China News - Summer 2009

Chongqing-the Gateway to Western China

Chongqing is a sprawling municipality (a city with provincial status similar to Beijing, Shanghai and Tianjin) of 32 million inhabitants on the Yangtze River. Seventy percent of the inhabitants are peasants. Per capital income levels are below that of the other municipalities, but the GDP of Chongqing is believed to be increasing at a rate of 12%. Chongqing, like many smaller inland cities is central to China's economic recovery. More than 60% of China's two-year $586 billion dollar economic stimulus package is going to inland areas and the $34 billion is earmarked for Chongqing is more than double the per capita share for the rest of China's 1.3 billion people.

A Chongqing to Lanzhou railway is one of several projects, costing a total of $220 billion which will drive up demand for coal and iron ore. The Yangtze River ports saw an increase in monthly cargo in January - the first monthly increase in half a year. The mayor of Chonqqing believes that a new growth cycle has begun. Statistics seem to confirm this because investment in infrastructure has increased by 35% from the same period last year. Low labour and property costs are attracting companies that once built factories on the coasts to relocate to Chongqing.. These moves are backed by Beijing, which sees the municipality as the centre of the 'Go West' campaign aimed at shifting development into the interior of China. Beijing is now focusing on improving the lives of 750 million people in more than 400,000 villages and turning them into consumers.

The central government plans to increase spending on agriculture and social programmes in rural areas by 20% to $104.6 billion, and boost a nationwide campaign to 'send electronics to the countryside' by giving a 13% rural sales rebate on TVs, cell phones and computers. One-off grants are even being given to farmers to upgrade farm vehicles to light trucks and cars. At the same time, new shopping centres, cinemas, sports facilities and other leisure complexes are being built in Chongqing and other inland areas.

These are all measures to loosen the wallets of rural dwellers whose incomes have risen by 6% for the last five years and also access the spending power of the 20 million migrants who have returned home from coastal areas after losing their jobs. They do have money to spend - the average migrant returning to Chongqing brings home $32,000 per household after five years working on the coast. However, this may not be easy because the lack of social security means that rural dwellers save their money for 'rainy days'. Chongqing is making efforts to correct this and now 85% of its farmers have medical insurance. Recently 9,000 Chongqing taxi drivers went on strike to protest against lack of medical insurance amongst other grievances. A meeting with the Chongqing Party Secretary resulted in company subsidised medical insurance and a monthly allowance.

The central government which helped coastal areas is supporting inland industry in a number of ways. Chongqing is a centre of the Chinese auto industry. A 13% discount on rural motorcycle sales, a campaign nicknamed, 'Motorcycles Down on the Farm,' is costing Beijing $733 million. This is only one of many incentives underway in Chongqing. Sales tax on cars with engines smaller than 1.6 litres has been halved. This incentive for the auto industry is one of 10 specific industry sectors - from metals to electronics - which are receiving stimuli from Beijing. Car makers in Chongqing are optimistic about the future. (From Newsweek 23/3/09)

World Bank forecasts China growth at 6.5%

The World Bank believes China will grow by 6.5% in 2009 because of the global slowdown. The Bank had earlier predicted 7.5%, which is still below the 8.0% projected by the Chinese government. Chinese banks have been largely unscathed by the international crisis and the Chinese authorities still seem to have plenty of leeway to implement further forceful measures on top of those already announced.

The World Bank, in its quarterly review, emphasised that China's economy was holding up relatively well in the face of the most severe downturn in decades. David Dollar, the World Bank's country director for China, said that he expected China to continue to grow faster than most other countries. All China watchers agree that a reduced reliance on exports and a greater domestic consumption were crucial to its long term growth prospects. (From Global Edition of the New York Times 19/3/09)

From the British Press

Chinese in Africa

Despite the Chinese not appearing to encourage accountability from Africans rulers, many Africans are more sympathetic to the Chinese model. In Africa, you can see roads and bridges built by the Chinese and they live with Africans. They don't require 4x4s and air conditioned houses, they just live as ordinary people and, they don't have the poisonous colonial relationship. In addition they treat Africans fairly, straightforwardly and equally. The Pew Research surveys carried out by Americans in 15 African countries were asked what they thought about the Chinese and, 'whom did they think is better economically for you: the Americans or the Chinese?' Consistently, and contrary to media reports, Africans, whether they were in Ethiopia, Ghana or Zambia, said that they preferred the Chinese. (From an interview with Dambisa Moyo, a Zambian-born economist published in Standpoint magazine, March 2009)

China's ten-year plan for national health service for its 1.3 billion people

The Chinese government has said that it will invest 850 billion yuan (£85 billion) between 2009 and 2011 to bring equitable and universal healthcare to 90% of the 1.3 billion people in China. The aim is to offer access to everyone. The plan has been several years in the drafting and by 2020 China will have a basic healthcare system that can provide safe, effective, convenient and affordable health services to both urban and rural residents. The details were published in a government document.

