Highlights from the Economic Observer, issue 415 April 20 2009
Ballooning Loans Pose Risk
Cover Story
*According to a senior official with China Banking Regulatory Commission (CBRC), it's likely that China's new loans would break six trillion yuan this year if they continue to increase at the current rate, an amount which policymakers considered could lead to speculative behavior and increased risk for the markets.
*Some experts also warned that with most new loans based on government credit, it would be hard to ensure loan quality.
*As the third package of the government's 4 trillion yuan stimulus investment kicked in, new loans would surge even more.
*A source close to China's central bank said it's only been four months since the government loosened up financial policy, and at least two more quarters would be needed to evaluate the policy's impact on the real economy. As such, it would be almost impossible for the government to rein in the policy before this time.
Original article: [Chinese]
China's Ministries Suggest Trade Financing Channels
News, page 3
*Several Chinese ministries and commissions advised in a report to the central government that it establish a government-backed credit guarantee firm to solve financing difficulties for small and medium sized firms.
*The EO learned that despite that China issued over 4.5 trillion yuan new loans in the first quarter of 2009, numerous small and medium sized firms still faced financing difficulties as the export climate continued to worsen.
*The report said central and local governments needed to appropriate 10 billion yuan each to the China Investment Corporation, the country's sovereign wealth fund, and enable the latter to establish the new insurance firm.
*The report also proposed the central treasury inject 10 billion yuan into the China Export and Credit Insurance Corporation.
Original article: [Chinese]
China Touching Bottom?
News, page 4
*China saw a 6.1% increase in the first quarter's gross domestic product (GDP) compared with the same period last year, China's National Bureau of Statistics said on April 16.
*Li Xiaochao, the bureau's spokesman stressed that positive signs had emerged in China's economic growth but that it was still facing slowdown pressure.
*Two researchers told the EO that judging from China's economic indicators in the first quarter, the country had blunted the sharp economic slowdown, but efforts were still needed to change these positive signs into a real growth trend.
Original article: [Chinese]
Salary Ceilings for SOEs
News, page 6
*New rules would be issued in the near future to regulate the compensation of senior managersin state-owned enterprises (SOEs).
*The report prescribed that the total annual salary of top executives in SOEs couldn't be more than 15 times higher than the average employee's, the EO learned.
Original article: [Chinese]
Special: Cradle of Private Business Warms Up
Nation, page 9-13
*Areas in Zhejiang province that have long served as the bastion of China's private businesses were showing signs of new life after the economic slowdown.
*Economic data for Donghuang, an industrial hub in southern China with a large migrant labor population, showed that in March there were hints of an economic rebound and a bottoming out in foregn demand.
*Wenzhou also saw promising signs for its manufacturing businesses for the month, with a 33% increase in loans, inventories being cleared out, and increases in fuel and power use associated with the sector.
Original article: [Chinese 1 2 3 ]
Pessimism Spreads in Universities
Nation, page 14
*Three university students in Beijing ended their lives by jumping from their apartments in mid-April, a time when outgoing graduates were busy writing theses and looking for work in a harsh employment market.
*Police said the three suicides were under investigation. The EO learned that one student had left a note on his social networking profile online, where he said his death had much to do with the university, and said laughs from his classmates had encouraged him to end his life.
*Surveys from Beijing Suicide Research and Prevention Center showed that China's university students accounted for a high proportion of depression patients.
Original article: [Chinese]
Tang Weizhen Writes to Clear Name in EO
Market, page 17
*Tang Weizhen, a Chinese-Canadian who was being investigated by Canadian and US authorities after allegations that he operated a multi-million dollar ponzi scheme, wrote to the Economic Observer to clear his name.
*He refuted the rumor saying he had been brought to the court by securities watchdogs. He explained that the securities watchdog still needed to hold a hearing on his case and that he was not afraid.
Original article: [Chinese]
CNPC to Issue Dollar-Denominated Bonds
Market, page 19
*Sources revealed to EO that China National Petroleum Corporation (CNPC), PetrolChina's parent company, would issue a 3-year dollar-denominated bonds in the near future.
*The bonds would be worth about 1 billion US dollars total, and the Agricultural Bank of China and the Bank of China would be the CNPC's issuance underwriter.
*This is the first time that China has allowed a non-financial institution to issue the dollar-denominated bonds. Before this, only the China Development Bank and The Export-Import Bank of China had issued such bonds in China.
Original article: [Chinese]
Eight Years of the EO
Observer, page 33
As the Economic Observer celebrated its eighth year in print this week, president Liu Jian writes on China's transformation and the values that have driven the EO through this eventful, dramatic era in Chinese history.
Original article: [Chinese]
