Chinese Official Says Radical Stimulus Package Needed

Nov. 6 - A senior State official told China Daily that the country will need to implement comprehensive and radical measures to stimulate the economy amid the global credit crisis.

Speaking on the condition of anonymity, the official, who claims to be close to China’s decision-makers, said that only a radical stimulus package can save the country from excessive slowdown.

“Major economic gauges indicate that we have entered into an excessive economic slowdown and need a radical stimulus package right now,” the official said.

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Hong Kong Launches Measure to Support SMEs

Nov. 4 - The government of Hong Kong Special Administrative Region is set to implement the Loan Guarantee Scheme starting November 6 to help small and medium enterprises (SMEs) cope with the global credit crisis.

Currently, ten participating lending institutions (PLI) are qualified to accept applications for the enhancement measures. The sub-ceilings for the Business Installations and Equipment Loans and Working Capital Loans (WCL) will be cancelled in addition to an overall maximum amount of guarantee for each SME to be maintained at HKD6 million.

The maximum guarantee period for WCL will be extended to five years and each SME will be allowed to avail of a guarantee again after full payment of the loan backed by the guarantee.

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China Issues New Law to Oversee State Assets

Oct. 29 - China’s 11th National People’s Congress Standing Committee has approved a law that will allow the management of state-owned companies to prevent their assets from being illegal seized.

The country has an estimated RMB30 trillion worth of state assets. According to China Daily, statistics show that between RMB80 billion to RMB100 billion worth of State assets are lost annually due to mismanagement.

The Enterprise State Assets Law will oversee almost 120,000 state-owned companies. “China has been devoted to the reform of its state-owned enterprises, and there is an urgent need for legislation to safeguard the management of state capital. This is the collective suggestion of many legislators,” Wu Bangguo, the nation’s top legislator, told China Daily. Read the rest of this entry »

China Joint Ventures Rehabilitated? Big Business Thinks So

By Chris Devonshire-Ellis

Oct. 29 - Joint ventures in China have had more than their fair share of criticism over the years. Tales of deliberately cynical Chinese partners, investors being ripped off, and disasters all around have often done the media and blog rounds. Rhetoric of this sort can be found in abundance at blogs such as Seattle-based, American lawyer Dan Harris’ China Law Blog, with articles such as “China – Damn the Joint Venture,” “China Joint Venture Jeopardy,” and “Beware the China Joint Venture,” all of which make valid salient points, but tend strongly towards rejection of them as a legal vehicle.

The debate, which is a long running (and probably never ending) legal and business topic, essentially depends on the type of business category the investor falls into. Small businesses are probably best left steering clear of JVs, unless they either have to utilize them due to regulatory issues, or have the resources to conduct proper due diligence, a point Harris stresses. Larger businesses however can actually find JVs extremely useful. Commentary from this position appears here: “China JV’s offer easier access to China Markets,” “The JV versus WFOE debate – Choosing Between the Options,” and indeed the May issue of China Briefing Magazine in its entirety, “Managing Your Joint Venture Partner,” which is downloadable by clicking on the cover. Read the rest of this entry »

China Pays for Factory’s Back Wages

Oct. 28 – According to a local government official in Guangdong province the government has used more than RMB24 million (US$3.5 million) of public funds to compensate 7,000 former employees of the toy maker Smart Union Group, reports Xinhua.

Xu Hongfei, deputy head of Zhangmutou, said the town government has agreed to shoulder all the laid-off employees from the firm’s two factories.

“The boss is nowhere to be found, so the government is paying the wages owed to the workers,” he told Xinhua.

While the government has agreed to cover back pay, it will not, however, finance any redundancy payments owed by the firm, Xu added

In neighboring, Shenzhen, the city government has so far used RMB3.7 million of pubic funds to cover back pay owed to around 800 workers affected by the closure of Chuangyi Toys Co. Ltd.

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China to Help SMEs Cope with Slowdown

Oct.28 – China’s Ministry of Human Resources and Social Security says it will implement policies to help labor-intensive enterprises and small- and medium-sized enterprises (SMEs) weather the global financial crisis.

The crisis has hit export-oriented SMEs hard and there has been a wave of factory closures and mass layoffs in the country.

According to Xinhua, so far 3,631 toy exporters or 52.7 percent of the industry’s enterprises have gone out of business in 2008 because higher production costs, wage increases and the appreciating value of the yuan.

Those enterprises are major engines fueling employment in China, creating about 70 percent of new jobs every year, Ding Dajian, an expert at the School of Labor and Human Resources at Renmin University of China told China Daily.

He added, “The collapse of such enterprises inevitably means grave job prospects for migrant workers.”

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Beijing Cuts Tax and Mortgage Rates to Boost Real Estate Market

Oct. 23 - In a statement released on its website, the Ministry of Finance, said that starting next week it would reduce taxes on real estate and lower mortgage rates in an effort to boost the slumping housing sector.

The property deed tax will be cut to 1 percent from 3 to 5 percent for first-time homeowners or if the property is less than 90 square meters. The stamp duty and value-added tax on land sales will also be temporarily suspended.Minimum down payments for property will be reduced 20 percent from 30 percent.

“Yesterday’s measures, which mainly address first-home buyers, will only save a tiny amount of money for buyers, and as long as expectations remain that prices will fall, the wait-and- see sentiment will prevail,” said Li Wei, an economist at Standard Chartered in Shanghai, told Bloomberg News.

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New China Briefing Regional Guides Published

27 provinces and autonomous regions, 67 cities and 230 free trade and development zones covered in a new five volume series

Oct. 23 - China Briefing has just published five new regional business guides to China. The books, some twelve months in the making, are the most comprehensive and detailed volumes on China thus far available, the books include: overviews of major first-, second- and third tier cities, profiles of main industries, infrastructure developments and demographics, including local purchasing power capabilities and annual GDP, in addition to details of all main local investment zones. All books are full color, with photos and maps and are available from the China Briefing Bookstore or via sales@china-briefing.com.

Please see below for details. For media, editorial or related review inquiries, please contact marketing@china-briefing.com.

Beijing and Northeast China

Full color, 184 pages

Featuring the provinces of Hebei, Heilongjiang, Jilin, Liaoning and Shandong and the regional cities of Anshan, Beijing, Changchun, Dalian, Dandong, Harbin, Jilin, Shenyang, Qingdao, Tianjin, Weihai and Zibo.

US$25 plus p&p

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China to Raise Tax Rebates on Selected Export Goods

Oct. 22 – China’s Ministry of Finance said tax rebates on selected export products will be raised beginning November 1; to ease pressure on businesses affected by slowing export demand.

This is the second time in three months that China has increased tax rebates for the export industry. Last August 1, tax rebates were increased by 2 percentage points to 13 percent.

The new tax rebate rates will range from between 9 percent and 13 percent and cover 3,486 types of products, or an estimated one-quarter of all exports listed by customs authorities.

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Chinese Exporters Shifting to the Domestic Market

Oct. 21 - Chinese exporters are looking into the domestic market to cope with slowing demand brought about by the global credit crisis, reports Xinhua.

During the Canton Fair, the board chairman of the Jiangsu Hotwind Sauna Equipment, Qiao Guan, told Xinhua that his company was planning to divert some of the business from abroad to the domestic market.

He said that company sales to the United States, which accounted for about 30 percent of its total exports, had dropped by more than 20 percent this year. “We have completed research on the domestic market, which shows some exported goods are affordable and have good sales prospects in the local market,” he added.

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