Economy/Resources - 235. page

Zhang Xiaojing, Director of Macro Studies at the China Academy of Social Sciences, urged top leaders to take drastic measures to promote reform and to change the crisis into an important opportunity for reform. Next year is the beginning of the twelfth five year plan. Zhang believes that, if the theme of the Chinese economy is transformation, these five years will be critical for that transformation. Zhang wrote that while crises and opportunities will continue, the uppermost leaders should demonstrate their courage and guts to promote reform so that the transformation will make fundamental progress.

Source: Qiushi, November 16, 2010
http://www.qstheory.cn/zz/gcysk/201011/t20101116_56744.htm

According to a Xinhua report, several top Chinese officials recently expressed concern about rapid price increases due to inflation in China. On November 11, Wen Jiabao, while visiting Guangzhou for the Opening Ceremony of the Asian Games, paid a visit to a local supermarket. Wen asked the sales-persons there about prices, supplies, and the sales of fruits and vegetables. Wen told them, “The State Council is working on policies to control rapid price increases.”

On November 16, at China’s Global Debt and Capital Market conference, Zhou Xiaochuan, President of the Bank of China, said, “China is facing the risk of an inflow of capital” and “the rising prices in China need attention from all areas.”

Sources: Xinhua, November 16, 2010
http://news.xinhuanet.com/2010-11/16/c_12782257.htm
http://news.xinhuanet.com/2010-11/16/c_12781043.htm

On November 5, the Managing Director of the International Monetary Fund (IMF) announced that the IMF Executive Board approved the Far-Reaching Governance Reform Plan. Once implemented, China’s voting power will reach 6.07%. It will surpass Germany, France, and Britain, being behind only the U.S. and Japan. China’s current voting share is 3.65%. The planned reform will shift 6% of the overall shares to emerging markets. Europe will also give two seats on the Executive Board to emerging market countries to increase the representation of those countries. China suggested that this reform just reflects the reality of the world economy. The “historic agreement” was reached in October, during the G20 conference of treasury ministers and central bank governors.

Source: Xinhua, November 6, 2010
http://news.xinhuanet.com/2010-11/06/c_12745053.htm

The Chongqing Evening Post recently reported that the Chinese Academy of Social Sciences (CASS) announced publication of the Blue Book of National Competitiveness. The Blue Book is based on research done on more than 100 countries. It concluded that China now holds the number 17 position among all countries and is number 9 among the G20. The Blue Book also set a goal for China to become number three in terms of national competitiveness (after the U.S. and the EU) by 2030 and number two (after the U.S.) by 2050. However, it is believed that China’s current growth model relies heavily on real estate investment and massive resource consumption. This is not a competitive model. The Blue Book also pointed out that China’s lack of the ability to innovate is a primary disadvantage. China is far behind Japan and South Korea in this area. 

Source: Chongqing Evening Post, October 26, 2010
http://www.cqwb.com.cn/NewsFiles/201010/26/20100026120000399042.shtml

According to a China Securities Journal article, the unreasonable allocation of revenue between the central and local governments has contributed to social instability. The central government takes the lion’s share of revenue, while smaller shares are allocated to local governments. However, local governments are responsible for expenditures on education, medical care, and retirement. When revenue falls short, two problems arise. One, local governments resort to auctioning land to augment their revenue. This has become the most popular source of income for local governments. Two, the severe lack of adequate funding for housing, education, medical care, and retirement, coupled with insufficient public facilities and services, has directly “impacted the stability and harmony of our society.” In contrast, the central government’s revenue is unusually high, “demonstrating the increase in national power.”

Source: China Securities Journal, October 28, 2010
http://cs.xinhuanet.com/xwzx/16/201010/t20101028_2644835.html

Zhu Hongren, Chief Engineer and spokesman for the Ministry of Industry and Information, recently stated that China is not using rare earth minerals as a bargaining tool. Instead, he said, China would like to achieve a win-win situation with other countries on the protection and utilization of these non-renewable natural resources. China holds 55.7% of the world’s reserve of rare earth minerals. China’s exports are the source of 90% of the international market. Zhu suggested that China did not do a good job of managing the production process in the past, especially in terms of environmental protection. Now China is controlling the mining, manufacturing, and trade areas to introduce order into the management process. He claimed that these steps do not violate WTO rules.

Source: Xinhua, October 28, 2010
http://news.xinhuanet.com/2010-10/28/c_12713000.htm 

The Economy and Information Committee of Guangdong Province published a news briefing on October 26. In it, the leaders of the Committee explained that the appreciation of the Chinese renminbi is already over the limit of affordability for most industrial enterprises in Guangdong Province. If the renminbi continues to strengthen in value this year, the majority of enterprises that export products and have a low profit margin will be unable to maintain normal operations and will therefore fold. The Deputy Director of the Guangdong Economy and Information Committee, Li Xiongming, said that the enterprises in Guangdong Province currently can only afford a two percent appreciation of the renminbi per year.

Source:
Yangcheng (Canton) Evening News, October 27, 2010
http://www.ycwb.com/epaper/ycwb/html/2010-10/27/content_955634.htm

 China’s central bank, The People’s Bank, issued its third quarter economic analysis on October 27, 2010. The analysis states that, compared to the second quarter, the market fears of an excessive downturn in the economy have receded; China’s economy is showing clear signs of stabilization, but pressure on prices cannot be ignored. The pressure comes from price hikes in food, the reform of income distribution and resource prices, as well as uncertainty about bulk commodity prices in the international market.

Source: Xinhua, October 27, 2010
http://news.xinhuanet.com/2010-10/27/c_13578505.htm