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Google CEO: We Want to Return to China in a Significant Way

NetEase (163.com) reported that, at the Code Conference on June 1, Google CEO Sundar Pichai expressed his interest in Google returning to China. He said that he wanted Google’s return to happen in a significant way, but we’re "being thoughtful about [the return]." "It depends. We are open [to the idea]."

Google closed its search engine in China in 2010. Though Chinese manufacturers are using its Android system, many Google services such as the Play app store are not available in China.

[Editor’s Note: There were reports that Zhou Yongkang and Bo Xilai expelled Google from China as part of a deal they made with Baidu. in exchange Baidu then posted negative information about Xi Jinping and their other political rivals. Recently, Baidu has been under scrutiny from both the government and from netizens for irresponsibly selling forums and search ads.]

Source: NetEase, June 2, 2016
http://tech.163.com/16/0602/10/BOI1V19S00097U7R.html

Briefings | | |   Economy/Resources

Caixin: May Manufacturing PMI Showed Continued Slowdown

Well-known Chinese financial site Caixin recently released its official Chinese Manufacturing PMI index number for May, which was 49.2, down 0.2 from April. Caixin PMI was formerly known as HSBC PMI, which was a well-respected economic indicator monitored globally by financial institutions. The PMI report showed that the health of China’s manufacturing sector continued to decline in May, with output and new orders both falling. At the same time, job shedding persisted across the sector, with the rate of reduction remaining close to February’s post-global financial crisis record. Weak demand conditions underpinned further falls in both purchasing activity and inventory holdings in May. The renewed fall in total new business placed with Chinese manufacturers in May is a big concern. Though fractional, it was the first reduction in new work for three months. PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline. 
Source: Caixin, June 1, 2016
http://pmi.caixin.com/2016-06-01/100950089.html
Briefings | | |   Economy/Resources

State Council Introduced a New Research Funding Management Policy

Guangming Daily reported that, on June 1, the State Council introduced a new set of regulations which include a shift in the funding ownership from the central administration to the research institute in order to allow more flexibility in funding management. The policy also increased the allocation in hiring of research staff from 5 percent to 20 percent of the total indirect expense. Prior to this, the central administration and local government introduced a number of policies which were meant to correct the rigid management policy and the repetitive application process, as well as inadequate management of the funding. According to the statistics, from 2006 to 2014, the Ministry of Finance increased the science and technology funding from 1 trillion yuan (US$0.15 trillion) to 2.9 trillion (US$0.44 trillion). The statistics from the Ministry of Statistics suggested that total research and development spent in 2015 was 14 trillion (US$2.13 trillion) where 11 trillion (US$1.67 trillion) came from companies and 3 trillion (US$0.46 trillion) came from a government research institute and from colleges.

Source: Guangming Daily, June 3, 2016
http://edu.gmw.cn/2016-06/03/content_20401516.htm

Briefings | | |   Economy/Resources

SASAC to Find solutions for SOEs That Have Financial Trouble

Recently, Xinhua reported on a news conference that the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) held. According to Xinhua, 12 SOEs went through restructuring in 2015. More SOEs will go through the merger and acquisition process in 2016. The article also said that SASAC is determined to spend the next three years finding a solution for 345 SOEs that are in financial trouble. It will also bring down the production volume in the coal mine and steel industries by 10 percent in the next two years. Another proposal to improve the profitability and efficiency of the SOEs is to reduce the number of management levels to no more than 3 or 4 levels while striving for lean and efficient management during the upcoming SOE reforms.

Source: Xinhua, May 23, 2016
http://news.xinhuanet.com/fortune/2016-05/23/c_129006195.htm

