ENGLISH EDITION OF THE WEEKLY CHINESE NEWSPAPER, IN-DEPTH AND INDEPENDENT
site: HOME > > Economic > Digest > Newspaper
Issue 562 26-03-2012
Summary:Summary: Relaxing China's Capital Controls, Personnel Shake-Up at CSRC and China's PV Manufacturers Wary of German Tariffs


Highlights from the EO print edition, No. 562, Mar 26, 2012


China's "Two-way Relaxation" of Capital Controls
News, Cover
~ The EO has learned that a plan to establish a pilot scheme allowing individuals from Wenzhou to directly invest their funds abroad, which was brought to a halt a year ago, has once again been submitted to the State Council for approval.
~ Shanghai and Tianjin have also submitted requests to set up similar schemes. It's possible that the three cities might receive approval to push ahead with the pilot programs at the same time.
~ Last week, the China Securities Regulatory Commission (CSRC) asked for feedback from representatives from top international funds in relation to the country's plans to lift the quota of funds that they may be allowed to invest in China's domestic capital markets via the Qualified Foreign Institutional Investor (QFII) program.
~ Recently, the State Administration of Foreign Exchange (SAFE) also announced various policies related to the opening-up of the capital account in relation to funds of individuals, this has sent a signal that China is likely to further relax capital controls.
~ One aspect of the relaxation is to make it easier for Chinese investors to move their funds offshore and invest overseas through such pilot programs as the Qualified Foreign Limited Partner (QFLP) scheme. On the other side of the equation, regulators will allow more money to flow into the country by expanding the QFII program.
~ The most recent data reveals that SAFE has already given approved to 23 financial firms to invest a maximum of $2.91 billion in the first few months of 2012.
~ According to data released in May last year, SAFE has only allowed four overseas firms to invest a maximum of $400 million and gave three Qualified Domestic Institutional Investors (QDII)permission to invest a maximum of $1.585 billion abroad.
~ The approval of QFII quotas was a bit slow last year, to some extent, the opening for capital flows was being slowly tightened, said Zhao Qingming (赵庆明), an international financial expert.
~ In a change from last year's tendency of one-way flows, the opening of China's capital controls is now beginning to show signs of a two-way tendency. This has occured as China's economic fundamentals went from a situation where there was high inflation, hot money was flowing in and foreign exchange reserves were growing too fast to a position where inflation has now turned a corner, hot money is flowing in both directions and the growth in foreign reserves has slowed.
Original article: [Chinese]


Another Six Provinces Join Coal Mine Reform
News, page 6
~ Following the reform of the coal mining industry in Shanxi, Henan, Inner Mongolia and Shaanxi, six more provinces will embark on similar reforms of their coal industries over the course of the next four years.
~ Recently, Wu Yin (吴吟), the Deputy Director of the National Energy Administration (NEA) told the EO that the number of coal mining enterprises will be reduced from the current 8,000 to less than 4,000 by 2016, when the period covered by China's 12th Five-year plan concludes.
 ~ Wu also revealed that during the 12th Five-year period, Heilongjiang, Hunan, Sichuan, Guizhou, Chongqing and Yunnan will encourage more mergers and restructuring in their provincial coal sectors in order to reduce the total number of coal mining companies operating.
~ Wu also said, the next step in reforming the coal industry might take the "Henan model" as it's lead, though further improvements to the model will continue to be sought.
~ Between 2012 and 2015, large coal companies will be given priority when it comes to exploiting resources located in areas where large coal deposits are found.
Original article: [Chinese]

