Highlights from the Economic Observer, issue no. 342, Nov 19 2007
Focus Series: Labor Contract Law Explained by a Draftee
Special, page 3
Concrete details on the implementation of the Labor Contract Law are on the cusp of being announced. Gou Jun, vice-director of the Labor Law Society and a consultant in the drafting process, reacts to the collective rush to prepare for the law and talks about what more is in store. [Full English translation of the series will be up soon!]
Original article: [Chinese]
State Council Targets Options in SOE's
From Cover
The government is taking a harsher look at stock option plans in SOE's that are listed abroad. It is said that SASAC, the state assets watchdog under the State Council, believes that many state-owned enterprises are being overly generous with their options, and in the past weeks has called for SOE's to report on their current circumstances.
Original article: [Chinese]
Editorial: Penalty for Late Income Tax Filing too Harsh
From Cover, Editorial
China's new personal income reporting system, which was publicized during the end of last year, calls for the public listing of those who don't make income reporting deadlines. We argue that while practical, it is to early to subject taxpayers to this treatment, as they need more time to understand the nascent and inadequately publicized system.
Original article: [Chinese]
Central Bank Encourages Moderate Yuan Appreciation
From News, page 5
In its third quarter currency policy report, the Central Bank of China has indicated that a moderate appreciation of the yuan would help alleviate inflation pressure-- a different attitude than it held just six months ago, when it supported conservative appreciation.
Original article: [Chinese]
Stirred by New Law, Foreign Mining Tycoons Descend on Beijing
From News, page 7
With the passage of a new law that limits foreign investment on real estate and mining, foreign firms are seeking out Chinese governmental ministries to learn how exactly they will be affected. The new law limits mining for resources that were previously encouraged, and outright bans the mining of others.
Original article: [Chinese]
Scandal hits Sinopec and PetroChina
From Nation, page 9
Sinopec and PetroChina’s subsidiary companies were involved in Guangdong's biggest money laundering investigation in June. Allegations stem from a deal with a Hong Kong Company which bought the oil with Hong Kong dollars instead of yuan, despite a ban on mainland companies accepting foreign currency for products and services. The investigation is pending, and likely consequences are still unknown.
Original article: [Chinese]
Town Poltical Reform in Jiang Su Province
From Nation, page 10
A town in Jiangsu province previously administered by Guanyun county is being given its own right to govern. This represents a new trend by which counties are giving towns more authority and room to choose the best model for economic development.
Original article: [Chinese]
Gold Rush in Winter
From Nation, page 11
Ever-climbing gold prices are providing a strong incentive for professional gold speculators, who unlike previous years, are not putting down their panning tools to return home early this winter at the onset of freezing waters. Tibet, Qinghai, and Xinjiang are also known for their gold, but this year people have gone as far as Yunnan, Sichuan, and even Myanmar and Vietnam. Domestic gold prices have risen 20 percent in the last two months. Our report focuses on six camps in Longhui county, Hebei province, which are staunchly holding out.
Original article: [Chinese]
Multiple SMI to Collectively Issue Bonds
Money & Investment, page 19
The government has recently allowed 20 firms from the small and medium industry (SMI) in Shenzhen to collectively issue bonds. The companies will gather under one banner to raise up to one billion yuan through bonds at a fixed interest rate of 5.7 percent that matured in five years. The green light comes from National Development and Reform Commission, and is expected to boost SMI’s credibility in issuing low risk bonds.
Original article: [Chinese]
Cash “Shortage” in Shenzhen
Money and Investment, page 20
Over-the-counter cash withdrawals have been limited at Shenzhen banks in the first two weeks of November to curb illegal cash transactions and excessive circulation. This comes after a meeting involving all commercial banks in the city on November 2nd, when bankers discussed the phenomenon of unusually large amounts of withdrawals at short intervals, and speculated on their links to money laundering, smuggling, and other underworld activities. Subsequently, the banks implemented limited withdrawal policy whereby a maximum of 30,000 yuan per day and 50,000 yuan per week is allowed for personal account holders. As for business accounts, withdrawals are limited to 100,000 yuan per day, 200,000 yuan per week, and 500,000 yuan per month.
Original article: [Chinese]
Mining Deals in Africa
Corporation, page 27
Private Chinese mining companies, which face stiff regulation and tilted competition against state-owned enterprises domestically, have turned their eyes on Africa in recent years. The latest bid for mining rights in 13 spots in Tanzania by a 61-year-old businessman, Duan YongJi, has become a point of interest as Duan is initiating a move for Chinese firms to jointly invest in Africa. Previously, Chinese firms were mainly confined to small-scale mining, as the industry requires high initial capital. Gold, nickel, and copper are among the minerals explored in Africa.
Original article: [Chinese]
Urgent Need to Rectify Financial Imbalance
Observer, page 41
The measured appreciation of the undervalued yuan is a major contributing factor to excess liquidity, a bubbling stock market, an overheated property market, and an imbalance trade surplus, argues Cheng Zhiwu of Yale University. The Chinese government’s policy in allowing its currency to appreciate in stages by 5 percent per annum over the next three years have driven up market expectation, says Cheng, adding that such expectations of a more valuable yuan in the near future have prevented savings with negative gains and an outflow of investment.
Original article: [Chinese]
