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The Beijing News: Emigration of Chinese Merchants’ Is Increasing, Threating Economic Environment

Chinese News Review carried a commentary that was originally published by The Beijing News, about the increase in the wave of emigration of China’s rich and powerful merchants. According the article, 70 percent of China’s rich and powerful people have emigrated or are considering emigrating overseas. As a result, China has become the country having the largest number of people emigrating overseas. As to the reason for their leaving China, the article cited two causes: lack of security and a desire to improve life satisfaction.

According to the article, when those emigrants leave China, they also take their wealth with them. It was estimated that between 1997 and 2010 over 17 trillion yuan (US$2.73 trillion) left China. The number has grown even larger since 2010. The article stated that the domestic inflation that has occurred in recent years has had a negative impact on ordinary Chinese people’s wealth. As more and more of China’s rich and powerful merchants choose to leave, it will be more and more difficult to increase domestic demand.

Toward the end, the article raised a question of what can be done to keep people from leaving China. Based on the 2011 China Private Wealth Report published by China Merchants Bank (CMB) and Bain & Company, 27 percent of Chinese merchants having personal assets over 100 million yuan (USD$16 million) have already emigrated while 47 percent are considering emigration.

Source: China News Review, November 25, 2012
http://www.zhgpl.com/doc/1023/1/5/4/102315489.html?coluid=53&kindid=0&docid=102315489&mdate=1124081454

Briefings | | |   Economy/Resources

China News: Number of Half or Fully Shutdown Companies Reached a 3-Year High

China News recently reported on research results that the China Entrepreneurs Survey System (CESS) had released. The CESS is a research institute jointly established by the Development Research Center of the State Council, the National Bureau of Statistics, and four other government agencies. According to the research, 23.1 percent of the company owners surveyed claimed that, at the time of the survey, their companies were either “shutdown” or “semi-shutdown.” This number is the highest in three years. The key reasons cited for the situation were a decline in orders, inventory pressure, and dropping prices. The health of privately owned companies was worse than for those that were state-owned. Most of the troubled companies were small to medium sized ones. Over a quarter of the companies expressed the belief that their inventory level was “higher than usual.” Half of the companies suffered a “lower than usual” order level. Most of the troubled companies were in mining, chemical fiber, non-ferrous metals, general equipment, and automobile and other transportation equipment industries. 
Source: China News, November 17, 2012
http://finance.chinanews.com/cj/2012/11-17/4336528.shtml
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People’s Daily: China’s Dependence on Foreign Oil Will Reach 60%

People’s Daily recently reported on the First China International Petroleum Trade Conference. According to experts attending the conference, China’s oil consumption is expected to increase to half a billion tons in 2013. Meanwhile, China’s dependence on foreign oil will reach 60 percent next year. China is currently the primary source of demand for global oil market growth. In the year 2002, China became the second largest oil consuming country in the world (after the United States). According to experts, in the next five years, China’s oil imports will maintain a growth rate of eight percent annually, while the average annual growth rate for global oil consumption will remain at 1.2 percent. The decline of oil imports in North America and the geopolitical situation in the Middle East will be the two main factors that will impact the international oil market the most. However, more than half of China’s foreign oil supply comes from the Middle East. This adds a lot of uncertainty to China’s energy safety. 
Source: People’s Daily, November 15, 2012
http://finance.people.com.cn/n/2012/1115/c1004-19594376.html
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CRN: Keeping RMB Stabilized is a Long Term Strategy

China Review News (CRN) recently published an article discussing the current appreciation of the Chinese currency (the RMB), which has caught some people unprepared. The article expressed the belief that there are four reasons: (1) The U.S. dollar depreciated; (2) More capital flowed into the emerging markets; (3) Short-term domestic demand for RMB increased; (4) The Chinese central bank did not actively interfere with the RMB exchange rate. Since China is moving towards a market based RMB exchange rate management model, the author suggested that it is very important to ensure, as a long term strategy, that the RMB remains stable. It also serves as a foundation for the internationalization of the Chinese currency. All major international currencies such as the U.S. Dollar, the British Pound, the Euro and the Japanese Yen have this foundation. The article concluded that, although the RMB is currently going up, the goal for the long run should be maintaining stability.
Source: China Review News, November 8, 2012
http://www.zhgpl.com/doc/1022/9/5/9/102295964.html?coluid=53&kindid=0&docid=102295964&mdate=1108074009
Briefings | | |   Economy/Resources

