May, 2011 Compiled by Yimin Zhang, University of Shanghai for Science and Technology and distributed free of charge

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WHO hopes China strengthen tobacco industry control

China can use its control over the state monopoly to end tobacco industry interference in tobacco control policy-making in a country where more than 1 million people die of smoking-related illness each year, a World Health Organization (WHO) official said. "China's tobacco industry is 100 percent state-owned. And this offers tremendous opportunity for the government to bring it under control," Dr Sarah England, a Beijing-based WHO tobacco control official, told Xinhua in an exclusive interview on the eve of the World No Tobacco Day which falls on Tuesday.

China is the world's largest cigarette producer and consumer. There are about 300 million adult smokers in the country and more than half of Chinese men smoke. China National Tobacco Corporation is the world's largest cigarette maker. Industry figures show that about 2,290 billion sticks of cigarettes were sold in China in 2009, up 40 percent from 2002.

Dr England said the biggest barrier to implementation and enforcement of national laws that are consistent with the WHO FCTC is a false belief that tobacco is good for the Chinese economy, which fails to take into account the huge humanitarian and economic cost of death and disease from tobacco. "People are beginning to question how something that needlessly kills a million Chinese people every year can possibly be good for the country," she said. The tobacco industry currently generates about 7 percent of the Chinese government's annual revenue. But health experts argue that the tobacco revenue is overshadowed by lost productivity and the overwhelming medical costs linked to the deaths and illnesses caused by tobacco consumption.

"Tobacco is a unique consumer product in that it kills up to half of the people who use it as directed. There is nothing else that is so deadly to consumers. I am confident that the senior leadership of China will make the right decision for the people and do what's necessary to essentially sunset the tobacco industry," Dr England said.

Source: Xinhua: WHO hopes China strengthen tobacco industry control, 2011-05-31

China sets pace in brand innovation

While Coca-Cola still has the biggest share of China’s $49bn soft drinks market, pride of place on a large display is given over to fast-growing local brews. These include Wahaha’s vitamin-packed smoothies, Nongfu Spring’s exotic fruit blends, Wang Lao Ji’s herbal teas and scores of others like them. None of these names would have resonance elsewhere. Just as US food and drink companies for decades ignored the rest of the world on the basis that their own market was big enough, so Chinese companies can afford to be similarly focused. “The local guys are innovating more and the foreign guys are having to play catch-up,” says Ted Hurley, associate director of fast-moving consumer goods at Nielsen, the information and analytics company. He reels off a list of other local names: Mengniu, Yili and Bright Food in the dairy industry; Cofco, a state-owned agribusiness with food interests from grains to wine; and Uni-President of Taiwan. “All have top-five-selling brands,” he says.

There are more prosaic examples. Toothpaste commands the same sweep of shelf space as in the west, with the same array of choice. There are tubes costing a few renminbi and international brands priced at up to Rmb18 ($2.77). In the middle of the shelving, with no fancy packaging or extreme promises, is Yunnan Baiyao toothpaste, priced at a punchy Rmb26. Yet despite its price, Yunnan – a traditional Chinese medicine company that segued into toothpaste a few years ago – has steadily been taking share from the likes of Colgate and Procter & Gamble, says Mr Hurley. “Yunnan has made the biggest market share gains in the past two or three years because it’s a local brand going premium – way more premium than anything else,” he says.

Source: Louise Lucas and Patti Waldmeir: China sets pace in brand innovation, The Financial Times, May 9, 2011

Wen emphasizes development of science, technology

Premier Wen Jiabao said Saturday China must develop powerful strength in science and technology and foster a large number of talented individuals in order to "gain the upper hand" in international competition. He made the remarks while addressing a plenary session of the National Congress of the China Association for Science and Technology (CAST) on Saturday. "China cannot develop without developing science and technology," Wen stressed. "Our future relies on the future of science and technology." He said China should pool its resources on major science and technology research programs, while making progress in the development of some strategically important new industries. Meanwhile, China should improve the quality, performance and competitiveness of traditional industries through scientific and technological progress, he said.

