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BBC Chinese: China’s Per Capita Carbon Dioxide Emissions Exceed the EU Number

BBC Chinese recently reported on the latest numbers for China’s carbon dioxide emissions. For the first time, emissions per capita exceeded the level in the EU. For a long time, China has maintained that the Chinese emissions level needed to remain high due to the country’s strong economic growth. However the Chinese government has always added that China’s per capita number was way below other large economies. From now on, this claim will no longer be true. At the present time, the total Chinese emissions level is higher than that of the United States and the European Union combined. A high ranking Chinese government official recently pointed out that China has been taking action to reduce emissions instead of just talking and that it is the lack of communication that has put China in a “misunderstood” position. According to the World Meteorological Organization, carbon dioxide emissions reached a record high in 2013.
Source: BBC Chinese, September 21, 2014
http://www.bbc.co.uk/zhongwen/simp/china/2014/09/140921_china_emission.shtml
Briefings | | |   Economy/Resources

Sinosteel’s Revenue Decline May Result in a Default

Beijing News published an article in which it reported that Sinosteel may not be able to meet its obligation to pay an amount due that totals tens of billions of yuan. According to the article, the liabilities to asset ratio for Sinosteel has remained between 90 and 95 percent since 2009. Prior to 2009, the business model for the State-owned steel companies involved importing ore and doubling or tripling the price when re-selling the ore to domestic downstream steel mills. In late 2009, these downstream steel mills were allowed to import ore, thus eliminating the high profit margin for large State-owned companies. Sinosteel’s revenue dropped from 180 billion yuan in 2010 to 140 billion yuan in 2013. Another reason for the financial loss is that it has failed in a series of investments overseas.

Sinosteel is under the China’s State-Owned Assets Supervision and Administration Commission. It has 86 subsidiaries, of which 63 are in China and 23 overseas. Their functions include developing and processing metallurgical mineral resources, trading and logistics of metallurgical raw materials and products, related engineering technical services, and equipment manufacture. 
Source: The Beijing News, September 24, 2014 
http://www.bjnews.com.cn/finance/2014/09/24/334968.html
Briefings | | |   Economy/Resources

China Uncovered $10 billion in Fraudulent Entrepot Trade

At a press conference on September 25, 2014, the State Administration of Foreign Exchange (SAFE) discussed its investigations into entrepot trade, a trading post where merchandise can be imported and exported without paying import duties. SAFE stated that its investigations confirmed that the amount of China’s entrepot trade using false documents had reached $10 billion. 
Wu Ruilin, Deputy Director of the Management Inspection Division of SAFE, stated that, since April of last year, SAFE has conducted special investigations of entrepot trade in 13 provinces and cities. In 2014, the effort has expanded to include 24 provinces and cities. 
Wu further explained that these investigations found that entrepot trade has become a speculative arbitrage tool because many companies use forged or altered commercial documents, re-use property documents, or use the import declaration documents for general cargo trade. 

Source: State Administration of Foreign Exchange, September 25, 2014
http://www.safe.gov.cn/resources/wcmpages//wps/wcm/connect/safe_web_store/safe_web/whxw/ywfb/node_news_ywfb_store/d258558045990e0ba668aed2d1baac76/
Briefings | | |   Economy/Resources

Ministry of Finance: State-owned Enterprises Have Liabilities to Asset Ratio of 65 Percent

On September 22, 2014, China’s Ministry of Finance released the economic performance report on State-owned enterprises for the period of January through August. 

The report showed that, as of the end of August, the value of State-owned assets exceeded 99 trillion yuan, with total liabilities at nearly 65 trillion yuan; the ratio of liabilities to assets was 65 percent. The central government owned enterprises showed high financial expenditures. In the first eight months of the year, these grew by 22.4 percent. 
The report also showed that, compared to the same period last year, the rate of growth of both the revenues and profits in these State-owned enterprises continued to decline. Costs, however, continued to increase faster than revenue. 
 Source: China Business News, September 23, 2014 
http://www.yicai.com/news/2014/09/4021971.html
Briefings | | |   Economy/Resources

