No. 401, Jan 5

By English Edition Staff
Published: 2009-01-05
Highlights from the EO print, issue no. 401, Jan 5, 2009

Seeking Certainty in 2009
Cover
Is China only ushering in darker times with the passing of 2008? When will the economic downturn reverse? Predicting the bottom has become the question since the global financial crisis set in. Chinese officials have warned that the first half of 2009 would be the toughest, but they also said confidently that things would improve by second half of the year. The main reason given was that by mid-year 2009, the backlog inventory in the Chinese market would have been exhausted, paving the way for production to rebound and prices to stabilize. However, industry players in the private sector were less optimistic; they believed the recovery depended largely on how the US market fared.
Original article: [Chinese]

Applying Wisdom to Manage the Economy
Editorial, cover
The EO believes while combating an economic downturn in a globlized economy, China not only need to be attentive to its internal changes and problems, but also sensitive to the external trends in order to strategize accordingly. When the sub-prime crisis broke in the US way back in 2007, little did China suspect it would have severe consequences on the domestic economy, and it wasn't until the global financial crisis that opinion turned. As the new year begins, the EO calls for Chinese policymakers to hone their wisdom in deciphering global trends and planning ahead with a holistic approach. 
Original article: [Chinese]  

Milk Scandal: Disappointment over Low Compensation
News, page 3
The municipal government of Shijiazhuang, where the melamine-tainted milk scandal first broke, offered compensation to victims on December 29. The compensation scheme – criticized by many as too little – offered 200,000 yuan for each death, 30,000 yuan to each victim who suffered acute illness, and 2,000 yuan for minor ailments. Some families have rejected the offer and vowed to pursue legal action.
Original article: [Chinese]

Agricultural Priorities in 2009
News, page 4
The priorities for rural agricultural development in 2009 would be to strengthen basic infrastructure, enhance production, develope collective enterprises, and improve rural incomes and livelihoods, the EO learned. Last year, China's total output in grains reached 528.5 billion kilograms - after output volume had risen for five years straight. The Chinese government intended to further boost output by another 50 billion kilograms between 2009 and 2020.
Original article: [Chinese
 
Limited Room for Boosting Consumer Spending
News, page 8
The Chinese government's efforts to encourage domestic demand have been met with a lukewarm response from Chinese consumers, who remained prudent and spendthrift as the economy worsened. Chinese economists blamed the lack of comprehensive social security schemes as a psychological barrier for Chinese consumers to spend freely. They said as long as the scheme remained weak, the government would have little room to maneuver in stimulating consumer spending.
Original article: [Chinese
 
Face-off with Somali Pirates
Nation, page 9
A group of Chinese sailors who had survived the threat of Somali pirates recounted their nightmares to the EO recently. The sailors, with no prior combat training, decided to organize themselves into small "guerrilla" groups and produce improvised weapons, such as petrol bombs, wooden planks embedded with shattered glass, ropes coated with butter, sharpened iron pipes and more. They performed drills numerous times before their cargo ship sailed through the Gulf of Aden, where they were indeed chased by pirates but were lucky that naval forces nearby came to their rescue in time. 
Original article: [Chinese

The "Constitutional Monarchy" of A Farming Empire
Nation, page 11 
Hebei Dawu Farming and Husbandry Group is a family business with a twist. Its founder Sun Dawu initiated in 2005 a leadership model akin to the separation of powers under a constitutional monarchy. Sun remained as the sovereign head of his farming empire but without the absolute power - he was restrained by three branches of administrative powers: a board of directors, a managing committee, and a monitoring committee, each in-charge of decision making, operational matters, and ownership respectively. The empire's subjects (employees) each had voting rights to determine who sat on the board of directors. This form of administrative system was adopted after Sun completed his three-year jail term for illegal fund raising in 2002. During his absence, the company's operations slid, causing him to search for a more sustainable way of managing family business.
Original article: [Chinese]

Assessing Village Collective Enterprises 
Nation, page 13
Huaiyang district in Jiangsu province has been promoting village collective enterprises through a series of incentives for village administrators. The district set a benchmark of three 10-thousand-yuan goals -- one each for annual collective enterprises' income, individual wealth program revenues, and capital returns on projects - in assessing village administrators' performance. Outstanding administrators who met the goals would be rewarded 30% of the newly created wealth in their respective vicinity.
Original article: [Chinese]
 
Scarred by SARS
Nation, page 15
Five years have passed since the Severe Acute Respiratory Syndrome (SARS) outbreak hit China, but many of its survivors were still struggling for their health. Some had lost the capacity to work after being inflicted with side-effects from SARS treatment, including bone difficiency syndrome and a form of chronic lung disease, while others suffered from social withdrawal syndrome. The EO spoke to some victims who were now shadows of their former selves. The predicament of SARS victims has attracted government attention, and the Beijing municipal authority has issued guidelines on how to help the victims recuperate physically and mentally.
Original article: [Chinese

A Shares Still Must Hit Bottom Before Rebound
Markets, page 18
An EO analysis of 2009 forecasts from mainland brokers and funds shows general optimism, with many agreeing that the first half of 2009 would see the market hitting bottom, with a rebound not appearing until the latter half of the year. There was also consensus that profits would fall by at least 10 percent. But institutions disagreed on whether the market had already hit bottom, with some saying that facing falling profits, it would be difficult for share prices to rise. Optimists noted however that the market was already at a historic low.
Original article: [Chinese]

Qin Bin - Rethinking the Financial Crisis and Regulation
Markets, page 20
The EO sits down with Qin Bin, director of research at the China Securities Regulatory Commission, to look back on the causes of the financial crisis and its implications for China. Qin stresses the importance core services that investment banks provided and will continue to provide, and that their primary mistake made by Wall Street was deviating from these. Qin goes on to say that one of the most important ways China can strengthen its own financial sector is by fostering talent within it. For 2009, he is optimistic about certain bright spots in China's capital markets, with new platforms for stock issuances opening up and maturing.
Original article: [Chinese

Business Leaders Sound Off on 2009
Corporation, page 25
The EO is running the results what they expected to see in 2009. Though opinion was diverse and optimism muted, there was consensus that China would see 8 percent GDP growth for the year, with prices of common goods sliding 1 to 2 percent. But despite pessimism over growth for their industries, 63% were optimistic that their firms would see positive growth in profits, with 10 percent even predicting they would see 30 percent growth or more. Though the EO did not ask why they were so optimistic about their growth in profits, we guess that strict cost-controlling measures, expansion in certain markets, and the fact that resondents came from leading firms were all important contributing factors.
Original article: [Chinese]