Highlights from the EO print, issue no. 378, July 28, 2008

Foreign Plants Retreating from China
Cover story
A recent research report by the Chinese Ministry of Commerce has warned that more and more US and European manufacturers would be considering the relocation of their China-based plants to bases closer to home. The main reason was to avoid continued exposure to skyrocketing shipping costs that are tied to global fuel price surges. One of retreating companies, US-based heating system producer DESA LLC has recently announced to move back its production line to home base in Bowling Green, Kentucky. The company said the incentives to produce in China had diminished rapidly due to reduced export tax rebates, increased shipping costs, and the appreciating yuan.
Original article: [Chinese]

Unanswered Questions of China's Antitrust Law
Cover, second lead
Though the Chinese Antitrust Law will come into effect on Aug 1, many legal details remain unanswered, such as the enforcing agency, the definition of monopoly agreements and the scope of market-dominant status. Law firms and legal experts have been flooded with inquiries from concerned enterprises, but even the experts failed in responding to all questions, as they waited for further clarification from Chinese authorities.
Original article: [Chinese]

Chinese SOEs Face Risks of Financing
News, page 3
Chinese state-owned enterprises (SOEs) in the fields of oil, electricity, iron and steel, real estate and agriculture have been identified as facing the highest risk of financing shortages. A total of 31 SOEs have submitted their 2008 risk management reports to the State-Owned Assets Supervision and Administration Commission (SASAC) recently, and after review, the phrase "tight finances" was used most frequently. The SOEs were generally most concerned with overseas investment risks, domestic macro-economic conditions and credit pressure, security issues, and legal risks.
Original article: [Chinese]

Core Roles of China's National Energy Bureau
News, page 4
China's newly elevated National Energy Bureau will have a 112-strong team under nine departments, and its core roles will include drafting strategic energy development plans and policy, and proposing necessary policy reforms; managing energy resources like oil, coal and electricity; drafting measures and policies related to developing new sources of energy and energy conservation; and developing international partnership in energy. The roles assigned indicated that the Bureau, which is under the National Reform and Development Commission (NRDC), would play a significant role in influencing energy price fixing and investment opportunities review in the future.
Original article: [Chinese]

Economic Transition in Guangdong
Nation, page 9 – 12
As the Pearl Delta in southern China's Guangdong province undergoes an economic transition of moving out low-end industries and replacing them with high value added production, the local authorities have also worked doubly hard in cleaning-up shanty towns and "unwelcomed" populations. This special focus tries to explore the social-economic costs of such a transition in three cities – Guangzhou, Dongguan and Shenzhen.
Original article: [Chinese]

Free Bus Ride in Changning
Nation, page 13
Hunan province's Changning city has become the first municipality in China to offer free public bus rides since July 1. Though some quarters have questioned the sustainability of such a policy, local public transportation official have said such a move greatly conserved energy, improved traffic flow, cut pollution, and was well-received among the public.
Original article: [Chinese]

Artists' Village Experiement with Sales of Rural Property
Nation, page 15
The controversy of artists from Songzhuang being taken to court for "illegally" buying rural property has resulted in a new ruling to protect both buyers and sellers. Under the Chinese law, rural land and property cannot be sold to urban residents. However, in a guideline issued earlier this year following the Songzhuang controvery in the outskirts of Beijing, it states that land remains under collective management, while the structures built upon the land are private property belonging to rural residents, who can trade it legally. According to local officials, there were no new lawsuits against artists after the new ruling took effect. The number of artists based there has increased from 1,300 people in 2006 to around 3,000 at present.
Original article: [Chinese]

Insurance Companies in the Cold
Money & Investment, page 21
Profit margins of Chinese insurance companies have been squeezed by huge coverage payouts after a series of natural disasters hit China in the first half of this year. Industry sources claimed a leading market player had watched its post-tax net profits dropped by as much as 70% by June this year when compared to the same period last year. The rare snowstorm in southern China earlier this year, the Sichuan earthquake in May and the floods thereafter have all added pressure to the industry.
Original article: [Chinese]

Business Permit for Profit-Oriented Websites
Corporation, page 29
From August 1, all profit-oriented websites and online trading participants based in Beijing must first obtain a business operation permit. The new ruling issued by the Beijing Commerce Bureau to enhance e-commerce management also targeted users of online customer-to-customer (C2C) trading communities such as Taobao, Eachnet, and Paipai. Previously, one only needed to register identity cards and banking information to begin trading on such C2C platforms. Critics said the ruling would be hard to enforce, as it would be difficult to ascertain the locality of seller, and the nature of a transaction as profit-oriented. Some believed the Bureau's move was aimed to boost tax collections.
Original article: [Chinese]

Beijing Real Estate: Supply Surpass Demand?
Property, page 38
The total area of property sold in Beijing for the first half of this year has dropped by over 47% as compared to the same period of last year, according to data released by the Beijing Statistics Bureau. Some suggested that it indicated a glut in Beijing real estate and some projected that the surplus would take about a year for the market to digest. However, some industry players believed the scenario was partly due to a wait-and-see attitude held by potential home buyers, who harbored great anticipation for property prices to drop after the Olympic Games.

Original article: [Chinese]