june 1, 2012 china weekly policy monitor (may 28- jun 1, 2012) · 2012. 6. 4. · cnfol.com ....

Weekly Policy Monitor

Guosen Securities (HK) Brokerage Co., Ltd. 1

June 1, 2012

China Weekly Policy Monitor (May 28- Jun 1, 2012)

China is a highly policy driven market. Sectors that enjoy government support measures stand to benefit. Each week,

we will compile and share with you a snapshot of the previous week’s policy news and rumours. We hope this serves as

a useful guide for allocating portfolio weightings from a top-down level to generate alpha.

May 28- Jun 1, 2012

TOP NEWS

Vice-Premier says Xinjiang will be the key focus for expanding domestic demand.

China will target 8% GDP growth for 2012.

China has no plans for a new RMB4 trillion stimulus.

Sectors Policy Source

Insurance, stocks CSRC and CIRC discussed plans to permit asset management and brokerage

companies to manage insurance funds (June.1)

Furthermore, according to unnamed sources, more insurance funds will be used to invest in stocks

in the near future.

Sina Finance

Macro Vice Premier says Xinjiang will be the key focus for expanding domestic demand

(June.1)

Vice-Premier Li Keqiang on Wednesday urged for more support for the Xinjiang Uygur

Autonomous Region to drive rapid development and long-term stability in this utter-most western

region of China. According to the vice-premier, huge achievements have already been made in the

past two years under a large number of assistance projects for Xinjiang, especially projects to

improve the well-being of Xinjiang citizens. Vast land, abundant resources and huge development

potential make Xinjiang a major area to implement China's strategy to expand domestic demand

and to develop the country's western regions.

China Daily

Nuclear The State Council has approved the 12th FYP for nuclear safety (June.1)

The State Council approved the 12th Five-Year plan for nuclear safety, and radioactive-pollution

prevention and control, during an executive meeting hosted by Premier Wen Jiabao on May 31.

The market expects existing projects that are currently suspended to be resumed soon.

Cnstock.com

Property Hunan denied easing restrictions for first-home buyers in the province (May.31)

Tian Yongjun, the Deputy Director of the Hunan Development and Reform Commission stressed

that it had NEVER discussed any property market rescue measures. At the same time, Xiamen,

Shanghai and Guangdong also announced that they have no property stimulus measures in the

pipeline and that they will continue to strictly enforce all central government policies and measures.

Sina Finance

Macro, property, imports China will target 8% GDP growth for 2012 (May.30)

Premier Wen reportedly said at a conference in Wuhan on May 19th that China will target 8% GDP

growth for 2012 instead of 7.5%. It was only on May 30 that the HK Economic Times apparently

picked up this story after being informed by a source of the premier’s comments.

Premier Wen added that it will maintain tight control of the property market but will allow

fine-tuning, such as lowering down-payment requirements. To boost consumption, he said China

will reduce imports and encourage domestic production. He also required investment proposals

under the central government’s budget for 2012 to be submitted for approval by the end of July.

Cnfol.com



Strategic emerging

industry

The State Council approved the 12th

Five-Year plan for strategic-emerging industries

(May.30)

China’ strategic-emerging industries, including energy saving, environmental protection, new

energy, next generation communications technology, bio-science, high-end equipment

manufacturing, new materials and new energy vehicles, will receive strong support from the central

government, according to the 12th Five-Year plan recently approved by the State Council.

Sina Finance

Stocks Companies from western China will be given priority when approving IPOs (May.30)

To support China’s western development plan, China Insurance Regulatory Commission proposes

to give companies from western China top priority when approving IPOs.

Cnstock.com

Property Over 10 cities raised lending cap for the housing accumulation fund for first-home

buyers (May.30)

To boost housing demand, over 10 cities, including Chongqing, Xiamen, Nanchang, Zhengzhou

and Wuhan, have raised lending caps for the housing accumulation fund (which usually offers

lower interest rates than banks) for first-home buyers.

Sina Finance

Property Hunan announced stimulus measures for the local property market (May.30)

The Development and Reform Commission of Hunan Province met to adjust control over the local

property market under the central government's theme of tight restrictions. To boost demand,

Hunan will provide preferential interest rates and lower down-payment requirements for first-home

buyers, as well as cut taxes. The market expects these measures to have the same impact as the

"property rescue measures" in 2009.

Caixin

Insurance, stocks China will allow insurance companies to issue convertible bonds (May.30)

According to a notice issued by the China Insurance Regulatory Commission this week, insurance

companies will be permitted to issue convertible bonds and include these bonds in their tier-2

capital, which will help broaden their capital-raising channels.

Tencent Finance

Macro China has no plans for a new RMB4 trillion stimulus (May.30)

The central government has issued official documents to clarify rumours and to confirm that the

government has no plans for a stimulus package similar to the RMB4 trillion in 2009.

JRJ.com

Auto China will provide RMB1B-2B in financial support each year to subsidise the

industrialisation of new-energy cars (May.29)

To push forward the development of new-energy vehicles, the Ministry of Finance announced

annual subsidies of RMB1-2 billion to qualified auto manufacturers to promote the industrialisation

of new-energy cars and to support R&D. Besides, China targets electricity powered car sales to

reach 0.5 million units in 2015.

Reuters

Futures The Shanghai Futures Exchange unveiled development blueprint (May.29)

The Shanghai Futures Exchange outlined its development plan on the Shanghai Derivatives

Market Forum. According to the plan, it will promote crude oil futures trading, innovative products,

continuous trading systems and internationalisation of the Futures Exchange.

Sina Finance

Bio-chemicals The 12th Five-Year plan for the bio-industry is expected to be announced soon (May.29)

According to officials of the Ministry of Industry and Information Technology, the State Council is at

the final stage of discussion regarding the 12th Five-Year plan for the bio-industry. Total output

value of the bio-industry is targeted to reach RMB3.6 trillion by 2015, which will greatly spur the

industry’s development.

Cnstock.com

Home appliance Energy-efficient flat panel TVs and air-conditioners will receive RMB100-400 in

subsidies (May.29)

Under the new home-appliance stimulus plan, China will provide rebates of RMB100-400 for

energy-efficient flat panel TVs and air-conditioners, starting from June 1st, 2012. This is expected

to increase domestic consumption by RMB135 billion.

Hexun.com



Transport China encourages private capital to fund the development of intelligent transport

systems (May.29)

China encourages private capital to invest in intelligent transport systems. Investment in intelligent

transport systems is estimated to reach RMB200 billion by 2020.

JRJ.com

Services Beijing will start replacing business tax with VAT soon (May. 29)

The State Council has approved expansion of VAT reform to Beijing. Under the reform programme,

implemented in Shanghai since the start of this year, certain services industries have switched

from paying a business tax, levied on total revenue, to a value-added tax, lowering their overall tax

burden. Several cities, including Guangzhou, Tianjing, Shenzhen and Nanjing, have also

submitted their applications to be included in the trial programme.

JRJ.com

Aviation NDRC gives green light to several large airport construction projects (May.29)

Following the acceleration of approval of airport projects in April, the National Development and

Reform Commission recently gave the green light to the construction and expansion projects of

two airports, with investment in each project of around RMB100 million.

Sina Finance

Auto China is rumoured to launch another “old-for-new” scheme to stimulate auto sales

(May.28)

According to unnamed sources, the scheme will focus on small-engine vehicles to promote

environment protection, and an auto-to-rural scheme may also be released to subsidise car buyers

at 10% of the purchase value or a maximum of RMB5,000.

Reuters

Stocks Retail investors starting to participate in share-backed financing (May.28)

China has recently started to allow retail investors to participate in share-backed financing, which

was previously only open to institutional clients with a balance of more than RMB5 million in their

investment accounts with brokerage firms.

Reuters

Services Premier Wen urges further opening up in the services sector (May.28)

Premier Wen Jiabao called for increased opening up in the country’s service sector and

encouraged local service providers to go global to boost the industry’s share in foreign trade. Wen

said China will promote service outsourcing in areas of software, information and construction,

while actively expanding imports to bring advanced technology and management experience from

overseas. Like industrial companies, Wen said service providers will also enjoy preferential power

and water rates, and will have priority over other companies for land acquisitions.

Xinhua New

Agency

Environment protection The 12th 5-Year plan for environmental friendly sectors will be released soon (May.28)

According to unnamed sources, the National Development and Reform Commission is drafting the

12th Five-Year Plan for the recycling sector to support China’s energy conservation and emission

reduction goals. Total output value of related industries is expected to reach RMB1.5 trillion in

2015.

Sina Finance

Steel, transport, energy,

water conservancy, coal

chemicals

Top priority will be given to steel and transport projects as the NDRC accelerates the

approval process (May.28)

According to senior officials from the National Development and Reform Commission, as China

accelerates the approval process for infrastructure projects, top priority will be given to steel,

transport, energy, water conservancy and coal-chemical sectors.

Tencent Finance

state-controlled and

monopolized sectors;

banking

China boosts private investment across industries (May.28)

The central government will open state-controlled and monopolised sectors wider to private

investment, in a bid to stimulate economic growth. Several ministries have issued guidelines on

investment of private capital into the strategic-emerging industries, among which, the China

Banking Regulatory Commission announced its plan to raise the upper limits on private investment

in banking institutions. And to encourage private investors to lend to rural residents and small

enterprises, the China Banking Regulatory Commission also lowered the minimum shareholding of

the main founder for rural banks (which usually are state-owned commercial banks) from 20% to

15%.

Xinhua News

Agency



May 21-25, 2012

TOP NEWS

The central government will give more financial support to infrastructure projects

Regulators expected to release guidelines to encourage private investment in various industries

Beijing will support development of the aviation and ocean engineering equipment sectors

Related sectors Policy Source

Infrastructure The central gov’t will give more financial support to infrastructure projects (May 22)

The government plans to speed up the approval process for large-scale infrastructure projects, and

has asked various parties to submit their project proposals for this year before the end of June. The

number of infrastructure project proposals under review is expected to peak in 1H. Some projects

initially scheduled to start construction in 2H will be brought forward to 1H, and the government

plans to speed up budget allocations to various construction projects.

JRJ.com

Private investments Regulators expected to release guidelines to encourage private investment in various

industries (May 23)

Regulators are drafting detailed guidelines to encourage private investment across industries, with

a special focus on the heavily state-controlled electricity, oil and natural gas sectors. The

guidelines will also cover civil aviation, healthcare, research & development of engineering

technologies and strategic emerging industries, etc. To better promote implementation of the

guidelines, the National Development and Reform Commission and local authorities will also issue

related regulations.

Tencent Finance

Aviation & ocean

engineering

equipment

Beijing will support the aviation and ocean engineering equipment sectors (May 24)

To adjust the economic structure and transform the development patterns, the central government

will soon issue suggestions on promoting development of civil aviation and supportive policies for

the ocean engineering equipment industry.

JRJ.com

Securities &

brokerage

China considers allowing HK individual investors to buy A-shares directly (May 21)

According to Hong Kong media reports, China-related authorities are considering allowing Hong

Kong individuals to directly invest in A-shares. Meanwhile, the QFII structure may be expanded to

allow the Hong Kong subsidiaries of Chinese securities companies to buy A-shares directly.

Hket.com

Securities &

brokerage

China starts to test I.T systems for brokerages to centralise warehousing of stocks

available for short-selling (May 21)

China will start to test I.T systems this week for brokerages to centralise warehousing of stocks

available for short-selling. The pilot test will include 25 brokerages and different financial

institutions like exchanges, asset management houses, etc. If successful, this centralised

stock-lending programme could be officially launched in two months time, covering 76 brokerages.

JRJ.com

Railways The Ministry of Railways will conduct open tenders in local markets (May 21)

The Ministry of Railways launched guidelines for conducting open tenders in local markets. The

guidelines require the local departments to follow fair and open market rules to conduct public

tenders. This will help to ensure a fairer, competitive and free market, and curb corruption.

JRJ.com

Property The central government expressed support for the property subsidy measures in

Yangzhou (May 22)

The central government expressed support for the property subsidy measures in Yangzhou for the

first time. Yangzhou provided 4%-6% subsidies to home buyers of completed flats two weeks ago.

It indicates that the central government on the one hand restricts speculation/investment demand,

but on the other hand allows fine-tuning to support genuine demand.

Tencent Finance



Pharmaceutical Beijing launches pilot scheme to remove pharmaceutical profits from the operating

revenues of public hospitals (May 21)

Beijing launched a pilot scheme aimed at cutting medical costs and enhancing hospital treatment

quality by removing pharmaceutical profits from the operating revenues of public hospitals. Five

public hospitals will take part in the trial to discourage over-prescription and to cut patients’ bills.

Tencent Finance

Construction and

buildings materials

China plans to expand the rural building materials pilot programme (May 22)

The government plans to expand the rural building materials pilot programme to stimulate the

consumption in rural areas through subsidies.

The pilot programmes were established in Shandong and Ningxia provinces in 2010, and were

expanded to Beijing, Tianjin and Chongqing in 2011.

JRJ.com

Taxation China may expand the trial programme of replacing corporate tax with VAT soon (May

22)

China may expand the trial programme of replacing corporate tax with lower value-added tax soon.

Beijing, Tianjin, Chongqing, Xiamen, Shenzhen, Jiangsu, Hunan, Hainan, Anhui and Fujian have

all applied for the trial reform. The plan for the expansion will be announced at the end of May or

June, and the trial should be rolled out by the second half of the year. The expanded trial

programme will mainly focus on the transportation & services sectors and follow the model of

Shanghai where the trial programme is currently being tested.

Sina Finance

Banking and

non-banks financials

Wenzhou judicial authority indicates support for the city’s financial reform (May 22)

Wenzhou’s intermediate court issued 30 suggestions on providing strong support for the city’s

financial reform. The 30 suggestions aim to provide judicial support, regulate private financing

activities, and ensure financial reform and innovation.

JRJ.com

Separation

membrane

The 12th Five-Year Plan for ‘separation membrane’ will be released soon (May 22)

The 12th Five-Year Plan for ‘separation membrane’ will be released soon. The plan states that

China will establish a mature market for the separation membrane sector and reach advanced

world standards during the 12th Five-Year Plan period (2011-15). Driven by the plan, the demand

for fluids for removing spent metal in the water market is expected to grow.

JRJ.com

Construction and

building materials

The NDRC accelerated approval of new projects on May 21st (May 23)

The National Development and Reform Commission accelerated approval of new projects on May

21st again by announcing about 100 new projects, mostly in the energy sector. This number was

roughly equal to the total approvals announced during the first 20 days in May. However, the

rebound in investment approvals has not helped commercial banks tackle the weakening credit

demand dilemma. New loans by the big 4 banks in the first 20 days of May totaled only RMB34

billion.

