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Issue 566 23-04-2012
Summary:Investigation of Chongqing projects could involve Shide subsidary, second quarter crucial to centrally-administered SOE and controversy surrounds return of Shanxi official.

Highlights from the EO print edition, No. 566, Apr 23, 2012

Investigation of Chongqing Projects Could Involve Shide Subsidary
News, cover
~ The Chongqing government began investigating the financing of build-transfer (BT) projects that were underway in the city at the end of March. BT projects refer to those invested in and built by enterprises and then acquired by the government.
~ The EO learned that the Chongqing Shenghe Construction Co. Ltd (重庆盛和建设有限公司) might be one of the companies that is being audited as part of the investigation. The company was awarded a 159 million yuan construction project in the city's northern Beibei District (北碚区) in 2009.
~ Chongqing Shenghe was once registered as a subsidary of Gaodeng International (Hong Kong) Investment Company (高登国际(香港)投资有限公司), which is an important offshore financing platform of Shide Group. Gaodeng planned to invest a total of 80 million dollars in Chongqing Shenghe.
~ However, before Chongqing Shenhe had even finished the process of registering as a business, it had already been awarded a contract by the local office of the National Development and Reform Commission. On July, 29, 2009 the project was approved by the Beibei Development and Reform Commission and on July 30 it was approved by the Beibei Foreign Trade and Economic Relations Commission.
~ Ownership of Chongqing Shenghe was transferred from Gaodeng to Ample Benefit Limited on December 10, 2011.
~ Sources in Chongqing also told the EO that the ongoing investigation into the BT projects has also increased the risks associated with the debt commitments of local state-owned enterprises.
Original article: [Chinese]

Executive Director from Vale Responds to Last Week's EO Story
News, page 2
~ The EO was contacted by Vale after we published "Ships Blocked from Chinese Ports" last week.
~ Among other things, Vale’s Executive Director José Carlos Martins wanted to clarify a recent quote on the ships’capacity that he said had been misinterpreted by Chinese media.
~ The company exports around 200 million tons of iron to Asia every year, and that would justify more than 100 of the Valemax vessels, which can each make 4 round trips a year and have a capacity of 450,000 tons  
~ Ten Valemaxes have so far been put into operation and Martins said that Vale is only planning to use 35 such ships, of which 16 will be chartered from international ship owners rather owned by the mining company.
~ Therefore, Martins said, Vale can’t be accussed of seeking a monopoly, either for iron ore or for logistics.
~ Martins said that 24 of the 35 Valemax ships are being built in China: 16 by Rongsheng Shipyard, 4 by Bohai Huludao Shipyard and 4 by STX Dalian Shipyard, with total related investments in China approaching US$3 billion.
~ Vale also claimed that Valemax ships can reduce carbon emissions  per ton of cargo by 35%.
~ Vale’s executive wrote that the intervention by China’s Ministry of Transportation was “unusual for a government ministry” because “in most countries the individual ports make such decisions,” and said it was  “strange” that “450,000 ton tankers are considered ok to berth but ore carriers of 400,000 ton are being restricted”.
Original article: [Chinese]

Land Ministry Sees Risk of Abandoned Projects
News, page 4
~ The Ministry of Land and Resources is concerned about the total area of land that is currently categorized as being "under construction" in China – almost 480,000 hectares.
~ Ministry officials kept repeating the terms "effective housing supply" during an April 17 videoconference for provincial and sub-provincial staff.
~ Despite the huge decline in government revenue from the sale of land leases, the ministry said there's enough land under construction and that the priority should be the completion of these projects.
~ At the end of 2011, 150,400 homes were under construction covering over an area of 479,900 hectares. That is four times the average annual supply between 2008 and 2010.
~ "We should continue to tighten short-term political control over investment," said Qin Hong, a director for policy research at the Ministry of Housing and Urban-Rural Development.
~ Developers have slowed down investment and postponed projects. The ministry has made development and completion its primary task of 2012 in order to prevent uncompleted projects becoming idle.
Original article: [Chinese]


SASAC Seeks to Combine Grain and Logistics Corporation with COFCO
News, page 5
~ A person close to the State-owned Assets Supervision and Administration Commission (SASAC) told the EO that the commission wants to merge China Grain and Logistics Corporation either with China National Cereals, Oils and Foodstuffs Corporation (COFCO) or with China Grain Reserves Corporation before the end of the year.
~ The person said a merger with COFCO was more likely.
~ The Grain and Logistics Corporation has been operating at a loss since it was set up in 2006, whereas COFCO’s finances are strong and, unlike the Grain Reserves Corporation, it could easily finance the deal out of its own funds.
Original article: [Chinese]

