Bill Zhang

Saturday, September 24, 2005

How can energy shortage be blamed on China

China's energy production and consumption has become the focus of world attention. In 2004, China's net crude oil import was 117 million tons, accounting for 6.31 percent of the volume traded worldwide. China supplies 94 percent of the energy it needs and is only six percent dependent on overseas market.

Per capita primary energy consumption in China is 1.08 tons oil equivalent, about 66 percent of world average, which stands at 1.63 tons, 13.4 percent of America's 8.02 tons, 26.7 percent of Japan's 4.03 tons and 28.1 percent of Britain's 3.82 tons. China has a per capita installed capacity of 0.3 kilowatt, about 10 percent of America's three kilowatt. China's crude oil import makes up 6.31 percent of world trade and is 23 percent of America's import and 56 percent of Japan's.

Some people attribute the hike of international oil prices in 2004 to the growth of crude oil consumption in emerging countries like China and India. This opinion fails to truly reflect the situation of international energy markets.

China is a developing country. Its basic principle of energy development is to rely on domestic resources and make prioritizing saving and efficiency the prime task of its energy policy. China issued the Law on Conservation of Energy in 1997. From 1978 to 2004 China's 4.8 percent average annual growth of energy consumption sustained a 9.4 percent average annual economic growth. From 1990 to 2004, energy consumption for every ten thousand yuan of GDP in China has decreased by 45 percent.

China's energy consumption dependence on other countries is rather small and the world has no reason to overreact over China's energy consumption growth. Meanwhile the international community should respect China's right to development and the Chinese people's desire for getting rid of poverty and living a well-off civilized life. The development of China's economy and energy also brings great business opportunity to the world and becomes a driving force of world economy.

In light of the Eleventh Five-Year Plan, China has studied out a medium and long-term plan for energy development. The plan can be summarized as: prioritizing energy saving with efficiency as foundation; diversified development with coal as basis; relying on domestic resources while exploring overseas; integrated planning of urban and rural areas as a whole and rationalizing structure; relying on science and technology and exploring new system; protecting environment and ensuring security. The medium and long-term plan stresses adjusting energy structure, accelerating development of nuclear power, renewable energies and vigorously developing hydropower.

The National People's Congress has adopted the Law on Renewable Energies, which provides legal guarantee for the development of renewable energy. According to the plan, China would increase the proportion of renewable energy in the primary energy consumption from current seven percent to 15 percent in 2020, substitute fossil energy by 400 million tons coal equivalent, reduce carbon dioxide discharge by one billion tons and sulfur dioxide discharge by more than seven million tons.

China would continue to stick to expanding the opening up policy in developing energy and ensuring energy security, strengthen energy cooperation with other countries. The solution to China's energy issue needs relying on domestic resources and expanding exchange and cooperation with other countries. The Chinese government is willing to strengthen and deepen dialogue and cooperation with other countries, international organizations and multinational companies in the energy area, on the principle of mutual benefit, win-win result, business operation, government coordination, broad cooperation, diversified development, sincerity and enhancing communication.

This article edited by Zhang Guobao, Vice Chairman of the National Development and Reform Commission

China has no plan to use forex on oil stockpile

China has no plans to use its soaring foreign exchange reserves to build up a strategic oil stockpile, a central bank official said on Friday. Ji Min, financial market division chief of the research bureau of the People's Bank of China, told a forum that the nation's more than US$700 billion forex reserves are still being held exclusively in non-tangible assets, mainly financial assets and portfolio investments.

Some researchers have said China should use part of its forex reserves to buy crude oil, but senior officials have said the current high prices in the international market would make it a bad move.

China's forex reserves expanded rapidly in recent years, largely as a result of its trade surpluses and expectations of local currency revaluation.

The rapid growth has also prompted debate about the necessity of holding forex reserves as large as China's, which are the world's second largest behind Japan.

Sceptics say the reserves, mostly held in United States' treasury bonds and other government bonds, are not being used profitably enough given the relatively low returns on bonds, although others argue that the role of forex reserves is mainly to protect financial security of a nation in stead of making profits.

