Economy/Resources - 221. page

Yang Cheng Evening News reported that three high-speed railways in Guangdong Province stopped or postponed construction work and entered the “winter sleep” phase in advance due to an interruption in the chain of financing. It has been reported that China’s Ministry of Railways owed 130 billion yuan (over US$20 billion) to the construction company. Some peasant workers have not received their wages for more than half a year. 　

Source: Yang Cheng Evening News, October, 27, 2011
http://www.ycwb.com/epaper/ycwb/html/2011-10/27/content_1241444.htm

Xinhua reported that recently some real estate developers in Beijing, Shanghai, and Hangzhou have reduced their housing prices in order to promote sales. For example, the “Beijing Business International City” apartment complex is selling at 15,000 yuan per sq. meter (U.S. $256 per sq. ft), down from its peak of 25,000 yuan. “Long Hu Li Cheng” in Shanghai gave the buyers a 280,000 yuan (U.S. $43,000) discount, or 20 to 30% off the list price. This has attracted a lot of buyers, but has also greatly agitated the earlier buyers who purchased properties at a higher price. The earlier buyers are demanding refunds of the “lost value” or even that they be able to return the properties to the developers.

The article listed three groups of developers who are considering the decision of whether to reduce the price of property. The first group conducts quick sales in a short period to recover their capital investment. It tends to include limited developers with only spotty action and does not impact the overall market price. The second group is the small to mid-sized developers who might be forced to lower prices because of pressure to repay loans. There was a burst in real estate trusts after 2009 with an interest rate of 15% or more. The trusts must be paid back between September of this year and the end of next year. The third group is the big companies that have sufficient capital. They face a pricing dilemma. If they don’t lower their prices, the properties won’t sell; but if they do lower their prices, there might be complicated disputes with owners who paid higher prices earlier.

According to statistics, of 70 large or mid-size cities, the housing prices in 17 of those cities were lower in September than a year ago; 29 kept the price the same; and for the cities with an increased price, the increases were all below 0.3%.

Wen Jiabao recently expressed that it is critical to control the real estate market and maintain a healthy growth of the market (Ed: not to have a dramatic drop in prices). Officials from Shanghai and Beijing all expressed their determination to “unswervingly control the real estate market and ensure that housing prices remain ‘flat or with only a slight decrease.’”

Source: Xinhua, Oct 26, 2011
http://news.xinhuanet.com/politics/2011-10/26/c_111125641.htm

According to Worker’s Daily, by October 17, 2011, ten major production accidents had occurred across China, making October of 2011 the highest work accident occurrence month this year. Work safety in China is now in a grave situation.

On October 21, 2011,  Luo Lin, head of the State Administration of Work Safety (SAWS), said at the National Safety Production Video Conference that more major accidents had occurred in the beginning of the fourth quarter than in the same period for the last 3 years. In October of 2010, there were 6 major production accidents across China. This October, by October 17, 2011, 10 major production accidents occurred in China with 151 casualties and missing people. The accidents involved several industries, with the most being in coal mining.

Source: Worker’s Daily, October 22, 2011
http://news.workercn.cn/c/2011/10/22/111022041037643367619.html

On October 22, 2011, China Business Journal published a report on an investigation into secret transfers of assets to Canada for entrepreneur emigration.

While the whole nation has been discussing whether to rescue the debt-ridden small and medium enterprises in Wenzhou, Zhejiang Province, business owners from Wenzhou and Yiwu in Zhejiang have been getting ready to emigrate abroad. Some business owners obtained bank loans using their businesses as collateral and transferred the borrowed money abroad for entrepreneur emigration to Canada; other entrepreneurs transferred their assets overseas through different channels long ago, just waiting for the right time to declare bankruptcy. Many Yiwu entrepreneurs have left businesses behind in China, which remain only as empty shells.

