Chinascope – Page 629

CCDI Uncovered Corruption and Abuse of Power During Inspections

On February 4, 2016, The Central Commission for Discipline Inspection (CCDI) of the Chinese Communist Party published the findings of its third round of inspections, which involved 31 entities. Major problems uncovered included corruption, weakening of the Party’s leadership, and violations in personnel selection and placement.

CCDI launched the third round of inspections in October of 2015. Fifteen inspection teams were dispatched to cover the 31 entities. Several central government organs such as the Ministry of Education and the National Bureau of Statistics (NBS), along with 21 major financial institutions including the central bank, securities regulators, state-owned banks and insurance companies were inspected.

For example, at the China Securities Regulatory Commission, CCDI discovered loopholes that breed corruption due to conflicts of interest. At China Construction Bank, CCDI also found officials abusing their power in order to attain personal gain. At China Life, China’s largest insurer, CCDI found that "the company’s local branches frequently violated laws and regulations" including fundraising fraud. CCDI has required these 31 entities to correct the problems per the CCDI’s recommendations. Further CCDI inspection teams may be dispatched to monitor the progress of the effort.

Source: The Central Commission for Discipline Inspection of the Chinese Communist Party, February 4, 2016 http://www.ccdi.gov.cn/xwtt/201602/t20160204_74087.html

Briefings | | February 5, 2016 | Government/Politics

China Puzzled by Australia’s Public Support for U.S. South China Sea Navigation

After January 30, when the U.S. Navy sent the USS "Curtis Wilbur" missile destroyer into the area that is within 12 nautical miles of China’s Paracel islands, the Chinese Foreign Ministry spokesman Lu Kang responded that the U.S. action was to exercise Maritime hegemony and asked the U.S. to stop such acts as early as possible. The Chinese Communist mouthpiece Global Times, a subsidiary of People’s Daily published a report critical of the fact that some countries are adding fuel to the flames by publicly supporting the “Freedom of Navigation Operation” (FONOP) of the United States. The article named Japan and Australia in particular.

On February 1, Global Times interviewed Chinese maritime scholar Liu Feng. During the interview, Liu said that Japan’s position of supporting the United States is not surprising. It is mainly due to its interests and strategic needs. However, the latest Australian statement on the issue was [surprising] and worthy of special attention. Liu Feng expressed the belief that following the United States to interfere with the South China Sea issue should not be Australia’s intention. He observed that, if Australia disregards China’s interests, it is likely to bring substantial harm to Sino-Australian relations.

Liu Feng said that the Sino-U.S. competition in the South China Sea is entering a new phase. Military provocation is becoming America’s customary option. [We] cannot rule out that the United States will choose a new target area for continued provocation in the future. The United States’ reckless acts in the South China Sea have significantly increased the possibility of an incident of Sino-U.S. friction at sea.

Source: People’s Daily, February 2, 2016

http://military.people.com.cn/n1/2016/0202/c1011-28103543.html

Briefings | | February 5, 2016 | Defense/Military

China’s Negative Population Growth, Not Far Away

According to a recent report on the website of yicai.com, a Shanghai based online media, the impact of a comprehensive two-child policy on the size and structure of the Chinese population may be less than expected. Due to the diminished willingness of Chinese people to give birth, a negative growth in population may arrive as early as 2023.

The National Health and Family Planning Commission (NHFPC) is the government agency responsible for drafting laws and regulations on family planning policy. According to an NHFPC survey, Chinese couples are willing to have an average 1.93 children. NHFPC projects that, as a result of the implementation of the two-child policy that started on January 1, 2016, the annual birth rate will increase to 3 million. This will increase the active labor force by an additional 30 million people by the year 2050. NHFPC expects to see the negative population growth begin in 2030.

However, a few scholars estimate that the positive impact of the two-child policy will be lower than expected. Yao Meixiong, a statistician based in Fujian Province, believes that an addition of 30 million to the labor force by the year 2050 may be an overestimate. Due to the ever increasing annual death rate, China will see a negative population growth as early as 2023, when the annual death rate exceeds the birth rate. This is seven years earlier than the official estimate.

Gu Baochang, a professor at Renmin University of China, looked at the characteristics of the women of childbearing age, more than half of whom are of age 40 and above. Considering the low willingness among the Chinese population to have more than two children, the new policy may not be as effective as expected.

Censuses have shown that the population of Chinese children who are below 14 years of age is trending downward in a surprisingly sharp decline. In 1964 the proportion of 14-year-olds among the total population was 40.7 percent; it was 33.6 percent in 1982; 27.7 percent in 1990; 22.9 percent in 2000, and only 16.6 percent in 2010. Alarmingly, the downward trend is continuing. According to statistics, 2015 was the fourth consecutive year of decline in China’s working-age population. It was the first time in the past 30 years to see a reduction in the population of migrant workers. Economists believe that China’s 2015 GDP growth rate, which saw a 25-year low, had a lot to do with the decline in migrant workers.

