Deflationary Pressure

The latest official data have showed Chinese consumer inflation running at low levels and factory product inflation remaining in negative territory,triggering worries about sluggish market demand and deflationary pressure.

China’s consumer price index(CPI) rose by 1.6 percent in September,down from 2 percent in August,said the National Bureau of Statistics (NBS) on October 14.

On the other hand,China’s producer prices continued to fall in September,signaling prolonged weakness in aggregate demand. The producer price index(PPI),a measure of costs for goods at the factory gate,fell 5.9 percent year on year,unchanged from the rate seen a month earlier.

The reading also marked the 43rd straight month of decline.

Falling commodity prices and weak domestic demand are mainly responsible for the weak PPI reading,according to HSBC research.

Low prices amid the economic downturn mean monetary policies need to further ease,said Bank of Communications analyst Liu Xuezhi.

Minsheng Securities Co. Ltd.reckons the index will stay in negative territory in the foreseeable future,as China still has a long way to go in digesting its overcapacity in upstream industries.

The downcast PPI and slowing CPI highlighted deflationary pressure for China,Minsheng Securities said,projecting a high possibility of further cuts in interest rates and the bank reserve requirement ratio in the fourth quarter.

FDI Data

Non-financial foreign direct investment(FDI) onto the Chinese mainland expanded 9 percent from a year earlier to $94.9 billion in the first nine months,said the Ministry of Commerce(MOFCOM).

BIKE SHOW

Visitors view a smart bicycle at the 2015 Asian Bicycle Exposition held in Kunshan,east China’s Jiangsu Province,from October 9-11

Fresh Move

A staff member of an Internet company monitors vegetables through live images on October 13 in Hohhot,north China’s Inner Mongolia Autonomous Region.

The company,founded in July this year,connects farmers and local consumers through the Internet.Consumers can order fresh vegetables via the website,WeChat account or smartphone application.

The company has signed cooperative agreements with 50 local vegetable processing and plantation organizations and delivers fresh vegetables to over 20,000 families in Hohhot each day.

Among all sectors,hi-tech services continued to shine,attracting $6.16 billion of foreign investment in the first nine months,a 57.6-percent surge year on year.

Hi-tech manufacturing saw investment inflow accelerate to a 10.4-percent growth during the period,reaching $7 billion.

FDI in the service sector in general rose 19.2 percent to $58 billion,while that in manufacturing edged up 0.7 percent to $29.8 billion,according to the MOFCOM.

More foreign firms invested in China through mergers and acquisitions,which accounted for 16.1 percent of the total FDI in the January-September period,up from 5.8 percent in the same period of last year.

Foreign Trade

China’s foreign trade dropped 11.4 percent year on year in September to$350.77 billion,less severe than the 9.1-percent contraction in August,data from the General Administration of Customs (GAC) showed on October 13.

Exports dropped 3.7 percent to$205.56 billion,and imports decreased 20.4 percent to $145.22 billion. The trade surplus totaled $60.34 billion.

For the first three quarters of the year,foreign trade dropped 8.1 percent year on year to $2.9 trillion,with exports down 1.9 percent to $1.66 trillion and imports down 15.3 percent to $1.24 trillion. The trade surplus totaled $424.09 billion.

GAC spokesperson Huang Songping attributed the drops to the sluggish global economy,high costs and slumping commodity prices.

Trade prospects in China are set to remain favorable during the fourth quarter after exports fell less than expected in September,Huang said.

Huang said the GAC remains confident that exports during the fourth quarter will overtake the figures for the third quarter as the structural reforms and steps by the government to boost foreign trade yield results.

“In the absence of any major economic or political risks,we remain confident and positive on prospects for exports in the fourth quarter,” he said.

Little Carrot,Big Money

Local farmers process carrots in Yongqing County,north China’s Hebei Province,on October 13.

The county has greatly developed its carrot industry over the past few years,making it the largest carrot production base in north China with an annual transaction value of 1.26 billion yuan ($198.6 million).

China-Russia Expo

Nearly 10,000 businesspeople from 103 countries and regions have participated in the Second China-Russia Expo that was held in Harbin,capital of northeast China’s Heilongjiang Province,from October 12-16.

More than 4,000 businesspeople are from Russia,which borders Heilongjiang. Some 170 large-scale Chinese enterprises and more than 50 leading Russian enterprises,including Sinara Group,Gazprombank,CTZUraltrak and Rusnano,attended the expo.

Some 46 activities,including seminars,investment promotions and commerce fairs,were held on the sidelines of the expo. Moreover 15 key commerce events covering a range of industries,including railways,forestry,finance,tourism and e-commerce,were held at the expo at the same time.

China and Russia are pushing forward a comprehensive strategic partnership,Chinese Vice Premier Wang Yang said at the opening ceremony of the expo.

China would like to integrate the Belt and Road Initiative with Russia’s strategy of developing the Far East and strengthen cooperation in aerospace,nuclear energy,civil aviation and crossborder transportation,Wang said.

Russia would like to expand cooperation with China and create a more open and favorable environment for cooperation,Russian Deputy Prime Minister Dmitry Rogozin also said on the occasion.

Renamed last year,the expo was formerly called the China Harbin International Economic and Trade Fair,an annual cooperation project between China and Russia since 1990.

GATEWAY

The ship lock of Changsha Comprehensive Hub on the Xiangjiang River. As of October 13,freight volume of the lock had totaled 260 million tons over the past three years

Hear Me Now?

The State Council decided to improve broadband in rural and remote areas on October 14.

Stronger telecom services will help attract investment and fuel coordinated development,narrowing the gap between urban and rural areas,said a statement released after an executive meeting of the State Council.

The meeting urged more input from the central budget,more support from local policies and capital,more telecom construction and maintenance from private capital,more public-private partnerships,and stricter supervision of subsidies.

By 2020,50,000 more villages will gain access to broadband,and 30 million rural households will enjoy upgraded services. The total investment is estimated to hit more than 140 billion yuan ($22 billion).

The meeting also stressed the importance of e-commerce,saying a faster expansion of e-commerce in rural areas will stimulate consumption,benefit farmers and support the real economy.

REAL Deal

Alibaba Pictures Group Ltd. has signed a memorandum of understanding to invest in REAL,a South Korean action movie,featuring Kim Soo Hyun.

The deal was put together at the recent Busan International Film Festival and reflects the strategic focus of Alibaba Pictures to go global.

The agreement will give it sole distribution rights for the movie in China.China’s e-commerce king Alibaba Group Holding Ltd.,which owns Alibaba Pictures,will help market the film through advertising and brand licensing on its e-commerce platforms.

“We’re investing in REAL because the Korean film industry is arguably the most influential in the region. The hugely popular Kim Soo Hyun is the embodiment of that. We aim to support regional movie making in Asia,as well as bigger Hollywood movies,” Zhang Qiang,CEO of Alibaba Pictures,said.

The REAL deal is Alibaba Pictures’second overseas foray after investing in the Hollywood blockbuster Mission:Impossible—Rogue Nation. The movie was released in China in September and has grossed 867 million yuan ($137 million) at the box office.

REAL is expected to start filming by the end of this year.