BEIJING, Nov. 7 — Foreign employees working in China have been required to pay into the country’s social security system since Oct. 15, according to a latest social insurance regulation.

Once the details are rolled out, more than 230,000 foreigners in China will be included in the country’s welfare system for pension, medical insurance, unemployment, work injury and maternity benefits.

The new scheme will be implemented by local governments before the end of this year, but companies will have to back-pay contributions from Oct. 15.

In Beijing, the salary cap for paying social insurance is 12,603 yuan (2,000 U.S. dollars) in 2011. For a foreign employee earning that or higher, his employer has to pay about 4,096 yuan every month, and the employee himself needs to pay about 1,326 yuan.

Some foreigners believe the implementation of the new regulation is still short on details, and worry they may not receive the benefits after joining the network.

For instance, a foreigner who loses a job in China instantly loses the right to live here, and it is still unclear how he or she is going to benefit from the unemployment insurance and retirement pension.

At a press conference held on Oct. 28, Xu Yanjun, deputy director of the National Social Security Management Center of the Ministry of Human Resources and Social Security, admitted that the system needs to be improved to function more efficiently.

However, China created its basic social security system just several years ago and is still working on strengthening the system. The imperfection of the system should not eclipse the necessity for foreigners being included, nor should it justify the rejection of the plan.

The lack of social security for foreign workers may lead to many labor disputes. It is an international norm to protect employee’s rights, regardless of whether they are foreigners or locals.

In the U.S. and Europe, it is a common practice to treat foreign and domestic workers equally and entitle them to the same social security norms, allowing foreigners the same social welfare benefits as nationals.

“There’s nothing wrong with the country making sure that everyone has basic insurance.” K. Lesli Ligorner, an attorney in Shanghai for Paul Hastings, was quoted by USA Today as saying.

Some criticize the new policy as a scheme to fill the deficit in China’s domestic social security system. This is also untrue for a country like China with such a huge population.

“We have no intention of grabbing money from foreigners, and the money of these 200,000-plus workers is insignificant when we’re talking about the welfare of China’s entire population,” Xu Yanjun explained to reporters.

Under the new rules, companies hiring foreigners, most of them foreign companies, will face more labor costs on doing business in China. Some see the raising costs for the foreign companies as a sign of a deteriorating business environment in China, which is a total misreading.

Chinese companies have been obliged to buy insurance for their Chinese employees for years. Leaving foreign employees out of the system gives their employers an unfair cost advantage in hiring.

As China is deepening reform in its market economy, the equalization of treatments for domestic and foreign businesses has become an irreversible trend. The cancellation of some favorable policies in the past for foreign firms conforms to the trend.

Besides, domestic companies hiring foreigners also need to pay contributions on top of the payments made by the employees. The new rules are not solely targeting on the foreign businesses.

Xu Yanjun vowed there would be no going-back on the scheme.

“Rather than airing grievances, they (foreign firms in China) should simply change their China strategy and share more knowledge with their Chinese partners,” a Xinhua commentary suggested last Monday. 

On Xinhua Web site: http://news.xinhuanet.com/english2010/china/2011-11/07/c_131232672.htm

A powered-off workshop is seen empty in Wenzhou, east China’s Zhejiang Province, June 30, 2011. © Xinhua

By Wang Guanqun

BEIJING, Oct. 10 — China’s small businesses turned to be the first to ring the alarm as the country is walking a fine line between fighting inflation and maintaining growth.

Some entrepreneurs have disappeared and others have jumped off buildings almost every week since April in Wenzhou City, an entrepreneurial capital in eastern China’s Zhejiang province, Xinhua reported.

The sudden disappearance of the business owners has revealed a surprisingly gloomy picture for the small and medium-sized enterprises (SMEs) in China.

RUNAWAY BOSSES

According to a Xinhua investigation, at least 80 cash-strapped businesspeople in Wenzhou have skipped town or declared bankruptcy to invalidate more than 10 billion yuan (1.6 billion U.S. dollars) in debt.

Just last month, two local entrepreneurs in Wenzhou killed themselves by jumping off the buildings and another broke his leg in a similar suicide attempt.

The tragedies in Wenzhou are extreme cases of private SMEs struggling to survive a liquidity crunch amid the country’s macro control policies set to curb inflation and cool down the over-heated property market.

In Wenzhou, one-fifth of the 360,000 small and mid-sized businesses have stopped operating due to cash shortages, according to the city’s council for small and medium-sized enterprises.

Of the 855 companies surveyed by the Wenzhou Economic and Information Commission, more than 76 percent said they are almost out of money and are struggling to continue production.