The faster than desired growth in forex reserves has also frustrated China's central bankers, as they have to increase local money supply, which runs contrary to the strong need to contain inflationary pressures, so as to maintain the floating band of the local currency, or renminbi.

But the nation's unfolding plan to reform its exchange rate system, which aims to improve flexibility, is supposed to be reducing such pressures as it helps dissipate speculation, a strong force driving up forex inflows.

After changing a decade-old exchange rate forming mechanism to one with reference to a currency basket instead of the US dollar two months ago, the Chinese central bank yesterday further broadened the floating band of the renminbi to give banks more flexibility in pricing.

The floating range for renminbi against non-US dollar currencies in the interbank cash market has broadened to 6 per cent from 3 per cent previously.

The renminbi appreciated 2 per cent against the US dollar in the July-21 reform to 8.11 yuan.

Thursday, September 22, 2005

Finland: AdLibris to set up online book store

Swedish AdLibris (of which the media company Bonnier owns 75%) is setting up an Internet book store in Finland. The service is scheduled to be launched by October 2005. AdLibris will acquire a database of Finnish books from Kirjavälitys. Orders and postings will be handled in Sweden.

AdLibris is the largest online book store in Sweden, and the company's target is to become the market leader in Finland too. According to MD Magnus Dimert, AdLibris' competitive advantage is low prices.

In Finland, online sales account for 15%-20% of total book sales. The largest operators in online book sales are Suomalainen Kirjakauppa, Akateeminen kirjakauppa and Bookplus.

Mobile Phone Tells Calories

A project coordinated by Technical Research Centre of Finland VTT has developed a communications service linked with consumer packaging that uses a camera mobile phone and the Internet. It shows the energy and nutritional values of foods, provides its users with a food diary and exercise meter, and makes it possible to compare products anytime, anywhere. The service also contains product searches and nutritional guidelines.

The product information on foods in a shop can be picked directly onto a mobile phone from the bar codes on the packaging. The service can be used at home via the Internet on a microcomputer. Somebody using the exercise meter can check how often he or she must perform a certain keep-fit exercise so that the system will burn off food that has been eaten.

The pilot system was developed with an eye on two consumer groups - weightwatchers and those with lactose intolerance - but it can be expanded to any consumer group whatsoever.

More information

Tuesday, September 20, 2005

Nordic countries get top business climate ratings

Denmark and the other Nordic countries receive top ratings for their business climate, Ritzau news bureau reported on Thursday.

The Nordic countries provide some of the best conditions for conducting business, according to a study conducted by the International Finance Corporation, the World Bank's business division.

With regard to creating a favorable business climate, Denmark took eighth place, surpassed by Norway's fifth spot. Iceland, Finland, and Sweden rounded out spots 12 through 14.

Law firms, accountants, and experts from the 155 countries included in the report conducted the study.

Business developments in the Nordic countries caught the attention of World Bank vice-president Michael Klein, as he presented the results at a press conference in London.

Countries, such as Germany, mired in economic stagnation should turn to the north for inspiration instead of considering US modelsas a way to overcome their woes.

"You just have to look to the Nordic countries, and that way you can avoid the discussion of what people in Germany actually think of the US," he said.

Denmark also took a first place with regard to how easy it is to get approval to import goods into Denmark: only one signature was needed. Obtaining approval in the Congo, in contrast, was somewhat more difficult with 80 signatures required.

High taxes, fees, and duties marred Denmark's finish as a favorable country to do business in. Danish companies pay on average 63.4 percent of their net earnings to the state, while US companies can settle with 21.5 percent and Swiss companies 22 percent

Monday, September 19, 2005

Germany's Siemens to cut 4,000 jobs

Germany's electronics and home appliance giant Siemens announced Monday it will cut as much as 4,000 jobs in the next two years.

The biggest cut will come in the company's communications division and more than 2,400 jobs will be cut in Germany.

In the computer services department of the communications division, 295 jobs, will be outsourced to India, the German news agency DPA reported.
"Siemens defined the 'Fit4More' program in April 2005 with the goal to reach all margin targets agreed upon and to put the company on course of sustainable profitable growth," Siemens said in a press release.