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2014 Statistics: Smog Days Increase 70 Percent in Beijing

The China Meteorological Administration recently issued its "China Climate Bulletin 2014." According to its report, the smog situation has worsened in China. Last year, there were 61 Smog days in the area of Beijing, Tianjin, and Hebei Province, a 70 percent increase over the 36 days in the previous year. On average, the whole nation has 17.9 smog days.

Source: Caixin Online, January 12, 2015
http://datanews.caixin.com/2015-01-12/100773475.html

CASS: Real Estate Purchasing Limits May Be Phased Out

China News reported that the Chinese Academy of Social Sciences (CASS) recently released a research report on the Chinese real estate market. The CASS Report found that an across-the-board decline was the dominant theme of the 2014 Chinese real estate market. “Continued adjustments” are expected to be the primary market trend for 2015. The current Chinese housing market suffers the problem of high inventory; at the same time demand remains low. A total of 46 city governments established policies that limit real estate purchases. As of now, only five of them still have these policies in place. The CASS Report expressed the expectation that all cities will drop these limitations within this year. More and more government administrative operations will be done via the market instead of direct government policies. In the new year, most of the real estate companies are planning to focus on reducing their inventory.
Source: China News, January 12, 2015
http://finance.chinanews.com/house/2015/01-12/6956881.shtml

Xinhua: Li Ka-Shing Is Restructuring His Assets

Xinhua recently reported that Li Ka-Shing, the wealthiest person in Hong Kong, announced on the 9th that his two flagship companies (Cheung Kong and Hutchison Whampoa) are being restructured to form two new companies to cover real-estate and non-real-estate businesses. The plan involves re-organizing Li Ka-Shing’s assets, which are valued at approximately HK$1 trillion (around US$129 billion). According to the numbers that Forbes released in March 2014, Li ranked number 20 in the list of the world’s wealthiest people. The most remarkable move in this re-organization is that the new companies will be registered in the Cayman Islands instead of Hong Kong, where the previous companies were registered. Analysts expressed their concerns on this registration choice since Mr. Li previously made a promise that his companies would always be registered in Hong Kong. Li argued in his announcement that the new companies will still be traded on the Hong Kong Stock Exchange just as they have been. In recent years, Li Ka-Shing has been moving out of the Chinese Mainland market and has been making a large number of investments in Europe and Canada. The latest development triggered a widespread discussion as to whether this means that assets valued in RMB (the Chinese currency) now face increasingly higher risks.
Source: Xinhua, January 10, 2015
http://news.xinhuanet.com/fortune/2015-01/10/c_1113948866.htm

Xinhua: Lake Poyang, China’s Largest Freshwater Lake Almost Completely Dry

On January 7, 2015, Xinhua published a photo article titled, “Lake Poyang, China’s Largest Freshwater Lake, Approaches Being Dried Out.” In the brief news article, four photos displayed the dried-out bed of Lake Poyang.

The water level of Poyang Lake at its hydrological station was only 8.11 meters. When the water level is less than 8 meters, it means that the lake has entered its extreme drought season. Currently, Poyang Lake’s water area occupies only 310 square kilometers. In the past, when the water area of the lake was more abundant, it was over 3000 square kilometers.

Source: Xinhua, January 7, 2015
http://news.xinhuanet.com/photo/2015-01/07/c_127367345.htm

Xinhua: China Is Becoming or Has Become the World’s Largest Garbage Dump

On January 6, 2015, Xinhua reported that China is becoming or has already become the world’s largest “garbage dump.” The article stated, “This is not exaggerated to scare people.” According to "Shanghai Securities News" (http://www.cnstock.com/), China imported 125 times more plastic waste, 50 times more metal waste and 21 times more paper waste in 2003 than in 1990. Chinese buyers bought this waste for more than twice the price that other countries wanted to offer. After having been recycled, re-processed or re-furbished, it was then returned to the market.

Some experts have said, “The land and water polluted by garbage cannot be restored for 100 years." The article particularly mentioned plastic waste from the United States, medical waste from Britain, chemical waste from South Korea, household waste from Germany, and abandoned agricultural film from Japan.

Source: Xinhua, January 6, 2015
http://www.xinhuatone.com/detail.jsp?con_id=410164&class_id=53

HSBC Chinese Manufacturing PMI Recorded a Seven Month Low

Well-known Chinese news site Sina recently reported that HSBC/Markit jointly released the final Chinese Manufacturing PMI (Purchasing Managers Index) number for December, which is at a seven month low point at 49.6. According to Qu Hongbin, HSBC Chief Economist of the Grand China Region, domestic demand is on the decline, which has caused the number of new orders to shrink. This also confirms that the manufacturing industry is getting weaker. Qu suggested that the government may need to relax its currency policies again in the next few months. The unemployment sub-index showed an increase in unemployment, which may indicate that manufacturing companies are not hiring. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.
Source: Sina, December 31, 2014
http://finance.sina.com.cn/stock/usstock/c/20141231/111321206181.shtml

BBC Chinese: China to Adjust Salary Structure for State-Owned Company Management

BBC Chinese recently reported that, starting on January 1, 2014, 72 large central government owned companies started adjusting their management salary structure. These companies include PetroChina, Sinopec, China Mobile, and some banks and railway companies. According to the Ministry of Human Resources and Social Security, after the reform, the salary level of these companies’ leadership teams will very likely decline. In China, the central government owned company management personnel are both corporate administrative professionals and government officials at the same time. The management personnel typically include the Chairman of the Board, the Chief Executive Officer, the Chairman of the Board of Supervisors, and the Top Secretary of the Communist Party branch in the company. The new plan will set the ceiling on the management salaries to be around eight times the average salary of the company’s staff. The current level is around 12 times.
Source: BBC Chinese, January 3, 2015
http://www.bbc.co.uk/zhongwen/simp/china/2015/01/150103_china_stateowned_corporation_salary

CASS Predicts Soft Landing in the Housing Market in 2015

On December 26, 2014, the China Academy of Social Sciences (CASS) published its Housing Green Paper, the China Housing Development Report (2014-2015). The report made a number of predictions: that the restrictions on house purchases will be eliminated in 2015; that, with upcoming government incentives, there is hope that the housing market will have a soft landing; and that half of the developers will no longer be in business. 

The report predicted that, in the next couple of years, the housing market will continue to decline. In the last 5 cities (Beijing, Shanghai, Guangzhou, Shenzhen and Sanya) that currently have restrictions on the number of houses one may be allowed to purchase, these restrictions will be removed within a year. Ni Pengfei from CASS commented that once the restrictions are eliminated, the assumption that it is a seller’s market and the myth of ever increasing housing prices will be completely shattered. 
The report predicted that the central and local governments will promulgate policies to facilitate a soft landing in the housing market. Such policies may include removing any restrictions on how many houses one can buy, loosening the lending requirement for those who own two or more houses, and reducing transfer fees and personal income taxes. 
Ni Pengfei held that, given the low returns on housing investment and the surplus in the housing market, government incentives would not stop the decline of the housing market. The report expressed the belief that, with the surplus of houses on the market and the surplus of developers’ capabilities, more than half of future developers will change their line of business or otherwise disappear from the market. 
Source: China News Service reprinted by Xinhua, December 26, 2014 
http://news.xinhuanet.com/politics/2014-12/26/c_127338644.htm