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Briefings - 825. page

CRN: Government Consumes a Large Percentage of China’s Financial Resources

China Review News (CRN) recently reported that, based on the numbers released by the National Bureau of Statistics, consumer spending contributed 55 percent to the economic growth in the third quarter of this year. However, government operational consumption is also considered part of the final consumer spending. Between 2000 and 2010, the Chinese government’s consumption grew from RMB 1.57 trillion to 5.36 trillion. Government operational spending takes about twenty percent of the annual government income. The same ratio number for the United Sates is 9.9%; it is five percent for the European Union and 2.8 percent for Japan. This indicates that it takes substantially more money to sustain the Chinese government. The statistical data also reflects a lowered quality of consumer spending because the government’s operational consumptions eats a large slice of the “consumer spending” pie.
Source: China Review News, November 3, 2012
http://www.zhgpl.com/doc/1022/8/2/7/102282777.html?coluid=53&kindid=0&docid=102282777&mdate=1027073850
Briefings | | |   Economy/Resources

China to Reform the Pay Scale in State Owned Enterprises

Qiu Xiaoping, vice minister of the Ministry of Human Resources and Social Security, disclosed that a reform will take place in managing the pay scale in state owned enterprises. Tighter control will be exercised over high-income professions.

Qiu stated that the Ministry needs to establish a reasonable control over income allocation and set up a minimum wage standard and rate of increase for wages. The Ministry also needs to build an infrastructure system to conduct pay scale research and information sharing while building a pay scale database for companies to use as a reference.

According to statistics, from 2002 to 2011, the average salary in urban regions grew 14.63 percent from 12,422 yuan (US $1,990) to 42,452 yuan (US $6,802). Farm workers have become the main workforce reaching 252 million in 2011. It was also disclosed that certain high ranking managers in state owned enterprises make a million or even a billion yuan in annual salary. It was suggested that their income shouldn’t be higher than three times the salary of those in a public servant position ranked at the same level.

Source: People’s Daily, October 31, 2012
http://politics.people.com.cn/n/2012/1031/c1001-19442054.html

Briefings | | |   Economy/Resources

Government Procurement Market Lacks Transparency

The China Federation of Logistics & Purchasing (CFLP) announced that the China Public Procurement website (http://www.china-cpp.com/) has been officially established, with headquarters in Wuhan, Hubei Province. It is considered the world’s largest online trading and service center.

According to Chen Yuanzhong, Vice Chairman of the CFLP, government procurement in 2011 was 11.3 trillion yuan (US$1.8 trillion), which accounted for 11 percent of total fiscal spending. However, government procurement is not regulated and lacks transparency and efficiency. China’s procurement market would reach 50 trillion yuan (US$8 trillion) if spending on education, health, housing, railroad, transportation, and energy were included. This number makes China the largest procurement market in the world.

Source: Xinhua, November 4, 2012
http://news.xinhuanet.com/fortune/2012-11/04/c_113597255.htm

Briefings | | |   Economy/Resources

Consumers Favor Foreign Luxury Goods over China Made Products

Xinhua carried an article that was originally published by Sichuan Daily. The article reported that the foreign luxury goods in China’s market are priced 45 percent higher than those sold in Hong Kong, 51 percent higher than in the U.S. and 72 percent higher than in France. The higher price occurs mainly because of of the markup from various sales channels and because of the tariffs imposed on luxury goods.

Meanwhile, products that are “Made in China” are priced lower in overseas markets than in the domestic market. One of the reasons stated was that China sets the export price of the goods at the manufacturer’s cost. Manufacturer’s profits come mainly from tax rebates. Another factor that drives up the domestic cost is the higher transportation expense. According to the article, Chinese consumers tend to favor foreign imported items because of the better quality. They lack trust in domestic made products.

