The meaning of the term "Big Oil" has changed overnight, as state-controlled PetroChina became the first company worth more than $1 trillion, tripling its value Monday in its debut day on the Shanghai Stock Exchange and making it by far the largest company in the world. Analysts are puzzling over whether this cash infusion will transform the energy scene and the role of China in the world economy or whether the Asian market is caught up in an irrational exuberance that will make the dot-com bubble seem small. Here's a primer on PetroChina and what it might mean to you.

Just how big is PetroChina?
By market capitalization, it is now worth more than the two previous global corporate front-runners, ExxonMobil and General Electric, combined. A unit of the state-owned China National Petroleum Corp., PetroChina is unquestionably China's biggest oil producer. But PetroChina makes only one quarter of the revenue that Exxon rakes in, and it also has slightly less in oil and gas reserves—an important factor investors consider when they weigh an oil company's future prospects. Significantly, though, PetroChina's reserves have been growing at about 5 percent a year in recent years, outpacing those of Exxon and other oil giants.

What does PetroChina plan to do with all that money?
It's no secret. This year, PetroChina has announced a string of oil and natural gas discoveries and projects. Just two weeks ago, the company announced a major gas field in the northwest Xinjiang region. Earlier this year, PetroChina said it would spend $5.2 billion by 2012 to develop the nation's biggest oil discovery in almost a half a century—the Jidong Nanpu field in northern China's Bohai Bay area. The Chinese government, concerned over China's growing foreign-oil dependence, has been pressing its oil companies to spend more on exploration and development. PetroChina is showing results. But it needs money to turn those discoveries into fuel.

Will a cash-infused PetroChina transform the world oil market and ease spiraling crude prices?

That remains to be seen. It is true that if PetroChina were successful in producing more oil for the fast-growing Chinese economy, it would ease the stress on the world market. But PetroChina faces a lot of pressures that its rivals in capitalist countries, like ExxonMobil, don't have to worry about. One of the most significant: Chinese government price controls keep gasoline prices artificially low, so PetroChina's refinery business loses tens of millions of dollars per day. It is not clear whether the company has the strength to carry out its big plans.

What does Warren Buffett think of PetroChina?
The legendary billionaire investor once owned 11 percent of PetroChina through shares traded on the Hong Kong market, but this summer and fall, Buffett's Berkshire Hathaway systematically sold its entire stake. It had appreciated to $3.3 billion, up from an original $488 million. Bad market timing for Buffett? Perhaps. But Buffett had said that the market had become "too hot," and though he wrote a letter to Jiang Jiemin, PetroChina's chairman, thanking him for doing a "terrific" job for shareholders, the time had come to get out.

What's all this about PetroChina and Darfur?

PetroChina's massive initial public offering comes near the end of a year when human rights activists have been ramping up a campaign for divestment in PetroChina as a means to pressure the Sudanese government about the bloody conflict in Darfur. PetroChina's parent, CNPC, is the largest player in Sudan's oil and natural gas industry. The activists say the oil money has helped prop up a regime that has been accused of sponsoring brutal militia campaigns in the western Darfur region, which President Bush has called a "genocide."

Activists initially took credit when Buffett sold his PetroChina stake, and also earlier this year, when Fidelity Investments sold 90 percent of its 4.5 million PetroChina shares traded on the New York Stock Exchange. But both Buffett and Fidelity said their decisions were based purely on financial considerations. Although the IPO's success suggests that the activists haven't exactly dampened investor interest in PetroChina, questions over China's role in Sudan are likely to continue. And PetroChina is a bigger target for protest than it's ever been before.

Sources: U.S. News & World Report

Millions of young Chinese are embracing the internet as a discreet space for their thoughts and emotions - almost five times as many Chinese as Americans surveyed said they have a parallel life online (61% vs. 13%) - according to a survey of Chinese and American youth released today by IAC and JWT.

Fewer than half of the 1,079 American respondents agreed that “I live some of my life online” (42%), a sizable majority of the 1,104 Chinese respondents agreed with the statement (86%). The two random online surveys polled 16- to 25-year-olds.

The “Young Digital Mavens” study aimed to explore how attitudes toward digital technology are changing among Chinese and American youth at a time when people are spending less time with traditional media and more with interactive technology.