High-level Personnel Changes to Shake up CSRC
Market, page 17
~ China Securities and Regulation Commission (CSRC), the country's top securities regulator, will soon embark on a new round of high-level personnel changes. CSRC decided recently that officials above departmental-level who have been working in "powerful departments" for five successive years will be made to change seats with those employed in "less powerful departments."
~ A representative from the CSRC told the EO that the major personnel reshuffle inidicated an adjustment to the CSRC's thinking in relation to how it conducts supervision, in keeping with moves to push through major reforms of China's capital markets, which include a shake-up of IPO procedures and other institutional reforms.
~ A market analyst said that the "powerful departments" definitely referred to those that wield administrative examination and approval power.  
~ The CSRC has gradually been simplifying the number of procedures that require administrative approval over recent years.
~ The proposed changes to personnel are being seen as an attempt to break-up networks of influence that currently exist and are a sign that the "marketization" of China's capital market has entered a critical period.
~ Wu Lijun (吴利军), assistant to the Chairman of the CSRC, told a meeting related to human resources on Mar. 22 that China's six domestic exchanges, including the Shanghai Stock Exchange and the Shenzhen Stock Exchange, will soon recruit six deputy managers through a transparent public hiring procedure.
~ "There used to be only a few high-level positions open for public recruitment," a person close to CSRC told the EO, adding that it is of great significance for the regulator to open up high-level positions to applications from outside the system.
~ Staff at the CSRC have started referring to the period from the end of February to the end of March as the "Personnel Tempest Period". At the end of February, CSRC announced that it will hire more qualified individuals for mid- and high-level positions in the CSRC. In mid March, the regulator decided that all high-level officials will switch roles and by the end of March, the CSRC will recruit ten new officials at departmental and bureau level.
Original article: (Chinese)

On the Run: Bank President Fails to Return from Thailand
Market, page 19
~ Sun Feng (孙峰), president of a branch of the Agricultural Bank of China in the city of Jiangyin in Jiangsu province, went on a "trip" to Thailand on Dec 28, last year with his parents, wife and children, but never came back.
~ An illegal fund-raising case involving over 200 million yuan wasn't revealed until over two months later when a Singaporean named Wu Yidian (吴伊甸) who works for Standard and Chartered Bank, was detained by the Security Bureau of Wuxi city. Wu was detained on March 6, 2012 on suspicion of "protecting and harboring a criminal." It is highly probable that she helped Sun Feng, who held a Singaporean passport, flee abroad.
~ Sun Feng, who took about 200 million yuan in funds that had been "illegally raised", was one of Wu Yidian's clients in Shanghai. Sun worked in the financing industry in Jiang Yin for ten years and had established a reputation for being well-connected.
~ Sun was well prepared to flee with his wife, Xia Yaqin (夏亚琴), who suddenly quit her job in late December. Sun also mortgaged his apartment before fleeing.
~ "Most of the lenders trusted him because he was the president of the bank," said Zhou Wenjing (周文镜), the president appointed to replace Sun. Sun's financing had no particular projects, but he received money mainly on account of his reputation and connections. He agreed to pay over 20 percent in interest to lenders.
~ One of Sun's colleagues said that Sun had become passionate about futures trading in recent years but he suffered a huge loss in the second half of last year, making it impossible for him to pay back all the money. This may be the main reason for his disappearance.
~ Just a few days before Sun's disappearance, Tianhua Technology Company based in Jiangyin city declared bankruptcy. Tianhua's president Feng Sirong (冯肆荣) was arrested by Jiangyin police station for illegal fund-raising.
~ Zhao Jidi (赵积娣), party secretary of a village close to Jianyin's richest village, Huaxi village, was the biggest lender to both Sun and Feng, lending a total of 95 million yuan.
~ Locals told the EO that Zhao Jidi used about 80 million of public funds to lend to Sun and Feng. "She embezzled at least 50 million of public funds. She also raised money from others as a go-between," a local official told the EO.
Original article: [Chinese]

