Highlights from the EO print edition, issue no. 460, March 15, 2010

Property Developer Enters the Football Field
News, cover
~ Without any warning, Evergrande Real Estate Group, a privately-owned property developer, announced at a joint press conference with the Guangzhou Municipal Sports Administration on March 1, that it plans to spend 100 million yuan to purchase the Guangzhou Football Club.
~ The club was recently involved in a high-level scandal involving corruption, match-fixing and gambling in the domestic league.
~ It's not the first time that Xu Jiayin, Chairman of the Evergrande board and the fifth richest man in mainland China according to latest Forbes' Rich List, has invested in a sporting team.
~ In April last year, the company invested 20 million yuan in a volleyball club and later hired Lang Ping, former head coach of both the Chinese and American Women's Volleyball Teams, to coach the team.
~ Analysts interviewed by the EO suggest that aside from promoting the Evergrande brand (恒大 or héng dà in Chinese),  property developers can also benefit from certain preferential policies offered by local governments to sporting clubs including being qualified to invest in the development of sporting facilities.
Original article: [Chinese]

The Age of GM Staple Crops in China?
News, page 3
~ China could well become the world's first major grain producer to seriously embark on the widespread commercial planting of genetically modified grain, after it approved the planting of two strains of GM rice and one strain of GM corn late last year. Though at least 2-3 years of testing is required before the final product will have a chance of being sold to end consumers.
~ Though many Chinese scientists support the planting of the GM crops, our investigation reveals that many uncertainties concerning the safety and feasibility of the plan remain.
~ It's claimed that the genetically modified seeds were raised in labs with negative pressure by the China Agricultural Science Institute, but some scientists have shown that no such labs exist.
~ Another doubt lies on whether the new crops will be able to lift output, Han Genchen, Chairman of  Aoruijin Seed Company, a NASDAQ-listed company that is the only supplier of the genetically modified corn seed, insists that the crops will boost output.
Original article: [Chinese]

Reforming Beijing's Representative Offices
News, page 4
~ In interviews with the EO, governors from Hubei, Gansu, Shandong and Jiangsu all announced that they plan to begin implementing the removal of their Beijing representative offices, after the conclusion of  China's legislature and advisory body meetings.
~ The governors indicated that they would begin making arrangements in late March and hopefully complete the task in six months.
~ In late January, the State Council issued a circular requiring local governments remove their representative offices in Beijing. However, many offices have since told the EO that they didn't receive any order to leave Beijing.
~ An source close to the matter told the EO that details on how these liaison offices withdrew from Beijing were still under deliberation.
~ Li Gang, president of a special newspaper devoted to providing information to the representative offices in Beijing, believes that it would make more sense to transform these offices into associations or clubs than simply dissolve them.
Original article: [Chinese]

Income Tax Threshold Not be Raised
News, page 5
~ The Ministry of Finance (MOF) is currently considering reforming China's personal income tax system, but there are no plans to lift the minimum taxable income from RMB 2,000 a month.
~  To ensure high-income earners will have a higher relative tax burden, the MOF is planning to take other factors in to account when calculating the amount of tax owed by an individual: including the number of people in the taxpayer's family and total family income.
~ In order to implement this new system, an online database is required. The State Administration of Taxation (SAT) has asked its local subsidiaries to set up an online system for sharing tax payers personal information and is also cooperating with the People's Bank of China and China Banking Regulatory Commission.
Original article: [Chinese]

China to Encourage Small Banks to Go West
News, page 5
~ A source at the China Banking Regulatory Commission (CBRC), the country's bank regulator, revealed to the EO that the commission has begun drafting guidelines aimed at encouraging small and medium-sized financial institutions to establish branches in China's western regions and issue loans to small and medium-sized enterprises.
~ The guidelines are expected to carried out before the end of this year.
~ According to requirements made by the CBRC, new loans issued to small-and-medium-sized in 2010 should exceed the 1.4 trillion yuan issued in 2009.
Original Article: [Chinese]

Analysis: China's CPI Rose 2.7% in February
News, page 7
~ China's consumer price index registered a year-on-year increase of 2.7 percent, which exceeded market expectation and was only 0.3 percentage points lower than the inflation control target, Premier Wen announced at the opening of the country's top legislature meeting.
~ In addition, other economic indicators have also continued to improve, arousing concerns that the country's economy may have begun to overheat.
~ Several economists interviewed by the EO held the central bank wouldn't raise interest rates in the near term, but that we are likely to see a rate rise in late April or early May this year.
Original article: [Chinese]

Regional Economies: The Next Driver of China's Economy
Nation, page 7-14
~ As regional economies become one of the driving power of Chinese economy, the economic map of China will be gradually reshaped.
~ During China's "Two Sessions," the Economic Observer published a special report on the leaders of China's local governments which outlined their ambitions and plans to develop their local economies.
~ From Northeast China to the Southwest, from Pearl River Delta to Yangtze River Delta, from Beijing, Tainjin and Tangshan to central China, they are all looking to restart their economic engines by promoting the industries in which they possess an advantage.
Original Article: [Chinese]

China Mobile Becomes Biggest Shareholder of Shanghai Pudong Development Bank
Market, page 19
~ Guangdong Mobile, a subsidiary of China Mobile, has bought 2.208 billion A shares off the Shanghai Pudong Development Bank (SPDB) at a price of 18.03 yuan per share. This means that Guangdong Mobile is now SPDB's biggest shareholder, followed by Shanghai International Group and its affiliated company: Shanghai International Trust Co.Ltd.
~ SPDB has lifted its core capital adequacy ratio from 6.76% to over 10%, far exceeding the 7% required by the China Banking Regulatory Commission. Some believe that this is an indication of the weakened control that the Shanghai State-owned Asset Administration and Supervision Commission now has over the bank.
~ According to some media reports, if you combine the shares held by Shanghai International Group and Shanghai International Trust Co.Ltd, China Mobile is only the second biggest shareholder of the SPDB.
Original article:[Chinese]