China’s ballooning online population, estimated at 137 million, is now second only to that of the US (165-210 million Americans, according to a July 2007 report from the Pew internet & American Life Project).

The study found a large majority of youth in each country now feels dependent on digital technology, but that attitude is especially pronounced in China:

*As many as 80% of Chinese respondents agreed that “Digital technology is an essential part of how I live,” compared with 68% of Americans.
*The internet is such a vital part of life for Chinese youth that they are twice as likely as young Americans to say they would not feel OK going without internet access for more than a day (25% vs. 12%).
*And more than twice as many Chinese youth admitted they sometimes feel “addicted” to living online: 42% vs. 18% of Americans.

“The Chinese people seem to be way ahead of Americans in living a digital life,” said IAC Chairman and CEO Barry Diller in Beijing, where he spoke to more than 350 Chinese students at Peking University. “More activity online means a more connected and a more evolved workforce - just what China needs as it makes its move from being the workshop of the world, to a developed economy in its own right.”

Test-Driving Freedom and Identity

“For young Americans, the internet provides an incremental increase in the huge range of options they enjoy in life, but for young Chinese it represents a steep increase in choice - and this is reflected in the strength of Chinese response to questions about opinions and interactions online,” said Tom Doctoroff, JWT’s CEO of Greater China and Northeast Asia area director.

Chinese respondents were four times as likely as Americans to agree that things online often feel more intense than things offline (48% vs. 12%). This feeling was more prevalent among Chinese men than women (52% vs. 43%), likely reflecting the fact that men were more likely to describe themselves as “dedicated gamers” (27% vs. 19% of women).

Young Chinese of both genders, however, are likely to find emotional stimulation and release online: 61% of both male and female respondents agreed that “I have felt strong emotions (e.g., anger, compassion) prompted by online interactions”; this compares with 47% of young American men and women.

While the internet provides an outlet for young people everywhere who are testing out different identities as they seek to discover themselves, this is especially true in China, where it allows more scope for experimentation than life offline:

*More than twice as many Chinese respondents agreed that “I have experimented with how I present myself online” (69% vs. 28% of Americans).
*More than half the Chinese sample (51%) said they have adopted a completely different persona in some of their online interactions, compared with only 17% of Americans.

Such experimentation is contributing to the development of self-awareness among Chinese youth. Far more Chinese than Americans agreed, “Online interactions have broadened my sense of identity” (66% vs. 26%) and “Online interactions have made me more self-aware” (60% vs. 26%).

Finding Real Community Online

The communication and community that interactive technology facilitates has a stronger appeal for Chinese youth than for young Americans. For example, more than three-quarters (77%) of the Chinese sample agreed that computer/console games are much more fun when played against others online, compared with one-third of Americans.

While fans of virtual communities are in the minority in both countries, “second-lifers” (those who agreed that “I feel more real online than offline”) account for just 4% of the US sample compared with 24% of Chinese respondents.

While many Westerners debate whether online experiences and relationships are “real,” far fewer Chinese have doubts:

*As many as 82% of young Chinese agreed, “Interactivity helps create intimacy, even at a distance,” compared with just 36% of young Americans.
*Almost two- thirds (63%) of Chinese respondents agreed that “It’s perfectly possible to have real relationships purely online with no face-to-face contact,” vs. 21% of Americans.

These relationships are fundamentally changing the way Chinese youth interact with each other:

*Fewer than a third of Americans (30%) said the internet helps their social life, but more than three-quarters of Chinese respondents (77%) agreed that “The internet helps me make friends.”
*Moreover, three times as many Chinese as Americans (32% vs. 11%) were willing to admit that the internet has broadened their sex life.
*As many as 54% of Chinese said they had made or heated up dates using text messages, compared with 20% of Americans.
Free Speech Very Free Online

In the United States, fewer than half of Americans (43%) agreed, “I often use the internet to find the opinions of others or to share my opinions.” By contrast, in China, where culture and political environment place less emphasis on personal views, almost three-quarters (73%) of Chinese respondents said they go online to share opinions.

Chinese respondents were also more likely than Americans to say they have expressed personal opinions or written about themselves online (72% vs. 56%). And they have expressed themselves more strongly online than they generally do in person (52% vs. 43% of Americans).