Under the scheme, 2,000 county hospitals and 5,000 township clinics in rural areas will be built in the next three years. Pilot health insurance schemes already extended to farmers will be increased. The subsidy will be increased by 50% to 120 yuan per person per year and the country will set up a national database. In addition, from this year, those over 65 years of age and children under the age of 3 years will be eligible for free medical check-ups. Hospitals and clinics in poorer areas will be improved and the price of essential medicines will be capped. Disease prevention and control, maternal health, mental health and first aid services will receive greater attention.

The new plan seems to replace the present system in which only the rich, city residents or government employees have access to affordable medical services. The 700 million or so rural residents are generally reluctant to incur huge hospital bills which can bankrupt a family. An indictment of the medical system was published in 2005 by a government think-tank which branded the system a failure and warned of severe public criticism of the government if it did not act. In the absence of a social safety net, Chinese workers save a huge proportion of their income in case of illness and this makes it difficult for the government to encourage more consumer spending to help revive the economy. (From The Times 9/4/09)

Shell in talks with Chinese oil giants about Iraq

Royal Dutch Shell is in talks with Chinese state oil firms over a joint bid to develop oil fields in Iraq which produces about 2.5 million barrels of oil a day. A partnership with Shell would be China's second major venture in the Gulf state. China's state owned oil group's $3 billion (£2 billion) project was the first large oil deal in Iraq after the fall of Saddam. China is the world's second largest consumer of oil and its state-run energy companies are keen to expand their foreign reserves. Shell is also keen to expand its refining business in China and is looking to participate in the expansion of a large oil refinery in southern China with a Chinese state energy firm. (From The Telegraph 15/4/09)

Record car sale in China during March

Vehicle sales in China reached 1.1 million, up by 5% from the previous record of 1.06 million sold in March last year. These figures from the China Association of Automobile Manufacturers showed China as the biggest car market in the world, outstripping even the US. Sales have been buoyed not only by a desire for many Chinese to own their first car, but also by government tax cuts and rebates on small car purchases. Growth in sales had slowed in 2008 as the global finance crisis took its toll, but government support measures introduced in February have spurred the market. Yi Junfeng, an analyst with Changjiang Securities said that few expected such an explosive growth and that it seems that the tax incentives for small cars and subsidies are really effective and the 10% annual growth set by the government is achievable.

In contrast to its performance at home, General Motors enjoyed a 38% surge in sales to 137,004 in March over the period a year earlier and its mini-vehicle joint venture SA-IC-GM-Wuling produced a 38% increase to 90,784 vehicles sold. Overall, passenger car sales hit a new monthly high of 772,400 units in March, up 10.26% from a year earlier and a rise of 27.2% over February. (From The Times 10/4/09)

Lang Lang and the London Symphony Orchestra

Lang Lang began the UBS Soundscapes series with the LSO at the Barbican on Saturday. At the age of 26, he is rated as the No 1 piano player in the world and played the ultimate gig last year: the Beijing Olympics. Last year he performed at the Albert Hall and played hardcore classics: Mozart, Rachmaninov, Chopin, Schubert, Debussy and Liszt. This year he returns to play Chopin's Second Piano Concerto with the Staatskapelle Dresden. Roger White, director of the Proms, says, 'Lang Lang has a special way of connecting with a much larger audience. Some of it is youth; some of it is energy and its innate showmanship. He is trying to find new ways of presenting the same music'

Lang Lang was born in Shenyang, northeast China in 1982. His father was a policeman and his mother a phone operator. They taught him to read music before he could read writing. He began piano lessons at the age of 3, gave his first recital when he was 5 and won a scholarship to the Beijing Conservatory when he was 9. At the age of 17 in 1999, he replaced the German pianist Andre Watts at the last minute at the Ravinia Festival in Chicago. After playing Tchaikovsky's Piano Concerto No 1 with the Chicago Symphony Orchestra, he was a sensation overnight. He has played for the Queen, Kofi Annan and Vladimir Putin. (From The Times 11/4/09)

Search for harmony leads back to Confucius

Daniel Bell, a philosophy professor at China's Tsinghua University and author of the book 'China's New Confucianism,' said that there is great interest currently in Confucius and that the leadership is relying more and more on Confucian-inspired values that put emphasis on maintaining stability and harmony. Chinese film studios are to make a £10 million biopic of the sage backed by the central government. Filming is expected to begin in three weeks with Chow Yun-fat who starred in a number of gangster films in Hong Kong before becoming internationally known for his role in 'Crouching Tiger, Hidden Dragon' playing the sage.

