Chinascope – Page 825

China News: Foreign Exchange Balance Declined Starting Two Months Ago

China News recently reported that, based on data released by the Chinese central bank, the Chinese foreign exchange reserve has been shrinking rapidly for two months now. In July alone, the total declined by RMB 24.5 billion (around US$4 billion). This could be one of the key causes of tight market liquidity. Experts expressed the belief that the foreign exchange balance decline could be the result of two forces: (1) the US Federal Reserve clearly intends to exit its QE (Quantitative Easing) strategy; (2) the Chinese State Administration of Foreign Exchange is requiring banks to increase their foreign exchange reserve. It is widely expected that international “hot money” will be leaving emerging markets and this trend will continue to impact the Chinese market where the expectation of depreciation in the Chinese currency is high.

Source: China News, August 21, 2013

http://finance.chinanews.com/cj/2013/08-21/5186110.shtml

Briefings | | August 27, 2013 | Economy/Resources

Xinhua: Significant Policies on Industrial Overcapacity Soon to Be Announced

Xinhua recently reported that, according to high ranking officials in the Ministry of Industry and Information Technology, the Ministry will jointly release, in conjunction with the Development and Reform Commission, an “overall resolution plan for overcapacity.” The plan is being finalized and will be officially put in place very soon. The plan will cover key industries and will take different approaches for different industries. The primary principles that this grand plan follows are: (1) expanding domestic market consumption; (2) moving production capabilities overseas; (3) reorganizing existing companies for optimized output; and (4) retiring high energy consumption and high pollution manufacturers. Focal controls will be applied to industries like steel, cement, electrolytic aluminum, and flat glass. Environmental protection rules will play a very significant role in this round of policy implementation. The China Banking Regulatory Commission (CBRC) is also involved in the planning process to ensure that necessary financial support can be arrange for adjustments required in various industries.

Source: Xinhua, August 20, 2013

http://news.xinhuanet.com/energy/2013-08/20/c_125202878.htm

Briefings | | August 27, 2013 | Government/Politics

People’s Daily: China’s Shipbuilding Industry Makes No Profit

People’s Daily recently reported on the tough situation the entire Chinese shipbuilding industry faces. According to the data that the China Association of the National Shipbuilding Industry (CANSI) released, the industry is suffering a major decline in profits. By the end of July, 80 key companies that the association monitored had a total profit of only RMB 200 million yuan (around US$33 million). At the same time, these companies are unable to collect the pending payments that their customers owe them. As of now, the industry is owed payments totaling RMB 100 billion (US$16.33 billion). This financial dead lock was partially caused by the recent sharp decline in shipbuilding prices. This has led many customers to believe that their original contract price was unfairly high. Cash flow in the shipbuilding industry is becoming a major challenge, making it much harder to get a loan from any bank. Competition from Japan is also an important factor. Since the beginning of the year, the Japanese yen has depreciated 20 percent.

Source: People’s Daily, August 22, 2013

http://gz.people.com.cn/n/2013/0822/c194844-19370272.html

Briefings | | August 27, 2013 | Economy/Resources

Experts Suggest Measures to Limit the Risks Caused by Local Governments’ Debt Crises

China Review News published an article on the financial risks China faces because of the magnitude of local governments’ debts and suggested ways to deal with the issue.

According to the article, local governments’ debts surpass that of the central government. Many of them face financial deficits, while the debt risk is much higher than the estimates. Reports indicate that, by the end of 2012, local governments’ debts reached 12 trillion yuan ($US1.96 trillion), which was 23.3 percent of GDP while the central government debt was 15 percent of GDP.

Several solutions were suggested on how to ease the local government debt crisis. First, local governments should be allowed more financial rights such as the right to receive increases in their share of tax revenues. Second, local governments must control their spending. Third, local governments should improve their financial capacity in developing basic infrastructure while assisting in the development of private businesses. Finally, local governments must be transparent in their financial spending and strengthen the system of checks and balances.

