China's Private Business Sidestepped by Stimulus
Cover story
Despite contributing over 80% of China's new jobs and 65% of its gross domestic product over the last few years, Chinese private businesses have been left in the cold by the 4 trillion yuan stimulus package passed in 2008. Most of the funds, which were being poured into infrastructure and social service projects in order to recuperate the economy, were being exclusively accessed by state-owned enterprises. Many representatives at the top legislative and consultative meetings in Beijing last week, especially those from Zhejiang province, a hotbed of China's private economy, proposed ways that private businesses could survive the worsening economic climate despite not having access to the stimulus pie.
Original article: [Chinese]
New Tax Law May Affect Foreign Firms Operating in China
Cover
Tax legislators are moving forward with a draft law that would redefine which foreign firms operating in China would have to pay a 25% corporate income tax. The thresholds, which target foreign-registered companies with management organs in China, include: If the board chairmen or one-third of board members live 90 days out of the year in China; if 50% or more of the firm's revenues come from China; or if the firm's accounting or filing is done in China.
Original article: [Chinese]
How to Manage, How to Use China's Massive Foreign Exchange Reserves?
News, page 3
As the economic crisis deepens, policymakers are grappling with how to best use China's USD ＄1.95 trillion in foreign exchange reserves to stimulate and guarantee domestic economic growth. The EO interviews Wu Xiaoling, deputy chair of the National People's Congress' Finance and Economics Committee, who says the funds are a form of debt the central bank owes to society, and that it is meant to facilitate trading, investment, and consumption when Chinese firms or individuals need to exchange money. In order to spur imports and Chinese investment abroad, the government should work to moderately reduce the scale of these reserves.
Original article: [Chinese]
Two Million Migrant Workers Stuck in Henan
News, page 6
Before the Spring Festival at the end of January, 9.5 million migrant workers returned to Henan province, one of the largest bases of labor exports in China. Of them, 2 million, though wanting to head out again after the vacation for new work, remained home. In response to the sudden influx of jobless migrant workers, the Henan government implemented 23 provisions, including training programs and labor missions to Beijing to find large-scale contracts to sign on behalf of the workers.
Original article: [Chinese]
Top Political Sessions: Special Report
Special, page 9
The plight of private businesses, the major driver of economic growth in China, received special attention from delegates of various parties and both the legislative and consultative congresses last week. In a special 6-page spread, the EO asks delegates to break down the challenges facing such firms, how they can pull ahead in the worsening economic climate, and what kinds of policy support they should receive during this time.
Original article: [Chinese]
Likely to Get 10 Billion Financial Support, Beijing Auto Ready for Merger and Acquisition
Industry, page 33
Beijing Automotive Industry Holdings Corp. may become an industry leader in mergers and restructuring thanks to industry stimulus funds coming its way. The company is likely to get 10 billion yuan in financial support from the Beijing government, which the former plans to use for both domestic and overseas mergers and acquisitions and brand-building. Beijing Auto is looking to acquire Fujian Motor Industry Group. Its overseas acquisition plan also involves Chrysler LLC and apart of Delphi assets.
Original article: [Chinese]