But many cash-strapped firms are unable to borrow money from banks, and some have turned to China’s underground lending market to pool money from individuals and firms.

The steep rates of the informal loans pushed some businesses to the brink of collapse.

MONETARY TIGHTENING

To curb soaring inflation, the People’s Bank of China (PBOC), the country’s central bank, has raised banks’ reserve requirement ratio six times this year and hiked interest rates three times in a bid to check excessive lending.

China’s benchmark interest rate of one-year deposits currently stands at 3.5 percent and banks have to set aside 21 percent of their deposits as reserves, mopping up about 2.1 trillion yuan (235 U.S. dollars) of liquidity otherwise available for lending.

The tightening monetary policies have bitten into China’s small businesses which create 80 percent of the nation’s jobs and generate 60 percent of the industrial output, but have difficulty securing bank loans.

Outstanding loans to small firms grew 26.6 percent year-on-year to hit 9.85 trillion yuan (1.55 trillion U.S. dollars) at the end of July, rising faster than the total outstanding loans of Chinese banks, said Xiao Yuanqi, an official from the China Banking Regulatory Commission (CBRC), late last month.

“But it (the statistics) does not touch upon the huge gap between actual bank loans and SMEs’ financing needs or whether the banking sector has narrowed that gap,” China Daily commented in an editorial.

The informal lending market between companies and individuals, which operates outside the banking industry, became a last resort for many private entrepreneurs facing a cash squeeze.

UNDERGROUND LOAN MARKET

The gap between small firms’ financing needs and the credit crunch bloomed Wenzhou’s informal lending market.

Currently, there are 186 guarantee firms, 1,088 investment companies, 431 consignment stores and 48 pawnshops in the city, data from local government departments showed.

Outstanding high-yield loans issued in the informal lending market currently totaled 110 billion yuan in Wenzhou, according to data from the PBOC’s Wenzhou branch.

And the informal loan rates are staggering. According to the PBOC’s Wenzhou branch, the composite annual interest rate in the city’s informal lending market hit a record 25.09 percent by the end of August, compared with the banking sector’s benchmark one-year lending rate of 6.56 percent.

The high rate drove the local residents in Wenzhou to lend on the informal market rather than to banks.

The PBOC estimated the market was worth 2.4 trillion yuan as of the end of March 2010, or 5.6 percent of China’s total lending.

Lian Ping, chief economist with the Bank of Communications, told Xinhua it is easy for those dealing with the informal lending market to fall into a vicious circle by taking on new debts to repay old ones, considering the system’s similarity to a Ponzi scheme.

“If there is no new funding to support such expectations, the system will collapse and creditors will suffer huge losses,” Lian said.

PREMIER’S CALL

To address the small businesses’ financing need, Chinese Premier Wen Jiabao paid a visit to Zhejiang province on Oct. 3 and Oct. 4.

Premier Wen said small enterprises should be a priority for bank credit support and enjoy more preferential tax policies.

Banks should increase their tolerance for the non-performing loan (NPL) ratios of small enterprises, set targets for the proportion and growth of loans to small companies and reduce the cost of securing credit, the premier said.

He also said bank support for small businesses must follow market principles and avoid too much administrative intervention in order to check moral hazards.

Wen said private lending activities should be better guided and regulated in order to play a positive role in boosting the country’s economy.

“Effective measures should be taken to contain the trend of usury, crack down on illegal fundraising and properly handle the problems of collateral and capital shortage in order to prevent risks from spreading and evolving on a regional scale,” he said.

“Small businesses play an irreplaceable role in creating jobs and boosting economic growth,” said Wen.

“It is of overall and strategic significance to support their development,” Wen added. 

On Xinhua Web site: http://news.xinhuanet.com/english2010/china/2011-10/10/c_131181749.htm

Photo taken on July 6, 2011, shows citizens visiting the Summer Real Estate Fair in Shenyang, capital of northeast China’s Liaoning Province. © Xinhua

By Wang Guanqun

BEIJING, Sept. 13 — New home prices, property transaction volumes and residential land prices in major Chinese cities all fell in August, suggesting the policies aiming at cooling the housing market are taking effect.

A report published by the China Index Academy (CIA) said the prices for new homes in ten first-tier cities, including Beijing and Shanghai, dropped 0.41 percent in August from July to 15,773 yuan (2,465 U.S. dollars) per sq m, the first decline since September of last year.

