Monday, August 30, 2004

A quick vent: although I appreciate Premier Wen's effort to introduce more equality to Chinese society, he, like Zhu, has given in to the temptation of using state capacities left over from the planned economy to accomplish current policy goals, thereby delaying reform. Recently, the PBOC and the CBRC ordered banks to provide student loans to students from poor families. While that is commendable, why is the Chinese government still ordering commercial banks to do its bidding. Why not set up a special fund in the MOF to do this? Why not ask the State Development Bank to do this? True, the reach of the Big Four is still the widest in China, but the MOF can still hire the Big Four banks to manage this special student loan fund. I think a lot of NPL will come out of this...sigh.....

Tuesday, August 31, 2004Banks told to make student loans a priorityLenders threatened with punishment if they don't take step 'central to stability'
Prev. Story Next Story

Parents wait outside a Beijing school as their children take university entrance exams. Only 5 per cent of students have taken out loans. Reuters photoMainland banks have been urged to offer education loans to poor students starting university next month, with authorities saying the issue is central to the social stability and training requirements of the nation.
China's central bank and the China Banking Regulatory Commission told lenders at the weekend they were to treat student loans as "an important task to guarantee the smooth entry of poor students into universities".
Central bank branches and commission bureaus at all levels were told to recognise the importance of the loans policy, while commercial bank headquarters were urged to encourage provincial branches to extend the credit.
"Commercial banks should not set any restrictions on state education loans," the notice said. "Those failing to make timely student loans in line with state policies and regulations will be investigated and dealt with strictly according to law."
The notice was apparently prompted by recent media reports that several parents who could not afford school fees and were denied loans had resorted to dramatic measures.
Earlier this month, a mother in Jilin province hanged herself after her son was told he had been accepted into a university. It is understood the mother - 48-year-old Zhao Liqin , who suffered from a chronic disease - killed herself because the family could not afford to pay both her medical bills and her son's tuition.
Zhou Hongling , head of the Beijing New People's Education Research Centre - a non-governmental research group - questioned whether the central bank and the commission could make such a demand.
"The authorities have no legal right to order commercial banks to do this - they are not the administrative superiors of commercial banks," Mr Zhou said. "So it is not known whether the notice will work."
Subsidised loans for university students were introduced in 1999, when the government ended full college subsidies and higher education costs started to soar. Tuition fees shot from several hundred yuan a year in the 1980s to as high as 8,000 yuan at some top universities.
Most banks suspended loans at the end of last year because of defaults on more than 20 per cent of borrowings.
Three years ago, the central bank blamed the defaults on an unsound social credit-rating system, students relocating after graduation, and the banks' poor ability to trace loans.
But demand for financial support is huge. A survey of 20 universities carried out last year by the China Foundation for Poverty Alleviation found that about 20 per cent of university students needed financial support.
The mainland has 16 million university students, but by the end of March, only 5 per cent had taken loans.

Keep up the great work. Enjoyed your blog. I specialize in industrial property loan
Nice blog. Please check out my nonprofit debt consolidation blog. It is all about nonprofit debt consolidation.
Hey, you have a great blog here! I'm definitely going to bookmark you!
I have a free debt consolidation services
site/blog. It pretty much covers free debt consolidation services
related stuff.

Come and check it out if you get time :-)
I like your blog. Check out my free bankruptcy form blog.
Post a Comment

Tuesday, August 24, 2004

There is a very interesting SCMP article on the D'Long saga. According to the account, we see Zhu's technocratic team stepping in to fix the whole mess. Wu Xiaoling, still just the deputy governor of the PBOC, and Xie Ping, newly appointed to the head of risk department at the PBOC, are taking charge of the bailout. Sigh......sometimes I do miss the good ol'days with Zhu. We certainly would be hearing colorful stories of Zhu screaming at the CBRC or PBOC for failing to catch such a major scandal by now.

Tuesday, August 24, 2004RESTRUCTURINGD'Long officials placed under house arrest Founder returns to help regulators save the technically bankrupt conglomerate
MARK O'NEIL in Shanghai
Prev. Story Next Story

The president of troubled D'Long group and several of his top managers have been placed under house arrest and the authorities are preparing the biggest debt-restructuring package since the 1998 collapse of Guangdong International Trust & Investment Corp.
Tang Wanxin, the president of D'Long Strategic Investment, and other directors of the firm are being held at home in Beijing, according to banking sources and Caijing magazine.

