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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BEIJING, Nov. 5 - China Briefing officially unveiled its newly published set of regional China business guides last night at the Capital Club in Beijing.

The guides, produced in association with Dezan Shira & Associates, provide comprehensive overviews of all of Mainland China’s provinces and many of the countries first-, second-, and third-tier cities. The guides also include information on regional differences, business factors and economic statistics, location analysis and evaluation, industry summaries, key aspects to consider when setting up businesses, and useful contact information on business organizations, development zones and hotels.

Over 200 people turned out for the event last night for the combination book launch and pr-U.S. election party. The event included door prizes, a raffle featuring several sets of the business guides and an official Barack Obama campaign t-shirt, and special campaign advertisements. (more…)

New president should Heed Bush’s early mistakes with China relations

By Chris Devonshire-Ellis

Nov. 5 - With Barack Obama confirmed as the next president of the United States, eyes will now fall upon China to see how it reacts. While the Chinese media has tended to take a more conciliatory role regarding the American administration in recent years, that was definitely not the case seven years ago when George W. Bush came to power. Despite his father being popular with the Chinese government, rhetoric against Bush began almost as soon as he had taken office, largely in response to his “axis of evil” comments in the 2002 State of the Union. Those remarks, which labeled North Korea as a rogue and dangerous nation, towards a state with which China has long had deep and long standing relationships, were very badly received. With North Korea at the time looking to come out of the dark ages and tentatively embrace change—Madeline Albright had visited Pyongyang in 2000—President Bush’s remarks set back years of Chinese diplomacy in just three words.

China’s media were quick to label the president as “Little Bush,” a term highly demeaning in Chinese, and disliking his foreign policies, describing him within weeks of taking office as a “warmonger” and worse, seeking to belittle him at every opportunity. Come the Hainan spy plane incident, China went to town. Within the space of just a matter of months, President Bush had upset most of the world’s leaders, being seen as provocative, and was forced into an embarrassing climb down and an apology to the Chinese people over the Hainan air crash, in which a Chinese pilot lost his life and the American crew of the reconnaissance aircraft were detained for ten days. (more…)

Nov. 5 - A senior government official says China may revise its value-added tax (VAT) system in 2009 to help lower business costs and help firms cope with the global downturn.

According to China Daily, the government could allow companies to deduct the tax incurred when buying machinery and other capital assets from their VAT bills. If this pushes through, it would decrease business costs by as much as RMB200 billion.

“We are quite likely to launch the overhaul of a VAT system next year,” said Han Yongwen, chief secretary of the National Development and Reform Commission, reports China Daily.

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Nov. 4 - China has issued legislation detailing the comprehensive requirements needed for a company’s internal control framework called the Basic Standard for Enterprise Internal Control.

The legislation was launched by the Chinese Ministry of Finance, the National Audit Office, and all three major industry regulators: the China Securities Regulatory Commission, the China Banking Regulatory Commission, and the China Insurance Regulatory Commission.

It is effective beginning July 1, 2009 and will be initially enforced among listed companies while also encouraging adoption by other large and medium size unlisted companies.

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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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Nov. 3 - The November issue of China Briefing magazine is out now and available for download (click on the image - subscription required however this is complimentary).

With a global recession and domestic downturn in China just commencing, this issue examines lessons learned during the previous Asian Financial Crisis of 1997, SARS and the impact these slowdowns had on foreign invested business in China. We look at managing your cash flow, properly assessing your sales projections, dealing with creditors, and an alternative way to look at the value of the RMB when sourcing. We also examine expanding business elsewhere into Southeast Asia and look at the emerging, and potentially downturn proof markets of Cambodia, India, Laos, Malaysia, Thailand and Vietnam.

In our series on China’s second- and third-tier cities, we focus on Liuzhou in Guangxi and Zhanjiang in Guangdong – both key cities in China’s increasing trade connections with the rest of ASEAN.

Included in this issue:

On the ground in China: Managing cash flow, dealing with creditors, assessing sales projections

On the ground China sourcing: Purchasing power parity, assessing the true buying value of the RMB

Expanding the China market: How emerging Asia will help counter the global downturn

3TC: Liuzhou and Zhanjiang

Nov. 3 - China Briefing has just published five regional business guides to China, and one guide to China’s neighboring countries. To celebrate this book launch, we are holding a Beijing business networking event for China Briefing subscribers, friends, and clients of Dezan Shira & Associates. Come and join us at Beijing’s largest networking event of the year, with complimentary wines, drinks and snacks—and with the U.S. election to be held later that day, some pre-U.S. election style partying and a free draw for prizes!

Date and Time: 6:30pm – 10pm, Tuesday, November 4

Address: Capital Club, Capital Mansion,6 Xinyuan Nanlu,Chaoyang District, Beijing
京城俱乐部 中国北京朝阳区新源南路6号，京城大厦50层

Tel: 8610 8486 2225 ext.0

Non-Subscribers are also welcome to attend, price: RMB 190 (+15 percent) includes free flow drinks and canapés, please RSVP and arrange to pay on the door. (more…)

Nov. 3 - Allan Zeman, the well known Hong Kong-based billionaire responsible for the development of the city’s Lan Kwai Fong area, has renounced his Canadian citizenship and become a naturalized Chinese citizen.

Zeman, who sold his Colby International sourcing business to Li & Fung several years ago, and who made his name in the Hong Kong property market by buying up the then cheap areas around Lan Kwai Fong in the early 1980’s then turning it into an entertainment district in the heart of the city, is currently the chairman of the government-owned Ocean Park facility and has long been involved with Hong Kong and China business investments and governmental consultation. He made the decision because, he says, he “has lived in Hong Kong for 38 years and always considered the city my home.” His government involvement has become increasingly active as a mentor to Chinese officials regarding business affairs since he sold his stake in Colby. “It’s time to solidify my beliefs,” Zeman said. “I really want to be a Hong Kong citizen. I think that if you are working for the government, on behalf of the government, on behalf of its citizens, you should really have a local passport.”

Chris Devonshire-Ellis, senior partner of Dezan Shira & Associates says: “I have known Allan for many years, and not many people know he gave me a lot of advice and support when I was setting up Dezan Shira & Associates back in the early 1990s. He continues to be a bit of a mentor for me, and I know that he has always had the interests of Hong Kong and China at heart. His decision is brave, responsible and typically generous and may well signal a trend that other well placed international executives may consider.” (more…)

Effects of financial storm only beginning to be felt and it will get worse

Nov. 3 – The world’s biggest economies are very likely to post negative growth in 2009 said Zhu Min, the executive vice president of the Bank of China.

Speaking at a conference of Chinese bankers in Shanghai on Saturday, Zhu said that current economic conditions would have a “huge” impact on China. “The financial crisis will technically precede economic and political turmoil by eight to twelve months,” he said.

His comments led to a depressing round of recent statistics and similar comments from respected Chinese academics. China’s Purchasing Managers Index, which is based on a survey of over 700 companies in 20 industries published by the China Federation of Logistics and Purchasing, fell in October to 44.6, down from 51.2 in September. A figure below 50 represents a contraction. Meanwhile, the pace of growth in China fell for the fifth consecutive quarter, and is currently at its slowest rate since 2003, during the days of SARS. (more…)