Highlights from the EO print edition, issue no. 364, April 21 2008

Chinese Companies Tapping Informal Funds for Survival
Cover Story
Facing increasingly tight credit controls, Chinese companies squeezed by higher costs and declining exports are turning to informal "banking" networks to tie over the difficult times. Underground fund raising through private capital is said to be gaining momentum, according to one official of All China Federation of Industry and Commerce. The cash-strong Wenzhou business communities from China's Zhejiang province, known for their enterprising and sharp investment sense, have become an informal banking network charging a 5% monthly interest rate for loans to needy companies that have failed to secure credit through legal channels. A research by the Federation estimates that Chinese companies raised some 800 billion yuan through informal channels last year.
Original article: [Chinese]

Pirates as Sale Representatives
Cover, human interest
The web of "professional and diligent" agents selling pirated movies and music may have served the interest of the entertainment industry if they are roped in as sales representatives, the chief of a Chinese music company has suggested. Impressed by the pirates' knowledge of their products and efficient marketing, Song Hezheng of Taihe Rye Music Company is flirting with the idea of employing the swarms of pirates as retail points. The unlikely thought was triggered by disappointment over static outlets staffed with unenthusiastic salespeople with low product turn-over.
Original article: [Chinese]

Responses From the Latest Macro Economic Data Assessment
News, page 3
Price adjustments, subsidies for lower income groups and students, and reviews of tight credit controls are among the suggested responses by various government agencies as China tries to cautiously mitigate inflationary pressure and face off a possible global economic slowdown. The quarterly meeting between the National People Congress' finance and economic committee, the National Development and Reform Commission, the Chinese central bank, the Ministry of Commerce, and the National Statistics Bureau held on April 16 maintained that tight macro controls would be necessary. However, views about price controls on certain resources, such as oil, actually worked against the market economy were aired during the meeting. So too were calls to consider the backlashes of tight credit controls on Chinese companies.
Original article: [Chinese]

Sixty-four billion yuan for Rebuilding Power Industry
News, page 5
Direct economic losses in the power industry have made up 22%, or 40 billion yuan, of the overall damages caused by the rare snowstorm in southern China earlier this year. An assessment meeting held on April 18 between government authorities and power companies disclosed that at least 64 billion yuan would be needed for rebuilding the power grid system, while the sum needed by power generation companies have yet to be ascertained.
Original article: [Chinese]

Satisfying the Thirst of Beijing
Special Focus, page 9 – 14
Ensuring water supply for Beijing has led to ecological damage and urban development in other regions of China. As the South-North Water Transfer project is scheduled to be completed by the end of April, groups of NGOs, water experts and government officials have gathered to discuss how to build an eco-compensation mechanism. There has been consensus that the central government should compensate residents, businesses, and local governments at the water sources; and higher water prices and sewage treatment fees should be charged at beneficiary points. Some believe that eco-compensation alone is not enough and that taxes and other means of wealth redistribution should come hand in hand. The focus series presents a case study in Hebei province's Hongqi village, where the people are asked to change their way of life and economic activities to satisfy the thirst of Beijing.
Original article: [Chinese][Chinese]

Solution for the Songzhuang Case
Nation, page 15
The prolonged legal proceedings between villages and artists in Songzhuang over property rights have reached an agreement via court mediation on April 14. Both parties have agreed the sales and purchase agreements signed are null and void, but the artists are allowed to stay on in the properties until the area has to make way for redevelopment. When the latter happen, compensations for building demolition and relocation will belong to the defendants (artists); while land compensation will go to the plaintiff (villagers).
Original article: [Chinese]

The Source of Anger
Comments, page 16
Labeling others as "betrayer" or "selling out the country" for failure to display patriotit logos on one's instant messaging profile or indifference towards the call to boycott French products have become a trend among Chinese net users of late. Commentator Meng Lei argues that the underlying anger felt by the name-calling Chinese is not just a nationalistic reaction, but also stems from a sense of rejection and isolation. Some Chinese are hurt because they feel that despite efforts of embracing western culture and globalization, they have failed to win appreciation. Meng, however, cautions that no matter what the sources of anger or ways of expressing the anger, one should not further isolate, trap and hurt oneself.
Original article: [Chinese]

China Petrol Share Prices Signify Revaluation of Stock Market
Money & Investment, page 22
The continuous drooping share prices of China Petro is seen by market observers as a signal for revaluating the Chinese A-share market. The blue chip state-owned oil and gas giant has lost 67% of its market value since its record high trillion-dollar capitalization when it debuted in the Shanghai Stock Exchange in November last year. Market analysts deem the slide as a process of rebuilding a reasonable valuation system for the inflated stock market.
Original article: [Chinese]

Overseas Acquisitions on the Rise
Money & Investment, page 23
Chinese firms conducting acquisition exercises abroad have been on the rise, with the size of deals having increased by 60% in 2007 compared to the previous year. Several international investment and financial firms reveal that main services sought after by their Chinese clients include consultation on acquisition, merger, and IPO issuance. Excess liquidity and huge reserves are among the driving force behind the cross-border investments.
Original article: [Chinese]

Tax Evasion Case Against Zhong Qinghou
Observer, page 49
Chinese billionaire Zhong Qinghou is investigated over hundreds of millions of yuan in tax evasion by the Hangzhou tax department, the home base of Zhong's beverage group Wahaha, following a tip-off late last year. Speculation has it that the mastermind behind the tip-off is linked to Danone, the French multinational that has a joint-venture dispute with Zhong, who once called himself "the chepeast CEO in history".
Original article: [Chinese]