April 09, 2010
Beijing Ramps Up Heavy Industry Restructuring
The head of the policy department of the Ministry of Industry & Information Technology - one of Beijing's five "super" ministries - says a plan is underway to consolidate the power, coal, iron and steel, cement, nonferrous metal, coke, paper, leather and printing material industries. Specifically targeted is the iron and steel industry with the call to shut down furnaces less than 30 tons capacity. The plan also calls to eliminate outdated plants in the textile industry by the end of next year. The ministry warns it will take joint efforts of all government departments to achieve the aims.
The consolidation of China's massive but scattered and often inefficient heavy industrial plant is a long standing goal. It will be accomplished through corporatization of government-owned businesses and mergers and acquisitions leading to a handful of powerful industrial leaders. This is part of Beijing's overarching desire to see American style "big 3" players in all industrial sectors.
Economic restructuring is one of 5 key areas Beijing is channeling central government resources into in a bid to jump start a "third wave" in the Chinese economy. The other areas are agriculture, alternative energy, social services particularly education and health care, and "independent innovation"....
The consolidation of China's massive but scattered and often inefficient heavy industrial plant is a long standing goal. It will be accomplished through corporatization of government-owned businesses and mergers and acquisitions leading to a handful of powerful industrial leaders. This is part of Beijing's overarching desire to see American style "big 3" players in all industrial sectors.
Economic restructuring is one of 5 key areas Beijing is channeling central government resources into in a bid to jump start a "third wave" in the Chinese economy. The other areas are agriculture, alternative energy, social services particularly education and health care, and "independent innovation"....
Labels: alternative energy, clean tech, high-tech, investment, reform, steel
March 30, 2010
Shanghai To Launch Yuan Funds, REITs
Before the Panic of '08 China's State Council created the little-known National Office of Financial 30 to direct a series of financial liberalizations in Chinese capital markets. The financial crisis and Beijing's mammoth stimulus spending delayed many of the reforms. But word is Shanghai is on the cusp of getting approval for two major initiatives -- launching foreign Yuan private equity funds and Real Estate Investment Trusts (REITs).
A "trial plan for participation of foreign investment in Renminbi investment funds" is close to approval. This will allow certain foreign investors, most likely big institutions such as the Carlyle Group, to invest in Chinese private equity funds via a mechanism that would grant a quota of Yuan directly to the foreign investor.
Property developers in Pudong (Shanghai) and Tianjin appear to the driving force behind establishing REITs in mainland China. Details for Chinese REITs are still being sorted out but word from Yan Qingmin, head of the Shanghai office of the China Banking Regulatory Commission, is that REITs should get the green light in the 1st half of this year. Rumour is Citic Securities, the brokerage of Citic Group - China's premier transnational corporation - may be the first to establish a REIT.
The intent of the Financial 30 is to expand private sector access in bank lending and to channel investment to Chinese small and medium enterprises as well as other breakthrough type reforms. The ShenZhen GEM board, for example, grew out of the program....
Labels: banking, finance, financial news, reform
December 16, 2009
China, Coal, and Copenhagen
Beijing's National Development and Reform Commission (NDRC) is deregulating the sale of coal. New regulations say the central government will no longer hold an annual pricing conference. Instead individual power generators have a month to negotiate prices for 2010 coal deliveries with mining companies directly. The new rules also give priority to transporting thermal coal for power generation on Chinese railroads over coal for direct industrial use (coking coal for steel for example). Railroad companies can no longer allocate quotas prior to actual delivery contracts banning broker middleman from buying up quotas for spot coal sales. The end result may provide price stability overall but indications are Beijing will tolerate higher electricity rates as a result of these reforms.
China like the USA relies on coal for the majority of its baseline electricity generation. But China's dependence is higher - coal accounts for around 75% of electricity production - and China consumes more coal than any other nation. And coal use is growing and is expected to rise for the next few decades even as its use for power generation declines with more nuclear, hydro, and alternative energy production. The UN Copenhagen Climate Change Conference will end without addressing (let alone solving) this essential point: no real progress on air pollution can happen without reducing the reliance on coal for electric power by China and the USA.....
Labels: arms sales, chinese trade, electricity, global economy, reform, un
September 21, 2009
China Watchers Can't See the Tea for the Leaves
The 4th plenary session of the 17th Chinese Communist Party Central Committee ended in Beijing last Friday. According to China watchers and so-called "experts" the party meeting was a bust primarily because their prediction that party secretariat (and current Vice President) Xi Jinping would be promoted to China's Central Military Commission fell flat.
