SMEs in S China to get financial aid amid global economic meltdown
December 7, 2008
Guanngdong province is coming in front of the regions hardly hit by financial crisis. Financial crisis most affected Guangdong due to the the fact that Guangong hosted low-end manufacturing industries depending on cheap labor widely. Now both nation-wide and regional support coming up one by one, here is one of the latest from Xinhua:
(Xinhua) — Authorities of south China’s Guangdong Province approved a financial plan on Friday to help small and medium-sized enterprises (SMEs) to survive the global financial crisis.
The provincial government will inject more than 10 billion yuan(1.45 billion U.S. dollars) as of next year in loan granting, tax reduction, business transformation and upgrading, and improving government services to SMEs, which are facing “unprecedented business difficulties and challenges”, Wang Yang, Guangdong’s party chief, said at a working conference on SMEs here.
The fund includes 1 billion yuan for technological innovation, 1 billion yuan as government mortgage for bank loans, and 200 million yuan to expand export, according to the plan. Other details are yet to be announced.
The initiative will be a key part of the province’s planned measures next year to allocate more investment to support SMEs development in the hard times, Huang Huahua, governor of Guangdong, said at the meeting.
The province had decided to earmark at least 8.5 billion yuan for business transformation of SMEs between 2009-2010, two years earlier than the original schedule.
The deepening global economic downturn has affected Guangdong, a famous home of labor-intensive and export-oriented companies, as demand of foreign buyers has continued to decline. However, many enterprises suffering shrinking orders or business suspension, predicted the hardest time may come next year.
The central government of China is revising policies and hopes to stimulate domestic demand to keep the national economy stable.
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Firms to pay lower court fees
December 4, 2008
The firms in China is in trouble caused by global financial turmoil. Many of them are being asked to return the loans back to banks, foreign buyers are canceling orders or refusing to pay for different reasons. Moreover, contract and unpaid salary disputes are increasing. In the light of this backdrop, The Chinese court provide a judicial aid to the firms in financial hardship. Similar support was previously given to individuals only. Here u can read news by Shanghai Daily:
” SHANGHAI’S medium and small enterprises battling a world economic downturn may now pay lower fees to defend lawsuits brought against them, the Shanghai Higher People’s Court has said.
Providing they have financial problems, the firms will be allowed to have their expenses reduced, delayed or exempted, the court said.
It’s a first for Shanghai firms. “Such judicial aid was only available to individuals,” said Zhou Zanhua, deputy director of the Shanghai No.1 Intermediate People’s Court.
Contract disputes and unpaid salary disputes are on the increase as the international crisis bites deeper, the higher court said. Some local enterprises had been forced to cut or suspend output or even go bankrupt.
Many enterprises with capital problems were being urged to return loans to banks, and their investors wanted to withdraw their investment, said Pan Furen, director of the Shanghai No.1 Intermediate People’s Court.
Local courts said the number of cases involving exports has risen.
Foreign buyers were canceling orders, rescinding contracts or refusing to pay for various reasons as they had more difficulty in selling, which led to more local cases, Pan said.
“The initial disputes happened in foreign markets in many cases,” said Wang Li, a presiding judge in the No.1 Intermediate People’s Court.
“But when both sides don’t want to bear expensive lawsuit costs abroad, they give up the chances to claim for losses from foreign businesses. Instead, they shift the blame onto each other and appeal to local courts.”
Labor disputes also increase when some companies dismiss people and reduce salaries. The Shanghai No.1 Intermediate People’s Court accepted 1,759 labor dispute cases since July, a 41.6-percent increase over the same period last year, Pan said.
In response, the higher court has ordered all lower courts to proceed with caution in litigation cases. Mediation will be used more often to solve problems, and the judicial process will be speeded up. In the case of salary disputes, courts need to protect the interests of both parties, the higher court said. “If we don’t proceed properly, many firms will go bankrupt or withdraw capital even faster, and workers will not get paid,” Pan said.
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Yuan Starts Making Exports Cheaper
December 3, 2008
The Chinese currecy yuan (renminbi) was in fall for the last 3 years until the Chinese economy started to be hit by global crisis. The currency has been stable for the last 3 months, but as the global financial crisis deepens and further affects Chinese economy, the yuan also started to decline,say, making the exports cheaper. Here is the news from Xinhua :
Yuan falls on talk currency decline is to help exports
By XINHUA
CHINA’S currency, the yuan, fell by the daily limit against the United States dollar for a second day yesterday, its fourth straight daily decline.
