Skip to content

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

Read More ...

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

Read More ...

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

Read More ...

The CCP’s Performing Arts Troupes in the U.S.

Read More ...

Qiushi: The Root Cause of the Chaos in Ukraine

On March 25, Qiushi published a commentary on the root cause of the chaos in Ukraine. The first reason is that “[Western] liberalism wantonly invaded [Ukraine], splitting Ukraine in the name of ‘freedom,’ and causing ordinary citizens to be unable to tell friends from foes.” The commentary also cited regional cultural differences, rampant corruption, and an unsuccessful “grafting” of the Western political system. 

However, “the ultimate cause of the unrest in Ukraine is that the European Union, the United States, and Russia compete for dominance over Ukraine.” Europe, once it controlled Ukraine, it would have leverage against China and Russia. The reason the United States competes for Ukraine is to squeeze Russia’s strategic space, block the Eurasian connection, and interrupt the Eurasian Silk Road that China has proposed. With respect to Russia, if it were to lose Ukraine to the West, it would lose the largest of the countries within the Commonwealth of Independent States; it would lose its last political strategic protective buffer. 

Source: Qiushi, March 25, 2014 
http://www.qstheory.cn/zywz/201403/t20140325_333580.htm

Briefings | | |   Geo-Strategic Trend

China’s Central Bank’s Four New Policy Characteristics

Xinhua republished an article from CNStock.com, which had reported on several major actions that China’s Central Bank has recently taken. The bank has stopped virtual credit card products, capped the amount of third party payments, and increased the volatility of the RMB exchange rate. All these show that People’s Bank of China is adopting policies to avoid innovation, reduce financial risks, and maintain the GDP level.

The article listed four new directions that the Central Bank is following:
1. Prevent financial problems and maintain the GDP level.
2. Focus on resolving financial risks and ensure that financial innovation does not create additional economic risks. The decision to stop virtual credit card products is an indication that the Central Bank would rather give up new innovation of financial products to avoid the potential risks associated with introducing innovative products.
3. Increate the volatility of the RMB exchange rate to push for the RMB’s devaluation and stimulate exports.
4. Limit the Internet purchase amount to support physical stores.

The article stated that because of item 1 and 2, the increasing trend of the RMB’s interest rate will be turned around and the cost of capital will decrease. This will lead to two results: one is to indirectly support real estate prices; the second is to limit financial innovation, which will reduce the inflow of foreign money into China.

Source:
1. CNstock.com, March 18, 2014.
http://news.cnstock.com/news/sns_jd/201403/2950773.htm
2. Xinhua, March 18, 2014.
http://news.xinhuanet.com/fortune/2014-03/18/c_126280684.htm

Briefings | | |   Government/Politics

Xinhua Calls on Governments at All Levels Stay Calm as China’s Housing Prices Continue to Fall

On March 19, 2014, Economic Information, a publication under Xinhua News Agency published an article calling on governments at all levels stay calm as China’s housing prices, from the Yangtze River Delta region to the first-tier cities nationwide, continue to fall. The downturn in housing prices will inevitably have a negative impact on China’s macro-economic growth and financial stability. According to the article, the impact of the “adjustment of property markets” is still under control.

Source: Economic Information, March 19, 2014
http://www.jjckb.cn/2014-03/19/content_496046.htm
http://news.xinhuanet.com/fortune/2014-03/19/c_119831357.htm

Briefings | | |   Economy/Resources

China Review News Agency: China Is Not Ready to Fully Liberate the RMB Exchange Rate in the Market

On March 26, 2014, China Review News Agency published an article on the abnormally sharp decline in the RMB exchange rate this year. In 2012 and 2013, China reduced its goal for maintaining the growth of GDP down from eight percent to seven percent. Last year, as a result, import and export businesses started to slow down. In the past, the appreciation of the RMB (the Chinese yuan) exchange rate resulted from the depreciation of the U.S. dollar. With the recovery of the U.S. economy and the appreciation of the U.S. dollar, the depreciation of the RMB exchange rate has become the trend. Since 2013, a large-scale cross-border capital flow in and out of China has been an indisputable fact. Starting on March 17, 2014, the People’s Bank of China widened the USDCNY trading band to +/-2 percent from +/-1 percent. Thus a larger-scale cross-border capital flow should happen, which may result in a turbulent foreign exchange market and volatile financial markets. Although China holds US$ 3.8 trillion in foreign exchange reserves, they are very limited as China relies more and more on importing fundamental resources from abroad. 

