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All posts by TGS - 46. page

State Media: Bank of China Engages in Money Laundering

The state’s media, China Central Television (CCTV), reported that the Bank of China, one of the four major state banks, engages in money laundering. In violation of government control of cross-border fund transfers, it transfers large amounts of cash abroad for clients who plan to emigrate overseas. 

"’Regardless of where and how you get your money, we can help you get it out [of China].’ The staff from a Bank of China branch said that it does not matter how black or dishonorable the money is; the bank has a way to clean it and get it overseas safely.” 
At a recent immigration expo in Beijing, an immigration agent explained that due to government control of fund transfers by individuals, one may be able to transfer up to $50,000 a year. In order to apply for investment immigration, one must transfer large amounts to accounts designated by foreign governments. To do that, one must go to the Bank of China. The Bank of China representative at the expo confirmed this information. “We help you convert such a large amount [of yuan] into foreign currencies and transfer it out in one transaction. That is the step we handle.” According to CCTV, the Bank of China charges its clients a 0.3 to 0.4 percent handling fee for these types of transfers. 
Source: Xinhua, July 9, 2014 
http://news.xinhuanet.com/2014-07/09/c_126731280.htm
Briefings | | |   Economy/Resources

Local Government Debts Lack Transparency

China Economic Weekly, which is under the State’s People’s Daily, published an article on the fiscal transparency of China’s municipal governments titled, “Where Do Municipal Governments Spend Their Money?” 

According to the article, the Tsinghua Economic, Financial, and Governance Research Center released its “2014 Chinese Municipal Government Research Report on Fiscal Transparency.” The report rated the 2014 fiscal transparency of 289 cities. 
Across-the-board, these cities received low ratings on the release of their government debt statistics. Of the 289 cities, only 14, or 4.84 percent of the total cities, released relevant statistics on their government’ debts. The report noted that two reasons contributed to the low ratings. First, the vast majority of government debts are handled by local governments’ investment and financing platform companies. Local governments do not include these companies’ financials in the operating statement on the State’s capital, nor do they disclose the financials of local State-owned enterprises. Second, a large number of cities have a huge number of outstanding government debts. Consequently, they are not willing to disclose the relevant information. 
Source: People’s Daily, July 1, 2014 
http://finance.people.com.cn/n/2014/0701/c1004-25221526.html 
Briefings | | |   Government/Politics

Qiushi: We Have Taken the U.S. Too Seriously

On June 25, 2014, Qiushi published an article questioning whether China has taken the U.S. too seriously. The article noted two features in China’s study of the United States. One is that China believes that the Sino-U.S. relationship is the core of China’s diplomacy; if China does a good job in that regard, everything else will be settled. Two, Chinese researchers want to believe from their heart in the U.S. point of view and think many of the U.S. views are reasonable and justified. The U.S. voice has significantly influenced some Chinese researchers. 

The author of the article stated, “I think, on the South China Sea dispute, we have taken the U.S. factor too seriously. The truth is that the United States is in relative decline, which is reflected in what the U.S. has been saying and doing in the past few years.” For example, during the recent Shangri-La Dialogue, Hagel was very tough in his remarks. “I think that is a sign of U.S. weakness.” Also, the United States is in the process of a global contraction. Although the United States announced its return to Asia, what it has done in Asia has no practical effect. “The U.S. says there will be more military deployment in the Asia-Pacific, but we only see more military contacts, some so-called military cooperation, and military exchanges. In particular in maritime disputes, such as maritime disputes in the South China Sea, the U.S did not take any real action.” 

Source: Qiushi, June 25, 2014 
http://www.qstheory.cn/international/2014-06/25/c_1111313407.htm

Briefings | | |   US-China Relations

National Audit Uncovered Mismanagement and Misuse of Funds

On June 25, 2014, China’s National Audit Office announced the findings of the central government’s audit of 38 departments regarding the implementation of Fiscal Year 2013 budgets and related expenditures. The National Audit Office found that, due to improper management, the State’s National Social Security Fund incurred losses of 17.5 billion yuan (approximately US$2.84 billion). The central bank, the People’s Bank, spent 210 million yuan (approximately US$34.13 million) in unauthorized awards to its employees. The audit also uncovered that from 2009 to 2012, without authorization, the National Statistics Bureau “over hired” 8,081 employees and incurred unauthorized expenditures of 239.4 million yuan (approximately US$38.91 million). 

Source: Xinhua, June 27, 2014 
http://news.xinhuanet.com/2014-06/27/c_1111339123.htm
Briefings | | |   Government/Politics

Low-income Subsidy Fraud in China

According to Jiancha Daily, fraud in the low-income subsidy program has been rampant throughout China. 