Sina Finance

Real estate &

construction and

building materials

The Chinese government may adjust the target outlined in the 12th FYP for public

housing construction (May 23)

The central government is assessing its target of constructing 36 million public housing units over

2011-15 to determine whether it needs to adjust it. This will require local authorities to work out

plans for construction of public housing during 2013-2015 based on the actual demand and submit

plans by the end of May.

Tencent Finance

Brokerage &

Securities

China launched the trial private bond placement programme for SMEs (May 23)

China’s two bourses have launched guidelines to kick off a trial programme that allows SMEs to

issue corporate bonds via private placements. However, property developers and financial

companies are not permitted to join the programme.

According to the guidelines, the bonds must have a duration of one year or more, and their interest

rates must not exceed three times that of the benchmark lending rate. Each bond issuance can

issue to not more than 200 investors.

JRJ.com



Securities &

brokerage

China’s first judicial interpretation on insider trading will become effective on June 1

(May 23)

The Supreme People’s Court of China has published its first judicial interpretation on criminal

cases filed against inside trading and illegal information leakage, to be effective on June 1. Under

the new law, any insider trading which makes a profit of more than RMB150,000, or whose

turnover exceeds RMB500,000 will be specified as “serious” violations and will be subject to

criminal punishment. It also noted that those who obtain inside information unintentionally would

not constitute a crime.

Caijing.com

Banking and

non-bank financials

China will give priority to stabilising economic growth (May 24)

The government should give priority to stabilising China’s growth and implement pre-emptive

policy adjustments and “fine-tuning more forcefully", according to a statement in an executive

meeting of the State Council.

The statement urged the implementation of structural tax reduction measures, maintenance of a

prudent monetary policy, optimised credit structure to focus more on satisfying the needs of the

real economy and major projects in the areas of railways, energy-saving and environmental

protection, as well as infrastructure, educational and healthcare facilities in rural and western

areas.

It also encourages private capital into sectors such as the construction of railways, municipal

utilities, energy, telecommunications, education and healthcare. Furthermore, the tightening

policies in the housing market will be stabilised and strictly implemented.

Xinhua.net

Railways The Ministry of Railways’ outstanding bonds are close to the regulatory limit of 40% of

its net assets (May 25)

The Ministry of Railways’ outstanding bonds are close to the regulatory limit of 40% of its net

assets. But it is still looking to raise the upper limit to increase project financing. The National

Development and Reform Commission and the Ministry of Finance are still studying the request

but give no response yet.

Tencent.com

Home-appliance Central government will provide subsidies for energy efficient home-appliances (May

25)

The central government launched RMB26.5 billion in subsidies to promote the consumption of

energy efficient home-appliance. Several ministries are working on detailed plans which are

expected to be released in July.

It also formulated detailed guidelines for the promotion of energy efficient air conditioners. The

guideline sets a wider scope of applicable for subsidies and principle of subsidies that is the more

energy efficient, the more subsides will be provided. The maximum subsidy is likely to be

RMB1,000 per unit.

JRJ.com



(May 14 to 18, 2012)

Date Related sectors Policy Source

May .18 Minerals, mining The Ministry of Commerce announced additional export quotas for rare earth minerals

totaling 10,680 tonnes. Of the added quotas, 9,490 tonnes were light rare earths, and

1,190 tonnes were medium and heavy rare earths, a statement on the MOC website

said.

The additional quotas would be provided to a total of 12 companies which had recently

passed examinations by the Ministry of Environmental Protection, the statement said.

The companies included Baogang Group, the country's largest light rare earth

producer, and the Aluminum Corporation of China.

Xinhua News

Agency

Railway The Ministry of Railways (MOR) sold RMB20 billion in bonds with a maturity of one

year, which will be used to fund construction projects and purchase new rail vehicles.

The MOR suffered a deficit of RMB6.98 billion in the first quarter, the Shanghai

Clearing House reported on May 2.

While the ministry can issue bonds to support major construction projects it should

also focus on improving its operating efficiency to pay off its massive debts, experts

said.

Global Times

May.16 Retail & Consumer The State Council announced the government will earmark RMB26.5 billion to

subsidise the consumption of household electrical appliances for a one-year period.

The appliances include air conditioners, flat-panel television sets, refrigerators,

washing machines and water heaters that meet energy-saving standards.

The government will allocate another RMB2.2 billion to promote the consumption of

energy-saving light bulbs and LEDs (light-emitting diodes) and RMB6 billion for

purchases of vehicles with engine sizes below 1.6 litres.

Another RMB1.6 billion will be earmarked to promote the consumption of highly

efficient electrical machinery, according to the statement, which did not elaborate on

how the subsidies will be implemented.

China Daily

Health care payment Minister of Health Chen Zhu announced that China plans to expand medical payment

reforms to ensure that new payment systems will be implemented throughout the

country's rural areas by 2015.

Chen said that the payment systems will help control medical costs, as they will result

in the scrapping of the fee-for-service system and cap patients' total medical

expenditures.

The current fee-for-service system is believed to have encouraged an excessive

number of prescriptions and unnecessary medical examinations.

Medical payment reforms will create a portfolio of payment models, including payment

based on diagnosis-related groups (DRGs), per diem payment for inpatient care and a

pre-pay system for outpatient care.

China Daily

May.15 Property China will increase residential land supply by more than 20% this year to further

restrain property prices, according to a plan released by the land authorities.

The Ministry of Land and Resources said that the government plans to provide a total

of 172,600 hectares of residential land this year, up 21.3% from 2011.

The amount of land to be doled out is double the annual average of 87,300 hectares

supplied over the past five years, the ministry said.

The ministry said 79.3% of the land supply will be used for affordable housing

development, as well as for small- and medium-sized commercial housing, up 0.7

percentage points from last year.

A total of 50,100 hectares of land, or 29.1% of the total, will be used to build affordable

homes, the ministry said.

Xinhua News

Agency



Property According to a policy released by the Shanghai Real Estate Trading Center, if a single

Shanghai householder has an apartment already registered under the owner's name,

they are not permitted to purchase another property,

Industry insiders believe that updating the rules is to remedy the loophole of the

original version.

Xue Jianxiong, research director of China Real Estate Information Corporation noted

that the new initiative shows that the real estate market is strongly regulated by the

Shanghai government, and it is also a response to rumours that Shanghai intends to

loosen real estate market regulations.

China Securities

Journal

May.14 Brokerage & Securities The China Securities Regulatory Commission (CSRC) is considering allowing more

foreign investors to enter the mainland stock and bond markets, by easing restrictions

on the country's Qualified Foreign Institutional Investor (QFII) scheme, the only

channel for foreign investors to access the country's capital markets.

This news, which the CSRC has yet to officially comment on, comes as the country

moves to open the domestic capital markets to more overseas investors. The nation's

financial regulators raised the total QFII quota from US$30 billion to US$80 billion on

April 3.

Under the current rules, foreign investors with QFII quotas are required to invest at

least 50% of their assets in mainland stocks. Regulators may soon scrap this

restriction though, according to the newspaper, citing a source from the CSRC.

China Securities

Journal

Government bond issuance The Ministry of Finance (MOF) announced that the State Council has given approval to

Shanghai and Shenzhen, as well as Zhejiang and Guangdong province, to continue

the trial bond issuance programme this year.

China Daily

May.12 Banking and non-bank

financials

The People’s Bank of China announced that China will lower banks' reserve

requirement ratio (RRR) by 0.5 percentage points starting May 18.

The cut, the second of its kind this year, will lower the RRR for the country's large

financial institutions to 20% and the medium- and small-sized financial institutions to

16.5%.

The cut will release an estimated RMB400 billion in capital into the market. China had

previously lowered the RRR by 0.5 percentage points on February 24.

China Daily

(May 7 to May 11, 2012)


May.11 Nuclear Power Qian Zhiming, deputy director of China’s National Energy Administration (NEA), said in

an interview that draft guidelines for nuclear power development have been approved

by the NEA, and are currently under review by the China Securities Regulatory

Commission (CSRC). China targets increasing nuclear power installed capacity to

about 70,000 MW by 2020, according to draft guidelines.

Hexun

Cultural China targets to at least double the total value-added of the cultural industries over

2011-15, according to the 12th Five-Year Plan for cultural reform and development

released by the Ministry of Culture. The Chinese government will strengthen policy

support for culture-related industries, especially the comic and animation industry,

according to the plan.

Hexun

Pension fund investment Administrative measures for state pension fund investment have been formulated and

are currently under review, according to unnamed government officials. Thirteen

provinces and municipalities have entrusted some of their pension funds to the

National Council for Social Security Fund, said Yin Weimin, the Minister of Human

Resources and Social Security.

Tencent Finance



May.10 Property The State Council has decided to expand the coverage of the trial property tax reform

in 2012, although details are still unclear, according to an official at the Ministry of

Housing and Urban-Rural Development. The central government is assessing and

analysing the effects of the pilot programmes carried out in Shanghai and Chongqing,

according to media reports.

Cnstock.com

Financial The CSRC announced new rules to promote more dividend payout by listed

companies, and may disclose names of companies with a low dividend payout history.

Companies will be required to disclose their profit distribution plan over the next three

years in their IPO filings, according to a notice released by CSRC.

CNBC

May.9 SOEs China's Supreme Court issued new rules that smooth the way for bringing lawsuits

against dominant companies. The rules allow plaintiffs to bring their cases in more

courts, specifically lower courts in big cities such as Shanghai, Beijing and

Guangzhou. The new rules also classify SOEs as dominant entities, making it easier

for plaintiffs to launch legal battles against them.

WSJ

Sugar Sugar-industry websites in China posted a notice from the government-backed China

Sugar Association offering rewards ranging from RMB1,000 (US$159) to RMB500,000

(US$79,365) for information that "exposes criminal sugar smuggling." The government

promised even more for "exceptional cases." The association said the anti-smuggling

reward was "to preserve normal sugar production and operation and the interests of 40

million sugar farmers in poor and remote areas."

WSJ

Financial The CSRC is considering a proposal to lower the bar for obtaining a license that allows

foreigners to buy securities in the country, which could pave the way for hedge funds

to gain direct access to the Chinese market, said two industry sources with knowledge

of the regulatory agency's thinking on the issue.

Reuters

High-end equipment

manufacturing

According to the 12th Five-Year Plan for the high-end equipment manufacturing

industry released by the Ministry of Industry and Information Technology, China

targets to increase the sales revenue of the industry to over RMB 6 trillion by 2015,

and make it a pillar industry by 2020.

JRJ.com

Water Conservation The Ministry of Water Resources plans to release a series of measures to regulate the

use of water resources and encourage water conservation. It plans to complete

trans-provincial water allocation, offer vigorous support to water conservation projects

and promote the water pricing reform in the next five years.

Sina Finance

May.8 LED The Ministry of Science and Technology began to seek feedback on the 12th Five-Year

Plan for LED. According to the draft plan released on the Ministry’s website, it targets

to increase the sales revenue of the LED industry to RMB500 billion, and develop 30

highly competitive leading LED companies during the 12th Five-Year Plan period

(2011-15).

JRJ.com

Energy conservation China’s Ministry of Finance and Ministry of Housing and Urban-Rural Development

said in a notice that they’ll take some joint measures, such as providing subsidies, to

promote the development of green buildings. China targets to increase the share

green buildings make up as a percentage of China’s total newly constructed buildings

to over 30% by 2020.

JRJ.com

May.7 SMEs The Ministry of Finance said in a notice that it will take various financial and tax

measures, including offering tax concessions, setting up SME development

foundations to help ease the strain on their cash flow, and increasing their access to

government procurements, etc, to support the development of small enterprises.

Tencent Finance

Telecommunications According to the 12th Five-Year Plan for the telecommunications industry released by

the Ministry of Industry and Information Technology, China targets to increase the

revenue of the telecommunications industry to over RMB1.5 trillion by 2015 and invest

over RMB2 trillion in related infrastructure construction.

Tencent Finance



Brokerage Zhu Guangyao, a Vice Minister of Finance, said the central government plans to allow

foreign firms to own as much as 49% of joint ventures involved in securities

underwriting. Foreign firms would also be allowed to take a 49% stake in commodity

and financial-futures firms.

Sina Finance

(April 30 to May 4, 2012)


May.4 Environment protection The government has issued a plan to boost the development of the waste-to-energy

industry during the 12th Five-Year Plan period. Under the plan, government subsidies

and preferential taxation treatment will be granted to waste-treatment companies to

promote the rate of harmless treatment of household garbage nationwide, especially in

large and medium-sized cities.

Meanwhile, Li Keqiang, the Executive Vice-Premier of the State Council pointed out at

an international meeting that China will invest up to RMB5 trillion in the environment

protection sector in 2011-15.

Hexun

May.3 Software, integrated circuit China has introduced new stimulus policies to boost the development of the software

and integrated circuit (IC) industries. As part of the new policies, qualified

manufacturers of IC will be entitled to tax cuts or exemptions. In addition, software

firms will continue to enjoy preferential corporate income tax policies. The government

also encourages consolidation in the software and IC industries and will provide

financial support for technological research and development.

Hexun

Agriculture The Ministry of Finance will launch a pilot programme of value-added tax exemption on

certain agricultural products on July 1, 2012, which is expected to greatly boost the

development of the agriculture sector.

Cnstock.com

Banking China will postpone the implementation of new capital adequacy rules for banks until

the year-end, which was scheduled to take effect on July 1, 2012. According to the

new capital adequacy rules, systemically important banks in China are required to

meet a minimum 11.5% capital adequacy ratio and 9.5% core capital adequacy ratio

by 2013. The market believes that the delay will to a certain extent ease the financing

pressure of relevant banks and boost new loans.

Reuters

Insurance Foreign insurance companies will be able to participate in the compulsory third-party

insurance business upon approval, according to an amended regulation released by

the State Council. This is expected to benefit foreign insurers and increase their share

in China’s insurance market.

Reuters

May.2 Futures Four major futures exchanges in China, namely Dalian Commodity Exchange,

Shanghai Futures Exchange, Zhengzhou Commodity Exchange and China Financial

Futures Exchange, announced to lower transaction costs for futures, starting from

June 1, 2012.

Sina Finance

May.1 Brokerage & Securities The Shanghai Stock Exchange, the Shenzhen Stock Exchange and the China

Securities Depository and Clearing Corporation jointly announced that the transaction

cost of A-shares will be lowered by 25%, starting from June 1, 2012. Meanwhile, to

further optimise the charging structure, the two exchanges will base the initial listing

fee and annual listing fee on companies’ registered capital, and offer a 50% discount to

GEM-listed companies.

