October 2011

India & ChinaFirst India-China Strategic Economic DialogueThe 1st India-China Strategic Economic Dialogue was held at Beijing on September 26, 2011. The Indian side was led by Mr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, and the Chinese side was led by Mr. Zhang Ping, Chairman, National Development and Reform Commission of China. The establishment of the Dialogue was announced in the India-China Joint Communiqué issued during the visit to India by Mr. Wen Jiabao, Premier of China in December 2010. The two sides had an in-depth and frank exchange of views on the world economic situation, respective domestic macro-economic situations, the goals and implementation of the mid and long-term economic and social development plans of the two countries as well as their respective industrial, fiscal and monetary policies and agreed to enhance pragmatic cooperation in economic sectors. The two sides agreed that the Dialogue was highly productive and successful.

M&M tractor JV commences construction of new plant in ChinaThe tractor unit of Mahindra & Mahindra has started construction of a new engine plant in Yancheng City in Jiangsu province in China. The foundation stone for construction of an engine manufacturing and assembly plant in China in collaboration with its JV partner Yueda Group was laid on September 6 at a function attended by India's Ambassador to China, Dr S Jaishankar, among others. M&M, which has so far invested $110 million in China, has a share of 9.2% in the fast-developing Chinese market, with annual sales of 29,000 units. The company is also a leading exporter of tractors from China, with a footprint in more than 60 countries, including the US, South America, Russia, Europe and Africa (More).

India-China bilateral trade (Jan-Sept 2011)Trade Value US$ Billion % ChangeTotal trade 54.499 20India’s imports from China 37.185 26.0India’s exports to China 17.314 8.9India’s deficit 19.871

http://www.customs.gov.cn/publish/portal0/tab1/info319818.htm

CII & China

CII’s Young Indians participates in Boao Youth Forum 2011CII’s Young Indians participated in the 2011 Boao Youth Forum held in Hong Kong on 15 September 2011, which was attended by over 1,500 representatives from the Asia-Pacific region. With “Asian Economies in Remodeling: What We Can Do” as the theme, this forum was the third session since its inception in 2009. Mr Shankar Vanavarayar, National Chairman, CII’s Young Indians (Yi), addressing the session, said that developing countries should reshape their education system and take steps for narrowing the gap between higher education and the demand for skilled manpower. Both India and China have large population and are developing economies, but are finding it difficult to meet the growing demand of skilled man power essential for driving economic growth, said Mr Shankar. Addressing the opening session, Zhou Wenzhong, Secretary General of Bo'ao Forum for Asia (BFA) said that the young people in Asia would play an important role in the transition of Asia as the 21st century is the century of Asia.

Mr Shankar Vanavarayar, National Chairman, CII Young Indians (second from right) addressing the session on "Education in Transition" at the Boao Youth Forum, Hong Kong, 15 Sept 2011

Session on Social Security and Individual Income Tax for ForeignersCII India Business Forum China organized a session on the “Social Security and Individual Income Tax for Foreigners” on 29 September 2011 in Shanghai. China issued the “Interim Measures for Participation in Social Insurance System for Foreigners Employed in China” on 6 September 2011, which will come into effect on October 15, 2011. Foreigners employed in China will be covered under five kinds of insurance: basic pension insurance for employees, basic medical insurance for employees, work-related injury insurance, unemployment insurance, and maternity insurance. Social insurance fees will be paid by both employers and foreign employees in accordance with the regulations. Ms Vicky Chen, Vice President HR, HROne made a presentation on the important points of the new policy. Around 40 members participated in the session.

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The Monthly China Journal of Confederation of Indian Industry October 2011- Volume 8 No 10

China Pulse

October 2011

(L-R) Mr Kailash Vijayvargiya, Minister for Commerce, Govt of MP, Mr Shivraj Singh Chouhan, Chief Minister of Madhya Pradesh, Dr S Jaishankar, Ambassador of India to China and Mr Sandeep Noelekar, Chairman, CII MP at the forum on "Investment and Trade Opportunities in Madhya Pradesh", Beijing

MP Chief Minister participates in WEF, China Mr Shivraj Singh Chouhan, Chief Minister Madhya Pradesh led a business and investment promotion delegation to participate in the World Economic Forum (WEF) held in Dalian, China from 14-16 September 2011. The 2011 Annual meeting of ‘New Champions’ at World Economic Forum opened with India as the theme. Mr Chouhan, representing India and his own state, was the special guest in the first session. Mr Chouhan spoke on the inclusive growth, good governance, technology for transparency and Madhya Pradesh's quite, yet firm move towards overall and sustainable development. The business delegation at WEF Dalian accompanying the Chief Minister was led by Mr Sudhir Mehta, Past Chairman, CII Madhya Pradesh State Council & Managing Director, Man-Force Trucks Pvt Ltd. The delegation had meaningful business interactions and investment promotion sessions at Dalian, Beijing and Shanghai, which focused on new areas of cooperation. This business and investment promotion mission to China was an initiative of Government of Madhya Pradesh in association with CII and was part of ongoing investment promotion drive being taken jointly by Madhya Pradesh government and CII.

