Posts tagged ‘Government-owned corporation’

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10/06/2016

China now rivals US and Europe as growth engine for Asian exports | South China Morning Post

China is now an equal or even bigger driver of export growth in neighbouring economies than the US and EU combined, marking a significant shift in the economic pecking order since the 2008 global financial crisis.

That’s according to research by Deutsche Bank AG economists who weighed up the influence of the US and China over the rest of Asia through the prism of export growth, as well as the currency and bond markets.China committed to free trade, market reforms, says senior official

In Taiwan and Indonesia, for example, the growth of China’s gross domestic product (GDP) dominates the US and European Union’s as a source of export demand. In other economies, the trading giants are equally important.

“This is noticeably different from the pre-crisis years when China was much less important –- bordering on irrelevance – as an engine of growth in the region,” Deutsche analysts led by Asia-Pacific chief economist Michael Spencer wrote in a note.

After a rocky start to the year, China has been aided in its growth prospects by a record surge in credit in the first quarter. Key indicators for May are expected to show that the economy is continuing to find its footing and growth is on track to hit the Communist Party’s goal of 6.5 per cent to 7 per cent for 2016.

The International Monetary Fund in April upgraded its China growth forecasts by 0.2 percentage point for this year and next, following signs of “resilient domestic demand” and growth in services that offset weakness in manufacturing.

China needs market-driven interest rate system to help yuan become global currency: economists

Beyond the pace of GDP growth, China’s currency gyrations are also increasingly important across the region. While the dollar still drives volatility in most Asian currencies, the yuan is as least as important for fluctuations in the Malaysian ringgit and South Korean won and is growing in significance for other exchange rates, except the Philippines peso.

“Asia is far from being a ‘yuan bloc’, but idiosyncratic shocks to the yuan cannot be ignored,” according to the Deutsche analysts.

The People’s Bank of China (PBOC) surprised traders this week by setting the reference rate at weaker-than-expected levels, helping send the currency to its biggest declines in four months versus a trade-weighted basket that includes the yen and the euro. The rate’s fixing had become more predictable since early February after the PBOC pledged greater transparency and the yuan increasingly tracked moves in the dollar against major currencies. That was after a sudden weakening of the yuan in January fuelled fears of a devaluation and triggered global market turmoil. During the subsequent three months, the central bank adopted a more market-based system to set the rate and said the basket would play a bigger role.

China cooling imports are sending a huge chill across the global economy

But the US still dominates in the bond markets, and moves in Treasury yields continue to steer Asian bond trading. And even if Asia central banks don’t match rate tightening by the US Federal Reserve, financial conditions in the region may tighten if US yields increase.

“We find only weak evidence that fluctuations in Chinese yields have any impact on other countries’ bond markets,” the analysts said.

Source: China now rivals US and Europe as growth engine for Asian exports | South China Morning Post

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04/04/2015

Poverty in China: Just a little bit richer | The Economist

THE villagers of Dingjiayan subsist on corn, potatoes, sunflowers and the few vegetables they grow. They sell the surplus and buy meat and a few other necessities in the nearby county town of Tianzhen. Its mud-and-brick buildings, and its setting among dusty hills in the north-eastern corner of Shanxi province, offer little to the occasional visitor to distinguish it from countless other parts of China where hard work brings but a meagre living. Yet Tianzhen county, of which Dingjiayan is a part, is one of just 592 areas that the central government designates as “impoverished”.

China’s official threshold for rural poverty is an annual income of 2,300 yuan ($370) per person. But the criteria for classifying a village or county are complex and often revised. They include comparisons of poverty rates and average incomes with those of the province, adjustments for inflation, quotas on the number of villages that may count as poor and a ban on including villages that own collective enterprises, whatever their income level. Though dozens of places have been listed and delisted every few years since the 1990s, the total has remained curiously fixed—at 592.

An “impoverished” designation brings substantial subsidies. But Ding Tianyu, who has lived in Dingjiayan for all his 73 years, says he hardly notices. Most households earn about 10,000 yuan a year, he says, and get a subsidy of 80 yuan for each mu (614 square metres) of land they farm. “I have five mu,” Mr Ding says. “When there is enough rain I am fine, and when I get the subsidy I feel just a little bit richer.”

With bustling shops and a fair number of pricey cars on its roads, Tianzhen’s county town does not, by Chinese standards, feel impoverished. There is little disclosure about how subsidies are used, says a restaurant owner. “We are told a lot of it goes into the local credit union and that we can apply for loans there, but they only lend to people with good connections.”