Besides, the China Securities Regulatory Commission has officially issued the

guidance on the reform for the IPO issuing system, according to which, the

three-month lock-up period has been canceled to boost the circulation of new shares.

In a separate article, it was reported that the Shenzhen and Shanghai exchanges have

started to seek feedbacks on the proposed delisting rules, in a move to push forward

the healthy development of blue chips.

Hexun



Apr.30 Foreign trade, energy,

consumer goods

The State Council released the administrative guidance on foreign trade to ensure

sustainable growth. Import duties on primary energy resources and daily necessities

may be lowered through provisional tariffs, subject to domestic economic conditions.

Cnstock.com

Airlines & Aviation Several airlines raised the fuel surcharge for some international routes, including US,

Canada, Australia and Brazil, by RMB100-RMB300, starting from May 1, 2012.

Ifeng.com

(April 23 to 27, 2012)


Apr.27 Bank The CSRC drafted IPO guidelines for small and medium-sized Chinese banks.

According to the draft, 20% of small and medium-sized Chinese banks are likely to be

listed in coming years only if they meet the following criteria: ranked the third level or

above by banking supervision departments in recent three years; risk-control

indicators in the recent year meet the requirements; asset profit ratio and return on

capital ratio are higher than the bank industry average in the recent year; bad-loan

ratio is lower than the bank industry average in the recent year; no violation of laws

and regulations in recent three years.

Finance.ifeng.com

Financial service A trial service centre to register private lending transactions in Wenzhou was

launched, representing the official start of financial reform in Wenzhou. The centre will

be run as a company, with a registered capital of RMB6 million. It will provide a series

of financial services including providing platforms for related financial institutions,

integrating information and disclosing it, rating related institutions and registration of

private lending transactions.

Sohu.com

Energy The 12th Five-Year Plan on the natural gas industry is pending approval while

coverage of the trial reform pricing mechanism for natural gas may be expanded.

During the 12th FYP, the consumption proportion of natural gas as a once-off energy

should be lifted from 4% to 7% or 8%. Driven by that, PetroChina will import much

more natural gas from this year.

JRJ.com

Apr.26 Finance The Zhejiang provincial government has approved the financial reform plans for

Wenzhou and would release them soon. Plans pointed out the objectives of reform are

following：Add 30 small loans companies and increase the number to 100 in 2013,

covering the urban area and major towns; municipal branches of banks are required to

set up departments specialising in small businesses to integrate rural cooperative

financial institutions into the shareholding system; new type of rural financial

institutions such as village banks will cover the whole cities and counties. The

government promised to provide strong policy support to achieve goals.

Sina Finance

Water resource China had vowed to invest RMB1.8 trillion in water conservation projects during the

12th Five-Year Plan period (2011-2015), with the central government contributing

RMB800 billion and local governments raising RMB1 trillion. Furthermore, RMB4

trillion would be invested to construct public water projects by 2020. To achieve the

goals, local governments will be required to continue to set aside 10% of local

revenues accrued from land sales for agricultural irrigation and water conservation.

JRJ.com

Energy The National Energy Administration is drafting regulations to encourage private

investment in China’s energy sector and may release them by the end of June.

JRJ.com

Apr.25 Solar & wind power The Ministry of Science and Technology (MST) unveiled the Five-Year Plan on solar &

wind power technology development. The solar power plan focuses on the research

and development of crystalline silicon solar cells, thin-film batteries and new batteries;

while the latter plan focuses on the establishment of large wind plants, targeting to

establish six plants onshore and two offshore. To ensure the success, the MST will

encourage private capital to enter these two sectors and to take advantage of various

related policies.

Hexun



Public housing fund The Ministry of Housing and Urban-Rural Development may expand the scope of

application of the public housing fund. Funds may possibly be used to rent and

decorate flats, which will improve living conditions. Furthermore, more pilot

programmes are expected to be established to use public housing fund to support the

construction of social housing. These policies will help make good use of idle public

housing funds.

JRJ.com

Finance A Shanghai Exchange official said the launch of Small Medium Enterprise (SME)

private placement bonds had been approved. These bonds include, but not limited to,

high-yield bonds. And the issuer should meet the following criteria: firstly, SMEs with a

credit rating of between BBB to AA- (including listed enterprises); located in developed

areas and especially limited in Beijing, Shanghai, Tianjin, Zhejiang, Suzhou and

Guangdong; high-tech enterprises or agriculture enterprises or enterprises with

independent innovation abilities.

Sina Finance

Apr.24 Infrastructure To balance regional development, related government departments are working on the

adjustment of “national highway network planning”, including connecting county

highways to the network and extending the network by 20,000 km. The draft has been

completed and will be distributed to provinces for more suggestions. This indicates the

government’s strong support to the construction of highways.

JRJ.com

Insurance The China Insurance Regulatory Commission and the Ministry of Finance plan to

establish tax deferred pension trial projects in Shanghai within this year. Many other

provinces actively applied for the establishment of trial projects. Tax deferred pension

may be extended to the entire country earlier than expected. The preferential tax

amount for individual tax deferred pension may be between RMB500 and RMB1,000

per month. Four experienced listed insurance companies are likely to be the pioneers.

JRJ.com

(April 16 to 20, 2012)


Apr.19 Financial services In a move to tighten the banking sector's risk prevention and control, the Ministry of

Finance (MOF) ordered financial enterprises to keep 1.5% of their gross loans as

general provisions beginning in July this year, up from the existing 1%.

The new "dynamic provision" rules will apply to policy banks, commercial banks,

financial companies, urban and rural credit cooperatives, lease financing companies

and financial asset management firms, as well as smaller town- and village-based

banks.

To ensure a smooth transition, financial enterprises will be given a grace period of five

years to meet the new regulatory standard.

Under the existing rules, financial asset management firms and small town- and

village-based banks are not subject to the regulation in this regard.

Xinhua News

Agency

Central banking Commercial banks in several cities, including Beijing, Shanghai and Guangzhou

lowered mortgage rates by as much as 15% for first-home buyers, according to

unidentified industry sources. First-home buyers can generally enjoy at least 10%

discount, they said.

China will increase liquidity via open market operations and cutting banks' required

reserves to steer the economy towards a soft landing, the official Xinhua news agency

quoted an unnamed central bank official as saying late on Wednesday.

The People's Bank of China will "increase reverse repo operations and cut the reserve

requirement ratio at an appropriate time to release liquidity," the official was quoted as

saying in an interview with the state news agency.

China Daily



Auto China is making the industrialization of pure electric vehicles and plug-in hybrid

automobiles the focus of its new plan to develop energy-saving and alternative-energy

vehicles by 2020.

The measure, aimed in part at upgrading the auto industry, was adopted by the State

Council on Wednesday in the long-awaited industry development plan on energy

saving and new-energy vehicles.

The plan sets the target of an accumulative production and sales of 500,000 pure

electric and plug-in vehicles by 2015, and more than 5 million by 2020.

It also aimed to lower the average fuel consumption of passenger cars produced in

2015 to 6.9 liters per 100 kilometers, and further to 5 liters per 100 kilometers in 2020.

People’s Daily

Shipping & Agriculture The National Development and Reform Commission has established an ad-hoc group

to study plans to boost the weakening shipping industry, and domestic shipping

companies might be granted tax concessions.

China Development Bank (CDB) said Thursday that it will extend 200 billion yuan

($31.75 billion) in loans over the 12th Five-year Plan (2011-2015) period to support the

development of modern agriculture.

The loans will be used in 10 key sectors, including modern agricultural production and

modern gardening industries.

Xinhua News

Agency

April 18 Healthcare China plans to expand a basic medical care insurance plan in the country and ensure

a coverage rate of no less than 95%.

In 2012, the government will provide an annual per-capita subsidy of RMB240 for

basic medical insurance programmes designed for urban and rural residents, said a

circular published on Wednesday about the country's work arrangement in 2012 for

healthcare reform.

The circular also called for measures to promote the development of commercial

health insurance and non-public hospitals in China.

Sina Finance

Aviation The Ministry of Finance has set up a new government fund to collect money for civil

aviation development, but has abolished two charges, so the move will not affect air

travelers' costs.

The move allows the authorities to use the money on more than just infrastructure

construction.

Passengers will stop paying the airport construction fee and airlines will no longer have

to pay into the Civil Aviation Infrastructure Construction Fund.

The change of fund names also signals a change in how and where the fund can be

spent. For example, the fund can now be used to develop energy conservation and

emission-reduction measures.

Tencent Finance

April 14 Foreign exchange regime The People's Bank of China announced that it would widen the yuan's daily trading

limit against the US dollar from 0.5% to 1%.

In the foreign exchange spot market, Chinese banks can exchange the yuan 1 percent

above or below the central parity against the U.S. dollar announced by the China

Foreign Exchange Trading System each trading day.

Reuters



(April 9 to 13, 2012)


Apr.13 Infrastructure Five ministries, including the Ministry of Transport, the National Development and

Reform Commission, the Ministry of Finance, the Ministry of Supervision, and the

State Council jointly issued a notice to prohibit the illegal transfer of highways financed

by government loans. Highways financed by government loans cannot be operated for

commercial purposes, according to the notice.

Tencent Finance

Apr.12 Property Commercial banks in several cities, including Beijing, Shanghai and Guangzhou

lowered mortgage rates by as much as 15% for first-home buyers, according to

unidentified industry sources. First-home buyers can generally enjoy at least 10%

discount, they said.

Sina Finance

Financial China will start a pilot project to allow Hong Kong banks to lend yuan directly to

Shenzhen firms and vice visa. The direct loan programme has received state approval

and low-cost yuan loans from Hong Kong will be used mainly to develop the Qianhai

zone in Shenzhen, according to a notice released by the Shenzhen municipal

government recently.

Reuters

Apr.11 Shipping The National Development and Reform Commission has established an ad-hoc group

to study plans to boost the weakening shipping industry, and domestic shipping

companies might be granted tax concessions.

JRJ.com

Financial The State Administration of Foreign Exchange (SAFE) said recently that it will

gradually broaden channels for capital outflow, encourage eligible institutions to invest

overseas, and relax restrictions on overseas investment by individuals.

Sina Finance

Financial China is considering increasing the ability of Chinese corporations to borrow

yuan-denominated funds outside its borders for use on the mainland, according to

people familiar with the matter, a potential move aimed at broadening cross-border

capital flows as it pushes to make the yuan a global currency. The People's Bank of

China and other government agencies are weighing a quota-based system through

which approved mainland businesses would be able to take out yuan loans offshore

and remit the funds, the people said. Subsequent to this report, Reuters reported on

April 12, 2012 that China will commence a pilot project in Shenzhen for cross-border

lending with Hong Kong (refer to the Reuters story above).

WSJ

Porperty Guangdong may impose property tax on new homes, according to Guangzhou-based

Yangcheng Evening News. Levying property tax can help combat property

speculation, increase housing supply, and curb property prices, the paper cited a

government official as saying.

Yangcheng

evening news

Apr. 10 Banking, non-bank

financials

The China Banking Regulatory Commission said in a notice posted on its website that

it began an investigation into bank fees on April 1, adding that banks that are found to

be charging high fees for routine services will be punished. China's bank regulator

warned in the notice that lenders will be "severely punished" for charging excessive

fees.

WSJ

SOEs The Chinese government tightened rules on major SOEs investing in non-core

businesses overseas. SOEs will not be allowed to make investment abroad in

non-core businesses, unless they get approval from the State-owned Assets

Supervision and Administration Commission of the State Council (SASAC), according

to a notice released by the nation’s state assets watchdog.

Cnstock.com

Taxation Foreign joint ventures involved in oil and gas production in China will be charged a

compensation fee calculated on production value rather than volume, according to the

Ministry of Land and Resources. The fee will extend to unconventional oil and gas

resources such as coal-bed methane gas, the ministry said, adding that it will be

retroactive from November 2011 and valid through March 2020.

WSJ



Apr. 9 IT According to the 12th Five-Year Plan for the software and IT sector released by the

Ministry of Industry and Information Technology (MIIT) recently, the Chinese

government targets to double the industry turnover to RMB4 trillion by 2015, and

develop at least 10 software companies with annual revenue of over RMB100 billion

each.

Tencent Finance

Coal, Power, Oil & Natural

gas, Logistics

The National Development and Reform Commission announced eight key tasks for

this year, including taking measures to ensure and stabilise the supply of coal, power,

oil & gas, support the development of the logistics industry, closely monitor economic

activities, promote economic restructuring, etc.

Cnstock.com

(April 2 to 6, 2012)


Apr.5 Insurance China has begun preparing draft regulations that will allow insurers to trade domestic

stock index futures as part of a broader plan to gradually open up the domestic

securities market. Participation by Chinese insurers, however, would be limited to

hedging, and they would not be permitted to trade for speculative reasons, according

to unidentified industry sources.

China Securities

Journal

Apr.4 Banking, non-bank

financials

China needs to break a banking “monopoly” of a few big lenders that make easy profits

because it’s hard to borrow money elsewhere, Premier Wen Jiabao said. The country

can extend nationwide the successful parts of a pilot program in Wenzhou in Zhejiang

province that allows private financing, including non-bank lending, according to Wen.

Bloomberg

Financial The China Securities Regulatory Commission increased the quotas for qualified

foreign institutional investors to US$80 billion from US$30 billion, according to a

statement on its website. Offshore investors will also be allowed to pump an extra

RMB50 billion (US$7.95 billion) of local currency into the country, up from RMB20

billion.

Bloomberg

Macro, Property, Agriculture Premier Wen Jiabao said in an economic meeting that the government should release

policy fine-tuning measures as soon as possible, provide vigorous support for the

agricultural sector to ensure sufficient supply of agricultural products, promote the

growth of SMEs, and “resolutely” maintain its curbs on the property market.

Cnstock.com

Apr. 3 Environment protection The Ministry of Industry and Information Technology has set the 2012 energy

conservation target at 5% of energy consumption per unit of industrial value-added.

The target for 2011 was 4%.

Sina Finance

Imports China raised import tariffs by increasing the customs value. The customs value of

several imported goods, such as perfume and consumer electronics, has been

increased by over 50%. The market expects the import tax on luxury items may be

levied on the basis of the full value of the goods.

Tencent Finance

Apr. 2 Stocks The China Securities Regulatory Commission (CSRC) announced that it has started to

seek feedbacks on the proposed new rules for IPOs, in a move to solve high initial

pricing and to curb speculative trading. According to the CSRC, the reform aims to

ensure the pricing of new shares reflect the true value of enterprises and protect

investors' rights and interest. The CSRC is also considering increasing scrutiny of

IPOs with PEs that are higher than their listed industry peers, especially when it is

more than 25% higher.