They can hold meetings, including those of the company board, but only with approval and under official supervision.
Other D'Long group officials arrested included He Guipin, the chairman of Jinxin Trust in Urumqi; Li Qiang, a vice-president of the group; and Wang Haiqin, a manager at Kunming Commercial Bank, the sources said.
D'Long executives could not be reached for comment.
"Their office is closed and no one is coming to work. There used to be 200 to 300 people working here. The office has been disbanded," said a man who claimed to be a security guard.
"Court officials have come here to investigate but we have not had investors coming here to demand the return of their investments."
The debts of D'Long Strategic, a private company set up by Tang and his three brothers in 1986, run into billions of yuan, owed to thousands of individual and corporate clients of the 21 financial institutions it owns and creditors of hundreds of other companies.
The D'Long crisis broke in April when creditor banks demanded repayment of loans.
As the most important of the four brothers, Tang was put on a police wanted list to prevent him fleeing the country. But Wang escaped to Burma in May, and many thought he would not return.
However, he flew back to Beijing on July 18 and was met at the airport by Xie Ping, a director of the stabilisation bureau of the central bank.
It is not clear what persuaded Tang to return but the official explanation is that the authorities told him that he was the only person who could unravel the company's complex organisational structure and debts.
Another possibility is that, as a close ally of Beijing, Burma helped to track down Tang and left him no alternative but to return.
Since then, he has met officials of the central bank, China Banking Regulatory Commission and China Securities Regulatory Commission to help form a rescue package.
In June, the government set up a committee to deal with D'Long's debt, headed by Wu Xiaoling, a deputy governor of the central bank, Mr Xie and representatives of the 15 major creditor banks.
Bankers say that D'Long is technically bankrupt, with liabilities far exceeding its assets, but the government dares not let it enter bankruptcy due to the effect on other firms and the anger this would provoke among individual investors.
A rescue could take the form of new loans from the central bank or creditor banks, to keep the group afloat and allow the sale of its assets to raise money. Another proposal is to hand over D'Long to Huarong Asset Management Corp and give it the job of selling its assets. Huarong is one of four asset management firms set up to take over bad debts of the Big Four state banks.
In the past, it has been policy to give priority to individual investors, especially of financial institutions.
Bankers estimate that since the end of 2002, mainland financial institutions lent up to 30 billion yuan to D'Long firms.

Comments: Post a Comment

Monday, August 23, 2004

Okay, back to some financial matters. A reporter called to ask me about the PBOC bailout of D'Long Group. I ended up having quite a few things to say. Here are the basic facts of the D'Long affair. First, D'Long is a private holding company started by the Tang family in Xinjiang. It began acquiring controlling shares in privatized dairy and food SOEs. In recent years, it expanded into financial services with the acquisition of minority shares in several city commercial banks and joint-stock banks. It also owns its own trust and investment company. Through a complex web of loan guarantees, loans, and shell companies, the group as a whole came to owe various banks some 20 to 30 billion RMB. In recent months, the Central Banking Regulatory Commission stepped up its investigation of D'Long, and after protestors blamed Bank of Communication for helping D'Long subsidiaries sell bad investment vehicles, D'Long became the focus of several central investigations. So, yesterday, instead of announcing the bankruptcy of D'Long, a fate that should befall on this Enronisque company, the PBOC announced a 15 billion bailout of the company. In this bailout, the Huarong Asset Management Company, originally set up to bailout state banks, would take over controlling shares of D'Long. Huarong would receive 15 billion in "relending" from the PBOC to help restructure the company. In the long-run, Huarong is expected to sell D'Long to private investors. Why?