He went on to emphasize that as a large nation, China should develop its own basic research and frontier research, adding, "There is no base for the innovation of science and technology, if there is no original innovation in the basic and frontier sectors." Wen pledged that the government will provide long-term, stable financial assistance for basic and frontier research. Wen said the nation should work hard to create an environment for scientists to become bold and innovative, which also encourages freedom and democracy in academic issues. He pledged to firmly carry out the national strategy on intellectual rights, by stepping up efforts to protection them, so as to give new vigor to the innovation of the entire nation.

Source: Xinhua: Wen emphasizes development of science, technology, 2011-05-30

China probes 57 officials in food safety cases

Chinese prosecutors have launched investigations on 57 government staff involved in food safety cases this year, the Supreme People's Procuratorate said on Monday. Among the suspects, 18 people allegedly took bribes in 17 cases and the other 39 people were investigated for dereliction of duty, said Qiu Xueqiang, deputy procurator-general of the Supreme People's Procuratorate, at a press conference. Investigations by procuratorates were mainly against government staff abusing power or neglecting duty to issue licenses for unqualified enterprises and those who accepted or demanded bribes.

Source: Xinhua: China probes 57 officials in food safety cases, 2011-05-24
Shanghai mayor vows to ensure food safety

The Shanghai municipal government will take the "toughest measures" to crack down on illegal food production and ensure food safety, said Shanghai Mayor Han Zheng on Monday. Han made the remarks while attending a food safety conference, during which the establishment of a supervising commission on food safety was announced. The Shanghai Food Safety Commission will coordinate various organizations and departments to strengthen food production supervision, according to Han. Shanghai will also work on a blacklist mechanism to expose and strictly punish enterprises that lack credibility and responsibility, Han said.

A series of food safety scandals have emerged recently despite repeated calls by Chinese authorities for the overhaul of the country's food industry. Last month, steamed buns in Shanghai were reported to have been dyed or laced with coloring additives to mislead consumers. In March, the country's largest meat processor, Shuanghui Group, apologized to the public after some of its pork products were found to contain clenbuterol, an additive that stops pigs from accumulating fat and is poisonous to humans. In 2008, melamine-tainted milk powder left at least six babies dead and sickened 300,000 others across the country.

Source: Xinhua: Shanghai mayor vows to ensure food safety, 2011-05-24

New rules regulate recalls of unfit food

Revised national regulations that set out when and how tainted food should be recalled from the shelves are another example of the way in which China is trying to ensure food is safe to eat, says the nation's top quality watchdog. The General Administration of Quality Supervision, Inspection and Quarantine posted details about the new rules on its website at the weekend to solicit public opinions. However, the new rules say that food that has been recalled because of defective labels or instructions can be put back on the shelves once the problem has been fixed - but only after customers have been informed.

Businesses responsible for the production of unsafe food may face fines of up to 30,000 yuan ($4,600) for failing to respond in a timely and appropriate way, the revision says. "The revision improves things a lot in comparison to the old regulations but I would rather see the rules we have being effectively implemented," added Sang Liwei, a food-safety lawyer and the China representative of the Global Food Safety Forum. Sang said the maximum penalty of 30,000 yuan is too little to dissuade companies from producing unsafe food. "The fine should be calculated based on the companies' revenues," he said

Source: Qiu Bo: New rules regulate recalls of unfit food, China Daily, 2011-05-26

Restaurants targeted in crackdown on illegal food additives

China's State Food and Drug Administration (SFDA) on Wednesday announced that they will conduct an inspection tour to check the implementation of an earlier measure regulating the use of additives in food by restaurants. In an earlier circular, the SFDA ordered all restaurants to pledge not to use illegal food additives or add ingredients that are harmful to human health in their food. It also ordered restaurants to declare the names of food additives used in self-made hot-pot seasoning, beverages, and other seasonings, to local food-safety authorities and post these additives in prominent places in the restaurants. The inspection will be conducted in Shanxi, Jilin, Anhui, Hainan, Guizhou, Yunnan, Qinghai, Tianjin, Ningxia, and Chongqing.

