Economy/Resources - 214. page

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

At a press conference on February 29, 2012, Chi Fulin, the President of the China Institute for Reform and Development, stated that, in the near future, the government should introduce an income allocation plan that adjusts the allocation of capital  in order to improve public welfare. “At the present time, State-owned capital is invested in competitive markets. It pushes the private sector out and over-heats the investment market. More importantly, it cannot reflect the public ownership of the State’s capital and is not conducive to social fairness.”

Zhang Zhuoyuan, a research fellow at the Institute of Economics at China’s Academy of Social Science, expressed that China is probably the worst country when it comes to income distribution and is also the most confusing and chaotic. Recently, when he was looking at the breakdown on his pay statement, he discovered that his base salary accounts for less than 20% of his total income.

Source: Yangtse Evening Post reprinted at China Economic Net, February 29, 2012 http://www.ce.cn/xwzx/gnsz/gdxw/201202/29/t20120229_23114559.shtml

A Xinhua report revealed some statistics on the 2011 performance of China’s state-owned enterprises that are under the central government, or central government enterprises. (State-owned enterprises include those under the central government, provincial government, and city government, among which those under central government are the largest in size.)

In 2011, these enterprises achieved an operating revenue of 20.2 trillion yuan (US$3.2 trillion), up 20.8% over 2010; a net profit of 971.3 billion yuan (US$154 billion), an increase of 6.4%; and tax payments of 1.7 trillion yuan (US$0.27 trillion), up 19.7%; accounting for about one sixth of the national tax revenue. As of the end of 2011, the asset size of the 117 central government enterprises reached 28 trillion yuan (US$4.4 trillion), up 14.9 percent; with net assets of 10.7 trillion yuan (US$1.7 trillion), an increase of 11.4%. Among the 2011 Fortune 500 companies, 38 are China’s central government enterprises, an increase of eight over 2010.

For the first 11 months of 2011, those enterprises’ overseas operating revenues reached 3.4 trillion yuan (US$0.54 trillion) with a profit of 128 billion yuan (US$20.3 billion), an increase of 30.7% and 28% respectively. The growth rate significantly exceeds that of their domestic operations.

Source: Xinhua, February 28, 2012
http://news.xinhuanet.com/2012-02/28/c_111577568.htm

In a special report about China’s real estate market, Shanghai Security News Online reported that some small and mid-sized developers in the second and third-tier cities in China have abandoned their businesses as they are no longer able to make payments on their loans. Taking Changsha, the capital city of Hunan Province, as an example, the developers of eight real estate projects have fled. There are similar cases in Nanjing City, Jiangsu Province, Jiaxing City, Zhejiang Province, Anyang City, and Henan Province.

The common thread among these run-away developers is that they have borrowed heavily, as much as several hundred million Yuan, from private money lenders. Such loans carry a high interest rate (in Changsha, they run from 3 to 5%, and sometimes even as high as 10% per month). Normally the loans are due in less than a year. While local banks charge only 0.7% per month, with China’s tightened bank loan policies, these developers could no longer get a bank loan.

According to the World Union’s report, for real estate developers in China, 1 trillion yuan (U.S. $163 Billion) in debt payments will be due soon.

Source: Shanghai Security News Online, February 28, 2012
http://www.cnstock.com/index/cj/201202/1871405.htm?page=7