I strongly suspect that the real motivation behind this bailout is, as always, to avoid a sudden surge in NPL ratio and to prevent a potential financial crisis from breaking out. Without knowing what would have happened had the PBOC not bailed out D'Long, it is difficult to say whether the PBOC did the right thing. On the one hand, the D'Long bankruptcy would mean at least 30 billion in new NPLs and perhaps more. Its complicated web of loan guarantees and triangular debt could destabilize the balance sheets of many of companies and banks, perhaps triggering a financial crisis that results in even more NPL. Most alarmingly, real deposit interest rates are currently negative, meaning that depositors are already a bit dissatisfied with leaving their money in the banking sector. A major financial scandal accompanied by illiquidity problems in several of China's smaller banks can trigger a local, if not national, bank-run. A PBOC bailout means that D'Long will continue paying interest to all of its creditors, and no new NPL will appear on their books. A potential financial crisis is thus prevented. On the eve of the 4th plenum, the last thing that Wen and Hu need is a major financial crisis.

On the other hand, this bailout sets a really bad precedence for other dubious private groups. the message basically reads: feel free to rack up a lot of bad debt; as long as your bad debt threatens the national economy, we will bail you out. True, the CEO of D'Long will likely go to jail, but investors in other private companies might encourage the management to take higher risks.

Some side commentaries: 1. The fate of the D'Long group shows the remaining problems with privatization. Because of D'Long's numerous connections and lax regulatory enviornment, the private firm still essentially faced soft-budget constraint. Even though it bought a lot of privatized SOEs, it is unclear whether the profit generated by these SOEs is "real."

I think this case on balance makes the CBRC looks bad. It had been aware of the D'Long problem since its formation in late 2002. Yet, little was done until the BOCO protests. Meanwhile, D'Long was allowed to set up more shell companies, raise more money, and get more loans. I fear more of this to come.

Comments: Post a Comment

Thursday, August 19, 2004

In the newest issue of Qiu Shi, the central committee's flagship magazine, former premier Li Peng penned a memorial for Deng Xiaoping. Needless to say, it is politically charged. Several China scholars have already pointed out that the article tried to shift the blame for the Tiananmen Square Massacre to Deng and "veteran comrades in the party." However, there is also another politically poignant point made in the article. He writes: "现在中国的许多地区又出现了缺电现象,成为发展经济和保证人民生活的制约因素。我坚信只要遵照当年小平同志加快电力建设的思想去做,电力一定会进一步搞上去,缺电现象一定能尽早得到克服." This translates to "currently, there is energy shortage in many places, which constrains the development of the economy and the livelihood of the people. I firmly believe that if we strictly follow Deng's wishes to accelerate the construction of electric capacity, we will improve the situation in electricity and will soon conquer the phenomenon of electricity shortage." Of course, as the former energy czar of China, he has a great interest on the issue. But perhaps this comment also implicitly criticizes the current Premier and Zhu Rongji for failing to pursue electricity policy according to the wishes of Deng.

If so, Jiang might be using Li to deal a blow on Wen Jiabao, probably in an attempt to stop the "anti-corruption storm" still brewing in China. According to several press accounts, Li Peng has been trying to publish a book to clear his name of Tiananmen for some time now, but the Politburo has rejected Li every time. Although this is not a full account, Li is at least allowed to whitewash his name somewhat. The tradeoff might be to include some criticism of Wen's electricity policy. As a relatively new Premier, electricity problem clearly isn't the fault of Wen alone, so implicityly, Zhu is also to blame.

Some readers have suggested that I am too speculative, but well, that's what you get in a blog. This is not Reuters.


















Comments: Post a Comment

Tuesday, August 17, 2004

A reader recently wrote a very interesting note to me. He first questioned whether Zhu still has any influence. My response was:

I think Zhu still has more pull than his lack of public appearances would suggest. The anti-inflation drive in April, especially the way that it was carried out, has Zhu's stamp all over it. At the very least, Wen clamped down tightly on inflation only with the expectation that Zhu would support him.

The reader further points out that Wu Guangzheng, the head of the CDIC, was touring Fujian between August 13th and August 17th! Wow! What an amazing coincidence. Huang's editorial came out on the 13th.

My excited response: Your observation about Wu Guangzheng is right on spot. I think you are right that Wu's visit might have directly or indirectly prompted Huang to write the letter. If it is the former, then Huang is indeed trapped in web of elite politics.

