China Economy recently reported that the State Council Executive Meeting released new policies to improve China’s imports. The primary goals are to ease the pressure of a “resource bottleneck,” to improve domestic consumption, and to reduce trade friction. Four new policies are: (1) Reducing tariffs (temporarily) on energy resources, raw materials and some daily consumer products; (2) Encouraging commercial banks to increase loans to support imports, especially in the areas of advanced equipment, key manufacturing parts, and energy resources; (3) Improving the efficiency of customs and inspection and quarantine authorities by allowing 24-hour appointments and eliminating unreasonable charges; (4) Reducing import operational costs by introducing better administrative improvements such as making more use of custom’s special supervisory areas and bonded supervisory areas.

Source: China Economy, March 31, 2012
http://intl.ce.cn/sjjj/qy/201203/31/t20120331_23205172.shtml

During his trip to southern China, Chinese Premier Wen Jiabao stated that the top national banks in China have too much power and have made too much money, and that their monopoly must be broken. “As for financing costs, actually let me speak frankly here. Our banks make a profit too easily. Why? It is because a few large banks are in a monopoly position. People can only obtain loans from these banks. It is very difficult to obtain loans from other sources. Now private capital has entered into the financial market. Fundamentally speaking, [we] have to break the monopoly. The Communist Party’s Central Committee has reached a unanimous agreement to carry out a pilot project in Wenzhou. A successful Wenzhou pilot project should be promoted across the country. Some (features of the project) can be implemented immediately throughout the country. "

Source: Beijing News, April 4, 2012
http://finance.sina.com.cn/roll/20120404/034011744163.shtml

A high profile article titled “Confidently Make State-owned Enterprises Bigger and Stronger” recently appeared on Red Flag Manuscript, a core publication of the Chinese Communist Party’s Central Committee.

The author, a director at the policy making State Development and Reform Committee, refuted voices in favor of privatization. “Some people want the state-owned sector, as a percentage of GDP, to fall to 10%, the U.S. standard, and ‘exit the competitive sector.’ Some have asked the state-owned enterprises to exit the basic industries and the service sector, in the name of ‘antitrust.’ Some advocate that the state only control the land and financial sectors and completely retreat from the business world.” The article argued, “The experiences of Eastern Europe and Latin America have shown that a market oriented toward privatization will leave the national economy unprotected; its property rights and even its economic lifeline will then be controlled by foreign capital.”

The author emphasized that the state-owned enterprises should maintain an advantageous and dominant position in the following sectors: (1) strategic areas related to national security: defense and the science & technology industry (nuclear, aerospace, weapons, ships, and military electronics); national infrastructure (such as the communications and broadcasting, electricity, and railway networks and important transportation facilities); key urban infrastructures (water supply, drainage, electricity, gas, and roads); the financial sector; and bulk agricultural commodities. (2) important basic industries: such as power, telecommunications, energy, and key petrochemical and metallurgy industries. (3) non-renewable strategic resources: mining, oil and gas resources. (4) pillar industries and the high-tech industry: mining, metallurgy, petrochemical, machinery, and transportation equipment; and high-tech industries (new materials, new energy, electronic communications, aerospace, biomedical, etc.

Source: Red Flag Manuscript, March 26, 2012
http://www.qstheory.cn/hqwg/2012/201206/201203/t20120326_147755.htm