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The Volume of Real Estate Transactions in China Continues to Decline

According to the Ministry of Statistics, from January through May of 2012, a total of 288 million square meters or 3.1 trillion square feet of real estate changed hands, a reduction of 12.4 percent from the same period last year; the rate of the decline decreased by 1 percent compared to January through April. The total sales volume was 1,693 billion yuan or US$266 billion, down 9.1 percent compared to the same period last year; the rate of decline decreased by 2.7 percent compared to January through April.

Of the total number of real estate transactions, residential housing space was down 13.5 percent, office space went up 3.6 percent, and commercial buildings fell 1.4 percent. The total sales volume for residential housing declined by 10.6 percent while the office space went down 8.7 percent, and commercial buildings rose 3.9 percent.

In terms of the total decline in real estate space, the eastern region was the highest at 14.1 percent. The central region was second at 10.2 percent and the western region was 11.1 percent.

By the end of May, 307 million square meters or 3.3 trillion square feet of real estate space remained unsold, up 4.32 million square meters or 46.5 million square feet from April. Of the unsold real estate, residential space went up by 2.7 million square meters or 29 million square feet, office space went up by 60,000 square meters or 645,600 square feet, and commercial buildings went up by 430,000 square meters or 4.62 million square feet.

Source: Xinhua, June 9, 2012
http://news.xinhuanet.com/house/2012-06/09/c_123258567.htm

Ministry of Finance to Issue Local Government Bonds

The Ministry of Finance announced that it plans, for the first time, to issue 41.6 billion yuan in local government bonds for the following seven regions: Qingdao, Guangxi, Chongqing, Shanxi, Gansu, Hainan, and Xinjiang. The bonds are for either a three year or five year term. The three year bonds are valued at 20.6 billion yuan and the five year bonds are valued at 21 billion yuan. Shanxi has the largest share totaling 8.5 billion yuan while Qingdao has lowest share totaling 1.5 billion yuan.

The on sale date for the three year bonds is June 15, 2012, while the five year bonds will be sold on June 29, 2012.

Source: People’s Daily, June 8, 2012
http://finance.people.com.cn/GB/153179/153522/18124989.html

China Central Bank Lowers Interest Rates

The People’s Bank of China announced that it was lowering its interest rates by 0.25 percentage point, effective June 8, 2012. The one year deposit rate will drop from 3.5% to 3.25% and the one year lending rate will fall from 6.56% to 6.31%. This is the first time since December 23, 2008, that the central bank has lowered interest rates. At that time, the central bank lowered its interest rates by 0.27 percentage points.

Source: Xinhua, June 7, 2012
http://news.xinhuanet.com/fortune/2012-06/07/c_112152900.htm

Xinhua: China Planning a Pilot Program Allowing Foreign Companies to Issue RMB Stock Shares

Xinhua recently reported that the State Council is planning to allow foreign companies to enter China’s stock market by issuing shares of stock in Chinese currency (RMB). The government is designing a pilot program and is preparing rules and technical details. Also under consideration is allowing foreign organizations with Chinese currency to invest those foreign-owned RMB in China’s domestic market. The plan supports Shanghai in becoming an international financial center, while it strengthens Hong Kong’s current status as an international financial center. The plan is part of China’s effort to widen the use of China’s currency internationally and to enhance the acceptance of China’s currency as an international reserve currency. The new pilot program may be extended to issuing bonds and establishing funds, in addition to stock shares.

Source: Xinhua, June 2, 2012
http://news.xinhuanet.com/finance/2012-06/02/c_123225878.htm

Over 350 Million Chinese Have No Clean Water

According to Zhang Wentai, Deputy Director of the Committee on the Environment and Resources of the National People’s Congress, over 300 million of China’s rural population and 50 million urban residents have no clean drinking water. Four factors have contributed to the problem: China’s wetlands are shrinking; its water sources are drying up; forests are being destroyed; and the “three highs” (high pollution, the high consumption of power, and the high consumption of water) are affecting water resources. In 2002 and 2003, official surveys of the water supply networks in several hundred cities found the quality of the water pipes to be inferior. For example, 50.80% of iron pipes, 13% of cement pipes, and 6% of galvanized pipes were below the national safety standard.

Source: China Youth Daily, May 31, 2012
http://zqb.cyol.com/html/2012-05/31/nw.D110000zgqnb_20120531_3-05.htm

Beijing News: SAC Issues Guide on Investing Private Capital in State-Owned Companies

Beijing News recently reported that the State-owned Assets Supervision and Administration Commission of the State Council (SAC) issued a document on an executive regulation detailing the guidelines for implementing the State Council’s orders that had first been released in 2010, encouraging private sector investment. One important guideline is to allow the private sector to invest in state-owned companies not only through a cash investment, but also a transfer of intellectual property, land, or other physical assets. The new guidelines also allow buying stock shares, company bonds or debts, and renting as means of participating in the re-organization process of state-owned companies. One of the primary goals of the new guidelines is to eliminate “discrimination against private investors.”

Source: Beijing News, May 26, 2012
http://epaper.bjnews.com.cn/html/2012-05/26/content_341239.htm?div=-1

In the First Quarter Total of Local GDP Exceeded National GDP by 480 Billion RMB

According to the National Bureau of Statistics, in the first quarter of 2012, the total national GDP in China was 10,800 billion RMB, while the total of all local GDP amounts was 11,280 billion RMB for the same period. The difference is 480 Billion RMB (US $75.65 billion). China Economy reporters calculated the total through a summation of the local numbers. Every year since 1985, when local and national governments started to calculate GDP separately, the two numbers have been inconsistent. While different methodologies may have contributed to the inconsistency, the authorities believe that data fraud has been a cause. According to the National Bureau of Statistics, despite government efforts to curb fraud, local governments frequently use their administrative power to arbitrarily adjust the GDP number upward to demonstrate their achievements and competence.

Source: China Economy reprinted by Xinhua, May 24, 2012
http://news.xinhuanet.com/fortune/2012-05/24/c_123184185.htm

China’s State Bank Took Over U.S. Branch of Bank of East Asia

On May 9, 2012, days after high-level US-China economic talks took place in Beijing, the Federal Reserve approved an application from the Industrial & Commercial Bank of China (ICBC) to buy a majority stake in the U.S. subsidiary of the Bank of East Asia. The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States.

ICBC has total assets of roughly $2.5 trillion. It will buy up to 80 percent of the U.S. branch of the Hong Kong-based Bank of East Asia, which operates 13 branches in New York and California.

In other Fed board decisions, the Bank of China, the country’s third-largest bank, won approval for a branch in Chicago. The Agricultural Bank of China, the fourth-largest bank, is set to establish a branch in New York City, where it already operates a representative office.

Source: International Herald Leader under Xinhua, May 21, 2012
http://ihl.cankaoxiaoxi.com/2012/0521/40050.shtml