Highlights from the EO print edition, No. 614, Apr 8, 2013
Unification of the Pension System Lacks Top-level Design
News, page 3
~ Reform of the social security system has been pushing forward step-by-step according to the "Income Distribution Reform Plan" published by the State Council before the "Two sessions," but now the Ministry of Human Resources and Social Security (MOHRSS) still has no specific work plan or timetable for it.
~ National coordination of the basic pension scheme is slated to be achieved by the end of China’s 12th Five-Year Plan in 2015. However, reform regarding delaying the retirement age, pension investment operations and the dual track pension system (where civil servants make no contributions but still get covered by the state budget after retirement) are expected to be postponed until after the 12th Five-Year Plan.
~ In 2011, nearly 100 delegates made proposals on reform of the dual-track of pension system during that year's "Two sessions." That year's government work report also promoted reform to unify the pension systems of civil servants and normal workers.
~ In late February this year, the Chinese Academy of Social Sciences released the "2012 Social Security Green Paper" and "Survey on Social Security income redistribution," showing that current pension payments vary from 200 yuan to 10,000 yuan due to the dual-track system.
~ Zong Qinghou, Chairman of Wahaha Group, has been calling for the unification of the pension system for years. "The dual-track pension system is the greatest injustice, and we are in urgent need of reform," he said.
~ Huang Wenzai, a member of the social security sector of the National Committee of the CPPCC, said that the pension for civil servants comes from taxpayers, but now the pensions of civil servants are three to five times higher than those of normal workers. "It's clearly abuse of power," Huang said.
~ Shenzhen is the only city with progress in pension reform. Civil servants who entered their units after Jul 13, 2010, should now pay 8 percent of their salary toward their pension and their unit will pay another 13 percent.
Original article: [Chinese]
Government to Rectify Local Clinics
News, page 5
~ On Mar 22, the General Office of the National Health and Family Planning Commission and the State Administration of Traditional Chinese Medicine issued a plan to carry out a one-year rectification of management and supervision of local medical clinics. Insiders predict that it will involve nearly one million public and private health institutions in China.
~ Hospitals often rent space to private clinicians to work out of, which gives patients the false impression that they're part of the hospital. Private clinics have a poor reputation among the public, which is why they seek to work out of hospitals to improve their credibility. Although the Ministry of Health has banned this practice several times, it remains very common. It's especially prevalent in fields like dentistry, pediatrics, gynecology, and plastic surgery.
~ "The fee [private clinicians must pay] will be passed on to patients though higher medical expenses," said a source working in an Anhui Province hospital. "For areas with poor medical services and resources, it makes obtaining medical treatment more difficult."
~ Deputy Secretary-General of the Chinese Hospital Association Zhuang Yiqiang said that deception, misdiagnosis and non-standard medical practices are the three biggest problems at local clinics.
~ Statistics from the Ministry of Health show that there were 901,709 local clinics in 2010, of which 460,927 were state-owned. Since 2005, the number of local state-owned clinics has decreased by 24,186 while the number of private clinics has increased by 76,407. The growth in private clinics is due to the low investment threshold and the relatively low amount of technical knowledge investors need.
~ The one-year rectification program not only aims to improve management and supervision of these clinics, but also find out how many there are now in China and what qualifications their personnel have.
~ "Due to the poor services at some local clinics, people don't want to see a doctor there," said Zhuang Yiqiang. "Thus, many farmers flock to the county and city hospitals. More supervision of local clinics will reduce this burden on large hospitals."
Original article: [Chinese]
Industry in the Desert
Nation, page 9
~ On the edge of the Tengger Desert (騰格里沙漠), rows of plants and chimneys have been built on the yellow sand. "Water is so precious in the desert," a local herder said. "Depleted groundwater will turn the desert into real hell."
~ The Tengger Desert is located in the Alxa League (阿拉善旗) of Inner Mongolia on the border with Mongolia. It serves as a shield for both border security and ecological safety. However, over the last 10 years its fragile ecosystem has been endangered by industrialization.
~ In late March, CCTV reported that the industrial district of the area discharged waste water directly into the desert. Xu Xinzhong (許新忠), head of the local environmental protection bureau, said the report was somewhat unfair. "We started to tackle the pollution problem at the end of 2012," Xu said. "Most of the enterprises in the industrial district were closed. The waste water from the operating factories can all be recycled. Alxa League is a vast area. Of course we cannot guarantee there are no factories breaking the rules. Regulatory force is limited."
~ An EO reporter visiting the Tengger Industrial District in October 2012 photographed wastewater being discharged into the desert. Xu Xinzhong said he was shocked by the picture. "It's too costly to obey the law," he said. "We've found enterprises can actually save money by breaking the law and just paying the fine."
~ Alxa has two major industries: salt chemicals and coal mining, both of which consume a large amount of water. Being mostly desert, water shortages are the top concern in its development of agriculture and industry.