Briefings | | |   Economy/Resources

Xinhua: Coal Mine Companies in Shanxi Province Are in Serious Financial Trouble

Xinhua reported that, by the end of 2015, seven major coal mine companies in Shanxi Province were carrying 11 trillion yuan (US$1.69 trillion) in debit, an increase of 10.2 percent compared to 2014. Their debt to asset ratio grew from 81.16 percent in 2014 to 82.3 percent in 2015. Meanwhile the operating cash flow dropped from 16 billion yuan (US$2.45 billion) to a negative 4.81 billion yuan (US$.76 billion). The article said that most of the employees were forced to take a pay cuts or were not paid on time. Statistics showed that, by the end of the first three quarters of 2015, the coal companies owed 3.5 billion yuan (US$.54 billion) in pay compensation and 10.9 billion yuan (US$1.67 billion) in social security funding. The human resource report from one of the coal mine companies said that its workers had to take an involuntary or voluntary work force reduction option or relocate to work on different projects. Among the seven coal mine companies, six of them rely on financial support from the government, which has grown 21.5 percent to 5.6 billion yuan (US$.86 billion). According to the statistics from the Ministry of Human Resources and Social Security, among the 1.8 million coal and steel industry workforce to be relocated, 1.3 million of them are coal mine workers.

Source: Xinhua, May 17, 2016
http://news.xinhuanet.com/local/2016-05/17/c_128988204.htm

Briefings | | |   Economy/Resources

After Alibaba Joined the IACC, Tiffany Quit

Well-known Chinese news site Sina recently reported that U.S. luxury brand Tiffany announced its withdrawal from the International Anti-Counterfeiting Coalition (IACC), which is the top international organization leading the fight against counterfeiting. The IACC is currently headquartered in Washington DC with over 250 well-known brands as members. Tiffany quitting the IACC Board and dropping its membership. The IACC accepted China’s largest online shopping host Alibaba as a member in April. That Alibaba got on-board caused a lot of dissatisfaction among IACC members. Before Tiffany, Michael Kors and Gucci had already withdrawn from the IACC. According to a report that China’s State Administration for Industry and Commerce released, only one third of the products sold on China’s largest online shopping site Taobao, which Alibaba owns, were not counterfeits. In previous years, well-known brands such as Gucci, Saint Laurent, and Puma took Alibaba to a New York court. Alibaba refused to accept the accusations but agreed to "try its best" to ban counterfeits on its platform. This promise did not gain trust from any of the victims.
Source: Sina, May 12, 2016
http://tinyurl.com/gtxyjjf
http://www.cankaoxiaoxi.com/finance/20160511/1155021.shtml
Briefings | | |   Economy/Resources

Caixin: April Manufacturing PMI Showed Further Slowdown

Well-known Chinese financial site Caixin recently released its official Chinese Manufacturing PMI index number for April, which at 49.4 is lower than March (49.7). Caixin PMI was formerly known as HSBC PMI, which was a well-respected economic indicator monitored globally by financial institutions. All sub-indexes of April manufacturing PMI declined. The index showed that operating conditions across China’s manufacturing sector continued to deteriorate in April, albeit marginally. Total new orders stagnated and new export work fell for the fifth month in a row. Weak market conditions and muted client demand contributed to a further solid decline in employee headcount. Manufacturing product prices indicated that inflationary pressures intensified across the sector in April, with material costs rising at the quickest pace since January 2013, which in turn underpinned the quickest rise in sales charges since October 2011. PMI (Purchasing Managers Index) is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline. 
Source: Caixin, May 3, 2016
http://pmi.caixin.com/2016-05-03/100938959.html
Briefings | | |   Economy/Resources

China to Further Control Land Use for Urbanization

On May 9, 2016, officials from the Ministry of Land and Resources explanained its thirteenth five-year plan, which was recently released. The plan covered the period from 2016 to 2020.  

Although the second national land survey showed that farmland has increased overall, some areas may not be used for farming and will be degraded into forests. Other problems include a serious shortage of reserve resources and mounting pressure on farmland due to disasters and construction. China must ensure it has no less than 18.65 million mu of arable land for steady farming. 
In regulating land use, consistent with the capacity reduction requirement, the supply of land for the production of iron and steel, coal and other industries with excess capacity and "zombie companies" will be strictly controlled. Policies will be developed to encourage and support exit, conversion, and mergers and acquisitions. 
For cities with a higher real estate inventory, the supply of land for housing will be reduced and ultimately eliminated.  Where any construction has not yet started, the use of the land will be allowed to change to the construction of resettlement housing and apartments for rent.  
Source: People’s Daily, May 9, 2016 
http://politics.people.com.cn/n1/2016/0508/c1001-28332853.html
Briefings | | |   Economy/Resources