Interaction with Ningbo delegationA 10-member delegation from Ningbo city of China, led by Mr. Gang Yong, Deputy Director General, Ningbo Foreign Trade & Economic Cooperation Bureau visited CII headquarters on 23 September 2011 to interact with CII officials. The meeting focused on strengthening bilateral trade and economic cooperation and promotion of exchanges between the enterprises of the two countries.

Seminar on “2011 Wuhan-New Delhi Economic and Trade Cooperation”CII and Wuhan Municipal Government (capital of Hubei province, China), jointly organized the seminar titled “2011 Wuhan-New Delhi Economic and Trade Cooperation” on 13 September 2011 in New Delhi. The Wuhan delegation comprised of over 30 government and business persons from Hubei province and was led by Mr. Tian Chengzhong, Deputy Governor of Hubei Province. The seminar focused on bilateral trade and investment. Over 100 persons including government officials, academicians and business people attended the seminar.

Meeting with Anhui delegationA 6-member delegation from Anhui province of China led by Mr. Zheng Mumin, Deputy, Chairman, CPPCC Anhui Committee visited CII headquarters on 12 September 2011 and interacted with CII officials.

China’s EconomyEconomy indicators

GDP (Q 3) Up 9.1% GDP (Q 2) Up 9.5%GDP (Jan-Sept) $5.01 trillion, up 9.4% Industrial value-added output

(Sept)Up 13.8%

Foreign trade $2677.441 Bn, up 24.6% Industrial value-added output (Jan-Sept)

14.2%

Exports $1392.270 Bn,up 22.7% PMI (Sept) 49.4Imports $1285.172 Bn, up 26.7% PPI (Sept) Up 6.5%Surplus $107.098 Bn, -10% Forex (End Sept) $3.2017 trillion Retail sales (Jan-Sept) Up 17% to 13.0811 trillion yuan Fixed assets investment (Jan-Sept) Up 24.9% to 21.23

trillion yuan

China revises up 2010 GDP growth by 0.1% China on September 7 revised up its GDP for 2010 by 0.1%, to 10.4%. The gains came from the service and industrial sectors. The revised GDP for 2010 now stands at just over 40 trillion yuan ($ 6.3 trillion). This was the second revision of the 2010 GDP growth figures (More).

China's grain output to top 550 million metric tons this year China will see a bumper harvest of grain this year despite frequent droughts and floods, with grain output expected to jump to a record high of more than 550 million metric tons, according to Vice Minister of Agriculture Chen Xiaohua (More).

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October 2011

Government & PoliticsChina's 1st attempt to build own space station successfulChina successfully launched first experimental space lab module, Tiangong-1 (or Heavenly Palace), on 29 September 2011 from Jiuquan Satellite Launch Center in Gansu Province. A Long March-2FT1 rocket carried the unmanned module as part of a mission to test space docking with another spacecraft later this year, paving the way for China to become the third country in the world to operate a permanent space station around 2020. Unlike previous Chinese space vehicles, Tiangong-1 has a docking facility which allows it to be connected to multiple modules in order to assemble an experimental station in low orbit (More).

China's Peaceful DevelopmentAt the beginning of the second decade of the 21st century and on the occasion of the 90th anniversary of the founding of the Communist Party of China (CPC), China declared solemnly again to the world that peaceful development is a strategic choice made by China to realize modernization, make itself strong and prosperous, and make more contribution to the progress of human civilization. (Full Text)

Sea trial of aircraft carrier The maiden sea trial of China's refitted aircraft carrier "has attained the anticipated objectives," a spokesperson of the Defense Ministry of China said on 31 August. The vessel, former Soviet aircraft carrier Varyag, has been totally refitted for its new role as a research and training platform in China. The vessel departed from a port in Dalian on August 10. Presently, the US, the UK, France, Russia, Spain, Italy, India, Brazil and Thailand, operate a total of 21 active-service aircraft carriers (More).

China plans investment boost, tax incentives for advanced materials industry China plans to beef up investment and offer tax incentives to increase the annual output of the advanced materials industry to 2 trillion yuan ($313 billion) by 2015, which is 5% of GDP of China in 2010, according to Gao Yunhu, deputy head of the raw materials industry department of the Ministry of Industry and Information Technology (MIIT). The advanced materials industry is expected to grow at an average annual rate of more than 25% until 2015, with major enterprises' research and development investments projected to match 5% of their total sales revenues (More).

