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Editorial Editor-in-Chief Makhdoom Babar 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

Govt’s rapid response to earthquake Earthquakes fall in the category of natural calamities. No individual and no government can stop these to happen. However, it has always been a matter of great importance to see how the respective governments respond and react to tackle with the aftermaths of such natural calamities. How the leaders, in different parts of the world, react to provide immediate relief to their public in such situations. Chinese people have always been very lucky in this regard. Successive governments, headed by CCP, have always been proving that how the Chinese leaders feel for their people and how rapidly and swiftly they respond in such situation to provide timely and effective relief to their people. Had it been floods or had there been the snow storms and earthquakes, Chinese leadership has always set examples for the rest of the world leaders to follow as to how to react for public relief in such situations. In the last week’s earthquake in Sichuan province, the Chinese leadership has once again proved its efficiency and sincerity to provide immediate relief to victims of the natural calamity. Not only this but the efforts that the Chinese government made to rapidly revive the economic life in the quake hit areas is also a very remarkable act. It proves that the Chinese leadership, while keeping in view the importance of providing immediate relief to the people in such situations, also has a firm belief in keeping the economic lives of people intact at the same time. We think that such an approach towards the people’s welfare and towards country’s economic life is the main reason behind growing economic power of China.

Editor Islamabad Office: Mail House, Shakeel Chambers 01 Khayban-e-Soharwardy, Islamabad Email: editor@ccedigest.com newseditor@ccedigest.com webeditor@ccedigest.com ads@ccedigest.com


in this issue April 29, May 05, 2013 04

Cover Story

China firm on tightening traffic rules

Despite public complaints, China will continue to enforce traffic regulations to ensure road safety, according to an official with the Ministry of Public Security.

06

Counting changes and coins of 200,000 Yuan every day At 8 a.m., one staff member opens the fare boxes, and distributes changes and coins to his colleagues

Products from joint venture carmaker Qoros Auto Co make their China debut at the Shanghai auto show today as it showcases new models designed for the nation's young buyers.


in this issue 09

IFC to expand women's access to finance

Apple seeks to double outlets in China Apple has announced its Q2 2013 earnings on Tuesday and shared that its retail stores brought in less revenue this quarter than the previous one, but is still 19 percent higher than this time last year

12

BoC to raise business operations in Cambodia’

China Mobile's 1Q Profit Growth Slows BEIJING-China Mobile Ltd. (CHL) said Monday that its first-quarter net profit growth slowed as intensifying competition and growing sales of low-cost smartphones hurt profitability.


Society

China firm on tightenin

04


ng traffic rules BEIJING -- Despite public complaints, China will continue to enforce traffic regulations to ensure road safety, according to an official with the Ministry of Public Security. A nationwide campaign to discourage pedestrians from running red lights has commenced, and the strict enforcement of the regulations has proven somewhat effective, the People's Daily quoted Wang Changjun, head of the ministry's research institute on traffic management, as saying on Wednesday. The campaign also targets "Chinesestyle street crossing," in which pedestrians cross the road once a large enough group forms, regardless of what colour the traffic light is. Violators often say that they had been waiting for a green light for too long or the duration of the green light had not been enough to allow them to cross the road. Under the tightened rules, pedestrians will be fined if police catch them crossing the street during a red light or jaywalking, with the amount varying in different cities. The fine is 10 Yuan (1.6 U.S. dollars) in Beijing, and 5 to 10 Yuan in east China's Zhejiang Province. Wang said some violators have ignored the strict rules and others have refused fines. Though enforcing the regulations consumes a lot of time and energy, the government intends to stick with it. "As long as we continue to strictly enforce the regulations and promote education, there will be less and less 'Chinese-style street crossing,'" Wang said. The enforcement will continue, and pedestrians are expected to change their bad habits, he said. He added that authorities are repairing broken traffic lights and improving equipment to allow a reasonable amount of time for both pedestrians and vehicles to cross the road. In some cities, local governments have established "safety islands" in the middle of wide roads, allowing senior citizens to take their time crossing the road, he said. Still, Wang said there is no excuse for violating traffic laws.Agencies 05


Society

Counting changes and coins of 200,000 Yuan every day CED Monitoring BEIJING-At 8 a.m., one staff member opens the fare boxes, and distributes changes and coins to his colleagues. Everyone will repeat counting over and over again. According to Hong Qing, head of the counting center, every worker counts changes and coins of 10,000 Yuan every day; therefore, avoiding mistakes is not an easy task. Counting money until they get cramps in hands is no exaggeration. Each person will count changes and coins of 15,000 -

06

20000 Yuan every day. They will count much more changes and coins on holidays. After counting, they will deposit the money in the bank. However, the bank will charge fees for dealing with too many changes and coins. To solve the problem, the bus company provides change service for changes and coins which is welcomed by the citizens. "We can find a lot of fake coins every day and don't know how to deal with them," Hong Qing said and took the reporter to visit their store room. In the room, Hong

Qing showed some boxes of electronic game currency and fake coins to the reporter. He said: "These are fake coins we have found. We can gather such fake coins of 70,000 to 80,000 Yuan every year. Some of these can be mended, others are stored here. Some fake coins have been placed here for a decade. We work very hard, so we hope that passengers can be considerate. Don't put fake coins in the box, and try to spread out the banknote before putting it into box."


