March 9 (China Daily) --
China
and the
US
have called for strong cooperative efforts on energy efficiency since the two
countries inked the milestone US-China Ten Year Energy and Environment
Cooperation Framework in
Washington
last June. But energy and environment officials from both sides talked more
about "should-dos" instead of "to-dos" in the discussions
following the deal.
The countries finally made some
detailed commitments at a forum on "Developing Effective Mechanisms for
Energy Efficiency Implementation in
China
"
on Feb
26 in
Beijing
, focusing mostly on commercializing
energy efficient technologies.
Such technologies offer a lot of
room for the
US
and
China
to
cooperate, said Jon Wellinghoff, acting chairman of US Federal Energy
Regulatory Commission, at the forum.
His Chinese counterpart, Liu Qi,
the deputy director of National Energy Administration, said the two countries
can also find common ground in the alternative energy sector.
China
and the
US
are the
world's two largest emitters of greenhouse gases and together consume one third
of its energy.
Steven Chu, US Secretary of Energy,
sent a message to the forum, urging the
US
to work closely with
China
,
India
,
and other nations to fundamentally transform the way they use and produce
energy. He stressed working together on energy efficiency, developing renewable
energy resources and carbon capture and storage.
Efficiency programs in the
US
could reduce energy demand there by 20
percent over the next 20 years, according to a
US
report. If China replaces 20
percent of the new coal-fired capacity it adds each year with Efficiency Power
Plants (EPPs) it can meet demand growth at one-third the cost and at the same
time save 51 million tons of coal each year and reduce annual CO2 and SO2
emissions by 140 million and 1.1 million tons respectively.
"China has ability beyond
the US to scale up manufacturing in an environmentally-sound way as long as the
US helps China develop the requisite technology," said Wellinghoff,
"We can become trade partners in that regard and move energy efficient
technology from the US to China," he added.
China
has a number of renewable energy
regulations he said the
US
might adopt if they prove successful in
China
, he said.
"We are looking at energy
pricing structure in US as well as our electric market, and
China
has some
interesting policies that deal with the issue," he said.
Officials from both countries
pledged to take concrete measures instead of just talking, at the forum.
"There will be more actual
contracts between the two governments in this regard under the new Obama
administration," said Wellinghoff.
An economic stimulus package
proposed in January by the Obama administration included $150 billion to
develop next-generation biofuels, plug-in hybrid vehicles, a new digital
electrical grid and lower-emission coal plants.
The two countries initiated a
three-year energy efficiency training program at the forum.
China
's National Development and
Reform Committee and the US-based Natural Resources Defense Council will create
a website as a platform for information sharing.
March
9 (China Daily) -- Developing a low carbon economy is a must as
China
continues to industrialize, not only for the nation's energy security strategy,
but also as part of an urgent international responsibility to address global
climate change.
A low
carbon economy requires both new policies and technological support.
But
China
is a developing country in the process of modernizing and its central task now
is to develop the economy and make life better for its people. This puts some
practical restrictions on how it implements a low carbon economy.
China
is
the world's second-largest energy consumer and is now the world's largest coal
consumer.
China
's
proven coal reserves are much larger than its proven oil and gas reserves and
it imported nearly 51 percent of its oil in 2008.
China
's reliance on coal as a main
source of energy will last for a long time.
Alternative energy
But
China
could enhance its national energy security by developing innovative policies
than prompt change in the country's energy consumption structure, shifting it
from heavy dependence on coal and oil to energy-saving products and alternative
energy.
Inadequate
funds and outdated technology also impede
China
's attempts to go green.
China
's
green technology level is generally low. Investment methods for clean energy
and environmental protection industries should be improved through preferential
financial, fiscal and industry policies.
China
needs
to embrace the Clean Development Mechanism (CDM) market to try to get more
international financial and technological support and to boost carbon credit
trading with developed countries.
The
CDM is a key component of the Kyoto Protocol. The Protocol enables
industrialized countries with greenhouse gas reduction commitments to invest in
projects that reduce emissions in developing countries, as an alternative to
more expensive emission reductions in their own countries. Developing
countries, in return, receive extra funding and advanced emission reduction
technologies through CDM projects.
$200b for clean energy
According
to United Nations' statistics investment in CDM projects amounted to $20.5
billion worldwide in 2006. Some $200 billion will be spent on clean energy
projects in developing countries by 2030.
CDM
projects will bring in alternative energy technology but it will likely come
with strings attached.
China
needs to cultivate its own technology and put some of its top scientists to
work on the issue.
An
increasing number of people should be sent abroad to study green technology and
more foreigners in such fields should be enticed over here.
China
's
carbon emissions are not only an economic issue, but also a social concern. A
variety of environmental protection funds and organizations should be used to
help get members of the public onto the "green road."
Widespread
public acceptance of a low carbon economy would get individuals to employ
various kinds of compensatory manners to offset their greenhouse gas emissions.
Green
culture is growing in
China
and more people are practicing green ideas in their daily lives.
"
China
is ready to work unremittingly with the rest of the international community to
achieve harmonious, clean and sustainable development in the world,"
Chinese President Hu Jintao said at the
2008
G
8 Summit's Major Economies Meeting on Energy Security and
Climate Change. Taking steps to encourage the kind of innovation needed to push
the country toward a low carbon economy will accelerate
China
's gait on the green road.
March
30 (China Daily) -
China
will not stop investing in large wind farms despite insufficient electricity
demand amid the economic downturn, said a senior official from National Energy
Administration (NEA).
Shi
Lishan, deputy director of Renewable Energy Department of NEA recently told
China Business Weekly that the current electricity oversupply does not alter
plans to build more wind power bases.
The
country's goal to raise its wind power generation capacity to 100 gW is still
achievable, added Shi.
At the
National Energy Work Conference in early February, Zhang Guobao, director of
NEA said
China
will build
several wind farms with capacity of over 10 gW in the Inner Mongolia and
Xinjiang autonomous regions and
Gansu
,
Hebei
and
Jiangsu
provinces over the next decade.
China
Wind Energy Association Vice-President Shi Pengfei confirmed that
China
has
started building six 10 gW wind power bases in these regions and provinces.
Gansu
province's Jiuquan wind power base will have a 15 gW capacity by 2015, he said.
