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Xinhua: Investment Funds Are Selling off Their Real Estate Holdings

Xinhua reported that, according to statistics, in the first quarter of 2014, 41.28 percent of stock funds and blend funds sold off their real estate holdings. 

Out of 625 stock funds and blend funds, 258 cleared out their holdings in the real estate sector and now have zero investment in that sector. 
In those three months, the market value of the real estate stocks that the funds held dropped from 39 billion yuan to 31 billion yuan, a decrease of 7.8 billion. 
According to the 2014 first quarter reports of the investment funds, after the financial sector, the real estate sector was the hardest hit. A downward price adjustment and a market cooling have been confirmed for the housing market. The changes in the housing market will put significant pressure on the stock market. 
Source: China Securities, May 8, 2014 
http://news.cnstock.com/news/sns_yw/201405/3014364.htm
Briefings | | |   Economy/Resources

China Released the First National Security Blue Book

According to Nanfang Dushi Bao (Southern Metropolis Daily), the first China national security blue book, the China National Security Research Report 2014, was released on May 6, 2014. It was prepared by the Strategic and Security Research Center under China’s Institute of International Relations. The Report reviewed, evaluated, and analyzed the national security issues of the past year and proposed countermeasures to the security challenges that China faces. 

The report found that China’s terrorist activities showed a pattern of geographic expansion, with government agencies and police as the main targets of attacks and the use of rudimentary tools as weapons. There were 10 terrorist attacks in 2013. 
The report stressed that relying on only some of the traditional government bodies cannot effectively curb the terrorist attacks due to their profound international background. The newly established State Security Committee (SSC) is “a strategic move to safeguard national security effectively.” 
The report stated that, based on the Party’s documents, "The SSC is the highest decision making body on national security. It is also the executive and coordinating body of the highest authority.” 
According to the report, the SSC will coordinate both domestic and overseas security. It has four functions: the development and implementation of a national security strategy, the promotion of the rule of law in national security, the development of national security policies, and the conduct of studies to solve major national security issues. 
Source: Nanfang Dushi Bao (Southern Metropolis Daily), May 7, 2014 
http://epaper.oeeee.com/A/html/2014-05/07/content_2067051.htm
Briefings | | |   Government/Politics

China to Build a Second Ship Lock at the Three Gorges Dam

According to a report from 21st Century Business Herald, building a second ship lock at the Three Gorges Dam may become a priority project to break the bottleneck in the Yangtze River’s shipping. If there is a fog or wind, ships will pile up waiting to pass the ship lock. Normally it takes three to five days. In the event the ship lock is under repair, the wait to pass the Three Gorges Dam can be between seven and 10 days, or even longer. 

The Ministry of Transportation recently released a government report showing that, in 2013, the average wait time to pass the Three Gorges Dam was about 10 days. The one way capacity of the first ship lock as designed is about 50 million metric tons per year. In 2013, it was approaching the upper limit set by the design. “The limited capacity to pass the ship lock will become a major issue affecting sustainable development of the region along the Yangtze River.” The Three Gorges Project Construction Committee, under the State Council, has been tasked with preparing a proposal for the construction of the second ship lock. 

Source: 21st Century Business Herald reprinted by Xinhua, April 30, 2014. 
http://jjckb.xinhuanet.com/2014-04/30/content_502706.htm

Briefings | | |   Economy/Resources

Qiushi: China Has Achieved a Decisive Success Following Its Own Path

Qiushi published a commentary on the failure of the West’s market fundamentalism and democratic fundamentalism and the success China has had following its own path. 

According to the commentary, the West, particularly the United States, has been persistent in pushing for its own political system based on market fundamentalism and democratic fundamentalism. However, the effect seems to be getting worse and color revolutions have completely faded as Ukraine is in the middle of separatist unrest. 
On the other hand, “With the further rise of China, the whole world will reflect more on the problems caused by the Western model, the chaos and even disaster, especially the absurdity of ‘"market fundamentalism’ and ‘democratic fundamentalism.’ China took its own path due to its unique cultural traditions, historical destiny, and national conditions. These have determined the future direction of China. China has achieved a decisive success in exploring its own path of development.” 
Source: Qiushi, April 28, 2014 
http://www.qstheory.cn/zxdk/2014/201409/201404/t20140428_344301.htm
Briefings | | |   Government/Politics

Qiushi: The Security of China’s National Resources Is an Important Part of National Security

Qiushi published an article stating that the security of China’s national resources is an important part of national security. The issues facing China include the pressure from rapid economic growth and population growth, as well as limited supplies of fresh water, oil, gas, arable land, and other strategic resources. The scarcity of resources is the main problem in the security of China’s national resources and will be difficult to improve on in the near to medium term. 

