So what are the measures that are being taken. The main idea is to encourage internal domestic consumption.
Here are what I found out.
1) Stop collection of management fees
On the 26 August, the various Chinese authorities announced that the management fees for the various industrial and commercial accounts and trading markets are waived.
Currently there are about 27.31 million industrial and commercial accounts. If taking the current fee of 650 RMB per account, the new rule will let the accounts save about 17 billion RMB. Ministry of Finance will also come up with 2 billion RMB to help with the transition.
2) Railway projects
From the authorities in charge of railways, for the rest of the year, the development of railways will speed up. The total investment is about 300 billion RMB(3千亿元). Various projects are going to start development.
The various highlights are the Jing-Jin(京津) route [BeiJing(北京)-TianJin(天津)], the Ha-Ning route(合宁) [HaFei(合肥)-Ning(南京)] and the Ha-Wu(合武) [HaFei(合肥)-WuHan(武汉)] route. It is about 370 kilometers and the investment is about 22 billion RMB.
Also, the Jing-Shi(京石) [BeiJing(北京)-ShiJiaZhuang(石家庄)] route, Shi-Wu(石武) [ShiJiaZhuang(石家庄)-WuHan(武汉)] route, Jin-Qin(津秦) [TianJin(天津)-QinHuangDao(秦皇岛)] route and the other routes totalling 9 routes are to start work soon. The total railway route is about 4,100 kilometers.
It is estimated that by 2010, the total railway route in commercial use will expand from current 78,000 kilometers to above 90,000 kilometers with about 700 coaches in service.
So what are benefits from more railway projects?
More people movements. Since 1 August, the Jing-Jin(京津) route sees about 60,000 people moving between BeiJing and TianJin, and increment of 1.3 times as per comparison.
Help with asset prices appreciation. Properties at the various cities where there are train stops, properties are seeing price appreciation.
3) The rebuilding in SiChuan
A member from the Macroeconomic Research Institute of National Development and Reform Commission says that the rebuild for the earthquake zone is costs about an estimated 1万亿元, to be completed in the coming 3 years.
The amount spent should let the earthquake zone recover back to the normal development route and let the economics and people's living standard return back to the level before the earthquake.
A state department report estimates that to fully recover the quake zone to return to levels before the earthquake, it will require about 6,900亿元 investments. It should incrase a total social output value of about 4万8800亿元 and help with the GDP growth.
4) Economic stimulus policies in ShangHai
Currently ShangHai is working on some economic stilunus package and will be submitted for approval.
From what is gathered by the media, there will be financial policies to help the SMEs, private enterprices, high tech enterprises and export companies. There will also be policies to help raise credits and help lower operation costs.
In 2010 there is the World Expo to be held in ShangHai. But what after that? Analysts believe it can be the 'big aeroplane' development project.
5) Reduction of export tax for textile industry
To help the labour intensive textile industry, on 1 August, the finance department and tax department increased the export tax rebate by 2%.
Dalian(大连) currently have about 1,000 plus textile export enterprises. With the reduction of the export tax, those enterprises can increase their earnings by about 100 million RMB.
FuJian(福建) is also another big textile export province with last year's exported value of about 7.3 billion US dollars. At an estimated growth export rate of about 10%, this year's export value can reach 8 billion US dollars. With the 2% reduction in export tax, the total revenue can increase by about 161 million US dollars.
ZheJiang(浙江) is a large clothing production province. About 100,000 clothing enterprise will benefit from the export tax cut. Not only can the competitiveness be increased, it can also help keep the current export market and at the same time stabalize the employment rate. A lot of the enterprise says that it is good to make use of this chance to upgrade production capabilities and create more value add to the products.
6) Development of the Yangtze River Delta
China's State Council, or the cabinet, on Wednesday (6 August 2008) approved guidelines to boost the development of the Yangtze River Delta.
The Yangtze River Delta Region, which covers affluent ShangHai, as well as JiangSu and ZheJiang provinces, is a major economic engine in China."The region should quicken its industrial restructuring and seek to create an industrial structure with a modern service industry as the pillar," said the guidelines.
