Archive for March, 2008

Taiwan advised to seize mainland opportunity for economic growth

Special Report: NPC, CPPCC Annual Sessions 2008

    BEIJING, March 7 (Xinhua) — The World Bank’s new chief economist on Friday suggested Taiwan to seize the opportunity of the mainland development for further economic growth.

    ”I’d like to say that Taiwan would have a better future in economic development if it seizes the opportunity of the mainland development which would last another tens of years,” said Justin Yifu Lin, also the World Bank’s senior vice president for development economics.

    As far as economic development is concerned, “it’s necessary Taiwan should take people’s interests and benefits into consideration,” said Lin on the sidelines of the ongoing annual session of the National People’s Congress, China’s top legislature, to which he is a deputy.

    According to him, the reason the Republic of Korea has overtaken Taiwan in economic development over the past few years lies in its efforts to take the opportunity of the Chinese mainland’s development.

    Taiwan, however, has “missed chances one after another,” Lin added.

    As an advocate for building a new socialist countryside, Lin said the mainland could learn advanced technology, management and marketing experiences from Taiwan for win-win agricultural cooperation across the Taiwan Straits.

    ”There is much space for agricultural cooperation across the Straits as I think Taiwan has basically built the countryside into what the mainland wants to,” he said.

    Lin encouraged farmers in Taiwan to come to the mainland for business development like their fellow entrepreneurs, saying that they would find the same large space as those from Taiwan’s manufacturing factory.

China’s economy to have rosy prospect in 2008 amid uncertainties

Special Report: NPC, CPPCC Annual Sessions 2008

    By Rong Jiaojiao, Cheng Yunjie and Huang Xin

    BEIJING, March 8 (Xinhua) — China’s economy in 2008 will maintain a robust and stable momentum despite uncertainties ahead, according to signs revealed during the country’s top legislative and political advisory sessions.

    Liu Shucheng, a political adviser and director of the Economic Research Institute of the Chinese Academy of Social Sciences (CASS), believes it is almost out of question for China to score 10 percent of gross domestic product (GDP) growth this year.

    ”China’s economy has maintained a long period of continued and stable growth, which is unprecedented since the founding of New China (in 1949),” he said.

    Justin Yifu Lin, a deputy to the National People’s Congress (NPC) and the World Bank’s chief economist, holds a similar view, saying China’s economy would be affected little by the U.S. subprime crisis.

    ”The demand by the United States, China’s second largest trade partner, would not decrease by a large margin as most of Chinese exports to it were low- and middle-end,” Lin said.

    Despite the sound economic expansion on the whole, Zhang Quan, an NPC deputy and head of Shanghai environmental protection administration, held that China should be fully prepared for the uncertainties ahead.

    ”Risk prevention capability should be further strengthened. Just as an old Chinese saying goes: be prepared for danger in times of safety,” he said.

    In his government work report at the NPC session, Premier Wen Jiabao said, “There are quite a few uncertainties in the current economic situation home and abroad, so we need to keep close track of new developments and problems, properly size up situations and take prompt and flexible measures to respond to them while keeping our feet firmly rooted in reality.”

    China’s GDP in 2007 reached 24.66 trillion yuan, an increase of 65.5 percent over 2002 and average annual increase of 10.6 percent. However, the consumer price index (CPI) in 2007 rose 4.8 percent year-on-year, the highest since 1997 and well above the 3 percent target, mainly due to rises in food and housing costs. In January this year, monthly CPI rose 7.1 percent, the highest monthly surge in the past 11 years.

    Meanwhile, the U.S. Federal Reserve cut interest rate six times in seven months. The European Central Bank (ECB) held key interest rate steady for fears of further inflation in the eurozone as inflation remained a record high of 3.2 percent since the beginning of the year.

    In general, the impact from U.S. subprime crisis on global economy is not clear. And there is no consensus on how international oil price and price hikes would impact on inflation.

    Under such circumstances, Premier Wen called for the appropriate pace, focus and intensity of macroeconomic regulation to sustain steady and fast economic development and avoid drastic economic fluctuations.

