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Economic Downturn Will Impact 2015 Fiscal Revenue

China’s Finance Minister Lou Jiwei predicted that, in the next few months, the State will face considerable pressure to meet its 2015 revenue target. He made these remarks when speaking to the People’s Congress on June 28, 2015. "In the next several months, due to factors such as the pressure of the economic downturn, we expect to face considerable pressure to meet the central government’s fiscal revenue target."

Lou set out five priorities for the future. In regards to in-depth reforms of the taxation system, Lou stated that efforts will be made to study a reform proposal on the personal income tax and to support real estate tax legislation. 
Source: Ministry of Finance of China, June 29, 2015 http://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/201506/t20150629_1262257.html
Briefings | | |   Economy/Resources

Shanghai Plans to Establish Gold Fixing Price in RMB

Well-known Chinese news site Sina recently reported that the Shanghai Gold Exchange is planning to use the Chinese currency RMB for its gold fixing price. The Exchange already submitted its plan details to the Chinese central bank for approval. Once approved, the Exchange will decide on the international and domestic banks that will be part of the process of fixing the prices. This is the latest of China’s efforts to improve its status in the world’s gold market. Currently the Base London Gold Fixing Price is the primary indicator of gold prices. However the London Fixing Price has been under legal investigation for potential manipulations. If the RMB-based Gold Fixing Price is established and accepted globally, the world gold trade could then be settled in RMB. This could render the London Gold Price irrelevant. However the Chinese currency is not yet freely exchangeable.
Source: Sina, June 24, 2015
http://finance.sina.com.cn/money/nmetal/20150624/181222507193.shtml
Briefings | | |   Economy/Resources

People’s Daily: Domestic Stock Market Lost RMB Nine Trillion in a Week

People’s Daily recently reported that between June 12 and June 19, the Chinese domestic stock market (also known as the A-Share Market), which is composed of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, lost a total of RMB 9.24 trillion (around US$1.49 trillion). That amount equals the market value of PetroChina and ICBC combined. PetroChina is the world’s second largest oil and natural gas company and ICBC is world’s largest bank (in terms of market value). The Chinese A-Share Market has 175 million active accounts. The one-week loss was the equivalent of a loss per account of RMB 52,800 (around US$8,537). The two domestic stock exchanges temporarily unlisted 1,088 stocks due to the over-the-limit level of their price drops. The Chinese Securities and Futures Commission (SFC) started an investigation into potential illegal activities. Many stock market experts expressed the belief that the main cause of this stock market landslide was the Chinese government’s intent to delay the “easing” of the monetary policies.
Source: People’s Daily, June 20, 2015
http://finance.people.com.cn/n/2015/0620/c1004-27185308.html
Briefings | | |   Economy/Resources

People’s Daily: China Signed Free Trade Agreement with Australia

People’s Daily reported on June 17 that China and Australia signed a Free Trade Agreement (FTA), making Australia the largest economy that has an FTA with China. A few weeks back, China also signed a free trade agreement with South Korea. According to the new agreement, in 4 to 11 years, key imports from Australia such as dairy products (which have a current tariff of 20 percent), wines (current tariff 12~20 percent) and beef (current tariff 12~25 percent) will enjoy zero tariffs. Rice, wheat, wool, and cotton imported from Australia will also enjoy zero tariffs. Experts expect that the trade volume between the two nations may gain an additional increase of US$16 billion annually. The agreement will benefit China mainly in certain categories in manufacturing and industrial fields such as spinning, clothing, toys, and sports equipment. These benefits will be realized over the next decade.
Source: People’s Daily, June 17, 2015
http://world.people.com.cn/n/2015/0617/c157278-27172265.html
Briefings | | |   Economy/Resources

EU Chamber of Commerce: A Quarter of EU Companies in China Are Pessimistic

Well-known Chinese news site Sina recently reported that, not long ago, the European Union Chamber of Commerce in China released its annual report on business confidence. The report showed that the EU companies in China are reconsidering their strategy in the Chinese market. The report pointed out that the continuing top challenge remains the on-going slow-down of the Chinese economy. More and more EU companies are laying off people based on their pessimistic expectations. According to the report, around a quarter of the companies surveyed expressed deep concern about their profitability in the near future. Among the industrial companies, only 13 percent of them expected growth and 28 percent expected profit over the next two years. The top three categories of companies, including machinery, legal, and transportation/logistics do not expect to expand their businesses this year. Around 39 percent of the EU companies in China are planning on cost-cutting activities. The Chamber sent their survey to 1,474 EU companies currently doing business in China.
Source: Sina, June 11, 2015
http://news.sina.com.cn/c/2015-06-11/011631936498.shtml
Briefings | | |   Economy/Resources

Central Bank Report: China’s Economy Is Slowing Down

The Chief Economist of China’s central bank led a number of officials from the bank in writing a research report predicting that China’s economy will continue to slow down for the rest of 2015. 

According to the report, in the first four months of 2015, industrial output continued to drop, while the downward pressure on the economy has been increasing. The report observed three new changes in China’s economy. Export growth has decreased significantly; real estate and manufacturing investment are slowing down faster than expected; and banks are now facing the problem of there being an insufficient demand for loans. 
The report adjusted its prediction for 2015 GDP growth downward from 7.1 percent to 7 percent. 
Source: ifeng.com, June 10, 2015 
http://finance.ifeng.com/a/20150610/13767943_0.shtml
Briefings | | |   Economy/Resources

Exports Slide Further While Imports Plunge

According to China’s General Administration of Customs, in May, Chinese exports fell for the third consecutive month, while imports plunged to the lowest level in three months. These developments highlight the adverse Chinese domestic economic environment, which may trigger further monetary policy adjustments. 

The total trade value in May was down by 9.7 percent from April. Exports fell 2.8 percent, and imports 18.1 percent, with the trade surplus increasing by 65 percent. In the first five months, the U.S. and ASEAN demand helped prevent a more substantial decline in Chinese exports as the exports to Europe and Japan dropped. U.S-China trade went up by 2.8 percent and Europe-China trade was down by 7.1 percent. 
Source: People’s Daily, June 9, 2015 
http://paper.people.com.cn/rmrb/html/2015-06/09/nw.D110000renmrb_20150609_3-01.htm
Briefings | | |   Economy/Resources

Ministry of Environmental Protection: Less than 10 Percent of Cities Passed Air Pollution Inspection

Xinhua reported on the 2014 Environmental Report that the Ministry of Environmental Protection recently published. Out of 161 cities in which the air inspection was conducted in 2014, only 16 cities or less than 10 percent of the cities, passed the inspection. Meanwhile soil contamination remains a serious concern. The article stated that, taking into consideration all of the land that was inspected, the soil erosion rate was at 31.12 percent. According to Ministry of Environmental Protection, the excess discharge of pollutants and a lack of control are the main reasons for the poor environmental quality.

Source: Xinhua, June 4, 2015
http://news.xinhuanet.com/fortune/2015-06/04/c_1115517511.htm

Briefings | | |   Economy/Resources