High-speed railways to use social capital

High-speed railways to use social capital

China would make full use of social capital to construct high-speed railways and China\’s high-speed railway planning would not lead to any financial crisis, the Shanghai Securities News reported on Monday, citing a senior official.
There is no obstacle in policies and regulations and social capital is encouraged to invest in the construction of high-speed railways, Wang Zhiguo, vice minister of the Ministry of Railways, said on Saturday.

\”Capital from local investment, strategic investors as well as listed companies, accounts for about 30 percent of the total capital input on railway construction,\” Wang said.
In-depth analysis, fine financial structure and reasonable debt level prevented China\’s railway construction from incurring financial crisis, Wang added. \”China\’s railway debt ratio was 52 percent in 2009, far below that of many foreign railway companies.\”
China has the longest operational high-speed railway of 6,552 kilometers in the world, and 13,000 kilometers more will be completed by 2012, Wang said.

Qinghai to invest 500 mln yuan to explore mineral resources

Qinghai to invest 500 mln yuan to explore mineral resources

Northwest China\’s Qinghai Province will invest 500 million yuan (about 73.2 million U.S.dollars) to explore mineral resources in the region\’s Qaidam Basin, according to the province\’s Land and Resources Bureau.
Qaidam Basin, which locates in the north of Qinghai Province, is one of China\’s four biggest inland basins.
So far, a total of 57 kinds of mineral resources, have been detected,with an estimated economic value of 16 trillion yuan(about 2.3 trillion U.S.dollars).
The bureau says the 500 million yuan(about 73.2 million U.S.dollars) will be mainly used to detect mineral resources within the region from 2010 to 2012.

China must learn from Toyotas mistakes

China must learn from Toyota\’s mistakes

Legislation on recalling defective vehicles is needed, say experts
Japanese automakers\’ recent product recalls were not only a warning to Chinese homegrown brands not to expand too fast and ignore management and quality control, but also sounded an alarm to China\’s automobile recall system.
\”Although we seldom witness Chinese automakers\’ recall initiatives, it does not mean that their products are high quality,\” said Tan Kunyuan, an auto industry analyst with Changjiang Securities.

The Toyota logo on a car covered in snow in Beijing. This winter is really cold for the Japanese automaker who saw one disaster after another in its product quality and after-sales services. [CFP]
\”Quality defects often emerge a long time after the vehicle has been in use, but Chinese-branded vehicles have only been in the market for a short time. Moreover, as recalls have a serious impact on brands, the still-young domestic automakers deal with quality problems through their after-sales service, rather than recalling them,\” said Tan.
However, Luo Lei, vice-secretary of China Automobile Dealers Association, attributed the rare occasions of recall from domestic automakers to an imperfect automobile quality supervision system in China.
\”Whether it\’s the US, European countries or Japan, faulty vehicles are under strict supervision and restrictions from the governments by related laws but, in China, we only have a recall regulation, rather than a law, with which to deal with auto manufacturers,\” said Luo. \”Without authoritative legislation, no enterprises are willing to initiate recalls.\”
In 1966, the US government legislated for the recall of defective vehicles. Japan began to implement a vehicle recall system in 1969 and included it in its auto industry laws in 1994.
However, China only started to pay attention to vehicle quality issues in October, 2004, by launching a vehicle recall regulation.
According to statistics from the national quality watchdog – the General Administration of Quality Supervision, Inspection and Quarantine – over the past five years it received 212 active recall applications from almost 60 automakers, involving 3.21 million defective vehicles in total. Only seven among the 212 recalls were from Chinese automakers. This compares with the recall of 3.29 million vehicles in Japan in 2001 alone.
The US has recalled more than 200 million vehicles since 1966.
\”Without a complete law to regulate vehicle quality, the domestic automakers will have no awareness to voluntarily recall their defective cars,\” said Luo.
China overtook the US to become the world\’s largest auto market last year, with 13.6 million vehicles sold within 12 months. China now has more than 180 million vehicles on the road, including 26.1 million cars owned by individuals. The number increased 33.8 percent from a year earlier.
In 2009, China experienced 238,351 traffic accidents, with 67,759 people being killed, 275,125 injured. This is said to have cost 910 million yuan ($133 million). Analysts said that although vehicles are not the major killer in accidents, some of the tragedies are caused by vehicle defects.

