Posts tagged ‘Beijing’

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21/10/2014

China’s reform tally since November 2013 policy meeting | Reuters

China’s leadership unveiled a blueprint for some of the most comprehensive economic and social reforms in nearly 30 years in November 2013.

Implementation since then has been slow but steady. China has eschewed riskier, game-changing reform but the incremental steps aim to reach enough critical mass to sustain momentum and help the world’s second-largest economy shift down fairly smoothly after decades of investment-fueled growth.

The following are some of the significant steps taken since the Communist Party Central Committee’s Nov 9-12 policy conclave:

OCTOBER, 2014

Oct 16 – The top economic planner is considering tightening rules for bond issues, according to traders and a leaked document.

Oct 11 – The State Council says it will institute a resource tax on coal while eliminating other taxes to simplify the tax structure.

Oct 9 – China levies tariffs on coal imports in a move to reduce the country’s dependence on the polluting energy source.

SEPTEMBER, 2014

Sept 9 – Domestic firms in many areas no longer require government approval to invest overseas but must register their investments with authorities starting Oct 6.

Sept 1 – The budget law is revised to allow local governments to issue bonds directly.

AUGUST, 2014

Aug 29 – The Politburo approves salary cuts for top officials at big state-owned firms to counter graft and income inequality.

Aug 26 – China cuts on-grid prices of thermal electricity from Sept. 1 to reflect a fall in coal prices.

Aug 20 – The government cuts taxes on high-tech companies, abolishes the need for firms to seek approvals in 68 further areas and additionally allows lower levels of government to approve business projects in 19 other areas.

Aug 15 – China eliminates 21 approval processes for a list of industries and lower levels of government are given the right to approve certain projects in an effort to cut red tape.

Aug 12 – China will raise natural gas prices for bulk buyers and non-residential use from Sept. 1 in an effort to reform pricing.

Aug 4 – Foreign firms in China are allowed to use their registered capital to buy stakes in other Chinese companies.

JULY, 2014

July 15 – The state-owned enterprise regulator chooses six state firms to test out reforms expanding the role of private capital in China’s state sector.

July 14 – China loosens currency controls to make it easier for domestic companies and individuals to set up special purpose vehicles (SPVs) for investments overseas.

July 2 – Banks are allowed to set their own exchange rates for the yuan against the dollar in over-the-counter deals with clients.

JUNE, 2014

June 27 – Regulators lower the threshold for banks to enter the foreign exchange market and removes a layer of approvals.

June 25 – China gives the greenlight to three banks wholly funded with capital from private firms, to be the country’s first private lenders.

MAY, 2014

May 21 – The experiment for China’s first municipal bond market is launched.

May 21 – Private firms are invited to invest in 80 major projects in the energy, information and infrastructure sectors.

May 16 – Financial regulators tighten oversight of interbank loans.

May 16 – China sets up international energy trading center where crude oil futures will be traded for the first time.

May 15 – Securities firms get the go-ahead to expand into new businesses such as the online financial services market.

May 6 – State-owned enterprises to increase dividend payouts by 5 percentage points to up to 25 percent of their profits.

APRIL, 2014

April 23 – Premier Li Keqiang says China will allow private investment in 80 projects in energy, information and infrastructure.

April 22 – Changes to the environmental law seeking stiffer penalties for polluters submitted to parliament.

April 11 – Chinese firms can invest up to $1 billion overseas without seeking approval, China’s top planner says.

April 10 – China allows cross-border stock investment between Shanghai and Hong Kong.

April 9 – The government relaxes price controls over non-public hospital services.

April 2 – The government says will fast-track some spending and cut taxes for small firms, as a way of supporting the weakening economy.

MARCH, 2014

March 31 – Britain and China sign an agreement to set up a clearing service for offshore yuan trading in London. That follows a similar agreement with Germany.

March 24 – China simplifies review procedures for mergers and acquisitions.

March 21 – The securities regulator issues rules for a pilot program allowing listed companies to issue preferred shares.

