Economy/Resources - 193. page

According to an article in Securities Times, companies are facing possible noncollectable accounts as their customers are not making their payments on time or are not paying at all. As of March 2012, industrial enterprises’ accounts receivable had increased by 17.74% compared to the same period last year. As of August 23, 2012, the total accounts receivable of the 1,437 listed companies that had already published their interim reports had risen drastically – by 45% – compared to the previous year.

According to Li Yang, Vice-President of the Chinese Academy of Social Sciences, a top government think tank, China’s corporate debt-to-GDP ratio stood at 107 percent in 2011, the highest in the world. A ratio that exceeds 90 per cent is considered “dangerous.” Li cited the standard set by the Organization for Economic Cooperation and Development.

Source: Securities Times, August 28, 2012
http://news.stcn.com/content/2012-08/28/content_6755013.htm

On August 27, 2012, the National Bureau of Statistics of China released statistics for China’s industries. According to the statistics, the profit for China’s national enterprises dropped 2.7% for the period of January through July, as compared to the same period in 2011. In July alone, the number dropped by 5.4 percent. This was the sixth consecutive month of cumulative negative growth. Falling iron and steel prices have led to losses for many listed companies that have published their interim reports for the first half of 2012. Maanshan Iron and Steel lost 1.9 billion yuan, Shandong Iron and Steel lost 996 million, and the Hangzhou Iron & Steel Group Company lost 107 million. Others, including the Shagang Group, saw their profits cut in half. The same occurred in coal and electricity companies where their profits went down between 10 and 14 percent in the second quarter of 2012.

Source: Caijing.com, August 29, 2012
http://comments.caijing.com.cn/2012-08-29/112089425.html

Li Zuojun, an economist at the Development Research Center of the State Council, recently delivered a speech on China’s economy, apparently at an internal meeting. According to reports, he stated that an economic crisis in China is on the way, and will possibly commence in July or August of 2013. A key feature of the crisis will be that small to medium sized businesses, banks, and local governments will declare bankruptcy, causing social conflicts to intensify even further. Li based his prediction on four reasons: the first is economic: the burst of the bubble in the housing market and local financial crisis; the second is international: the withdrawal of foreign investment from China; the third is political: the change in the control of the Communist Party; the fourth is the “triple witching”: the short, intermediate, and long term economic cycles all bottoming out at the same time.

Source: ifeng.com, August 24, 2012
http://house.ifeng.com/rollnews/detail_2012_08/24/17068910_0.shtml

On June 27, Qiushi Theory carried an opinion piece that was originally from Red Flag Manuscript. A research fellow at the Academy of Marxism of the Chinese Academy of Social Sciences wtote the article. The piece stated that, in the current economy, the development of the public sector part of the economy should take precedence over the non-public sector. It also raised the question as to what can be done to bring back the dominance and control of the declining State Owned Enterprises (SOEs).

According to the article, China’s economic model consists of the co-existence of public and non-public ownership. During the Party’s 16th National Congress, a proposal was made to extend an equal effort in developing both the public and non-public sectors of the economy. The author asserted, however, that these efforts can’t carry an equal weight. Rather, the development of the public sector of the economy should take priority over the non-public sector. The author stated, “The public sector of the economy provides the base and the guarantee that the people will be the masters in a socialist country. Allowing the public sector to dominate will determine the characteristics of the socialist system.”

At the end of the article, the author raised the question as to what can be done to protect the dominant status of the public sector of the economy and enable the SOEs to regain their dominant status. The GDP of SOEs dropped from 49.6 percent of total GDP in 1998 to 26.6 percent in 2010, while the GDP of the private sector increased from 3.1 percent to 30.5 percent in the same period and has thus surpassed SOEs.

Source: Qiushi Theory, June 27, 2012
http://www.qstheory.cn/hqwg/2012/201212/201206/t20120627_166477.htm

RFA carried a report on China’s growing urbanization and the social implications of the coutryside’s decline.

The report stated that, according to official statistics, in 2011, China had 691 million urban residents, which accounts for 51.27 percent of the total population. This was the first time that the urban population exceeded that of the countryside. The China Urban Development Report of 2012 predicted that, if urbanization grows one percent per year, the urban population will exceed 60 percent by 2020.

Many experts are concerned about the social implications of the growth in the urban population. Agricultural productivity has declined as more and more young and middle aged farmers have left the countryside. Other potential issues include: 1) when farm workers go to the city to work, their family members can’t go with them; 2) farmers do not have title to their land and can’t transfer or sell the land; 3) because of their residential status, farm workers do not have social security.

Source: Radio Free Asia, August 24, 2012
http://www.rfa.org/mandarin/yataibaodao/xql-08242012151753.html