Central bank reiterates prudent monetary policy

Date Jun 24 2013 11:10:06

China's central bank said on Sunday that the country will continue to implement the prudent monetary policy while fine-tuning it at the proper time.
It will keep a stable and moderate growth in its credit supply as well as social financing, said the People's Bank of China in a statement issued after a quarterly meeting of its monetary policy commission.

This came after a statement from the State Council on Wednesday, which vowed to continue the prudent monetary policy stance, firmly guard against systemic risks and make sure that credit gets channeled into real economy.

The central bank said the national economic operation and financial sector are "generally stable" while consumer prices being "basically stable," but it also highlighted challenges and risks.

The PBOC said it will maintain the stability and continuity of macro-economic policies while optimizing the allocation of "financial resources" to support economic restructuring and guard against financial risks.

China's economic growth has been slowing. The 7.8-percent growth rate in 2012 was its slowest pace in 13 years, and economic data released so far in 2013 were not quite encouraging.

The PBOC has been taking a tough line with Chinese lenders. It refused to inject cash into the financial system in the past week despite a spike in domestic interbank lending rates and evidence that the economy is slowing.

Analysts saw the move as the PBOC's attempt to force domestic lenders to stop channelling money into the informal banking sector, known as "shadow banking," which has boomed in recent years and fueled concerns about financial risks.

The central bank vowed to improve the formation mechanism for the yuan exchange rate and maintain its basic stability. It also said it will move ahead with interest rate liberation.

Edited by SHMET

China to promote renewable energy for heating

Date Jun 19 2013 11:13:19

The National Energy Administration will promote solar, geothermal and biomass heating and aims to put it into practice before the end of the year, Shanghai Securities Journal reported on Monday.

A draft of the program said 50 million tons of coal equivalent (TCE) will be replaced by renewable energy by 2015 to generate electricity, up from 30 million tons currently. The number is set to climb to 100 million tons by 2020.

China set a target to keep total energy consumption below 4 billion tons of TCE by 2015, with electricity consumption below 6.15 trillion kilowatt hours.

Report by SHMET

Nation to scrap license system for imports of iron ore: report

Date Jun 14 2013 10:26:15

China plans to scrap a decade-old iron ore import licensing system this year, opening up an import market that takes two-thirds of the world's international iron ore trade, Reuters reported Thursday citing an industry source with direct knowledge of the matter.

The move could cut costs for domestic steel mills by eliminating licensed middlemen charging import commissions.

It could also mark the end of years of efforts by China, alarmed by its growing dependence on imports and the dominant role played by the likes of Rio Tinto and Vale, to wrest pricing power away from the big miners by strictly regulating trade.

"China will open up its iron ore trade from the second half of the year," said the source, who declined to be named as he was not authorized to speak to the media.

"Import qualification licenses will no longer be required, in order to make the industry more market-oriented and give steel mills more choices," the source said.

China imported a record 743 million tons of the commodity in 2012, up 8 percent from the year before.

Iron ore traders will only require the same routine licenses issued to other importers - a more streamlined process - and will no longer need approval from government-backed industry bodies like the China Iron and Steel Association (CISA).

The old licensing system was part of China's efforts to make the iron ore industry speak with "one voice" when dealing with major foreign suppliers.

The system was also aimed at stamping out unlicensed traders who were blamed for driving up prices through speculative buying.

That campaign proved counterproductive, instead creating a grey market for middlemen to rent out their permits.

The CISA and the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters, a unit that helps regulate iron ore trade on behalf of the Ministry of Commerce, worked together to issue licenses to importers.

"Some traders that held licenses made a huge profit by selling imported iron ore to unlicensed buyers over the past few years and the move means that they might lose the advantage," said an iron ore trader in Shanghai.

China has been trying to reduce government interference in the workings of the market.

Edited by SHMET

China considers less strict coal import quality restrictions

Date Jun 05 2013 10:28:28

China, the world's largest coal buyer, is considering easing a proposed ban on low-grade thermal coal imports following protests by major utilities, trade sources said.