March 20 – The foreign exchange regulator relaxes curbs on foreign investment in China’s stock market.

March 20 – PetroChina, China’s biggest oil and gas producer, is welcoming private investment into oil and gas pipelines in China, according to chairman Zhou Jiping.

March 20 – China lifts ban on equity financing for listed property developers after four years.

March 16 – China sets 2020 targets for urban population growth and registered urban residents.

March 15 – The central bank doubles the yuan currency’s daily trading band against the dollar.

March 11 – Central bank governor Zhou Xiaochuan says China’s deposit rates should be liberalized in one to two years.

March 11 – Development of 3-5 privately-owned banks to be tested in Tianjin, Shanghai, Zhejiang and Guangdong, bank regulator says.

March 11 – The cabinet outlines its healthcare reform plan.

March 7 – Loss-making solar equipment maker misses interest payment in China’s first domestic bond default.

March 5 – Premier Li Keqiang promises to wage a “war” on pollution and reduce the pace of investment to a decade-low.

March 1 -Simplified corporate capital registration comes into force. Government data later show 309,500 new firms were registered in March, up 46 percent from a year earlier.

FEBRUARY, 2014

Feb 26 – Beijing details pension reform that seeks to decrease urban-rural economic divisions before 2020.

Feb 21 – The central bank gives operational details for cross-border yuan deals made through Shanghai free trade zone.

Feb 20 – Sinopec Corp, Asia’s largest oil refiner, says it will sell up to 30 percent of its retail business to private investors in a multi-billion dollar revamp.

JANUARY, 2014

Jan 29 – The cabinet sets up a cross-ministry group to boost development of three service zones in Guangdong province.

Jan 22 – Six teams to supervise economic reforms are set up, with President Xi Jinping and Premier Li Keqiang in charge.

Jan 17 – China’s wealthy eastern province of Zhejiang became the first to implement changes to the one-child policy.

Jan 6 – The cabinet publishes guidelines strengthening regulation of off-balance lending.

DECEMBER, 2013

Dec 11 – Beijing strips 82 powers away from central government ministries. Over 200 administrative approvals are set to be abolished or delegated to local authorities in 2014.

Dec 10 – New standards on performance ratings of officials break the obsession with growth and include such criteria as work safety, innovation, environmental and resource costs.

Dec 8 – The central bank sets guidelines for issuing of interbank certificates of deposit, a step towards allowing markets to determine interest rates.

Dec 4 – The government expands its value-added tax trial to rail transport and the postal service.

Dec 4 – The central bank announces details of financial reform test runs in the Shanghai free trade zone.

NOVEMBER, 2013

Nov 30 – The stock market regulator announces IPO reforms.

Nov 12 – Anhui province, which spearheaded land reform in 1978 announces pilot land reforms, including accelerating the development of large-scale farming, completing land use rights registration before end-2015 and simplifying land transactions.

via Factbox: China’s reform tally since November 2013 policy meeting | Reuters.

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21/10/2014

China’s growth slowest since global crisis, annual target at risk | Reuters

China grew at its slowest pace since the global financial crisis in the September quarter and risks missing its official target for the first time in 15 years, adding to concerns the world’s second-largest economy is becoming a drag on global growth.

Employees work at a shoe factory in Lishui, Zhejiang province, in this January 24, 2013 file photo. REUTERS/Lang Lang/Files

A pick-up in factory output and government confidence that the labor market remains stable were offset by further slowing in the property sector, and economists remained divided on whether or not authorities would step in with major stimulus measures such as interest rate cuts.

China’s gross domestic product (GDP) grew 7.3 percent in the third quarter from a year earlier, official data showed on Tuesday, the weakest rate since the first quarter of 2009.

That was slightly above the 7.2 percent forecast by analysts but slower than 7.5 percent in the second quarter, and even then some economists were surprised.

“It’s hard to square the GDP print with the industrial production numbers for the quarter,” said Andrew Polk, economist at the Conference Board in Beijing, one of the more pessimistic research houses on the Chinese economy.

