Highlights from the EO print edition, issue no. 423, June 15, 2009

Pingan Insurance to Buy Large Stake in Shenzhen Development Bank
Cover, lead story
>> On June 12, Ping An Insurance (Group) Company of China and Shenzhen Development Bank (SDB) simultaneously announced that Ping An Insurance would purchase at least 370 million and possibly up to 585 million additional shares issued by SDB.
>> Ping An said it would also buy 520 million shares from the U.S.-based TPG's Asian arm Newbridge Capital for 11.45 billion yuan by the end of 2010. Newbridge Capital is currently the largest shareholder in Shenzhen Development Bank.
>> The two deals would enable Ping An to acquire a stake of nearly 30 percent stake in Shenzhen Development Bank, and by doing so, replace Newbridge Capital as the largest shareholder in the bank.
>> The deals still requires regulatory approval.
Original Article: [Chinese]

China Defines State Compensation Standard in Relation to Psychological Suffering
News, cover
>> The EO learned that China has drafted compensation standards in relation to mental suffering into the State Compensation Law which is currently undergoing revision.
>> The maximum amount of compensation for a person wrongly convicted of a crime, will be equivalent to five times the country's annual average salary from the previous year.
>> The annual average salary of China's employees in 2008 reached 29,229 yuan, according to the National Bureau of Statistics.
>> Calculated on this basis, the state compensation in 2009 would amount to a maximum of 146,145 yuan.
Original Article: [Chinese]

State Tax Revenue Continues to Decline
News, page 3
>> A source from the State Administration of Taxation revealed that May's tax revenue continued to decline compared to last years figures, but registered a slight rebound from the speed of April's slide.
>> Because a large number of construction projects were started, revenues from tax on the use of arable land, tax on the use of urban land, urban real estate tax and similar tax items grew by at least 20%.
>> However, the country's value added and company income tax continued to decline when compared to last year. As a result, state tax revenue will continue to decline.
Original Article: [Chinese]

NDRC Unveil 20 Policies to Stimulate Private Investment
News, page 5
>> At an internal investment seminar held on June 11, the National Development and Reform Commission put forward 20 policy suggestions aimed at stimulating private capital investment
>> Suggestions included allowing and encouraging private capital to invest in telecommunications, finance and the urban water supply sector, among other monopoly fields; enhancing supports in terms of financing, loan and credit guarantees for private companies; supporting and guiding private capital to invest in non-profit sector like education, culture and health care.
Original article: [Chinese]

Resource Prices on the Rise - Inflation Risk
News, page 6
>> Although China's main inflation indicators remained negative in May, fears of inflation are beginning to emerge as the country's asset prices begin to rise.
>> Thanks to high profit margins, a large amount of capital flowed into financial assets - including the stock and real estate markets, and also into non-financial sectors like crude oil, aluminium and other bulk commodities.
>> Li Xunlei, chief economist of Guotan Jun'an Securities Company, held that the asset prices would replace consumer prices to become the main indicator of inflationary tendencies in the economy.
Original article: [Chinese]

New Graduates: Dreams Conflict With Realities
Nation, page 11
>> According to Shaanxi Education Department, the number of new university graduates in Shaanxi will hit a new record this year, with 246,800 students expected to graduate in July. However, according to a survey, by the end of May, only 41% of these graduates have signed contracts, their averaged expected monthly salary was 2,171 yuan.
>> Serious employment pressure still exists in Shaanxi, with many graduates lowering their monthly salary expectation from 4,000 yuan down to 2,000 yuan.
>> Tough conditions like these have forced many graduates to alter there expectations. Some have taken part in exams to run for village governors; some have taken up positions with town governments and medical institutes; others have become volunteers to support rural education.
>> However, most graduates stilled longed for a job in one of the large cities like Beijing, Shenzhen and Shanghai according to a survey made by Shaanxi Academy of Social Sciences.
Original article: [Chinese]

China Huijin and Shanghai International Group (SIG) Swap Stakes in Securities Companies
Market, page 17
>> China Huijin Investment Company, an investment arm under China Investment Corporate (CIC), has reached a cooperative intention with Shanghai International Group (SIG), the city's state-owned assets operator, to the effect that they will take controlling stakes in each other's securities companies through equity swaps.
>> After the deal, Huijin Investment will hold a 51.36% equity interest in Shenyin & Wanguo Securities, and SIG would control a 45.63% share of Guotai Jun'an Securities.
>> Details on the equity swap are still under negotiation between the two companies and still require approval from the securities watchdog.
>> The move is in response to the new supervisiory regulations that now apply to securities companies. The regulations were issued in April last year.
>> According to the rules, if over two securities companies are controlled by the same unit or individual, or by each other, they are prohibited from dealing with the same securities business.
Original article: [Chinese]

Three Private Equity Funds Bet On Ping An
Market, page 23
>> The EO learned that three well-known private equity funds: Shenzhen Eastern Bay Investment Management Company, Shenzhen Co-power Asset Management Company and Shenzhen Mingda Capital Management Company all bought shares in Ping An Insurance Group.
>> They maintained that Ping An's present stock price was undervalued.
Original article: [Chinese]

China Mobile Invests Ten Billion to Spur 3G Phone Sales
Nation, page 39
China Mobile, the country's largest telecommunication carrier, has already issued license numbers and is busy promoting their 3G capable mobile phones which utilizes the home-grown TD-SCDMA technology, however sales of their 3G phones are still weak.
According to a market monitor, China Mobile only managed to sell 8,000 units of their 3G phones in the first quarter of 2009. This figure was well short of the company's planned target of 10 million by year's end.
Against this backdrop, sources said China Mobile would spend 10 billion yuan to promote the TD-SCDMA phones.
Original article: [Chinese]