China’s Ministry of Finance will impose a duty on all oil shipments entering Chinese waters beginning from July this year, said the China Daily on Tuesday, with the proceeds set to go into a new marine pollution compensation fund to be utilised during an oil spill.
Chinese Premier Wen Jiabao has called for stimulus policies that would boost the nation’s slowing economic prospects, raising expectations that the government will undertake new expansionary measures to prevent a hard landing for the world’s second largest economy.
Speaking to reporters during a visit to the city of Wuhan, Premier Wen gave no details of the possible new measures, but added that it was necessary to keep inflation in check, while keeping growth a top priority.
In the latest sign of trouble for the world’s second largest economy, foreign direct investment into China fell 0.7 percent in April – the longest stretch of decline since the start of the global financial crisis.
China’s Ministry of Commerce announced yesterday that April’s inbound investment dropped 0.7 percent from a year earlier to $8.4 billion, following a 6.1 percent decline in March. FDI fell 2.4 percent in the first four months, from a year earlier, to $37.9 billion while outbound direct investment grew by 72.8 percent to $23.2 billion.
The future of the global economy remains shrouded in mystery. Whether the crises in the United States and the eurozone will improve remains to be seen. While the latest economic data from China largely points to a soft landing, until the Chinese economy rebalances, it will not emerge from its own domestic crisis. In fact, China will be the last major economy to emerge from the global crisis.
China has unveiled new rules that will effectively force the Big Four international accounting firms – Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers – to appoint a local citizen as the head of their mainland operations within the next five years, or face severe financial penalties.
Pig faeces could be China’s next big energy source, claimed a report by Reuters on Wednesday, following the invention of a bioreactor called “PooCareTM”, which is able to convert solid waste into biofuel.
As China’s economy heads for a slow down, the Chinese central bank has promised to boost the supply of liquidity in the financial system by turning to monetary easing tools. The announcement comes after China’s weaker-than-expected Q1 GDP growth, with a central bank official saying the extent and timing will be ‘appropriate’.
According to the official Xinhua news agency, an unnamed central bank official said China is looking to ‘steadily’ increase liquidity to steer its economy towards a soft landing.
The Chinese yuan fell sharply against the dollar in early Monday trade, after Beijing widened the currency’s trading limits. According to Beijing, the move will make the yuan more market-oriented as the country seeks to gradually liberalise its exchange-rate regime.
On Saturday, China’s central bank made the announcement that it will widen the yuan’s daily trading band against the dollar to 1 percent, up from the previous 0.5 percent.
With the announcement, the yuan on Monday dropped to its lowest level against the dollar in almost three months.
China’s economy is grossly imbalanced, and for years many academics have been talking about an imminent rebalancing. For now, it is clear is that China’s rebalancing act will not be automatic. Rich as China may be, weaknesses in China’s economic model will constrain the options Beijing can take. But the bigger question is, does China have the political will to address this problem?
Three of China’s largest Internet companies have vowed to end all “rumours” about the Chinese government from spreading online, claimed a report by Reuters on Tuesday, as the government continues to crack down on the web following widespread rumours of a coup.
