Stock Market
Housing Market Under Control?
Traders Against IPOs 3972
Average Housing Price in Beijing (August 2011 to July 2012, US$/square meter) Source: www.soufun.com The Chinese government recently emphasized that they would not loosen State controls on house prices as the domestic real estate market is once again overheating. According to official statistics, 25 Chinese cities saw an average six percent rise in housing prices since June, with analysts blaming the recent introduction of State subsidies for loan interest payments and three cuts in the deposit reserve ratio designed to stimulate the country’s flagging economic growth. In order to ease popular doubts that the real estate market was being hijacked for use as a stimulus-byproxy, Premier Wen Jiabao made a public pledge July 7 claiming that the government would “resolutely implement regulation of the real estate market” and make curbing speculation “a long-term task.”
Reform
Shenzhen Outlaws For-Profit Prescriptions Shenzhen’s municipal authorities have become the first to ban for-profit pharmacies in city hospitals. The reform, which comes into effect on July 1, requires all public hospitals to cease selling pharmaceuticals at a profit. The same reform, however, has raised all treatment charges to offset potential losses incurred by the new policy. Since the 1950s, the Chinese government has allowed hospitals to sell medicine at a markup up to 15 percent to compensate for a huge reduction in government funding. However, this led to incremental increases in the cost of treatment, with hospitals deliberately choosing to sell only the most expensive medicines to maximize profits. However, with hospitals remaining the principal market for pharmaceuticals as well as the country’s primary retailers, experts believe this reform is unlikely to make a dent in China’s widespread problem of medical profiteering.
Thousands of Chinese stock traders have signed a petition calling for a temporary suspension of IPOs. The petition came in the wake of eight new IPOs issued in a single week in July. A post on a popular Chinese bulletin board, tianya. cn, subsequently claimed that an overissuance of IPOs was the reason behind China’s depressed stock market. The post soon attracted over 60,000 clicks, with 3,000 more investors voicing their support for a suspension of IPOs. China’s security authorities responded by refusing to “interfere.” China’s stock market suffered a sharp fall in June, with the Shanghai and Shenzhen indexes down by 6.19 percent and 6.32 percent respectively, wiping 200 billion yuan (US$30bn) off the value of Chinese stocks. Many analysts have accused the government of failing to act in the interests of business by refusing to answer calls to rein in the IPO craze.
Business
Antivirus Software Pays for Customers Kingsoft Network Technology, a Chinese antivirus software developer, has launched China’s first program designed to protect users from online fraud. According to a company statement issued July 12, Kingsoft will compensate users up to 8,000 yuan (US$1,177) for losses incurred through online fraud each year. Users can get advance compensation within seven working days without paying any fees. Kingsoft’s move triggered a knee-jerk response from competitors, with Qihoo360, another leading developer, the first to issue a copycat program promising maximum annual compensation of 36,000 yuan (US$5,294). Analysts believe the Kingsoft example could kick-start an overhaul of China’s antivirus software developers. Since 2010, most of the country’s antivirus providers have gone from charging users to offering free software. Could they even start paying people to use their products? NEWSCHINA I September 2012
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Photos by CFP
Economy