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Issue 572 04-06-2012
Summary:Beijingers Get it Easy in Exams, Local Government Bonds About to Mature and Labor Shortages Prompt Changes to Education Policy in Fujian

Highlights from the EO print edition, No. 572, Jun 4, 2012

Beijingers Get it Easy in Exams
News, cover
~ This week, final year students across China will sit the national college entrance exam, or gaokao. After the rate of university enrolments rose to 75 percent of all gaokao candidates in 2012, the focus has now shifted from "more students at university" to "more students at prestigious universities."
~ According to a study of "University Admissions and Constitutional Fairness" conducted by Professor Zhang Qianfan, a law professor at Peking University, his own university, which is one of the most prestigious in the country, takes 100 times more students from the capital than it does from Guangdong and Anhui provinces. While at Fudan, the best known university in Shanghai, there are 274 students from Shanghai for every student from Shandong, even though the coastal province boasts a population that is four times as large.
~ The admissions process involves the local government, the ministry of education and universities. According to Qu Xiangfei, an associate researcher from the international law institute at the Chinese Academy of Social Sciences, local governments want to have more universities that are directly under the control of the central government. The ministry thinks these universities play an important role in promoting the local economy, and therefore help the ministry in its dealings with local governments. The system also suits the universities who can satisfy both the local government and the ministry.
~ In the National Medium and Long-term Educational Reform and Development Project Summary from 2020, the government said it would "strengthen information openness and social supervision on opening the university quota distribution principles and methods." However, in practice, the way the quotas are set still isn’t transparent.
~ Peking University’s Professor Zhang also believes that local protectionism and the uneven distribution of universities between provinces are the main reasons for unbalanced admissions quotas – for example, of the country’s top 39, eight are in Beijing and four are in Shanghai, but there are none in 13 provinces, including Hebei and Henan.
~ Scholars have suggested many ways to tackle this problem, such as holding a national unified examination which would make it easier to compare the scores of candidates from different provinces, who currently sit different papers. They have also suggested canceling household registration limits and distributing quotas according to the size of each province's population.
Original article: [Chinese]

Who will Pay for Baosteel's Extra Steel?
News, cover
~ The 69.68 billion yuan Baosteel project in Zhanjiang (湛江) that was last week approved by the National Development Reform Commission will be financed roughly half and half from the company's internal capital and bank loans.  
~ The steel plant, which will have an annual capacity of 10 million tons, was first considered 34 years ago. Baosteel general manager He Wenbo (何文波), has said that Guangdong province might also make an investment in the project.
~ It will be challenging for Baosteel since total domestic production capacity is already 900 million tons and last year's consumption was only 700 million tons.
Original article: [Chinese]

Local Government Bonds Worth 200 Billion Yuan to Mature By August
News, page 3
~ Local government bonds worth 107.8 billion yuan matured at the end of May, according to data from the finance ministry, and a further 92 billion must be repaid or refinanced by the end of August.
~ The EO learned that some provinces had hoped to extend the repayment period by two to three years, but that this request was rejected by the Ministry of Finance.
~ Instead, most provinces have chosen to issue new bonds in order to repay old ones. This "has always been a common practice for government bonds. As long as they can be rolled over, there’s nothing wrong with it," said Liu Shangxi (刘尚希), vice director of a research institutes under the Ministry of Finance.
~ Some provinces also said they might borrow from banks in order to redeem their local government bonds.
Original article: [Chinese]

