China Economy - News & Updates

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China not a fake-drug factory, says official​

By Xie Chuanjiao (China Daily)
Updated: 2009-05-27 07:43

China has been unfairly demonized as a center of fake drug production, a senior health official said yesterday.

Bian Zhenjia, deputy commissioner of the State Food and Drug Administration, said reports claiming the country was a major exporter of fake drugs were unfair.

"I don't agree with what the foreign media has been saying. The Chinese government has always paid great attention to cracking down on fake drugs," Bian told a news conference.

He said an article in The Observer saying "health fears grow as Chinese fake drugs flood into Britain" was found to be false after confirmation with food and drug supervision departments in the United Kingdom.

"We hope we can work together with the rest of the world to crack down on fake drugs, not hype up the problem and launch attacks," he said.

There are 4,708 pharmaceutical companies and manufacturers in China, all operating in a very standard way - especially compared with what was done in the past, he said.

"We have strict requirements for pharmaceutical producers in terms of qualifications."

For instance, pharmaceutical enterprises need to acquire production licenses, and drugs must have batch and registration numbers approved by industry and commerce departments.

According to World Health Organization rules, drug importers should ask their Chinese producers and dealers to provide certificates authorized by national and provincial food and drug administrations.

"The problems lie in the fact that some overseas companies have deals with illegal producers in China so the products involved have problems," Bian said.

There are also other cases where foreign companies import chemicals from China and then use those to make drugs.

Further cases involve foreign enterprises and importers who have purchased drugs from China which they repackage and sell in other places, actions portrayed by some foreign media as "China-made fake drugs being sold in other countries".

"If the international community gives us information on fake drugs, we will investigate," Bian said.

Nation not a fake-drug factory, says official

 

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HK ties up stimulus boost plan​

Updated: 2009-05-27 08:08

The Hong Kong Special Administrative Region yesterday announced HK$16.8 billion of tax cuts, fee waivers and spending to shield people from a recession that's likely to be the worst on record.

The government could "do something further" if conditions worsen, its Financial Secretary John Tsang said at a briefing in the city yesterday.

Yesterday's measures, including waiving business registration fees, salary tax cuts and suspending two quarters of property rates, take stimulus and relief spending since 2008 to HK$87.6 billion, or about 5.2 percent of gross domestic product, Tsang said.

"It's too little, too late," said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. "The problems are hitting us now," he said, adding that a HK$40 billion package should have been announced yesterday.

A waiver on salary tax payments will be raised to HK$8,000 for 2008-09 from HK$6,000. Fees for business registrations and for entertainment and restaurant licenses will be dropped for a year. The government will waive property rates for two more quarters.

The financial secretary predicted that the second half of this year will be better than the first half and the city may return to economic growth in 2010.


HK ties up stimulus boost plan

 

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Index shows 5th straight monthly gain​

(China Daily/Agencies)
Updated: 2009-05-28 08:08

China's benchmark stock index rose, completing a fifth monthly gain, as raw-material producers and shipping companies climbed on higher commodity prices and increased transportation rates.

PetroChina Co advanced 4.4 percent to a nine-month high and China Petroleum & Chemical Co added 2.4 percent. China COSCO Holdings Co, the world's largest operator of dry-bulk ships, climbed 4.6 percent after the Baltic Dry Index rose for a 17th day in London.

"Ample liquidity and optimism about economic recovery have contributed to the monthly rally," said Wang Peng, Shanghai-based chief investment officer at First Trust Fund Management Co. "The gains may not last if we fail to see more good economic and corporate data."

The Shanghai Composite Index, which tracks the bigger of the nation's exchanges, added 44.36, or 1.7 percent, to 2,632.93 at close yesterday. The index gained 6.3 percent this month. China's markets will be shut on Thursday and Friday for public holidays.

The Shanghai index has posted gains every month this year for a 45 percent rally on optimism a 4-trillion-yuan stimulus package and record lending would revive growth.

The CSI 300 Index added 1.5 percent to 2,759.71.

An index of energy stocks on the CSI 300 index has jumped 71 percent this year, the most among the 10 industry groups, as crude climbed.

Shipping companies rose after the Baltic Dry Index gained 5.6 percent on signs China is still stockpiling materials including iron ore. The index tracking transport costs on international trade has advanced almost fourfold since the start of the year, recovering some of 2008's record 92 percent drop.

