Highlights from the Economic Observer, issue no. 359, March 17 2008
Soya bean Oil Shortage Tests China
Cover story
A shortage in soya bean oil is sweeping across China, and is already leaving shelves empty at supermarkets. Domestic producers say that, with government price controls in place despite foreign soya bean price increases, they have no choice but to reduce output or shut down production entirely to keep losses bearable. Last week, the central government extended loss subsidies to some soya bean oil producers.
Original article: [Chinese]
Congress Passes New "Super Ministries"
News, page 2
On March 15th, the National People's Congress approved a State Council consolidation scheme that will refine the NDRC's role to macro-economic matters, and move it away from low-level approval of projects. This will ultimately leave the NDRC more powerful than it was before. Beside this, other departments and administrative units where dismantled, and five new "super ministries" formed—including the long-anticipated Environmental Protection Ministry, a significant upgrade from its previous incarnation.
Original article: [Chinese]
The Long Inflation Spike
News, page 5
On March 11 China's statistics bureau announced the country's consumer price index (CPI), which was an 8.7% growth over the previous month's and thus making it the greatest month-on-month leap since 1996. Experts cite the persisting difficulties recent snowstorms have presented for the transportation of goods across China, combined with the delay between central macroeconomic treatments and their desired effects.
Original article: [Chinese]
New Law to Force Local Government to Listen Up
News, page 7
A new law slated to be passed in May will prevent the softening of central government's power at the local level by affirming its jurisdiction over taxes. During the two top congresses, the words "financial resources" replaced "financial power" in discussion of the reform, signaling an important new treatment of an issue that has been on the legislative back burner for 20 years.
Original article: [Chinese]
Special Expose on Chinese Steel
Nation, page 9
China's urbanization and industrialization has fueled perpetual domestic demand for steel, and by extension, iron ore. A series of articles explores not only how their prices have increased, but how unhealthy competition among state-run and private Chinese businesses are hurting growth in these industries.
Original article: [Chinese]
Is The Bull Market Caving in?
Money & Investment, page 17
China's A-share stock market slumped to a seven-month low in March. Market analysts have projected even slower growth ahead, citing contractions in exports as a major contributing factor. Declining demand from a slower US economy has caused China's exports to the latter to experience negative growth in February. That, coupled with the yuan's appreciation, labor cost increases, and tax adjustments, make a strong case for investors to exercise cautioun. Now, drooping market confidence has investors wondering when China's bull market will give way to a bear one.
Original article: [Chinese]
Sinosteel Makes Hostile Bid for Midwest
Corporation, page 33
China's leading iron ore trader Sinosteel Corporation has launched a hostile bid of A$1.2 billion for Australia's Midwest, offering A$5.60 per share. The move is aimed at securing raw material and preventing competitors from acquiring Midwest, which Sinosteel has 19.89% stake.
Original article: [Chinese]
SASAC Alerted over Crazy Expansion
Corporation, page 35
The move to take over some 20 cement companies in two years, and eyeing another 61 construction-related target companies, has earned China National Building Material Group Corporation (CNBM) the Chinese nickname "Crazy Expansionist". The State-owned Assets Supervision and Administration Commission (SASAC) recently received a report entitled "Is CNBM Crazy?", drafted by a market analyst seeking to alert the authority of the risks involved with the company's rapid and large-scale expansion. Subsequently, SASAC has reminded CNBM to exercise caution and be mindful of the market's reactions when enlarging its operations.
Original article: [Chinese]
Shanghai Mayor: Seeking Green Light for Disney Theme Park
Corporation, page 38
Shanghai has submitted a plan to develop a Disney theme park in Pudong district for approval by the National Development and Reform Commission (NRDC), according to its mayor. Sources revealed to the EO that the theme park would be nearly four times the size of the Disneyland in Hong Kong, and would be based in Pudong's Chuansha new town. The project is said to be a joint venture between Walt Disney Company and a Shanghai-based state-owned enterprise.
Original article: [Chinese]
The Most Expensive Chinese Rock Album
Lifestyle, page 59
Priced at 500 yuan, Zuoxiaozuzhou's latest album You Know Where the East Is (a double CD) has been termed as the most expensive Chinese rock album. The alternative Chinese rocker, known for his out-of-tune vocals, has a cult following both at home and abroad. His latest album touches on a wide spectrum of issues challenging China today, including politics, social issues, faith and morals: "It is about the larger society, if my music is only about art, then I'd see it as a failure."
Original article: [Chinese]