Magazine_Layout 1 5/31/2013 8:42 PM Page 1
Magazine_Layout 1 5/31/2013 8:42 PM Page 2
Magazine_Layout 1 5/31/2013 8:42 PM Page 3
Editorial Editor Jamshed Ullah News Editor Arshad Chaudhry Research & Analysis Uzma Zafar Raja Pervaiz Hussain Suzie Worng Waqas Wiki Designing & Layout Asmat Ullah Khan Awais Shehzad Technical Support Sultan Haroon Iqbal Bukhari Co-ordination Sobia Noreen Internet Edition John Nelson Rehmat Chughtai
Contact Head office:
CASH Mass Media, 1102-1103 11th Floor, Longhang No 555, Nathan Road, Mongkok, Kowloon, Hong Kong
Islamabad Office: Mail House, Shakeel Chambers 01 Khayban-e-Soharwardy, Islamabad Email: editor@ccedigest.com newseditor@ccedigest.com webeditor@ccedigest.com ads@ccedigest.com
A Powerful financial indicator
A
ccording to a globally credible survey report, China has emerged as the most financially secure country in an index jointly launched by PICC Property and Casualty Co Ltd, the largest non-life insurance company in the Chinese mainland, and Genworth Financial Inc, a Fortune 500 insurance holding company. The report that surveyed 13,000 households in 14 European countries, and five Latin American countries and China. China scored 78 out of 100, the highest score of any country and the highest since the index was launched in 2007. Only 3 percent of Chinese households are financially vulnerable, whereas the same figure for Germany is 22 percent and 26 percent for France, according to the report. Of more than 1,000 households surveyed in Beijing, Guangzhou, Shanghai and Wuhan, only 1 percent said their financial situation will worsen over the next 12 months. Only 3 percent believed they were financially vulnerable, while 97 percent said that they have rarely experienced financial problems or had a positive outlook for the future. Digging deeper into the survey's underlying results, some 39 percent said they had seen their total household income fall due to several factors. Forty-eight percent reported it was due to a drop in level of income, 20 percent reported it was due to stopping work for health reasons, and 12 percent said it was due to job loss. The majority of Chinese household assets were in property. PICC and Genworth's report cautioned that Chinese households were too focused on property investments, and said their investment portfolio should be diversified. We believe that this report is a very powerful indicator with regard to future of China’s economy and foreign investments in this emerging financial capital of the world.
Editor
Magazine_Layout 1 5/31/2013 8:42 PM Page 4
in this issue 26, 02 May 2013 04
Cover Story
Palace gets tough on smoking 06
Short movies to make TV debut overseas
Despite its efforts to boost grain yields for the 10th consecutive year, China the world's largest rice consumer - is expected to become also the world’s largest rice importer this year, according to a new report.
Magazine_Layout 1 5/31/2013 8:42 PM Page 5
in this issue 09
China emerges as financially most secured country
China Unicom to upgrade broadband speeds in Beijing
12
Banks see forex surplus for 8th month
ELECTRONIC CHIP
Magazine_Layout 1 5/31/2013 8:42 PM Page 6
Society
Palace gets tough on smoking
04
Magazine_Layout 1 5/31/2013 8:42 PM Page 7
“The ban on smoking in the Palace Museum is good for health. Smoking in public areas, which also affects passive smokers, causes lung cancer and heart disease� CED Monitoring
B
EIJING-The Palace Museum has for the first time ruled that both employees and visitors will be punished for smoking onsite, an official with the museum told media. Both health and cultural heritage experts welcomed the ban, and said they hope the Forbidden City will enforce the rule. A media officer from the museum, who asked for anonymity, said that in the past, only areas that were open to tourists had a ban on smoking. "Staff could smoke in offices. Now no one is allowed to smoke in the whole museum area. This is to reduce the potential fire hazard which is the most pressing problem the museum faces," she said. According to the officer, if an employee is found smoking, all the people in his group will be deprived of their yearly "fire bonus," given for fire prevention actions, although she would not say how much this is.
"We can't give fines to tourists so we just discourage them from smoking, but we'll send them to the police if they disobey," said the official. She told the Global Times that tourists are hard to manage because even though no-smoking signs are posted in the museum, some people still secretly smoke. Zeng Yizhi, from the International Committee of Monuments and Sites in China, said that it is necessary to ban smoking in the entire complex, because the museum has many wooden structures and precious cultural relics like silk cloth and papers, which can catch fire easily. "The museum should also control the numbers of tourists every day; it's troublesome to supervise too many people," said Zeng. Lawyer Liu Ziruo told the Global Times that because the smoking tourists do not violate any law, even the police do not have the right to punish them. Although Beijing instituted a ban on smoking in historic sites in
2008, and banned smoking in all public places in 2011, neither ban is well-enforced, said Yang Jie from the tobacco control center of the Chinese Center for Disease Control and Prevention. "The ban on smoking in the Palace Museum is good for health. Smoking in public areas, which also affects passive smokers, causes lung cancer and heart disease," said Yang. Only officers from Beijing Patriotic Health Campaign Committee are able to levy fines on smokers who flout the ban, which can be up to 200 Yuan ($32.54). Public places, including tourist sites and restaurants, could be fined from 5,000 to 30,000 Yuan if people are caught smoking inside, said Yang. A fire broke out in a museum watchtower on the evening of October 17, 2008. While the tower sustained some damage, firefighters arrived in time to extinguish the blaze, the website ifeng.com reported. The cause was not reported. 05
Magazine_Layout 1 5/31/2013 8:42 PM Page 8
Society
Short movies to make TV debut overseas
06
Magazine_Layout 1 5/31/2013 8:42 PM Page 9
Performers from Shaanxi province grab the limelight at the ninth China (Shenzhen) International Cultural Industries Fair, which opened on Friday. The four-day event showcases the country’s rich cultural diversity.
