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Xinhua: Hong Kong Increases Real Estate Cost for Outsiders

Xinhua recently reported that the Hong Kong government just extended the real estate stamp duty for another three years. It also added a 15 percent duty for buyers, which will apply to local businesses and to non-residents. According to the Hong Kong government, the new requirement will help lower the cost that local permanent residents have to pay to purchase real estate. Another goal of the new policy is to place a more substantial restraint on the recent speculation in the housing market. Large outside capital has been targeting Hong Kong real estate. However, the government suggested that this new tax is a temporary measure designed to reduce the number of external buyers. Eventually the policy will expire. The background of this recent change in real estate policy is the loss of balance between demand and supply. The influx of capital has resulted in a sharp increase on the demand side of the housing market. If the new policy is not strong enough to improve stability, the government is determined to do more.
Source: Xinhua, October 26, 2012
http://news.xinhuanet.com/fortune/2012-10/26/c_113513933.htm
Briefings | | |   Economy/Resources

Xinhua: Upper Management’s Largest Wage 4553 Times Greater than that of Lowest Worker

Xinhua recently reported that, based on a report released by the Ministry of Human Resources and Social Security, upper management income in some industries has grown very rapidly. According to the report, the highest wage received by upper management is 4533 times more than the wage of the lowest grade worker. Based on the national labor union’s research, 23.4 percent of workers have not received a pay raise in the past five years. The biggest gaps in wages exist in the large scale state-owned companies, especially those with monopoly powers. Experts suggested that the government needs to regulate itself better and to truly consider the interests of the general public. They also called for closing the loopholes in the personal income tax system. 
Source: Xinhua, October 20, 2012
http://news.xinhuanet.com/comments/2012-10/20/c_113435946.htm
Briefings | | |   Social Stability

Xinhua: Chinese Currency Exchange Rate Reached Record Highs

on October 19, 2012, Xinhua reported that the rate of exchange of China’s RMB to the U.S. Dollar hit record highs for the past six consecutive days. China’s central bank released the interbank foreign exchange market’s central parity rate at RMB 6.3021 to USD $1 on October 18. It is widely believed that the primary cause of this increase is that the U.S. Dollar weakened after the Federal Reserve kicked off QE3. Another possible cause is the RMB appreciation pressure from China’s neighboring countries. Experts are worried about the negative impact this round of RMB appreciation has had on China’s exports. However the RMB futures market also demonstrated an expectation that the RMB will be devalued in the long run. This means the probability of a major RMB fluctuation is unlikely. 
Source: Xinhua, October 19, 2012
http://news.xinhuanet.com/finance/2012-10/19/c_123842468.htm
Briefings | | |   Economy/Resources

CRN: China’s Natural Gas Consumption increased by 400 Percent in Ten Years

China Review News (CRN) reported that recent research showed that China is the fourth largest country in the world in the consumption of natural gas. In 2011, China consumed 130 billion cubic meters of natural gas. That was four times the volume of the level in the year 2000. According to the research, China’s consumption may double in the period from 2011 to 2015. Next to the United States, China is the second largest natural gas consumer among all member countries of the Organization for Economic Co-operation and Development (OECD). Based on China National Petroleum Corporation’s (CNPC) estimate, China will need 350 billion cubic meters by the year 2020. China is becoming one of the largest natural gas importers in the world; a quarter of its demand relies on imports. The research report expressed the belief that the increased demand for imported natural gas is only accelerating. 
Source: China Review News, October 19, 2012
http://www.chinareviewnews.com/doc/1022/7/4/0/102274067.html?coluid=45&kindid=0&docid=102274067&mdate=1019174636
Briefings | | |   Economy/Resources

Xinhua: Seventy Percent of Chinese Workers Take Overtime

Xinhua recently reported on a national survey on how the Chinese work force population spent its work and leisure time. The survey covered the two year period of 2011 and 2012. The results showed that 69.4 percent of the work force worked some amount of overtime. A total of 24 percent of the people surveyed worked 51 to 70 hours per week. Only 30.4 percent of the work force actually enjoyed an 8-hour work day. A 41.1 percent share of the entire sample surveyed had less than 10 hours of “leisure time” per week. 46.8 percent of the people surveyed stated that they had suffered a decline in available “leisure time.” 5.1 percent of the sample said they had “nearly no leisure time.” The weekly “leisure time” total actually declined over the past three years. Experts expressed the belief that the survey reflected that people are under significant pressure at work. The primary cause of the high pressure is the economic growth model.
Source: Xinhua, October 14, 2012
http://news.xinhuanet.com/fortune/2012-10/14/c_113361441.htm
Briefings | | |   Social Stability

Xinhua: Canada Extended Review Schedule for CNOOC Acquisition of Nexen

Xinhua recently reported that Paradis, the Canadian Minister of Industry, announced on October 10, 2012, that the federal schedule for review of China National Offshore Oil Corporation’s (CNOOC’s) acquisition of the Canadian energy company Nexen will be extended for 30 more days. Under the Investment Canada Act, the transaction is subject to the approval of the Federal Government of Canada. The Act was designed to regulate transactions over CAN$330 million to ensure that Canada will enjoy a “net profit.” If the US$15.1 billion acquisition is successful, it will become China’s largest acquisition of an overseas company. Paradis’ announcement suggested that the case is under “complete, careful, and strict” review. Nexen is a global independent energy company listed on the Toronto and New York stock exchanges. The company focuses on the development of Western Canada’s oil sands and shale gas, as well as conventional oil and gas exploration in the North Sea, offshore West Africa, and the deep-water Gulf of Mexico.
Source: Xinhua, October 12, 2012
http://news.xinhuanet.com/fortune/2012-10/12/c_123812747.htm
Briefings | | |   Geo-Strategic Trend

CRN: China’s Era of Cheap Capital is Over

China Review News (CRN) recently published a commentary discussing a major economic turning point in that China will no longer be able to rely on an overabundance of residents’ savings. China’s past economic growth heavily relied on cheap capital provided by the savings people had in the bank. Because of these savings, China had a very low investment cost to subsidize its globalization effort. China’s growth also relied on an extremely low costs for labor, land, natural resources, and environmental protection. However, the prices of these factors of production have been increasing and are about to reach a point where a revaluation will be inevitable. Chinese society is aging, which will result in a decline in the size of the labor force. China is also facing a bottleneck in the area of natural resources, along with a seriously declining living environment. Low efficiency and pollution are raising serious questions about the sustainability of China’s growth. The recent global downturn is causing a heavy decline in market demand. The global capital flow is experiencing a process of re-balancing. China’s current export-oriented model will have to face the challenge of a major adjustment.
Source: China Review News, October 11, 2012
http://www.zhgpl.com/doc/1022/6/3/9/102263933.html?coluid=53&kindid=0&docid=102263933&mdate=1011065658
Briefings | | |   Economy/Resources

Xinhua: Eighty Steel Companies Suffered RMB 3 Billion in Total Losses This Year

Xinhua recently reported that eighty large and mid-sized Chinese steel companies suffered losses in sales that totaled RMB 3 billion (around US$ 478 million) in the first eight months of this year. The month of August was the lowest point of the year. The numbers are based on statistics that the China Steel Association provided. As of September, steel prices had dropped for thirteen consecutive months. This was the longest cycle for dropping prices in the past decade. With the planned start of some new infrastructure construction projects, it is expected that the steel market will see some relief in the fourth quarter. Experts hope that the situation will not get worse and that a slight rebound may be possible.
Source: Xinhua, October 13, 2012
http://news.xinhuanet.com/energy/2012-10/13/c_123818147.htm
Briefings | | |   Economy/Resources