In 2012, when the list was last updated, Xinshao county in Hunan in south-central China was added. Local officials used the county’s official website to trumpet this “exceptional good tidings” after two years of “arduous efforts” and “untold hardships”. A large roadside board added its “ardent congratulations”. After nationwide criticism, the officials accepted that their words had been badly chosen. But their cheer was understandable: the official designation was worth an extra 560m yuan for the county each year from the central government.

The episode caused many to question the value of the system and the perverse incentives it creates for local governments. A commentary last year in the Legal Daily claimed that many places were misusing the funds and had fudged their figures to qualify as impoverished. Officials from the State Council Leading Group Office of Poverty Alleviation and Development, which manages the list, have acknowledged widespread abuses. In February it banned lavish new buildings and “image projects” in officially designated poor areas.

State television reported on two counties, one in Ningxia and one in Hubei, where local governments spent 100m yuan each on new headquarters. In March, during China’s annual full legislative session, the council’s poverty head, Liu Yongfu, raised a different question about the programme. He told the Southern Metropolis, a newspaper, that hundreds of counties would be taken off the list by 2020. “If a poor area as big as a county still exists, then can Chinese society still be called moderately prosperous?” he asked.

Attainment of a “moderately prosperous society” is a goal that previous Chinese leaders set and that Xi Jinping, the current president, has adopted as well. Much progress has been made since reforms began in earnest in the late 1970s. China claims to have lifted 620m people out of poverty since then. Others may quibble over that number—the World Bank puts it at 500m—but few question the premise that China deserves immense credit for alleviating so much poverty.

Much still remains, however. A little uphill from Dingjiayan sits a smaller village, Dingyuanyao. Its higher elevation means it gets less water, and a resident says most of its 90 residents will clear just 1,000 yuan a year after paying for seeds and fertiliser. Some own motorbikes and televisions, and they are grateful for the basic health insurance they receive. They laugh in unison when asked if they receive subsidies. The arrival of electricity 30 years ago was a vast improvement, they agree. But little has changed in their lives since then.

via Poverty in China: Just a little bit richer | The Economist.

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19/12/2014

Xi Jinping Wins the Popularity Contest – Businessweek

A recent survey on the popularity of global leaders is providing rich fodder for the Communist Party of China’s propaganda machine. The study, which canvassed some 26,000 people in 30 countries on their attitudes toward 10 world leaders, shows President Xi Jinping was rated higher by the people of China than any other leader in the survey was rated by the people of his or her respective country.

Chinese President Xi Jinping

“Chinese President Xi Jinping was the highest-rated world leader in many fields,” China Daily reported on Wednesday, commenting on the study (PDF), which was published by the Ash Center for Democratic Governance and Innovation at the Harvard Kennedy School and carried out by Japanese research firm GMO. “Chinese respondents showed the highest confidence in regards to how their leader handled domestic and international affairs.”

Among the national rankings, where people rate their own leader, Xi averaged 9 out of 10, higher than any other head of state, with 94.8 percent of Chinese expressing confidence about how he handles domestic affairs and 93.8 percent saying the same about international affairs.

Xi was followed by Russian President Vladimir Putin (8.7), Indian Prime Minister Narendra Modi (8.6), South African President Jacob Zuma (7), and German Chancellor Angela Merkel (6.7). U.S. President Barack Obama came in seventh place, with only a 6.2 ranking. Just 51.7 percent of Americans were confident about Obama’s handling of domestic affairs, while 49.1 percent said the same regarding international affairs.

But while Xi’s high popularity is getting lots of attention in China’s party-controlled press, the possible reasons behind it are not. Leaders in countries that hold a high degree of state control over the media would naturally rate higher, the Harvard study says, a conclusion ignored by China Daily and other Chinese publications.

via Xi Jinping Wins the Popularity Conest – Businessweek.

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01/09/2014

State-owned enterprises: Fixing China Inc | The Economist

JIN JIANG is one of the world’s biggest hotel groups, managing five-star properties across China, a budget motel chain and a travel agency. It is also a state-owned enterprise (SOE), controlled by the Shanghai government. It has seen better days. The company’s best hotels played host to hundreds of foreign leaders in the past century, including Richard Nixon in 1972, when America and China began their historic rapprochement. But in recent years visiting dignitaries have opted for newer hotels over Jin Jiang’s musty rooms and tired furnishings.