Labor Shortages Prompt Changes to Education Policy in Fujian
Nation, page 10
~ Fujian's Ministry of Education announced that it was introducing a new policy in relation to non-local students sitting the university entrance exam (gaokao) at a press conference on May 28th. According to the new rules, students who aren't registered locally according to China's nationwide household registration or hukou system, but have completed 3 years of high school in Fujian, will be eligible to sit the gaokao in Fujian from 2014. In the past, students who were registered elsewhere had to return to their place of registration to sit the exam. Fujian is also likely to become the first province in China to allow students from elsewhere to sit the university entrance exam.
~ The new policy has been prompted by recent changes in both the education and labor markets in Fujian. According to official data, from 2011 to 2012, Fujian accepted 678,000 students who are the children of migrant workers to receive basic education in the province, 419,000 of these students are from other provinces. Meanwhile, the number of local students in Fujian who have been registering to take part in the annual Gaokao has been declining every year since 2009. This decline has mirrored the decline in the provincial birth rate. Local higher education institutions are also starting to have problems in recruiting enough students.
~ In addition, government policies aimed at supporting economic development in central and western China have created more job opportunities for people living in these areas. Salaries for skilled workers in these regions have been reported to come close to those being paid in coastal provinces like Fujian and Guangdong. Due to these changes, Fujian has been suffering from labor shortages in recent years.
~ Liu Jianjin (刘剑津), deputy secretary of the Fujian Education Commission told the Economic Observer on May 28 that "the policy will help with the conflicts between rural and urban areas, and is good for social justice. It can also promote the quality of education in Fujian and attract more migrant workers to Fujian."
~ Liu Weixiong (刘辉雄) from the Fujian Provincial Education Examination Authority (福建省教育考试院), said Fujian needs more skilled workers in order to realize its goal of industrial upgrading.
~ Fujian started down the road of education reform in 2008 and since then has made steady progress. In 2008, the children of migrant workers were formally brought into the provincial public education system. Schools accepting migrant children were subsidized to the tune of 40 million yuan in 2008, that figure rose to 110 million yuan in 2009 and 260 million yuan in 2011. Special classes with different textbooks for students from different regions were also initiated, in an attempt to make it easier for students to go back to their hometown to take the gaokao. Each province uses its own textbook and syllabus and designs a unique exam for its students. In 2011, Fujian started allowing students registered in different districts within Fujian province to take the university entrance exam in the region where they were studying.
~ The new policy has also raised some concerns, especially in relation to the need to balance the needs of local students with the goal of making the system fairer to students from elsewhere. Some are worried that the quality of education may deteriorate and that the children of migrants may flood in and use up the limited educational resources. According to announcement from the education ministry, the new policy won't have a big influence on local students in Fujian.
Original article: [Chinese]

Electing the Head of a Trade Union in Shenzhen
Nation, page 11
~ Recently OHMS Electronics (Shenzhen) Co., Ltd. (欧姆电子(深圳)有限公司) has made a name for itself as the first company with a directly-elected trade union leader. In contrast with the situation in most companies where the trade union is controlled by management, the election of trade union representatives in OHMS was conducted according to the Trade Union Law. On May 27, 75 representatives elected by all the members of the trade union, chose 11 trade union council members from a total of 14 candidates and also elected a president from a choice of three candidates.
~ However the EO’s journalist was told by the Shenzhen Federation of Trade Unions (深圳总工会) that they don't endorse the use of the term "direct election," that's been used by the media. According to Bi Yufei (毕宇飞), head of the publicity department of the federation, the voting procedures that Shenzhen is now promoting that allow members of some trade unions to nominate and elect union leaders, should instead be referred to as "normalized democratic elections."
~ The head of the publicity department also told the EO that Zhao Shaobo (赵绍波), the newly-elected president of OHMS union, would not be available for an interview as interviews this would disturb his work. This is despite the fact that when the EO contacted Zhao earlier, he told the journalist that "I can’t agree to an interview independently. However, if the federation agrees, I won't refuse either." A source from a related government department in Shenzhen revealed that the city government feel under pressure due to the widespread use of the sensitive term "direct election" and therefore city leaders had ordered officials to make sure that the "normalized democratic elections" were handled in a low-key fashion.
~ Apart from the Japanese-owned OHMS, Shenzhen Hai Liang Storage Device (深圳海量存储设备), a subsidiary of Hitachi Global as well as Coca Cola Shenzhen have embarked on the election of union leaders this year, under the guidance of the Federation of Trade Unions. One source told the EO that the new approach to union elections was being introduced at the suggestion of Wang Yang (汪洋), the provincial party secretary of Guangdong, with the aim of strengthening the trade unions.
~ However, the reforms are also thought to be connected with the serious conflicts between employees and employers in Shenzhen in recent years. Early this year in March, there was a serious strike at OHMS when about 700 workers took part in a sit-in which was aimed at convincing the company to provide better welfare to employees. At Hailaing Storage Device, more than 2,000 workers participated in a strike last December, complaining about their shrinking social security payments.
~ Guo Wanda (郭万达), the vice president of China Development Institute (综合开发研究院), thinks the direct election of the trade union leaders is "very important" given the current situation. He thinks the reason why there are so many conflicts between employees and employers is because the current trade union system is defective. Guo says he didn’t understand why worldly foreign enterprises pay less attention to the trade unions when they come to China. He also pointed out that "the key is how to make sure the elected-president will truly stand for the employees after the election."
Original article: [Chinese]

