriented country”, China will invest RMB 5 billion to introduce advanced manufacturing technology and equipment in the next few years, as a senior government official said on Tuesday.

The investment will focus on manufacturing equipment in the textile, machinery and home appliance sectors, said Wei Jianguo, vice commerce minister. “It’s to improve our manufacturing industry’s competitiveness that is largely defined by the level of the manufacturing equipment,” he said at the which opened in Shanghai yesterday. In his speech, Wei said that although China is the world’s third biggest maker of machine tool by volume after Japan and Germany, the country is still weak in high-end products like computer numerical control tool. The central government regards the equipment manufacturing industry as a strategic one and is eager to accelerate its upgrading. China plans to develop a group of competitive large-scale manufacturers who own intellectual property rights over their products and technologies by 2010, according to a circular by the State Council, China’s cabinet, last year. Support will be offered in terms of financing, for example. Currently, more than 70 percent of the high-tech output in the nation’s manufacturing industry are made by joint ventures and foreign companies in China. Officials stressed yesterday that the country will enhance IPR protection to encourage technical innovation and will “execute tougher punishment on IPR infringement.” In the automobile industry, Wei said China is drawing up rules governing the export of cars by cutting the number of small exporters and will develop large-scale exporters with annual overseas sales of 500,000 to one million units. There are now fewer than 400 auto exporters from the peak of 1,267, which included small firms that export less than five units a year.

As part of their overall entry strategy, Unicon Group have launched the Canterbury of New Zealand Chinese information website.

www.canterburychina.com

THE cost of living in Shanghai is catching up with more expensive locations in the region such as Hong Kong and Taipei, according to the latest global cost of living survey. The ECA cost of living survey listed Shanghai in 100th place among the top 300-plus most expensive cities in the world, up 23 spots from last year. Shanghai was also one position higher than Singapore among Asian cities, which ranked at 122nd place globally, according to the report. ECA International, the world’s largest membership organization for international HR professionals, carries out the survey twice a year comparing a basket of 128 consumer goods and services commonly purchased by expatriates in more than 300 locations worldwide. Lee Quane, general manager of ECA International Hong Kong, said that soaring food, oil and grain product prices, along with strengthening yuan against the US dollar pushed up the ranking. “The difference in living costs throughout China remains considerable,” he added. For instance, Hong Kong is the highest ranked city in China, which remains at the 79th place in the world this year. It is followed by Taipei, which dropped back from 88th place to 94th this time. Mainland Chinese cities, especially second-tier cities, reported rapidly rising living cost in the past 12 months. The 95th-placed Beijing is the top-ranked city with a rise of 13 spots from that of last year. The cost of living for foreigners in Chongqing grew by about 12 percent, a figure which was double the rise in Beijing. Xiamen is in the 182nd place and is the least costly city for expatriates in China on the list, according to the report. The survey also suggested that Seoul in South Korea beat Tokyo of Japan to be crowned the most expensive city in Asia. The global crown for the world’s most expensive city went to Luanda in Angola.

from Shanghai Daily: Metro by Rachel Yan:  Counting the cost of living

China ranks first in global plantation area (about 25 million ha) and fifth in global forest area (175 million ha).

To address the growing and massive timber supply gap, numerous Chinese government policies and incentives have recently been enacted to expand the area and volume of plantations; the focus is on the expansion of fast-growing, high-yield (FGHY) plantations. The goal by 2010 is to have 4.7 million ha of FGHY plantations established, providing 49 million m3 of timber per year, which in turn can support 6.4 million m3 of wood-based panel production, and provide 3.4 million m3 of large-diameter timber production. By 2020, the FGHY plantations are planned to exceed 13 million ha, providing a whopping 133 million m3 of timber per year that could support 21.5 million m3 of wood-based panel production and 15.8 million m3 of large diameter-timber. These goals and new policies demonstrate the importance of the forestry sector in the eyes of the central government. These plantation policies and others are being used by the government to stimulate investments in priority projects, especially in the wood pulp and wood panel sectors. For potential investors, China’s market for locally grown plantation wood offers good prospects for stable and continuous revenues. However, in China’s current context, developing new plantations or buying existing plantations is not a straightforward task.

Source: WOOD Markets Monthly, October 2007 Report Thanks Paul!

Top European Union officials will talk tough in Beijing this week about China’s snowballing trade surplus and its reluctance to open its booming economy further to European business.

European trade chief Peter Mandelson will warn Beijing it must make a “major change” on investment restrictions, red-tape barriers for EU companies, and counterfeiting, or risk tougher action by Brussels.

