China Economy Forum

[Brotherhood]

Hainan uses offshore duty-free policy to boost economy - People's Daily Online March 07, 2011

Three shops in Hainan, the most southern province of China and an increasingly popular tourist destination, were recently approved by central authorities to offer duty-free goods. This means that Hainan has taken one step further on its way to becoming an international tourist island in terms of business.

The offshore duty-free policy means that international tourists are allowed to purchase certain items on the island without taxation on the condition that they show flight tickets proving the date of their departure. This policy is aimed at attracting more international big brand discount stores to set up shop on the island.

Central administrative departments, such as the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation, jointly gave the green light for this crucial duty-free program, which is one of a series of provincial policies for promoting Hainan as an international tourist island.

The related supervision regulations and the software will soon be finalized, said Luo Baoyou, governor of Hainan Province.

Luo also lists some current limits of this policy. For example, the type and amount of items are limited, and sales are limited to certain customers in order to prevent smuggling.

According to the statistics that have been collected since the tax-refund policy trial was launched on Jan. 1, few tourists have come from Japan, South Korea and Russia, which raised critical doubts about the effectiveness of the policy.

It is a question of fit and the art of marketing, Luo responded, when commodity items prepared perfectly fit the needs of overseas tourists, and when the marketing strategies are delicately tailored for the local situation, things can be expected to greatly improve.

By Li Yancheng, People's Daily Online

 

[Brotherhood]

Most Chinese provinces to make resident income grow as quickly as economy in 2011-2015 - People's Daily Online March 07, 2011

Altogether 24 provincial regions have set targets for the growth of resident income which equal or outpace local GDP growth goals in the 2011-2015 period, an official with China's top economic planning body said Sunday.

Five provincial governments have promised to make the increase of people's income outperform local GDP growth, while another 19 set the same growth rates for GDP and resident income, said Xu Xianping, vice minister of the National Development and Reform Commission.

Another five provincial regions have pledged to make resident income increase "basically keep pace with" local GDP growth in the same period, he said.

There are 31 provinces, autonomous regions and municipalities in the Chinese mainland.

China plans to coordinate the increase of people's income with economic expansion, and the increase of workers' pay with improvements in labor productivity for the 2011-2015 period, underlining its goal of rebalancing economic and social development.

The move signaled an important policy orientation and would exert great influence on China's economy, Xu told a press conference, without elaborating.

To achieve the targets, Xu stressed the necessity of establishing a nationwide social insurance network, ensuring residents' access to medical services and constructing housing projects for middle- and low-income urban households.

Source: Xinhua

 

[Brotherhood]

China's fiscal expenditure to exceed 10 trillion yuan for first time - People's Daily Online March 07, 2011

China's national fiscal expenditure in 2011 will reach more than 10 trillion yuan, which is up by 12 percent compared with the previous year, according to the country's budget report for 2011. This will be the first time China's annual fiscal expenditure has exceeded 10 trillion yuan.

According to the report, the central government will spend more than 1 trillion yuan on areas directly related to people's livelihoods, such as education, medical and health care, social security and employment, housing support and culture, representing an increase of more than 18 percent over last year.
Around 988 billion yuan will go to projects for agriculture, rural areas and farmers, representing an annual increase of more than 15 percent.

The central government will also allocate more than 3.7 trillion yuan for tax rebates and fund transfers to local governments, an increase of more than 15 percent.

Other expenditure on closely related to people's livelihood include investment on rural irrigation and water conservancy, transportation and environmental protection.

In total, nearly two-thirds of the central government's fiscal budget will be used to improve people's living conditions.

Meanwhile, the government will also try to reduce administrative costs by implementing financial and economic discipline to practice austerity among government agencies.