Early this year, a cleanup campaign in Xuzhou City, Jiangsu Province resulted in the stoppage of low-income subsidies to 17,479 who did not meet the eligibility requirements. At the same time, the eligibility of 8,159 persons was approved so they could start to receive the 2014 low-income subsidies. Similarly, in the first quarter, Dongfang City removed 1,265 from the low-income subsidy recipient list and added 1,477 to the list. At the end of May, Ha’erbin City stopped payments to 7,470 who were not eligible and accepted 1,706 for payments of low-income subsidies. In June, Leiyang City in Hunan Province also found 402 of the current recipients to be ineligible. 

According to the 2012 Social Security Green Book released by the China Academy of Social Sciences (CASS) in 2013, close to 80 percent of the households surveyed that were at the poverty level did not receive a low income subsidy. The results also revealed that over 60 percent of those that received a low income subsidy were not households at the poverty level. The survey was conducted in five provinces including Anhui and Fujian. 
Source: Jiancha Daily, June 23, 2014 
http://newspaper.jcrb.com/html/2014-06/23/content_162038.htm

Briefings | | |   Social Stability

China to Tighten Control over Land Use

On June 19, 2014, China’s Ministry of Land and Resources held a press conference to explain the new regulation issued on May 22 which will tighten control of the use of land in China. 

Analysts expressed concern that changes in the supply of land will affect the housing market. An official from the Ministry of Land and Resources responded that control of the use of land in major cities will not increase the housing market. 
Statistics indicate that about 40 percent of urban land in China is used inefficiently. Between 10 and 15 percent of residences in the countryside remain unoccupied. About 5,000 square kilometers of urban and industrial land is under construction, which is equal to about 11 percent of the entire urban land in China that has already been built up. Wang Shouzhi, head of the Policy and Regulation Department in the Ministry of Land and Resources said that there is a need to regulate the overall land use on a macro level in order to prevent some locals from making a quick buck in economic development in their blind pursuit of revenue. 
Sources: 
Ministry of Land and Resources, June 20, 2014 http://news.mlr.gov.cn/xwdt/jrxw/201406/t20140620_1321128.htm 
Xinhua, June 20, 2014 
http://news.xinhuanet.com/2014-06/20/c_126646825.htm
Briefings | | |   Economy/Resources

Corporate Defaults on the Rise

On June 19, citing statistics published by UBS Securities, Security Times reported that defaults in China are likely to increase and occur on a large-scale. 

Since the first quarter of 2014, there have been signs of a credit crisis, including downgrades in credit ratings. On March 4, solar equipment producer Shanghai Chaori Solar Energy Science and Technology Co. Ltd. announced it would not be able to make the interest payments that were due on its bonds. This became China’s first-ever domestic bond default. On March 20, 2014, the Shanghai Stock Exchange ordered loss-making Chinese solar cell maker Baoding Tianwei Baobian Electric Co. Ltd. to temporarily delist its "11 Tianwei Bonds." Trading on the bonds had been suspended since March 10 when the company announced that it had posted a loss of 5.23 billion yuan (US$844.51 million) for 2013. That was its second straight year of losses. Increasing numbers of firms are in default. 
The amount involved in the defaults has reached 53.6 billion yuan (US$8.71 billion). The defaults are concentrated in medium to large businesses in real estate and machinery manufacturing and have spreading to over six major cities and provinces. These defaults will likely lead to bankruptcies in real estate and in financial institutions. 

Source: Securities Times, June 19, 2013 
http://kuaixun.stcn.com/2014/0619/11501515.shtml

Briefings | | |   Economy/Resources

State Think Tank Criticized for Being “Infiltrated by Foreign Forces

On June 13, 2014, an official from the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China criticized China’s Academy of Social Science (CASS) because it had been infiltrated by foreign forces. 

Zhang Yingwei, head of the CCDI team on assignment to the CASS blasted the institution for its major ideological problems. They included, "conducting illegal collusive activities during politically sensitive periods," "accepting point-to-point penetration from foreign forces," and "using the Internet to create subtly deceptive reasoning and argumentation." Zhang demanded that the whole institution "maintain a high degree of political sensitivity" and "be politically in line with the Party." 
These remarks were first reported on the People’s Daily website. The report has since been removed. 
Source: People’s Daily reprinted by China News Service, June 14, 2014
http://www.chinanews.com/gn/2014/06-14/6280497.shtml
Briefings | | |   Government/Politics