The
Xinjiang wind power generation base in Hami will produce 20 gW of electricity.
Inner Mongolia
will have a 20 gW and 30gW wind power base
in western and eastern part of the region, respectively.
Both
Hebei
and
Jiangsu
will
each have wind power facilities capable of generating 10 gW but 70 percent of
Jiangsu
's wind power
capacity will come from offshore operations.
If all
the wind power bases finish construction by 2020, wind will account for 3
percent of the country's overall power generation capacity, up from 1.1 percent
in 2008, said Shi, adding these facilities will cost one trillion yuan.
Domestic
wind power generation capacity grew by 4 gW to 10 gW in 2008, the second
fastest rate in the world, behind only the
US
.
Hebei
is
planning to attract 100 billion yuan worth of investment for its wind farm
projects, which will give the wind-rich province a total wind power capacity of
12 gW by 2020, a senior provincial energy official said.
The
province, one of the country's key wind power bases due to its closeness to
North China's grid load center, will jointly fund the massive energy projects
with nation's top power firms and other investors, said Zhao Weidong, vice
director of the Hebei Provincial Development and Reform Commission's Energy
department.
The
province's total installed wind power capacity reached 1.1 gW in 2008, the
second most in the country, after
Inner Mongolia
.
The
country's five leading power generating groups, China Huaneng Group, China
Datang Group, China Guodian Group, China Huadian Group and China Power
Investment Group are all involved in wind farms projects in the province, said
Zhao.
The
largest existing projects are ones by China Energy Conservation Investment
Corporation, which installed a 300 MW wind farm, and some slightly smaller ones
build by Guohua Energy Investment Company (a subsidiary of China's top coal
miner Shenhua Group) and Hebei Construction Investment Corporation, said Zhao.
March 12
(China Daily) -- Senior officials yesterday called on the government to treat the
development of new energy as its top priority this year if it was serious about
easing its energy shortage and improving the environment.
Zhang
Guobao, head of the National Energy Administration, said on the sidelines of
the annual session of the National Committee of the Chinese People's Political
Consultative Conference (CPPCC): "
China
should never falter in its
effort to develop new energy, even though the current financial crisis
temporarily cushioned the conflicts between energy supply and demand."
He
added: "We should keep a close watch on the development of cutting-edge
technologies the world over, and invest more to improve research and
development capabilities."
Zhang
warned if the country did not give the development of new energy its due importance,
"we will find ourselves lagging behind the world within a decade".
For
many countries now, developing new sources of energy is an important move to
cope with the global financial turmoil.
In US
President Barack Obama's massive stimulus plan, launched last month, he hailed
the construction of new energy industries as the key to creating more jobs and
pulling the country's economy out of recession.
At
present, coal accounts for two-thirds of
China
's energy consumption, while
new energy accounts for no more than 5 percent of the total, indicating a huge
potential to help shift the country's reliance on coal.
Last
year,
China
imported 38.85 million tons of refined oil, an increase of 5.06 million tons
from a year earlier, and its reliance on export for oil consumption reached
49.8 percent, 1.4 percentage points higher than what it was in 2007.
In the
face of the escalating demand for energy, Zhang said it was "time to
restructure the nation's energy mix" by exploring renewable energies and
boosting clean energy consumption.
In
Premier Wen Jiabao's government work report, delivered during the ongoing
National People's Congress (NPC) session, he pledged that the country would
vigorously develop a circular economy, clean energy and promote the development
of nuclear, wind and solar power this year.
Many
agreed that nuclear power should be prioritized in
China
's energy development agenda
in the next 10-20 years.
"Nuclear
power is the most effective energy source to control greenhouse gas emissions,
as its power generation process does not emit carbon dioxide directly,"
said Chen Yingxu, deputy director of the
College
of
Environmental
and Resource Sciences
at
Zhejiang
University
and a CPPCC National
Committee member.
"The
rapid development in nuclear power technology in recent years makes it the
safest and most economical energy source compared with other renewable sources,
such as solar power and bio-fuel," said Chen.
China
now
has 11 operational nuclear reactors with a combined installed capacity of some
9,100 MW, which accounts for 1.3 percent of the country's total power
generation.
According
to a nuclear power development plan approved in 2006, the country expects to
raise its nuclear power capacity to 40 GW by 2020, accounting for 5 percent of
its total capacity.
With
the recent boom in nuclear industry, there have been rumors that the country
would readjust the target to 70 GW by 2020.
China
plans to start work on four new nuclear
plants this year in Haiyang, Rongcheng in eastern
Shandong
province, Sanmen in eastern
Zhejiang
province,
and Yaogu in southern
Guangdong
province.
China
Guangdong Nuclear Power Group, one of the nation's two major companies
developing nuclear reactors, plans to invest 30 billion yuan ($4.4 billion) in
its nuclear projects this year, Xinhua reported.
March 9 (China Daily) -
China
made progress in reducing its energy use last year, according to a government
report.
The National Bureau of Statistics (NBS)'s annual report, released late
February, said energy consumption per unit of gross domestic product (GDP) fell
4.59 percent in 2008, slightly higher than the bureau's previous 4.21 percent
estimate.
Even a small drop in
China
's
energy use can save tens of millions of tons of coal. The Chinese government
had earlier vowed to reduce its energy consumption by 20 percent per 1,000 yuan
of GDP from 2005 levels, during the 11th Five Year period (2006-2010). But the
country only cut it by 5.38 percent over 2006 and 2007, about a quarter of the
five-year target.
But preliminary statistics showed that in 2008
China
's
emissions of sulfur dioxide (SO2) and chemical oxygen (COD), two major
pollutants, have likely dropped 7 percent and 5 percent, respectively, from
their 2005 levels.
The country's 11th Five Year Plan requires they be reduced by 10 percent
from the 2005 level by 2010. Deputy environmental minister Zhang Lijun said the
country may surpass these targets before the deadline.
But
China
fell short of its target reductions of the two pollutants in the plan's first
two years. The two indexes dropped only 2.14 and 3.16 percent, respectively,
from 2005 level by 2007, less than the expected 4 percent.
Zhang said that the Ministry of Environmental Protection (MEP) has
disapproved or postponed approval of 156 polluting or energy consuming
projects.