By Li Jia, People’s Daily Online

 

[Brotherhood]

China showcases major hi-tech progress in 11th Five-Year Plan - People's Daily Online March 07, 2011

On March 6, 2011 a worker stands at a large poster showing China's progress in aerospace. It is one of the displays for the exhibition of China's major technological achievements during the 11th Five-Year Plan (2006-2010). The exhibition, held from March 7 to March 14, in Beijing presents China's remarkable progress in innovation-driven research and development and the bigger role of high technology in boosting the country's strategic emerging industries and industrial restructuring. (Xinhua photo)

Photo, taken on March 6, 2011, shows China's Harmony bullet train and a comprehensive inspection train, which is used to test the operation of high-speed rail ways. Both are displayed at the exhibition of China's major technological achievements during the 11th Five-Year Plan. (2006-2010).The exhibition presents China's remarkable progress in innovation-driven research and development and a bigger role of high technology in boosting the country's strategic emerging industries and industrial restructuring.(Xinhua photo)

Photo taken on March 6, 2011 at the exhibition of China's major technological achievements during the 11th Five-Year Plan (2006-2010) held from March 7 to March 14. The digitalized vehicle is based on a China-developed software system, which has been applied to all major parts of an auto. The exhibition presents China's remarkable progress in innovation-driven research and development and a bigger role of high technology in boosting the country's strategic emerging industries and industrial restructuring.(Xinhua photo)

Photo, taken on March 6, 2011, shows a model of an intelligent transportation system for mega-cities like Beijing. The model is one of the displays for the exhibition of China's major technological achievements during the 11th Five-Year Plan (2006-2010) held in Beijing from March 7 to March 14. The exhibition presents China's remarkable progress in innovation-driven research and development and a bigger role of high-tech in boosting the country's strategic emerging industries and industrial restructuring.(Xinhua photo)

Photo, taken on March 6, 2011, shows a worker installing the exhibits for the exhibition of China's major technological achievements during the 11th Five-Year Plan (2006-2010). The worker is looking at a model of the Chang'e-1, China’s first lunar probe. The exhibition, held in Beijing from March 7 to 14, presents China’s remarkable progress in innovation-driven research and development and the bigger role of high technology in boosting the country's strategic emerging industries and industrial restructuring.(Xinhua photo)

Photo, taken at an exhibition on March 6, 2011, shows the C919, China's large 200-seat passenger jet, which is scheduled to make its maiden flight in 2014 and be delivered for operation in 2016. The exhibition, held in Beijing from March 7 to 14, presents China's remarkable progress in innovation-driven research and development and the bigger role of high technology in boosting the country’s strategic emerging industries and industrial restructuring.(Xinhua photo)

 

[Brotherhood]

China to build more hospitals while reforming health service - People's Daily Online March 08, 2011

The Chinese government plans to build more hospitals at the county level as one of the measures to reform the national public health service, said a State Council circular on Monday.

By the end of this year, every county with a population of more than 300,000 must have a public hospital with at least 100 beds and certificated medical workers accounting for 75 percent of the total staff, said the pilot project plan to reform public hospitals, which was published on the official website of the Chinese government.

Under the plan, the country will try a system of technical cooperation between county hospitals and rural clinics in one-fifth of the nation's 2,800 counties in a bid to improve medical service to villagers.

The country will also try to reform the health authorities and improve supervision of public hospitals, the document said.

Also, chief officials of the health departments at all levels will be banned from doubling as public hospital heads to tighten the supervision of public hospitals.

To control the cost of medical service, measures will be taken to make public hospitals use basic medicines listed by the state and adopt public bidding in the purchase of medicines, the document said.

It also pledged that China would work out policies to encourage private investment in operating hospitals and create a better environment for private hospitals.

Source: Xinhua

 

[Brotherhood]

China's rural per capita net income up 8.9% annually over past five years: NBS - People's Daily Online March 08, 2011

The per capita net income for China's rural residents maintained an 8.9-percent annual growth rate during the 2006-2010 period, or 12.7 percent before price factor adjustments, the National Bureau of Statistics (NBS) said Monday.

The figure was 3.6 percentage points higher than that of the country's 10th Five-Year Program period (2001-2005), the NBS said in an online statement.

The per capita net income for rural residents rose 81.8 percent in five years before price factor adjustments to 5,919 yuan (902 U.S. dollars) in 2010, said the statement.

This growth was attributed to increases in wages and transfer incomes as well as stable household, business and property incomes, it said.