~ What concerns locals most is whether the underground water is polluted. On Mar 29, experts on waste water treatment from Beijing were invited to Alxa. Xu said a sample of groundwater was taken right after the CCTV report. "The test results say it's not polluted," he said.
Original article: [Chinese]
Chengdu-to-Poland Express Freight Route to Open
Nation, page 12
~ The freight express from the Qing Baijiang container center in Chengdu to Lodz, Poland will make its debut on Apr 26.
~ The trip will take 14 days initially and later be reduced to 12 - just one-third of the time that the traditional sea-rail transportation combination takes. And the cost is only one-fourth that of air transport.
~ The internationally standardized train, which can carry 41 containers, will leave every Friday. It will use an Electronic Data Interchange (EDI) system which can submit transit information in advance to save time. In the future, the system may help reduce the trip length even further to 10 days.
~ In charge of the project is Chengdu Asia-Europe Block Train Logistics Inc. (成都亞歐班列物流有限公司), a joint venture involving Poland HATRANS Logistics Inc. (波蘭HATRANS物流有限公司), Jiangsu Feiliks International Logistics Inc. and Yue Hai Global Logistics Inc. (深圳越海全球物流有限公司).
~ "It's estimated that the actual operation price will be $11,000 per container, though the highest acceptable price for corporations is $7,500," says Chen Zhongwei (陳仲維), director of the Chengdu Logistics Office. "So the Chengdu government will make up for that through subsidies."
~ The opening of the railway will not only help with the surging freight volume from IT companies like Dell and Foxconn, but also lay the foundation for attracting more foreign investment and business.
Original article: [Chinese]
Easy Pass for Cross-border Travelers in Yunnan
Nation, page 12
~ Yunnan province may once again implement an "easy pass policy" for travelers looking to cross the border into Vietnam, Laos and Burma, 10 years after a similar scheme was suspensed. News of the new policy was revealed at a recent meeting of the Yunnan Public Security Bureau. Five cities on the Chinese border in Yunnan province will be included in this new "barrier-free travel zone". Under the new policy, travelers can apply for a "Border Pass" in these five cities instead of being forced to return to the place where their hukou (household registration) is registered.
~ This policy will cut the paper work of cross-border traveling to Vietnam, Laos and Myanmar. The procedure is also cheaper, with the new border passes set to cost only 20 yuan.
~ A lot of people are optimistic about the new policy. "It's a golden opportunity. I'll regret it for the rest of my life if I miss it," He Nanhong (賀南宏), a restaurant owner in a border city told the EO. Mr. He recently invested all his savings on expanding his restaurant.
~ The policy was first introduced in 1991 but later suspended due to concern about cross-border gambling. The influence of halting the policy was described as catastrophic by officials in some of the border towns. "We have tried our best to solve the problem [illegal gambling]. It's an international issue. Solving it takes time but we can't afford to wait." Meng Biguang (孟必光), head of the Dehong Autonomous Prefecture (德宏州) government said. In 1991, 290,000 travelers went to Myanmar through Dehong and 90 percent of them did so by getting a border pass locally.
~ The policy change turned many busy border cities like Dehong into ghost towns. Almost all businesses in these cities are now doing it tough. However, illegal cross-border travel has become a booming industry.
~ Many travelers told the EO about their experience of getting overcharged by illegal guides. At first the guide asked for only 10 yuan for a one-day travel package in Vietnam but when they reached Vietnam the guide told the travelers they had to pay extra money for lunch and transportation. Traveler can end up paying more than 1,000 yuan for a short trip across the border.
Original article: [Chinese]
The "Enemies" of China's Banks
Market, page 17-20
~ The traditional business of commercial banks, such as loans and wealth management, are facing fierce competition from online financial services and other non-financial institutions.
~ Considered by many insiders as the biggest rival, third-party payment companies not only help their clients make payments but have also extended their services to other areas, such as providing supply chain finance (SCF) and online loans.
~ Alipay launched credit payments this March, which allows consumers to pay their online shopping with a line of credit that's based on their transaction history. Alipay extended this service from small enterprises to consumers.
~ Aside from payment services, some third-party payment companies like 99 Bill, started reverse factoring business in SCF, that is, to coordinate the supply chain and distribution system of a big company and to form a management plan for its circulating funds. Some companies have developed their own model of providing small loans.
~ Interest rate spreads and some intermediate business like private placement fund trusteeship and fund consignment are now the areas in which commercial banks make most of their money. These business lines are also being threatened by the intrusion of non-financial institutions as a result of the loosening of regulation.
~ In order to meet the challenges, banks are seeking to strengthen their online services, such as online banks and mobile banking. They are trying to cooperate with the online business and third-party payment companies so that they can complement each other's advantages.
~ Also in the future, banks will strengthen their cooperation with non-financial institutions in two areas - The re-financing of listed companies and financial funds, delegating to brokers and other non-financial institutions.
Original article: [Chinese]
