Economy/Resources - 130. page

"The Chinese Communist Party’s (CCP’s) Politburo normally holds two special meetings each year to discuss economic issues. One is usually in July and one is in December. Mingpao reported, however, that it added one in April of last year because, since last year, the economic slowdown has become the new norm."

This year the Politburo met again in April to discuss economic growth. "[China’s] GDP grew at 6.7 percent in the first quarter of this year. The announcement of the Politburo’s economic meeting stated that there is relatively high pressure for the GDP growth rate to drop even further. It is usually rare for China’s annual GDP growth rate to beat its first quarter’s growth rate, so China faces a major challenge in trying to meet its targeted growth rate of 6.7 percent."

"The Northeastern region is of particular concern. Liaoning Province recorded a negative growth, becoming the first state to post such a record. The three provinces in the Northeastern region (Liaoning, Jilin, Heilongjiang) were among the bottom four provinces having the slowest growth."

Source: Mingpao, April 30, 2016
http://news.mingpao.com/pns/dailynews/web_tc/article/20160501/s00013/1462038853619

Xinhua reported that, based on the data released by Global Blue, a tourism shopping tax refund company headquartered in Nyon, Switzerland, Chinese consumer spending on luxury products in overseas markets was down 24 percent in March, for the first time since 2010. In European markets, luxury goods spending dropped 35 percent. The data also indicated that Chinese consumers spent less on luxury goods purchase in the Asia Pacific, which was down 6 percent. Japan was the only country that saw an increase. According to the report, in March of 2015, the Chinese consumers’ spending on overseas luxury goods grew 122 percent. The analysis suggested that the reduction in this year’s amount was mainly driven by the terrorist attack in Paris and Brussels as well as the narrower price gap between Chinese and European markets which currently averages about 30 percent. The article stated that the slowdown of the domestic economy in China is also a contributing factor.

Source: Xinhua, April 25, 2016
http://news.xinhuanet.com/fashion/2016-04/25/c_128921834.htm

Frequent reports about Ponzi schemes have been appearing on China’s online P2P (person to person) financial management web sites. Those online platforms offer financial products with high returns to attract investments but in the end they have turned out just to be Ponzi schemes.

Phoenix published an article commenting on how widespread such schemes are. The article pointed out that the root cause is that China’s Central Bank keeps printing Renminbi, causing a drastic devaluation of the money. The public, in order to protect the wealth they accumulated in Renminbi and to counter the devaluation factor, has had no choice but to look for investment options that promised high returns. 

Xinhua carried an article on the reaction from Lou Jiwei, China’s Finance Minister, to Moody’s recent downgrade of its outlook for China. The article wrote that Lou spoke at a press conference in Washington DC on April 15 and claimed that Moody gave the rating because it has a biased view and does not reflect the reality of China’s economic status. Lou quoted figures that the Ministry of Statistics recently released for the first three months of this year. They showed that the growth of China’s GDP was at 6.7 percent. Lou called that a pretty good number. Lou also stated that the central administration has launched measures to control the growth of local debt and has additional plans to control the growth of debt using a plan to turn the debt into equity.  The article then quoted statements from a number of officials who denounced Moody’s downgrade. According to the article, this is not the first time that Lou expressed his opinion about the downgrade. On March 20, Lou publically stated that he “does not care” about the downgrade.

Source: Xinhua, April 18, 2016
http://news.xinhuanet.com/fortune/2016-04/18/c_128904588.htm

China Youth Daily published an article that reported on the publicly traded State Owned Enterprises (SOEs) that had released their annual reports. By April 16, among 1,725 SOEs, after their nonrecurring profits and losses, 144 of them showed a negative net profit for three consecutive years. The cumulative loss totaled 140 billion yuan. Most of these companies were in the steel, chemical, coal, cement, and glass industries. Half of them incurred losses exceeding hundreds of millions of yuan each year. The report indicated that, out of these 144 “zombie companies,” 122 of them relied on supplemental funding from the government to survive. That total amounted to 30.7 billion yuan (US$4.74 billion) over the past three years. The article reported that, since April 30 is the deadline for filing their annual reports, there will be more zombie companies that have not yet filed. Therefore, the total number of zombie companies could be as high as 270 this year.

Source: China Youth Daily, April 18, 2016
http://finance.youth.cn/finance_gdxw/201604/t20160418_7874215.htm

According to statistics that the China’s Ministry of Water Resources released, over 80 percent of the water from underground wells is unfit to drink. In 2015, the study tested 2,103 wells in the populous plains of China where the underground water resources are well developed, yet heavily polluted. Tests were conducted in shallow underground waters which are susceptible to soil or surface water contamination. The study of the Ministry of Water Resources concluded, “The evaluation showed the overall poor quality of these water resources.”