Also, the per capita living expenditure of rural residents rose 7.8 percent annually during the period to 4,382 yuan in 2010 after deducting the price factors, it added.

The Engel's Coefficient, which measures the amount of money spent on food compared with total income, was down 4.4 percentage points over the past five years to 41.1 percent in rural areas in 2010, it said.

Meanwhile, grain and oil expenditures decreased while consumption of health foods such as dairy products increased. The rural per capita grain expenditure fell 13.1 percent during the period while the rural per capita expenditure for dairy products rose 8.6 percent, said the statement.

Expenditures on home appliances such as refrigerators, air conditioners and microwave ovens also saw substantial growth, according to the statement.

Source: Xinhua

 

[Brotherhood]

China Vanke 2010 net profit up 36.65 pct, sales top 100 bln yuan - People's Daily Online March 08, 2011

China Vanke Co., the country' s biggest developer by market value, said its 2010 net profit rose 36.65 percent on strong demand for homes.

Its net income surged to 7.28 billion yuan (1.1 billion U.S. dollars), from 5.3 billion yuan in the previous year, the company said in a statement filed to the Shenzhen Stock Exchange Monday.

Operating revenue last year rose 3.75 percent year on year to 50.71 billion yuan, while earnings per share jumped 37.5 percent year on year to 0.66 yuan, it said.

The company's contracted sales rose 70.5 percent from a year earlier to 108.16 billion yuan in 2010, becoming the first Chinese developer to exceed the 100 billion yuan mark.

Vanke attributed its increased earnings to China's home prices hike in 2010.

China's housing prices have been climbing steeply since June 2009, fueled by record bank lending and tax breaks. The monthly year-on-year growth rate hit a record 12.8 percent in April last year.

Government data showed last month that prices of new properties in 68 of 70 major cities surveyed grew from a year earlier in January, with 10 cities reporting double-digit increases in new home prices.

Source: Xinhua

 

[Brotherhood]

Land available for 10 m new 'affordable homes' - People's Daily Online March 07, 2011

China's land watchdog is guaranteeing there will be enough building sites available for the construction of the 10 million affordable homes the country has called for this year and said it will complete a detailed land-use plan before the end of March.

Xu Shaoshi, minister of land and resources, told China Daily on Saturday the land is "absolutely guaranteed".

If the land provided falls short of what is required, those to blame will face severe punishments, Xu said.

He added that the general land supply plan will include an additional plan specifically about the provision of land for affordable housing.

China plans to build 36 million affordable homes during the coming five years, including 10 million in 2011 and 10 million in 2012. The remaining 16 million will be finished during the final three years of the 12th Five-Year Plan (2011-2015) period, said Xu Xianping, deputy head of the National Development and Reform Commission, at a news conference in Beijing on Sunday.

The affordable homes are part of the plan to help solve the problem of rapidly rising house prices caused by an overheated real estate sector.

Compared to the target of 5.8 million new affordable homes in 2010, the challenge of finding enough land for the 10 million affordable homes in 2011 will put pressure on land resources.

The central government reiterated on Jan 26 that, of the total supply of land for housing, more than 70 percent should be for affordable housing, small- and medium-sized homes and the reconstruction of shantytowns. A report from the ministry showed the ratio in 2010 was 67.9 percent across 30 provinces, municipalities and autonomous regions.

Illegal land use, such as leaving land idle that was earmarked for building, is something the ministry is trying to counter.

Xu said more severe punishments will be introduced for such practices.

He added that the heads of 12 places with rampant land misuse had been summoned to the ministry for "face-to-face" discussions.

But, according to a report from WorldUnion Properties, the construction of the 10 million affordable homes this year might be hampered not so much by a lack of land as a lack of funding. It suggested funding could fall short by as much as 816.2 billion yuan ($124.4 billion), which is more than half of the 1.3 trillion yuan needed.

Zhang Rongming, vice-chairwoman of the CPPCC National Committee, said a shortage of funding could be a problem, despite the fact that the government will raise money from its allocated fiscal revenue, the housing provident fund and local authorities' land transfer revenues.

"We expect the central government will contribute more to the cost of construction and favorable policies could be brought in to encourage other capital to be invested in the project," she said.

