I am frankly pretty shocked that State Asset Supervision Administration Committee (SASAC) and the Ministry of Finance (MOF) finally reached some kind of agreement to officially take dividend from SOEs. They had been locked in a struggle over which agency will control what share of the dividend. As we found out in a recent trip, every government has a rough idea of the money that SOEs under their control have. They issue "renwu" or spending targets to them accordingly. For example, local SOEs are expected to support major construction projects launched by the local government. One can see this as a kind of dividend.....By formalizing dividend, the central government is just trying to get a larger slice of the action. I am sure we will see some kind of mechanism to channel profits of local SOEs into the central coffer. Once the center knows about a source of money, they rarely will leave it alone. Well, guess what, SOE profitability will all of the sudden plunge in many localities as local governments pressure local SOEs to hide profit from the formal budget.


China State Firms to Pay Dividends Required Payments
To Go to Government,
In Bid to Curb Growth By RICK CAREW
Wall Street Journal

May 31, 2007 BEIJING -- China's State Council said it will begin a program this year that will require state firms to pay dividends to the government, a move intended to cool rapid investment growth of many of China's biggest listed firms. The move will initially require the 158 central-government-owned companies to return a portion of profits to the state coffer. The statement posted on the central government's Web site didn't give details of the plan or specify the criteria for determining dividend levels for specific companies. China's central-government-owned companies comprise the country's largest industrial enterprises, many of which have listed units.

They include China's state-owned telecommunications operators and airlines; China's largest steelmaker, Shanghai Baosteel Group Corp.; and Asia's largest oil refiner, China Petroleum & Chemical Corp., or Sinopec. The proposal to force state-owned enterprises to pay dividends has been championed by the World Bank, which argues that it would help curb investment that has grown at annual rates above 20% in recent years.

China launched an overhaul of state-owned enterprises in the late 1990s by implementing huge layoffs and closing unprofitable factories. Those moves, coupled with an improving macroeconomic environment, have turned losses to profits for the state sector. Without shareholders demanding dividends, economists say those companies have reinvested a large portion of their profits in new projects, working against government efforts to cool the economy. The administrator of China's state-owned assets said in December that operating profits at central-government-owned companies grew 18.9% in the January-November period of 2006 compared with a year earlier, to reach 688.77 billion yuan ($90.03 billion).

China's State Council said the dividend measures will be rolled out in phases beginning with centrally owned state firms. Local-government-owned companies' dividend policies will be determined by provincial and city-level governments. Li Rongrong, chairman of China's State-Owned Assets Supervision and Administration Commission, first flagged the measures in September last year, saying they would be implemented sometime in 2007. That agency and the Ministry of Finance drafted the measures approved yesterday by the State Council. The dividend payments will be used to boost China's overall industrial development, advance high-technology industries, and supplement the social-security system, the State Council statement said. --Juan Chen contributed to this article.

Write to Rick Carew at rick.carew@dowjones.com

Not to brag or anything, but it's kind of cool to be interviewed by the Chinese press for a change. The 21st Century Economic Report, supposedly the WSJ of China, did an interview with me on US politics, of which I know little. Nonetheless, I bravely charged on. I also had a series of remarks on the Chinese economy and the Chinese government, but as expected these did not make it into the article--I am not surprised.

　　美国西北大学助教史宗瀚：

　　贸易逆差主要是美国国内政治问题

　　“中美五月纸上对话”系列之六

　　·编者按·美国方面，美中经济关系中的压力主要来自美国国会。23日中美战略经济对话第二轮战略在华盛顿进行，美中经济安全与审查委员会 (USCC)将就中国产业政策和国有企业进行的听证会被推迟到紧接着的24日，原本定于2月底举办的这次听证会可能对华采取严厉的贸易保护措施。本版就听 证会主题邀请国内外权威人士进行对话，分两次刊出，以期沟通、化解冲突，本期刊出第一部分是为中美五月纸上对话系列之六。

　　本报记者 宇瀚 上海报道

　　《21世纪》：贸易逆差问题成为近来美国国会议员活力聚焦点，这是为什么？

　　史宗瀚：形成贸易逆差的原因很多，也有美国方面的结构性因素。但主要是美国政治上的问题，而中国的贸易盈余这么大、这么快，就把问题变得更加严峻化了。

　　《21世纪》：为什么说是政治上的问题，因为议员们主要是受到选民的压力吗？

　　史宗瀚：主要是出于政治上的考虑，选民的利益具体是什么很难讲，选民也不可能花工夫去研究这些问题，但议员们说得太复杂了，选民也弄不明白，简 单地归结为中国因素，选民容易明白，而中国是一个很大的国家，一般老百姓很容易把问题都放在中国身上，议员们把问题简单化有利于让选民明白，于是他们把很 多事情都堆到中国头上，就成为一种必然。

　　《21世纪》：你认为中美经济关系中最主要的争端在哪些领域？

　　史宗瀚：结构性问题就是人民币升值问题。其实，每年升值3%-5%，再过5年，不用10年，总的升值就会很高。这种争执实际上不是一个很大的实 际问题，也没有对错，这更多是一个政治上的问题，美国有自己国内政治因素，中国也有自己的步伐，有自己国内的要求。美国这个国家，选民的情况实际上是很复 杂的，尽管这种争端可能并不完全是由于中国造成的，但选民不会考虑得那么深。