In a separate article, it was reported that the latest development plan for the OTC

market has been submitted to the State Council, according to which, more than 100

software and high-tech companies may be listed in 2012.

JRJ.com

Pharmaceuticals As stated by the National Development and Reform Commission, the retail price caps

for 53 kinds of drugs for digestive systems will be cut by 17% on average, starting from

May 2012. Prices for three other categories of drugs, namely, antineoplastic drugs,

Xinhua News

Agency



disease-modifying antirheumatic drugs and blood by-products, may also be reduced

soon.

Aviation The National Development and Reform Commission and the Civil Aviation

Administration of China announced the new fuel surcharge rate for domestic routes.

The new regulation, which took effect on April 1, 2012, states that the fuel surcharge

rate cannot exceed RMB0.002541 per passenger-km with every RMB100 increase

over the base blanket purchasing jet fuel price.

Following the new regulation, several airlines raised the fuel surcharge for some

domestic routes from RMB130 to RMB140, starting from April 5, 2012. After the

adjustment, domestic routes that exceed 800 km will incur a fuel surcharge of about

US$22.

Sina Finance

Internet The Ministry of Industry and Information Technology plans to speed up the expansion

of Internet broadband access. The objective is to cover 50% of all users with

broadband access speed of 4Mbps or above and to install fiber-to-the-home

broadband connections for 35 million families this year.

China Daily

Macro The PBoC said it would move ahead gradually on interest rate liberalisation, will

strengthen two-way movement of the RMB, and pledged to continue its current

“prudent” monetary policy stance. It would also actively explore measures to guide the

supply of money and credit to grow steadily.

Wall Street

Journal

(March 26 to 30, 2012)


Mar. 30 Communication The National Development and Reform Commission issued suggestions on the

construction of “China’s Next Generation Internet” by identifying two development

stages – commercial pilot programme and full adoption in the commercial sector.

During the first stage, IPv6 will be used by the 100 most popular commercial websites,

70% of external networks of central or provincial governments, external networks of

key universities, new telecom businesses and new Internet fixed terminals, as well as

mobile terminals. During the second stage, IPv6 will be used by the 1,000 most

popular commercial websites, 70% of external networks of county governments and

universities, mobile Internet service, upgrade of China telecom business, interactive

TV business and TV terminals.

JRJ.com

Construction & Building

Materials

A National Development and Reform Commission official said China will strictly limit

investment in new cement capacity this year. In addition, the government will

encourage M&A in the cement industry by providing financial support to eliminate

backward production capacity and to prevent blind expansion of capacity and low-end

redundant construction. These measures are in line with requirements under the 12th

Five-Year Plan.

JRJ.com

Automobile The State Council has approved a draft of safety regulations for school buses. The

draft clearly defines governments’ responsibilities. Local governments above the

county level are responsible for school bus safety management in their jurisdiction,

while the central government is in charge of guidance and supervision of school bus

safety. For rural areas that cannot ensure nearby schooling or convenient public

transport to schools, measures should be taken to ensure students' access to school

buses.

It also specifies stricter requirements for technical conditions of school buses and bus

drivers' qualifications, as well as limiting maximum speed limits and load of school

buses.

The draft will not only protect students from traffic accidents but will also create broad

market opportunities for businesses and coach makers.

China daily



Mar. 29 Financial The State Council will launch a trial reform financing programme in Wenzhou. It

pointed out 12 major tasks for the programme as follows:

regulate the development of private financing business; promote the development of

new types of financial institutions; cultivate professional asset managers; execute

individual foreign direct investment; deepen reform of local financial institutions;

establish multi-level financial services system; develop local capital market; develop

various types of debt products; broaden the range of insurance services; construct

better social credit system; improve local financial management system and establish

an economic reform system and risk-prevention mechanisms.

Insidechina.com

Automobile The Ministry of Industry and Information Technology (MIIT) plans to launch trials of

methanol-fueled cars in Shaanxi, Shanxi and Shanghai as these three chosen regions

have all accumulated abundant experience in developing methanol-related

technologies including methanol-fueled cars.

The MIIT said it expects the trials to help establish a criterion for the development of

methanol-fuelled cars, provide solutions to construct, improve and manage

infrastructure facilities, as well as develop policies for industry development.

JRJ.com

Mar. 28 Securities Chinese Vice Premier Wang said China should create conditions for the establishment

of a national over-the-counter market system. He also emphasised that it was crucial

to accelerate the mechanism reform by promoting direct financing and optimising

financial structures to meet the demand of diversified investments.

Hexun

Communication Several ministries will jointly study plans for the implementation of the China

broadband strategy. They will map out procedures for the establishment of

organisations, investigation, document drafting and consultation and summit the plans

to the central government for approval in June.

JRJ.com

E-commerce According to the newly issued 12th Five-Year Plan for E-commerce, China targets to

increase E-commerce turnover to over RMB18 trillion by 2015. E-commerce of

corporations will become the main contributor to that goal and the main driver to

improve China’s competitiveness in the global market. Mobile E-commerce will also

get priority to be developed in agriculture, business management, safety production,

tourism, etc.

Cnstock.com

Mar. 27 Financial The Ministry of Finance said that local social security funds can only be invested in

fixed deposits and treasury bonds, while any other direct or indirect investment is

strictly prohibited. It also points out the necessity to consolidate bank accounts of local

social security. Bank accounts of provincial social security have to be reduced to five,

while county level is limited to three by the end of this year.

Sina Finance

Securities China’s first cross-exchange ETF products, the CSI 300 Exchange Traded Fund, will

be approved to execute day trading. They will be launched by Huatai-PineBridge

Money Market and Harvest and be listed on Shanghai and Shenzhen stock exchanges

respectively. This signals a major move in creating a blue-chip market and paves the

way for more ETF launches.

Cnstock.com

Luxury goods, Food &

Beverages

Chinese Premier Wen Jiabao said SOEs and agencies must “strictly control” funds

used to renovate “luxury” office buildings or buy artwork, according to a statement on

the government’s website. He also pledged to ban the use of public funds to buy

cigarettes and “high-end” alcohol, warning that this may easily lead to corruption in the

Communist Party and endanger the ruling Party’s survival.

Bloomberg

Mar. 26 Securities Based on the requirements of the 12th Five-Year Plan, the China Securities

Regulatory Commission will further promote reform to improve capital markets in nine

aspects, including the establishment of a consistent regulation system of the

over-the-counter market, the lower requirements for H-share listing and the

strengthening information disclosure system, etc.

JRJ.com

Financial Quotas for RMB Qualified Foreign Institutional Investors (QFII) were approved to reach

RMB20 billion in February and distributed to nine fund management and 12 securities

companies. 80% of the money will be invested in bonds while the rest will be invested

Sina Finance



in equities (mainly in A shares). Based on this, the China Securities Regulatory

Commission will further promote the opening-up of the capital market by expanding the

RMB QFII pilot scheme, increasing QFII & RMB QFII quotas and expanding the

investment range for RMB QFII.

(March 17 to 23, 2012)


Mar. 23 Property A document drafted by the NDRC and approved by the State Council declares that the

government will speed up reform of China’s fiscal regime and will expand the property

tax reform pilot scheme at an appropriate time. Industry insiders predict that Shenzhen

and Guangzhou may be included in the scheme. At present, property tax is levied in

two cities: Shanghai and Chongqing.

Tencent Finance

Mar. 22 Coal mining The National Energy Administration (NEA) released a coal industry development plan

for the 2011-2015 period. According to the plan, China intends to form 10 coal

companies with an annual capacity of 100 million tonnes each, and another 10 with a

capacity of 50 million tonnes each by 2015.

These 20 companies are expected to account for over 60 percent of the nation's total

coal output. And China’s annual coal output will be controlled at around 3.9 billion

tonnes during the period.

Xinhua News

Agency

Economic planning The government has approved a plan to rejuvenate the economy of northeast China

by 2015.

The northeastern region, once a leading industrial hub, will be built into an

internationally competitive base for equipment manufacturing, raw materials and

energy supplies, according to a statement from the National Development and Reform

Commission (NDRC).

The region, which includes the provinces of Heilongjiang, Jilin and Liaoning, will also

be built into an important base for agriculture and animal husbandry, according to the

NDRC.

China Daily

Anti-dumping The Ministry of Commerce (MOC) announced that it will levy anti-dumping duties on

photographic paper imported from the EU, the US apan, saying the imports have

caused "material damage" to the industry in China.

The anti-dumping measures will last for five years beginning Friday and the duty rates

range from 16.2% to 28%, depending on the dumping margin, or the difference

between the average value of the product in its country of origin and its export price.

Xinhua News

Agency

Electronics The Ministry of Finance announced that China will raise an import tariff on liquid crystal

display (LCD) panels to 5% starting on April 1.

China has previously placed a 3% tax on imported LCD panels of 32 inches or more

(excluding backlight modules) in order to spur development in the country's booming

television manufacturing sector, which is heavily reliant on LCD panel imports.

The increased tariff comes at a time when several domestic LCD production lines have

gone into operation, changing the market's dynamics.

Sina Finance

Pension fund investment It has been announced that the National Council for Social Security Fund has been

entrusted to manage Guangdong provincial pension fund worth around RMB100

billion.

The National Council for Social Security Fund said much of the fund will be deposited

in banks and invested in the bonds market, rather than in stock markets as previously

rumoured.

Sina Finance

Mar. 21 Agriculture The Ministry of Finance (MOF) said in a statement that it has earmarked RMB24.3 People’s Daily



billion as subsidies for farmers to support the upcoming spring farming work.

So far this year, the MOF has allocated RMB107.8 billion in subsidies to help farmers

buy agricultural materials such as equipment to plant seeds and reapers, an increase

of nearly 30% y-o-y, according to the statement.

Mar. 20 Banking People's Bank of China Governor Zhou Xiaochuan wrote in an article that conditions in

China are "basically mature" for interest rate liberalization and the creation of a deposit

insurance system. He said the authorities are studying the launch of such a system

when conditions mature but did not give a specific timetable for these reforms.

In the same article, he also argued that China should open up its financial markets,

enhance the two-way flexibility of the yuan and gradually open more channels for

outbound capital flows and push forward the opening of the capital account.

Sinan Finance

Energy China raised fuel prices for the second time this year, hiking gasoline and diesel by

6.5% to 7%. Prices went up by RMB600 a metric tonne, the biggest hike since June

2009.

China, the world's second-biggest oil user, raised fuel prices for the first time this year

by RMB300 a tonne on Feb 8.

The prices are set in reference to a basket of crudes (Brent, Dubai and Cinta), which

jumped more than 10% in the past 22 working days.

There's widespread market speculation that China will reduce the price-adjustment

reference period to 10 days, from 22 days, to better reflect volatile global oil

prices. The NDRC hasn't said when it might further reform the pricing system.

China Daily

Mar. 19 Taxation China’s Finance Minister Xie Xuren said at a forum that China is considering

increasing the proportion of underlying tax, which is smaller compared with circulation

tax under the current Chinese taxation system.

Further, China will expand trials of replacing turnover tax with VAT in a bid to boost the

development of the tertiary industry.

The underlying tax includes income tax of individuals and corporate business income

tax, while the circulation tax covers the VAT, turnover tax, and consumption tax.

China Daily

(March 12 to 16, 2012)


Mar. 16 Property Banks in Beijing are lowering mortgage rates for first home buyers, and the best deal

currently is a 15% discount to the benchmark rate. However, the minimum down

payment requirement for first-home buyers remains at 30%.

Tencent Finance

Furniture Shen Danyang, spokesman for the Ministry of Commerce, disclosed in a press

conference that the ministry will test run the “old for new” furniture subsidy programme

in selected cities, and could expand the scheme to nationwide.

People.com

Mar. 15 Energy Liu Tienan, head of the National Energy Administration, said recently that the

upcoming 12th FYP for exploration and development of shale gas is expected to

create a golden period for the development of related industries. China’s shale gas

development strategy during the 12th FYP period will mainly focus on shale gas

exploration, according to Liu.

JRJ.com

Financial Chinese Premier Wen Jiabao said in a press conference that the PBoC and the China

Bank Regulatory Commission are considering launching a pilot scheme in Wenzhou to

regulate private lending and encourage private capital flow into the financial industry.

Hexun.com



Banking China is easing restrictions on lending capacity at three of the nation’s four biggest

banks after new loans dropped to a four-year low, officials at the banks with knowledge

of the matter said. The regulator is letting the lenders use more of their deposits to

make loans, the bank officials said, after China’s exports, industrial production and

retail sales declined in the first two months.

Bloomberg

Mineral Shen Danyang, spokesman for the Ministry of Commerce said in a press conference

that China’s rare earth export restrictions are justified and are in accordance with

World Trade Organization rules. The policy aims to protect resources, and realise

sustainable development, according to Shen.

China Daily

Mar. 14 Pharmaceutical China vowed to extend drug-price cuts, rankling some of the country’s largest

manufacturers, in an overhaul of its health-care system to trim the cost of caring for an

aging population. The plan will be supported by a tendering system tested in Anhui

province that encourages drug makers to compete on price and quality for state

contracts.

Bloomberg

Property Chinese Premier Wen Jiabao stressed in a press conference that home prices remain

far from a reasonable level and relaxing curbs could cause “chaos” in the market,

indicating no imminent relaxation of cooling measures. A bursting property bubble

would hurt the entire economy, and the government wants “long-term steady and

sound growth” in housing, according to Wen.

Bloomberg

Mar. 13 Property Seven ministries, including the Ministry of Housing and Urban-Rural Development,

National Development and Reform Commission, etc, said in a report published

recently that they aim to stabilise the first-home mortgage policies this year. The

government should ensure adequate credit for first-home buyers, while curbing

unreasonable housing demands, according to the report.

Sina Finance

High-tech China will exempt import duties on a wider list of "key technical equipment", in a further

step to shift manufacturing to strategically important industries such as cleaner and

higher-tech sectors in the world's second-largest economy. The ministry did not

elaborate on the value of the tax cut. The new list will come into effect on April 1.

Reuters UK

Shipbuilding The Ministry of Industry and Information Technology released the 12th Five-Year Plan

for the shipbuilding industry, pursuant to which the shipbuilding industry will see the

total sales revenue increase to RMB1.2 trillion by 2015, nearly doubling from 2010.

