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Issue Wrap: No. 522, June 6, 2011

Highlights from the EO print edition, No. 522, June 6, 2011

Tencent’s E-Commerce Empire

News, cover

~A grand strategy is gradually emerging after Tencent’s acquisition of a number of e-commerce businesses and a reshuffle of senior executives.

~On May 30, Tencent restructured its e-commerce division. Since the beginning of this year, Tencent has been buying shares in a series of online businesses with amazing speed, including Okaybuy.com, Icson.com and Ftuan.com as well as many others that haven’t been announced. A source close to Tencent said that the holding’s primary goal is to have an investment in each category of e-commerce.

Original article: [Chinese]

What happens when the real estate bubble and local debts problems combine? 

News, page 2

~The central government will use a stress test devised by an authoritative research institute in order to assess the risk posed by local government debt. The institute has also made one proposal for dealing with the debts: intervention by the central government. 

~One source told the Economic Observer that work has begun on sorting out local financing platforms.

~Some real estate agents are already clear about the coming stress tests. One said, “if the central government decides that it’s safe to unburden local governments off their local debts, then the whole land market and the real estate market will change dramatically. Everybody knows that the problem of regulating the real estate market lies in the close relationship between real estate and local finance. If this relation weakens, the central government will strengthen control measures and that will definitely lead to a decrease in housing prices.”

Original article: [Chinese]

Economic Slowdown Isn’t A Cause For Concern

News, page 7
~ Energy shortages, rising prices for consumer goods and droughts in southern China suggest that China’s economic conditions are approaching chaos, and the publication of main economic indicators for May has raised concerns that the economy may suffer a hard landing. Upcoming consumer price index data may also show that inflation accelerated in the short run.

~ Decision makers in China are now seeking equilibrium: sustaining economic growth while controlling the inflation.

~However, most Chinese analysts believe that it’s healthy for the economy to slow down and that the government is right to persist with policies to prevent the economy from overheating. The good news is that inflationary pressures are expected to relent in the second half of the year.

Original article: [Chinese]

Can a Dam Save Poyang Lake?

Nation, page 9
~A prolonged drought, on a scale rarely seen in Chinese history, is drying out the country’s largest fresh water lake, Poyang Lake. Nearly two thirds of the water has evaporated and the middle of the lake has become grassland and the outlet into the Yangtze river is now a sandbank.

~As a result of the drought, Jiangxi Province is now reconsidering the construction of a key water control project that was suspended for fear that it might damage the natural environment. By building a 2.8-kilometer dam, the project was designed to prevent water flowing from the lake into the Yangtze, thus alleviating water shortages. If the project is resumed, it will be a driving force for electricity, shipping and tourism in Jiangxi province. 

~In fact, the drought is believed to be a result of the Three Gorges Dam, and some experts believe that building another dam would aggravate the area’s ecological problems. 

~The project has been in preliminary planning phase for more than 2 years since Jiangxi Provincial Water Resources Department issued its first draft plan in September 2008. Experts working on the project are now looking for a win-win plan that is benefits both the Yangtze and Poyang Lake.

Original article: [Chinese]



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