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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

Study Times: Increasing People’s Wealth Leads To a Strong Nation

The CCP Central Party School’s newspaper, Study Times, recently published an article discussing the importance of increasing the Chinese people’s wealth. The key point is that compared to the growth of China’s national wealth, the growth of average people’s income has lagged far behind. According to a study of the period from 1995 to 2007, China’s fiscal income increased by 5.7 times, and the average yearly increase was 16%. In contrast, the average annual increase of city residents’ disposable income was 8%, and the average annual increase of rural residents’ disposable income was 6.2%. Consequently, many people are asking, “How can we spend more money when we don’t have any money?"

The article’s author argued that the ultimate goal of a country’s economic and social development is to let its people have a prosperous life. A “wealthy nation full of poor people” can never sustain a society’s healthy growth.

Source: Study Times, May 25, 2009.
http://www.studytimes.com.cn/WebPage/ny1.aspx?act=1&id=2672&nid=9696&bid=12&page=1

Applications for College Entrance Exam Down

Other than Guangdong, Jiangsu, and Chong Qing, most provinces will see a decrease in college entrance examination applications this year. The main reason is the tough job market college graduates face.

Some high school graduates apply for vocational schools to learn a trade. And more and more of them are applying to colleges overseas.  For example, there are 3000 high school students who take the SAT test each year to apply to colleges in the US.

Source: Huan Qiu, May 28, 2009
http://china.huanqiu.com/roll/2009-05/473516.html

Young Party Leaders at High Risk for Corruption

Young party leaders under the age of 45 make up a larger portion of those accused of corruption charges. According to Guangzhou Discipline Inspection Committee, among 227 government employees who were charged with corruption from 2007 and 2008, 127 of those were between 31 and 45, accounting for 55.95 percent of the total.

Source: China News, May 18, 2009
http://www.chinanews.com.cn/gn/news/2009/05-18/1695619.shtml

Online Survey Results on Geithner’s Visit

Huanqiu published its online survey results on US Treasury Secretary Geithner’s fist visit to China: 83 percent believe that the purpose of Geithner’s China visit was to ask China to buy more US debt; 49 percent feel that China will not purchase more debt; 63.3 percent believe the US relies on China.

Huanqiu also listed the following five requests made to Geithner from its online users. They are: keep US currency stable and stop pressing China on the currency issue; lift the sanction on exporting high-tech to China; ensure safe investment in the US; recognize China’s (world) market economy status; and cancel US trade protection clause against China.

Source: Huan Qiu, May 31, 2009
http://china.huanqiu.com/roll/2009-05/475121.html

Chinese Protesters Warmly Welcome Nancy Pelosi

When Nancy Pelosi, the speaker of the U.S. House of Representatives and a vocal critic of China’s human rights record, started her China visit on May 24, 2009, she received a warm welcome from Chinese petitioners who are fed up with the government’s corruption. The petitioners, staged protests against the Chinese government almost daily. When Pelosi arrived, they showed their appreciation for her promotion of human rights in China. The largest demonstration occurred on May 25, when several thousand petitioners gathered at Beijing’s South Train Station for the Speaker’s arrival. They shouted slogans to protest government corruption, its denial of human rights and democracy, and its ignoring justice in its courts. One banner said “Welcome Pelosi. Pay Attention to China’s Human Rights! SOS.” The police and hired underground gangsters clashed with the protesters. The demonstration lasted for two hours during which the police took some protesters away.

The demonstration can been seen on YouTube:
http://www.youtube.com/watch?v=usADrSCMQKE&feature=channel

Source:
[1] Voice of America, May 25, 2009
http://www.voanews.com/chinese/w2009-05-25-voa47.cfm
[2] Radio Free Asia, May 25, 2009
http://www.rfa.org/mandarin/yataibaodao/pelosi-05252009094129.html
[3] Epoch Times, May 25, 2009
http://www.epochtimes.com/gb/9/5/25/n2537583.htm

Epoch Times: China’s Report of GDP Growth Is Questionable

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