“There are confusing things going on. You have credit growing at the slowest pace since 2002. You have real estate investment slowing on a monthly basis and you have industrial production averaging slightly above 8 percent on a quarterly basis, slightly down from Q2. With that being the most reliable component of GDP on a quarterly basis, 7.3 percent seems a bit high to me.”

via China’s growth slowest since global crisis, annual target at risk | Reuters.

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19/10/2014

How Poor Is China? – Businessweek

By one measure, China is set to surpass the U.S. this year in gross domestic product as the world’s largest economy—in terms of purchasing power parity (rather than nominal GDP), says the International Monetary Fund. China also has the world’s second-largest population of ultra-wealthy, with some 7,600 people possessing at least $50 million, according to a report released on Tuesday by Credit Suisse. (The U.S. remains No. 1 in its number of super-rich).

Sifting through trash near Hefei, China

Still, that wealth contrasts with impoverishment. About 82 million Chinese still live in poverty, an official announced at a press conference in Beijing on Tuesday, reported the China Daily.

That figure is according to the Chinese poverty standard of about 2,300 yuan a year, or about $1 a day. Using the international standard of $1.25 a day, set by the World Bank, raises the figure to 200 million, said Zheng Wenkai, vice-minister of the State Council Leading Group Office of Poverty Alleviation and Development. This means that 15 percent of China’s population is impoverished, according to the broader measure.

All told, China has 120,000 villages plagued by poverty. Residents lack electricity, running water, schools, and proper health care, the English-language paper reported. Dire conditions are exacerbated by the fact that most are in remote, often mountainous parts of the country that have inadequate roads.

“Poor populations are concentrated in extremely poor contiguous regions with poor living conditions, inadequate infrastructure as well as being afflicted with natural disasters,” the Global Times reported. Last year, China lifted 40 million residents out of poverty, and it plans to bring an additional 10 million out in 2014. China will send resident-assistance teams to the worst hit regions, the official said.

via How Poor Is China? – Businessweek.

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04/10/2014

Meet the Hong Kong teenager who’s standing up to the Chinese Communist Party

Joshua Wong Chi-fu is Hong Kong’s most prominent pro-democracy student leader.

Political movements often conjure images of passionate university-goers championing progressive views they learned on campus. But the long, storied history of Hong Kong’s student-led political movements is taking a different turn: The most prominent student leader of the territory’s pro-democracy protests is only 17 years old.

Sporting heavy black glasses and a bowl cut, Joshua Wong Chi-fung doesn’t exactly cut a menacing figure. But his activism against what many in Hong Kong perceive to be the Chinese Communist Party’s encroachment onto their freedoms has already attracted Beijing’s attention. Mainland authorities call him an “extremist.” A party document on national security identifies Wong by name as a threat to internal stability. Pro-Beijing newspapers in Hong Kong, meanwhile, accuse him of working for the US Central Intelligence Agency to infiltrate Hong Kong schools. (Wong denies the charges.)

Joshua Wong’s fight against ‘brainwashing’

Wong got his start in 2011, when he and fellow students founded a group called “Scholarism,” which they thought was catchier than the direct translation of the Chinese, meaning “scholarly trends.” Wong and Scholarism rose to prominence in 2012, when the Hong Kong government tried to roll out Communist Party-approved “patriotic” education in Hong Kong’s public schools, to replace civics classes. The curriculum included textbooks like one titled “The China Model,” which characterised China’s Communist Party as “progressive, selfless and united,” and criticized multi-party systems like Hong Kong’s while avoiding major (unflattering) events – notably, the Great Leap Forward, the Cultural Revolution and the Tiananmen Square massacres of 1989 – reports the New York Times (paywall).

One Hong Kong journalist likened the move to a Trojan horse that dissolved Hong Kong’s identity; Wong called it “brainwashing,” an attempt to require students to “develop an emotional attachment to China,” as he put it in this video by the South China Morning Post (paywall). In Sep. 2012, Wong and Scholarism mobilized more than 120,000 people to demonstrate (paywall) against the education programme, including a slew of students who went on hunger strike. Within days, the Hong Kong government scrapped the plan for mandatory implementation.