Further thoughts: I was going to look up the RMRB for the official press release of Wu's visit. Guess what? The title of the article is there, but when I clicked on it, the article has been removed!! What's the deal. Okay, so according to unofficial sources, Wu Guangzheng is now in Fuzhou looking into things, but so is the private secretary of former Fujian party secretary Jia Qinglin (Kong Xuewen)!! What a mess!

Zhu would appear to be enjoying retirement with grace.

The "anti-inflation drive" is a mis labelling. It was a cooling down of the hot sectors, steel, aluminium smelting, cement and real estate. These contribute zero to inflation.

Inflation of around 5% was driven by high grain prices, which will come crashing down when the bumper harvests come in in the next month, which will be the real driver of reduction in CPI.

Wu Guangzheng and Jia Qinglin are closely aligned and do not deviate from the Hu/Wen line; there were strong differences regarding the cooling measures, but the attacks came from outside the politbureau.
Post a Comment

Monday, August 16, 2004

So, finally, we have a sad, but expected, ending to the Huang Jingao affair. As many of you know, Huang Jingao, a county chief from Fujian, wrote a letter to the People's Daily on the 13th detailing the corruption and, more important, the official tolerance of it in Fujian. After the letter was posted for one day, the Central Propaganda Department ordered the RMRB to remove it. So, what's going on here? Does this have to do with the Jiang-Hu-Wen struggle? Of course, I would say yes, but I am biased.

Let's look at the evidence here. It seems that this is a perfect example of a provincial level struggle festering up to the central level. Song Defu, a long-time Hu Jintao protege from their days in the CYL, was party secretary of the Fujian government between 2001 and 2003. During the period under discussion, from 2002 to 2003, Song Defu served as provincial party secretary, but Huang's immediate superior, the party secretary of Fuzhou city, was (is) He Lifeng, who has close ties with Fujian's previous party secretary, Xi Jinping. Several unofficial sources also suggest that He Lifeng is extremely corrupt, with a vast network of supporters in the region. This might be behind the "resistance" faced by Huang all along. In the letter, Huang recounts an event on 12/02 when a special investigation committee organized by the Fuzhou City Committee determined that there was only 3 million in questionable funds, where as Huang estimates that the amount to be hundreds of millions. Despite likely resistance from He Lifeng, other "city leaders" supported Huang's effort. Those others might be the relatively clean element in Fuzhou and/or those who are closer to Song Defu, the serving party secretary at the time.

But according to the letter, at the end of 2003, the party secretary of Fuzhou, still He Lifeng, suddently gave Huang permission to further pursue the case. Why? A quick google search reveals that in mid-2003 a huge corruption case broke out in Fuzhou, which threatened to topple the city government. An infamous drug dealer and money launderer in the city named Chen Kai was arrested earlier in the year. By June, 8 senior officials in the city government were arrested for receiving bribes from Chen. Obviously, since He Lifeng was party secretary of the city all along, there is little chance that he was not a part of the Chen ring. Under pressure from the provincial government and possibly the central government, He might have made a show of pursuing the highway case (which Huang was investigating) to take the heat off himself on the Chen Kai case. The Chen Kai case was far more serious than the highway case. His tactic worked. He saved his job, and Chen Kai was rumored to have "committed suicide due to a guilty conscience."

So, what does this have to do with national politics? If He Lifeng was indeed a protege of former party secretary Xi Jinping, then He is probably protected by Jiang himself, since Xi is a loyal follower of Jiang. The Chen Kai case is at the level of the Yuanhua case and likely attracted the attention of officials at the highest level. Unfortunately, Song Defu, who had been party secretary, was demoted to the head of the provincial NPC position in January 2003, replaced by Lu Zhangong, who is much less loyal to Hu Jintao. (I am not sure which faction he is in. According to Lam, he is in Wu Guanzheng's faction, but he is a long-time official in Zhejiang, which is traditionally a Jiang stronghold). In comes Huang Jingao's letter, which might have been written on his own initiative or with the prodding of Song's faction. In any event, the RMRB decided to publish it, probably with Hu Jintao's blessing. In the letter, there is also a slight dig on Jiang's Three Represents theory: "if the communist party speaks of "three represent," then we must respond to the cries of the people.... otherwise, how are we 'representing?' what are we 'representing'." This might have hinted at the hypocrisy of Jiang followers Xi Jinping and He Lifeng. The Propaganda Department, under the control of Jiang loyalist Liu Yunshan, soon take action to ban the letter from all media. In this contest of power, Jiang is still showing the upper hand.

