Three weeks of snow across most of China have "taken a toll on
the economy" but the impact will dissipate over the full year,
according to renowned economist Fan Gang.
Fan, director of China's National Institute of Economic
Research, said here on Saturday the long snow spell would actually
stimulate investment, including upgrading the power grid nationwide
and improving coal infrastructure.
"The domestic market also has great potential to spur economic
development. There is no doubt that such a big economy will
encounter various difficulties each year, but the Chinese economy
is maintaining stable growth momentum," added Fan. He disputed the
views of some analysts that the snow would be a major drag on
growth.
Li Huiyong, a senior macro-economic analyst at Shenyin and
Wanguo Securities, forecast the gross domestic product (GDP) for
the first quarter of 2008 would grow around 10.1 percent, 0.5 point
lower than an earlier prediction. This was due to slower growth in
exports, investment and industrial production.
He also predicted the consumer price index (CPI) would surge to
6.8 percent in January, 0.3 point higher than in December, and
possibly set a new high in February. The Spring Festival, which
begins on Thursday, is a traditional time for shopping sprees among
Chinese.
The CPI rose 4.8 percent in 2007 and hit an 11-year high of 6.9
percent in November, well above the government target of three
percent.
Zhu Hongren, deputy director of the Bureau of Economic
Operations with the National Development and Reform Commission
(NDRC), said on Friday, "The snow has affected the Chinese economy
for the moment. But for the long run, the country will maintain a
quick economic growth pace".
Li Rongrong, chairman of the state-owned Assets Supervision and
Administration Commission of the State Council (SASAC), said on
Saturday the weather would not influence the overall performance of
listed companies. Some companies, however, faced interim production
difficulties due to energy shipments stalled by transport
snags.
On Friday, two new closed-end stock funds gained approval from
the China Securities Regulatory Commission, ending a five-month
freeze on new funds in an effort to break the fall of domestic
equities.
The benchmark index dipped to 4,320.77 points on Friday, nearly
30 percent off its record high of mid-October. Investors sold
holdings due to concern over a possible U.S. recession and the
country's worst snow in five decades that had caused economic loss
of about 53.8 billion yuan (7.5 billion U.S. dollars) by Jan.
31.
The domestic stock market has also seen volatile trading in
recent weeks, with shares sinking more than seven percent on Jan.
22, the largest percentage loss in 7.5 months.
Li told shareholders they need not to be too concerned about the
sliding domestic market, adding the country would make up the
losses due to the snow havoc very soon.
The State Grid and China Southern Power Grid were mobilizing all
forces available to fix power equipment and streamline power
distribution, according to the SASAC.
Sinopec, the country's largest oil refiner, set up 10 temporary
gas stations along the Beijing-Zhuhai Expressway to ease shortages,
said SASAC.
The country had also mobilized all available railway containers
to move power coal and ease electricity constraints that have hit
many areas. The containers only other use should be to move relief
materials, Xinhua learned on Saturday from the Ministry of
Railways.
The latest ministry figures revealed that more than 42,200
containers were loaded with power coal on Friday, up 12,000 from
the previous day, a new record.
The railway line between Datong in the coal-producing province
of Shanxi and Qinhuangdao, a port city in Hebei Province, which is
a dedicated coal transport route, set a new daily freight record of
one million tons.
Chinese Commerce Minister Chen Deming on Saturday called on
local agencies to ensure market supply during the Spring Festival
season, adding the Ministry of Commerce (MOC) was endeavoring to
increase the market supply of vegetables, fruit and meat in
snow-strangled provinces.
The MOC, the Ministry of Railway and the Ministry of
Communications also held a supply and sale coordination meeting in
the southern Hainan Province. It was decided that 158,300 tons of
vegetables and fruit will be provinded to the snow-stricken Anhui,
Jiangxi, Henan, Hubei, Hunan and Guizhou provinces before Feb.
15.
The country has so far released more than 17,000 tons of pork
from its reserves to meet demand in some of the hardest-hit big
cities and Guizhou Province.
The General Administration of Customs of China (GACC) ordered
its local customs to streamline the procedures for importing snow
relief materials and energy products, including crude oil, coal and
oil products.
Zhanjiang Customs, a key port in southern China, reduced the
crude oil declaration process from three days to half a day.
Goldman Sachs chief economist for Asia, Liang Hong, said the
damages brought by the snow would not impede the long-term Chinese
economic growth, adding short-term production losses could be
offset by a rise in grain production due to the wetter
conditions.
However, Liang said the country needed to put more funds into
the infrastructure sector, including railways, highways, airports,
electricity grid and power plants.
As for the impact to the textile industry, Zhao Qiuyan, a senior
analyst with the China Trade Remedy Information website under the
MOC, told Xinhua on Sunday, "The impact of snow havoc on textile
and apparel exports was limited as more of these products are
consumed domestically".
Zhao added with the price increase in food and other daily
necessities, the average textile products prices were stable or on
the decline, giving them much room to increase sales
domestically.
Official statistics revealed that 66.8 percent of the products
were sold on the domestic market at the beginning of 2000, while
this figure had increased to 75.04 percent by the end of
November.
Analysts from China Lianhe Securities held most iron and steel
companies would normally have a material reserve that could at
least support one month's production and large iron and steel
manufacturers had their own electricity stations, so the blizzard
didn't affect their daily operation too heavily.
China Merchants Securities analysts believed fire-powered plants
and electricity grid companies had suffered some losses from the
snowstorm, while those hydropower plants gained more profits
against the background of recent electricity shortages.
(Xinhua News Agency February 4, 2008)
