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Local Government Debts: Backdoor Loans

Xinhua reprinted a China Business News article reporting on backdoors loans made to local governments. The article stated that such loans are rampant and lack proper accounting. 

According to China Business News, when, due to their investment and financing platforms and the local governments existing debts, they find it difficult to obtain additional loans, some of them ask large companies that have international backgrounds to take out bank loans on their behalf. These large companies then use local governments’ land as collateral for the bank loans.

Because the loans are obtained to satisfy the needs of local governments, the funds are then remitted to the local governments, thus becoming debts of the local governments. However, as a result of special accounting treatment, the local governments do not record the loans on the books as actual loans, but as current accounts with these large companies. 

First, not all the fund transfers are recorded in the books. Second, since the local governments’ land is used as collateral for the loans, some local governments may call the loans “Assets” on their books. Third, because the large companies have already recorded the loans as liabilities, the local governments use that as a reason not to report the loans as their own liabilities. Fourth, some large companies have gone so far as to create a separate bank account for these loans. The money is set aside for the local governments to use so they can withdraw funds and deposit the payments for the loans. 

Source: China Business News reprinted by Xinhua, November 19, 2013

http://news.xinhuanet.com/fortune/2013-11/19/c_125723133.htm

Confucius Institute Launches Its U.S. Center in Washington, D.C.

On November 20, the Headquarters of the Confucius Institute launched a U.S. Center in Washington, DC. Liu Yandong, China’s Vice Premier, who is visiting the United States, attended the opening ceremony. Yuan Guiren, the Chinese Minister of Education, gave a speech.

Yuan said in his speech that a network of more than 430 Confucius Institutes and over 640 Confucius Classrooms has been set up around the globe. The United States is the country with the largest number of Confucius Institutes and over 350 Confucius Classrooms.

According to the information provided by the Center, its main task is to provide an open, reliable source of information for the U.S. government so it can understand the activities of the Confucius Institute; conduct communication and cooperation with American media and society, and enhance the public’s understanding of the Confucius Institute.

Source: Xinhua, November 21, 2013
http://news.xinhuanet.com/2013-11/21/c_118238001.htm

China to Increase the Proportion of Navy and Air Force in the Military

In an interview with Beijing Morning News, Li Daguang, a military expert at National Defense University, announced that China will reduce the proportion of its ground forces and increase its navy and air force. China’s military will break the tradition of having a ground force-led military command mechanism and will establish separate command headquarters for the respective military entities. In combat operations, they will be under a joint command based on the direction of combat. 

The white paper, "The Diversified employment of China’s Armed Forces," published on April 16, 2013, disclosed the number of the Army mobile operational units, navy, and air force for the first time. The PLA Army mobile operational units include 18 combined corps, plus additional independent combined operational divisions (brigades), and have a total strength of 850,000. The size of the Navy is 235,000 and the Air Force 398,000. 

Source: Beijing Morning News and Xinhua, November 19, 2013 

http://www.morningpost.com.cn/szb/html/2013-11/19/content_257299.htm 
http://news.xinhuanet.com/mil/2013-11/19/c_118199380.htm

Qiushi: Market to Play Vital Role in Resource Allocation

On November 20, Qiushi published an article explaining the goals of economic reform as proposed during the Third Session of the 18th Congress of the Communist Party. 

According to Qiushi, China preliminarily established a socialist market economy in which a lot of problems remain unresolved. In particular, the relationship between the government and the market has not been ironed out. Due to many constraints, the market has, therefore, not played an effective role in allocating resources . 
“To move in the direction of reform of the socialist market economy, the key is to balance well the relationship between the government and the market. The [Third] Session has established the task of deepening economic reform by enabling the market to play a vital role in resource allocation. This is a major advance for our Party, both in theory and in practice. From a ‘fundamental role’ to a ‘vital role’, this change reflects the general rule that the market determines the allocation of resources. It certainly will play an extremely important role in China’s reform and opening up, and its economic and social development.” 
Source: Qiushi, November 20, 2013 
http://www.qstheory.cn/zywz/201311/t20131120_293236.htm

The New National Security Committee Will Have More Power than Any Other Leadership Group

On November 19, 2013, China Review News published an article giving more specifics about the new National Security Committee, a “Small Security Cabinet” that will handle external and internal security threats comprehensively. Under the leadership of state president Xi Jinping, the National Security Committee will have more power than any other leadership group. It will include leaders from National Defense, Foreign Affairs, Public Security, the International Communication Office of the CCP Central Committee, and other ministries.