China
needs to "sprint" in
2009 to achieve its green goals, said Zhou Shengxian, environmental minister.
The country also closed inefficient production facilities in industries
such as papermaking, coal and ethanol, since 2006, said Zhang.
China
increased its capacity to treat
medical waste (by 6 percent), residential waste (by 8 percent) and daily waste
water (by 35 percent) since 2005, he added.
China
's investment in ecological
protection will increase to 1.53 trillion yuan from 700 billion yuan, according
to the plan, and 350 billion of
China
's
4-trillion stimulus package is earmarked for environmental investment.
"During the new round of investment we need to avoid polluting and
energy-consuming projects," said Xie Zhenhua, vice minister of the
National Development and Reform Commission (NDRC).
Wang Jinnan, general director of the
Chinese
Academy
for Environment Planning under MEP, said that the package's infrastructure
projects must abide by relevant environmental policies from the beginning and
environmental assessments of these projects should be stricter.
Environmental protection and energy conservation will likely be a hot
issue during the NPC and CPPC annual sessions.
The National Development and Reform Commission has pledged to increase
efficiency in the power sector and to push through more fuel price reforms,
while closing down inefficient enterprises, echoing similar policies that have
been in place for years.
The government vows to work to make the nation greener, introducing
regional climate change programs, shutting small coal mines and power plants
and continuing to experiment with cap and trade emissions programs.
Its efforts to increase efficiency include plans to enable power trade
between provinces and to upgrade urban power grids.
According to the 11th Five-Year Plan, industrial demand for water should
also drop 20 per cent from 2005 to 2010, while forests should make up 20
percent of the country's total land area, up from 18.2 percent in 2005.
Many regional governments have already made ecological promises in 2009.
The
Beijing
municipality proposed
decreasing its COD and SO2 by 2 percent and 3 percent in 2009,
Hebei
province plans to cut COD by 5.5 percent and SO2 by
5 percent while the
Inner Mongolia
autonomous
region plans to cuts its COD and SO2 emissions to 80 to 90 percent of the 11th
Five Year target levels.
March 7 (China Daily) --
China
's
five major power-generating companies incurred losses in January due to high
coal prices.
All these companies lost money in 2008 also because of the same reason.
The companies are China Huaneng Group, China Datang Corp, China Guodian
Corp, China Huadian Corp and China Power Investment Corp.
"We expect to see continuous losses in February also," said
Zhai Ruoyu, general manager, China Datang Corp.
The current coal price is still "too high" for power
companies, said Zhai, who cited that as the main reason for the losses.
Transportation costs have also partly caused high coal prices.
Meanwhile the preferential power price policies made by some local
governments are expected to be cancelled before March 15, according to the
central government.
Many high-energy consuming industries have been facing difficulties due
to the economic downturn. To mitigate some of their woes, local governments
began to offer them preferential power prices since late last year. However,
the move may "cause mess" in
China
's power pricing systems, said
a statement.
"The first two quarters will be the most difficult for
China
's power
industry. Power demand is likely to see a continuous decline in the
first-half," the China Electricity Council (CEC) said in an earlier
report.
Power demand is now expected to pick up only in the third quarter,
according to the CEC. The five major power companies posted losses of around 40
billion yuan in 2008, while coal-fired power generators had losses of 70
billion yuan, according to the National Bureau of Statistics.
The losses are mainly due to rising fuel costs and lackluster
electricity demand. In the first-half of last year coal prices went up sharply,
and as a result many domestic power companies plunged into the red, said Xue
Jing, executive, CEC.
What's more, many sectors of the economy have seen a slowdown since last
September because of the global financial crisis, causing a decline in power
generation, she said.
Expert warns of
China
's nuclear talents vacuum
March 4 (Xinhua.net) –
Beijing--
China
is in
great need of nuclear science talents from the young generation, a nuclear
physicist said here on Tuesday.
Zhu Zhiyuan, director of the
Chinese
Academy
of Sciences
Shanghai
Branch, said
China
must step up efforts to attract and cultivate more young nuclear talents, in
order to meet the demand of the country's future development.
China
, realizing the huge potential of
the nuclear power as a "clean energy", has already strengthened
nuclear science education in recent years, said Zhu, who is here to attend the
annual session of the National People's
Congress
,
China
's top
legislative body.
However, these efforts could not at once make up for the lack of nuclear
specialist education in the country caused by previous insufficient attention
towards the field for more than a decade.
"Many young people at the time were simply afraid of nuclear
technologies, while others assumed the prospect of nuclear power as
unpromising," Zhu said.
Even now, few of the students enrolled in nuclear physics departments of
Chinese universities or research institutes chose the field as their top
choice, Zhu said, adding that he himself chose the subject inspired by Nobel
Laureate Lee Tsung-Dao and Yang Chen-ning back in the 1970s along with many
youths of his age.
He said the country's development of nuclear power and the civil or
medical use of nuclear technologies are both indispensable from the cultivation
of nuclear talents.
"
China
now needs a batch of ambitious young people to devote themselves to the
nuclear science and explore the world of physics," Zhu said.
March 6 (China Daily) --
China
will take more steps to boost
automobile demand by modifying the related policies and expanding the used car
and auto leasing markets, said Premier Wen Jiabao.
"New growth areas of consumption will
be fostered and developed. The second-hand vehicle and auto leasing markets
would be standardized and rapidly developed," said Wen in the government
work report speech he delivered at the opening of the second session of the
11th National People's Congress (NPC) yesterday in
Beijing
.
The premier said the government will also
modify the related policies to guide and forge a healthy consumption pattern in
the automobile market, one of the key sectors that would stimulate domestic demand
and drive economic growth.
Moreover, "we will implement policies
to reduce the vehicle purchase tax and subsidize rural residents' vehicles
purchases to stabilize and increase consumer spending on cars and
motorcycles," said the National Development and Reform Commission in its
report on the implementation of the 2008 plan for national economic and social
development at the NPC.
Shen Rong, vice-president of China
Automobile Dealers Association (CADA), confirmed that it is now drafting a new
standard for used vehicle appraisal and evaluation.
