11/22/10 Source: Xinhua

The fluctuation range of China’s currency exchange rate can be further broadened to help curb rising inflation, Li Daokui, a member of the monetary policy committee of the People’s Bank of China, said at a forum on Saturday.

“The rapid price rises that the country faces are largely propelled by increasing costs instead of surging demand, leaving room for the Chinese yuan to appropriately appreciate to counter the rising prices of international commodities,” Li said at the China Macroeconomic Forum held at Beijing-based Renmin University of China.

Earlier in October, he said China can afford an annual 3 to 5 percent appreciation of the yuan. “Of course, the pace of the yuan’s appreciation should be based on domestic factors,” he said, adding the country’s reliance on external demand has declined somewhat this year.

He predicted China’s trade surplus would drop from $190 billion in 2009 to $180 billion this year, accounting for 3.5 percent of the country’s estimated gross domestic product (GDP) in 2010, a noticeable reduction from the pre-crisis level of 7.9 percent.

Commenting on another change in the country’s economic growth pattern, he said domestic consumption has started to play a leading role among the driving factors that determine China’s GDP, further reducing the country’s dependence on exports.

Consumption is expected to account for 55.4 percent of China’s GDP in 2010, overtaking investment for the first time as the biggest driver of economic growth, according to a report released on Saturday by Renmin University of China.

“That shows the government’s efforts to shift the momentum of its economic growth from external to domestic demand, especially consumption,” said Liu Yuanchun, deputy head of the university’s School of Economics.

A nominal year-on-year increase of consumer goods sales will reach 18.3 percent this year and maintain a growth rate of 17.8 percent in 2011. “China has stepped into a consumption-driving time,” the report said.

It said the growth rate of China’s GDP will amount to 10.1 percent in 2010, before slowing down to 9.6 percent next year mainly due to monetary-tightening policies, declining external demand, and measures to cool the real estate market and heavy industry.

“The year 2011 will be the most complicated year for macroeconomic management,” Liu said, urging the government to make curbing inflation its top priority next year.

He said the Consumer Price Index (CPI), a key gauge of inflation, is likely to show year-on-year growth of 3.2 percent this year, possibly slowing down to 3 percent in 2011, and that an annual 3 percent increase in the CPI could be expected in coming years.

China’s CPI surged 4.4 percent in October from a year earlier, reaching a 25-month high, according to the National Bureau of Statistics. Some analysts have predicted the figure may rise to nearly 5 percent in November.

The central bank lifted reserve requirements for banks on Friday evening, the second time in nine days, to soak up superfluous liquidity and cage the inflation tiger.

The State Council, China’s cabinet, over the weekend also ordered local governments to take steps to rein in surging food prices, which usually account for one-third of the country’s CPI.

Among the central government’s other recommendations, local authorities were encouraged to boost production to ensure supplies are adequate, while checking irrational demand and punishing illegal activities that push prices up. Reducing the cost of agricultural products and providing temporary subsidies were also urged as measures.

From Dec 1, highway toll stations are forbidden from collecting fees from vehicles being used to transport fresh agricultural products, according to a circular on the central government’s website.

Local governments must also disburse subsidies temporarily and establish coordinated social-security mechanisms that are capable of providing gradual rises in basic pensions, unemployment insurance and minimum wages, the circular said.

Liu said rising vegetable prices could be absorbed by the market in two months, while grain price hikes could be balanced in eight months.

10/14/2010 Source: People’s Daily

Police authorities in southwest China’s Sichuan Province have blamed last week’s mass food poisoning that killed a tourist and sickened dozens on poor management of a local hotel.

“Chefs at the Pearl Garden Hotel in Luding County mistook nitrite for salt while preparing breakfast on Oct. 8,” said Li Zhongming, an officer with the public security bureau in the Tibetan Autonomous Prefecture of Garze.

Dozens of tourists and hotel staff suffered nausea and vomiting after eating porridge, pickles and noodles, Li said at a press conference Thursday afternoon.

A 47-year-old woman from Guangzhou died and 42 others were hospitalized.

A hotel manager confirmed five packs of nitrite were bought in February and stored in the kitchen’s warehouse, Li said.

Nitrite is commonly used to prepare pickles, stewed meat and some other foods in Sichuan cuisine.

“The inventory record showed a chef took out a pack on August 1 to cook a particular dish,” he said.

The chef used some nitrite and put the rest under the kitchen table.

On Aug. 18, all the kitchen staff were replaced, said Li. “The new chefs mistook the nitrite as salt on Oct. 8 which caused the mass food poisoning.”

In subsequent lab tests, the provincial disease control and prevention center found 10.8 grams of nitrite in every kilogram of noodles, and 11.3 grams of nitrite in every kilogram of porridge.

