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EditorialGovt’s rapid responseto earthquake
Editor
Earthquakes fall in the category of natural calamities. No
individual and no government can stop these to hap-
pen. However, it has always been a matter of great im-
portance to see how the respective governments
respond and react to tackle with the aftermaths of such
natural calamities. How the leaders, in different parts of
the world, react to provide immediate relief to their pub-
lic in such situations.
Chinese people have always been very lucky in this
regard. Successive governments, headed by CCP, have
always been proving that how the Chinese leaders feel
for their people and how rapidly and swiftly they respond
in such situation to provide timely and effective relief to
their people. Had it been floods or had there been the
snow storms and earthquakes, Chinese leadership has
always set examples for the rest of the world leaders to
follow as to how to react for public relief in such situa-
tions.
In the last week’s earthquake in Sichuan province,
the Chinese leadership has once again proved its effi-
ciency and sincerity to provide immediate relief to vic-
tims of the natural calamity. Not only this but the efforts
that the Chinese government made to rapidly revive the
economic life in the quake hit areas is also a very remark-
able act. It proves that the Chinese leadership, while
keeping in view the importance of providing immediate
relief to the people in such situations, also has a firm be-
lief in keeping the economic lives of people intact at the
same time.
We think that such an approach towards the peo-
ple’s welfare and towards country’s economic life is the
main reason behind growing economic power of China.
April 29, May 05, 2013
Cover Story
China firm on tighteningtraffic rules
At 8 a.m., one staff member opensthe fare boxes, and distributeschanges and coins to his col-leagues
Despite public complaints, China willcontinue to enforce traffic regulations toensure road safety, according to an of-ficial with the Ministry of Public Security.
04
Counting changes and coinsof 200,000 Yuan every day
06
Products from joint ven-
ture carmaker Qoros Auto
Co make their China
debut at the Shanghai
auto show today as it
showcases new models
designed for the nation's
young buyers.
in this issue
in this issueIFC toexpandwomen'saccess tofinance
Apple seeks to double outlets in ChinaApple has announced its Q2 2013 earningson Tuesday and shared that its retail storesbrought in less revenue this quarter than theprevious one, but is still 19 percent higherthan this time last year
China Mobile's1Q Profit GrowthSlowsBEIJING-China Mobile Ltd. (CHL) said
Monday that its first-quarter net profit
growth slowed as intensifying competition
and growing sales of low-cost smart-
phones hurt profitability.
BoC toraisebusinessoperationsinCambodia’
09 12
04
Society
China firm on tightening traffic rules
BEIJING -- Despite public complaints,China will continue to enforce traffic reg-ulations to ensure road safety, accord-ing to an official with the Ministry ofPublic Security.A nationwide campaign to discouragepedestrians from running red lights hascommenced, and the strict enforce-ment of the regulations has provensomewhat effective, the People's Dailyquoted Wang Changjun, head of theministry's research institute on trafficmanagement, as saying on Wednesday.The campaign also targets "Chinese-style street crossing," in which pedestri-ans cross the road once a large enoughgroup forms, regardless of what colourthe traffic light is. Violators often say thatthey had been waiting for a green lightfor too long or the duration of the greenlight had not been enough to allowthem to cross the road.Under the tightened rules, pedestrianswill be fined if police catch them cross-ing the street during a red light or jay-walking, with the amount varying indifferent cities.The fine is 10 Yuan (1.6 U.S. dollars) in Bei-jing, and 5 to 10 Yuan in east China'sZhejiang Province.Wang said some violators have ignoredthe strict rules and others have refusedfines. Though enforcing the regulationsconsumes a lot of time and energy, thegovernment intends to stick with it."As long as we continue to strictly en-force the regulations and promote edu-cation, there will be less and less'Chinese-style street crossing,'" Wangsaid.The enforcement will continue, andpedestrians are expected to changetheir bad habits, he said.He added that authorities are repairingbroken traffic lights and improvingequipment to allow a reasonableamount of time for both pedestrians andvehicles to cross the road.In some cities, local governments haveestablished "safety islands" in the middleof wide roads, allowing senior citizens totake their time crossing the road, he said.Still, Wang said there is no excuse for vi-olating traffic laws.Agencies
05
China firm on tightening traffic rules
Society
06
Counting changes and coins of200,000 Yuan every dayCED Monitoring
BEIJING-At 8 a.m., one staffmember opens the fare boxes,and distributes changes and coinsto his colleagues. Everyone will re-peat counting over and overagain. According to Hong Qing,head of the counting center, everyworker counts changes and coinsof 10,000 Yuan every day; there-fore, avoiding mistakes is not aneasy task. Counting money untilthey get cramps in hands is no ex-aggeration. Each person will countchanges and coins of 15,000 -
20000 Yuan every day. They willcount much more changes andcoins on holidays.
After counting, they will de-posit the money in the bank. How-ever, the bank will charge fees fordealing with too many changesand coins. To solve the problem,the bus company provideschange service for changes andcoins which is welcomed by thecitizens. "We can find a lot of fakecoins every day and don't knowhow to deal with them," Hong Qingsaid and took the reporter to visittheir store room. In the room, Hong
Qing showed some boxes of elec-tronic game currency and fakecoins to the reporter. He said:"These are fake coins we havefound. We can gather such fakecoins of 70,000 to 80,000 Yuanevery year. Some of these can bemended, others are stored here.Some fake coins have beenplaced here for a decade. Wework very hard, so we hope thatpassengers can be considerate.Don't put fake coins in the box,and try to spread out the banknotebefore putting it into box."