As China has more vehicles and the number of traffic accidents grows, quality and safety of vehicles has become more and more important.
Another deficiency of China\’s recall system is that the government\’s punishment for faulty vehicle producers is considered to be too light.
According to the regulation, maximum penalties for automakers that try to hide product defects are a fine of 30,000 yuan, without compulsory compensation to purchasers. That compares with Toyota\’s possible penalty of $16.4 million required by the US government for the current recalls, and more expensive compensation to consumers.
\”Japan also added compulsory compensation to consumers to its recall system in 1995,\” said Jia Xinguang, an independent auto analyst based in Beijing.
He also suggested that China should establish an information collection and management system with a database to support the recall system.
\”Moreover, China should extend the range of recall in the automobile industry to some automobile parts and accessories,\” said Jia. \”By the end of 2007, Japan had conducted seven recalls on 130,000 automobile accessories after it included automobile parts and accessories such as tires and children\’s car seats into its recall range in 2004.\”

Individual income tax threshold to remain: MOF

Individual income tax threshold to remain: MOF

China will not raise the individual income tax threshold, the Ministry of Finance said, according to a report in the Economic Observer.
Proposals were presented during the annual legislative sessions to raise the threshold to ease the burden of medium and low income earners.
China\’s current monthly individual income tax cut-off point stands at 2,000 yuan.

Fast train to open a year ahead of schedule

Fast train to open a year ahead of schedule

The highly anticipated Beijing-Shanghai high-speed railway will begin operation next year, and is expected to cut travel time to four hours, railway officials said.
The high-speed railway between China\’s two most important metropolises was scheduled to open in 2012 but will now open one year ahead of time, said Zheng Jian, chief planner with the Ministry of Railways.
Wang Zhiguo, vice-minister of railways, said that it would be a four-hour journey from Beijing to Shanghai, and only three hours from Beijing to Nanjing, capital of East China\’s Jiangsu province.
At present, it takes about 10 hours to travel from Beijing to Shanghai and Nanjing by train.
A new-generation bullet train that will travel up to 380 kilometers per hour (kph) is now under development for the high-speed rail link.
It will be rigorously tested this year, and engineers want the train to run at a top speed of 420 kph to guarantee a safe operational speed of 380 kph, Huang Qiang, chief researcher with the China Academy of Railway Sciences told the Beijing News.
Vice-Minister Wang Zhiguo said it was expected that high-speed trains would one day take passengers from Beijing to most capital cities within eight hours, except for Haikou, Urumqi, Lhasa and Taipei.
It is expected that an 110,000-km railway network will be completed by 2012, including 13,000 km of high-speed rail, he said.
China already has 6,552 km of rail track in operation – the longest amount of high-speed rail track in the world.
The ministry wants to export China\’s high-speed railway technology to North America, Europe and Latin America.
Wang said State-owned Chinese companies are already building high-speed lines in Turkey and Venezuela.
Many countries, including the United States, Russia, Brazil and Saudi Arabia, have also expressed interest.
\”China is willing to share its mature and advanced technology with other countries to promote development of the world\’s high-speed railways,\” he said.
The ministry has signed cooperation memos with California in the United States, as well as Russia and Brazil.
\”We are organizing relevant companies to participate in bidding for US high-speed railways and prepare for bidding on a line in Brazil linking Rio de Janeiro with Sao Paulo,\” the vice-minister said.
The ministry introduced high-speed train technologies from France, Germany and Japan, while at the same time made its own innovations. It now owns 940 patents concerning high-speed railways, the ministry\’s chief engineer He Huawu said.
At present, at least 10,000 km of high-speed rail line is under construction in China. About 3,676 km of new track for running trains at speeds up to 350 kph have already been laid and put into operation. Another 2,876 km of old tracks have been upgraded to run trains of 200 to 250 kph.
Ultimately, China plans to construct a 120,000-km railway network, including 50,000-km of high-speed rail track, by 2020.

Chinas fiscal revenue up 33 pct Jan-Feb

China\’s fiscal revenue up 33 pct Jan-Feb

China saw a 32.9 percent growth year-on-year in fiscal revenue in the first two months of the year due to factors including rising tax revenue following continued economic recovery, the Ministry of Finance (MOF) announced Sunday.
Fiscal revenue for January and February combined reached more than 1.36 trillion yuan (about 200.05 billion U.S. dollars), the MOF said in a statement posted on its website.
Of the total, the central fiscal revenue topped 702.7 billion yuan, up 36 percent from the same period in 2009, while local governments raked in 657.61 billion yuan, up 29.7 percent.
Fiscal revenue in January was 865.9 billion yuan, up 41.2 year on year and exceeding February\’s 494.5 billion yuan.
The statement said the big difference in fiscal revenue between the past two months was resultant because a nationwide seven-day Spring Festival occurred in February, leading to fewer working days in the month.
The MOF attributed the fast fiscal revenue growth to the continuing economic recovery in China which boosted tax revenue, and a low comparison base in the first two months last year, when revenue was down 11.4 percent due to the financial crisis.
China\’s National Bureau of Statistics released figures last Thursday which showed in January and February, the country\’s industrial output grew 20.7 percent, and retail sales of consumer goods rose 17.9 percent, while the urban fixed assets investment leapt 26.6 percent, and import and export in general trade soared by 52.1 percent.

