Highlights from the Economic Observer, issue 396 Dec. 1, 2008

China's Richest Man Involved in Seven Sins
Cover Story
Mainalnd China's richest man Huang Guangyu was under investigation after he was discovered to have some RMB 70 billion worthh of suspicious bank funds. He is suspected of seven crimes including manipulating share prices and money laundering, sources said. His company, Gome Electrical Appliances, officially announced on November 28 that Huang was under a police probe. The police have kept a close eye on the billionaire since he was first interrogated in 2006.  
Original article: [Chinese]

Pay Raise for Chinese Public Servants 
Cover 
Chinese local government employees embraced a second round of salary adjustments after China launched a three-year plan to reform subsidies for public servants last year. While public servants in Hebei, Henan, Inner Mongolia, and Anhui benefited from better subsidies, a larger scale pay raise may take place elsewhere in the country in the coming year. Some local government officials considered it a measure to stimulate consumption amidst the worsening economic climate.   
Original article: [Chinese]

China Decides on 756 Low-Price Common Medicines 
News, page 5
Over 700 common medicines have been selected for addition to China's basic medicine catalog and thus become cheaper, according to the Ministry of Health's newly drafted plan for basic medicines, itself one of 11 documents involved in China's ongoing health care reform. The draft suggested provincial or municipal governments designate manufacturers of these medicines and make collective purchase plans every three to five years. It also suggested the government should subsidize manufacturers with low profits.
Original article: [Chinese]  

Cut Staff or Salary?
News, Page 6
The Economic Observer has learned that pressed by oversea market contractions and a sharp order decrease, both state-owned and private companies in China were facing a hard choice between staff and salary cuts. In order to reduce costs, Wuhan Iron and Steel Group recently pushed forth a scheme to cut entry-level staff and senior managers respectively by 15% and 50%. 
Original article:[Chinese]

Deep Roots for Taxi Strike  
Special focus, Nation, page 9-12
Since taxi drivers in western China's Chongqing went on strike on November 3, there have been over ten similar strikes elsewhere in the country. Besides the harsh realities drivers complained of – high charges from taxi company, competition from unlicensed taxies, high gas prices, difficulty in getting gas--the Economic Observe explored two deeper causes: monopolies in the taxi industry and a lack of a platform for drivers to express their interest. 
Original article: [Chinese] 

"Unspoken Rules" of Environment Protection  
Nation, page 15 
A surge in Chinese officials imprisoned for bribery has shed light on the dark underbelly of China's environmental protection apparatus. Wang Yongping, a coalmine businessman, told the Economic Observer that because coal production was a high energy consumption, high pollution business, he had to seek an agent to work on his behalf, usually a friend or mistress of a key environmental official, to grease the wheels. Such unspoken rules have become institutionalized in Shanxi, he said. 
Original article: [Chinese]   

Morgan Stanley Finishes Investing in Hangzhou Trust 
Market, page 20 
Hangzhou Industrial and Commercial Trust (Hangzhou Trust) and Morgan Stanley jointly announced on November 26 that the two had finished procedures on a share transaction approved by the China Banking Regulatory Commission seven months ago. The first shareholding financial company in east China's Hangzhou city, Hangzhou Trust has now become a joint venture with 19.9% of shares held by Morgan Stanley. The chairman of Morgan Stanley China said the two companies would cooperate in securities, fund management, personal finance, and direct investment. 
Original article: [Chinese]  

Central Aviation SOEs to Receive Injection from Supervisor 
Corporation, page 27 
Listed companies under China Eastern Air and China Southern Air, two central state-owned aviation groups, have recently applied for a fund injection from government supervisors as their profits slipped. So far, China Southern Air has been approved of an appropriation of RMB 3 billion from the Ministry of Finance. However, none of the ten central SOEs the EO interviewed admitted to having received similar injections.  
Original article: [Chinese]