News@ChinabyNumbers

Trading of shares in Australian gas company Arrow Energy was halted today as speculation mounted that the $3 billion takeover bid by Royal Dutch Shell and PetroChina would be sweetened.

Shares will be halted until March 23 or until an announcement is made, Arrow announced in a statement. Arrow shares have risen 52% on the Sidney exchange since the offer was announced on March 8.

The deal would give Shell access to reserves to feed a liquefied natural gas project in Queensland, which would help supply rising Asian demand.

Shell and PetroChina may need to raise their bid price based on previous prices paid for coal-seam gas transactions. The two companies originally bid A$4.5 ($4.14) per share for Arrow, but analysts said that they will likely have to increase their bid to A$5 per share to be successful.

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Beijing has agreed to re-allow American pork imports into China, according to statements by the US Trade Representative's (USTR) office.

US pork imports were banned in China last year following an outbreak of swine flu.

China is the world's largest producer and consumer of pork, and China was the seventh-largest export market for American pork and pork-variety exports prior to the ban.

Exports in 2008 were $275 million.

China agreed to end the ban in principle last October. The USTR welcomed the news and said resuming trade in US beef is next on the agenda.

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An investor consortium including Capital Group and Blackstone Group has invested $600 million in China Shouguang Agricultural Product Logistics Park, according to a source familiar with the deal.

The consortium has taken a combined 30% stake in Shandong-based China Shouguang prior to the planned $700 million initial public offering in Hong Kong planned by China Shouguang's parent, Dili Group Holdings. The investment in agricultural logistics come as demand for Chinese fruit, vegetables and by-products are set to increase both domestically and abroad, driven in part by rural-to-urban migration.

China Shouguang expects the center's annual trading volume to reach 10 million metric tons after completion.

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Vice Commerce Minister Zhong Shan warned yesterday that any increase in the renminbi exchange rate risks driving Chinese exporters out of business.

Zhong said that while most exporters were able to absorb the appreciation of the renminbi that occurred in 2005, others were forced to close. He said that the profit margin on many Chinese exports is lower than 2%, and that even an incremental change upwards would produce "fundamental changes" to the condition of China's exporters.

"Water doesn't boil if it is heated to 99 degrees Celsius," he said. "But it will boil if it is heated by one more degree." Zhong's comments were derided as "classic protectionism" by an aide attached to the US senate's Democratic leadership.

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Xiao Chen, Microsoft MSN China's Vice President of Sales will leave the company at the end of March to pursue his own start-up.

Chen has been with the company since its founding, and his departure is expected to deal a blow to Microsoft's efforts to penetrate China's online social networking space.

MSN China was launched in 2005 using a joint venture structure, but has struggled since against QQ, China's most popular instant messaging service operating by Tencent Holdings.

MSN China lost face last year when its micro-blogging site, Juku, was accused of pirating code from a competitor.

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China Mobile reported yesterday that profit growth in 2009 slowed to 2.3% from 30% in 2008 and that will cut capital spending over the next three years to maintain profitability.

Earnings growth has been slowed by increasing competition for China Unicom and China Telecom.

High expenditures on marketing and depreciation for third-generation mobile services (3G) will also put downward pressure on profits.

China Mobile Chief Financial Officer Xue Taohai also said that low-income subscribers in rural areas and mobile tariffs are also trending down.

Net profit for the 12 months ended December 31 was $16.87 billion.

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China's State-owned Asset Supervision and Administration Commission (SASAC) told state-owned enterprises (SOEs) dabbling in real estate to prepare to exit the market.

With the exception of 16 SOEs which are pure real estate developers, 78 other enterprises under SASAC supervision are to speed up restructuring and withdraw from the property sector. The move is an attempt to curb rising property prices, which has been aggravated in some cases by the willingness of SOEs to bid for prime projects, but analysts question whether the move will have much impact on prices.

Meng Qi, a market analyst with brokerage Century 21 said that the SOEs under SASAC are not major real estate players anyway: He pointed out that SOEs' income from real estate only accounted for 5% of the national total.

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Hyundai Heavy Industries, the world's largest consumer of steel plate, may cut back purchases from China for the first time in five years.

Management said it will build fewer vessels in the near future and is also considering redirecting its purchases to a new Korean mill.

"It's not like Chinese steel plates are cheaper than those from Korea or Japan," said Hyundai Heavy Chief Operating Officer Kang Chang June.

New furnaces built by Korean plate producers Posco and Dongkuk Steel Mill are expected to boost Korean production capacity by 37%, but overall usage of steel plate may decline due to a drop in ship orders.

Last year Hyundai Heavy and its affiliates used nearly 25% less steel plate than originally projected.

The increased production combined with continued damp demand for steel plates are expected to squeeze the margins of Chinese mills, which are also expanding.

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The trial of four Rio Tinto employees charged with stealing commercial secrets and taking bribes will begin on Monday in Shanghai.

Stern Hu, an Australian citizen who was Rio Tinto’s chief iron ore negotiator in China, and three Chinese colleagues – Liu Caikui, Ge Minqiang and Wang Yong – were detained nine months ago, initially accused of the more serious crime of stealing state secrets. The charges were later downgraded and the case was handed to state prosecutors in January.

If convicted, the four face a fine and a maximum jail term of seven years on each charge, subject to a total of 20 years.

The detentions have strained Sino-Australian relations and added a new twist to the already contentious price negotiations between the major global iron ore suppliers and Chinese steelmakers. Coincidentally, Rio Tinto CEO Tom Albanese is due to address the China Development Forum in Beijing on Monday.

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The World Bank raised its China growth forecast for 2010 from 9% to 9.5%.

However, the report also warned about inflationary pressure and asset bubbles in real estate (although two of Hong Kong's biggest real estate developers in the mainland said prices will not plunge this year).

"China's macro stance needs to be tighter than it was in 2009," said World Bank economist Louis Kuijs.

Analysts expect Beijing to raise interest rates soon as it prepares to exit from the stimulus, but the government has said that lending will remain loose so long as the global outlook remains unclear.

The bank said that trade and household consumption in China should continue to grow strongly as the stimulus is withdrawn.

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