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Chinese manufacturing activity

Although the manufacturing sector in China contracted in January with the HSBC PMI reading falling to 50.5, it still represented the 16th straight month with a positive reading. The contraction was put down to weak domestic demand. The sub index for production stood at 53.0 down 0.9 points from December.
China’s trade surplus rose to USD31.9 billion in January easing concerns the economy was slowing down, this was an increase of 14 per cent from 2012. Imports rose by 10 per cent to USD175.27 billion led by record shipments of crude oil, iron ore and copper. Exports increased 10.6 per cent from 2012 to USD207.13 billion

Car sales reached new highs in January with 1,881,835 cars, SUV’s, MPV’s, and minivans sold in China. This represented an increase of 10.1 per cent from a year earlier and 3.7 per cent higher than December. The total number of sales exceeded production by over 160,000 units. China’s total automotive market growth declined by 6 per cent in January slowed by sluggish sales of commercial vehicles and the Spring Festival. It is estimated this market will grow 8-10 per cent in 2014.

China will give more subsidies for electric cars than previously announced and extend the incentive program beyond 2015 to help reduce air pollution. In 2014 the government will decrease the subsidies by 5 per cent as opposed to the original 10 per cent, and in 2015 subsidies will be reduced by 10 per cent instead of the 20 per cent originally announced. On completion of the current program the government has indicated it will continue to subsidize the electric vehicle market.

The total number of cities and regions involved in the Government promotion of electric vehicles in China has risen to 40. Cities in Eastern regions are required to promote not less than 10,000 units by the end of 2015, remaining areas have been set targets of 5,000 units, Beijing and Shenzhen have their own targets of 35,000 units. Beijing is planning on constructing five medium to large charging stations and 35,700 charging posts for pure electric cars and plug in hybrids, as well as two hydrogen stations for fuel cell cars. If all are successful it will mean at least 160,000 units of new energy cars should be sold this year which is more than 9 times the total sales of 2013 which stood at 17,642 units.

The proportion of electric buses and taxis in Shenzhen, Shaanxi and Hunan has grown from 2 per cent in 2010 to 9.9 per cent in 2012 and nearly 20 per cent in 2013. BYD who are based in Shenzhen have been responsible for manufacturing most of these.

GM has announced that the automakers joint ventures in China plan to invest a further USD11 billion by 2016, the money being spent in products, production capacity and recruitment. GM will launch 19 new models and redesigns in China this year focusing on the Buick, Chevrolet and Cadillac brands. GM and its Chinese joint ventures sold 348,061 vehicles in China in January a 12 per cent increase year on year, this followed an 11.8 per cent rise in December and 13.3 per cent rise in November. In 2013 GM sold around 3.16 million vehicles in China an 11.4 per cent increase from 2012.