July 2012

Mr. Rangarajan Vellamore, Chairman, CII IBF China presenting a gift to Ms. Riva Ganguly Das, Consul General of India Shanghai during the farewell lunch on July 1, 2012 in Shanghai

Mr. Asit Tripathy, Joint Secretary, Ministry of Commerce, India delivering a keynote speech at the ‘India-China Business Seminar’ on June 6, 2012 in Kunming

India & China

India-China trade (Jan-June 2012)Trade June 2012

US$ billionJan-June 2012

Change compared to Jan-June 2011

Total trade 5.7276 34.1890 -3%Indian imports 3.9859 22.6775 0.3%Indian exports 1.7416 11.5115 -6.2%India’s trade deficit 2.2443 11.1660

Source: http://www.customs.gov.cn/publish/portal0/tab1/info379008.htm

India, China agree to step up security dialoguePrime Minister Dr Manmohan Singh and Chinese Premier Wen Jiabao agreed to step up their defence and security dialogue and work to take steps to ensure that the two countries achieve a $100 billion trade target by 2015. The two leaders spoke of the need to continue with their dialogue at their 40-minute meeting on the sidelines of the Rio+20 Environment Summit in Rio de Janeiro on June 20, 2012 (More)

CII & China

The 7th China-South Asia Business Forum & India China Business SeminarA CII delegation participated in the 7th South Asia Business (CSAB) Forum held in Kunming from 5-7 June 2012. Consulate General of India, Guangzhou in association with CII organized an exclusive ‘India China Business Seminar’ on 6th June during the CSAB Forum. Mr. Asit Tripathy, Joint Secretary, Ministry of Commerce, India delivered a Keynote speech on overview of India-China trade and investment relations. Representatives from Indian organizations and companies made presentations on the Indian economy and the investment opportunities for Chinese companies in various sectors in India. Mr. E B Rajesh made a detailed presentation on potential of goods and services that can be exported from India to China.

Farewell get together for Ms Riva Ganguly DasA farewell get together was organized by CII IBF China members for Ms. Riva Ganguly Das, Consul General of India in Shanghai on 1st July. Mr Rangarajan Vellamore, Chairman CII IBF China, in his address thanked her for her support and guidance to the Indian business community in China and her efforts in the formation of CII IBF in China. Since the launch of Forum, the Consulate General of India, Shanghai has been partnering with CII IBF in organizing several programs across East China to promote the bilateral trade and investment.

Vibrant Gujarat delegation visits Mainland China and Hong Kong A government business delegation from Gujarat led by Mr. Bharat Lal, Principal Resident Commissioner of Government of Gujarat in New Delhi visited Mainland China and Hong Kong to promote the ‘Vibrant Gujarat

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China PulseThe Monthly China Journal of Confederation of Indian Industry July 2012- Volume 9 No 7

July 2012

2013 Global Summit’ and to further stir up the rapidly growing business interest of Chinese investors in Gujarat. The delegation during its visit focused on attracting Chinese investments in sectors which are currently witnessing huge imports from these regions. During the visit of delegation, the Embassy of India Beijing, the offices of Consulate General of India in China in association with CII jointly organized road shows in Shanghai, Beijing, Guangzhou and Hong Kong on various sectors.

Chinese Economy

China Economic Indicators GDP growth Q2 7.6% Industrial value added output

H1Up 10.5%

GDP growth H1 7.8% Retail sales H1 Up 14.4% to 9.82 trillion yuan ($1.56 trillion)

GDP H1 22.71 trlillion yuan ($3.6 trillion)

Fixed-asset investment H1 Up 20.4% to 15.07 trillion yuan ($2.38 trillion)

CPI (June) 2.2%, lowest in 29 months PPI (June) Down 2.1%Fiscal revenue H1 Up by 12.2% to 6.4 trillion

yuan ($1.01 trillion)New loans (June) Up by 285.9 billion

yuan to 919.8 billion yuan

ODI (non-financial sector) H1

Up 48% to $35.42 billion FDI H1 Down 3% to $59.1 billion

China foreign trade (Jan-June 2012)Trade June 2012

US$ billionJan-June 2012 US$ billion

June 2012 Jan-June 2012Change compared to May 2012

Change compared to June 2011

Change compared to Jan-June 2011

Total trade 328.687 1839.840 -4.5% 9.0% 8.0%Exports 180.204 954.376 -0.5% 11.3% 9.2%Imports 148.482 885.464 -8.9% 6.3% 6.7%surplus 31.722 68.911 - 42.9% 56.4%

Source: http://www.customs.gov.cn/publish/portal0/tab1/info379005.htm

China's banking assets top 105.8 trillion yuan by 2011Total assets of China's banking sector of China had risen 19.1% year-on-year to 105.8 trillion yuan ($16.8 trillion) by the end of 2011, according a report released by the People's Bank of China (PBOC) on 8 June 2012 (More).

China to relax QFII rules to attract investment The State Council of China in April increased total qualified foreign institutional investors’ (QFIIs) quota to $80 billion from $30 billion. On June 2012, China pledged to make it easier for QFIIs to invest in China’s capital market. It is a part of the country's efforts to free up capital flows and accelerate the opening of domestic capital market. China will lower the QFII threshold, including lowering the QFII asset requirement to $500 million from $5 billion (More).