People’s Daily: Housing Prices Cooling Down

People’s Daily recently reported on the housing market data that the National Bureau of Statistics just released. According to the official statistics, out of seventy large and medium sized cities, sixty-eight saw a month-over-month housing price decline. One city broke even and another had an increase. The seventy-city average price for new real estate fell by 1.2 percent month-over-month, which is the biggest decline in ten years. Traditionally, September is the peak month of the year for the housing market. However there is no sign of recovery as of now. Market analysts thought that it was the high inventory level and a significantly lower demand that had caused the decline. Several provincial governments have come up with new local policies to “rescue” the housing market. It is widely expected that at least ten more provinces will follow suit. 
Sources: People’s Daily, September 19, 2014
http://finance.people.com.cn/n/2014/0919/c1004-25690606.html
National Bureau of Statistics, September 18, 2014
http://www.stats.gov.cn/Tjsj/zxfb/201409/t20140918_611639.html
Briefings | | |   Economy/Resources

Ministry of Commerce: Foreign Direct Investments Fell by Fourteen Percent

Well-known Chinese news site Sina recently reported that the Ministry of Commerce briefed the media in a press conference on the state of the economy as of August. According to the Ministry, the August number for Foreign Direct Investments (FDI) was US$7.2 billion, which represents a year-over-year decline of 14 percent. Another focal point was, for the first eight months of 2014, total actual foreign investments in the manufacturing industry declined by 15.7 percent year-over-year, down to US$27.5 billion. The top ten foreign investment sources were Hong Kong, Taiwan, Singapore, Korea, Japan, the U.S., Germany, the UK, France and the Netherlands. Noticeably, investments from Japan, the U.S. and the EU suffered declines of 43.3 percent, 16.9 percent and 17.9 percent, respectively. 
Source: Sina, September 16, 2014
http://finance.sina.com.cn/china/hgjj/20140916/100520304349.shtml
Briefings | | |   Economy/Resources

China National Coal Association Will Continue to Limit Production and Reduce Imports in Q4

China Financial and Economic News reported that, according to China National Coal Association, the coal industry in China continues to suffer hardship. Currently close to 70 percent of the coal enterprises have to make pay cuts and 30 percent of the coal companies are in arrears on paying wage. With 300 million tons of coal in their inventory on hand, the Association said it will continue to limit production in Q4 in order to bring the coal price back up, hopefully by 20 percent. The association also proposed to reduce coal imports by 20 million tons in the 4th quarter of 2014. According to the statistics, coal production in the first 8 months of 2014 was 2.5 billion tons, down 1.44 percent from the same period in 2013; sales were 2.4 billion tons, down 1.62 percent from the same period in 2013.

Source: China Financial and Economic News, September 22, 2014
http://economy.caijing.com.cn/20140922/3705114.shtml

Briefings | | |   Economy/Resources

Chinese Economists on Compensation Reform in State Owned Enterprises

China Economic Online published an article on the general concern that reform is needed in setting the annual compensation scale for the top managers in State Owned Enterprises (SOE). According to the article, those managers are paid, on average, five times more than their peers in private sectors. In addition, their compensation does not line up with their job performance. The SOE’s are also under the management of the State-Owned Assets Supervision and Administration Commission (SASAC). The article said that the commission’s effort to reshape the board of directors in SOE’s has been unsatisfactory so far. It quoted one Chinese economist who stated that the compensation adjustment effort will involve changes in other areas first: who should set the pay scale and who can make the final call – the board of directors or SASAC? According to the economist, it requires that the government function should be separated from the enterprise management. "The enterprise should be under the management of diversified equity and mixed ownership." He recommended that, "The board members in the SOE’s should be independent, professional, and have accountability."

According to the article, based on the list of compensation in 2013 for the board of directors of the SOE’s, as published by China Economic Research Institute, 259 SOE’s are publicly traded companies. The average annual compensation in 2013 for 83 of the chairmen of the board who received compensation was 840,630 yuan (US$136,894) while 19 of them had annual compensation of over one million yuan (US$162,853). The top management in the financial and banking industry had the highest pay with annual income averaging 940,000 yuan (US$153,077), while the chairmen of the board and bank CEOs were paid at 1.71 million (US$ 278,470) and 2.35 million (US$382,692) respectively.

Source: China Economic Online, September 21, 2014
http://www.ce.cn/cysc/newmain/yc/jsxw/201409/21/t20140921_3570080.shtml

Briefings | | |   Economy/Resources