　　《21世纪》：所以我们需要多加强沟通？

　　史宗瀚：对有些问题，沟通并不能够解决，美国政治体制就是这样，议员有动力把问题搞得简单化，把责任放到中国头上。现在美国因为要选举了，议员们就会把动作搞得很大，美国的政治体制就有动力去把中国这种非民主国家丑化，到选举以后可能缓和一点，好一些。

　　不管专家说什么，议员有自己的独立利益，比如选区里面有很多钢铁公司，那么这个议员就容易把中国丑化，他这样是做给选民看的。

　　《21世纪》：那么你觉得美国国会施加压力效果有多大？

　　史宗瀚：目前发出这么大的声音主要是美国国内的原因，中国也知道这种原因，因此不可能会做出很大的让步。议员借此出出气，所有的议员和选民都看到，我们美国很棒，这样议员也同选民的一个交待。

　　图：

　　史宗瀚 美国西北大学政治学系助理教授，公认的少壮派中国问题专家，上世纪90年代初开始研究中国金融体制和转移支付问题。

　　Victor C.Shih

It turns out that the story on Huang Ju's demise may be erroneous. The official press has not reported on it, which is unusual if he really did pass away. In addition, it carried the following piece on Minister of Supervision Li Zhilun's passing. Note, the second paragraph states that Huang Ju expressed his condolences. My speculation is that perhaps Huang and Li stayed in the same hospital, and rumors got out that someone important passed away. People then just assumed that it was Huang Ju, but in fact it was Li, who is on the standing committee of the central discipline and inspection committee, the party's anti-corruption watchdog. Huang is also a standing committee member (changwei), but of the much more powerful Politburo.



新华社北京５月９日电　中共中央纪律检查委员会副书记、监察部部长李至伦同志，于４月２８日在北京病逝，享年６５岁。李至伦同志的遗体９日在八宝山革命公墓火化。

　 　李至伦病重期间和逝世后，胡锦涛、江泽民、吴邦国、温家宝、贾庆林、曾庆红、黄菊、吴官正、李长春、罗干、王乐泉、王兆国、回良玉、刘淇、刘云山、吴 仪、张立昌、张德江、周永康、俞正声、贺国强、郭伯雄、曹刚川、曾培炎、王刚、李鹏、万里、乔石、朱镕基、李瑞环、宋平、刘华清、尉健行、李岚清、徐才 厚、何勇、成思危、热地、唐家璇、华建敏、陈至立、贾春旺、王忠禹、刘延东和韩光等分别以不同方式表示慰问和哀悼。

　　李至伦是辽宁锦州 人，１９６４年１月加入中国共产党，１９６７年９月后历任广东省保亭县（现海南省保亭县）县委办公室副主任、县委常委兼宣传部部长、县委副书记，共青团中 央团校组教处处长、副教育长、校党组书记、副校长兼共青团中央青运史研究室主任，中国青年报社社长、党组书记，监察部办公厅主任、副部长，中央纪委常委、 监察部副部长，中央纪委副书记、监察部副部长、部长等职。

　　李至伦是中共十三大、十五大、十六大代表，中共第十六届中央委员

Well, according to the Western press, VP Huang Ju just passed away. Nothing from the official press yet, but if true, it should be forthcoming soon. Politically, I don't think it is so important since he had been sick for a long time. It would have been nice for Zeng if he had been able to participate in the discussion for the next Standing Committee, but he had been ill since February anyway.

From Times Online
May 9, 2007
China's vice premier, Huang Ju, dies
Death of vice premier in charge of the economy opens way for President Hu Jintao to appoint ally on powerful committee
Jane Macartney of The Times, in Beijing

China¡¯s vice premier in charge of the economy, Huang Ju, has died in a Beijing hospital, opening the way for President Hu Jintao to appoint an ally to fill his seat on the all-powerful Politburo Standing Committee.

Mr Huang, 69, who had been ill with pancreatic cancer for many months, died this morning at the 301 military hospital in western Beijing, The Times learnt from Chinese sources. This is the hospital where most of Chinese leaders undergo treatment and where paramount leader, Deng Xiaoping, died in February 1997.

There had been rumours that Mr Huang was seriously ill for several months.His failure to appear at the funeral in January of Bo Yibo, the last surviving leader of the Mao Tse-tung generation of leaders, was the clearest sign that Mr Huang was no longer able to carry out his official functions.

Mr Huang, an engineering graduate of Beijing¡¯s Tsinghua University, had spent most of his career in Shanghai, where he was a prot¨¦g¨¦ and close ally Jiang Zemin, a former president and Communist Party leader. His close ties to Mr Jiang had given him a reputation as a member of Mr Jiang¡¯s ¡°Shanghai clique¡± in the top echelons of the party. President Hu has been gradually trying to build his own powerbase since he came to power in 2002 by replacing Mr Jiang¡¯s men.

The death of Mr Huang provides the President with an important opportunity to move one of his own loyalists onto the Politburo Standing Committee ¨C a group of nine men who wield ultimate power in China. Mr Huang, who became a standing committee member in 2002, had held the portfolio in charge of the economy ¨C one of the most powerful jobs in China.