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People’s Daily: Land Resources Restricted in Cities with Population over Five Million

People’s Daily recently reported that Jiang Daming, Minister of Land and Resources, announced in a speech given at a conference that from now on cities with a population of over five million will not be granted new land resources for construction. However, this new rule does not apply to land that’s considered “living space,” which means the housing market will not immediately be impacted. Most of the capital cities of the provinces fall within the scope of the new rule. This is in line with the recently announced new policy of strict control of the scale of the population in large cities. The new rule focuses on managing the supply of industrial and business land. The Ministry of Land and Resources is encouraging cities to make better use of the land they have already been granted. Jiang also pointed out that, in addition to this new rule, more regulations are being planned to enable the clear identification of city boundaries. The up-coming policies will ensure the safety of permanent agricultural land.
Source: People’s Daily, January 10, 2014
http://politics.people.com.cn/n/2014/0110/c70731-24086306.html
Briefings | | |   Economy/Resources

CRN: China’s Economy Faces Four Major Challenges

China Review News (CRN) recently published an article discussing China’s macroeconomic trend, based on the goals set by the recent Third Plenary Session of the 18th Central Committee Conference of the Communist Party. The author expressed the belief that China’s rapid economic growth was largely based on demand that was not domestic. Over the past 35 years, China’s domestic consumer market has been playing less and less of an important role in its GDP numbers. The article identified four primary challenges China faces: 1) Taking advantage of the rapid developments in the science and technology space; 2) Reducing the dependency on pure government investments for economic growth; 3) Adjusting the economy gracefully to deal with the lack of younger workers due to an aging society; 4) Balancing the domestic economy and China’s role in the global economy. The author called for a significant change of the economic growth model and structure so as to focus more on domestic consumers. 
Source: China Review News, January 12, 2014
http://hk.crntt.com/doc/1029/7/4/5/102974525.html?coluid=53&kindid=0&docid=102974525&mdate=0112082909
Briefings | | |   Economy/Resources

State Oceanic Administration: Half of Ocean Waste Water Discharge Outlets Exceed Pollution Level

According to the State Oceanic Administration, the latest statistics show that, out of 156 ocean waste water discharge outlets in China, 78 of them, or 50 percent exceed the allowable level of pollution, especially in phosphorus, suspended solid waste, and the chemical oxygen demand level. In addition, seawater encroachment and soil salinization both worsened compared with 2012.

Source: Xinhua, January 10, 2014
http://news.xinhuanet.com/politics/2014-01/10/c_118922927.htm

Briefings | | |   Economy/Resources

Vice Minister of Finance: Current Economy Unsustainable

Wang Baoan, Vice Minister of Finance, wrote an article at Qiushi on challenges the China’s economy faces. He summed up the problems into “four highs” and “four lows:” high input, consumption, pollution and speed; and low output, efficiency, efficacy and tech content. 

Wang wrote, “The ‘current version’ of China’s economy is unsustainable.” He cited a few examples to support his conclusion. China’s use of resources is inefficient. The energy consumption of the gross domestic product (GDP) is 2.6 times the world average. The GDP per capita is only 21 percent of the U.S. and 32 percent of Japan. One U.S. dollar increase in GDP needs five U.S. dollars in investment. “This growth relying on and supported by investment is unsustainable.” 
Other examples include excess production capacity in steel, flat glass and shipbuilding. The excess capacity in solar photovoltaic modules and wind power equipment hit over 40 percent. Commenting on lack of innovation in China, Wang wrote, “When one fish died in the pond, it is an accident. If the majority of the fish died, it indicates that water is the problem.” 
Source: Qiushi, January 1, 2014 
http://big5.qstheory.cn/zxdk/2014/201401/201312/t20131230_307459.htm
Briefings | | |   Economy/Resources

China’s Local Government Debt Climbed to 17.9 Trillion Yuan

China’s National Audit Office (NAO) announced on Monday that, by the end of June 2013, local government debt had increased to 17.9 trillion yuan, soaring 67 percent over the figure for three years ago.

According to the NAO’s last figure, for the end of 2010, the total debt of local governments in China was 10.7 trillion yuan. China’s local governments cannot borrow directly from banks. Their debt is built up mainly by establishing some financial entities and using these entities to borrow money for infrastructure projects. Government debt also includes financial guarantees for some projects.

If the debt of the central government is included, the Chinese government’s overall debt is 30.3 trillion yuan, accounting for 53.3 percent of GDP. Some analysts worry that the economic slowdown could lead to an increase in bad debts, thus putting pressure on large state-owned banks. The NAO report also points to an over-reliance on land related fiscal revenue as a cause of the rapid increase in local government debts.

Source: Voice of America, December 30, 2013
http://www.voachinese.com/content/china-local-government-20131230/1820431.html

Briefings | | |   Economy/Resources

People’s Daily: China’s First Commodity Exchange Opened Its Doors

People’s Daily recently reported that the Bohai Commodity Exchange (BOCE) officially started its first business day in Tianjin on December 18. BOCE is a trading platform for large scale commodity exchanges, following international trading standards. Initial commodity categories focus on crude oil, coal, nonferrous metals and agricultural and forestry products. The Exchange is planning to provide comprehensive services including trade, settlement, logistics, and finance. The goal of BOCE is to become a commodity trading center and pricing center with significant power to influence the market. By the end of 2013, over 60 brands and commodities had been listed on BOCE. 
Source: People’s Daily, December 19, 2013
http://www.022net.com/2009/12-19/426241293324347.html
Briefings | | |   Economy/Resources

NDRC: International Investments below US$1 Billion No Longer Require Approval

Southern Metropolis Daily recently reported that the Chinese National Development and Reform Commission (NDRC) announced a new policy governing Chinese overseas investments. The new policy allows Chinese investors not to seek Chinese government approval for investments below US$1 billion outside of China. Instead, the investors are asked to fill out a for-record-only form. The new policy replaces the old requirement to get approval from NDRC, the Ministry of Commerce, and the State Administration of Foreign Exchange (SAFE), which typically took four months. Both state-owned companies and privately owned companies enjoy the same rights under this new rule. However, the new policy does not apply to investments involving “sensitive regions or sensitive industries.” 
Source: Southern Metropolis Daily, December 16, 2013
http://news.nandu.com/html/201312/16/600970.html
Briefings | | |   Economy/Resources

SOE’s Debt for November Year to Date Increased 14.5 Percent

On December 20, People’s Daily published an article about the financial status of State Owned Enterprises (SOEs). The financial reports from SOEs showed that November year to date sales and profits were up 11.3 and 8.2 percent respectively compared to the same period last year. However their total debt was close to 60 trillion yuan (US$9.8 trillion), up 14.5 percent. The industries that saw growth in their profits include power, electronics, building construction, auto, and transportation. The industries that saw a decline in their profits include non-ferrous metals, coal, chemicals, and light industries.

Source: People’s Daily, December 20, 2013
http://ccnews.people.com.cn/n/2013/1220/c141677-23895718.html

Briefings | | |   Economy/Resources