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Monthly Archives: July 2015 - 6. page

China’s June PPI Down 4.8 Percent Year on Year

According to the latest release from the National Bureau of Statistics on July 9, China’s producer prices continued to fall in June, indicating a prolonged weakness in demand. 

In June, China’s Producer Price Index (PPI), which measures the average change in the price of goods and services sold by manufacturers and producers in the wholesale market, fell 4.8 percent year on year, compared to the 4.6 percent drop in May. Month on month, the producer price index in June went down 0.4 percent. The drop in June marks the 40th consecutive month of the decline of the index and represents the sharpest drop since 2009. 
For the 4.8 percent PPI drop, prices of production materials fell 6.2 percent in June, contributing 4.7 percentage points to the PPI drop during the month. Prices of consumer goods were down 0.2 percent. 

Source: National Bureau of Statistics, July 9, 2015 http://www.stats.gov.cn/tjsj/zxfb/201507/t20150709_1211569.html

Briefings | | |   Economy/Resources

Jiang Zemin and Zeng Qinghong Tried to Set up Road Blocks to Xi Jinping’s Anti-Corruption Campaign

On July 4, 2015, China Gate, a Chinese website headquartered in the U.S., republished an article from Cheng Ming Monthly magazine in Hong Kong (original article is not available online) on the internal fight between factions within the Chinese Communist Party (CCP).

The article stated that former CCP top leader Jiang Zemin and his right-hand Zeng Qinghong have become the next biggest targets of Xi Jinping’s anti-corruption campaign, following the downfall of Zhou Yongkang, which broke the unspoken rule that there would be "no legal punishment of any Politburo Standing Committee member."

In order to save himself from being investigated, Zeng Qinghong tried to set up other CCP senior leaders as anti-corruption targets. This included the families of Li Peng and Chen Yun, both of whom were powerful political figures in the past. Zeng hoped that these families would be too big for Xi Jinping to take on and this would stop Xi’s anti-corruption campaign.

However, Zeng’s strategy didn’t work. Chen Yun’s family used to be close to Jiang Zemin, but this time, the family chose to side with Xi Jinping. Chen Yun’s son Chen Yuan supported Xi’s corruption investigation against two Vice Chairmen of the National People’s Congress. Chen Yun’s daughter Chen Weili made a high-profile statement, "We all support Xi Jinping’s anti-corruption campaign."

Source: China Gate, July 4, 2015
http://www.wenxuecity.com/news/2015/07/04/4392092.html

Briefings | | |   Government/Politics

Xi Jinping Acknowledged the Party’s Corruption Could Lead to Its Downfall

On July 2-3, 2015, several overseas Chinese websites republished an article from Cheng Ming Monthly magazine in Hong Kong (the original article is not available online) on the possible collapse of the Chinese Communist Party (CCP).

According to the article, the Party is so corrupt that it is on the verge of disintegration. Even top Party leaders do not avoid the topic of the "death of the Party." 

In the middle of June 2015, the CCP Politburo Standing Committee held a two-day expanded meeting, discussing major political, economic, and other crises that the Party is facing. In addition to the Politburo Standing Committee members, Secretaries of the Secretariat of the CCP Central Committee, the State Councilors, Party Committee members of the National People’s Congress and the People’s Political Consultative Conference, Central Military Commission members, and Deputy Secretaries of the Central Commission for Discipline Inspection (CCDI) attended the meeting.

At the meeting, Xi Jinping said in his speech, "We must have the courage to face, acknowledge, and accept the harsh reality that the Party has become so corrupt and degenerated so much that it could cause the crisis of the Party’s downfall." 

An investigative research report on the Party’s development and on Party cadres was distributed at the meeting. The report listed six crises, in the areas of politics, the economy, society, faith, and the future, that could lead to the Party’ death. The investigation showed that only 25 percent of senior officials in the CCP Central Committees and local governments have passed the CCDI’s review; 90 percent of Party committees at grass-roots levels or county levels have failed their performance review and need to be "reorganized."

Source: China Gate, July 2, 2015
http://www.wenxuecity.com/news/2015/07/02/4387525.html 
http://www.boxun.com/news/gb/china/2015/07/201507031039.shtml#.VZ08O2dmK3M
http://www.iask.ca/news/china/2015/07/337621.html

Briefings | | |   Government/Politics

China’s Draft Cybersecurity Law Allows Cutting Off Area-wide Internet Access

China’s recently proposed draft cybersecurity law makes it clear that the national Internet information authorities should perform the duties of supervision and management of network security. Once a publication or transmission of information that is prohibited by laws and regulations occurs, the authorities must demand the service provider to stop the transmission network operator, take measures to eliminate the information, and save the relevant records. When the above mentioned information comes from abroad, the authorities must notify the relevant agencies to take technical and other necessary measures to block the dissemination of the information.
The Draft emphasizes real name registration, requiring that Internet service providers should require the users to submit real identity information at the time of signing an agreement or confirmation or service. If the user does not submit real identity information, the service provider is not allowed to provide the related services. Any service provider who does not require users to submit real identity information, or who provides service to users who have not submitted their real identity is subject to a fine between 50,000 yuan (US$8,053) and 500,000 yuan (US$80,530). That provider may also be ordered to suspend all relevant business, stop or close operations, or have its relevant business license revoked.
The Draft classifies the websites or online systems that have a large number of users into the category of critical information infrastructure. It requires that the operator of the critical information infrastructure should collect and store important data such as citizen’s personal information within its borders. Any operator that stores Internet based data overseas, or provides data to overseas organizations or individuals without security assessments is subject to a fine between 50,000 yuan (US$8,053) and 500,000 yuan (US$80,530). It may also be ordered to suspend all relevant business, stop or close its operation, or have its relevant business license revoked. Executives directly responsible and other personnel directly responsible are subject to a fine between 10,000 yuan (US$1,611) and 100,000 yuan (US$16,110).
The Draft makes provisions for Internet security monitoring and an early warning and emergency response system. It requires that, when an Internet security incident occurs, the authorities at government offices above the county level should immediately start the network security emergency response plan and release the public-related warnings and relevant information. The Draft makes provision for Internet control: "For safeguarding national security and maintaining public order, out of the need to deal with major emergency social safety incidents, the State Council or provincial governments under the approval of the State Council can adopt temporary measures including limiting Internet communications in some areas."
Source: People’s Daily Online, July 9, 2015
Briefings | | |   Information/Technology

