China to deepen reforms to achieve sustainable economic development

China to deepen reforms to spur growth

2013-11-07 | China Daily

 

BEIJING – The upcoming policy meeting of the Communist Party of China (CPC) is expected to unveil a package of measures to deepen reforms to achieve sustainable economic development, said experts.

The reforms are “essential for China as it tries to find a sustainable growth model over the medium and long term,” said the Wall Street Journal in an article.

The Third Plenary Session of the 18th CPC Central Committee, which is expected to steer the country to an historic turning point, will kick off at this weekend.

Thanks to three-decade reform and opening up, China has become the second largest economy in the world with an annual growth rate of nearly 10 percent and an approximate $6,000 GDP per capita.

However, China’s economic growth has experienced a sequential slowdown since 2011, with a growth target of 7.5 percent in 2013.

China is facing comprehensive problems such as production overcapacity, local debts and shadow banks. Population aging and an enlarging wealth gap also piles pressure on the old growth model.

China’s economic development has entered a stage where only reforms can unleash growth potential and reduce risks, said a research report from Britain’s Barclays Bank.

Experts anticipate that the new reforms will focus on urbanization — a critical driving force for China’s long-term economic growth.

The director of the Asia Research Center of the London School of Economics, Athar Hussain, said China has made great changes in the past few years, noting that urbanization, which requires both economic and political reform, will become the most important issue for the Chinese government in the next five years.

Hussain also forecasted that more city clusters, such as the Chengdu-Chongqing cluster in the central and western areas, will be created to reduce the stress on the four megacities of Beijing, Shanghai, Guangzhou and Shenzhen.

Expert said a scientific and effective transformation to urbanization will stimulate domestic demand, balance investment and consumption, and inject new impetus to the economic growth.

As a driving force of economic growth and rebalance, the Wall Street Journal said urbanization will be supported at the Third Plenary Session of the 18th CPC Central Committee on November 9-12.

Experts also pointed out that the policy of focusing on the dominant role of people is very important, which will increase the autonomy and sustainability of China’s urbanization progress.

History shows that land and agriculture is deeply related to the fate of Chinese people. The old urban-rural dual structure is expected to be reshaped following reforms in such fields as the land system, the social security system, modern agriculture and law.

The Third Plenary Session of the 18th CPC Central Committee is an opportunity for China’s new leadership to show their wisdom by coping with those challenges, said Anoop Singh, director of the Asia and Pacific Department of the International Monetary Fund (IMF) in an article published on IMF’s website.

Gainers & Losers of Chinese Economy

China’s Rich List Mirrors Industry Shifts

2013-09-23 17:20 | The Economic Observer

By Kang Yi (康怡) | Issue 637, Sept 16, 2013

 

The worst period for the Chinese economy seems to have passed – at least for China’s ultra-rich.

The latest Hurun Rich List, released on Sept 11, showed that the average wealth of the entrepreneurs listed had risen by 18.5 percent over last year. But rather than indicating a recovering economy, this could just be an illustration of the “Matthew Effect” where the rich get richer and the poor get poorer.

59-year-old Wang Jianlin (王健林), chairman of the real estate giant Wanda Group, became China’s richest man for the first time with his 135 billion yuan. This broke the previous 130 billion yuan record for the wealthiest Chinese.

Compared to last year, Wang’s wealth increased by 108 percent. Founder and Chairman of Hangzhou Wahaha Group Zong Qinghou (宗庆后), who held the top spot last year, fell to number two this year but still saw his wealth grow by 44 percent. Founder of Tencent Ma Huateng (马化腾) came in at third after his fortune grew 51 percent. The wealth accumulation rate of all these entrepreneurs far outpaced the growth of the Chinese economy, which only grew by 7 to 8 percent.

Wang Zhongmin (王忠明), vice secretary-general of the All-China Federation of Industry & Commerce,  says that even though China’s economic growth is slowing, wealth accumulation of the rich is speeding up. He says this indicates that private enterprises of a fairly large scale have started to enjoy a certain economic inertia.

“Taking Wang Jianlin as an example, his industry structure is prepared for the future,” Wang Zhongmin said. “It’s not only involved in real estate, but is also internationalizing and branching out into culture. Wang has already accelerated and has inertia. Because his development is healthy, the government and other sectors will provide him with more support in terms of resources.”

