Highlights from the EO Print, issue no. 399, December 22, 2008
Lending Crunch Despite Increased Liquidity at Banks
Cover story
A series of stimulus policies introduced by the Chinese government of late had boosted liquidity for banks, but that failed to translate into more lending. Many companies, especially the export-oriented ones, were still unable to secure credit as banks exercised extra caution to avoid risk of bad debts. Over the past months, a series of interest rate and reserve ratio cuts had released at least some RMB 1 trillion of liquidity, yet the lending in November dropped by RMB260 billion compared to the month before. The EO learned that Chinese banks in general avoided granting credit to certain industries, including textile, small hydro-power plants, and export-oriented ones.
Original article: [Chinese]
Eyes Benefits in the Long Run
Editorial, cover
China's 30-point blueprint to ease financial strains, released on Dec 13, showed the government's determination to deploy all available tools to steer the country out of the on-going global financial crisis, opined the EO editorial. The blueprint would complement and ensure the effective delivery of a four trillion stimulus package introduced earlier; it also signaled the government's will to reform the financial sector for the long run. The EO likened the move to a holistic medical treatment for a patient – while helping the patient to recover from a critical condition, also strengthened his immunity system to better deal with future attacks.
Original article: [Chinese]
Left With No Option
Cover, second lead
When China's online industry was booming, many IT professionals were willing to take on relatively lower salaries in exchange for higher companies' options. They hoped by holding out for a few years, they would become overnight millionaire when their companies go public listing and share prices soar. Many had their dreams dashed when global credit crunch set in and online companies abandoned plans for listing.
Original article: [Chinese]
Proposal to Review Labor Dispatch Regulations
News, page 3
After the Labor Contract Law came into effect in China January this year, more companies were found to have hired interim workers via employment agencies to cut cost. Such hiring allowed companies to skip signing indefinite-term contract with workers and avoid certain social security obligations required for full status staff. According to Chinese Institute of Industrial Relations, the number of interim workers dispatched by employment agencies had this year increased by seven million, a 35% jump compared to before the Law took effect. The EO learned that the National People's Congress, the country's top legislature, had studied the impact of such employment trend and proposed to review regulations governing dispatch hiring.
Original article: [Chinese]
Brewing a Flexible Pension Scheme for Migrant Workers
News, page 5
A draft to reform the social security scheme in allowing migrant workers to transfer their accounts and contributions nationwide was being finalized, the EO learned. Migrant workers have been highly mobile, moving from city to city, or province to province in search of jobs. Yet the present pension system forbade cross-province transfer of accounts. As a result, migrant workers had to close the old account and open a new one whenever they moved to another province. In the process, they lost part of their savings, as the contributions made by employers would stay behind with respective local governments. The EO learned that a draft to overcome this problem would likely be published earlier next year.
Original article: [Chinese]
Remarriage in Post-Quake Communities
Nation, page 9
Construction worker Wu Jiafang, 54, tied the knot for a second time recently and drew national spotlight. Wu became the symbol of a loving husband in the aftermath of the 8-magnitude Sichuan earthquake in May, after a photograph - which featured him carrying his dead wife on his back and riding a motorbike to give her a final sent off - was widely circulated in the media. The photograph moved millions of Chinese, including his new wife, Liu Rurong, 45, who was based in Shenzhen and initiated contact after reading news about him. Wu was not alone in picking up the pieces again by way of remarriage; many of those widowed by the earthquake had found new partners who shared the post-quake grief.
Original article: [Chinese]
Subway Projects Flourishing under Stimulus package
Nation, page 15
Subway projects for some Chinese provincial capitals, like Jiangxi's Nanchang and Guangxi's Nanning, have received speedy approval from related authorities, thanks to the recently announced four trillion yuan stimulus package. Sources close to the provincial officials told the EO that if not for the stimulus package - which gave priority to infrastructure building to boost domestic demand - Nanchang would have to wait at least three to five years more for its application submission. Yet now its application was already pending cabinet approval and might commence as soon as mid next year.
Original article: [Chinese]
Shopping Coupon not the Answer to Boost Spending
Comments, page 16
Chengdu municipal government's latest move to handout some RMB38 million worth of shopping coupons to low-income residents - each to receive RMB100 – might win applause from the recipients but not an answer to boost consumer spending, commentator Wang Xiaowei said. Chinese were generally cautious with spending; the ongoing global financial crisis had only exacerbated the habits. Wang believed the hesitation to spend stemmed largely from a lack of sound social security network, such as affordable education and health care, and reliable pension scheme. As a result, the public felt insecure and compel to save up for rainy days. To improve the social security system would thus be a more effective manner to raise consumer confidence in spending.
Original article: [Chinese]
China's Measures to Help Hong Kong Boost Market Confidence
Market, page 17
Chinese Premiere Wen Jiabao announced measures to help Hong Kong to weather economic downtown on Dec 19, covering capital market support, infrastructure building and social aspects. Some market observers called it a "Christmas gift" for the island, and several international financial services groups had also expressed optimism for the island's stock market performance next year.
Original article: [Chinese]
Tangshan's 39 Steel Companies Consolidated into Two Giants
Corporation, page 29
A total of 39 privately owned iron and steel companies in Hebei province's Tangshan, under the guidance of the local government, were consolidated into two groups - Changcheng and Bohai. The move came after numerous small and medium steel companies in Tangshan went into closures, cut or halt outputs since October. Private companies churned out some 51% of Tangshan's total iron and steel productions. The speedy regrouping was aimed at enhancing the companies' defense against the worsening economic conditions, with prices of iron and steel nosedived in recent months and lower demand for exports.
Original article: [Chinese]
Controversy over Interim Labors at Coca-Cola Plants
Corporation, page 30
A group of university students have stirred public debates in China after publishing a report accusing Coca-Cola for using interim workers illegally and mistreated them with long working hours and low wages, allegations that the multinational company denied. The report was put together after the students went undercover to work at bottling plants in South China's Pearl River Delta.
Original article: [Chinese]