China cuts interest rates People’s Bank of China (PBOC) announced on June 7, 2012 that it would cut the benchmark interest rate for deposits and loans by 25 basis points beginning from 8 June, the first cut in more than three years. After the cut, the one-year deposit interest rate will fall to 3.25% while that of loan interest rate will be lowered to 6.31% (More). Again on July 5, PBOC announced further cut in the benchmark interest rate for one-year deposits by 25 basis points beginning July 6, 2012 (More).

China's foreign debts total $751 billion China's outstanding external debts totaled $751.26 billion at the end of March, including $193.56 billion as medium and long-term foreign debts and $557.7 billion as short-term debts. Of the registered external debts, which stood at $480.16 billion, 76.67% were US dollar denominated debts, while 7.05% and 8.23% were yen and euro denominated debts, respectively (More).

Government & Politics

China's first manned space docking mission successful After a successful 13-day stint in space, China’s Shenzhou-9 manned spacecraft, carrying on board its three astronauts, returned to Earth on June 29. The first manned space docking of China succeeded on June 18, 2012 afternoon with the coupling of the Shenzhou-9 spacecraft and Tiangong-1 lab module. During their stay in Tiangong-

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July 2012

1, the astronauts conducted several experiments and tests and produced valuable data, which will help in improving technologies for astronauts' future long-term stays in a space station (More).

Wen proposes free trade deal with South AmericaChinese Premier Wen Jiabao proposed a free trade deal between China and Mercosur, the South American trade bloc, on 25 June during his trip to the region. In Buenos Aires he met Argentine President Cristina Fernandez and held a video conference with the presidents of Brazil and Uruguay. He also aimed to double the trade between China and the bloc to $200 billion in 2016 from the volume in 2011 (More).

China's Japanese bond holdings hit all-time high China solidified its position as the largest creditor of Japan after increasing its holdings of Japanese government bonds by 71% by the end of 2011 from a year earlier to 18 trillion yen ($230 billion). Foreign institutions and individuals held a total of 92 trillion yen worth of Japanese government bonds by the end of 2011 (More).

China to offer $10 billion loan to SCO members President Hu Jintao addressing the Shanghai Cooperation Organization (SCO) summit on June 7, 2012 in Beijing, promised that China will offer a loan of $10 billion to support economic cooperation within the SCO. He said China will help train 1,500 experts from other member countries over the next three years, provide 30,000 government scholarships and invite 10,000 Confucius Institute teachers and students to China for research and study over the next decade (More).

Private investors offered preferential tax ratesChina has issued a policy offering preferential rates of tax for private investment to assist investors in accessing the country's state dominated sectors. The tax policy, compiled according to existing regulations, covers six major tax categories and 33 sub-items. It comes after several long-monopolized sectors opened to private capital, a move anticipated by the market since May 2010, when the government published instructions to encourage the participation of private investment in state-run sectors to increase the economy's efficiency (More).

New preferential policies to boost cross-straits ties China introduced a package of preferential policies on June 17 in the areas of the economy, science, culture and education to strengthen ties with Taiwan. Four banking institutions from the mainland, including the Industrial and Commercial Bank of China, Bank of China, China Construction Bank and China Development Bank, will offer a credit of 600 billion yuan ($95 billion) to Taiwanese-invested businesses in the mainland (More).

China's healthcare reform tasks completedAccording to a new official report, missions set for China's healthcare reform program for the period from 2009 to 2011 were completed on schedule. During the period from 2009 to 2011, China's central government invested 450.6 billion yuan ($70.79 billion) in the country's medical care services. The three-year plan missions included establishment of a basic medicare insurance system, implementation of the basic drug system and improvement in grass-roots medical services. By the end of 2011, over 95% of the country's population had been covered by basic medicare insurance programs designed for employees, urban residents and rural residents (More).

EU, US, Japan call on WTO to aid in rare earth dispute On June 27, the European Union, the United States, and Japan jointly requested the establishment of a dispute settlement panel at the WTO over alleged Chinese export restrictions on rare earths, tungsten and molybdenum. The three countries requested for consultations with China regarding the export restrictions on various raw materials, including rare earths, last March. Formal consultations were held in April but failed to deliver a solution. According to well informed sources, the EU, United States and Japan asked China to cancel its rare earth export quota and tariff policies, but China refused to do so. China's policies help protect its domestic resources and environment (More).

Business & Industry

China issues auto trade-in program for 2012 Ministry of Finance of China on June 14 issued an old-for-new trade-in auto program for 2012 to boost the sluggish auto market and facilitate its emissions reduction efforts. The government will offer subsidies ranging from 11,000 yuan to 18,000 yuan for the renovation of used passenger vehicles in rural areas, city buses and heavy trucks (More).

Steel industry readies for project surge As the State Council of China announced a series of policies to stimulate the economy by accelerating the approval of many important projects, including railway, energy, and infrastructure construction in rural region and western China, steel industry analysts said the pipeline of new work will increase demand for steel in the long term (More)

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July 2012China to expand foreign trade of mechanical and electronic products China's exports and imports of mechanical and electronic products will see an average annual growth of 10% during the coming five years, according to the sector's development plan for the 2011-2015 period released on 4 May 2012. It will further diversify its markets to make exports to the emerging countries account for 40% of the total. It will also actively promote imports of advanced technology equipment and key components and take steps to improve the trade balance in the sector (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

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Disclaimer: This document is being shared for information purposes only and is therefore not intended to substitute for formal professional advice. All information in this document has been compiled and/ or arrived at from online sources in the public domain.

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