"The related government departments are
doing research to modify the policy on the sector and establish a public
information platform for used vehicles, in a way to standardize the market, and
encourage the circulation of used cars," said Shen.
In January,
China
for the first time topped the
US
in automobile sales, after a series of industry and market support measures
adopted by the government began to take effect.
Analysts said
China
's
automobile market still lags the
US
market despite the better
performance in sales volume. Used cars and automobile services are significant
sectors.
"Sales of used cars make up only about
one-third of the total number of cars sold in China, while the used car market
is usually bigger than the new car market in developed nations," said
Huang Yong, chief expert, China Automotive Technology and Research Center.
Currently, the sales of used cars in the
US
,
Germany
and
Japan
are 3.5, 2 and 1.4 times that of the new car market.
Last year,
China
traded 2.74 million of used
vehicles, with a slight increase of 3 percent from 2007, the lowest growth in
the recent years, according to CADA. It compared to total domestic automobile
sales of 9.38 million units.
The trade revenue totaled 118 billion yuan,
up 10.56 percent from the previous year, said the association.
However, "we are glad to see that among
the used vehicles sold last year, passenger cars accounted for 1.43 million
units, with a year-on-year growth of 10.17 percent, 7 percent higher than the
total segment," said Shen of CADA.
Luo
Lei, another official of CADA, predicted that the used car market would revive
in the second-half.
March 21 (Xinhua.net) --
BEIJING
--
China
aims for
10 million units in both vehicle production and sales this year, according to
an online government document concerning detailed automobile support package.
China
's automobile industry is to
yield an average 10 percent growth for its production and sales in the next
three years, said the document, released on Friday.
The stimulus package was unveiled by the State Council, the cabinet, on
January 14, but the detailed plan was not released by the government until
March 20.
The auto support package was among nine others for the country's 10
industry initiatives by the government since January in a bid to cope with the
downturn in the short-term, and upgrade its industrial structure for the long
term.
In a three-year development plan, the document said by 2011, passenger
cars with an engine displacement below 1.5 liters would take 40 percent of the
market, and those below 1 liter would have a 15 percent share.
Analysts say smaller-engine cars use less oil and are more
environmentally-friendly. They are also cheaper compared with big-engine,
gas-guzzling cars.
China
would also form two to three
auto giants with capacities reaching 2 million in vehicle production and sales,
and four to five smaller companies with capacities greater than 1 million in
the next three years through mergers and acquisitions, according to the
document.
Another government paper concerning stimulus support for the steel
sector was also released Friday. It said
China
would set up several steel
giants, with the top five producing 45 percent of the steel by 2011.
Excessive capacity and low industrial concentration have long plagued
China
's steel
sector.
Based on 2007 figures from the China Jianyin Investment Securities, the
top five Chinese steel companies produced only about 20 percent of the
country's steel.
The steel support plans would strive to eliminate respectively 72
million and 25 million tonnes of obsolete iron and steel production capacities
by 2011.
March 16 (China Daily) --- Recent government
measures could boost the alternative-energy bus industry.
The government will give public-transport
companies and government agencies as much as 600,000 yuan ($88,000) in
subsidies for each alternative energy bus they use.
Li Haiping, chairman of Zhongtong Bus
Holding Co Ltd, said the subsidies will help companies get over the high-cost
hurdles involved with initially producing green-energy vehicles.
Share prices of listed bus manufactures
including Zhongtong Bus and Beiqi Foton Motors rose following the move.
"The policy is good for bus
makers", said Qin Pan, brand manager of the Shandong-based Zhongtong.
"It will boost demand for
alternative-fuel vehicles," he said.
The funds will be available for electric,
hybrid and fuel-cell vehicles used for public transport and sanitation services
in 13 cities, including
Beijing
,
Shanghai
,
Chongqing
and Shenzhen, according to a statement on the Ministry of Finance's website.
Fuel-cell buses will get the highest subsidies.
Zhongtong produced and sold more than 20
alternative-energy and electric buses last year but plans to produce 200 to 300
such buses this year.
"The company could earn an additional
300 million yuan, 15 percent of this year's total projected income," said
Li.
The government of
Jinan
in
Shandong
provinces are reportedly considering buying 320 renewable-energy buses for the
11th National Sports Games in October. Zhongtong may obtain most of the orders
due to its good relations with the local government, said industry insiders.
The China Association of Automobile
Manufacturers predicted there may be 600 green-fuel buses in
China
by the
end of 2009 and 1,000 by the end of 2010. Beijing-based Beiqi has already won
an order for 450 hybrid buses from that city's public transit body.
The company plans to build a new factory and
expand its annual hybrid bus output to 1,000 units, according its website.
"The government subsidies are big
enough for buyers to reduce costs," said Yao Hongguang, an analyst from
Shenzhen-based Ping'an Securities.
But financial policy alone may not be enough,
said
Yao
.
"There should be other ways to promote
green buses, such as administrative orders for public transportation
organizations to purchase them," he said.
China
government policies steer Feb vehicle sales higher
March
11 (Agencies) --
China
vehicle
sales topped 800,000 units for the first time in eight months in February as
Beijing
's policy
initiatives aimed at boosting consumption lured buyers back to showrooms.
China
,
which overtook the
United
States
as the world's No 1 auto market in
January, saw 2008 sales growth fall to its slowest rate in more than a decade
as the global financial crisis weighed.
"The
February figure is very impressive. It seems that the new incentives are really
having an impact on the market," said Yi Junfeng, an industry analyst with
Changjiang Securities.
The
policies introduced at the start of the year, including the scrapping of some
road fees and halving of sales taxes on small vehicles, have increased the
number of buyers to showrooms nationwide, analysts said.
Many
automakers such as Chery Automobile,
maker of
China
's
best-selling compact car QQ, recently unveiled ambitious sales target for the
year.
A
total of 827,600 vehicles were sold in February, up 24.72 percent from a year
earlier, the China Association of Automobile Manufacturers said on Tuesday.
Vehicle output rose 23.08 percent to 807,900 units.
Passenger
car sales in February rose 24.23 percent from a year earlier to 607,300 units,
the association said.
In
the first two months, cars with engines of 1.6 litres or below benefitted the
most. Combined sales of the segment rose 18.8 percent, Ministry of Industry and
Information Technology data showed, outperforming a 5.81 gain in overall car
sales.