Mainstream media China commenters and analysts along with most of the traditional "gatekeepers" of China disinformation believe Xi Jinping will be the next president of China because he is supposedly aligned with Jiang Zemin. What is lost in this interpretation is the sea change that occurred in the first ever peaceful transfer of power in 2003 when Jiang Zemin stepped down and in the last party congress that selected the current leadership. Hu Jintao's power does not derive from alliance with a former great leader a la Mao or Deng but from his political base the Communist Youth League. Also from the Communist Youth League is Vice Premier Li Keqiang.
According to mainstream China watchers Li will be Wen Jiabao's replacement as PM in a new administration. But this writer believes Li has every chance of becoming China's next president. Here's why: the Chinese Communist Party is changing rapidly. Membership is growing fast and members are getting younger. Over 70% of delegates to the last party congress were under 55 with several hundred under 45. These party members were only teenagers or even younger when Chairman Mao died. They are not committed to "follow the leader" political successions.
And the party is now openly discussing the expansion of what it terms "intra-party democracy" with plans to engage non-party affiliated figures such as Health Minister Chen Zhu and the historic Chinese People's Political Consultative Conference. This news has great potential ramifications including the elusive possibility of multi party political participation. Yet it is completely ignored by western news reports. Fact is there is a lot of change going on in Chinese politics. But you need to step away from the silk screen to see it.
Labels: democracy, elections, hu jintao, reform
October 12, 2008
A Real Great Leap Forward
As the nations of the world deal with the downside of globalization Beijing looks inward and is preparing Chinese for a monumental change - de facto private ownership of land. The Third Plenary Session of the 17th Central Committee of the Chinese Communist Party* concluded today with vague but profound statements on improving the lives of China's rural poor. The specifics will be hammered out in time for ratification at next year's National People's Conference (March 2009) but numerous leaks tell of the greatest liberalization in land holding since the first land reform in the 1950s when surplus and unused land held by large landlords down to "rich peasants" was redistributed to landless Chinese. After two decades (approximately 1958-1978) of mixed results with collectivization, landholding returned to the leased small plots originally devised by the Communist ("collective property") party at the the Third Plenum of the 11th CPC Central Committee under Deng Xiaoping in 1978. Now Beijing is ready to truly leap forward.
The new changes would allow for rights of sale, transfer, and extended lease (more than doubling the current 30 years to 70 years) on land to give rural Chinese de facto private ownership. The reforms are on the heels of last year's new law on private property. I predicted March 2007 that the new law protecting property could open the door to finally giving rural Chinese what they've long for for centuries - their own piece of China. This is a monumental change and very important to follow and understand its impact on the Chinese economy.
*The members of the CPC Central Committee are: Zhou Yongkang, Li Keqiang, Li Changchun, Wen Jiabao, Hu Jintao, Wu Bangguo, Jia Qinglin, Xi Jinping and He Guoqiang.
Labels: land reform, private property, reform
March 06, 2008
National People's Congress Open For Business
The first session of the 11th National People’s Congress convened Wednesday (March 5, 2008) at the Great Hall of the People in Beijing.
Premier or Prime Minister Wen Jiabao opened the session with remarks on the state of the Chinese union emphasizing challenges ahead particularly dealing with inflation.
Beijing will pursue a “tight monetary policy” according to Wen signaling the central government’s worry over excessive liquidity and runaway growth in some areas.
As expected, Beijing will channel excess cash into more state investment, already accounting for over 45% of China’s Gross Domestic Product. Investment targets will be health care and social security bureaucracies based on United States models. Housing and safe drinking water for China’s impoverished classes will also receive state directed investment.
The Congress will vote on the candidates already selected last October by the Communist Party for top government positions. Hu Jintao will no doubt be elected for a second and final 5 year term as President.
But there are some interesting items to watch on the Congress agenda. For example, debate on “institutional restructuring of the State Council,” China’s day-to-day working government and a vote on changing the election law to adjust the level of representation for rural Chinese.
Currently, each rural delegate of the Chinese congress represents 4 rural residents. The aim of the reform is to increase representation for Chinese rural citizens. Also there will be discussion of a Congressional delegation for migrant workers.
And in another show of support to the vast floating population of migrant workers in China, by some estimates perhaps 200 million people, Wen Jiabao announced mandated paid vacations for migrants.
It is easy for foreign observers, particularly American media, to dismiss the National Peoples’ Congress as a rubber stamp farce. But as I’ve pointed out before, you ignore the work of the NPC at your peril.
The Congress affirms the direction China is going and gives law to Beijing’s policies. Each year thousands of petitions, white papers, and forums are presented by ordinary Chinese (an ancient tradition, by the way, that predates any Chinese republic) and in this great airing of gripes and views are clues to the aspirations and desires of the Chinese people.
The NPC will adjourn March 19. I’ll have a report on this year’s session in next week's episode of The Sinomania! Show video broadcast.
Labels: china, democracy, government, migrants, national peoples congress, reform
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