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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

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