Source: Xinhua, November 4, 2012
http://news.xinhuanet.com/fortune/2012-11/04/c_113597301.htm

Briefings | | |   Economy/Resources

Military Expert: China Is only 15-Years behind the U.S. and Russia in Fighter Development

On October 31, 2012, China’s second stealth jet fighter, the J-31, made its successful maiden flight. Commenting on the significance of the event, China’s aviation expert, Yongling Xu, said in an exclusive interview with a People’s Daily reporter, "China has narrowed the gap in the field of aviation technology between itself and foreign advanced countries to about 15 years. With the support of China’s strong national (financial) power, coupled with the ingenuity of the Chinese people, the day that China’s aviation industry catches up with the United States is just around the corner.” 

Source: People’s Daily, November 1, 2012 
http://military.people.com.cn/n/2012/1101/c1011-19464982.html
Briefings | | |   Defense/Military

PLA Daily: Resolutely Follow the Commands of Hu Jintao

On November 1, 2012, the People’s Liberation Army Daily issued an editorial in support of Hu Jintao. The editorial stressed the Communist Party’s absolute control over the military. It stated that the military is the main support for the Party and the country; it is responsible for the Party’s political dominance, implying that the role of the military in the rifts among the Party leaders is critical. The editorial warned, “The hostile forces in and outside China are ready to make trouble. … (We) must keep a clear mind and take a firm stand on major issues. … (The military) must consciously be highly consistent with the Party Central Committee and the Central Military Commission ideologically, politically, and in action and resolutely follow the commands of the Party Central Committee, the Central Military Commission, and Chairman Hu.

[Editor’s note: The PLA editorial on November 1, 2012, has been interpreted as showing support for Premiere Wen Jiabao after the New York Times published an article on October 26, titled “Billions in Hidden Riches for Family of Chinese Leader,” referring to Wen Jiabao. Wen, who is close to Hu Jintao, is known for his stance against the faction of former President Jiang Zemin and his cohorts such as the demoted Bo Xilai who, according to reports, was instrumental in the forced organ harvesting of Falun Gong practitioners in China.]

Source: People’s Liberation Army Daily reprinted on the Chinese Communist Party website, November 1, 2012
http://theory.people.com.cn/n/2012/1101/c49151-19459961.html

Briefings | | |   Government/Politics

Forty Percent of China’s Civil Servants Plan Early Retirement

According to a recent survey of China’s civil servants (government employees), 38.53 percent of those surveyed experienced that the reality of their government jobs turned out to be way below their expectations. Over 70 percent responded that large scale downsizing of the government is likely. With respect to the future of a government career, 39.10 percent are “preparing to retire early, just in case,” to play it safe; 10.11 percent are considering leaving the government for either a job in the private sector or to continue their education. The remaining 50.79 percent are not optimistic about their career prospects; their attitude is, "one step at a time, and deal with changes by not changing.”

Source: Xiaoxiang Morning News reprinted by Sina.com, October 31, 2012
http://edu.sina.com.cn/official/2012-10-31/1501360447.shtml

Briefings | | |   Social Stability

China’s Fiscal Revenue Slows Down, with Non-tax Revenue Filling the Gap

The Ministry of Finance’s statistics show that the fiscal revenue for January-September was 9.1 trillion yuan (US$1.5 trillion), an increase of 892.5 billion (US$143 billion) or 10.9% over the same period last year and 18.6 percent points lower than the growth for the same period last year. The tax revenue was 7.7 trillion yuan (US$1.2 trillion), a year-over-year increase of 8.6 percent, down 18.8 percent from the same period last year.

According to an official from the Ministry, since the beginning of this year, due to the downward macroeconomic pressure, the local fiscal revenue growth turned weak. To compensate for the gap, non-tax revenues, or various types of fees, are becoming an increasing source of fiscal revenue.

For the first three quarters of 2012, the non-tax revenue in many provinces and cities has grown far more than the tax revenue. Tianjin saw an increase in non-tax revenue (54.75%) that was more than 40 percentage points higher than the increase in tax revenue (10.86%); Anhui’s non-tax revenue (52.1%) increased more than 30 percentage points more than tax revenue (15.3%); Guangdong had non-tax revenue (25.89%) growing higher than the tax revenue (8.15%) of nearly 18 percentage points. In some places, imposing fines has become an important part of the non-tax revenue.

Source: Nanfang Weekend, October 30, 2012
http://www.infzm.com/content/82459

Briefings | | |   Economy/Resources