Source: China Review News, August 26, 2013
http://www.chinanews.com/gn/2013/08-26/5203417.shtml

Briefings | | August 26, 2013 | Economy/Resources

Standard for China’s Minimum Wage Jumped in First Half of Year

According to the Ministry of Human Resource, since the beginning of this year, China’s minimum wage standard has increased an average of 18.4 percent in 22 regions. Shanghai has the highest monthly minimum wage standard which is 1,620 yuan per month (US$265).Beijing and Xinjiang have the highest hourly wage standard at 15.2 yuan (US$2.5). It was estimated that, in the second half of this year, some businesses will face an increase in layoffs, delayed wage payments, and conflicts between the demand for wage increases from employees and employer’s inability to meet those demands.

Source: Xinhua, August 23, 2013
http://news.xinhuanet.com/fortune/2013-08/23/c_117058634.htm

Briefings | | August 26, 2013 | Economy/Resources

China Youth Daily: McCain Had Ulterior Motives in Remarks on the Diaoyu Islands

U.S. Republican Senator John McCain said at the press conference after his talks with Japanese Foreign Minister shore Tian Wenxiong on August 21, “The Diaoyu Islands are Japanese territory, which is the U.S. Congress and the U.S. government’s position and will be communicated to the Chinese.” Regarding China’s official boat that entered into the waters around the Diaoyu Islands several times, he said, “China violated Japan’s sovereignty.”

In response to McCain’s statement, China Youth Daily published a commentary article. The article quoted Su Hao, Director at the Center for Strategic and Conflict Management of the Foreign Affairs College, to express its point.

Su Hao said, "This should not be [considered] a slip of the tongue. It is McCain’s real personal view.” In my personal opinion, I believe that McCain’s remarks were stated after careful consideration and point to specific issues. Moreover, it not only represents his personal view, but also represents the view of the U.S. conservative forces and conservative political groups like him. To some extent, it represents a potential U.S. policy option."

Su Hao also pointed out that McCain’s talk indeed also released some information, and revealed U.S.’s potential considerations. Moreover, the timing of McCain’s speech also has a profound meaning.

Su Hao said, "While McCain is not an official government official, this is the first time that a major U.S. political figure has made such a clear and biased statement on the Diaoyu Islands issue. This is a very serious event. We must pay serious attention. To some U.S. politicians’ [who express] such erroneous views, [we] must give immediate criticism and rebuttals."

Source: China Youth Daily, and republished by people’s Daily, August 23, 2013

http://zqb.cyol.com/html/2013-08/23/nw.D110000zgqnb_20130823_1-04.htm http://military.people.com.cn/n/2013/0823/c1011-22668640.html

Briefings | | August 23, 2013 | US-China Relations

Xinhua: Bo Xilai Denies Bribery Charges

On August 22, 2013, Xinhua reported that the first day of Bo Xilai’s trial on charges of accepting bribes, embezzlement, and abuse of power began in the Shangdong Jinan Intermediate People’s Court.

“Bo Xilai appeared in court to be tried. Relevant witnesses provided testimony in court. The defendant’s family members, members of the People’s Congress, members of the Chinese People’s Political Consultative Conference, media reporters, and about one hundred people from all walks of life attended the trial.”

“Under the auspices of the presiding judge, defendant Bo made statements about the allegations of bribery set forth in the indictment. He denied the allegations. … Both the prosecution and the defense had a full opportunity to cross-examine the witnesses. The court consented to all of Bo ‘s requests to speak. The defendant and his counsel fully expressed their views.”

“During the trial, defendant Bo Xilai was emotionally stable and his physical condition was normal. The courtroom and audience maintained good order.”

Source: Xinhua, August 22, 2013

http://news.xinhuanet.com/legal/2013-08/22/c_117057062.htm

Briefings | | August 23, 2013 | Government/Politics

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.”

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