When people think of Chinese state companies, they often have its giant banks or oil companies in mind. But most of the 155,000 enterprises still owned by the central and local governments are more akin to Jin Jiang: they are businesses that have little to do with the country’s economic or political priorities, and they have had a run of bad years, losing ground to private-sector rivals. That may be about to change. China is in the midst of the biggest attempt in more than a decade to fix the country’s brand of state capitalism, attempting to breathe new life into Jin Jiang and dozens, if not hundreds or even thousands, more like it.

There are two main problems with China’s SOEs today. First, they have failed to comply with the government’s order to focus on what are deemed to be “strategic sectors” such as aviation, power and telecommunications. These are industries that the Communist Party believes it must dominate in order to maintain control of an increasingly complex economy. But fewer than half of state companies occupy these commanding heights. Some 80,000 are instead in the economic lowlands: they run hotels, build property developments, manage restaurants and operate shopping malls. The temptations to branch out have been too great: relative to their private-sector peers, they have benefited from cheaper financing from state-owned banks, favouritism from local governments in land sales and a lighter touch from regulators.

Second, despite these advantages, SOEs have given progressively less bang for their buck. Faced with mounting losses in the 1990s, China undertook a first round of drastic reforms of its state-owned companies. There were mass closures of the weakest firms, tens of millions of lay-offs and stockmarket listings for many of the biggest which made them run a little more like private companies. That initially paid dividends. SOEs’ return on assets, a gauge of their productivity, rose from barely higher than zero in 1998 to nearly 7% a decade later, just shy of the private-sector average. But over the past five years, their fortunes have ebbed. Profitability of state companies has fallen, even as private firms have grown in strength. SOE returns are now about half those of their non-state peers. For an economy that, inevitably, is slowing as it matures, inefficient state companies are a dangerous extra drag. Jian Chang of Barclays says that putting SOEs right is “the most critical reform area for China in the coming decade”.

Until recently, however, few analysts thought that China had the desire or the ability to get back into the muck of SOE reform. Companies under the central government, such as PetroChina, the country’s biggest oil producer, were believed to be strong enough to resist the changes that would erode their privileges. At the provincial and municipal levels, local officials were thought bound to government-owned companies by ties of power, patronage and money. China was not expected to sit entirely still: gradual deregulation of interest rates and energy pricing was placing indirect pressure on state companies to operate more efficiently. But a direct, frontal assault on them of the kind waged by Zhu Rongji, then prime minister, in the 1990s seemed out of the question. Even when the party unveiled a much-ballyhooed reform plan last November and vowed to target SOEs, there were doubts about how far Xi Jinping, China’s president, could go. People close to the State-owned Assets Supervision and Administration Commission (SASAC), the agency that oversees China’s biggest SOEs, say that it was still dragging its feet at the start of this year.

But a flurry of announcements in the past few months shows that reforms are getting on track. There is no one-size-fits-all approach. Sinopec, Asia’s biggest refiner, is close to selling a $16 billion stake in its retail unit, a potentially lucrative opening for private investors. CITIC Group, China’s biggest conglomerate, is poised to become a publicly traded company by injecting its assets into a subsidiary on the Hong Kong stock exchange, for $37 billion. After its initial reluctance, SASAC announced reforms at six companies. They are to experiment with larger private stakes and greater independence for directors.

via State-owned enterprises: Fixing China Inc | The Economist.

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21/08/2014

Bosses at China’s state-owned enterprises face pay cuts of up to 50pc | South China Morning Post

Officials in charge of China’s state-owned enterprises face pay cuts of up to 50 per cent and new job descriptions under a reform plan approved by President Xi Jinping.

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Xi said at a meeting on Monday that China needed to speed up reform targeting the salaries of top executives at SOEs. He also approved a seven-year overhaul of their management structure.

Sources say the reform plan involves two steps.

The first is to cut the salaries of top executives at major SOEs, particularly those in finance and banking. Some may have to take a 50 per cent pay cut.

The second step is to gradually change their job responsibilities. The government-appointed officials will probably join the board of directors. The day-to-day operations will be handled by senior managers recruited from outside, with salaries in line with international standards.

The new model will be similar to that of the MTR Corporation in Hong Kong. As the major shareholder, the Hong Kong government appoints three representatives to the board of directors to ensure the firm follows its policy direction. The day-to-day operations, however, are run by top managers hired through an open recruitment process.

The reform is to address public discontent over the ambiguous status of top SOE managers, particularly those in charge of the so-called central enterprises directly under the State Council. Most of these top executives carry a vice-ministerial or ministerial-level ranking that comes with perks and privileges. At the same time, they are paid like top Western business executives and earn many times more than their fellow officials.