Sina Finance

Securities The China Securities Regulatory Commission has issued a circular to domestic

securities companies, according to unnamed sources. The regulatory authority orders

various departments within these companies, including the asset management

department, the investment banking department, etc, to take joint measures to combat

speculation in new shares.

Hexun.com

Mar. 12 Defense & Telecom The Ministry of Industry and Information Technology is drafting supporting rules to

guide and encourage private capital investment, especially investment in the national

defense industry and the telecom industry.

Tencent

Finance

Retail, Nondurable goods,

Durable goods, etc

According to a notice issued by China’s Ministry of Commerce, the ministry will launch

a nation-wide Consumption Promotion Programme from April 2 to May 4. It points out

in the notice that expanding consumption is a long-term strategy Beijing sticks to, and

an important measure Beijing takes to cope with the global financial crisis.

government

website

Communication, Internet,

Information Technology

The 12th FYP for broadband network construction will be issued after the NPC &

CPPCC sessions. China aims to expand average bandwidth to at least 20 MB/s for

urban households and 4 MB/s for rural households by 2015. In the capitals of more

developed eastern regions, average bandwidth is expected to reach 100 MB/s,

according to sources close to the situation.

JRJ.com

http://topics.bloomberg.com/home-prices/

http://uk.reuters.com/places/china



(March 5 to 9, 2012)


Mar. 9 Property The Ministry of Human Resources and Social Security said that no further property

tightening measures will be issued, but that strict implementation of existing policies

will continue in 2012.

Sina Finance

Telecom The government is formulating regulations for private capital to enter the telecom

market. A clear schedule is already in place, and the Ministry of Industry and

Information Technology is now working on the specific implementation rules.

China Venture

Nuclear China will soon resume the approval and construction of nuclear power plants, senior

officials said during the plenary session of the Chinese People's Political Consultative

Conference (CPPCC) National Committee. Ten approved new nuclear plants, whose

construction were put on hold last year after Japan's Fukushima nuclear accident, will

soon be given permission to start construction.

China Daily

Mar. 8 Stocks The Ministry of Human Resources and Social Security said that the trail operation of

local pension fund investment will be launched in selected provinces and cities after

the “two meetings”.

The PBoC is assessing the possibilities of quota increase for existing QFII institutions.

The Shenzhen Stock Exchange issued new regulations regarding new share trading.

New shares with a turnover velocity of over 50% and a fluctuation range of 10% will be

suspended from trading.

The CBRC head says it is formulating regulations for private capital to enter into the

financial area. The standard will be broadly the same as that for government capital.

Xinhua.net

Macro The Ministry of Commerce and other authorities are drafting new policies to spur

domestic consumption with the expiration of a previous stimulus package. According

to the former assistant minister of commerce, the government may draft a package of

policies to encourage large companies to engage in direct talks with the owners of

foreign brands to benefit the public.

China Daily

Transport, energy To further strengthen energy conservation and emission reduction, energy-saving

vehicles and vessels, and new energy vehicles and vessels, will receive a 50%

reduction or be exempted from vehicle and vessel tax, respectively, as announced by

the Ministry of Finance.

Besides, according to the National Energy Administration, China is now drafting the

control scheme for energy consumption. The power consumption cap for 2012 may be

at 4.1 billion tonnes of standard coal, and 6,400 billion kw-hr.

Reuters China

Private sector According to the Ministry of Commerce, China will proactively support private

companies to “go global”. The Export-Import Bank of China (one of the three state

policy banks) also represented that it will take active measures to support the policy,

including purchasing some assets from other countries.

Reuters China

Mar. 7 Retail The Beijing Municipal Commission of Commerce announced that this year’s “Beijing

Shopping Season” started on March 8, and will last until March 25, with Suning

Appliance, Suning.com, Beijing Easyhome, Beijing Hyundai, Wumart, Lohohd, Love

Diamond and China Environment International Travel Service being joint sponsors.

100,000 cash coupons with a total value of RMB200 million will be issued to citizens

during the period.

The Beijing News

Property The government plans to expand the pilot scheme on property tax reform. Shanghai

and Chongqing have already commenced the pilot scheme since the beginning of

2011.

Tencent Finance

Energy Domestic fuel prices may be linked to the price of West Texas Intermediate crude,

instead of Cinta, under proposed changes to China’s fuel-pricing system.

Economic Info.

Daily



Mar. 6 Property Second home purchases are restricted in some districts of Shanghai, banning

unmarried children with one home registered under their own names from purchasing

more properties.

Meanwhile, the National Development and Reform Commission is working on a

long-term mechanism to regulate the real estate industry. According to the NDRC,

China will stick to its macro-regulation stance towards the real estate industry, and

thus promote a steady and healthy long-term development.

Tencent Finance

SMEs As stated by Xie Xuren, the Finance Minister of China, at the National People’s

Congress, the country will establish a development fund to provide more support to

SMEs.

Hexun.com

Foreign exchange According to Zhao Xiaochuan, the PBoC governor, the RMB exchange rate floating

range can be increased. Premier Wen Jiabao also pointed out in his work report that

China will improve the RMB exchange rate formation mechanism in 2012.

Sina Finance

Mar. 5 Macro The 2012 Chinese People’s Political Consultative Conference and the National

People’s Congress commenced today. As announced by Premier Wen at the meeting,

this year’s target of GDP growth will be set at 7.5%, while the CPI growth will be

confined to around 4%. This is the first time that China reduces its target of annual

economic growth in 8 years.

Wen also restated that China will push forward its pro-active fiscal policy and prudent

monetary policy, and make moderate and proper adjustments under certain

circumstances.

Xinhua News

Agency

Property First-home buyers enjoy preferential interest rates. Starting from Jan. 2012, a number

of banks have gradually reduced the mortgage rates for first-home buyers. The Bank

of China and Citibank offered max 10% discount in interest rates to selected clients.

China Securities

Banking, non-bank

financials

The PBoC has halted the issuance of central bank bills for 9 successive weeks. This

has sent a positive signal to the capital market. SSE Index has increased 13.7% during

the period. The market is expecting further liquidity improvement.

Sina Finance

Paper-making The Ministry of Industry and Information Technology, the Ministry of Science and

Technology and the ministry of Finance jointly released the 12th Five Year Plan for the

Promotion of Cleaner Production, pursuant to which new technology will be introduced

in the paper-making industry, which will create challenges for industry players.

Tencent Finance

Automobile As outlined in the recently released 12th Five Year Plan for Western China

Development, priority will be placed on transport infrastructure construction, which is

believed to benefit the commercial vehicle market.

Meanwhile, the 12th Five Year Plan for the Technological Development of Electric

Cars has been released, pursuant to which, great efforts will be exerted to develop the

technologies related to battery cars.

Hexun.com

(February 27 to March 2, 2012)


Feb. 27 Bank The PBoC released for the first time the tentative schedule for opening China’s capital

account. It stated that the capital account opening process will be implemented in three

stages. During stage one (i.e. 1-3 years) it will loosen control on the direct investment

of companies with a real trading background. During stage two (3-5 years), it will

loosen control on the commercial credit of companies with a genuine trading

background. During stage three, it will gradually open up the property, stock and bond

markets cautiously under close supervision.

Sina Finance



Automobile The Ministry of Industry and Information Technology released the “2012 government

vehicles purchase catalogue”. All 412 brands on the list are domestic brands, such as

Geely, Chery and Great Wall Motor. It also includes low-end cars and new energy cars.

We believe Geely (0175.HK) and Great Wall Motor (2333.HK) will benefit the most from

the new list, as they account for 20% and 12% of the vehicles included in the list

respectively.

NetEase

Finance

Coal The 12th Five-Year plan for the coal industry is expected to be released soon following

the meeting of the national coal council on February 24 to discuss methods for

implementing the goals during the five-year period.

21CBH.com

Financing The China Securities Regulatory Commission (CSRC) has entered into discussions

with the Finance Ministry and the State Taxation Administration on ways to promote the

development of the securities market. The CSRC proposes to reduce the tax rate for

individuals on interest earned from corporate bonds.

JRJ.com

Feb.28 Financing Considering the importance of blue chips in the market, it is crucial for securities and

fund companies to promote the development of blue chips and make them dominant in

the market, according to the China Securities Regulatory Commission. Six measures

will be taken by the Shanghai Stock Exchange to achieve the goal later.

Sina Finance

Electricity The China Electricity Council has proposed a 10-year blueprint to help develop a more

market-oriented electricity industry. Based on the blueprint, restructuring will start in

some provinces first and will be gradually promoted to the rest of the country. Guizhou

has been selected to conduct a pilot programme to reduce electricity prices but specific

prices have not been set yet.

QQ Finance

Healthcare According to an official of the Health Ministry, the 12th Five-Year Plan on healthcare

will be released soon. However, medical payment reform is complicated as different

provinces have different problems. The plan is expected to promote the development of

basic healthcare and hospitalisation healthcare, but still needs future discussion due to

the anticipated difficulties in implementing the plan.

JRJ.com

Energy The Ministry of Industry and Information Technology released the 12th Five-Year Plan

for industrial energy saving. The government targets to reduce coal consumption by

670 million tonnes by 2015, according to the new energy saving standard. Nine energy

saving projects valued at RMB590 billion will be launched and relevant measures will

be taken to ensure success.

Sina Finance

Feb. 29 Energy A National Development and Reform Commission official said within this year quotas

for using renewable energy will be set in accordance with the macro objective of

adjusting the energy consumption structure. The quotas will be mainly distributed to

power producers, large corporations investing in power generation and local

governments.

Hexun

Food & Beverage &

Pharmaceutical

The Ministry of Industry and Information Technology unveiled the 12th Five-Year Plan

on the meat industry. It is also working with the Agriculture Ministry to determine

development plans (2011-2020) for the grain processing industry. The government

targets the total value of the grain processing industry to reach RMB 3.9 trillion in 2015

and grow to RMB6.9 trillion by 2020. The government also hopes to incubate a number

of established grain processing companies.

JRJ.com

Culture, Media and

Entertainment

The Ministry of Culture released details for the development for the culture sector

under the 12th Five-Year Plan period (2011-15). The government targets the

value-added of the sector to grow by 20% pa to reach RMB800-900 billion by 2015,

doubling from the 2010 level of RMB400-430 billion. The plan includes details on the

government’s developing objectives and approaches covering 11 sectors such as

games, entertainment and Internet culture.

JRJ.com

Infrastructure The NDRC plans to delay the approval of new highway projects as the debt-to-asset

ratio for previous highway projects reached more than 70%. The delay will make it

more difficult for companies to secure financing from banks.

QQ Finance



Mar. 1 Industry The Finance Ministry and Work Safety Administration launched regulations to improve

production safety standards, covering more sectors, such as metallurgy machines,

machinery manufacturing and development of new weapons.

Hexun

Bank As the RMB currency is being gradually accepted overseas, the PBoC will continue to

expand cross-border RMB business, which will further boost the use of RMB in

cross-border trading and investment. Two measures will be taken to support the

expansion: 1) enhance the liquidity of RMB; and 2) promote commercial banks to offer

excellent financial service on cross-border RMB. The PBoC will also strengthen

cooperation with other central banks.

Xinhua net

Energy The Ministry of Industry and Information Technology released the 12th Five-Year Plan

for the solar photovoltaic industry, pointing out clearly that it is necessary to support the

development of competitive companies, and promote resource integration and merger

and recombination among key corporations.

Hexun

Food & Beverage &

Pharmaceutical

A new plan to reduce the price of drugs on the national healthcare catalogue will be

released. Four major categories of drugs will lead the reduction first, including

antineoplastic drugs, immunity drugs, blood products and drugs for digestive disease.

JRJ.com

Energy According to the NDRC, residential electricity prices will be divided into three tiers

across the country within this year. The first tier is to meet the basic electricity demand;

the second is to satisfy the reasonable electricity demand, while the third is to meet the

power demand to improve living conditions.

Sina Finance

Mar.2 Financing Seven ministries including the PBoC, the Ministry of Finance and the NDRC launched

a report to reform and develop the water industry. The seven ministries pledged

support for IPOs of water companies to issue equity and debt in the open market. The

report also points out that it is necessary to attract diversified investments through local

governments’ and financial institutions’ joint effort.

JRJ.com

Financing China may announce QDLP (Qualified Domestic Limited Partnerships) this month,

allowing overseas hedge funds to raise onshore RMB. The first batch will be US$5

billion. In accordance with QDLP, a fund may be registered in Shanghai to raise

onshore RMB. After that, the fund will be permitted to invest in overseas markets

through other overseas registered hedge funds.

JRJ.com

External trade Ten ministries including the Ministry of Commerce and NDRC launched a report to

promote transformation of external trade growth. The report points out that the

objective of external trade is to make products and corporations more competitive,

enhance the cooperation among different industries and improve the government’s

competence in establishing international trading rules. To achieve the objectives,

relevant policies concerning tax and financial services will be released.

Hexun

(February 18 to 24, 2012)


Feb 18 Banking China's central bank announced to lower banks' reserve requirement ratio (RRR),

underling its efforts to ease the short-term credit crunch and secure growth.

The cut, the second of its kind in three months, will lower the RRR by 50 basis points to

20.5% for large commercial banks and 17% for medium- and small-sized banks.

The move became effective on February 24 and released an estimated RMB400 billion

in capital into the market.

Sina Finance



Feb 20 Media & Entertainment China and the US have reached an agreement concerning issues related to films.

Although the agreement does not change the annual quota of 20 revenue-sharing

foreign films in Chinese theatres, it allows 14 premium format films, such as 3-D and

IMAX movies and similarly enhanced format films, to be exempt from the quota.

Also, the US studios' share of their films' grosses in the Chinese market will rise to

25%, from about 13.5% to 17.5% now.

China Daily

Feb 21 Infrastructure & Building

Materials

The State Council has approved a plan aimed at accelerating development in the

western regions through the end of 2015.

According to the plan, about 15,000 km of railways will be opened in the western

regions in this period. Energy-saving and resource conservation will also be given an

emphasis. The government targets the western regions to achieve a 15% cut in energy

use per unit of GDP from that of the end of 2010, and to reduce water consumption by

30% per unit of industrial output growth.

Xinhua News

Agency

Manufacturing Zhong Shan, Deputy Minister of Commerce, said at the 2012 China Imports and

Exports Work Conference that China will "at the appropriate time”, increase tax

rebates on specific categories of goods, including “labour-intensive products". The

move, if implemented, will be the first increase since 2009.

China Daily

Feb. 22 Food & Beverage &

Pharmaceutical

Tong Min, a senior official from the State Food and Drug Administration (SFDA) has

vowed to implement higher standards for the registration and production of health food

products.

