Highlights from the print edition, issue no. 407, Feb 23, 2009

Low Cost Housing to Get a Shot in the Arm
Cover
China is likely to triple its spending on low-cost rental housing this year, with the central and local governments allocating 20 and 80 billion yuan respectively, the EO has learned. The move to build more state-subsidized units to be let out at lower rates aimed at reducing housing pressure for lower-income groups. It was also expected to stimulate the slumbering real estate industry.   
Original article: [Chinese]

China's Budget Deficit to Jump Nine-fold
News, page 3
China's budget deficit is expected to reach 950 billion yuan this year, nine times higher than that of last year, the EO has learned. The expanded fiscal spending to stimulate a slowing economy, including the anticipated issuance of 200-billion-yuan worth of bonds for supporting local government projects, is expected to be passed during the country's top legislative conference scheduled in early March.
Original article: [Chinese]

Stocking up on Iron Ore
News, page 4
Two sets of conflicting data for China's iron ore imports in January revealed that some traders might have seized upon a global price slump in the mineral to speculatively stocking up on it. The Transport Ministry's data showed that January's iron ore imports stood at 43.3 million tons, or a 4.8% year-on-year jump. However, Chinese customs data showed 32.6 million tons in imports, or 11.2% drop from a year ago. The differences arose as the Ministry's data was based on receipt of the goods on the dock, while customs data was based on goods that had left the dock and taxes declared. The gap suggested that a substantial part of the January iron ore imports remained on the dock, as traders waited expectantly for prices to soar before releasing them into the market.
Original article: [Chinese]

Trade Protectionism Rears its Head
News, page 7
Trade protectionism has reared its head in recent months as countries across the world struggled to keep their heads above water amidst the global economic downturn. The trend, however, could lead to a regression for global trade, warned prominent Chinese economists whom the EO interviewed.
Original article: [Chinese]

Investigating the Trail of Counterfeit Medicine
Nation, page 9
From sore throat and fever tablets to eye drops, numerous pharmacies in China, especially those in the county-level, have been found to be stocked with counterfeit drugs. The EO investigated a trail of supplies, discovering that some pharmacies were pressured by distributors into selling fakes. Most of the faked drugs were produced in makeshift backyard factories, with little attention paid to quality but huge efforts invested in packaging them to resemble well-known brands with a twist.
Original article: [Chinese]

The Story of a "Rougue" Graduate
Nation, page 10
The EO traces the four-year political path followed by 25-year-old undergraduate Ma Yonghong, who strove to bring about reform in his village by seeking local elected office. Ma's ambition, however, was blocked by local interest groups and the old guards of power. After two failed attempts at village-level democratic elections, Ma has become deeply disillusioned.
Original article: [Chinese]

Wholesale Dealings of Migrant Workers
Nation, page 11
Shenzhen-based Zhang Quanshou had been a successful supplier of migrant workers to manufacturers around the Pearl River Delta until a spate of factory closures hit the region last year. After the Lunar New Year ended, his staffing business declined by two-thirds compared to a year ago, and he had to provide lodging and food for over 2,000 workers pending job deployment.
Original article: [Chinese]

Debate Over Shopping Vouchers for Shenzhen
Nation, page 12
As some local governments in China have already distributed shopping vouchers and travel coupons to their residents, locals of Shenzhen – the country's manufacturing powerhouse badly hit by the slowing economy – were expecting their local authorities to do the same. The local officials, however, have been hesitant and scholars suggested that the best way to revive Shenzhen's waning economy would be by providing credit and tax cuts for small and medium-sized industries to boost employment opportunities.
Original article: [Chinese]

China Development Bank Seeks Acquisition of Shenzhen Bank
Market, page 17
China Development Bank (CDB) has submitted an acquisition formula for gaining stakes in Shenzhen Development Bank (SDB) to the China's banking regulatory body for approval, the EO has learned. CDB, a former policy bank that went commercial last year, has been looking for merger targets to extend its outreach. SDB has emerged as an option as the joint-stock bank's international strategic partner Newbridge Asia would have its shareholder lock-up period expiring soon, and CDB hopes to take over the stakes.
Original article: [Chinese]

New Energy Industries to Shine
Market, page 18
Market analysts in China have projected that new energy industries – including nuclear, wind and solar power, renewable fuel and new energy cars – would become the favorites among investors this year. Some securities houses have identified at least 137 related stocks in the Chinese markets with potential sound returns. Analysts believed favorable policies in promoting the use of new energy of late, both at home and abroad, would propel these stocks upward.

Original article: [Chinese]

Top Management Adjustments at Hua Xia Bank
Market, page 20
Hua Xia Bank kick-start a top management reshuffle after the Lunar New Year ended, according to inside sources. The reshuffle was said to involve at least 15 top managers, and it was aimed at nurturing cross-departmental skills among them, conserving resources, and preventing corruption.
Original article: [Chinese]

Rumors got it Wrong: Chinese Firms Not Interested in AIG Subsidiary
Market, page 21
The EO has learned that western media reports and market rumors that certain Chinese institutions were bidding for American International Assurance, a subsidiary of ailing insurance giant American International Group (AIG), were off the mark. In public and private, sources at three Chinese firms said to be involved- China Life, Bank of China, and the Industrial and Commercial Bank of China - have denied rumors that they tendered bids. However, the EO was able to confirm that China's sovereign wealth fund, the CIC, was in fact looking into the possibility of a joint-purchase of International Lease Finance Corp, a different AIG subsidiary, along with other Chinese firms. Such an investment was unlikely to be taken on by one investor due to the size of the target, and drawn-out negotiations among interested parites were probably holding up deals, one source told the EO.
Original article: [Chinese]

Sanyuan Share Prices Soar after Announcing Bid for Sanlu Assets
Corporation, page 26
Beijing-based Sanyuan dairy company has seen its long-stagnant share prices soar after announcing its planned bid for the assets of the bankrupt Sanlu Group, which was at the center of the poison-milk scandal last year. In anticipation of the take over, Sanyuan had suspended its share trading for over four months until last week. Since trading resumed on Feb 16, two days after an intermediate court ruled that Sanlu assets would be auctioned off in March, Sanyuan's value has doubled compared to half a year ago. Market observers believed investors' confidence came from knowing that Sanyuan could expand its outreach nationwide much faster upon taking over Sanlu, as the latter had a strong distribution network across the country.
Original article: [Chinese]

Long-term Co-operation behind Minmetals Bid for Oz Minerals
Corporation, page 29
Five years of business co-operation and two months of negotiations were the foundation of Chinese state-owned Minmetals Corp's 2.6 billion Australian-dollar offer to Oz Minerals, the world's second largest zinc mining company. Minmetals deputy general manager Jiao Jian said the two companies had done several joint mining explorations and bulit mutual understanding over time. He said it was a friendly bid for strategic partnership and to boost Minmetals' resources reserves.
Original article: [Chinese]