08
Finance
IFC to expandwomen'saccess tofinance
09
BEIJING-
International
Finance
Corporation (IFC)
will manage the
Women's Finance
Hub to improve
their access to
financial services
and promote best
practices, said
the member of
the World Bank
Group in a
statement.
10
Finance
CED MonitoringBEIJING-International Finance
Corporation (IFC) will manage theWomen's Finance Hub to improvetheir access to financial servicesand promote best practices, saidthe member of the World BankGroup in a statement.
The hub is an online platformto help advance access to financefor women entrepreneurs by dis-seminating research and informa-tion on critical issues related to thewomen's market. It will also ad-dress gaps in data, promote col-
laboration in knowledge sharing,and highlight innovation and bestpractices in expanding women'saccess to finance, said the IFC.
"Women-owned enterprisesrepresent significant untappedeconomic potential," said NenaStoiljkovic, IFC's vice president forbusiness advisory services, "It willalso be necessary to expand fi-nancial literacy, leverage bestpractices, and put in place poli-cies and regulations that removebarriers to women's participation inthe economy. The Women's Fi-
nance Hub will provide an impor-tant boost to global effort in theseareas."
More than 200 million smallbusinesses in emerging marketscannot obtain the credit they needto grow and generate much-needed jobs. The challenge iseven more acute for women-owned businesses, which accountfor more than 30 percent of thesefirms. The financing needs of theseenterprises reach about 320 billiondollars a year, according to theIFC's data.
11
More than 200 millionsmall businesses in emerg-ing markets cannot obtain
the credit they need togrow and generate much-
needed jobs.
Finance
12
CED MonitoringBEIJING-The Bank of China is
going to expand its business op-erations in Cambodia after it waslaunched here two years agoand seen rapid business growth,Zhu Shuming, visiting deputygovernor of Bank of China, hassaid.
Speaking at a meeting withChea Chanto, governor of theNational Bank of Cambodia(NBC), Zhu thanked the NBC for
supporting the presence of Bankof China-Phnom Penh Branch,saying that the bank has seenrapid business growth since itwas officially launched here inMay 2011 and opened its firstsub- branch in December lastyear.
He said currently, the bankhas started to make profits fromits business operations andranked the 7th largest bank inCambodia.
"The bank's progress showsthat Cambodia's banking sectorstill has much room to grow," hesaid, adding that the bankplanned to increase its invest-ment in Cambodia throughopening more sub- branches.
He asked the NBC to supportthe bank in its business expan-sion plan.
Chea Chanto pledged sup-port to the bank, saying that thepresence of the Bank of China
BoC to raise business operations in Cambodia’
13
has largely contributed to devel-oping Cambodian economy andstrengthening the banking sys-tem.
He added that the Bank ofChina is playing a vital role inpromoting trade and investmentties between Cambodia andChina.
Earlier in the day, Zhu alsomet with Cambodian DeputyPrime Minister and Finance Min-ister Keat Chhon in order to seek
his support for the bank's busi-ness expansion plan.
At the meeting, Keat Chhonsaid Cambodia and China set atarget last year to boost the bilat-eral trade volume to 5 billion U.S.dollars by 2017. In this sense, heasked the bank to lend more totrade sector in order to help thetwo countries achieve the goal.
He also urged the bank tofocus on rice industry in terms oflending in order to help Cambo-
dian government achieve thetarget of exporting 1 million tonsof milled rice by 2015.
Bank of China is a state-owned public listed bank inChina and is a leading commer-cial bank in the world.
Currently, Cambodia has 33commercial banks, servingabout 1.6 million borrowers and1.9 million depositors, accordingto the NBC.
BoC to raise business operations in Cambodia’
IT
14
Apple seeks to double outlets in China
BEIJING-Apple has an-nounced its Q2 2013earnings on Tuesday andshared that its retail storesbrought in less revenuethis quarter than the pre-vious one, but is still 19percent higher than thistime last year. The com-pany reported that in thispast quarter, its storesgenerated a little over$5.2 billion in revenue, a19 percent decreasefrom Q4 2012.
15
Apple seeks to double outlets in China
Finance
16
17
The company’s retail per-formance was led bystrong sales of iPhonesand iPads. At the end ofthis quarter, it said thatthere were 402 Applestores in the world, with151 outside of the US.Company CFO Peter Op-penheimer said thatApple is on track to open30 new stories and re-model 20 stores in fiscalyear 2013.
This quarter, Apple’sstores saw an average of$13.1 million in revenueper store. 91 million visitorscame to its stories, whichthe company brokedown to be 17,500 visitorsper store per week.
Tim Cook, Apple’sCEO, said during the Q&Apart of the earnings con-ference call that he ex-pects to double thenumber of the com-pany’s retail stores inChina within the next twoyears. This region is anarea that Apple appearsto be placing a lot of itsfocus on — Apple saidthat it had its best quarterever in the country withrevenue of $8.8 billion, in-cluding sales from its retailstores — a 11 percent in-crease year-on-year.