The article concluded that excess promotion of the market-determined exchange rate mechanism may intensify the fluctuations of the interest rate in China and not benefit the stability of financial markets. China is not ready to liberate the RMB exchange rate in the market fully because the RMB interest rate and China’s price system are not market-oriented.

Source: China Review News Agency, March 26, 2014
http://hk.crntt.com/doc/1030/9/4/6/103094658.html?coluid=53&kindid=0&docid=103094658&mdate=0326071815  

Briefings | | |   Economy/Resources

People’s Daily: Russian Banks May Switch to UnionPay

People’s Daily recently reported that Anatoly Aksakov, Deputy Chairman of the Russian State Duma Financial Markets Committee, suggested Russian banks under U.S. and European sanction may switch to China’s UnionPay credit card system, replacing the Western payment networks such as Visa and MasterCard. UnionPay is the only domestic bank card organization in China. Established in 2002, UnionPay has grown into the second largest payment network after Visa. UnionPay is now accepted in 141 countries in the world, including United States. Visa and MasterCard stopped the payment services for two Russian banks after the sanctions imposed on Russia after its invasion of Crimea. Aksakov said that even Iran has survived the financial sanctions. Russia’s participation in UnionPay will only hurt Visa and MasterCard.
Source: People’s Daily, March 21, 2014
http://world.people.com.cn/n/2014/0321/c1002-24705197.html
Briefings | | |   Geo-Strategic Trend

BBC Chinese: Chinese Authorities Ordered National Investigation of Nursery Schools

BBC Chinese recently reported that the Chinese government has started a nationwide investigation into incidents caused by nursery schools illegally feeding children unnecessary medication. The investigation was directly triggered when two nurseries in Hubei Province were found to be feeding all children antibiotics without permission and without any prescription. Parents said they were never told anything about these activities. Not long ago, it was discovered that nurseries in Xi’an, Shanxi Province had been illegally feeding children similar drugs for over three years involving 54,600 pills. Some nurseries in Jilin Province were reportedly found doing the same to all children in attendance regardless of whether they were sick or not. Media reports have been widely criticizing the government’s lack of monitoring and action on this issue.
Source: BBC Chinese, March 21, 2014
http://www.bbc.co.uk/zhongwen/simp/china/2014/03/140321_china_kindergarten_drugs.shtml
Briefings | | |   Social Stability

CRN: The U.S. May Encourage Japan’s Aggressiveness

China Review News (CRN) recently published a commentary analyzing Washington’s possible new strategy after the on-going conflict in Crimea. The commentator suggested that the United States is facing an inability to maintain both the new European frontline, which is threatened by the Russian moves, and the existing plan to “Return to the Pacific” at the same time. The U.S. defense budget simply cannot sustain two large overseas spending initiatives. The author expressed the belief that the U.S. core national interests are under attack due to the recent Crimea conflict because it impacts the confidence of all other new European allies from the former Soviet camp. If the “Return to Europe” strategy gains traction, the United States won’t be able to maintain its level of involvement in the Pacific region, which, the article concluded, will result in the U.S. encouraging Japan to play a much more important role.
Source: China Review News, March 20, 2014
http://hk.crntt.com/doc/1030/8/3/7/103083763.html?coluid=218&kindid=0&docid=103083763&mdate=0320111519
Briefings | | |   Geo-Strategic Trend

Central Bank: Sixty Percent of the Residents Believe the Housing Prices “Unacceptably High”

In the first quarter of 2014, the People’s Bank of China conducted a survey of twenty thousand urban depositors in 50 cities. The results showed that 64.3 percent of the residents believe that current housing prices are "unacceptably high," 33 percent believe that current prices are "acceptable," while only 2.7 percent of the residents believe they are "satisfactory." Within the next three months, 15 percent of residents will be ready to buy a housing unit. This figure is 2.7 percent higher than the previous quarter and 0.2 percent higher than the same period last year.

The report showed that 55.8 percent of residents believe that the general price level is "unacceptably high." 32.6 percent of the population expected the price level to continue to climb, 48.5 percent expected the price level to remain "basically unchanged."

Source: Xinhua, March 22, 2014
http://news.xinhuanet.com/2014-03/22/c_119890856.htm

Briefings | | |   Economy/Resources