No 420, May 25

By English Edition Staff
Published: 2009-05-25

Highlights from the Economic Observer print edition, issue no.420, May 25, 2009

China's Local Level Stimulus Plan Faces Delivery Problems
Cover story
>> China's National Audit Office said some stimulus funding for the local level was stuck in the pipeline, delaying local projects.
>> Local governments under pressure to raise capital for stimulus projects, as local treasury coffer shrunk from contracted tax revenues.
>> Treasury bonds issuance by local governments reached 111.8 billion yuan by late May, concerns over debts repayment capacity.  
Original article: [Chinese]

China to Resume IPO in June Under New Rules
News, page 3
>> After some eight months of halting new listing of initial public offering (IPO) of shares, the Chinese government will resume the process after June 5 under new rules.
>> The new rules aim to fix shortcomings through a more market-oriented share pricing mechanism, and allow all investors access to both off-line and on-line share subscription systems.  
>> Previously, IPO prices were set way too low and they surged on the very first day of issuance, disadvantaging retail investors.
Original article: [Chinese]

China's Strategy in Facing Dollar Depreciation
News, page 4
>> China has recently relaxed rules for Chinese companies to invest abroad, market observers deemed that as a move to cut dependency on US debts as a major reserve through diversification of direct investment channels.
>> Analysts believed the move would also pave the way for accelerating the globalization process of the Chinese currency.
Original article: [Chinese]

Water Price Hike Across China
News, page 5
>> In the last two months, major cities across China - including Shanghai, Tianjin, Shenyang, Guangzhou, and Nanjing – have been preparing to raise water charges to reflect the scarcity of the resources.
>> The price hike proposals have met with criticisms from the public and scholars, mainly over the monopoly status of water companies.
Original article: [Chinese]

Nose-diving of FDI Utilized and Contractual Values
News, page 6
>> China's official statistics revealed that April foreign direct investment (FDI) actual utilize value dropped 22.5%; meanwhile, the FDI contractual value for the first four months plunged between 30% to 40%.
>> The EO learned that the Ministry of Commerce had drafted a report suggesting ways to stabilize FDI to the State Council.
Original article: [Chinese]

China's Preparation to Gain More Say in IMF
News, page 8
>> China plans to raise its funding contribution to the International Monetary Fund (IMF) to gain more weigh in its voting rights.
>> At present, China's contribution to the world body constituted 3.72% of all the members' funding, ranked six after the US (17.09%), Japan (6.13%), Germany (5.99%), England (4.94%) and France (4.94%).
Original article: [Chinese]

Investigating Hunan's Viaduct Collapse
Nation, page 10
>> On May 17, a viaduct in Zhuzhou, Hunan province, collapsed, killing nine and injuring 16. Following the incident, nine people were arrested and three officials removed.
>>The 15-year-old bridge had collapsed ahead of a scheduled demolition, raising question over its engineering quality. In addition, the contractor who won the tender to perform the demolition job was found to be unqualified.
Original article: [Chinese]

Hot Money Floods Greater China Region
Market, page 19
>> MainlandChina, Hong Kong and Taiwan stock exchanges have been rallying in the past weeks, partly due to the inflow of hot money.
>> Market observers believed the surge was partly due to market expectation that China would lead in global economic recovery, and the improved straits relations.
Original article: [Chinese]

Huijin To Take over CCB Securities Arm
Market, page 23
>> Central Huijin - the investment arm of China's central bank and a subsidiary of China's sovereign wealth fund China Investment Corporation (CIC) - will take over a securities subsidiary from China Construction Bank (CCB).
>> The subsidiary is China Jianyin Securities; industry players speculated that it might adopt a new role -- handling oversea acquisitions for CIC.
Original article: [Chinese]

China's Largest Solar Plant Concession Bidding "Stuck"
Corporation, page 25
>> Two months have passed since the concession bidding closed, but the winner for running China's largest grid-connected solar power plant - located in the Dunhuang desert, Gansu province - has yet to be announced.
>> The delay could be due to an unrealistically low tariff rate proposed by the "winner". The EO learned that China's top economic planner - National Development and Reform Commission - was withholding the bidding result; fearing an undercutting competition would jeopardize the future of the industry.
>> Of the 13 bids considered, the highest proposed tariff was 1.9208 yuan per watt while the lowest was 0.69 yuan per watt, a joint bid by SDIC Huajing Power and the NYSE-listed Yingli Green Energy; the next lowest bid was priced at 1.0928 yuan per watt. Experts estimated that the feasible price range should be at least 1.2 yuan per watt.
Original article: [Chinese]

Corporate Bonds: The Answer for Real Estate Developers?
Industry, page 37
>> More and more Chinese real estate developers are seeking corporate bond issuance to overcome funding shortage.
>> But companies with state-backed credential often have the advantage in getting approval from relevant authorities as opposed to private firms, especially the small and medium sized ones.
Original article: [Chinese]

The Passing of a Grassroots Photographer

Observer, page 47
>> Zhao Tielin, known for his black-and-white photo essay series concerning the lowest strata of the Chinese society, died from lung disease on May 16, 2009, aged 61.
>> Zhao was a businessman turned photographer. In 1994, after his two companies folded, Zhao went to live in a ghetto in Hainan, making photos at 10 yuan per piece in the neighborhood, which made up of mostly prostitutes and migrant workers.
>> He has published a few books with photo essays and writing depicting the lives of these people.
Original article: [Chinese]