Highlights from the Economic Observer, issue no. 355, Feb. 18th 2008
One Bank, Two Systems: Agricultural Bank Reform Scheme Slowly Clarifies
Cover story
Before the Spring holiday, the Agricultural Bank of China had already received preliminary approval from supervising agencies for a reform scheme which will be publicized after this years “two sessions” in March. According to the new scheme, agricultural and non-agricultural services at the bank will be split and have independent assessment mechanisms. Financial regulators, starting last November, set that the Agricultural Bank's reforms should advance its commercialization, prepare it for a market listing, and leave it better equipped to deal with the "three agricultural problems".
Full article in English forthcoming. Original article: [Chinese]
Shanxi Ignites Reform Investigation After High-Profile Sentencing
Cover
Shanxi will once again examine its state-owned firms working in international trade after the boss of one former wholly state-owned firm was recently sentenced to life imprisonment for having stolen assets during the restructuring of his firm. On February 15th, Shanxi's party discipline and inspection commission and provincial government required over twenty local firms to look into the division of their assets and ensure that foul play had not similarly occurred.
Original article: [Chinese]
Land and Resources Law Being Drafted
From News, page 3
The Ministry of Land and Resources is drafting a new law to clarify the jurisdiction of land supervision bodies, especially those dealing with land use at the local level. The Ministry is working to get a draft of “National Land Supervision Regulations” to the State Council for review in 2008.
Original article: [Chinese]
New Tap Water Pricing System Forthcoming
From News, page 5
The National Reform and Development Commission has finished drafting its "Urban Water Supply Price Fixing Regulations", which will change how water prices are calculated. Previously based on water producers' profit margins on net assets, but in the future will be based on average operational costs. The regulation will likely come into effect in the early half of this year. Based on the new law, water producers will sell their water to the government for lower prices, but civilians are unlikely to see any decrease in the final price. Tap water prices have been debated since 1998, when the Ministry of Construction published, "Urban Water Price Management" law.
Original article: [Chinese]
Banks Warn of Economic Slide
From News, page 6
The most recent reports of several banks say that the risk that China's economy will falter in 2008 is far greater than the risk of it overheating. As the government has increasingly stressed its concern of preventing rising prises from becoming “structural inflation”, many banks have adjusted their growth predictions for China in 2008-- one example, Deutsche Bank, has tweaked its projected GDP growth down from 10.4% to 10%.
Original article: [Chinese]
Agriculture is the Greatest Lurking Danger
From Hot topic, page 7
On January 30th, a major policy document was released by the party suggesting ways to strengthen China's agricultural industry and stressing the importance of resolving agricultural issues. The EO interviews Song Hongyuan, vice-director of the Ministry of Agriculture's to speak about the document and Chinese agriculture.
Full article in English forthcoming. Original article: [Chinese]
The Effectiveness of Price Intervention Limited
From Nation, page 9
On January 16th, the National Development and Reform Commission announced that, during periods when the government is intervening in prices, 12 makers of instant noodles, small packaged vegetable snacks, and dairy products must report planned price increases for certain products. The EO asks both a National Development and Reform commission member and scholar to sound off on government intervention in food prices and what we can expect in 2008.
Full article in English forthcoming. Original article: [Chinese]
Overpriced Strategy in Chinese Online Gaming Sector
Corporation, page 25
The top Chinese online game company, Shanda Interactive Entertainment, has raised market expectations for gaming firms and made it difficult for competitors to expand through acquisition. Since last year, Shanda announced setting up a one-billion-yuan fund to acquire and invest in small and medium size online game companies. Subsequently, Shanda bought over a small Sichuan-base company named Aurora, making the latter's 23-year-old owner an instant multi-millionaire. The buyout set the benchmark of market evaluation for online game developers, who soon began demanding prices tenfold or more beyond their present value from investors. The overvaluations have deterred Shanda's competitors and investors from actively acquirig creative and innovative online gaming companies.
Original article: [Chinese]
