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Issue Wrap, No. 529, Jul 25, 2011

Highlights from this week’s newspaper:

SASAC Wants Control of All State Assets Within 5 Years

News, page 2
~ The State-owned Assets Supervision and Administration Commission of the State Council, or SASAC, has set itself the target of taking full control of all state-owned assets within the next five years. Currently, it controls 74% of such assets, with the remainder under the control of other government authorities.
~ In Hunan and Hubei Provinces, the local branches of SASAC have already been taking control of more assets, such as water and electricity utilities that had previously been under the supervision of the various departments of government. 
~ Huang Shuhe, a SASAC official, argues that centralized management and wide supervision is good for the allocation of resources.
Original article: [Chinese]


Government May Need to Pay More to Induce Farmers to Sell Grain 
News, page 3
~ This summer, China’s grain market has been extremely quiet. Ten state-owned grain enterprises have purchased 10.4 million tons of wheat in 2011, less than half of the amount bought last year, according to data from the State Administration of Grain that covers the period up to July 5. 
~ The enterprises are cautious because of the shortage of credit and some companies in the sector have instead preferred to run down their grain reserves. 
~ Farmers are also reluctant to sell their wheat. The price at which the government is prepared to buy wheat has increased only slightly from 2010, whereas farmers have had to cope with droughts and frost as well as much higher prices for seed and fertilizer. 
~ Most local agricultural officials argue that the government should pay farmers more for their wheat. The government is now considering this. 
~ This summer’s dramatic fall in wheat purchases has also alarmed both the National Development and Reform Commission and the State Administration of Grain. 
~ However, some people also warn that if the minimum purchasing price is increased, then it will lead to higher inflation. 
Original article: [Chinese]



Drug Companies’ Low Prices Alarm Regulators
News, page 4 
~ Some of the pharmaceuticals makers who won government tenders to sell basic drugs at subsidized prices did so by bidding at exceptionally low prices. This has alarmed industry regulators. 
~ The State Food and Drug Administration intends to conduct a quality check on basic medicines whose prices are inexplicably low, particularly those drugs that are on sale for less that their cost price. 
~ “Our cost price is close to two yuan for an injection, while a drug company in Guizhou (a province in southwest China) put in a bid which would sell for only 1.2 yuan,” said one drug company employee. 
~ Bidding with such low prices has two consequences: some contracted companies failed to supply the drugs, claiming that the price of raw materials had increased. They did produce the medication, but cut many corners. 
~ In one example described to the EO, Sichuan Shuzhong Pharmaceutical Co., Ltd (四川蜀中制药) substituted apple skins for plant roots in making the Chinese herbal remedy, Banlangen (板蓝根), which is used to treat colds. 
Original article: [Chinese]



Problems with Quality Plague Resettlement Housing
Nation, Page 10
~ On July 20, workers began demolishing a newly-built apartment block in Zhengzhou that was to house people who had been relocated due to the demolition of their homes. The 300 apartments in the “Grand View Jiayuan” residential compound on Changjiang Road in Zhengzhou (郑州) were being knocked down due to their poor quality.
~ The sub-par construction of the apartments was blamed on the poor quality of the bricks used in their construction, which were made and supplied by Xinzheng City (新郑市) Hongji (宏基) Wall Building Materials Co., Ltd, one of the four vendors contracted to supply bricks to Zhengzhou’s resettlement housing project.
~ This is not the first time that problems with Hongji’s bricks have been revealed. In April, Xinzheng authorities fined the company for similar problems. However, problems persisted and the company has now been ordered to halt production.
~ Another resettlement project in Zhengzhou that was built to re-house the villagers of Xiaogangliu village (小岗刘村) has also run into problems. The apartment block was skewed, villagers dubbed it the “twisted house” and refused to move in.
~ An insider from local real estate industry said, replacement housing is different from commercial housing in that developers are already aware of who their final customers will be. Also, due to government restrictions on investment and lack of competition among developers, such projects are given lower priority and completed in a haphazard manner. 
~ Many cases involving problems with the quality of government-led construction have emerged recently. This raises questions about the huge plan to construct millions of government-subsidized housing apartments which is currently being carried out. 
~ From August, the Ministry of Housing and Urban Rural Development will carry out an inspection of the quality and safety of building construction which will focus on affordable housing projects.
Original article: [Chinese




Suspicious Consumers Steer Clear of Quick-Grow Fruit and Vegetables 
Nation, page 10
~ Fruit and vegetable sales have suffered as consumers fret about the chemical used by farmers to ripen their produce. Ethephon – the chemical in question – is harmless according to many scientists, but the government hasn’t given any assurances.
~ Chen Wei, a peasant in Anhui Province, says that ethephon is cheap and that if he applies it to unripe tomatoes he can still sell them the next day.
~ Ren Dapeng, the director of Legal Research Center of Rural and Agriculture in China Agricultural University (中国农业大学农业与农村法制研究中心), says that many farmers don’t understand the chemicals that they apply to their crops and rely on advice from government departments that aren’t up to the job.
~ Jiang Shiyan, who sells agricultural chemicals in Jiangsu Province, says that there are many regulatory loopholes and too many different departments with similar responsibilities.
Original article: [Chinese]


Source: Flickr user Bigtearice under creative commons

Guangzhou Accused of Favoring Taxi Companies over Passengers and Drivers 

Nation, page 12
~ After recent increases in the price of petrol, the government in the southern city of Guangzhou last week held a meeting about changes to taxi fares.
~ The city’s Price Control Administration published two proposals: raising the minimum fare to nine yuan and adding a 30% service fee for trips between 10 pm and 6 am or increasing the minimum fare to 10 yuan.
~ Both proposals benefit the companies that employ the taxi drivers rather than the drivers or their passengers, said Han Zhipeng, a member of the National Committee of the CPPCC, who was prevented from speaking at a Guangzhou government hearing on the proposals.
~ In 2006, Guangzhou Municipal Committee reformed the taxi industry, introducing a labor contract system, under which taxi companies buy the cars and taxi drivers each month pay 9,800 yuan to 1,060 yuan for the use of a taxi.
~ The contract system was designed to make it easier for the government to regulate the industry, but the companies don’t pay the drivers or provide them with social security. Instead, they care the drivers an array of fees, such as a mandatory maintenance fee of 600 yuan to 1000 yuan.
Original article: [Chinese]


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