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Friends of Judges Selected as Jurors

Courts selectively “designate” jurors in spite of the random selection required by the law, said Study Times, the publication of the Party School of CPC, on December 29, 2008. The designations are based on relationships with judges. Lack of uniformity in sentencing has also become a major problem in the legal system. Judges tend to have too much discretion in sentencing. Scholars are calling for separation of trials and sentencing to reduce abuse of discretion by judges.

Source: Study Times, December 29, 2008
http://www.studytimes.com.cn/WebPage/ny1.aspx?act=1&id=2366&nid=8473&bid=5&page=1

The Main Theme China’s State Media Will Be Promoting the History of Chinese Communist Party in the N

Radio Free Asia reports that after New Year’s Day, China’s State media’s will mandate reporting the economic achievement under the rule of Chinese Communist Party (CCP) and promoting the history of CCP as the main theme. At the same time, the authorities will apply more strict examination of media reports and publications. Particularly when the content is related to Taiwan, Tibet and so on, the media reports and publications must be consistent with the authorities in political stance. 2009 will be the 60 years anniversary of China under the rule of CCP.

Source: Radio Free Asia, December 29, 2008 http://www.rfa.org/mandarin/yataibaodao/chuban-12292008095619.html

China to Strike on Hostile Forces for Ethnic Separatist Activities

A Beijing senior official recently claimed to “resolutely” strike on hostile forces’ secession, infiltration, and sabotage activities using the ethnic issues, so as to defend ethnical solidarity and social stability.

At the National Ethnical Working Forum on December 24, Jia Qinglin, the member of standing committee of Politburo and Chairman of The Chinese People’s Political Consultative Conference (CPPCC), set the requirement of “deeply understanding the significance of the ethnical solidarity under the new situation and practically defending the ethnical solidarity.” Jia said it’s needed to “resolutely” strike on domestic and overseas hostile forces’ secession, infiltration, and sabotage activities using the ethnic issues, so as to defend national unity, ethnical solidarity, and social stability.

Earlier in December, the Ministry of Education issued the Guidelines for Ethnical Solidarity Education, requiring elementary schools to strengthen the education of ethnical solidarity from the third grade, calling it a “strategic task that matters for the great renaissance of the nation of China.”

Source: Voice of America, December 25, 2008
http://www.voanews.com/chinese/w2008-12-25-voa40.cfm

The Chinese Government’s Real Estate Policy

Outlook Weekly published an article on real estate policy set by the Ministry of Finance and the Central Bank on October 27, 2008 with the following major issues: 1) The Chinese government encourages people to purchase homes in a gloomy market; 2) Policies were set to stimulate the housing market; 3) Under the present policy, many people who have urgent needs for housing still cannot afford to purchase homes; 4) The real estate industry has agglomerated massive funds. The following is the translation. [1]

Experts Pointed Out that It is Unhealthy for the National Economy to Excessively Reply on the Real Estate Market, and the Rescue Effort is not for Making Huge Profit

On October 22, the Ministry of Finance and the Central Bank announced the “Combined Fist” measure, which consists of deed tax, stamp duty, adjustment of the loan rate of individual buying homes, and adjustment of the first down payment for real estate. According to these measures, from November 1, 2008, for individuals who are first-time purchasers of an ordinary house of less than 90 square meters, the deed tax rate will be decreased to 1% uniformly; the stamp duty will be exempt temporarily for individuals selling or buying a house; and the land increment duty will be waived temporarily for individuals selling a house. At the same time, the Central Bank decided from October 27, the lower limit of a commercial individual mortgage interest rate will expand to 0.7 times of the loan datum rate, and the minimum down payment rate will be adjusted to 20%.

This response is the related departments’ more systematic, concrete, and overall deployment for the real estate market after the interest rate dropped twice and follows the the State Council Routine Conference’s proposal of “Enlarge the indemnificatory housing construction scale, reduce the housing transaction taxes and fees, and support the residents to buy homes.” The goal is to regulate macroeconomic regulation and control and to “guarantee growth”. 