We’re also innovatingin the online store there.China has an unusuallylarge number of potentialfirst-time buyers, andthat’s not lost on us.We’ve seen significant in-terest in iPhone 4 andwe’re making it more at-tractive to first-time buy-ers.
18
Science and Technology
China Mobile's 1QProfit Growth Slows
19
BEIJING-China Mobile Ltd. (CHL) said
Monday that its first-quarter net profit
growth slowed as intensifying competition
and growing sales of low-cost smart-
phones hurt profitability.
20
Science and Technology
The slower rate of growth comes as theworld's largest mobile carrier, with more than700 million customers, is plowing almost $7billion this year into building a new fourth-generation network as it fights to retain su-premacy.
In the first quarter, the company faced"unprecedentedly intense market competi-tion and more apparent substitution of tradi-tional communication business by newtechnologies and new businesses," China Mo-bile Chairman Xi Guohua said in a statement.
Though China Mobile is far and awayChina's largest carrier, profit growth hasslowed in part because the company wassaddled with a proprietary third-generationChinese standard not commonly used outsidethe country. Among other problems, that leftChina Mobile unable to offer popular phoneslike Apple Inc.'s (AAPL) iPhone. As Chineseconsumers have rushed to buy touch-screensmartphones that run on 3G networks, theyhave increasingly bought services from rivalsChina Unicom (Hong Kong) Ltd. (CHU) andChina Telecom Corp. (CHA).
It has also been hampered by a surge inthe use of applications on smartphones,which has hit revenue growth from traditionaltext and voice services. Applications like Ten-cent Holdings Ltd.'s (0700.HK) WeChat allowusers to send voice and text messages free ofcharge, leading many users to make fewerphone calls and send fewer traditional textmessages.
Net profit for the three months endedMarch 31 rose to CNY27.9 billion fromCNY27.8 billion a year earlier.
China Mobile's first-quarter operatingrevenue rose 5.7% to CNY134.7 billion fromCNY127.5 billion a year earlier.
Although China Mobile has attractedmore users to its third-generation services re-cently, analyst Victor Yip with UOBKayHiansaid in a note that it hasn't helped much to liftaverage revenue per user--a key metric forcarriers. In the first quarter, average revenueper user fell to CNY63 from CNY65 in the sameperiod a year earlier.
This is in part why China Mobile has beenworking to sign a deal with Apple to offer theiPhone. In January, Chairman Xi Guohua metApple Chief Executive Tim Cook in Beijingand discussed cooperation, raising expecta-tions that the carrier would soon begin offer-ing the iPhone. China Mobile would be a keypartner for Apple, which faces fierce compe-tition from Samsung Electronics Co.(005930.SE) and other rivals offering smart-phones powered by Google Inc.'s (GOOG)Android operating system.
Since then, the company has said it hasno further updates on the talks with Apple.
21
22
Industry
Alibaba vows to tackle fakes
23
Alibaba vows to tackle fakes
24
CED MonitoringHANGZHOU-Alibaba Group
Holding Ltd, China's biggest e-commerce company, plans tostep up efforts to fight counter-feiting, which the companyhead says is the biggest obsta-cle for its future development.
The Hangzhou-based com-pany will spend "as much as itcan" to tackle counterfeitingproblems on its e-commercewebsites, said Shao Xiaofeng,Alibaba's chief risk officer.
The company will set up acommittee for intellectualproperty rights protection thisyear, which will have Lu Zhaoxi,its new CEO starting on May 10,as head and Alibaba's differentbusiness division leaders asmembers, Shao said.
The effort came after thecompany was removed fromthe United States' yearly list of
the world's most "notoriousmarkets" last year because ofits improvement in reducingcounterfeits.
"I am afraid that somethingwe notice but don't preventtoday will eventually grow intoa cancer for a company's fu-ture development. ... That's whyI think I will surely regret it if wedon't do well in fighting coun-terfeits," Ma Yun, Alibaba'schairman, said at his last newsconference before he officiallysteps down as CEO on May 10.
About 2,000 employees atAlibaba are responsible forprotecting intellectual propertyrights.
Last year, Alibaba dealtwith 94 million items that in-fringed copyrights and handedout punishment 900,000 times, itsaid.
In the first three months of
this year, China's public secu-rity organs have dealt with3,747 counterfeit cases, whichinvolved a total value of 24.2billion Yuan ($3.91 billion), saidMeng Qingfeng, head of theEconomic Crime InvestigationDepartment of the Ministry ofPublic Security.
In December, a report fromthe United States Trade Repre-sentative said that Taobao,owned by Alibaba, "hasworked with rights holders tosignificantly decrease the list-ing of infringing products forsale through its website, andhas committed to continueworking to streamline its com-plaint procedures to further re-duce listings of counterfeitproducts".
Industry
25
26
Industry
China’s Industry facesrecovery fight
27
CED MonitoringBEIJING-The country's industry
is still in a protracted struggle forrecovery and for a shift to betterserve domestic consumers, ac-cording to information providedby the Ministry of Industry andInformation Technology.
In the first quarter, industrysaw 9.5 percent value-addedgrowth year-on-year, slowerthan the 10 percent seen in theprevious quarter, and evenslower than the 11.6 percent inthe first quarter of 2012.
Economists warned that thesector's slower growth may forcethe country to rely more ongrowth driven by capital invest-ment, resulting in an evengreater challenge to its plan torely increasingly on domesticconsumption.