On a month-on-month basis, new home prices in 44 of the 100 cities monitored by the Beijing-based institution saw declines in August, up from 33 cities in July. Seven of the ten first-tier cities saw month-on-month drops, according to the CIA.

Meanwhile, the average floor price for residential land in 133 Chinese cities studied by the CIA plunged 9 percent to 1,619 yuan (253 U.S. dollars) per sq m in August, said the institution.

The transaction volumes for residential land in the cities continued to drop to 20.18 million sq m last month, down 17 percent from the same month last year and down 14 percent from a year earlier, according to the CIA.

Analysts attributed the property transaction declines in the major cities to the Chinese government’s adoption of a serious of measures earlier this year to curb soaring real estate prices. These measures included purchase restrictions, higher minimum down payment requirements, property taxes in the municipalities of Chongqing and Shanghai, and constructions of more government-subsidized apartments.

“The growing trend of the property prices in the past one year came to a halt in August, indicating that the property-cooling measures are bearing fruit now,” Liu Haibo, southern region general manager of the CIA, was quoted as saying by China News Service.

SLUGGISH MARKET

The capital’s new home sales dropped to 5,506 units in August, with daily sales of less than 200 units, according to the statistics posted on Beijing’s real estate transaction management website. Beijing’s new home transaction volume last month slumped 36.7 percent from July, or 16.4 percent from a year earlier, an all-time low in nearly three years, according to the website.

The housing prices in Beijing also saw a declining trend starting from May. According to the website, in the first five months of this year, the average new home price was 14,127 yuan per sq m.

In the first six months, the figure dropped to 13,623 yuan. The average price declined further to 13,623 yuan per sq m in the first seven months.

Xinhua reported the east Beijing’s Tongzhou District has witnessed a roller-coaster surging and plummeting of new home prices since last year.

A real estate in the district, Runfeng Lingshang, had been expected to be priced at 25,000 yuan (3,906 U.S. dollars) per sq m in 2009. But when contacted by Xinhua on Sept. 7, a saleswoman of the project said its homes will be sold at 13,000 yuan (2,031 U.S. dollars) per sq m.

“The property prices in Tongzhou District have fallen back to the level of 2009,” a manager of Yahao Real Estate Selling and Consulting Agency told Beijing Business Today.

Apart from Tongzhou District, many real estates in Beijing’s Fangshan and Daxing District also offered large discounts amid sales stagnation recently, according to Xinhua.

In Shanghai, the average home price was 22,026 yuan per sq m in August, almost the same as in July, according to China Real Estate Information Corporation. But the new home sales plummeted 25 percent from July, or 18 percent from a year earlier, hitting a new low since August 2005.

Another Xinhua report published on Sept. 9 said the 106 listed property companies’ overall asset-liability ratio increased 3.58 percent in the first half of this year to 72.25 percent. The total inventory of the 106 firms topped 964.011 billion yuan (151 billion U.S. dollars), up 38.39 percent.

On Sept. 5, China Vanke Co., the country’s largest property developer by market value, announced in a statement that its sales for August fell 12.6 percent from a year earlier.

In order to ward off risks, China Merchants Property Development Co., another giant property developer, vowed it will “actively participate in the constructions of affordable housing projects in major cities.”

MORE SUBSIDIZED HOUSES

In response to public complaints about soaring property prices, the State Council, or China’s Cabinet, has drawn up a plan to build 10 million subsidized housing units this year and 36 million more over the next five years.

These units include affordable homes, low rent homes, price-capped homes and public rental homes.

The government has allocated a total of 170.5 billion yuan (26.6 billion U.S. dollars) to build affordable homes for low-income people this year.

Up to the end of August, local authorities across China had started building or renovating 8.68 million government-subsidized housing units this year, completing 86.percent of the annual target, according to a statement issued by the Ministry of Housing and Urban-Rural Development (MOHURD) on Sept. 9.

MOHURD Minister Jiang Weixin said last month that construction of all subsidized housing units should be started before the end of October, and the main framework of at least one third of the housing projects should be finished at the same time.

Hebei, Liaoning, Fujian, Shandong and Shaanxi provinces have started building more subsidized housing units than the number as ordered by the State Council for the year.

Meanwhile, the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China (CPC) tightened the supervision on the construction of affordable housing projects nationwide.

The discipline watchdog was sending 10 inspection teams to 20 provinces, autonomous regions and municipalities in the following two weeks starting from Sept. 6 to assess the implementation of the central government’s policy, check the quality of the housing, and verify the proper use of public money.

MIXED EXPECTATIONS

September and October are considered as the prime season for property sales, but the sluggish transactions across the country in August cast shadows on this year’s sale prospect.

