TODAY'S BRIEFS

TODAY'S BRIEFS

China to back Europe in global financial regulations

China will apparently back European efforts to overhaul the global financial system and call for new international regulations in the wake of the global financial crisis, the Wall Street Journal reported. Chinese officials in closed-door talks with European leaders on Friday and Saturday in Bejing said they would support Europe's efforts, and President Hu Jintao told European Commission President Jose Manuel Barroso that China would "actively cooperate" with the EU, according to diplomats present at the meetings. Formal talks on new reforms will begin in mid-November in Washington. Separately, central bank governor Zhou Xiaochuan said on Sunday that the credit crunch may add uncertainty to China's economic development. He said the central bank would strengthen supervision of the credit system and work to maintain a sufficient supply of credit to the domestic market.

Chalco 3Q earnings plummet 92%
Aluminum Corp of China (Chalco) saw its third quarter earnings fall 92% year-on-year to US$26.7 million due to higher prices for raw materials, energy and fuel, the South China Morning Post reported. Net profit for the first nine months of the year fell by 72.1% to US$377.2 million. Aluminum prices have fallen by 33% from their peak due to expectations that a global economic slowdown will stifle demand from manufacturers of aircraft, consumer goods and automobiles. A recent JP Morgan report said that with current prices at about US$2,031 (RMB13,900) per ton, even the lowest-cost smelters are facing losses of up to US$146 (RMB1,000) per ton. Spot prices for alumina on the mainland have dropped by nearly 40% to US$387 (RMB2,650) per ton due to higher supply from increased capacity.

ICBC, CCB see 3Q profit growth slow
Two mainland banks saw their third quarter profit growth slow dramatically in what analysts believe will set the tone for the rest of the earnings season, the Financial Times reported. Industrial and Commercial Bank of China on Friday said its net profit grew by 25.5% to US$4.1 billion in the third quarter, sharply down from a 57% increase seen in the first half and a 77% increase in the second quarter. China Construction Bank, on Friday said its net profit grew by 12.1% in the third quarter to US$3.7 billion. "We are witnessing a very quick deceleration in profit growth in the banking sector as the Chinese economy decelerates," Dorris Chen, an analyst with BNP Paribas, was quoted as saying. "The slowdown will be very similar for other banks." The slowdown in growth is partly due to the high base set during the third quarter of 2007, when credit growth, stock and property prices were all at their peak.

PBOC: China to tighten forex management
Central Bank governor Zhou Xiaochuan on Sunday said that China will tighten controls on cross-border capital flows in a bid to stave off disruptions arising from the global financial crisis, Bloomberg reported, citing state media. In a speech delivered to lawmakers, Zhou said the government should not underestimate the impact of the crisis on China as the mainland's reliance on exports remains relatively high. He said the central bank would strengthen foreign-exchange management, improve its overseas investment system, and use interest-rate tools to stabilize market expectations and keep the currency steady. Despite challenges to the economy, Zhou said China can, "effectively defend against the impact coming from overseas."

Melamine found in Chinese eggs
Hong Kong testers discovered high levels of melamine in one brand of Chinese eggs, prompting Hong Kong authorities to expand their testing to include meat products imported from China, AP reported. Hong Kong testers had discovered 4.7 parts per million of melamine in eggs produced by a division of Dalian Hanwei Enterprise Group. The legal limit for melamine in foodstuffs in Hong Kong is 2.5 parts per million. Hong Kong's Secretary for Food and Health, York Chow, said the melamine may have come from the feed given to chickens. Hong Kong has asked for assistance from the mainland's food safety agency to isolate the source of the melamine. The chemical melamine is at the heart of an ongoing dairy scandal that has killed four infants and sickened 53,000.

China, Vietnam to set up economic zones, explore for oil
China and Vietnam have agreed to turn disputed border areas into economic growth zones and jointly explore offshore areas for oil, in a sign of improving relations between the two countries, AFP reported. The agreement was reached during a visit by Vietnamese Prime Minister Nguyen Tan Dung to Beijing, which ended on Sunday. Under the agreement, northern Vietnam will see new industrial projects as well as rail and road links that will connect China's Yunnan and Guangxi provinces with Vietnam's Haiphong seaport. These "economic corridors" will help raise annual trade between China and Vietnam to a projected US$25 billion in 2010 from US$16 billion last year. The agreement also called on the two countries to "collaborate on oceanic research, environmental protection, meteorological and hydrological forecasts, oil exploration and information exchanges by the two armed forces."

Embraer expects high demand for small aircraft in China
The world's third-largest aircraft manufacturer, Embraer, said the mainland will need a further 883 regional aircraft over the next 20 years, the South China Morning Post reported. "China has an undeveloped market for regional and corporate jets given that they account for just a fraction of the total number of aircraft in the country," Embraer vice president Guan Dongyuan told reporters in Macau. He added that Embraer would post US$400 million in sales in China this year compared to US$150 million last year. There are currently 70 jets serving regional destinations in China. Larger rivals Boeing and Airbus have previously estimated that China will require more than 3,000 large aircraft over the next two decades.