This “Combined Fist” of real estate industry policy ended the previous argument of whether or not to rescue the market. However, some experts who were interviewed pointed out that loosing the real estate market policy by locking below 90-square-meters housing’s rigid demand is by no means the second spring for the ailing real estate industry.

Rescuing Plan Does Not Mean Maintaining Huge Profits for Real Estate Agencies

The “Golden September” and “Silver October” for the real estate market in previous years are much more subdued this year. Taking the four big cities of Beijing, Shanghai, Shenzhen and Guangzhou as examples, transactions since September number less than half compared to the previous year. In the “October 1” golden week, the four big cities’ transaction simultaneously decreased to a new lowest point in history.

The national situation is not optimistic either. The National Development and Planning Commission and State Statistical Bureau’s newest statistics revealed that from January to September in 2008, the increase scope of the house selling price in 70 big or mid-sized cities dropped month by month, to 11.3%, 10.9%, 10.7%, 10.1%, 9.2%, 8.2%, 7.0%, 5.3%, and 3.5%, respectively.

The downtrend of the real estate market leads to not only the shrinkage of new house sales, but also a weak existing house market. According to Guangzhou media reports, currently 40% of the real estate agencies in Shenzhen have already closed their doors. For the recent six months in Liaoning Province, more than 300 real estate agencies have closed their doors. From the end of the last year, Zhong-Da-Heng-Ji, the top real estate agency in China, has closed more than 200 branches.

Professor Zhao Xiao of Beijing University of Science and Technology, who argues that there are two economic engines for China’s economic growth, expressed his concerns: “Influenced by the factors of the global economic situation and Chinese currency appreciation, the export – the important engine for China’s economic growth has already been weak. If the other engine, real estate based, also shuts down, how do we to push our economy?” Researcher Li Kaifa from China’s Academy of Management Science belives the current situation of the house market might be exaggerated by house developers and media, even though he is not against a new policy to stabilize the house market.

Director Yang Jiacai from No 1 Bank-Monitor Department of China’s Banks Monitor Committee has confirmed Li Kaifa’s point, when he responded the concern regarding whether or not the price drop of the house sales endangers the security of financial institutions. Yang Jiacai points out that the key is “How much of the price drops”. From the current overall situation, the residential loans are 9% of the total loans.  Even if these loans are all risky, only 9% of the market is affected.

In Li Kaifa’s view, if the regulation and control can lead the real estate industry to a healthy development track, he will favor this kind of rescue plan, which is not rescuing the developers, nor maintaining the huge profits from the high house price and the real estate industry, but to let the real estate market return to the normal development track.

Bao Zonghua, Routine Vice Chairman of China Real Estate & Residence Research Society, pointed out that the “Combined Fist” and the Central Bank’s proposal, “Enlarge the indemnificatory housing construction scale, reduce the housing transaction taxes and fees, and support the residents to buy homes,” will stabilize the current real estate market, and will have favorable results for the middle or below the middle level income earners to buy houses, which will be helpful for the steady development of the real estate market.

The Economy Can Not Be Over-Reliance on Real Estate

It is noteworthy that, before the CCP central committee releases the combination plan for the real estate market, 18 cities nationwide have introduced measures to stimulate the real estate market. Some cities, such as Nanjing, Xi’an, Shenyang, Fuzhou etc. even released measures to subsidize for home buyers.

The experts interviewed pointed out that behind these measures are the local government’s financial thirst for land. As the trade volume declines, developers become more cautious about reserving land; and from time to time nobody bid for the land on the market. The situation makes the local government who is financially dependent on the land very uneasy.

On the adjustment of the real estate market, industry experts have pointed out that housing prices evoke too many issues regarding the demands for interests. The government decision-making must consider multiple issues. It should not only stimulate economic growth, protect local financial resources, but also consider the people’s livelihood and harmony. In our country, house price is not merely an issue of high and low price; but also should be on the way to restore the rational features of the market, to protect low-income people, to provide revenue guidance for the spending of the rich, to guide investment and commercial opportunities through the supply of products, and so on. If house price can not be integrated into the market system in the end, it will not be possible to construct an ideal market.

