English Translations of Chinese Economic News

Here are some links to translated stories at the Economic Observer.

The Strictest Audit in History
The EO learned from several ministries and local governments that the audit might be in preparation for parts of China’s tax system reform; which includes improving transfer payments from central to local authorities, making better use of reserve funds at all levels and standardizing local government channels for borrowing.

The source close to the NAO said that the central government isn’t very clear on the scale of local government debt, and that a detailed understanding is needed. In recent years many local governments have launched large scale construction projects. It’s unavoidable that some have under-reported or not reported their debt, he said.

An official from the Shaanxi Provincial Development and Reform Commission told the EO that this audit will be the most accurate yet and catch those who’ve been misreporting. “During the last two audits, it was possible to hide some debts by shifting them to upper or lower governments,” the official said. “This time it’s impossible for them to transfer debts.”

The Tenement Nightmares Of Beijing
Wang Mengyun (王梦芸) seems satisfied with her new bedroom, even if it's less than seven square meters and originally served as a kitchen. "This is the biggest room I've had in the four years I've lived in Beijing," she says. "And it only costs me 950 yuan ($150) a month."

Peng, the head tenant who sublets the room to Meng Yun, notes the rising prices of rentals. Any bedroom with a window is always more than 1,000 yuan. "A kitchen usually has three walls and a window, so many people would rush to grab it," he notes.

Meng Yun, who arrived in the capital after graduating from a college in her native Henan Province in 2009, currently earns 2,500 yuan ($408) a month as a clerk at a wine importing business, but is always uncertain about having decent place to stay.
One of the big stories in the news this week is about affordable housing. The government forced builders to provide plans for affordable housing as part of their land bids, but the housing is built on cheaper land outside of cities. Since there is no or little supporting infrastructure such as workplaces, markets, hospitals, schools, etc., there are tens of thousands of empty apartments, a new form of ghost city in China.

China’s Steel Problem
In June, crude steel production across China reached 64.67 million tons. From January to June, crude production totaled 390 million tons and another 550 million tons of rolled steel. This has pushed prices ever lower. At the end of June, the prices of eight major steel varieties monitored by China Industry and Steel Association (CISA) all continued their decline.

China’s leading steel company, Baosteel, is expected to see a 50 percent fall in net profits in the first half of 2013. It’s also forecast that that China’s largest private steel company, Jiangsu Shagang Co., Ltd, will see a 65 to 95 percent drop, and Hebei Steel, which has the largest production capacity in China, is expected to see profits drop by between 70 and 90 percent.
Here is picture from Monday's Beijing Times.

The headline is "life or death" for Chinese steel companies. On the left hand side is a comparison of Hebei province's (the one that surrounds Beijing) steel production versus Japan, USA and Russia, with Hebei producing 1.5 times as much as Japan, 1.85 times as much as the entire U.S.A., and 2.3 times as much as Russia. On the right (it's hard to see) is a comparison of profit margins on a ton of steel. Several years ago it was an iPhone, then it was meat, and now it is a popsicle.

Also speaking of steel, I used to track the Baoshan steel index, but the data stopped being reported at the start of 2013.

Finally, Economists on Li Keqiang's New Slogan
An interview with three economists about the challenges of directing credit towards the real economy against a backdrop of slowing growth.

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