Finance

IFC to expand women's access to finance

08


BEIJINGInternational Finance Corporation (IFC) will manage the Women's Finance Hub to improve their access to financial services and promote best practices, said the member of the World Bank Group in a statement. 09


Finance

CED Monitoring BEIJING-International Finance Corporation (IFC) will manage the Women's Finance Hub to improve their access to financial services and promote best practices, said the member of the World Bank Group in a statement. The hub is an online platform to help advance access to finance for women entrepreneurs by disseminating research and information on critical issues related to the women's market. It will also address gaps in data, promote col-

10

laboration in knowledge sharing, and highlight innovation and best practices in expanding women's access to finance, said the IFC. "Women-owned enterprises represent significant untapped economic potential," said Nena Stoiljkovic, IFC's vice president for business advisory services, "It will also be necessary to expand financial literacy, leverage best practices, and put in place policies and regulations that remove barriers to women's participation in the economy. The Women's Fi-

nance Hub will provide an important boost to global effort in these areas." More than 200 million small businesses in emerging markets cannot obtain the credit they need to grow and generate muchneeded jobs. The challenge is even more acute for womenowned businesses, which account for more than 30 percent of these firms. The financing needs of these enterprises reach about 320 billion dollars a year, according to the IFC's data.


More than 200 million small businesses in emerging markets cannot obtain the credit they need to grow and generate muchneeded jobs.

11


Finance

BoC to raise business op

CED Monitoring BEIJING-The Bank of China is going to expand its business operations in Cambodia after it was launched here two years ago and seen rapid business growth, Zhu Shuming, visiting deputy governor of Bank of China, has said. Speaking at a meeting with Chea Chanto, governor of the National Bank of Cambodia (NBC), Zhu thanked the NBC for 12

supporting the presence of Bank of China-Phnom Penh Branch, saying that the bank has seen rapid business growth since it was officially launched here in May 2011 and opened its first sub- branch in December last year. He said currently, the bank has started to make profits from its business operations and ranked the 7th largest bank in Cambodia.

"The bank's progress shows that Cambodia's banking sector still has much room to grow," he said, adding that the bank planned to increase its investment in Cambodia through opening more sub- branches. He asked the NBC to support the bank in its business expansion plan. Chea Chanto pledged support to the bank, saying that the presence of the Bank of China


perations in Cambodia’

has largely contributed to developing Cambodian economy and strengthening the banking system. He added that the Bank of China is playing a vital role in promoting trade and investment ties between Cambodia and China. Earlier in the day, Zhu also met with Cambodian Deputy Prime Minister and Finance Minister Keat Chhon in order to seek

his support for the bank's business expansion plan. At the meeting, Keat Chhon said Cambodia and China set a target last year to boost the bilateral trade volume to 5 billion U.S. dollars by 2017. In this sense, he asked the bank to lend more to trade sector in order to help the two countries achieve the goal. He also urged the bank to focus on rice industry in terms of lending in order to help Cambo-

dian government achieve the target of exporting 1 million tons of milled rice by 2015. Bank of China is a stateowned public listed bank in China and is a leading commercial bank in the world. Currently, Cambodia has 33 commercial banks, serving about 1.6 million borrowers and 1.9 million depositors, according to the NBC. 13


IT

Apple seeks to double outlets in China BEIJING-Apple has announced its Q2 2013 earnings on Tuesday and shared that its retail stores brought in less revenue this quarter than the previous one, but is still 19 percent higher than this time last year. The company reported that in this past quarter, its stores generated a little over $5.2 billion in revenue, a 19 percent decrease from Q4 2012. 14


15


Finance

16


The company’s retail performance was led by strong sales of iPhones and iPads. At the end of this quarter, it said that there were 402 Apple stores in the world, with 151 outside of the US. Company CFO Peter Oppenheimer said that Apple is on track to open 30 new stories and remodel 20 stores in fiscal year 2013. This quarter, Apple’s stores saw an average of $13.1 million in revenue per store. 91 million visitors came to its stories, which the company broke down to be 17,500 visitors per store per week. Tim Cook, Apple’s CEO, said during the Q&A part of the earnings conference call that he expects to double the number of the company’s retail stores in China within the next two years. This region is an area that Apple appears to be placing a lot of its focus on — Apple said that it had its best quarter ever in the country with revenue of $8.8 billion, including sales from its retail stores — a 11 percent increase year-on-year. We’re also innovating in the online store there. China has an unusually large number of potential first-time buyers, and that’s not lost on us. We’ve seen significant interest in iPhone 4 and we’re making it more attractive to first-time buyers.