Heavy industry registered 9.8percent value-added growthyear-on-year, while light indus-try saw 8.7 percent and thetechnology industry saw 11.9percent growth.
Xiao Chunquan, a ministryspokesman, said at a news con-ference in Beijing that a moder-ate decline should be seen as anormal phenomenon after in-dustry's rapid growth in the pasttwo decades.
"A slowdown of growth in in-dustrial activities will help easethe pressure on the environment
China’s Industry facesrecovery fight
Automobile
28
and resources. Italso makes room forthe structural adjust-ment of the econ-omy," Xiao said.
He added that theindustrial sectorfaces considerablepressure from a lackof robust growth inconsumption as wellas in the investmentin fixed assets.
Domestic con-sumption growth fell2.4 percentagepoints in the firstquarter from the pre-vious year, while in-vestment growth wason par with that ofthe first quarter oflast year, accordingto the National Bu-reau of Statistics.
In the first twomonths, large indus-trial companies sawtheir combined prof-its rise 17.2 percentyear-on-year, whileprofits from theirmain business linesrose only 5.2 per-cent. Meanwhile,some 20 percent ofthe companies werestill running at a loss.
The GDP of theworld's second-largest economy ex-panded 7.7 percentin the first quarter,and most analystssaid the figure couldrise to about 8 per-cent in the secondquarter.
Song Guoqing, aprofessor of eco-nomics at PekingUniversity, who isalso an adviser tothe central bank,said at a recent con-ference that GDPgrowth in the secondquarter might hoverat around 8.1 per-cent.
Zhu Baoliang, aneconomist with theState InformationCenter, pointed outthat the unemploy-ment rate did not riseto the point that thegovernment had torevise its policyfocus — althoughgrowth will continueto be "very muchdriven by govern-ment-backed invest-ment projects" in thesecond quarter.
The expected shiftin the growth model— meaning growthrelying more on do-mestic consumptionthan government in-vestment or exports— is still a long wayfrom now, he said.
At a recent exec-utive meeting of theState Council, Pre-mier Li Keqiangcalled for more ef-forts to boost domes-tic consumption.
Xiao, the ministryspokesman, said,"Consumption isplaying an increas-ingly important rolein supportinggrowth."
He highlighted therole played by the ITsector in boostingconsumption growth.China's e-commercesector grew 45 per-cent year-on-year to2.4 trillion yuan(384.46 billion) in thefirst quarter.
Wang Tao, chiefeconomist with UBS,wrote in a researchnote that the damp-ening impact of the
29
anti-corruption cam-paign on consump-tion is decreasing,therefore consump-tion will pick up inthe second quarter.
But she also notedthe rapid credit ex-pansion in the firstquarter, accompa-nied by the urban-ization drive, whichwill generate moregrowth in fixed-assetinvestments, espe-cially in infrastruc-ture.
In the first quarter,Chinese banks pro-vided 2.76 trillionyuan in new loans,300 billion yuanmore than in thesame period lastyear.
"China shouldwork out a more de-tailed urbanizationplan," said Liu Lig-ang, chief economistin China with ANZBanking Group."Otherwise theprocess will be ineffi-cient and will en-courage morei n v e s t m e n t - d r i v e ngrowth."
30
Automobile
Peugeot Citroen achievesrecord Q1 sales in China
PARIS -- PSA Peugeot Citroen posted record sales in the first quarter in China by selling 142,000 ve-hicles, up 31 percent from first-quarter of 2012 in a market up 17.5 percent, the French carmakerconfirmed in a statement.The auto company reported the market share of 3.95 percent, a significant growth compared to theprevious year.Since 2009, the Chinese market has been the world's leading automobile market where the com-pany's sales data showed the fastest growth trend seen in 2012, "when unit sales totalled 442,000 foran increase of 9.2 percent in a market up 7.2 percent," the carmaker said.The sales of the Sino-French joint venture products contributed notably to the rising trend as theDongfeng Peugeot-brand sales saw a sharp upswing to hit 24 percent.To further develop the Chinese auto market, PSA Peugeot Citroen and Dongfeng DPCA announcedthe launch of two new models in the second half of 2013: the Citroen C-Elysee and the Peugeot 301.It will also increase production capacity at Wuhan with the inauguration of a third plant in July.In addition, the CAPSA joint venture between PSA Peugeot Citroen and Changan will begin localproduction of the Citroen DS5 in the second half of 2013 at the Shenzen facility, which will offer ca-pacity of 200,000 vehicles per year at full operation.The DPCA joint venture is aiming to expand its Chinese market share to 5 percent in 2015.(XINHUA)
31
Peugeot Citroen achievesrecord Q1 sales in China
Agricluture
32
CED MonitoringSHANGHAI-Products from
joint venture carmaker QorosAuto Co make their Chinadebut at the Shanghai autoshow today as it showcasesnew models designed for thenation's young buyers.
The premieres includeQoros' first production vehicle -the Qoros 3 Sedan - along withthe Qoros 3 cross hybrid andthe Qoros 3 estate conceptmodels.
"Qoros vehicles are morethan a transport tool. They aresymbols of your taste for life,and represent simple, elegantand enduring fashion," saidGuo Qian, chairman and CEOof the company based inChangshu, Jiangsu province.
The company plans to startproduction with the Qoros 3sedan at an initial capacity of
150,000 units. Production could later rise
to 450,000 vehicles a year, ac-cording to an earlier report.