Comments: Post a Comment

Friday, August 13, 2004

More on the Jiang vs. Hu-Wen struggle. Waldron and Tkacik penned an article in the WSJ stating that Jiang is currently winning the factional struggle. Based on available evidence, I would say they are right. Most recently, when Hu went to unveil a bronze statue of Deng to commemorate his 100th birthday. The headline read "Hu Jintao unveils the statue in Guang'an; Jiang Zemin signed it." Clearly, signing it was more important than merely unveiling it. It is by no means conclusive, but it seems Hu and Wen have played their most serious cards--corruption investigations-- to little effect. As my earlier posting suggests, the reason why the recent "audit storm" has done little might have to do with "problems" with Wen's son, who might have taken advantage of his father's status in the business world. If Wen doesn't take a strong stance, then Hu cannot do anything against Jiang on his own. It is curious that Wu Guangzheng, head of CDIC and supposed Hu ally, has not done anything much recently. The audits were spearheaded by the NAO rather than the CDIC. The CDIC followed up on a few cases after the audits, but nothing serious has surfaced. In the most recent speech Wu made to a group of local leaders, he made no mention of the cases that the audit had turned up, at least not in the public account. Perhaps he is switching to wait-and-see mode. If so, Hu is in trouble.

Economic implications: I think inflationary tendency will make a come-back later this year and almost definitely by next spring. With Hu-Wen on the defensive, coastal provinces will once again clamor for more credit. Jiang will support Jiangsu, Shanghai, and Zhejiang's call for looser credit, and Wen will comply. The looser monetary environment, in combination with continual raw material shortage, will generate further inflationary pressure.


