Mrs Riva Ganguly Das, Consul General of India Shanghai speaking at the “India – China (Yancheng) Business and Investment Seminar’’, Yancheng, 24 May 2012

June 2012

India & China India-China trade (Jan-April 2012)

Trade April 2012 Jan-Apr 2012

Change compared to Jan-April 2011

Total trade $5.663 bn $22.296 bn -5.3%Indian imports $3.917 bn $14.359 bn -1.0%Indian exports $1.746 bn $7.937 bn -12.3%India’s trade deficit $1.746 bn $7.937 bn

Source: http://www.customs.gov.cn/publish/portal0/tab1/info367770.htm

Air China opens flight to Mumbai Air China launched a new regular flight between the southwestern city of Chengdu and Mumbai on 2 May 2012, marking the first direct flight between the Chinese mainland and Mumbai, the economic center of India. It is the second direct air route Air China has launched between Chengdu and India. The carrier had opened Chengdu-Bangalore flight in February 2010 (More).

CII & ChinaIndia – China Business and Investment SeminarConsulate General of India Shanghai jointly with Yancheng Municipal People’s Government and Confederation of Indian Industry organized “India – China (Yancheng) Business and Investment Seminar’’ on 24 May, 2012 at Yancheng city of Jiangsu province of China. Several prominent Indian companies such as Mahindra & Mahindra, Larsen & Toubro and Sylvania Havells have located their businesses in Yencheng. The 25-member Indian delegation including Mr Rangarajan Vellamore, Chairman, CII IBF China and other members was led by Consul General Riva Ganguly Das. The delegation had a fruitful meeting with Mr. Zhao Peng, Party Secretary of Yancheng on opportunities for trade and bilateral investment. Mr. Cao Youhu, Vice Mayor of Yancheng Municipal People’s Government made a presentation on the economy of Yancheng and focus sectors at the seminar. Senior representatives from CII, Deloitte, State Bank of India and Mahindra & Mahindra also made presentations on investment opportunities in India and preferential policies for various sectors. Mr. Chen Yunhua, Chairman of Jiangsu Yueda Group shared his experience working with M&M in their successful joint venture set up in Yancheng to manufacture tractors for local market. Over 150 participants with more than 100 representatives of Yancheng and northern Jiangsu based companies, government officials and media representatives participated in the Seminar.

Seminar on ‘Investment Opportunities in India’s Infrastructure Sector’ The Consulate General of India, Guangzhou organized an investment Seminar in Guangzhou City of Guangdong Province on 25 May 2012. The event was supported by Department of Foreign Trade and Economic Cooperation (DOFTEC) of Guangdong Province, CII and CCPIT Guangzhou. Mr I M Pandey, Consul General of India, Guangzhou in his opening address highlighted the investment opportunities for the Chinese companies in infrastructure sector in India. Mr Nagaraj Naidu, Counselor (Trade & Commerce) from Embassy of India, Beijing explained about the ‘India’s 12th Five Year Plan’ and ‘India’s Budget: 2012-2013’ and the opportunities available for investment in infrastructure sector in India. The representative of Deloitte group explained about FDI policy of India and the legal aspects of investment in India and the various tax benefits that can be availed under the current policy regime. The representative of Huawei Technologies Limited shared their experience of working in India and gave suggestions on how to do business in India. The Seminar was attended by around 100 persons including senior officials from Foreign Affairs Office of Guangdong, DOFTEC of Guangdong Province, Bureau of Foreign Trade and Economic Cooperation of Guangzhou City and representatives of 75 Chinese enterprises based in Guangdong Province from infrastructure sector.

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The Monthly China Journal of Confederation of Indian Industry June 2012 - Volume 9 No 6

China Pulse

June 2012Chinese EconomyChina foreign trade (Jan-April 2012)

Trade April 2012 Jan-Apr 2012 April 2012 Jan-April 2012Change compared to March 2012

Change compared to April 2011

Change compared to Jan-April 2011

Total trade $308.078 bn $1167.182 bn -5.5% 2.7% 6%Exports $163.252 bn $593.240 bn -1.5% 4.9% 6.9%Imports $144.826 bn $573.941 bn -9.7% 0.3% 5.1%surplus $18.426 bn $19.299 bn - - -

Source: http://www.customs.gov.cn/publish/portal0/tab1/info367767.htm

Economic IndicatorsCPI (April) Down to 3.4%, down from 3.6% in

March percent in MarchPMI (April) 53.3.

PMI (non-manufacturing) Down 1.9% to 56.1% Industrial production growth

Down 9.3%

New yuan loans (April) 681.8 billion yuan, down from 1.01 trillion yuan in March

FDI (Jan-April) Down 2.38% to $37.88 billion

ODI (non-financial)(Jan-April)

UP 72.8% to $23.16 billion Retail sales (April) Down 14.1%

China cuts reserve ratio againPeople’s Bank of China announced on May 12 lowering of the reserve requirement for commercial lenders by 50 basis points effective from may 18. It is the second time China has taken such action this year to inject more market liquidity and shore up the economy. The cut would release about 400 billion yuan into the market and after the cut, the reserve requirement ratio for major banks will stand at 20%, while for small and medium-sized lenders, the ratio will be reduced to 16.5% (More).