The model will go on sale inChina and Europe in the sec-ond half of the year, said thecompany.
The Qoros 3 aims to com-pete with similar-priced modelsfrom Volkswagen and Toyota.
The company said it plansto roll out a new model everysix to 12 months to build itslineup. The joint venturefounded in 2007 between CheryAutomobile, China's biggestautomaker by sales, and IsraelCorp, the largest holding com-pany in its namesake country,caters to customers striving for"a modern, metropolitan and'always-connected' lifestyle",the company said.
The brand's global debut
last month at the Geneva AutoShow shows the young car-maker's confidence and com-mitment to producing highquality vehicles, Guo said.
"Qoros has sparked greatinterest among distributors anddealers worldwide - especiallyin Europe - that are eager torepresent the brand.
"However, the praise at theGeneva Auto Show was just afirst step on our path to suc-cess," he said.
"We are committed to cre-ating a distinctive auto brandwith quality as our foundation.We will bring top-level productsand services to customers inChina and worldwide."
He said the Qoros 3Sedan's "elegant design andlarger interior space offer first-class specifications and highsafety standards".
New Qoros brand makes China premiere
33
The model - 4,615 mm longand 1,839 mm wide - has a longwheelbase for its class, shortoverhangs, a coupe-like sil-houette, and a roofline thatflows smoothly into the strongrear quarters, according to thecompany.
Designed by a teamheaded by BMW Mini's formerchief designer Gert Hildebrand,"it boasts a powerful overall ap-pearance", the company said.
It is powered by two op-tions in four-cylinder 1.6-litregasoline engines, both featur-ing direct injection and vari-able valve timing to maximizeperformance.
It also has an advanced 8-inch touch screen offering en-tertainment, navigation anddetails about the status of thevehicle. It can even enable thedriver to book services at deal-
ers, said the company. "That's because our target
consumers are open-minded,pioneering, and always 'con-nected' young people whoseek self and social recogni-tion," said Volker Steinwascher,vice-chairman of Qoros.
In addition to the Qoros 3Sedan, the brand also unveiledits concept models, the Qoros 3cross hybrid and the Qoros 3estate."The Qoros 3 cross hy-brid symbolizes innovative driv-ing pleasure," said thecompany.
A crossover that features acompact body, the Qoros 3cross hybrid has a three-cylin-der turbocharged 1.2-litregasoline engine, a 50 kW elec-tric motor above the rear axle,and a second electric motor -an integrated starter generator- between the conventional en-
gine and transmission. The model is equipped with
an intelligent control systemthat ensures seamless transi-tions in power to respond to thedriver and road conditions. TheQoros 3 estate concept on dis-play in Shanghai distinguishesitself with modern functions anddelicate details, according tothe company.
The five-door model has alonger body and larger sidewindows, giving it a sporty anddynamic look.
The model also presents avision of a future especiallypopular with European cus-tomers.
"It is geared towards theneeds of modern families, pro-viding a spacious and versatileinterior space for them," saidthe company.
New Qoros brand makes China premiere
34
Construction
Shanghai mulls new rail link to airports
35
CED Monitoring
SHANGHAI-Shanghai isstudying the construc-tion of an express rail-way to connect its twoairports, an official said.
"We are looking atways of shortening thetime between PudongInternational Airportand Hongqiao Airport,such as building an ex-press route, and thatmeans we will see morebusiness jets arriving,"said Jing Yiming, vice-president of ShanghaiAirport Authority andchairman of ShanghaiHawker Pacific BusinessAviation Service Center.
He was speaking atthe three-day 2013Asian Business AviationConference and Exhibi-tion (ABACE) thatstarted on Tuesday.
According to Jing, ittakes about two hoursto travel between theairports by taking theMetro, and if the newexpress railway islaunched, the timerange will be shortenedto 30-40 minutes.
Business aviationtraffic at Shanghai's air-ports has reached 3,800flights, accounting forone third of the nation'stotal.
China's rapid devel-opment and huge po-tential of business andcorporate aviation alsoattract more players tojoin the market.
Shanghai mulls new rail link to airports
36
Construction
TOO FAST AND TOO SOON?ARE CITIES EXPANDING
CED Monitoring
BEIJING-A great deal of hopehas been invested in the roleurbanization can play in help-ing to drive the nation's nextcycle of economic boom. Buthow can China manage whatno other country has everachieved before, to build somany urban communities insuch a short space of time?
To do things right, PremierLi Keqiang recently said thatChina will have to learn fromother nations' experiences.Now Professor Xue Lan, dean ofTsinghua University's School ofPublic Policy and Manage-ment, joins the discussion bysharing his concerns and re-porting his observations.
China's urbanites outnum-bered its rural residents for thefirst time in history in 2011 andkeep increasing steadily. Withthis achievement, urbanizationhas become a hot topic thatmany hope can be a new en-gine for economic growth.
However, without serioussolutions to address the un-precedented challenges facingChinese cities, these great as-pirations may come unstuck, asthis high-speed urbanization ispartly powered by certain dis-torted mechanisms.
First-tier cities or not, manyurban centers in China sharethe ambition of becoming inter-national, national or regional
37
TOO FAST AND TOO SOON?ARE CITIES EXPANDING
metropolises, playing the roleof financial, industrial or cul-tural centers. Accordingly, theirplanning, infrastructure andpopulation have all scaled up,leading to a greater need forinvestment.
