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China SEARCH Engine
Volume II, Episode 51
March 12, 2008
Beijing Plays Musical Chairs: Report on the National People’s Congress - Chinese Stocks Tank!

March 5, 2008

Markets Plunge - Sovereign Wealth Fund - IPOs - National People's Congress convenes

February 21, 2008

Private Equity Buys Chinese - Macro Update - Sovereign Wealth Fund IPOs - more!

February 13, 2008

General Motors Turns Chinese - New China Funds - Coal Boom?

February 6, 2008

Macro Effects of Winter Storms - IPOs - Happy Year of the Rat! - more

January 29, 2008

Chinese Stocks: Correction or Bear? Davos 2008 - IPOs!

January 20, 2008

Four predictions for where Chinese stocks will be in 2008 - plus more!

December 31, 2007

A brief look back at some of the images of 2007

December 20, 2007

Markets Sag - Chevron Gas Deal - Aging Time Bomb? - Property ETF - IPOs - more!

December 10, 2007

US-China Summits in Beijing - QFII Up to $30 Billion (US) - IPOs losing steam?

November 27, 2007

Chinese Stock Prices Melt - Sarkozy Up to Beijing - IPO Updates - Will Trent Lott Lobby for Taiwan?

November 20, 2007

Currency Crisis! Dollars Drained by China, OPEC Continue Down - Inflation

November 14, 2007

Time to Short China's Yo-Yo Market? - Mining In or Out? IPOs - more

November 2, 2007

Oil Shock! Price Problems At the Chinese Pump - Stocks: Where's the Correction?

October 24, 2007

SPECIAL REPORT: 17th Party Congress - Shanghai Bubbles? - Market Numbers

October 15, 2007

China Bull Run Gets New Highs - PetroChina - IPOs - Money - more

October 9, 2007

Chinese Stocks Up & Up - IPOs - Iron & Steel - Pacific Pipeline - more

October 4, 2007

Hong Kong Booms - Commodities, Inflation, Oil at $100 a barrel? - more

September 25, 2007

UAW Tells GM No Jobs For China - Markets Hit 5,500 - China's Auto Industry - IPOs

September 19, 2007

New IPOs Rock Shanghai! But is Resistance Building? A Big Push for Private Equity…

September 10, 2007

Report on APEC 2007 - Energy Security - Markets Update - IPOs in Hong Kong

August 30, 2007

Chinese Stocks Stay Up - Big Bond Sale - IPOs - Upcoming Party Congress

August 22, 2007

China Stock Markets Get Higher But For How Much Longer? - Surprise Rate Hike - IPO Update

August 14, 2007

China Toy Recall - Markets & IPOs - Western Banks Catch Asian Flu?

August 6, 2007

Shanghai Composite Busts Past 4,600 - Beijing Bets on Banks - Chinese IPOs in Japan

July 31, 2007

China Stocks Up Again & Again! - Pussyfooting Around Currency? - Democracy in Japan?!

July 25, 2007

Will Barclay's Turn Chinese? 2Q/H1 Macro Report + IPOs!

July 19, 2007

Food Fight! China-USA sling hash / Peak Oil? / Markets Flat Line...

July 10, 2007

Chinese markets confused? Big IPOs - Chery+Chrysler

June 27, 2007

COSCO - China Mobile - IPOs - Telecom Mergers & Acquisitions

June 21, 2007

New Record Highs in Hong Kong, Shanghai: Will Beijing Put On the Squeeze? - IPOs & more

June 15, 2007

Fundamental Misalignment: US-China currency war - stock markets up & IPOs

June 7, 2007

China Stock Pop - Hot News items - climate change, tainted food...

May 31, 2007

Chinese stock markets hiccup - IPOs - USA-China Trade Gap

May 25, 2007

Report on the 2nd USA/China Strategic Economic Dialogue: Win-Win or When-When? - Market numbers - New IPOs

May 18, 2007

New life for Hong Kong? IPO Update - USA/China summit

May 11, 2007

Will Shanghai end up like NASDAQ or Nikkei? - IPOs

April 30, 2007

Tulips to Dotcom - is Sino Mania the next big bubble?

April 20, 2007

The Heat is on! - IPO Report - Air Pollution in China

April 15, 2007

China markets, IPO update, Beijing Ready for Olympics?

March 30, 2007

China markets up, up, up! Sinomania! goes to China

March 23, 2007

Focus on National People's Congress... Hi-Tech, IPOs

March 17, 2007

China's new investment strategy, IPOs, the Wrap...

March 7, 2007

China syndrome or hong bao bounce? New IPOs... more!

February 27, 2007

China Stock Market Yo-yo, new IPO issues, the wrap

February 17, 2007

Chinese New Year edition! Will China buy Chrysler & more!

February 9, 2007

The USA-China WTO trade dispute and New IPOs

February 1, 2007

IPOs: New Red Chip — Bubble Burst? — USA-China

January 26, 2007

BUBBLE TROUBLE? — IPOs on NASDAQ — Renminbi Yuan

January 20, 2007

IPOs in 3 hot sectors — BAOSteel — Macro Report

HKEX Hang Seng Shanghai
SSE Shanghai Hong Kong
SZEX Shenzhen Beijing
MUSIC in China: Listen!