Just 2 to 3 grams of nitrite could be fatal, while health authorities in China considered a maximum 20 mg of nitrite the safe limit in every kilogram of food.

The authorities have ordered the hotel to close pending a full investigation. A spokesman with the local health bureau said the people responsible would be penalized in line with the country’s food safety laws.

As of Thursday, all 42 victims had recovered and been discharged from hospital. Local authorities have promised to compensate them, and negotiations were underway.

Pearl Garden Hotel is near the Hailuogou (Conch Gully) National Glaciers Park, a major tourist attraction about 300 km from the provincial capital Chengdu.

10/14/2010 Source: Xinhua

The People’s Bank of China reported on Oct. 13 the country’s fastest quarterly growth of foreign exchange reserves since the beginning of year, sparking concerns over the possible impact on China’s economy brought by hot money rushing in.

In the third quarter of 2010, China’s foreign exchange reserves rose by 194 billion U.S. dollars, witnessing a much higher growth rate than in the previous two quarters.

Hot money, referring to the short-term flow of money into a country to take advantage of favorable interest rates, is thought to be responsible for the rapid growth in foreign exchange reserves.

“Under the shadow of a global currency war, yuan assets can provide the greatest safety and is the most attractive to international investors,” said Guo Tianyong, head of the China Banking Research Center at the Central University of Finance and Economics.

The value of yuan hit a new high against U.S. dollar Wednesday as the central parity rate of the yuan was set at 6.6693 per U.S. dollar on Oct. 13, according to the data released by the China Foreign Exchange Trading System.

Data from China’s customs showed that the country’s trade surplus in the third quarter was only 65.3 billion U.S. dollars.

Zhao Qingming, a researcher with China Construction Bank, said that the appreciation of the euro against the U.S. dollar was another reason for rapid growth of foreign exchange reserves.

In September, funds outstanding for foreign exchange stood at 289.6 billion yuan, which is around 43.5 billion U.S. dollars, maintaining its upward trend.

“It indicates the accelerating influx of hot money in the context of expectations of a stronger yuan and higher asset prices,” explained Zhuang Jian, a senior economist with the Asian Development Bank.

“The recent rise in bulk commodity prices and housing prices are both signs of the hot money influx,” Zhuang said.

10/12/10 Source: Xinhua

Five people allegedly involved in the attack on Fang Zhouzi, a famous science writer known for his efforts in exposing academic fraud, went on trial Sunday in Beijing, a court said.

Xiao Chuanguo, the behind the scenes plotter, along with four hired attackers, were charged with the crime of “creating disturbance and thus undermining the social order” at the Shijingshan District People’s Court.

The attackers disabled Fang with pepper spray, then hit him with a hammer on a street near his home on Aug. 29. Fang suffered slight injuries in the attack.

They were also charged with being responsible for another attack on Fang Xuanchang, an editor of the financial journal Caijing, on June 24.

Xiao, 55, head of the Urology Department of Wuhan Union Hospital, hired the attackers to take revenge on the two writers as he believed their revelations of his academic frauds led to him failing to become a member of the Chinese Academy of Sciences, police in Beijing said last month after they arrested him at the Shanghai Pudong airport on September 21.

It is so far unknown when the court will rule on the case.

According to China’s Criminal Law, if convicted of the crime the accused could face a maximum of five years in prison.

Fang Zhouzi was born in Fujian Province in 1967. He is well known for exposing bogus research and academic fraud in China.

10/12/10 Source: Xinhua

China has welcomed the final ruling by the U.S. Court of International Trade (CIT) directing the U.S. Department of Commerce (DOC) to scrap its imposition of countervailing duties (CVD) on tires from a Chinese manufacturer, China’s Ministry of Commerce (MOC) said Monday.

The U.S. court ruling on Oct. 1, together with its two previous rulings, showed that the DOC’s simultaneous imposition of CVD and anti-dumping duties (AD) based on the Non-Market Economy (NME) methodology on China’s Hebei Starbright Tyre Co., Ltd was unlawful, according to a statement provided by the MOC’s Bureau of Fair Trade for Imports and Exports.

The U.S. Commerce Department was also urged to correct its behavior on this issue, the statement added.

China had always maintained that the double use of these punitive duty measures infringed on U.S. rules of not adopting anti-subsidy measures against non-market economies, said an official from the bureau, who declined to be named.

It also went against the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures and harmed the interests of Chinese enterprises, said the official.

The U.S. Commerce Department has yet to respond. The court gave the DOC 60 days to decide on an appeal in the Court of Appeals. China will use the ruling to encourage domestic enterprises to use legal means to protect their legitimate rights and interests, the statement said.

