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Issue Wrap: No. 523, June 13, 2011

Highlights from the EO print edition, No. 523, June 13, 2011

 Sichuan City Is First To Restructure Financing Platforms

News, cover

~The city of Suining, in central Sichuan province, is one of the many under-developed areas in China’s west. At the beginning of June, several municipal departments in Suining, such as the Finance Bureau, State-owned Assets Supervision and Administration Commission, National Development and Reform Administration and China Banking Regulatory Commission, became frantic trying to correct the failings of the financing platform companies. The rectification was the first of its kind in China. 

~As in many other cities, a number of financing platform companies have sprung up in the past few years as urban construction and investment boomed. As the State Council begins to restructure tens of thousands of financing platform companies around China, their destiny remains unknown.

Original article: Chinese

Editorial - The Perils of Neglecting China’s Graduates

News, cover

~University students can’t find satisfactory jobs on a job market that is crying out for factory workers.

Original article: Chinese

Cracks and Leaks in Newly-Built Welfare Housing

News, page 3 

~According to authoritative sources, construction began on 3.2 million welfare apartments before the end of the May 2011. That represents a third of the total amount, but it’s not the quantity but the quality that turns out to be the real issue.

~Large-scale seepage and cracking problems have emerged in the finished projects due to poor quality building materials and shoddy workmanship.

~One of the developers revealed that many of these problems are due to multi-layer subcontracting.

   ~The first round of strict nationwide quantity inspection on the apartments is about to kick off. 

   ~Self-inspections will be carried out in provinces such as Hubei and Jiangsu from July 2011. Part of which will be aiming at uncovering false statistics on the construction projects.

Original article: Chinese

 Shanxi’s Coal Reform – The Progress After 3 Years 

News, page 4, 

   ~By the end of 2010, after three years of Shaanxi’s reinvestment program, as much as 770 billion yuan has been withdrawn from more than 1 trillion yuan of hot money that was circulating in Shanxi's coal mining industry.

   ~Around 350 billion went into local industries including agriculture, tourism, education, manufacturing, high-tech, culture, wine and medicine.

   ~Part of the funds weren’t accounted for, and the remaining 400 billion was once again pumped into coal-mining operations in Inner Mongolia and Xinjiang and other investment projects in the southern such as Shenzhen and Hong Kong. 

   ~Shanxi government officials have indicated that they are confident of ensuring that the capital is invested for the province's own benefit.

Original article: Chinese

Volatile Cotton Prices 

News, page 6 

~Textile manufacturers and cotton farmers were taken by surprise when cotton prices tumbled 20% to 24,000 yuan a ton drop from the abnormally high 31,000 yuan per ton seen in March.

  ~The volatility is linked to the scarcity of orders that textile makers have received. This led to a drop in the demand for cotton, which resulted in cuts in cotton production. It also encouraged cotton growers to stockpile large quantities of the raw material.

   ~The farmers, particularly those with stockpiles, have suffered from the sudden price fall. The businesses involved in the cotton production and processing are also operating at a loss. The unpredictability of prices has forced them to halt production.

~The government’s newly-introduced cotton price protection policy with the minimum purchase price of 19,800 yuan a ton is still considered relatively low given the subsidies for other sections in the agriculture industry. 

Original article: Chinese

 University Students Earning Less than Laborers,

 Special section pages 9 to 13 

 ~The employment rate and monthly salary for new graduates rose during the 2009 and 2010 recruitment seasons, according to a research report, conducted by consulting firm MyCOS. However the gap between expected starting salaries and actual starting salaries is still considerable. 

   ~An experienced courier may earn 5,000 to 8,000 yuan per month while the starting salary for a college graduate who has gone through a total of 16 years of study might be less than 2,000 yuan.

  ~The development of higher education has been out of line with changes in the economy and the quality of higher education is declining. 

  ~The phenomenon of manual workers earning more than graduates might also explain the high dropout rate among young school children, which is especially significant for those pupils from poorer families or those in rural areas. 

    Original article: Chinese

 China Concepts Stocks – a Backlash 

Market, page 20 

~US-listed China Concept Stocks are facing an unprecedented crisis: plunging share prices, no prospects for switching exchange, no success in raising capital. A spate of accounting frauds has started a trend of bashing the "Chinese Concept" on the US stock market.

   ~Many Chinese companies have since been stuck in a dilemma, but some agent firms will always be able to sense the best opportunities. They have even started to persuade companies with good records to get delisted from the US stock market and move to other capital markets to raise funds. 

~The strategies from these agent firms for delisting are very similar. The firms usually provide funds to buy out retail shareholders on the OTC Bulletin Board and then move on to another markets for a new public offering. Most of these agents are foreign firms and are able to provide huge amounts of foreign currency for the tender offer. The only disadvantage is that they are not as familiar with the Chinese companies as their Chinese counterparts. 

   ~One executive of AMEX expressed his concern over the delisting frenzy and commented that he doesn't think it's fair to tar all the Chinese Concept Stocks with the same brush. 

Original article: Chinese

Electric Car Project in Jeopardy. 

Automobile, page 33 

~The electric bicycle sector hasn’t been the only one to suffer since the government put an emergency stop on the use of lead-acid batteries - the low-speed electric vehicle sector, which is still in its infancy stage, has also been severely hit. 

~Many of these companies are based in Shandong province and have already been forced to shut down due to the short supply of batteries. Numerous small-sized private low-speed electric vehicle producers will be wiped out and only around 50 of them will be able to survive from the tighter supply chain.

~Several severe cases of lead poisoning have recently been exposed in different parts of China. This has prompted the National Environmental Protection Department to supervise all production of lead-acid batteries. Any enterprise that violates these regulations will be closed down.

~Low prices have been the main advantage for these private enterprises without experience making automobiles. Low-speed electric vehicles have been on sale for as little as 20,000 yuan, making the use of lead-acid batteries unavoidable. 

~Now that a higher standard has been set, the electric vehicle manufactures that can’t incorporate improved technology will be wiped out. 

~Supervisory departments for the automobile industry are drawing up technological standards for low-speed electric vehicles and considering launching pilot projects in certain areas. One such project will be based in Shandong province and key manufacturers are being invited to participate. 

 Original article: Chinese

Compiled by Li Meng

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