--- SEARCH ---
WEATHER
CHINA
INTERNATIONAL
BUSINESS
CULTURE
GOVERNMENT
SCI-TECH
ENVIRONMENT
LIFE
PEOPLE
TRAVEL
THIS WEEK
Learning Chinese
Learn to Cook Chinese Dishes
Exchange Rates
Hotel Service


Hot Links
China Development Gateway
Chinese Embassies

Psychological Factor Causes the Oil Price Surging
Business people in China spent their day on yesterday in a similar mood to that of their peers in other parts of the world.

With sympathy in their hearts for the lives lost in New York, they have to face declining stock markets, surging oil prices and possible uncertainties that may come with the tragedy in the United States.

"Like other people around, we were very sorry for the dead. We know thousands of people were working there in the (attacked) buildings," said Liu Hongbo, a manager at an advertising company who visited the World Trade Centre last year as a tourist.

After the initial shock, players in China's economic and business circles also have begun to consider the ramifications of the terrorist attacks on their businesses.

Falling exports this year have made Chinese business people feel the chill of a slowing US economy. Now the crashes, which are expected to bring new difficulties to the US economy, may influence US-related transactions and plans ranging from trade and investment to Chinese companies' listing in the US stock market and the country's entry into the World Trade Organization, officials and experts say.

But many of them also think that the impact would be insignificant in the long term since the impact of the crashes on the US economy, which is still based on strong fundamentals, would be shortlived.

"The attacks have more influence on US politics and diplomatic relations than on its economy," Wang Zhile, a researcher with the Chinese International Trade and Economic Co-operation, said.

Wang said the US would soon resume normal economic activities and its involvement in international activities.

Trade and WTO

Vice-minister for foreign trade and economic co-operation, Sun Zhenyu, was quoted by media as saying yesterday that China's exports to the US market will decrease and China's overall investment and WTO entry will be affected.

Sun's fellow vice-minister for foreign trade, Long Yongtu, is now in Geneva completing the final legal documents concerning China's membership in the trade body. China originally expected to obtain the final approval of membership from WTO trade ministers in Doha, Qatar, in November, when they are scheduled to meet for negotiations to kick-off a new round of global trade talks.

There were concerns that the meeting might be postponed following the US tragedy.

US deputy trade representative, Jon Huntman, however, was reported to say in Hanoi yesterday that the he was confident that a new global trade round could be launched in Doha.

Oil trading

Oil shares on China's stock market outperformed the rest of the market on expectations of soaring oil prices.

"The attack provides the best chance for speculators to manipulate the market," said Chen Huai, an economist with the State Council's Development Research Centre.

This is not good news for China.

China imported 70 million tons of oil last year compared with 36 million tons in 1999, and oil imports are estimated to surpass 100 million tons by 2005.

But Zhu Xingshan, a professor with the Energy Research Institute of the State Development Planning Commission, said the elevated price would not last long, as the disaster did not influence oil production.

Industry officials said China has not changed its policy on crude and oil products trading and production following the terrorist attacks.

"There is no change in the oil import and export policies so far," an official with the State Economic and Trade Commission was quoted as saying.

Chinese oil products production at the two state oil giants, PetroChina and Sinopec Corp, will remain unchanged for the time being, company officials said.

An official at Sinochem, the State oil and petrochemicals trader, said the global rise of oil prices has been caused mainly by psychological influences.

Actual oil production has not been affected, he said.

Money matters

Chinese companies with listing plans for the New York Stock Exchange and investment banks helping them prepare for the listings are among the companies in operation that bear the direct brunt from the incidents.

Some Chinese companies may have to cut short their listing plans, although the "technical influence" of the tragedy on Wall Street will be limited, according to Shawn Xu, managing director of China International Capital Corporation (CICC), a joint-venture investment bank owned by Morgan Stanley and the China Construction Bank.

Xu said some Chinese firms are currently seeking stock offerings on the New York Stock Exchange. But he declined to give the number or the names of the applicants.

"If the pace of Chinese firms listing overseas slows down, our business may be affected," he said. "But at the moment, it's hard to make judgments (with precision)."

While reassuring that New York's position as a major financial centre of the world will not be rocked, "the psychological impact on investors will be tremendous," he said.

Investment banks such as Morgan Stanley and Merrill Lynch that have China operations said business must continue.

Morgan Stanley, the US-based stock brokerage which had 3,500 employees stationed at the World Trade Centre, said in a press release that its headquarters was not located in the building and "all our businesses in the Asia-Pacific region are fully functioning."

Merrill Lynch said it will proceed with a planned conference in Shanghai -- which some officials from major Chinese companies will attend -- today and tomorrow.

Safe assets

An official from the World Gold Council said the rising price of gold in the world market will impact the Chinese market.

Ronald Wang, an official from the council's China operation, said if the gold price continues to rise, there will be a shortage of supply on the domestic market.

The price of gold surged in Europe as nervous investors scrambled for safety in solid assets.

"As far as I know, many gold companies have suspended their gold material supply and are putting a close watch on the trend of the market," he said.

The world market outlook is unclear since the New York Mercantile Exchange, a large futures trade market, closed after the attacks, he added.

A manager of Beijing Guiyou Department Store's business department said the store's gold jewellery department has not felt any change and has not decided to lift the price so far.

Gold jewellery prices have been dropping on the domestic market ever since the State Development Planning Commission began relaxing its control on gold jewellery pricing on August 1.

IT industry

A spokesperson from chip maker Intel's China operations, said the attacks on the United States would influence its product supply due to transportation problems following the incidents.

As it is now the dominant chip provider in the market, the short supply will probably drive up the price of chip products.

Legend, Asia's top computer vendor, said the direct influence will be minor as its businesses are mainly within the Chinese mainland. But as a publicly listed company in Hong Kong, Legend worries that the economic environment will influence the performance of the stock market.

(chinadaily.com 09/13/2001)

Security Enhanced After the Terrorist Attack
Investors Buy Safe Assets After Attack on US
HK Flights to US Cancelled, Consulate Shut
Final Words From Hijacked Passenge
US Under Terrorist Attack
Print This Page
|
Email This Page
About Us SiteMap Feedback
Copyright © China Internet Information Center. All Rights Reserved
E-mail: webmaster@china.org.cn Tel: 86-10-68326688