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BBC: Chinese Official Media Worry about Anti-Government Remarks Online

Recently, China’s official media have expressed concern in their commentaries about a decrease in the government’s credibility and the proliferation of anti-government remarks online. Public opinion in China, especially online public opinion expressing “anti-official voices,” is almost out of control. It is no longer a secret that the Chinese government at every level employs a large number of "Fifty Cent Party Members" (who earn 50 cents for each pro-government posting online). The Communist Party has failed to control the minds of the younger generation.

Source: BBC Chinese Edition, July 14, 2012
http://www.bbc.co.uk/zhongwen/simp/chinese_news/2012/07/120714_china_internet_weibo.shtml

Briefings | | |   Economy/Resources

Qiushi Journal: Is China’s economy Really Heading Downstream?

On July 16, 2012, Qiushi, a journal of the Central Committee of the Chinese Communist Party, published an article titled “Is China’s Economy Really Heading Downstream?” The article’s writer expressed the belief that, although China’s economic growth has indeed been slowing down for the past 5 consecutive seasons, the current economic slowdown is still within a normal range. He asserted that, as Southeast Asian countries have a more obvious advantage in terms of  labor cost, it is an inevitable trend for China to make some adjustments in terms of labor-intensive manufacturing and foreign trade structures and that, with China’s $3.3 trillion foreign exchange reserves, a short-term deficit won’t seriously impact China’s economy.

Source: Qiushi Journal, July 16, 2012
http://www.qstheory.cn/zxdk/2012/201214/201207/t20120712_169555.htm

Briefings | | |   Economy/Resources

CRN: China still has Three Policy Tools to Stabilize the Economy

China Review News (CRN) recently published an article that discussed the strategy for dealing with the current decline of the Chinese economy. The author suggested that the Chinese government still has three policy tools that it can use: (1) With the decline of the CPI (Consumer Price Index), China has more room to reduce the interest rate; (2) The government can still increase direct investments into the economy, although this may have a negative effect; (3) The central government can temporarily relax the restrictions on local governments’ borrowing power. The article expressed the belief that the government should determine a minimum risk control line which would serve as an indicator of whether or not to use some of these policy tools.
Source: China Review News, July 14, 2012
http://www.zhgpl.com/doc/1021/6/7/2/102167204.html?coluid=53&kindid=0&docid=102167204&mdate=0714062027
Briefings | | |   Economy/Resources

The U.S. Controls the Energy Card

The International Herald Leader recently published an article that suggested that the United States holds an “energy card” in its hands that it can play against China. Not long ago, the U.S. offered China relief from a sanction applying to any country that buys oil from Iran. However the relief is only effective for 6 months. The article expressed the belief that it is unfair for the U.S. to tell China which country China can buy oil from. However, the author admitted that the U.S. has 3 “energy advantages”: (1) China relies significantly more on Middle East oil than the United States does; (2) The U.S. has many more ways to influence the international oil price than China has; (3) The U.S. has a large degree of energy independence, while China is now the world’s biggest importer of energy. The article concluded by calling for serious consideration of the “worst case scenario,” which is that the U.S. can play the energy card to strategically suppress China.
Source: International Herald Leader, July 10, 2012
http://ihl.cankaoxiaoxi.com/2012/0710/59111.shtml
Briefings | | |   Economy/Resources

State-Owned Enterprises Warned of Upcoming “Winter Conditions”

Shao Ning, Vice Chairman of the State-owned Assets Supervision and Administration Commission (SASAC), recently attended a management conference at which he stated, “After 30 years of rapid development, the Chinese economy has entered a period of contraction. State-owned Enterprises (SOEs) must prepare for ‘winter conditions’ in the next three to five years.” The first time that the SASAC discussed “winter” was last December when Huang Shuhe, a Deputy Director at SASAC warned twice that SOEs must be prepared for tough winter times in the next three to five years. SASAC Director Wang Yong made similar remarks last March. Wang stated that in a grim economic situation, the SOEs "should identify risk points by improving management and alleviating the bleeding.”

A China Entrepreneurs commentator stated that SOEs are not the only ones that must prepare for a cold winter. “Private enterprises, especially mid to small companies, need to do a better job of preparing for winter. When a cold winter comes, these companies will be the hardest hit as their struggle is in the midst of the market.”

Sources:
Xinhua, June 26, 2012
http://news.xinhuanet.com/fortune/2012-06/26/c_112287187.htm
China Entrepreneurs, July 9, 2012
http://www.iceo.com.cn/column/28/2012/0709/252364.shtml

Briefings | | |   Economy/Resources

Forty Three National Enterprises Qualified Finalist of 2012 “Fortune” Global 500

On July 9, 2012. Fortune Magazine published its 2012 "Fortune Global 500" list of companies as ranked by revenue. Seventy-nine Chinese companies made the list, including 73 Chinese mainland and Hong Kong top companies (the other 6 being Taiwanese with the total representing an increase of 12 over the previous year). Of these, 43 were central enterprises (national companies), an increase of five over the previous year.

Of the 43 central enterprises, the China Merchants Bank, the Emerging Jihua Group, the Anshan Iron and Steel Group, China Power Investment, Huadian Group Ltd., and China Power Construction were new companies on the list.

The 2012 "Fortune Global 500" companies required a minimum full-year operating income of US$22.006 billion, an increase of US$2.52 billion over the minimum income for 2011.

Source: Xinhua, July 10, 2012
http://news.xinhuanet.com/2012-07/10/c_112403123.htm

Briefings | | |   Economy/Resources

China Review News: After 30 Years of Rapid Growth, China Faces an Economic Correction

China’s rapid economic growth has relied on the low cost of capital, the low cost of labor, and low environmental costs. However, the “three low economic costs” no longer exist in China. It is difficult to manipulate the financial market to maintain the low cost of capital. Labor costs are increasing. Former Foxconn employees’ continuously committing suicide is an extreme reaction to employees long working hours and low pay. The demand for environmental protection is now high across the country. The protest in Shifang is the most recent example.

From 2007 to 2011, one quarter of China’s GDP came from net exportation, real estate development, and the automotive industry. However, in 2012, due to internal and external factors, net exportation, real estate development, and the automotive industry are all slowing down. After nearly 30 years of rapid growth, China has to face a period of economic correction with low economic growth and welfare.

Source: China Review News, July 9, 2012
http://www.zhgpl.com/doc/1021/6/2/2/102162285.html?coluid=53&kindid=0&docid=102162285&mdate=0709071414

Briefings | | |   Economy/Resources

Xinhua: Wen Jiabao Emphasized the Continuation of Price Control for Housing

Xinhua recently reported that Chinese Premier Wen Jiabao spoke about the housing market during his visit to Jiangsu Province. Wen stated that the government initiated housing market adjustment has reached a key stage and that “the task remains difficult.” He emphasized that it is a long term government policy to suppress speculative investments in the housing market. He also suggested that information regarding the housing market is a bit out of control right now and the general public is still worried about a potential rebound in prices. Wen asked the local governments not to implement new policies that would move the market in a different direction. He also asked the suppliers to adjust product strategies to offer more regular lower-priced commercial real estate in the general market. During his visit, Wen also mentioned the planned reform of the real estate tax system, which is considered part of the control system for the future housing market.
Source: Xinhua, July 7, 2012
http://news.xinhuanet.com/politics/2012-07/07/c_112383129.htm
Briefings | | |   Economy/Resources