Wong’s next battle: ‘universal suffrage’

But Wong and Scholarism knew that as long as Hong Kong lacks representative government, both the education issue and the Chinese government’s failed 2003 attempt to impose US Patriot Act-style rules on Hong Kong would eventually resurface. So they began researching the controversy that’s now galvanising the Umbrella Revolution: universal suffrage.

This issue is really confusing – and, as even Wong admits, “really boring.” The background goes something like this: Hong Kong is governed by what’s called the Basic Law, which legal scholars from the then-British colony and the mainland wrote up prior to the 1997 handover. The law promises Hong Kong a “high degree of autonomy” until 2047 (after which, it is assumed, it will merge with the People’s Republic of China for good). It also indicates, although vaguely, that the ultimate objective is for the chief executive and the congress to be elected by universal suffrage by Hong Kong’s seven million people.

That’s not how it is at the moment. Hong Kong’s chief executive is currently chosen by an “election committee” made up of 1,193 members selected to represent “functional constituencies,” such as business and labor groups. Beijing controls who is on the committee, and, in turn, whom the committee elects; the committee also decides who runs. Ultimately, since the Chinese government still has to officially “appoint” the chosen candidate, it has veto power over the chief executive.

In 2007, the National People’s Congress, China’s legislature, promised that by 2017, Hong Kong’s chief executive “may be implemented by the method of universal suffrage.” Some in Hong Kong read that to mean by 2017, they’d have fully democratic elections. But the NPC, evidently, had something else in mind: that each and every Hong Kong citizen would be allowed to vote – but only for one of three candidates selected by the (Communist Party-picked) “electoral committee.”

via Meet the Hong Kong teenager who’s standing up to the Chinese Communist Party.

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03/10/2014

China Focus: Nation rises after 65 years of development – Xinhua | English.news.cn

One need look no further than China’s railways to see the enormous development of the country since its foundation on Oct. 1, 1949.

At the 65th anniversary of that formative moment, every Chinese citizen has access to a modern train service. In 1949, the nation’s railways extended only 22,000 km, with half the track in poor condition.

In comparison, the mileage had expanded to 100,000 km by 2013. More than 10,000 km was high-speed infrastructure, and another 12,000 km was under construction at that time.

This modernization is transforming the lives of Chinese people. For Tsering Dekyi, for example, his wish to send his children from their remote home to far-off schools for a better education is no longer a wild dream.

“I heard that the trains are very fast and safe. It takes only two hours from here to Lhasa. I really hope that my three kids will be able to attend schools in Lhasa or inland cities by train in the future,” Tsering Dekyi said from Xigaze City, some 200 km west of Lhasa in southwest China’s Tibet.

This is possible after an extension of the Qinghai-Tibet Railway was put into operation in August, linking Xigaze and Lhasa like never before.

Via the Qinghai-Tibet Railway, launched in 2006 as the world’s highest plateau rail track, Xigaze locals can even travel further off to major cities like Beijing and Shanghai.

Train track mileage is not the only data that makes clear the positive changes in China since 1949. In 2010, China overtook Japan to become the world’s second-largest economy. China is the world’s top goods trader. The nation also ranks third in global investment…

Meanwhile, the 2014 APEC Economic Leaders’ Meeting will come to Beijing in November, with leaders gathering in the Chinese capital to discuss important economic issues for the Asia-Pacific region. China will take center stage once more.

Behind the huge economic achievements made especially since the reform and opening-up policy was introduced in 1978, the nation has made huge, unprecedented strides in providing basic education and welfare for its population of 1.3 billion, the world’s largest.

Sixty-five years ago, a shocking 80 percent of the population were illiterate, but by 2008, free nine-year compulsory education programs were fully implemented across the country. This year, 7.27 million university students will graduate, marking a historical high.

