Highlights from the EO print edition, issue no. 435, September 7, 2009

Labor Shortage in Wenzhou
Nation, page 9
~ Statistics from Wenzhou labor market revealed that of the 49,535 positions advertised in August, 36,368 positions, or 73% of the vacancies, remain unfilled.
~ However, this labor shortage has more to do with the after-effects of the financial crisis than being a positive sign for the local economy. At the beginning of the crisis, many firms fired regular workers, forcing them to return to their hometowns.
~ Another factor is the relatively low income that migrant workers can earn in Wenzhou. Data shows that by working over 10 hours a day they'll only get paid around 1000 yuan a month, 200 yuan less than the going rate in Guangzhou.
~ Despite these labor shortages, small and medium-sized enterprises in Wenzhou, and other cities along the Southeast coast, are still suffering from a lack of orders and their prospects remain bleak.
Original Articles: [Chinese]

Consolidation of State-owned Pharmaceutical Firms
News, cover
~ China National Biotec Group will soon be completely incorporated into China National Pharmaceutical Group Corporation (Sinopharm), a source from Sinopharm revealed to EO.
~ The two pharmaceutical manufacturers are currently directly administrated by the country's State-owned Assets Supervision and Administration Commission (SASAC).
~ The source added that the merger has already gotten the nod from SASAC and is now awaiting final approval from the State Council.
~ The EO also learned that Sinopharm, which has an annual revenue of 50 billion yuan, would likely acquire Shanghai Institute of Pharmaceutical Industry (SIPI), another pharmaceutical manufacturer under SASAC's control, by the end of this year.
~ This means that the consolidated Sinopharm will, in addition to the pharmaceutical wing of Hong Kong-listed conglomerate China Resources Holdings and the Shanghai Industrial Investment Company (SIIC), become one of China's three giant pharmaceutical conglomerates.
~ The consolidation of the three centrally-owned firms, is part of SASAC's broader plan to reduce the number of state-run enterprises from the present 138 to between 80 and 100 by 2010.
Original article: [Chinese]

Export Recovery Will Decide Extent of Future GDP Growth
News, page 2
~? As developed countries are expected to take a long time to emerge from the global recession, China's export market will likely remain weak in the near future, this will mean that China can no longer rely on the rapid expansion of exports to boost GDP growth.
~? Analysis reveals that the decline in exports was caused by the shrinking volume of global trade due to the global downturn and that China's export competitiveness has not been damaged.
~ By 2010 the proportion of China's GDP made up from exports is expected to decline from the pre-crisis highs of 36% registered in 2007, to the sub 25% level that existed prior to 2002.
Original Article: [Chinese]

China Addresses Industrial Overcapacity by Tightening Environmental Controls
News, page 3
~ To address the problems of excessive capacity, low barriers to market entry and outdated technology that persist in the Chinese steel industry, Liaoning Province in the Northeast of China is imposing stricter environmental requirements on steel companies.
~ But Liaoning is just one example, with the macro-policy focus shifting from stimulus to restructuring, the overcapacity in many sectors is attracting the attention of policy-maker's around the country and environment protection departments are once again leading the charge to rein in heavy polluting and energy demanding industries.
~ From 2004 to 2007, environmental protection departments had been playing an active role in policing the readjustment of China's industrial sector. But since then, the focus has turned to setting up a legal infrastructure for environmental law.
Original Article: [Chinese]

Macro-economists Optimistic about China's Recovery
News, page 8
~ Macro-economists interviewed by the EO agreed that China's economy will avoid a second decline and that August marked the start of a sustained recovery.
~ However, they raised concerns that inflation would start to pick up in August.
Original Article: [Chinese]



Growth Enterprise Board on Track for October Launch
Market, page 17
~? According to sources, after tests of the new trading network are completed in late September and early October, the Shenzhen Stock Exchange will be ready to launch the new Growth Enterprise Board (GEB) as early as late October
~ The EO learned on Thursday that the first batch of companies that applied to list on China's new Nasdaq-like Growth Enterprise Board, will participate in approval hearings starting from September 20.
~ The new Nasdaq-style GEB has been 10 years in the making and is being set up as a source of funds for small and medium sized enterprises with a special focus on tech-related firms.
Original Article: [Chinese]?

CNPC Expands Oil Refining Sector
Corporation, page 25
~ The introduction of a new pricing mechanism for refined oil offers an opportunity for China's state oil giants to expand their refining sectors.
~ In theory, by offering greater pricing flexibility, the new pricing mechanism can help the oil giants avoid making losses in the downstream oil refining business.
~ China National Petroleum Corporation (CNPC) recently signaled its intention to double its refining capacity to 240 million tons per year by 2015. To this purpose, the CNPC has drawn up a huge investment scheme, the EO learned.
~ In response, the China Petrochemical Corporation (Sinopec) has also drawn up a similar scheme to enlarge its refining capacity. In addition it plans to open up service stations in market regions dominated by the CNPC.
~ Available data showed that of the 31 new oil refinery projects that have been built recently or are still under construction, 17 belong to CNPC and Sinopec Group has invested in 11.
Original Article: [Chinese]

Wind Power in China
Corporation, page 30
~ This week's EO features a special report on China's new energy industries including wind and solar power.
~ Jiangsu Province in southeast China is planning to develop wind power projects that will be able to generate 1000 MW of energy in 20 years. This target, combined with large state-run enterprises' desire to get their hands on land suitable for wind power projects, has given a big boost to China's wind energy market.
~ However, the industry is also plagued by problems of duplicate projects that exceed the real capacity of the new but booming industry.
~ That said, China is still lacking enough crystalline silicon to produce enough high-quality solar panels and also is unable to make enough high-quality wind turbines to meet demand.
Original Article: [Chinese]