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Issue Wrap No. 424, June 22
Summary:

Highlights from the EO print edition, issue no. 424, June 22, 2009

No Date Set for Commencement of RMB Trade Settlement Trial
Cover, lead story
>> A clear timeline has not been agreed to in regard to the introduction of a pilot project that will allow the use of renminbi in settling cross-border trade transactions, according to a source from the State Administration of Foreign Exchange
>> Previously, a source familiar with the matter had disclosed that the project was scheduled to begin in June.
>> A Shanghai official involved in the trial said government agencies disagreed about examination and approval procedures in relation to the import and export quotas of the companies involved, they also disagreed on export tax rebate requirements.
>> Moreover, others were worried that in the long term, internationalization of the renminbi might result in a surge in demand for the Chinese currency which might inhibit the governments ability to formulate and implement monetary policy.
Original Article: [Chinese]

China to Regulate Pay of Senior Managers
News, cover
>> The EO has learned that a regulation that seeks to put a cap on the salaries of senior managers of China's state-owned enterprises (SOEs) got the green light from the country's State Council on June 10.
>> According to the regulation, compensation of senior managers in the SOEs must consist of three parts: annual basic salary, performance-related payments and medium-and-long term bonuses or incentives. The performance-related payments should not exceed three times their annual basic salary.
>> The regulation was targeted at the solely state-owned or state controlled enterprises like PetroChina and did not apply to mixed state-owned holding companies like Ping An Insurance Group.
Original Article: [Chinese]

Central-owned Enterprises Make Foray into Financial Sector
News, page 4
>> According to Chongqing's municipal government, China National Petroleum Corporation (CNPC) will establish a financial leasing company in Chongqing before the end of the year.
>> This marks another move by CNPC to enter the financial sector following the oil giant's take over of Xinjiang's Karamay Commercial Bank last month.
>> Li Wei, deputy director of the State-owned Assets Supervision and Administration Commission, also brought up the topic of central-owned enterprises entering the financial business sector as he kicked off a tour of central-owned enterprises.
Original article: [Chinese]

MOF To Allow Banks to Dispose of Bad Assets at Discounts
News, Page 4
>> The EO learned that China's Ministry of Finance recently issued draft regulations relating to how financial companies can dispose of their poor quality assets.
>> The draft regulation proposes that banks will be allowed to dispose of their bad assets at a discount and all loss thus incurred would be written off.
>> However, this disposal method is only available to banks that sell their bad assets to the four asset management companies and their counterparts under the administration of provincial-level state-owned assets supervision and administration commission.
>> The four asset management companies: China Cinda, China Huarong, China Great Wall and China Orient Asset Management Corporation, were set up in 1999 to dispose of 1.4 trillion yuan worth of bad assets accumulated by the country's four largest state-owned banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank.
Original article: [Chinese]

"Xiaotangshan Hospital Model" Reappeared in Beijing?
Nation, page 11
>> Since June this year, confirmed cases of A/H1N1 influenza have continued to increase in Beijing, while the capacity of the two hospitals designated for treating contagious diseases, Beijing Ditan Hospital and Beijing Youan Hospital, is being pushed to the limit.
>> Against this backdrop, the Beijing municipal government has decided to resurrect a former hospital as its back-up for receiving and treating swine flu patients.
>> The back-up hospital is located on the outskirts of Beijing, 50 km from the city center and 20 km from Beijing's Capital Airport.
>> Such a case is reminiscent of the Xiaotangshan Hospital, which was built six years ago especially to treat SARS patients.
Original article: [Chinese]

Shanghai Financial Service Office Seeks Expansion
Market, page 17
>> Following the State Council's March announcement that it plans to turn Shanghai into an international financial center, the city's financial services office has been busy preparing to boost staff numbers.
>> The office was formed in September 2002, with the aim of disposing of the local government's financial assets, but it's now transforming itself into a powerful body in charge of establishing Shanghai as an international financial center.
>> The office presently has only 30 staff, but a source revealed that this figure is expected to climb to over 100.
Original article: [Chinese]

Project to Pilot Islamic Finance in Ningxia
Market, page 20
>> The EO learned that China's Banking Regulatory Commission had given approval to Bank of Ningxia to undertake an Islamic financial services project.
>> A source familiar with the matter said according to suggestions from regulatory bodies, the bank would likely set up a special department or create special service windows in its branches capable of providing Islamic financial services.
>> Lu Suping, the bank's chairman, told EO that establishing a special branch for Islamic finance was the bank's idea. A special branch would also be built and designed in an Islamic style and they would recruit a Muslim branch manager.
Original article: [Chinese]

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