At a meeting of the Chinese Politburo late last month, President Hu Jintao informed the comrades around the table that, "if national defense construction is not done well, a secure environment for economic construction can hardly be assured." Economic reform, it seems, is no longer the "central task" of the party.
Some of those assembled may have noted that this sentiment hardly gibed with Mr. Hu's stated belief that China's "peaceful rise" is anchored on economic progress, but there was a good reason for the turnabout. The president had been compelled to read this statement by his predecessor, Jiang Zemin, who can't abide the slogan "peaceful rise."
Instead, Mr. Hu was made to mouth such sentences as: "from beginning to end, we must place national sovereignty and security in first place, resolutely defend fundamental national interests, and resolutely defend national sovereignty and territorial integrity." From here on, the late leader Deng Xiaoping's dictum that economic construction is "the central task," which has guided China's development for two decades, will be relegated second to militarization.
The humiliation was but the latest sign that China's leadership is going through a power struggle, one that brings a danger of escalation beyond China's borders. Alas, Mr. Jiang seems to be winning the day, and if Mr. Hu isn't able to halt the increasingly assertive military policies, serious problems lie ahead. One early victim could be a U.S. foreign policy predicated on China's emergence as a "status quo" power, the favorite phrase of many sinologists. But Mr. Jiang, in his new incarnation, is not a status quo leader.
Chinese who know all these players believe that President Hu and his Prime Minister Wen Jiabao, while not exactly democrats, are chiefly concerned with internal issues such as poverty, corruption, internal unrest, and the like -- and had hoped to turn to them after Mr. Jiang's "retirement." Our own decade of watching the careers of Messrs. Hu and Wen convinces us that they see their country's massive economic and social problems -- and not military modernization -- as the top priority. Both men grew up in modest petit bourgeois homes, both came from families that suffered during the Cultural Revolution, and both were sent to dirt-poor Gansu province for a decade of "work in the countryside" in the 1970s.
By contrast, Mr. Jiang and his closest prot間?in the present standing committee of the Politburo, Zeng Qinghong, are from privileged party clans. The former president, who passed his title to Mr. Hu not two years ago, is calling the shots from the Central Military Commission, trumping Messrs. Hu and Wen's domestic agenda with the nationalism card. To do that, Mr. Jiang is whipping up yet another pointless and dangerous confrontation with Taiwan -- and succeeding in nobbling his ostensible successors.
This seems to follow a script that Mr. Jiang hinted at in the mid-1990s when he told Japan's Asahi Shimbun that, "without the threat of force, peaceful reunification [with Taiwan] cannot be accomplished." Evidently Mr. Jiang thought that if he built up his army sufficiently, Taiwan and the United States would be intimidated. But a bucket of water has been poured over his plans by the firm words from U.S. National Security Adviser Condoleezza Rice and Admiral Thomas Fargo, commander in chief of the U.S. Pacific Command, during recent visits to Beijing. Both made it clear that U.S. arms sales to Taiwan would continue in order to correct the imbalance caused by China's missile buildup. This puts Mr. Jiang in a dilemma. If he pushes ahead, he risks war. But if he doesn't, he must abandon his entire political strategy.
To be sure, the official media still sometimes touts the line that China has embarked on a "peaceful rise" and will not present any dangers to her neighbors. Authored by Hu acolyte and former Central Party School vice president Zheng Bijian, the slogan "Peaceful Rise" was to be the bumper-sticker for Mr. Hu's kinder, gentler foreign policy.
But while the line may sooth the nerves of China's neighbors, it does not describe what Mr. Jiang and the People's Liberation Army have in mind. Just in case Mr. Hu was in any doubt about this, or about who is in charge, at the July 24 Politburo session Mr. Jiang humiliatingly had his successor personally instruct those assembled on the chairman's new military guidelines. Apparently, it was below Mr. Jiang's dignity to take the mike himself.
For the moment, no powerful opposition to Mr. Jiang exists. He and his hard-line faction have been in charge ever since the Communist Party's 16th Congress in November 2002, and Mr. Jiang's support from the Chinese Army is bolstered by his staunch advocacy of military modernization.
This explains why China is now demanding that the U.S. cease arms sales to Taiwan, although U.S. military sales to Taiwan was a condition of normalization in 1979. Japan is getting a taste of China's naval power as Chinese military and commercial vessels conduct seabed surveys in waters that have been in Japan's jurisdiction for over a century.
What is important to understand is that this dangerous approach does not represent a consensus in the Chinese leadership. It is a policy choice adopted chiefly for domestic political reasons, by Mr. Jiang's faction, and should not be imputed to Mr. Hu or Mr. Wen, whatever lip service they may be forced to give it for the moment.
It is essential the United States and democratic Asia work to see that Mr. Jiang's policies fail and that Mr. Hu and Mr. Wen are able to return China to Deng Xiaoping's theory that "economic construction is the central task." And this means they must start pushing back on Mr. Jiang's "Army First Policy."
Mr. Jiang is deeply unpopular for his vanity and selfishness. Even PLA generals are uneasy about the "two centers" of power in the Chinese Communist Party. China has no institutional mechanism for deciding who will be in charge. The army and secret police are strong. But they are divided. The risk is that the split moves downward into society, pervading and dividing every institution.
The best way for America and its Asian allies to push back would be by quietly, but firmly, flexing their muscle around the region. This, for one, might dispel Mr. Jiang's fantasy of an easy conquest of Taiwan. Cooperation on radar and missile defense, closer cooperation with Japan, returning the Seventh Fleet to the Taiwan Strait on a more regular basis, joint air exercises with the Japanese and others and increasing naval sorties and discreet coordination with Japanese and Taiwan naval forces would do the trick -- provided they are backed up by absolutely unequivocal and authoritative statements from Washington that no wiggle room exists here. Peace in Asia and specifically with Taiwan is the indispensable precondition of the Beijing-Washington relationship.
The Chinese leadership, civilian and military alike, must be made to clearly see that provocative military moves -- like the German reoccupation of the Rhineland in 1936 -- will not go unanswered. Only then will Mr. Jiang's fallacies be exposed and a more reasonable leadership take his place, one that understands that belligerence and displays of force gain nothing, while a prosperous, unthreatening, and democratic China would be warmly welcomed into Asia, not least by Taiwan.