The Shanghai index's monthly gains this year cap the longest winning streak since the end of May 2007.

Hang Seng soars

Hong Kong stocks rose, with the benchmark index set for its highest close in more than seven months, after the government unveiled HK$16.8 billion of tax cuts, fee waivers and spending to spur growth.

The Hang Seng Index added 893.71, or 5.3 percent, to 17,885.27, its highest close since Oct 2, and its largest gain since May 4.

The benchmark Hang Seng Index has surged 57 percent from a four-month low on March 9 as investors speculated government stimulus efforts worldwide would ease the global economic slump.

Index shows 5th straight monthly gain

 

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120b yuan saved for taxpayers in Q1(Xinhua)​

Updated: 2009-05-27 20:00

BEIJING -- China's tax payers have enjoyed tax reductions of 120 billion yuan ($17.65 billion) in the first quarter, as the country offered cuts to stimulate the slowing economy, Vice Minister of Finance Zhang Shaochun said at a press conference here Wednesday.

China said last November that it would extend its value-added tax (VAT) reform to all industries from January 1, as part of a 4-trillion-yuan stimulus package over the next two years to buttress economic growth.

Premier Wen Jiabao said in March that the VAT reform could see cuts of about 500 billion yuan this year.

Zhang, quoting figures released Tuesday, said the central government had spent 518.9 billion yuan, or 57.1 percent of its 908-billion yuan budget, by the end of April, mainly on projects related to people's livelihood, such as low-income housing.

Mu Hong, Vice Minister of the National Development and Reform Commission (NDRC), at the same press conference repeated his May 6 statement that the central government had allotted 300 billion yuan of stimulus investment, out of the total 1.18 trillion yuan.

The central government said in November it would offer 1.18 trillion yuan towards the 4-trillion-yuan package, the rest will come from local governments and the private sector.

The government said on Tuesday that among the 300 billion yuan, 37.5 billion yuan will be spent on low-income housing, 44.7 billion yuan on education and health care, 34.2 billion yuan on scientific innovation and technological upgrading, 111.9 billion yuan on agriculture infrastructure, forestry, and water conservation in rural areas, 45.8 billion yuan on railways, roads and airports, and 25.9 billion yuan on energy conservation and environment protection.

120b yuan saved for taxpayers in Q1

 

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China allocates $40b for infrastructure investment so far in 2009​

(Xinhua)
Updated: 2009-05-27 14:29

China's central government has allocated 270 billion yuan ($39.7 billion) for infrastructure investment so far this year, a National Development and Reform Commission (NDRC) official told legislators Tuesday.

That amount is part of a planned total of 367.6 billion yuan in the 2009 central budget.

Adding another 30 billion yuan from last year's budget meant that the country had already allocated 300 billion yuan to infrastructure investment since the fourth quarter of last year, NDRC vice director Mu Hong told legislators.

The NDRC is China's top economic planning body.

Mu made his comments during a session on major public investment projects held by the Standing Committee of the National People's Congress, the top legislature.

The money is also part of the 4-trillion-yuan, two-year stimulus plan announced late last year as the economic downturn deepened.

China allocates $40b for infrastructure investment so far in 2009

 

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$32b plan to form new CBDs, aid industry​

By Qiu Quanlin (China Daily)
Updated: 2009-05-29 10:50

The city Guangzhou is to pump 220 billion yuan ($32.2 billion) into boosting its modern service industry.

The local authority has earmarked two areas of the Guangdong provincial capital to be developed into conceptual central business districts (CBDs), it stated in a new development guideline issued on Wednesday.

Zhujiang New Town, Yuancun and Pazhou will make up one district, while Tianhebei Road, Huanshidong Road and Dongfeng Road will be the other. Both will be formed by 2020.

The CBDs will ensure Guangzhou's future as a business hub by boosting development in finance, trade, information technology, exhibition, premium retail and law, the local government said.

With the CBDs as a platform, the southern metropolis will then establish four core services in outskirt districts, it said, with science research and production in Luogang, logistics in Nansha, air cargo transport in Huadu and Baiyun, and the creative industry in Liwan's downtown Xiguan area.

The guideline also set a new goal for the tertiary industry, to increase to 65 percent of the city's gross domestic product by 2015, and 70 percent by 2020.