Nutritious meals are being provided to students from poor families with billions of yuan budgeted each year by the government.

About 32.29 million rural students have benefited from the 46.23 billion yuan (7.52 billion U.S. dollars) in subsidies the central government has allocated since 2011, when it launched the nutrition improvement program. Also, more than 10 million university students have completed their studies after being granted student loans under programs adopted since 1999.

The 660 million people that China has lifted out of poverty since 1981account for more than 70 percent of the world’s total.

Meanwhile, the Chinese government has worked hard to provide basic healthcare for its people, with over 95 percent of the population covered by different sorts of healthcare programs by 2011.

However, there remain problems among the achievements, and they must be dealt with increasingly urgently. The issues include restraints on future development from the environment and resources, wide gaps between the wealthy and the poor, industrial overcapacity and imbalanced regional development.

Meanwhile, the Chinese economy must also brave challenges imposed from an economic slowdown after a boom over the past decade, as employment and structural control are key agendas for the government.

In order to cope, the Chinese leadership has showed political courage in pushing comprehensive reforms, including fighting corruption. Overhauls of administrative management, fiscal and financial systems are steadily being carried out as well.

There is no doubting the truth of Chinese President Xi Jinping‘s assertion that today’s China is nearer to its great goal of rejuvenation than at any period in history.

via China Focus: Nation rises after 65 years of development – Xinhua | English.news.cn.

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03/10/2014

Hong Kong protests: No exit | The Economist

IT IS a challenge unlike anything Chinese leaders have seen since Tiananmen Square in 1989; a city roiled by days of unauthorised protests led by students demanding democracy. On October 1st, the 65th anniversary of Communist rule in China, anti-government demonstrations in Hong Kong, which had begun nine days earlier with class boycotts, swelled to include well over 100,000 people. Protesters, conveniently armed with the umbrellas that have become their rallying symbol, endured downpours of rain to jeer the territory’s leader, Leung Chun-ying, as he presided over the raising of the national flag. A few raised their middle fingers towards it.

The “umbrella revolution”, as the movement has been dubbed, is the nightmare Communist Party leaders in Beijing have long feared from Hong Kong and the “one country, two systems” arrangement it has enjoyed since its handover from Britain in 1997. It is the first large-scale student-led protest for democracy to erupt in any Chinese city since 1989. And it presents unusual challenges. The authorities in Hong Kong are reined in by a legal system bequeathed by the British; they cannot, as officials commonly do in mainland China, handle unrest with a combination of astute bargaining, thuggish violence, ruthless treatment of ringleaders and tight controls over media and the internet. Xi Jinping, China’s president, is constrained by a desire to keep Hong Kong stable and prosperous: a botched response could badly damage one of the world’s wealthiest economies and China’s image.

But if the protests continue far beyond the public holiday on October 1st and 2nd, leaders in Beijing will doubtless become impatient for tougher action. On October 1st the party’s newspaper, the People’s Daily, called on Hong Kong residents to support “resolute” action by the police against the demonstrators, who it said would “reap what they have sown”. The party does not want Hong Kong’s protests to fan dissent elsewhere. Chinese censors on the mainland have been working hard to make sure they do not (see article). So too have China’s police, who have rounded up dozens of activists on the mainland for expressing sympathy with the protests. Some tour groups have reportedly been denied permits to go to Hong Kong on their usual shopping extravaganzas. Despite the party’s efforts, however, news of Hong Kong’s defiance is spreading in China.

The protesters’ main demand is that the people of Hong Kong be allowed to vote for any candidate of their choosing in elections for the post of chief executive in 2017 (the first in which citizens would have such a vote). Mr Xi has made clear he does not want any Western-style democracy within China’s borders. The current election plan, which China proposed on August 31st, calls for candidates to be screened by a committee stacked with party supporters.