The eastern economic hub should step up efforts for industrial upgrading and turning itself into an advanced global manufacturing base, according to the executive meeting presided over by Premier Wen Jiabao.
The region should improve its overall capacity and ability to innovate while aiming for sustainable development, the guidelines said. The delta region should also coordinate the development of rural and urban areas.
Improving the delta's international competitiveness plays a significant role in the country's reform and opening up, said the meeting. This year is the 30th anniversary of China's reform and opening up policy.
The meeting also urged the delta to modernize its agricultural sector, conserve energy and land, protect the environment and perfect its employment and social security systems.
The State Council also called on the region to set up a unified open market system and help lead the way toward a sound market economy system nationwide.
China's central bank to seek policy balance between fighting inflation, boosting economy
2008-08-15 22:44:59
BEIJING, Aug. 15 (Xinhua) -- The People's Bank of China (PBOC),the central bank, said on Friday that it would seek a balance between fighting inflation and boosting economic growth in the rest of the year to ensure a steady and fast economic development.
PBOC expected the country's economic growth to remain steady and fast in the second half despite challenges from home and abroad, boosted by increasing domestic demands, industrial structure upgrading and fast industrialization and urbanization, it said in the monetary policy implementation report for the second quarter.
The central bank said it would make small changes to its monetary policies at a proper time in the second half, responding to the domestic challenges and uncertainties on the global economy.
The government had focused on using tightening policies to fight inflation and to prevent the economy from overheating. But economists were calling for minor changes to the macro-economic policy to avert the risk of sharp economic slowdown.
The country's consumer price index (CPI), a main gauge of inflation, eased to 6.3 percent in July from 7.1 percent in June, 7.7 percent in May and a peak of 8.7 percent in February.
According to the PBOC report, the central bank would encourage financial institutions to increase credit supply to key industries and weak links, especially to small enterprises, post-quake reconstructions and those concerning agriculture, farmers and rural areas.
The report also urged tightened supervision on the foreign exchange flows to prevent the risk of large amount of outflows.
The State Administration of Foreign Exchange (SAFE) created a new system last month that enabled real-time monitoring of the foreign exchange flows. The system is mainly an Internet-based data exchange mechanism among SAFE, banks, enterprises and accounting firms.
The system should be well managed, the PBOC said. On Thursday, the central bank announced that it would establish a department to deal with foreign exchange issues.
Editor: Pliny Han
Chinese official: curbing inflation a priority after GamesLatest Updates
2008-08-27 22:04:50
BEIJING, Aug. 27 (Xinhua) -- The Chinese government will stick to an economic policy that focuses on curbing inflation for the rest of the year, a senior official on Wednesday told China's top legislature, as slowing output and rising prices loom over the post-Games economy.
Economic planners would exert themselves to increase supplies of necessities, closely track key prices and make price controls more effective, National Development and Reform Commission deputy chief Zhu Zhixin told the fourth session of the Standing Committee of the 11th National People's Congress.
"A lot of factors can drive prices up," said Zhu. "There is a strong demand for primary products, with prices hovering high on international markets, while more expensive land and labor at home will add to costs."
His statements came after China's main inflation indicator showed a deceleration in July and as the world wondered where the already slowing economy would head after the glitz of the Games.
The consumer price index was up 6.3 percent last month over July last year, lower than the 7.1 percent in June and 7.7 percent in May, as tighter monetary policies adopted last year seemed to bite.
Meanwhile, the country's economic output in the first half was 10.4 percent higher, compared with 10.6 percent in the first quarter and 12.2 percent in the first half last year.
Zhu said the output slowdown was "a moderate correction from a high level".
"The national economy is heading in the direction expected by the macro-control policy."
Zhu cited the pressures on some industries and enterprises as one of the major conflicts in the economy, saying it would take time for the latest supportive policies to show an effect and for companies to adjust.
He told the top legislature the government would continue to seek a balance between fighting inflation and maintaining growth.
Tasks for the rest of the year included improving the contribution of domestic consumption to economic growth, boosting agricultural output and increasing aid to small enterprises, he said.