China is taking heavy-handed measures following a string of food safety scandals in recent months. Courts in China have heard 61 cases involving food safety violations and convicted 106 criminals over the past eight months, the Supreme People's Court said last week. Additionally, sentence terms for the convicts, which were handed down during the period from September last year to April this year, were all without chance of reprieve. The court also vowed harsh punishments for officials involved in food safety violations. Chinese police nationwide have solved more than 1,000 cases that "severely" jeopardized food safety so far this year

Source: Xinhua: Restaurants targeted in crackdown on illegal food additives, 2011-05-26

Pension program to cover 60% of China's rural areas

China plans to expand a piloted pension program to 60 percent of its rural areas this year, an increase from the original target of 40 percent, Chinese Vice Premier Zhang Dejiang said Friday. Zhang made the remarks during a visit to the cities of Yulin and Baoji in Shaanxi province that lasted from Wednesday to Friday. The new program has made progress, as its policies and measures have been redesigned to attract rural people and basic pensions have been doled out on time, Zhang said. China launched a pilot pension program for its 800 million-strong rural population in August, 2009, as part of efforts to narrow the standard-of-living gap between rural and urban residents. Any rural resident over the age of 16 who does not take part in the government's existing urban pension scheme is eligible to join the government-subsidized program. Farmers over 60 will receive a monthly endowment of varying amounts set according to their area's standard income levels after paying a fee to join the program. In the past only China's urban dwellers were covered by the national pension system and old folk in the countryside had to depend on their children to take care of them. By the end of 2010, the pension program for rural residents has covered 24 percent of the country's counties.

Source: Xinhua: Pension program to cover 60% of China's rural areas, 2011-05-14
China's pension fund increases tenfold

China's National Council for Social Security Fund (SSF) said that by the end of 2010 the assets managed by it totaled 856.7 billion yuan ($131.76 billion), a tenfold increase since it was established in August 2000, China Securities Journal reported on Thursday. According to the report, SSF posted an average investment yield of 9.17 percent during the past decade. Dai Xianglong, chairman of SSF said earlier that the fund will add 100 billion yuan investment in 2011, focused on fixed-return products, private equities and overseas assets. He expected the SSF to become 1.5 trillion yuan by 2015. The report also said the SSF will invest more on government-subsidized housing projects for low-income families

Source: Ben Yue: China's pension fund increases tenfold, China Daily, 2011-05-19
More efforts needed to help grads find jobs

China's State Council, or Cabinet, acknowledged that getting jobs remains a tough challenge for many college graduates and efforts must be made to help them. A State Council meeting on Wednesday, presided by Premier Wen Jiabao, agreed that supportive policies must be adopted to encourage graduates to work at the grass-roots level and less-developed areas, and to become self-employed. "The task to promote employment rate of college graduates remains arduous because the total number of graduates is still very large, and some graduates' expectations for jobs do not match the demand of employers," said a statement of the meeting.

According to the Ministry of Human Resources and Social Security, China will have about 6.6 million college graduates in 2011. The statement said efforts should be made to "expand employment channels and create more opportunities for graduates." China's plan to develop more knowledge and technology-intensive enterprises should help create more job opportunities. Small and medium-sized enterprises that employ university graduates could enjoy preferential policies in obtaining loans and social security, the statement said. "More jobs should be created in the fields of social management, public education, health and cultural sectors," it said. "Graduates who start up their own businesses can obtain loans worth up to 100,000 yuan ($15,380) and get relevant training subsidies," it said.

Source: Xinhua: More efforts needed to help grads find jobs, 2011-05-26

Trade unions set wage talks target

Unions will introduce collective wage negotiations by 2013 in at least 95 percent of enterprises set up by Fortune 500 companies operating in the country, a senior union official said. Among the approximately 4,800 corporations of Fortune 500 companies in China, 93 percent have already established unions, said Guo Chen, a division chief overseeing grassroots organizations with the All-China Federation of Trade Unions (ACFTU), the top union organization. "A greater union presence in Fortune 500 companies is a priority and we will introduce collective wage negotiations in all companies that have unions in the next three years," Guo told China Daily.

China's Trade Union Law stipulates that a corporate unit with 25 employees or more should set up a union. The primary task of a union is to boost collective contract agreements and to mediate labor relations through negotiation between employees and employer.