Cautiously
optimistic
However,
some analysts and industry executives remain cautious about the market's
outlook, saying a single monthly figure was not evidence of a sustained pick-up
in demand.
The
figures may have been slightly distorted by the week-long Lunar New Year
holiday, which occured in January this year but in February 2008.
Still,
automakers are heartened by the government's measures.
"
China
's car market will grow 10 percent this
year, if there is good growth of 5 to 10 percent in March," Nigel Harris,
Ford Motor's chief of sales and market in
China
, told Reuters this week.
The
No 2 US automaker aims to outperform the market this year, betting on policy
support to bolster sales of its newly-launched Fiesta small car which snapped
up orders of more than 4,000 units in a five-week long pre-sale, Harris said.
China
's large carmakers
woo small rivals
March
9 (China Daily) -- China's auto makers, often touted as possible buyers of
assets from desperate foreign giants, are instead heeding calls from the
government to look to their fragmented and over-crowded home turf for
deals.
China
has more than 100 automakers who have been dragging their feet for
years on combining to forge large, globally competitive groups, due largely to
resistance from regional governments that are keen to protect local jobs and
tax income.
But, with a push from the
central government, they have developed a new sense of urgency as
China
's
once-booming auto market slows sharply and losses pile up at many smaller
firms.
"The problem with
China
is we
have too many players fighting each other at the lower end but none has the
clout to compete globally," said Guotai Jun'an Securities analyst Zhang
Xin.
"There has been a lot
of talk - or rather expectations - about Chinese snapping up
US
auto assets,
but the automakers first need to make sure they have the ability to turn those
assets around."
Sichuan Auto Industry Group
Co, a tiny automaker tucked away in southwest
China
, denied a media report it was
in talks to buy General Motors' Hummer brand for up to $500 million.
"I don't know where
this is coming from," an executive at the company, which has barely $150
million in assets, said.
But he acknowledged that
Sichuan Auto was recently approached itself by some big State-run domestic
firms earmarked to lead a restructuring of the local industry.
Limited success
China's big auto groups,
including Shanghai Automotive Industry Corp (SAIC) and FAW Group, are mostly
low-price manufacturers for brands of foreign partners such as General Motors
and Volkswagen AG, while smaller players have succeeded mainly in local niche
markets.
Many Chinese companies
harbor grand ambitions, hoping to emulate the global success of Asian giants
such as Toyota Motor Corp, and some have expressed initial interest in brands
such as Saab and Volvo, according to sources familiar with the situation.
But Chen Bing, an official
at China's top economic planner which would have substantial influence over any
overseas deals, recently tempered expectations by saying Chinese automakers
were not yet strong enough to face such challenges.
The central government, for
its part, is expected to issue a detailed plan as early as this month
encouraging big players to take over smaller domestic firms, state media
reported.
The government wants to cut
the number of major Chinese auto groups to 10 or fewer from 14, and wants two
or three mega-producers with annual output of more than 2 million vehicles
each, the reports said. SAIC Motor's production was 1.7 million vehicles in
2008, compared with 8.2 million at
Toyota
.
To consolidate, however,
they must overcome zealous local governments that have jealously protected
regional firms and, in the process, fueled duplicative and wasteful
investments, auto executives and analysts said.
Some auto executives have
been talking down the prospects for acquisitions after SAIC's investment in
Ssangyong Motor Co turn sour when the South Korean SUV maker filed for
protection from creditors.
"Now we are not
interested in acquisitions and we don't have any plans (for
acquisitions)," Chen Hong, president of SAIC's listed unit SAIC Motor,
said over the weekend.
Strength in fewer
numbers
But the case for domestic
buys has grown more compelling.
"Now that the economy
is slowing and the pace of consolidation is picking up in other industries such
as steel and cement, I don't see why autos would be much different," said
Chen Qiaoning, industry analyst with ABN AMRO TEDA Fund Management.
Car sales growth in
China
slowed to
a single-digit rate in 2008 for the first time in at least a decade.
Beijing
has
indicated that it wants Changan, a Ford Motor China partner, and three
other big State-controlled automotive groups - Shanghai Auto, FAW and Dongfeng
Motor Corp - to lead the nationwide industry realignment.
Signs are already emerging
of fresh moves to consolidate.
Hunan Changfeng Motor Co is
holding separate talks with Guangzhou Automobile Group and Beijing Automotive
Industry Holding Co and could reach a deal in a matter of weeks, a source with
direct knowledge of the matter said.
Chery Automobile and Anhui
Jianghuai Automobile group may also join hands, executives and analysts said.
However, some mid-sized
private-sector players that are well-established in specific segments, such as
Great Wall Motor Co, could be tough customers.
"Demand for our
vehicles is pretty solid so far this year and we have set a target for about 70
percent sales growth for the full year," said a spokesman at Great Wall, a
leading domestic manufacturer of pickup trucks and SUVs.
"We are also
profitable and well-managed. Why should we throw ourselves into the arms of
someone else who may be bigger but not necessarily stronger than we are?"
he asked.
March 26 (Susty) -- Scaling
Up and Slimming Down
China
’s
Automobile Industry
In the years following, the
number of auto manufacturers swelled , if with varying quality and branding
originality. Today, there are over 100 domestic
carmakers, with about a dozen clustering the market. In the wake of
government-led consolidation and recent economic slowdown, three clear-cut
leaders have emerged:
• Shanghai Automotive
Industry Corporation (SAIC)
• China First Automobile
Works Group Corporation (FAW Group)
• Dongfeng Motor Corporation
(DFM)
Altogether, these companies
comprised roughly half
of auto sales in 2008,
according to trade association China Association of Automobile
Manufacturers Although on
average these automakers
enjoyed double-digit growth in sales for the years 2008/2009, car sales are
already flagging, and, like their American analogues, China’s powerhouse
automakers are finding it difficult to weather the tough times.
And that is where the
Chinese government comes in – literally – stage left. In mid-January,
Beijing
pledged
assistance to the automobile industry as part of its stimulus plan. Quite
unlike its American counterpart,
the automotive piece of
China
’s
stimulus package focuses not on giving struggling carmakers direct handouts,
but rather in boosting consumer demand.
