Short Takes

China ranked 20th in the International Institute for Management Development (IMD) World Competi-
tiveness Yearbook 2009, a slight fall from its spot as 17th last year. The report identified the strong performance of China's domestic economy, international trade, public finance, labor market, and scientific infrastructure. But the country still struggles in areas of international investment, business legislation, management practices, health, and environment. The United States remained at the top of the list, but Hong Kong is swiftly closing the gap at second place.

A recent Pacific Economic Cooperation Council survey showed that opinion leaders in the Asia-Pacific region are optimistic about the Chinese economy despite the global crisis. Though leaders expressed low satisfaction with the economic stimulus packages of the world's largest economies, over 60 percent were "satisfied or very satisfied" with Beijing's actions. China also received the greatest positive feedback on expectations for future growth. Twenty-eight percent of respondents believed China's economic growth would be stronger over the next 12 months, compared with 19 percent for India, 16 percent for the United States, and 10 percent for Japan.

Top earners in Greater China remain cautious in their spending, according to a recent survey by Visa Inc. High-income households interviewed in mainland China save 28 percent of their earnings, followed by 26 percent in Taiwan and 24 percent in Hong Kong. Interest in growing investments was highest among mainland respondents, 42 percent of whom were willing to incur debt to do so, compared with only 25 percent in Hong Kong and 14 percent in Taiwan. But the overwhelming majority in all three regions cited increasing personal income and saving money as their primary financial priorities.

The PRC State Council announced further support policies for exporters at its executive meeting in May. The government will provide $84 million worth of short-term export credit insurance to trading companies, tax breaks for labor-intensive and high-tech industries, and greater financial access to smaller companies. The State Council also said that it would keep the exchange rate stable to help exporters avoid exchange risks.

In a similar measure, the Ministry of Finance raised export tax rebates on more than 2,600 items on June 1. The list of items in the official announcement included TV transmitters, sewing machines, canned food, toys, plastic, porcelain, glass, and steel products. This is the seventh time China has raised export tax rebates since last August.

Beijing Municipality recently released new preferential policies to encourage multinational companies to establish regional headquarters in the city. The rules simplify procedures for establishing regional headquarters and reduce the minimum required cumulative registered capital invested by overseas parent companies from $30 million to $10 million. Regional headquarters, which have been established or relocated to Beijing after January 1, 2009 with registered capital of over ¥100 million, can also receive financial support from the municipal government to build, rent, or purchase office space. A trial of the new subsidies is currently under way in Beijing's Chaoyang district.

Following raised taxes last year on large vehicles and a recent price increase for gasoline, the PRC government continues to roll out policies that encourage use of smaller vehicles and alternative-fuel technology. Several PRC ministries recently jointly launched a pilot program in 13 cities nationwide to subsidize the use of hybrids and new-energy vehicles for public transport. In anticipation of the upcoming World Expo, car buyers in Shanghai will be eligible for subsidies of up to 20 percent on purchases of new-fuel vehicles from 2010 to 2011. In addition, the National Development and Reform Commission announced in June that consumers who trade in their mid-sized and small trucks or sell cars that no longer meet the government's emission standards are eligible to receive rebates on new vehicles.

Sichuan Tengzhong Heavy Industrial Machinery Co. has bid on General Motor Corp.'s Hummer brand. The little-known private truck maker intends to expand its presence in China and transform the Hummer into a global icon. As CBR went to press, the bid was drawing mixed reactions and could face difficulties in obtaining official approval, given Beijing's new fuel-efficient and environmentally friendly policies.

The PRC government may require all personal computers (PCs) sold in China to include a new software called "Green Dam-Youth Escort" beginning July 1. The software will block access to a regularly updated list of websites and will be provided free of charge by the government. According to the official notice, the measure is aimed at protecting young people from pornography and other "harmful content." The notice requires imported computers to have the software—a disc shipped with the computer will suffice—before they are sold in China. All PC producers must submit reports on their shipments of computers with the software.

These new regulations add to the growing concern over PRC government censorship of the Internet. There are additional worries that PC makers will not have ample time to make such a large production change and that the software could render computers more vulnerable to virus attacks and system crashes. Zhang Chenming, the general manager of Jinhui Computer System Engineering Co., which developed Green Dam, reportedly said that the user can turn off or uninstall the software.