Stuart Hoggard, Publisher

Data just in from China is quite astounding:
According to China Customs Authority, from January to March 2006 China imported 1,560,000 tons of plastic in primary forms.

This represented a value of US$2,956,949,000 (yes that is US$2.95 billion) which is a 15.2 percent increase over the same period last year!

Granted, this was plastic in primary forms, not all of which is destined for packaging.

Data for other packaging materials is equally staggering!

Paper imports increased by 20.2 percent while alumina imports were up by 39.9 by volume to 1,080,000 tons or $173,580,000 in the same period

Yet with expenditure of more than US$4 billion in material imports, in just the first three months of this year, China's trade surplus looks like it will hit a new high of somewhere between US$120 billion and US$130 billion by tear end according to estimates from Mr Bi Jingquan, the deputy head of the National Development and Reform Commission.

Which is quite a worry, and with the failure of the recent WTO talks, we can expect some more aggressive saber rattling coming out of Washington.

However, the Chinese are learning to play a smart game by talking-up the benefits of outsourcing/offshoring production from the US to China: A report by Morgan Stanley being widely quoted inside China shows that China's low-priced products have saved American consumers over US$600 billion over the last ten years and US$100 billion in 2004 alone!

China's low-priced products have saved American consumers over US$600 billion over the last ten years and US$100 billion in 2004 alone!

Internal economies of scale

While China’s positioning on the international trade agenda is evident and will become more so as the year progresses, what is less evident to those outside Asia are the massive strides being made in the domestic economy – which have a direct impact on packaging and materials demand.

Retail sales for April this year were up a respectable 13.6 percent over the same period in 2005, to reach US$ 72.3 billion (RMB 578 billion), according to a report from the National Bureau of Statistics.

Even after adjustments for the Lunar New Year, traditionally the season of spending and gift giving, the gain in April was the largest since March 2005 - though not the highest growth China has seen which was in May 2004 when it reached a record high of 17.8 percent, then fell as the government implemented curbs on lending and investment.

Government tax cuts and an increase minimum wages also helped boost consumer spending, benefiting retailers - for example Gome Electrical Appliances, a leading Chinese home-appliance retailer, announced that sales rose 68% in the first quarter of 2006.

Although the Chinese government measures have put money in more people’s pockets the main driver of this retail growth has undoubtedly been an extensive store-opening programme.

Let 70,000 supermarkets bloom!
In 2005 Chinese state-linked retailers quietly embarked on an expansion path.

Encouraged by Central Government to diversify beyond China’s 56 priority coastal cities, provincial government retail chains have been developing new outlets in rural areas.

According to the Ministry of Commerce, by the end of 2005, more than 70,000 supermarkets had been opened in rural towns and villages during the year!

According to the Ministry of Commerce, by the end of 2005, more than 70,000 supermarkets had been opened in rural towns and villages during the year!