Related readings:
Guangdong sees slowdown in foreign trade decreases
Guangdong's Q1 industrial growth slows to a crawl
S China province sees drastic surge in Q1 ship exports
Guangdong sees signs of hope




Ding Li, a researcher with the Guangdong Provincial Academy of Social Sciences, said Guangzhou should strengthen cooperation with Hong Kong to further develop its service industry.

"Hong Kong has developed a sound service industrial system and could help improve Guangzhou's capability to host more international service industries," he said.

Meanwhile, the local government has also attached great importance to attracting more multinational and domestic firms to set up headquarters in the city.

A report by its development and reform commission said Guangzhou ranked third behind Beijing and Shanghai among China's 35 major cities in their capability and potential to spur "headquarters economy" growth.

As the country's third largest metropolis for development capacity, Guangzhou boasts a system covering various major industries and intends to develop its "headquarters economy" by drawing strength from its automobile, iron and steel, petrochemicals and other heavy and high-tech industries.

According to the official website of Guangzhou municipal government, there are 12 districts in Guangzhou, namely, Yuexiu, Haizhu, Liwan, Tianhe, Baiyun, Huangpu, Huadu, Panyu, Nansha, Luogang, Conghua and Zengcheng.

http://www.chinadaily.com.cn/bizchina/2009-05/29/content_7952753.htm

 

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$32b plan to form new CBDs, aid industry​

By Qiu Quanlin (China Daily)
Updated: 2009-05-29 10:50

The city Guangzhou is to pump 220 billion yuan ($32.2 billion) into boosting its modern service industry.

The local authority has earmarked two areas of the Guangdong provincial capital to be developed into conceptual central business districts (CBDs), it stated in a new development guideline issued on Wednesday.

Zhujiang New Town, Yuancun and Pazhou will make up one district, while Tianhebei Road, Huanshidong Road and Dongfeng Road will be the other. Both will be formed by 2020.

The CBDs will ensure Guangzhou's future as a business hub by boosting development in finance, trade, information technology, exhibition, premium retail and law, the local government said.

With the CBDs as a platform, the southern metropolis will then establish four core services in outskirt districts, it said, with science research and production in Luogang, logistics in Nansha, air cargo transport in Huadu and Baiyun, and the creative industry in Liwan's downtown Xiguan area.

The guideline also set a new goal for the tertiary industry, to increase to 65 percent of the city's gross domestic product by 2015, and 70 percent by 2020.

Ding Li, a researcher with the Guangdong Provincial Academy of Social Sciences, said Guangzhou should strengthen cooperation with Hong Kong to further develop its service industry.

"Hong Kong has developed a sound service industrial system and could help improve Guangzhou's capability to host more international service industries," he said.

Meanwhile, the local government has also attached great importance to attracting more multinational and domestic firms to set up headquarters in the city.

A report by its development and reform commission said Guangzhou ranked third behind Beijing and Shanghai among China's 35 major cities in their capability and potential to spur "headquarters economy" growth.

As the country's third largest metropolis for development capacity, Guangzhou boasts a system covering various major industries and intends to develop its "headquarters economy" by drawing strength from its automobile, iron and steel, petrochemicals and other heavy and high-tech industries.

According to the official website of Guangzhou municipal government, there are 12 districts in Guangzhou, namely, Yuexiu, Haizhu, Liwan, Tianhe, Baiyun, Huangpu, Huadu, Panyu, Nansha, Luogang, Conghua and Zengcheng.

http://www.chinadaily.com.cn/bizchina/2009-05/29/content_7952753.htm

 

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Guangdong sees hope of economic recovery(Xinhua)​

Updated: 2009-05-31 11:05

Guangdong province, an economic powerhouse in southern China, witnessed a slower decline of external trade, a rally in industrial production and a steady growth in investment against the current global downturn in the first four months of this year.

The provincial statistical bureau said on Saturday that in April, Guangdong's foreign trade value was $47.14 billion, a decline of 18.1 percent from the same month of last year. But the value was 5.2 percent above the March level.

The accumulative trade value was down 21.7 percent year-on-year, but the decline rate was 1.4 percentage points below the January-March level.

In April, the province actually used $1.64 billion in foreign direct investment, up 7.2 percent year-on-year. The growth, the third since February, was 1.2 percentage points higher than the March level. FDI actually used amounted to $5.36 billion for the first four months, up 2.9 percent over the same period of last year.