All kinds of crises, such as water, air, food, energy safety and more, are around the corner in China. Therefore, the National Security Committee will place a heavy focus on dealing with domestic social security issues and on any normal crises that may lead to abnormal crises.

Source: China Review News, November 19, 2013
http://www.zhgpl.com/doc/1028/7/4/9/102874945.html?coluid=151&kindid=0&docid=102874945&mdate=1119144524

Cai Mingzhao: Present Good Information about China and Spread China’s Voice

[Editor’s Note: Cai Mingzhao, the Vice Minister of the Publicity Department of the Chinese Communist Party (CCP) Central Committee and Director of International Communications for the CCP Central Committee, wrote an article for People’s Daily Online on how to make better use of propaganda to promote China’s soft power. In the article Cai discussed how propaganda work can “present good information about China and spread China’s voice” overseas. The following is an excerpt from his article] [1]

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Xi Jinping Explained the CCP’s Central Committee’s Economic Reform Decisions

Xi Jinping, the chairman of the Central Committee of the Chinese Communist Party, wrote an article that Xinhua published on November 15, 2013. Actually, the article was Xi’s speech given at the Third Plenary session of the 18th Congress of the Chinese Communist Party that was held this month. The article further explained the CCP Central Committee’s decisions on deepening economic reform comprehensively. 

  1. The comprehensive deepening of reform will focus on economic reform only. “We should take new steps to improve the socialist market economic system.” The Party and the government should play an active role in our socialist market economic system.
  2. Adhere to the dominant position of the state ownership. While the state-owned economy plays a leading role, the mixed-ownership economy is also important. State capital, collective capital, and private capital are allowed mix together in cross-shareholdings.
  3. While maintaining the stability of the existing financial structure of the central government and local governments, improve the revenue division between the central government and local governments.
  4. Encourage larger and professional agricultural cooperative enterprises. Add farmers who have settled in cities into urban housing and social security systems
  5. Promote consultative democracy in economic and social development areas under the Party’s leadership.
  6. Abolish the reeducation through labor system [the forced labor camp system]. Punish and redress criminal acts with a better legal system.
  7. Anti-corruption [will be] under the unified leadership of the Party.
  8. Further control the Internet with the improved leadership system.
  9. A new National Security Committee, which shall be under centralized and unified leadership, will safeguard the national sovereignty, security, and development interests externally and will maintain political security and social stability internally.
  10. Set up a national natural resources asset management system.
  11. Establish a Central Leading Group, which will be in charge of deepening the economic reform comprehensively, to ensure the smooth progress of the reform.

Source: Xinhua, November 15, 2013
http://news.xinhuanet.com/politics/2013-11/15/c_118164294.htm

BBC Chinese: IKEA Gave More Aid to the Philippines than China Did

BBC Chinese recently reported that China only provided minimal aid to the Philippines after that nation was hit hard by typhoon Haiyan. China’s commitment on aid totaled US$2 million. The United States promised US$20 million plus military missions involving an aircraft carrier fleet. Japan promised US$10 million in aid plus military help. Australia committed US$28 million. Even the popular furniture retailer IKEA donated US$2.7 million to the victims. China complained that China was hurt by the same typhoon as well. The Chinese government received mixed comments in the media. Singapore researcher Zhen Yongnian suggested that China is far behind the United States in terms of “soft power.” Some Chinese netizens even commented that the Chinese government was better to the Philippines than to its own people.
Source: BBC Chinese, November 14, 2013
http://www.bbc.co.uk/zhongwen/simp/world/2013/11/131114_china_philippines_aid_ikea.shtml