Highlights from the Economic Observer, no. 341, Nov 12, 2007
Number One in the World... So What?
Cover Editorial
The stock market rally has made PetroChina the world's most valuable company-- priced at over one trillion dollar on November 5, the first day it was listed on the Shanghai Stock Exchange. However, that is only face value. Although the company's market value is now twice the size of Exxon Mobil, the latter's net profit is double PetroChina's. Moreover, PetroChina holds its throne by compromising consumer interests and public welfare through monopoly behavior. If these are the ways the world's “firsts” are created, how does it benefit the country's overall economic development and its global competitiveness?
Original article: [Chinese]
Fever of Excess Liquidity Subsiding
Cover Story
A lower transaction rate for second-hand properties, stunted upward climbs of stock prices, and reduced investment returns all point towards a contraction of liquidity. The Chinese government has puzzled over how to deal with the liquidity surplus for the past two years and introduced various control measures in response; now it seems that the prolonged market fever is subsiding.
Original article: [Chinese]
Farewell Monthly Passes
Cover
Beijing subway monthly passes will cease to exist this month after nearly 30 years in use. Besides offering some 170,000 commuters a reduced fare, the monthly passes used to represent the status of being native Beijing folks, since only commuters with a local hukou (registered residence) could apply. The privilege had in the past encouraged a black market in the passes, and the abolishment of it is seen as a step forward in dismantling institutionalized discrimination that targets one's place of origin.
Original article: [Chinese]
Subsidies to Improve Energy Conservation in Steel Productions
News, page 4
The Chinese government is stepping up efforts to get rid of backward and high-energy usage productions method in the steel industry. The efforts include possible subsidies to help the industry replace equipment that demand excessive electrical and water resources.
Original article: [Chinese]
New Restrictions on Foreign Investors
Focus, page 6
Our focus series lays out the restrictions placed on foreigners under the newly issued Sector Investment Guide for Foreign Investors published on November 7. Foreign-invested firms are restricted from participating in secondary property market trading and real-estate agency activities. The regulations, which were introduced by the State Development and Reform Commission, also aims to discourage foreigners from investing in residential properties and high-end hotels. In the mining sector, foreigners are totally barred from exploring resources such as wolfram, molybdenum and tin.
Original article: [Chinese]
Consumers Become Developers in Wenzhou
Nation, page 9
A year ago, a group of individual house-buyers initiated a project that pooled funds together for land purchase and property construction in Wenzhou for private use. The project is now under pressure from the local authorities to adopt a business model in order to obtain project approval. The 256 members involved have been told to sign an agreement to consent to the public sale of the property units once the project is completed. If they sign, the members would effectively become shareholders and act like a collective developer rather than consumers.
Original article: [Chinese]
Law Suit to Redeem Made-in-China Reputation
Nation, page 10
Chinese toy makers whose reputations have been scarred and have suffered losses in the wake of the Mattel product recall are planning to sue the American toy giant. The businesses say that they have acted in accordance with the Mattel contract and feel that they have been unjustly implicated, as the recalled episode has created a widespread distrust in China-made products.
Original article: [Chinese]
Guangdong's Biggest Money Laundering Network Busted
Money & Investment, page 17
An underground banking network in Shenzhen that tapped internet technology had amassed a money laundering empire worth some 4.3 billion yuan within one and a half year of operation, police investigations revealed. This is the largest money laundering shop discovered so far in Guangdong province, and its tendrils reached out to bases in Shenzhen, Guangzhou, and Hong Kong. The police also recovered over 90 bank cards, 40 internet banking passwords, and 11 identity cards used in facilitating illegal transactions.
Original article: [Chinese]
Wal-Mart's Lay-off Controversy
Corporation, page 25
A recent lay-off wave by US retail giant Wal-Mart in China has triggered complaints from former workers and investigations by the authorities. The lay-off, which Wal-Mart justified as part of the company's need to restructure its global procurement network, has come at a sensitive time with the new Labor Contract Law poised to take effect early next year. Although Wal-Mart has claimed to pay handsome compensations, the sudden sacking without advance notice and reasoning has sparked accusations that multinational companies are firing workers to prepare for the new law, which is deemed to have more stringent requirements concerning lay-offs.
Original article: [Chinese]
Overdraft on Relationships for Owning Property
Property, page 38
Dependency of the younger Chinese generation on their parents' financial support in acquiring property has led to family conflicts and soured relationships. As property prices continue to rise though the generation born in the 1980s has yet to develop sound financial standing, parental support becomes the only option for many young couples yearning to own property. In some cases, such arrangements have led to emotional and economic blackmail from parents.
Original article: [Chinese]
Nobel Winning Economic Theory and its Relevancy to China
Observer, page 41
Mechanism design theory has placed three American economists – Leonid Hurwicz, Eric Maskin, and Roger Myerson – on the Nobel Prize list this year. The theory helps identifying efficient trading mechanism, regulation schemes, and voting procedure. The EO interviews disciples of the Nobel Laureates – Qian Yinyi, Wang Yijiang, Li Daokui, and Chong-En Bai, to find out how the theory is relevant to China's economic development and reform.
Original article: [Chinese]