Between January and April, Guangdong invested 286.87 billion yuan in fixed assets, a growth of 13.7 percent year-on-year. The growth rate was one percentage point above the January-March level.

Guangdong's major industrial enterprises, which saw a big decline in the fourth quarter of last year, realized 117.2 billion yuan in output value in April, up 3.5 percent year-on-year or 6.8 percent month-on-month. The industrial output value was up 2.1 percent year-on-year in the first four months, and the growth rate was 1.2 percentage points higher than the January-March level.

Consumption, another important indicator of the provincial economy, remained robust.

In April, Guangdong's retail sales stood at 112.94 billion yuan, up 14.9 percent over the same month of last year. In the first four months of this year, 16.23 million square meters of commercial housing were sold in the province, up 40.8 percent year-on-year.

Guangdong sees hope of economic recovery

 

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New energy seen as new growth engineBy Fu Jing (China Daily)​

Updated: 2009-06-02 09:29

New energy is the focus of a two-tier program that involves the investment of trillions of yuan to add zip to the economy, a senior official said yesterday.

Liu Qi, deputy director of the National Energy Administration, said new-energy output is likely to exceed the targets set by the nation's overall energy plan (announced in 2006) and the renewable-energy plan (released in 2007).

"We are aiming to make the new-energy industry a new engine of development," Liu said.

Following instructions from the Cabinet, Liu and his colleagues "are working intensely so that the draft will be tabled for approval by the higher authorities as soon as possible," he told China Daily after a press conference in Beijing.

The first phase of the program covers a strategic shift in three years to nuclear, solar, wind, biomass power and clean coal technologies - with investment opportunities worth as much as 3 trillion yuan ($439 billion), he said. Phase 2 encompasses the period up to 2020 and will entail far more investment.

According to energy officials, the existing plan for nuclear energy is likely to expand by as much as 50 percent from the level planned in 2006.

Targets may also be raised for renewable energy, whose target for 2020 was set at 15 percent of total output. The actual figures for capital investment and details of the projects are subject to the central government's final approval, Liu said.


The new-energy program is aimed at not only reducing the economy's energy intensity but also identifying potential high-growth areas and driving forces for future development.

Vice-Premier Li Keqiang, in a policy speech on May 21, described the new-energy industry, which includes energy consumption and environmental protection, as a strategic industry.

Officials said that energy specialists were summoned to Beijing on April 2 and have been working on the new program since.

At the press conference yesterday, Zhang Guobao, director of the National Energy Administration, said a new-energy program would be a driving force in growth once the present fiscal stimulus plan has helped stabilize the overall economy.

Beijing has shown keen interest in the development of the new technological frontier after the US, the EU and Japan unveiled clean energy programs against the backdrop of the global financial crisis.

New energy seen as new growth engine

 

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Purchases of US bonds likely to continueBy Zhang Ran and Li Xiaokun​

(China Daily)
Updated: 2009-06-02 10:36

China may continue buying US Treasury bonds and other dollar-denominated assets even though US government debt yielded the lowest return in three decades this year and the dollar is under pressure, experts say.

The comments came as US Treasury Secretary Timothy Geithner yesterday tried to reassure China that its vast holdings of US financial assets are "very safe", and that Washington is committed to a strong dollar as well as a reduction in the budget deficit.

The US' top finance official also promised "very disciplined" future spending, possibly including reintroduction of pay-as-you-go budget rules.

Geithner, who is in China on his maiden trip as Treasury Secretary, was speaking at Peking University, where he studied Chinese more than two decades ago.

Zhao Quanhou, a senior researcher with the Ministry of Finance, pointed out that "investing in US Treasury bills is an important component of China's foreign currency reserve investments. This type of investment is comparatively safe as the US financial market is the largest in the world and is highly liquid".

"But the timing of purchases is critical. The government should pay close attention to possible fluctuations in the value of the US assets."

Gong Liutang, a professor of Guanghua School of Management at Peking University, agreed, saying that China has limited choices for investing, with US-denominated assets still a "priority" considering overall risk and liquidity.

But they pointed out that China might have to adopt a "de-dollar" strategy if the US failed to restructure its economy by increasing the country's savings rate and reducing its current account deficit.

"In that situation, China will have to speed up the yuan's internationalization and realign the portfolio of its foreign reserves," said Sun Lijian, an expert at Fudan University.

