Treating the Economy: Rates up Third Time
On July 21, the central bank raised the lending and deposit benchmark rates by 0.27 percentage points. That same day, the State Council decided to lower the interest tax from 20 percent to 5 percent starting August 15. This comes as experts are split among two camps: one saying that the economy is overheating due to investment and the trade surplus, while the other is emphasizing steady growth due to an improvement of the economic foundation, adding that China's growth should be viewed in the context of a developing country.
Original article: [Chinese]
Editorial: The First Step to Fixing the Economy is Solving the People's Basic Needs
Economic regulators have not only failed in smoothing out China's runaway growth, they have also failed to deal with long-term threats to China's economic stability. If the government invests more in public service and welfare, it will establish the foundation Chinese need to save less and consume more. Only if China begins investing in these publicly enjoyable necessities—education, healthcare, social security, etc.—will Chinese begin to part with their disposable income and lead China into a new age of domestic-demand driven growth.
Original article: [Chinese]
Without Punishment, Audit is “Paper Tiger”
On July 17 the National Audit Office released a review of the central government's budget implementation, revealing discrepencies with government revenues. Our correspondent contacted several of the 56 government agencies mentioned in the report with questions regarding cases of embezzelment and malfeasance but was consistently refused information and told that blame lay elsewhere.
Original article: [Chinese]
China's Foreign Exchange Investment Company Sets Initial Course
A report prepared by the China International Capital Corporation and one other body outlining the orgnizational framework for the FEIC has been submitted to the group charged with its establishment. Sources say it suggests financial portfolio investments as the FEIC's main investment direction, and that most investments will be managed by instutional investors selected by FEIC.
Original article: [Chinese]
Why Does Economic Growth Keep Beating Expectations?
Fan Wenzhong, deputy director of the research division in the China Banking Regulatory Commission, discusses why the economy is growing at such a high rate. He says that growth is still primarily investment and export driven, but that China's economy should not be simply evaluated as "overheating" because increases in income, improvements in transportation, and rising profits are all positive. The long-term problem lies in growth carried by high polluting industries that consume the most energy.
Original article: [Chinese]
Watch Out! Economic Adjustments Will be Even More Severe
In the next half of this year the government will use an array of monetary, fiscal, and administrative policy to control the economic growth, with monetary policy taking center stage.
Original article: [Chinese]
OECD Report Received by Environmental Watchdog
On July 17 the OECD presented Beijing with its "China's Environmental Assessment" report. China's State Environmental Protection Administration (SEPA) announced that they would recommend the report to the State Council, and for the first time, directly addressed their contention with the World Bank's recent report, "Cost of Pollution in China". SEPA had previously asked for the deletion of sections in the World Bank report that cited yearly deaths associated with air pollution, calling the data unscientific.
Original article: [Chinese]
Wild Housing Prices in Wenzhou
Wenzhou investors have come home to speculate in their own backyards. They often form teams of three to five in order to accumulate more than ten million yuan to target the housing market with, and it is reported that government officials are also involved. According to one senior housing analyst, the speculators have formed tight profit chains with the local government and land developers.
Original article: [Chinese]
A Long Road Ahead for QDII
QDII has a long way to go. Most investors hold conservative attitude toward QDII, with younger ones making up the greatest portion of buyers. This is because the banks don't provide guarantees for QDII investment, foreign exchange rate risks are hard to avoid, investments cannot be recalled easily, and banks don't have convincing enough data to persuade investors.
Original article: [Chinese]
Funds Wait on the Edge of the Market
A-share trade volume has topped off recently as funds hold their breath for signals from policymakers. Large-cap stocks are reporting stable share prices due largely to the fact that big funds have yet to dump their holdings.
Original article: [Chinese]
The Success of Asian American Coal Inc.
It's no secret how difficult it is for foreign firms to receive mining rights in China. To succeed where others have failed, AACI has adopted a "Chinese face", dispatching foreign managers to work in china and using local Chinese for negotiations with government.
Original article: [Chinese]
Bias Against China in Airline Industry
Lin Zuoming, president of China Aviation Industry Corpotation I (CAIC I), says it is not optimistic in its bid for Airbus. He says that US and European aviation corporations are biased against Chinese firms, citing their fear of Chinese mergers in the industry and reticence to let go of their core technologies.
Original article: [Chinese]
Dangdang Secret Financing
Dangdang.net, the biggest internet book store in china, is negotiating with two foreign venture capital firms for up to a hundred million dollars in financing for an overseas listing. Dangdang has kept up explosive growth, and is working to improve its customer experience and shorten the transportation time for goods. Despite this, the company still faces competition from Taobao.net and Joyo.net.
Original article: [Chinese]
Olympics Start Early for Chinese Internet Giants
Sina and Tengxun Networks have entered a cooperative agreement to jointly cover the 2008 Olympics online, making Sohu their sole major competitor. Sohu had previously spent millions of dollars to secure its rights as an official internet advertising medium for the Games.
Original article: [Chinese]
MySpace China Clarifies Business Plan
On July 16, MySpace China began to cooperate with Channel[V]. MySpace China wants to make its net users more active, and is aiming at Chinese college students and young professionals. Most revenues will come from advertisements for IT products, automobile and real estate.
Original article: [Chinese]