The yuan finished at 6.8870 per US dollar on the over-the-counter market, having declined 0.5 percent against its central parity rate. The central parity rate, announced by the China Foreign Exchange Trading System, was 6.8527 yuan per US dollar yesterday, compared with 6.8505 yuan on Monday.
On Monday, the yuan also fell by the 0.5 percent daily limit on the over-the-counter market to end at 6.8848 to the US dollar. Monday’s move marked the yuan’s biggest weakening since China ended the peg to the US dollar in July 2005.
The yuan’s central parity rate is based on a weighted average of market makers’ price inquiries before the market opens on each business day. The rate is allowed to fluctuate within a band of 0.5 percent on either side of the mid-point.
Zhao Qingming, a senior analyst at China Construction Bank, said the yuan depreciation resulted directly from a stronger US dollar.
“In addition, China has announced many pro-active fiscal and monetary policies to stimulate the economy, which fuels market speculation that the yuan might depreciate against the US dollar to help increase exports,” he said.
Ou Minggang, director of the International Finance Research Center at the China Foreign Affairs University, attributed the yuan’s depreciation to recent interest-rate cuts in China.
Last week, the People’s Bank of China, the central bank, cut the benchmark one-year yuan loan rate to 5.58 percent from 6.66 percent and the one-year yuan deposit rate to 2.52 percent from 3.60 percent. The 108-basis-point cuts were the fourth since mid-September and the largest since the late 1990s.
Ou said the weaker yuan could help support China’s exports.
Monday’s unusual yuan move buoyed shares of Chinese textile firms yesterday, betting the weaker yuan could help textile exports.
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China expects economic growth by 10% in 2009
December 2, 2008
The Development Research Center of the State Council researcher Zhang Liqun said, China’s economy is expected to grow by 10 percent in 2009 despite the impact of the financial crisis and global economic downturn. Here you can read his remarks about the critical year of China’s economy.
China expects economic growth by 10% in 2009
By Xinhua
“Although dim world economic situation has led to weak overseas demand, domestic consumption and investments, vast development potential decided the country’s economy will grow at fast paces,” said Zhang Liqun, the Development Research Center of the State Council researcher.
He forecasted China’s economic growth would accelerate largely at the second half of next year.
Zhang said his remarks were based on the country’s huge domestic consumption, and investment potentials; sufficient fund, technology, labor and social security, and the government’s gradually mature macro-economic control measures.
“Personal income continues to increase as millions of migrant workers flow into the city to get their lives improved. Enlarging demand for houses and autos will form huge and lasting consuming power,” he said.
“However, domestic enterprises need to accelerate their paces in upgrading business structure, in a bid to better cope with severe world economic situation,” he said.
China’s gross domestic product (GDP) grew to 20.16 trillion yuan (2.96 trillion U.S. dollars) in the first three quarters of this year, up 9.9 percent from the same period of last year. The growth rate was 2.3 percentage points lower than the same period of last year.
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Purchasing index drops to record low
December 1, 2008
Manufacturing Purchasing Managers’ Index is important in a sense that it is a gauge indicating overall conditions of manufacturing. According to Shanghai Daily Newspaper, the China Index fell to a record low in November, here is the news :
PURCHASING INDEX DROPS TO RECORD LOW
Shanghai Daily by Wang Yanlin
The China Manufacturing PMI dropped to 40.9 points last month, down from 45.2 in October and 47.7 in September, said CLSA Asia Pacific Markets today.
Any reading below 50 indicates a contraction. The index has fallen four straight months.
“Production contracted at the sharpest rate in the survey’s history during November. Firms generally attributed the latest fall to a drop in orders, reflecting fears of a protracted economic downturn and uncertainty in financial markets,” said the CLSA report.
Peng Ken, a Citigroup economist, said the weakness in the PMI pointed to further declines in industrial production.
“Likely in response to the PMI figures, the central bank raised the reference exchange rate to the highest in more than three years today,” said Peng. “This would fuel further speculation in a bigger depreciation in the yuan.”
China’s manufacturing sector faces sagging external demand. China’s export growth fell below 20 percent in October after traditional trading partners slashed shipments amid the global financial crisis.
Economists predicted sharper declines of overseas sales would follow as the crisis was spreading to the real economy.
The World Bank said China’s gross domestic product may ease to 7.5 percent, the slowest since 1990, next year.
China announced massive fiscal stimulus packages and sharp interest rate cuts last month to boost consumption and spur growth.
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