How do we define the wealth gap among countries in the world?

The World Bank released a 190-page report during the 2005 United Nations Summit commemorating the 60th anniversary of the founding of the world body. The report puts forward a new standard integrating GDP, natural resources and people’ skills and capacity, according to Xinhuanet report.

Based on the standards adopted by various countries now, it is no doubt that the main index for a country’s financial power is GDP, that is the total value of all commodities produced and labor services offered by a certain country or region in a certain period of time.

However, experts pointed out that problems such as consumption of resources and environmental damages have been neglected in this mode of calculation, going against the sustainable development of a country.

The newly-released report adds content on natural resources and people’s skill and ability, from which, experts come to a conclusion that the pattern of development in many poor countries can hardly sustain long.

For example, as for some poorest countries in sub-Sahara Africa, if deducting the net savings from the factors including natural resources exhaustion and rapid swelling of population, then, the per capital net savings for most of the nations will be negative.

The report’s makes rankings on the wealth conditions of various countries in the world in accordance with the new standard.

It especially lists the ten richest countries and ten poorest ones. Switzerland takes the first place among the richest, followed by Denmark and Sweden. It is noteworthy that only four nations of ¡°Group 8¡± are included in the 10 richest countries.

In the other group, almost all countries in sub-Sahara Africa are included in the ten poorest nations. It is surprising that the fourth place country counting from bottom is Nepal. Ethiopia becomes the poorest country in the world.

The report shows that China’s per capita wealth was US$9,387 in 2000, including US$4,208 intangible assets, US$2,956 capital output and US$23 natural resources. The figure is US$200 more than that in the past. The genuine saving rate on Chinese mainland was 25.5 percent and 21.4 percent in Hong Kong. In this item, China is only next to the first place Haiti, while the figure in United States is only 8.2 percent.

In contrast, Japanese per capita social wealth was US$493,200, Republic of Korea US$141,000, Russian US$38,700 and Indian US$6,820.

- People’s Daily Online

China’s industrial enterprises earned 864.3 billion yuan

China’s industrial enterprises earned 864.3 billion yuan (about 107 billion US dollars) in profit in the first eight months of this year, up 20.7 percent from the same 2004 period, the National Bureau of Statistics said on Thursday.

The NBS, meanwhile, said the industrial enterprises, which include all state-owned firms and the non-state-owned enterprises with annual sales income more than 5 million yuan (602,410 US dollars), suffered losses of 137.3 billion yuan in the January-August period, representing a 53.1 percent year-on-year increase.

The state-owned industrial enterprises and the share-holding enterprises under the State control suffered losses totaling 69.7 billion yuan, an increase of 82.7 percent over the corresponding period of 2004, according to statistics.

The NBS also said the industrial enterprises’ sales income amounted to 15 trillion yuan in the period, up 27.7 percent from the same period a year earlier.

Of China’s 39 major industries, the profits of the coal, oil, ferrous and nonferrous metal ore mining and nonmetals mineral mining rose by 80.4 percent, 76.4 percent, 47.9 percent, 128.5 percent, 80.7 percent respectively in the first eight months.

The NBS also noted that the profits of the transportation equipment manufacturing, building materials, telecommunications sectors fell by 35.4 percent, 14.8 percent and 6.5 percent respectively in the period.

The industrial enterprises in the petroleum refining and coking sectors reported an economic losses of 8 billion yuan in the January-August period.

- Xinhua

China’s population and family planning minister said China would work to limit its mainland population to below 1.37 billion by 2010.

China has been working to build a new mechanism featuring management according to law, self-governance of villagers or residents, quality services, policy impetus and comprehensive management as an overall approach towards the population issue during the past few years.

China plans to keep its family planning policy in place to maintain a low birth rate.

To some extent, China’s population growth has been brought under control in the past 30 years, with a steady growth of 100 million people every seven years, postponing China’s 1.3-billion Population Day by four years.

According to data released by NPFPC, had China failed to implement the family planning policy, China’s population would be nearly 400 million more than the present figure.

Starting from 2004, China began to implement a pilot project of “rewarding some rural households practicing family planning.” Last year, more than 310,000 farmers in 10 cities of five provinces where the pilot project was implemented received around 200 million yuan (US$24 million) in cash reward for having only one child or two daughters in their families.

- Xinhua

Excerpts from The American Chamber of Commerce People’s Republic of China and The American Chamber of Commerce in Shanghai WHITE PAPER 2005 September 2005.

• CHALLENGES
• Top business challenges are related to the arbitrariness and lack of clarity and transparency of China’s regulatory environment.
• Number one challenge is in attracting, developing, and retaining management level human resources.
• Other challenges are:
• Dealing with corruption
• Difficulty in enforcing contracts
• Local protectionism
• 450 BUSINESSES SURVEYED
• 50% have <100 employees while 22% have >500
• 56% have been in China >6 years
• 60% have established WFOEs and 35% Rep Offices.
• 62% are in China to serve the local market
• 20% use China as a manufacturing base for export
• 68% are profitable in China
• 42% have margins > their worldwide average
• 82% cite increased business
• Increasing competition from domestic companies
• Research & Development
• 7% have R&D facilities
• 37% increased R&D operations in 2004
• 47% are likely to invest in R&D in 2005
• 44% say lack of IPR protection influences movement of R&D facilities to China.
• ECONOMIC OVERVIEW
• (more…)

Strong trade growth, but large trade surplus continued in August

• China’s continued large trade surplus, while supporting economic growth, is likely to cause trade frictions with its main trading partners, especially the U.S., and exert further pressure on currency appreciation
• Both exports and imports grew faster than expected in August. The export sector was probably helped by excess capacity in some domestic sectors and the recovery in the global tech market; imports were likely boosted by high energy prices
• There is continuous improvement in consumer spending and acceleration of money supply growth, both of which should help reduce the risk of a hard landing of the Chinese economy. The central bank is not expected to raise the policy rates
• Despite slowdown in year/year growth rate, seasonally adjusted data suggest that retail sales actually accelerated in August. Going forward, resilience of consumption is the key to sustainability of China’s growth. Government policies to step up efforts in developing the social welfare systems and to support income growth should be positive for the consumption outlook
• While money supply M2 accelerated for at least the past two consecutive months, growth of bank loans picked up only marginally, to 13.4% in August from 13.1% in July. While the M2 looks likely to outperform the full-year target of 15%, the central bank has not shifted to significant monetary loosening
• While net exports imply stronger growth near-term, consumption will be the key to sustainability of growth beyond the current year
• The central bank is unlikely to hike the policy rates in the near future and will probably allow only very gradual appreciation of the currency

Aug Exports (US$ % YoY) 32.1% Actual
Aug Imports (US$ % YoY) 23.4% Actual
Aug Trade Balance (US$ Bln.) 10.0 Actual
Aug Retail sales (% YoY) 12.5% Actual
Aug Money Supply, M2 (% YoY) 17.3% Actual

Source: National Statistics Bureau, Reuters, IDEAglobal and Citigroup