17


Science and Technology

China Mobile's 1Q Profit Growth Slows

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BEIJING-China Mobile Ltd. (CHL) said Monday that its first-quarter net profit growth slowed as intensifying competition and growing sales of low-cost smartphones hurt profitability.

19


Science and Technology The slower rate of growth comes as the world's largest mobile carrier, with more than 700 million customers, is plowing almost $7 billion this year into building a new fourthgeneration network as it fights to retain supremacy. In the first quarter, the company faced "unprecedentedly intense market competition and more apparent substitution of traditional communication business by new technologies and new businesses," China Mobile Chairman Xi Guohua said in a statement. Though China Mobile is far and away China's largest carrier, profit growth has slowed in part because the company was saddled with a proprietary third-generation Chinese standard not commonly used outside the country. Among other problems, that left China Mobile unable to offer popular phones like Apple Inc.'s (AAPL) iPhone. As Chinese consumers have rushed to buy touch-screen smartphones that run on 3G networks, they have increasingly bought services from rivals China Unicom (Hong Kong) Ltd. (CHU) and China Telecom Corp. (CHA). It has also been hampered by a surge in the use of applications on smartphones, which has hit revenue growth from traditional text and voice services. Applications like Tencent Holdings Ltd.'s (0700.HK) WeChat allow users to send voice and text messages free of charge, leading many users to make fewer phone calls and send fewer traditional text messages. Net profit for the three months ended March 31 rose to CNY27.9 billion from CNY27.8 billion a year earlier. China Mobile's first-quarter operating revenue rose 5.7% to CNY134.7 billion from CNY127.5 billion a year earlier. Although China Mobile has attracted more users to its third-generation services recently, analyst Victor Yip with UOBKayHian said in a note that it hasn't helped much to lift average revenue per user--a key metric for carriers. In the first quarter, average revenue per user fell to CNY63 from CNY65 in the same period a year earlier. This is in part why China Mobile has been working to sign a deal with Apple to offer the iPhone. In January, Chairman Xi Guohua met Apple Chief Executive Tim Cook in Beijing and discussed cooperation, raising expectations that the carrier would soon begin offering the iPhone. China Mobile would be a key partner for Apple, which faces fierce competition from Samsung Electronics Co. (005930.SE) and other rivals offering smartphones powered by Google Inc.'s (GOOG) Android operating system. Since then, the company has said it has no further updates on the talks with Apple. 20


21


Industry

Alibaba vows t

22


to tackle fakes 23


Industry

CED Monitoring HANGZHOU-Alibaba Group Holding Ltd, China's biggest ecommerce company, plans to step up efforts to fight counterfeiting, which the company head says is the biggest obstacle for its future development. The Hangzhou-based company will spend "as much as it can" to tackle counterfeiting problems on its e-commerce websites, said Shao Xiaofeng, Alibaba's chief risk officer. The company will set up a committee for intellectual property rights protection this year, which will have Lu Zhaoxi, its new CEO starting on May 10, as head and Alibaba's different business division leaders as members, Shao said. The effort came after the company was removed from the United States' yearly list of

24

the world's most "notorious markets" last year because of its improvement in reducing counterfeits. "I am afraid that something we notice but don't prevent today will eventually grow into a cancer for a company's future development. ... That's why I think I will surely regret it if we don't do well in fighting counterfeits," Ma Yun, Alibaba's chairman, said at his last news conference before he officially steps down as CEO on May 10. About 2,000 employees at Alibaba are responsible for protecting intellectual property rights. Last year, Alibaba dealt with 94 million items that infringed copyrights and handed out punishment 900,000 times, it said. In the first three months of

this year, China's public security organs have dealt with 3,747 counterfeit cases, which involved a total value of 24.2 billion Yuan ($3.91 billion), said Meng Qingfeng, head of the Economic Crime Investigation Department of the Ministry of Public Security. In December, a report from the United States Trade Representative said that Taobao, owned by Alibaba, "has worked with rights holders to significantly decrease the listing of infringing products for sale through its website, and has committed to continue working to streamline its complaint procedures to further reduce listings of counterfeit products".


