[Abstract] We should improve our policy system to boost consumer spending, more details can be described as follows:
Firstly, we should increase infrastructure investment, improve relevant laws and regulations, as well as create a good environment for consumption. Secondly, we should put equal importance on both the turnover tax and income tax, strengthen the function of public finance and improve fiscal policy of boosting consumer spending. Last but not least, we should facilitate the development of financial market, develop consumer credit services in a proactive and stable manner, broaden channels for investment overseas and enhance financial policy of boosting consumer spending.
[Abstract] Recently, foreign media have made a big fuss about the fact that China surpassed Japan as the world’s second -largest economy. To such kind of flattery, we have to maintain a high level of vigilance. Although China has entered the ranks of the world’s largest economy, it is still not an economic power. In terms of per capital index, China is far behind the U.S. and Japan, also in terms of aggregate indicators, China is not among the top in all aspects. Despite the fact that China’s economy has sustained continuous and rapid development, its potential growth rate has started to slow down. Moreover, changes on labor and capital will restrain China’s economic growth. Thus, China must speed up the transformation of its development mode and improve the quality of development.
[Abstract] In the first half of 2010, Japan’s economy experienced a fallback and most of the indicators began to decline, the economy as a whole, however, stayed on the way to recovery. The major economic indicators have showed the following trends: external demand is weakening while domestic demand is sluggish, slow recovery of production and a rather difficult employment situation, commodity prices are decreasing and prosperity index is declining. In summary, Japan’s economic recovery is expected to slow down in the future.
[Abstract] The growth rate of the U.S. economy reached 2.4% in the second quarter of 2010, thus the U.S. has achieved four consecutive quarters of growth. As can be seen, economic recovery is steady. Nonetheless, the steady economy recovery has not brought significant improvement in employment, as the current unemployment rate remains high at 9.5%. The followings reasons can be used to explain such phenomenon:
Firstly, there is a big gap between the actual output and potential output, also the utilization of its capacity is low. Secondly, the wage is rigid in nature and the structural unemployment is severe. Last but not least, there has been no clear sign of recovery in the real estate market and the expansionary fiscal policy failed to create more employment as expected.
[Abstract] In the second half of 2010, the U.S. economic growth is likely to slow down and enter a period of adjustment which normally occurs after rapid economic recovery. This will not, however, lead to a double dip recession. The expansion of industrial capacity will slow down gradually. Whether the commodity price will fall back or not, we still need to keep a close eye on the future development. The manufacturing Purchase Management Index may shrink from its peak. The job market will remain weak while the retails will be featured with flat growth. The replenishment cycle may end earlier than expected and the real estate market is likely to recover slowly after the market turbulence. The trade surplus between the U.S. and China will continue to increase which would heat up the trade friction. In the short term, the U.S Dollar faces the risk of call-back but will remain strong in the middle term.
[Abstract] There are three problems in the marketization process of the RMB exchange rate: firstly, the exchange rate does not fully reflect the changes in the market supply and demand. Secondly, the basket of currencies and the method of weight-determination are very complicated. Finally, the fluctuation range of exchange rate is locked which results in failure of the market adjustment itself. To resolve those problems, we should improve the flexibility of exchange rate, facilitate the reform of exchange rate marketization, create more tools for risk management of exchange rate. By doing so, we will be able to deepen the marketization reform of the RMB exchange rate. In the next 12 months, the RMB is expected to appreciate up to 4%. Presently, there is still lot of pressure on the rapid appreciation of the RMB, the impact of the exchange rate adjustment is likely to appear at the end of this year or the beginning of next year.
[Abstract] The current domestic and international financial environments have created a good opportunity for reforming the RMB exchange rate regime, but it has also brought great pressure on marketizing the RMB exchange rate regime. The re-start of the RMB exchange rate regime has increased the expectation on RMB appreciation. Besides, RMB appreciation will produce significant impact on our foreign trade, economic restructuring, fund flow and RMB internationalization
[Abstract] At the beginning of 2010, the international pricing of iron ore became short term & negotiation-based, this is likely to increase the volatility of iron ore’s price. The common practices used by international buyers to deal with price volatility are: equity participation, swap contract, long term contract and so on. We can learn from their experiences and adopt the following measures to cope with price volatility: using M & A to get equity mineral products overseas, developing financial derivatives market for mineral products, building a strong industrial Union, restructuring the iron and steel industry and developing substitutions, as well as giving full play to the role of China Iron and Steel Association.
[Abstract] Nowadays, there is a mixed view on Fannie Mae and Freddie Mac. In fact, Fannie Mae and Freddie Mac advanced the U.S housing construction. From the formation mechanism of Mortgage-Backed Securitization, we can see that this kind of housing finance model is unsustainable as it is sub-prime mortgage-based. Nonetheless, there is still something worth learning from the two mortgage corporations if the source of the sub-prime mortgage can be properly fixed. China can establish specialized mortgage financier to diversify financial risk in the real estate market, strengthen supervision on the existing housing finance system as well as create independent evaluation system.
