Highlights from the EO print, issue no. 360, March 24th, 2008
Chinese Textile Industry in Plight
From Cover
Over two thirds of the Chinese enterprises in the textile industry are making a mere 0.62% profit margin, according to research conducted by the country's textile trade association. Textile used to be China's leading exports, registering around 20% growth rate for the past five years. However, in the first two months of 2008, the growth rate has dropped to 5.7%. The decline is partly due to the rising value of yuan and higher labor cost that affected the industry's global competitiveness. The US economic slowdown too has added pressure. The association is compiling the findings for submission to the State Council, hoping to lobby for more export tax rebates.
Original article: [Chinese]
A Fine Balance in Taxation
From News, page 4
China has started reducing export tax rebates for several sectors since last year as a means to cut the trade surplus, however, such policies have squeezed the survival space of certain industries like steel making and textile. Facing increasing uncertainty in the global market, several tax policies along similar lines are now being delayed, pending closer observation. On the other hand, the Chinese government's core concern has now moved on to curbing inflation, and tax cuts to stimulate domestic consumption are widely expected, especially taxes related to housing.
Original article: [Chinese]
One Minister, Ten Deputies for a New Super Ministry
From News, page 5
One Minister and 10 Deputy Ministers will be taking the reins of the newly established Ministry of Human Resources and Social Security. The news was announced on March 19 following a day-long top officials meeting. The Ministry is formed by combining the former Ministry of Human Resources and Ministry of Labor and Social Security, and comes after the NPC approval of the latest State Council reshuffle scheme. Concerns over losing jobs, and uncertainties over future career paths, have loomed over the Ministry as its personnel wait anxiously for further announcements.
Original article: [Chinese]
Three Challenges for Chinese Central Bank Governor
From News, page 6
When Zhou Xiaochuan first took over the helm of the People's Bank of China in 2002, the country's Consumer Price Index (CPI) dropped by 0.8%. By his second term, the CPI had grown to 8.7%, and making inflation the foremost concern for the bank. Analysts and academics say that besides this, the bank is also preoccupied with liberating the capital market at an appropriate timing and allowing the Chinese currency's exchange rate to be determined by the market force.
Original article: [Chinese]
US Trade Representative Meeting China's Minister of Commerce
From News, page 8
US trade representative Susan Schwab has paid a courtesy call to the new Chinese Minister of Commerce Chen Deming on March 19. Discussions between the two have touched on, amongst other, bilateral trade issues and topics for negotiations at the WTO's Doha round.
Original article: [Chinese]
Monopoly in Rural Supermarkets
From Nation, page 9
The supply-and-sales cooperative, a rural development institution from the days of planned economy, has returned to dominate the delivery of daily commodities in Chinese villages through a monopoly in supermarkets. Under a government project to bring chain supermarkets into the rural areas to boost local consumption and commodities quality, the cooperatives have reinstated their dominance through stakes in chain stores, and ownership of land and property. The mushrooming chain supermarkets in the countryside have forced private grocery stores and small shops that lack economy of scale out of business.
Original article: [Chinese]
Lukewarm Response to Home Appliances Subsidy
From Nation, page 11
Red tape has doused the enthusiasm of rural consumers towards a government subsidy extended to electrical home appliance purchase. Long queues that appeared in the first week following the announcement a month ago have disappeared, and sales points have blamed the complicated reimbursement process as the cause. The procedure involves buyers having to produce the original and copy of receipt, identity card, product's certificate, saving account document, resident registration, and other documents for various level of local governments' approval, before the reimbursement could be released.
Original article: [Chinese]
The Twelfth Week of Anxiety
From Money & Investment, page 17
China's A-share stock market in Shanghai has entered its twelfth week of decline, heightening fear and panic that the market could crash. Market analysts believe if share prices continue to fall sharply, the crash would be inevitable and investors' interest aside, the country's economy at large would also be impacted. Calls for "saving" the market have emerged, with some suggesting the government to reform capital-raising mechanism, reduce stamp duty, and delay introducing the start-ups exchange. There are also calls for encouraging companies to re-purchase their shares when prices have dropped below expectation.
Original article: [Chinese]
Urbanization Process Catalyses Real Estate Growth
From Property, page 40
China's goal of having 70% of its population as urbanites would take another 13 to 15 years to realize if the rate of urbanization is between 1.3% and 1.5% per annum. Based on such pace, researcher Liu Qihong has estimated that the real estate sector could enjoy another 15 years of boom. He is of the view that unless the government allows farmers who have migrated to the city to enjoy the same rights as urban residents in purchasing economic housing, the real estate market would not attain healthy development.
Original article: [Chinese]