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Industry

China’s Industry face recovery fight

26


es

CED Monitoring BEIJING-The country's industry is still in a protracted struggle for recovery and for a shift to better serve domestic consumers, according to information provided by the Ministry of Industry and Information Technology. In the first quarter, industry saw 9.5 percent value-added growth year-on-year, slower than the 10 percent seen in the previous quarter, and even slower than the 11.6 percent in the first quarter of 2012. Economists warned that the sector's slower growth may force the country to rely more on growth driven by capital investment, resulting in an even greater challenge to its plan to rely increasingly on domestic consumption. Heavy industry registered 9.8 percent value-added growth year-on-year, while light industry saw 8.7 percent and the technology industry saw 11.9 percent growth. Xiao Chunquan, a ministry spokesman, said at a news conference in Beijing that a moderate decline should be seen as a normal phenomenon after industry's rapid growth in the past two decades. "A slowdown of growth in industrial activities will help ease the pressure on the environment 27


Automobile

and resources. It also makes room for the structural adjustment of the economy," Xiao said. He added that the industrial sector faces considerable pressure from a lack of robust growth in consumption as well as in the investment in fixed assets. Domestic consumption growth fell 2.4 percentage points in the first quarter from the previous year, while investment growth was on par with that of the first quarter of last year, according to the National Bureau of Statistics. In the first two months, large industrial companies saw their combined profits rise 17.2 percent year-on-year, while profits from their main business lines rose only 5.2 percent. Meanwhile, some 20 percent of the companies were still running at a loss. 28

The GDP of the world's secondlargest economy expanded 7.7 percent in the first quarter, and most analysts said the figure could rise to about 8 percent in the second quarter. Song Guoqing, a professor of economics at Peking University, who is also an adviser to the central bank, said at a recent conference that GDP growth in the second quarter might hover at around 8.1 percent. Zhu Baoliang, an economist with the State Information Center, pointed out that the unemployment rate did not rise to the point that the government had to revise its policy focus — although growth will continue to be "very much driven by government-backed investment projects" in the second quarter.

The expected shift in the growth model — meaning growth relying more on domestic consumption than government investment or exports — is still a long way from now, he said. At a recent executive meeting of the State Council, Premier Li Keqiang called for more efforts to boost domestic consumption. Xiao, the ministry spokesman, said, "Consumption is playing an increasingly important role in supporting growth." He highlighted the role played by the IT sector in boosting consumption growth. China's e-commerce sector grew 45 percent year-on-year to 2.4 trillion yuan (384.46 billion) in the first quarter. Wang Tao, chief economist with UBS, wrote in a research note that the dampening impact of the


anti-corruption campaign on consumption is decreasing, therefore consumption will pick up in the second quarter. But she also noted the rapid credit expansion in the first quarter, accompanied by the urbanization drive, which will generate more growth in fixed-asset investments, especially in infrastructure. In the first quarter, Chinese banks provided 2.76 trillion yuan in new loans, 300 billion yuan more than in the same period last year. "China should work out a more detailed urbanization plan," said Liu Ligang, chief economist in China with ANZ Banking Group. "Otherwise the process will be inefficient and will encourage more investment-driven growth." 29


Automobile

Peugeot Citro record Q1 sa PARIS -- PSA Peugeot Citroen posted record sales in the first quarter in China by selling 142,000 vehicles, up 31 percent from first-quarter of 2012 in a market up 17.5 percent, the French carmaker confirmed in a statement. The auto company reported the market share of 3.95 percent, a significant growth compared to the previous year. Since 2009, the Chinese market has been the world's leading automobile market where the company's sales data showed the fastest growth trend seen in 2012, "when unit sales totalled 442,000 for an increase of 9.2 percent in a market up 7.2 percent," the carmaker said. The sales of the Sino-French joint venture products contributed notably to the rising trend as the Dongfeng Peugeot-brand sales saw a sharp upswing to hit 24 percent. To further develop the Chinese auto market, PSA Peugeot Citroen and Dongfeng DPCA announced the launch of two new models in the second half of 2013: the Citroen C-Elysee and the Peugeot 301. It will also increase production capacity at Wuhan with the inauguration of a third plant in July. In addition, the CAPSA joint venture between PSA Peugeot Citroen and Changan will begin local production of the Citroen DS5 in the second half of 2013 at the Shenzen facility, which will offer capacity of 200,000 vehicles per year at full operation. The DPCA joint venture is aiming to expand its Chinese market share to 5 percent in 2015.(XINHUA)

30


oen achieves ales in China

31


Agricluture

New Qoros brand makes CED Monitoring SHANGHAI-Products from joint venture carmaker Qoros Auto Co make their China debut at the Shanghai auto show today as it showcases new models designed for the nation's young buyers. The premieres include Qoros' first production vehicle the Qoros 3 Sedan - along with the Qoros 3 cross hybrid and the Qoros 3 estate concept models. "Qoros vehicles are more than a transport tool. They are symbols of your taste for life, and represent simple, elegant and enduring fashion," said Guo Qian, chairman and CEO of the company based in Changshu, Jiangsu province. The company plans to start production with the Qoros 3 sedan at an initial capacity of 32

