Economy/Resources - 208. page

The Ministry of Finance published the January and February financial report on State Owned Enterprises (SOE). The report indicated that in the first two months of 2012, the SOE’s income was 7.5 trillion yuan, which was 9.9 percent higher than the same period last year. The SOE’s profits amounted to 363.5 billion yuan, which was down 10.9 percent from the previous year. Profits for SOEs for the full year of 2011 were 2.2 trillion yuan, which was up 12.8 percent from 2010. The industries that had the largest growth in profits were tobacco, posts & telecommunications, while steel, petroleum & petrochemical, real estate construction, and mechanical industries had the largest declines in profits.

The SOEs included State-controlled share-holding companies, 117 central enterprises, and those SOEs at the local levels. The report did not include the State Owned Finance Industry.

Source: Xinhua, March 20, 2012
http://news.xinhuanet.com/fortune/2012-03/20/c_122855448.htm

The Economic Observer recently reported on the current status of China’s real estate construction market, which has been the primary engine for the economy. The dramatic decline in investment in the housing industry is having a major impact on China’s economic growth. Even the largest company in this industry, Wan Ke, is lowering its sales projection to half of the planned level. According to China Index Research Institute, in November and December of 2011, national land sales declined 47 percent each month. Starting this year, residential new construction growth was 0 percent, and 90 percent of the housing companies downsized or stopped their land purchases. Most of these companies are prepared to lower their prices. However, it is expected that even lowering their prices will not improve their sales volume. No one is optimistic about the near future.

Source: The Economic Observer, March 17, 2012
http://www.eeo.com.cn/2012/0317/223026.shtml

On March 18, 2012, the National Bureau of Statistics published its February home sales report on 70 of the middle to large size cities in China.

The prices of newly constructed homes dropped in 45 out of 70 cities, as compared to January 2012; 21 remained flat and 4 cities had a price increase that was less than 0.1 percent. In the same period in 2011, the prices dropped in 27 out of 70 cities and 12 were higher in February than in January.

For existing home sales, in February 2012, the prices in 45 out of 70 cities dropped compared to January, while 14 remained flat and 11 had an increase that was under 0.4 percent. In the same period in 2011, prices dropped in 44 out of 70 cities and were higher in 7 cities in February as compared to January.

Source: China News Review, March 18, 2012
http://finance.chinanews.com/house/2012/03-18/3752023.shtml

According to the Ministry of Commerce, by the end of 2011, Chinese companies had invested US$322 trillion in 18,000 businesses in over 178 foreign countries. There were close to 1.2 million expatriates stationed overseas and the cumulative capital investment exceeded US$1,500 trillion.

Of those regions where China invested, the investments in European and African countries grew 57.3% and 58.9% respectively, compared to the same period last year. China’s investment in EU countries grew by 94.1%. The areas in which China invested consisted mainly of coal mining, manufacturing, electricity production and supplies, transportation, and retail industries.

Source: China Economic Net, March 1, 2012
http://intl.ce.cn/specials/zxxx/201203/01/t20120301_23119212.shtml

According to the statistics published by the National Statistics Bureau, February’s CPI growth was 3.2 percent compared with the same period last year, the lowest since July 2010. The February CPI was below the one year savings interest rate of 3.5 percent thus ending the two year long period of “negative real interest rates” where the CPI has been higher than the interest rate.

Among commodities, food is still the key factor that drives up CPI growth. For example, pork, fresh vegetables, and cooked vegetable’s prices have increased 18.2%, 12.3% and 6.1% respectively over the same period last year.

Source: Chinese Economy, March 10, 2012
http://www.ce.cn/xwzx/gnsz/gdxw/201203/10/t20120310_23144612.shtml

Study Times published an article discussing the need for China to develop an effective strategy to increase national competitiveness through innovation. In 2007, the U.S. spent a great deal of money on research and development. The total was $368 billion, which is 2.68% of its GDP, or $1,265.70 per person. In comparison, China currently spends about $48.7 billion on R&D, which is 1.46% of its GDP, or $37 per person. At the industry level, the transition from scientific and technological success to manufacturing and production has been very slow. Only 25% of the technological breakthroughs have made this transition, which is way behind the 80% rate in developed countries. Further, less than 5% of these successes have been developed to the point of full production. The article recommended upgrading industries in the following areas: new energies, information, biology, material, medicine, environmental protection, oceanography, and space, as well as other new emerging industries.

Source: Study Times, March 5, 2012
http://www.studytimes.com.cn:9999/epaper/xxsb/html/2012/03/05/07/07_38.htm

The International Herald Leader published a commentary about Chinese companies delisting their stock from U.S. stock exchanges. On February 15, 2012. Shanda Interactive Entertainment Limited became the first Chinese Internet company from mainland China to have completed a stock buy-out and delisted its stock from NASDAQ. On February 21, 2012, after a massive stock buy-back, the Alibaba Group offered to delist its B2B site Alibaba.com from the Hong Kong Stock Exchange. Shanda and Alibaba are not alone. In 2011 there were a total of 22 Chinese companies that delisted their stocks in the U.S. More are expected to announce plans to delist. According to the article, Chinese companies that were listed through reverse mergers now find it difficult to play by the rules of the American style stringent reporting requirements. "Under the U.S. regulations, the tax payments reported on their SEC filings should be the same as those tax payments filed with tax authorities in the home country, with a discrepancy not exceeding 10%. But according to sources in some consulting agencies, for Chinese companies listed in the stock markets in the U.S., the difference is as large as 10 times, far surpassing what the U.S. law allows."

Source: International Herald Leader, March 6, 2012
http://news.xinhuanet.com/herald/2012-03/06/c_131442157.htm

China News recently reported that the spokesman for the Chinese People’s Political Consultative Committee (CPPCC), Zhao Qizheng, commented in a media briefing on two major security concerns of Chinese companies doing business overseas. Zhao suggested that, though China’s “Go Out” strategy has been very successful, many Chinese companies still face challenges due to a lack of knowledge of the international market. One of the major security concerns is the personal safety of the Chinese company’s staff working overseas. Another major concern is the safety of the investment. On the second point, Zhao added that many failures were directly caused by not using effective public diplomacy, which, if used, would help eliminate the negative voices in the foreign government and the general public. Zhao revealed that, last year, public diplomacy associations were established in Shanghai, Tianjin, and Guangzhou. These three cities do the most international business.

Source: China News, March 2, 2012
http://finance.chinanews.com/cj/2012/03-02/3715152.shtml