As early as the beginning of August, some large-scale real estate developers have been promoting multiple discounted real estate sales. While the consumers welcome these measures, the old owners are unsatisfied. Some experts said, "Whether the house price increase or decrease, there are always people who are not happy." Real estate industry affects a wide range of groups, and involves complicated interest relationships. Each expression of opinion is out of their own interests, while the methods to resolve multiple disputes of interests lie in the market’s "invisible hand."

"It is unhealthy that the local economy relies too much on the real estate industry," economist Wang Xiaoguang told reporters during an earlier interview. While Lee Kaifa says, "Even more worrisome is that currently the real estate industry has become the leading industry within the national economic system.” He says, "About 40% of the funds in the society are flowing into the real estate industry, and the percentage is even larger in some big cities."

According to Lee, a healthy economy should be that the total society liquidity is rationally distributed among varies industries, while the the proportion of the real estate industry should be stabilized at 10% to 15%. Moreover, the average profit return of the manufacturing industry should be more than or equal to the rate of return on real estate, otherwise it is not conducive to the healthy development of the national economy.

"Industry is the leader of the national economy, and the material basis for technological transformation of all sectors of the national economy," Lee Kaifa thinks, "a country’s level of industrial development directly determines the levels of the country’s technology and economic development. To achieve modernization in China, we must always maintain a prosperous industrial economic development, rather than depending on the real estate as such an important economic pillar. "

For this reason, Lee Kaifa thinks, "The adjustment of the real estate market should not only be reduced to a reasonable level based on the market demand, but also adjust its proportion in the national economic system." In his view, the rapid expansion of the real estate market has led to China’s macro-economic imbalances. It is now the opportunity to adjust the real estate market and house price so that to help ease inflationary pressure and that more people can afford for houses.

Aiming at Indemnificatory Housing

Moderate down-adjusting of surging house price is favorable for squeezing the bubble market and adjustment of industry structure. However, a number of experts interviewed also said that violent dropping of house price will be detrimental to the macro-economy and thereby affect people’s livelihood.

Official data show that real estate investments are facilitating the development of more than 50 industries with a ratio of 1:2.86. The impact of real estate industry on the national economy has reached 30%. In recent years, the rapid development of steel, cement, household, building materials and many other sectors is inextricably linked to the real estate industry. Under this backdrop, continuous cool down of real estate market will trigger a chain reaction of the other industries, which in turn will affect people’s income and employment, and make it difficult for low-income home buyers to buy houses and to repay their loans. These consequences will results in an unhealthy cycling of the real estate industry.

"In the past few years, direct contribution of real estate to the general annual economic growth is more than 1 point; the indirect contribution is up to 2 to 3 points." In Zhao Xiao’s view, the current round of economic growth started in the real estate industry. In fact, the real estate industry investment accounts for 30% of the fixed assets investment in recent years.

For these reasons, Bao Zonghua thinks that the Central Committee should have coordinated an overall strategy with scientific standards regarding the policy-making of real estate industry. For example, under what circumstances the market should be saved, what is the most effective way to save the market, where to focus, etc.  House problems have extensive impact and are directly regarded to the residents’ vital interests. Thus, policies must be consistent rather than “treating headache on head and treating the pain of foot on foot” (fixing local problems) or temporary solutions, let alone "treating the headache on foot”. These measures would result in a further round of the abnormal development of the industry.

"The house price regulation should essentially focus on the real interests of people besides safeguarding the healthy development of the real estate market. The people should be allowed to share the fruits of reform so that ordinary people can afford to buy or rent houses"

As to the direction of the real estate market development, Lee Kaifa thinks that we should still pay great efforts to develop indemnificatory housing. In his view, to improve the system of indemnificatory housing and establish "cost price housing" is still an effective way. Cost price housing has two advantages than commercial housing: no cost for the land and no windfall profits. In accordance with the principle of fair sharing of resources, urban residents resolve the issue of indemnificatory housing from the land policy. That is, house purchase based on the rights of residential land use should only include the costs of demolition, ancillary charges and construction costs, the same reason as the house land for farmers. "However,” Lee stressed, “one person can only enjoy once the right of indemnificatory housing in one’s life. If there is other demand, one may buy commercial houses according to its own conditions. Indemnificatory housing should only to be sold to the government."