150,000 units. Production could later rise to 450,000 vehicles a year, according to an earlier report. The model will go on sale in China and Europe in the second half of the year, said the company. The Qoros 3 aims to compete with similar-priced models from Volkswagen and Toyota. The company said it plans to roll out a new model every six to 12 months to build its lineup. The joint venture founded in 2007 between Chery Automobile, China's biggest automaker by sales, and Israel Corp, the largest holding company in its namesake country, caters to customers striving for "a modern, metropolitan and 'always-connected' lifestyle", the company said. The brand's global debut

last month at the Geneva Auto Show shows the young carmaker's confidence and commitment to producing high quality vehicles, Guo said. "Qoros has sparked great interest among distributors and dealers worldwide - especially in Europe - that are eager to represent the brand. "However, the praise at the Geneva Auto Show was just a first step on our path to success," he said. "We are committed to creating a distinctive auto brand with quality as our foundation. We will bring top-level products and services to customers in China and worldwide." He said the Qoros 3 Sedan's "elegant design and larger interior space offer firstclass specifications and high safety standards".

C


China premiere The model - 4,615 mm long and 1,839 mm wide - has a long wheelbase for its class, short overhangs, a coupe-like silhouette, and a roofline that flows smoothly into the strong rear quarters, according to the company. Designed by a team headed by BMW Mini's former chief designer Gert Hildebrand, "it boasts a powerful overall appearance", the company said. It is powered by two options in four-cylinder 1.6-litre gasoline engines, both featuring direct injection and variable valve timing to maximize performance. It also has an advanced 8inch touch screen offering entertainment, navigation and details about the status of the vehicle. It can even enable the driver to book services at deal-

ers, said the company. "That's because our target consumers are open-minded, pioneering, and always 'connected' young people who seek self and social recognition," said Volker Steinwascher, vice-chairman of Qoros. In addition to the Qoros 3 Sedan, the brand also unveiled its concept models, the Qoros 3 cross hybrid and the Qoros 3 estate."The Qoros 3 cross hybrid symbolizes innovative driving pleasure," said the company. A crossover that features a compact body, the Qoros 3 cross hybrid has a three-cylinder turbocharged 1.2-litre gasoline engine, a 50 kW electric motor above the rear axle, and a second electric motor an integrated starter generator - between the conventional en-

gine and transmission. The model is equipped with an intelligent control system that ensures seamless transitions in power to respond to the driver and road conditions. The Qoros 3 estate concept on display in Shanghai distinguishes itself with modern functions and delicate details, according to the company. The five-door model has a longer body and larger side windows, giving it a sporty and dynamic look. The model also presents a vision of a future especially popular with European customers. "It is geared towards the needs of modern families, providing a spacious and versatile interior space for them," said the company. 33


Construction

Shanghai mulls new rail l

34


link to airports

CED Monitoring SHANGHAI-Shanghai is studying the construction of an express railway to connect its two airports, an official said. "We are looking at ways of shortening the time between Pudong International Airport and Hongqiao Airport, such as building an express route, and that means we will see more business jets arriving," said Jing Yiming, vicepresident of Shanghai Airport Authority and chairman of Shanghai Hawker Pacific Business Aviation Service Center. He was speaking at the three-day 2013 Asian Business Aviation Conference and Exhibition (ABACE) that started on Tuesday. According to Jing, it takes about two hours to travel between the airports by taking the Metro, and if the new express railway is launched, the time range will be shortened to 30-40 minutes. Business aviation traffic at Shanghai's airports has reached 3,800 flights, accounting for one third of the nation's total. China's rapid development and huge potential of business and corporate aviation also attract more players to join the market.

35


Construction

ARE CITIES E

TOO FAST AND

CED Monitoring BEIJING-A great deal of hope has been invested in the role urbanization can play in helping to drive the nation's next cycle of economic boom. But how can China manage what no other country has ever achieved before, to build so many urban communities in such a short space of time? To do things right, Premier Li Keqiang recently said that China will have to learn from other nations' experiences. Now Professor Xue Lan, dean of Tsinghua University's School of Public Policy and Management, joins the discussion by sharing his concerns and reporting his observations. China's urbanites outnumbered its rural residents for the first time in history in 2011 and keep increasing steadily. With this achievement, urbanization has become a hot topic that many hope can be a new engine for economic growth. However, without serious solutions to address the unprecedented challenges facing Chinese cities, these great aspirations may come unstuck, as this high-speed urbanization is partly powered by certain distorted mechanisms. First-tier cities or not, many urban centers in China share the ambition of becoming international, national or regional 36


