BIZCHINA / Weekly Roundup
Quick review: May 29-June 4
(China Daily)
Updated: 2006-06-05 09:34
Land allotment
The Ministry of Land and Resources said last Wednesday that a ban on land
allotment for building villas would be strictly implemented, in order to
further support recent government moves to cool down the property market.
The ministry urged governments at various levels to immediately halt the
approval of land for villa construction and commence structural
adjustments of the land supply.
Although a ban on land approval for villas was imposed three years ago,
when Beijing was attempting to slow the rise of several macro-economic
indices, nationwide implementation has been inconsistent.
Property policy
The State Council, China's cabinet, has decided to significantly tighten
the rules on mortgage down payments and housing transactions, in an
effort to cool down the country's overheated property sector.
A statement issued last Monday said that as of June 1, the minimum down
payment for a new apartment larger than 90 square metres would be raised
from 20 per cent to 30 per cent.
The ratio for an apartment smaller than 90 square metres will remain
unchanged at 20 per cent, in order to cater to the needs of middle- and
low-income groups, the State Council said.
Excessive investment, loans
The People's Bank of China, the central bank, last week warned of
excessive investment and loans throughout the country, and pledged it
would take active measures to curb this trend.
China's financial institutions granted 1.26 trillion yuan (US$157.5
billion) in loans in the first quarter, up 519.3 billion yuan (US$64.9
billion) from the same period last year, according to the central bank's
quarterly monetary policy report.
The country's outstanding loans had grown 14 per cent year-on-year to
21.9 trillion yuan (US$2.7 trillion) by the end of March. The central
bank attributed this growth to a surge of fixed asset investments based
on a flood of new construction projects in the first quarter, as well as
commercial banks' increased willingness to lend, due to improved capital
adequacy.
Electronic system
China plans to introduce an electronic system for trading
dollar-denominated bonds, as a means of developing a domestic market for
foreign-currency debt securities.
The China Foreign Exchange Trade System and the National Interbank
Funding Centre markets for trading foreign currencies, bonds and other
related securities said they are preparing to offer the system to their
members in Shanghai. The statement, posted on their Chinamoney website
last week, did not provide any further details.
The country is now promoting a foreign-currency bond market, so local
banks can use US dollars, rather than sell them to the central bank.
Auto sector measures
China will introduce measures to trim overcapacity in the auto sector and
promote local brands, the industry regulator said last week.
Sources from the National Development and Reform Commission said annual
sales for all carmakers in China must reach four-fifths of their
manufacturing capacity if they want to build plants in other cities.
All new vehicle manufacturers will also be required to produce
Chinese-brand vehicles, sources said. If carmakers intend to invest in
different product categories from their current offerings, these should
include domestically developed brands.
Oil plan
Shanghai Futures Exchange, the country's only exchange for metal and
energy contracts, has developed an ambitious plan to introduce new
oil-related products that meet the needs of heavy energy users such as
power companies and airlines. The new strategy was issued in response to
wildly fluctuating international oil prices.
The exchange is also contemplating measures to open the futures market to
more financial institutions and foreign investors.
Increasing consumption of oil and other raw materials to fuel China's
rapid economic growth, particularly copper, is widely seen as having a
direct influence on world prices.
Northern development
Vice-Premier Zeng Peiyan last Tuesday said that development of Binhai New
Area in North China's Tianjin Municipality must be accelerated.
"Development of Binhai New Area is a task of strategic importance in
China's overall economic and social development. Its development will
promote the growth of Beijing and Tianjin, Hebei Province and areas
around the Bohai Sea," Zeng said at a meeting organized by the State
Council to promote the zone's development.
Binhai New Area should become an open gateway to China's northern
regions, a modern manufacturing and research base, and an international
shipping and logistics centre, he said.
Gov't auto purchases
The government is expected to spend 70 billion yuan (US$8.75 billion) to
purchase vehicles this year, said an official with the China Machinery
Enterprise Management Association.
Zhu Jinping, the association's deputy secretary-general, revealed last
week that the Ministry of Finance had earmarked 300 billion yuan (US$37.5
billion) for government procurement this year, with 70 billion yuan
(US$8.75 billion) assigned to vehicle purchases.
Government expenditure on vehicles has grown steadily in the last three
years, from 35 billion yuan (US$4.4 billion) in 2003 to 60 billion yuan
(US$7.5 billion) last year.
Tax breaks
In accordance with international practices, the government is considering
tax breaks for charitable donations, the Ministry of Civil Affairs said
last week.
"We are negotiating with taxation and financial departments to set up a
new tax reduction system for donations," said Jiang Li, vice-minister of
Civil Affairs.
According to the current tax law, corporate donations can be exempted
from income tax only when the amount is within 3 per cent of a company's
annual revenue; the ratio is 30 per cent for individuals. This means that
the more one donates, the more tax they have to pay.
"New policies will encourage companies and individuals to donate," Jiang
said.
Agricultural exports
The Ministry of Commerce last Monday urged exporters of domestic farm
products to strengthen food inspections, in a bid to deal with Japan's
new law on food imports.
The Japanese Government said the "positive list system" law, which took
effect last Monday, includes new tests for pesticides and other
chemicals. The law is aimed at improving the quality of imported food and
banning the excessive use of fertilizers and pesticides on agricultural
products.
(For more biz stories, please visit Industry Updates)
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