The U.S. Commerce Department decided on July 31, 2007, that it would launch AD and CVD probes simultaneously into China-made off-road tires.Further, it announced on Sept 4, 2008, that it would levy duties of 19.15 percent and another duty ranging from 2.45 percent to 14 percent on Chinese tires.

In 2008, China’s Hebei Starbright Tyre Co., Ltd sued the U.S. Commerce Department in the CIT.

The CIT ruled on Sept. 18, 2009, that the duties imposed by the U.S. Commerce Department on Hebei Starbright Tyre Co. Ltd. could cause double counting since “while Commerce may have the authority to apply the CVD law to products from a non-market economy (NME)-designated country, the CVD and NME AD statutes are unclear as to how Commerce is to account for the overlap between the statutes when imposing both CVD and AD duties on goods from a NME country.”

In response to the DOC’s appeal, the U.S. court made its ruling on Aug. 4, 2010, for the second time, which says that the U.S. DOC did not abide by the CIT’s ruling in 2009 and needed to halt the imposition of the anti-subsidy measures on China.

10/08/10 Source: Reuters

Tang Jitian, 42, and Liu Wei, 33, had their license to practice revoked after being accused by the Beijing municipal bureau of justice of “disrupting order in court and interfering with proper litigation procedure,” according to a notice posted on the bureau’s website.

Many Chinese dissidents and rights campaigners say the ruling Communist Party has been imposing tighter controls on lawyers who mount legal challenges to government power.

Over the past decade, a loose network of Chinese lawyers has sought to use litigation mixed with publicity to challenge laws and policies restricting citizens’ movements, rights to protest and powers to challenge official decisions.

Liu told Reuters she planned to appeal, although she said she had not yet received official notification of the decision.

“I don’t think there is much hope. If the government acts illegally, it acts illegally all the way through,” Liu said.

“We’ll try every avenue. If we don’t succeed, we’ll have to accept it. But I believe someday, there will be a reversal.”

Very few lawyers have been willing to represent members of Falun Gong, which was banned in 1999 after thousands of members gathered in central Beijing to protest around the Communist Party headquarters.

Tang and Liu had walked out of a court in southwest China last year, to protest what they said was judicial meddling in a trial of a Falun Gong practitioner. The justice bureau said they had failed to follow the judges’ instructions.

Tang’s telephone was off on Sunday morning. He told Reuters after his initial hearing last month that he had no regrets.

The disbarment follows the brief reappearance in Beijing of prominent rights lawyer Gao Zhisheng, who had disappeared for over a year and who had also taken on controversial cases, including defending Falun Gong practitioners.

Amnesty International has taken up the case of Wang Yonghang, a Dalian-based lawyer who was sentenced to seven years in prison late in 2009 after defending Falun Gong members and challenging the legality of the crackdown in an online article. His license was revoked in 2008.

Over 3,300 Chinese Falun Gong practitioners have died in prison or due to abuse in the ten years of the crackdown, according to Falun Gong.

10/08/10 Source: China Daily

SHANGHAI – The Shanghai municipal government issued a new regulation on Oct 7 that took effect the same day, limiting families to the purchase of one new apartment as the nation tries to curb property speculation and soaring prices.

Beijing introduced the same measure on April 30.

According to the regulation, every household in Shanghai is permitted to purchase only one more commercial residential property as of Oct 7 and anyone found in violation of the regulation will not be allowed to register their ownership of the property.

“Speculation is rampant inShanghai’s housing market. This new regulation will prove to be a timely and effective means of cooling down the housing market,” said Chen Jie, a professor in the school of management at Fudan University who specializes in property research.

According to the regulation, property developers are required to pay value added tax on land, which ranges from 2 to 5 percent.

“This is a strict rule that will effectively press developers to sell their completed projects quicker to increase the cash flow,” said Xue Jianxiong, a senior analyst at the estate agency E-House China.

Chen explained that value added tax on land is based on the property’s sale price. The higher the property is priced, the more tax the developers have to pay.

“In the future, few property developers will put the highest price tag on their products, because that would entail the highest rate of tax,” Chen said.

“So far,Shanghai’s property regulation is the toughest in the nation, which might send a strong signal to the housing market. No speculation is encouraged in the sector,” Xue said.

The regulation stated that the city will take the lead in initiating a property tax in preparation for the official property tax to be launched by the government.

Shen Lu, a multinational white-collar worker who purchased an apartment with her husband two years ago, is pessimistic about the new regulation.

“It’s like a game of cry wolf,” she said. “Every time the housing department announces that it is going to combat housing speculation, the price just soars. If there is solid demand to support the price, no one can solve the problem,” Shen said.

Along with the new regulation to cool down the housing market,Shanghai plans to offer 1 million government subsidized homes over the next five years while it continues to increase the available housing stock.