Economy/Resources - 233. page

Guangming Daily recently published an article discussing issues related to China’s national financial safety, which is considered to be the core of economic safety. The article expressed concern that financial globalization has resulted in an increase in negative economic fluctuations. The author believes that there are four elements that endanger the Chinese economy: (1) hot money, or unemployed capital; (2) financial innovations that lead to instability; (3) strong pressure that results from China’s foreign exchange reserves; (4) an incomplete financial system in China’s rural areas. The article called for long-term positioning of the Chinese currency (RMB), improvements in financial market administration, and increased investment in social security systems.

Source: Guangming Daily, December 20, 2010
http://epaper.gmw.cn/gmrb/html/2010-12/20/nw.D110000gmrb_20101220_4-10.htm

Government specialists and economists were interviewed for an article in Xinhua analyzing the direction of China’s economy in 2011. The following are highlights of the major points:

– China will face inflation next year, mainly caused by international inflation.
– China’s monetary policy will change from “loosened” to “neutral,” but not “tightened.”
– Once the government’s stimulus package has run its course, China will have to work through the private sector to drive its economic growth.
– The real estate market will drop slightly, but not significantly.
– The income disparity between China’s rich and poor will widen even further.
– China’s export business will continue to grow.
– The yuan will rise slightly.

Source: Xinhua, December 17, 2010
http://news.xinhuanet.com/herald/2010-12/17/c_13653229.htm

Xinhua reported that the State Grid Corp. of China will spend $989 million to buy seven Brazilian power distributors. State Grid owns a 30-year concession, with another 20-year renewal, to distribute power to Brazil’s southeastern region, the most economically advanced area, which includes major cities such as Rio de Janeiro, Sao Paulo, and Brasilia.

“The deal for the seven Brazilian power distributors is expected to generate more than $110 million in annual earnings for State Grid Corp. It will also open markets for China to sell machinery to South America and to construct electricity projects there.”

Source: Xinhua, December 21, 2010
http://news.xinhuanet.com/2010-12/21/c_12900736.htm

On December 18, 2010, Xinhua News Agency held an opening ceremony to launch its financial information exchange. It is the first exchange that offers financial information worldwide. It plans to work with other global institutes to provide services on the trading of financial information, cultural innovation products, media news information, advertising, patent transfers, and business information.

Li Congjun, President of Xinhua, said, “Xinhua Financial Information Exchange … eventually will be the most influential financial information and cultural industry service center in the world.” Xu Feng, General Manager of the exchange, said its position is one of “exchanges of exchanges (including stock, commodities, and more).” “When the time is right, Xinhua will call for a World Exchange Conference.”

Sources: Xinhua, December 18, 2010
http://news.xinhuanet.com/2010-12/18/c_12894394.htm
http://news.xinhuanet.com/2010-12/18/c_13654860.htm
http://news.xinhuanet.com/fortune/2010-12/18/c_12893815.htm

On December 16, 2010, China Review News discussed a report from Radio France Internationale (RFI) titled “China Petroleum & Chemical Corporation Expands Its Empire around the World.”

China Petroleum & Chemical Corporation (Sinopec Corp), the biggest oil company in Asia, has purchased the American-owned Argentine subsidiary of Occidental Petroleum Corporation for $2.45 billion U.S. So far this year, China has spent $38.8 billion U.S. on mergers and acquisitions in the petrochemical energy business around the world, more than it has ever spent before on M & A in its history. “With the undisguised ambition of conquering the world, Sinopec Corp, together with two other Chinese oil companies, will form a golden triangle to establish a new network for the world’s oil distribution.”

Source: China Review News, December 16, 2010
http://gb.chinareviewnews.com/doc/1015/3/9/4/101539497.html?coluid=59&kindid=0&docid=101539497&mdate=1216095427

On December 15, 2010, the Chinese Academy of Social Sciences (CASS) issued its blue book on society. The book pointed out that, while China’s economy is developing rapidly, it also faces challenges and social issues. The problems are particularly striking in the areas of income distribution, labor relations, and prices for goods and housing. The book summarized the five major issues and challenges for China’s social development in 2010. They were: 1) The economy is entering a new phase; the development model needs to be transformed. 2) Conflicts in labor relations have become evident; a new generation of farm workers has become the focus of attention. 3) Reform in the distribution of income has met heavy resistance; be aware of the “trap of middle-income nations.” 4) “Land urbanization” has become hot again; be aware of damaging farmers’ interests. 5) The semi-urbanization problem is very serious; villages are shrinking in some areas.

Source: China News Agency, December 16, 2010
http://www.chinanews.com.cn/gn/2010/12-16/2724961.shtml

Xinhua quoted several government researchers, stating that China would not increase interest rates to counter inflationary pressure, since doing so would most likely attract international “hot money” to China and hurt China’s economy. Instead, China will rely on lending controls, such as increasing the ratio of lenders’ cash reserve requirements. On December 10, the Bank of China increased the reserve requirement ratio by another 50 basis points, which is the third increase in one month and the sixth in 2010.

In November, China’s CPI increased 5.1% over the same month in 2009. The CPI for food increased 11.7% over the same period last year. Since the global financial crisis began, China has added 17 trillion yuan (U.S. $2.6 trillion) in new loans and the supply of renminbi has reached 70 trillion yuan (U.S. $10.6 trillion).

Source: Xinhua, December 14, 2010
http://news.xinhuanet.com/fortune/2010-12/14/c_12879617_3.htm

On December 10, 2010. People’s Daily published an article discussing the development of the culture industry in China. The article stated that the government’s planning for the culture industry and its policies has played an important role in the rapid development of the culture industry. During the 11th Five Year economic development cycle, provinces invested 2.5 billion yuan (US $400 million) in developing the culture industry. The government also worked with several top universities, including Shanghai Jiao Tong University, Beijing University, and Tsinghua University, to establish culture industry research centers. A major tenet on the theory side was that the state-owned culture business and the market-based culture industry should co-exist and be the “two wheels” that propel cultural development.

Source: People’s Daily Online, December 10, 2010
http://culture.people.com.cn/GB/13443697.html