Source: Chen Xin: Trade unions set wage talks target, China Daily, 2011-05-31

Consumption set to rise

China's domestic consumption may increase in April, in a rebound from the first quarter's slowdown, according to analysts. However, they warned that the expectation of higher inflation is likely to reduce consumer spending for the whole year. In April, total retail sales of consumer goods, a main gauge of domestic consumption, may rise by 18.3 percent from a year earlier, compared with 17.4 percent in March, according to a report from China International Capital Corporation Ltd. Other analysts have forecast year-on-year growth in total retail sales of consumer goods to be between 16.3 percent and 18 percent, indicating a steady rise in retail sales in the domestic markets. In the first three months of this year, the total figure for retail sales of consumer goods was 4.29 trillion yuan, a year-on-year rise of 16.3 percent, according to the statistics bureau. The growth rate declined from 22 percent in the last quarter of 2010.

Because of restrictions on purchases of automobiles and new homes, sales of motor vehicles and furniture slowed in the first quarter of this year. The year-on-year growth rate of motor vehicles was 14.2 percent, 25.6 percentage points lower than that in the same period last year. The increase of furniture sales was 24.5 percent, 13.1 percentage points lower than the year-earlier figure, according to the NBS.

Source: Chen Jia: Consumption set to rise, China Daily, 2011-05-10

China to invest 6.2t yuan in transportation

China plans to spend 6.2 trillion yuan ($954 billion) to upgrade its transportation infrastructure during its 12th Five-Year Plan period (2011-2015), an official said Thursday. The figure was compared to a previous investment of 4.7 trillion yuan in the sector during the 2006-2010 period, Sun Guoqing, director of the comprehensive planning department of the Ministry of Transport, said during a press conference. The money will pay for the construction of road and waterway transportation facilities, with road construction accounting for a large part of the budget, Sun said. According to a development plan released by the ministry at the conference, China will construct 108,000 kilometers of highway during the 12th Five-Year Plan period. By the end of 2015, the country's highway network will cover more than 90 percent of cities with populations of 200,000 people or more, according to Sun.

Source: Xinhua: China to invest 6.2t yuan in transportation, 2011-05-26
In China, Factories vs. Farms

Growing cities, expanding deserts from years of overgrazing, and a reforestation effort have helped shrink China's farmland by 8.3 million hectares in the past 12 years, the government says. With less land under cultivation, Chinese farmers are unable to boost production of corn and wheat fast enough to cool surging domestic prices, so the country is importing more. China, the world's biggest grain producer, was a net exporter of soybeans until 1995. In 2011, it is forecast to import 57 million tons, or almost 60% of global trade in the oilseed used in animal feed and tofu, according to data from the US Agriculture Department. In February 2011, wheat on the Chicago Commodities Exchange reached its highest level since 2008 as traders fretted that drought was damaging China's crop, raising the risk the country would drain the world market.

Source: Forsythe, Michael; Javier, Luzi Ann: In China, Factories vs. Farms, Business Week (May 2, 2011): 1.
China to spend more on water conservancy

China's investment in water conservancy projects from 2011 to 2020 is expected to reach 4 trillion yuan ($615 billion), almost four times as much as that spent during the past 10 years, a senior water official said Monday. China's Minister of Water Resources Chen Lei said the country's water conservancy spending during the past five years reached 700 billion yuan, and about 363 billion yuan for the 2001-2005 period. The investment will be used in projects including consolidating 15,900 small reservoirs by 2013, and another 2,721 large and medium-sized reservoirs by 2015, Chen said. Chen added the increased investment is expected to strengthen the nation's water conservancy capacities in fighting droughts and floods, which in recent years have increasingly affected many regions across the nation.

Source: Xinhua: China to spend more on water conservancy, 2011-05-24
Industrial-Organization-Transformation-Oriented Agricultural Modernization with Chinese Characteristics: From the Perspective of Industrial and Agricultural Interaction

Agricultural modernization is an internal decision of economic development rules as well as one of our nation's strategic measures. However, in spite of its half-a-century process, China's agricultural modernization still fails to change its traditional agriculture. The basic reasons lie in that China's agricultural modernization fails to follow the basic rules of System Theory, over-emphasizes the technological transformation of agricultural system while neglecting that in industrial organization.