China
Auto Target: Produce 10 million Cars Domestically in 2009
The plan includes 5 billion
yuan worth of allowances (US$730 million) – or 5,000 yuan (US$726) a head – for
farmers wishing to upgrade their current vehicle and slashing purchasing
tax for small cars in
half (from 10 percent to five percent).
The Chinese government-set
target is to have 10 million domestically manufactured cars sold in 2009, which
would exceed the total number of American made automobiles sold worldwide in
2008. If efforts to get more cars on the road sounds like precisely the thing
China
’s smoggy
skies and cramped cities don’t need, don’t despair just yet.
First, the initiative aims
at increasing car sales among rural populations. Chinese cities are holding a
firm line on urban auto use, a real necessity considering current
traffic-choked urban roads. Additionally, cities like
Shanghai
have restricted the issuance of new
licenses considerably, and are testing measures aimed at keeping existing autos
off the street. In
Beijing
,
for example, cars are prohibited
from driving one day of the workweek, depending on their license plate number. This follows the similar,
but more stringent, measure taken in the capital during and in the lead up to
the 2008 Olympics.
Second, the central
government has promised 10 billion yuan (US$1.5 billion)funding
for development and deployment of alternative energy vehicle technologies, including hybrid, all electric, and fuel cell vehicles, as well as
standards that require more energy efficient manufacturing facilities.
Electrifying News:
Central Government Pledges $1.5 Billion to EVs
Though part of the earmarked
spending will go to auto companies, Industry and Information Technology vice
minister Miao Wei says consumers will enjoyrebates
for of energy-saving automobile purchases. The government may cough up up to 50,000 yuan
(US$7,300) in rebates depending on the energy efficiency of the car.
A great first step in
promoting more eco-friendly autos in China, the success of this initiative will
depend, in large part, on the capacity of China’s carmakers to increase demand
for low-priced, innovative, and technologically advanced autos by creating a
superior homegrown variety to the current default option: Toyota
Prius (at the
recently discounted price of $36,500, even the domestically manufactured models
are still far out of the budget of even wealthy Chinese).
At the moment, three
companies are racing to outdo each other in electric vehicle sector:
•BYD
•Chery
•Nanjing Iveco
Here’s how they stack up
against each other:
China
’s electric prototypes are indeed impressive. The question on everyone’s
mind is whether any of the three electric automakers will be able to scale up
volumes and decrease price to make the vehicle competitive – even with the
generous rebates – on the market?
Despite this promising
news, one wonders why the government is encouraging private-car purchases and
energy-intensive manufacturing (instead of a service-based economy) to grow
given already scarce
resources. In its defense – and unlike the
US
in the ‘60s–‘90s –
China
is also pumping a ton of money into alternative transportation systems, in
order to promote rail andurban
transit infrastructure.
Nevertheless, automobiles
are likely to become less a luxury good and more aneveryday
part of life in China, in response to the necessities of modern life and almost universal
development benchmarks. This suggests that keeping up with the Joneses is a
behavioral inclination that crosses cultural divides.
March 5 (Xinhua News) --
Volkswagen AG is best known as the manufacturer of the iconic
"Beetle", but its new claim to fame may be its recession-busting bid
to boost production and increase market share in the already highly competitive
Chinese automotive market.
The German company has just
unveiled ambitious plans to consolidate its position in
China
through
both new marketing initiatives and a product development program tailored to
the needs of the Chinese motorist.
The bold manifesto,
released on Feb 26 with target of increasing annual vehicles sales from the
current 1 million to 2 million as well enlarging its fleet by adding or
renewing at least four models per year by 2018, will open a new chapter for the
company's operations in
China
.
"We have launched
Strategy
2018 in
line
with the long-term objectives of the Volkswagen Group in
China
. It
follows on from the successful restructuring, in line with the Olympic Program,
we adopted in the run-up to the 2008 Games," said Winfried Vahland,
executive vice-president of the Volkswagen Group, and president and CEO of
Volkswagen Group
China
(VGC).
According to Vahland, 2008
was an extraordinary year for the company and its two Chinese joint venture
companies, Shanghai Volkswagen and FAW-Volkswagen: "We exceeded our
three-year Olympic Program (2005-08) targets and achieved every objective
identified in our 'Year of Striving for the Gold Medal' initiative. We also
sold more than one million cars for the first time. These remarkable
achievements have consolidated Volkswagen's dominant position in the Chinese
auto market and have laid a solid foundation for VGC's continued growth."
As a result of the
recession in the global economy, many
auto manufacturers encountered an unexpected sales reduction last year and are
now planning production and sales cutbacks to live through tough times in 2009.
Some of them are even considering of shedding off unprofitable brands and
assets.
"Although the global
economy and automobile markets still face challenges, we remain fully confident
in the long-term prosperity of
China
's
automotive industry and of Volkswagen Group's future role as an industry leader
in the country," said Vahland.
Vahland believes that
Shanghai Volkswagen and FAW-Volkswagen, two powerful joint venture companies,
can generate new win-win partnerships and achieve even greater success for VGC
in the future, a concept VGC refers to as the "1+1>2" Philosophy
(one plus one is greater than two).
"We recognize that the
slowdown presents challenges. We have defined the plan to face these challenges
and take advantage of all the opportunities on offer."
His confidence comes from
the excellent sales performance Volkswagen Group achieved last year.
For the 2008 fiscal year,
with a 4.5 percent increase in sales revenue to 113.8 billion euros, the
Group's operating profit rose by 3.0 percent to 6.3 billion euros.
"We met our target and
surpassed our record results for 2007, even though conditions were
tougher," Chairman of the Board of Management of Volkswagen AG, Martin
Winterkorn, said yesterday.
"The current year
remains extremely difficult for the entire automotive industry. Our target is
to perform better than the overall market," Winterkorn commented on future
business.
Last year, the company, the
biggest European carmaker, released Mach 18 (Group Strategy 2018), a
development plan for the Volkswagen brand globally that established the
development direction of Volkswagen, with the ultimate goal of becoming a
leader in the automobile industry worldwide.
In November, it pushed
forward a plus plan with focus on becoming an economic and environmental leader
in the global automotive industry, which remains the central element of the
Group Strategy 2018.