Via: William Schomberg BRUSSELS, Nov 25 (Reuters) - EU officials to talk tough on trade in China

A BIG Chinese currency revaluation would invite speculation and damage growth, said Fan Gang, an adviser to the People’s Bank of China. Sharp increases in the yuan’s value would trigger “large speculative capital inflows and outflows that will kill China’s growth and financial stability,” Fan, a member of the central bank’s monetary policy committee, said at an investment forum in Seoul yesterday. Officials from the Group of Seven nations have increased pressure on China to allow the yuan to appreciate more and take the burden off other currencies. French Finance Minister Christine Lagarde said on Sunday that the yuan causes “tensions,” Bloomberg News reported. “What would happen after a large - say 40 percent to 50 percent - appreciation of the yuan? Another request in two years?” Fan said. He was referring to United States legislators’ calls for bigger gains. Stronger currency The yuan has climbed about 11.5 percent versus the US dollar since a fixed exchange rate was scrapped in July 2005. China’s economy grew 11.5 percent in the third quarter as record trade surpluses pumped in cash. A stronger currency would make exports more expensive, staunch the inflow of money and ease tensions with trading partners. The US dollar is likely to keep falling, a “problem” for the yuan, Fan said. Central bank Governor Zhou Xiaochuan said on Monday China supports a strong US dollar. The greenback has dropped to records against the euro and the Canadian dollar this month. Fan underscored the potential cost to China in job losses from a currency revaluation, denied the yuan was responsible for global trade imbalances, and said the nation’s priorities were long-term growth and stability. He also said the government should speed up tax changes to curb a stock market bubble, adding that several measures are being prepared. The key CSI 300 Index has more than tripled in the past year, even after declines since mid-October.

Source: Shanghai Daily Adviser warns on huge rise in yuan

CHINA’S economy will grow at a stable 11.5 percent this year compared to 2006, Premier Wen Jiabao said yesterday while on a four-day visit to Singapore. The economy can move forward smoothly if the government prevents the economy from overheating and contains inflation, Wen said. Rising consumer prices are a cause for concern although Wen said a jump in food costs was the biggest contributor to inflation. The Consumer Price Index grew 6.5 percent in October, while food prices contributed five percentage points, Wen said. The country’s economy expanded 11.5 percent in the third quarter of this year, the fifth consecutive year of double-digit growth. More austerity measures such as an increase in bank reserve requirements and a more expansive trading band for the yuan are expected to rein in the hyperactive economy. Wen said on Monday that China needs to prevent bubbles in the stock market and curb speculation in the real estate market. He said the government should strengthen supervision through economic and legal measures to create an open, fair and transparent stock market. The mainland’s stock index has risen 96 percent since the start of this year. Referring to complaints about rapidly growing housing prices in the past few years, he said the central government has allocated 4.9 billion yuan (US$659 million) to build low-cost homes for the poor, or migrant workers, and more affordable residences will be put on the market for middle-income earners. Last month’s average housing price in the mainland’s 70 biggest cities jumped 9.5 percent on a yearly basis, compared with September’s 8.9 percent rise, the National Development and Reform Commission said last week.

Source: Shanghai Daily: Wen: Economy may grow 11.5% this year

WANGFUJING in Beijing climbed one notch to become the 19th most expensive shopping location in the world while Hong Kong’s Causeway Bay stayed as the second most expensive global shopping site, Cushman & Wakefield said in its annual report, Main Streets Across the World. Wangfujing in Beijing saw its rent rise 26.3 percent year on year to US$8.01 per square meter per day. Rents in Hong Kong’s Causeway Bay grew 7.5 percent year on year to US$36.27 per square meter per day. In Shanghai, both Huaihai Road and Nanjing Road climbed rapidly - 3.4 percent and 17.8 percent respectively. “In China, record retail sales growth - 18 percent year on year in October - is continuing to drive international retailers’ aggressive expansion not only in Shanghai and Beijing, but now into provincial capitals such as Chengdu (Sichuan Province). Of course, the run-up to the 2008 Olympic Games has fueled even more leasing and development activities in Beijing,” said Richard Middleton, executive managing director for China at Cushman & Wakefield, a global real estate consultant.

Source: Shanghai Daily: Rents continue to rise in Asia as retailers go on ‘aggressive’ drive

A NEW Zealand kiwifruit marketing company took a Jiangsu Province fruit trading company to court, accusing it of trademark infringement and demanding 300,000 yuan (US$39,474) compensation. Shanghai No. 1 Intermediate People’s Court heard the case yesterday but didn’t give a verdict. New Zealand Zespri Group Limited, the world’s biggest kiwifruit marketing company, sells kiwifruit in about 70 countries and regions. It entered the mainland market in 1998 and registered its trademark as Zespri with a logo showing sunbeams. But company officials found a similar trademark and logo on kiwifruit sold by Xishu Fruit Trading Company in the local market earlier this year. They reported the case to Shanghai Administration of Industry and Commerce, as Xishu’s fruit bore the trademark Znishio and a similar sunbeam logo. The watchdog seized about 100 boxes of the fruit and the labels. However, Zespri told the court that Xishu continued selling the fruit with the similar trademark, which also appeared on its Website. During the hearing, Xishu argued the two words were obviously different. The sunbeam, it said, was a common way of representing the fruit.

Source. Shanghai Daily: NZ fruit company sues Jiangsu trader