Dairy Products China News

Welcome to the January issue of Dairy Products China News.

At the start of 2013 the latest trade data has proven surprisingly positive for China, showing exports up by a surprising 14.1% in December compared with a year before and imports up by 6%. The former figures have been fundamental to the country’s economic expansion: China has always been heavily reliant on exports, whereas India – an obvious comparison, with both these major economies expected to expand by around 7% this year – has been more dependent on its domestic market. Rising imports, of course, point to stronger domestic demand. Manufacturing activity grew for the 3rd consecutive month in and the country’s services sector – some 43% of its economy – expanded at its fastest pace in 4 months in December. In contrast, China has a much more developed industrial manufacturing sector whereas India has a sophisticated services sector.

All very encouraging after the slowdown seen in 2012, but are these reliable indicators or will the difficulties in the economies in Europe and the US act as a brake on these positives? One also has to ask, how reliable is China for foreign investors; recently, the Chinese Academy of International Trade and Economic Co-operation noted that 823 out of China’s 1,689 listed, non-financial companies, have annual reports containing “abnormalities”.

The Hu-Wen regime oversaw growth but also failed to make progress on many issues, not least the growing problem of corruption. The leadership handover to Xi Jinping and Li Keqiang appears to have happened with a minimum of fuss and they have to concentrate on getting away from a debtfuelled market to a consumer-driven market. Initial signs are that the new team may well have the energy and vision to make necessary changes, something which will surely encourage all foreign businesses investing in (or receiving investments from) China in 2013 and beyond.