China Cracks Down on “Small Gold Mines”
Translated by Liu Peng
China recently launched a campaign to crack down on “small gold mines” - that is, secret slush funds containing public money that has been siphoned off by government organs and other public institutions.
The exact number and size of these illegal accounts remains a mystery. Sun Baohou, Auditor-in-Chief at the National Audit Office (NAO) once remarked that it’s almost impossible to know just how many exist in China.
However, he went on to estimate that government organs and public institutions might lock away 82.7 billion yuan in secret accounts every year.
Others speculated that the figure may be as high as 500 billion yuan a year, which corresponds to about 5% of national gross domestic product (GDP).
A directive on regulating and inspecting these slush funds was jointly issued by the Central Commission for Discipline Inspection of the Communist Party of China, the Ministry of Supervision, the Ministry of Finance and the NAO in late April.
This is the twelfth time since the 1980’s that China has launched a crackdown on slush funds. The campaign is expected to last for 8 months.
The directive offers whistle-blowers a reward of up to 100,000 yuan for information leading to the uncovering of secret accounts containing embezzled money.
The Economic Observer learned that the State Administration of Forestry began an internal investigation of its accounts on May 11.
However, some still doubted the efficacy of the project, observing that central authorities lacked the resources required to do a full audit and therefore most administrative units would only be asked to report on themselves.
Chinese Political Parties Voice Up on Unemployment
The first motion presented to China’s top political advisory body’s annual plenary session, which opened on Tuesday, dealt squarely with unemployment.
The motion, entitled “Resolutions on Solving Employment Pressure Caused by the Global Financial Crisis”, was submitted by the China Zhi Gong Party, which has strong ties to overseas Chinese.
It noted that the financial crisis had dampened employment opportunities at a time when college graduates were at a peak in China, and suggested leaders should not look for a quick fix in economic growth, which it said would not necessarily correlate to job creation.
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Other parties had also released proposals related to employment, including the China National Democratic Construction Association (CNDCA) and the China Democratic League.
The CNDCA suggested in a draft resolution that laid-off workers who have returned to the countryside should seize the chance to improve their entrepreneurial skills and work together to found local firms.
A People’s Daily poll online asking readers to vote on the issues leaders should focus on reflected how Chinese have become increasingly anxious about their livelihoods. Health care, food safety, the income gap, and employment topped the list.
Meanwhile, Chinese forums were being bombarded by feedback, with many netizens writing open pleas for solutions to unemployment, a lack of healthcare and retirement benefits, corruption, and other ills that they said hit lower echelons of the society hardest.
One netizen in a China.com forum had this to say to leaders involved in the meetings: “What of the 40, 50 year olds who’ve lost their job, are sick and unable to find new job? They’ve worked their whole lives building New China, and yet we can’t give them what they need to survive? They are not asking much, just enough to get by.
Economic Issues to Dominate China’s Political Consultative Session
China’s top political advisory body opened its annual plenary session in Beijing on Tuesday (March 3) afternoon, with economic issues poised to dominate the nine-day conference attended by over 2,100 delegates nationwide.
Proposing countermeasures to overcome the global financial crisis and the economic downturn would be the main task for the Chinese People’s Political Consultative Conference (CPPCC), said its chairman Jia Qinling in his opening speech.
The CPPCC national delegates comprised of politicians from the Communist Party of China (CPC) and eight other recognized parties in China, leaders of minority ethnic groups, representatives of various social groups and organizations, scholar and experts from various fields.
During the plenary session, the delegates would voice their views and concerns related to a wide range of issues - from legislative, policy making to developmental matters touching on social, economy and politics.
The gathering is also an event to exhibit China’s ethnic diversity, as reps of various minority groups came dressed in traditional costume.
The CPPCC session opened two days ahead of the plenary session of China’s parliament, the National People’s Congress.
These two events, which run almost concurrently in Beijing through March 13, are commonly known as the Two Sessions (Liang Hui) in Chinese. Liang Hui is closely followed by the public and observers alike, as issues brought up in them impact the course of policy making in the country.
In outlining the main tasks for the CPPCC this year, Jia stressed the need to form special task forces to review economic problems and draft suggestions, especially on ways to enlarge domestic demand, maintain healthy economic growth, accelerate industry restructuring, and improve China’s development model.
