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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 170

China Business Intelligence No. 170

Samsung Economic Research Institute Beijing Office

Aug. 18, 2010

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Highlights:

I. Market

The property market policy which was announced in April of this year has started to have noticeable results since June. The Chinese government announced the strongest-ever regulation policy because the previous property regulations lost its momentum. Following the announcement of the Fourth Clause on April 15, the State Council of China additionally released the Tenth Clause on April 17, aimed at curbing property price hikes in cities, to implement a stringent property policy. The Chinese government needs to overhaul its property policy in line with public demands, while strengthening public confidence in policy execution. In the mid-to-long-term, consumption-oriented housing purchases should be encouraged while investment-oriented demand is curbed.

II. Industry

China' s try to enter the wind energy market evolved into an earnest move in late 2009 among some manufacturers of wind power generators. With market demand starting to slow in 2010, manufacturers of wind power generators are facing excess production capacity. In addition, the Chinese government has limited the expansion of production capacity since 2009, encouraging companies to engage in competition with their foreign counterparts. While the Chinese market is highly competitive and less profitable, foreign markets offer reasonable prices for wind power generators. Chinese products have price competitiveness on the global stage but have quality problems. Therefore, emerging markets are good entry points. At the same time, the government should introduce institutions to prevent mutually-damaging competition among Chinese players.

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