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Metal Casting Technologies : December 2007
METAL Casting Technologies December 2007 27 reported recently that data compiled by statisticians in China, Hong Kong and the US all show that, after at least five years of deflation, Chinese export prices have begun to creep up over the past 18 months. Reports have said that manufacturers are raising their average selling prices and feel confident they can pass on any future cost increases. Pricing power has returned to a number of industries due to consolidation, the closure of smaller producers with poor environmental and safety records and natural attrition over the past half-decade, when many manufacturers faced severe margin compression. According to one index compiled by the US Bureau of Labor Statistics, the price of Chinese exports has risen 1.5 per cent since February. This may be specific to the large manufacturing clusters such as Hong Kong's Pearl River Delta hinterland or the Yangtze River Delta around Shanghai, which have been experiencing increasing labour and raw material costs. Given the price pressures in these regions, a number of inland manufacturing hubs are emerging, such as southern Jiangxi province, generally poorer and more cost-efficient than its coastal counterparts. This may initiate a shift in some of China's rural economies, where the Town & Village Enterprises (TVEs) producing cast metal products, coking, bricks and cement have experienced rapid expansion of output in recent years but neither technological change nor energy efficiency improvements. TVEs in these sectors are quite unlike the later TVEs that were designed to serve competitive regional markets, mostly in the south and eastern coastal areas that operate within the network of offshore Chinese capital in global textile and appliance markets. These differences are evident in their scale, governance, energy efficiency and demand characteristics producing low quality products for local, mostly rural markets, often using outdated, high energy use equipment. The building materials, coking and metal casting sectors provide key inputs to China's economic development and have been a major contributor to China's economic growth over the last 20 years. TVEs provide more than half of the total output from these sectors. The proportion of casting produced by Township & Village Foundries (TVFs) could be as high as 65 per cent of total national output according to a case study by academics at the Energy Environment Economy Institute in Tsinghua University (published in Global Energy Issues in 2004). TVEs in these sectors account for one sixth of China's total emissions of CO2. In 1995, there were about 22 million TVEs covering all sectors in China, employing 129 million people. There are estimated to be 23,000 TVFs in China, with an output of around 6.6 million tons (2001). A typical, average investment could lead to a reduction of 2,000 tons of CO2 per year.