The new standards being considered would affect a much smaller proportion of imports and ensure that more supplies from Indonesia, the world's top steam coal exporter, would meet the minimum requirements.

"The NEA is looking at lowering the bar on calorific value, which means more imports will be able to get through," said a source linked to a state-owned power company.

The National Energy Administration (NEA) is now looking to allow thermal coal imports with a minimum calorific value of 3,750 kcal/kg (NAR), down from the 4,540 kcal/kg limit that was previously proposed, trading and utility sources said.

The maximum sulphur content has also been raised to 2 percent from the earlier plan of one percent, trade sources said.

It was not immediately clear when a final decision on implementing the standards will be taken. Major coal miners in China said they have not been consulted on the revision.

Plans to curb coal imports came on the back of intense lobbying by Chinese coal miners, who have blamed the near 30 percent jump in overseas supplies last year for the tumble in local prices, sources said.

Expectations that the proposed ban would be relaxed has already lifted Indonesian coal prices by around $1-$1.50 a tonne through the week as more Chinese buyers returned to the market, traders said.

An earlier proposal to bar steam coal with heating value of 4,540 kcal/kg would have blocked some 55 million tonnes of coal imports, accounting roughly a fifth of total shipments based on last year's trade data.


Traders said the revised proposal, if adopted, would only affect less than 10 percent of imports.

"If that should happen, it will have a very minimal impact on the Indonesian seaborne trading market because most of the Indonesian coal traded is above 3700 kcal/kg," said a Chinese coal trader.

"The ban is going to affect Indonesian low CV coal and high sulphur American coal. In the short-term that's going to place a cost burden on the power plants but this is going to be overcome by the Chinese local supply."

The Indonesian Coal Mining Association (ICMA) said it will lobby the local government to pursue a diplomatic approach to protest against the plan.

"It is China's right to do that, but we are trying to persuade our government to (push) through their diplomatic channels to relax their regulation," ICMA's executive director Supriatna Suhala told Reuters.

China imported about 290 million tonnes of coal, including lignite, last year, against total output of 3.6 billion tonnes.

Some large Chinese miners and traders remained sceptical that Beijing would introduce a ban at all, as many utilities have existing term contracts and many stakeholders are involved.

"There is the coal faction, the utilities and the large traders backed by local governments and banks. It's difficult to justify such a move when the miners have had a decade of solid profit growth," said a source with a mid-sized Chinese mine.

Low-grade coal became a target because it competes with a large proportion of their production.

But blocking imports of low-grade coal, which account for a meagre percentage of China's total output, would do little to rebalance a market that is now plagued by over capacity, industry experts said.

"The main reasons for falling coal prices are weak demand from power generators and an oversupply. But most miners are unwilling to cut back on production," said David Fang, an analyst with the China Coal and Transport Distribution Association.

Edited by SHMET

China issues economic reform guidelines

Date Jun 03 2013 10:54:26

China's top planning agency has today released key economic reforms for the year ahead. High on the agenda - medical insurance, public housing and a crack down on anti-competitive practices. 

Under the guideline of reform work in 2013, China's National Development and Reform Commission has developed a raft of changes.

Among them, stepping up its efforts to promote orderly urbanization, while keeping people's interests a top priority. The country will unify medical insurance system for both urban and rural residents. The government will merge the low-rent housing and public rental housing projects to meet the requirement of urbanization.

The guidelines also set the agenda for the reform of the administrative system, which is seen as a key factor to vitalize market players. The government will remove policies and regulations that disobey the rules of fair competition, and will promote civil capital to be invested in sectors including financial, energy, railway and telecommunication. The country is set to open some of the railway ownership and management rights. China will further remove red tape to improve the efficiency of examining and approving projects, and to strictly control the number of new projects in industries with overcapacity.

Kong Jingyuan, Director General of Dept of Comprehensive Reform of The Econ. System, NDRC, said, "We must further relax administrative control and limits to give more power to lower-level government bodies, and open more investment fields, letting civil capital to contribute to infrastructure construction. "

The NDRC also said that the reform requires a proper relationship between the government and the market, as well as the government and society.

Edited by SHMET