07
Magazine_Layout 1 5/31/2013 8:42 PM Page 10
Society
BEIJING-Short movies from China are to make their debut on TV overseas in September, with the broadcasting and online distribution rights for about 30 shorts bought by a British company. The movies last for a total of 10 hours and will be shown in the United States, Europe and East Africa. It is the first time short films from China have been exported. The country's shortmovie producers are excited about entering overseas markets, and hope this can help promote the art form at home, and speed up its industrialization. The deal was signed on Friday between Shorts International — a shortmovie entertainment company with the world's largest catalogue dedicated to shorts, and vast partnerships with satellite and cable TV networks worldwide — and Shenzhen Times Network Media, the copyright agent for seven of the movies selected. Carter Pilcher, CEO of Shorts International, said: "China is a powerhouse in the world, and people are eager to know about the country through its movies. "People may not be patient enough to watch a long feature, but they will 08
be interested in watching a short one." Pierre-Yves Lochon, CEO of Sinapses Asia, who coordinates selection and purchasing for Shorts International, told China Daily that if audience feedback is positive, the buyer may make it a longterm deal by purchasing the overseas telecast rights for about 10 Chinese short movies every year. The seven Chinese shorts that Shorts International bought from Shenzhen Times Network Media are among winners of the KingBonn Award at the China International (KingBonn) New Media Shorts Festival, the only Staterecognized international short film award in China. The award celebrates its fourth anniversary this year and has attracted 30,031 entries from 94 countries and regions. The remaining short films that have been bought are either winners or nominees at film festivals in Hong Kong, Macao and Taiwan, or come from independent producers. Announcement of the deal preceded a four-day trade fair in short movies at the venue for the ninth China (Shenzhen) International Cultural Industries Fair. Hu Liangming, general manager of Shenzhen Times Network Media, said
he hopes the international deal can stimulate domestic transactions for Chinese shorts, which are still struggling to generate revenue. In Western countries, short movies reach audiences through multiple distribution channels, including electronic sales on iTunes and Amazon, theater screenings, payTV channels and video on demand subscription. In China, people watch shorts online and free of charge in most cases. Zhu Xiangyang, chief content officer of Youku.com, which has the biggest share of the country's online video market, said, "Chinese people still think that they don't need to pay for information on the Internet." Zhu highlighted this root cause of Chinese new-media shorts' financial plight at a forum on Tuesday in Shenzhen, which formed part of the China International (KingBonn) New Media Shorts Festival. Chen Yan, secretarygeneral of the Shenzhen Copyright Society, said that to enhance copyright protection the society has launched two platforms for copyright owners to have their ownership registered. This costs only 10 Yuan ($1.60)
Magazine_Layout 1 5/31/2013 8:42 PM Page 11
09
Magazine_Layout 1 5/31/2013 8:42 PM Page 12
Finance
China emerges as financially most secured country 10
Magazine_Layout 1 5/31/2013 8:42 PM Page 13
CED Monitoring BEIJING-China has emerged as the most financially secure country in an index jointly launched by PICC Property and Casualty Co Ltd, the largest non-life insurance company in the Chinese mainland, and Genworth Financial Inc, a Fortune 500 insurance holding company. The report surveyed 13,000 households in 14 European countries, and five Latin American countries and China. China scored 78 out of 100, the highest score of any country and the highest since the index was launched in 2007. Only 3 percent of Chinese households are financially vulnerable, whereas the same figure for Germany is 22 percent and 26 percent for France, according to the report. Of more than 1,000 households surveyed in Beijing, Guangzhou, Shanghai and Wuhan, only 1 percent said their financial situation will worsen over the next 12 months. Only 3 percent believed they were financially vulnerable, while 97 percent said that they have rarely experienced financial problems or had a positive outlook for the future. Henry Chang, general manager of Genworth
Consulting Services (Beijing) Ltd, said: "While Chinese households are very positive about their financial situations, they do have a number of shortterm to medium-term concerns regarding job security, credit viability and income stream." Digging deeper into the survey's underlying results, some 39 percent said they had seen their total household income fall due to several factors. Fortyeight percent reported it was due to a drop in level of income, 20 percent reported it was due to stopping work for health reasons, and 12 percent said it was due to job loss. Chang said PICC and Genworth planned to fill this gap with their products. He also noted that a major reason for China's high savings ratio is the lack of social security coverage. The top concern for Chinese respondents in terms of their financial security, according to the survey, was their income from work, followed by cost of living and social security. By contrast, the top concern for European respondents in terms of their financial security was the cost of living, then came income from work and savings levels. Kevin Fleming, Genworth's vice-president for
new markets, said that in southern Europe where countries were hit hardest by the sovereign debt crisis, people were more likely to link their financial security with the wider economy, whereas in China people were much less concerned with the wider economy. Fleming noted that 76 percent of Chinese respondents said they have as much in savings as they receive in income every month. Northern Europe was still the most financially secure region in Europe, according to the report, with Norway and Sweden ranked just after China. Three percent of respondents in Norway and 5 percent in Sweden reported feeling financially vulnerable. An earlier report by the Southwestern University of Finance and Economics found that the average asset of a Chinese household is 1.21 million Yuan ($195,000), and their average liability is 62,600 Yuan. The majority of Chinese household assets were in property. PICC and Genworth's report cautioned that Chinese households were too focused on property investments, and said their investment portfolio should be diversified.
