| TO THE POINT: The Social Security Fund received 65 billion yuan ($9.5 billion) worth of listed stocks transferred from state shareholders by March 29. Chinese shipbuilders lost ground to their South Korean rivals that scooped up orders by slashing prices. The eye-popping 12-trillion-yuan ($1.76-trillion) investment package of central China's Hubei Province raises hopes and eyebrows. The World Gold Council said China's gold demand is expected to double in a decade. China Central Huijin Investment Ltd. is expected to rake in record-high dividends from the country's big three banks in 2009.
By HU YUE
Funding Retirement
State shareholders had transferred nearly 65 billion yuan ($9.5 billion) worth of stocks in listed companies to the Social Security Fund (SSF) by March 29, according to a statement from the SSF.
On June 19, 2009, the government ordered 10 percent of state-owned stocks in companies listed after the 2005-06 shareholding reform be transferred to the fund free of charge.
This move was largely designed to shore up the financial position of the fund, a strategic reserve of the country established in August 2000 to meet the future pension needs of an aging population. The SSF obtained capital from the Central Government, sales of lottery tickets and returns on investments. But its capital distress grew in the recent years as more Chinese reached retirement age.
In an effort to address the aging problem, the fund aims to boost its asset portfolio to 2 trillion yuan ($292.9 billion) by 2015 from the current 776.5 billion yuan ($113.7 billion), said Dai Xianglong, Chairman of the National Council for the SSF.
As a long-term value investor, the fund sees the bright prospects presented by the Chinese stock markets, and is also gearing up to spread its wings abroad, said Dai.
"We are planning to build a heavier presence in foreign stocks, bonds as well as unlisted corporate equities," added Dai.
Stuck in Port
Nearly two years after the financial crisis, China's shipbuilding industry has yet to set sail again.
Chinese shipbuilders received new orders of only 159,000 deadweight tons in January 2010, barely 10 percent of that of South Korea, according to London-based Clarkson ship brokers. Meanwhile, many owners are seeking to postpone deliveries or cancel them outright since they have no cargo to ship.
A lack of financing that helps keep shipbuilding afloat has only added to the industry's woes. The deep downturn means yards are taking in few down payments on new orders that were typically used to finance ship construction.
South Korean competitors have taken this opportunity to grab market shares by depressing prices, said Wang Jinlian, Secretary General of the China Association of the National Shipbuilding Industry.
Of course, the competition will also be a powerful catalyst for Chinese shipbuilders to strengthen efficiency and sharpen their competitive edge, he added.
China overtook South Korea as the world's biggest shipbuilder in the first half of 2007 by winning more orders in terms of deadweight tonnage, but South Korea remained far ahead in manufacturing high-end products, like LNG (liquefied natural gas) ships.
Liang Zhiyong, a senior analyst with the China Shipbuilding Industry Economy Research Center, also struck a note of caution. "Darker days may lie ahead for the industry given the chronic overcapacity problem and the deteriorating global trade," he said.
The past few years have seen a number of small private yards spring up across the country, building excess capacity that would take years to absorb.
Hubei's Stimulus Plan
By announcing a jaw-dropping 12-trillion-yuan ($1.76-trillion) investment package, central China's Hubei Province stunned the world.
The program is three times the country's 4-trillion-yuan ($586 billion) stimulus package announced in November 2008, and nearly 10 times the province's GDP in 2009.
The massive projects, 30 percent of which are focused on infrastructure, will cover a range of sectors including manufacturing, services, agriculture and environmental protection, and will be implemented over the next few years, said Xu Kezhen, Director of Hubei Provincial Development and Reform Commission, at a meeting on March 22.
"As the province accelerates the pace of industrialization, investments will be a significant driving force in the long term," he said.
Given the staggering size of the plan, the question on everyone's lips is where the money will come from.
The commission said there are several sources of financing, including local government budgets, bank lending, self-financing of enterprises, bond issuance, as well as foreign direct investment.
"It is also necessary to lure private sector investments and smooth the way for the projects," said Xu.
But even if Hubei had the money, it remains unclear what lies ahead for its plans. After all, the investing spree comes against a wave of momentum to wean the economy off its dependence on investments.
Such astronomical investment is not a wise option since it will surely add fuel to risks of an overheating economy, said Cai Jiming, Director of the Center for Political Economy at Tsinghua University.
Jia Kang, Director of the Research Center for Fiscal Science under the Ministry of Finance, agreed. The problem of bad loans may arise if the infrastructure projects cannot generate enough revenues to repay the debt, he said.
Record-High Returns
China Central Huijin Investment Ltd., the domestic investment arm of the country's sovereign wealth fund, China Investment Corp., is expected to earn over 70 billion yuan ($10.25 billion) in dividends from the country's big three lenders in 2009, said a Shanghai Securities News report.
The record-high dividends were a result of improved performance by the Industrial and Commercial Bank of China, China Construction Bank and Bank of China. They reaped total net profits of 317 billion yuan ($46.4 billion) in 2009, up 18 percent from the previous year.
Central Huijin sought a capital injection of $50 billion from the government, in an effort to boost its capital base and prepare itself for the impending public offering of Chinese lenders, according to earlier media reports.
Golden Age
China's consumer gold demand is on track to double by tonnage terms by 2015, drawing strength from an economic boom, said a recent report by the World Gold Council (WGC).
"Now one of the world's largest economies, China has rapidly become a prominent gold market. However, our analysis confirms that significant untapped growth potential exists in the Chinese gold market," said Marcus Grubb, Managing Director of Investment, Research and Marketing at the WGC, in the report.
Gold consumption in China exceeded $14 billion in 2009, as the economic take-off boosted income, making fancy jewelry a new "must have" for numerous families. Jumping aboard the golden caravan are also risk-wary investors seeking a safe haven from the fickle stock market and inflationary jitters.
But China's per-capita ownership of the glittering metal was still nowhere close to that of developed countries, indicating deep potential for the industry.
The biggest question now lingers on supplies as the country's known gold reserve could be exhausted within six years, said the WGC.
The only solution is to pump investments into mining and exploration, it added.
Harbin Trade Fair
The 21st China Harbin International Economic and Trade Fair will be held on June 15-19, 2010, the organizers announced at a press conference in Beijing on March 26.
As one of China's largest-scale foreign trade fairs, it has been successfully held for 20 consecutive years. This year's event will have 3,000 booths for exhibitors from more than 80 countries and regions of the world.
"The fair will strengthen its efforts to provide a better platform for economic and trade cooperation between China and the rest of the world," said Sun Yao, Vice Governor of Heilongjiang Province, at the press conference.
Last year, the fair defied the ripple effect of the financial crisis to witness signed deals worth more than $100 billion, hitting a record high. | 