EXPANDING

D TOO SOON?

metropolises, playing the role of financial, industrial or cultural centers. Accordingly, their planning, infrastructure and population have all scaled up, leading to a greater need for investment. But does a country need so many financial, industrial or cultural centers? This lack of provident planning has increased the danger of vicious competition for investment and the risk of a waste of resources. Smart plans Planning authorities may gain wisdom from the experience of cities in other countries. For example, Santa Barbara, a small but beautiful city in California, gives a holistic and peaceful impression. Anybody who has flown to that city from China must have been impressed by the simplicity of its airport, for in China, regardless of the size of the city, it has to construct a grand airport if it is to have one. The harmony and pragmatism demonstrated in Santa Barbara's city planning is very much needed in China's urbanization, if China is to have fewer stereotyped cities and minimize the waste of resources. Also, opportunities for industries to thrive are never reserved exclusively for metropolises. The headquarters of Hallmark Cards, the largest 37


Construction

manufacturer of greeting cards in the United States, is located in Kansas City, Missouri. Starting from this less well-known city in the midwestern US, Hallmark cards are now sold all over the world, and the company has consolidated annual revenue of around $4 billion. Hallmark Cards was not based on depending on one city for all its resources and convenience, but on the pursuit of excellence, and keeping its research and development center there. Pursuit of excellence is part of the city's culture, which has also greatly benefited a lot of other companies. Other than the poorly conceived and potentially wasteful plans, local governments in China also have problems in their hasty moves to promote urbanization. Projects that take decades to complete in other countries are often finished in four or five years. No haste Harvard University initiated a plan for campus expansion 10 years ago, when Larry Summers was still its president. To construct new teaching and research buildings on the other side of the Charles River, the university went through several rounds of communication with faculty, students and local residents, and even set up an exhibition room to present its plan to the public. But still, the construction may take another 10 years or longer before it can be accomplished. While Harvard was in the process of communication, hundreds of universities in China have established brandnew campuses and even university towns. These hasty developments, while reflecting local government officials' eagerness to contribute to the modernization of our country, also reveal the limits of their terms of office. 38

Every official wants to present a good record when their terms of office are over so as to lay the foundation for their next steps. The pace of urbanization, however, is not necessarily in step with the officials' terms. As a result, quality problems, like those revealed in recent extreme weather in a lot of Chinese cities, are beginning to emerge. What's worse, the negative results are far from being fully discovered, as the cities' incumbent leaders are usually reluctant to expose anything negative about their predecessors, who are in most cases their current bosses. A problem related to the change of officials is the change of policies. Very often in China, transitions of government officials also bring about transitions of ideas and policies. Although it is necessary for policies to evolve as society develops, changes, if too frequent, only suggest that the existing policies are not forward-looking enough. In Charleston, South Carolina, the setting of Gone with the Wind, many historical buildings from the colonial era remain well preserved today, as Mayor Joseph Riley's life's pursuit is to protect the historical buildings and preserve the city's history and culture. It's perhaps not a coincidence that he is one of the longest serving mayors that is still in office - he has served 10 terms starting from 1975. When I was invited to Charleston by the Board of the Brookings Institution, Riley was our luncheon speaker. With his soft southern accent and beautiful PowerPoint slides, he spoke on and on, for over an hour, long exceeding the appointed time, until the moderator had to stop him. The next day, when the governor of South Carolina asked me about my impres-

sions of Charleston, I mentioned Riley's presentation. Immediately the governor asked: "Did he finish it?" We both laughed. Behind Riley's unfinished presentation was his genuine love for the city and persistence in protecting it, which can be a great source of learning for Chinese officials. To advance urbanization with good Chinese characteristics, the planning authorities should first learn to sort out priorities and make hard choices. Since we cannot do everything and do it well, we had better make choices in accordance with cities' advantages. Only by choosing priorities and continuing its development can a city distinguish itself. The next thing to do is to slow down. It takes time for contemporary trends to become cultural assets, and for experience to become invaluable learning. It also takes time for problems and conflicts to be exposed, and then, to be resolved. Hasty development may do more harm than good to a city. Sustainability needed Vital importance should be attached to sustainability in China's urbanization drive sustainability both in terms of the environment, and of the system. Environment deterioration is affecting not only major cities, but also many medium and small cities in China. If the nation's urbanization does not develop in a sustainable way, it could bring more problems and even disasters to future generations. Meanwhile, sustainability in urban governance is also important. For example, not enough attention is paid to the public finance system. Without a healthy public finance system, urbanization will create more problems than it solves. It is estimated that thousands of millions of rural resi-


dents will become urbanites in the decades to come. It is the mission of our generation to make hard choices, slow down our pace, and achieve sustain-

ability, to ensure the healthy development of China's urbanization. Xue Lan is also co-chair of the Urban China Initiative

jointly led by the Tsinghua School of Public Policy and Management, Columbia University, and McKinsey & Company. 39