    The premier said China would strive to keep this year’s CPI increase at around 4.8 percent while following a prudent fiscal policy and a tight monetary policy.

    As the U.S. newspaper International Herald Tribune observed from the premier’s report, the price hike has become the top concern of Chinese government. The main task is to rein in growing inflation and prevent the economy from being overheated.

    China’s top economic planner, central bank governor and financial minister gathered at a press conference on Thursday to explain government measures to regulate macro-economic growth and contain rising inflation.

    To prevent fast economic growth from becoming overheated growth and keep structural price increases from turning into significant inflation, the People’s Bank of China raised the reserve requirement ratio by half of a percentage point to 15 percent on Jan. 25, the highest since 1984. In 2007, the central bank had raised the ratio ten times and benchmark interest rate six times.

    Economists believe the measures is to ensure sound economic growth and stabilize market anticipation of inflation. The central government has regarded curbing price hikes as the “rigid lever” for this year’s macroeconomic regulation while saving room for economic structure adjustment.

    For low-income earners, who are affected most by growing inflation, a protective umbrella will be provided by the government that advocates “putting people first”.

    ”I believe the government will make greater efforts to solve social issues and improve people’s livelihood through increasing fiscal revenue and making use of other resources,” said Jia Kang, a political advisor and director of the Research Institute for Fiscal Science under the Ministry of Finance.

    Indeed, Premier Wen’s report showed unusual concern on the issue of prices, and came up with nine measures, short- and long-time, to increase effective supply and curb unreasonable demand.

    These measures include expanding production, especially the production of the basic necessities of life such as grain, vegetable oil and meat as well as other commodities in short supply, speeding up improvement of the reserve system, promptly improving and implementing measures to aid the low-income sector of the population and to make sure that the prices of the means of production, particularly agricultural supplies, do not rise rapidly.

Restless hot money inflows may worsen China’s inflation risk, warns political advisor

Special Report: NPC, CPPCC Annual Sessions 2008

    BEIJING, March 8 (Xinhua) — A Chinese political advisor on Saturday warned a continued over-expectation for the appreciation of the Chinese currency yuan would bring in more inflows of hot money and worsen the already excessive liquidity.

    The yuan’s rising exchange rate against the greenback has attracted international surplus capital to flood the Chinese market via various legal or illegal channels, said Li Deshui, former director of the National Bureau of Statistics (NBS).

    Li, who made this remark at a plenary meeting of the First Session of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), said effective monitoring of capital flows shall be at the core of the government’s macro-control work.

    The subprime crisis has dragged the U.S economy down to a recession mire, featuring shrinking consumption and retarded economic growth, Li said.

    Meanwhile, China has kept raising the interest rates, while the United States has so far seen five cuts, Li said, adding domestic interest rate hikes and growing expectations for the yuan appreciation will make the investment in Chinese currency, stock markets and real estate “a rarely secure haven from risks”.

    ”More international speculative funds will pour in through various channels,” Li said.

    China has now an accumulation of about 500 billion U.S. dollars of hot money, according the analysis of relevant research institutes, he said.

    Hot money, if not blocked effectively further, will aggravate the imbalance between China’s internal revenues and expenditure, worsen the already excessive liquidity, add more uncertain factors to Chinese capital market, overheat the economy, intensify the inflation pressure and may even trigger a financial crisis, he warned.

    Chinese Premier Wen Jiabao has listed “tighten oversight on the flow of capital across borders” in the yearly government work report as one of the specifics of a tight monetary policy.

    ”We shall keep an eye on the gate, and never allow short-term international funds to enter and leave as freely as they want,” Li said.

Chinese political advisor calls for stricter control in land expropriation

    BEIJING, March 8 (Xinhua) — China should tighten land expropriation, said a political advisor at the ongoing session of the 11th National Committee of Chinese People’s Political Consultative Conference on Saturday.

    China’s current law on land management stipulates that governments can expropriate collectively owned land “for public interests”, but there is no specification what public interests mean, said Liang Jiyang, a researcher with the Institute of Geographic Sciences and Natural Resources Research under the Chinese Academy of Sciences.