11
Magazine_Layout 1 5/31/2013 8:42 PM Page 14
Finance
Banks see forex surplus for 8th month
12
Magazine_Layout 1 5/31/2013 8:42 PM Page 15
BEIJING -- Chinese banks bought more foreign currency from clients than they sold in April as the market expects the Yuan to continue to appreciate, according to a report from China's foreign exchange regulator. Individuals and institutions exchanged 134 billion U.S. dollars in foreign currency for Yuan through Chinese banks while buying 99.7 billion U.S. dollars in foreign currency from financial institutions in April, said the State Administration of Foreign Exchange. The surplus of 34.3 billion U.S. dollars, though lower than that in the previous month, marked the eighth straight month for Chinese lenders to see a forex surplus in bank-toclient transactions. Liu Dongliang, a China Merchants Bank analyst, said
the continuous surplus indicates strong market expectation for the Yuan’s appreciation. The Chinese currency RMB, or the Yuan, has seen its value rise against the U.S. dollar. It has strengthened 972 basis points from the first trading day of the year to a record high on May 9, as compared to the total of 146 points it advanced last year. Ding Zhijie, head of the School of Banking and Finance at the University of International Business and Economics, said the surplus also indicates huge speculative money inflows. Zhao Qingming, an expert in international finance, said due to big interest rate spreads between domestic and overseas markets; foreign investors can easily make a profit by simply depositing the specula-
tive capital in Chinese banks, or purchase some wealth management products. The U.S. Federal Reserve has maintained its benchmark interest rate between 0 to 0.25 percent. In China, the benchmark interest rate is set at 3 percent. Liu said the large inflows of speculative capital within a short period of time will make it more difficult for the Chinese central bank to handle liquidity, combat inflation and rein in the property market. Liu also warned that the speculative money may retreat from the Chinese market if the domestic economy continues to slow down and the Yuan is believed to be overvalued, or if the U.S. Federal Reserve scales back its quantitative easing program.(XINHUA)
13
Magazine_Layout 1 5/31/2013 8:42 PM Page 16
IT
China Unicom to upgrade broadband speeds in Beijing CED Monitoring BEIJING-China Unicom has announced it will starting raising broadband speeds in Beijing by phasing out its low-end packages. The Beijing subsidiary of the Chinese telecom has launched a scheme which increases speeds and make 4 Mbps the slowest connection in the city. However, it has not announced similar initiatives in other Chinese cities. According to China Unicom, Beijing users with a 512 14
kbps or 1 Mbps connection speed will be raised to 4 Mbps, users with 2 Mbps connection will be raised to 10 Mbps while users with 4 or 8 Mbps will be raised to 20 Mbps. Fiber-optic customers also may be able to get speeds of up to 100 Mbps, while the package with the lowest speed of 512 kbps--currently 12 percent of users--will be halted by the end of this year. The move is in response to China's Ministry of Industry and Information Technology's goal of having 75 percent of Chinese broadband users on 4
Mbps or higher connections starting this year, an increase from its goal of 50 percent in 2012, the report noted. A report by Qihoo 360 last month found China's national average bandwidth to be 3.14 Mbps. Beijing's average Internet bandwidth was only ranked fifth in the whole of China at 3.5 Mbps, behind Shanghai and Taiwan at 4.7 Mbps, Macau at 4.32 Mbps and Jiangsu at 3.93 Mbps, a separate report by China Daily noted.
Magazine_Layout 1 5/31/2013 8:42 PM Page 17
15
Magazine_Layout 1 5/31/2013 8:42 PM Page 18
IT
ELECTRONIC CHIP to help tackle carcass dumping
16
Magazine_Layout 1 5/31/2013 8:42 PM Page 19
CED Monitoring SHANGHAI-A new technology developed in the ear tag of pigs will help prevent the casual dumping of dead swine, a practice that aroused food safety concerns earlier this year in Shanghai and several parts of China. Shanghai Bio-tag Co has developed an elec-
tronic chip that has been, so far, embedded in the ear tags of 170,000 female pigs in Shanghai, eastday.com has reported. Hopefully the technology will be promoted to all pig farms in Shanghai in two years. The company could not be reached for a comment. The chip – the size of a watermelon seed – will
store information, including the animal's conditions while being raised, time of slaughter and vaccinations. The tag will also allow carcasses to be traced. In March, more than 10,000 pig carcasses dumped by farmers were found floating on a river through Shanghai.
17
Magazine_Layout 1 5/31/2013 8:42 PM Page 20
Industry
Local companies under pressure from rising Yuan
A worker inspects a circuit board at an electronics factory in Dongguan, Guangdong province. Appreciation of the Yuan has put huge pressure on smaller-scale businesses in the Pearl River Delta region, forcing some to relocate or shut down altogether 18
Magazine_Layout 1 5/31/2013 8:42 PM Page 21
CED Monitoring GUANGZHOU-Local government officials have insisted that Dongguan remains a top destination for processing trade businesses, despite recent closures in the city being blamed on the continued strength of the Yuan. He Yu, Dongguan's vicemayor, acknowledged that some processing trade businesses had closed since the end of last year, but he said those were due to what he called a "provincial-wide industrial reshuffle", which will not affect the city's overall economy. A report in local media claimed that a growing number of processing trade enterprises in Dongguan and nearby Shenzhen - both in Guangdong province - especially those funded by Hong Kong and Taiwan businesspeople, have been forced to close because of various market factors, particularly the rising value of the Yuan. According to the China Foreign Exchange Trade System - also known as the National Interbank Funding Center - the Yuan advanced 87 basis points to 6.1911 against the dollar on Tuesday, the highest level since China's foreign exchange reform in 2005. On China's foreign exchange spot market, the Yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day. Early on Monday, the Yuan weakened 1 basis point to 6.1998 against the dollar, according to the exchange trade system. Dongguan, in the heart
