Economy/Resources - 195. page

Qiu Shi, a magazine of CCP Central Committee, recently published an article discussing the direction in which China’s economy is headed, given the background of the global downturn. The author expressed the belief that, although the global economy seems to be recovering slowly, the long term expectations are that it is moving in a negative direction. The world economy currently is a mixed bag of a number of pros and cons, such as uncertainty in Europe, lowered global inflation, capital outflows in emerging countries, and global investments shrinking in value. Impacted by the world economy, China faces some challenges: (1) the high pressure of a downturn; (2) small businesses are still struggling; (3) food prices are fluctuating significantly. The author suggested that China should take positive actions: (1) government investments should continue; (2) the government should support strategic new industries; (3) Mid-Western provinces will have more growth based on industries that have moved from the east; (4) domestic consumer spending should be encouraged; (5) second half imports and exports will speed up. The article concluded that the Chinese economy still has hope despite its difficulties.

Source: Qiu Shi, August 2, 2012
http://www.qstheory.cn/jj/jjyj/201208/t20120803_174163.htm

On August 6, 2012, the National Population and Family Planning Commission of China released China’s 2012 Migrant Population Development Report. According to the report, the migrant population reached 230 million in 2011, accounting for 17 percent of the national population. Migrant worker’s average age was 28. In 2011, no more than 30 percent of the entire migrant workers population had insurance. Migrant worker’s insurance includes pensions, medical care, disability, unemployment, maternity, and funds for housing. Seventy-two percent of migrants either rent or share housing with others.

According to the report, China’s migrant workers work an average of 54.6 hours per week, far surpassing the standard 40 hour work week stipulated in China’s Labor Law. Only 51.3 percent of migrant workers have a fixed-term labor contract.

Source: The Central People’s Government of the People’s Republic of China, August 7, 2012
http://www.gov.cn/jrzg/2012-08/07/content_2199409.htm

China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC) recently held an internal meeting regarding the grim situation that state-owned central enterprises are facing. “Any investments involving large-scale expansion must stop,” said the person in charge on the meeting. “When the economic situation is not good, state-owned central enterprises must not only watch their own cash flow but also the flow of capital for their customers, both upstream and downstream.”

The SASAC has publicly warned central enterprises several times to get ready for “winter.” As of today, 36 central enterprises’ listed concept-class companies have publicized their 2012 reports. Out from these 36 companies, the net profits of 19 companies have decreased. This means that 52.8% of the central enterprises have shown reduced profits. In the first half of 2012, 94 out of 139 central enterprises continued to lose money or lost money for the first time, which means that 67.6% of China’s central enterprise companies are losing money. The deteriorated central enterprise companies are mainly in the manufacturing, electricity, petrochemical, transportation, and real estate industries.

Source: China Review News, August 7, 2012
http://www.zhgpl.com/doc/1021/9/1/5/102191591.html?coluid=10&kindid=253&docid=102191591&mdate=0807092907

According to the Ministry of Human Resources and Social Security, at the end of June, the minimum wage was adjusted upwards in 16 provinces and cities. The increase averaged 19.7 percent over 2011. Currently Shen Zhen has the highest monthly minimum wage of 1500 yuan per month, while Beijing has the highest minimum hourly rate of 14 yuan per hour.

According to Su Hainan of the Committee on Labor Compensation of China’s Labor Association, the increase in 2012 was less than the 22 percent increase of 2011 over 2010, but it was still within expectations. Su said, “The standard of the minimum wage is a double edged sword. If it increases too slowly, it will affect worker’s basic living standards, but if it increases too fast, it will have a negative effect on the economy, especially now that we have a labor surplus compared to market demand.”

Currently the standard minimum wage varies greatly between regions; the minimum wage is still determined by each local region. Su observed, “In the long term, the fundamental solution is to resolve the unbalanced economic development between regions by investing more and promoting economic development in those regions that are behind, such as the middle western region.”

Source: Xinhua, July 29, 2012
http://news.xinhuanet.com/politics/2012-07/29/c_123487285.htm

On July 20, 2012, Qiushi, a journal of the Central Committee of the Chinese Communist Party (CCP), reprinted an article from the China Jinggangshan Executive Leadership Academy Journal titled “Beware of the Real Economy Being Virtualized.” The real economy, which refers to the production and service sectors, is declining in China due to higher costs (of goods and labor), heavy taxes, overcapacity, limited investment, financing problems, and a lack of innovation.

However, the virtual economy is overly booming in China due to the huge returns from real estate, the stock market, the futures market, coal resources, antiques, art works, financial products, loan sharking, and the speculative markets for some agricultural products. Such a phenomenon poses a significant potential risk for sustainable economic development in China. In analyzing the main reasons behind the virtualization of the real economy, the article’s writer proposed some solutions for improvement.

Source: Qiushi, July 20, 2012
http://www.qstheory.cn/jj/xsdt/201207/t20120723_171534.htm