Issue Wrap No. 493, Nov 8, 2010

Highlights from the EO Print Edition, Issue Wrap No. 493, Nov 8

Where do China's Wealthy Bank their Money?
Cover
~ The personal banking department of the CMB has attracted more than 10,000 clients whose assets exceed 30 million yuan.
~ Because of its numerous wealthy, high-end clients, the CMB has become an increasingly intimidating competitor for its domestic peers.
~ A private equity fund issued by the personal banking department of China Merchants Bank (CMB) collected 1.2 billion yuan in a single day.
~ According to a report co-released by the Merlin Group and Kaijie Consulting Company, in 2009 the number of Chinese whose assets exceeded 6.67 million yuan reached 477,000, up 31% from the previous year.
Original article: [Chinese]


Chinese Government to Invest 3.5 Trillion Yuan in Railways
News, page 3
~ The Chinese government will invest 3.5 Trillion yuan in railway construction during the 12th Five Year Plan.
~ The projected investment presents a 1.3 trillion yuan increase from the 11th Five Year Plan.
~ The government will spend 700 billion annually to renovate old railways and expand high speed railways.
~ The total length of Chinese railways is expected to reach 120,000 kilometers in 2012.
~ Local governments and enterprises are also expected to invest. Local contribution is expected to make up 60% of total railway investment in the next few years.
Original article: [Chinese]

What's Behind China's Recent Blood Shortage
Nation, page 9
~ In recent weeks, hospitals across the country have reported that there is a shortage of blood supplies.
~ An official with the Beijing Red Cross Blood Center said, "the media should be responsible and encourage people to donate blood."
~ The "blood shortage" has exposed weaknesses in China's current blood donation system and there are signs that perhaps a black market in blood might reemerge, which could have very serious consequences.
~ People think hospitals are overcharging for blood, but as an official with the Red Cross explains, "the price of blood is not simply determined by the blood itself, but also includes the cost of collection, preparation etc. In fact, the price that is now being offered is below cost."
~ Shenzhen is an example of a city that has managed to establish a successful voluntary blood donation system. The keys are providing information to the community and policy guidance. The city also pays attention to maintaining a pool of regular blood donors.
Original article: [Chinese]

Another Rare Earth Story: Meet Molybdenum
Corporation, page 29
~ Molybdenum is a silvery-white metal used to make industrial steel.
~ Last week, JDC Molybdenum shares rose as high as 63%.
~ Industry insiders say that the central government is likely to include Molybdenum on the same list with other rare earths that will be categorised as protected mineral resources.
~ The change in policy may lead to consolidation of the sector by imposing limits on the size and practices of existing mines. 
~ The market has begun to respond to reports of consolidation with the market price of Molybdenum rising 10 percent.
~ Controls on the molybdenum market are expected to impact large enterprises in Shaanxi Provice, which will be required to scale back on production to abet consolidation.
Original article: [Chinese]  

Cooperative Economic Zone to be Established in Cities Bordering North Korea
Nation, page 10
~ On October 26, director Li Yunfeng of the Northeast Region's Leading Group Office for Regional Cooperation told the EO that 13 cities along the Yalu River (which forms China's border with North Korea) are in talks to create a series of Yalu River cooperative economic zones that would open the northeast's eastern border area.
~ The goal of the zone is to link the Liaoning coastal economic band and to open and develop the Changjitu pilot area, so as to facilitate trade with the People's Democratic Republic of Korea (North Korea).
~ The 13 cities, which include Tonghua City, Dandong, the Yanbian Korean Autonomous Prefecture, Dalian, and others, hope that this economic zone will eventually be raised to the national level.
~ Li Yunfeng explained that the cities are all in the Yalu River basin and all have economic dealings with North Korea, so it makes sense to combine forces.
~ Tonghua's mayor, Tian Yulin, said that the economic zone would not only deepen cooperation among cities in northeast China, but would also enhance international relations and further develop the Bohai Economic Rim.
~ Dandong is the most economically succesful of the cities in the Yalu River area, serving as the shipping point for 76% of China's exports to North Korea. However, even Dandong has been hindered by a lack of financing available for cross-border business, as well as fickle border policies.
Original article: [Chinese]

CIC Establishes Subsidiary in Hong Kong
Market, page 20
~ China Investment Corporation (CIC), China's 300 billion US dollar sovereign wealth fund, has established a wholly-owned subsidiary in Hong Kong, CIC International (Hong Kong) Company.
~ The new company will be headed by Professor Lawrence Lau (Liu Zunyi), former president of the Chinese University of Hong Kong and a member of CIC's International Advisory Council.
~ According to an anonymous source, after Hong Kong, CIC will also establish subsidaries in London and New York. 
Original article: [Chinese]

Exclusive Interview with the CEO of Tencent - Ma Huateng
Corporation , page 25
~ The conflict between Tencent and Qihoo 360 has attracted a lot of media and public attention in China this past week. Ma Huateng, the CEO of Tencent, hasn't accepted a media interview for over a year, but made an appointment to meet a reporter from the Economic Observer last Thursday afternoon.
~ Ma told the EO that the original target of Qihoo 360 was Baidu. Qihoo 360 had tried to cooperate with Tencent and struck a blow to Baidu, but Tencent refused to cooperate. So Qihoo 360 then turned to attack Tencent by sending a virus to Tencent users and attempting to get them to desert QQ.
~ Ma also explained that tencent was not an industry monopoly for it had been allowing users to choose what they liked and never imposed its products on users. Ma said that Tencent had never invaded users' privacy. 
Original article: [Chinese]

Former Head of Chongqing Branch of China Mobile Detained in Beijing
Corporation, page 26
~ On October 22, the EO reported that Shen Changfu, the former Party Secretary and General Manager of China Mobile's Chongqing office (Chongqing Mobile), was taken in for questioning by Beijing authorities.
~ On October 28, the Economic Observer confirmed through sources familiar with the situation that Shen Changfu's arrest was due to economic irregularities discovered with the company's import dealings.
~ In 1999, under the guidance of the State Council, China Telecom was split into China Mobile, China Unicom and China Telecom. After the restructuring, Shen Changfu was reassigned as bureau chief of the Chongqing Communications Authority, a figurehead position that he very much resented.
~ However, insiders say that "Shen Changfu is a man that is unwilling to admit defeat." He eventually achieved the post of GM at Chongqing Mobile.
~ In the eleven years that followed, Shen Changfu's family became very wealthy and powerful.
~ An insider said that based on Shen Changfu's rank, the sum of money involved in the corruption case can be no less than 10 million yuan.
~ Because the prosecution of Shen Changfu has not yet begun, documents have not been made available by the prosecutor's office and the full reason for Shen Changfu's arrest is still unknown.
Original article: [Chinese]