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Hexun: The Seven Vested Interest Groups in China

Hexun.com published an opinion piece by Deng Yuwen, a senior deputy editor of Study Times, a journal of the Party School of The Chinese Communist Party (CCP). In his article, Deng discussed those vested interests in China that are a serious obstacle to further reform in China.
 
“It has become common knowledge that vested interests are a serious obstacle to deepening reform in China, but to break up their resistance to reform is very difficult at this time. Even Premier Li Keqiang sighed, ‘touching these interests is often harder than touching one’s soul.’”

According to Deng, unlike vested interests in the West, China’s vested interests have their own unique features: “1.) development is unbalanced; 2.) forms are ambiguous and transitional; 3.) abnormal profiteering behavior has the appearance of legality; 4.) interests are exclusive of others; 5.) the supremacy of power is problematic; and (6) there is a lack of legal legitimacy.” Deng defines vested interests as “individuals or those with social status who have control over the use of power and resources and have formed interested groups or alliances with the goal of protecting their special interests.”

Deng categorizes Chinese vested interests as follows: 1.) powerful government departments and their officials; 2.) local governments and their officials; 3.) national monopolistic enterprises (particularly those centrally owned by the State and important enterprises owned by the local governments) and their senior management; 4.) foreign transnational capital and their Chinese agents, commonly known as “foreign compradors”; 5.) real estate developers; 6.) large, privately owned domestic companies, including real estate brokers and coal mine owners and financiers; and 7.) scholars, experts and professionals who are attached to the above categories of vested interests.

Source: Hexun.com, April 24, 2013
http://opinion.hexun.com/2013-04-24/153506662.html

Briefings | | |   Social Stability

Economist: Potential Risks Underlying Economic Stability Cannot be Ignored.

Zou Dongtao from China’s Central University of Finance and Economics published an opinion piece in which he discussed six potential risks underlying the stability of China’s economy and warned that these risks cannot be ignored.

Zuo stated that the foundation of economic stability is not solid and that conflicts in economic operations are accumulating. The potential risks are in the follow areas:

1. Marginal efficacy of investment is diminishing. With investment interests lacking and more investment needed to maintain the current economic growth, the investment-driven economic model is not sustainable.

2. Production capacity surplus is increasing. In the first quarter of this year, over a third of the businesses in textiles, paper, synthetic fiber, nonferrous metal, ferrous metal, and steel indicated that they have serious over-capacity.

3. Consumption of electricity in manufacturing and railroad cargo volume remain low, showing slow industrial growth.

4. The money supply demonstrates fast growth while businesses have “anemia.” Although M2 reached one trillion yuan, many enterprises are short on cash flow.

5. The revenue of the central government shows a negative growth and local government debts show increasing risks. Compared to same period last year, the central government’s revenue decreased by 5.2 percent.

6. Mid and small sized businesses continue to face serious issues. According to a recent survey of Chinese enterprises, on the most difficult issues businesses ranked the problems as follows: “labor costs rising” (78.3 percent), “excessive burden of social security and taxes” (56.2 percent), and "profit margin too low” (45.3 percent). 

Source: jrj.com.cn (Financial Sector), April 24, 2013
http://opinion.jrj.com.cn/2013/04/24073415253621.shtml

Briefings | | |   Economy/Resources

State Media Survey: Over 80 Percent Oppose the Party

On April 15, 2013, the People’s Forum under the State media People’s Daily conducted an online survey on the Communist Party’s credibility. The survey, titled “Confidence, Belief and Faith” had four questions and was shut down within 24 hours after over 80 percent of those surveyed indicated that they disapproved of the Communist Party.

In response to Question 1, “Do you agree that the Chinese Communist Party has sufficient courage and wisdom to push forward reform?” 72.1 percent selected “No.”

To Question 2, “Do you agree with the statement that upholding and developing socialism with Chinese characteristics benefits the fundamental interests of the overwhelming majority of the people?” 82.1 percent answered “No.”

As for Question 3, “Do you completely agree that only the Communist Party of China can lead the people to successfully take the road of socialism with Chinese characteristics?” 83.53 percent said “No”

In answering the last question “What do you think positively about China’s system of one party rule with multiple parties participating?” 80.90 percent expressed “No.” About 10 percent answered “not clear about it” or “do not know.”

The survey and its results were taken down from Internet within 24 hours of its being posted, but not before approximately 3,000 people submitted answers to the survey.

Source: Epoch Times, April 24, 2013
http://www.epochtimes.com/gb/13/4/24/n3854521.htm

Briefings | | |   Social Stability

ShineWing: Local Government Debt is Out of Control

Zhang Ke, Vice President of the Chinese Institute of Certified Public Accounts and chairman of the Beijing based ShineWing (HK) CPA Limited said during an interview with Financial Times that due to concerns about risks, his firm has ceased its audit businesses relating to local governments’ issuance of bonds. “The situation is out of control.”

“We have audited the bonds that some local governments have issued. We found they were very high risk, so we withdrew.” Zhang continued, “Most local governments do not have the ability to pay back the principal or service the debt. Things could become very serious.”

