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China to Step up Expansion of Party Organizations in Private Sector

At a national meeting on May 25, Zhou Bohua, the head and Party chief of the State Administration for Industry & Commerce (SAIC), identified some “blank spots” in the Party organization in the non-state sector, especially in single-person retail businesses, professional market places, and small and micro business. Zhou said that, as the next stage, SAIC will push forward the expansion of Party organizations in these areas.

According to the official statistics, 80% of China’s non-state enterprises and single-person retail businesses have yet to establish Party organizations. At present, China has 10.12 million non-state enterprises and 37.56 million single-person retail businesses, employing nearly 200 million people. The Party’s coverage of the small scale private enterprises is only 21%, with less than 1% coverage of single-person retail businesses.

For professional market places, where the merchants and entrepreneurs gather and trade, the state industrial and commercial authorities at different levels will dispatch instructors and liaisons to ensure they are covered by Party organizations.

Source: website of United Front Department, Central Committee of Chinese Communist Party, Mary 28, 2012
http://www.zytzb.cn/publicfiles/business/htmlfiles/tzb2010/S2012/201205/726532.html

Briefings | | |   Government/Politics

China’s State Bank Took Over U.S. Branch of Bank of East Asia

On May 9, 2012, days after high-level US-China economic talks took place in Beijing, the Federal Reserve approved an application from the Industrial & Commercial Bank of China (ICBC) to buy a majority stake in the U.S. subsidiary of the Bank of East Asia. The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States.

ICBC has total assets of roughly $2.5 trillion. It will buy up to 80 percent of the U.S. branch of the Hong Kong-based Bank of East Asia, which operates 13 branches in New York and California.

In other Fed board decisions, the Bank of China, the country’s third-largest bank, won approval for a branch in Chicago. The Agricultural Bank of China, the fourth-largest bank, is set to establish a branch in New York City, where it already operates a representative office.

Source: International Herald Leader under Xinhua, May 21, 2012
http://ihl.cankaoxiaoxi.com/2012/0521/40050.shtml

Briefings | | |   Economy/Resources

China Trains Ministerial-Level Officials from Developing Countries

According to People’s Daily, 14 officials from seven developing countries including Pakistan, Ethiopia, Fiji, and Sudan recently arrived at the China Executive Leadership Academy at Pudong, Shanghai, where they will receive a week long training. The Academy, an agency directly under the Chinese Communist Party’s Central Organization Department, is headed by Department chief Li Yuanchao, who is on the CCP’s 25-member Politburo. Among these students, six are ministerial-level officials. The 14 participants will be lectured about China’s political system, government structure, decision-making process, media, and mass communication. In addition, they will also take field trips to local communities and industrial parks.

Source: People’s Daily, May 17, 2012
http://cpc.people.com.cn/GB/164113/17908572.html

Briefings | | |   Geo-Strategic Trend

PLA Daily: Never Expect to Take Away Half an Inch of China’s Territory

On May 10, 2012, amid the heightened tensions between China and the Philippines over what is known as the Scarborough Shoal in English and Huangyan island in Chinese in the southeastern region of the disputed waters, People’s Liberation Army Daily, the official voice of Chinese military, published a commentary titled, “Never Expect to Take Away Half an Inch of China’s Territory.”

The article said, “We never tolerate any unreasonable embarrassment with blind patience, not to mention that the issue matters for China’s territorial integrity, national dignity, and even social stability.

“For anyone who tries to snatch the sovereignty over Huangyan Island, not only will the Chinese government not agree; the Chinese people will not agree; and the Chinese army will not agree.

“For anyone, regardless of what tricks he plays, what backing he has, or what accomplice he ropes in, never expect to take away half an inch of China’s territory.”

Source: PLA Daily, May 10, 2012
http://www.chinamil.com.cn/jfjbmap/content/2012-05/10/content_4839.htm

Briefings | | |   Geo-Strategic Trend

Li Keqiang’s Visit to Russia

During his recent visit to Russia, Chinese Vice Premier Li Keqiang met separately with Russian President Dmitry Medvedev and the Russian president-elect, Prime Minister Vladimir Putin, in Moscow. According to the China News Service report, the originally scheduled 1 hour and 45 minutes meetings were extended to nearly three hours. Talks involved increased mutual support on issues concerning core interests, close strategic cooperation in international affairs, and cooperation on major bilateral strategic projects.

Chinese and Russian enterprises signed 26 cooperation agreements on projects amounting to US$15.2 billion. They involved infrastructure, energy, electrical and mechanical equipment, high-tech, finance, and other sectors. As progress in cooperation in energy projects, China and Russia signed energy contracts valued at US$6 billion. They involve the fields of oil and gas, electricity, coal, new energy, energy equipment and energy savings.

