BizChina

Frequent readers of my “Frank Talk” blog and the weekly Investor/Advisor Alert should be familiar with the story of China’s high speed rails. We’ve previously discussed how China is building the world’s largest network of high speed rails at an incredible speed.

Since opening the first high speed line between Beijing and Tianjin in 2008, the country has laid down more than 4,600 miles of new tracks. This is three times more than Japan, where the bullet train was invented, and this is just the start. Once completed near the end of this decade, the high speed rail system will connect more than 250 Chinese cities, span 18,641 miles and reach roughly 700 million people.

Currently, the high speed rail network connects about one-third of China’s cities. That figure is set to nearly double over the next two years. If current forecasts hold true, 100 percent of the China’s cities will be connected through high speed rails by 2019.

China's first rare earth spot exchange will be established as early as August this year and will be led by Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co, the country's top rare earth producer.

Analysts said a nationwide exchange could help build a unified rare earth pricing mechanism in the country.

Rare earths are used in the manufacture of magnets that have a wide range of applications, from electric motors to disk drives, and demand for them is soaring worldwide.

"Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co will be one of two corporations designated by Baotou's municipal government to set up a rare-earth exchange in the city," said the company in a filing with the Shanghai Stock Exchange Wednesday.

Gold imports by China, the world’s second-largest consumer of the precious metal after India, may increase as record jewelry demand outpaces domestic supply, the World Gold Council said.

China produced 340 metric tons of gold last year and consumption was about 700 tons, leaving a gap of 350 tons to 360 tons, Albert Cheng, Far East managing director at the council, said yesterday. “With increasing demand in China we will have to rely on imports to fill the gap between demand and supply.” China is the world’s largest gold producer.

Demand for gold jewelry gained 21 percent in the first quarter from a year ago to 142.9 tons, the highest level ever, and China became the largest investment market, the council said. Bullion jumped to a record $1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.

Most China stocks fell, led by utilities and industrial companies, on concern government controls on electricity prices amid power shortages will hurt economic growth.

Huaneng Power International Inc. fell to the lowest level in three weeks after the China Securities Journal said a nationwide price increase is "unlikely." A gauge tracking industrial companies in the CSI 300 Index slid to a four-month low on concern power shortages will hurt production. Industrial & Commercial Bank of China Ltd. and China Vanke Co., the nation's largest developer, advanced on speculation their share prices were undervalued relative to their earnings prospects.

"Power shortages are a major problem that may drag China's economic growth for the short term, as it will restrict manufacturers' production and increase their operating costs if prices rise in some areas," said Mei Luwu, a Shenzhen-based fund manager of Lion Fund Management Co., which oversees more than $7.8 billion. "Some low-valuation stocks like banks and developers offer buying opportunities for long-term investors who are building up allocations."