America Goes Easy on China's Solar Industry
Corporation, page 25
~ Chinese photovoltaic (PV) cell manufacturers have now a wary eye to Europe after the U.S. announced new tariffs last week.
~ News that Germany may soon file a complaint to the EU about subsidies for Chinese solar panel producers has left many Chinese manufacturers worried. The recent decision by the U.S. commerce department to impose tariffs on Chinese-made solar panels has manufacturers worried that they could serve as an example for other countries to emulate.
~ On March 20, the US Department of Commerce announced details of the "Preliminary Countervailing Duty Determination," according to which tariffs of between 2.9 percent and 4.73 percent were announced.
~ However, many Chinese PV companies expressed that the "tariffs were lower than what we had expected." Zhuang Yan (庄岩), the vice-president of Canadian Solar (阿特斯阳光电力) told the EO that "although the result is not reasonable, the impact on Chinese enterprises is not so great ... We will earn just 3.95 percent less, because the price of the PV modules are already higher in America than they are in Europe."
~ Zhuang considers the tariff as a "symbolic" slap on the hand for China.
~ Responding to the new tariffs, Chinese enterprises will also apply different measures. "According to the verdict, if the solar cells used in the PV modules are not produced in mainland China or the solar cells produced in China are less than 20mm thick, the anti-subsidy tariff won't be charged," says Zhang Hanbing (张含冰), chief director of the global market of Canadian Solar.
~ Zhang said many of their cells are purchased from Taiwan and also from JA Solar whose products are around 18mm thick.
~ Fang Peng (方朋), the CEO of JA Solar, told the EO that they will produce solar cells outside mainland China for export to the U.S. and will consider setting up factories in the U.S. in the future.
~ However, what really worries those operating in the Chinese solar industry is the potential influence of the American case on other countries, and thus they're saying that they have to fight hard to find an efficient solution to the American move in order to prevent future tariffs.
~ While the US market accounts for less than 15 percent of China's PV exports in 2011, Europe makes up around 57 percent, among which Germany is the biggest market. Around 70 to 80 percent of the solar modules used in Germany are from China. It's said that the German Solar Industry Association plan to appeal to the EU in late March to establish measures to deter the dumping of Chinese PV products. "The solar panel producers in China are able to sell their products into the European market at prices that are 30 percent lower than those offered by German producers, due to the support of their raw materials and finance." said Frank Asbeck, CEO of the second biggest solar energy enterprise in Germany.
~ On May 16, the U.S. Department of Commerce will announce the preliminary verdict in relation the anti-dumping tariffs, and in June, the final result of the anti-subsidy tariff will also be announced.
Original article: [Chinese]

Qujiang Cultural Tourism Group Implicated in Golf Course Probe Ahead of IPO
Corporation, page 29
~ The initial public offering of Xi'an Qujiang Cultural Tourism Group's Co. Ltd (西安曲江文化旅游集团有限公司) might be thrown off track by an inspection of its gold course. The course's largest shareholder, Xi'an Qujiang Cultural Industry Investment (Group) Co. Ltd. (西安曲江文化投资集团), is under investigation by the Ministry of Supervision for constructing a golf course illegally.
~ An undisclosed source told the EO that executives from Xi'an Cultural Tourism are also under investigation and the company's IPO may be affected. The EO was also told that the golf course project wasn't undertaken for businesses purposes and entailed a heavy risk of losses and violation of regulations.
~ The Links Golf Course project covers just over one square kilometer on the south bank of Weihe River (渭河). According to a Xi'an environmental protection body and a document from the National Development and Reform Commission (NDRC) of Xi'an, the project was examined and approved as a city sports park. Evidence seen by the EO shows that Qujiang investment group started the plan for the Golf course in the third quarter of 2009.
~ An anonymous source told the paper that "the project runs a high risk, as it might be flooded by the Weihe River. For such an investment, it's almost impossible to make profits as well."
~ The proposal for a golf course on Weihe River was made by an official in Xi'an, and, before Qujiang Cultural Investment Group took it up, the official approached  Xi'an Tourism Group (西安旅游集团) and Xi'an Economic and Technical Development Zone, which both thought the project was too difficult.
~ Although the project itself is flawed, Qujiang Cultural Investment Group had hoped that government would provide subsidies that they could spend on a real estate development. Their hopes, however, did not come to fruition. Local news outlets have written that, as "a company with a high sense of social responsibility,"  Xi'an Cultural Tourism undertakes projects that aren't market-orientated, but meet government objectives.
~ On March 23, the group told the EO that it's confident about its profitability and that its initial public offering won't be affected by the investigation into the golf course project.
Original article: [Chinese]

 

Related Stories

0 comments

Comments(The views posted belong to the commentator, not representative of the EO)

username: Quick log-in

EO Digital Products

Multimedia & Interactive