Zhang also said, “The situation is out of control. There may be a crisis. However, because the due dates on these debts keep getting extended, they have become long-term debts. Therefore, the timing of the burst is uncertain.” He indicated that, from public squares to road improvements, many local governments have put money into investments and received mediocre returns. Now they can do nothing but borrow new money to pay old debts. Zhang said, “This approach will not survive much longer. … When that time comes, it will not be the government but CPA firms and banks that will bear the ultimate responsibility.”

The Beijing based ShineWing (HK) CPA Limited claims that it is the largest domestic CPA firm in China.

Source: Caijing.com, April 17, 2013
http://economy.caijing.com.cn/2013-04-17/112682959.html

Briefings | | |   Economy/Resources

2013 Hurun Report: The Growth of the Super-Rich Slowing Down

According to the 2013 Hurun Report released on April 15, 2013, the number of super-rich Chinese, defined as individuals with a net worth of 100 million yuan, grew two percent to 64,500 individuals, the slowest growth in the past four years. Beijing is home to more millionaires than any other city in China, accounting for 475,000 millionaires (in US dollars), followed by Shanghai with 390,000.

Eighty percent of these people are business owners, 15 percent are real estate investors, and five percent are day traders in the stock market.

These estimates of the 2013 Hurun Report are based on the macro-statistics from the National Bureau of statistics of China and on micro-statistics, including ownership of luxury homes and automobiles, income tax returns, sales of other luxuy items and registered capital of businesses.

Source: Xinhua, April 18, 2013
http://news.xinhuanet.com/overseas/2013-04/18/c_124595059.htm

Briefings | | |   Economy/Resources

82 H7N9 Cases With 17 Fatalities

Xinhua reported that, as of 17:00 Beijing time on April 17, 2013, China had a total of 82 H7N9 cases with 17 deaths, five released and 60 under treatment. From 20:00 April 16 to 17:00 April 17 alone, an additional 5 new cases were reported, one in Shanghai and 4 in Zhejiang Province.

According to Xinhua, as of April 17, the distribution of reported cases was as follows: one in Beijing, 31 in Shanghai (11 deaths), 20 in Jiangsu Province (three deaths), 25 in Zhejiang Province (two deaths), three in Anhui Province (one death), and two in Henan Province. The authorities stated that there is no epidemic connection between these cases, which have spread to 30 prefecture-level regions.

A week ago, on April 10, there had been a total of 33 reported cases and nine deaths.

Sources: 
Xinhua, April 17, 2013
http://news.xinhuanet.com/politics/2013-04/17/c_115429085.htm
Xinhua, April 10, 2013
http://news.xinhuanet.com/2013-04/10/c_124564934.htm

Briefings | | |   Social Stability

Xinhua: Who Really Wants to Make Trouble on the Korean Peninsula?

On April 11, 2013, Xinhua published an article by Hu Wenlong, research fellow at the China Academy of Military Sciences. Hu stated that it is inevitable and understandable that North Korea may be making trouble because of the U.N. Security Council sanctions resolution against North Korea. However, the United States may want North Korea to make trouble.

According to Hu, the U.S. response this time is different from its previous responses in three respects. First, its ultimate motive is different. The U.S. is not trying to diffuse the tension or push for negotiations. Instead, it is watching North Korea and following suit. It is escalating the military confrontation, thereby demonstrating its selfishness rather than a desire to safeguard world peace. “In fact, a phone call would diffuse the tension, but Obama does not pick up the phone.” Second, the U.S. is maneuvering things militarily. Besides issuing threats and escalating the situation, the U.S. is preparing for war. “More importantly, the U.S. is engaging in combat deployment and is rehearsing operations. Clearly the U.S. wants North Korea to make trouble. It is not the U.S.’s real wish for North Korea not to make trouble.” Third, the U.S. points a finger at China in order to mislead the media, to the extent that it wants to hold China responsible. “Now it is clearly pressuring China and blaming China for not taking tougher measures against North Korea. … Targeting North Korea is a pretext; targeting China is its true intent.”

Source: Xinhua, April 11, 2013
http://news.xinhuanet.com/world/2013-04/11/c_124564746.htm

Briefings | | |   Geo-Strategic Trend

China’s M2 Exceeds 100 Trillion Yuan

According to People’s Bank of China’s latest release, in March 2013, M2, China’s broadest measure of money supply, reached 103.61 trillion yuan for the first time. Over the past 10 years, China’s M2 money supply has risen sixfold from 13 trillion yuan in 2000. It was just below 50 trillion yuan in 2008. However, starting in 2009, M2 increased 10 trillion every year. In 2012, it exceeded 97 trillion.

Currently, the ratio of China’s M2 to GDP is close to 190 percent. This number brings to light a clear acceleration when compared to recent years. It reflects the reality of a decreased return on investment and a narrowing path of economic growth driven by money supply.

Source: People’s Daily, April 12, 2013
http://www.people.com.cn/24hour/n/2013/0412/c25408-21108374.html

Briefings | | |   Economy/Resources