The government had been focusing on preventing the economy from overheating before changing the goal to "keeping steady, rapid growth" in July.
Many analysts foresaw a loosening of the tight monetary policy to provide liquidity for enterprises, especially exporters, that were squeezed by weakening demand, credit controls and rising costs.
Earlier this month, administrators raised the export tax rebate rates for some textiles and garments, while the central bank allowed more credit to small and medium-sized enterprises.
"The fiscal and monetary policies are likely to be eased, if the current trend is a guide," said CITIC Securities analyst Zhu Jianfang. "The central bank is not expected to come up with any big tightening moves after the Olympics."
Editor: Wang Hongjiang
12 September 2008
- SMEs to get benefit package soon
BEIJING, Sept. 12 (China Daily) -- The Ministry of Finance will "soon" draft special rules requiring local governments to buy more products from small and medium-sized enterprises (SMEs).
Funding to SMEs will be increased significantly to help them cope with the tightened credit situation and falling global demands, the ministry said yesterday.
The ministry will earmark 3.51 billion yuan (512 million U.S. dollars) worth of special funds to help the growth of SMEs, which will enjoy preferential tax policies, too. It, however, did not say when exactly the new government procurement rules would be announced.
Analysts said the new rules would change the prevailing situation in which governments shun SMEs to buy goods from big companies.
The country has about 40 million SMEs, including those run by individuals. They have become the national economy's most dynamic factor, accounting for about three-fourths of the urban labor force.
But because of last year's tightening monetary policy, aimed to rein in the runaway economy, it has become difficult for vulnerable SMEs to get bank loans.
Moreover, the demand for their products have fallen, thanks to the slowing of economic growth from 11.9 percent last year to 10.1 percent in the second half of this year.
And the drop in exports of their products, as a result of this year's gloomy global economy, has made things even worse.
The central treasury, too, has given financial help to enterprises facing multiple problems.
Of the 3.51-billion-yuan support package, 500 million yuan (73 million dollars) will go into making SMEs acquire state-of-the-art technologies. This year's amount is 25 percent more than last year's.
A total of 200 million yuan (29.2 million dollars) of the technology development fund will be used to subsidize institutions that guarantee the SMEs would get bank loans, the ministry said.
The SMEs' technological innovation fund will get 1.4 billion yuan (204.4 million dollars), up 27.3 percent than last year.
The ministry will use 1.2 billion yuan (175.2 million dollars), up 20 percent, to help the SMEs tap the international market by providing them information and helping them go through the often complicated global certification process.
The ministry imposes a 20 percent tax on SMEs with low profit levels, and has cut the tax rate for high-tech SMEs to 15 percent, according to the newly promulgated corporate tax law.
The government passed a unified corporate tax law for domestic and overseas companies in March, imposing a flat tax rate of 25 percent on them. Before that, domestic enterprises had to pay a 33 percent tax.
The law stipulates that high-tech firms and small enterprises with marginal profits will enjoy preferential tax rates.
- China's railway investment hits $19.6 bln in first 7 months
BEIJING, Sept. 8 (Xinhua) -- China's railway investment soared 37.5 percent from January to July. The numbers are attributed to a building boom of high-speed lines and the country's desire to link together poor regions.
The investment reached 133.78 billion yuan (19.6 billion U.S. dollars), the Ministry of Railways (MOR) said on Monday.
More people than ever are using railways. In the first 7 months of the year trains carried 855.3 million passengers, up 12.6 percent from the same period last year. Cargo volume was 1.94 billion tons, up 6.8 percent from a 2007.
The MOR had planned to invest 1.25 trillion yuan (182.6 billion U.S. dollars) in railway building and renovation through 2010 extending the train network by 17,000 kilometers.
China started construction on the 1,318-km-long Beijing-Shanghai high-speed railway on April 18. The train is designed to run 350km per hour. The total project cost 220.9 billion yuan (32.3 billion U.S. dollars).
