Imports Fall by 18% in May, Why Imports and Exports Fall Sharply?

Yesterday, the General Administration of Customs released the import and export data in May of this year. Last month, the import and export value reached 1.97 trillion yuan, down by 9.7%; of which exports reached 1.17 trillion yuan, down by 2.8%. Last month the imports fell unexpectedly sharply, imports amounted to 803.33 billion yuan, a decrease of 18.1%.

Sharp dro in imports caused trade surplus to expand 65%

Because of the sharp dro in imports, China's trade surplus reached 366.8 billion yuan last month, an expansion of 65%. So far, in the first five months of this year, China’s import and export value reached to 9.47 trillion yuan, down by 7.8% over last year, of which exports reached 5.4 trillion yuan, reversing the downward trend in the beginning of this year year, achieving an increase of 0.8%; however, imports fell by 17.2% to 4.07 trillion yuan, which also resulted in 1.33 one trillion yuan of China's trade surplus in the first five months.

Coal, iron ore imports fell significantly, which dragged imports off

For the last month, China's foreign trade imports fell unexpectedly, there are financial institutions noting that this year the most obvious decline appears in imports of coal, iron ore imports also decline largely, dragging down the value of imports, but also showing that the Chinese domestic demand is still weak. According to Customs data, in May China's coal imports fell sharply nearly by 30%, declined by more than 40% year on year. In the first five months of total imports amounted to 83.26 million tons, a substantial reduction of nearly 40% over the same period last year’s total imports. The main reason is the downturn domestic coal market and overcapacity squeeze the imported coal market space. In addition, imported coal’s price advantage loss ia another reason.

Further data shows that this year China’s exports to the United States and ASEAN grew, while the EU is China's largest export region, but in the first five months of this year, China-EU trade value decreased, besides import and export volume of China to Japan also fell. In the first five months, bilateral trade between China and US amounted to 1.34 trillion yuan, an increase of 2.8%, accounting for 14.2% of our total foreign trade. Of that, exports to US reached 969.09 billion yuan, an increase of 8.9%; imports from US 374.22 billion yuan, down 10.2%; trade surplus 594.87 billion yuan, expanding 25.7%. In the last five months, trades with ASEAN totaled 1.13 trillion yuan, an increase of 0.5%, 11.9% of China’s total foreign trade. Of that, exports to ASEAN 683.47 billion yuan, an increase of 9.9%; imports from ASEAN 441.87 billion yuan, down 11.3%; ASEAN trade surplus 241.6 billion yuan, expanding 95.2%.

Sino-Japanese trade decreased
And this year, Sino-Japanese trade decreased significantly, whether trade value or imports or exports decline by more than 11%. In the first five months, the trade between Mainland and Hong Kong also declined substantially, of which exports to Hong Kong fell by 9.2%; imports from Hong Kong dropped by 24.1%. (www.chinainout.com)

China WTO Tariff Protection to Expire in July 2015, China’s Door Opened Again

You know, from July 2015, WTO protection period will be over, what changes will the domestic economy will have?

1. Tariff cuts. Comprehensive tariff reductions, the average tax rate will be reduced to 17% from the 221%; the agricultural tax in five years will be reduced to 145-15%; all export subsidies will be abolished.

2. To open agricultural markets. Regarding wheat, corn, rice and cotton, China will implement "proportional tariff quota system" in order to open the markets; the state control on the trade of soybean oil will gradually undone.

3. Restrictions on US exports (including textiles) surge. Special provisions controlling China's export goods in the surge of the elimination of quotas valid for 12 years; other overseas countries to ban Chinese dumping provisions valid for 15 years.

4. To open the retail market. Foreign companies can have more distribution rights and after-sale service.

5. To open professional services. These services opened to foreign companies include legal, accounting, medical and other services.

6. To open audio and video products market. To Allow more foreign films imports, at least 20 films per year, double than the current number.

7. To open the auto industry. Automobile tariffs will be phased to be reduced from the current 80-100%, in 2006 the tarrif was 25%; it will be allowed that US organizations provide car loans.

8. To open the telecommunications industry markets to foreign investors, foreign investors will be allowed to hold 49% stake in the field of telecommunications services, and 2 years later increasing to 50%; foreign investors will be allowed to fully invest Internet market.

9. To open the securities industry. Foreign financial companies will be allowed to hold 33% stake in the fund management company.

In 2015 China must be open in all walks of life
Foreign investment will be allowed to enter into all sectors of China, including the current state-controlled mining, transportation, direct marketing and so on.
www.chinainout.com

2014 Global Wine and Spirits Market Sales Decline

According to the International Wine and Spirits Institute (IWSR) data, in 2014 the global spirits market fell by 0.1%, decreased 3.1 million boxes (9 liters). At the same time the global wine sales fell by 1.1%.

Local spirits consumption in America, Europe and the CIS decreased, Brazilian rum and Ukrainian vodka sales declined severely. In Asia-Pacific, Africa and the Middle East, local spirits consumption was still growing.

Overall, the spirits consumption in Africa and the Middle East grew fastest, local spirits reached 1.2 million boxes, imported spirits 1.5 million boxes. IWSR said it is the key area of growth and investment.

US and European markets on imported spirits continues to grow, but the growth rate slowed declines compared with 2013, whiskey and flavor spirits has become an important driving force. In fact, the whiskey is the largest growth categories, sales increasing 10 million cases in both local and export markets, India, the United States and Angola are the top three growth markets.

According to IWSR, in Europe, whiskey and gin sell well, flavored spirits and vodka did not seem to be favored by consumers.

In 2014 global wine market declined by 1.1%, losing 39.5 million boxes. imported wine consumption was flat, the local wine sales fell by 1.5%. Because of the political struggle and economic turmoil, the wine consumption of CIS declined fastest.

