Coal Mines on the Brink 
News, page 3 
On July 10, Li Yizhong, head of the State Administration of Work Safety, met with small-scale coal mine bosses for a frank discussion about the future of the industry and the wave of shutdowns they face on the horizon. Coal mine bosses, who have been vilified over highly public mining accidents during the past several years, complain of volatile policy that has left them scrambling to increase production output in order to stay above mandated shutdown thresholds. As a result, they have been unable to invest more in safety and environmental upgrades. 

Stats Discrepency in Energy Saving 
News, page 4 
On July 12, the National Bureau of Statistics published data on provincial energy consumption that contributed to GDP in 2006. According to the data, energy consumption that contributed to GDP decreased 1.33 percent when compared to 2005. Meanwhile, the provinces themselves reported their figures as much higher—closer to four percent. The discrepencies between the conclusions reflect different methodologies, and as a result, a new system under consideration will be implemented soon. 

Full article: [Chinese]

HSBC: An Innocent Trade Surplus  
News, Page 5 
An HSBC report points out that China’s short-term capital inflows exacerbate excess liquidity more than the trade surplus does. This is because the surplus stands at 40 percent of the foreign exchange reserve, while short-term capital inflows make up 50 percent. 

Full article: [Chinese]

A Still-Hot Economy: Forecasts are Adjusted, Interest Rates May Go Up 
News, page 6 
Ahead of the National Bureau of Statistics’ publication of macroeconomic data for the first half of 2007, financial institutions have already adjusted their forecasts to reflect an overheating economy. Experts base the adjustments on an investor rebound since February, industrial growth, the record trade surplus, and increases in credit-based investments. The failure of the recent policy measures to significantly affect the trade surplus and swelling forex reserves suggests that a wider array of policy options will be considered soon. And another interest rate hike (or two) isn’t out of the question. 

Full article: [Chinese]