For this reason, the
Volkswagen AG Board of Management is intensifying efforts to continue with the
successful realization of this ambitious project even in a difficult economic
period.
Based on Mach 18,
"VGC's newly-launched Strategy 2018 is geared toward the current ongoing
Chinese automobile market situation and is related to all brands and long-term
business strategy in
China
in order to achieve the sustainable development of the company," said
Vahland.
"And we want to
deliver a very clear message (by the strategy) that we at Volkswagen promise
long-term development in
China
and will increase our investment in this market."
Last year, Volkswagen sold
1.02 million vehicles in
China
- marking a year-on-year growth rate of 12.5 percent. This easily outstripped
the 6.7 percent average increase for the whole industry - the smallest increase
in a decade on account of growing concerns about the international financial
situation. Total vehicle sales for 2008 were said to be around 9.4 million.
Sales of the Volkswagen
brand amounted to 844,491, up 8.2 percent from 780,784 units in 2007, including
12,649 imported vehicles. Audi delivered 119,598 vehicles to customers
including 13,640 imported units, with a 17.3 percent jump.
The sales of Skoda cars
more than doubled to 59,284 from 27,325 units in 2007. The group also sold 518
Bentley cars, and 117 Lamborghini super sports cars in 2008.
To achieve its double-sales
target by 2018, Volkswagen is aiming to improve customer satisfaction and brand
image through enhanced dealer networks and an upgraded service.
It will double dealership
numbers from 1,000 to 2,000. This expansion will coincide with improvements in
dealership management aimed at creating the best customer service ethos in the
Chinese automotive market.
Volkswagen was one of the
first overseas car manufacturers to venture into the Chinese market with a
focus on developing a dedicated dealership network. During the past 25 years,
VGC has seen its dealership sales grow from initial sales of 1,710 units in
1985 to current sales of more than 1 million cars per annum.
Vahland also outlined his
belief that the bulk of market growth will come from increased demand for
passenger cars, especially in medium and small cities, where the presence of
VGC is currently relatively weak.
However, he also said the
ambitious expansion plan never meant compromising on quality. The company's
commitment to green issues was also paramount in its future plans in
China
.
"We will continually
optimize production in terms of production efficiency and product quality in
order to maintain our leading position in the industry," said Vahland.
The company also maintains
a commitment to two of the company's existing initiatives - its
"Powertrain" technology/customer service strategy and a wider policy
of developing more environmentally-friendly cars.
VGC remains committed to a
20 percent reduction in fleet consumption and emissions by 2010. The
implementation of the Powertrain technology, Volkswagen's proprietary
environmentally-friendly technology brand, has already made remarkable inroads
in achieving these objectives.
"So far, we have
reduced the average fuel consumption of our automotive marques by 15 percent.
Engine downsizing strategy is another sector we are focusing on. We are looking
at not only reducing fuel consumption, but also at generating more power,"
said Vahland.
VGC also has underscored
its commitment to the environment through a series of highly successful
initiatives throughout
China
.
As well as the introduction of its Powertrain technology, it has sponsored a TV
series on road safety, produced a green education campaign (entitled
"Volkswagen's Green Future Environmental Protection Initiatives"),
and launched both the Shanghai Volkswagen's Olympic Wish Woods Plan and the
FAW-Volkswagen's Public Welfare Woods program. It also provided a "Green
Fleet" to assist with the logistics of the 2008 Olympics.
China
to boost
Russia
energy links
March 6 (China Daily) --
China
will renew its deals with
Moscow
for energy resources before the end of this month, said the Chinese ambassador
to
Russia
yesterday as he hailed the unbreakable link between the two nations.
The agreements will include a long-term
crude oil trading pact and a project to build a new pipeline, ambassador Liu
Guchang told China Daily during discussions at the CPPCC.
"It marks a major breakthrough in
bilateral energy cooperation," he said, "and reflects the
strengthened and practical efforts of two countries in coping with the sharp
drop in trade caused by the global financial crisis."
And he added with gusto: "No matter how
grave the economic crisis is, it will not affect the energy cooperation between
China
and
Russia
."
Liu said the move was a crucial part of a
high-level strategic partnership, adding: "
China
's energy security is key to
the country's sustainable development. For
Russia
, the Chinese market is the
most stable, has the most potential and is the most geographically
convenient."
On Feb 17,
China
signed a $25-billion energy deal with
Russia
in
Beijing
that will see it secure 15 million
tons of oil - 300,000 barrels a day - from
Moscow
for the next 20 years in return for
loans.
Pan Zhanlin, a specialist on Sino-Russian
relations and ex-Chinese ambassador to the former
Yugoslavia
, hailed the energy
cooperation, adding that the implementation of the agreement is crucial.
Liu, meanwhile, said the bilateral trade had
hit a historical low, with the volume dropping 40 percent in January compared
to the same month last year.
Describing it as "a gloomy
picture", the ambassador said both sides were affected by the crisis,
resulting in shrinking markets, a shortage of financial liquidity and decreased
purchasing power.
"We have not made accurate analysis so
far," Liu said, "but we are both working on methods to boost
trade."
Trade between
Russia
and
China
was valued at $56.8 billion last year, up 18 percent year-on-year but a sharp
fall from the 44.3 percent of 2007.
March 20 (China Daily) --
China
will
raise gas prices within the year, industry insiders said yesterday. The current
low price scenario for natural resources offers a good opportunity to make
price adjustments now, they pointed out.
It is the right time for
China
to hike natural gas prices, said Lin
Boqiang, energy professor with
Xiamen
University
. Since the
prices of gasoline and diesel are relatively low now, any rise in the price of
natural gas will not affect domestic consumers much, he said.
The country should further reform its
natural gas pricing mechanism to ensure healthier development of the industry.
Currently, the pricing system is "very messy", Lin said.
"I believe this round of price
adjustment will not be very huge," he said.
The State-capped natural gas prices are less
than half of the international prices. The National Energy Administration (NEA)
had said earlier that reforming the gas pricing system would be "its key
task this year".
NEA head Zhang Guobao had said "
China
should
build a reasonable natural gas pricing mechanism as soon as possible".
Analysts said the country's rising imports
of the fuel would end up further linking its gas prices to the international
prices.
