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Local Governments Face High Pressure as Debts Mature

SecuTimes recently reported on the issue of local governments facing pressure due to debts that will mature at a peak time in 2012. According to the National Audit Office, it is estimated that local government debts amounting to RMB 3 trillion (US$477 billion) are expected to mature this year. With the adjusted interest rate, 2012 is the year in which local governments face the highest risk of defaulting on their debts. By the end of 2010, total local debts reached RMB 9.67 trillion (US$1.54 trillion). In fact, local governments never planned to pay off their debts with budgeted fiscal funds. Instead, nearly all expected payments were based on anticipated land sale income that was not included in the official budget. However, the cooling housing market has caused a significant decline in land sales. It is estimated that the funding gap for these debts is about RMB 500 to 1000 billion. In the meantime, local governments are required to fund housing construction plans for low income families. This will further increase the likelihood of a debt crisis.

Source: SecuTimes, April 28, 2012
http://news.stcn.com/content/2012-04/28/content_5510372.htm

East Day: China May Have Built a Carrier Electromagnetic Catapult System

East Day, the large news site based in Shanghai, recently republished a Russian report on the successful completion of building the Electromagnetic Catapult System for Chinese aircraft carriers. The Chief Designer, Ma Weiming, received honorable recognition from the Central Military Commission. Ma got his Doctor’s degree at Tsinghua University in 1996 and was elected a member of the Chinese Academy of Engineering in 2001. According to the report, the Carrier Electromagnetic Catapult System is more than 100 meters in length and has a sophisticated power supply and command system. Its key component is an energy storage system that can accumulate enough energy in 45 seconds. Each Catapult System may consume 4 MW of power. An aircraft carrier with 4 Catapult Systems may need 60 MW to power all systems. This suggests that China’s future aircraft carriers may have to employ nuclear power.

Source: East Day, April 28, 2012
http://mil.eastday.com/m/20120428/u1a6520067.html

Ministry of Commerce: First Quarter Foreign Trade Slowed Down

China Economy recently reported that the Ministry of Commerce released a first quarter foreign trade review showing the market’s movement in six key areas: (1) The import and export growth rates significantly slowed down, which was a continuation of the direction established in the last quarter of 2011. (2) Chinese exports to Europe suffered a decline, while trade with emerging markets showed rapid growth. (3) Labor-intensive products (such as shoes) recorded very slow growth, while mechanical and electrical products exhibited healthy growth. (4) Coastal provinces reported much slower growth than the Middle West provinces. (5) Private companies were responsible for more than half of the growth in foreign trade. (6) Import growth significantly slowed. Some commodities were produced in much larger quantities, with lower prices.

Source: China Economy, April 27, 2012
http://www.ce.cn/xwzx/gnsz/gdxw/201204/27/t20120427_23280625.shtml

Qidong Village of Hunan Province Launched 24 Hour Skynet Electronic Surveillance System

According to an article carried by the People’s Daily, Qidong Village of Hunan Province has installed and launched a Skynet Electronic Surveillance system throughout the village; even the bus lines are included. The surveillance system is a high resolution system that is rated first class and is the first of its kind in Hunan Province. The village also formed a surveillance team that consists of members from the public security, transportation, city management, electric and water power departments to perform surveillance duties 24 hours a day, 7 days a week, using real time images.

Source: People’s Daily, April 27, 2012
http://politics.people.com.cn/GB/70731/17763532.html

Liu Qi: Be on Guard against Sabotage Activities Carried out by Hostile Forces

On April 27, 2012, Liu Qi, the secretary of the Chinese Communist Party Beijing Municipal Committee, spoke at Beijing’s first quarter financial review teleconference. Liu called for the party cadres and the general public to "clearly understand the current situation, be confident, do a solid job, advance while maintaining stability, and make an effort to finish the second quarter tasks in the run up to the 18th National Congress of the Party".

In addition to the second quarter directions, Liu particularly highlighted the importance of “security and stability” work. He asked all levels of the government to "ensure stability with a high level sense of political responsibility and historic mission, increase efforts to resolve conflicts, be strictly on guard against the sabotage activities carried out by domestic and foreign hostile forces, strengthen the guidance of public opinion, and strengthen and innovate in the area of public administration so as to create a favorable social environment for promoting scientific development in the capital."