Banks Using Real Estate Trusts to Circumvent Restrictions
Market, page 17
~ One of the principal aims of the restrictions on the real estate sector has been to restrict the flow of credit to real estate developers, but banks are still channeling capital into the industry through other routes - the EO has learned that several real estate trusts received a large proportion of their capital from the banks.
~ Real estate trusts control more than 600 billion yuan, but people within the industry estimate that almost 1 trillion yuan has flowed into the sector since the controls were introduced in 2010.
~ One person working in the industry said that this money has helped real estate developers through "the most difficult" days and that, like a cat with nine lives, some of those firms have been able to evade bankruptcy thanks to the provision of extra capital.
~ Much of the 1 trillion yuan has been raised from customers buying financial products at banks. The president of one Beijing branch of a joint-stock bank told the EO that most of the customers buying these products are high-end customers with a large amount of capital.
Original article: [Chinese]

CNPC Opens Door to Private Investors
Corporation, Page 25
~ The China National Petroleum Corporation (CNPC), the government-owned parent company of PetroChina, has invited the National Social Securities Fund, the Urban Infrastructure Fund and Baosteel to invest in its new gas pipeline project that will transfer natural gas from western China to the eastern provinces. Since the Urban Infrastructure Fund is founded by the All-China Federation of Industry and Commerce which has private members, this move is being viewed as the first time that a state-owned monopolies, like CNPC, is opening up to private investors.
~ Given the participation of the National Social Securities Fund, which according to government fiat must be profitable, the above project is thought to carry little if any risk.
Original article: [Chinese]

Gree Electric Learns to Say No to SASAC
Corporation, Page 25
~ Shareholders of Gree Electric, China’s leading home appliance manufacturer, have just refused Zhou Shaoqiang, as a new member of their board of directors. Zhou is currently the deputy director of the State-owned Asset Supervision and Administration Commission (SASAC) of Zhuhai City.
~ It is rare for such a move to take place in China, as the Zhuhai SASAC is the controls Gree Electric’s parent company, Zhuhai Gree Corporation.
~ The Zhuhai branch of SASAC was used to having its way when it came to Gree Electric due to the fact that they own 100 percent of the Zhuhai Gree Corporation. However, as the parent company's stake in Gree Electric fell from 60 percent to the current 18 percent, its new shareholders, including foreign investors such as Morgan Stanley, UBS and others, are beginning to have a bigger say in what happens in the company.
Original article: [Chinese]

Couriers Shift to Online Retailing
Corporation, Page 28
~ As online retailers such as Buy360 and Vancl, are starting to establish their own courier companies, courier companies such as SF-Express, YT-Express and Shentong Express, are setting up their own online retailing platforms.
~ The SF-Express’s online retailing business is focusing on selling food imported from abroad. YT-Express also has a website selling agricultural products. Shentong Express will open its online retailing platform next month.
~ Though courier companies don’t need to worry about how to deliver their goods when doing online retailing, people are doubting the possibility of them succeeding because they lack the experience of doing business online.
Original article: [Chinese]


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