Similarly beer consumption declined in 2014, cider and mixed drinks sales grew. (www.chinainout.com)

MERS Hits South Korea and Its Economy

According to zaobao.com’s report on 4 June, South Korea’s MERS continues to spread, the diagnosed patient has been increasing to 30 people, two died, and nearly 1,400 people were isolated.

On the 3rd June, South Korean President Park Geun-hye chaired an emergency meeting, listened to the report on the specific circumstances, required government departments to work closely with the experts in order to find effective countermeasures as soon as possible, completely eliminate the epidemic and restore social stability.

She stressed that, "Since the first confirmed case diagnosed in Korea after, the epidemic continued to spread during two weeks, there are two deaths, so that people feel extremely uneasy, in order to prevent the epidemic into continuing to spread, the authorities are analyzing the current situation and the corresponding programs after proper analysis of the current situation and the corresponding programs, which will be open to the public. "

On 3rd June, a 50-year-old woman, who was in the isolation and observation, went to play golf with her friends. At the news of that, health authorities urged people to be vigilant and cooperate with the government's prevention work.

At present, MERS caused panic in Seoul and surrounding areas. Customers declines at the major shopping malls, cinemas and other public places, making the business of the major shopping malls downward.

Korea National Tourism Organization said that due to the increasing patients, 2500 Chinese tourists originally planned to travel to Korea, then canceled the trip, which would cause a great impact on Korean tourism.

South Korea's economic research institutes pointed out that if MERS's influence continued to spread, the South Korea's economic growth rate in the second half of this year may decline from 3% to 2%.

The South Korean government urged people to wash their hands and go to the public places with a mask. Recent sales of masks online exploded seven times, a number of pharmaceutical factories’ shares also rose by 15%. (www.chinainout.com)

China's Weak Demand Makes Copper Prices Lower

Copper fell below $6,000 on Monday, bringing a halt to a rally in May, on continued weak demand in China, the biggest consumer of the metal.

Prices for three-month delivery on the London metal Exchange touched $5,985 on Monday. The metal has fallen more than $400 from its price at the beginning of May.

There are few signs of strong orders for copper in China by cable makers and for power grid investment, despite the arrival of the traditional peak buying season.

“The downstream demand is still fairly limited, we don’t see sufficient or meaningful recovery in terms of fundamentals and sentiment has started to turn,” said Xiao Fu, an analyst at BOC International, a unit of Bank of China.

Analysts expect China’s copper demand to grow by 4 per cent this year, yet that figure is predicated on considerable use in power grid investment, based on announced government spending plans.

Power grid investment fell by 8.65 per cent in April, according to SMM, a China-based metals consultancy. In the first four months, China completed Rmb86.6bn of grid investment, 20 per cent of the planned amount for the year, it said. Last year, only 88.7 per cent of grid investment was completed.

A fall in copper stocks in warehouses tracked by the Shanghai Futures Exchange in April and May, which was taken as a sign of better demand, may also not have gone to end users, according to analysts.

“The evolution of China’s demand conditions remains the crucial issue for sentiment towards the complex in mid-2015, and neither the micro nor macro evidence for May suggests an improvement in this dynamic,” Standard Chartered wrote in a note. (www.chinainout.com)

China and South Korea Sign an FTA, China Abolishs Tariffs on 91% of All South Korean Goods

China, S.Korea sign FTA deal

China and South Korea signed a free trade agreement (FTA) in Seoul on Monday, the largest bilateral FTA deal for China in terms of trade volume.

Under the accord, South Korea will eliminate tariffs on 92% of all products from China within 20 years, while China will abolish tariffs on 91% of all South Korean goods.
Under the regulations, in 20 years at most, China’s zero-tariff goods will reach 91% of tariff lines, 85% of imports, the Korean zero-tariff goods will reach 92% of tariff lines, 91% of imports. China will reduce the tariffs of the rice cookers, washing machines, refrigerators, medical equipment, appliance parts and other products to zero. South Korea will phase out the tariffs of motors and transformers, and phase out the tariffs of the handbags, golf clubs and other large household items imported from China in 15-20 years.

The countries began talks in May 2012 which covered 17 areas, including trade in goods and services, investment and trade rules as well as e-commerce and government procurement. (www.chinainout.com)

China Reduces Tariff to Promote Domestic Demand

Recently, the state authorities announced that from June 1, 2015, some consumer goods import tariffs would be reduced by more than 50% on average.

To reduce some consumer goods import tariff rates, it appears to be detrimental to the economic interests, but it is actually wise to promote domestic demand, but also a social consensus obtained in practice.

China Tourism Research Institute statistics show that China's outbound tourism trends in recent years show a substantial increase, overseas spending 20,000 yuan per capita, the proportion for shopping about 58%. Chinese people overseas shopping led to the capital outflow, so that our annual inbound and outbound tourism trade deficit exceeded 100 billion US dollars, which is not conducive to boost domestic demand and expand consumption, but not conducive to economic restructuring and upgrading.

Chinese people are keen to sweep goods overseas, which is a result of many complex reasons, unsound consumer market is an important factor, lack of brand building and counterfeit products seriously affect people's consumption enthusiasm. The more immediate reason is the high import tariffs on luxury goods and the undeveloped duty-free shopping level. Studies have shown that if the consumer goods import tariffs decrease by 10 percent, funding for overseas shopping will be returning 300 billion yuan. At the same time, the reduction of tariffs can attract more foreign brands into China, and can also promote domestic enterprises to further change the mode of operation and adjust the product structure.

It can be seen China is determined to reduce the tariff. At present, the economic is under downturn pressure, boosting domestic demand and promoting consumption is the key to economic growth and structural adjustment.(www.chinainout.com)