According to Hurun, the shift in this year’s rich list is a sort of microcosm of the industrial structure adjustment in China. “The wealth of the Rich List this year reached a new record mainly through the real estate industry recovery and the rapid development of IT,” Hurun said.

Hurun also gave a nod to the progress of China’s urbanization, which was hoped to become the biggest engine driving China’s economy during “Twelfth Five-Year Plan” period (2011–2015). “No one is more representative than Wang Jianlin to represent China’s urbanization progress,” it said.

Wang’s Wanda Group has branched into four industries including commercial real estate, high-end hotels, cultural tourism and department store chains. It’s opened 72 Wanda Plazas, 40 five-star hotels, 6,000 cinema screens, 62 department stores and 68 karaoke clubs across China.

Wanda Group had total revenue of 141.7 billion yuan in 2012 with a profit of over 20 billion yuan. According to Hurun’s estimate, 80 percent of Wang Jianlin’s wealth comes from real estate.

But the IT industry had the biggest gains this year. Three out of the top 10 richest Chinese on the list are in IT, and the total number of entrepreneurs on the list involved in the IT industry increased over 20 percent since last year.

One of the best representatives on the list was Xiaomi Founder and CEO Lei Jun (雷军), who came in at 63rd. His wealth grew 567 percent from 2.4 billion yuan last year to 16 billion yuan this year. Xiaomi’s MI mobile phone is one of the most popular domestic made models in China, reaching 12.6 billion yuan in sales in 2012.

However, the Rich List showed that not all of China’s super rich had such a good year. 252 entrepreneurs saw their wealth shrink, of which 77 percent came from publicly-listed companies.  Six people experienced more than a 50 percent drop in their wealth and 115 entrepreneurs who made the list last year fell off altogether this time.

It was the clothing and liquor industries that saw the biggest loss of wealth. Iron and steel, minerals and non-ferrous metals also saw big declines. Many entrepreneurs from these industries fell off the Rich List this year.

The Hurun Rich List is being regarded as a mirror of China’s private economy. Wang Zhongmin says he hopes to see more private bankers on the list in the future. Gradual financial reform may allow this to happen. Meanwhile, Hurun says that the entertainment industry will be the most likely “dark horse” to make a splash in the future.

However, Hurun warns that the people on its Rich List are just the top of the iceberg. “Behind each of the people with ‘transparent wealth’ there are two rich people with ‘hidden wealth,’” it says. “There are 1,000 rich people ranked in our list, which means there should be more than 3,000 if you count those with hidden wealth.”

Private Security Firms & China’s Growing Population of Super-Rich

2013-10-10 11:21 | The Economic Observer
By Li Rong (李容) and Zhang Hua (张华) | October 7, 2013  
As a Shaolin Temple disciple since childhood, Shi Xingfeng, president of Bojing Security Agency, often has to remind himself to hide the heroic spirit that often glows from the eyes of martial arts masters.

“It’s professional discipline,” Shi says. “You’ve got to learn to be an invisible bodyguard.”

As a matter of fact, the Chinese super-rich are still not accustomed to the idea of having tall, strongly built men in suits and a solemn face hanging around. It’s considered too indiscreet. “In China, bodyguards are disguised as chauffeurs or secretaries to protect the clients’ safety better,” Shi explains.

But he also says there are cultural differences in the approach to paid protection. In the West, if a VIP’s hat has been blown off by the wind, his bodyguards are not to pick it up for him.  A Chinese magnate though expects such services. “The Chinese super-rich have yet to nurture such a concept — a bodyguard is there to protect his safety, not to be his babysitter,” Shi laments.

It was not until 2010 that privately run security services were even legalized in China, which is when Shi founded his security agency. He aspires to imitate Academi, formerly known as Blackwater USA, a security contractor that has worked for the U.S. State Department and usually retrains retired military or police personnel to become premium armed security guards.

Shi says Chinese often have a very poor awareness of their safety. “In China, many rich people are reluctant to hire bodyguards because they believe that it is showing off,” he explains. “They also worry about privacy.”