China IPOs Blocked in the Near-Term

Late on July 4, the Shanghai and Shenzhen exchanges announced that 28 planned IPOs of “A Shares” will be delayed, 10 at Shanghai Stock Exchange and 18 at Shenzhen Stock Exchange. On July 3, China Securities Regulatory Commission expressed that, in light of the recent market situation, there would be no new IPOs in the near-term and the number and volume of deals down the line would be greatly reduced. 

This is the ninth "A Share" IPO delay in history.  The previous delays were as follows:
1. July 21 to December 7, 1994 
2. January 19 to June 9, 1995 
3. July 5, 1995, to January 3, 1996 
4. July 31 to November 2, 2001 
5. August 26, 2004, to January 23, 2005 
6. May 25, 2005, to June 2, 2006 
7. September 16, 2008, to July 10, 2009 
8. November 16, 2012, to December 30, 2013 
China’s A shares are generally only available for purchase by mainland citizens; investment from outside mainland China is restricted to select foreign institutions or under mutual market access arrangements between the Shanghai Stock Exchange and the Hong Kong Stock Exchange, subject to aggregate and daily quotas.

Source: The Beijing News, July 5, 2015 
Briefings | | |   Economy/Resources

VOA Blog: He Qinglian on Blaming the Stock Market Plunge on a Foreign Conspiracy

Well known economist and sociologist, He Qinglian, who blogs regularly on Voice of America, looked into the theory that has been widely circulated in China that a foreign conspiracy accounted for the crash in China’s stock market causing Beijing to roll out a slew of support measures to stem the stock market slide. 

In her July 5 blog, He Qinglian noted that, over the past year, the total market capitalization of publicly traded companies in the Shanghai and Shenzhen stock exchanges has grow by US$6.7 trillion to US$10.05 trillion, far exceeding that of the Japanese stock market at around US$5.0 trillion. 
One critical step in Beijing’s game plan is to overtake the US equity market cap of US$25 trillion and to have its A shares included in MSCI’s Emerging Market Index (an index created by Morgan Stanley Capital International). US$1.7 trillion in funds worldwide track this index. According to MSCI’s estimate, a decision to include domestic Chinese stocks in the index would have injected an estimated US$400 billion of funds from asset managers, pension funds, and insurers into mainland China’s equity markets over time. 
On the evening of June 9, 2015, MSCI decided against including mainland China’s equity in the gigantic MSCI Emerging Markets Index, citing a number of regulatory matters it has yet to iron out with Chinese securities agencies. 
When refuting speculation that foreign institutions were accountable for the crash of China’s stock market, the author questioned Beijing’s confidence and ability in managing the economy through artificially propelling a bull market, attracting foreign investors to fuel its growth, and counting on Chinese investors’ patriotism to reverse the stock market plunge. 
Source: Voice of America, July 5, 2015 
Briefings | | |   Economy/Resources

Xinhua Exclusive Report Says Western Media Incited Turkish Anti-China Demonstrations

China’s state media Xinhua published an exclusive report to “disclose” information about the recent Turkish demonstrations against the Chinese government. In asking what caused the demonstrations, the report quoted unnamed analysts who “point out that a few Western media have long been distorting China’s ethnic policy and the living status of those in ethnic minority areas. A small group of agitators and their reporting of rumors that [China] banned the ‘Ramadan fast’ in the Xinjiang Autonomous Region have brought about the recent anti-China protests in Turkey.” 

As for why the demonstrations are worsening to such a level, Xinhua News Agency reporter Zou Yue in Ankara  said that since the holy month of Ramadan began on June 18, a few Turkish media quoted foreign media that said that Xinjiang has banned some Muslims from fasting for ‘Lent.’ Thereafter, related reports were spread on Twitter, Facebook, and other social networking sites. Some Turkish nationalists have posted pictures on social media of so-called ‘Chinese police beating and maiming Uighur women and children.’ The Turkish mainstream media subsequently also made the relevant reports.” “After the incitement of various distorted reports, anti-China sentiment in Turkey increased rapidly.” 

Source: Xinhua, July 6, 2015 

Briefings | | |   Government/Politics

HK Mingpao: New Poll Showed Impression of Beijing Getting Worse

Mingpao, one of the primary Hong Kong newspapers, recently reported on a poll of Hong Kong residents. The Hong Kong Institute of Asia-Pacific Studies of the Chinese University of Hong Kong, a widely trusted polling organization, administered the poll. It tracked the Hong Kong residents’ level of confidence in the “one nation, two systems” policy and was taken not long after the Hong Kong Legislative Council vetoed the proposed political reform plan that Beijing supported. According to the poll, around 52.4 percent of the people had weakened confidence in Hong Kong’s “high degree of autonomy.” A record high of around 36.2 percent of the HK residents surveyed said they had a bad impression of the central government – the same number was 4.3 percent in 2007. At the same time, only 20.9 percent of the population had a good impression (the same number in 2007 was 58.2 percent). 
Source: Mingpao, June 29, 2015
Briefings | | |   Geo-Strategic Trend