Chinese respondents were almost twice as likely as Americans to agree that it’s good to be able to express honest opinions anonymously online (79% vs. 42%) and to agree that online they are free to do and say things they would not do or say offline (73% vs. 32%).

“One of the biggest differences between American and Chinese youth is in attitudes toward anonymity,” said Doctoroff. “In the US, with its cult of celebrity, young Americans see the internet as a way of getting known, of building their personal brand; many regard the internet as a kind of personal broadcasting medium. But whereas publicizing your name, face and opinions is seen as a step toward success in the US, in China it has been a surefire way of veering into dangerous territory. So for young Chinese, the internet is the ideal place to air opinions and hear what others think without crossing the line.”

About the study: In both China and the US, random online surveys polled respondents aged 16-25. The US portion, which included 1,079 respondents, was conducted Nov. 9-14 using SONAR, JWT’s proprietary research tool. In China, Millward Brown surveyed 1,104 respondents Nov. 9-15; the survey was conducted in Chinese. The US data set was weighted to balance the number of males and females surveyed; the China data set was weighted to balance out age-distribution differences with the US sample.

While the US sample is representative of America’s youth, the Chinese sample is weighted toward the young elite: Only about 10% of the Chinese population is online, largely young, urban and educated males.


Source: MarketingCharts

The money flowing from China into global equity markets could tally as much as $246 billion next year, with markets in Hong Kong and South Korea expected to benefit the most, according to HSBC Global Research.

"The great wall of Chinese money could be about to arrive," HSBC strategist Garry Evans wrote in a research report Friday. HSBC says it reached the $246 billion figure using a formula that assumes China's foreign-exchange reserve expanding at between $30 billion and $40 billion a month, while appreciation of the yuan would be held to 7% against the U.S. dollar. The formula assumes that little of the money will head into global bond markets as the yuan appreciates rapidly and U.S. Treasury yields decline.

Chinese authorities have approved about $40 billion in outflows under the government's qualified domestic institutional investor scheme, comprising allocations granted to banks, mutual funds and insurance companies, HSBC wrote in the report. About $20 billion of those funds have been invested so far, mostly in Hong Kong stocks.

To manage the value of its currency, China maintains strict controls on the flow of funds into and out of the country. Institutions wishing to invest funds abroad must seek approval from state authorities.

HSBC said that next year Chinese authorities will likely approve $10 billion in overseas investments to mutual funds each month, while $67 billion will be invested through China's sovereign wealth fund, or China Investment Corp., and $27 billion will come from the "through train" investment scheme, which is likely to come into effect during the second half. Fund outflows that have been approved but not yet utilized will make up some of the remainder.

Hong Kong is likely to remain a favored investment destination for Chinese fund outflows next year, with HSBC expecting it will receive about $94 billion.

Investment in the former British colony should taper off around that mark because of Beijing's guidelines, which limit investment by a fund in any one market at 30%.

Some of the remaining $153 billion will head in to South Korea, said Evans. Chinese fund managers he met during a recent trip to Beijing expressed strong interest. HSBC's estimates contain rounding errors and may reflect the bank's attempt to provide approximate figures.

"There are cultural affinities between China and Korea," Evans wrote. "Seoul is only a one-hour flight from Beijing, and this is one market that is easy for foreign institutions to access."

Other beneficiaries are likely to include Chinese stocks listed on exchanges such as Singapore. China Aviation Oil, Evans said, is an example of just five Chinese stocks listed in the city-state with a market capitalization above $1 billion.

Foreign stocks benefiting from Chinese growth in an indirect way, such as Singaporean property group CapitaLand Ltd. and Australian resource firms, are also expected to be targeted by mainland fund managers, the report said.

Evans said many of the China fund managers he spoke with had few plans to channel funds into U.S. or European markets for the time being.

"They felt they needed more to study these markets more extensively before making any investments," Evans wrote in the report.

So far this year, foreign investors have channeled $18 billion into Indian equities, $6 billion into Taiwanese stocks, $3 billion into Thailand, and been net sellers in South Korea, according to HSBC.

Source: MarketWatch

China's growing economic might is fuelling massive demand for foreign oil, but record crude prices are proving a major burden for both the government and consumers.