The film will tell the story of the life of Confucius, who lived from 551BC to 479BC, and tell of his long journeys around the kingdoms of north-east and central China. It will be a joint production by Dadi Cinema of Beijing and the state backed China Film Group. (From The Daily Telegraph 17/3/09)

Women in Chinese parliament compared to other countries

Country % Women Total number of seats
China 21 637
United States 17 73
Japan 9 45
Germany 32 197
Sweden 47 164
India 8 49
World average 19  

Source:Inter-Parliamentary Union (From The Economist 10/4/09)

UK fund mangers to help China sovereign wealth fund

Three British-based fund managers have been lined up by the leaders of China's £136 billion sovereign wealth to help invest Chinese reserves overseas. Standard Life Investments, Aberdeen Asset management and Martin Curries are reported to be close to signing a deal after a review of more than 400 fund managers who applied for licences from the China Investment Corporation (CIC) in early 2008. It is believed that 20 to 25 international investment houses will be granted a mixture of global equity and fixed-income licences. The value of the licences has not been disclosed, but it is believed that they will earn the winners more that £100 million in some cases.

The CIC licences will come as a boost to British efforts to increase trade with China in the face of the growing global crisis. Last February, Gordon Brown pledged to double British exports to China by 2010 - from £5 billion to £10 billion. China's massive sovereign wealth funds have been criticised after making high-profile losses with deals with Morgan Stanley and Blackstone. Analysts say that CIC is now refocusing its investments into natural resources, fixed income and real estate. The use of foreign investment firms is intended to bring much needed expertise into the CIC whilst providing some political cover at a sensitive time for the organisation. CIC is secretive about its dealings and requires its mandated investment companies to sign non-disclosure agreements. (From The Daily Telegraph 9/4/09)

Intellectual property in China

For over a decade Schneider Electric of France has bombarded a Chinese firm, Chint Group, with lawsuits accusing it of copying its technology. But the tables were turned on 15th April when the two companies settled an infringement case - with the French firm handing over $23 million to Chint. This settlement is a landmark. It serves as a reminder that Chinese companies are now just as eager to defend patents as Western firms and that China's intellectual property regime has been tightened in recent years.

China's patent office now leads the world in patent applications with more than 800,000 filed in 2008. Many are for 'middling' technology and receive only a 10-year term and are derided by Western research-intensive firms. But Chinese firms are increasingly filing 'invention' patents that are rigorously scrutinised and receive 20 years of protection. This year Chinese companies are poised to surpass foreign ones in receiving invention patents in China.

Intellectual property is relatively new to China. Although patents date back to Venice in the 15th century, Communist China did not allow them until 1985. Since 2006, it has been pursuing a deliberate policy of gathering as many patents as possible and developing home-grown technologies - not least because Chinese companies pay about $2 billion every year to American firms alone - according to the American Bureau of Economic Analysis.

In addition, Chinese firms are also increasingly seeking patents abroad which is an indication that they intend to protect their technology when exporting it to rich countries. In 1999, China won 90 patents in the US, but increased this to 1,225 during last year. This is still relatively few - IBM files 3,000 patents per year. But the number of Chinese patents is expected to soar soon and the quality is also improving.

China's revision of patents laws, which take effect in October, will strengthen the requirement for novelty and bring the laws up to global standards. All these trends are important, because countries that create intellectual property eventually enforce protection laws as well. It is worth remembering that America was the great copyright and patent infringer in the 18th century when it was a developing country! (From The Economist 25/4/09)

Poverty in the world and China

Just over 25% of the people in the world or 1.4 billion lived in poverty in 2005, according to the World Bank. The figure in 1990 was 42%. Rapid economic growth has led to a dramatic decline in poverty in China, where the share of people existing below the threshold level of $1.25 a day fell from 60.2% to 15.9% between 1990 and 2005. In India, the corresponding figures are 51.3% in 1990 and 41.6% in 2005. South Asia has the most very poor people of any region in the world. But the fraction of the population that lives in extreme poverty is highest, at 50.9%, in sub-Saharan Africa, although it has fallen from 57.6 in 1990. Source; The World Bank. (From The Economist 25/4/09)

