Issue Wrap No. 458, March 1

By English Edition Staff
Published: 2010-03-01

Highlights from the EO print edition, issue no. 458, March 1, 2010



China's Budget Deficit to Exceed 1 Trillion Yuan in 2010
News, page 4
~ The EO learned that according to the draft fiscal budget for 2010, the Ministry of Finance (MoF) has set a fiscal revenue growth target rate of 8 percent for the coming year. This is the same as the growth target that they set for 2009.
~ In detail, the ministry envisages the central government collecting 7.4 trillion yuan in fiscal revenue while spending 8.45 trillion yuan over the coming year, meaning the country's budget deficit will exceed 1 trillion yuan in 2010.
~ However, the draft budget still requires the approval of the upcoming National People's Congress.
~ In 2010, the central government once again plans to issue another 200 billion yuan of treasury bonds on behalf of local governments to support the financing of local government projects.
Original article: [Chinese]

CIC No. 2 Receives State Council Approval
News, page 5
~ Guoxin Asset Management Company, also known as "CIC No. 2", has been given permission by the State Council to assume a capital assets management role for centrally-owned companies, providing an extra vehicle by which the State-owned Asset Supervision and Administration Commission (SASAC) can reduce the number of central-owned enterprises from the current 128 to their stated goal of between 80 and 100 companies.
~ Unlike the Central Huijin Investment Co. Ltd, which is focused on managing the financial assets, Guoxin will mainly manage the industrial assets.
~ So far, it's not clear who will head the new asset management company and the value of the assets that will be turned over to it to manage.
~ However, it is expected that smaller, less-competitive enterprises might be put under Guoxin's management. The firm may also gain control of non-key assets of various state-owned enterprises.
Original article: [Chinese]



China Preparing to Allow RMB to Strengthen Against US Dollar?
News, page 7
~ The EO learned that several ministries and commissions have begun research into the possible impact of any Renminbi appreciation on labor-intensive industries as well as the electromechanical and processing trade.
~ The news has been confirmed by Ministry of Commerce, Ministry of Industry and Information Technology, China's Chamber of Commerce for Import and Export of Machinery and Electric Products and the China National Textile and Apparel Council.
~ An inside source revealed that an evaluation report has all but been completed and will be released soon.
~ The above source also revealed there were indeed had signs of a slight loosening of rigid controls on the Remnimbi exchange rate, but given it could impact on many other economic areas, especially unemployment, the government was unlikely to make any rash decisions.
Original article: [Chinese

 


Special Feature: Risky Hainan
Nation, page 9
~ After Hainan's official announced a plan to promote itself as an "international tourism island" received approval from the State Council, local property prices soared. Figures now show that investment in real estate accounted for 40% of fixed-asset investment in urban areas and that housing prices were breaking new records each day.
~ Though Hainan intends to attract more overseas tourists by offering free transport by boat, zero tariffs, and cancelling the need to get a visa, most of the big-spending tourists visiting the island are still Chinese.
~ Hainan spent 14 years recovering from the bursting of it's last property bubble in 1993 which was created when over 50 billion yuan flowed into speculation on the island's property market. Given that 470 billion yuan of investment has been put into the property market, who knows how long it will take the island tourist island to recover when this current bubble bursts.
Original Article: [Chinese]

Ping An Group's Acquisition of Shenzhen Development Bank Approved
Market, page 20
~ Sun Jianyi, vice president of Ping An Insurance (Group) Company of China, revealed to employees on Feb 20 that the group's application to acquire Shenzhen Development Bank had already received approval from the State Council.
~ As a listed company on the Shenzhen stock exchange, Shenzhen Development Bank is likely to first exit the exchange and then be incorporated into the Ping An Bank, a subsidiary of Pian An Group.
Original Article: [Chinese]



Special Feature: Preview of China's "Two Sessions"

Special Feature, page 33
~ As China's Two Sessions - an annual meeting of the full body of both the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC), begin this week, the Economic Observer has produced this special report on the main issues to be discussed at the meeting ans how they will influence and direct China's future.
~ The feature includes interviews with politicians, educators, local officials as well as ordinary people, seeking clues to the direction China will take over the next decade.
Original Article: [Chinese]


We Implore Them to Speed Up Reform of the Hukou System
News, cover
~ On the eve of the annual meeting of the Chinese People's Political Consultative Conference and the National People's Congress, which begin on March 3 and and 5 respectively, the Economic Observer has published an editorial in collaboration with twelve other Chinese media outlets to call for a complete reform of the country's household registration system.
~ China's household registration system involves each individual being assigned a hukou, which places barriers on their ability to migrate to different parts of the country and also determines the level of social welfare that they have access to, depending on where in the country they are officially registered.
~The system has long been criticized for being an obstacle to the furthering of the process of urbanization as well as being a source of corruption and social inequality.
~ To eliminate the current household registration system, China needs to do more to improve its social security system and provide equal access to employment opportunities and education for people from diverse backgrounds and from different regions.
~ The common editorial argues that reforming the household registration system will not only promote social equality in China, but will also benefit the country's economic development by restructuring the way China allocates its resources.
Original article: [Chinese
 


Introducing EO's Book Review
New Monthly Supplement
~ After a break of 3-4 years, the EO relaunches a monthly supplementary publication called EO's Book Review, or 书评增刊 in Chinese, which has been inserted into the pages of this week's newspaper.
~ The cover story of this month's edition is devoted to Janos Kornai, an economist noted for his analysis and criticism of the planned economies of Eastern Europe's former communist states.
~ The EO invited Xu Chenggang, a University of Hong Kong professor to introduce Kornai's career and achievement.