The article recommended that China’s national resource security strategy should include the implementation of strategies to survey, protect, stockpile and allocate resources. It should also include strategies to increase the efficiency, substitution, and innovation of national resources as well as cooperation and diplomacy in connection with national resources. 
Source: Qiushi, April 28, 2014. 
http://www.qstheory.cn/st/zyhj/201404/t20140429_344551.htm
Briefings | | |   Economy/Resources

Qiushi Warns that Information and Ideological Warfare May Disintegrate the State

Qiushi, a journal of the Central Committee of the Communist Party of China, published an article on information and ideological warfare becoming an urgent issue in national defense. 

The article stated that, for a long time, United States has used culture penetration as a highly militant, subversive, and destructive element of its national strategy. Its dominance on the Internet is much more overwhelming than its nuclear and conventional military advantages. Of the 13 root servers in the world, 10 are located in the United States. Also located in the United States are the largest search engine (Google), the largest portal (Yahoo), the largest online video site (YouTube), the largest SMS platform (Twitter) and the largest social media (Facebook). 
The article further stated that in China, some web portals have become anti-Party and anti-government “independent kingdoms,” while others use weibo to voice different opinions and comments and established negative “forums” to oppose the State’s media. For example, in a heated online debate launched by a few patriotic figures against online VIPs who have complex backgrounds and engage in rumor mongering, “almost none of the traditional main stream media and their websites or weibo even echoed any support [for the patriotic side].” 
The article warned that “the all-time information and ideological warfare using the pen, the keyboard, and coins can deflate the morale of the entire nation, leading to the disintegration of the State.” 
Source: Qiushi, April 23, 2014 http://www.qstheory.cn/gf/jsll/201404/t20140423_343027.htm
Briefings | | |   Government/Politics

Qiushi: The Chinese Economy Faces Three Major Risks

According to the periodical Qiushi, China’s economy faces three major risks. Therefore, it is important for China to “guard against deflation, the flight of venture capital, and debt default. It must prevent them from resonating together which would amplify their negative impact on the economy.” 

Regarding the risk of deflation, there is pressure on the Consumer Price Index and the Producer Price Index to decline. The growth of the money supply is slowing down. Economic growth is also lower due to a lack of demand, with GDP growth at 7.4 percent in the first quarter of this year. 
The risk of capital flight is increasing as evident from RMB depreciation. The trade deficit and the funds outstanding for foreign exchange are growing. If economic growth continues to slow down, capital flight will accelerate, thus putting more pressure on the RMB to depreciate, which in turn will adversely impact the real estate market, the foreign exchange market, and the financial market. 
Debt default may continue in the construction, real estate, and mining industries. As more caution is exercised in providing loans and credit, market interest rates will move up, leading to a further contraction of the economy. 
Source: Qiushi, April 23, 2014 
http://www.qstheory.cn/jj/xrsd/201404/t20140423_342974.htm
Briefings | | |   Economy/Resources

Qiushi on the Chinese Economy: Have Confidence, Patience and Determination

Qiushi published a commentary on the Chinese economy titled, “Have Confidence, Patience and Determination.” 

“First, [we should] establish confidence and let the public know that the current economy is still running in the normal range, that the trend is still smooth, and that they should not be too worried. This will stabilize everyone’s expectations. Second, [we should have] patience. It takes time to resolve excess capacity, to introduce, implement, and achieve the results of the policy of reform and to cultivate new economic growth. Therefore [we should] not be in a hurry. Being in a hurry can easily lead us to re-taking the old road. Third, [we must] have the determination to  push reform forward unswervingly, to strengthen the propaganda about the effective reforms already made, and to sum up and promote successful reform experience, boost reform morale, and stand in solidarity to make breakthroughs, all in a timely manner.” 
The commentary compares the Chinese economy to "a person who is basically healthy, but with ying and yang out of balance, and with some bad habits and illnesses. The person is now right in the critical period of the treatment and reactions may be severe, but one must bite his teeth and tough it out. After the “treatment” in this stage, the Chinese economy will see healthy growth.” 
Source: Qiushi, April 21, 2014 
http://www.qstheory.cn/wz/shp/201404/t20140421_342012.htm
Briefings | | |   Economy/Resources