China Revises Restricted and Prohibited Categories

The Ministry of Commerce (MOFCOM) and General Administration of Customs have jointly issued Announcement Nos. 121 and 122 [2008], revising the scope of the restricted and prohibited categories under processing trade effective February 1, 2009.

To maintain steady growth of China's foreign trade, a total of 1,730 products including textiles, plastic products, wooden products and metal products have been removed from the restricted category, accounting for 77% of the total in the restricted category. Meanwhile, 27 products including copper, nickel and aluminum are also removed from the prohibited category.

Details of the revised Prohibited Category (in Chinese), are available at:

For details of the revised Restricted Category (in Chinese), please visit MOFCOM's webpage at:

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In other news, the Purchasing Managers' Index (PMI) of China's manufacturing sector climbed 2.4 percentage points month-on-month to 41.2% in December 2008, according to the China Federation of Logistics and Purchasing (CFLP).

The index has been lower than 50% for three consecutive months. It was also the fifth time the index remained below 50% within last year after it fell to a record low of 38.8% in November.

The new monthly figure reflected the country's economy had further contracted, analysts said.

A reading above 50% suggests expansion, while one below 50% rings alarm for economic slowdown, said the group.

The PMI included a package of indices used to measure a country's monthly economic performance. China's PMI was conducted on the base of surveys directed at purchasing and supply managers of more than 700 manufacturers across the country.

Indices measuring new orders rose 5.0 percentage points to 37.3% in December. New orders for export rebounded by a slight 1.7% to 30.7% from the previous month.

The sub-index of output rose to 39.4%, up 3.9 percentage points. Purchasing prices were up 6.1 percentage points to 32.7%, the first increase after five straight months of significant drops.

Despite rebounds in most sub-indices, all indices, except the supplier's delivery time, were lower than 50%.

Of the 20 industries involved in the PMI calculation, only the beverage and pharmaceutical manufacturing industries were above 50%, while ten industries including non-ferrous metal smelting, chemical fiber and transport equipment manufacturing industries were under 40%, the CFLP said.

Zhang Liqun, a researcher with the Development Research Center of the State Council, China's Cabinet, said the PMI figure indicated the economy remained in the tank but the number of purchasing managers who were bullish on the economy was on the rise.

He said with previous macro-management policies taking effect, the economy would embark on a relatively fast growth track after the spring next year.

China unveiled an economic stimulus package in December with a total of 4 trillion yuan ($583.4 billion), equivalent to nearly 78% of last year's national fiscal revenue, to be invested in the next two years to boost domestic demand and improve people's quality of life.

China's ministries, agencies, and local governments have announced investment plans since the Cabinet announced the stimulus package.

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