Disposable Personal Income Lagged Behind GDP Growth

On October 31, 2012, Securities Times published a report on the National Bureau of Statistics of China’s recently released statistics on China’s revenues. According to the statistics, during the 10 years from 2002 to 2011, the personal disposable income of urban residents increased 1.8 times. In the same period, national fiscal revenue increased 4.5 times and domestic GDP went up 3.6 times. “This wide gap shows that during the past 10 years, most of the newly created wealth was distributed outside the reach of China’s residents. Considering the multiple of 4.5 times in the increase in fiscal revenue, it can be said that the government received a much larger share of the benefits than ordinary residents. In fact, on average, urban residents’ income increased by 10 percent per annum, while fiscal revenue went up by as much as 20 percent per annum.”

Source: Securities Times, October 31, 2012
http://news.stcn.com/content/2012-10/31/content_7280245.htm

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HSBC Chinese October PMI Number Released

NetEase recently reported that, on November 1, 2012, HSBC released the PMI (Purchasing Managers Index) number for the Chinese manufacturing industry. The October number is 49.5, which is higher than last month’s figure of 47.9. This also indicates that the Chinese manufacturing sector is on the decline for the year. In October, manufacturing production output was still slipping. However total new orders had a slight increase due to more new customers. Meanwhile new export orders declined for the sixth consecutive month. Inventory was also shrinking, while ten percent of the manufacturers surveyed were reducing the size of their workforce. For the first time this year, the average price of manufacturing sector products saw a 9 percent increase. This was widely believed to be caused by the increased cost of material. Qu Hongbin, HSBC Chief Economist for the China Region, commented that the HSBC PMI number demonstrated that the Chinese manufacturing sector is showing signs of stabilization, which is largely the result of the earlier government “easing” measures. 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: NetEase, November 1, 2012
http://money.163.com/12/1101/09/8F7ES76J00252G50.html
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CRN: Government Consumes a Large Percentage of China’s Financial Resources

China Review News (CRN) recently reported that, based on the numbers released by the National Bureau of Statistics, consumer spending contributed 55 percent to the economic growth in the third quarter of this year. However, government operational consumption is also considered part of the final consumer spending. Between 2000 and 2010, the Chinese government’s consumption grew from RMB 1.57 trillion to 5.36 trillion. Government operational spending takes about twenty percent of the annual government income. The same ratio number for the United Sates is 9.9%; it is five percent for the European Union and 2.8 percent for Japan. This indicates that it takes substantially more money to sustain the Chinese government. The statistical data also reflects a lowered quality of consumer spending because the government’s operational consumptions eats a large slice of the “consumer spending” pie.
Source: China Review News, November 3, 2012
http://www.zhgpl.com/doc/1022/8/2/7/102282777.html?coluid=53&kindid=0&docid=102282777&mdate=1027073850
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China to Reform the Pay Scale in State Owned Enterprises

Qiu Xiaoping, vice minister of the Ministry of Human Resources and Social Security, disclosed that a reform will take place in managing the pay scale in state owned enterprises. Tighter control will be exercised over high-income professions.

Qiu stated that the Ministry needs to establish a reasonable control over income allocation and set up a minimum wage standard and rate of increase for wages. The Ministry also needs to build an infrastructure system to conduct pay scale research and information sharing while building a pay scale database for companies to use as a reference.

According to statistics, from 2002 to 2011, the average salary in urban regions grew 14.63 percent from 12,422 yuan (US $1,990) to 42,452 yuan (US $6,802). Farm workers have become the main workforce reaching 252 million in 2011. It was also disclosed that certain high ranking managers in state owned enterprises make a million or even a billion yuan in annual salary. It was suggested that their income shouldn’t be higher than three times the salary of those in a public servant position ranked at the same level.

Source: People’s Daily, October 31, 2012
http://politics.people.com.cn/n/2012/1031/c1001-19442054.html

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