Several protest movements have converged to challenge this. Until recently the best-known was Occupy Central with Love and Peace, which is modelled on Occupy Wall Street and named after an important business district in the heart of Hong Kong. But even Occupy Central’s leaders, who teach at local universities, wondered whether they could muster meaningful numbers. Then came the students, both from universities and schools, thousands of whom began boycotting classes on September 22nd. On the evening of September 26th the police inflamed their passions by arresting Joshua Wong, the 17-year-old leader of a movement called Scholarism, which two years ago led successful protests against an effort to introduce party-backed “patriotic” teaching in schools. Mr Wong was released on September 28th, but in the early hours of that day Benny Tai, one of the leaders of Occupy Central, announced that its protest, which had been scheduled for October 1st, would begin immediately.

via Hong Kong protests: No exit | The Economist.

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02/10/2014

Hong Kong’s protests: A tough test for China’s leaders | The Economist

IT IS a most unusual sight on Chinese soil, and most unsettling for leaders in Beijing. On September 28th and 29th tens of thousands of demonstrators surrounded government offices and filled major thoroughfares around Hong Kong, braving rounds of tear gas from riot police to call for democracy and demand the resignation of Leung Chun-ying, the territory’s Beijing-backed chief executive. One image broadcast and shared around the world, of a lone protester holding his umbrella aloft in a cloud of tear gas (pictured above), has given the non-violent protests a poetic echo of “tank man” from the crackdown at Tiananmen Square in 1989.

Umbrella man

It also captures precisely what Communist Party leaders in Beijing fear from Hong Kong and its special status under the “one country, two systems” arrangement it has enjoyed since the territory’s handover from Britain in 1997. Not only are its people willing (and allowed by law) to challenge their government openly, but they also could become an inspiration for protests elsewhere in China. The spread of news and images of the protests has been blocked or heavily censored on the mainland, but as the protests carry on, the risk of contagion rises. In that sense this marks one of the most difficult tests of Chinese rule since Tiananmen.

Compounding the difficulty is the lack of a middle ground. The protesters’ main demand is that the people of Hong Kong be allowed to vote for any candidate of their choosing in elections for the post of chief executive in 2017 (the first in which citizens would have such a vote). President Xi Jinping has made clear he will have nothing resembling full Western democracy within China’s borders. The current election plan, put forward by the central government on August 31st, gives the central government an effective veto over nominees to ensure that Hong Kong remains firmly under its control.

Several protest movements have converged to challenge that control. Until recently the best-known movement had been Occupy Central with Love and Peace, which is modelled on Occupy Wall Street and named after an important business district at the heart of Hong Kong. But even Occupy’s leaders wondered whether they could muster meaningful numbers.

The biggest drivers of these protests have been university students and secondary school students, thousands of whom boycotted classes last week. On the evening of September 26th the leader of the secondary school students, 17-year-old Joshua Wong of Scholarism, was arrested—a move that, along with the use of pepper spray by police, was credited with swelling the popularity of the protests over the weekend (Mr Wong was released on Sunday). In the early hours of September 28th Benny Tai, one of the leaders of Occupy Central, announced that its protest, which had been scheduled for October 1st, China’s national day holiday, would begin immediately.

Mr Leung has shown no sign of bending. On the afternoon of September 28th, at a press conference held inside the government headquarters while thousands of protesters surrounded the building, Mr Leung repeated his endorsement of the election plan. It calls for chief executive candidates to be screened by a committee stacked with Communist Party supporters (he was elected by a similar committee in 2012, collecting 689 votes along with the derisive nickname “689”). Mr Leung acknowledged that the plan may not have been the “ideal” that some wanted, but he called it progress nonetheless. He said it had given Hong Kong citizens the “universal suffrage” they had been promised. Mr Leung said he welcomed “rational” dialogue but that the government would be “resolute” in dealing with the “unlawful” demonstrations. Asked whether the Chinese army would ever be used, Mr Leung expressed his confidence in the police. The tear gas canisters began flying shortly afterward, surprising protesters who exclaimed variations of “are you kidding?” and “shame on you”. Many donned goggles and unfurled umbrellas to protect themselves against the gas, while some raised their hands and yelled, “don’t shoot”. The protests did not become violent, but they grew and spread to other areas. The calls for Mr Leung’s resignation became louder.

via Hong Kong’s protests: A tough test for China’s leaders | The Economist.

