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China News Review: We Need to Be Fully Prepared for Economic Difficulties

China News Review published an opinion article about China’s current economic environment. According to the article, from July 13 to 15, Premier Wen Jiabao visited Chengdu City in Sichuan Province, where he held a forum on the current economic climate in Henan, Hunan, Guangxi, Sichuan and Shanxi provinces. According to Wen, China’s economic growth rate is in a steady and stable state and still within the expected target set at the beginning of the year. However, the current economic climate is not showing signs of improvement. The economic difficulties are expected to continue for an extended period of time.

China News Review cited figures that the Ministry of Statistics published, saying GDP for the first half grew 7.8 percent, down from 8.1 percent in the first quarter. GDP for the second quarter grew 7.6 percent, falling below 8 percent for the first time in three years. The official June Purchasing Manager’s Index reached 50.2, an indication that there is still growth in the manufacturing sector. The article stated, “The statistics for the second quarter suggest that China’s economy is facing tougher challenges than expected and will not see signs of recovery very soon.”

Source: China News Review, July 17, 2012
http://opinion.china.com.cn/opinion_14_46714.html

Central Government Agencies Disclose Spending Figures

As of July 20, 2012, a total of 98 central government agencies had published their actual 2011 expenses and their budgeted expenses for 2012 in the following three spending areas: overseas trips, auto purchases, and maintenance expenses for meals and receptions. The total 2011 expenses in these categories amounted to 9.36 billion yuan. Overseas trips accounted for 1.98 billion; auto purchases and maintenance expenses accounted for 5.92 billion; and meals and receptions accounted for 1.47 billion. The 2011 actual expenses for the Ministry of Taxation alone were 2 billion yuan, with 1.36 in auto purchases and maintenance. The budgeted expenses for 2012 were down by 1.38 billion to 7.98 billion yuan with 2.14 for overseas trips, 4.35 for auto purchases and expenses, and 1.49 for meals and receptions. Spending for the armed police was in 2011 actuals, but that figure was excluded from the 2012 budget.

Some experts suggested that there were more areas in which expenses could be reduced further. For example, cutting unnecessary overseas trips could result in a reduction of 30 percent; auto purchases could be reduced as well by limiting the new car purchases and selling used cars to recoup some of the expenses. Others indicated that a system of checks and balances is lacking, where new guidelines are yet to be established. The article indicated that the parties who have violated the system should take more responsibility.

Source: China Economy, July 21, 2012
http://www.ce.cn/cysc/newmain/yc/jsxw/201207/21/t20120721_21196784.shtml

China’s Private Enterprises Are in Dire Straits

An 18-year-old mechanical processing company in the Pearl River Delta is facing difficulties just trying to survive. The head of the company posted a message on the Internet to complain about his situation. The message went viral on the Internet because it resonated with so many others. From the message, one can gauge the many problems that the company faces: The extremely narrow financing channels, rapidly increasing labor costs, a high tax burden, asset bubbles and inflation, and gray expenditures (money that must be spent "under the table"). The company is an individual case. However, it resonated with many others because private enterprises face a similar plight.

In recent years, due to the banks reluctance to lend, private enterprises have had to turn to loan sharks; raise their employees pay; in spite of structural tax cut calls, "decreases" have gradually, to the contrary, resulted in de facto "increases"; rising housing prices have led to higher rents, and rising inflation has caused the cost of raw materials to increase, so that private enterprises’ operating costs have risen faster. State-owned enterprises and local governments strictly control the high-profit industries, so private enterprises can only try to survive in the low-profit areas.

In the end, some private enterprises faced the dire fate of either having to close down or, in utter defeat, to hand their business over to others.

Source: Beijing News, July 17, 2012
http://www.bjnews.com.cn/finance/2012/07/17/210658.html

Major General Zhu Chenghu: China May Need to Modernize Its Nuclear Arsenal

On July 18, 2012, Major General Zhu Chenghu spoke at a seminar where he announced that China may need to modernize its nuclear arsenal in response to a planned U.S.-backed missile defense system that may have a destabilizing effect on strategic stability. China "must modernize its nuclear arsenal" because the deployment of a U.S. missile defense system "may reduce the credibility of China’s nuclear deterrence. … Therefore Beijing needs to improve its capability to survive and infiltrate. … Otherwise, we will have a tough time maintaining that we have a credible system of nuclear deterrence.”

