By English Edition Staff
Published: 2008-06-30

Highlights from the EO's print edition,issue no. 374, June 30 2008

Pay Rise Inline with Inflation
Cover
The Chinese government plans to introduce a salary reform that include requiring pay raises in line with inflation--for example, if the Consumer Price Index increased by 6%, so would salaries. Other changes include salary-fixing mechanism whereby companies would negotiate collective agreements with workers' unions; salary distribution in state-owned enterprises; and realizing a minimum wage. The reform, to cover both the public and private sector, would be spelt out in a government document likely to be issued by the State Council.
Original article: [Chinese]

What Kind of State-owned Assets Law is Needed?
Editorial, cover
The editorial has expressed disappointment over the outcome of the second review of the draft law on state-owned assets management. After 15 years of deliberations, the lawmakers still failed to define clearly the role, power, and responsibility of a sponsor for the tens of trillions of yuan worth of assets, which are public property entrusted to the government. Instead, the second review has reduced the draft into something like a state-owned company law, which could have been covered under the Enterprise Law.
Original article: [Chinese]

Checks on Hot Money
Cover story
Establishing the exact amount of hot money, or short-term speculative foreign investments, that has flowed into China and drafting preventive measures against its in and outflow have become a priority for the government. The State Administration of Foreign Exchange (SAFE) and the central bank are among the agencies issuing orders to check the flows and researching on the size of hot money, which apparently appeared in different figures depending on whose records one looked at. Market watchers believe the amount of hot money has ballooned over the past few years due to expectations for more yuan appreciation, high returns in the stock markets and real estate.
Original article: [Chinese]

Overseas Farming to Ensure Food Security
News, page 4
Though admittedly having missed the best timing for initiating large scale farming abroad due to increased foreign suspicions, China would still encourage such activities through state policies to promote food security. The Agriculture Ministry has looked into overseas farming strategies, and arranged five major state-owned farming groups to explore and invest in Central Asia, Russia, Africa, Southeast Asia, and South America.
Original article: [Chinese]

Battling for Coal
Nation, page 9
Power generation plants have been afflicted by high coal prices and a shortage in supply. The battle for coal has upgraded from between enterprises to between provinces, as some local governments have imposed restrictions on selling the resources out of provincial borders to ensure local supplies.
Original article: [Chinese]

High Interest Loan Businesses Thrive
Nation, page 10
Though the interest rate could be eight times higher than commercial banks, many Chinese businessmen have been turning to Wenzhou private capital for loans as the government imposed tight credit controls. With monthly interest rates as high as 9% or more, profits from the loans are shared between the money lenders and the middlemen, while the loan takers are usually owners of small and medium enterprises needing short term cash flow.
Original article: [Chinese]

Preventing the Collapse of Cities from Resource-exhaustion
Nation, page 15
The northeast of China used to be an industrial and steel production base, yet as resources have been exhausted, companies went down and massive job losses occurred. In recent years, the Chinese government has vowed to revitalize the region through sustainable development. The EO spoke to Song Xiaowu, an official from the State Council working on the project, who revealed the process of learning from overseas experiences to come up with six broad policies to support a transformation in resource-exhausted cities. Among the policies include reform of resource taxes, establishment of preparation fund for redevelopment, loans that give priority to projects focus on sustainable development, government financial support for reconstruction and reduce unemployment.
Original article: [Chinese]

Inspiration from Bill Gates' Retirement
Opinion, page 16
Bill Gates has won big round of applause for his generosity in donating personal assets to charity upon retirement at the age of 53 last week. Unlike many corporate philanthropists before him, Gates has given not just money but also his time and energy by opting earlier retirement to spare efforts for charity works, commentator Li Xiang opined. What if more corporate geniuses, like investment guru Warren Buffett, were to devote their time, smartness and efforts to running charity organizations? Li pondered.
Original article: [Chinese]

Chinese Sovereign Wealth Fund's 80-billion-dollar Plan
Money & Investment, page 17 
The EO has learned that China Investment Corporation (CIC), the country's sovereign wealth fund, has entrusted Morgan Stanley to plan the distribution model for a 80-billion-dollar investment fund. The fund would be divided into two parts – 70 billion dollars to be handled by several professional assets management companies that win the bids, while the remaining fund would be handled by one appointed company for flexible investment.
Original article: [Chinese]

China to Pay Double to Secure Australian Iron Ore
Corporation, page 25
Chinese steelmaker Baosteel has to pay 96.5% more to secure iron ore from the Australian miner Rio Tinto after the two concluded price-talks recently. Strong demand from the Chinese side has put it at a disadvantage throughout the price negotiations process. In addition, Rio Tinto has used the media well by ensuring favorable reports by providing information voluntarily; while the Chinese side, as usual, was tight lipped and prevented effective communication to influence public and market opinion.
Original article: [Chinese]

Chinese Cinema and Realism
Lifestyle, page 42
A low-budget Chinese movie, Old Fish, played by amateur actors has plucked the best director and best actor awards during the recently concluded Shanghai International Film Festival. The screenplay is based on the true story of a low ranking police officer - played by a real officer from Harbin - assigned to defuse a series of bombs planted around a town in Northeastern China when experts failed to arrive in time. The officer was killed by the 11th bombs he faced.
Original article: [Chinese]