China has turned its huge trade surpluses with the US into the world's largest holdings of Treasury debt.

China now holds about $768 billion of Treasuries as of March.

The government and experts have expressed concern that Washington's mushrooming deficit, generated by massive government borrowing to fuel its economic recovery plan, and the ultra-loose monetary policy will undermine both the dollar and US bonds.

As the media predicted, the Geithner avoided emphasizing repeated US calls for revaluation of the yuan in his speech, mentioning briefly that a more flexible exchange rate regime would spur Chinese domestic demand.

Experts said the move showed Washington's "pragmatic" attitude when seeking help from Beijing.

In his speech, Geithner also backed China for more influence in the framing of international policy.

"China is already too important to the global economy not to have a full seat at the international table," he said.

Though he described the recession as still "powerful and dangerous" in much of the world, Geithner said the global recession seems to be "losing force".

"In the US, the pace of decline in economic activity has slowed ... Households are saving more ... Orders for goods and services are somewhat stronger," he said.

Moreover, the US financial system was healing and it now seemed that the world would avoid financial collapse and deflation, he added.

Geithner spent yesterday in a flurry of meetings with China's top economic team, including Vice-Premier Wang Qishan and the commerce, finance and banking chiefs.

During his meeting with Wang, his Chinese counterpart at the China-US Strategic and Economic Dialogue (SAED), Geithner discussed details of the upcoming dialogue scheduled this summer in Washington.

The US wants to develop relations with China from a long-term and global perspective and handle major economic issues between the two sides under the framework of the dialogue, Geithner said.

Geithner is due to meet with President Hu Jintao and Premier Wen Jiabao today.

Agencies contributed to the story

Purchases of US bonds likely to continue

 

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China may soon revise power goalBy Fu Jing​

(China Daily)
Updated: 2009-06-02 10:21

China will soon announce the revised power supply capacity target for 2020, a senior energy official said yesterday.

Teams of experts and officials are busy reworking the target, which may increase to 1,400-1,500 GW by 2020, said Sun Qin, deputy director of the National Energy Administration. He said speeding up construction of power plants would help stimulate the domestic economy and create more jobs.

The revised target, if approved by the central government, would be nearly a 50 percent increase from the previous goal set by the government in 2006, when it planned to develop 1,000 GW in installed capacity by 2020.

This year, China's power capacity will cross 900 GW and will soon be on par with the US, which has 1,000 GW in electricity supply capacity now.

"To meet the increasing demand for power and face up to the challenges thrown up by financial crisis, we will further accelerate construction of energy infrastructure," Sun said at a news conference held in Beijing yesterday.

Sun, however, did not clarify when the new target would be officially approved. He said China would restructure its electricity supply mix by supporting more investment in nuclear, solar, wind and biomass energy.

In line with the revised target, the ratio of nuclear power to the combined installed electricity capacity will increase to 5 percent in 2020 from 2 percent in 2008. Sun said China's installed nuclear power capacity would increase to 60-75 GW by 2020, from the previous target of 40 GW. It stood at 9.1 GW at the end of 2008.

"All the targets are under discussion and we are drafting the final program documents, which will be submitted to the central government for approval," said Sun.

A senior official with the NEA told China Daily separately that China's highest leadership has called for a revision in the national energy program, in order to help the economy buffeted by the financial crisis.

"The energy infrastructure has seen significant investment and will benefit the industrial chain if it is well developed," said the official, surnamed Ding. She called it a "rational investment area" as China's urbanization and industrialization would continuously expand electricity demand.

China may soon revise power goal

 

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CIC increases its stake in US bankBy Wang Xu (China Daily)​

Updated: 2009-06-03 09:21

China Investment Corp (CIC), the nation's $200 billion sovereign wealth fund, plans to spend $1.2 billion on buying 44.7 million shares of common stock in Morgan Stanley.

Morgan Stanley, the sixth-largest US bank by assets, said last night it was looking to sell approximately 80.2 million shares to raise $2.2 billion in a public offering. That equated to $27.44 per share, an 8.2 percent discount on the closing price on Monday of $29.89 per share.

CIC said in a statement that the purchase raises its equity ownership in Morgan Stanley to approximately 9.86 percent and reduces the bank's overall cost basis and increases its returns potential.

