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Outlook Article: China Should Invest Up To 1,000 Bn Yuan In Africa

According to Outlook Weekly, a Xinhua publication, a Government think tank proposed that China spend 500 to 1, 000 billion yuan of its foreign exchange reserve on Africa. The Director of the Center for Economic Security Studies of China’s Institute of Contemporary International Relations wrote that this funding infusion may be implemented through “direct investment, donations, low or zero interest loans, export financing or the Islamic model of zero interest in exchange for profit sharing.” The proposed primary areas of investment are infrastructure projects, improvement of sanitary conditions, education and manufacturing.

Source: Outlook Weekly, June 1, 2009
http://news.xinhuanet.com/politics/2009-06/01/content_11467829.htm

Beijing News: Cheap Labor is the Chinese Economy’s Achilles’ Heel

Beijing News recently published an article by well known scholar Ma Guangyuan on the cost of Chinese labor. The article quoted the results of a study by the Chinese central bank. In Dongguan, a major manufacturing city in Guangdong Province, the minimum wage standard went up from RMB 350/month in 1994 to 770/month in 2008 – an annual increase rate below 5%.

The article pointed out that the "miracle" of the "Chinese Model" is obviously built on a "low wages in exchange for profit" basis. As a result, consumer spending remains low. For the past 30 years, the average annual increase in China’s GDP rate has been far higher than the increase in the rate of consumer income. Cheap labor is more of an Achilles’ heel than the "core competitive advantage" of "Made in China". 

Source: Beijing News, May 30, 2009.
http://www.thebeijingnews.com/comment/letters/2009/05-30/008@013649.htm

Hand-Foot-and-Mouth Disease Spreading in China

Epoch Times reported on May 26 that, based on a reliable source, it may be concluded that an unspecified epidemic of either Hand-Foot-and-Mouth Disease (HFMD) or influenza A(H1N1) is widely spreading in China. Since March, people have placed many orders for first-aid equipment in China. Medical equipment used in ERs and on hospital wards is also in hot demand. The factories producing this type of equipment and the associated pharmaceutical materials are working overtime to fill the orders.

Source: Epoch Times, May 26, 2009
http://www.epochtimes.com/gb/9/5/26/n2538281.htm

China’s Bank Loan Risks Are Soaring

The credit rating organization, Fitch Rating, said that Chinese banks are taking huge risks in providing loans to support the government’s plan to stimulate the economy. In the first four months of this year, under the push of the government’s infrastructure development plan, Chinese banks offered loans in the amount of Renminbi 5,200 billion yuan (762 billion dollar), surpassing the 4,900 billion yuan total bank loans for last year. Aggressively targeting profits is another reason for the increase in bank loans.

The Bank of China’s quarterly report said that its supervising arm is following up on the actual usage of the loans. Fitch Rating’s interpretation is that the government has lost control of the loans; otherwise it would know where the money went. It also pointed out that as the assets quality at China’s banks starts to deteriorate, more problems will surface down the road.

Source: BBC Chinese, May 21, 2009
http://news.bbc.co.uk/chinese/simp/hi/newsid_8060000/newsid_8062600/8062633.stm

Qiushi Journal: Stick Firmly to the Socialist Core Value System

Qiushi Journal, the publication of the Communist Party of China (CPC) Central Committee organs, published an article titled “Stick Firmly to the Socialist Core Value System.” The article stated that constructing the Socialist Core Value System is a major strategic mission for the CPC. The Socialist Core Value System consists of four areas: 1. Marxism as the leading theory; 2. Socialism with Chinese characteristics as the common goal; 3. A patriotism-based nationalist spirit and a spirit based on the times of revolution and opening; and 4. A socialist viewpoint of honor or disgrace.

The article argued that the Socialist Core Value System is the core of China’s cultural soft power and is a powerful ideological weapon to lead society. It’s the CPC’s ideological counter to the “universal value” promotion of Western-style freedom, democracy, and human rights and the attempt to replace the CPC’s leadership and socialism in China with the Western political system.

Source: Qiushi Journal, 11th Issue of 2009
http://www.qsjournal.com.cn/qs/20090601/GB/qs%5E504%5E0%5E1.htm

Adopting a Smart Foreign Diplomacy Strategy

Lianhe Zaobao in Singapore published an article by He Maochun, an International Relations Professor at Tsinghua University. He argued that neither of China’s hard power, soft power, or smart power is strong enough to make it a super power. Thus it should adopt a smart foreign diplomacy strategy to unify internal forces, align neighboring forces, and borrow far-away forces to counter Western countries’ pressure and containment.

He outlined six steps: 1. Develop a Greater China economic zone covering China, Taiwan, Hong Kong, and Macao. 2. Humbly rejuvenate the Great East Asia Chinese culture zone (China, Korea, and Japan). 3. Strengthen the political and economic power of the Shanghai Cooperation Organization. 4. Expand cooperation with the Association of South East Asian Nations (ASEAN) member countries. 5. Steadily move into Africa and Latin America. 6. Using the opportunity of fighting the global financial crisis with Western countries, try to resolve the following issues: stop arms sales to Taiwan; stop supporting the “separatists”; remove the technology and arms embargo for China; stop the “discrimination” against China’s overseas investments and protect the safety of China’s capital.

Source: Lianhe Zaobao, May 28, 2009
http://www.zaobao.com/special/china/sino_us/pages7/sino_us090528a.shtml

International Herald Leader: An Abnormal Phenomenon – China’s Luxury Goods Consumption

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

VOA: Hidden Danger Revealed in Carrying Out the RMB 4000 Billion Stimulus Package

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