Moreover, since their homes and the venues they frequent are thought to be well-secured, VIPs in China don’t feel they are at particular risk. “The truth is that as public figures, rich people often attract hatred of the rich,” and are “in much greater danger than an ordinary person” of calculated attacks, Shi says.

After the Fact

Some 80 percent of Shi’s clients are entrepreneurs, but the majority of them came to him only after running into trouble. “Usually they have already encountered a real security problem in general verbal abuse, but sometimes even physical confrontations, before thinking about hiring bodyguards.”

The latest example is Zong Qinghou, China’s beverage tycoon and the 86th richest man in the world, according to Forbes’ Global Rich List. He was attacked walking out of his own house and injured by someone who had asked him for a job.

In most cases, whether they are robberies or retaliation, the perpetrators aren’t even “professional.” Had these entrepreneurs had a bit more awareness of safety issues, the tragedies wouldn’t have occurred.

A Whole Engineering System

As the number of China’s super-rich grows, so do concerns for personal safety. “The demand is related to economic development, especially in the coastal cities such as Beijing and Shanghai,” says Xin Yang, the general manager of Beijing Yunhai Elite Security.

Industry statistics show that China currently has some 4,000 licensed security firms with as many as 4.3 million security agents and an annual turnover of about 40 billion RMB ($653 million). And there is sure to be plenty of room for growth in the sector.

For the rich and famous, it isn’t just their own personal safety, but that of their families and properties. This is a whole “engineering system,” as Shi puts it.

Shi says the typical procedure when taking on a client is first to assess all the potential risks, then identify the level of danger and finally develop a specific strategy for protection. Teams of five to eight security personnel are typically dispatched. They include those specialized in anti-kidnapping, anti-tracking or target control, as well as those disguised as chauffeurs or secretaries to offer close minute-by-minute protection of the client.

Uneven Quality

Having studied martial arts since the age of 15, and having later worked for years as one of the “Zhongnanhai Guards Group” protecting China’s top leaders, as well as foreign visitors such as Bill Gates, Zhe Meijie is considered one of the top Chinese security specialists.

Zhe says that while more and more security companies are springing up, the industry lacks supervision and public regulations. “It’s a mixed bag,” he says. “We hope that the government will introduce appropriate policies to guide the industry’s development and that practitioners and managers in the sector get better training, as well as learn to cooperate to avoid vicious competition among themselves.”

As such a new industry, China’s bodyguard services are still groping in the dark. To improve standards and find quality recruits, security firms increasingly tap into the ranks of newly retiring police and soldiers. “Decommissioned special forces soldiers possess high military qualities and can adapt themselves fast to bodyguard work,” Shi says. “They are our first choice.”

Before being put into service, candidates must go through a sort of boot camp, including physical training, kickboxing, martial arts and anti-kidnapping training, as well as business protocol.

“If you can’t fight, you definitely can’t be a bodyguard,” Shi says. “But only knowing how to fight doesn’t make you a bodyguard either. What a bodyguard requires most is intelligence.”

Half the training is related to skills and theories such as driving special vehicles, information collection, legal knowledge, public relations, emergency care and social etiquette. Physical techniques represent 20 percent and fighting 30 percent, Shi estimates.

But above all, integrity is still the most important aspect of a profession that involves both danger and privacy. “We are still far from the standards of the profession in advanced countries like America since this is a business that is just starting in China,” says Shi. “We want to become China’s Blackwater, but it’s a tough road. We are learning how to do our job, and we realize that also includes educating the clients.”

Gender Imbalance Troubles China

2010-07-08 18:42 | The Economic Observer
With a severe gender imbalance among young Chinese, China is about to face a lot of problems.According to a Blue Paper on Society released by the China Academy of Social Science, because of the serious gender imbalance among Chinese under the age of 19, ten years later, tens of thousands of male Chinese of marriageable age will have difficulty finding a wife.It is not just the marriage market that will be influenced.In agricultural areas, unmarried young men over 25 years old are everywhere; in rural kindergartens and primary schools, the number of male students is obviously higher than that of females. In the Yangtze River Delta, Pearl River Delta and southeast Fujian Province where the local economies are dominated by the manufacturing and service industry, because of the severe shortage of women aged between 18 and 25, clothing factories have no choice but to hire young men.