of the Pearl River Delta, is considered one of the world's top manufacturing hubs. Officials said it is home to more than 330,000 enterprises, most of which are engaged in the processing trade, or the business of importing and assembling materials, parts and components. "Only 800 enterprises closed last year. It is rational, given that we are making efforts to help upgrade this traditional industry," He told China Daily. Since 2008, more than 4,000 traditional processing trade enterprises in Dongguan have upgraded their operations, without having to close, sources with the local government said. Alongside some closures, He said there have also been a rising number of new businesses being opened in the city, including more than 1,000 in the city's Dalang township. According to industrial upgrading guidelines, issued by the provincial government in 2008, traditional processing trade industries were encouraged to move from the Pearl River Delta region by the end of 2012 to eastern, western and northern areas of Guangdong, where labor and production costs are comparatively lower. High-end and financial service businesses, meanwhile, were encouraged to move into the Pearl River Delta region. The guidelines also encouraged processing trade business - which used to depend on exports for growth to focus on the domestic
market.And to promote the industry, local officials launched the annual China Processing Trade Products Fair, being held this year from June 19 to 21. "The fair aims to help traditional processing trade enterprises turn their attention on the domestic market," He said. Processing trade industries have thrived in the Pearl River Delta region since the 1980s, when many Hong Kong and Taiwan businesses moved there to trade with overseas clients. However, the appreciation of the Yuan and increased production and labor costs have made the industry upgrades being encouraged by local authorities difficult for some businesses. "A growing number of smaller-scale processing trade enterprises have closed operations or transferred to other Asian regions after they found it difficult to make profits in the domestic market," said Huang Guoyi, assistant manager of a chamber of commerce in the Songgang township in Shenzhen. Liu Chengming, the owner of a shoe manufacturing enterprise in Huizhou, which neighbors Dongguan and Shenzhen, said the rise of the Yuan had narrowed his profit margins over the past few years. "Overseas clients have demanded a lower price as the Yuan appreciated," Liu told China Daily. His company moved from Dongguan in August last year to Huizhou, where labor costs are lower. 19
Magazine_Layout 1 5/31/2013 8:42 PM Page 22
Industry
Sino-Indian trade imbalance to increase
20
Magazine_Layout 1 5/31/2013 8:42 PM Page 23
CED Monitoring BEIJING-The trade imbalance between China and India is likely to keep growing and the situation is hard to change, but India is benefiting from Chinese imports, experts said. "India's trade deficit with China is expanding. In the short term, that's hard to resolve. The imbalance is mainly because India has limited exports to China, while Chinese manufactured goods have a competitive advantage in the Indian market," said Liu Xiaoxue, a researcher on South Asian studies at the Chinese Academy of Social Sciences. The slower growth pace in China in recent years, together with overcapacity in the steel and iron sectors and the Chinese government's tightening policies in the real estate sector, reduced demand for Indian raw materials — mainly iron ore and iron sand, which account for the bulk of Indian exports to China. That's the reason behind the country's increasing trade deficit with China, Liu added. Hu Shisheng, director of the Institute of South and Southeast Asian and Oceanian Studies at the China Institutes of Contemporary International Relations, agreed with Liu's view. "The trade imbalance is rooted in India's trade structure," Hu said. "India's trade deficit with
China will not be reversed in the foreseeable future. Any change depends on whether India can export products that meet the demand of the Chinese market," Hu added. "In fact, the trade deficit is likely to increase because India needs more Chinese manufactured products, and China diversified its sources for imports of raw material." In the first four months of the year, Sino-Indian trade declined 6.2 percent yearon-year. Chinese exports increased 3.6 percent and imports decreased 24 percent, yielding a trade surplus of $8.83 billion, according to China's General Administration of Customs. In 2012, bilateral trade dropped 10.1 percent, and China's exports went down 5.7 percent while its imports plunged 19.6 percent, leaving a trade surplus of $28.87 billion, compared with $27.17 billion in 2011 and $20.08 billion in 2010, according to customs data. "India has trade deficits with major manufacturing countries due to the depreciation of the rupee in recent years, its poor export advantages and robust import demand, especially for mechanical equipment, amid its economic transformation. But the trade deficit with China is remarkable," Hu said. The expanding trade deficit with China, which accounts for one-third of India's
overall trade deficit, has been a concern for India for many years and partially accounts for the frequent trade remedy investigations it launches into imports of Chinese products, experts said. "Trade probes from India will remain frequent in the coming years as India's imports of low-end manufactured products from China dent its efforts to revive its manufacturing sector," Liu said. "But trade investigations should be resolved under the World Trade Organization framework." Hu added that India's trade deficit with China is "no big deal and far from a safety concern". "India should seize this period when Chinese exports have good quality and low prices, as prices of Chinese exports are rising. Expanding imports from China just benefits India because they lower its costs of economic transformation, enhance the living standard of its citizens and increase its exports to markets such as the United States and the European Union," Hu said. Wang Shouwen, director of the Foreign Trade Department of the Ministry of Commerce, said on May 9 that the Chinese and Indian economies are highly complementary and that bilateral trade has huge potential. "In the future, the importance of Sino-Indian trade will be equal to that between the US and the EU," Wang said. 21
Magazine_Layout 1 5/31/2013 8:42 PM Page 24
Automobile
Volkswagen to open new plant in China 22
Magazine_Layout 1 5/31/2013 8:42 PM Page 25
The Volkswagen stand at an auto show in Shanghai. The German company is planning a new production plant in Changsha, Hunan province in Central China to boost its market share in the country. 23
Magazine_Layout 1 5/31/2013 8:42 PM Page 26
Automobile