But does a country need somany financial, industrial orcultural centers? This lack ofprovident planning has in-creased the danger of viciouscompetition for investment andthe risk of a waste of resources.
Smart plansPlanning authorities may
gain wisdom from the experi-ence of cities in other coun-tries.
For example, Santa Bar-bara, a small but beautiful cityin California, gives a holisticand peaceful impression. Any-body who has flown to that cityfrom China must have been im-pressed by the simplicity of itsairport, for in China, regardlessof the size of the city, it has toconstruct a grand airport if it isto have one.
The harmony and pragma-tism demonstrated in Santa Bar-bara's city planning is verymuch needed in China's urban-ization, if China is to have fewerstereotyped cities and mini-mize the waste of resources.
Also, opportunities for in-dustries to thrive are never re-served exclusively formetropolises. The headquartersof Hallmark Cards, the largest
Construction
38
manufacturer of greeting cardsin the United States, is locatedin Kansas City, Missouri. Startingfrom this less well-known city inthe midwestern US, Hallmarkcards are now sold all over theworld, and the company hasconsolidated annual revenueof around $4 billion.
Hallmark Cards was notbased on depending on onecity for all its resources andconvenience, but on the pursuitof excellence, and keeping itsresearch and developmentcenter there. Pursuit of excel-lence is part of the city's cul-ture, which has also greatlybenefited a lot of other compa-nies.
Other than the poorly con-ceived and potentially wastefulplans, local governments inChina also have problems intheir hasty moves to promoteurbanization. Projects that takedecades to complete in othercountries are often finished infour or five years.
No hasteHarvard University initiated
a plan for campus expansion10 years ago, when Larry Sum-mers was still its president. Toconstruct new teaching and re-search buildings on the otherside of the Charles River, theuniversity went through severalrounds of communication withfaculty, students and local res-idents, and even set up an ex-hibition room to present its planto the public.
But still, the constructionmay take another 10 years orlonger before it can be accom-plished. While Harvard was inthe process of communication,hundreds of universities inChina have established brand-new campuses and even uni-versity towns.
These hasty developments,while reflecting local govern-ment officials' eagerness tocontribute to the modernizationof our country, also reveal thelimits of their terms of office.
Every official wants to present agood record when their termsof office are over so as to laythe foundation for their nextsteps. The pace of urbanization,however, is not necessarily instep with the officials' terms.
As a result, quality prob-lems, like those revealed in re-cent extreme weather in a lotof Chinese cities, are beginningto emerge. What's worse, thenegative results are far frombeing fully discovered, as thecities' incumbent leaders areusually reluctant to exposeanything negative about theirpredecessors, who are in mostcases their current bosses.
A problem related to thechange of officials is thechange of policies. Very oftenin China, transitions of govern-ment officials also bring abouttransitions of ideas and poli-cies. Although it is necessaryfor policies to evolve as societydevelops, changes, if too fre-quent, only suggest that the ex-isting policies are notforward-looking enough.
In Charleston, South Car-olina, the setting of Gone withthe Wind, many historical build-ings from the colonial era re-main well preserved today, asMayor Joseph Riley's life's pur-suit is to protect the historicalbuildings and preserve thecity's history and culture.
It's perhaps not a coinci-dence that he is one of thelongest serving mayors that isstill in office - he has served 10terms starting from 1975. WhenI was invited to Charleston bythe Board of the Brookings Insti-tution, Riley was our luncheonspeaker. With his soft southernaccent and beautiful Power-Point slides, he spoke on andon, for over an hour, long ex-ceeding the appointed time,until the moderator had to stophim.
The next day, when thegovernor of South Carolinaasked me about my impres-
sions of Charleston, I men-tioned Riley's presentation. Im-mediately the governor asked:"Did he finish it?" We bothlaughed. Behind Riley's unfin-ished presentation was his gen-uine love for the city andpersistence in protecting it,which can be a great source oflearning for Chinese officials.
To advance urbanizationwith good Chinese characteris-tics, the planning authoritiesshould first learn to sort out pri-orities and make hard choices.Since we cannot do everythingand do it well, we had bettermake choices in accordancewith cities' advantages. Onlyby choosing priorities and con-tinuing its development can acity distinguish itself.
The next thing to do is toslow down. It takes time forcontemporary trends to be-come cultural assets, and forexperience to become invalu-able learning. It also takes timefor problems and conflicts to beexposed, and then, to be re-solved. Hasty developmentmay do more harm than goodto a city.
Sustainability neededVital importance should be
attached to sustainability inChina's urbanization drive -sustainability both in terms ofthe environment, and of thesystem. Environment deteriora-tion is affecting not only majorcities, but also many mediumand small cities in China. If thenation's urbanization does notdevelop in a sustainable way, itcould bring more problems andeven disasters to future gener-ations.
Meanwhile, sustainability inurban governance is also im-portant. For example, notenough attention is paid to thepublic finance system. Withouta healthy public finance sys-tem, urbanization will createmore problems than it solves.
It is estimated that thou-sands of millions of rural resi-
39
dents will become urbanites inthe decades to come. It is themission of our generation tomake hard choices, slow downour pace, and achieve sustain-
ability, to ensure the healthydevelopment of China's urban-ization.
