Commentary from This Week's Paper

By EO Editorial Board
Published: 2010-12-03

People's Railway Once Again Fails to Stand up on Behalf of the People
By Gao Chujian
Economic Observer Online
~The Ministry of Railways has written out a rule that, while passengers with tickets for regular trains will have their tickets nullified if they are late for the train, passengers with tickets for electric multiple unit (EMU) trains, or bullet trains, will have a chance to take the next train if they are late, triggering severe public suspicion.
~Many people consider the new rule to be a type of "discrimination". People are being treated differently based on first the speed of their trains and essentially the prices of their tickets.
~But more concerns have been raised about why the Ministry of Railways has decided to issue such a policy, a policy which imposes punishment on passengers when they are unable to catch their trains, but does not address the issue of providing compensation for passengers whose train arrives behind schedule.
Original article: [Chinese]

Does Law Exist?
By Yang Tao
Economic Observer Online
~On October 20, a 26 year old waitress was hit by a car and then stabbed to death by the driver.
~The driver was a young man, a college student. The reason he killed the young waitress is that he was afraid she would be able to identify him since she had seen his face.
~This incident indicates that China is still far from its goal of "constructing a society ruled by law". The young man killed the young woman to avoid being extorted. He dared to do this because, in today's China, it is still possible for people to avoid punishment as long as their wrong doings remain unexposed.
~People have no faith in the law, police abuse the law, judges and the wealthy act above the law; thus it's natural for a college student to ignore law's existence.
Original article:[Chinese]


Price Restrictions are Not a Useful Tool to Curb Inflation
By Chen Jibing
Comment, page 16
~The Chinese government has recently set reining in inflation as its top priority. But it needs to keep in mind that administrative measures are not effective ways for it to reach its goal.
~For example, currently, the central government and its local subsidiaries are all planning to impose price restrictions on certain commodities such as cooking oil. This means, on the one hand, they will have to spend large amounts of money in tackling illegal market operation and hoarding; on the other hand, this policy is sure to fail in a time of globalization.
~Additionally, based on experience, the more restrictions governments impose, the higher the prices of commodities will be.
~Instead of imposing restrictions, the Chinese government should lift the ban for private enterprises to enter industries dominated or even monopolized by state-owned enterprises, such as oil, energy and healthcare.
Original article: [Chinese]

Through WikiLeaks, We see the "Weakness" of American Government
Wu Yue Sanren
Economic Observer Online
~China has a saying commonly applied to the US: imperialism is a paper tiger. Judging from the events of the past week, the American government is not only a paper tiger, but a weak one.
~The website WikiLeaks released more than 250,000 cables from American embassies all over the world. The cables are rife with so-called "state secrets" and unflattering gossip about foreign leaders.
~After Wikileaks hit the press, Secretary of State Hilary Clinton ran around calling every embassy in the world to reassure them that America meant no harm, really, and that WikiLeaks is not an accurate representation of American foreign policy.
~We laughed and laughed, and once we stopped laughing, we wondered: "Is the US government really this powerless?"  If this happened here, the culprit would have been quietly led away and taken care of long before he had state secrets to divulge.
~Americans believe that the integrity of the government must be safeguarded by the press. The idea is that if the government is entirely transparent, then the people cannot be tricked. 
~Coverage of government activity, good or bad, fair or malicious, all serve to monitor government activity.
~The US government is vulnerable, because its people are powerful. In countries with a "weak," transparent government, the social fabric is strong and the standard of living is high. In countries where the government does whatever it wants, average people suffer. This is what WikiLeaks shows us. 
Original article: [Chinese]

Foreign Investment Companies Are Not Worried About Standardized Taxes
By Xi Si, a commentator with EO
Economic Observer Online
~After several years of work, China finally implemented a standard national tax for that applies to both foreign and domestic companies. From now on, no more special treatment for foreign investment when it comes to taxes.
~Foreign investment companies have been rather muted in their response to the tax; the change was expected.
~Their complaints are not about tax incentives.
~The companies are concerned about operating in a fair competitive environment. They want to be able to compete fairly with domestic companies but cannot do so with restrictions and limitations.
~As long as the government maintains a fair and consistent policy environment for all companies, the complaints will address themselves. 
Original article: [Chinese]

Putting a Stop to Giving Foreign Capital in China the "Supranational Treatment"
By Yi Peng
Economic Observer Online
~China will levy two additional taxes (urban maintenance and education tax) on foreign capital, which is a sign of the ending of supranational treatment in China's tax system; taxation is now unified for internal and external enterprises.
~Initially supranational treatment played a big part in attracting FDI. Because China's economy is developing quickly, China already has a fairly mature and steady investment environment. Even without supranational treatment, China is still a large potential market for FDI.
~Not only that, but this policy will help to provide a fair and level playing field for enterprises at home and abroad and create a fair competitive environment.
Original article: [Chinese]

Faking it? What's Behind the Fines for Sinopec and PetroChina
By Jiang Lei, a journalist with the EO's Corporation Department
Comment, page 16
~ In order to deal with the recent outbreak of diesel shortages across the country, the National Development and Reform Commission (NDRC) handed down fines and other punishments to eight oil companies for violating pricing regulations. The list of companies that were reprimanded also included three companies that are subsidaries of the two domestic oil giants - Sinopec and PetroChina.
~ For huge companies like Sinopec and PetroChina, a fine of less than a million yuan is not a big deal, but to the private enterprises, the fines, some of which are close to ten million yuan, could break them. The more private enterprises suffer, the safer the position of the traditional dominant players who compete with .
~ The fact is that the fundamental cause of the diesel shortage is that a duopoly exists in the domestic oil industry - the method of linking planned production to market forces is flawed so that there is a dislocation that prevents price signals from influencing supply. Becaue of this, an imbalance between supply and demand emerged.
~ Problems with the design of the NDRC's refined oil pricing system also exacerbated the problem as speculators were able to continue to hoard and profit off price variations.
~ Regulators do not dare to deal with the industry duopoly or problems with the existing refined oil pricing mechanism. Instead, feeling that they had to do something, they went after that part of the industry that isn't protected by existing policies - the private oil companies and local refiniries.
~ Instead of examining the weaknesses with the current system they simply go after the weakest players.
~ Will this kind of regulation put people at ease? Who will regulate these regulators?
Original article: [Chinese]

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