Source: China News Service, April 30, 2012
http://www.chinanews.com/gn/2012/04-30/3856877.shtml

Briefings | | |   Geo-Strategic Trend

China’s First Quarter Tax Revenue Growth Slows

On April 24, 2012, the Chinese Ministry of Finance released a report on the first quarter’s tax revenue, showing a tax revenue of 2.58 trillion yuan (US$409 billion), 10.3% higher than the same period last year. However the growth rate was down 22.1 percentage points; it was the lowest in the past three years.

The data show that from January to March, on a year-over-year basis, the domestic value-added tax, consumption tax, business tax, and corporate income tax increased by 5.4%, 15.1%, 7.6% and 20.5% respectively. The growth rates dropped 17.8, 6.4, 18.7 and 17.4 percentage points respectively from the same period last year. The import taxes and tariffs increased by 13.0% and 9.6% respectively, 35.8 and 37.9 percentage points lower than the same period last year.

It is noteworthy that real estate related tax revenue growth fell sharply. For the first quarter, the deed tax and the real estate sales tax decreased by 13.6% and 17.5%, respectively, 41.1 and 45.8 percentage points lower than the same period last year. The land appreciation tax increased by 4.5%, 108.4 percentage points lower than the same period last year. In addition, personal income tax revenue declined by 6.2% year-on-year, down 43.2 percentage points from the same period last year.

A Ministry of Finance official attributed the decline to the slowdown of domestic economic growth, as well as tax cut practices implemented in the fourth quarter of last year.

Source: Xinhua, April 24, 2012
http://news.xinhuanet.com/2012-04/24/c_111836288.htm

Briefings | | |   Economy/Resources

China’s Top Cop Investigated As Bo Xilai Scandal Develops

On April 19, 2012, the Associated Press quoted from overseas-based Chinese websites and political insiders that Zhou Yongkang, one of nine members of the Party’s all-powerful Politburo Standing Committee, is also under heavy scrutiny and could face a reckoning as part of the recent scandal unraveling around the ousting of Bo Xilai, a Politburo member and former Party chief of Chongqing.

"Zhou, 72, is widely reported to have been the only leading official to have argued against last week’s striking decision to suspend Bo’s membership in the 25-seat Politburo – a step that effectively ended the political career of one of China’s most ambitious and high-profile politicians."

"Since then, Zhou has made tearful self-criticisms to President Hu Jintao and former leader Jiang Zemin, his political mentor, according to the U.S.-based Chinese-language dissident news site Boxun.com, which has been reporting accurately on the Bo scandal. Despite that, Zhou is now under some form of secretive investigation by the Party’s disciplinary body," it said.

Source: Associated Press, April 19, 2012
http://www.boston.com/news/world/asia/articles/2012/04/19/probe_of_security_boss_could_widen_china_scandal/

Briefings | | |   Government/Politics

Red Flag Manuscript: Confidently Make State-owned Enterprises Bigger and Stronger

A high profile article titled “Confidently Make State-owned Enterprises Bigger and Stronger” recently appeared on Red Flag Manuscript, a core publication of the Chinese Communist Party’s Central Committee.

The author, a director at the policy making State Development and Reform Committee, refuted voices in favor of privatization. “Some people want the state-owned sector, as a percentage of GDP, to fall to 10%, the U.S. standard, and ‘exit the competitive sector.’ Some have asked the state-owned enterprises to exit the basic industries and the service sector, in the name of ‘antitrust.’ Some advocate that the state only control the land and financial sectors and completely retreat from the business world.” The article argued, “The experiences of Eastern Europe and Latin America have shown that a market oriented toward privatization will leave the national economy unprotected; its property rights and even its economic lifeline will then be controlled by foreign capital.”

The author emphasized that the state-owned enterprises should maintain an advantageous and dominant position in the following sectors: (1) strategic areas related to national security: defense and the science & technology industry (nuclear, aerospace, weapons, ships, and military electronics); national infrastructure (such as the communications and broadcasting, electricity, and railway networks and important transportation facilities); key urban infrastructures (water supply, drainage, electricity, gas, and roads); the financial sector; and bulk agricultural commodities. (2) important basic industries: such as power, telecommunications, energy, and key petrochemical and metallurgy industries. (3) non-renewable strategic resources: mining, oil and gas resources. (4) pillar industries and the high-tech industry: mining, metallurgy, petrochemical, machinery, and transportation equipment; and high-tech industries (new materials, new energy, electronic communications, aerospace, biomedical, etc.

Source: Red Flag Manuscript, March 26, 2012
http://www.qstheory.cn/hqwg/2012/201206/201203/t20120326_147755.htm

Briefings | | |   Economy/Resources