In the latest in an Al Jazeera series on China, Melissa Chan reports from Beijing on the challenges soaring prices and rising demands pose.

China's transport network is crucial in keeping the country's economy rolling along.

Trucks take products from the factories to the ports, from where they sail to the rest of the world.

But there is a problem that is slowing down this process so imperative in keeping China's economy going - the higher cost of fuel.

China faces an international high price on crude oil, but officials keep petrol prices artificially low.

That creates its own set of problems, which have the potential to affect the flow of traffic and therefore the flow of commerce.

Price controls

Oil refineries do not have much incentive to produce fuel if the profit margin is low or if it would bring them losses.

So they have stopped producing diesel, and China's trucks now wait in long lines at filling stations.

"The same route that took me two days, now takes five. I can't find enough diesel," one driver says.

"It's my company's truck, so I don't know the details. But, of course there has been an effect on our business," another says.

The lack of diesel means that goods manufactured for the foreign market are taking longer to hit the shelves.

China needs to take a closer look at its price control policy on fuel, walking a fine line between international market pressures and keeping its people happy.

"For price reform one major rule is to give the international market rate a quick response. Now, for import oil, it accounts for 50 per cent of the market," Yang Fuqiang from the Energy Foundation says.

"Before, it was a small portion, so the Chinese central decision makers did not pay attention to the international oil market. Now they have to."

What is happening in China is likely to have a noticeable effect on the movement of manufactured goods.

Which means that this Chinese issue is something everyone should keep an eye on.
 
Sources: Al Jazeera

A top European Union trade official urged China on Monday to make product safety a priority and do more to regain consumer confidence, prompting an angry response from Beijing.

China's growing importance as a global exporter has put its troubles with product safety under intense scrutiny after a series of scares over tainted goods, EU Trade Commissioner Peter Mandelson said.

"Some Chinese officials pointed out that less than 1 percent of China's exports to Europe had alleged health risks. But Europe imports half a billion Euros ($750 million) worth of goods from China every day, so even 1 percent is not acceptable," Mandelson said at the opening of an international food safety forum in Beijing.

His comments angered Vice Premier Wu Yi, who heads a Cabinet-level panel to improve China's product safety. "I am very dissatisfied with Peter Mandelson's speech," Wu told reporters after the opening ceremony, without elaborating.

China has struggled to convince foreign consumers it is a safe manufacturer and exporter after discoveries around the world of potentially dangerous levels of chemicals and toxins in some Chinese products, from toothpaste to fish.

It launched a four-month nationwide safety campaign in August and has repeatedly promised more stringent regulations, inspections and enforcement, especially for a multitude of small and illegal enterprises that form the core of the food industry.

Mandelson said he had seen "a very positive set of moves."

"But it is a long and meticulous process and ... China's partners will be watching very closely," he added. "Restoring and then maintaining consumer trust and confidence in Chinese products must be China's priority if it wants to maintain the export growth rates of recent years."

The two-day food safety conference drew delegates from the United States, Canada, Australia, Malaysia, Thailand and Japan.

Wu, who also spoke at the forum's opening, said China was "willing to make greater efforts, together with countries in the world, to maintain food safety."

She said enhanced reporting and monitoring, greater international cooperation and better media management would improve China's record.

Mandelson said about half of the 1,000 safety violations registered last year by the EU's monitoring system were for nonfood products made in China.

Chinese exports made up 9 percent of food products that were flagged, including honey, peanuts and genetically modified rice, he said. The numbers were expected to go up this year, he said.

Along with food safety, tensions have risen over China's ballooning trade surplus with the EU — the world's largest consumer market with 490 million people.

Beijing has accused the EU of using safety concerns as a pretext to protect its own producers, an allegation Mandelson called "unfounded."

"I strongly reject the argument that strong consumer rules are trade protectionism," he said.

He said fixing product safety problems depended on tackling the widespread counterfeiting of products in China, where bogus goods ranging from movies to bags and even food are widely sold.

Eight out of 10 fake products — including medicines — seized at Europe's borders are made in China, he said.

"China will never properly tackle the issue of product safety without addressing the tidal wave of counterfeit goods. This is a war that China must win," Mandelson said.
  
Sources: The Associated Press