Yan Qingmin, a member of the CPPCC National Committee, said the role of bank loans in the regulation of the property market should not be overestimated.

"Because a tightening monetary policy usually has to be conducted through management of credit," said Yan, who is also assistant chairman of the China Banking Regulatory Commission.

Yan, who was speaking on Friday, suggested the government relies more on tax and fiscal support to curb increases in the cost of real estate and to fund the building of the affordable homes.

 

[Brotherhood]

Commerce minister: Trade surplus to shrink in 2011 - People's Daily Online March 08, 2011

China's imports is going to rise, while the previously huge trade surplus should shrink in 2011, as the country has moved to re-caliber its economy onto domestic consumption which is considered more sustainable.

Commerce Minister Chen Deming told a news conference in Beijing Monday that China has planned to lower import tariffs on a slew of selected goods this year. He called the developed countries, including the U.S. and European trade partners, to end trade discriminations on China by allowing more high-tech exports to China.

The country’s trade surplus, has dropped in the recent years. Last year it decreased 6.5 percent year-on-year to US$183 billion. That followed a 34 percent fall to US$196 billion in 2009 from a year earlier.

Chinese economists have complained that the trade surplus, coupled with the inflows of overseas speculative “hot money”, has exacerbated China’s inflation as the central bank has increased supply of local currencies to the market by buying the surplus.

The government's 2011 economic blueprint calls for nurturing self-sustaining growth by promoting consumer spending. That might help to ease political volatility with Washington and other trading partners that complain about currency controls.

In 2010, China’s exports grew by 31.3 percent, while imports rose by a staggering 38.7 percent, which gave a boost to global economic revival.

Chen, speaking to reporters on the sidelines of the National People’s Congress, declined to give a detailed trade forecast for this year but said Beijing would try to simplify import procedures. “Our foreign trade policy principle this year is `stabilize exports, promote imports, reduce the surplus',” the minister said.

"We expect import growth to be relatively fast," Chen said. "The ratio of surplus to GDP should decline, though we cannot rule out the possibility there still might be a surplus."

During the November meeting of G20 finance ministers and central bank chiefs in Seoul, the United States proposed a ratio of trade surplus or deficit to a nation's GDP be set at 4 percent, in a bid to solve global trade imbalances. But a number of countries rejected the proposal.

Last year, the surplus-deficit ratio of GDP in the current account was 3.2 percent for China, but "it's hard to say whether the figure will drop to below 3 percent or not, but it will definitely get smaller", Chen said.

Chen said the government expects China to become the world's biggest consumption market over the next decade. But he said there are no plans to de-emphasize exports, which support millions of manufacturing jobs.

According to some foreign media reports, the Ministry of Commerce is considering a tariff reduction on high-tech products and resource-related goods and is seeking opinions from other ministries.

"Simpler import-related procedures are a priority, and we are also considering reducing import tariffs on some goods," Chen said.

By People's Daily Online

 

[Brotherhood]

Rising labor costs good for China's economic restructuring: minister - People's Daily Online March 08, 2011

A pinch of rising labor costs has been felt by Chinese factories, but China's labor minister said on Tuesday it is good for the nation's strategic economic restructuring.

China faces a dilemma that underpaid factory workers demand higher wages while many small-sized export-oriented factories could not afford the rising costs of labor and raw materials, Yin Weimin, minister of human resources and social security, told a press conference.

"Rising labor costs, however, could push for the transformation of the economic development pattern," he said.

The wage increase could be realized through more consultations between employers and employees, he noted.

After decades of economic boom on the back of cheap labor and intensive energy use, China wants to make the economy more technology-depended and vowed to make more ordinary people share the benefits of the growth.

In the 12th Five-Year Plan period (2011-2015), China aims to increase the disposable income of urban and rural residents by at least seven percent a year, the same rate as the GDP growth target.

The minimum wage should increase by at least 13 percent a year over the next five years.

Source: Xinhua

 

[Brotherhood]

20 mln fishermen benefit from China's subsidy mechanism: official - People's Daily Online March 08, 2011

China's plan to subsidize diesel oil used in fisheries benefited more than 20 million fishermen over the past five years, a Ministry of Agriculture (MOA) official said Monday.

