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GM's high hopes for bumper Year 2010 in China market
M's Buick display area in 2007 Shanghai Expo in the file photo taken in 2007.

Although it is facing the biggest challenge worldwide in its century old history, General Motors has found the Chinese market is giving it a glimpse of hope for business survival.

Last year, the US auto firm harvested record profits in China, benefiting from the robust economic growth in the country.

The US automaker reported 1.83 million units sold across the country, an increase of 67 percent from the previous year.

It compared with a 46 percent year-on-year increase for China's total automobile sales in 2009, spurred by the Chinese government's prompt stimulus package for the automobile industry amid global stagnation. The stimulus included halving taxes on smaller cars with an engine capacity of or less than 1.6-liters and subsidies for trading in old vehicles.

"The year of 2009 was very successful for GM in the China market. We forecast further growth in 2010 as we are confident in the Chinese government's active moves to support the local economy in such a global slowdown," said Tim Lee, president of Shanghai-based GM International Operations, which operates in all GM's markets outside North America.

"The biggest concern for a promising future here is that the Chinese government is increasing money supply," said Lee. He told China Daily that he believed China's investment climate was "still very good this year".

He continued: "GM will continue to invest business here, not only bringing more products but also adding capacity for every joint venture."

In addition to expanding its capacity through adding production shifts and developing its existing assembly lines to meet robust market demand, Lee said that GM was still considering building a new plant in China in the near future to accommodate strong growth in the world's largest auto market.

"We have enough capacity to build the cars we need to sell this year and we need to continue to look for ways of increasing our capacity. That will mean we will have to add a new plant some time in the near future," said Kevin Wale, president and managing director of GM China.

For the first two months of 2010, GM's sales in China rose 73.6 percent from a year earlier to a record 393,498 units.

"Our February sales numbers, with year-on-year growth rate of 51 percent, exceeded our expectations despite the Spring Festival holiday," said Wale. "The continued strong market demand portends another record year for both the industry and GM in China in 2010."


Beijing Jan-Feb, 2010 foreign trade value up 70%

BEIJING - Foreign trade value in the Chinese capital rose 70 percent year-on-year to $42.2 billion in January and February, Beijing's customs authorities said Saturday.

Export value in the first two months of 2010 stood at $8.06 billion, up 10.7 percent from the same period last year, while imports rose by 94.7 percent to $34.16 billion, the customs said.

This has resulted in a trade deficit of $26.1 billion, up 150 percent year-on-year, the customs said.

The customs authorities attributed the surging import value of crude oil, automobiles and iron ore, which climbed by 180 percent, 96 percent and 36 percent respectively, to the growing trade deficit.

The European Union remains as Beijing's largest trade partner, followed by Saudi Arabia, which saw trade value with Beijing up 140 percent in January and February.

In the same period, China's nationwide exports surged 31.4 percent to $204 billion year-on-year and imports stood at $182.3 billion, up 63.6 percent, with a trade surplus of $21.76 billion, contracting 50.4 percent, according to the General Administration of Customs Wednesday.


China steelmakers want Govt in ore talks, Mar. 2010

SHANGHAI/BEIJING - The vice president of the China Iron & Steel Association (CISA) and the heads of more than 10 Chinese steelmakers wrote a joint letter to Premier Wen Jiabao on March 11, asking him to take up the issue of rising iron ore import prices at a national level, the China Securities Journal reported on Saturday, quoting sources.

The companies included Baosteel, Wuhan Iron & Steel, Anshan Iron & Steel and Hebei Iron & Steel, it said.

China's steel sector, which produced almost half the world's steel in 2009, faces a huge increase in iron ore costs this year. China's own iron ore output cannot meet domestic producers' needs so they depend on imports.

The mills have long used a system of negotiating annual benchmark prices with the top global iron ore suppliers Vale, Rio Tinto and BHP Billiton.

But last year China failed to clinch an agreement after CISA, which was leading the negotiations, demanded a cut of 40-50 percent. Chinese mills used an interim price cut of 33 percent instead, based on deals done in Japan and South Korea.

This year, spot market prices for iron ore have soared above $130 per ton, double the 2009-10 contract price, spurred by strong demand from Chinese steelmakers and global strength in commodities markets.

New system to come?

CISA had begun the year hoping for a price rise of about 20 percent. CISA's secretary general told Reuters in an interview last September that he expected iron ore oversupply in 2010.

The chairman of Hebei Iron & Steel said on Thursday that many mills were now abandoning the traditional annual contracts that run from April 1 in favour of deals starting on January 1, and he saw the old system changing this year.

Vale, the top miner, has proposed quarterly pricing to some Japanese mills this year, a source with knowledge of the talks said on Friday. It has already told some Chinese mills it plans to drop the benchmark, an analyst said.

All three big miners have now put annual pricing talks with China on hold, Dow Jones newswires quoted an unnamed steel industry executive as saying on Friday.

By ditching annual pricing deals, the miners may be banking on a global economic recovery pushing up demand for steel this year, which could keep spot prices of iron ore on the rise.

China's own steel production hit a record 1.80 million tons per day in February, weakening the mills' case in price negotiations.

But some analysts have warned of large stockpiles of steel products in China, which could soften the impact of a demand recovery. China also has 71 million tons of iron ore stocked up at its ports, more than a month's worth of imports.