ChinaBlog.George.Yuyu.Huang

Recent News 2007-7-4

1. The rocketed price of pork is at the peak of ten years, raising the concern that central government will launch another around of macro economical regulation. Pork is one of most important food for Chinese and the hiked price is a severe test on the effectiveness of the measures of government.

2. Liu Bing, Ma Yan and Wang Jinping, the economist of National Bureau of Statistic of China, claimed in a report that the foodstuff safety of china is still far away from the warning line. The materials they cited showed the output and net import of foodstuff in china consecutively increased in the last three years. In the end of last year, the storage of food in china was more than 200 billion kilograms, the number of 40% of the annual national consume of Chinese. The rate is higher than the criteria established by Food and Agriculture Organization of the United Nations. And historical experience indicated that when the markup of food is above 20%, it may cause inflation. At present, the rate is about 10%.

3. The data released by Beijing Municipal Construction Committee showed the average price of the newly transacted house of June increased 20.4%, compared with that of May, reaching 10,280 Yuan per square meter. Xie Guozhong, a well known economist and the former employee of Morgan Stanley, commented that figures and facts of the property market demonstrate the situation has deviated the target of the central government since 2004.

4. State Information Center points out in a report that economy is heating. To reverse the trend, more rigorous measures to cool investment are unavoidable, including the adjustment on interest rate, foreign exchange rate, and the price of labor and land.
Important indicators of 2007: (Prospected Growth Rate)
GDP: 10.9%; CPI） 3.3%; Foreign Exchange surplus: 275 billion dollars; Fixed asset investment 26.1%; Export 26%，Import 19.5%; Nominal Consume 15.8%

5. Central government of china will push the energy reduction by controlling even prohibiting the imports of equipments, materials and technologies that will consume lot of energy. At same time, the government will levy tax on the exports of energy intensive products. The state council may draft a regulation to limit the temperature of air-conditioners no less than 26 C in most public area.

6. China Shenhua Energy Company Limited (”CSEC”), the leading integrated coal-based energy company, will issue 1.8 billion A shares in Shanghai, raising at least 50 billion Yuan. Influenced by the IPO of CSEC on mainland, the share price of the company jumped to unprecedented 29.6 HK dollars and several investment banks, including UBS Warburg and Morgan Stanley, raised the rating of the share to “increasing hold”.

7. Wu Shihong, the former superstar of TCL, re-entried the boardroom of the china’s largest home appliance manufacturer as independent director and will take charge over the fiancé and compensation and benefit commission. Wu Shihong had been an idol of professional managers. She has no university degree but succeed herself from a receptionist as GM of IBM and Microsoft of china. Later, she joined the team of TCL. However, her performance in TCL had beaten expectations of investors.

8. State Environmental Protection Administration of China declared 38 enterprises in the drainage area of Yangzi River, Yellow River, Huaihe and Haihe, the most polluted rivers in china, will be supervised to establish their water disposal systems. However, Pan Yue, the vice president of SEPAC, conceded that the power of environmental department is too limited to do more, that the incentive mechanism to local officials caused the deterioration of environment and that there is no fundamental reform on the enforcement system, the amelioration of environment is impossible. Mr. Pan have advocated the “Green GDP” concept and brought forward the “Green Loan” policy with the China Banking Regulatory Commission, the banking watchdog of china.

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