Oil Company Reform

Caijing Magazine

May 5, 2014

In November 2013, the Chinese Government once again shed light on mixed ownership reform. And of all industries, the state-capital-intensive oil industry was put at the forefront. However, despite multiple positive indicators, the reform is encountering significant difficulties.

Most experts on the issue argue that to promote mixed ownership reform, the top priority now is to break the monopoly of China’s three major state-owned oil giants,  making it possible for other market players to survive on their own.

However, when private capital is introduced, it shouldn’t just be a situation of injecting cash and waiting for a share of the profits. Instead, it should contribute to the company’s competitiveness - specifically, by generating a more effective corporate governance structure and a better awareness of market and efficiency.

This requires a favorable environment throughout institutional innovation. It is essential for the companies to separate themselves from government administration and recover their nature as market players.

Free Highway

Beijing Youth Daily

May 4, 2014

During the May 1 Labor Day holiday, highways across China witnessed yet another wave of traffic congestion, the latest in a long line of such incidents experienced since the country implemented the policy to waive tolls for vehicles on four important national holidays.

The congestion once again drew fierce complaints. Some even blamed the congestion on the free highway policy by arguing it goes against economic theory. According to this group, vehicle tolls should be even more expensive than they currently are, so that more vehicles  stay parked at home, making highway traffic smoother.

It is a pity that these critics fail to see the whole picture. The policy was carried out at a time when the Central Government decided to deal with the disorder in highway tolls. In June 2011, the Central Government launched a year-long investigation on toll roads. Following the investigation, a number of toll roads became free of charge. However, a much larger number of highways were completed through bank lending. Because the debt has not yet been paid off, it is impossible to waive the tolls. Against this backdrop, the Central Government implemented the policy to ease car owners’ burden. It came as a signal implying that the nation’s highway system may change back from being a money maker to a public resource.

Caixin Magazine

April 21, 2014

The southern city of Shenzhen recently launched a groundbreaking trial to grant legal status to some residential buildings, allowing them to be sold on the market.

Caixin Magzine in this issue examines Chinese residential buildings. Such real estate, constructed on collectively-owned land, mostly in rural areas, was previously banned from being sold, and could only be used as residential houses. In the last decade, amid fast-expanding urbanization, a large number of rural villages have become parts of urban areas. But these residential houses on collectively-owned land have never been permitted to be traded or mortgaged as freely as other commercial real estate.

As urbanization picks up pace, real estate on collectively-owned land is necessary to meet the strong demands of accommodating rural migrant workers who flock into cities. In Shenzhen, around 31.62 percent of newly migrated people are living in buildings built without official approval on collectively-owned land.

The magzine believes Shenzhen’s pilot might end the government’s strict control on land resources and alter the economic growth relying heavily on land development.

Oriental Outlook

April 24, 2014

Problems with tap water sparks extreme worry as it is indispensible to life. Oriental Outlook looks at the recent incident of tap water contamination in Lanzhou, capital of northwest China’s Gansu Province.

Liu Wenjun, an expert on drinking water safety, said the contamination of water sources is the core issue. The environmental state of a water source decides the quality of the tap water. After more than three decades of reform and opening up, the deterioration of China’s environment has been as quick as its industrialization, with many water sources having suffered.

Compared to decades ago, water contaminants have changed greatly. The major contaminants in China are inorganic and organic matter. Of them, the organic contaminants are worthy of special attention. In the past few decades, human beings have created millions of organic compounds that find their way into water sources and cause lasting contamination.

Faced with this new situation, upgraded treatment of tap water is needed. However, most water suppliers are still using  traditional water treatment technology, which is unable to remove the new soluble contaminants and ammonia nitrogen from the water.The incident in Lanzhou is just an example of the failure of traditional water treatment technology.