    ”The term should be clearly defined to curb land seizures, and compensation should be paid in full,” he said, adding land expropriation generates huge profits.

    ”The price of land is many times the compensation the government pays in expropriation,” he said. “The huge difference lured some local government to seek profits from land.”

    Over expropriation has led to sharp decrease of arable land, said the researcher.

    Currently the acreage of arable land in China is 121.8 million hectares or 0.09 hectares per person, which is respectively 8.3 million and 0.11 hectares down from 1996 and less than 40 percent of world’s average level.

    Liang estimated that China’s population could grow to 1.6 billion, who need at least 120 million hectares of land to ensure enough food.

    Land expropriation leaves nearly 50 million farmers with few land who have become a vulnerable group prone to mass incidences to threaten social stability, he said.

    Land monopoly also fueled rising house prices in China, added Liang. Despite government efforts in cooling the red-hot housing market, real estate prices in major Chinese cities in January still jumped 11.3 percent over the same month last year, according to an earlier report.

    China adopted the landmark property law last March. In a move to better protect farmers from land seizures, which frequently caused public anger, the law stresses the protection of arable lands, promising strict restrictions in the transformation of land from agricultural use to construction projects.

WB chief economist predicts 30 years of fast growth

    BEIJING, March 10 — China’s economy would keep growing fast for up to 30 more years thanks to its vast domestic market and foreign investment, incoming World Bank chief economist Lin Yifu said Friday.

    ”For the prospect of China’s development, as you know I’m an optimist and I believe China is absolutely likely to see high-speed growth for 10, 20, or 30 years,” Lin, a Chinese professor, told reporters at a press conference in Beijing.

    ”There is quite a large amount of room for China’s industry to be upgraded, and also China has a vast domestic market.”

    ”Meanwhile, foreign investors, either taking China as a manufacturing base for exports or a market that keeps expanding, will (continue to) come to invest in the country.”

    China’s historic economic transformation began 30 years ago. Since then, hundreds of millions of people have been lifted out of poverty and China’s economy has grown to become the fourth biggest in the world.

    But with China’s inflation hitting an 11-year high in January and economic growth rising at double-digit pace for a fifth straight year in 2007, there are many concerns in the country over overheating and potential social unrest.

    In a bid to cool the economy, the government has raised the amount of money banks must keep in reserve 11 times over the past 14 months and hiked interest rates six times in 2007.

    Lin argued that interest rate hikes were a better tool than reserve ratio rises for China.

    ”I am personally in favor of using interest rate policies (more often),” said Lin.

    He explained that the problem with reserve ratio hikes was that small and medium-sized enterprises — the main providers of jobs — were often the first to lose access to credit.

    Lin, the founding director of the China Center for Economic Research at Beijing University, was named last month as the World Bank’s next chief economist, and will take over the position in May.

    He was speaking Friday on the sidelines of China’s parliament, the National People’s Congress, of which he is a delegate.

    (Source: Shenzhen Daily/Agencies)

China targets company executives in fight against pollution

Special Report: NPC, CPPCC Annual Sessions 2007

    BEIJING, Feb. 26 (Xinhua) — China is to get tough on corporate executives responsible for causing severe pollution by imposing hefty fines on them.

    Heads of Chinese enterprises which cause severe pollution incidents may face the fine equivalent to half of their annual income, according to the draft of an amended law on water pollution.

    The draft of amendment to the Water Pollution Prevention and Control Law was submitted on Tuesday for review to the 32nd session of the Standing Committee of the National People’s Congress (NPC), or top legislature.

    ”Enterprise heads directly responsible for causing severe water pollution incidents and others with direct responsibility would be fined up to half of their income in the previous year,” the draft said.

    Previous punishment of responsible company heads stopped at administrative penalties.

    Enterprises would be held responsible for 30 percent of the direct loss of any serious water pollution incident they cause and20 percent for incidents of medium consequences.

    Environmental officials and experts have repeatedly called for heftier fines on illegal polluters as a way to curb environmental violations.

    ”The fine should be made heftier, especially on those who repeatedly violate the environment rules,” said Hou Yibin, a deputy to NPC’s Standing Committee.

