Economy/Resources - 212. page

According to The Beijing News, the Dalian Shide Group, a Chinese private enterprise whose chairman is Xu Ming, is reportedly being investigated for economic problems. It has used up most of its stock ownership in banks as collateral for loans and has borrowed more than 6 billion yuan in funds. Meanwhile, within this coming month, the company has over 800 million yuan in payments to make on its loans; the monthly interest rates run as high as 4.5%. It is reported that the company has started preparations in anticipation of filing for bankruptcy.

Xu Ming established Shide in Dalian in 1992. In 2005, Forbes ranked Xu as China’s eighth richest man. It has been reported that Xu has close ties with Bo Xilai, the former Party Secretary of Chongqing City, Sichuan and has provided him with financial support. On March 15, 2012, the CCP leadership removed Bo from his position and he is currently under investigation. Shortly thereafter, Shide lost contact with Xu Ming, whom many believe is also under investigation or arrest in connection with Bo.

Source: The Beijing News, April 19, 2012
http://www.bjnews.com.cn/finance/2012/04/19/194671.html

According to a report on the BBC Chinese website on April 14, 2012, since January 2010, Guangdong Province has investigated and taken disciplinary action against over 10,800 corrupt officials. The total amount of bribes that these officials accepted exceeds 1.1 billion yuan. An official from the Guangdong Provincial Commission for Discipline Inspection said that the above anti-corruption action has restored nearly 1.8 billion yuan (US$285.5826 million) in economic losses. He did not disclose the total amount of economic losses that resulted from these corrupt officials’ actions.

Source: BBC Chinese Website, April 14, 2012
http://www.bbc.co.uk/zhongwen/simp/chinese_news/2012/04/120414_china_corruption.shtml

Xinhua reported that China’s central bank announced that China will widen the yuan trading band against the U.S. dollar. On every trading day, the yuan is currently allowed to trade 0.5 percent on either side of a midpoint price set by the central bank. The new rules will allow the currency to fluctuate by up to 1.0 percent on either side. The move is expected to lower the possibility of a near-term large scale flow of “hot money.” Experts expressed the belief that the widened trading band is one step closer to a free-floating yuan exchange rate. Over the past 7 years, China has been taking steady steps toward the goal of internationalization of the yuan (RMB), which includes cross-border RMB settlements, RMB direct investments overseas, and supporting the Hong Kong off-shore RMB trading market.

Source: Xinhua, April 14, 2012
http://news.xinhuanet.com/fortune/2012-04/14/c_111780377.htm

On April 13, 2012, Chinese Premier Wen Jiabao chaired an Executive Meeting of the State Council. Measures discussed included planning near term policies for China’s macro economy. Among all of the decisions made, the key one was to stick to the current policies controlling the housing market. Wen emphasized the requirement of ensuring that those polices would not suffer any level of roll back. The Executive Meeting also identified some other near term challenges: the global financial crisis has not ended; the European debt crisis still persists; the Chinese domestic economy is declining; the pressure of inflation is increasing; small-sized businesses are having a tough time obtaining financial help; and Chinese exports are slowing down. In addition to the housing market policies, the meeting focused on policies in 9 economic areas, which included enlarging the domestic consumer market.

Source: China Review News, April 14, 2012
http://www.zhgpl.com/doc/1020/7/4/9/102074989.html?coluid=151&kindid=0&docid=102074989&mdate=0414090603

China Review News (CRN) recently published an article discussing key issues related to China’s overseas investments. The article referred to the World Investment Report 2011 released by the United Nations Conference on Trade and Development (UNCTAD), which indicated that the total for all global overseas investments in 2010 was US$1.32 trillion. China’s direct overseas investments ranked number five in this report, surpassing traditional investors such as Japan and Britain. Enterprises owned by China’s central government were the primary force in overseas investments. However these investments also experienced a large amount of losses. Since last May, the State-Owned Assets Supervision and Administration Commission (SAC) has released two risk management regulations. SAC recently issued a new order to further control the risks by banning state-owned companies from investing outside of their primary line of business. The article also pointed out another key issue. China lacks a global strategy to balance investments in the areas of research, manufacturing, sales, resources, trade, finance, and information.

Source: China Review News, April 14, 2012
http://www.zhgpl.com/doc/1020/7/4/9/102074945.html?coluid=53&kindid=0&docid=102074945&mdate=0414074702

Yu Benlin, the Deputy Director General of the Ministry of Commerce’s Bureau of Fair Trade for Imports and Exports, spoke at the “Expansion of Sino-US Economic and Trade Cooperation Forum” that was held during the 111th Chinese Imports and Exports Fair (the Canton Fair) on April 15, 2012. Yu explained that Chinese foreign trade is facing major pressure in three areas: increased external attacks, a tighter export environment, and international strategic planned pressure. 1) Increased external attacks: The U.S. has implemented both an anti-dumping and an anti-subsidies policy on imports from China. As an example, Yu mentioned the 2011 anti-dumping and anti-subsidies investigation on China’s solar products. 2) A tightened export market: World market demand remains weak. Taking the E.U. as an example, growth in E.U. countries is slower than expected, the manufacturing industry is shrinking, and its first quarter growth may be weak. 3) Increased International pressure: The world media has shifted its media campaign on China from the “China Threat” to “China Accountability.” Different countries have demanded that China take responsibility for things that are beyond China’s economic capability.

Yu also pointed out that the U.S. has misapplied its regulations to China’s imports according to its own wishes. As an example, he mentioned the “substitution country” used during the anti-dumping investigation. In addition to India, which the U.S. used previously, it has started to use Indonesia and Thailand (for importing goods). The anti-dumping duties that the U.S. imposed during its investigation of Chinese imports were normally above 100 percent.

Source: Xinhua, April 15, 2012
http://news.xinhuanet.com/fortune/2012-04/15/c_111782252.htm

Qiushi published a commentary with an analysis of income distribution in China. This analysis showed that the wealth of local residents increased rapidly in a relatively short period of time as the result of economic development and the economic transformation. While relative to other countries, the inequality in the distribution of property of China’s residents is not very great, the inequality is growing very rapidly. … From the wealth distribution chart, [it is clear] the so-called middle class remains very small.”

Source: Qiushi, April 10, 2012
http://www.qstheory.cn/jj/xsdt/201204/t20120410_150235.htm

Xinhua recently reported on the state of the Chinese job market during the first quarter of 2012. According to the report, general economic growth in China is slowing down. People in society are experiencing widespread worry about the job market. The spokesman for the Ministry of Human Resources and Social Security predicted that the market will be challenging this coming year; he stated that 25 million new jobs are needed for 2012. The primary problem in the Chinese job market is the mismatch between position requirements and the skill sets available. The first quarter figures showed that a large number of companies cannot find qualified, skilled technicians, while millions of college graduates cannot find jobs. Researchers suggested that the best immediate solution to enable the creation of new jobs would be to cut taxes for small businesses. They also suggested that the government needs to promote free secondary vocational education and to concentrate its resources on training migrant workers.

Source: Xinhua, April 7, 2012
http://news.xinhuanet.com/fortune/2012-04/07/c_111748444_2.htm