There has been criticism that the high salaries are unwarranted because many SOEs operate as monopolies or near-monopolies.

An executive of an energy industry SOE said the head of a central enterprise in his field could make one million yuan (HK$1.26 million) a year. Those working for banking and finance central enterprises could earn more.

Jiang Jianqing, the chairman of the Industrial and Commercial Bank of China, was paid nearly two million yuan in 2013. In comparison, the annual salary of some ministry-level party cadres is about 200,000 yuan. Yet some top executives point to their counterparts in the West and complain their incomes are too low.

via Bosses at China’s state-owned enterprises face pay cuts of up to 50pc | South China Morning Post.

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26/01/2014

The party is over for SOEs conferences – Chinadaily.com.cn

\”Best employee\” got a Porsche. The \”excellent\” few scooped 500,000-yuan stocks and trips to Hong Kong. \”Good\” employees won cool gadgets like NOTE2 and IPhone 5s.

The party is over for SOEs conferences

Generosity indeed at the year-end dinner of Qihoo 360, an NYSE-listed Chinese Internet company, which wowed netizens and left many public sector employees somewhat slightly envious.

A female employee with a private petroleum company in Yantai, Shandong province poses after winning a car as a year-end bonus on Jan 15, 2014. The affluent company gives away 52 cars worth 6.5 million yuan ($1.07 million) to employees with outstanding performance in the last year. [icpress.cn]

Traditionally, Chinese companies host \”annual conferences\” in the last lunar month of the year to celebrate their success by thanking staff and clients.

In previous years, the most lavish of such extravaganza were often the headline grabbing spectacles staged by China\’s mammoth state-owned enterprises (SOEs) featuring sumptuous banquets in five-star hotels, swanky gifts and wall-to-wall celebrities. This year, it was private firms which stole the show, while the otherwise high-profile SOEs had little to celebrate.

LET THE GOOD TIMES ROLL

Employees of a number of big SOEs in Beijing have told Xinhua that \”annual conferences\” would either not be held at all, or would be receptions made \”as simple as possible\”.

The gifts for staff and clients have morphed from MacBooks, IPads and IPhones to chocolates, towels and even toothpaste, they said.

Tian, who works in a state-owned Beijing bank, told Xinhua that his bank won\’t be hosting any annual conference at all this year, for the first time in many years.

He recounted the good old days when the winner of the prize draw at the annual conference received a 60-gram gold bar and he, together with hundreds of colleagues, won a MacBook.

This new austerity SOEs have suddenly adopted is a direct result of a campaign to cut extravagance and reduce red tape which has been in full swing since the Communist Party of China (CPC) leadership election in 2012.

The CPC has sworn to reduce waste, promote frugality and banned CPC officials from pomp, ceremony, bureaucratic visits and unnecessary meetings.

These annual dinners, often attended by government officials, evolved into nothing more than wining and dining away public funds, and an opportunity of buying gifts and trips, said Yu Nanping, a professor at the East China Normal University.

Many companies turned the year-end dinners into public relations events and a tool for cozying up to government officials, he added.

An annual conference can cost hundreds of thousands yuan, including planning, lighting, venue hire, catering, services and gifts.

A state-owned building material company in Beijing used to host annual conferences for officials, employees and clients not justin Beijing, but often flew guests to Yunnan or Fujian provinces, costing about 2 million yuan each time, according to the firm\’s public relations manager.

This year they canceled such trips and held a conference call with staff and clients in other cities, said the manager.

via The party is over for SOEs conferences – Chinadaily.com.cn.

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26/11/2013

Sales of postcards drop amid push for austerity |Politics |chinadaily.com.cn

Printers claim SOEs scrapping orders of gifts

Companies making calendars and greeting cards say they have seen a huge drop in orders after the Party\’s top discipline body banned officials spending public money on their products.

The Central Commission for Discipline Inspection announced the ban on Oct 31, forbidding Party organs, government departments, State-owned enterprises and public institutions from buying, printing, mailing and handing out New Year cards, postcards and calendars.

The move was seen as the latest attempt to promote frugality and curb extravagance among officials.

In recent years, local governments and institutions have bought, printed and given away a large number of cards and calendars at the Spring Festival holiday, the commission said, adding that as the materials have become more luxurious, the waste in public funds has become more serious.