CED Monitoring SHANGHAI-German automobile conglomerate Volkswagen AG will invest 12 billion Yuan ($1.95 billion) to build its first plant in Central China, in a bid to help increase its capacity to meet the rising demand from the world's largest vehicle market and respond to the similar move its major rival General Motors announced last month. The new plant will be set up by Volkswagen's joint venture with China's SAIC Motor, and will have an annual output of 300,000 units, German national daily newspaper Frankfurter Allgemeine Zeitung reported over the weekend. It also said that the production at the new plant, located in Changsha, capital of Hunan province, will begin in early 2016. An official with Volkswagen Group China told China Daily on Tuesday that the plant agreement will be signed on Wednesday in Changsha and the construction of the plant will start in a couple of days. According to an environment assessment announcement posted on the website of the Hunan Research Academy of Environmental Sci-
24
ences in October, investment in the plant will reach 12.08 billion Yuan, and the facility will produce Skoda Octavia and two other medium-sized sedan models. Martin Winterkorn, chairman of the board of management of Volkswagen AG, said in March that Volkswagen will add 10 new plants around the world, with seven in China, in the near future. He confirmed that Volkswagen's newly built plants in Urumqi (the Xinjiang Uygur autonomous region), Foshan (Guangdong province) and Ningbo (Zhejiang province) will start production this year. The company will also build parts plants in Changchun in Jilin province and Foshan in 2013. Over the next three years, the German automaker plans to set up a new vehicle factory in southwestern China. The plan is aimed to support Winterkorn's target of increasing Volkswagen's output capacity in China from current 2.6 million to 4 million by 2018, with average annual growth of 35 percent. Bob Socia, President of General Motors China, said on April 20 that the US au-
tomaker will open four additional plants in China through 2015, after it opened two new manufacturing facilities in 2012. "General Motors' manufacturing facilities in China are running at near maximum capacity. We need to add capacity to keep up with the rising demand for its products," said Socia. The planned plants will enable General Motors, the largest foreign vehicle producer in China by sales, to increase its domestic manufacturing capacity by 30 percent annually to about 5 million units by 2015. It will also create around 6,000 manufacturing jobs. According to consulting firm KPMG's 14th annual Global Automotive Survey released earlier this year, China is the top investment destination for global automakers. It found that 70 percent of respondents view China as their top choice for investments, ahead of other BRICS countries India, Russia and Brazil and South Africa. The BRICS markets are expected to account for nearly half of all global vehicle sales by 2018.
Magazine_Layout 1 5/31/2013 8:42 PM Page 27
Magazine_Layout 1 5/31/2013 8:42 PM Page 28
Dongfeng to buy 40% shares of Fujian Motor
Magazine_Layout 1 5/31/2013 8:42 PM Page 29
Magazine_Layout 1 5/31/2013 8:42 PM Page 30
Automobile
CED Monitoring BEIJING-Dongfeng Motor Corp, a State-controlled vehicle manufacturer in Shiyan, Hubei province, is planning a share purchase of more than 40 percent in Fujian Motor Industry Group.
28
The two companies will sign an agreement on the deal soon, but it is unclear how much the deal is worth, the report added. The acquisition will help carry out the government's instruction of consolidating the fragmented automobile indus-
try, the report added. Fujian Motor was founded in 1992, and is fully controlled by the government of Fujian province. The company has five automobile manufacturing subsidiaries, including Taiwan's Yulou Motor Co, Fujian Benz Automotive Co, and South East
Magazine_Layout 1 5/31/2013 8:42 PM Page 31
(Fujian) Motor Co. The acquisition does not involve the five subsidiaries of Fujian Motor, according to the
report. Dongfeng Motor is the parent of Hong Kong-listed Dongfeng Motor Group Co. Dongfeng Motor sold 3.08 mil-
lion cars in 2012, according to data from the China Association of Automobile Manufacturers.
29
Magazine_Layout 1 5/31/2013 8:42 PM Page 32
Construction
Beijing announces 6 new subway lines, sections BEIJING -- Beijing will add six new subway lines or sections to its underground grid by the end of 2014 as part of efforts to ease traffic jams, subway authorities said at a press briefing on Tuesday. A line that links suburban Changping district with Line No. 8 will be constructed by the end of the year, according to sources with the Beijing Railway Construction and 30
Management Co., Ltd., the subway's constructor. The second phase of Line No. 8 will also be finished within the year. Four new lines, including the second phase of Line No. 6, Line No. 7, the east part of Line No. 14 as well as the west part of Line No. 15, will be put into operation by the end of next year, according to the sources.
Along with two sections that were opened earlier this year, a total of 84.8 km of subway will be put into use in the two years of 2013 and 2014. As of May 5 this year, Beijing's subway length has risen from 114 km in 2007 to 456 km, accounting for 23 percent of the country's total and carrying approximately 10 million passengers daily. By 2015, the number of
Magazine_Layout 1 5/31/2013 8:42 PM Page 33
subway lines in Beijing will reach 19, with a combined
length of 561 km. By 2020, the total subway length is ex-
pected to have increased to1,000 km.
31
Magazine_Layout 1 5/31/2013 8:42 PM Page 34
Construction
Tai’an to become
polycentric city
32
Magazine_Layout 1 5/31/2013 8:42 PM Page 35
CED Monitoring TAI’AN-City plans for the next three years have been nearly nailed down, featuring diversified functional zones instead of a single downtown area, according to the Tai'an urban planning bureau. Following Tai’an’s construction plan during the 12th FiveYear Plan (2011-15), the plan will divide the city into 21 zones, including a city entrance, historical culture and tourism zone.
The zones are expected to take over original urban functions and create functional areas with special features and niche service industries. For example, the historical culture zone will focus on tourism, residences and a complex service center. “The plan is based on a comprehensive picture of key projects, reconstruction of old villages and diversified functions,” said one staff member from the city’s planning bureau. “It will boost the development
of finance and business, optimize the city’s layout and improve the living environment.” At the same time, the city will equip more public facilities. For medical resources, Tai’an will build more suburban hospitals. Tai’an now has about 6.4 beds for every 1,000 citizens. There are 11 beds for every 1,000 citizens downtown, while the suburbs only have two per 1,000 citizens. Tai’an is scheduled to build 10 more schools during the 12th Five-Year Plan (2011-15).