He said some companies, especially those that sell products intended for weight loss

and blood sugar reduction, use illegal additives and exaggerate the effects of their

products in advertisements.

According to Tong, the SFDA will revise its regulations to adjust the permitted scope

and usage of health food products and adopt new methods to evaluate the products.

China Daily

Feb 23 Financial regulation The China Securities Regulatory Commission issued a statement saying it is

formulating policies to curb speculative investments, especially for IPOs and inferior

stocks that drive share prices to irrational highs. The measures may include improving

the delisting mechanism and a more efficient risk-warning system for private

investors.

Xinhua News

Agency

Healthcare & Insurance China will raise government subsidies for health insurance offered to farmers and

non-working urbanites to more than RMB360 a year by 2015.

The 80% increase was announced after a State Council meeting on Wednesday

where new health reform targets were set for the 12th Five-Year Plan (2011-15)

period.

Major reform targets include the expansion of basic health insurance coverage,

improving the country's essential medicine system, as well as community-level clinics

and public hospitals.

Sina Finance

Feb 24 Tourism Beijing city hopes to boost tourism by providing financial incentives to travel agencies.

According to the Beijing Tourism Development Committee, the municipal government

will provide bonuses ranging from RMB300, 000 to RMB500,000, according to the

length of time foreign tourists stay in the city.

People’s Daily



Feb 17 Metals & Resources China raised the resources tax on six minerals, including iron ore, tin and

molybdenum, to help conserve reserves in the world’s second-biggest economy. The

tax on iron ore production was raised to 80 percent of a base rate, from 60%, effective

Bloomberg



from February 1, the official China Taxation News said in a report, citing a joint circular

from the Ministry of Finance and State Administration of Taxation.

Infrastructure The Ministry of Railways intends to give local governments more power to decide on

their railway construction projects, according to an unnamed government official.

cnstock.com

Communication, Internet,

Information Technology

The Ministry of Industry and Information Technology plans to carry out a “Broadband

China” Strategy aimed at higher Internet connection speed at a lower price this year,

Qin Hai, vice chief of the ministry’s promotion department said. China aims to expand

average bandwidth to at least 20 MB/s for urban households and 4 MB/s for rural

households by 2015. In the capitals of more developed eastern regions, average

bandwidth is expected to reach 100 MB/s.

JRJ.com

Internet, Information

Technology

Eight ministries, including the Ministry of Commerce and the Ministry of Finance, jointly

issued a document to promote the sound and rapid development of the electronic

commerce industry. The eight ministries will set up an expert consultative committee to

help develop national E-commerce model cities, and launch a pilot project on

E-invoicing, according to the document.

cnstock.com

Tourism & Travel, Food &

Beverage

Seven ministries jointly issued a document requesting financial support for the tourism

sector. Financial institutions should create innovative financial products to facilitate the

sound development of the tourism industry, according to the document.

China daily

Feb. 16 Metals & Resources The State Council pledged to expand the pilot programme of VAT reform and advance

resource tax reform, according to a statement released after a government meeting

presided over by Chinese Premier Wen Jiabao.

People’s Daily

Banks, non-banks financials The People’s Bank of China said in its fourth-quarter monetary policy report that, it will

flexibly use interest rates and other price-based tools to maintain the overall stability of

the economy and price levels. It will also use interest rates to adjust the demand for

capital, as well as saving and investment decisions.

Sina Finance

Internet The Chinese government intends to regulate and continue censoring social networking

sites on the mainland for the foreseeable future, the State Council said in its revised

outline for China’s 12th Five-Year Plan on Cultural Reform and Development.

Forbes

Feb. 15 Property According to an unnamed source, the Ministry of Housing and Urban-Rural

Development is mulling an expansion of the pilot programme of using local property

pensions to support social housing construction.

Tencent Finance

Pharmaceuticals China plans to expand its list of essential drugs this year to 800 to cover diseases such

as cancer, and prices for pharmaceuticals may fall further, Health Minister Chen Zhu

said. China may have 500 Western products and as many as 300 traditional Chinese

medicines on the new list, according to Chen.

Bloomberg

Information Technology The Ministry of Industry and Information Technology announced the 12th Five-Year

Plan regarding the “Internet of Things”. According to the plan, China aims to build a

complete Internet-of-Things industry chain, develop 10 industrial zones and over 100

key enterprises by the end of 2015.

JRJ.com

Feb.14 Macro Chinese Premier Wen Jiabao said the nation needs to start “fine-tuning” economic

policies this quarter, the first indication of a timeframe for an adjustment he has

pledged since October. Economic circumstances in January and the first quarter

deserve attention, Wen told business executives in Beijing as he sought opinions on a

government report. “We have to make a proper judgment as early as possible when

things happen and take quick action,” Wen was cited as saying.

Bloomberg

Banks China’s regulatory authority is mulling a revision of the commercial bank capital

regulations, and the revised version is expected to come into effect as early as July,

according to an unnamed source. The revised regulations may allow banks to include

loan-loss reserves as their Tier-2 capital.

Sina Finance

Media China told its television broadcasters to limit the number of imported television series

they show, China’s State Administration of Radio Film and Television said on its

Xinhua news

agency



website. Domestic television channels will not be allowed to broadcast foreign TV

series during prime-time hours, and no imports can exceed 50 episodes, according to

SARFT.

Feb. 13 Property Wuhu’s new property measures were stopped three days after they were announced.

The eastern Chinese city of Wuhu said it will delay implementation of planned

subsidies for apartment purchases, a striking reversal demonstrating that national

authorities are not yet ready to allow a loosening of controls on the key sector.

Wall Street

Journal

Property Chinese Premier Wen Jiabao said at a meeting that, China’s property tightening

policies should serve two goals: 1) to cool down the red-hot property market, and bring

property prices down to reasonable levels; and 2) to ensure the sustainable, steady

and healthy development of China’s property market. The central government will

maintain its property regulation polices until home prices return to reasonable levels.

Sina Finance

Infrastructure Chinese Premier Wen Jiabao said private capital should be introduced to railway

construction. The government plans to take several measures, including introducing

private capital, to solve funding shortages for various railway construction projects,

Wen said at a meeting held in Beijing

Tencent Finance

Banks China's banking regulator has drafted rules to stop banks from charging their

customers excessive fees, which have become a focus of rising frustration. The new

rules, issued recently by the China Banking Regulatory Commission, said all fees must

be set by banks' head offices and not local branches, that banks must be more

transparent when setting prices, and that they must give three months' notice before

raising fees.

Wall Street

Journal



Feb.10 Property Wuhu, an industrial city in Anhui province, is launching policies to support tax

reduction and hukou transfers, according to a statement aimed at improving residents’

housing and living conditions published by Wuhu’s municipal government on its

website. It is believed that Wuhu’s measures have the potential to be replicated by

other cities. This might finally break the central government’s policy deadlock

regarding the property sector.

Shanghai

Securities News

Tourism The US Ambassador to China announced that the US will simplify travel visa

application process and increase visa processing speed by 40% in 2012, which is

believed will boost tourism both in China and the US.

Beijing Business

Today

Feb.9 Financing Zhejiang province will now allow small loan financing companies to increase capital

from their shareholders, to provide additional sources of funding for these companies.

Sina Finance

Feb.8 Employment The State Council issued a job-creation and wage-growth plan for the 12th Five-Year

period, pursuant to which, during 2011 to 2015:

45 million new jobs will be created and urban unemployment rate will be maintained

within 5%;

China also plans to create jobs for 40 million people in the rural surplus labour force;

and

The government also pledged to maintain a minimum 13% annual growth in the

nation’s minimum wage standards and to keep the standard in most regions higher

than 40% of the average wage of local urban employees.

State Council

Petrochemicals The National Development and Reform Commission raised processed oil prices.

Prices of petrol and diesel for national reserves will be revised up by RMB300/tonne to

RMB8,580/tonne and RMB7,730/tonne, respectively, while adjustments will be made

NDRC



to the prices of petrol and diesel for other uses.

Banks The Administrative Measures on Capital of Commercial Banks is expected to be

officially implemented from July 1, 2012, which will directly affect the refinancing

programmes in the market.

Sina Finance

Property The PBoC will provide credit support to first-home buyers. This is seen as a signal of

relaxing credit terms relating to first-home purchases. What’s more, as released by the

National Development and Reform Commission, the investment budget of the central

government for 2012 has been increased by RMB20 billion approximately, which will

mainly be used in the construction of social security housing projects.

Sina Finance

Feb.7 Construction As announced by the Ministry of Finance, local governments’ income from government

bonds, property tax etc will be used to build security housing projects.

Sina Finance

Feb. 6 Auto The legislative Affairs Office of the State Council issued the draft recall policies for

automobiles, pursuant to which responsibilities and scope for car manufacturers and

tire manufacturers were defined.

Sina Finance.

Agriculture The National Development and Reform Commission has raised the minimum prices

for 2012 of early indica rice, middle-season and late indica rice to RMB120, RMB125

and RMB140 per 50 kgs, or by RMB18, RMB18 and RMB12 compared with 2011,

respectively.

NDRC

Aviation Pursuant to a notice recently released by the Ministry of Transportation and

Communications, unless approved by relevant government authorities, no aviation

company that is involved in the European Union Emission Trading System is allowed

to raise freight charges or add fee items for this reason.

Reuters China

Stocks The China Securities Regulatory Commission will strengthen the regulation on IPO

pricing. It is planning to authorise third-party research institutes to analyse the industry

PE ratios of all listed companies, and release the results for public inspection. For

those IPOs whose prices deviate significantly from the relevant industry PE, its issuer

and underwriter will be requested to provide explanations on the basis for their pricing.

Reuters China

(January 30 to February 3, 2012)


Jan. 30 Finance The National Development and Reform Commission (NDRC) and the Shanghai

Municipal Government jointly issued a plan to make Shanghai a global centre for

innovation, transaction, pricing and clearing of RMB-denominated financial products

by 2015.

The plan also aims to make the government-backed Shanghai Interbank Offered Rate

(Shibor) the benchmark for RMB credit everywhere and targets to more than double

the annual non-forex financial market trading volume to RMB1,000 trillion by 2015.

Yet the NDRC's plan did not specify how quickly China would liberalise its capital

account, a crucial step in Shanghai's attempt to become a global money hub.

Reuters

Feb. 1 Water-conservation,

machinery, seed trade

A document publicised by the Central Committee of the Communist Party of China and

the State Council said China will step up efforts to construct water-conservation

facilities and continue to increase funding for the projects to boost agricultural

development.

China will promote new technologies and equipment for water-saving irrigation,

expand the purchasing subsidies and offer tax breaks for equipment.

The document also said that China will push for agricultural mechanisations in the

country by boosting credit support for the purchase of large and medium-size

Xinhua News

Agency



machineries.

This government document gives emphasis to scientific innovation in seed production,

saying China will support the cultivation of new varieties of seeds and promote

commercialisation of the industry by encouraging large enterprises to enter the seed

market through mergers and acquisitions as well as equity participation.

SMEs, finance A statement released after a State Council executive meeting presided over by

Premier Wen Jiabao announced that China's central government will earmark RMB15

billion to establish a development fund for small and medium-sized enterprises,

particularly focusing on newly-formed ones.

The country will relax restrictions on the usage of private capital, foreign capital and

funds from international organisations in setting up small financial institutions.

Xinhua News

Agency

Feb. 2 Public finance A proactive fiscal policy is a "feasible and indispensable" option to allow China to

maintain steady development amid the global economic downturn, said Finance

Minister Xie Xuren on Wednesday.

In an article for the latest issue of Qiushi, a journal of China’s Communist Party, he

also wrote "the domestic and global turmoil has not changed the fundamentals of

China's economy, and fiscal policies will have to continue to play a vital role in

maintaining steady development".

Xie said that further expenditure is needed in areas such as key projects under

construction and those in the planning stage. Other areas include improving people's

livelihoods and bolstering the upgrading of smaller businesses.

Xinhua News

Agency

Feb. 3 Oil & Chemicals The Ministry of Industry and Information Technology announced the 12th Five-Year

Plan for the oil and chemicals industries. The ministry vows to devise a mechanism to

ensure the stable supply of some important raw materials such as crude oil, coal,

kalium, sulphur and natural rubber that China’s manufacturers are heavily dependent

on. It also states the intention to assist qualified manufacturers in venturing overseas

and to support their joint exploration efforts with foreign partners.

Government

website

(January 23 to 27, 2012)


Jan. 27 Real estate Jiang Weixin, China’s Minister of Housing and Urban-Rural Development, said

recently that the central government would accelerate the establishment of its personal

housing information system, and 40 major cities will be able to share personal housing

information online by the end of June. The system will allow housing authorities at all

levels to know the exact housing status of every individual in their area, and thus help

the government combat property speculation.

Sina Finance

Jan. 26 Auto, Clean energy Beijing will implement the national vehicle V emission standard in 2H12, according to

the Beijing Municipal Environmental Protection Bureau. The new standard is similar to

the Euro V Standard on vehicle emission in Europe and targets lower sulphur content.

NOx emission from existing vehicles in Beijing is expected to be reduced by 10%

following introduction of the national V standard.

Sina Finance

Jan. 25 New energy, Environment

protection

A programme to curb the increase in greenhouse gas emission in Guangdong

Province will probably be the largest of the nation’s seven test climate-protection

systems, according to Bloomberg New Energy Finance. Guangdong is seeking to cut

the amount of carbon emitted per unit of production in its economy by 19.5% in the five

years through 2015. Other regions have lower targets, with Chongqing and Hubei

setting reductions of 17%.

Bloomberg

http://topics.bloomberg.com/new-energy/



Real estate, Internet A second-hand property transaction platform will be built in Beijing, through which

buyers and sellers will be able to sign contracts online. According to the Beijing

Municipal Commission of Housing and Urban-Rural Development, Beijing citizens

logging on to the platform will be able to access reliable property sales and leasing

information.

Sohu Focus

Food & Beverage Zhang Yong, head of China's State Council Food Safety Commission, said in a food

safety forum that China will work to further boost food safety through legislation, and

eliminate regulatory loopholes and supervisory blind spots.

Sina Finance

Logistics The major channel of the “North-to-South Grain Transfer” project, a key project aimed

at boosting China’s grain storage and promoting the construction of logistics

infrastructure, will be opened up during the 12th Five -Year Plan period, according to

Nie Zhenbang, head of China’s State Administration of Grain.

Xinhua News

Jan. 24 Paper making China will cut over 10 million tonnes of outdated paper-making capacity by 2015 and

enhance recycling in order to reduce pollution during the 12th Five-Year Plan period,

the NDRC announced recently. Mergers and acquisitions will also be promoted to

realise production expansion and energy conservation.

