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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 11

China Business Intelligence No. 11

Samsung Economic Research Institute Beijing Office

Dec. 8, 2006

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Highlights

I. China's Macroeconomic Controls Show Results

  • According to economic data released in October, China's macroeconomic controls have showed noticeable results. China's industrial production growth rate (value-added) grew 14.7% in October, marginally lower than September's 16.1% growth rate. Urban fixed asset investment grew 16.8% in October, a 7 percentage point decline from September levels.
  • The Chinese economy's performance in 2007 will likely be guided by macroeconomic measures. If the Chinese government continues with the current level of policy intensity, it cannot be ruled out that China will experience deflation in 2007 and growth under 9%. If the Chinese government steps off of the pedal, there is a possibility for a soft landing and growth in the 9-9.5% range.

II. Mobile Operators Quicken Rural Market Entrance

  • China's vast countryside offers substantial business opportunities for mobile phone service operators. Despite its large population, the countryside's mobile penetration rate was a mere 11.5% as of June 2006.
  • Mobile operators are making an aggressive push into the agricultural market. Since 2004, MII in concert with six large telecom operators (including China Telecom and China Mobile) has been carrying out a nationwide project 'Village Phone Program' to connect small villages in 16 provinces via mobile networks.
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