Economy/Resources - 200. page

On May 10, 2011, China’s Ministry of Land and Resources issued the “2011 China’s Land and Resources Report.” The report revealed that China relies on imports for over 56 percent of all of the oil and iron ore it uses. The report stated, “In 2011, the total foreign trade in mineral products amounted to US$957.1 billion, which was a 34.3 percent increase over the previous year; imports increased 34.5, while exports increased 33.9 percent.”

Source: People’s Daily, May 10, 2012
http://politics.people.com.cn/GB/1027/17859378.html

SecuTimes recently reported on the issue of local governments facing pressure due to debts that will mature at a peak time in 2012. According to the National Audit Office, it is estimated that local government debts amounting to RMB 3 trillion (US$477 billion) are expected to mature this year. With the adjusted interest rate, 2012 is the year in which local governments face the highest risk of defaulting on their debts. By the end of 2010, total local debts reached RMB 9.67 trillion (US$1.54 trillion). In fact, local governments never planned to pay off their debts with budgeted fiscal funds. Instead, nearly all expected payments were based on anticipated land sale income that was not included in the official budget. However, the cooling housing market has caused a significant decline in land sales. It is estimated that the funding gap for these debts is about RMB 500 to 1000 billion. In the meantime, local governments are required to fund housing construction plans for low income families. This will further increase the likelihood of a debt crisis.

Source: SecuTimes, April 28, 2012
http://news.stcn.com/content/2012-04/28/content_5510372.htm

China Economy recently reported that the Ministry of Commerce released a first quarter foreign trade review showing the market’s movement in six key areas: (1) The import and export growth rates significantly slowed down, which was a continuation of the direction established in the last quarter of 2011. (2) Chinese exports to Europe suffered a decline, while trade with emerging markets showed rapid growth. (3) Labor-intensive products (such as shoes) recorded very slow growth, while mechanical and electrical products exhibited healthy growth. (4) Coastal provinces reported much slower growth than the Middle West provinces. (5) Private companies were responsible for more than half of the growth in foreign trade. (6) Import growth significantly slowed. Some commodities were produced in much larger quantities, with lower prices.

Source: China Economy, April 27, 2012
http://www.ce.cn/xwzx/gnsz/gdxw/201204/27/t20120427_23280625.shtml

A recent National Bureau of Statistics report show that, in 2011, the population of Chinese farm workers, farmers who left their land and chose to work in cities, reached 252 million, up by 4.4 percent from 2010. Of these workers, there were 158 million migrant workers who travel outside their local region to find jobs, 3.4 percent more than 2010. The report showed that 65.4 percent of farm workers were concentrated in the eastern region, down 1.5 percent from 2010; 17.6 percent were in the central region, up by 0.7 percent; 16.7 percent were in the western region, up by 0.8 percent; and the balance of 0.3 percent worked in Hong Kong, Macau, or outside of China.

The survey also reported that there were fewer farm workers who worked outside of their residential province. The jobs that the farm workers held remained in the manufacturing, construction, and service industries. The average monthly income for the migrant workers in 2011 was 2,049 yuan (US$350), up by 21.2 percent from 2010. The middle and central regions had a greater increase than the Eastern region. There has been improvement in delayed wages and extended working hours. The level of participation in social insurance has improved but still remains low.

The term "migrant worker" refers to the farm workers who work outside of their residential village or town for more than 6 months. The sample survey was conducted among 200,000 farm workers from 7,500 villages and 899 counties in 31 provinces.

Source: Xinhua, April 28, 2012
http://news.xinhuanet.com/local/2012-04/28/c_123050775.htm

In Stockholm recently, Wen Jiabao met with local Chinese companies, overseas Chinese and representatives of Chinese students. In his discussion he raised the question of China’s future. He also pointed out a number of issues related to China’s economic development. He stated, “In a nutshell, our economic development is neither balanced nor coordinated; nor is it sustainable. (The problems) relate mainly to the widening income gaps between rural and urban areas and between different regions, to expanding inequality in income distribution, to over-consumption of resources, to  energy, and to severe environmental pollution. These problems lead us to think about what we will leave to future generations.” Wen stated that sustained growth “relies not only on economic development, but also on progress in society, on the quality of our people, and on the power of morality. No one would be able to beat such a country (that had those qualities).

Source: China News Service, April 25, 2012
http://www.chinanews.com/gn/2012/04-25/3843708.shtml

According to Beijing News, the People’s Bank of China (China’s central bank) ranks No. 1 in assets in the world and last year printed money equal in value to half of the total currency printed in the world. The latest statistics released by the central bank show that, as of February 2012, its assets reached 28,330 billion RMB (about $4,500 billion), surpassing the U.S. Federal Reserve Bank and the European Central Bank. In the past five years, its assets increased by 119% and M2 by 146%. Due to the exchange control and the fact that the RMB is not an international currency, the increased RMB circulated only inside China. Thus those in China bore the full inflationary impact. “China is way behind the United States in terms of total GDP, economic power, personal income, and the overall wealth of the country. In 2011, the ratio of China’s M2 to GDP reached 189% while the ratio of M2 to GDP in the U.S. was about 64%. This showed the power of the RMB to boost inflation.”

Source: The Beijing News reprinted by Xinhua, April 24, 2012
http://big5.xinhuanet.com/gate/big5/news.xinhuanet.com/politics/2012-04/24/c_123025821.htm

On April 24, 2012, the Chinese Ministry of Finance released a report on the first quarter’s tax revenue, showing a tax revenue of 2.58 trillion yuan (US$409 billion), 10.3% higher than the same period last year. However the growth rate was down 22.1 percentage points; it was the lowest in the past three years.

The data show that from January to March, on a year-over-year basis, the domestic value-added tax, consumption tax, business tax, and corporate income tax increased by 5.4%, 15.1%, 7.6% and 20.5% respectively. The growth rates dropped 17.8, 6.4, 18.7 and 17.4 percentage points respectively from the same period last year. The import taxes and tariffs increased by 13.0% and 9.6% respectively, 35.8 and 37.9 percentage points lower than the same period last year.

It is noteworthy that real estate related tax revenue growth fell sharply. For the first quarter, the deed tax and the real estate sales tax decreased by 13.6% and 17.5%, respectively, 41.1 and 45.8 percentage points lower than the same period last year. The land appreciation tax increased by 4.5%, 108.4 percentage points lower than the same period last year. In addition, personal income tax revenue declined by 6.2% year-on-year, down 43.2 percentage points from the same period last year.

A Ministry of Finance official attributed the decline to the slowdown of domestic economic growth, as well as tax cut practices implemented in the fourth quarter of last year.

Source: Xinhua, April 24, 2012
http://news.xinhuanet.com/2012-04/24/c_111836288.htm

Qiushi publish an analysis that criticized the “noises that demonize the public ownership system and state-owned enterprises.” The article, entitled, “The Western Hand behind the Break-up of State-owned Enterprises,” expressed the belief that foreign investment may have become a national economic security issue. “Statistics show that, of the 28 major industries in China, 21 are controlled by foreign investment through (the foreign companies’) right to a majority of the assets. Foreign investments control the top 5 enterprises in almost every industry that has been opened up. These 21 industries are those where state-owned enterprises have withdrawn. China’s privately owned companies are not able to form an effective force to compete with the wolves of the Western multi-national corporations. … State-owned enterprises are the only major force in the market that can compete and fend off the multi-national corporations that Western monopolistic capital controls. … In any country, when foreign investments control an industry, it is likely to become a national economic security issue.”

Source: Qiushi, April 18, 2012
http://www.qstheory.cn/jj/jt/201204/t20120418_151879.htm