National

Business Daily

Jan. 23 Agriculture China will continue to strengthen policy support for agriculture, Chinese President Hu

Jintao said during a tour of rural areas in Beijing during the Spring Festival holiday.

President Hu said that considerable attention has been paid to the work related to

agriculture, rural areas and farmers, and he believes that the living standard of

Chinese farmers will improve with support from the government.

Tencent Finance

(January 16 to 20, 2012)


Jan.20 Stocks According to the Ministry of Human Resources and Social Security, several pilot

provinces have officially authorized the National Council for Social Security Fund to

manage their pension funds. A maximum of US$57 billion would be injected into the

A-share market once the relevant approval is granted by the central government.

Reuters

Jan.19 Consumer goods, service

sector

The Ministry of Commerce intends to issue policies to stimulate consumption, pursuant

to which fiscal measures may be taken to promote the sales of energy saving home

appliances, e.g. solar products for home use.

Sina Finance

Light industry, textile,

pharmaceutical,

chemicals, consumer

staples

China has released its industrial restructuring plan for the 12th Five-Year Plan period

(2011-15). The plan has set the following targets:

Light industry: technology innovation will be enhanced to meet the increasing

requirements for consumer goods.

Textile industry: The annual growth of industrial value added is targeted at 8%. By

2015, total exports within the industry are expected to reach US$300 billion, with an

annual growth of 7.5%.

Pharmaceutical industry: The target of annual growth in total output during the period

from 2011 to 2015 is set at 20%, and the adjustment of the industry structure will be

strengthened, to promote rapid development.

Chemical fibre industry: energy conservancy and pollution reduction will be further

promoted.

Sugar manufacturing industry: Annual sugar production for the relevant period should

reach 16 million tonnes.

Hexun



Jan.18 Energy The approval of new nuclear energy projects will be resumed in 1Q2012. China has

suspended approval of projects in order to revise safety standards following the

nuclear disaster in Japan in March 2011.

People’s Daily

Auto The second draft of the car warranty policy is being reviewed. The return policy may be

lengthened from the current 30 days to 60 days, while guarantees for repairs,

replacements or compensation on faulty products will be strengthened.

Xinhua News

Agency

Jan.17 Service sector,

transportation

Following the success in Shanghai, several cities, including Beijing and Shenzhen,

have filed applications to the Ministry of Finance for a pilot programme to replace

turnover tax with a value-added tax (VAT) in the transportation sector and some

services industries. The VAT reform is expected to reduce the tax burden and promote

the development of the related industries.

China Daily

Stock market Local pension funds of RMB100 billion will be injected into the market in 1Q 2012. The

funds will be managed by the Social Security Fund. A large portion of the fund is

expected to be invested in fixed-income assets, while around 30% to 40% in stocks.

The report also mentioned that an improved version of the Dutch Auction IPO system

is expected in the A-share market, and that there’s no timeline for the launch of

Shanghai’s international board. In traditional auctions, the price rises until one bidder is

left. In a Dutch auction, the auctioneer sets an extraordinarily high price and lowers it

until someone bids on the item.

The report added that China’s Securities Regulatory Commission will reduce the

overseas listing threshold of Chinese companies.

Sina Finance

Jan. 16 Heavy industry, new energy Seven cities and provinces, including Beijing, Shanghai, Shenzhen, Tianjin,

Chongqing, Guangdong and Hubei, will conduct trial programme of carbon emission

trading to accelerate the national economic restructuring.

Sina Finance

Real estate The pilot programme for property tax may be expanded to more cities, but will not be

implemented nationwide in 2012, as indicated by the Ministry of Housing and

Urban-Rural Development and the Ministry of Finance, after having assessed the

effectiveness of the pilot scheme.

China Daily

Bonds, stocks China’s Securities Regulatory Commission may expand its RQFII pilot programme in a

bid to further open the country’s capital market. It is also considering allowing some

institutions under the RQFII programme to issue exchange-traded funds (ETFs) made

up of A-shares, citing an unnamed official close to the commission. The total

investment quota is approximately RMB20 billion. He also indicated that the proportion

of institutional investors in IPO subscription may increase to over 20% in 2012.

Meanwhile, Dai Xianglong, the head of the Social Security Fund, said at the Third

Annual Economics Conference that China should remove QFII quota restrictions step

by step, to create more channels to promote the internationalisation of the RMB.

Xinhua News

Agency

Foreign trade According to Zhang Xiaoqiang, the Vice Minister of the National Development and

Reform Commission, China’s target for foreign trade growth for 2012 has been set at

around 10%, due to the challenging economic conditions.

Sina Finance

Construction, steel The Ministry of Housing and Urban-Rural Development issued the guidance on

speeding up the application of high tensile reinforcement steel. High tensile

reinforcement steel (Grade 500 MPa) will be promoted in construction projects for

environment protection purpose.

MOHURD

(January 9 to 13, 2012)


Jan. 10 Bonds, stocks Guo Shuqing, chairman of the China Securities Regulatory Commission, said the

watchdog plans to launch several new products, including high-yield corporate,

Xinhua News

Agency



municipal and government agency bonds, in order to boost direct financing. He

revealed that the authorities are also working to further open the securities market to

foreign investors by raising the investment quota for Qualified Foreign Institutional

Investors (QFII) in the A-share market.

Foreign exchange rate In an interview with the People’s Daily, PBoC governor Zhou Xiaochuan said at

present the RMB is allowed to fluctuate as much as 0.5% on either side of the central

bank’s reference rate. He said China could expand the floating range of the RMB when

a balance is reached between capital inflows and outflows, and when conditions are

ripe to widen the floating range. He stressed that an enlarged floating range does not

mean the average RMB exchange rate will take an apparent upward or downward

trend.

People’s Daily

Energy, taxation The National Energy Bureau said it is exploring the possibility of imposing fossil-fuel

tax in the future and that it will levy resource tax on crude oil, natural gas and coal on

the basis of prices.

Xinhua News

Agency

Agriculture, IT The No. 1 central government document for 2012 is to be formally released soon. A

vice-minister revealed that this year’s document revolves around the primary industry.

The document emphasises on taking advantage of technology to promote innovation

and entrepreneurship. Information technology is expected be brought to the fore, as

the Ministry of Science and Technology has embarked on a pilot scheme in seven

provinces to promote the use of information technology in agriculture in rural areas.

Xinhua News

Agency

Jan. 11 Export & Import China's exports and imports grew at their slowest pace in more than two years in

December as foreign and domestic demand ebbed. A source told the 21st Century

Business Herald that the Ministry of Commerce is considering measures to stabilise

China’s exports, including channeling credit to three kinds of exporters, namely

manufacturers with stable orders, exporters of daily necessities and businesses

exporting to emerging economies. Policies on tax rebates and foreign exchange rate

will remain stable.

The 21st Century

Business Herald

Entertainment China’s film watchdog indicated plans to cap movie ticket prices in a move to create

more access to cinemas. The State Administration of Radio, Film and Television

(SARFT) may impose a price cap on tickets and may require theatres to show more

half-price screenings, according to a Xinhua report earlier this week. The report didn’t

say when regulators plan to implement pricing changes or offer additional details,

adding that the SARFT plans to issue pricing guidelines for theatres this year.

Shenzhen Daily

Jan. 12 Banks, non-banks

financials

In an interview with the China Daily, Zheng Xinli, deputy head of the economic

sub-committee of the National Committee of the Chinese People's Political

Consultative Conference, called for the quick launch of a deposit insurance system,

which he said would reduce potential default risks and help drive market-oriented

interest rate reform for commercial banks.

China Daily

Renewable energy Liu Tienan, Minister of the National Energy Bureau, said that China will start work on

its second installment of wind power projects for the 2011-2015 period, aiming to add a

total installed capacity of 15-18 million kilowatts. Meanwhile, China will also implement

the first installment of solar power projects, which will add a total installed capacity of 3

million kilowatts. The government is increasingly cautious about giving approvals to

new solar power projects.

Business China

Jan.13 Railways An informed source revealed that China’s Ministry of Railways plans to spend RMB80

billion to purchase locomotives and carriages, an amount lower than that spent in

previous years. The 2010 budget for locomotives and carriages was RMB126 billion.

Sina Finance



(January 2 to 6, 2012)


Jan. 06 Oil & Gas The Ministry of Finance increased the threshold for the nation’s oil windfall tax to

US$55 per barrel from US$40 effective Nov. 1, 2011. This is positive for the Chinese

oil giants as it will boost earnings. Our 2011E earnings sensitivity to the tax adjustment

is: 22% for PetroChina, 14% for Sinopec and 11% for CNOOC.

Bloomberg

Auto Global auto makers are scrambling to size up the impact of China's decision to stop

encouraging growth among foreign companies, a move that appears to give domestic

car companies greater protection from outside rivals. China last week said it would no

longer promote investments from foreign auto makers through policies such as

preferential tax treatment and streamlined approval processes.

Wall Street

Journal

Media The Chinese authorities are clamping down on the type of content being broadcast on

the airwaves and websites within the country, aiming to promote Chinese culture and

reduce outside influences. The order, which came into effect January 1, restricted the

number of entertainment programs that satellite channels can broadcast each week to

two, with a maximum of 90 minutes of content defined as entertainment allowed during

prime time -- between 7:30 p.m. and 10 p.m.

CNN

New energy, Internet,

Tourism

The Chinese government is studying policies to encourage spending on energy-saving

products, and will take other measures including the promotion of online shopping and

tourism, as it strives to meet challenges posed by a global slowdown, Commerce

Minister Chen Deming told the ministry’s annual works conference, according to a

statement posted on its website.

Bloomberg

Jan. 05 Postal industry The State Postal Bureau of China recently issued targets for the express courier

service industry under the 12th Five-Year Plan. The government aims to boost the

revenue of domestic courier companies to RMB143 billion by the end of 2015, 1.5

times higher than 2010, with an annualised growth of 20%. At the same time, the

government aims to develop more than five large and highly competitive domestic

courier companies with annual revenue of over RMB10 billion each.

People’s Daily

Consumer goods China’s Ministry of Commerce has set the targets for growth in retail sales, exports and

imports under the 12th Five-Year Plan. China targets retail sales of consumer goods to

grow by about 15% annually, and for exports and imports to increase by about 10%

per annum.

Ifeng Finance

Waste treatment The Ministry of Industry and Information Technology issued the utilisation target for

industrial solid waste treatment under the 12th Five-Year Plan. According to the plan,

the rate of utilisation will reach 50% by 2015, which will stimulate investment in the

solid waste treatment industry.

Hexun.com

Jan. 04 Banks, non-banks financials China’s central bank said at the monetary policy meeting that it will implement prudent

monetary policy. It stressed the need to fine-tune policies to steer a course between

economic restructuring and managing inflation.

Sina Finance

Home appliance, Auto A former official of China’s Ministry of Commerce hinted in an interview that the

proposed government stimulus measures may include subsidies for families living in

affordable housing to buy appliances and for consumers planning to change their cars.

The Ministry of Commerce said last week that new consumption stimulus policy will be

announced.

China Daily

Macro policy Chinese Premier Wen Jiabao reiterated that Beijing is focused on fine-tuning both

monetary and fiscal policies for individual sectors and warned of a difficult first quarter

during a tour of heavy machinery factories in Hunan Province over the New Year's

holiday. The authorities have made clear they will stay on the path of "prudent"

monetary policy with a priority on ensuring stable growth, Wen said in a government

report on the visit. China will tighten and loosen different policies according to the

needs and situations of different sectors, he added.

Wall Street

Journal

http://topics.bloomberg.com/chen-deming/

http://www.mofcom.gov.cn/aarticle/ae/ai/201201/20120107915368.html?2211793026=50175321



Jan. 02 SMEs The Ministry of Finance said government departments will make at least 30% of their

purchases through small and medium-sized enterprises starting from the start of 2012.

China Daily

Jan. 01 Taxation The Chinese government said it will continue to offer value-added tax (VAT) refunds to

the animation industry 2012 in its effort to boost cultural development. For companies

that develop their own animation software products, a 17% VAT will be levied, but the

portion of VAT actually collected that exceeds 3% of the taxpayers' tax base will be

refunded upon tax collection, the Ministry of Finance said in a statement on its website.

China Daily

(December 26 to 30, 2011)


Dec.30 Foreign investment According to a guideline recently released by the National Development and Reform

Commission and the Ministry of Commerce, which will take effect on January 30,

2012, China will ease its restrictions on foreign investments and it will encourage

foreign investments in emerging industries and the service industry, especially in the

central and the western regions of China.

Sina Finance

Banking, non-bank

financials

The People’s Bank of China (PBoC) did not issue 3-month bills on December 29,

2011. The PBoC usually issues 3-month bills each week. The suspension on

December 29 was viewed by the market as another signal that the PBoC will lower the

reserve requirement ratio next year to ease the tight market liquidity condition.

Sina Finance

Retail, onsumption Minimum wages in 24 cities increased by 22% on average in 2011. Starting from

January 1, 2012, minimum wage in Beijing will rise to RMB1,260, up RMB100 or 8.6%

compared to the current level.

Hexun.com

Dec. 29 Rare-earth exports China unveiled an initial cut of 27% in its quota for rare-earth exports for 2012.

According to the Ministry of Commerce, China has set the first tranche of rare earth

export quotas at 10,546 tonnes for 2012, which only includes export quotas for

enterprises that have already passed stringent environmental inspections.

The Wall Street

Journal

Agriculture The central government is estimated to have injected over RMB1 trillion into the

agricultural sector in 2011 to support development of the rural area. This represents a

huge increase compared with that of 2009 and 2010.

Hexun.com

Dec. 28 SMEs China will promulgate favourable policies for small to medium-sized enterprises

(SMEs) in 1H 2012. Policies include establishing public service platforms for SMEs

and providing a favourable environment for innovative and high-tech SMEs, to achieve

a growth of 11% in industrial value added and to create new job opportunities. The

basis of taxation for SMEs will be revised upwards from RMB30,000 to RMB60,000 for

the period from January 1, 2012 to December 31, 2015.

Sina Finance

Environment protection Twelve ministries and commissions, including the National Development and Reform

Commission, the Ministry of Education, the Ministry of Finance, the Ministry of Housing

and the Urban-Rural Development and the Ministry of Commerce etc., have jointly

issued an energy conservation plan, which is designed to restrict the carbon emissions

of more than 17,000 enterprises with annual energy consumption of over 50 million

tonnes of standard coal.

