Highlights from the EO print edition, No. 618, May 6, 2013

Shanghai Seeks Young Cadres
News, page 1
~ Over the past two months, the municipal committee of China's Communist Party in Shanghai has conducted a study of young cadres working in the city. Research groups were sent to the various counties, state-owned enterprises, universities and other institutions in order to draw up a database of over 2,000 up-and-coming division-level cadres. The database will serve as a talent pool"to be drawn on in staffing future party and government vacancies in the city.
~ Young officials need to have met two basic standards in order to be included in the new database: They should be born after 1970 and have worked at a division-level position for more than two years. A report containing the findings is set to be released in mid-May.
~ Over the next five years, more than half of the 1,900 bureau-level officials working in Shanghai are set to retire. "It is no exaggeration to say that if the Shanghai government doesn't take some extraordinary steps to select cadres, there will be a shortage of qualified people to take up government postings," an unnamed person familiar with the project told the EO.
~ This individual pointed out that the 2006 "pension scandal" had many far-reaching repercussions for the city and one of the effects was that the cadre selection process became much more conservative.
~ New city leaders have now vowed to reform the system for promoting cadres and public servants.
Original article: [Chinese]

Government Weeds Out Freeloaders
News, page 3
~ The State Commission Office for Public Sector Reform (SCOPSR) announced last August that a nationwide campaign to clean up and regulate "public institutions" or (事业单位) had been completed, but the results have still not been released.
~ The campaign was aimed at streamlining public institutions by combining, downsizing and even eliminating certain offices in order to reduce government waste.
~ Many of the institutions being eliminated aren't funded by the government. Employees from these work units will be moved to government funded institutions after their offices are eliminated, so the reform has actually increased the financial burden for local governments rather than reduced it.
~ The number of officials working for public institutions throughout the country is enormous. In Beijing alone there are over 500,000 employees of these quasi-government institutions. Among them, many are bureau-level or division-level officials. What to do with officials from institutions that are being done away with is the most difficult problem of the reform.
~ Experts from China National School of Administration told the EO that the most crucial factor of the streamlining process isn't eliminating institutions, but figuring out how many freeloaders (吃空饷) there are.
~ Freeloaders refer to people who get salaries without going to work. For example, in 2012 journalists from the EO's former investigative reporting unit reported that a businesswoman called Wang Hui (王辉) continued to receive a government salary for 15 years after she left a county civil affairs bureau in Shanxi in 1992.
~ In 2005, SCOPSR launched a nationwide campaign to weed out other such "employees" who remained on the government's books. In just seven provinces, 70,000 individuals were found to be receiving payments despite no longer working for a public institution. It's estimated that anywhere between 350 million to 1.4 billion yuan a year is spent on paying these non-existent workers.
Original article: [Chinese]

Shenzhen's New School Admissions Scheme Gives Home Owners Priority over Locals
Nation, page 14  
~ After establishing a pilot project in Longgang District last year, Shenzhen this year expanded the trial of a new "points system" that determines which students get priority for limited places at public schools citywide.
~ The Shenzhen Education Bureau introduced the pilot in March this year asking education departments in different districts to draw up a detailed system of standards that can be used to determine which children gain access to public schools in Shenzhen.
~ However, the policy set by one central district, which has the best and the largest number of public schools, triggered huge controversy because it gave too much priority to those owning real estate in the city and too little to those with a local hukou (household registration).
~ Supporters said that the policy reduces the importance of hukou, which represents the direction of  reforms in the future. But opponents argued that the policy lets local government avoid responsibility for providing compulsory education for locals.
~ According to the Primary School Application Guide for Luohu District in 2013, applicants are divided into five categories (A, B, C, D and E) in accordance with their hukou and home ownership status. The more points a family has, the better their child's admission chances are. People who own property in Shenzhen but don't have a local hukou are level C with 80 points, but those who have a local hukou but no property are designated level D with a score of only 70 points.
~ Many people with a local hukou but no property have expressed dissatisfaction with the new policy. On the other hand, some of those without local hukou are also against the policy saying that they can't afford a house in Shenzhen.
Original article: [Chinese]