Wuhan's hybrid buses

Wuhan is only one of several cities in China trying out hybid vehicles which combine gas power combined with diesel in a bid to promote clean-energy vehicles. Wuhan has 100 such vehicles. (From China-Britain Business Review, April 2009)

'Parking advisers' in China

Keith Mercer, leader of Worthing Borough Council, is pushing for traffic wardens to be re-branded as 'parking advisers' and be dressed in a less threatening uniform. This follows his experiences in Beijing where he saw an official in a Beijing street who was dressed in a drab uniform and taking notes about parked cars. On his cap were the words, 'parking adviser' in both Chinese and English. The Chinese official also gave advice to motorists about where there were parking spots. Mr Mercer believes that people in the UK feel threatened by our parking wardens' uniforms - it is a 'in-your face thing'. (From The Sunday Times, 19/4/09)

IMF votes

The IMF has been promised lots more money and has a new sense of purpose, but reform is needed - especially if it is to win the trust of emerging nations. Even after several rounds of reform, the votes governing the International Monetary Fund are largely a legacy of the global distribution at the end of the Second World War. Emerging economies do not trust the IMF because they think they do not have enough say in it. Rich countries which have the bulk of power are said not to take it seriously.

Country Share of votes (existing) Share of votes (proposed)
United States 16.77 16.73
Japan 6.02 6.23
Britain 4.86 4.29
France 4.86 4.29
China 3.66 3.81
Russia 2.69 2.39
Belgium 2.09 1.86
South Korea 1.38 1.36
Brazil 1.38 1.72

Source: IMF (From The Economist 11/4/09)

From the Chinese Press

Human Rights Action Plan of China (2009-10)

This document issued by the Information Office of the State Council on 13 April highlights goals that authorities expect to be implemented within two years. The plan guarantees economic, social, cultural, civil and political rights and also the rights and interests of ethnic minorities, women, children, the elderly and the disabled. Goals also include human rights education, performing international human rights duties and conducting exchanges and cooperation in the area of international human rights.

The document implements the principles prescribed in China's Constitution. It is meant to boost social awareness in respecting and protecting human rights and to develop human rights causes and social harmony. The document was drafted by the Central Committee of the Communist Party of China and the State Council.

However, as a developing country, China's per capita resources are below the world's average and its economic and social development is imbalanced between regions. Therefore China's human rights protections still face numerous challenges. Many problems in citizens' participation in public affairs, the rule of law, social justice, employment, social security, education and health care need to be resolved urgently. (From Beijing Review 30/4/09)

Government transparency ('sunshine laws')

The 2009 Financial Budget of the Chinese Central Government was published on the internet for the first time on 20 March. After 10 years of preparation, regulations governing citizens' rights to access government information were enacted on 1 May 2008. Amongst other items, the regulations order each administrative department to disclose its performance report to the public before 31 March every year. Zhang Tong, Assistant Minister of the Ministry of Finance, said that the ministry would work to be more open, take questions and gradually release more information.

The regulations specify that local governments are to publicise data on land acquisitions, residence relocations and related compensation. The rules stipulate the 'release on demand' principle which grants citizens the right to seek through written enquiry information that has not been included in official dissemination. Staff should respond within 30 days. The rules apply to all departments at all levels. However, the regulations do not apply to information which involves state secrets, individuals' privacy or confidential commercial information.

According to Zhou Hanhua, a researcher at the Institute of Law under the Chinese Academy of Social Sciences, the Regulations on the Disclosure of Government Information ushered in a huge shock in China. He said that government transparency was no longer considered a favour from the government, but a duty and statutory obligation whose implementation was overseen by the courts. (From Beijing Review 30/4/09)

New Chinese Antarctic research station

China's third Antarctic station officially opened in January at Dome A, the South Pole's highest ice cap. It has a floor space of 236 square metres which includes living and research areas. It is the first Chinese station on the ice sheet. The steel structure can accommodate 15 to 20 scientists in summer but there are plans to increase it to 500 square metres to make it a year-round station. (From China Today, April 2009)

Cars on Chinese roads

There were 169.88 million cars in China up to the end of 2008, an increase of 10.11 million on the year before - an average increase of 30,000 per day. The biggest increase was in passenger vehicles, which saw a gain of 20%. Private car increases slowed down to only 4.52% of the year before and there were 129.34 million on the road at the end of 2008. This represented 76.14% of total vehicles. To help the environment, the government recently halved the purchase tax on cars with an engine smaller than 1.6 litres to encourage purchase of low-emission cars. (From China Today, March 2009)

China to provide loan to Brazil for oil

China agreed to lend $10 billion to Brazil's Petrobras in return for a guaranteed oil supply over the next decade in a deal cemented yesterday as the Brazilian President Luiz Inacio (Lula) da Silva ended a state visit. The two counties are also researching how they conduct trade in yuan and real (Brazilian currency). This is the latest sign that developing countries are trying to reduce their reliance on a weakening American dollar. The Brazilian foreign minister said that discussions focussed on how to improve the financial system.

