Issue Wrap No. 462, March 29

Highlights from the EO print edition, issue no. 462, March 29, 2010

COEs Required to Draw Up Timetable for Retreat from Real Estate Market
News, cover
~ At a meeting held on March 19, Li Rongrong, director of the State-owned Assets Supervision and Administration Commission (SASAC), announced that aside from the 16 centrally-owned enterprises (COE) whose main business is related to property development, the remaining 78 COEs who have invested in real estate will be required to work out a timetable for their exit from the market within 15 days.
~ That means that the companies have a deadline of April 9th, and that there are only ten days left for these 78 COEs to hammer out their exit strategy.
~ A source from the SASAC said "All we've done is announce the need for a timetable for COEs to exit the market, specific ideas on how to organize the withdrawal of these 78 COE from the market are still unclear."
~ Industry players interviewed by the EO said, given that commission had already stipulated that these 78 COE are permitted to complete any developments that are already under way, it's hard to understand how the new exit order will be implemented.
Original article: [Chinese]

Health Care Reform to Cut Spending on Medicine by 70 Billion Yuan
News, cover
~ As s major part of the country's health care reforms, the Ministry of Health is attempting to rein in the price of essential medicines by putting together a list of generic drugs that will be produced and distributed under the control and supervision of the government. The list will include 80 percent of the most-commonly prescribed medicines.
~ With the tendering process for the production of these essential medicines coming to a close, the average prices of the 307 generic drugs on the list has dropped by an average of somewhere between 25% and 50%. The government will also reimburse citizens covered by the national health insurance system for the full cost of these generic drugs.
~ Public hospitals will be required to sell these generic medicines at wholesale prices, instead of being permitted to charge the current 15% mark-up.
~ It's estimated that this will save the Chinese people up to 70 billion yuan a year.
~ According to the national plan, the sales of generic medicines will increase so that it amounts to about 50% of the total sales volume of the total market. In the past, when a similar system was in place, generic medicine sales only accounted for 10% of the total.
~ However, although the new system offers expanded market share, smaller pharmaceutical companies, often the main producers of  these generic medicines, will still face severe competition in both tendering for a contract and also competing with other official suppliers of the generic medicines.
Original article: [Chinese]

China's Export to Grow by More Than 10% in 2010
News, page 4
~ "The export and import volumes in the first two months of 2010 have exceeded market expectations. Overseas orders for big enterprises rose 15 percent from a year earlier, while orders for small-sized firms were up 10 percent," said Jiang Ling, vice mayor of Guangdong's Dongguan, a global processing, manufacturing and important export base in southern China, adding "this is a true recovery."
~ The statement was supported by statistics from the General Administration of Customs. According to the most recent statistics, China's total trade value rose by 45.2 percent in February from a year earlier.
~ The EO has also learned that the Ministry of Commerce has raised its foreign trade growth target to 10 percent from 8 percent.
~ Many stock brokers are optimistic about China's export and import outlook in 2010. Sinolink Securities predicted that foreign trade would grow by between 15 and 20 percent. Citic Securities forecast China's exports in 2010 would grow by 16.7 percent while Shenyin & Wan'guo Securities predicted a 21.9 percent jump.
Original article: [Chinese]

Has China Already Begun to Withdraw from Stimulus Measures?
News, page 6
~ Though financial players both at home and abroad are bullish on the Chinese economy for this year, their opinions diverge on when and how China should exit the economic stimulus measures it has adopted.
~ As the growth rate of China's financial revenues is likely to exceed the growth in fiscal spending in 2010 and with the National Development and Reform Commission (NDRC) already suspending approval for large-scale projects, Stephen Green, Regional Head of Research, Greater China at Standard Chartered, believes that China has already begun to retreat from the stimulus policies adopted in late 2008.
~ However, Guo Tianyong, Director of the Chinese Banking Research Center under the Central Financial and Economic University, says a sound and loose monetary policy is still needed.
~ Stephen Green thinks China should continue to gradually increase the cash reserve ratios applied to lending institutions.
~ Wang Xiaonian, Director of the Economic Operation and Development Research Center under the NDRC, considers the task of curbing rising property prices and eliminating preferential housing loans as the priority.
Original article: [Chinese]

Debate Over Regulations Establishing Wind Power Standards
Corporation, page 26
~ Debate among industry players has emerged about whether draft regulations regarding the standardization of wind power equipment and connections to the power grid promotes or impedes the development of the emerging sector.
~  The China Power Engineering Consulting Group Corporation, who drafted the regulations on behalf of theNational Energy Administration's (NEA),, insist that the proposed rules are in accordance with the present technology level of Chinese wind power producers and will lead to the furtherer development of the industry
~ On the other hand, some wind power companies claim that the proposed regulations favor companies that run the country's power grids and will impede the healthy development of the new industry by unreasonably lifting the technical requirements for wind power providers.
Original article: [Chinese]