Chinese Law | China: Vol.2, No.08

CHINA MARITIME LAW NEWSLETTER

Vol. 2, No.8 - September 6, 2002

TOPICS THIS ISSUE:

Shanghai's exports jump in July
China Shipping Development soars
Shanghai to build container port
Hutchison Whampoa profits attributed to ports
Navigational improvements needed on Sino-Russian River

Shanghai's exports jump in July

July saw Shanghai's exports register double-digit growth for the first time in 15 months due in large part to the city's soaring foreign investment and brisk overseas sales chalked up by the private sector.

Outbound shipments from Shanghai port hit US$2.67 billion in July, up 19.2 percent year-on-year, the Shanghai Foreign Economic Relations and Trade Commission said yesterday.

"This big growth is the result of increasing foreign investment flowing into Shanghai, especially in the manufacturing sectors," said an official with the com-mission. "Private companies are also becoming a driving force behind growth."

Imports reached US$3.77 billion in July, an increase of 28.8 percent from a year ago. During the first seven months of this year, the city's imports were valued at US$20.88 billion, a rise of 10.9 percent from a year ago. Exports rose 7.5 percent year-on-year to US$17.18 billion.

During the first seven months of the year, foreign-funded companies exported US$10.3 billion worth of goods, up 11.5 percent from a year ago. That accounts for 59.9 percent of the city's total exports.

Exports from private companies during the seven-month period were US$76.95 million, up 291 percent from last year. The commission didn't breakdown figures for July alone.

Seven foreign-invested companies enjoyed the fastest export growth in the city during the period, including Intel Technology China Ltd., Shanghai Siemens Mobile Communications Ltd. and ChipPAC, a chip packaging concern.

Exports to Japan, the United States, the European Union and Hong Kong totaled US$12.37 billion during the seven-month period, up 4.93 percent year-on-year. They accounted for 71.99 percent of the city's total. Exports to the United States, the city's biggest export market, were valued at US$4.25 billion, up 14.7 percent from a year earlier.

Orders from the U.S. shored up last month's export figure, exports to Japan, meanwhile, reached US$3.66 billion, up 0.5 percent year-on-year. Analysts predict exports to Japan will likely remain listless in the following months.

Exports of information technology products during the seven-month period were valued at US$3.76 billion, accounting for 21.8 percent of the city's total, up 26.91 year-on-year, thanks to a warming global IT market.

There are still some sticking points looming ahead, analysts say. The devaluation of the U.S. dollar, the accounting scandals and bearish stock market, make the outlook of the U.S. economy hard to predict. And the economy of the European Union and Japan are slow.

(Source: Shanghai Daily)

China Shipping Development soars

China Shipping Development could raise its present 25% shareholding in China Shipping Container Lines after the box carrier posted a 12% increase in revenue for the first half to almost RMB4.26billion (US$519m).

China Shipping Development is looking at plans to increase their stake in CS Container Lines but they have not come to any conclusions yet. They added that the number of boxes carried by CS Container Lines climbed 34% to 1.08million in the first half of 2002, about 49% of the carrier's overall target for this year. But despite the increase in revenue and box volumes, CS Container Lines still posted a net loss for the first half, although declined to give details.

China Shipping Development added that freight rates have started to increase in the last two months, but CS Container Lines is still facing the same problem of over capacity that is affecting box trades generally. In increases in freight rates and box volumes he believed CS Container Lines could return to the black later this year.

They were more confident in the wet and dry bulk trades, after China Shipping Development posted a 47% increase in net profits to RMB262.2m (US$31.9m) for the first six months of this year, compared with RMB178.2m previously. Turnover climbed by 18.5% to RMB2.3bn, up from RMB1.7bn a year earlier as China Shipping, which mainly focuses on bulk cargoes including oil and coal, benefited from rising demand for these commodities.

Furthermore the firm readjusted its operating strategies and composition of its shipping capacity in the first half to take into account changing market conditions.

