China News Summary
China to subsidise white goods for rural residents
In the latest of stimulus measures China announced it will subsidize household appliances for rural residents, sending shares in Haier Electronics (1169,HK), China's largest manufacturer of white goods, soaring by 56 percent.
From today rural residents in 14 provinces will be able to buy selected TV sets, refrigerators, washing machines and mobile phones at a 13 percent discount, paid for by the government. The subsidy will cover all the country's rural residents starting February 1,2009. The policy will be valid for 4 years.
In the pilot program started in last December and ended in this May, Haier snatched 38 percent of sales. The pilot program took place in the nation's three major agricultural provinces - Shandong, Henan and Sichuan - subsidising mobile phones, televisions and refrigerators. A total of 36 Haier products were approved for sale during the pilot program.
In mainland markets, shares in eight household appliance manufacturers rose to the 10 percent upper trading limit, led by Meiling Appliances (000521,SZ), GD Midea Electric Appliances (000527,SZ) and Wuxi Little Swan Co. (000418,SZ). Hisense ElectricCo. (600060,SH) advanced 6.83 percent.
Some 155 domestic and foreign companies took part in the bidding for subsidied products and 122 won the bid. Hisense became the new bidding champion with 75 products, followed by Midea, and Haier won the third with 70 products.
The so-called "appliance going rural " project is hoped to lift consumption by nearly RMB 1 trillion, with over 480 million household appliances expected to be sold over the four years. Sceptics have pointed out that with an average appliance price of RMB 1,917, prices are still far beyond the disposable income of most rural residents and that the four year window is unlikely to stimulate immediate consumption.
Minmetals acquires rare earth sites
China Minmetals Corp., the nation's biggest steel and metals trader, formed a joint venture named Minmetals Rare Earths with two local companies in mid-China's Jiangxi province. Mimetals is planning to invest RMB 2 billion on the project in the next five years. The new company can process 8,500 tons of rare earth annually, the largest capacity in China.
Centergate
The price of Beijing Centergate Technologies (000931,SZ) dropped 10 percent as trading resumed today after the company announced that its Chairman, Xu Zhongmin, is under investigation. Phase one construction at Shougang Jingtang's new steelworks at Caofeidian are ready for commission but the company plans to delay start-up till April next year due to sluggish steel market.
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