No. 392 Nov 3
Highlights from the Economic Observer, issue 392 November 3 2008
Guard Your Money
Cover
The ongoing global financial crisis has tangibly impacted Chinese, who have seen shrinking stock and fund values and a growing threat of unemployment. As global economic woes cast a shadow over China's real economy, many have become focused on preventing wealth evaporation. This week's cover story recounts how Chinese individuals and companies in the finance sector live in recession and discusses how they could protect their money.
Original article: [Chinese]
Grain Market Rescue Package Brewing
News, page 3
Stuck between the biggest harvest in a decade and decreasing demand due to economic downturn, Chinese grain authorities are studying a market rescue package to make up for slumping grain prices. Though some academics doubt if the limited government funding could effectively prop up grain prices, central grain officials said the key would be how the government would assemble the policies.
Original article: [Chinese]
China's Fertilizer Sector Loses Billions
News, page 5
China's fertilizer sector has suffered a RMB 15.6 billion loss thanks to a large raw material supply bought at high prices which have since tumbled, sources said. Sharp decreases in fertilizer material prices in the past two months have led to a RMB 1,500 drop in phosphorus fertilizer prices. With 30% having ceased or reduced production, fertilizer producers have asked for government intervention and some requests have won approval from authorities.
Original article: [Chinese]
Hong Kong Found Eggs Tainted with Melamine
Nation, page 10
Hong Kong health officials announced on October 25 that eggs produced by mainland-based Dalian Hanwei Chicken Farming Limited contained excessive level of melamine. Hanwei chairman Han Wei said the melamine was from chicken feeds produced by a fill mill based in Shenyang, Liaoning province. As feeds with higher protein contents would be sold out at a higher price, the melamine or even the melamine waste were illegally added in the feeds of the poultry. Dalian Hanwei Chicken Farming Limited suspended egg exports to Hong Kong and recalled all tainted eggs from the market.
Original article: [Chinese]
The Silent Grand Canal
Nation, page 14
The Grand Canal of China, also as known as the Beijing-Hangzhou Grand Canal is the largest ancient canal or artificial river in the world. For many years, it has been the golden channel connecting north and south China. As one of the country's eight large coal bases, Jining City, in the south of Shandong province, has taken over 90% shipment volume of the Grand Canal. However, with coal and steel prices sliding, the once bustling Grand Canal has become idle and silent.
Original article: [Chinese]
Competing for Equal Pay for Equal Work through Arbitration
Nation, page 15
146 collective labor of power supply system in Yiyang, Changde and Chenzhou of Hunan province, have sued Hunan Electric Power Company for "equal pay for equal work". This is the biggest labor arbitration case in China since implementing the new Labor Law. The case will set a precedent for equal pay for equal work, which has been an issue in China for many years.
Original article: [Chinese]
Climbing Risks in Credit Card Default
Market, page 21
Every time a financial crisis deepens, the default risks for credit cards spikes. For instance, by the end of June, the Merchant Bank's default rate in credit cards climbed to 2.74% from 1.92% earlier this year. In response, Chinese banks like the Industrial Bank have tightened their issuance of credit cards towards the high-risks customers and raise the examining and approval bars for the customers' applications.
Original article: [Chinese]
Chinese Banks Bid Farewell to Golden Times
Market, page 21
As China's economy goes enters a slowdown, Chinese banks would likely see a change in their high-rate growth with low-level bad accounts. According to Bank of China's third quarter financial report, its net profit saw a quarter-to-quarter decline of some 17.2 billion. In addition, Industrial and Commercial Bank of China, China Construction Bank and other state-owned listed banks registered a decline in their third quarter performance compared with the second quarter this year. Those bank's deposit and loan businesses have been affected by the central bank's consecutive reduction of interest rates. Furthermore, their assets' quality will face more risks as the conditions in micro-level companies worsen.
Original article: [Chinese]
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