The policies of purchase restrictions and affordable housing construction adopted by central and local governments have had a profound impact on the property market.

“The purchase restrictions can effectively curtail the speculative investment, and the affordable housing projects will ease the contradiction between supply and demand,” Chen Zhi, deputy secretary-general of Beijing Real Estate Association, was quoted as saying by Beijing Daily.

In accordance with this policy, more and more potential home buyers choose to wait and see. Now 58.82 percent of respondents are hesitant to buy a home as they are still weighing the prices and discounts, according to an online survey conducted by China’s leading property information website soufun.com.

“The policies showcase the central government’s determination on curbing housing prices,” Zhang Dawei, market research director of Beijing Centaline Property Consultants Co., told Xinhua, “This has directly influenced the consumers’ psychology, and will thus cause the sales to fall in September and October.”

Besides, China’s prudent monetary policy starting from the beginning of this year increases the housing developers’ financing costs and asset-liability ratio. The funding pressure will further increase, prompting some developers to undersell their homes for quick cash withdrawal.

“This (the prudent monetary policy) has significantly reduced developers’ bargaining chips,” an editorial on China Securities Journal commented on Sept. 9.

But Wang Xiaoqin, professor of economics with Huazhong University of Science and Technology, believed the developers will offer more discounts in the sales of coming months to push up the transaction volumes. He told Xinhua the sales may go up in September and October, though the prices will drop.

“We should still be cautious as the foundation is not solid for healthy and stable development of the property market, and the inflation is expected to remain high, so the home prices will maintain steady and relatively high,” Chen Zhi told Beijing Daily.

“Besides, the formulation of long-term policies on the supervision over the property market, such as the land law, real estate law and the property taxes, are still in progress or under study. The fundamental mechanism that can directly impact on the development mode of the real estate market is yet to come,” Chen added.

“So once the current policies are relaxed, the market would see a retaliatory rebound,” he warned. 

On Xinhua Web site: http://news.xinhuanet.com/english2010/indepth/2011-09/13/c_131135440.htm

Dietmar Schmitz, Commissioner General of the German Pavilion, attends a press conference briefing on Germany’s participation in the Shanghai Expo 2010, in Beijing, March 23, 2010. ©Wang Guanqun

By Wang Guanqun

BEIJING, March 23 — The German Pavilion in the forthcoming 2010 World Expo Shanghai will present solutions devised by German industries and institutions to today’s most pressing urban problems, said Dietmar Schmitz, Commissioner General of the German Pavilion, in a news conference on Tuesday.

The German Pavilion, which will run from May 1 to the end of October 2010, is presenting itself as “balancity”, a city in balance, which is their explanation for the Expo Shanghai theme “Better City, Better Life”, Schmitz told reporters.

Speaking of the solutions to the urban problems, Schmitz gave an example of a flexible car-sharing model being practiced with success in Ulm, Germany.

“Car-sharing helps to protect the environment, it helps to use less energy, and it is more comfortable for people who live in the city to travel by car even if they don’t have a car by their own. It is a modern philosophy,” Schmitz said in an interview with Xinhuanet.

“We will also show a special system on how to lead the traffic,” said Schmitz, “by using this system, there will not be so many queues standing for the lights, and the traffic can move more fluently.”

Schmitz said earlier in a speech that urban planning resolutions also included “Hamburg’s ‘Umbau Ost’ urban redevelopment scheme along with its ‘HafenCity’ harbor conversion, and an innovative water purification system for Berlin’s Spree River.”

Talking about the solution to the reutilization of the pavilion itself, the commissioner said, “I have to admire the Shanghai Expo organizer, because they thought what should be done when Expo is over.”

“The Shanghai organizer asked all the international participants to rebuild their pavilions after the Expo… and make a green park in the area,” said Schmitz, “this is a very good idea to change the industrial site it was before into a park with a real after-use.”

According to Schmitz, the German Pavilion in Shanghai Expo is the biggest one Germany has ever had at an Expo. Some 8 to 9 million visitors are expected to visit the pavilion during the 184-day Expo.

On Xinhua Web site: http://news.xinhuanet.com/english/2010-03/23/content_13231763.htm

Ruslan Khozouz (L), diplomat of Jordan Embassy, speaks during an interview with Xinhuanet correspondent at the 7th Shanghai Expo International Forum held in Beijing, Nov. 12, 2009. ©Xinhuanet

By Wang Guanqun

BEIJING, Nov.13 — At the seventh Shanghai World Expo International Forum opened Thursday, representatives from the participating countries expected much from the 184-day world feast next year.