Real est

Housing loan risks still high, says CBRC 40


CED Monitoring BEIJING-Chinese banking regulators warned that risks related to property loans remain high, and vowed to keep a close watch on such lending this year. "Pressure from risks posed by property loans is still rising. These potential risks cannot be neglected," Wang Zhaoxing, a vicechairman of the China Banking Regulatory Commission, was quoted as saying by Financial News. He said a high level of liabilities has been accumulated by developers, with more than half of such companies suffering from negative cash flow in the first three quarters of 2012. "Defaults on mortgage loans have increased in some areas since the third quarter, especially for expensive or big properties." Wang added that the commission will improve its supervision of liquidity risks and require banks to strengthen their liquidity management. China's property lending accelerated in the fourth quarter as the real estate market recovered, according to central bank data released in January.

Outstanding property loans extended by major financial institutions went up 12.8 percent to 12.11 trillion Yuan ($1.95 trillion) at the end of 2012, 0.6 percentage point higher than in previous quarter. According to a survey conducted by the China Banking Association last year, nearly 70 percent of Chinese bankers expressed worries over the risks that stem from lending to the property sector. A report released by the International Monetary Fund on Wednesday warned China of risks related to its rapidly expanding leverage, and said real estate is one of the areas seeing the fastest credit expansion. Rising home prices cannot simply discount the risks lying in property loans, said Hu Bin, a Moody's vice-president and senior analyst. New home prices increased by 1.2 percent last month, the eighth rise in past nine months. In March, 68 of 70 major cities witnessed month-on-month increases in home prices, up from the 66 in February, according to the National Bureau of Statistics on Thurs-

day. "The previous rounds of property control measures from the government have led to consolidation within the property industry and the dropping out of some of the weakest players, which means more tightening would probably hit bigger ones, and that could cause much more serious problems for banks," Hu said. Apart from fending off property lending risks, the commission has also ordered banks to submit details of their lending exposure to other financial institutions through the interbank market by May 8, China Business News reported on Thursday. Such financial institutions include banks, brokerages and investment funds. The report said the move came after the Basel Committee on Banking Supervision suggested controlling interbank risk exposure by limiting exposure to 25 percent of a bank's first-tier capital.

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Construction

Widening gap between housing supply and demand

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CED Monitoring BEIJING-China has a sufficient amount of real estate and construction space to provide housing for 120 million people, according to the National Bureau of Statistics, 21st Century Business Herald reported. According to the data released on April 15, there are 424 million square meters of real estate for sale and 353 million square meters of construction area. Qin Hong, director of the Department of Housing and Urban Policy Research Center, believes that the biggest problem in housing development is not the imbalance between supply and demand, but housing resources. “Since 2011, the core of the regulation has been to increase the supply, including controlling speculative investment, building affordable houses in order to solve the conflicts of supply and demand issues,” said Zhang Dawei, research director of Beijing Centaline Real Estate. “Estimating that it’s 100 square meters per house, there needs to be at least six months to digest the sale of 424 million square meters of housing,

and the 353 million square meters of housing currently under construction can provide 3.53 million houses, so the so-called common sense conclusion of a land and housing supply shortage can not be established,” Zhang added. However, despite the abundant housing supply, the gap between housing supply and demand in major cities is widening. According to data provided by EJU Real Estate Institute, since the end of March, the number of newly built commercial housing in the 20 largest cities is 72.24 million square meters, the lowest level in the last 17 months, and housing stock in Beijing unprecedentedly fell below 70,000 units. The current supply capacity of real estate is large enough, and the average housing area is not small, but there is a structural problem of housing supply. So the next step is to solve the problem of uneven distribution of housing resources, Qin said. “On the one hand, the uneven development of public services between the eastern and the central and western regions drives the housing needs to the more developed regions, hence pushing

up housing prices in those regions; on the other hand, there still exists speculative investment in the property market, leading to the imbalance of the possession of housing resources,” Qin said. According to the requirements of the Ministry of Land and Resources, supply of residential land in 2013 must not be less than the annual average supply of the past five years. “The requirement is the provision of principle and it still needs to be refined and differentiated. The key in 2013 is to digest the abundant housing stocks in the third and fourth-tier cities rather than increase the land supply, otherwise, it would risk a crash in the property market,” Zhang said. “We need to take into the consideration of the needs of urbanization to solve the housing problem. For small and medium-sized cities which have a big housing inventory, the supporting construction for industry and employment must be emphasized, or the market cannot be sustained,” said Liu Xiaoguang, Chairman of Beijing Capital Co Ltd.

