Source: Xinhua/CRIENGLISH.com  11/30/2007

Investors’ concerns over a growth “hangover” from domestic over-investment are unwarranted, said a UBS report released earlier this week about China’s macroeconomic trends in 2008.

Jonathan Anderson, UBS’ senior analyst on global emerging markets, made this comment in “The 2008 China Macro Almanac” amid worries that the country’s economy is set to overheat, with its double-digit gross domestic product (GDP) and a monthly consumer price index (CPI) of more than six percent.

“The current high headline CPI inflation rate is mostly due to temporary supply-related spikes in a few goods categories,” said the report, adding that the CPI would fall throughout the first half of 2008.

The optimism of the report comes from the buoyant margins in most industrial and service sectors. While profits dropped sharply in heavy industrial firms between 2004 and 2006, they have already recovered visibly over the past 12 months, the report said.

The report anticipated the country would continue its double-digit growth despite a tiny slowdown of 0.6 percent in 2008 from more than 11 percent this year, which mainly came from falling net exports.

A potential recession in the United States could be a major external risk for Chinese economy, but past experience has shown that domestic growth is “insulated from even the most aggressive export shocks”, said the report.

Source: www.chinaview.cn 

11/14/2007:

China has drafted executive regulations for a new corporate income tax law that will harmonize the domestic and foreign rates, and the final draft has been submitted to the State Council for approval, the China Securities Journal reported on Wednesday, citing an expert close to the issue.

The income tax rate for foreign companies in special bonded zones, which previously enjoyed a preferential rate of 15 percent, will rise in stages to 18 percent, 20 percent, 22 percent, 24 percent and finally 25 percent, the same as domestic companies, over five years, according to the draft.

The arrangement would apply to such bonded zones as Shenzhen Special Economic Zone, economic development zones set up in coastal cities like Hongqiao Economic and Technological Development Zone in Shanghai, and high- and new-tech development zones including Zhongguancun Science Park in Beijing.

The unidentified expert also said the 24-percent rate for foreign companies established in coastal regional development zones, such as the Yangtze River Delta and the Pearl River Delta, would rise directly to 25 percent in 2008.

However, foreign companies that have tax holidays, which provide for five tax-free years and another five years of up to 50 percent reduction, will retain those concessions for the full 10 years before facing the new higher rates.

The 15-percent rate will be retained until 2010 for foreign companies that invest in middle and western regions of China, an apparent effort by the government to redress regional economic imbalances.

The regulations will include new criteria for high- and new-technology firms, which can enjoy a lower 15-percent rate.

The qualifications could include the ownership of core proprietary property rights or government-supported products.

The regulations will also specify the proportion of sales that must be devoted to research and development and the ratio of research employees among total staff for qualified high- and new-tech firms.

The changes will make it more difficult for companies to gain the status of high- or new-tech investors, according to the expert.

“They would no longer enjoy the status forever and qualifications will be re-evaluated every one or two years. Those who fail to meet the standards would be disqualified,” said the expert.

The regulations also state, in detail, tax policies that will favor infrastructure projects, environmental protection, and energy and water conservation.

The expert said the draft is still subject to revision by the State Council.

The new law, adopted this past March to allow fair competition between foreign and domestic companies, is set to take effect on Jan. 1, 2008.

Souce: www.chinaview.cn 11/07/2007

Chinese economy would overheat if the issue of excess liquidity could not be solved substantially, a senior Chinese official said on Wednesday.

Speaking on the first day of the International Finance Forum in Beijing, Cheng Siwei, vice chairman of the Standing Committee of the National People’s Congress (NPC), said the excess liquidity currently remains a major issue in the Chinese economy, calling for effective measures to deal with it and prevent it from causing the economy to overheat.

“Capital coming from bank deposits, forex reserves and hot money from overseas have raised the consumer prices and pushed up both the property market and the stock market at the same time, which traditionally move in opposite directions,” said Cheng, who is also a leading economist.

“China is taking monetary measures to curb excess liquidity,” said Cheng, but he admitted that the policies of raising the reserve requirement ratio, interest rate and the securities stamp tax have not brought about “satisfactory results”.

China should further expand the capacity of the stock market by encouraging companies listed overseas to go public in the domestic market, as well as accelerating the listing of profitable domestic companies, said Cheng.

China has brought back three of its state-owned giants, China Construction Bank, China Shenhua and PetroChina, to list on the Shanghai Stock Exchange in recent weeks.

Cheng also advised the government to diversify its forex reserves and gradually release more forex from national reserves to domestic companies and individuals.

Source:  www.chinaview.cn  11/04/2007

China’s industry and commerce authorities have handled more than 60,000 intellectual property rights infringement cases amid stepped-up efforts in IPR protection after its entry into the World Trade Organization, according to a senior official. From 2002 through the first half of this year, the country’s industry and commerce departments at all levels have dealt with 60,203 IPR infringement cases valued at 1.4 billion yuan (186 million U.S. dollars), said Li Wenzhang, deputy director of the fair trade bureau of the State Administration of Industry and Commerce (SAIC). The IPR of overseas companies, such as Estee Lauder, Coca Cola and Anheuser-Busch, have been protected in China after infringements were solved, Li said at the China Trademark Festival held Friday to Saturday in Changsha, capital of central Hunan province. The event attracted more than 1,200 companies and officials both home and abroad. The SAIC will continue to focus its crackdown on illegal activities faking trademarks, names and packaging from others, Li added. Li also said a research report on commercial secrets in China has been completed as part of the country’s implementation of its IPR strategy. The comprehensive research, launched in 2005 by a 16-member team of experts, tells the status quo of commercial secrets in China and its future development measures and goals, according to Li.

