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Qiushi: Seeking New Advances in Marxist Political Economy

November 25, 2015, a day after Xi Jinping chaired a politburo study session on the Marxist political economy, Qiushi Journal, a semi-monthly publication of the Central Committee of the Chinese Communist Party (CCP), published a commentary titled, "Extending New Spheres of the Marxist Political Economy in Contemporary China." It called for creatively contributing to the evolution of the Marxist political economy. 

The commentary recalled that, since 1949, all the way through the reform and opening up years, four former CCP leaders, Mao Zedong, Liu Shaoqi, Deng Xiaoping, and Chen Yun, all paid attention to the study, research, and application of the Marxist political economy. 
As China’s reform enters a period where it must fight the toughest battles, the interests that a number of social groups have expressed have become more diversified and economic development has displayed growing uncertainty. To seek the right way forward, to respond to the challenges of our time, to showcase the benefits of the socialist system, and to offer theoretical guidance in the practice of grand historic reform, the Marxist political economy is called for in order to fulfill its historic mission with characteristics that mark open-mindedness, inclusiveness, and evolving with the changing times. 
The commentary stated that, in the face of the extremely complex economic situation at home and abroad, as well as varied economic phenomena, the study of the Marxist political economy could help in the conduct of an economic analysis in a scientific way, improve the capability of managing a socialist market economy, and better answer problems related to economic development. 
The commentary concluded that the creative evolution of the Marxist political economy requires us to take into consideration the relationship between politics and the economy, government and markets, the economy and society, and China and the world. It also requires us to have a firm grasp of the situation in China while borrowing from helpful elements in Western economics. This will bring forth the great momentum, vitality, and potential of the theoretical creativity that underpins China’s sweeping economic and social development, and will facilitate the contribution of Chinese wisdom to the Marxist political economy. 
Source: Qiushi Journal, November 25, 2015 
http://www.qstheory.cn/wp/2015-11/25/c_1117249400.htm

Briefings | | |   Economy/Resources

Western Luxury Brands Will Close More Stores in China

With discounts, price reductions, and store closings, 2015 may have been the most turbulent year for luxury goods in China. According to Fortune Character Research Institute, 78 percent of the US$91 billion that Chinese spent in 2015 was spent outside of China. As for Western brand names in China, last week Louis Vuitton announced closure of three stores in China. In 2015 alone, 83 percent of Western luxury brands closed some of their stores. In the past several years, Prada closed 16, Chanel 11, and Burberry three. Fortune Character Research Institute predicted that the trend to close stores will continue and will be more widespread. In 2016, over 95 percent of luxury brands are expected to close some stores. 

Source: The Paper, reprinted by Xinhua, November 25, 2015 
http://news.xinhuanet.com/fashion/2015-11/27/c_128472144.htm
Briefings | | |   Economy/Resources

Beijing Business Today: Endless Steel Overcapacity

On November 17, 2015, Beijing Business Today and Xinhua Economic Information Daily published an article titled “Endless Steel Overcapacity.” China produced 820 million tons of crude steel in 2014, accounting for about half of the global steel production, thanks to the large infrastructure and real estate boom in the last decade. However, domestic demand has decreased recently due to sluggish real estate development. Serious excess steel capacity has resulted in low profit margins. In the past 10 months, China exported 92.13 million tons of excess steel overseas at cheaper rates. This amount is much more than the amount of steel exported last year (73.89 million tons). However, this year’s profit from the exportation of steel has dropped by 6.6 percent.

Local governments have been reluctant to solve the problem of the excess steel production because the iron and steel industry accommodates a lot of employment opportunities. The iron and steel industry would have to lay off unneeded employees in order to reduce the steel overcapacity. The government should let the market eliminate unprofitable companies and backward production capacity. At the same time, the government should take responsibility for assisting the unemployed workers to find new jobs. It should also provide them with a social security pension, health care, and job training so as to minimize any social conflicts. 

Sources: Beijing Business Today & Xinhua Economic Information Daily, November 17, 2015
http://www.bbtnews.com.cn/2015/1117/127566.shtml
http://www.jjckb.cn/2015-11/17/c_134823900.htm

Briefings | | |   Economy/Resources

Macao Chief Executive: Gambling Industry May Suffer a New Low

The South China Morning Post recently reported that Macao Chief Executive Chui Sai discussed his estimate of the City’s 2016 gambling-related income in his speech to the Macao Legislative Council. Cui projected that Macao’s gambling industry may have a pre-tax income of US$25 billion in 2016, which is lower than that of 2015 and is only half of the 2014 number. The gambling business in Macao is currently seeing its worst days in history. Analysts say the primary factors are the significantly slowed Chinese economy as well as the Mainland’s anti-corruption movement. Macao’s gambling income has suffered 17 consecutive months of decline. Although the City is still expanding its capacity to handle a large volume of tourists, the total number of visitors is seeing a decline. The upcoming holiday season is critical to Macao’s economy.
Source: South China Morning Post, November 18, 2015
http://www.nanzao.com/sc/business/1511954ac25eda1/ao-men-te-shou-bo-cai-ye-shou-ru-ming-nian-liao-xu-jiang-kong-chuang-2010-yi-lai-zui-di
Briefings | | |   Economy/Resources

China to Adopt U.S. Registration System for IPOs

On November 20, Xiao Gang, Chairman of the China Securities Regulatory Commission (CSRC), stated that the State Council will push for the implementation of a registration system similar to the one in the United States to be initiated as early as March 2016. 

