Highlights from the Economic Observer, issue 340, Nov 5th 2007
Monopoly in Fertilizer Sector Affects 900 mil Farmers
Cover Story
The monopoly of two state bodies over potassium fertilizer imports has led to rising costs for 900 million farmers in China. Sinochem Corporation and one other group is accused of blocking private firms' entry into the lucrative potassium fertilizer import trade, and allying with international cartels to buoy prices, which have increased by more than 135% over the past three years.
Original article: [Chinese]
Credit Control to Prevent Flows into Stock Market
Cover
The government is to plug up loose credit regulations to prevent illegal use of loans for investing in the stock market. The China Banking Regulatory Commission is said to be in the midst of drafting a guideline to minimize credit risks and strengthen the management of loan processing in commercial banks. This comes after news broke earlier this year of two companies channeling loans totaling 2.5 billion yuan from eight banks into the stock market.
Original article: [Chinese]
Controversy Over Universities' Land Sales
News, page 3
The Ministry of Land and Resources is studying the legitimacy of higher learning institutions selling land as a means to settle debts. These institutions are said to have collective debts of some 200 billion yuan, and some of them have recently, with the support of Education Ministry and local governments, sold land to developers to recover from their deficits.
Original article: [Chinese]
Delay in Beijing-Shanghai Express Rail Construction
News, page 4
The construction of the Beijing-Shanghai express railway has been delayed due to disagreements over land acquisition and relocation matters. Work for the 186 billion yuan project, covering four provinces and three municipalities and with a track measuring 1,318km, is supposed to commence this month. However, all but one local government disagreed to shoulder the cost of land acquisition and relocation in their respective territories as a way to gain share in the railway project.
Original article: [Chinese]
End of Monopoly in Methane Trade
News, page 5
The Chinese State Council has opened the door for more local companies to take part in foreign trade involving methane. Previously, China United Coal-bed Methane Corporation had the sole right in dealing with foreign co-operations, but the State Council has recently issued a notice allowing "other authorized companies" to join the trade. PetroChina and Sinopec Corporation are likely to be added to the list, which is said to be expanded to between five and ten authorized companies.
Original article: [Chinese]
Fuel Challenges for China
Feature, page 9
The price of petrol in China has finally gone up by 500 yuan per ton after months of escalating global oil price. The price bump, which is still far below the global market rate, is expected to push up the consumer price index by 0.05%. As market watchers anticipate global oil prices to soon reach the 100 USD per barrel mark, some refineries in the country have cut down or even frozen productions, leading to fuel shortage and long queues at petrol kiosks.
Original article: [Chinese]
Former HK Chief's Family Business Takes Over Abandoned Development Project
Nation, page 11
The biggest abandoned property in Tianjin-- a 25-storey high World Trade Center building-- has finally found a buyer in the Orient Overseas Corporation. The corporation is part of the family business of former Hong Kong Chief Executive Tung Chee-Hwa. The unfinished building has been an eye-sore of the city for the past seven years.
Original article: [Chinese]
Scarred by Mining Industry
Nation, page 12
First, tea plantations made way for the mining industry; later, villagers were forced to relocate following threats of landslide and polluted water sources. EO tracks the side-effects left behind by of a now defunct iron mine in Anxi, south of Fujian province.
Original article: [Chinese]
Market Watchdogs Work on Share Incentives for State Firms
From Markets & Investment, page 17
The Ministry of Finance, the state-owned assets watchdog agency, and the banking regulatory commission are researching new ways to standardize incentive-based share schemes in state-owned firms, with new rules to come out in the short term. On October 31, the Merchant Bank of China revealed its own such effort, which sets a threshold stock price of 39.3 HK dollars that must be met after two years if managers want to sell their shares on the secondary market.
Original article: [Chinese]
New Focus on Controlling QDII
From Markets & Investment, page 22
Regulators are puzzling over how best to tighten the reins on QDII (Qualified Domestic Institutional Investors) funds that are galloping into the Hong Kong stock market. Institutional investors have already been warned to properly consider risk and to diversify their QDII investments among several markets. Chinese have been clamouring to invest in H-shares since the option was made available to them through qualifying institutions.
Original article: [Chinese]
Huawei Resets Labor Contracts According to New "N+1" Plan, Labor Law
From Corporation, page 26
Huawei has begun implementing its "N+1" plan, acalculated response to the new Labor Law. The EO reports on many of the details of the plan, which has been closely guarded by the firm.
Original article: [Chinese]
Starbucks and Pepsi Team up on China Rollout
From Corporation, page 31
Starbucks and Pepsi are bringing a bottled coffee drink called "frappucino" that has been popular in the US and Japan to China. The two are hoping to leverage their relative strengths in China.
Original article: [Chinese]