Last year,
China
started building its second
west-east gas pipeline, the largest of its kind in the world. The project will
cross 14 provinces, autonomous regions and municipalities. It will carry 30
million cu m of natural gas every year from Central Asia and Xinjiang to the
eastern and southern areas, including
Shanghai
and
Guangdong
.
The price of natural gas imported from
Central Asia through the pipeline would be higher than current gas prices in
China
.
PetroChina, the project builder, is now conducting studies to decide the
terminal gas cost of the project, an official with the company told China Daily
yesterday.
"It (the terminal price of the second
pipeline) will be higher than the current prices," said the official, who
did not want to be named.
Zhang Guobao, also vice-minister of the
National Development and Reform Commission, said in February that the
government would work out the terminal price of the second pipeline by the end
of this year.
China
's production of natural gas rose 12.3
percent year-on-year to 76.1 billion cu m in 2008 as the government promoted
cleaner energy, according to the China Petroleum and Chemical Industry
Association. The annual growth rate was down from 23.1 percent in 2007.
The country will increase its natural gas
production to 120 billion cu m in 2011, a three-year plan chalked out by the
NEA has outlined.
March 24 (China Daily) -- Industry
heavyweights in the oil and insurance businesses may post poor earnings results
for 2008, analysts have said.
Seven industry behemoths, including
PetroChina, Sinopec, China Shenhua Energy Co and China Life, which together
account for more than 40 percent of the market capitalization at the bourses,
are scheduled to release their 2008 earnings results this week.
"The companies in the oil and
petrochemicals sector have experienced a tough time in 2008," said Qian
Qimin, analyst, Shenyin & Wanguo Securities. However, he said "the
market may have already discounted such gloomy news to some extent."
Sinopec, the country's largest oil refiner,
warned in January that earnings may decline by up to 50 percent due to the
disparity between high global crude prices and low domestic refined oil prices
during the first half of 2008.
Data from the China Petroleum and Chemical
Industry Association (CPCIA) suggest that
China
's three major oil companies -
PetroChina, Sinopec and CNOOC - are expected to post combined profits of 222.8
billion yuan in 2008, a decrease of 31.3 percent from a year ago.
Analysts, however, said these three
companies could expect better revenues this year due to a rebound in domestic
demand and relatively stable oil prices.
China Life, the country's largest insurer
also warned in January of a 50 percent fall in earnings for 2008. Another
insurer, Pacific Insurance Co alerted a possible 80 percent earnings decline.
"Insurers' investment returns usually
occupy a large proportion of the companies' profits. Due to a sluggish stock
market in 2008, insurance companies are likely to report shrinking
profits," said Tao Zheng'ao, analyst with Donghai Securities.
If bank rates are cut further to below 2.5
percent, life insurance companies would be under more pressure this year, since
their rate of insurance policies would be higher than the benchmark interest
rate, according to Tao.
March 7 (Bloomberg) -- PetroChina Co., the nation’s biggest oil producer, has won initial approval from the
National Development and Reform Commission to build a liquefied natural gas
receiving terminal in Shenzhen, a commission official said.
The company has been allowed to conduct a
feasibility study for the project in the southern
province
of
Guangdong
, Hu Weiping, deputy head of the NDRC’s oil and gas bureau told reporters at the
nation’s legislature. The Beijing-based producer is selecting sites and
assessing the technical and economic viability of the terminal, Hu said.
PetroChina is building gas import terminals
on the nation’s east coast as demand for the cleaner-burning fuel rises. The
company may sign an agreement to buy LNG from Exxon Mobil
Corp.’s Gorgon project in
Australia
under
a term contract, Chairman Jiang Jiemin said March
5. The Shenzhen terminal may cost as much as HK$8 billion ($1.03 billion), the
South China Morning Post reported Feb. 23.
“We have just received an application for
the Exxon deal, and it is going through the approval process,” Hu said. It will
be up to PetroChina to decide whether the LNG from Exxon will supply the
Shenzhen terminal, he added.
China
is adjusting its plan to develop LNG
because of changes in the economy, Hu said, without elaborating. The current
lower prices offer a “good opportunity” for LNG buyers such as
China
, he said.
LNG Pricing
The government plans to bring domestic
natural gas prices in line with global levels to encourage imports of the fuel
within a “workable” period of time, Hu said, without giving more details. “It
takes time to find a balanced pricing system acceptable to both suppliers and
consumers,” he said.
The country will have to rely on domestic
production, cross- border pipelines, LNG terminals and coal-bed methane to meet
demand for natural gas, Hu said.
PetroChina has found gas reserves at the
Longgang field in southwest
Sichuan
province, although here hasn’t been a “definite result” on the size of the
reserves, Hu said today.
China, the world’s second-biggest energy
consumer, is planning a third natural-gas pipeline across northwest Xinjiang
province, although the construction schedule has yet to be set, Wang Lequan, Communist Party chief for the province, said yesterday. Gas will be
sourced from
Turkmenistan
,
Uzbekistan
and
Kazakhstan
, he said.
Drawing Board
The first pipeline across Xinjiang to
China
’s
eastern regions has been in operation since December 2004. The second, costing
more than 250 billion yuan, is under construction.
“The third link is still at the drawing
board stage,” Hu said today. “Our current focus is on the second gas pipeline
from
Turkmenistan
and to put it into commercial operation.”
China
has yet to secure a fuel source for the
third link, Hu said. “The original plan was to import from western
Siberia
, but we haven’t reached an agreement yet,” he
added.
A retail pricing formula for the second
West-East gas pipeline, which terminates in
Guangdong
and
Hong Kong
, may be settled by the end of
this year or the start of 2010, Hu said, without elaborating.
China National Petroleum Corp., PetroChina’s
parent, and
Myanmar
are still working on an agreement for a cross-border gas pipeline, and approval
has not been given yet, Hu said.
Lower crude oil prices have given
China
the
opportunity to plan on boosting imports to fill its reserves, Hu said.
China
’s
West- to East pipeline project
March 25 (BUSINESS WIRE) --
FLORENCE
--GE Oil &
Gas technology has again been selected for one of the largest gas transmission
projects in the world. GE will be the primary supplier
of compression e |