Some of them sought opportunities for further cooperation and development through the Expo.

Jon Trausti Saemundsson, Icelandic Embassy Project Manager, told Xinhuanet that the Shanghai Expo will be a great opportunity for both China and Iceland to learn from each other.

“I hope there is going to be a lot of business opportunities for both sides,” he added.

Arild Blixrud, Commissioner General of Norway for Expo 2010, agreed by saying, “We want to invite Chinese people to visit Norway; we want Chinese come and invest in Norway.”

For other representatives at the forum, the Expo will be a chance to find solutions to some of the world’s problems.

Maurice Strong, former UN under Secretary General and first executive director of the UN Environment Programme, said the Expo park “will become a great place to demonstrate the latest technologies that we need to adopt for climate change.”

“I think the Expo will give a tremendous boost to the prospect for a better climate,” he added.

Also others saw the Expo as dialogues between different cultures and civilizations.

“Most countries of the world are participating in the Expo. It is a kind of interaction of civilizations. Just like Iraq — we have Babylon, we have ancient places. So we can show them all in the Expo 2010,” Ziyad Tariq Alhiyali, representative from the Iraqi embassy said.

Representative from the Jordan Embassy Ruslan Khozouz believed the Shanghai Expo is a great platform for communication where diverse cultures clash. He said the Expo will open to the world a splendid window to understanding more about the Chinese and the Oriental civilizations.

The forum was co-hosted by the Shanghai Municipal Government and Bureau of International Expositions, under the theme “Shaping Urban Future with Global Wisdom.”

More than 300 representatives and Expo officials and organizers took part in the forum.

(Xinhuanet correspondents Hui Meng, Liu Li also contributed to the story.)

On Xinhua Web site: http://news.xinhuanet.com/english/2009-11/13/content_12447526.htm

Jon Trausti Saemundsson (L), Project Manager of Iceland Emassy, speaks during an interview with Xinhuanet at the 7th Shanghai Expo International Forum held in Beijing, Nov. 12, 2009. ©Xinhuanet

By Wang Guanqun

BEIJING, Nov. 13 — Guests participating in the seventh Shanghai World Expo International Forum said their countries are actively preparing for the upcoming Expo 2010, and revealed some of their ideas to Xinhuanet.

Canada’s Expo 2010 Commissioner General Mark Rowswell, commonly known as “Da Shan” in China, said based on the experience of the previous Expos, Canada puts a lot of efforts on the Expo 2010.

“Not to boast myself, but the cooperation between Cirque du Soleil and me would be a feature in the Canada pavilion,” the Chinese crosstalk star talked in fluent Chinese, “we will use our extraordinary imagination to embody our theme, a theme of the ‘vigorous city’.”

“After its open-up, I believe the Canada pavilion will be one of the most popular pavilions in the park,” he added.

But Rowswell declined to talk further on the details inside the pavilion, joking “if we reveal this too early, there will be many countries imitating us.”

Iceland Embassy representative Jon Trausti Saemundsson told Xinhuanet that since they come from Iceland, they are creating the Iceland pavilion like an ice cube.

“People coming to visit the pavilion will be transferred into the ice cube,” he said, “so people come in will come into an area that they can smell the nature of Iceland.”

Saemundsso said they will cool down the area, so people will feel the chilling. And on the visitors’ way out, they will be given ice water, which are imported from Iceland.

“So visitors will be walking in the Shanghai Expo park with the ice from Iceland,” he said.

Commissioner General of Norway for Expo 2010 Arild Blixrud said they will show harmony of the nature in their pavilion.

“We will build up a pavilion in wood, not steel. So when people come to our pavilion, they can touch the nature,” he said, “we want to remind them, keeping a good contact with nature will make a society a good place for living.”

“The United Nations has declared Norway as a very good country for living for sixth consecutive year, and we want to tell people why it is so,” said he.

The Jamaica representative said in the exhibition in the Caribbean pavilion, there will be a traditional beverage displayed. Besides, some of the world’s top athletes from Jamaica will be invited to the pavilion to join the activities with the visitors.

Thursday marked the 170 days countdown to the opening of 2010 Shanghai World Expo. According to the Shanghai organizer, constructions of most pavilions have been started in the Expo park, which is expected to see some 70 million visitors in the 184 exhibition days.

(Xinhuanet correspondents Hui Meng, Liu Li also contributed to the story.)

On Xinhua Web site: http://news.xinhuanet.com/english/2009-11/13/content_12447993.htm