    ”The amount of fines should be imposed according to the severity of violations, and too little money cannot effectively tackle the long-standing problem of ‘low violation cost’,” said a statement of the NPC’s Law Committee issued in December.

    Water pollution is one of the biggest environmental concerns for both the government and public.

    A 2006 survey revealed China’s surface water generally suffered from medium pollution, but one third of the 744 samples tested were graded as the worst pollution rating.

    According to statistics from the State Environmental Protection Administration (SEPA), the administration handled 161 emergency environmental pollution incidents in 2006, 59 percent of which involved water pollution.

    Pan Yue, the vice director of SEPA, said on Monday that the agency has issued a regulation stipulating that highly polluting companies must pass environmental inspections when applying for an initial public offering (IPO) or re-financing, one major step toward a “green securities policy”.

    The regulation targeted companies engaged in power generation, steel, cement and aluminum production, and provincial companies classified as energy-intensive or highly polluting. That latter category covers 13 industries, including metallurgy, coal, textiles and paper.

    Besides the “green securities policy”, China has introduced two other green policies — one for insurance, one for credit — in a bid to solve severe environmental problems through economic measures.

    The “green insurance system”, which aimed to have all industries with pollution risks insured, will be implemented nationwide by 2015 after a trial period. The goal would be to have insurers compensate victims of environmental accidents, avoid bankruptcy by the polluting company and lessen the government’s financial burden.

    The “green credit policy” was launched in July. It instructed banks to limit lending to energy-intensive, polluting industries. Under this policy, companies with violations could be barred from getting loans and those with outstanding loans could have their loans called in. 

IMF chief expects 10% economic growth for China

    BEIJING, Feb. 15 (Xinhua) — Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), said Friday that although there was some impact from U.S. sub-prime mortgage crisis on China, IMF still expected the Chinese economy to expand by 10 percent this year.

    Strauss-Kahn made the remarks at a press conference one day after his arrival to Beijing, the first visit for him as managing director of the IMF.

    Focusing on concerns about the current situation for the global economy in his discussions with the Chinese officials, Strauss-Kahn stressed again that the fast-growing emerging economies like China and India could not “decoupled” from poor growth prospects in the United States and Europe, and immune from the financial crisis.

    ”The current financial crisis, which began in the United States housing market, is spreading to affect the real economy in the U.S. and elsewhere,” said Strauss-Kahn, noting that no region will escape entirely unscathed since both the industrial economies and the emerging economies are closely linked with trade and financial market.

    But Strauss-Kahn also expressed his strong beliefs that despite impact from the financial crisis, the emerging economies like China and India are still full of vigor.

    ”We still expect China’s economy to expand by 10 percent this year, and India’s economy to growth by about eight percent.” he said.

    He called on emerging market countries to be ready to respond to the crisis and warned there were still challenges ahead for China in sustaining its strong economic performance.

    Strauss-Kahn said China’s most immediate priority was recovery from the effects of the recent severe winter weather that disrupted much of the country and caused a loss of life.

    He said the Chinese government was also confronting several macroeconomic policy challenges, including preventing inflation from becoming entrenched, and rebalancing growth away from a heavy reliance on exports and investment towards consumption. Addressing social inequalities and improving energy efficiency were also priorities.

    China’s continued tight monetary policy would be important in containing investment growth and inflationary pressures, and the government’s emphasis on reorienting the budget towards improving social services, including health and education programs, could help to reduce disparities and rebalance growth, he said.

    The IMF had seen China’s focus on financial sector reforms, and welcomed the decision to participate in the IMF’s financial sector assessment program, which could help China to assess its financial risks and stability.

    ”We also welcome the Chinese authorities’ objective of allowing greater flexibility over time,” said Kahn in relation to exchange-rate policy. He praised China’s exchange-rate reform as moving in the right direction.

    But Strauss-Kahn also expressed the hope of seeing a faster pace of appreciation that would help address China’s key economic challenges and contribute to global economic stability.

    As he promised in his latest speech in India, Strauss-Kahn reaffirmed that he would continue his reform of the IMF, including the development of a new income model and reforms that would give greater representation to emerging economies.

