Highlights from the EO print edition, Issue no. 470, May 24, 2010
Foxconn's Suicide Tragedy
News, cover
~ A 21-year-old Foxconn factory worker named Nan Gang, jumped to his death on May 21, increasing Foxconn's suicide toll to ten this year.
~ Behind these successive suicide cases, lies the fact that profits for original equipment manufacturers like Foxconn are declining due to excessive competition. In order to attract more clients, Foxconn emphasizes fast production. To increase its speed of production, Foxconn workers have to work overtime.
~ In addition, Foxconn's young workers, who were born in the 1990s, are more psychologically fragile. Foxconn needs to change its military-style management and adopt more humane management methods.
Original article: [Chinese]
Emigration Continues Unabated Among Chinese Elites
News, cover
~ Lured by better living conditions and advanced tax laws in foreign countries, nowadays, more and more wealthy Chinese people are choosing to become foreign citizens.
~ Due to limited investment channels at home and a rising fear of being attacked by people discontent with society, Chinese private entrepreneurs are tending to live abroad. However, these entrepreneurs still choose to conduct business in China as there are more opportunities to make money here.
~ Another factor responsible for the emigration trend among Chinese elites lies in the fact that they want better-education for their children.
~ Canada and Australia are the two most-welcoming countries for wealthy Chinese emigrants due to their mature Chinese communities, followed by America and Singapore.
Original article: [Chinese]
Voices Against Real Estate Tax Implementation
News, page 4
~ After related ministries and commissions stated that a real estate tax would be introduced in due course to combat rising house prices, voices of dissent have emerged from various government departments.
~ Some officials posed several questions such as: Should we introduce a real estate tax? Do we have the ability to successfully impose the tax?
~ Local tax collection officials from Nanjing stated that the conditions required for local governments to adopt a real estate tax are still not ripe in China.
~ Liu Shangxi, vice director of the Research Institute of Fiscal Science under the Ministry of Finance, believes it is meaningless to introduce a real estate tax to curb the rise of housing prices. He said the tax would simply be passed on to home buyers and would not restrict housing speculators.
~ Liu's opinion was echoed by Li Weiguang, a professor at Tianjin University of Finance and Economics who also noted that the introduction of the tax can not control housing prices.
Original article:[Chinese]
High Medical Fees Remain Despite Reform
News, page 7
~ The Chinese government has spent 390.2 billion in the ongoing reform of its medical system since it began reform last year, enabling 401 million urban residents and 833 million rural residents to have health insurance coverage. Meanwhile, more clinics have been founded in rural China and more medical workers have been trained to treat patients in rural areas.
~ Despite the above achievements, problems remain. Because the reform allows hospitals to add 15 percent to drug prices for their own profit margin, hospitals are tending to buy relatively expensive drugs to increase their earnings. Additionally, drug manufactures are choosing to not include low cost drugs in the bidding process because of their scarce profit margins, making it impossible to reduce the prices of drugs as much as originally planned.
~ Prior to the 15% profit limit on drug prices, hospital income mainly depended on drug sales. Hospitals now tend to raise hospitalization costs as well as prescription fees which offset the benefits brought to patients by reduced medicine prices.
Original article: [Chinese]
Genetically Modified Rice Seeds Found in Hunan Province
Nation, page 9
~ Though the Chinese government prohibits the commercial sale of genetically modified (GM) rice, GM rice seeds are still being sold to farmers in Hunan Province.
~ All existing GM rice seeds are produced in Hubei Province where the Huazhong Agricultural University, the country's only agency recognized by the Ministry of Agriculture (MOA) to safely produce GM rice, is located.
~ GM seeds are welcomed by farmers because they are insect resistant which reduces planting costs. Yet the farmers themselves dare not eat the rice because, "even the insects are not eating it." Currently, GM rice is sold and processed in Hubei, Hunan, Fujian and Guangdong provinces.
~ An unnamed expert with Huazhong Agricultural University said, experts and MOA officials had done a poor job in explaining the harmful effects GM rice may have on people and caused the wide-spread fear citizens have towards GM rice.
Original article: [Chinese]
Chongqing Strives to Become China's Third "New Special Economic Zone"
Nation, page 12
~ Chongqing is making great efforts to have its Liangjiang District become China's third "new special economic zone", and follow the path of Shanghai's Pudong District and Tianjin's Binhai District.
~ Bo Xilai, secretary of the CPC Chongqing Municipal Committee, claimed that Chongqing will become the dominant economic zone of the middle and upper reaches of the Yangtze River and will also become the engine that will drive western China's economic growth. He believes Liangjiang District will make a good platform for economic development .
~ By becoming the third "new special economic zone", Chongqing hopes to be allowed to pilot reforms concerning land, finance, taxation, investment, foreign trade and other fields in order to promote the local economy.
Original article: [Chinese]
Jiangsu Lianfa Textile Suspected of Falsifying Application for A-share Listing
Market, page 17
~ A source familiar with the matter told the EO that Jiangsu Lianfa Textile Company, which successfully went public on the Shenzhen stock exchange on April 23 this year, is suspected of falsifying its application to be listed on the A-share market.
~ The source said the company's three major shareholders including Jiangsu Lianfa Group Corporation, Lianbang International Textile Company and Shanghai Ganghong Investment Company are suspected of being closely associated.
~ However, the company's stock prospectus stated they were not closely associated with each other.
Original article: [Chinese]
"Hot Money" Returns to China
Market, page 19
~ According to rough calculations, the amount of hot money, foreign capital entering the country allegedly seeking short-term profits, that has flowed into China in the first quarter of this year totals 71.5 billion US dollars; 2 billion US dollars higher than the amount registered for the whole of 2009.
~ Li Youhuan, a researcher at the Guangdong Academy of Social Sciences who has been researching hot money, said at present, the majority of the hot money is waiting for opportunities to enter the stock market.
Original article: [Chinese]
Central Huijin to Issue 88 Billion Yuan Worth of Bonds
Market, page 19
~ On May 20th, a source told the EO that the application to issue bonds put forth by Central Huijin Investment Company, the domestic investment subsidiary of China's sovereign wealth fund - China Investment Corporation (CIC), has been approved by the State Council.
~ Central Huijin will likely begin issuing 88 billion yuan worth of ten-year bonds in September this year. The money it raises will be spent on injecting capital into the Import and Export Bank of China, China Export & Credit Insurance Corporation and buying shares of the three big state-owned banks including the Industrial and Commercial Bank of China, the Bank of China and China Construction Bank.
~ The EO learned that agencies involved in the matter are lobbying the State Council to let Huijin's bonds enjoy the advantage of a sovereign rating.
Original article: [Chinese]
