China this week

The fight for market share in China between the world's two largest aircraft manufacturers has been heating up as demand for new aircraft in the country has reached new highs. The growth in the aviation industry is expected to remain red hot though as China readies for the 2008 Olympics in Beijing and 2010 World Expo in Shanghai. As long as the economy continues to expand at the current blistering rates, industry experts believe that the demand for new aircraft will be growing rapidly as well. This growth will likely make China the world's second largest aviation market within ten to twenty years.

Naturally both Boeing and Airbus view China as a tremendous source of future revenue growth and are therefore making tremendous efforts to win valuable new contracts and are fighting for even more valuable relationships. With both airlines set to release new aircraft models in the next few years, this competition has perhaps never been fiercer than it is today.

Airbus is certainly celebrating its newest deals on the mainland which Airbus Chief Executive Officer, Noel Forgeard, ...more

The first private airline in China is set to begin operations later this year as it becomes the first challenger to the state's monopoly in the airline industry. The industry is currently controlled by three large state controlled airlines, Air China, China Eastern, and China Southern in addition to numerous regional airlines controlled by provincial level authorities. While these state-controlled airlines still dominate the Chinese market, the industry has gone through substantial changes in recent years, which has seen wide-spread consolidation with the goal of building stronger airlines. The entrance of private airlines into China's aviation industry will likely speed up these changes in the industry and help build even stronger airlines by increasing competition.

Three private airlines were granted regulatory approval from the Civil Aviation Administration of China in May of this year. The first of these airlines, Okay Airways, is expected to be given final approval by November 20 of this year and begin operations before the end of the year.

Okay Airways is headquartered ...more

The National Basketball Association ended its first trip to China this weekend after the Sacramento Kings beat the Houston Rockets in Beijing to even up the preseason China games. The Kings' win in Beijing followed up their loss to the Rockets last Thursday in Shanghai in what was the first NBA game ever in China and the first time an NBA team played on the mainland in twenty-five years.

Although the games were only preseason games, the level of excitement at both games was much more like a playoff game. Sunday's game in Beijing saw the Kings' Bobby Jackson hit a jumper with 6.7 seconds left on the clock to beat the Rockets 91-89 in front of 17,000 fans. In Thursday's game in Shanghai, the Rockets were able to edge out the Kings with their own two-point victory, 88-86.

While both teams ended up being winners and losers over the two-game China trip, the NBA and host of corporate sponsors that accompanied them, feel that bringing the games to China will be a winning situation for everyone involved.

The NBA in fact, has seen China as a potential key market for quite some time. ...more

Faced with an energy crisis, China has developed plans to substantially increase its nuclear energy generating capacity over the next fifteen years. The country currently relies on nuclear power for only 2 percent of its energy supply, however it is looking to raise the reliance on nuclear power as it quadruples its nuclear generating capacity to 32,000 megawatts by 2020.

To get this process moving, the government recently announced its intentions to spend US$8 billion to purchase four foreign nuclear reactors. As a result, the world's leading nuclear technology companies have been lobbying to be selected as a provider of one if not more of these nuclear reactors. While the U.S. has historically been very cautious of the nuclear technology it shares with China, the government is moving ahead with regulatory approval to allow Pittsburgh-based, Westinghouse Electric Co., to provide China with some of the desired nuclear energy technology.

British-owned, Westinghouse Electric Co, first applied to build two of its 1,100 megawatt next-generation AP1000 nuclear reactors in February ...more

The international price of oil rose to over US$55 per barrel this week continuing a trend that is beginning to cause supply issues on domestic oil markets. The center of the problem is the state controlled oil pricing system which remains fixed well below the price on world markets. Since about 40 percent of China's oil is imported, the margin on selling this oil has gone down tremendously. In fact, it has been reported that wholesale diesel is actually selling above the government controlled retail price. As a result refiners in China have been forced to curb the amount of oil they produce.

Speculators on the market are also increasingly becoming a problem. Distributors, in hopes that the government will soon raise the domestic price of oil, have been stockpiling oil supplies, further exacerbating the problem. In Beijing, speculators are even making bets on the retail market. Recently the number of gas coupons sold by the China National Petroleum Corporation (Sinopec) has risen dramatically. Sinopec sells these gas coupons which for the price of gas today can be redeemed for gas ...more