On Oct 14, the State-owned Assets Supervision and Administration Commission issued a notice saying the authority will strengthen supervision and inspection as well as strictly prohibit State-owned enterprises from buying, printing, mailing and giving away New Year cards.

While figures on the amount of public money spent on greeting cards, postcards and calendars every year are unavailable, a county official in Jiangxi province, who gave only her surname, Li, said her government purchases 40,000 New Year cards or postcards every year for about 5 yuan (80 cents) each.

While civil servants can each get 10 cards, some officials may ask for more than 150, she said.

\”Some cards are sent in the name of individuals, some are sent in the name of departments to higher level governments or officials,\” Li added.

Xinhua News Agency also quoted another county official in Central China as saying, \”the money used (in his county) to buy cards is more than 300,000 yuan, equivalent to the money needed to build a Hope Primary School\”.

There are more than 2,800 county-level administrative regions and more than 300 city-level administrative regions in China, as well as thousands of State-owned enterprises and public institutions.

The Bank of China\’s Zhejiang branch has scrapped a plan to purchase 73,900 wall calendars, 52,600 desk calendars and 26,000 postcards, Xinhua reported.

The ban, however, is potentially a disaster for companies that make postcards and calendars.

via Sales of postcards drop amid push for austerity |Politics |chinadaily.com.cn.

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01/11/2013

China plea paper ‘to be overhauled’ – BBC News

A Chinese newspaper that made a front-page appeal for the release of a reporter accused of defamation is to be overhauled, a press regulator says.

Journalist Chen Yongzhou, in handcuffs, is escorted by police officers at the Changsha Public Security Bureau detention centre in China

The Guangzhou-based New Express made a rare public plea for the release of journalist Chen Yongzhou.

But Mr Chen subsequently admitted on television that he had taken bribes to fabricate stories about a part state-owned company.

Now the New Express is to undergo \”full rectification\”, the regulator said.

via BBC News – China plea paper ‘to be overhauled’.

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17/03/2013

* Chinese state-owned railway giant goes into biz

China Daily: “The China Railway Corporation, which will take over the commercial functions of the former Ministry of Railways (MOR), went into business on Sunday.

Chinese state-owned railway giant goes into biz

The company announced its arrival via Sina Weibo, the Chinese equivalent of Twitter, two days after receiving approval from the State Council, China’s cabinet.

The company will conduct business operations that were previously conducted by the now-defunct MOR, while the newly formed State Railways Administration will handle the MOR’s administrative responsibilities.

With registered capital of 1.04 trillion yuan ($165.73 billion), the China Railway Corporation will take over all of the MOR’s related assets, liabilities and personnel, as well as shoulder the responsibility of running trains for public welfare, according to a statement posted on the government website.

The wholly state-owned enterprise is administered by the central government and supervised by the Ministry of Transport, the statement said.

The move was made as part of the government’s efforts to restructure its cabinet, as well as eliminate a previous situation in which the MOR played roles as both market participant and regulator in the railway sector.

The company is expected to address the MOR’s high remaining debt and improve the country’s massive railway network.”

via Chinese state-owned railway giant goes into biz |Economy |chinadaily.com.cn.

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09/12/2012

* Canada OK’s foreign energy takeovers, but slams door on any more

China acquires more natural resources.

Reuters: “Canada approved China’s biggest ever foreign takeover on Friday, a $15.1 billion bid by state-controlled CNOOC Ltd for energy company Nexen Inc., but drew a line in the sand against future buys by state-owned enterprises.

A man walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol

In a fierce defense of a tough, new foreign investment framework, Prime Minister Stephen Harper said Canada would not deliver control of the oil sands – the world’s third-largest proven reserves of crude – to a foreign government.

The ruling, anxiously awaited by investors and politicians alike, followed months of heated debate about how much of Canada’s energy sector could and should be absorbed by companies run by other nations.

The bid triggered unusually open dissent among legislators in the ruling right-of-center Conservatives, many of whom were particularly nervous about the idea of allowing China to gain control of the oil sands.

Canada said yes to this deal, but will not do so next time.

“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead,” Harper told reporters after Ottawa gave the deal the green light, along with approval for the less controversial takeover of gas company Progress Energy Resources Corp by another state-owned energy company, Petronas of Malaysia.

“Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada,” he added.”

via Canada OK’s foreign energy takeovers, but slams door on any more | Reuters.

See also: https://chindia-alert.org/2012/02/13/pattern-of-chinese-overseas-investments/

Posted in China alert, Economics, Foreign acquisition, Natural resources, oil & gas | 1 Comment »

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