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Cover Story
Print Edition> Cover Story
UPDATED: December 25, 2009 NO. 52 DECEMBER 31, 2009
Top 10 National Business Events of 2009
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Export Growth Negative

Figures released by the General Administration of Customs on February 11, 2009, showed a decrease of 17.5 percent in Chinese exports in January; the first time China recorded negative growth in the past seven years. The trend continued for the rest of the year, a direct result of the financial crisis that proved fatal to international demand.

The export decline led to production suspensions or closures of a large number of export-oriented companies, leaving many workers unemployed.

According to the National Bureau of Statistics, in the first half of 2009 decreases in exports imposed the most severe impact on China's economic growth. The contribution of exports to economic growth was negative 41 percent, pulling down the GDP growth by 2.9 percentage points. 

Central Economic Work Conference

As an economic window for 2010, the Central Economic Work Conference, held on December 5-7, 2009, in Beijing, served as a focal point for Chinese policymakers to formulate macro-policies for economic development in the upcoming year.

In 2010, China will maintain its macro-economic policies and continue its proactive and appropriately accommodative policies. The conference also proposed plans to make consumption a driving force for economic growth, strengthen efforts to readjust national income allocation and increase the consumption capability of the people, especially from low-income groups.

Held at a crucial time in China's economic development when the country has made marked post-crisis progress, the conference was of great significance to consolidating improvements in the Chinese economy and realizing steady and fairly fast economic development.

Rare Metal Mining Restrictions

On April 10, 2009, the Ministry of Land and Resources issued a circular on quota controls for aggregate yielding of tungsten, antimony and rare earth mines. According to the circular, by June 30, 2010, China will cease accepting applications for prospecting and exploitation permits for the specified resource mines. Early in 2005, export prohibitions were placed on rare earth raw ore and in 2007 foreign companies were restricted from entering the rare metal sector.

The main purpose of China's restrictions on rare metal exports is to protect the environment and natural resources, according to the Ministry of Commerce.

But China's control policies caused an uproar across the globe. On June 23, the European Union and the United States sued China through the WTO for its export restrictions, a challenge China will have to overcome to protect its domestic rare metal resources.

Growth Enterprise Board Launched

After 10 years of preparation, ChiNext, the country's growth enterprise board, was launched on October 30, 2009, at the Shenzhen Stock Exchange. On the opening trading day, prices of the first batch of 28 ChiNext-listed shares soared 76-210 percent, causing the stock exchange to halt trading three times in accordance with regulations.

According to the China Securities Regulatory Commission, the low threshold of the growth enterprise board aims to provide a financing platform for high-growth small and medium-sized enterprises to alleviate financing difficulties.

Tire Special 'Safeguard' Case

On September 11, 2009, U.S. President Barack Obama announced three-year punitive tariffs on all light truck tires imported from China. The tariff rates in the three years will be 35 percent, 30 percent and 25 percent, respectively.

The tariff is the first special "safeguard" investigation launched by the Obama administration against China. Previously, the Bush administration launched six such investigations, none of which resulted in the adoption of safeguard measures.

China's Ministry of Commerce said the U.S. action is a serious trade protectionist measure that violates not only WTO rules but also U.S. commitments made at the G20 Summit, delivering the wrong message to the rest of the world.

Auto and Steel Stimulus Packages

Initiatives to readjust and strengthen the automobile and steel industries became a national priority following a State Council announcement on January 14, 2009. The plans for the two industries aim to optimize the industrial structure and improve corporate quality and competitiveness on the international market.

The industry invigorating plans were the first China initiated to cope with the economic crisis and stimulate economic development. China complemented the plans by launching similar packages for eight other industries: equipment manufacturing, textile, shipbuilding, electronic information, light, petrochemical, non-ferrous and logistics.

The lifeblood of China's economy, the 10 industries contribute to 80 percent of the country's industrial added value and 40 percent of the GDP. The stimulus packages are expected to have far-reaching influence for China's industrial technology upgrading and structural readjustment.

Pilot RMB Settlements in Cross-Border Trade

After an executive meeting on April 8, 2009, the State Council revealed plans to establish pilot renminbi settlements in cross-border trade in Shanghai and four other cities in Guangdong Province, namely, Guangzhou, Shenzhen, Zhuhai and Dongguan.

All five pilot cities are export-oriented centers with large trade volumes. The executive meeting of the State Council acknowledged that as China copes with the global financial crisis, renminbi settlements are of great significance to promoting trade relations between China and neighboring countries and regions while avoiding exchange rate risks.

In the wake of the financial crisis, the renminbi demand from China's neighbors has increased, and currency swap contracts have been signed more frequently by the Chinese central bank to fulfill the growing requests.

With rising status as an international currency, the renminbi is likely to be one of the major currencies in the international currency system, but will not replace the U.S. dollar as a global currency.

Resignation of Hu Shuli

On November 9, 2009, Hu Shuli, one of the most admirable and influential reporters in China, resigned from her post as editor in chief of Caijing magazine due to disputes with the magazine's owner concerning the publication's future development, financing and news reporting.

Founded by Hu, Caijing is an economic magazine but often covers many non-economic sensitive issues.

Hu's resignation has echoed through Chinese media circles, causing many to discuss how to develop the industry properly while protecting the media's right to criticize and the people's right to know.

Consumption Stimulus Packages

On January 14, 2009, China cut the purchase tax on vehicles with engines of 1.6 liters or less from 10 percent to 5 percent. The government also set aside 5 billion yuan ($732.06 million) to subsidize farmers who discard their overused high-emission vehicles and buy vehicles with engines of 1.3 liters or less.

The cut was the first government policy to boost consumption launched by China in 2009. A series of stimulus policies followed suit, including subsidies for motorcycle, agricultural machinery, color TV, refrigerator, washing machine and new energy car purchases. Individuals can also receive exemptions or reductions on business taxes when selling their houses.

The stimulus policies have had marked effects. In the first three quarters of 2009, the GDP grew 7.7 percent from the same period in 2008. Consumption pushed up the growth by 4 percentage points, 0.2 percentage points higher than the first half of the year.

Rio Tinto Spy Gate Incident

Four Rio Tinto employees, including Hu Shitai, head of Rio's Shanghai office and China iron ore division, were detained in Shanghai on July 5, 2009, on charges of espionage. A senior executive of China's major steelmaker Shougang Group, Tan Yixin was arrested in Beijing on July 7 on commercial crime charges.

According to the Shanghai State Security Bureau, during iron ore negotiations this year, Hu stole state secrets through illegal means including bribing Chinese steel company staffs, which imposed serious damage on China's national economic security.

To prevent further state economic security infractions, China has stepped up efforts against commercial espionage.



 
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