Source: yicai.com, February 1, 2016

http://www.yicai.com/news/2016/02/4746821.html

Briefings | | February 2, 2016 | Economy/Resources

China Signed 17 Agreements with Iran

Well-known Chinese news site Sina recently reported that, during Chinese President Xi Jinping’s visit to Iran, China signed 17 agreements with Iran. The agreements covered energy, finance, telecommunications, and other fields, including peaceful use of nuclear energy. China is currently Iran’s largest trade partner with an annual trade volume of US$50 billion. In the newly signed agreements, the two countries agreed to target US$600 billion in the next ten years. The two countries also signed a joint statement on establishing a 25-year “comprehensive strategic partnership.” Both Xi and Iranian President Rohani agreed to develop a tighter relationship in politics, culture, and trade. Both sides committed firmly to supporting each other on major issues concerning independence, sovereignty, and territorial integrity. China supports Iran in playing a more important role in regional and international matters. China also supports Iran in applying for membership in the Shanghai Cooperation Organization (SCO).

Source: Sina, January 24, 2016

http://mil.news.sina.com.cn/china/2016-01-24/doc-ifxnuvxc1838003.shtml

Briefings | | February 2, 2016 | Geo-Strategic Trend

Goldman Sachs: China Has to Allow RMB to Depreciate

The Chinese government backed Hong Kong news platform Phoenix New Media recently reported that Goldman Sachs President and COO Gary Cohn spoke about China at the World Economic Forum (Davos). Cohn said that China may have to allow its currency to depreciate. Cohn expressed his belief that the depreciation is needed to solve the issue that the Chinese economy is slowing-down. He said China will “have to do something in the next six months.” Chinese Vice President Li Yuanchao also commented at the Davos Forum that China does not plan to depreciate the RMB and that, in addition, there is no policy currently in place for depreciation to occur. The Chinese currency has suffered a volatile new year so far. The Chinese central bank unexpectedly adjusted down the on-shore exchange rate and the RMB depreciated 1.5 percent in the first week of January. This raised a lot of doubts among the financial community about the Chinese government’s strategy.

Source: Phoenix New Media, January 23, 2016

http://finance.ifeng.com/a/20160123/14185278_0.shtml

Briefings | | February 2, 2016 | Economy/Resources

Half a Million Jobs in Steel Industry May Be Cut Due to Overcapacity

About 500,000 may see their jobs gone because of China’s effort to reduce steel overcapacity.

On January 22, the State Council announced that China will cut its crude steel production capacity by 100 million to 150 million tons. To accomplish this goal, Chi Jingdong, deputy secretary-general of the China Iron and Steel Association (CISA), said that, based on the per worker output of 300 metric tons at China’s steel mills, it means that 500,000 steel workers will face job changes.

To deal with the 500,000 job changes, the State Council has reviewed and approved the “Guidance on the Steel Industry Turnaround,” which is expected to be released officially after the Chinese New Year which is on February 8. According to the Guidance, the reduction in crude steel production will be accomplished within a three year period (2016 – 2018). Two approaches will be used: mandatory and guided closedowns. Those companies that do not meet the legal requirements of the environmental law and regulations must be completely shut down permanently. Government policies will guide the elimination process for those that have already exited the market, that need to be relocated, or that are involved in mergers and acquisitions.

Source: The Economic Observer reprinted by Huanqiu, January 30, 2016

http://china.huanqiu.com/article/2016-01/8478107.html

Briefings | | February 1, 2016 | Economy/Resources

French Economy Minister: I Don’t Believe the Chinese Economic Data

A major Taiwanese newspaper, The Liberty Times, recently reported that Emmanuel Macron, the French Minister of the Economy, Finance, and Industry, stated that he did not believe the just released official Chinese economic data “for a second.” Macron made those comments at the World Economic Forum Annual Meeting held at Davos-Klosters, Switzerland. Beijing just announced that China enjoyed a GDP growth of 6.9 percent in 2015. Macron expressed his doubts and thought that the actual growth rate should be far lower than the official number. However, he also said that “we just have to get used to it.”

Macron described his “real worry,” which was for the world economy and for the geopolitical environment, which has been getting more and more unstable. At the same time, well-known global investor George Soros also said that the Chinese economy is heading for a “hard landing.” Soros estimated that the Chinese GDP growth rate will stay at around 3.5 percent. Compared to other developed countries, a lack of transparency often covers over the true picture of China’s economy.

Source: The Liberty Times, January 23, 2016

http://news.ltn.com.tw/news/business/breakingnews/1582639

Briefings | | February 1, 2016 | Economy/Resources

Xinhua Commentary Series: Spotlight on the U.S. Presidential Election

Wu Guoguang: Xi Jinping’s Reversal of the Course, Will China’s Transition be Peaceful or Marked with Bloodshed?

Cheng Xiaonong: U.S.-China Strategic Relations Have Crystallized

Xinhua Commentaries: “Exposing the Three Major Political Deficits of the U.S.”