NDRC

Retail, consumption Starting from Dec. 2011 to Jun. 2012, the Ministry of Commerce, the National

Development and Reform Commission, the Ministry of Police, the State Administration

of Taxation and the State Administration for Industry & Commerce will actively rectify

the irregular charging activities in the retail sector.

Sina Finance

Auto The State Administration of Taxation released the measures for Administration of Tax

on Vehicle Purchases. Several fees and procedures have been cancelled to ease the

tax burden and to simplify the process for second-hand car buyers.

China Securities

Journals



Auto China released four national standards on electrical vehicle (EV) charging ports, which

will come into force on March 1, 2012. These standards are designed to promote a

unified market and the long-term development of the domestic EV industry.

China Securities

Journal

Consumption According to Xiao Jie, the Director of the State Administration of Taxation, China will

further improve preferential tax policies in 2012. In terms of consumption tax reform,

the range and structure of consumption tax will be adjusted to promote environment

protection, energy conservation and rational consumption.

Tencent Finance

Dec. 26 Energy The National Development and Reform Commission announced that starting from

December 26, 2011, China will initiate the trial of pricing mechanism reform for natural

gas in Guangdong province and the Guangxi autonomous region, where the pricing

mechanism will change from the “cost-plus” approach towards market driven. The

reform will gradually move to other provinces.

China Securities

Journal

Banking, non-bank

financials

Ms. Wu Xiaoling, a former vice-governor of China’s central bank said at a forum in

Beijing that the People’s Bank of China will resort more to reserve requirement ratio

(RRR) as a tool to pursue a prudent monetary policy. She told her audience that if

funds outstanding for foreign exchange grow by a small margin or even drop, the

central bank will have to offer more liquidity by adjusting the RRR.

China Securities

Journal

Taxation Xie Xuren, China’s Finance Minister, unveiled the roadmap of how the structural tax

reduction programme will be conducted in 2012. According to him, the tariffs on some

products will be lowered in 2012 to facilitate the import of energy, natural resources,

technically advanced products and key components. Small businesses with an annual

leviable income of less than RMB60,000 will receive tax concessions and will be

entitled to have their leviable income halved to calculate income tax at a rate of 20%.

The current pilot scheme of replacing income tax with valued-added tax (VAT) for

transportation businesses and sophisticated service business based in Shanghai will

be expanded gradually. Resource tax reform will be implemented more widely, shifting

towards price-based taxation. He also vowed to push ahead with property tax reform

on a trial basis. In addition, the VAT levied on the wholesale and retail of vegetables

will be removed in 2012.

Xinhua News

Agency



Dec.19 Banking, non-bank

financials

The regulation of China’s credit rating industry will be centralised with the People’s

Bank of China, a PBoC vice-governor revealed at a forum. At present, in addition to

the PBoC, the National Development and Reform Commission, the China Banking

Regulatory Commission and the China Insurance Regulatory Commission also act as

watchdogs in different market segments. The PBoC is expected to harmonise

regulations and cut red tape with a view to facilitating development of the industry. The

news is welcome by China’s credit agencies, as they will be regulated primarily by the

central bank in the future rather than by more than three government agencies

currently.

Sina Finance

Macro-economy, taxation A director of a research institute affiliated with China’s Ministry of Finance hinted that

there would be a high probability that environmental tax would be introduced during

the 12th Five-Year Plan period, i.e. 2011-2015. Corporate income tax is also likely to

be reduced as part of a structural tax reduction programme.

Sina Finance

Dec. 20 Pension, equity Dai Xianglong, chairman of the National Council for Social Security Fund and former

central banker, indicated the central government is considering allocating a portion of

the pension funds managed by provincial and municipal governments for long-term

equity investment.

Xinhua News

Agency



Real estate The Information Office of the Shanghai Municipal Government vowed to continue to

enforce property purchase limits next year. A number of major cities, including Beijing,

Xiamen, Haikou, Fuzhou and Qingdao, had made similar commitments. China’s

policymakers suggested at the Central Economic Work Conference, which concluded

last week, for the property tax to be introduced more widely on a pilot basis next year.

Currently, property tax is only levied in two cities, Chongqing and Shanghai.

Sina Finance

Dec. 21 Banking, non-bank

financials

The Financial Supervisory Commission in Taiwan issued a statement, saying that

mainland Chinese banks can hold stakes in Taiwan’s local banks starting from January

2, 2012. Mainland banks will be allowed to have a maximum of 5% holding in a Taiwan

bank. And the combined holding of mainland investors in a Taiwan bank is capped at

10%. Mega Financial Holding Co. and Cathay Financial Holding Co., in which Taiwan’s

government is a major shareholder, have expressed intention to sell shares to

mainland investors.

Caijing agazine

Dec. 23 Railway, Construction,

Steel, Machinery

Sheng Guangzhu, the minister of China’s Ministry of Railways, revealed at an industry

conference that RMB500 billion will be deployed for investment in fixed assets for

railway construction in 2012. RMB400 billion of this amount will be spent on

infrastructure and a total of 6,366 km of new railways is expected to be put into

operation.

He stressed the need to complete projects that are currently under construction,

construct indispensible new railways and improve support facilities.

Rapid railway construction slowed down after the fatal train crash in July 2011. Since

2008, China’s railway construction has gone through a peak to a trough. Mr. Sheng’s

speech signaled that China’s leadership intends spending on railways to return to the

norm in the coming years.

Xinhua News

Agency, Caijing

agazine




financials

Guo Shuqing, chairman of the China Securities Regulatory Commission, suggests to

invest RMB4 trillion of pension funds into the domestic equity market. Endowment

security and housing security should also be invested into the equity market to derive

profits, following the success of investment of social security funds. The social security

fund currently manages RMB800 billion and has an annual compound return of 9.17%.

Domestic securities companies will benefit from the development of the national social

security system.

Sina Finance

Import and export,

Domestic consumption

According to the Ministry of Commerce, China is adjusting foreign trade policies to

maintain steady growth as the trading environment will be very tough in the first quarter

of 2012. The government is also discussing new policies to stimulate consumption as

the home-appliance subsidies will expire soon.

Sina Finance

Domestic consumption Chinese Vice-Premier Li Keqiang said expanding domestic demand has been set as

the top priority for 2012. Regulations on commodity prices will be enhanced, while

economic restructuring will be further promoted.

Reuters China

Dec.15 Import The Ministry of Commerce said that China will cut its import tariff rates on over 730

commodities to boost imports. The provisional tariff rates will average 4.4%, which is

much lower than the current most-favoured-nation rate.

Sina Finance

Dec.14 Import, Automobiles The Ministry of Commerce announced that China will impose anti-dumping and

countervailing tariffs on high-emission vehicles imported from the US in the following

two years. Auto producers affected include GM, Chrysler Group, Mercedes-benz,

BMW and Honda of America, etc.

Reuters China



Dec.13 Pharmaceuticals The 12th “Five-Year Plan” for the pharmaceutical industry will be released. According

to the plan, the industry expects to achieve an average annual growth of 20% in terms

of total output, and 16% in terms of value addition.

Hexun

Real estate As pointed out at the 2011 Central Economic Work Conference, China’s regulation

over the real estate industry has entered a crucial stage where the results are still

unstable. Thus, austerity policies must be maintained to further reduce housing prices

to a more reasonable level.

People’s Daily

Foreign investment To regulate approval of establishing foreign invested enterprises and foreign exchange

control, the Ministry of Commerce and SAFE (State Administration of Foreign

Exchange) have issued a notice, stipulating that no loans granted by domestic

institutions to foreign invested enterprises can be used for reinvestment purpose in

China.

Reuters China

Dec.12 Export and import,

technology, clean energy

President Hu Jintao says China targets to expand the country’s exports to exceed

US$8 trillion over the next five years in order to balance trade. China will continue to

open its market to attract more advanced technology and bolster higher-valued

products to become more competitive. China’s industries of the future will be cleaner,

more technological, more value added and be able to create more jobs. Hu added that

China will lower import costs and make trading systems more efficient for importers.

China will also continue to welcome foreign investment, encouraging higher-end

projects such as the establishment of research and development centres in coastal

cities, and factories in central and western areas to make the entire industry structure

more complementary, Hu said.

Shanghai Daily

Automobiles China’s State Council released a draft regulation on school bus safety. Premier Wen

Jiabao pledged central and local government funds to provide and improve school bus

services in the wake of the traffic accident that killed 19 pre-school children and

sparked national outrage.

School bus and coach manufacturers in China are expected to benefit from

government purchases of more school buses that meet safety requirements.

China Daily

Banking, non-bank

financials

As pointed out at the 2011 Central Economic Work Conference, which commenced on

December 12, 2011, proactive but moderate monetary policies, which are subject to

constant adjustments, will be adopted to cope with the complexity and uncertainty of

the current economic conditions. Proactive fiscal policies will be adopted in 2012 to

promote economic growth.

Sina Finance




financials

The Central Economic Work Conference will be delayed until December 12-14. This is

the first time the meeting has been postponed in the past six years. A media report

claims postponement of the meeting is to give the leadership extra time to deliberate

and reach a consensus on next year’s strategy given the challenging global economic

conditions. Stabilising growth is expected to become China’s top policy priority.

Sina Finance

Banking, non-bank

financials

The vice minister of the Ministry of Finance said that China will continue to implement

the structural tax cut policy. The cut has so far reduced tax burdens of corporate and

individuals by around RMB500 billion. The official added that proactive fiscal policies

and moderate monetary policies will be further promoted in the future.

Sina Finance


financials

The macro-economic policy is expected to be more flexible and pro-growth next year

as the market has formed a consensus 2012 GDP growth will be less than 9% but

within the government’s tolerance level.

Tencent inance



Dec.5 Real estate The Ministry of Housing said home purchase restrictions will continue after they were

originally supposed to expire by the end of this year. According to an officer, the

purchase restrictions are unlikely to loosen in the foreseeable future.

Sina Finance

Import & Export Chinese Vice Premier Wang Qishan said taxes for import and export enterprises will

be cut. According to the vice premier, the tax liability should be reduced to maintain

consistency and stability in China's foreign trade policies.

Sina Finance

(November 15 to December 2, 2011)



financials

The China Securities Regulatory Commission released a notice to ease the

requirements for listing IPOs by quality brokers, effective from January 1, 2012.

Instead having “strong market competitiveness” and “promising development space”,

brokers who only meet one of these requirements can now be granted permission for

listing IPOs. The criteria for both terms have been reduced as well.

Reuters China


financials

The People’s Bank of China announced a 50 basis points cut in banks' reserve

requirement ratio, effective from December 5, 2011.

PBOC

Healthcare The National Development and Reform Commission promulgated the Relative Price

Rule on pharmaceuticals to enhance the scientific level and transparency of

government pricing and suppress extravagant profits.

Sina Finance

Nov. 30 Healthcare Vice Premier Li Keqiang said that reforming the healthcare system will be the sector’s

focus under the 12th Five-Year Plan. Three initiatives will be taken: (1) establish a

protection mechanism to address serious diseases and develop corporate health

insurance; (2) fine tune the system for regulating basic drugs, and expand the scope to

villages and grass-root non-governmental health organisations; and (3) accelerate

reform of public hospitals and retain their non profit-making nature.

Sina Finance

Nov. 29 Banking, non-bank

financials

According to a media report, the State Administration of Foreign Exchange, the

People's Bank of China and the China Securities Regulatory Commission have

reached a consensus on the so-called "small QFII", known as RQFII (RMB Qualified

Foreign Institutional Investor programme). Implementation of RQFII will be accelerated

and targeted to be launched at the end of this year.

Sznews.com

Media & entertainment According to The State Administration of Radio Film and Television, starting from

2012, advertisements will be banned during the broadcasting of TV dramas to improve

the viewing experience for audiences. TV stations fear this will seriously affect

profitability and the quality of their programmes.

SARFT

Agriculture & forestry Details for fine-tuning of the valued-added tax on agriculture and forestry residues, and

its recycled products were announced. Measures including tax rebates, tax waivers

and business permits will be used to encourage companies to support the scheme.

Ministry of

Finance

Nov. 28 Banking China has commenced renminbi trading against the Australian and Canadian dollars.

The market believes this is an important step towards internationalisation of the

renminbi.

JRJ.com

Real estate Austerity measures for the Chinese real estate sector will continue, Chinese

Vice-Premier Li Keqiang said.

Sina Finance

Nov. 28 Machinery Details of the 12th Five-Year Plan for the machinery and industrial engineering sector

were announced. The bearing industry has been particularly emphasised, and a 12%

annual growth rate is required.

Sina Finance



Healthcare, agricultural,

new energy

The Ministry of Science issued the 12th Five-Year Plan on biotechnology

development, focusing on the bio-pharmaceutical, bio-agricultural, bio-manufacturing

and bio-energy sectors. The government will release RMB10 billion in special funds

and RMB30 billion of supporting funds for subsidising the development of 30 new

medicines, 200 technological improvements and 20-30 key techniques for

industrialisation.

Ministry of

Science

Nov. 26 Cement Details of the 12th Five-Year Plan for the cement industry were announced. It

encourages merger and acquisitions in the industry to boost the sector's

competitiveness and improve product quality.

Sina Finance

Banking, non-bank

financials

Securities margin trading and related policies were officially announced to transfer this

from the testing stage to a regular basis.

Sina Finance

Nov. 24 Banking China's Banking Regulatory Commission chairman says regulations for "systematically

important banks" will be strengthened.

Sina Finance

Nov. 23 Banking, non-bank

financials

The People's Bank of China says the RRR cut for rural cooperatives in Zhejiang is a

“normalisation” process.

Hexun.com

Nov. 15 Technology China’s ministries have decided to actively develop e-commerce. Twenty one major

Chinese cities, including Beijing and Shanghai, will act as the model cities for the

policy.

NDRC

Sales Contact

Dan Weil

Global Head of Institutional

Sales and Trading

Managing Director

+852 2248 3588

[email protected]

Chris Berney

Managing Director

+852 2248 3568

[email protected]

Joe Chan

Director

+852 2248 3578

[email protected]

Cancy Kong

Vice President

+852 2248 3538

[email protected]

mailto:[email protected]



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Disclaimers

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made as a result of buying and selling securities.

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other business (such as placing agent, lead manager, sponsor, underwriter or proprietary trading in such securities) with the listed

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recommendation contained in this report is suitable for their particular circumstances. This report is not intended to be an offer to buy or

sell or a solicitation of an offer to buy or sell the securities mentioned.

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Co., Ltd. Some parts of the report may have been originally published in Chinese, within the People’s Republic of China, by Guosen

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june 1, 2012 china weekly policy monitor (may 28- jun 1, 2012) · 2012. 6. 4. · cnfol.com ....

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