Economy/Resources - 132. page

People’s Daily published an article on the problem that China is facing with excess capacity in the coal mine industry as well as the re-settlement of 1.3 million coal mine workers. According to the article, demand for coal has slowed down since 2012. The rate of decline was 2.9 percent in 2014 and 3.7 percent in 2015. The China National Coal Association published statistics that showed that, by the end of 2015, China had been sitting on 300 tons of coal inventory for 48 consecutive months. Excess capacity and the importation of foreign coal have resulted in a sharp price drop – as much as 28.6 percent in 2015. The article reported that, in 2015, income for the major coal mine industry dropped 14.8 percent and profit dropped 65 percent compared to the same period in 2014. Over 90 percent of the industry suffered financial losses. Currently, according to the article, the supply of coal exceeds demand by 2 trillion tons. The National Energy Association stated that the plan is to close 1,000 low efficiency coal mines which is equivalent to 60 million tons of capacity in 2016. The long term plan is to reduce 500 million tons of coal production over the next three to five years through mergers and acquisitions with as few bankruptcies as possible. Meanwhile, the article said, there are 1.3 million coal miners in the work force who must be redirected and the re-settlement of these people is expected to be a challenging task.

Source: People’s Daily, March 28, 2016
http://energy.people.com.cn/n1/2016/0328/c71661-28230173.html

Guangming Daily published an article which quoted the statistics from the 2015 Blue Book on the number of Chinese students who returned home after studying abroad. According to the Blue Book, by the end of 2015, there were 4.04 million Chinese students studying abroad, an annual growth of 19.06 percent. Meanwhile the number of students who returned back home reached a cumulative total of 2.2 million, a growth rate of 22.46 percent. The statistics also reported that 59 percent of the returned students are female with an average age of 27. Eighty percent of the students hold a Master’s degree and 9.49 percent have a doctor’s degree. Business Management and Economics are the two most popular majors for these students. The Blue Book also showed that the U.K, U.S, Australia, Korea, and Japan are the top five countries that the Chinese students chose. Seventy-five percent of the people who were interviewed expressed interest in finding a job along the east coast and two thirds of them wished to work for a business enterprise.

Source: Guangming Daily, March 27, 2016
http://edu.gmw.cn/2016-03/27/content_19459323.htm

An article listing ten problems that will further hinder China’s economy was widespread on the Internet. It claimed that the next two years will be the most challenging for China, due to the following problems:

One, exports: the main driver for China’s economic growth will no longer be as effective as before. China’s strategy of “low prices to occupy the world” is no longer in effect. Without low prices, exports will not be booming; without booming exports, China’s economy is losing its growth lever.

Two, high taxes: The high corporate tax system has suppressed businesses’ creativity. Whether a corporation makes money or not, the tax is always there.

Three, monopolies: Monopolies have shut down the door on innovation. In any business where a company has a monopoly or in one with enormous government administrative offices, it is very difficult for someone to create a small business.

The other seven problems include the following: It has proven difficult to generate an increase in demand for domestic consumption; the government is more conscious about return on investment and steers away from the old practice of making a large investment without considering the return; the real estate industry is hopeless; China does not have a good system to encourage people to innovate; the government’s functions prohibit further economic growth; high tolls on the roads, the high expense of freight train shipping, and the high cost to obtain the needed certificates from government offices all contribute to blocking the free flow of the economy; and also, people are losing their confidence in China’s economy.

Source: Eastday.com, March 10, 2016
http://mini.eastday.com/a/160310101029314.html?btype=index&subtype=guonei&idx=8&ishot=0

China.com carried an article on the financial struggle that the Taiyuan Iron and Steel Group (TISCO) is going through. According to the article, TISCO is the largest and most advanced stainless steel manufacturer in the world. Its annual steel production volume exceeds 10 million tons, 40 percent of which is in stainless steel. However the company’s profits have been declining yearly since 2012. They dropped from 18 billion (US$2.8 billion) in 2011 to 10 billion (US$1.55 billion) in 2012; 5 billion (US$0.77 billion) in 2013; 4 billion (US$0.62 billion) in 2014; continuing to a negative 40 billion (US$6.19 billion) in 2015. Recently, the company had to shut down some equipment and production lines and significantly cut back workers’ hours. According to the article, TISCO employees were asked to work one month and take three months off. They were told that during the three months that they are off, they are required not to take on any other jobs and must remain on call in case of any last minute schedule changes. The workers had to take a 20 percent pay cut and some of the workers could only make 50 percent of their pay compared to what they made before. Other measures that the company took included shifting the direct workforce to an indirect role by taking back-end maintenance and support functions such as working in a nearby agriculture farm that the company built. At the same time, TISCO set up sales offices in Shanghai, Guangzhou, Hong Kong and the U.S. in order to expand its sales channels.

Source: China.com, March 20, 2016
http://finance.china.com.cn/industry/hotnews/20160320/3636545.shtml

People’s Daily reported that, during the 2016 China Development Forum currently being held in Beijing, Lou Jiwei, China’s Minister of Finance, commented on Moody’s recent downgrade of its rating on China. Lou said that China does not particularly have a problem with the downgrade, even though it understands the agency’s concerns about the local debt in China. As to whether China can reduce its current capacity and overcome issues while going through structural reform, Lou said that China didn’t have any policies in place when Moody’s issued the downgrade but, since then, China has decided to spend one trillion yuan (US$150 billion) on capacity and inventory reduction, which shows its confidence in dealing with the issues.

Source: People’s Daily, March 20, 2016
http://finance.people.com.cn/n1/2016/0320/c403268-28212252.html

Recently real estate prices have risen rapidly in several major cities in China. There have been big debates on whether this represents a bubble. Financial Times Chinese published an article suggesting that by observing the past stock and housing market bubbles in the U.S. and Japan, one can see a phenomenon; the closer the bubble is to bursting, the faster it expands.

The article gave three reasons:

First, the buy and the short are supposed to balance the market. At the early stage of the bubble, they are in balance. As the bubble keeps developing, more people want to buy instead of sell. The short can no longer restrict the bubble.

Second, as the bubble grows, some investors start to worry about risk. To attract those rational investors, the market starts to offer higher short-term returns. If these returns are high enough, it will attract more investors.

Third, at the late bubble stage, a uniform consensus forms that the bubble will last forever. Almost all investors jump in to buy the bubbled assets. However, if all of them have bought the assets, to whom will they sell to make profit?

Source: Financial Times Chinese, March 9, 2016
http://m.ftchinese.com/story/001066525

Chinese have a tradition to keep the body whole after death. As a result, cornea donations across the Strait have never been abundant. For many years, there have been more than 20 "eye banks" in mainland China. They are in a very awkward situation, like a library that has no books. In other words, there have been "no corneas in the banks," for a long time. Only less than two percent of the patients on the waiting list can get a cornea. In Taiwan, there are more than 10 times the number of patients on the waiting list for cornea donors.