TODAY'S BRIEFS Daily News Update - 4 November, 2008

TODAY'S BRIEFS

GE to buy Chinese jets
General Electric (GE) will buy five Chinese regional jets, with an option to purchase 20 more, in a deal that could be worth up to US$750 million, the Wall Street Journal reported. This marks the first overseas order for China's major aircraft manufacturer, Commercial Aircraft Corp of China, and a milestone in the country's long-term ambitions to become a rival to Boeing and Airbus. A GE representative told the paper that the deal for five 70-seat ARJ21-700 regional jets was struck at the Zhuhai air show and is currently being finalized. GE plans to lease the aircraft to China's domestic carriers for use within China. GE supplies engines for the ARJ21 line of jets. China's next challenge is to finalize deals with overseas customers that are not involved in the jet's production. Beijing this year announced plans to produce a 150-seat jetliner that would compete directly with Boeing and Airbus by 2020.

Rio Tinto CEO: China slowdown worsening
The chief executive of Australian mining firm Rio Tinto said that the economic slowdown in China was worsening and demand for metals won't rebound until 2009, Bloomberg reported. "It's decelerating more in the fourth quarter than we saw in the third quarter. That is going to lead to a deferred pickup in cumulative demand for most of the things we produce during the course of 2009," Tom Albanese said in an interview with the newswire service in Madagascar. China is the world's biggest buyer of metals and accounts for 17% of Rio Tinto's sales. However, in the third quarter the country's GDP grew at its slowest pace in five years. Analysts say a continued contraction in Chinese economic growth next year could further drive down Rio Tinto's shares.

Think tanks expect slower yuan appreciation
Two leading mainland think tanks have estimated that the yuan will appreciate by 1-2% against the US dollar next year, a considerable slowdown from the 6.3% appreciation seen so far this year, the South China Morning Post reported, citing state media. In an article published in the state-run China Securities Journal on Monday, economists at the National Development and Reform Commission and the State Information Center said the US dollar was likely to remain strong while "periodic depreciation" was possible for the yuan next year. The report was released as market watchers attempt to gauge the effect of the global financial crisis on the Chinese currency.

Pepsi to spend $1b in China

PepsiCo plans to invest US$1 billion in China over the next four years, representing the firm's largest investment thus far in the country, the Wall Street Journal reported. The investment will be used to build more plants, boost the company's sales force and marketing efforts, and expand research and development of products tailored for Chinese consumers. China is PepsiCo's second largest beverage market by volume and the investment will heighten the company's rivalry with Coca-Cola in the country. Coca-Cola in September launched a US$2.4 billion takeover bid for Huiyuan, a local fruit juice maker, though the deal is pending regulatory approval. PepsiCo's China investment comes as the firm struggles in its home market. The company's third quarter net profits were dragged down by weak US beverage sales and the firm plans to cut costs by US$1.2 billion over the next three years.
For more on the Coca-Cola-Huiyuan deal, please read this report in the November issue of the magazine.

CITIC Pacific bailout could boost parent2019s stake
The parent company of beleaguered CITIC Pacific could take a greater stake in the Hong Kong-listed conglomerate as a part of a planned US$1.5 billion credit agreement, the Wall Street Journal reported. CITIC Pacific disclosed last month that it could lose up to US$2 billion due to unauthorized foreign exchange bets on the Australian dollar. CITIC Pacific has already confirmed that it is in talks with its parent over the potential credit facility. A company spokesperson declined to comment on the talks, saying only that the details had yet to be determined. CITIC Group currently holds a 29.44% stake in CITIC Pacific. Shares in CITIC Pacific have been suspended from trading since October 30 and the company said they will remain suspended until the credit facility issue is resolved.

US seeks to prevent China textile surge
The US will examine mainland textile and apparel imports as the end date for the quota regime - set for December 31 - approaches, the South China Morning Post reported. The US International Trade Commission said it will compile reports every two weeks starting on December 1 on the volume, value, unit value and import market share of textiles and apparels over concerns of a "market-disrupting surge" of Chinese made goods as a five-year quota system expires. Some Chinese manufacturers downplayed the potential for an explosion in Chinese textiles and apparel exports as factories in Guangdong are facing shutdowns on the back of the global financial crisis.

Cabbies stage rare strike
Taxi drivers in Chongqing city staged a strike over high operating costs, shortages of natural gas and high traffic fines, AFP reported. During the rare protest, which left thousands stranded during Monday morning rush hour, taxi drivers smashed police vehicles. They also damaged cars belonging to drivers who tried to cross picket lines and pulled passengers from those vehicles. In total at least 20 vehicles, including three police cars, were smashed. The Chongqing city government held an emergency meeting on Monday morning to address the strikers' demands, state media reported. Strikes are rare in China as union activity is controlled by the Communist Party.