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Economy/Resources - 193. page

Qiushi: Six Rules behind Adjustments to the U.S. Dollar

Qiushi Journal, a bi-weekly magazine published by the Central Committee of the Chinese Communist Party, recently republished an article discussing the hidden rules behind each major U.S. dollar adjustment made since the Second World War. The author claims that six rules have been discovered: 1) the U.S. dollar became stronger before a global financial crisis and declined afterwards; 2) each time the U.S. dollar appreciated, it brought “a catastrophic blow” to the emerging economies at that time; 3) each time the U.S. dollar depreciated, somewhere in the world an economy would have bubbles, such as Japan in the 1980s; (4) the U.S. dollar obeys “political cycles” which correspond to U.S. presidential elections; (5) the U.S. dollar follows different strategies against “capital surplus” nations (like Europe) and “trade surplus” nations (like China); (6) the U.S. dollar is used to manipulate commodity prices. The author also offered some ideas on how to take advantage of these findings.
Source: Qiushi, August 23, 2012
http://www.qstheory.cn/jj/hqsy/201208/t20120823_177320.htm
Briefings | | |   Economy/Resources

RFA: Number of Golf Courses Growing Despite Prohibition

Radio Free China (RFA) recently reported, based on a number of Chinese media sources, that more and more golf courses are being built across China. In 2004, the Chinese State Council issued an order to stop building all gulf courses. However, the number of golf courses grew from 170 in the year 2004 to over 600 today. Although the central government organized an investigation and clean-up in 2011, the golf courses are still functioning well. Local governments give strong support to many of these establishments because they rely on high-end businesses to bring in local revenue. Some of these golf projects were approved under different names, such as “sports parks,” where other real estate, such as luxury homes, could also be developed. According to China Youth Daily, of all of these 600 plus golf courses, only one is open to the public. The rest are all luxury clubs which only offer expensive membership to the wealthy. 
Source: Radio Free China, August 31, 2012
http://www.rfa.org/mandarin/yataibaodao/yl-08312012154633.html
Briefings | | |   Economy/Resources

Securities Times: Corporate Bad Debt on the Rise

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

Briefings | | |   Economy/Resources

Profits dropped in China’s Industries

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

Briefings | | |   Economy/Resources

Chinese Economist: Expect an Economic Crisis in China in 2013

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

Briefings | | |   Economy/Resources

Wen Jiabao: China Must Push Export Growth

Xinhua recently reported that on August 24 and 25, 2012, Chinese Premier Wen Jiabao visited Guangdong Province. During his visit, Wen made some public comments on the situation of China’s exports. He admitted that China is suffering the high pressure of an economic decline. The global market downturn has apparently impacted Chinese exports. Wen visited many export-oriented companies in Guangdong. He had several working meetings in which he suggested that actions must be taken in five areas: (1) the government must continue to implement and improve export policies that stabilize the export business; (2) companies should adjust their export business models to improve their scale and intellectual properties; (3) China must actively increase the importation of advanced machinery, key technical parts, and frequently used consumer products; (4) Export companies must be careful about trade friction and be positive on risk management; (5) China must put a bigger effort into fully utilizing foreign investments.
Source: Xinhua, August 27, 2012
http://news.xinhuanet.com/fortune/2012-08/27/c_112851606.htm
Briefings | | |   Economy/Resources

CRN: The Chinese Economy Faces Its Biggest Adjustment

China Review News (CRN) recently published an article analyzing the direction in which the Chinese economy is moving. The article expressed the belief that, based on the numbers from the first month of the third quarter, the Chinese economy shows no sign of having any hope in the near term. The official July PMI (Purchasing Managers Index) reached a new low for the past eight months. Export growth is now down to 1%. GDP growth slipped to 7.6%, which represents a slowdown for the last six consecutive quarters. The author suggested that the structure of the Chinese economy is heavily distorted. For example, government investment contributes to over 50% of the GDP; consumer spending is constantly on the decline; by the end of 2010, local government debts had reached RMB 10 trillion. Meanwhile, over the last 10 years, the domestic supply of the Chinese currency to the market increased 600%. The author concluded that the Chinese economy is quickly approaching the point of a total breakdown, which will reflect the combination of all the accumulated risks it has taken in the past several years. 
Source: China Review News, August 24, 2012
http://www.zhgpl.com/doc/1022/1/1/0/102211028.html?coluid=53&kindid=0&docid=102211028&mdate=0824072547
Briefings | | |   Economy/Resources

Red Flag Manuscript: More Effort Should Be Made to Develop the Public Sector of the Economy

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

Briefings | | |   Economy/Resources