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Issue 617 29-04-2013
Summary:Local Governments Feeling the Pressure, Reforms to Land and Hukou System Part of New Urbanization Plan and SOE Called on to Prop Up Economic Growth

Highlights from the EO print edition, No. 617, Apr 29, 2013

Local Governments Feeling the Pressure
News, page 1
~ Mr Liu, the head of a local finance bureau in a city in Northern China, is very worried about the fact that the pace at which fisical revenue is growing in his city is starting to slow just as the pace at which spending increases continues to rise.
~ This year, land transfer revenue in his city has declined by 8 billion yuan. Mr. Liu is considering putting in a request to the central Ministry of Finance for more central government funds.
~ Mr Liu is not alone, the heads of many local finance bureaux around the country face similar problems.
~ Although most local governments saw overall revenue increase in the first quarter of 2013, the rate of growth has declined. The pace at which local government fiscal revenue increased was 4.6 percentage points less over the same period last year.
~ Data obtained by the EO reveals that tax revenue in Shanxi (山西) province decreased by 3.5 percent year-on-year in the first three months of the year,
~ A finance offical from northeast China told the EO that local governments would need to find other ways of raising money if spending on education, pensions and medical care continued to increase. One of these other methods is by selling bonds.
~ The EO learned from a source close to Ministry of Finance that if fisical revenue growth does not strengthen in the future, the central government may increase the amount of bonds it issues on behalf of local governments.
Original article: [Chinese]

Green Light for Shanghai's New Free Trade Zone
News, page 1
~ Shanghai Comprehensive Bonded Zone could soon become a free trade zone, with approval coming as early as June.
~ Deng Fusheng (邓福胜), Director of the Shanghai Municipal Commission of Commerce, confirmed with the Economic Observer on Apr 18 that Shanghai is working with the relevant state ministries to formulate a plan to establish a free trade zone in Shanghai. The plan will specify the policies and measures related to foreign exchange, service trade liberalization, regional facilitation and other areas.
~ The draft rules and regulations are still awaiting the State Council's final approval.
~ Shanghai Comprehensive Bonded Zone inculdes Yangshan Free Trade Port Area, Shanghai Waigaoqiao Free Trade Zone and Shanghai Pudong Airport Comprehensive Bonded Zone, covering an area of 28 square kilometers.
~ "Looking from the current development, these 28 square kilometers are the basic framework of a future Shanghai free trade zone," an official from the administrative committee of Shanghai Comprehensive Bonded Area told the EO.
~ It's not only trade-related industries that will benefit from the free trade zone, the shipping and finance sectors are also likely to get a boost.
Original article: [Chinese]

Reforms to Land and Hukou System Part of New Urbanization Plan
News, page 2
~ A detailed plan that lays out the goals of China's new urbanization push is currently being drafted by central government planners from various ministries.
~ A draft set of quality control indicators have already been agreed upon that will require reform of the Hukou system, the land management system, the tax system and administrative controls. Central government planners also aim to quicken the push to remove barriers in the way of the "healthy development" of urbanization.
~ The new plan will lay out detailed goals in relation to land use, renewable energy, transportation and pollution.
~ In terms of reforms to the Hukou (household registration) system, officials will pursue a policy of completely removing restrictions that limit access to welfare, housing, education and medical care for non-residents in small cities and towns, they will gradually remove restrictions in an orderly way in medium- and small-sized cities, but they will still strictly control access to services in large and very large cities.  
~ Planners will first focus on solving problems in relation to allowing migrant workers from the countryside and their families to settle in urban areas. After they've dealt with that policy challenge, then they will turn to the task of gradually establishing a universal resident permit system.
~ In terms of land reform, firm controls will be placed on land that has been zoned for construction or development, linking the amount of land made available to such purposes to the number of rural residents that are moving to the cities. Rural residents will also be given greater leeway to sub-lease and contract out land.
Original article: [Chinese]

Central SOE Called on to Prop Up Economic Growth
News, page 3
~ The State-owned Assets Supervision and Administration Commission (SASAC) set a target for the 115 state-owned enterprises (SOE) that operate under its remit earlier this week. The central government agency told these large state-owned firms that they should aim to lift annual profits by 10 percent in 2013. In this way, some of China's largest companies are being told to step up and form a team that can help prop up aggreagte economic growth over the coming year.
~ The 10 percent target is not going to be easy for these companies to meet. In 2012, profits at the SOE grew by 2.7 percent year-on-year. In addition, the amount that this large state-owned companies paid in tax increased by 12.8 percent last year.
~ In order to help these companies meet this ambitious target, SASAC might announce various policies and measures to help the centrally-administered SOEs.
Original article: [Chinese]

Special Feature: From Wenchuan to Ya'an
Nation, page 9-13
~ This week's Nation section includes a special feature on the Ya'an Earthquake.
~ The paper sent four journalists to the disaster zone to report on the earthquake.
~ Some of the journalists also covered the huge earthquake that struck Wenchuan in 2008 for the paper and they noted some of the differences between the two disasters.
~ The speed and quality of the response of both officials and civil society has greatly improved since the earlier quake.
Original article: [Chinese]

Special Feature: Shanghai Auto Show
Auto, page 33-40
~ This week's Auto section includes a feature on the Shangahai Auto Show which includes interviews with participating industry leaders.
~ Editors from the Auto section also look at the trends that will shape China's car industry over the coming year.
Original article: [Chinese]

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