The subsidy plan has greatly eased financial pressures felt by fishermen after a surge in oil prices, said the MOA's Bureau of Fisheries official, whose name was not indicated.

The ministry launched the plan in 2006 after diesel oil prices rose more than 50 percent within two years to 6,000 yuan (914 U.S. dollars) per ton, adding costs of 5.68 billion yuan to the country's fishery production, the official said.

The subsidy plan covers fishermen and fishery enterprises that use motorized fishing vessels for near-shore and inland fishing and aquatic production.

In 2006 alone, the central budget allocated two batches of subsidies at 3.18 billion yuan, the official added. The official did not specify the total figure for the past five years.

The MOA official said the ministry will strengthen the implementation of the policy in the country's 12th Five-Year Program period (2011-2015).

The ministry recently issued a notice to check fund usages during the 2006 to 2010 period and asked local governments to further improve the mechanism and promote supervision over fund management, he noted.

Source: Xinhua

 

[Brotherhood]

China expects 13 pct annual growth in marine economy in next five years: oceanic official - People's Daily Online March 08, 2011

China's marine economy is expected to grow at an annual rate of more than 13 percent in the next five years, Liu Cigui, director of the State Oceanic Administration, said Monday.

"Development of the industry has just started in China," Liu told Xinhua in an exclusive interview, saying the country "has a bright future in its marine economy".

To further explore oceanic resources, China's deep-diving manned submersible vessel "Jiaolong" will attempt to dive to a depth of 5,000 meters this year after it successfully reached 3,759 meters under the sea last year.

As the first manned vehicle in the world designed to reach 7,000 meters below sea level, the submersible can be used in 99.8 percent of world's sea areas, according to the vehicle's chief designer Xu Qinan.

Liu also said China may launch its HY-2 satellite, a marine remote sensing satellite series, at a proper time this year.

China's oceanic industry recorded an annual increase of 13 percent in the past five years to top 3.8 trillion yuan (579 billion U.S. dollars) last year and employ more than 33 million people.

However, the marine economy accounts for no more than 10 percent of China's gross domestic product (GDP), and it is mainly centered on traditional sectors such as fishing, transport and tourism, which together account for two-thirds of the total marine output.

China has abundant marine resources, with its 3 million square kilometers of offshore waters and 32,000 kilometers of coastline. China also has a proven marine oil reserve of 24.6 billion tonnes and natural gas reserves of 1.6 billion cubic meters.

Premier Wen Jiabao said Saturday in the government work report draft for this year that the country will boost the marine economy and emphasize the balance between land and sea.

The State Council on January 4 approved a development plan for the country's first ocean economic zone in the coastal province of Shandong, in an effort to bolster marine economy.

"Since China has just started developing its marine economy, environmental issues should be closely watched," Liu said.

The central and local governments have issued laws and regulations on environmental evaluation, "highly polluting projects should be banned," he said, urging citizens to join in environmental protection.

Source: Xinhua

 

[Brotherhood]

China to slash drug prices, saving 1.5 billion USD - People's Daily Online March 08, 2011

China has vowed to lower the maximum retail prices of some antibiotics and circulatory system drugs by 21 percent on average beginning on March 28. It is estimated to save a total of nearly 10 billion yuan, or 1.5 billion dollar for citizens.

The price cut pushes China one crucial step further on its way to furthering its medical health system reform.

Most listed drugs, which include a total of 162 types, nearly 1,300 formulas and specifications, are currently extensively used in China to treat infections and cardiovascular disease, which means this action will bring about a significant reduction in expenses.

The price adjustment plan has a series of careful pricing procedures, including cost and price surveys and expert evaluation, and it eventually got approved by National Development and Reform Commission (NDRC), an NDRC official said on March 7.

The following are several adjustment highlights.

First, the expensive drugs will become cheap, and the inexpensive drugs will stay the same. It aims to strike a balance between improving people's livelihood and ensuring the supply of inexpensive medicines.