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Agriculture

China’s Poultry Industry under pressure 44


CED Monitoring SHANGHAI-The unexpected outbreak of the new H7N9 strain of bird flu is imposing a huge financial strain on breeders and sellers, reports Yu Ran in Wenzhou, Zhejiang. After being woken in the early morning by his 16,000 chickens crowing in their coops, Pan Jianjing was unable to get back to sleep. Usually a sound sleeper, the 37-year-old breeder's rest has been disrupted by business concerns. The 45


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outbreak of the H7N9 strain of bird flu has resulted in the bottom falling out of the market and Pan hasn't sold a chick in the past two weeks. Pan's 2,000-square-meter farm, in Tengqiao village, Wenzhou, Zhejiang province, an area well known for smoked chicken products, has turned from moneyspinner to cash drain.By Tuesday, the national and provincial labs had tested 47,801 samples from 84,444 collected nationwide, according to the Ministry of Agriculture. The 39 positive samples taken from live poultry all originated in the municipality of Shanghai and the provinces of Anhui, Zhejiang and Jiangsu, all of which confirmed cases of H7N9 bird flu. So far, 82 cases have been confirmed nationwide and 16 people have died, according to media reports. Feeding his chickens

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costs Pan almost 3,000 Yuan ($485) a day, including about 2,000 Yuan for a dozen packs of feed, which cost 150 Yuan each. The rest goes on wages and electricity charges. With no money coming in, Pan's loss is expected to reach more than 100,000 Yuan within the month. "I used to make an annual net profit of 40,000 to 50,000 Yuan, which covered the family's daily expenses and helped to pay for the gradual expansion of my farm. Now I'm worried that I will spend all my savings in just one or two months," said Pan, the family breadwinner and father of a 3-yearold son and a daughter, 11. The growth cycle of a chicken lasts about 60 days, which means that most of the meat chickens, as opposed to laying chickens, have to be sold within two months, otherwise keeping them will result in a huge waste of food

and money. At present, most of his roosters are 40 days old and need to be sold within 20 days to minimize the losses, which are rising daily. By Monday, the losses experienced by poultryrelated businesses nationwide had reached more than 13 billion Yuan, according to estimates provided by the National Poultry Industry Association. Unsold baby meat chicks have so far cost breeders more than 3.7 billion Yuan. "I have no option but to pray that the scandal of the H7N9 virus will be controlled as soon as possible. That would save us from a severe dilemma," said Pan. Meanwhile, Ye Guowang, who owns a chicken farm in the same village as Pan, is wasting money every minute on feeding 10,000 chickens that are ready to be sold. "Most of my chickens have stopped growing, but they are still eating a


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large amount of feed every day, which is a waste for me," said 63year-old Ye, who has seen his business expand over three decades from a few dozen chickens to around 20,000 on his farm at any given time. Ye added that it is common to have a few cases of bird flu in the hennery every year, especially at springtime, but the unexpected new H7N9 strain has wrought huge damage on the poultry industry. The outbreak has brought the industry to a standstill; few consumers are willing to buy poultry-related products, which has resulted in a sharp fall in the prices of chickens and ducks and even eggs. "The price of an ordinary meat chicken has dropped from 12 Yuan a kilo to four, but still no one wants to buy, even at such a low price," said Ye, who spends around 2,600 Yuan a day 48

keeping unsold chickens on his farm. To ensure his chickens are healthy and safe to be sold at the market, Ye has to treat them with a vaccine twice a month to prevent the various strains of bird flu and other infectious diseases. "I will have to buy more vaccine for these chickens in around a week, if the demand for chicks stays at zero," said Ye, who usually earns a profit of around 1.5 Yuan for each chicken sold. Compared with Ye Guowang, Ye Enlin, the managing director of the Wenzhou Minxin poultry cooperative in the village is suffering much greater losses; he has signed agreements to buy 5 million chickens a year from 80 henneries in the cooperative. Three days ago, Ye Guowang, also a member of Wenzhou Minxin poultry cooperative, put 10,000 chicks in the hot house, where the temperature is

constantly maintained at between 33 C and 35 C. The chicks were sold to the cooperative as part of an agreement signed in January, so he hasn't lost any money on them yet, but that may change if the outbreak doesn't end soon. "I signed the agreement to buy those chickens, so I am facing double the losses of farm owners," said Ye Enlin, who has lost more than 10 million Yuan in sales during the past month. Ye has slaughtered and frozen a few hundred mature roosters in the hope of selling them in two or three months, as a means of minimizing his losses. And it's not just the breeders who are suffering; poultry sellers who've been forced to close their stands at agricultural produce markets are waiting anxiously for an end to the outbreak, but the cases keep appearing.

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