China’s overseas investment to reach $150 billion in 2015 According to the Ministry of Commerce (MOC) of China, China’s overseas investment is expected to grow by an annual rate of 17% during the period from 2011 to 2015 and reach $150 billion in 2015. The contract value of overseas projects is expected to hit $180 billion in 2015, while the business volume in overseas contracted projects may hit $120 billion. China’s non-financial overseas direct investment totaled $23.16 billion in the first four months this year, up 72.8% from a year earlier (More).

China to expand high-end equipment sectorChina is looking to triple the sales revenue of its high-end equipment manufacturing industry to 6 trillion yuan ($951 billion) by 2015, according to the sector's 12th Five-Year Plan (2011-15). Sales of high-end equipment will account for 15% of the overall revenue of the equipment manufacturing industry in three years, compared with 8% in 2010, and will also have a larger share of the global market. The proportion of revenue is expected to further expand to 25% by 2020, when high-end equipment manufacturing becomes a pillar industry of China (More).

Government & Politics Nearly 90% families own their houses or flats Nearly 90% of Chinese families own their houses or flats, a figure much higher than the world level, which stands at about 60%, according to a report issued by Southwestern University of Finance and Economics and the People's Bank of China. Each urban household owns 1.22 apartments on average, higher than the number of 0.74 released by China International Capital Corporation in 2010 (More).

More funding for technical, vocational schools in ChinaTechnical and vocational education will be a top priority for the Chinese government spending on education. According to State Councilor Liu Yandong, the education budget will be increased this year by 580 billion yuan ($92 billion) from 2011, with more money going to rural, remote and poverty-stricken areas, as well as areas mainly with ethnic groups (More).

70% of annual global e-waste dumped in ChinaThe final destination of around 70% of the world's annual 500 million tons of e-waste is China, according to a report by China Business News. The majority of e-waste import activities are based in and around China's main ports. According to Lai Yun, director of Greenpeace's Pollution Prevention Project, "the smuggling of e-waste is still rampant because of the high profits associated with recycling of the material." Official statistics show that more than 40 million tons of this solid waste was imported in 2010, with an industrial output value of around $23.7 billion (More).

Foreign tourists may get 3-day visit It is reported that Beijing will soon launch a new policy to allow 72-hour non-visa entry for foreigners in an effort to ease their travel. This would represent a crucial sign that Beijing is open to the world. The policy is expected to be similar to ones already being run in Shanghai (48 hours) and South China's Hainan province (21 days for tour groups) (More).

Sensitive industries off-limits to foreign PE firms National Development and Reform Commission of China has decided that yuan-denominated funds managed by overseas private equity firms are "foreign" and may not invest in sensitive industries, such as national defense-related companies, and they also face restrictions on investing in industries including resources, telecommunications, education and the Internet, which could limit exit channels such as initial public offerings (More).

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June 2012China, Singapore to build 100 billion yuan high-tech zone Sichuan provincial government and a Singapore company jointly launched the construction of a 100 billion yuan ($16 billion) high-tech zone (Singapore-Sichuan High-tech Innovation Park) on 8 May 2012. Park is planned to cover 10.34 square kilometers and house 120,000 residents in Gaoxin and Tianfu districts in Chengdu, capital of Sichuan. The project will be operated by the Singapore-Sichuan company - Sino-Singapore (Chengdu) High-Tech Innovation Park Development Company Ltd., with a registered capital of $297 million jointly invested by Singapore state owned company, Temasek Holdings and Chengdu High-tech Investment Group (More).

China, South Korea, Japan issue Joint Statement on Agricultural Cooperation The Fifth Trilateral Summit Meeting of China, South Korea and Japan was held in Beijing from 13-14 May 2012. The three nations on 13 May released a Joint Statement on Agricultural Cooperation to improve agricultural technology, enhance food production capabilities, and facilitate trade in agricultural products (More).

China, Japan and South Korea ink investment deal China, Japan and South Korea signed a deal on May 13 in Beijing to promote and protect trilateral investment after more than 13 rounds of talks over the past five years. The agreement, which has 27 terms and an additional protocol, includes every important aspect that an international investment agreement should have. The three sides have also agreed to launch talks on an FTA this year (More).

PBOC plans to give $10 billion to new venture People’s Bank of China (PBOC) plans to give $10 billion from its huge foreign exchange reserves to a new entity to assist Chinese state owned firms to invest abroad. PBOC is in talks with China Reform Holdings Corp, a company controlled by the state owned Asset Supervision and Administration Commission, to set up a joint venture, probably abroad, the sources said. China has the world's largest foreign exchange reserves totaling $3.3 trillion and has been seeking ways to diversify holdings to preserve value and improve returns. The State Administration of Foreign Exchange (SAFE) manages the bulk of China's official foreign exchange reserves. China Investment Corp (CIC), a sovereign wealth fund, was set up in 2007 with an initial $200 billion. CIC had $410 billion at the end of 2010 and was given an extra $30 billion in 2011. It was set to receive a further $50 billion injection (More).

