Highlights from the September 3, 2007 issue of The Economic Observer, No. 331
NEWS
Editorial
Cover
On August 30, the draft of the Antitrust Law passed the Standing Committee of the National People's Congress. Our editorial staff weighs in on the implications of this historic law.
Original article: [Chinese]
China Construction Bank, PetroChina File for A-market listing
Cover
The China Construction Bank and PetroChina have submitted materials for their A-market listing to China's top securities regulator, the China Securities Regulatory Commission. Market observers say that the financial industry occupies over 32 percent of the stock market's value, making it already vulnerable to shocks in the industry. As a result the CSRC may be more inclined to approve PetroChina first as part of a risk-diversification strategy.
Original article: [Chinese]
New Finance Minister Takes Reigns
Cover
On August 30th, the Standing Committee of the National People's Congress appointed Xie Xuren as the new head in the Ministry of Finance. This is his second time at the Ministry of Finance-- previously worked his way up to a vice-minister from 1990 to 1998. From 2003 onward he was the head of the State Tax Bureau, where he was known for keeping a low profile but being heavily involved in grass-roots projects. The appointment comes after five Ministries saw their chiefs step down six weeks before a major meeting of the Communist Party.
Original article: [Chinese]
China's Economy: The Three Excesses
Page 3
On August 29, Ma Kai, chairman of the Development and Reform Commission, presented on China's economy to the Standing Committee of the National People's Congress, where he put emphasis on the so-called 三過 or “three excesses”. These include growth in investment, loans, and the trade surplus. Issues raised included whether or not government construction projects were contributing to the “three excesses”, the possibility that financial and real estate bubbles could reinforce each other, and flaws in government policy aimed at cooling the real estate sector.
Original article: [Chinese]
Law to Make Foreign Corporate Tax Preference Clearer
Page 3
Ambiguity over when foreign companies can start to enjoy temporary preferential taxes will hopefully be cleared up by a new law that has been submitted to the State Council.
Original article: [Chinese]
New Plan to Evaluate Local Government in Energy Conservation
Page 4
On August 26, Ma Kai of the National Development and Reform Commission in a report to the Standing Committee of the National People's Congress stressed that the new plan for evaluating energy conservation by local government will be critical to the success of reducing China's need for power. The EO has learned that the plan assesses local governments in four main areas, and ties their GDP and value-added to energy consumption
Original article: [Chinese]
Consumer Confidence Down in August
Page 5
Due to rising commodity and housing prices and sliding optimism in China's economy, consumer confidence dove during August.
Original article: [Chinese]
NATION
In the Wake of the Pig Disease
Page 9
Since June, a deadly disease has torn through Changsha county and decimated pig populations. In response, livestock regulators are scrambling to aid stricken farmers in one of the country's most important pig farming regions.
Original article: [Chinese]
Jiangsu Pilots Housing Guarantee Project
Page 10
Before the State Council met on August 27 to discuss options for a housing guarantee system, Jiangsu province had already started its own pilot project, which involved public property rights to help the poor afford housing. With public property rights, the government invests in housing projects that are eventually sold or rented to private citizens at prices lower than the market. This is controversial; Duan Hou, an assistant professor at Fudan University's Law School, tells the EO that public property rights is a legal curiosity in that it is not clearly dealt with in the Property Law, which was passed last March with much fanfare and comes into effect on October 1.
Original article: [Chinese]
Guanting Reservoir Returns to Backup Status
Page 12
On August 21, Jiao Zhizhong, director of the Beijing Water Authority, announced that the Guanting Reservoir is ready to serve as an emergency source for drinking water. Although the reservoir is serving Beijing, 80 percent of its surface area is located in Hebei province. Previously, the reservoir was tainted by polluted runoff released upstream, and as a result was removed from Beijing's backup water network. In order to cleanup and reintegrate the reservoir, Hebei shut down many local factories, which has significantly impacted local economic development.
Original article: [Chinese]
COMMENTS
You Can Be Homeless, But Not Hopeless
Page 16
Our columnist argues that since the government began liberalizing the housing market in 1997, steep price climbs over the past few years have left many unable to afford housing. Regulators should work harder to put a lid on property prices that contribute to the mounting pressure felt by tenants and buyers. As a government, it is obligated to guarantee housing for citizens.
Original article: [Chinese]
Autonomous Local Governments: Working with Citizens in Mind
Page 16
EO special contributor Qiu Feng says that provincial management of counties should consider citizen perspectives, including how to expand their freedom and guarantee their rights. He argues that citizens are the principals of governance, and should not be the targets of a government's executions of power.
Original article: [Chinese]
MONEY & INVESTMENT
Above 5,000 Points: Is the Market Being Rational?
Page 17
Since August 13, the Industrial and Commercial bank and Bank of China have both enjoyed swift boosts in their stock prices that have helped the Shanghai index break 5000 points. But some say that this is irrational so soon after the sub-prime loan crisis, especially since their intrinsic values were already detached from their stock prices before.
Original article: [Chinese]
CORPORATION
Oil Giants to Roll Out New Refineries
Page 25
Sinopec and China National Petroleum Organization, China's two state-owned oil giants, are expanding their oil refining capabilities. With a total of 30 new refineries each capable of producing ten million tons of oil products per year planned, this will likely ease China's scarcity for finished oil products, but will strengthen their monopoly status in the industry. Their plans first must be approved by the National Development and Reform Commission.
Original article: [Chinese]
More Restructuring in Airline Industry
Page 26
On April 28, China Aviation Corporation I announced that it will be broken up into two privately-owned companies. China Aviation Corporation I's listed subsidiary, This is its biggest restructuring to date and comes in the wake of the domestic airline industry's push for stock market listings.
Original article: [Chinese]
Carrefour Investigates Staff in Bribery
Page 29
A recent Carrefour memo notified employees that an internal probe was being conducted after eight managers and employees in its Beijing division were detained by police on suspicion of accepting bribes. After the charges surfaced, the company has said it will strengthen its emphasis on professional ethics.
Original article: [Chinese]
OBSERVER
Looking Back on 1917
Page 41
Observer re-examines socialist thought and constitutionalism during the Russian Revolution.
Original article: [Chinese]
