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China to Continue Its One-Child Policy

On January 14, 2013, Wang Xia, Director of China’s National Population and Family Planning Committee, said at an NPFP Work Conference that China will continue its one-child policy. He stated, “We will adhere unwaveringly to the Planned Parenthood Policy, China’s fundamental national policy, and maintain a low birth-rate.”

Source: China News, January 15, 2013
http://www.chinanews.com/gn/2013/01-15/4487037.shtml

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CRN: China’s Central Bank Printed More Currency than the U.S.

China Review News (CRN) recently reported that, based on information officially released by China’s central bank, China’s currency supply (M2, a broad indicator to quantify the amount of money in circulation) reached RMB 97.42 trillion yuan (around US$15.53 trillion) by the end of 2012. This number represents an annual increase of 13.8 percent and is two times the Chinese GDP. Based on the current exchange rate, China’s GDP is one third of the U.S. scale, but the Chinese currency’s circulation level has already surpassed the U.S. Experts warned that the extra printed money may introduce potential systemic risks. Last year’s data for China shows that the government was loosening up the currency policies in order to “stabilize growth.” It is expected that China will maintain the current policies for the first half of 2013 and may tighten up in the second half, which typically faces higher inflation pressure.
Source: China Review News, January 11, 2013
http://www.zhgpl.com/doc/1023/9/7/7/102397732.html?coluid=10&kindid=253&docid=102397732&mdate=0111093828
Briefings | | |   Economy/Resources

Air Quality Deteriorates in Large Areas in China; Public Advised to Stay Inside

Recently misty weather has covered large areas of China with a serious deterioration in air quality. The air quality in multiple metropolitan areas has been coded as “serious pollution.”
The Beijing Environmental Monitoring Center released data showing that, since Thursday night (January 10), the pm2.5 concentration has been sustained at above 300 micrograms and reached level six, which is “serious pollution.” In the most polluted area the pm2.5 index reached 456.
In nine out of 11 cities in Hebei Province, the measure of air quality has been labeled "serious pollution.” In Shijiazhuang, Handan, Xingtai, and Hengshui, the quality index even exceeded 500. Air in Wuhan City in central China was also "heavily polluted" for several days.
On Saturday January 12, China’s Central Meteorological Station issued a blue fog warning. Nine provinces, including Hebei, Tianjin, Shandong, Henan, Jiangsu, Anhui, Zhejiang, Hubei and Sichuan Basin, had heavy fog with visibility of less than 1000 meters. Environmental experts warned that heavy fog prevents the dispersion of air pollutants. Local governments have issued air quality warnings to the public and advised people to stay indoors. Schools have suspended outdoor physical activities.
Source: BBC Chinese, January 12, 2013
http://www.bbc.co.uk/zhongwen/simp/chinese_news/2013/01/130112_china_air.shtml
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Radio Free Asia: Half of World’s Black Dollars Are from China; Capital Flight Is Accelerating

Radio Free Asia quoted a report from the German newspaper Süddeutsche Zeitung, which said that, in the past 10 years, through different means and various channels, the illegal funds fleeing from China reached a staggering US$3 trillion. Out of every two "black dollars" in the world, one is from China. It was estimated that, after the 18th National Congress of the Chinese Communist Party, when the authorities considered implementing the exposure of the personal assets of government officials, the capital flight accelerated to US$41.2 billion in November alone. Süddeutsche Zeitung reported that the second largest group responsible for the flight of capital was government officials.
Li Xinde, who runs a website that monitors Chinese public opinion, believed that the cause of the problem was the current policies and laws that involve anti-corruption, exposure of personal assets, and supervision of power.
A Beijing economist Zhong Dajun attributed the rampant capital flight to the current social political system, where a person can become rich quickly but develop a strong sense of insecurity after becoming rich. A 2011 report from China’s central bank revealed eight major means that corrupt officials use to transfer their property: cash smuggling, remittance fraud, current account fraud, overseas investment, credit card spending, creating an offshore financial center, foreign direct receipt, and transfer through offshore special relationships.
Although China has strict foreign exchange regulations, more and more rich people continue to transfer their money overseas. Hexun, a Chinese financial news portal, reported that China’s capital flight using even the most simple and primitive method–hiding bundles of cash in ones luggage–has accelerated.
Source: Radio Free Asia, January 10, 2013
http://www.rfa.org/mandarin/yataibaodao/xl2-01102013123334.html
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Xinhua: Quick Risk Management Required after U.S. QE4

Xinhua recently published an article about the new QE4 policy that the U.S. Federal Reserve announced on December 13. The article called for early risk management reactions to remedy the damage. The U.S. Fed’s QE3 and QE4 operations will inject a combined $85 billion in monthly currency. The article expressed the belief that the U.S. move was much faster than the international community expected. The Fed announced its QE3 plan only three months ago. Since China has the world’s largest foreign exchange reserve, mostly in U.S. Dollars, the QE4 execution will have the heaviest impact on China. It can also cause rapid appreciation of the Chinese currency. The immediate result will be a slowdown in Chinese exports. The article suggested that China should take similar actions to increase the supply of the Chinese currency so that the appreciation expectation can be stopped. The author called the U.S. “selfish” and concluded that the Fed is introducing an unnecessary “depreciation war.”
Source: Xinhua, December 14, 2012
http://news.xinhuanet.com/comments/2012-12/14/c_114022883.htm
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November Year to Date Profit for State Owned Enterprises Down 7 Percent

According to data released by the Ministry of Finance on December 14, 2012, November year to date profit for State Owned Enterprises was 1.94 trillion yuan (US$310 billion), down seven percent compared to the same period last year.

The revenue for November year to date was 37.94 trillion yuan (USD$6.08 trillion), up 10.9 percent from the same period in 2011 and 11.8 percent from October. The industries that showed the largest increase in profit included electric power, tobacco, electronics, light industry, and the auto industry. The industries that showed the sharpest decrease in profits include the chemical industry, nonferrous metals, transportation, construction material, and mechanical areas.

Source: Xinhua, December 15, 2012
http://news.xinhuanet.com/fortune/2012-12/15/c_114034861.htm

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China Holds Central Economic Work Conference

China will hold a Central Economic Work Conference on December 15 and 16, 2012, to determine the direction for its economic policies in the upcoming year.

Many policy experts believe that the target for economic growth will remain at 7.5 percent with a focus on maintaining stability while improving quality and productivity. It is expected that the urbanization of rural areas will drive economic growth in the mid to long term. There will also be personnel shifts at the upper management level in the Central Bank, the Ministry of Finance, the Ministry of Commerce, and the National Development and Reform Commission, as well as in some entities dealing with financial regulation.

Source: Huanqiu, December 13, 2012
http://china.huanqiu.com/politics/2012-12/3374586.html

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China Review News: Low-Cost and High Return Will Gradually Disappear in China

On December 9, 2012, China Review News published an article discussing the transformation of China’s economy over the next decade. Over the next ten years, China will gradually lose the advantage it has of a high rate of return on capital because of low-cost. According to the article, China’s huge consumption potential can gain new impetus for China’s economy. However, the transformation of the direction of China’s economy should focus more on key technology development, technology upgrades, and product upgrades.

Source: China Review News, December 9, 2012
http://www.zhgpl.com/doc/1023/3/5/6/102335601.html?coluid=53&kindid=0&docid=102335601&mdate=1209080504

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