    ”The international community is facing a challenging period ahead as the global economy and financial markets adjust to the recent turbulence and policymakers work to preserve economic and financial stability,” said Strauss-Kahn.

    ”I am confident from my discussions here in Beijing that China will play a role in this effort commensurate with its growing importance in the world economy.” he added.

    Strauss-Kahn arrived in Beijing on Thursday after he met with the finance ministers of G7 countries in Japan and visited India.

    Strauss-Kahn met with Chinese Premier Wen Jiabao on Thursday afternoon in Beijing and also held discussions with People’s Bank of China Governor Zhou Xiaochuan.

China’s state-owned grain companies shrug off losses

    

Farm machines transport Corns in Yitong county, Northeast China’s Jilin Province in December 2008.(newsphoto)
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    BEIJING, Feb. 10 (Xinhua) — China’s grain circulation enterprises shrugged off losses to reap unprecedented profits last year, the first in the past 46 years.

    Overall net profits of the nation’s grains enterprises hit a historic 167 million yuan (23.194 million U.S. dollars) last year, Xinhua learned from the State Administration of Grains (SAG) on Sunday. In 2006, those companies suffered a 2.97 billion yuan loss.

    Grain companies in 17 provinces including Jiangsu, Shandong and Henan earned handsome profits while those in other areas trimmed their losses, according to SAG.

    The first-ever profit surplus was believed to be a result of effective government measures backed by the minimum purchasing price schemes, which aims to protect the interests of both farmers and grain trading companies.

    Rising grain prices also drive up the profit. Last year the minimum purchasing price for wheat and rice stood at 69 to 72 yuan and 70 to 75 yuan for every 50 kilograms, respectively.

    China’s National Development and Reform Commission (NDRC) announced Friday that the minimum purchasing price for wheat and rice in 2008 will be raised slightly

    The minimum purchasing price for different types of rice ranges from 75 yuan (about 10.4 U.S. dollars) to 79 yuan per 50 kilograms; while that for wheat ranges between 70 yuan and 75 yuan.

    Volatile price fluctuation still plagued the industry despite the profits, according to sources with SAG, while limited access to bank loans, rising interest rates and lack of competence hamper the enterprises’ development.

    The grain watchdog said the country produced 501.5 million tons of grain in 2007, the fourth consecutive year of increase despite months of severe drought. The year ended with a relatively high level of grain reserves.

    Snowstorms that started to hit southern China in mid January, however, have taken a limited toll on grain output as most winter grain crops were planted in the north.

    But Agriculture Minister Sun Zhengcai said the output still failed to meet domestic demand for the year.

    Official statistics show that over the past decade, Chinese per-capita grain supply decreased from 412 kg in 1996 to 378 kg in2006.

    China’s consumer price index (CPI) rose 4.8 percent in 2007, with the prices of grains, such as soybean, reaching a record high.

    The government also took a series of measures to rein in price increases. These included injecting state grain reserves into the market and promoting sales of grain purchased at minimum prices from farmers.

    ”The prices of agriculture products should be kept at a reasonable level, which would ensure that farmers get enough profits, and at the same time remain affordable to consumers,” said Chen Xiwen, a leading agricultural policy decision maker.

    

    China raises minimum purchasing price for wheat, rice

    BEIJING, Feb. 8 (Xinhua) — China’s National Development and Reform Commission (NDRC) announced Friday that the minimum purchasing price for wheat and rice in 2008 will be raised slightly in an effort to protect farmers’ interests in grain production.

    The announcement said the minimum purchasing price for different types of rice ranges from 75 yuan (about 10.4 U.S. dollars) to 79 yuan per 50 kilograms; while that for wheat ranges between 70 yuan and 75 yuan.  Full story 

    China’s grain output to remain stable in 2008

    BEIJING, Feb. 2 (Xinhua) — China’s grain output will remain stable at around 500 million tons this year if there are no major natural disasters, the State Grain Administration (SGA) said on Saturday.

    The ongoing snow, the worst in the country in five decades, has rendered limited effects on grain production, Chen Xiwen, head of the Office of the Central Leading Group on Rural Work, told the media. Full story