Economy/Resources - 230. page

On February 12, 2011, Xinhua reported that the General Office of the State Council sent out a notice about establishing the National Security Review and Approval System for Foreign Acquisitions of Chinese Companies. A multi-ministry joint committee will be created to administer the review process. The notice encompassed the System’s scope, content, working mechanism, and procedures. The national security review mainly covers companies that foreign investors may actually control. The fields the companies will deal with will include military, key agriculture products, critical energy and resources, important infrastructure, important transportation, key technology, and heavy equipment. The State Development and Reform Commission and the Ministry of Commerce are the leading agencies on the operational front. These regulations apply to investors from Hong Kong, Macau and Taiwan. The process of reviewing the acquisition of financial companies will be regulated separately.

Source: Xinhua, February 12, 2011
http://news.xinhuanet.com/2011-02/12/c_121070713.htm

On February 18, 2011, the People’s Bank of China (PBOC) announced that it will increase the bank reserve ratio by 0.50% on February 24. This is the second reserve ratio hike this year and the eighth since the start of 2010. With this rate hike, PBOC expects to keep 350 billion yuan in the banking system from entering circulation.

China, however, refused to allow significant appreciation of the Renminbi against the U.S. dollar. On February 17, 2011, Zhou Xiaochuan, governor of the central bank, said in Paris that “(China) has never paid special attention to external pressure for the Renminbi’s appreciation. The Chinese government will decide the pace on its own.”

Sources:
1. Xinhua, February 18, 2011
http://news.xinhuanet.com/fortune/2011-02/18/c_121098458.htm
2. Xinhua, February 19, 2011
http://news.xinhuanet.com/fortune/2011-02/19/c_121099068.htm

Guangming Daily reported on the 2011 Investigation Report of the International Business Survey issued by Grant Thornton China on February 16, 2011. According to the survey, following the global economic recovery, Chinese enterprises’ intentions to expand have markedly increased. It showed that 45 percent expect to be involved in M&A activities in the next three years. That is an increase of 19 percent over last year’s 26 percent. It is also higher than the global average of 34 percent. Among the enterprises surveyed, 26 percent anticipate acquiring companies overseas in the next three years, the highest level since 2008. Overseas acquisitions have increased rapidly in recent years. Since the start of February of this year, Chinese companies have spent over US$10 billion on acquisitions. At the moment, large state-owned enterprises are responsible for most overseas acquisitions. Due to opposition from hostile overseas forces, many face obstacles and failure. Thus many private enterprises and other economic entities have been driven to join the acquisition activities.

Source: Guangming Daily, February, 17, 2011
http://economy.gmw.cn/2011-02/17/content_1624010.htm

Qiushi, the core publication of the central committee of the Chinese Communist Party published an article on its website warning that urbanization at the current excessive rate is posing a serious threat to China’s food supply. The threat is three-pronged: a reduction in the farming population, in farmland itself, and in government funds. “This will inevitably lead to the food crisis arriving much sooner than anticipated.” The article stated that the authorities have manipulated the composition of the price index by increasing the weight of housing prices and expenditures on education. Their objective is to reduce the impact of food prices and ease the public’s concern over inflation. “This is just like a thief, who covers his ears when he steals a bell. It will not allay fears of inflation. It may, instead, conceal the impact of over-urbanization on the supply of food.”

Source: Qiushi, February 16, 2011
http://www.qstheory.cn/lg/zl/201102/t20110216_68361.htm

Sino-European International Group, a privately owned Chinese company based in Wenzhou, China, recently signed a contract to build luxury helicopters in China jointly with Eurocopter. All parts will be imported from Europe, while assembly will be done inside China. The plan for the future is that all parts will be produced in China. An initial investment of half a billion RMB was spent to establish a factory in Changshu. Official release of helicopters for sale is scheduled for next June. The price for each helicopter is planned be in the range of RMB 30 million to 60 million. Eurocopter is the largest helicopter vendor in the world. It belongs to EADS (European Aeronautic Defence and Space Company N.V.)

Source: Xinhua, February 11, 2011
http://news.xinhuanet.com/2011-02/11/c_121066688.htm

According to the Statistics Bureau’s data released last year, the salary level of those in China’s financial securities industry was six times that of the average salary for other professions. Among all professions, the highest salary was 11 times more than the lowest one. The most recent statistics released by the Salary Institute of Human Resources and the Social Security Ministry show that the difference has now widened to 15 times. Based on the current data, the income disparity among different professions in China is the greatest in the world.

Source: Huanqiu (Global Times), February, 10, 2011
http://china.huanqiu.com/roll/2011-02/1485203.html

On February 8, 2011, the People’s Bank of China announced that, effective February 9, it will raise the benchmark interest rate by 0.25%; the one-year deposit rate will be 3%; and the one-year lending rate will be 6.06%. Scholars suggest this increase is due to the pressure of high inflation and the real estate bubble. They expect that 2011 will bring even more rate hikes.

Ba Shusong, Deputy Director of the Financial Research Institute, Development Research Centre of the State Council, stated that China will adopt a monetary tightening policy in 2011. Ba outlined three causes for the rate increase: 1. A rapid increase in loans in January 2011, which some estimated at 1.2 trillion yuan. 2. Consumer product price increases due to weather and the Chinese New Year. 3. Continuous price increases for commodities overseas.

China News Service referred to the central bank’s monetary policy report, which was released before the Chinese New Year. The report stated it would "use ‘society’s total financing amount’ to measure the scale of financing." China News Service interpreted this to mean, "PBOC does not look just at ‘RMB loans,’ but also at corporate bonds, stock, trust loans, and entrusted loans, etc. for deciding on monetary tightening."

Sources:
1. People’s Bank of China Website, February 8, 2011
http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2011/20110208183128735889235/20110208183128735889235_.html
2. China News Service, February 8, 2011
http://www.chinanews.com/cj/2011/02-08/2828737.shtml
3. China News Service, February 8, 2011
http://www.chinanews.com/cj/2011/02-08/2828736.shtml

On January 30, 2011, after the State Council issued its first document of the year, Chen Lei, the Minister of Water Resources, held a press conference where he announced, "China has an annual water shortage of 40 billion cubic meters. Two-thirds of its cities suffer from a shortage of water." Chen said that the No. 1 Document sets targets to improve China’s plan to conserve water over the next five to 10 years.  According to the No. 1 Document, China will intensify its efforts to accelerate the development of the nation’s water conservation and promote the sustainable use of water resources.

Source: Xinhua, January 30, 2011.
http://news.xinhuanet.com/2011-01/30/c_121040588.htm