Beijing-Shanghai bullet train to roll in 2012

Beijing-Shanghai bullet train to roll in 2012

The highly anticipated Beijing-Shanghai bullet train, with a speed of 218 mph, is expected to be put into use by 2012, said an official with the Railways Ministry, the Beijing News reported Friday.
\”The high-speed train will not travel nonstop between Beijing and Shanghai. It will stop in Ji\’nan, Hefei, Nanjing and Xuzhou,\” said Yang Shaoqing, deputy chief of the Ministry\’s Transportation Bureau.
The outsized railway project, extending 809 miles, broke ground in April 2008 and is expected to cost up to 220.9 billion yuan ($32.4 billion).

Steel mills head home for ore stocks

Steel mills head home for ore stocks

An employee working at a steel furnace in Dalian. China\’s iron ore production stood at 200 million tons in 2009 and is likely to rise by 20 percent this year. [LIU DEBIN / FOR CHINA DAILY]
 Surging spot prices of iron ore are forcing steel mills to look for more domestic supplies, something that would also reduce their dependence on costly imports, industry insiders said.
Beijing Ye-Steel Trading Co, a private steel mill that buys ore from the spot market, has stopped buying imported iron ore after prices surged to above $130 per ton in February.
\”We are now buying domestic iron ore with a 66 percent iron content priced at 1,080 yuan ($158) per ton including tax, much cheaper than imported ore,\” said a sales manager from Ye-Steel who declined to be named. The company is one of several steelmakers choosing domestic iron ore sources more often.
Industry analyst Xu Xiangchun from consulting firm Mysteel said that since the spot price of imported iron ore is higher, many steel mills have increased offtake from domestic sources, especially from Hebei province where most of China\’s mines are located.
This should help to keep rising imported iron ore prices in check, he said.
As to whether the domestic sourcing option will impact annual benchmark price talks – which are currently ongoing – it \’s hard to say, he said.
The price of 66 percent content ore from Iran rose to $144 per ton including freight on Thursday – more than double the 2009 benchmark price reached by Australia\’s Rio Tinto, BHP and Brazil\’s Vale.
That price is 7 percent higher than domestic ore, and if taxes are included, the price is nearly $168 per ton.
Ye-Steel\’s sales manager said domestic ore accounted for a mere 5 percent of the company\’s raw material consumption in 2009, as the global financial crisis weighed on imported ore prices.
But after spot prices of imported iron ore rose to a record high this year, he expects domestic supplies to account for 30 percent of the company\’s raw material usage in 2010. Since the domestic ore has a lower percentage of iron, it comes with higher mining costs attached to it.

Xu said low-priced spot ore imports last year squeezed domestic miners\’ margins, even pushing some out of business. But when imported ore prices jumped above domestic pricing levels, China\’s miners shifted back to sourcing from the local markets.
Domestic iron ore production stood at 200 million tons in 2009 and is likely to rise by 20 percent in 2010, he said.
Chinese steel mills are at a disadvantage in the annual iron ore price talks due to the large number of steel firms scattered across the nation, and their high dependence on imported iron ore.
Steel mills increased iron ore imports by 42 percent to a record 628 million tons in 2009.
Imported ore, on average, accounted for 62 to 69 percent of the total offtake by Chinese steel mills, according to official data. 

Chinas top 5 banks bad loans down in 09

China\’s top 5 banks\’ bad loans down in \’09

The non-performing loan (NPL) rate of China\’s five major banks was down by one percentage point to 1.8 percent from the start of the year, the China Banking Regulatory Commission (CBRC) said Thursday.
Non-performing loans fell by 63.8 billion yuan to 357 billion yuan (52.3 U.S. dollars) in 2009, according to the statement, accounting for about 72 percent of the total bad loans of all Chinese commercial banks, the CBRC said in a statement on its website.
The NPL rate for the major banks was higher than the average level of all Chinese banks, which was 1.58 percent.
The five banks include Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Bank of Communications, which are all listed companies, in addition to the unlisted Agricultural Bank of China.
The four listed lenders\’ provision cover was 163.41 percent, above the level of 150 percent required by the CBRC, and that of the Agricultural Bank of China stood at 105.81 percent, higher than the required 100 percent, the CBRC said.
Liu Mingkang, chairman of the CBRC, said China\’s big and medium-sized banks should attach great importance to risk control, and reforms and innovations should be carried out to raise their core competitiveness.

Payment guideline for bankers issued

Payment guideline for bankers issued

China\’s banking regulator issued a guideline Wednesday requiring the country\’s commercial bank executives and employees\’ pay to be based on performance assessment in a move to align the pay system in the sector.
Under the guideline, at least 40 percent of bonuses for banks\’ top executives must be deferred for a minimum 3-year period. Banks will recover earlier payments and hold back the retained bonuses if executives cause heavy losses due to poor performance.

Assessments will cover the banks\’ business performance, social responsibility, and risk management such as capital adequacy, bad loans ratio and provision coverage ratio.
Bonuses to bank employees will be no higher than the level the year before if the bank does not meet any one of the above three requirements.
The guideline requires bonuses to executives to be no more than 3 times their base salary.
It also stated the base salary for bank employees should not exceed 35 percent of their total