33
Magazine_Layout 1 5/31/2013 8:42 PM Page 36
Real Estate
HOME PRICES’ RISE SLOWS DOWN
34
Magazine_Layout 1 5/31/2013 8:42 PM Page 37
35
Magazine_Layout 1 5/31/2013 8:42 PM Page 38
Real Estate
CED Monitoring BEIJING-New home prices in China's major cities rose at a slower pace in April as the government's recent tightening measures started to take effect, data from the National Bureau of Statistics show. "The trend of surging property prices across the country has been curbed in April as the growth rate in quite a number 36
of cities has slowed down," said Liu Jianwei, a senior statistician with the bureau. "However, the fundamental reason for the rising property price hasn't been addressed yet, and implementation of tightening policies has to be strengthened in the market," Liu said. The highest growth rate was capped at 2.1 percent in
Guangzhou. In March, the highest growth rate was 3.2 percent in Shanghai. Of the 70 cities monitored by the NBS, 67 saw new home prices rise month-on-month in April, compared with 68 in the previous month. But, 36 cities registered slower month-onmonth price rises in April. The central government said on March 1 that it planned
Magazine_Layout 1 5/31/2013 8:42 PM Page 39
to introduce a 20 percent capital gains tax and higher down payments and mortgage rates for second-home buyers in cities where prices are deemed to be rising too fast. And major cities unveiled detailed regulations by the end of March. But some analysts said the growth rate of property sales this year will be very similar to 2012, despite the government's latest round of policy tightening. China's average home price may rise 3 to 8 percent this year, with the sale volume climbing 5.6 percent, research from CLSA Asia-Pacific Markets showed. "Though the average home price across the country will increase by 3 to 8 percent in 2013, the price hike in key cities such as Beijing, Shanghai and Guangzhou could hit 20 percent," said Nicole Wong, regional head of property research at CLSA. Growth in the sales value of China's commercial residential housing in the first four months eased to 59.8 percent from a rise of 61.3 percent during the first quarter.
The amount of floor space sold grew 38 percent, up 0.9 percentage points on the first three months, according to the NBS. For Xiao Jin, vice-general manager of Beijing Vanke Co Ltd, quality projects will sell fairly well this year, even with the rigorous property policies in place. "The strong demand remains there, and the reduced supply will further strengthen the price hike expectations of potential buyers," Xiao said. Beijing Vanke will soon launch 240 units of high-end apartments in the capital's market, with the average price hovering around 50,000 Yuan ($8,064) per square meter. According to a survey by CLSA, a total of 43 percent of property developers are expecting a price hike, with the proportion reaching a record high from the end of 2010. And 35 percent of potential buyers are also expecting a price increase, the highest since the end of 2011. But the imbalances between supply and demand will improve by the end of this year,
said Wong. Despite the stringent real estate policies, Chinese developers are still on track to meet their sales targets for 2013, according to an industry report by Standard & Poor's Ratings Services. For Bei Fu, a Standard & Poor's credit analyst, the developers' sales targets may appear aggressive, but the strong sales so far in what is usually a slow selling season suggests it could be mission possible. "While we expect some of the sales momentum to lose steam, overall performances should be good for the full-year of 2013," Fu said. The report notes, however, that the governments of top-tier cities are likely to be more stringent in implementing new regulations, which could have a dampening effect on transaction volumes. "We continue to assume up to 10 percent growth this year in transaction volumes for bigger players and limited growth for smaller players," said Fu. "And we expect 5 percent growth in average selling prices across the country."
Some analysts said the growth rate of property sales this year will be very similar to 2012, despite the government's latest round of policy tightening. 37
Magazine_Layout 1 5/31/2013 8:42 PM Page 40
Real Estate
REAL ESTATE MARKET MAINTAINS STABLE GROWTH
A statue in front of a residential site in Shanghai. 38
Magazine_Layout 1 5/31/2013 8:42 PM Page 41
China's property investment increased 21.1 percent year-on-year in the first four months, up 0.9 percentage points on the first quarter CED Monitoring BEIJING-China's real estate investment growth quickened in the first four months of the year, but property sales growth dipped slightly due to the government's latest round of policy tightening. Property in-vestment, which affects more than 40 industries ranging from steel to furniture, increased 21.1 percent year-on-year from January to April, up 0.9 percentage points on the first quarter, the National Bureau of Statistics said on Monday. "The improvement was probably as a result of the still robust housing sales," said Yao Wei, China economist with Societe Generale SA. "The tightening measures seem slow to bite, which may allow developers to contribute some more strength in the second quarter." Growth in the sales value of commercial residential housing in the first four months eased to 59.8 percent from a rise of 61.3 percent during the January to March period. The amount of floor space sold grew 38 percent, up 0.9 percentage points on the first three months. Strong sales and easier credit have enabled property developers to quicken their construction activity. Construction of new homes rose 1.9 percent in the first four months of 2013, up from a decline of 2.7 percent in the first quarter, according to the NBS.