Government departments told to 'buy Chinese'China has asked central government departments to buy made-in-China products when making government procurements. Ministry of Finance (MOF) said in a statement May 22 that all central government departments should also procure energy-saving and environmentally friendly products as well as authentic software. The statement reiterated the strict regulations governing the purchase of imported products (More).

Huge investment in 'green' projectsChina will invest more than $316 billion in promoting energy saving and low carbon projects during the 12th Five-Year Plan period (2011-15). China has also set a goal of reducing its energy intensity by 16% and carbon intensity by 17% during the 12th Five-Year Plan period (More).

Disease costs 13% of China's GDP The economic burden of disease currently consumes about 13% of China's GDP, Vice Minister of Health Wang Guoqiang said at a conference on traditional Chinese medicine (TCM) held in the country's southwest Guangxi Zhuang Autonomous Region on May 26. He said that China is currently facing "dual disease burdens," or health problems usually found in a developed country as well as those typical in a developing economy (More).

Japan, China to begin direct currency trading Japanese Finance Minister Jun Azumi said on May 29 that Japan and China will begin direct yen-yuan trading on June 1, abandoning the existing system that determines yen-yuan rates via their US dollar values. The yen-yuan trading will be dealt at the Tokyo and Shanghai markets. Azumi said the direct trading will lower transaction costs and reduce settlement risks of the financial institutions and facilitate the use of both the Japanese and Chinese currencies. The yen-yuan direct trading will also inject vitality into Tokyo's financial market, he said. It is the first time China has allowed a major currency other than the US dollar to trade directly with the yuan (More).

Business & Industry China aims to double textile output by 2020 Chinese textile producers aim to more than double the country's textile output by 2020 from the 2010 level, according to a 10-year plan from the textile industrial association released on 8 May 2012. China is planning to increase textile and clothing exports by an annual rate of about 7% and boost the export value of fiber products to $400 billion by 2020 (More).

Lenovo ranks No 4 tablet PC maker Chinese PC maker, Lenovo Group Ltd became the fourth largest maker of tablet PCs in the world measured by market share in the last quarter of 2011 fiscal year. It also reported a record-high annual net profit growth rate of 73%, bringing it closer to its US rivals Hewlett-Packard Corp and Apple Inc. For 2011 fiscal year, Lenovo had $29.6 billion in sales, commanding 12.9% of the global market for the types of products it makes (More).

China food manufacturing to exceed 9 trillion yuan The output value of China’s food industry is expected to exceed nine trillion yuan this year. In the first quarter of this year, the output value had increased 26.1% year on year to 2.02 trillion yuan (More).

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June 2012China to host first service trade fair China will host its first fair for trade in services in Beijing from May 28 to June 1 amid growing worries that the world's second-largest economy will land on a slower growth track. The fair, akin to Canton Fair and being the first one designed for service trade, is expected to be the world's only comprehensive transaction platform for trade in services. It will play a role in facilitating deals between domestic and foreign companies on such services as banking and IT. China's trade in service has maintained a good momentum. In 2011, China's volume of service trade surged to $410 billion, taking the fourth spot in the global ranking. But compared with the U.S. whose service trade volume topped $900 billion in 2011, China has a long way to catch up. According to a five-year plan to promote trade in its service sectors, China's service trade volume is projected to reach $600 billion by 2015 with annual growth averaging over 11% (More).

CII India OfficeU. D. Bhatkoti, Advisor

Confederation of Indian Industry

CII China OfficeE B Rajesh, Chief RepresentativeConfederation of Indian Industry

The Mantosh Sondhi Centre 23 Institutional Area, Lodi Road, New Delhi-110003 Tel: 91-11-2462 9994-7; Fax: 91-11-24601298 Tel: Email: u.d.bhatkoti@cii.in; Website: www.cii.in

Room No 11A47/49, Shanghai Mart,2299 Yan'an Road (West), Shanghai 200336, China

Tel: +86 (21) 62360969; Fax: +86 (21) 32283510 Email: e.b.rajesh@cii.in; Website: www.cii.in

Translation Disclaimer: English is our official business language. Due to the complexities of the human language,and the possibility of a number of different translations and interpretations of particular words and phrases there are inherent limitations in translations. Thus, the CII accepts no responsibility or liability for the accuracy of the translation of its contents (wherever applicable), its study and test materials, submissions, comments, reviews, correspondence, and external links, etc.

Disclaimer: The main purpose of this publication is to provide basic information & news, it is not meant as substitute. Theviews expressed in this publication are those of the authors and do not necessarily reflect the position or policy of theConfederation of Indian Industry (CII).

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