China’s 1st pilot free trade zone opens

Posted on September 29, 2013 by Hanqing Zhao

Few days ago, The China (Shanghai) Pilot Free Trade Zone has been formally established. Chinese government regards the establishment of the zone as a significant chance to start the next phrase of economic and political reform in China. “They outline goals to upgrade financial services, promote trade and improve governance as well as measures to encourage foreign investment in 18 sectors in the country’s tightly regulated service industry.”China’s State Council said.(From reference)

This time, Chinese government offers more and higher level preferential policies in order to attract foreign investments. It is the biggest and most influential attempt made by government since the establishment of Chinese first special economic zone Shenzhen(which is my hometown). For example, according to the official announcement, the prohibition of selling video game consoles in China will be cancelled in the zone. In is a good signal which indicates that Chinese companies will soon develop more sorts of business and join in more competitive international markets.

In my opinion, the decision shows that Chinese government is trying to change its positioning strategy.Economically, it wants to make more use of Chinese other resources besides cheap labors. Politically, Chinese government is going to make institutions more efficient.

Reference:

http://news.yahoo.com/chinas-1st-pilot-free-trade-zone-opens-071413493–finance.html

Picture: http://l1.yimg.com/bt/api/res/1.2/QQrUT_XD3PkLsKFHN1Mi1A–/YXBwaWQ9eW5ld3M7Zmk9ZmlsbDtoPTU2NjtweW9mZj0wO3E9NzU7dz05NjA-/http://media.zenfs.com/en_us/News/ap_webfeeds/b6d2a56ad598bc203e0f6a70670081d6.jpg

Giant reality-check

Posted on September 24, 2013 by Hanqing Zhao

Most of Chinese biggest banks are not real banks. These companies are not only commercial banks, but also parts of financial institutions. They are strongly supported by government and with the background of political power, these banks always make profits easily. “These banks’ revenues as a share of China’s economic output equaled nearly 3% last year, whereas the highest ratio achieved in recent decades by American banks was only 1% of GDP in 2006.”(data from reference article) Central government’s supports have played an important role in these banks’ fast growth.

However, currently, the motivation which has driven China’s four biggest banks to their high revenue goals is nearly breaking down. Although they are still profitable not, a wave of non-performing loans is coming, which will soon affect these banks badly. As the Chinese economic situation is being changed, the government is less willing than before to pour credit into these government-owned firms. Chinese big banks are becoming real institutions. which, in my opinion, in the next step of Chinese market reform. And it will reduce the monopoly of government-owned companies and make the whole market more active and open.

Reference:

http://www.economist.com/news/finance-and-economics/21584331-four-worlds-biggest-lenders-must-face-some-nasty-truths-giant-reality-check

Picture:

http://sgcomcsffile.s3.amazonaws.com/file/news/image/20130515/2d3cd7b2f74d3833ff9b4469f1140ae9.jpg

http://blog.thomsonreuters.com/wp-content/uploads/2013/08/china-banks-1024×733.jpg

Post about ethics in business (External blog embedded)

Posted on September 12, 2013 by Hanqing Zhao

This topic reminds me of the economic term “production efficiency”, the rise of the proletariat, and the development of social welfare system. It is true that allocating resources as efficient as we can is the best way to maximize profit. However, when people become labors (or assets), another form of resources, is it ethic to allocate them efficiently–to minimize their salaries as well as rest time and increase their working time? Here comes the most controversial part. A lot of people claim that there is no such thing as business ethics because the most primary goal of businessmen, or capitalists, is to earn money as possible as they can. Therefore, all the methods used to improve labors’ lives, even the social or company’s welfare with a name of ethics, is only for keeping them working and running the “production efficiency”.

It is wrong to say that businessmen don’t have any responsibilities to the whole society, including their workers and customers. However, when the ethics and business appear at the same time, it is hard for everyone to identify that is the business “ethical” or is the ethic an another form of “business”.