But the total land area bought by developers fell 8.6 percent during the JanuaryApril period, easing from a drop of 22 percent in the first quarter. The quickening real estate investment and slowing sales figures were in line with the expectations of some analysts. Moody's Investors Service said in a recent research note that it had a stable outlook for China's property market. It said developers focused on the mass market will enjoy the strongest level of sales, including the likes of China Overseas Land & Investment Ltd, China Vanke Co Ltd and Longfor Properties Co Ltd. "The stable outlook reflects our expectation for around 10 percent year-on-year growth in the value of residential property sales over the next 12 months, in line with the average seen in 2012 but down from the high levels seen during January-March 2013," said Kaven Tsang, a Moody's vicepresident. Property prices in China's major cities rose for the 11th consecutive month in April, according to a report by China Index Academy, a Beijingbased real estate research institute. But the growth rate slowed slightly as the government's latest tightening policies gradually kicked in. The average price of new homes in 100 monitored cities was 10,098 Yuan ($1,600) per square meter during April, up 1
percent over the previous month, according to the academy. The month-on-month growth rate is down 0.06 percentage points from March. Meanwhile, home transactions in the new and preowned home markets slumped in most cities in April, due to the government's cooling measures. However, Chinese developers are still on track to meet their sales targets for 2013, said an industry report by Standard & Poor's Ratings Services. "The developers' sales targets may appear aggressive, but the strong sales so far in what is usually a slow selling season suggests it could be mission possible," said Standard & Poor's credit analyst Bei Fu. "While we expect some of the sales momentum to lose steam, overall performances should be good for full-year 2013." The report notes, however, that the governments of toptier cities are likely to be more stringent in implementing new regulations, which could have a dampening effect on transaction volume. "We continue to assume up to 10 percent growth this year in transaction volume for bigger players and limited growth for smaller players. We expect 5 percent growth in average selling prices," said Fu. "Given the mix of opportunity and challenges, we maintain our stable outlook on the sector." 39
Magazine_Layout 1 5/31/2013 8:42 PM Page 42
Agriculture
RAIN, SNOW MAY EAT INTO GRAIN HARVEST
Corn harvested in Luobei county, Heilongjiang province, last autumn has turned moldy as a result of excessive rain and snow in Northeast China, causing heavy losses for local farmers. 40
Magazine_Layout 1 5/31/2013 8:42 PM Page 43
CED Monitoring BEIJING-Excessive rain and snow in Northeast China - the country's main grain-growing area - has delayed spring plowing by about 10 days, with some doubting that the country will achieve yet another increase in its grain harvest this year. By Wednesday, 66.323 million mu (4.4 million hectares) of farmland had been ploughed, accounting for only 40 percent of the planned acreage, Heilongjiang Daily reported on Thursday. In the worst-case scenario, reduced grain production will drive up China's food prices, increase the inflation rate in the second half of the year, and cause food prices to surge in the global market, analysts said. Provinces in Northeast China have been hit with excessive rain since last autumn. In Heilongjiang province alone, the rainfall volume from Sept 1 to Nov 1 reached 151 millimeters, 70 percent higher than the average amount in previous years. By March 28, the average winter precipitation in Heilongjiang province stood at 53.2 millimeters, 109 percent higher than the historical average, a record in 50 years, according to the province's meteorological bureau. Local government and media in Heilongjiang said that more than 5.3 million hectares of farmland was wa-
terlogged, and conditions in 3.2 million hectares of land were "serious" in the province. "We are two to three weeks behind the usual time to plow the land and plant the seeds," said Yu Zhiwen, a 59year-old farmer in Suihua, Heilongjiang. Yu runs a plot of farmland with less than 3 hectares. Water in his plot reaches his ankles, making it inaccessible to either machines or farmers. "The pump does not work. All we can do is wait for the weather to warm up and for the water to evaporate," Yu said. Yu has a family of five, and all of his household's income comes from the land. In previous years, the land could produce at least 7,500 kilograms of corn per hectare, but he only expects about half of that amount this year. In 2012, China's northeastern provinces accounted for 23 percent of the country's grain production, 15 percent of its rice and 43 percent of its corn, official data showed. "Corn in Northeast China is only harvested once a year, so a late ploughing means a shorter growing period, and this will affect yields," said Feng Lichen, president of Yumi.com.cn, a corn industry website. "If the bad weather continues, the impact on this year's corn output will be huge," Feng said. The local government and the Ministry of Agriculture said
they are still assessing the losses caused by the rain, and they declined to reveal further details. Meanwhile, analysts said that they feel "pessimistic" about the prospects of China achieving yet another bumper harvest. And given the country's huge demand for corn, a reduced output would trigger price increases in the global food market. "We expected to see a bumper corn harvest in the world this year, but if China suffers any losses in yields, corn prices in the global market will surge," said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant. Ma also said the government could face growing inflation pressure in the second half of the year, as a reduced grain harvest would drive up food prices in the domestic and global markets. "This will likely make the government tighten up monetary policies in the last few months of this year," Ma added. China's grain output reached 589 million metric tons in 2012, the ninth consecutive year of increased grain harvests, according to the National Bureau of Statistics. The country is the world's second-largest corn consumer after the United States. In 2012, corn imports to China jumped nearly two-fold to 5.2 million metric tons. Most of the imported corn came from the US.