(Source: Maritime News Asia)

Shanghai to build container port

Shanghai is speeding up construction of its container port in the Waigaoqiao area to fill the shortfall before the Yangshan deep-water port is completed in 2005. With an estimated cost of RMB 2.975bn (US$360.2m) and a yearly capacity of handling 1.8 million TEUs (20-foot equivalent units), the fourth phase at the Waigaoqiao port is the largest construction in Shanghai's 150 year shipping history.

Work is expected to be finished by the end of the year and will be run at full capacity in early 2003. The weak capacity of Shanghai to handle containers has failed to meet the fast growing demand, say officials at the Shanghai Port Authority.

The number of handled containers has been increasing for years. Last year, 6.34 million TEUs passed through the Shanghai port. In the first half of this year, it handled 3.844 million TEUs and the figure for the whole year is expected to be 7.5-8 million units.

To turn itself into a hub port in Northeast Asia, the Yangshan project is of paramount importance, officials claimed. Covering an area of 1.63 square kilometres, the container port, with a depth of 13.2 metres, can accommodate four container boats of the fourth generation, each carrying 4,000 TEUs, at the same time.

Now that the 1.25-kilometre coastline construction has been completed, cranes will be installed in November. The 800,000-square-metre storage area is almost finished and the roads, which are under intense construction, are expected to be completed soon.

Construction of the Waigaoqiao port started in 1993. Containers have been moving through the area since 1996 and it keeps expanding to meet the growing demand. The first and the second phases of the port are able to handle 1.5 million TEUs. The third phase, with a capacity of handling 400,000 TEUs, had not yet been fully implemented.

(Source: China Daily)

Hutchison Whampoa profits attributed to ports

Hutchison Whampoa said that ports contributed more than half of the HK$5.95bn (US$763m) reported for the first six months of the year. The profit figure was 17% below the year earlier HK$7.18bn, but sales of fractional port stakes and writebacks in other divisions helped the company beat analyst forecasts.

The combined throughput of the group's worldwide operations increased 31% to over 16.3millionTEU with the division's HK$3,16bn in earnings before interest and taxation, up 22%.

These port results include one-time profits of totalling HK$1.13bn sales of ports stakes of 1% to 3% to strategic partners. Absent the surprise one-time gains, the company's net profit would have totalled HK$4.43bn, below forecasts, as sharp declines in its energy business and its treasury operation ate into profits.

Hutchison's ports and related services division reported turnover of HK$9.38bn, a 36% increase over last year. The company said sales were up thanks to a boom in business at Yantian and additional contributions from ports acquired in the latter part of 2001 and in early 2002.

The additions to the port holdings included eight terminals in Mexico, Argentina, Pakistan, Saudi Arabia, Tanzania and Thailand that were acquired in June 2001; Ningbo Beilun Container Terminal Phase II in Mainland China which was acquired in January 2002; and two container terminals in Busan and one in Kwangyang in South Korea, which were acquired in February 2002.

The port operations sprawling from Hong Kong and into Yantian in nearby Shenzhen reported a combined throughput growth of 18% and a core earnings growth of 10%. The Hong Kong terminals were up 4% in combined throughput, but down 4% in earnings. By contrast, Yantian enjoyed 56% growth in throughput and a 58% growth in core earnings.

Shanghai Container Terminals managed a 4% growth in throughput, but earnings fell by 13% "due to competition from ports nearby."

(Source: Maritime News Asia)

Navigational improvements needed on Sino-Russian River

Chinese and Russian experts have called for joint efforts by the two governments to improve the navigational aids and facilities on their border river, known in China as the Heilong River (Black Dragon River).

Experts, at seminars held recently in Tongjiang City, Heilongjiang Province, and the Russian city of Khabarovsk, proposed this. Navigational authorities from both countries jointly sponsored the seminars.

Participants agreed all water channels, ports, and supportive facilities along the river have to be upgraded.

They also discussed ways to develop cross-river transport. Some suggested China and Russia could become partners in establishing and operating a container-transport business serving China, Russia and Japan.

(Source: AFX News)

The China MARITIME Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.