Xue Lan is also co-chair ofthe Urban China Initiative
jointly led by the TsinghuaSchool of Public Policy andManagement, Columbia Uni-versity, and McKinsey & Com-pany.
40
Real est
Housing loanrisks still high,says CBRC
41
CED MonitoringBEIJING-Chinese banking
regulators warned that risks re-lated to property loans remainhigh, and vowed to keep a closewatch on such lending this year.
"Pressure from risks posed byproperty loans is still rising. Thesepotential risks cannot be neg-lected," Wang Zhaoxing, a vice-chairman of the China BankingRegulatory Commission, wasquoted as saying by FinancialNews.
He said a high level of liabili-ties has been accumulated by de-velopers, with more than half ofsuch companies suffering fromnegative cash flow in the first threequarters of 2012.
"Defaults on mortgage loanshave increased in some areassince the third quarter, especiallyfor expensive or big properties."
Wang added that the com-mission will improve its supervisionof liquidity risks and require banksto strengthen their liquidity man-agement.
China's property lending ac-celerated in the fourth quarter asthe real estate market recovered,according to central bank data re-leased in January.
Outstanding property loansextended by major financial insti-tutions went up 12.8 percent to12.11 trillion Yuan ($1.95 trillion) atthe end of 2012, 0.6 percentagepoint higher than in previous quar-ter.
According to a survey con-ducted by the China Banking As-sociation last year, nearly 70percent of Chinese bankers ex-pressed worries over the risks thatstem from lending to the propertysector.
A report released by the Inter-national Monetary Fund onWednesday warned China of risksrelated to its rapidly expandingleverage, and said real estate isone of the areas seeing the fastestcredit expansion.
Rising home prices cannotsimply discount the risks lying inproperty loans, said Hu Bin, aMoody's vice-president and senioranalyst.
New home prices increasedby 1.2 percent last month, theeighth rise in past nine months. InMarch, 68 of 70 major cities wit-nessed month-on-month increasesin home prices, up from the 66 inFebruary, according to the Na-tional Bureau of Statistics on Thurs-
day."The previous rounds of prop-
erty control measures from thegovernment have led to consoli-dation within the property industryand the dropping out of some ofthe weakest players, which meansmore tightening would probablyhit bigger ones, and that couldcause much more serious prob-lems for banks," Hu said.
Apart from fending off prop-erty lending risks, the commissionhas also ordered banks to submitdetails of their lending exposure toother financial institutions throughthe interbank market by May 8,China Business News reported onThursday. Such financial institutionsinclude banks, brokerages and in-vestment funds.
The report said the movecame after the Basel Committeeon Banking Supervision suggestedcontrolling interbank risk exposureby limiting exposure to 25 percentof a bank's first-tier capital.
Construction
42
Widening gap betweenhousing supply anddemand
43
CED Monitoring
BEIJING-China has a suffi-cient amount of real es-tate and constructionspace to provide housingfor 120 million people, ac-cording to the NationalBureau of Statistics, 21stCentury Business Heraldreported.
According to the datareleased on April 15, thereare 424 million squaremeters of real estate forsale and 353 millionsquare meters of con-struction area.
Qin Hong, director ofthe Department of Hous-ing and Urban Policy Re-search Center, believesthat the biggest problemin housing developmentis not the imbalance be-tween supply and de-mand, but housingresources.
“Since 2011, the coreof the regulation hasbeen to increase the sup-ply, including controllingspeculative investment,building affordablehouses in order to solvethe conflicts of supply anddemand issues,” saidZhang Dawei, researchdirector of Beijing Cen-taline Real Estate.
“Estimating that it’s100 square meters perhouse, there needs to beat least six months to di-gest the sale of 424 millionsquare meters of housing,
and the 353 millionsquare meters of housingcurrently under construc-tion can provide 3.53 mil-lion houses, so theso-called common senseconclusion of a land andhousing supply shortagecan not be established,”Zhang added.
However, despite theabundant housing supply,the gap between housingsupply and demand inmajor cities is widening.
According to dataprovided by EJU Real Es-tate Institute, since theend of March, the numberof newly built commercialhousing in the 20 largestcities is 72.24 millionsquare meters, the lowestlevel in the last 17 months,and housing stock in Bei-jing unprecedentedly fellbelow 70,000 units.
The current supply ca-pacity of real estate islarge enough, and theaverage housing area isnot small, but there is astructural problem ofhousing supply. So thenext step is to solve theproblem of uneven distri-bution of housing re-sources, Qin said.
“On the one hand, theuneven development ofpublic services betweenthe eastern and the cen-tral and western regionsdrives the housing needsto the more developedregions, hence pushing
up housing prices in thoseregions; on the otherhand, there still existsspeculative investment inthe property market,leading to the imbalanceof the possession of hous-ing resources,” Qin said.
According to the re-quirements of the Ministryof Land and Resources,supply of residential landin 2013 must not be lessthan the annual averagesupply of the past fiveyears.
“The requirement isthe provision of principleand it still needs to be re-fined and differentiated.The key in 2013 is to digestthe abundant housingstocks in the third andfourth-tier cities ratherthan increase the landsupply, otherwise, itwould risk a crash in theproperty market,” Zhangsaid.