Comments: Post a Comment

Monday, August 09, 2004

Since I can't vent elsewhere, I will vent on my own blog. I attach a SCMP article below about how Wen is still calling for local officials to stick with retrenchment policies, despite rising opposition to it. I strongly suspect that Zhu is behind this firm stance against possible inflation. I personally don't think Wen is so determined to stamp out inflation. He might be doing this in order to get Zhu's continual support in the difficult time of factional conflict with Jiang's people. The last thing he needs is to have Zhu angry with him also. Hu Jintao is going along with Wen's policy presumably for the same reason. They need Zhu's support in order to do battle with the other "immortal" Jiang Zemin. There is a great irony in that Wen is giving these remarks in Deng's hometown. Deng was a fierce opponent of central administrative measures throughout the 80s and 90s. However, Wen's statement in Guangan might also have been a dig at Jiang, Deng's successor.

Monday, August 9, 2004Premier urges provinces to tighten economic controls
Prev. Story Next Story

Wen Jiabao visits Guangan, birthplace of Deng Xiaoping Premier Wen Jiabao has urged provincial leaders to strengthen macroeconomic control measures, in the latest sign that Beijing is not yet confident the overheating economy has sufficiently cooled.
Mr Wen made the comments on a visit to Sichuan province as debate among economists is growing over further measures the government might adopt after initial steps led to a sharp slowdown in economic expansion.
"Strengthening and perfecting macroeconomic controls is still the economic focal point," Xinhua quoted Mr Wen saying when he met provincial leaders in Chengdu on Saturday. The leaders were summoned from Sichuan, Guangxi , Guizhou and Yunnan and Chongqing municipality .
"All regions and departments will continue to implement all policies and measures of macroeconomic control, and consolidate the controls' results," he said.
Mr Wen's remarks came ahead of the release of July economic data this week.
Economists believe the data will show a further slowdown in growth as the effects of credit curbs and administrative restrictions take hold. "The macroeconomic controls are still in a critical phase. The results gained are initial and partial," Mr Wen was quoted as saying.
"If [we] are not careful and lapse, [the problems] will rebound and what we have achieved will be wasted. Leaders at all levels must recognise the difficulty and complexity of our macroeconomic controls and press ahead."
Mr Wen highlighted five priorities: more support for agriculture; further control over investment growth; resolving bottlenecks in industries such as coal, electricity and oil; promotion of the private economy; and public welfare reforms, Xinhua reported.
Mr Wen made a similar call last month when he chaired a State Council meeting in Beijing. In that meeting, he stressed that austerity measures introduced by the central government had achieved "obvious results" but warned against "blind optimism". Similarly when President Hu Jintao toured Shanghai late last month, he echoed Mr Wen's call to stay firm with the "macroeconomic controls".
The remarks by Mr Hu and Mr Wen indicate the top leadership is concerned about the strong reactions from the provinces, which have complained that the austerity measures were excessive and choked off growth.
According to the Xinhua report, Mr Wen emphasised in his talks with the provincial leaders that western provinces - including those relatively poor ones - must follow the principles laid down by the central government in achieving economic development and not just blindly follow the unrestricted growth once commonly pursued by coastal provinces.

Comments: Post a Comment

Tuesday, August 03, 2004

As we near the 4th plenum in September, factional fights seem to intensify. Taking a cue from the Chen Yun play book, both Wen and Jiang are now pointing fingers at each others' children for allegedly corrupt behavior. There is little doubt that children from both families have abused their connections in various ways. The manifestation of this fight has been a wave of audits on government units headed by Jiang cronies and most recently, a report from the 21st Century Herald insinuating corrupt dealings by Wen's son. 21st Century Herald, which is operated by the Guangdong government (where Jiang crony Zhang Dejiang is party secretary) published a strange story inquiring the mysterious investor who bought over 7 billion HKD worth of Ping'an Insurance shares. The article did not name Wen Yunsong's name, but the profile is very similar to Wen's businessman son. Incidentally, Wen Yunsong is a graduate of our Kellogg Scool at NU. I should see if alumni relations can dig up more. Anyway, as I pointed out before, the NAO was auditing Netcom, but I don't think the audit will "discover" anything now. The score is 1 to 1.

Comments: Post a Comment

This page is powered by Blogger. Isn't yours?