Economy/Resources - 241. page

At the end of June, 2010, China had $2.4543 trillion in foreign exchange reserves. On August 24, 2010, China Review News reported that China has been implementing a strategy to diversify the allocation of its foreign exchange reserves.　　

According to the U.S. Treasury Department on August 16, China had reduced its holdings of U.S. Treasury bonds by $96.2 billion since July 2009.

Japan’s Finance Ministry announced on Aug. 9 that China had purchased 456.4 billion yen (about 5.3 billion U.S. dollars) in Japanese government bonds in June, which means that China has purchased Japanese government bonds for 6 consecutive months. For the first half year of 2010, China purchased a total 1.73 trillion yen in holdings of Japanese government bonds (about 20.2 billion U.S. dollars). Meanwhile, China has increased its holding of South Korea government bonds by 111%, up to 3.99 trillion won (about 3.4 billion U.S. dollars). In mid-July of 2010, the Chinese Administration of Foreign Exchange bought about 400 million euros in Spain’s 10-year bonds.

Source: China Review News, August 24, 2010
http://gb.chinareviewnews.com/doc/1014/2/4/1/101424122.html?coluid=53&kindid=0&docid=101424122&mdate=0824080231

Wang Xiaolu, a scholar at the National Economic Research Institute under the China Reform Foundation, recently published an article that calculates the 2008 urban residents’ “hidden income” to be as high as 9.26 trillion yuan, about 30% of the year’s gross domestic product (GDP). Wang believes that the existence of gigantic amount of “hidden income” or “grey income” shows the severe distortion of the distribution of national income. The sources of the “hidden income” include corruption, and other means of misappropriation of public funds and private wealth.

On August 24 and 25, the National Bureau of Statistics published two articles on its website, confronting Wang’s study by questioning its methodology.

Source: Jinghua Daily, August 26.
http://epaper.jinghua.cn/html/2010-08/26/content_580292.htm
[Editor’s Note: Jinghua Daily is a Beijing local newspaper]

The People’s Bank of China recently published a “Notice on Issues of Three Types of Organizations, Including Offshore Renminbi’s Clearing Houses, Investing the Renminbi in Banks’ Bond Markets.” China Review News quoted an article by the Shanghai Securities News, commenting that it will improve the Renminbi’s circulation overseas to create the condition for it to “come back” after “pushing it out,” moving forward the goal of making the Renminbi a major foreign exchange currency.

The article stated that there are 3 ways to push the Renminbi to “go abroad.” They are: currency exchange between China and other countries, using the Renminbi for cross-border trade settlement, and Hong Kong’s Renminbi’s offshore market. The article then argued for establishing a Renminbi onshore market in Shanghai to provide a better condition for the Renminbi to circulate back.

Source: China Review News, August 24, 2010
http://gb.chinareviewnews.com/doc/1014/2/4/1/101424105.html?coluid=53&kindid=0&docid=101424105&mdate=0824074956

China will face increasingly more trade protectionism over the coming two to five years, according to an official at the Economic Forecast Division/State Information Center.  Mr. Zhang stated that, as the global economy enters the post-crisis era, then trade wars will escalate.  

“In the next two to five years, China will face increasingly more trade frictions. China’s export will inevitably be the hardest hit by trade protectionism. Furthermore, trade barriers will be the norm and there will be pressure on China’s RMB, expecting it to further appreciate. Filing complaints or turning to the WTO (World Trade Organization) may be of no use. The key to breaking encroaching trade barriers lies in China’s transformation, strategic realignments and the State’s earnings model.

Source: Shanghai Securities News, August 11, 2010
http://paper.cnstock.com/html/2010-08/11/content_39773.htm

Zhou Yongkang, Communist Party Politburo Standing Member, presided over a Legal Daily forum on propaganda. Zhou stated that the media must continue to adhere to “positive propaganda.” ”It is a proven fact that a large number of journalists are strong supporters and promoters of our political and legal work. They are close allies of political and police officers.” Zhou called for journalists to “persevere in unity and stability, continue mainly positive propaganda, promote the main directive and take the initiative.” According to Huanqiu, the Legal Daily was launched in August 1980 as the Communist Party’s main mouthpiece, influencing public opinion on political and legal matters.

Source: Huanqiu, August 13, 2010
http://china.huanqiu.com/roll/2010-08/1012804.html

The Chinese Minister of Commerce, Chen Deming, recently wrote an article estimating China’s domestic market size for 2010 to be US$2,000 Billion. The article was published with the background that many foreign investors have recently started to worry that China is no longer focusing on attracting foreign investments and is no longer welcoming foreign capital. The article also admitted that foreign investments have declined 2.6% so far this year. The article discussed the strategy on how China plans to get out of the “crisis.” The primary solution is to adjust and upgrade industry structures. Services, high-end manufacturing and environmental products are identified as key areas.

Source: China News Net, July 28, 2010
http://www.chinanews.com.cn/cj/2010/07-28/2432022.shtml

The Director of the Chinese National Population and Family Planning Commission recently suggested in a forum that, for a long period of time, the tension among the Chinese population, natural resources and the environment will remain. On one hand, a stable low birth rate ensures a preferred “population environment” for the long run; on the other hand, too high or too low a growth rate will break the balance of a healthy social development. With the current population growth trend, the Chinese population is having an annual net growth of 8 million people. It is projected that the number will peak at 1.5 billion in 2033. The solution to balancing the population and resources is believed to be speeding up the adjustment of the development model.

Source Xinhua, July 16, 2010
http://jjckb.xinhuanet.com/xwjc/2010-07/16/content_238043.htm

Xinhua recently republished an article by Economic Information Daily that discussed the reason that China could not adjust to the right track of an economic development model. The author of the original article is the well-known Chinese economist Wu Jinglian. Wu believes there are four primary obstacles to the reform: (1) various levels of the government still control some important powers over resource allocation; (2) GDP growth is still the primary indicator for measuring of government performance; (3) the financial situation of the government is heavily connected to the growth of material products; (4) market power is very much constrained in terms of resource configurations.

Source: Xinhua, July 16, 2010
http://jjckb.xinhuanet.com/xwjc/2010-07/16/content_238046.htm