CIC purchased $5.6 billion mandatory convertible securities in Morgan Stanley's common stock in December 2007, representing approximately 9.86 percent equity ownership but its stake was diluted to approximately 7.86 percent after Mitsubishi UFJ Financial Group Inc bought into the bank last October.

Morgan Stanley said yesterday it has not received approval for the deal but it believed that it will satisfy the criteria.

Morgan Stanley received $10 billion as part of the $700 billion Troubled Asset Relief Program, a bailout plan by the US government aimed at shoring up its ailing banking sector.

"Morgan Stanley is widely expected to be able to leverage on its strengthened financial position and will be on the road of resuming its successful trajectory amid the dramatic restructuring of the international financial services industry," CIC said on its website.

CIC was established in 2007 to find better returns for China's massive foreign exchange reserves. It earmarks one-third of its money for overseas investment and two-thirds for the domestic market.

Wang Jianxi, the fund's vice-general manager, said in March that CIC would increase its investment in all classifications, given the global financial crisis had led to a tailspin in asset prices and therefore good investment opportunities.

American Express Co and JPMorgan Chase & Co also announced plans on Monday to raise capital.

CIC increases its stake in US bank

 

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Job growth strong sign of recovery​

By Wang Linyan (China Daily)
Updated: 2009-06-04 09:16

Signaling a recovery in China's employment market, 3.65 million urban residents found new jobs in the first four months of the year, an executive meeting of the State Council presided over by Premier Wen Jiabao said yesterday.

The short-term measures that the country has taken to counter the employment pressures are adequate, said Yang Weiguo, an associate professor at the school of labor and human resources of Renmin University of China.

In the long run, consideration is needed in creating jobs that meet the needs of the country's development, Yang suggested.

China's urban unemployment rate was 4.2 percent at the end of 2008 and 8.86 million urban residents were registered as jobless, according to the Xinhua News Agency.

The government has taken a series of measures to stabilize and increase employment since the second half of last year.

They include expanding domestic consumption, reducing enterprises' tax burden, encouraging graduates and migrant workers to be self-employed and setting up vocational training.

The government plans to allocate 42 billion yuan ($6 billion) from the 2009 central budget to increase employment, up 66 percent from last year, said a statement from the meeting.

However, it pointed out that the employment situation in China is still grim, with an oversupply of laborers and structural problems, as China's economy is not recovering on a solid footing.

Lu Quan, a PhD from the Social Security Research Center in Renmin University of China, said university students and migrant workers are the two main sources of pressure.

Lu suggested employment policies should relate to industry policies.

The development of the service industry would also help create jobs for migrant workers, he said.

According to government figures, 6.11 million new graduates will be fighting for positions this year, along with the nearly one million who have been unemployed since last year.

Yang said most of the university students can find jobs.

"It's just some are selective with what they can get. But they will adjust their expectations along with the change of the labor market," he said.

Enterprises and scientific and research organizations are encouraged to take university graduates.

The government will also encourage the development of small- and medium-sized enterprises and those of the service sector, which will provide more jobs than big enterprises, the statement said.

It said the vocational training plan should be implemented sooner and enterprises should be encouraged to offer skill training for its employees.

"Specialized skills allow these young people to have job choices, but also match the needs of the country's industry development," Yang said.

"Besides, it's more effective to train them at a younger age."

Job growth strong sign of recovery

 

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Minister makes call to go green​

By Li Jing (China Daily)
Updated: 2009-06-05 09:22

A top Chinese minister has a word of warning for the newly rich.

"It is a disgraceful lifestyle to drive a BMW but have only dirty water to drink," said Zhou Shengxian, minister of environmental protection.

In an exclusive interview with China Daily, Zhou said he is concerned about a lack of respect for the environment as the country carries out its economic stimulus plan, which Beijing introduced last November to temper the impact of the global financial crisis.
To coincide with World Environment Day today, Zhou announced he is leading his 200-odd staff into all-out warfare, including a publicity plan to promote green modernization and ensure environmental well-being for the country's 1.3 billion people in a 30-trillion yuan economy.

Fact-finding teams from the Ministry of Environmental Protection recently visited some 40 cities and discovered defects in the 4-trillion yuan stimulus package, which is funding investment in many new infrastructure projects and factories.

