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Issue Wrap No. 438, September 28
Summary:

Highlights from the EO print edition, issue no. 438, September 28, 2009


Huijin's Financial Expansion
News, cover
~ Central Huijin Investment Company, a domestic investment firm managed by the country's $200 billion sovereign wealth fund - China Investment Corporation - has signalled its intention to rapidly expand.
~ A source told the Economic Observer that China's Ministry of Finance is considering putting the country's two largest insurance companies - People's Insurance Company (Group) of China (PICC) and New China Life Insurance Company under the management of Central Huijin Investment Company.
~ A week ago, the State Council also gave permission to Central Huijin to inject capital into the Export-Import Bank of China and China Export and Credit Insurance Corporation (Sinosure).
~ At present, Central Huijin is a major shareholder in five of the country's state-owned banks as well as several securities companies.
Original article: [Chinese]

MOF to Issue 50-year Treasury Bonds
News, cover
~ The Ministry of Finance (MOF) has decided to issue 50-year government bonds valued at 350 billion yuan in the final quarter of 2009.
~ The MOF claimed that these new treasury bonds, this will be the first time that bonds of such a long maturity have been sold, are being issued to promote reform and innovation and perfect the yield curve. But analysts agree that it has more to do withincreasing fiscal revenue while reducing the tax burden.
~ The issue will consist of 60 billion yuan in saving bonds and 290 billion yuan of treasury bonds.
Original article: [Chinese]

SASAC Pushes for Role in Budgeting for Centrally-owned Enterprises
News, page 3
~ Currently, the MOF is responsible for deciding how much centrally-owned enterprises (COE) should pay in dividends and also exercises control over the budgets of COE.
~ Last year, MOF oversaw the payment of over 50 billion yuan in dividends into government coffers.
~ Since the establishment of the State-owned Assets Supervision and Administration Commission (SASAC) in 2003, the body has been pushing for  more control of the budgeting of COE.
~ Recently there has been a renewed push within the organization to gain control of the budgeting authority over COE.
Original Article: [Chinese]

Nation-wide Environmental Inspection
News, page 3
~ China's Ministry of Environmental Protection is about to stage a nation-wide environmental investigation campaign into all of the  new investment projects that were established amid the implementation of the country's 4-trillion yuan stimulus package, the EO learned.
~ The ministry will make use of "resolute measures" against those projects that are found to be in breach of the environmental protection regulations.
Original Article: [Chinese]

External Confidence v Internal Doubt - Chinese Economic Forecasts
News, page 5
~ Many economists are predicting that China's economy will peak in the second quarter of next year. A view shared amongst investment banks both at home and abroad.
~ Nomura Securities has adjusted their GDP growth prediction up to 8.5% in 2009 and 10.5% in 2010. The Asian Development Bank, UBS, Goldman Sachs and JP Morgan have also upgraded their forecasts.
~ However, unlike their foreign counterparts, Chinese banks are less optimistic. They see the petering out of the stimulus provisions and the likelihood of less credit on offer in 2010, as not auguring well for future growth.
Original Article: [Chinese]

Survival of the Fittest in China's New Media Landscape
Nation, page 10
~ The General Administration of Press and Publications (GAPP) released "Guidelines on the Further Reform of the Press and Publication System" back in April this year. This week, EO asked Fang Weiping of GAPP's Industry Development Division about progress in restructuring the sector.
~ Fang revealed that although the press and publishing industries have been able to grow in a time of global recession, he also pointed to a lack of competition and poor management in some areas.
~ Fang also argued that Chinese culture's global influence is still limited and that overseas business development was needed to change this.
Original Article: [Chinese]

New Opportunities for Central Provinces
Nation, page 11
~ In late September, China's State Council approved a development program that aims to provide support to six of China's centrally-located provinces.
~ The program aims to help the provinces to further exploit their comparative advantages to boost the country's economic growth.
~ The program also incorporates an earlier plan called the "Central Plain City Amalgamation centering on Zhengzhou", proposed by Henan province in 2003.
Original Article: [Chinese]

Water Pollution in Yancheng - What's Changed
Nation, page 13
~ After a high-profile water contamination case that effected Yancheng's drinking water supply in February, the coastal city in the north of Jiangsu province has since removed more than 30 chemical plants from the catchment area that supplies the city's drinking water.
~ The drinking water contamination case, along with other similar incidents, is viewed as a side-effect of Yancheng's 20-year policy of luring chemical factories from its southern neighbours.
~ The Yancheng government has said that the auto industry, textile sector and power equipment will now replace the chemical industry.
Original Article: [Chinese]

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