All posts by RWZ - 229. page

China Review News (CRN) recently published an article analyzing the direction in which the Chinese economy is moving. The article expressed the belief that, based on the numbers from the first month of the third quarter, the Chinese economy shows no sign of having any hope in the near term. The official July PMI (Purchasing Managers Index) reached a new low for the past eight months. Export growth is now down to 1%. GDP growth slipped to 7.6%, which represents a slowdown for the last six consecutive quarters. The author suggested that the structure of the Chinese economy is heavily distorted. For example, government investment contributes to over 50% of the GDP; consumer spending is constantly on the decline; by the end of 2010, local government debts had reached RMB 10 trillion. Meanwhile, over the last 10 years, the domestic supply of the Chinese currency to the market increased 600%. The author concluded that the Chinese economy is quickly approaching the point of a total breakdown, which will reflect the combination of all the accumulated risks it has taken in the past several years. 

Source: China Review News, August 24, 2012

http://www.zhgpl.com/doc/1022/1/1/0/102211028.html?coluid=53&kindid=0&docid=102211028&mdate=0824072547

Xinhua recently reported the news that G20 is planning a conference on August 27, 2012, to discuss a potential global food crisis. The report mentioned that the U.S. drought this year covers twice the area of the 2008 drought. According to the U.S. Department of Agricultural, this year’s drought is the largest since 1956. Around 2000 counties in more than 30 states have suffered serious drought. This will have a major impact on U.S. corn exports, which represent 39% of the global trade volume in corn. In addition, the official U.S. food reserve level recorded a sharp decline. Since the United States is a large food exporter, this year’s drought may trigger a global food crisis. This has already been reflected in the Chicago futures market.

Source: Xinhua, August 19, 2012

http://news.xinhuanet.com/2012-08/19/c_112769623.htm

China Review News (CRN) recently reported on the labor cost control issue in companies that the central government owns. Since the beginning of this year, these large companies have suffered major financial losses in the market. Meanwhile, between January and June, state-owned companies faced cost increases of 12.8%. The issue of the cost of labor has become a big headache. From central government officials to average workers, all are complaining about the fact that the management staff of these large companies still receives the same high pay, regardless of the performance of the business. Across the board labor cost control policies are being implemented in state-owned companies as an answer to the decline in sales that taking place everywhere. 

Source: China Review News, August 17, 2012

http://www.zhgpl.com/doc/1022/0/3/8/102203827.html?coluid=10&kindid=253&docid=102203827&mdate=0817093146

Qiu Shi, a magazine by the CCP Central Committee, recently published an article discussing China’s strategy on gold. The author emphasized the importance of establishing and implementing a national strategy: (1) China must recognize gold’s strategic value and its position as a wealth reserve tool; (2) Domestic gold mining and manufacturing should be considered as the primary approach in developing China’s gold reserves; (3) The government should actively invest in China’s gold industry and push the development of the domestic gold market. 

The author suggested that gold plays a strong role in enhancing social and financial stability. China has been the world’s largest gold producer since the year 2007. The article concluded by calling for a comprehensive national gold strategy to be designed and used to guide China into becoming a stronger country.

Source: Qiu Shi, August 1, 2012

http://www.qstheory.cn/zxdk/2012/201215/201207/t20120727_172665.htm

China Review News (CRN) recently published a review on the phenomenon of many of China’s local governments coming up with huge investment plans. The scale of these government investments are comparable to the central government managed “4 trillion” (in Chinese RMB) stimulus package that started in 2008. An example is Changsha, the capital city of Hunan Province, which just announced an investment plan of RMB 800 billion. The review pointed out that the income of typical Chinese local governments has declined significantly in the past year due to the adjustments that the central government has made in the area of real estate investments. With the apparent decline in the overall Chinese economy, the central government is loosening up currency and financial policies. However, the review expressed the belief that, if many local governments make un-coordinated investments, it may result in disastrous economic damage. It would be a better idea to manage market demand and stimulate private investments in the right direction.

Source: China Review News, August 2, 2012

http://www.zhgpl.com/doc/1021/8/6/6/102186619.html?coluid=53&kindid=0&docid=102186619&mdate=0802072701