Commodity Online
BEIJING: Certain development in China in the past few days raises hopes that indeed the 4 trillion yuan China stimulus package may have started working. On Wednesday the Chinese equities closed 1.47% up at 2408 points while it rose 0.72% on Thursday to stand at 2425 points setting a new record since August last year.

China Gezhouba Group Co, one of the largest engineering and construction companies that built the massive Three Gorges Dam in China, announced that it had received a total of 11.68 billion yan worth of orders in the first quarter of 2009 accounting for 40 % of the yearly target, the China Daily reported.

Nearly 50 percent, or 5.77 billion yuan, worth of projects came from hydropower plants, its core business, the company said in a statement.

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The Wuhan-based construction company recorded 19.4 billion yuan in revenue last year, up 61 percent from a year earlier, boosted by its overseas business surge, it said in its earnings report last month.

The company, which has diversified its business into areas such as cement and power, aims to chalk up 22.7 billion yuan in revenue this year. The construction firm, however, said its overall profitability "could be sustained" against the backdrop of the country's 4-trillion-yuan economic stimulus package, which it said would boost demand for construction and engineering projects.

Meanwhile, analysts pointed out that the Chinese equities rally could be taken with a bit of caution as it has tracked the rally in Wall Street while turnover is still lower than that of February. On Wednesday,the Shanghai Composite Index gained 34.81 points, or 1.47 percent to 2,408.02. The Shenzhen Component Index rose 174.06 points, or 1.94 percent to 9,156.01. Coal shares boosted the index up, as there were reports Monday that the government might consider raising the coal price by 4 percent.

Even as there are isolated reports that show that stimulus package may be working, certain other corporate reports aren’t so encouraging. For example, China's top 100 retail chains recorded slower sales growth last year and the increase in store numbers was the lowest in a decade, China Chain Store & Franchise Association said on Thursday.

The total sales volume of top retailers rose 18.4 percent from a year before to 1.20 trillion yuan (US$175.6 billion) in 2008, accounting for 11.1 percent of the country's total retail sales. The number of retail stores reached 120,775, up 10.6 percent on a year by year base, the lowest growth in ten years, according to CCFA.

In February, China's Cabinet approved a stimulus plan for the textile business, one of the country's pillar industries most seriously affected by the global financial crisis. The government had raised the tax refund rate for exported textiles and clothing to 15 percent, 2 percent below the expected 17 percent.

It is still too early to guage the impact of the move on manufacturer confidence in China and how far that will address the key problem of insufficient demand due to recession.