COMPLETING THE LINK: Construction of the Jiaxing-Shaoxing sea-crossing bridge in east China's Zhejiang Province progresses as planned. The bridge is expected to come into use by the end of 2012 (XU YU)

Numbers of the Week

232 million tons

China imported 232 million tons of crude oil in the first 11 months, up 6.1 percent year on year, according to data from the General Administration of Customs. The amount is close to the 239 million tons for the entire year of 2010.

2.125 billion yuan

The China Iron and Steel Association said 25 of the country's 77 large and medium-sized steel makers generated a combined loss of 2.125 billion yuan ($335.7 million) in October, an increase of 1.83 billion yuan ($288.19 million) from September.

TO THE POINT: China's exports are tapering off as the world economy teeters, but investment and consumption have maintained momentum, offsetting the impact of weakening exports. The auto market continues cooling as the withdrawal of policy incentives pours cold water on buyers' interest. A bright spot is the e-commerce sector, which reported surprisingly brisk growth in the third quarter. China's industries are currently the world's most competitive, but the road ahead will be a bumpy one.

November Figures

Foreign Trade

China's exports went up 13.8 percent from a year earlier to reach $174.46 billion in November, 2.1 percentage points lower than in October. Imports stood at $159.94 billion, soaring 22.1 percent year on year, against 28.7 percent last month, according to data from the General Administration of Customs. The trade surplus shrank 34.9 percent to $14.52 billion.

In the first 11 months, China's foreign trade volume expanded 23.6 percent year-on-year to $3.31 trillion, far exceeding the full-year amount of $2.97 trillion in 2010.

The November figure brought exports in the first 11 months to $1.72 trillion, up 21.1 percent, while imports added up to $1.59 trillion, an increase of 26.4 percent.

"The export growth was higher than expected given withering external demands amid European debt crisis," said Liu Fuyuan, a renowned economist and President of China Human Resource Development Association. "But the prospect remains dim, especially if the situation in developed countries deteriorates."

"In response, smaller exporters are supposed to strengthen their competitive edge and tap into emerging markets," he added.

"Exports have been holding up better than expected," said Goldman Sachs economist Yu Song. "The implication of that is less policy loosening likely in the near term."

"But export growth is likely to slow to a single-digit rate in the coming months, given the weak outlook for the global economy," he added.

Li Yang, Vice President of the Chinese Academy of Social Sciences (CASS), said there is no need to worry about the export sector's negative impact on the broader economy, which has become less dependent on net trade.

Investments

Investments in fixed assets climbed 24.5 percent year on year to 26.95 trillion yuan ($4.3 trillion) in the first 11 months of this year. The growth rate was 0.4 percentage point lower than that during the first 10 months.

Industrial output

The value added of industrial enterprises above a designated size—annual sales revenue exceeding 20 million yuan ($3 million)—grew 12.4 percent in November, compared with 13.2 percent in October. The growth rate for the January-November period was 14 percent.

Industrial value-added output measures the final output value of industrial production, or the value of gross industrial output minus intermediate input, such as raw materials and labor costs.

All 39 sectors reported growth in industrial value added in November. The best performers were non-metal mineral products and chemical materials and chemical products, which increased 16.8 percent and 14.5 percent, respectively.

Retail sales

Retail sales of consumer goods totaled 1.61 trillion yuan ($254.34 billion) in November, an increase of 17.3 percent from a year earlier. The November figure brought the amount in the first 11 months to 16.35 trillion yuan ($2.58 trillion), up 17 percent.

Fiscal revenue

China's fiscal revenue stood at 645.73 billion yuan ($102.01 billion), up 10.6 percent year on year, 6.3 percentage points lower than October, according to data from the Ministry of Finance.

The slowdown was largely attributable to macro-economic gloom, personal income tax reform, as well as falling property transactions and auto sales.

The November figure brought the amount for the first 11 months to 9.73 trillion yuan ($1.54 trillion), surging 26.8 percent.

Auto Downturn

China's once-feverish auto market is struggling with a prolonged downturn resulted from economic slowdown and withdrawal of policy incentives.

Auto sales across the country totaled 1.66 million units in November, representing a slight drop of 2.42 percent year on year, said the China Association of Automobile Manufacturers (CAAM). Output in November came in at 1.7 million units, falling 3.41 percent from the previous year.

In the first 11 months, auto output and sales grew about 2 percent year on year to 16.73 million units and 16.82 million units, respectively.

Xu Changming, Director of Information Resource Department of the State Information Center, said the drop was within expectations.

"November and December are traditionally peak months for vehicle sales, but the gloom will continue in the coming months with the government rolling back some policy incentives," he said.

"In addition, the favorable tax policies attracted many potential buyers to showrooms in the past two years, leaving less demands for this year," said Jia Xinguang, analyst with China Automobile Industry Consulting Co. Ltd.

Despite looming uncertainties, the CAAM predicted that this year's total auto sales will surpass last year's 18.06 million units. The association also expected the market to grow 5-10 percent in 2012 as policy effect abates.

E-commerce Thrives

The Internet has become a hotbed for business in China, as the e-commerce sector blossoms.

The e-commerce transaction volume in the third quarter amounted to 1.8 trillion yuan ($284.36 billion), jumping 47.6 percent from a year ago, and up 9.1 percent from the previous quarter, said the Shanghai-based iResearch Consulting Group, in a recent report.

"The e-commerce market gained strength thanks to vibrant domestic and foreign trade, as well as strong online shopping activities," said the report.

"For the Mid-Autumn Festival and the Chinese Valentine's Day, a string of websites offered generous discounts to lure customers," it said.

During the July-September period, online shopping transactions totaled 197.51 billion yuan ($31.2 billion), soaring 73.4 percent from the same period of 2010.

The B2B platforms also fared well, with their combined revenues surging 40.3 percent year on year to reach 3.48 billion yuan ($549.76 million). Alibaba.com dominated the market, with a share of 53.8 percent, followed by Globalsources.com with a share of 11.6 percent.

Meanwhile, the third-party payment industry also burst with vitality. Its transaction value skyrocketed 130.7 percent year on year to 615.5 billion yuan ($97.24 billion).

In a bid to regulate the emerging sector, China's central bank has granted licenses to 40 third-party payment companies.

"The firms are expanding their presence into some new areas like manufacturing and energy sector," said the report. "In addition, instead of providing sheer payment services, they are offering a set of solutions, including guarantees and payment settlements."

Competitive Edge

China's industries remain the most competitive in the global market, but they face daunting challenges due to global economic downturn and domestic costs inflation, said the Annual Report on Industrial Competitiveness of China, recently released by CASS.

Of all the 12 monitored sectors, the textile and garment industry is China's most competitive industry, and the eastern region remains the most competitive area, though its strength is weakening.

"Flagging world economy will mount pressures on China's exports," said the report. "Worse still, protectionism is exacerbating, putting Chinese exporters in a quandary position."

"A more structural problem is that the country's hi-tech industries still have a long way to go to catch up with Western competitors," it said.

"The service sector has been growing rapidly, but it would be difficult for it to expand global market shares," it added.

Zhang Qizi, a senior researcher at the Institute of Industrial Economics of CASS, said those structural flaws would present challenges for China as it tries to avoid the middle-income trap.

The middle-income trap is a concept that the strategies taken by a country to grow from low income to middle income are not enough to make them enter into the high-income group.

"The key is for the nation to launch strategic transformation and reduce reliance on labor and resource-intensive industries," Zhang said.