41
Magazine_Layout 1 5/31/2013 8:43 PM Page 44
Agriculture
CHINA SET TO BECOME WORLD’S TOP RICE IMPORTER 42
Magazine_Layout 1 5/31/2013 8:43 PM Page 45
CED Monitoring BEIJING-Despite its efforts to boost grain yields for the 10th consecutive year, China - the world's largest rice consumer - is expected to become also the world’s largest rice importer this year, according to a new report. The country's rice imports this year will surge to 3 million metric tons from 2.34 million tons a year ago, according to the report, released by the United States Department of Agriculture. Since 2012, "consumption demand for rice in China has exceeded the supply", the report said. If the forecast holds true, it would represent a sharp increase as the country's rice imports hovered around 450,000 tons per year over the five-year period that ended in 2011, official data showed. It would also make the country outstrip Nigeria to become the world's largest rice importer. Analysts said that the country has no shortage of rice supplies and blamed the expected surge in imports on the price dis-
crepancy between the domestic and global markets. The discrepancy is a result of the government's minimum grain purchase price, which aims to shore up domestic grain prices after they declined in the global market due to weak demand and increased rice yields in recent years, analysts added. The global rice output this year is expected to increase 2 percent year-on-year to 479 million tons, making 2013 the eighth consecutive year of increased rice yields, according to the USDA. Meanwhile, global rice stocks are expected to hit 107.8 million tons, the highest level since 2002, the report added. "The government should allow the purchase price to have some flexibility, so that it fluctuates according to the international market," said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, one of the industry's largest specialist consultancies. Meanwhile, rising labor costs and other factors are supporting rice prices in the domestic mar-
ket, placing upward pressure on imports. Lured by the low global prices, "Chinese companies are very willing to import", Ma added. During the first three months of the year, China's rice imports jumped by a staggering 192 percent from a year ago to 690,000 tons, Chinese official trade data showed. Because of the price discrepancy, imported rice will always be attractive to domestic companies, Ma said. "The government should continue increasing its investment in the agricultural sector to drive down prices in the long run," he added. Imports of other agricultural commodities are also expected to increase. The country's soybean imports are expected to rise by 10 million tons from a year ago to 69 million tons, according to the USDA forecast. China's grain output reached 589 million tons in 2012, the ninth consecutive year of increased harvests, official data showed. 43
Magazine_Layout 1 5/31/2013 8:43 PM Page 46
Science and Technology
THOUSANDS OF CHINESE FALL FOR FAKE MARS HOUSING 44
Magazine_Layout 1 5/31/2013 8:43 PM Page 47
CED Monitoring BEIJING-More than 10,000 Chinese people have applied to join a Dutch aerospace project Mars One that plans to send humans to Mars for permanent settlement, accounting for 1/8 of total applicants around the world. However, the person in charge of the project admitted in an interview last week that they were beating a retreat from the plan since the complexity of the project goes far beyond their imagination, and the trip is unlikely to realize in 2023. Recently some reporters went to the Netherlands and found the headquarters of the project was based in a rented office, which disappointed a lot of applicants. At present, the Chinese applicants have contributed over 100,000 U.S. dollars to the project for application, but their refund request was denied when they wanted to withdraw from the project. Some reporters found the company Mars One was regis-
tered on June 23, 2011, with only one employee, and the registered address is a residence in Amersfoort, which is under the name of Bas Lansdorp, who is reportedly the co-founder of Mars One. When the reporters went to the office of the company, they did not see any sign or logo of Mars One. Lansdorp and his colleagues only occupied a few tables in a large open office area. Therefore, media assumed that Mars One project is probably a commercial scam. A Chinese scholar said yesterday that the Mars program is very tricky, and he was not surprised the plan cannot be realized, because the project is a blatant commercial hype. Deputy Director of the International Institute of Air and Space Law at Leiden University Mrs. Drs. T.L. Masson-Zwaan also said that because the plan won't bring volunteers back to the earth, it has caused ethical issues. She said from a humanitarian point of view, this is contrary
to the basic ethical standards, and they should at least make sure this is a two-way trip. Although the plan does sound tricky, two weeks since the global launch of application for Mars One program, more than 80,000 applicants from more than 100 countries around the world, including 10,000 Chinese, have applied to join. At present, the registration fee of the 80,000 applicants amounts to more than 1 million U.S. dollars, among which the Chinese applicants paid more than 100,000 U.S. dollars. Tens of thousands of registered Chinese applicants have built hundreds of online chat groups and online forums to exchange on Mars topics every day. In some online chat groups the reporter joined, many applicants expressed disappointment about the news that the Mars One is difficult to be realized. Some people tried to get back the 11 U.S. dollars registration fee but failed. 45
Magazine_Layout 1 5/31/2013 8:43 PM Page 48
News Byte
STUDENTS BUILD HOUSES WITH RECYCLED PAPER
Photo shows the paper houses in the Chongqing University, Chongqing, southwest China. Fourteen paper houses, made up with recycled paper by more than 200 freshmen, were displayed in the Faculty of Architecture and Urban Planning of the university.
WORLD'S TALLEST BUDDHA STATUE FINISHED
The Buddha statue in Jiujiang, East China's Jiangxi province.
46
Magazine_Layout 1 5/31/2013 8:43 PM Page 49
The construction of the world's tallest statue of Amitabha ("Infinite Light") was completed on Sunday in Jiujiang, Jiangxi province, according to China Youth Daily. The 48-meter-high statue cost 1 billion Yuan ($162 million) and used 48 kilograms of gold for gilding. Construction funds came from disciples and philanthropists around the world, the report said.
MARS ONE NOT A SCAM, ASSERT ORGANIZERS
The Mars One Project has rejected Chinese media reports that their project is a scam that has cheated over 10,000 Chinese applicants of their $11 fee, and said it is a "rumor." "Mars One is making good progress on its plans. We have already contacted an American company to start work on the Environmental Control and Life Support System and Mars Surface Exploration Spacesuit System," Aashima Dogra, a manager of the project, told local media via e-mail. The whole process involved in selecting astronauts, training, landing and life on Mars will be made public, she said. The $6 billion project aims to send four people picked via reality TV show on a oneway trip to establish a colony by 2023. The number of Chinese applicants is second only to those from the US. The regis47
Magazine_Layout 1 5/31/2013 8:43 PM Page 50
tration fee is paid according to the economic situation of their countries. While Chinese applicants pay $11, Americans pay $38. The Guangzhou Daily reported the project might be using the registration fee to raise money, as it is registered under an address of the residential community where they rent the office with other companies. The report was a blow to space enthusiasts, with many questioning its feasibility. "We'd feel hurt if it is fake, as it has been my dream to explore space," said Yang Shimeng, a steel engineer in Tianjin. In response to the allegations, Bas Lansdorp, founder of the project, told the Global Times he chose his home as the company's registered address, because the office's real location can't be used. He added that the project is just starting, and there will be a lot of difficulties, but it is still doable.
CHINESE SOES REPORTS SLOWER PROFIT GROWTH
BEIJING: China's state-owned enterprises (SOEs) saw their total profit growth slow to 5.3 percent year on year to reach 689.13 billion Yuan (111.32 billion U.S. dollars) in the first four months, the Ministry of Finance has announced. The growth rate slowed from 7.7 percent recorded in the first quarter this year.