Source: Radio Free Asia, July 19, 2012
http://www.rfa.org/mandarin/Xinwen/Hezixiandaihua-07192012035326.html

Huanqiu: Russia Should Not Have Fired at Chinese Fishing Ships

Huanqiu published a commentary titled "Russia Should Not Have Fired at Chinese Fishing Ships. "On July 16, 2012, an incident occurred in which the Russian coast guard seized a Chinese fishing vessel and detained 17 fishermen after it found they were allegedly fishing illegally in Russian-controlled waters in the Sea of Japan. During the pursuit, the Chinese sailors resisted being boarded, so the Russian coast guard fired directly at the ship. “The reckless behavior of the Russians at the grass-roots level not only harms Chinese confidence in fostering a long-term friendship with Russia, but also provides excuses for forces seeking to undermine Sino-Russia ties."

Source: Huanqiu, July 18, 2012
http://opinion.huanqiu.com/1152/2012-07/2923188.html

Hu Jintao: Support Africa in Five Key Areas

On July 19, 2012, in Beijing, Chinese president Hu Jintao attended the opening ceremony of the Fifth Ministerial Conference of the Forum on China-Africa Cooperation. Hu said that, in the next three years, the Chinese government will promote the new China-Africa strategic partnership and will take measures to support African peace and development in five key areas.

First, expand cooperation in investment and financing. China will provide a US$20 billion line of credit, with a focus on supporting African infrastructure, agriculture, and manufacturing and development of SMEs. Second, continue to expand aid to Africa, including building more agricultural technology centers, training 30,000 professionals for Africa, providing 18,000 government scholarships, and setting up cultural and vocational and technical training facilities; China will provide a 1500-person medical team. Third, build a cooperative partnership with Africa in cross-border inter-regional infrastructure construction; encourage able Chinese companies and financial institutions to be involved in African cross-border inter-regional infrastructure construction; help African countries improve customs and commodity inspection; and promote regional trade. Fourth, support and promote bilateral exchanges and cooperation of non-governmental organizations, women, and youth; set up a "China-Africa News Exchange Center” in China, to support the news agencies with both sides exchanging reporters; continue to implement the" China-Africa Joint Research and Exchange Program” to fund academic institutions and scholars on both sides to carry out 100 academic research, exchange, and cooperation projects. Fifth, China will launch a "Sino-Africa Peace and Security Partnership Initiative," to deepen its cooperation with the African Union and African countries in the field of peace and security, provide financial support to the AU peacekeeping operation, build a standing army, and increase trainings for peace and security officials and the number of peacekeepers for the AU.

Source: Xinhua, July 19, 2012
http://news.xinhuanet.com/politics/2012-07/19/c_112477365.htm

China’s Export-Import Bank Doles Out 20 Billion Yuan to Support Press and Publication’s “Going Out

On July 3, 2012, in Beijing, China’s Press and Publication Administration and the Export-Import Bank jointly signed  “the cooperation agreement on supporting the press and publication industry for going out (going overseas), using key enterprises and key projects.” Liu Binjie, Director of the Press and Publication Administration and Li Ruogu, Director of China Export-Import Bank signed the agreement on behalf of the two parties. The agreement indicates that, over the next five years, the Export-Import Bank of China will provide no less than 20 billion yuan (about US$3 billion) to press and publishing companies in support of their efforts to go overseas.

Wu Shulin, Deputy Director of the Press and Publication Administration, said that “the strategic cooperation to jointly support China’s press and publishing industry to go out is a major step in implementing the Communist Party’s spirit of the Sixth Plenary Session and the ‘12th Five-Year Development Plan of China’s press and publication industry.’”

Source: People’s Daily, July 4, 2012/7/5
http://politics.people.com.cn/n/2012/0704/c70731-18444926.html

General Guo Boxiong: China’s Armed Forces Must Remain Absolutely Loyal and Reliable

General Guo Boxiong, Politburo member and Vice Chairman of the Communist Central Military Commission, stated that the entire armed forces “must resolutely follow the Party’s command and remain absolutely loyal and reliable.” Guo made the remarks at the University of National Defense. Guo urged increasing ideological education because of the fact that the Party has absolute leadership of the armed forces. This will “ensure that the armed forces, ideologically, politically, and in action maintain consistency with the Central Military Commission and resolutely follow the command of the Party Central Committee, the Central Military Commission, and Chairman Hu.”  He also stressed that efforts be made to "ensure high solidarity, security, and stability among the troops.”

Source: Xinhua, July 17, 2012
http://news.xinhuanet.com/politics/2012-07/17/c_112460636.htm