Second, the price of patented drugs will be lowered more moderately so adequate funds will go to support the research and innovation of new drugs.

Third, individually-priced drugs are to be further marked down to a price closer to that of uniformly-priced drugs. This ensures a fair and competitive market environment.

The NDRC official also revealed that there will be a further pricing plan on the basis of batches.

By Li Yancheng, People's Daily Online

 

[Brotherhood]

China aids poor with prices indexes tailored to low-income families - People's Daily Online March 08, 2011

The Chinese government is working to make life less torrid for the country's low-income families, who are most vulnerable to price hikes, by giving them subsidies to off-set price hikes.

China will "improve the system of subsidies and institute a sound mechanism to raise social assistance and social security benefits when commodity prices rise," Premier Wen Jiabao said, when delivering the government work report Saturday.

"We cannot allow price rises to affect the normal lives of low-income people," he vowed.

Low income people are sensitive to price fluctuations because they rely heavily on subsidies, which are defined by the basic price level of consumer goods and services,

China's consumer price index (CPI), a major gauge of inflation, has increased continuously since June last year, when a 2.9-percent year-on-year rise was registered.

The index hit a 28-month high of 5.1 percent in November and stood at 4.9 percent in January this year.

The price hikes have mainly been driven by surging food prices.

On Wednesday, the National Development and Reform Commission ordered local authorities to establish, by the end of this year, a mechanism to peg subsidies for low-income families to the price of daily necessities.

Wen said the government aims to keep consumer price increases at around 4 percent this year. He said stabilizing prices will be a top priority, pledging that the government will do more to contain rising prices of food, housing and other essentials. The problem "affects social stability," he warned.

"CPI measures the general situation of the country's macro economy but does not reflect the impact of actual price changes upon low-income families," said Zhang Weiguo, an economist with the Shandong Academy of Social Sciences.

Meanwhile, living standards differ among regions, he said. "Therefore, it is necessary for each local government to design an index tailored for low-income earners in line with the living standards in the region.

Some local governments have already set about formulating such gauges. Subsidies will be provided to them if price increases go above a certain level.

Shandong Province launched its index in 2008 which covers 8 categories of products and services, including food, cigarettes and alcohol, clothing and household items and maintenance, according to the local statistics authority.

So far, the government has handed out subsidies worth more than 200 million yuan (30.47 million U.S. dollars), according to the local price department.

Source: Xinhua

 

[Brotherhood]

Mainland should learn from Hong Kong in urbanization: HK Chief Executive - People's Daily Online March 08, 2011

Donald Tsang, chief executive of the Hong Kong Special Administrative Region (HKSAR), has advised the mainland to draw experiences from Hong Kong for efficient, low-cost urbanization.

The Chinese mainland should adopt the development strategy of a densely-populated region like Hong Kong in order to avoid taking up farmlands, which might affect food supply, Tsang said Monday during a speech at Peking University.

Hong Kong houses around 7 million people in a 1,100 square kilometer area. However, under the region's urban planning policies, green space takes up 40 percent of the city's territory.

Traffic costs only account for 5 percent of Hong Kong's gross domestic product (GDP) as a result of efficient management and operation of the region's public transportation system.

According to Tsang, by following Hong Kong's mode of urban development, the mainland can reduce the use of land and the costs of infrastructure while boosting the efficiency of commercial activities.

The service industry accounted for 92 percent of Hong Kong's GDP.

Also during Monday's speech, Tsang said Hong Kong is ready to be the "proving ground" for the internationalization of the yuan.

According to Tsang, one of China's focuses now is to expand the influence of the yuan in cross-border trade and investment in order to reduce dependence on the U.S. dollar.

Tsang said that opening the financial market is of crucial importance and Hong Kong is ready to provide support for China's strategic financial plans.

In addition, Tsang said he believes the 12th Five-Year Program, China's development plan from 2011 to 2015, will have a profound influence on the region's development as the draft of the program includes a special chapter for Hong Kong and Macao for the first time.

According to Tsang, the draft plan included a series of supportive polices for Hong Kong's development, aiming to consolidate and promote the region's role as an international financial center.

Source: Xinhua