Economy/Resources - 255. page

Voice of America published an article about the Chinese Stimulus Package based on reports by the Chinese State Auditing Administration. The auditing publication revealed issues on the how the spending effort was completed. Some investments were used for monetary speculation. Some funds were not actually delivered to the intended projects. Small and medium sized businesses were left behind. By the end of March, based on audit results covering 335 new projects in 18 provinces, the Central Government delivered 94% of the promised funds while only 48% of corresponding local investments were actually completed. The US agency Stratfor Global Intelligence suggested that, the Chinese Stimulus Package can help the economy in the short term at the cost of a long term solution.

Source: VOA, May 20, 2009.
http://www.voanews.com/chinese/n2009-05-20-voa2.cfm

On May 20, the International Herald Leader, under Xinhua News, reported on the foundation laying ceremony for China’s biggest luxury shopping center in Shanghai. Among the ceremony attendees was French LVMH group President Beorne Arnold who expressed confidence in the Chinese market.

Beorne Arnold’s confidence is not unfounded. According to a research, in 2008, for the first time, China replaced the U.S. and became the second largest consumer of luxury goods in the world. However, China’s luxury goods consumption is a dysfunctional social phenomenon. The majority of luxury goods consumers are young people with less earning power who buy things in order to show off. Additionally, non-Chinese brands dominate the luxury goods market, which negatively impacts the expansion of China’s domestic brands. The consumption also does not help the tens of millions of Chinese who are living below the poverty line. Per China’s present poverty relief standard, over 40 million people live below poverty line. Using the UN’s poverty standard, the number is over 150 million.

Source: International Herald Leader, May 25, 2009.
http://news.xinhuanet.com/herald/2009-05/25/content_11430893.htm

Epoch Times expressed that the report that China released on 2009 first quarter GDP was not convincing and the Economist pointed out that the figures had likely been fudged. The government released GDP and production numbers for the first quarter of 2009 declaring 6.1% and 16% increases respectively over the same period in 2008. However, the electricity production in the first quarter was 4% down from the same period a year earlier. In the past, GDP and electricity output have moved broadly together, although it is not a one-to-one relationship.

Economists have long questioned whether China has been massaging its GDP data. It is widely believed that China’s GDP growth was overstated during the period after the Tiananmen Square Massacre and the Asia Crisis period.

Source:
[1] Epoch Times, May 25, 2009
http://www.epochtimes.com/gb/9/5/25/n2537054.htm
[2] Economist, May 21, 2009
http://www.economist.com/finance/displaystory.cfm?story_id=13692907

Xinhua quoted Hong Kong Wen Wei Po’s article, reporting that in the U.S., there are many companies like General Motors and Citibank that are in trouble, indicating the U.S. economy is still struggling, far from what the Washington officials claim “U.S. economy has reached the bottom.” “No wonder Obama’s hair has turned grey after taking office.”

GM’s stock went down to $1.09 per share on May 12. It was taken out of the Dow Jones Index and listed as junk stock. Citibank also went below $1 and was taken out of the Dow Jones Index. According to Bloomberg, in May 2000, the combined market value of GM and Ford was $100 billion, 50 times the market value of the  Shanghai Automotive Industry Corporation (SAIC) Group. At the beginning of 2009, SAIC’s market value is more than Renminbi 40 billion yuan ($6 billion), more than the combined value of GM and Ford.

Source: Xinhua, May 22, 2009
http://news.xinhuanet.com/world/2009-05/22/content_11418440.htm

To cope with the international financial crisis we must the expand domestic demand, promote consumption, innovation, and foster new economic growth, thereby improving the overall quality of the economy and international competitiveness.

At present, the market continues to be weak in exports; exports are losing steam in leveraging economic growth.  The expansion of consumption, especially in rural areas, has become an important focus to maintain China’s steady economic growth.  Employment relates to human dignity and social stability, national strategic planning must take into consideration the unemployment problem.  In order to balance the social resources, as well as human resources, effective implementation of national development strategy with employment as one of the top priorities must take place.

Source: StudyTimes.com, May 18, 2009.
http://www.studytimes.com.cn/WebPage/ny1.aspx?act=1&id=2649&nid=9602&bid=4&page=1

Xinhua reported that China will continue its current policy on Maritime Delimitation and island sovereignty. The issue involves China’s May 11, 2009, submission of information on the outer limits of the continental shelf beyond 200 nautical miles to the UN Commission on the Limits of the Continental Shelf (CLSC). China reiterates in the submission that China has sovereignty, but will put aside disputes to seek joint development with other countries. Most of submissions made by other countries to CLCS are for areas over which the submitters have disputes with China, Xinhua observed.

Source: Xinhua, May 18, 2009
http://news.xinhuanet.com/herald/2009-05/18/content_11394144.htm

Hong Kong based newspaper, Wen Wei Po, strongly supportive of the Chinese Communist government, published an article on May 15 to discuss the future direction of the Chinese economy. The article suggested that although tertiary industries such as the techology and services industries are important; it is very hard for them to compete against the West. Agriculture and basic industries still provide the primary support to Chinese economy. A future strategy emphasized in the article was to keep developing the economy’s export orientation which is believed to have been a successful approach thus far. The article also stated that the Chinese financial industry needs significant improvement, yet it should not follow the example of the West, offering too many complicated “gambling” financial tools which form what the article called the “Casino Economy”.

Source: Wen Wei Po, May 15, 2009.
http://paper.wenweipo.com/2009/05/15/PL0905150001.htm 

Famous scholar, Chi Fulin, who acts as an important advisor in Chinese reform and development research, believed that the Third Central Committee Plenary Session of the Seventeenth CCP National Assembly sent three important signals.

The first was rural reform, which he claimed was the central point connecting the rest of the reform strategy; the second was to stabilize the macroeconomic environment, which heavily relies on expanding rural markets;the third defined the focal point of rural reform – the increasingly larger gap between cities and rural areas, which was believed to be a primary reason for social conflicts.

Source: Xinhua News, October 28, 2008.
http://news.xinhuanet.com/politics/2008-10/28/content_10265488_1.htm