Guo Jinlong, the Mayor of Beijing, gave the first quarter financial summary: in the first quarter, Beijing’s nominal GDP grew 7 percent compared to the same quarter last year. Guo concluded, “It was reasonable and met with expectations.”

Source: Xinhua, April 28, 2012
http://news.xinhuanet.com/local/2012-04/28/c_123050620.htm

National Bureau of Statistics: Chinese Farm Workers Exceeded 250 Million

A recent National Bureau of Statistics report show that, in 2011, the population of Chinese farm workers, farmers who left their land and chose to work in cities, reached 252 million, up by 4.4 percent from 2010. Of these workers, there were 158 million migrant workers who travel outside their local region to find jobs, 3.4 percent more than 2010. The report showed that 65.4 percent of farm workers were concentrated in the eastern region, down 1.5 percent from 2010; 17.6 percent were in the central region, up by 0.7 percent; 16.7 percent were in the western region, up by 0.8 percent; and the balance of 0.3 percent worked in Hong Kong, Macau, or outside of China.

The survey also reported that there were fewer farm workers who worked outside of their residential province. The jobs that the farm workers held remained in the manufacturing, construction, and service industries. The average monthly income for the migrant workers in 2011 was 2,049 yuan (US$350), up by 21.2 percent from 2010. The middle and central regions had a greater increase than the Eastern region. There has been improvement in delayed wages and extended working hours. The level of participation in social insurance has improved but still remains low.

The term "migrant worker" refers to the farm workers who work outside of their residential village or town for more than 6 months. The sample survey was conducted among 200,000 farm workers from 7,500 villages and 899 counties in 31 provinces.

Source: Xinhua, April 28, 2012
http://news.xinhuanet.com/local/2012-04/28/c_123050775.htm

Chinese Scholars: The Chongqing Model Has Collapsed

[Editor’s Note: Since Wang Lijun went to the U.S. Consulate in Chengdu, Sichuan Province, seeking political asylum and Bo Xilai was removed as Chongqing’s top leader, the Chinese people have had widespread discussions about Bo’s style of government, which has come to be called the “Chongqing Model.” The general characteristics of the “Chongqing Model” include heavy borrowing to stimulate economic growth, the ideology of returning to the “left,” and the political movement that Bo initiated. Bo Xilai pushed the “Chongqing Model” to the center of China’s political stage using his high-profile “singing the red” campaign, where people were organized to sing songs ythat were popular in the Mao Zedong era in praise of the Communist Party, and the “striking the black” campaign in which the Chongqing authorities bypassed the regular legal system claiming they were eradicating triads in Chongqing.

Voice of America (VOA) reported that, in recent discussions, many Chinese scholars have expressed their disapproval of the “Chongqing Model.” The following is the translation of the VOA article.] [1]

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China’s Central Bank’s Increased Issuance of RMB Leads to Domestic Inflation

According to Beijing News, the People’s Bank of China (China’s central bank) ranks No. 1 in assets in the world and last year printed money equal in value to half of the total currency printed in the world. The latest statistics released by the central bank show that, as of February 2012, its assets reached 28,330 billion RMB (about $4,500 billion), surpassing the U.S. Federal Reserve Bank and the European Central Bank. In the past five years, its assets increased by 119% and M2 by 146%. Due to the exchange control and the fact that the RMB is not an international currency, the increased RMB circulated only inside China. Thus those in China bore the full inflationary impact. “China is way behind the United States in terms of total GDP, economic power, personal income, and the overall wealth of the country. In 2011, the ratio of China’s M2 to GDP reached 189% while the ratio of M2 to GDP in the U.S. was about 64%. This showed the power of the RMB to boost inflation.”

Source: The Beijing News reprinted by Xinhua, April 24, 2012
http://big5.xinhuanet.com/gate/big5/news.xinhuanet.com/politics/2012-04/24/c_123025821.htm