China This Week: The Economic Front

Shan Shan updates EA with the latest economic news from China:

Warning to Google "Multinationals 'should respect laws in China": Chinese trade experts said on Tuesday that Google's description of China's Internet restrictions as an unfair barrier to free trade is groundless, as the country's Internet regulations apply to everyone and are in accordance with the rules of the World Trade Organization.

"It is understandable that different countries have various laws and regulations with regard to the Internet,", said Wang Lequan, director of the research center on transnational corporations at the Ministry of Commerce.  "As long as these regulations fulfill China's commitment to the World Trade Organization, multinationals should respect that.”

China This Week: Kyrgyzstan, Beijing’s Help for US; Latest on Economy

Google said last week that it would ask the US and governments in Europe to press China to lift Internet restrictions.

Warning of Real Estate Risks: The credit risks associated with home mortgages are growing and a "chain effect" may reappear in real-estate development loans, the China Banking Regulatory Commission said in its annual report.

The regulator has told banks to report on risk exposure by the end of June to help prevent a credit boom from leading to more bad loans. Property prices rose by 12.4 percent year-on-year in May, the second-fastest increase on record.

The State Council issued a directive warning that some  quasi-independent financing vehicles, often used by local governments to fund infrastructure projects, were dangerously loaded with debt.

This is China's latest effort to tackle the mounting debt worries of local governments, which analysts have warned could become financial time bombs.

Chinese business confidence falls: Chinese confidence in the economy has fallen in the second quarter of the year because of concerns over rising production costs and shrinking demand, according to a survey by the People's Bank of China. Confidence has risen since the first quarter of 2009.

The report had a silver lining, with entrepreneurs  "prudently optimistic" about demand for exports.

WTO blocks US poultry ban on China: China appears to have notched up a victory in a dispute over a US ban on poultry imports, criticised in an interim report of the World Trade Organization.

"We think the US will not try to impose a similar ban in the next fiscal year, since it would be regarded as open defiance of the latest WTO ruling," a Ministry of Commerce official said Wednesday.

China's $47 billion for Qinghai quake reconstruction: China plans to spend 32 billion yuan ($46.8 billion) on the reconstruction of parts of northwest China's Qinghai Province battered by a 7.1 magnitude earthquake in April, the government said.

The money would mainly came from the central budget, supplemented by funds from the Qinghai government, donations and corporate funding, according to a circular published on the government's website, www.gov.cn.

The main reconstruction tasks should be finished in three years, according to the circular.

China This Week: Pipelines to Myanmar, US Penalties, Google's Concession

New EA correspondent Shan Shan launches our China This Week feature:

China Starts Pipelines to Myanmar

China National Petroleum Corporation (CNPC), the country's largest oil and gas producer and supplier, has announced that work has started on construction of two oil and gas pipelines between China and Myanmar.

In a statement posted on its website, the CNPC said that the pipelines, each of 1100 kilometres, are expected to run from the Kyaukpyu port on Myanmar's west coast and enter China at Ruili in Yunnan Province. The oil pipeline has a designed transport capacity of 22 million tonnes per year, while the natural gas pipeline has capacity of 12 billion cubic meters annually.

The statement did not say when the project would be finished.

US Sets Penalties on Chinese Drill Pipe: The US Commerce Department Tuesday set preliminary duties on imports of $119.2 million drill pipe from China. The department said in a statement that it "determined that Chinese exporters of drill pipe have received countervailable subsidies of 15.72 percent”. Based on these rates, the department will instruct US Customs and Border Protection to collect a cash deposit or bond.

The department said that it will make its final determination in August.

Agricultural Bank of China's Share Plan Approved: Agricultural Bank of China (ABC) has been given the go-ahead by Chinese regulators for what could be the world's largest share flotation. China's securities regulators Wednesday approved the initial public offering as the lender finalized preparations for its dual listing in Shanghai and Hong Kong.

ABC plans to sell up to 22.24 billion A-shares on the Shanghai Stock Exchange and up to 25.41 billion shares in Hong Kong.

However, analysts cannot agree on the likely amount Agbank will raise. It is considered the weakest of China's "big four" banks because its main customer base is within China's poorer rural communities. The offer is also complicated by the continuing uncertainly in global financial markets.

Natural disasters kill 157 in China in May: Natural disasters in China in May left 157 people dead and 22 missing, and caused about 45.17 billion yuan ($6.61 billion) in direct economic losses, the Ministry of Civil Affairs said on Wednesday.

Disasters, including floods, storms, landslides, droughts, snowfalls, freezing temperatures, and earthquakes, caused the evacuation of 842,000 residents and affected the lives of more than 64.57 million people, the ministry said in a statement on its website. Natural disasters hit 5.17 million hectares of farmland in May, destroying about 956,000 hectares of crops.

The damage caused by natural disasters in May was much more severe than in previous years. Yunnan, Guizhou, Hunan, Jiangxi, Guangdong and Chongqing were the provincial-level regions worst hit.

Shenzhen to Raise Minimum Wage: The minimum wage in Shenzhen City in south China's Guangdong Province will increase in July by 10 percent to 1,100 yuan per month ($161.04), municipal authorities said Wednesday.

"The pay rise will increase costs for labor-intensive companies, but I hope those companies will take this as an opportunity to speed up their technological innovation and industrial upgrading to boost their competitiveness," said Wang Min, head of the city's Human Resources and Social Security Bureau.

Shenzhen's move comes after a series of pay rises in China. Beijing will increase its minimum wage by 20 percent to 960 yuan from July 1.

The most dramatic rise has been at Foxconn, an IT contract manufacturer which will raise salaries for assembly workers at its production base in Shenzhen by 66 percent to 2,000 yuan per month from October 1.

Google agrees not to collect Wi-Fi data in Hong Kong: Google has ceased operating its Street View cars in Hong Kong and undertaken that, when the cars recommence driving, they will not collect Wi-Fi data, Hong Kong's   Privacy Commissioner for Personal Data said on Tuesday.

Google has agreed to provide the Commissioner access to the payload data collected by the Street View cars and shall render such assistance as may be required to facilitate the Commissioner's understanding of the process of the collection and the interpretation of such data.

In the meantime, Google shall securely store the data, including any backup, archives, or copies and shall not tamper with same or allow anyone to have unauthorized use or access which may contravene the laws of Hong Kong. Google has also assured to completely delete the payload data at the direction of the Commissioner and to provide the Commissioner with an independent third party's verification of the deletion.