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Local Officials Will Have Lifetime Accountability for Government Debt

According to an article from Yicai.com, in order to reign in the exploding local government debt that has been growing out of control, Xi Jinping recently announced that the municipal government must strictly control the debt ceiling and the related officials must have lifetime accountability for the debt. Xi made the announcement during the finance conference which was held last week. The lifetime accountability will prevent the officials from shirking their responsibility once they have retired, According to the article, local debt has risen rapidly in recent years because officials seek GDP growth as a measure of their political achievement. The article went on the report that the Ministry of Finance has set up a debt ceiling in order to ease the local debt risk. By the end of 2016, local debt was at 15.32 trillion yuan (US$2.27 trillion) which was less than the 17.19 trillion (US$2.54 trillion) debt ceiling. The debt ceiling for 2017 was set at 18.82 trillion yuan (US$2.78 trillion). Meanwhile, in 2014, the State Council started to include the local debt as one of the measures for party official’s political achievement.

Source: Yicai.com, July 16, 2017
http://m.yicai.com/news/5316629.html

Pan Asia Nonferrous Metals Exchange Is a State Ponzi Scheme

The Pan Asia Nonferrous Metals Exchange was once an attractive investment platform that the government promoted in 2011. Over 220,000 people invested a total of 43 billion yuan (US$6 billion) in it. However, in 2015, it turned out that it was a Ponzi scheme and most people lost their money.

Investors have repeatedly appealed to both the Yunnan Provincial government and the central government to request help in order to recover their losses, but, so far, the government has provided no response.

Recently, a video was posted on YouTube with edited video clips promoting Pan Asia from the China Central Television (CCTV). These showed that the government was responsible for crediting and promoting Pan Asia in its earlier years. The video clips showed CCTV’s vigorous introduction of the nonferrous metal exchange platform, broadcasting Pan Asia’s collaboration with CCTV, and promoting Pan Asia’s business.

Source: Radio France International, September 24, 2016
http://cn.rfi.fr/中国/20160924-泛亚诈骗:国家导演的庞氏骗局

Caixin: Chinese International Travelers Significantly Changed Their Spending Pattern

The well-known Chinese financial news media group Caixin recently reported that Chinese international travelers have been labeled as major spenders. The United Nations World Tourism Organization’s (UNWTO) 2016 numbers showed that Chinese consumer’s international spending reached US$261 billion, which was more than twice the U.S. total (the U.S. spending was ranked number two). However, international consulting company Oliver Wyman just released a study showing some significant changes in the pattern of Chinese’ international spending habits. The report showed that, starting in 2016, Chinese international tourists spent only 33 percent in their total overseas expenditures on buying physical products. The same number was 41 percent in 2015. The statistics also showed that those who are still interested in buying physical products are among the lower income population. The spending trend is shifting to the categories of “Sightseeing” (ranked number one) and “Entertainment” (ranked number two). The research also showed that Chinese travelers depend heavily on Chinese language website reviews and on security incident news about the destination countries.

Source: Caixin, July 12, 2017
http://international.caixin.com/2017-07-12/101114417.html

China’s SOEs Are the Largest Oil Drilling Contractors in Kuwait

According to an article that China.org published, China’s State Owned Enterprises (SOEs) broke through the domination that the U.S. and the European countries held and became the largest oil drilling contractors in Kuwait, which is considered a strategic partner of China’s “one belt one road” project. The SOEs have built 53 teams in Kuwait and employ over 3,000 Chinese and foreign workers. They own 53 drillers and hold 45 percent of the oil drilling market share. The article claimed that by the end of first quarter in 2017, China’s SOEs will be responsible for a total of 64 projects in the amount US$13.7 billion in Kuwait. The projects range from oilfield services, exploration, refinery, housing, and infrastructure, to telecommunications.

Source: China.org, July 16, 2017
http://news.china.com.cn/2017-07/16/content_41222830.htm

People’s Daily: Eleven Provinces and Cities had a Minimum Wage Increase in 2017

According to an article that People’s Daily published, by July 15, 2017, 11 provinces and cities had raised their minimum wage. The statistics disclosed that both the number of provinces that had a minimum wage increase and the rate of increase were lower than in the past. Take Beijing as an example. The rate of the increase in the minimum wage was only 5.8 percent this year while the rate of the increase in Shanghai was 5 percent. Most regions have minimum wage increases once every two years. Some regions have changed it to once every three years.

The article reported that, in 2012, 25 regions had wage increases that averaged 20.2 percent. In 2013, 27 regions had increases at a rate averaging 17 percent. In 2014 19 regions had increases that averaged 14.1 percent. In 2015 24 regions had increases of 14 percent. In 2016, 9 regions had increases that averaged 10.7 percent. The article cited the reasons for the reduced rate of the wage increases as slowed economic growth in recent years as well as the intent to ease the pressure on businesses in order to maintain their cost competitiveness. According to the list of the minimum wage in 31 regions mentioned in the article, the minimum wage gap varies between regions with those along the coastline ranked in the top five minimum wage regions including Shanghai, Tianjing, Beijing, Guangdong and Jiangsu. The regions in the Southwest, Northwest, and Northeast have a relatively lower minimum wage. The bottom two regions are Tibet and Guangxi Province where the minimum wage of the level 4 job category in Guangxi is only 1,000 yuan (US$141). That amount is less than half of the minimum wage in Shanghai which is 2,300 yuan (US$330).

Source: People’s Daily, July 16, 2017
http://society.people.com.cn/n1/2017/0716/c1008-29407521.html

Zhu Rongji’s Son: China Has Overbuilt Houses for 300 Million People

Zhu Yunlai (Levin Zhu), son of former Chinese Premier Zhu Rongji, is an outspoken banker in China. He recently commented on China’s housing market.

“Actually according to the Statistics Bureau, if you add each year’s numbers together, China’s current total housing capacity can supply 1 billion people, at an average rate of 30 square meters per person. Counting even people living in small towns, China has only 700 million urban dwellers. That means there is a 300 million over-capacity.”

“The nationwide average housing price is 7,000 yuan (US $1,000) per square meter. The average income for urban residents is 30,000 yuan per year.  Taking out expenses and taxes, 10,000 yuan can be used for house payments. The housing price has way exceeded the general public’s purchasing capability.”

“Then why are houses so expensive? It is because of the financial factor. China has issued 160 trillion yuan. The number is still rising. So the housing price for sure is rising – that’s called asset inflation.”

“People eventually will realize that even if you have the money to buy a property, you won’t be able to sell it later because the general public, that is those who are really in need of a house, cannot afford one. So the housing assets will not increase in value and people may be forced to sell at a loss.”

Source: Sina, June 25, 2017
http://cj.sina.com.cn/article/detail/2192180454/296831?column=realty&ch=9

 

 

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