Source: China Business Journal, October 22 2011
http://www.cb.com.cn/1634427/20111022/290307.html

On October 19, 2011, the Credit Suisse Research Institute published its second Global Wealth Report. The report said that the total wealth in China grew US$4 trillion from January 2010 to June 2011, exceeding US$20 trillion. China is ranked second in the world next to the U.S. in total wealth, followed by Japan and France. Of the adult population, 37 percent have a total wealth between US$10,000 and $100,000 per person and 5.8 percent have less than $1,000. Meanwhile, China’s million dollar club broke the one million mark. The wealth of 5,000 of those is over US$50 million, which is second to the U.S.

Source: Xi’an News, October 21, 2011
http://news.xiancn.com/content/2011-10/21/content_2499151.htm

The amount of China’s municipal solid waste has reached 70 million tons; the total construction waste is estimated to be between 2.1 to 2.8 billion tons, with 300 million tons of new construction waste generated each year. However, according to Xinhua the disposal of construction waste is mainly temporary pilings and landfill. For example, the annual production of construction waste in Qingdao city’s urban district is as high as 10 million tons, 70% of which is used in reclamation, while 10% is dumped in landfills.

Xinhua said that only five percent of the country’s construction waste is recycled, with only a handful of companies in the business. The problem lies in the inadequate supervision of the disposal of the waste. Construction companies only clean up the waste from the site, while the transportation companies randomly dump or bury the waste nearby to lower their cost. The mechanism involved in waste collection, transportation, recycling, product quality supervision, and product promotion is yet to be put in place.

Source: Xinhua, October 18, 2011
http://news.xinhuanet.com/society/2011-10/18/c_111103536_3.htm

Over 90 owners of private enterprises in Wenzhou, Zhejiang Province have fled in order to escape from debts they could not pay, in an amount of more 200 million yuan (US$31 million). A loan crisis in intermediate and small business enterprises is erupting. Chinese Premier Wen Jiabao brought a group of top financial officials including Finance Minister, Xie Xuren; Governor of the People’s Bank of China, Zhou Xiaochuan; Chairman of the China Banking Regulatory Commission, Liu Mingkang, together with the Party Secretary and Governor of Zhejiang Province, to travel to Wenzhou to deal with the crisis. They held discussions with the local entrepreneurs and asked the local government to try to do everything they could to stabilize the economic and financial situation.

The trigger was that the intermediate and small enterprises could not get funding under the central govenment’s macroregulatory policy and therefore turned to private (underground) sources for loans that often required as much as 200 percent in annual interest.

Source: China Review News, October 5, 2011
http://gb.chinareviewnews.com/doc/1018/5/7/8/101857897.html?coluid=151&kindid=0&docid=101857897&mdate=1005104610

On September 27, 2011, China Review News published a short article to introduce a series it is publishing on “China’s subprime crisis.” Heads of companies are becoming runaway bosses because they are unable to pay hundreds of millions in debt. For example, Hu Fulin, the owner of China’s most popular sun-glass company, recently fled from Wenzhou, the “capital of China’s private manufacturing companies,” to escape his debts. Recently, a “List of Runaway Wenzhou Bosses” has been circulating on the Internet and has caused quite a stir.

“Some analysts believe the incident indicates that a crisis exists in Wenzhou that may affect hundreds of billions in private loans. With the continuous deterioration in the chain of repayment of private loans [Ed: As banks favor SOE’s, banks make loans that are not on the books or borrowers turn to underground sources at higher interest rates, creating a chain of loans] quite a large number of enterprises may collapse. For the banks that originally made these private loans, the funding chain is getting longer. Once the enterprises, the loan borrowers, have business problems and cannot repay the loans, the original banks will be in trouble and more economic entities will be affected. Therefore, a subprime crisis may erupt in China.”

Source: China Review News, September 27, 2011
http://gb.chinareviewnews.com/doc/1018/4/9/6/101849670.html?coluid=73&kindid=7150&docid=101849670