China is seeking to promote the yuan as an international currency after signing 650 billion yuan in swap agreements with Argentina, Indonesia, South Korea, Malaysia and Belarus in recent months. The yuan has gained 21% against the US dollar since a dollar peg was abolished in 2005, which eroded the value of exporters' dollar-denominated profits. Mr da Silva and Hu Jintao signed 13 agreements in all, covering science, space, law, ports and farm products. According to Xinhua. China displaced the US as Brazil's top trading partner last month. The trend is expected to continue. (From SCMP via Agencies in Beijing 20/5/09)

China's long-term climate change plan

Beijing is drafting a long-term plan for climate change that will focus on raising energy efficiency, developing clean-coal technology and expanding carbon-absorbing forests, a top climate policy official has said. Xie Zhenhua, a deputy chief of the National Development and Reform Commission who steers climate change policy, believes that the plan would strengthen China's 'capacity to enforce international covenants'. He said that the goal of the plan is to strive for a double-win of responding to climate change and also developing the economy. A global UN conference in Copenhagen in December will attempt an agreement on nations' ability to contain greenhouse gases from fuels, industry, farming and land clearance. As China is the world's biggest emitter of these gases, it faces pressure to begin cutting down on them. However, Beijing says that China and other developing countries should not be forced to accept mandatory emissions caps to solve a problem caused by wealthy countries over centuries. China is serious about combatting climate change without the need to take on mandatory caps. (From SCPM via Reuters in Beijing 20/5/09)

What's in a name?

Simplified Chinese characters were introduced nearly 50 years ago as a means of increasing literacy. However in response to a trend towards using unusual or ancient characters for children's' names, the Chinese government is issuing a list of 8,000 characters which must be used for names for newly born babies. Statistics from police authorities, which are responsible for residence and identity registration, show that nearly 8,000 characters which are being used by Chinese citizens for their names cannot be found in the government's 76,000-character database. Most of the characters are in fact wrongly written or made-up. Police officers have reiterated regulations that require citizens to use only standard characters in their names. Once the new table of characters is issued, parents will have to choose characters from the list to make up name for their children. According to language experts, the list will provide adequate scope for Chinese parents to name their children. The 8,000 simplified characters on the list should be able to convey any concept in the language. There are those who oppose this system however. They argue that language experts should not have the power to draw up a list of characters for compulsory naming of children and that choice of children's name should not be restricted simply for greater administrative expedience. (From Beijing Review 21/5/09)

Billionaire starts charity

Forbes-listed Chinese billionaire, Cao Dewang, Chairman of Fuyao Glass Industry Group recently announced that he would donate 70% of his family's stake in the company to the establishment of a charity foundation. Fuyao is China's largest maker of automotive glass. From the stock market price on 16 February, the donation is worth about 4.38 billion yuan ($640 million).

Cao, 64, a native of Fujian Province, who left school at 14 years of age due to poverty, was ranked 53rd amongst the Forbes ranking of rich mainlanders last year and was worth 4.83 billion yuan ($705 million). Last year, he donated 20 million yuan ($2.92 million) to the Sichuan earthquake disaster relief fund. He received a philanthropy award from the Ministry of Civil Affairs in 2008 and was listed at 14th in the China Philanthropy List which was released by the Shanghai-based researcher Rupert Hoogewerf after donating $21.35 million. This was the fifth time he had been on the list. (From Beijing Review 26/2/09)

China's satellite navigation system

A Chinese Long March rocket blasted off from its launch pad in Xichang Satellite Launch Centre in Sichuan province on 15 April 2009. This carried Compass-G2, the second navigation satellite of China's global positioning and navigation system to its preset geostationary orbit over the earth. The complete system, called Compass, is a major part of China's space infrastructure which will help monitor meteorology for disaster forecasts and also provide services for transport and communications. The full system will comprise 30 more satellites and is expected to be completed by 2015. (From Beijing Review 23/4/09)

Sino File is compiled by Walter Fung with some input for From the Chinese Press by Teresa Ray.

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