Of particular concern, he said, is:

environmental protection not being highlighted in the overall plan;
new industrial operations causing additional environmental problems in China's central and western frontier regions; national environmental protection policies being affected; environmental management by companies becoming more relaxed, and corporate investment in pollution control seeing a marked decline.

Zhou pledged the ministry will use the most stringent measures to ensure the country's green development, especially using its power in the approval and review of new projects.

From November to the end of February, the ministry rejected or suspended approval of 14 polluting and high energy-consuming projects with development budgets totaling 104 billion yuan.

On top of that, ministry officials told China Daily yesterday that due partly to government policing of investment projects, China is fully capable of meeting its goals in the emission control of sulfur dioxide and chemical oxygen demand, a main index of water pollution. The target is to cut emissions by 10 percent of the nation's 2005 level, in line with the goals for the country's 2006-2010 development program.

Controlling those two emissions had only been possible when developed countries' per capita GDP reached the $20,000 level. It is a feat for China to achieve the same when its per capital GDP is only around $3,000, he said.

This is because the country has come to realize that no economic policy can be successful if not matched by sound environmental policy, Zhou said.

Convinced that China can "use the crisis as an opportunity to adjust its industrial structure," Zhou also said he and his staff would keep an eye out for local governments attempting to ignore environmental protection in their investment initiatives.Minister makes call to go green

http://www.chinadaily.com.cn/bizchina/2009-06/05/content_8251884.htm

 

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Merger talks fuel interest in two Shanghai carriers​

By Wang Ying (China Daily)
Updated: 2009-06-05 10:41

Rumors about the impending merger of two Shanghai-based carriers, China Eastern and Shanghai Airlines have been doing the rounds despite denials by managements of both the companies.

This time the rumors have been attributed to a journalist who claims to have overheard China Eastern Chairman Liu Shaoyong confirming the news at a recent dinner party.

The incessant merger news has also had an impact on the share prices of the two carriers. Shares of the smaller Shanghai Airlines rose 0.35 percent to 5.67 yuan in the past three days, while those of the ailing ST China Eastern fell 1.86 percent to 5.27 yuan in the same period.

Analysts said despite the slight fall in China Eastern shares, both companies have gained from the rumors.

"The share prices of the two airliners showed that the market is expecting something big to happen. Otherwise, the two debt-stricken carriers cannot carry such a high price, or we can say they are over-valued," said Yao Jun, industry analyst, China Merchants Securities.

"It is true a merger between the two will be an opportunity for the carriers to get out of the current problems," Yao said.

The idea of merging the two airlines was first broached in 2002 by the Shanghai municipal government, as it was keen on building a superpower local carrier. Although the proposal has been dogged by political and inter-regional complicities, the stock market has never given up its imagination of a super airline based in China's busiest air traffic hub.

The latest merger rumors have been denied by both companies. Luo Zhuping, board secretary with China Eastern, said he has not heard of any new development on the merger front, while Xu Junmin, board secretary of Shanghai Airlines denied any knowledge of an impending merger. "Our airline has been operating normally as usual," he said.

Plagued by fluctuations in fuel prices and falling demand due to the financial crisis, the two carriers have required massive government bailouts.

Falling demand along with hefty losses on hedging contracts saw China Eastern report a net loss of 13.93 billion yuan in 2008, a free fall from previous year's 604 million. Its debt-to-equity ratio hit 115.13 percent by the end of March.

Shanghai Airlines is in no better situation, with its net loss widening to 1.25 billion yuan in 2008 from 2007's 435.12 million yuan. The carrier's debt-to-equity ratio touched 97.26 percent in March.

Analysts said that there are a number of ways that the two carriers could be restructured. China Eastern could acquire Shanghai Airlines or else downsize itself to a local enterprise controlled by the State-owned Assets Supervision and Administration Commission of the Shanghai government. There is a third proposal to merge selective assets of China Eastern and Shanghai Airlines.

The forthcoming World Expo 2010 will provide a golden opportunity for Shanghai-based carriers. If they can produce a win-win merger this time, they can benefit from the surging demand triggered by the expo, analysts said.

Li Lei, aviation analyst, CITIC China Securities, said: "China Eastern currently has a 33 percent share of the Shanghai market, while Shanghai Airlines holds around 20 percent. A merger would guarantee the dominant position in Shanghai for the resultant entity."

Merger talks fuel interest in two Shanghai carriers