Guo Kesha who works at the State Council Research Office thinks that the newly introduced policy combinations will help to attract buyers into the market out of their autonomous demand. These policies will not only benefit people’s livelihood, but also stabilize the real estate market, and will not allow return of unreasonable system.

Zhang Liqun from the Department of State Development Research Center agrees with the above-mentioned viewpoints. He thinks that the newly introduced policies can avoid a backlog of demand for house purchasing in the period of house price adjustment. After a long-term backlog of demands, an outbreak will lead to the lack of housing supply again and results in a new round of price fluctuation." In Zhang Liqun’s view, it is more important to maintain a stable house price based on the current price. "Stable house price can prevent demands of speculative buying and provide a benign environment for resolving rigid house demand."

Endnotes:
[1] Outlook Weekly, Oct. 27, 2008
http://news.sohu.com/20081027/n260262625.shtml

Chinese Municipalities Order Harsh Punishment for Petitioners Headed to Beijing

Due to a flurry of factory bankruptcies across the nation, the number of migrant workers going to Beijing to appeal is increasing markedly. Beijing requires all local governments in the political-legal committee to emphatically work on preventing and controlling “petition riots.” An article from the website of the People’s Daily on December 23, 2008, recommends that the whole country follow the regulation issued by (the government of) Sanxi Province to give harsh punishments to petitioners. The article reveals that the office of the Taiyuan Municipal Party Committee and the Political-Legal Committee issued a notice to punish those who go to Beijing’s Tiananmen Square, Zhongnanhai, foreign embassies in China, central government leaders’ places, and provincial and municipal Party and government offices to appeal, as well as those who organize and instigate group appeals.

Source: Boxun, December 23, 2008
http://news.boxun.com/news/gb/china/2008/12/200812231119.shtml

PLA Daily: Chinese Army Must Establish Strategic Level Big Early Warning System As Soon As Possible

China’s state-run news agency Xinhua republished an article from the PLA Daily talking about the immediate need for the Chinese army to develop a strategic level early warning system. The article says that over the last decade, the Chinese army has shortened the distance from developed countries in early warning systems. However, the “short board” problem in the fighting efficiency of the early warning system still exists. At present, the army has mastered most of the modern early warning monitoring technology, is striving to solve the “short board” problem, and is working to develop the strategic level “big early warning” system.

Source: Xinhua, December 18, 2008
http://news.xinhuanet.com/mil/2008-12/18/content_10523193.htm

Nuclear Industry Veterans Protest In Guangdong Province

120 veterans went to protest in front of the Guangdong provincial office and requested a settlement for medical benefits. The veterans have been working in a factory that produces nuclear material and claimed to have been exposed to various levels of nuclear radiation over the years. According to Civil Rights and Livelihood Watch, many of them have been diagnosed with various chronicle diseases but are unable to afford medical care. One veteran told the reporter that he suffers from extreme fatigue. Some of his colleagues have died at an average age of less than 40 years old.

Source: Radio Free Asia, December 19, 2009
http://www.rfa.org/mandarin/yataibaodao/junren-12192008092201.html

Unemployment Rate Higher than Official Number, Could Reach 10 Percent

At the beginning of this year, the official target for the number of unemployed was set at 10 million or 4.5 percent. However the reality is far worse than that now. According to experts, the unemployment rate in China is estimated to be at 8 percent and could possibly reach even the 10 percent mark. They explain that even though there is a labor investigation system setup by the National Bureau of Statistic, the publicized number does not include those who are excess labor in the countryside, peasant workers who lost their jobs in cities such as regions of the Pearl or Yangtze River Deltas or the 12 percent of college graduates who are still looking for jobs.

Source: Radio Free Asia, December 20, 2008
http://www.rfa.org/mandarin/yataibaodao/zhong-12192008223343.html