Also featured in his six-point work schedule was the need for CPPCC to explore friendly ties abroad, including publicity works to improve international understanding on China’s political system.
In the coming days, CPPCC delegates would take turns to present their proposals. Last year, a total of 4,472 proposal were submitted. Among the suggestions subsequently being incorporated into government policies included the ones for micro-loans and funding for rural and agricultural development.
A day prior to the opening, CPPCC spokesman Zhao Qizheng had told a press conference that many delegates intended to raise questions over the four-trillion-yuan stimulus package introduced by the Chinese government late last year.
Proposals expected to touch upon the issue might include how to supervise spending under the stimulus package and avoid redundant projects.
Number Game:China’s Statistics
Numbers Game: Analyzing China’s Macroeconomic Statistics
By Sun Jianfang
The release of China’s April economic data met with conflicting interpretations and suspicion over inconsistencies when released earlier this month.
Although most commentators were optimistic, many government officials started to question the likelihood of a V-shaped recovery and suggested that the economy may remain in the doldrums for an extended period.
When they surveyed business sentiment in March, officials from the National Bureau of Statistics (NBS) reported that the outlook was generally optimistic. However, when they undertook a similar survey recently, the confidence of some businesses had taken a big hit.
Company profits and corporate tax receipts are two of the best indicators of minor changes taking place in the industrial economy. While national tax revenues registered a year-on-year decline of 10.3% in the first quarter this year. In April, revenue dropped further, with a 13.6% year-on-year decline. These numbers show that business is still doing it tough
Despite this, economists generally interpreted April’s numbers as a sign that the economy was starting to pick up. Retail figures and the growth in the amount of fixed capital investment both exceeded expectations, and, although inflation and foreign investment fell, there was a slowing in the pace of the decline.
Others have also noted the large number of inconsistencies in April’s economic figures. For instance, although the rate of growth in industrial value-addedoutput had decreased on the March figure, and the national power output dipped 3.55% year-on-year, down from the 2% drop in March, the fixed asset investment numbers still registered a record high of over 30% growth.
Another example of statisitical inconsistency can be seen in April’s export figures. China’s Customs said the country’s export realized a month-to-month growth of 8.3% in April; however, according to China’s Ministry of Commerce, the indicator was down 5.5% on the March figure.
Others have questioned the money supply data released in May. According to the central bank, by the end of April, broad money supply (M2) gained nearly 26% to 54.05 trillion yuan from a year earlier. However, a source close to the central bank told EO that additional loans before the end of April were no more than 80 billion yuan, but by April 31, the figure suddenly balloned to 600 billion yuan.
Wang Xiaohui, macro-analyst of Sinolink Securities, was also confused with the increase of money supply. “China’s bank’s loans fell considerably in April, meanwhile, the central bank withdrew a portion of the currency from circulation through open market operations. Furthermore, foreign trade surplus ought to have dropped off slightly in April. These three factors didn’t support an increase of money supply in April,” he said.
Although they had common concerns about the accuracy of the statistics, economists held that macroeconomic situation had gradually begun to improve.
Zhang Liqun, researcher of Development Research Center of the State Council, remarked “some people doubted its accuracy when the government announced the value-added for industrial companies registered a year-on-year increase of 8.3% in March. However, judging from the 7.3% growth in April’s value added indicator, the economy has a basis for recovery.”
Dong Xian’an, macro-analyst of Southwest Securities, projected that China’s industrial output would begin to rally in May, and that output would be up 10% year-on-year in the third quarter.
Chu Jianfang, chief macro-analyst at Citic Securities, predicted that the decline of China’s producer price index (PPI) was about to bottom out in the second quarter and would probably begin to bounce back in the following months.
Hua Sheng, an economist, told the EO that judging from the April’s economic indicators, China had been in the early stage of recovery but instability still existed.
Although they agreed on little else, most economists concurred that for the coming two quarters, the economy was stepping out of a deflationary phase.
When questioned by EO on the prospects for China’s economy, a common response from government officials was that “a turn for the better doesn’t mean things improve immediately.” They questioned the likelihood of a V-shaped recovery and predicted that the economy was likely remain subdued for an extended period.
The information excavating from China’s markets
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