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02/10/2014

China’s $163 Billion R&D Budget – Businessweek

The amount of money China spends annually on research and development has tripled since 1995—reaching $163 billion in 2012, or 1.98 percent of GDP. As China cracks down on corruption elsewhere in government, so too has Xi Jinping’s administration turned greater attention to curtailing massive graft in research fields—including arresting top scientists and administrators suspected of skimming off the top. In June, for instance, Song Maoqiang, former dean of Beijing University of Posts & Telecommunications’ school of computer science and technology, was given a harsh 10-year prison term for embezzling $110,000 in research funds.

One component of China’s campaign to clean up corruption is requiring central government agencies to disclose their annual research budgets. In the Aug. 29 issue of the journal Science, two researchers—based at China’s Dalian University of Technology and the U.K.’s University of Nottingham—mined and compiled available budget information to “open [up] the ‘black box’ of China’s government R&D expenditures.”

Three agencies—the Ministry of Science and Technology (MOST), the Chinese Academy of Sciences (CAS), and the National Science Foundation of China (NSFC)—together were responsible for distributing nearly three-quarters of China’s research spending in 2011. The agencies dole out grants through both competitive, peer-reviewed proposal processes (sometimes aimed at achieving national goals or research priorities) and through more inscrutable, contract-based research. In general, the latter is more susceptible to corruption. Defense-related research usually falls into this category.

After combing through extensive records only recently made public, the Science authors, Yutao Sun and Cong Cao, could still not fully determine where all of Beijing’s research money has gone. “Slightly less than half (45.25%) of the central government R&D spending in 2011 is not accounted for,” they write, speculating that it is “likely spent at eight defense-related agencies that have not yet disclosed [their department annual reports].”

The authors calculate that in 2011, China devoted 4.7 percent and 11.8 percent of its total R&D budget to basic and applied research, respectively. That is a much lower percentage than in countries whose science and technology achievements Beijing hopes one day to rival, including the U.S. and Japan. In 2009, the U.S. spent 19.7 percent and 17.8 percent of total R&D budget on basic and applied research, respectively, and Japan spent 12.5 percent and 22.4 percent. “The low share of scientific research expenditure has negatively affected China’s innovation capability and may jeopardize China’s ambition to become an innovation-oriented nation,” the authors conclude.

via China’s $163 Billion R&D Budget – Businessweek.

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30/09/2014

Water consumption: A canal too far | The Economist

THREE years ago the residents of Hualiba village in central China’s Henan province were moved 10km (six miles) from their homes into squat, yellow houses far from any source of work or their newly allocated fields. These days only the very young and very old live there. Close to their old farms, a giant concrete canal now cuts a swathe. From October 31st the channel will gush with water flowing from China’s lush south to the parched north.

The new waterway is part of the biggest water-diversion scheme in the world: the second arm of what is known as the South-North Water Diversion Project. This is designed to solve an age-old imbalance. The north of China has only a fifth of the country’s naturally available fresh water but two-thirds of the farmland. The problem has grown in recent decades because of rapid urban growth and heavy pollution of scarce water supplies.

The result is a chronic shortage. The World Bank defines water scarcity as less than 1,000 cubic metres (35,300 cubic feet) of fresh water per person per year. Eleven of China’s 31 provinces are dryer than this. Each Beijing resident has only 145 cubic metres a year of available fresh water. In 2009 the government said that nearly half the water in seven main rivers in China was unfit for human consumption. All this has encouraged ever greater use of groundwater. Much of this is now polluted too.

In 1952 Mao Zedong suggested the north could “borrow” water from the south. After his death China’s economic boom boosted demand for such a scheme and provided the cash to enable it. In 2002 the diversion project got under way. An initial phase was completed last year. This involved deepening and broadening the existing Grand Canal, which was built some 1,400 years ago, to take 14.8 billion cubic metres of water a year more than 1,100km northward from the Yangzi river basin towards the port city of Tianjin.