Quarterly Survey of Economists: Resources and Real Estate to Recover First
News, page 4-6
~ Each quarter the EO surveys close to 100 eminent economists from investment banks, research institutes and government departments on their take on how China's economy is traveling. Below we outline the results of our survey of their forecasts for the second quarter of 2013.
~ Most economists said that GDP growth in the first quarter was lower than expected due to lower-than-expected levels of investment.
~ In terms of concerns about what might influence growth in 2013, those who replied to the survey said they were worried that the momentum of the "real economy" might not be enough to propel the economy forward and they were also concerned about obstacles to the domestic economic development model.
~ Just shy of half the 73 economists surveyed believe that economic growth will come in at between 7.7 and 8 percent in the second quarter. Another 35 percent think it will be in the 7.5 to 7.7 percent range.
~ Sixty-six percent of the surveyed economists expect the CPI to remain below 3 percent over the period from April to June, with another 34 percent predicting that inflation will fall somewhere between 3 and 4 percent.
~ 60 percent of surveyed economists expect exports to grow by between 6-8 percent in the second quarter.
~ 80 percent believe that investment growth will remain stable over the quarter, rising by around 20 percent year-on-year.
~ Another 75 percent believe that retail sales growth will expand by less than 15 percent over the quarter.
~ 62 percent of those surveyed say monetary policy will remain stable over the second quarter. Close to three quarters of the economists surveyed also predicted that housing prices would continue their upward momentum, increasing by a small amount over the 3 months to July.  
~ As for stocks, 58 percent of economists say Shanghai's A-share index will hover between 2,100-2,300 points, while another 31 percent a more pessimistic, forecasting that the index will fall to between 2,000 and 2,100 points.
Original article: [Chinese]

Xi'an's Novel Solution to Air Pollution
Nation, page 12
~ Xi'an, a former imperial capital and also one of the country's most polluted cities, is planning to utilize the power of the wind to help reduce smog levels.
~ As part of a comprehensive plan to address air pollution, city planners say they will plant trees in such a way as to funnel natural wind flows through the city. The plan has already been submitted to the municipal government for approval.
~ "The dominant wind directions in Xi'an are a northeasterly wind and a southwesterly wind," said Hui Xilu (惠西鲁), director of Xi'an City Planning Bureau. "We are going to take advantage of the natural airflow, including northeasterly wind, southwesterly wind and winds coming off the Qin Mountain caused by temperature difference between day and night."
~ Emissions from vehicles and the burning of coal along with dust are seen as the main cause of Xi'an's air pollution. Like Beijing, the city's geography is also said to exacerbate the problem, as Xi'an is located in a natural basin which means that pollution will often settle on the city. These factors have been aggravated by the expansion of the city over recent years.
~ Aside from strategic tree planting, the new plan also calls for an increase in the number of parks and surface water in the city, the promotion of public transport, encouraging more people to install central heating systems and the use of renewable energy.
~ In terms of land problems and heritage protection, Xi'an plans to take advantage of existing ecological and historical conditions to build several green channels from the outskirts to the central city.
~ City planners say there is no way of estimating just how effective the new plan will be and have not attached any specific goals in terms of air quality data to the plan.
Original article: [Chinese]

Baosteel Branching Out into IT
Corporation, page 27
~ "These past three years have been the best time in the e-commerce field," He Wenbo (何文波) chairman of Baosteel, told the Economic Observer at the company's annual shareholder meeting.  
~ He said that Baosteel, China's largest steel producer, has been involved in the e-commerce field for ten years. But compared to steel production, the company's investment in e-commerce isn't very large. He hopes that in the future, 20-30 percent of the company's profit will come from e-commerce.  
~ Baosteel intends to use its industry advantage to build an "Alibaba for the industrial sector." At the end of 2011, Baosteel became the first industrial company to receive a third-party payment license in order to establish "Eastern Pay" (东方付通).
~ According to Mr. He, Baosteel is seeking a new development pattern. Steel is still the primary focus, but the company is also branching out with its Baosight IT business and an e-commerce platform for the Shanghai steel trading market.
~ Baosteel holds a 55.5 percent stake in Baosight, which mainly provides software development, engineering design and other IT information services in the industrial field.
~ This June, Baosteel and a company under the Shanghai Baoshan district government will also jointly launch the "Shanghai Steel Trading Center." Baosteel will hold 90 percent of the shares. This will become the focus of Baosteel's efforts to develop e-commerce.
Original article: [Chinese]