Currently, after they pass the review of CSRC’s Public Offering Review Committee (PORC) and complete post-review procedures, the CSRC approves all Initial Public Offering (IPO) applications of companies wishing to list their equities on the stock exchanges. Xiao Gang stated that the current approval-based system has brought about inflated financials with understated risks, excessive fund raising during the IPOs, high issuance prices, and the corruption of security officials. 
According to Xiao Gang, the upcoming registration system will be similar to the U.S. SEC registration required for IPOs. CSRC will review whether the prospective issuer has provided full disclosure of its financials and risks. The issuer will determine that the IPO share prices are based on the market. The registration system will also provide a mechanism for companies to delist from the stock exchange if they wish. 
Source:  Finance (Jing Rong Wang), November 22, 2015 http://stock.jrj.com.cn/ipo/2015/11/22153420113134.shtml
Briefings | | |   Economy/Resources

Xinhua: Louis Vuitton Closed Another Store in Guangzhou

Xinhua recently reported that Louis Vuitton (LV) just closed down one of its key stores in Guangzhou, which is the capital city of Guangdong Province – one of the most economically developed provinces in China and the closest province to Hong Kong. It is very telling since the store is still profitable and it is not the only LV store to close. Louis Vuitton is a widely recognized luxury brand in China. The move is symbolic since it’s the latest event that represents a continuous “flood” of store closures across many luxury brands since last year. Other examples include Gucci and Burberry. According to a research report by Bain & Company, the Chinese luxury market started to suffer a negative growth in 2014, which saw the largest number of store closures. Experts suggested that the main causes of the decline in the luxury sector were the anti-corruption movement, low domestic consumer spending, and customers shopping directly outside of China. 
Source: Xinhua, November 13, 2015
http://news.xinhuanet.com/fortune/2015-11/13/c_128425284.htm
Briefings | | |   Economy/Resources

Caixin: Crackdown Day Is Coming

On November 5, 2015, Caixin Weekly magazine, a media in Mainland China that is closely related to Xi Jinping’s leadership camp, published a cover report titled “Crackdown Day.” The report asserted that the long-awaited “Crackdown Day,” a national campaign to crack down on market manipulation and to increase the transparency of the stock market, is coming.

On November 10, 2015, Power Apple published an article introducing Caixin’s article titled, “‘Crackdown Day’ Is Approaching, Liu Yunshan Is in Danger.” Liu Yunshan is a follower of Jiang Zemin, the former top leader of the CCP and the People’s Republic of China. Liu is a current member of the Chinese Communist Party Politburo Standing Committee and a leader of the Propaganda and Ideology Leading Group. Liu Lefei, son of Liu Yunshan, is the vice chairman of CITIC Securities International. Among 11 top senior management personnel in CITIC Securities International, eight high-ranking senior officers have been detained for investigation. Liu Lefei has been suspended from his position and is restricted from going abroad. He is expected to confess what he has done.

In addition, Liu Yunshan’s son Liu Lefei, the sons of Zeng Qinghong and Li Changchun (who also belong to Jiang’s faction) and 320 children of the Party leaders have all been placed under control, preventing them from escaping from China.  

Sources: Caixin Weekly, November 5, 2015 & Power Apple, November 10, 2015
http://weekly.caixin.com/2015-11-05/100870579.html
https://www.powerapple.com/news/zhong-gang-tai/2015/11/10/2487260.html

Briefings | | |   Economy/Resources

Xi Jinping on Protecting Investors in the Stock Market

On November 10, 2015, Chinese President Xi Jinping held the 11th meeting of the Communist Party leadership on financial and economic affairs, calling for stock markets to be better regulated so that investors are treated fairly. 

Xi pointed out that in promoting economic structural reforms, the effort should focus on key issues. He called for efforts to resolve excess capacity effectively, promote optimal industrial restructuring, reduce costs and help businesses stay competitive, resolve the real estate inventory, and promote a sustainable development of the real estate industry. 
On stock markets, Xi stated that efforts should be made to guard against and defuse financial risks and to accelerate the formation of stock markets that have a fully functional financing mechanism, a solid infrastructure, effective regulation of the stock markets, and full protection of the interests of investors. 

Source: Caixin, November 10, 2015 
http://www.caixin.com/2015-11-10/100872547.html

Briefings | | |   Economy/Resources