China has entered a society where the number of men far exceeds that of women.

“China’s high sex ratio has lasted for over 20 years, its accumulated effects are becoming obvious,” Yuan Xin, a professor with Nankai University’s population and development research institute, said.

The sex ratio at birth under normal circumstances, should be 103 to 107 male infants for every 100 female babies. Because the death ratio of baby boys is higher than that of girls, the number of boys and girls will be close to equal when they are reach the age of marriage.

But in China, the sex ratio has been increasing since the 1980s. In 1982 when China conducted its third national population census, the number of male births for every 100 females was 108.47; in 1990, it rose to 111; in 2000, it was 119 and in 2005, it jumped to 120.49, 13. The male population at that point was 13 percent higher than that of females.

“In a short period of over 20 years, the gender imbalance has expanded quickly from eastern provinces to western, from rural areas to urban cities. Now it has almost covered the whole country,” Yuan Xin said. In 1982, only 18 provinces had a relatively high sex ratio while in 2005, all provinces, except Tibet, had a high sex ratio and three provinces had a ratio exceeding 130.

The gender imbalance will not only produce a large number of single young men, but also will give rise to a series of social problems.

Based on statistics provided by the National Bureau of Statistics, with the size of the male population aged zero to 19 being 23 million more than that of the female population, in the next ten years, every year there will be 1.2 million more men reaching marriageable age than women, forcing the former to seek wives in less-developed regions or search for younger females. The final result will be that young men in poor areas will be edged out of the marriage market, which, according to Tian Xueyuan who is the deputy director of the China Population Association, will give rise to a black market of “wife selling” and thus threaten social stability.

In recent years, 36,000 women have been sold and sent to Zhejiang Province to marry local men, statistics from the local public security bureau show. Most of these women are from underdeveloped regions like Yunnan, Guizhou, Sichuan and Hubei.

In the mountainous area connecting Guangxi Province and Vietnam where the economy is poor, men are forced to marry brides who have illegally entered China from Vietnam.

“The narrowing of the marriage market has produced a large number of single men. What is worse, it is the impoverished who are bearing the consequences,” Tian Xueyuan said.

The gender imbalance will also give a heavy blow to the job market. A textile factory owner, Yuan Xin, who is doing business in Guangzhou, Hangzhou and Shanghai said, said the sex ratio in many textile factories has reached up to four to six males per one female; some factories have even closed due to a lack of female laborers. Yaun Xin said that excess of male laborers would intensify the competition in the job market and make it even more difficult for women to find jobs. Additionally, because of the shortage of females, in some sectors, men would have to take positions which formerly belonged to women, while in some other sectors, men would face more severe competition.

What has caused such an unbalanced sex ratio? The answer is multi-faceted.

One answer is the advanced technology which allows people to know the sex of fetuses when a woman is only four-months pregnant or even less. Male fetuses will kept alive while female fetuses will be aborted.

The technology, called type-B ultrasonic, though prohibited by Chinese laws to be used on pregnant women, is still available in some clinics in Chinese cities, towns and villages, especially in some villages surrounded by cities.

Those clinics, always disguised to be lawful outpatient hospitals or pharmaceutical stores, will inspect the sex of the fetus through a B-type ultrasonic ultrasound and if it is a female, they will ask a doctor, who works for a local hospital and wants to earn extra money, to perform an abortion.

But that is not the complete answer.

“The core of the problem lies in the traditional view which holds that men more important than women,” Tian Xueyuan said.

Though the Chinese government has made it clear that women are equal to men under law, many Chinese parents and families still consider men more important than women and boys better than girls because men are more capable of supporting families and will continue the family line.

According to Yang Juhua, a professor with Renmin University, the unequal social status between male and females is still obvious in Chinese society. Aside from education levels, women are still suffering from disadvantages in many fields. Their wages are still lower than that of men in same-level positions and they are more likely to be refused when competing for university acceptance or job vacancies with male peers with the same qualifications. Additionally, Chinese women play a much weaker role in state affairs than their foreign counterparts. Females only account for one fifth of the total officials in government, party organizations and public agencies,

Edited by Rose Scobie | Original Source People\’s Daily