- Tibet plans huge industrial investment
LHASA, Sept. 5 (Xinhua) -- China's southwestern Tibet Autonomous Region plans to invest heavily in 22 industrial projects to stimulate comprehensive economic development, according to the local authority.
The government will pool 21.17 billion yuan (about 3 billion U.S. dollars) for 10 mining projects, four construction and building material enterprises, three medicine and food plants, and five industrial development zones in five years, Li Xia, the autonomous regional economic commission director, told Xinhua in an exclusive interview.
Among the selected projects, the mining sector will absorb 15.9 billion yuan and the industrial zones will take 3.45 billion yuan, according to Li, citing a government decision released at a local economic meeting held here late last month.
The projects are expected to earn 18.28 billion yuan with an estimated profit of 5.11 billion yuan after they start operation before 2013. They will bring job opportunities for nearly 15,600 people.
According to the schedule, investment in the projects will reach 5.9 billion this year.
Industrial development in Tibet had remained inactive for a long time and the sector only accounted for 7.5 percent of the region's overall gross domestic product last year, official statistics showed.
The 22 projects are expected to speed up development of other industrial fields and the comprehensive economic growth, according to Li.
The launch of the Qinghai-Tibet railway in 2006, the first raillink between Tibet and the rest of China, has been a big step to greatly facilitating transport and communication in the landlocked region.
- Full steam ahead for rail plan
BEIJING, Sept. 2 -- The development of China's railway network will include the construction of 548 railway stations within the 11th Five-Year Plan period (2006-10), a senior official from the Ministry of Railways, said yesterday.
"Twenty-eight new stations have already been completed, 58 are under construction and 210 are in the design stage," Zheng Jian, the ministry's deputy chief engineer, told China Daily.
Last month, Beijing South - the largest in the country - and Tianjin railway stations opened for business at the two ends of a new high-speed intercity service, he said.
In the coming years, as more high-speed routes are added, the ministry plans to develop six passenger transport hubs - Beijing, Shanghai, Wuhan, Guangzhou, Xi'an and Chengdu - and 10 regional hubs, with local railway stations upgraded to deal with the increased numbers of travelers, he said.
But it is not only the hubs that are looking to upgrade their facilities, Zheng said.
In Hangzhou, capital of Zhejiang province, for example, plans have been drawn up to build a station with 30 platforms, more than at Beijing South, he said.
Local governments have realized that their existing railway stations are too small to satisfy the demands brought about by rapid economic development, he said.
"Cities like Hangzhou and Nanjing know that being linked to the high-speed rail network will have a hugely positive impact on their economies, and that is why they want to build big stations, Zheng said.
"However, we will continue to stress that while the construction of large railway stations is fine, they must adhere to the basic principles of economy and not be overly lavish in their decoration," he said.
One Beijing woman said he was pleased to see all the new railway stations being built in the capital.
"Railway stations are no longer shabby or overcrowded like they used to be," commuter Zhang Tao said yesterday.
"They are more like airports," she said.
Under the Ministry of Railways' mid- to long-term plan, the nationwide, high-speed rail network will be extended to 12,000 km by 2020.
- China's central bank to make credit easier
BEIJING - China's central bank said on Monday that it would increase the flexibility of its credit control policy to ensure steady economic growth.
'(We) have to take into account... rising international uncertainties in particular and improve the flexibility (of credit controls) to deal with various potential impacts,' the central bank said in a statement.
The country's credit policy has to 'strike a balance between maintaining fast and steady economic growth and curbing inflation', it said.
The central bank will expand loan access for the agriculture sector and small companies countrywide, as well as reconstruction projects in areas devastated by the May 12 earthquake, it said.
State media reported last month that the central bank had raised this year's quota of new yuan loans by 5 per cent, although this has not been confirmed.
The previous cap was widely understood to be no more than the 3.63 trillion yuan (US$532 billion) lent in 2007.
The world's fourth biggest economy grew 10.4 per cent in the first half and 10.1 per cent in the second quarter, down from 11.9 per cent for all of 2007.
The slowdown has led to the government making a subtle policy shift from preventing economic overheating to ensuring steady growth. - AFP
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