“We need to take intothe consideration of theneeds of urbanization tosolve the housing prob-lem. For small andmedium-sized citieswhich have a big housinginventory, the supportingconstruction for industryand employment must beemphasized, or the mar-ket cannot be sustained,”said Liu Xiaoguang,Chairman of Beijing Cap-ital Co Ltd.
Agriculture
44
China’s PoultryIndustry underpressure
45
China’s PoultryIndustry underpressure
CED Monitoring
SHANGHAI-The
unexpected
outbreak of the new
H7N9 strain of bird flu
is imposing a huge
financial strain on
breeders and sellers,
reports Yu Ran in
Wenzhou, Zhejiang.
After being woken in
the early morning by
his 16,000 chickens
crowing in their
coops, Pan Jianjing
was unable to get
back to sleep. Usually
a sound sleeper, the
37-year-old breeder's
rest has been
disrupted by business
concerns. The
46
Construction
outbreak of the H7N9strain of bird flu hasresulted in the bottomfalling out of the marketand Pan hasn't sold achick in the past twoweeks.Pan's 2,000-square-meterfarm, in Tengqiao village,Wenzhou, Zhejiangprovince, an area wellknown for smokedchicken products, hasturned from money-spinner to cash drain.ByTuesday, the nationaland provincial labs hadtested 47,801 samplesfrom 84,444 collectednationwide, accordingto the Ministry ofAgriculture. The 39positive samples takenfrom live poultry alloriginated in themunicipality of Shanghaiand the provinces ofAnhui, Zhejiang andJiangsu, all of whichconfirmed cases of H7N9bird flu.So far, 82 cases havebeen confirmednationwide and 16people have died,according to mediareports.Feeding his chickens
costs Pan almost 3,000Yuan ($485) a day,including about 2,000Yuan for a dozen packsof feed, which cost 150Yuan each. The rest goeson wages and electricitycharges. With no moneycoming in, Pan's loss isexpected to reach morethan 100,000 Yuan withinthe month."I used to make anannual net profit of40,000 to 50,000 Yuan,which covered thefamily's daily expensesand helped to pay forthe gradual expansion ofmy farm. Now I'mworried that I will spendall my savings in just oneor two months," said Pan,the family breadwinnerand father of a 3-year-old son and a daughter,11.The growth cycle of achicken lasts about 60days, which means thatmost of the meatchickens, as opposed tolaying chickens, have tobe sold within twomonths, otherwisekeeping them will resultin a huge waste of food
and money.At present, most of hisroosters are 40 days oldand need to be soldwithin 20 days tominimize the losses,which are rising daily.By Monday, the lossesexperienced by poultry-related businessesnationwide hadreached more than 13billion Yuan, accordingto estimates provided bythe National PoultryIndustry Association.Unsold baby meatchicks have so far costbreeders more than 3.7billion Yuan."I have no option but topray that the scandal ofthe H7N9 virus will becontrolled as soon aspossible. That wouldsave us from a severedilemma," said Pan.Meanwhile, YeGuowang, who owns achicken farm in thesame village as Pan, iswasting money everyminute on feeding10,000 chickens that areready to be sold."Most of my chickenshave stopped growing,but they are still eating a
47
Construction
48
large amount of feedevery day, which is awaste for me," said 63-year-old Ye, who hasseen his businessexpand over threedecades from a fewdozen chickens toaround 20,000 on hisfarm at any giventime.Ye added that it iscommon to have afew cases of bird flu inthe hennery everyyear, especially atspringtime, but theunexpected newH7N9 strain haswrought hugedamage on thepoultry industry.The outbreak hasbrought the industry toa standstill; fewconsumers are willingto buy poultry-relatedproducts, which hasresulted in a sharp fallin the prices ofchickens and ducksand even eggs."The price of anordinary meat chickenhas dropped from 12Yuan a kilo to four, butstill no one wants tobuy, even at such alow price," said Ye,who spends around2,600 Yuan a day
keeping unsoldchickens on his farm.To ensure his chickensare healthy and safeto be sold at themarket, Ye has to treatthem with a vaccinetwice a month toprevent the variousstrains of bird flu andother infectiousdiseases."I will have to buy morevaccine for thesechickens in around aweek, if the demandfor chicks stays atzero," said Ye, whousually earns a profit ofaround 1.5 Yuan foreach chicken sold.Compared with YeGuowang, Ye Enlin,the managing directorof the Wenzhou Minxinpoultry cooperative inthe village is sufferingmuch greater losses;he has signedagreements to buy 5million chickens a yearfrom 80 henneries inthe cooperative.Three days ago, YeGuowang, also amember of WenzhouMinxin poultrycooperative, put10,000 chicks in the hothouse, where thetemperature is
constantly maintainedat between 33 C and35 C. The chicks weresold to thecooperative as part ofan agreement signedin January, so hehasn't lost any moneyon them yet, but thatmay change if theoutbreak doesn't endsoon."I signed theagreement to buythose chickens, so I amfacing double thelosses of farm owners,"said Ye Enlin, who haslost more than 10million Yuan in salesduring the past month.Ye has slaughteredand frozen a fewhundred matureroosters in the hope ofselling them in two orthree months, as ameans of minimizinghis losses.And it's not just thebreeders who aresuffering; poultry sellerswho've been forced toclose their stands atagricultural producemarkets are waitinganxiously for an end tothe outbreak, but thecases keepappearing.