In late October the second, far more ambitious and costly route is due to open. This new watercourse, over a decade in the making, will push 13 billion cubic metres of water more than 1,200km from the Danjiangkou dam in the central province of Hubei to the capital, Beijing. The aim is to allow industry and agriculture to keep functioning; already in 2008 Beijing started pumping in emergency supplies from its neighbouring province, Hebei. The new canal will help avert an imminent crisis. But the gap between water supply and demand will remain large and keep growing.

The transfer will supply about a third of Beijing’s annual demand. A spur of the canal will provide an even greater proportion of Tianjin’s. But these shares will shrink over time. Even if people use less water, population growth, the expansion of cities and industrialisation will increase China’s overall demand. By lubricating further water-intensive growth the current project may even end up exacerbating water stress in the north.

Shifting billions of cubic metres across the country has caused huge disruption. The government says it has moved 330,000 people to make way for the central route. Laixiang Sun of the University of Maryland in America reckons the number uprooted is at least half a million. There will also be health and environmental costs. Diverting river-water northward could promote the spread of diseases common in the south, particularly schistosomiasis, a debilitating snail-borne disease. Reduced flow in the Yangzi may make coastal water supplies vulnerable to intrusion by seawater and increase the potential for drought.

The financial cost is also high. Mr Sun puts the cost of the project at more than $62 billion—far higher than the original $15 billion price tag. His estimate does not include the running of the project or the building of 13 new water-treatment plants to clean the water.

By increasing supply, the government is failing to confront the real source of the problem: high demand for water and inefficient use of it. Chinese industry uses ten times more water per unit of production than the average in industrialised countries, according to a report by the World Bank in 2009. A big reason for this is that water in China is far too cheap. In May 2014 Beijing introduced a new system that makes tap water more expensive the more people use. But prices are still far from market levels. Officials turn a blind eye to widespread extraction of un-tariffed groundwater by city dwellers and farmers, despite plummeting groundwater levels.

Raising the price would cut demand and encourage more efficient use. It should also help lure industry away from water-scarce areas where prices would be set at higher rates. Arid areas that are forced by the government to pipe water into desiccated cities like Beijing could offset their losses by charging higher tariffs.

via Water consumption: A canal too far | The Economist.

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30/09/2014

Fake Trade Documents Sneak Money in and Out of China – Businessweek

Companies have “faked, forged, and illegally reused” trade documents to sneak $10 billion of hot money in and out of China since April of this year, a Chinese official announced yesterday.

Fake China Trade Disguises at Least $10 Billion of Hot Money Flows

A multi-month investigation into China’s dodgy export and import numbers has revealed the latest invoicing scams, said Wu Ruilin, a deputy head of the State Administration of Foreign Exchange, at a press briefing in Beijing on Thursday, reported China Daily today.

Much of the financial funny business was carried out through the port of Qingdao, where a commodity financing scandal was unearthed earlier, he added. The fraudulent trades have “increased pressure from hot money inflows and provided an illegal channel for criminals to move funds,” Wu said, adding that they had also distorted trade data.

China’s long-standing problem with false invoicing got an added level of official scrutiny after unusually high export numbers early last year. Companies have long inflated export numbers to disguise capital inflows, often aiming to benefit from China’s appreciating currency or to invest in property when that market was still hot. Exaggerating imports has been used to spirit money out of China, by contrast.

The practices of China’s banks will now be in the spotlight, as they have failed in “verifying the authenticity of the deals, which helped increase the fraudulent activities,” China Daily reported Wu as saying. All told, the foreign exchange regulator found 967 separate illicit foreign-exchange transactions through August, and imposed 180 million yuan (almost $30 million) in fines. The investigation now covers 24 provinces and cities across China.

via Fake Trade Documents Sneak Money in and Out of China – Businessweek.

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