Second Quarter Crucial to Centrally-administered SOE
News, page 7
~ Centrally-administered state-owned enterprises (COEs) continued to see profits fall in the first quarter.
~ Across all state-owned enterprises, revenue grew by 13 percent, but profits fell 9.1 percent from the same period in 2011, with the 118 COEs under SASAC suffering a 13 percent decline.
~ Analysts said the lower profits were due to the macroeconomic situation and also the swift uptick in costs for SOEs, which, on average, increased by almost 15 percent over the first three months of the year.
Original article: [Chinese]

Controversy Surrounds Return of Shanxi Official
Nation, Page 12
~ The recent appointment of Wang Hui (王辉), former chairwoman of the Shanxi Xue’en Group (山西雪恩集团), to the position of deputy head of Wenshui County (文水县) in the central-western province of Shanxi, has stirred controversy in the area. ~ "She was very quite controversial, as she never went to the office, but was still promoted to a leadership position when she returned!” one person who knows Wang told the EO.
~ Journalists from the EO's new investigative reporting unit found that Wang continued to receive a government salary for 15 years after she left the county civil affairs bureau in 1992. Three heads of the bureau - Xi Shibiao, He Linrui and Chen Yueming - all confirmed that Wang continued to receive her salary for 15 years.
~ In 2005, Wang purchased a tractor factory with her husband and launched her business career by turning it into a real estate development.
~ In 2010, Wang was also voted to the position of vice president of the county CPPCC. Locals told the EO that members had been told to vote for Wang and that it was a "political task given to the county CPPCC from leaders in the city." Wang Zhigang (王志刚), the president of the local CPPCC, also confirmed this and revealed the details of how they persuaded members to vote for Wang in a meeting.
~ Wang responded in her interview with the EO on April 18 that "I was lucky, because there were no female and non-party members in the county party committee and the county government and I could fill the vacancies."
~ The Shanxi Xue’en Group signed a contract with the Wenshui government in 2006 for the "Cangerhui Eco-cultural Tourism Economic Zone" (苍儿会生态文化旅游经济区) in 2006. 
~ The EO’s journalist also learned that the company also runs a golf course, which hasn’t been approved by relevant department. 
Original article: [Chinese]

Wuhan Invites Public to Apply for Counselor Positions
Nation, page 13
~ The city of Wuhan has chosen to open up the appointment of "counselors" to ordinary citizens. Thirty-four candidates signed up to take part in the new scheme when the announcement was made on April 16.
~ The decision marks the first such change in China, though Wuhan’s government has tried not to make too much noise about the reforms.
~ In the past, according to regulations introduced in 2007, potential counselors needed to be recommended by government leaders, departments, social organizations or individuals, they were then confirmed and passed through a final check. Most of the counselors were retired leaders, heads of enterprises, experts or scholars.
~ According to the new rules, anyone can sign up so long as they are "familiar with Wuhan, care about the city's development and … are willing to devote themselves to public affairs."
~ The selection process now consists of two rounds that includes applicants writing a 3,000-word essay in which they outline their qualifications, goals and also motivation to join. The applicants will be judged by an expert panel made up of current counselors, members of the media and citizen representatives.
~ Most of the current counselors aren't in touch with the everyday concerns of ordinary people, said professor Li Guang (李光) from Wuhan University. Many of the current position holders also don’t have much time to devote to the role since they often hold other positions at big enterprises.
~ Wuhan’s mayor Tang Liangzhi (唐良志) conceived the changes after listening to citizen representatives’ suggestions last year.
Original article: [Chinese]

New Party Head Appointed for Shanghai Stock Exchange
Market, page 17
~ On April 12, Gui Minjie (桂敏杰),the former vice chairman of China Securities Regulatory Commission, was appointed as party secretary of the Shanghai Stock Exchange.
~ Many people in the industry think that reform of the Shanghai Stock Exchange is likely to be initiated following the personnel change.
~ A person who works at the Shanghai Stock Exchange told the EO that "Some people suggested that the stock exchanges and the broader securities regulatory system should be separated ... although the securities regulator will devolve power to the stock exchanges, these two parties will still continue to have a close relationship ... ".
Original article: [Chinese]


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