China Watch Blog

China Watch Blog has learnt that Beijing is unveiling new measures almost daily to shore up growth that slowed to 8.1 percent in the first quarter and is expected to decline further.

Gasoline and diesel prices have been cut for the second time in a month amid growing government efforts to reverse a sharp slowdown in the economy.

The reduction came after an interest rate cut on Thursday — the country’s first in nearly four years — prompting analysts to suggest that data due this weekend will show May trade and industrial activity was even weaker than pessimistic forecasts had suggested.

“Markets are bracing for a potentially bad set of May economic data for China,” said Moody’s Analytics economist Alaistair Chan in a report.

The National Development and Reform Commission said on Friday the country will cut its retail fuel prices by more than 5.5 percent on Saturday, the deepest since December 2008, in tandem with the global slump crude oil prices.

It lowered retail gasoline prices by 530 yuan ($84) a metric ton, or 0.38 yuan a liter, to be capped at 8,320 yuan a ton.

Diesel prices were down by 510 yuan a ton, or 0.43 yuan a liter, to 7,510 yuan a ton.

Gasoline prices were down 5.5 percent, while diesel dropped by 5.8 percent, down from a previous cut on May 10 when prices were reduced about 4 percent.

China had raised fuel prices in February and March.

China Watch Blog has learnt that Scoot Pte is offering Apple Inc iPads to budget long-haul travelers after ripping out aircraft entertainment systems weighing more than two tons to save fuel.

The tablets helped the carrier cut 7 percent off the weight of planes obtained from parent Singapore Airlines Ltd even after a 40 percent increase in seating, Chief Executive Officer Campbell Wilson said. The savings will help Scoot, which made its maiden flight on June 4, cope with fuel prices that have jumped about 36 percent in two years.

Fuel is the No 1 worry for any airline because it usually accounts for at least 40 percent of costs, Wilson said in a June 1 interview in Singapore. Scoot will charge economy passengers S$22 ($17) a trip to rent the tablets, which are loaded with movies, music, games and television shows.

Bloomberg reported that cutting costs and finding new sources of revenue will be key for Singapore-based Scoot as it seeks to make a profit flying older planes than other low-cost carriers and selling tickets as cheap as S$158 one-way to Sydney, a flight of more than seven hours. Singapore Air formed Scoot after budget operators led by Jetstar and AirAsia Bhd won 26 percent of the city’s air-travel market.

The iPads are “a very smart move”, said Corrine Png, JPMorgan Chase & Co’s Singapore-based head of regional transportation research. “If they can make the aircraft lighter, it does help improve fuel efficiency.”

The budget carrier will loan the iPads free to passengers in its business-class seats. It also eventually intends to have users access content via a wireless system on planes. Qantas Airways Ltd began trials of a similar product in December.

The carrier will have four Boeing Co 777s this year, each fitted with 400 seats, including 32 in business class. The airline will add its second destination, Australia’s Gold Coast, this week. Services to Tianjin, China, will begin in August followed by two other northern Chinese cities before the end of the year, Wilson, 40, said.

“China has a huge amount of potential,” he said. “It’s developing fast and the propensity of people there to spend is increasing dramatically.”

China will probably be the world’s fastest-growing aviation market through 2014, with international passenger numbers swelling at an average pace of 11 percent, the International Air Transport Association said last year.

Scoot plans to increase its fleet to as many as 14 777s by the middle of the decade. The carrier will be able to pare maintenance costs by working with its parent, Wilson said.

Singapore Air also owns regional carrier SilkAir and has a stake in short-haul budget carrier Tiger Airways Holdings Ltd.

China Watch Blog has learnt that China’s outbound foreign direct investment could hit the $2-trillion mark by 2020, with the private sector playing an important role as mainland investors eye the cheap ‘bargains’ in the US and Europe as recession bites the world.

According to a report by US-based research firm Rhodium Group, if Europe continues to attract the same share of global FDI as in the previous decade – around 25 percent – then Europe would see $250-500 billion in new Chinese M&As and green-field investment by 2020.

In partnership with China International Capital Co Ltd, Rhodium Group released the report on China’s investment in Europe on Thursday in Brussels.

With the huge economic and employment impacts of China’s upcoming surge in overseas investment, the authors urged European countries to keep their economies open in order to maximize the benefits of the Chinese inflows, the China Daily reported.

The report was released amid speculation that the European Union is preparing to resort to protectionist measures against Chinese telecom investors.

The report’s author, Daniel Rosen, said that 63 percent of Chinese investment in Europe comes from private companies.

So far, the top five Chinese private investors in Europe are Geely, Huawei, Lenovo, Sany and Wolong Group.

China started to encourage its enterprises to invest overseas a decade ago, but the pace only started to pick up in the past couple of years.

“Europe must not risk losing its hard-earned reputation for openness by imposing additional barriers to capital inflows based on economic security considerations,” the report said. “Several cases have already raised that specter.”

Europeans will embrace foreign investment if a thorough, EU-wide process to address concerns is in place, guided by the principles of openness and non-discrimination, said the report.

China Watch Blog has learnt that the word “Spurs” turned into a red-hot search item among Chinese netizens on Thursday, but it had nothing to do with the NBA team Spurs losing to Thunder. The mad rush was prompted by a student’s hoax about the national college entrance exam, or gaokao.

At noon on Thursday, when the first section of gaokao – Chinese language and literature – came to an end, a message on a micro blog said that the composition topic of Fujian province is “how Spurs win the NBA Western Finals?” The message spread fast on the Internet and raised suspicion.

Later that day, media in Fujian reported that it was an Internet hoax, the Shanghai Daily reported.

“This is definitely a fake message. Maybe someone is just spreading it for fun,” said Xiong Bingqi, vice-president of 21st Century Education Research Institute, a nongovernmental research group.

However, the wild attention it raised showed the people’s huge interests in the exam, which could help decide the fate of millions.

“Just like last year, the gaokao composition is a high-profile issue for the public,” Xiong said.

The gaokao composition requirement has changed a lot through years. In 1977 when the exam was reinstated after the “cultural revolution” (1966-76), students were asked to write of their experiences in the past year.

In the 1980s, hot social topics were taken as the themes of the compositions, such as environment protection.

In the 1990s, the compositions focused more on students’ perception of life. For example, the 1995 composition asked students to write a dialogue between two birds after reading a fable about birds.

During the past decade, students were required to analyze texts, including news reports and literary works.

“In the 1970s, the writing test was always connected with politics and history. But the initial goal of the writing test is to check students’ abilities of observation, thinking and expression,” said Xiong, the education expert.

“So, in recent years, more compositions are based on analyzing given material – students do not have to string together useless, hollow words in compliance with a requirement – they are encouraged to make their own assessment based on analysis,” Xiong said.

“That is actually the goal of education: to teach students to learn and judge independently,” he said.

Xue Xiaolei, a professor at the School of Literature and Journalism at Chongqing Normal University, said the composition topics are always tied with current affairs.

“When China had a major earthquake in 2008, many composition topics were gratitude and forgiveness,” she said, adding that composition is a way to evaluate students’ overall skills of observing the world and connecting with the society.

“The composition used to require students to write in a certain genre, such as argument. Now, students are welcomed to write in any genre,”said Cai Yiqing , an experienced Chinese teacher at Taizhou No 2 High School in Jiangsu province.