TRANSCRIPT: Special report on the work of the new National People's Congress with a look at new government shake up, China's 2008 government budget, some interesting deputies and their proposals, investment news, a look at the gloomy Chinese stock markets...
Sinomania! Volume II Webisode 51, March 12, 2008

Beijing Plays Musical Chairs:
My Report on the National People’s Congress.
And Chinese Markets Tank!

NPC 2008

The first session of the 11th National People’s Congress – the Chinese parliament – is underway at the Great Hall of the People in Beijing and in conferences, sessions, and pressers all over the city.

Gone are the celebrity sightings and photo ops of the 10th Congress – movie stars Gong Li and Zhao Benshan for example were not reelected. What’s in – grass roots issues, environmentalism, restructure and reform.

The NPC opened with Premier or Prime Minister Wen Jiabao emphasizing the challenges ahead for China in dealing with inflation.

China's monthly consumer price inflation hit an 11-year high of 8.7 per cent last month with consumer prices rising by 9.2 per cent in the countryside and 8.5 per cent in the city. The biggest impact and worry was a 23 percent spike in food prices.

The NPC says it will now pursue a “tight monetary policy” an important signal with differing impacts on various sectors of the Chinese economy that I will discuss in next week’s show.

The 2008 draft budget was presented. China’s central government budget is just under five and half trillion Yuan or close to three-quarters of a trillion US dollars based on market exchange rates. In actuality that figure is much higher. And the government continues to run a deficit, although quite small by global standards, estimated for 2008 at around 180 billion Yuan.

As exports are slowing Beijing will channel excess cash into more state investment which already accounts for over 45% of China’s Gross Domestic Product. State directed investment targets are health care and social security programs based on United States models and housing and safe drinking water for China ’s impoverished classes.


Here’s how China ’s 2008 budget pie slices up:

The biggest piece goes to national defense at 410 billion Yuan, a priority Beijing shares with Washington as both governments richly reward their military-industrial complexes, although Chinese expenditures are less than one tenth those of the USA.

Next, as in the United States, is welfare at over 276 billion Yuan, and the Chinese also prefer to use the euphemisms social security and employment programs.

Education is third at just over 156 billion Yuan, followed by environmental programs for agriculture, forestry and water conservation at 145 billion, science and technology at around 114 billion, and lastly medical and health care – always under funded by Beijing – at just over 83 billion Yuan.


By week’s end, the NPC will vote on the candidates already selected last October by the Communist Party for top government positions. Hu Jintao will no doubt be elected for a second and final 5-year term as President. Zhou Xiaochuan, governor of the Chinese central bank, is expected to keep his job for another term.

The biggest news so far is a major restructuring of the State Council, the day-to-day government of Beijing and the Chinese President’s cabinet.

New “super ministries” will be set up to prevent bureaucratic turf wars and bring central control down to at least the provincial level.

The increasingly powerful National Development and Reform Commission or NDRC will gain a new ministerial authority for energy security macro level economic control.

All told 15 central government departments are involved the most important reshuffle in Beijing for close to a generation. The Sinomania! blog will have full details on the reshuffle.


The National People’s Congress is one of the largest parliamentary bodies in the world with almost 3,000 members or deputies. Each deputy must present proposed legislation based on petitions from the people they represent, an ancient tradition that predates the Chinese republic. In this great airing of gripes and views are clues to the aspirations and desires of the Chinese people.

Some deputies and proposals of note this year are:

ZhangYin, China’s richest woman is proposing tax cuts for the rich and an easing of regulations against her polluting paper mills.

Wu Xiaoling, former Vice Governor of China’s central bank, a deputy on the finance and economic affairs committee is arguing against immediate convertability China’s currency.

Tian Chengping, current Labor and Social Security minister warned of a “very severe” employment picture in China this year with about 20 million new workers looking for jobs.

Chen Fei, a grass roots environmental activist representing a district in coastal Zhejiang Province, passed out squares of cloth to fellow deputies in Beijing to use as handkerchiefs. Chen is leading a campaign to eliminate paper waste and paper bags from China’s rivers and countryside.

New NPC deputy Mao Xinyu is a 38-year-old grandson of Chairman Mao. His agenda is not known but he is something of a hit with the press.

Sidney Shapiro is on his sixth term as a member of the Chinese People’s Political Consultative Committee, the advisory board to the NPC. Mr. Shapiro is 93 years old, was born in the USA and became a Chinese citizen in 1963 after moving to China in 1947.

Liang Xiaohong, a member of the Chinese People’s Political Consultative Conference, and the Vice President of the China Academy of Launch Vehicle Technology, announced a five-year plan to corporatize China’s military-industrial complex. Plans are to be revealed sometime this year and the reform will begin with the rocket sector and run through the China Aerospace Science and Technology Corporation conglomerate. There is talk of raising up to 69 billion Yuan or over $8 billion US dollars by 2010. The new rocket company will have a production base in Tianjin and contain all related assets from rocket research, production, and testing.

So here’s a potential opportunity to invest directly in Chinese space technology.


Briefly – Chinese markets are down down down! News is the same or worse for all indicators. The Shanghai Composite Index closed March 11 at 4,165.88 after falling on Monday to its lowest level since July 2007. The index is now down 16% since the start of the year not technically a bear market but a way out of the woods is needed soon.

I’ll see you next week on Sinomania! for more on how the NPC will affect business and markets and the Alpha Bet!


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