Source: www.chinaview.cn 10/31/2007

China will raise the prices of gasoline, diesel oil and aviation kerosene by 500 yuan per ton, almost a 10 percent rise, starting from November 1, China’s economic planner announced on Wednesday.

The average retail prices of gasoline and diesel oil was lifted to 5,980 and 5,520 yuan per ton, up 0.4 and 0.46 yuan per liter respectively.

The adjustment was made to shorten the gap between high-flying international crude prices and state-set domestic oil prices, according to the National Development and Reform Commission.

The government-controlled oil prices in domestic market had been blamed for a shortfall of oil supply, as some refineries would stop processing to avoid losses while some producers and sellers would hoard up oil to gain more profits in the case of possible price hikes, said Liu Zhenqiu, vice director of the price department of the NDRC.

Crude price in international market has reached 93.53 U.S. dollars per barrel on October 29, up by over 80 percent from the price at the beginning of the year.

“If the crude price is 80 U.S. dollars per barrel, domestic refineries will lose 600 yuan for each ton of crude it process, and 1,000 yuan for each ton of oil it produce,” said Liu.

China will also raise the price of natural gas for automobiles and industrial production, according to the NDRC. (one U.S. dollar equals to 7.48 yuan)

www.chinaview.cn 10/31/2007

In the wake of headline food scandals, China’s cabinet on Wednesday approved in principle a draft law on food safety to address the “weak points” in food production, processing, delivery, storage and sales.

“Food safety is vital to improving people’s lives and health, so relevant legislation must match national efforts of safeguarding food safety,” said Chinese Premier Wen Jiabao.

The draft law, based on the existing Food Hygiene Law, was discussed at Wednesday’s executive meeting of the State Council, which was presided over by Wen.

The draft law proposed a food safety risk supervision and evaluation mechanism to provide a “key basis” for constituting food safety standards and food born disease control measures. The mechanism demanded a “unified, timely, objective and accurate” disclosure of emergency information.

Related institutional systems covering food production, processing, delivery, storage and sales should be set up to prevent food safety problems, according to the premier.

The government would standardize practices such as food production licensing, inspection and quarantine results recording, product labeling and recalling, said the premier, adding the producer would bear major responsibilities for food safety scandals and be punished more severely.

The draft law says imported food and additives must meet China’s national food safety standards while food products exported from China to other countries and regions should satisfy the compulsory requirements set by importers and pass local entry inspection and quarantine.

Local governments have legal obligations to supervise food safety and build fast and convenient aid channels to protect consumers’ rights, said the premier.

The draft law will be submitted to the National People’s Congress, the country’s legislature, for debate and adoption.

World Health Organization (WHO) chief Margaret Chan on Wednesday expressed appreciation on China’s efforts to crack down on food safety problems.

Chan told Li Changjiang, head of the China’s product quality watchdog, that she was “very impressed” with an ongoing nationwide product safety inspection campaign launched in August.

“Food safety is a serious matter not only for the WHO, but for the world as a whole,” said Chan, who is in China for an international health forum.

The campaign she mentioned was a four-month overhaul described by Chinese vice premier Wu Yi as a “special battle” to ensure product quality and food safety. It had seen 667 tons of substandard and fake food products destroyed and 446 tons removed from marketplaces by Oct. 8.

The Chinese government has taken a highly responsible attitude towards food safety and strengthened international cooperation in this regard, the State Council heard.

Last week Wu ordered the advancement of a crackdown on products in distribution as well as in production. A total of 626 criminal cases involving the production or sales of substandard food, drugs and farm produce had been filed during the campaign, with 774 suspects brought under control, according to the vice premier.

China and the Association of Southeast Asian Nations (ASEAN) on Monday issued a joint statement, vowing to strengthen cooperation in food safety, promote food trade and protect consumers’ rights and benefits.

Source: www.chinaview.cn 10/22/2007

Hu Jintao remains head of the nine-member Political Bureau Standing Committee of the Central Committee of the Communist Party of China (CPC), the Party’s top leadership.

Hu, 64, was reelected on Monday as a member of the nine-member Political Bureau Standing Committee at the first plenary session of the 17th CPC Central Committee.

He succeeded Jiang Zemin as Party leader at the 16th CPC National Congress in November 2002.

Hu was elected a member of the Political Bureau Standing Committee of the CPC Central Committee in 1992, at the age of 49.

Four other members of the Political Bureau Standing Committee of the 16th CPC Central Committee, Wu Bangguo, Wen Jiabao, Jia Qinglin and Li Changchun , were reelected into the top echelon on Monday.

Wu, 66, has been chairman of the Standing Committee of the National People’s Congress since 2003.

Wen, 65, serves as Chinese Premier.

Jia, 67, is chairman of the National Committee of the Chinese People’s Political Consultative Conference.

Li, 63, is in charge of CPC’s publicity and ideological work.

The newly elected Political Bureau Standing Committee also consists of four new members– Xi Jinping, Li Keqiang, He Guoqiang and Zhou Yongkang .

Xi, 54, and Li, 52, serve as Party chiefs in Shanghai and Liaoning respectively.

Xi was a member of the 16th CPC Central Committee and alternate member of the 15th CPC Central Committee.

Li was a member of the 16th and 15th CPC central committees.

He Guoqiang, 63, is head of the Organization Department of the CPC Central Committee.

Zhou, 64, is minister of public security.

Both He and Zhou were members of the Political Bureau of the 16th CPC Central Committee since 2002.

Three members of the Political Bureau Standing Committee of the16th CPC Central Committee, 68-year-old Zeng Qinghong, 69-year-old Wu Guanzheng and 72-year-old Luo Gan, are not in the new CPC central committee elected on Sunday.