Highlights from the EO print edition, Issue No. 474, June 21, 2010

Johnson & Johnson Involved in High-level State Food and Drug Administration Official Corruption Case
Cover
~ An official from the Central Commission for Discipline Inspection of the Communist Party of China (CPC) confirmed on June 13 that Zhang Jingli, vice director of the State Food and Drug Administration (SFDA), is currently under investigation for suspicion of violating party regulations and laws.
~ Sources from the SFDA, health departments and medicine circles revealed to the EO that Zhang's case came to the light during the course of a Central Commission for Discipline Inspection of CPC investigation into 6 officials accused of accepting bribes from various pharmaceutical companies, including two Chinese-registered subsidiaries of global pharmaceutical giant Johnson & Johnson - Shanghai Johnson & Johnson Pharmaceuticals Ltd 上海强生制药有限公司 and Johnson & Johnson Medical (Suzhou) Ltd. (强生（苏州）医疗器材有限公司).
~ Zhang is the highest official at the SFDA to be investigated for corruption following the sentencing and subsequent execution of Zheng Xiaoyu, former head of the SFDA, on corruption charges in 2007.
Original article: [Chinese]

Shape of Income Distribution Reform Begins to Emerge
News, Page 4
~ More details of how the Chinese government intends to proceed with the huge task of evening out income distribution within China emerged at a yet another meeting devoted to the topic of income distribution organized by the National Development and Reform Commission and attended by officials from the Ministry of Finance, academics and members of the China Democratic League on June 13.
~ The NDRC has organized numerous meetings on the topic since April, inviting officials from the State Council Research Office, the Ministry of Finance, the Ministry of Human Resources and Social Security, the Ministry of Civil Affairs and other departments and ministries.
~ At the June 13 meeting, The Director of the China Society of Economic Reform, Song Xiaowu, recommended that the central government require centrally-owned enterprises (COE) to pay a greater percentage of their profits to the central government, allowing the transfer of more revenue to local governments in undeveloped areas.
~ Currently, COEs are required to pay only five percent of their annual profit to the central government. Meanwhile, restricted by their limited revenue, local governments are unable and unwilling to improve the social security system for ordinary citizens, especially rural residents.
~ Without an effective social security system, many are forced to save more than they otherwise would, which limits aggregate consumption thus contributing the biggest obstacle to a shift in the structure of the Chinese economic development model.
~ Others at the meeting also recommended establishing a collective wage bargaining mechanism as an effective way to raise the salaries of ordinary employees of enterprises.
~ Though income distribution is a shared goal, it will be a gradual process, according to an unnamed official with the National Development and Reform Commission.
Original article: [Chinese]

Ministry of Agriculture to Crack Down on Unlicensed Trade in GM Seeds
News, Page 5
~ China's Ministry of Agriculture will issue an announcement in the following two months that will mark the beginning of a crack down on the sale and planting of unlicensed genetically-modified (GM) seeds.
~ According to the current regulations, before any GM seeds have been tested by the government and issued with a permit, GM seeds are banned from commercial trade and can only be used in experimental plots.
~ Recently, farmers in Hunan and Hubei provinces were found to have planted GM rice seeds.
~ The Ministry of Agriculture found that the GM seeds it seized from farmers in Hunan and Hubei were registered in the name of non-GM products by the companies that produced them in order to skirt the regulations.
~ The EO learned that the seed companies found guilty of violating the laws and regulations related to trade in GM seeds, will be restricted from conducting experiments for two to three years and, in serious cases, have their licenses revoked.
Original article: [Chinese]

Slow Down of Growth in Power Consumption Indicates Potential for Double Dip
News, page 7
~ As the the annual growth rates of both power generation and power consumption slowed in May, compared to the annual rate for April, some analysts are concerned that China's economy might experience a second slow down or a "double dip" as it has become known.
~ Statistics released by the National Bureau of Statistics show that the country produced 340.5 billion kilowatt-hours of electricity in May 2010, up 16 and 19% on the amount produced during the same period of 2008 and 2009 respectively. However, these growth rates are both two percentage points lower than those of the April figure.
~ Another indicator of the potential for a second dip is that the Purchasing Managers' Index (PMI) has decreased from 55.7% in April to 53.9% in May.
Original article: [Chinese]

Deaths Plague Attempt at "Harmonious Demolition" in Changsha
Nation, page 9-10
~ It's been almost one year since the Changsha municipal government introduced a new policy aimed at making the process of demolishing and the relocation of urban residents more harmonious in July last year.
~ In this regulation, the government replaced the phrase housing demolition with the word "expropriation", which seemed to be more acceptable to local residents. In addition, the government, in place of property developers, was put in charge of the housing expropriation work.
~ However, four deaths occurred in the city during the housing expropriation in May.
~ These deaths include the suicide of Huang Jianhua, a resident of one of Changsha slums who complained that he had not been awarded fair compensation from the government.
Another case involved the death a 70-year-old man named Yin Xianchun, who collapsed after a quarrel with the people responsible for the housing demolition.
Original article: [Chinese]

Government Bonds to Replace Bank Loans as Backbone of Local Financing
Market, page 19
~ On June 18, the central government issued the first batch of local bonds on behalf of a few provincial governments. The bond sale raised 43.8 billion yuan on behalf of the local governments.
~ The central government intends to use the money raised through bond sales to meet the capital demands of local governments, replacing bank loans, which have served as the dominant channel of local financing in previous years.
~ However, for a smooth issuance of local bonds, a complete rating system as well as a proper issuance platform is needed. In addition, the central government also needs to provide access for big foreign investors.
Original article: [Chinese]

Breaking China's Oil Monopoly
Corporation, page 25
~ Zhenhua Oil Company, which is under the control of the State-owned China North Industries Group Corporation, was recently granted a license to independently import crude oil.
~ The oil company becomes only the third domestic enterprise given permission to import crude oil - the other two are the country's two oil giants Sinopec and PetroChina.
~ According said Qi Fang, chairman of Hebei Chamber of Commerce for Petroleum Industry, other centrally-controlled state-owned enterprises, also known as centrally-owned enterprises or COE, are challenging the monopoly that the two oil giants have on the import of crude oil and and oil refining.
Original article: [Chinese]

List of Subsidized Energy-Efficient Cars to be Published at End of Month
Automobile, page 33
~ To promote the use of energy-efficient cars, the Ministry of Finance recently announced it will provide subsidies to consumers of electric and hybrid cars.
~ This has pushed auto manufacturers to work hard to have their products covered by the policy.
~ The first list of which cars qualify for the subsidies will be publicized at the end of this month and the second list will be made public as early as the mid-July.
~ Though the government has already made it clear that all cars that have an engine capacity below 1.6 liters and fuel consumption 20% less than the current standard, will be covered by the policy, it is still possible that auto manufacturers whose cars do not qualify may still be able to take advantage of certain loop holes and have their cars included on the list.
Original article: [Chinese]