Agricultural modernization as an outcome of economic development cannot be achieved within the agricultural sector only. The agricultural transformation process in western countries has revealed that agricultural modernization is a process in which agricultural organizations spontaneously achieve the transformation in agricultural industrial organization and agricultural technology with the core ideology of industrialization. The existing binary system has made Chinese agriculture fail to achieve the transformation in industrial organization and technology synchronically with the industrial sector. Therefore, in the current conditions, in order to facilitate agricultural modernization, we must transform the land system at the level of relations of production, urban and rural household registration system, urban and rural social security system and other key factors, promote the transformation of agricultural industrial organization with the core concept of industrial revolution, thus promoting the spontaneous revolution in agricultural production technology.

Source: Tang, Kaijiang: Industrial-Organization-Transformation-Oriented Agricultural Modernization with Chinese Characteristics: From the Perspective of Industrial and Agricultural Interaction, Journal of Business and Management6. 5 (May 2011): 211-216.

China sets outdated facilities elimination target

China's Ministry of Industry and Information Technology (MIIT) said Tuesday that it had set targets for local governments to eliminate outdated industrial facilities in 2011. The MIIT ordered 18 industrial production sectors to cut production levels in 2011. The production cuts will save 26.53 million tons of iron, 26.27 million tons of steel and 133.55 million tons of cement. Different provinces and regions will share different responsibilities in accomplishing those goals, the MIIT said. China has been phasing out disused and outdated production facilities since last May, according to the MIIT. The government has also suspended its approval of energy-intensive, highly-polluting construction projects in 12 sectors, including iron, steel, cement and aluminum, the MIIT said.

Source: Xinhua: China sets outdated facilities elimination target, 2011-05-11
Outsourcing service in China promising

China's outsourcing service is promising as it has witnessed fast expansion with optimized structural adjustments over the past few years, officials attending the 4th Global Outsourcing Summit said Monday. "China's outsourcing service has become a green engine for economic development and will have a strong influence on the urban economic transformation," said Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation. According to Huo, the number of China's outsourcing companies had exceeded 10,000 by the end of 2010 and these companies had created some 2.3 million jobs. Figures from the Ministry of Commerce show that China's offshore outsourcing contracts totaled $14.5 billion in 2010, up 43 percent year-on-year. "Outsourcing has become a key factor in China's urban economic transformation," said vice-minister of commerce Wang Chao.

Source: Xinhua: Outsourcing service in China promising, 2011-05-24
Wenzhou denies manufacturing base is withering

Municipal government officials in Wenzhou, Zhejiang province have denied speculation that the city faces the loss of its manufacturing base, as factories close and funds are diverted into capital investment. "The factory closures are not as severe as is being reported by the media, and the city will never be deserted just because fewer factories are making goods for both the domestic and overseas markets," said Huang Shoujun, director of the Small and Medium-sized Enterprise Department at Wenzhou Economic & Trade Commission.

"Private businesses in Zhejiang, Wenzhou in particular, now allocate their money this way: One-third for manufacturing; one-third for real estate; and one-third for financial investment," said Zhou Dewen, chairman of the Wenzhou Council for the Promotion of Small and Medium-Sized Enterprises. Last year, more than 2,000 enterprises in the city closed down, more than half of them were involved in manufacturing. Zhou said it's not surprising that private businesses are shifting from manufacturing to investment, given that capital chases profits, and profits are running at 30 percent or more at present. "As labor is not as cheap as it was and inflation is squeezing profit margins, it's not surprising that a few small enterprises have failed to handle their financial problems. However, that shouldn't be recognized as a common phenomenon in the city, " said Huang. According to a survey carried out by Wenzhou's Economic & Trade Commission in March out of 855 local enterprises, more than 90 percent have outstanding orders to be fulfilled, and 23.9 percent of them have orders which must be completed within three months.

Source: Yu Ran: Wenzhou denies manufacturing base is withering, China Daily, 2011-05-25

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