[Abstract] During the second half of 2010, the Central bank should focus on the cumulative effect brought by previous policies, continue to implement a moderate loosen monetary policy, maintain policy’s stability and continuity while increase its flexibility and pertinence, as well as control the impact, pace and focus of the policy. Besides, the central bank should also ensure a moderate increase of monetary credit; implement the credit policy of “guarantee and control” and optimize credit structure; improve RMB exchange rate system; prevent systematic risk, maintain healthy and stable development of the financial system, as well as promote stable and balanced increase of the macroeconomy.
[Abstract] During the first half of 2010, the interest rate in China’s financial market increased and tightened monetary policy generated distinct result, but a tight financial situation also appeared; the exchange rate of RMB against the U.S. dollar was stable, but there was a clear increase in effective exchange rate. The People’s Bank of China raised banks’ deposit-reserve requirement ratio three times; the open markets operated flexibly, timely and appropriately; the policy guidance for “Window guidance” and credit has been enhanced; finally, the reform of RMB exchange rate has been relaunched.
[Abstract] During the first half of 2010, China continued moderate loosen monetary policy, though not as loosen as in the previous period; the money supply declined steadily and was slowly reaching the target set at the beginning of 2010, but still far away from it; the savings in financial institutions declined; RMB loans increased in a fair quick but stable manner, there was a balanced distribution of bank loans except in January, nonetheless, demand of loans became weaker.
[Abstract] Presently, China’s government has taken the strategies of two “three-step” to internationalize RMB, which led to three demands from overseas, namely, transaction, prudence and speculation of Yuan-dominated assets. Moreover, it is hard to achieve the three objectivities of liquidity, safety and profitability. It is suggested to realize the following three functions simultaneously: RMB cross-border trade settlement, the function of investment in RMB financial market and the function of reserve currency under the condition of opening capital projects. On top of that, we can speed up RMB internationalization through improving China’s position in the two big international financial institutions.
[Abstract] Although small enterprises are the most dynamic factor in economic development, they face the common difficulties in financing. The U.S. has resolved this problem effectively through improving the financing environment and making more financing channels. We should construct financial model which suits small Chinese enterprises, starting from establishing credit rating system, encouraging the development of “Grass root financing” and exploring the financing market.
[Abstract] Many American problematic enterprises obtain internal financing through various forms, such as selling assets, recapitalization, recovering funds used by big shareholders. We can learn from those practices and resolving enterprises’difficulties in financing through the following mechanisms: bringing outsiders into the corporate governance, improving procedures of assets transfer and M & A, recovering occupied assets to establish legal environment conducive for cooperate finance.
[Abstract] All the countries tend to face a prominent problem in their economic development: the difficulties which SMEs encounter in terms of financing, especially for enterprises in difficult situation. The U.S. obtains external financing through strengthened protection of new creditor’s rights and other various measures, which gave us a good deal of enlightenment. In order to establish an appropriate financing system for enterprises in difficulties, we have made the following recommendations: strengthening protection of creditor’s rights; restraining debtors’ operations and improving means of financing; and giving the same treatment to various applicants of corporate finance.
[Abstract] An energy service company operates according to the energy performance contracting. The energy performance contracting it promotes is an effective way to improve energy efficiency and to save energy. Developing the industry of energy saving services will not only help us to meet the energy saving target of the “11th Five-year plan”, but also benefits the transformation of economic development mode. Specifically, it can push industrial upgrading forward, reduce energy consumption, protect our environment, increase employment and improve labor quality and so on.
[Abstract] China is blessed with rich marine resources, however, the exploitation of such resources is relatively rudimentary. China is now ready for exploiting marine resources, thus, we should start to exploit marine resources under the principle of “Exploitation & Protection”. The following recommendations have been made to achieve this objective: first of all, to develop pelagic fishery. Secondly, to exploit marine oil, gas and biological resources. Last but not least, to develop “blue agriculture”.
[Abstract] In the last twenty years, China has gained significant progress in its development of marine economy, nonetheless, there are also many problems which need to be resolved, such as the small proportion of marine economy in GDP, lagged marine technology, the structure of marine industry need to be further optimized, serious pollution and so forth. Therefore, we offer the following suggestions to tackle those problems: making development plan for marine economy and vigorously developing high-techs for marine exploitation; restructuring the marine industry, preventing marine pollution and strengthening the ecological construction.
[Abstract] The objectives of China’s global resource strategy for the period of “12th Five-year plan” are: to equip China’s domestic economy with vital resources globally which has strategic importance in a safe, effective and stable way; to further optimize the efficiency of resource allocation and improve resource security. In order to achieve those objectives, we have made the following three recommendations:
First of all, we should quickly establish and improve the strategic reserve system of important resources and increase exploitation of domestic resources. Secondly, speeding up the transformation of our development mode and establishing a strategic system where energy and resource are interchangeable. Last but not least, actively conducting international resource competition and cooperation, accelerating implementation of the “Go Abroad” resource strategy, as well as competing for international pricing power of important strategic resources.
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