Highlights from the Economic Observer issue no. 394 November 17 2008

A RMB 4 Trillion Pie for Chinese Officials
Cover
Chinese officials have flocked to Beijing to share in the RMB 4 trillion that the central government has planned to invest in ten sectors, including infrastructure, housing, agriculture, health care and social securities in 2009 and 2010. Sources estimated that the investment would equal some 14% of China's GDP this year. As of November 14, 10 billion yuan had been allocated to policy-mandated housing, railway, highway, health care, energy conservation projects and more.
Original article:[Chinese]

China to Loosen Loan Controls
Cover
China's banking watchdogs and the National Development and Reform Commission were drafting details of regulation which would allow banks to provide loans as registered capital for investment in China, sources said. In 1996, the State Council tightened registered capital requirements for new investment project in China. With the new regulations in place, local governments can quickly spend their share of the four trillion yuan stimulus package by first borrowing money from banks, then go on to implement large-scale projects in sectors like infrustructure and energy, thus boosting local economic growth.
Original article:[Chinese]

Chinese Power Records Negative Growth
News, page 5
China Electricity Council confirmed to the EO that national power generating capacities in October declined 0.82% compared with same period last year. It is the first time the industry has recorded negative growth since 1999. You Min, director of development at the CEC, ascribed the trend to production freezes and sharp output declines in the steel, chemical and construction material industry.
Original article:[Chinese]

Grain Exports: Cautious Backtracking
News, page 6
An official from China's macro-economic planner, the National Development and Reform Commission, confirmed rumors that Chinese grain authorities were loosening grain exports to fight price drops, telling the EO on November 13 that the Commission was considering the types and quantity of grain to be exported. In response to price surges, China had restricted grain exports since the first half of 2007. Grain experts cautioned that the policy shift might backfire, as it links the domestic and global markets and therefore exposes the former to a dire climate.
Original article: [Chinese]

A-Shares Rebound: Are the Darkest Days Over?
Market, page 17
As China issued a RMB 4 trillion economic stimulus package last week, Chinese A-shares have finally bucked market trends and expectations, moving toward 2000 points. Optimists believed share prices would break through the 2000 mark, while major fund companies remained cautious and worried that the rebound would lead to sharper drops. The hardest time would be the next six months, and the economy might retain stability the second quarter next year, according to a report by Everbright Securities.
Original article: [Chinese]

Goldman Sachs Cashes in Hotel assets in China
Corporation，page 28
Amid global economic gloom, Goldman Sachs has sold a five-star hotel in central China's Xi'an province that it bought for nearly RMB 100 million to a Singaporean company for RMB 400 million, sources said. A senior manager confirmed to the EO that the company had signed a share transfer agreement earlier this month, the new owner and manager being Paramount Hotel Singapore. The EO learned that since 2005, Goldman Sachs had begun controlling a large number of hotels and commercial real estate in China through Japanese real estate companies with business in China.
Original article: [Chinese]