Chinese premier specifies five tasks for political reform Premier Wen Jiabao on September 14, 2011 at the World Economic Forum's Annual Meeting of the New Champions 2011, which was held in northeast China's port city of Dalian, specified five areas that must be addressed by the government in order to boost the reform of the country's political system. These five tasks are running the country according to the law, promoting social fairness and justice, safeguarding judicial justice, ensuring people's democratic rights and combating corruption. He said that the most important and challenging were to expand democracy, promote social fairness and justice and fight against corruption (More).

China vows to boost European investmentPremier Wen Jiabao said on September 14 that China was ready to increase its investment in debt-ridden Europe, and urged the European Union (EU) to recognize China as a full market economy. "European countries are facing sovereign debt problems and we've expressed our willingness to give a helping hand many times. We will continue to expand our investment there," Wen said while addressing 1,500 business leaders and government officials at the opening of the World Economic Forum, known as the "Summer Davos" (More).

2nd China-Arab States Economic and Trade Forum China and Arab countries held 2nd China-Arab States Economic and Trade Forum from 21-22 September 2011 to boost economic and trade ties, in Yinchuan, capital city of northwest Ningxia Hui Autonomous Region, which is home to more than 10 percent of China's 20 million Muslims. The forum featured an array of activities, including a centerpiece conference and other sub-forums and seminars that focused on economic and trade cooperation between China and Arab countries. Six institutions from China and their seven counterparts from the Arab world have entered into cooperation agreements covering power industry, medical treatment and desertification control. The bilateral trade between China and the Middle East countries reached $190 billion in 2010 and in the first half of 2011 it has increased by 36% year-on-year to $120 billion.

China, South Africa sign deals on mineral resources, finance cooperationChina and South Africa on September 28, signed two deals on geology and mineral resources, and financial cooperation during the visit of the South African vice president to China. The cooperation will focus on geology and sustainable mineral resources management, utilization and development in both countries on the basis of mutual benefit. According to the agreement signed by China Development Bank and Development Bank of South Africa, the two banks will provide financial support for bilateral cooperation in infrastructure construction, transportation, water resources utilization, housing, health and education (More).

Business & IndustryChina not intent to maintain role of major rare earth supplierAccording to Li Zhong, vice president of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Holding Co, China's top rare earth producer, China does not intend to maintain its role as the world's major rare earth supplier, and the trend of tight supplies was irreversible. "The country will gradually shift to a domestic demand-oriented path from the external demand-oriented path," said Li Zhong (More).

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October 2011

Chinese state-run oil firm wins Afghanistan projectChina National Petroleum Corporation (CNPC) won Afghanistan's first oil field auction in ten years on 16 September. The deal will help China to secure energy sources and increase its presence in Afghanistan. CNPC won the bid to develop Amu Darya blocks in cooperation with an Afghanistan company, Watan Group. They beat competitors from Australia, Britain and Pakistan by offering a generous royalty, corporate tax on profits and a US$30 million refinery that Afghanistan desperately needed. This deal would allow China to access Afghanistan's rich but undeveloped oil and gas reserves that may potentially yield billions of barrels of oil (More).

Machinery production up 26.42% in Jan-AugChina's machinery industry experienced expanded growth in both production and sales volumes during the period from January to August this year. The production volume of the industry grew by 26.42% to reach 10.66 trillion yuan during this period, while sales volume increased by 26.16% to stand at 10.4 trillion yuan. Between 2001 and 2010, the industry's total output value grew from 1.44 trillion yuan to 14.38 trillion yuan, registering an average annual growth rate of 25%. The number of large-scale enterprises engaged in the machinery industry rose from 34,000 in 2001 to 107,000 in 2010, with their assets expanding from 2 trillion yuan to 10 trillion yuan (More).

Contact: CII China Office

U. D. Bhatkoti, Advisor E B Rajesh, Chief RepresentativeConfederation of Indian Industry Confederation of Indian Industry

The Mantosh Sondhi Centre Room No 11A47/49, Shanghai Mart,23 Institutional Area, Lodi Road, New Delhi-110003 2299 Yan'an Road (West), Shanghai 200336, China

Tel: 91-11-2462 9994-7; Fax: 91-11-24601298 Tel: +86 (21) 62360969; Fax: +86 (21) 32283510Email: u.d.bhatkoti@cii.in; Website: www.cii.in Email: e.b.rajesh@cii.in; Website: www.cii.in

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

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