Author: Thomas Clouse



By Thomas Clouse


Chinese regulators have targeted state-owned enterprises in an anti-monopoly investigation for the first time.


Photo Credit: Chen Wei Seng /

China’s two largest fixed-line telephone operators—China Telecom and China Unicom—are the targets of an investigation by the National Development and Reform Committee. In the past officials used the anti-monopoly law, which took effect three years ago, to block foreign company acquisitions of domestic Chinese firms. The two telecom companies submitted proposals to the NDRC promising to reduce prices and increase speeds for their broadband internet services and asking the regulator to halt the probe.


China’s central bank lowered the reserve requirement ratio for the nation’s banks for the first time in almost three years on December 5. The change lowered the proportion of deposits that banks must keep in reserve, freeing up around 350 billion renminbi ($55 billion). The adjustment comes after both manufacturing and non-manufacturing activity declined in November and inflationary pressures continued to ease. China’s official purchasing managers index (PMI) in November fell below 50, which indicates a contraction in activity for the first time since February of 2009. Meanwhile, the consumer price index rose by only 4.2% year-on-year, down from 5.5% in October and 6.5% in July. The policy adjustment signals a shift in officials’ main focus—from containing inflation to promoting economic growth.


China increased its poverty threshold in November for rural residents, more than quadrupling the number of rural citizens eligible for government benefits. The new annual income limit of 2300 renminbi ($362—up from $200) will bring China’s standards closer to those of the World Bank and will increase the number of people officially in poverty in China by around 100 million people. The additional benefits, including subsidies, job opportunities and discounted loans, will further boost rural consumption. Retail sales in rural China rose by 16.5% year-on-year in the first ten months of 2011, according to the National Bureau of Statistics.