Movie Director Faces Public Scrutiny

(XINHUA)

Zhang Yimou, a famous Chinese filmmaker and director of the 2008 Beijing Olympics opening and closing ceremonies, underwent public scrutiny after it was exposed that he had been hired by Beijing Xinshike Film and Culture Development Company to direct a promotional video for the Ministry of Railways.

The video, which cost 18.5 million yuan ($2.9 million) to make, has triggered a corruption investigation into a married couple who are both ministry officials.

In an interview with a news website of Xinhua News Agency, Zhang said he was paid to give advice on artistic style for the video and accepted 2.5 million yuan ($397,000) in after-tax income as payment. Although the video credited Zhang as director, he said his name should not have been listed as such in accordance with the contract. Zhang said he later learned of the video's cost and corruption allegations through online reports. In the future, he said he will do more research to gain a clearer idea of his involvement with projects. Zhang vowed to cooperate with authorities in disposing of his earnings.

Zhang, 62, is one of China's most successful film directors, directing such movies as Red Sorghum (1987), Curse of the Golden Flower (2008), and The Flowers of War (2011). Movie stars Gong Li and Zhang Ziyi have become famous for acting in his movies.

Prioritizing Growth

Stable growth was reaffirmed as a priority, as were maintaining fiscal and monetary policies to combat turbulent global conditions.

Current economic growth is within expectations, but external conditions remain grim and pose difficulties and challenges, according to a statement released on July 31 after a meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee, presided over by President Hu Jintao.

The committee pledged to cut taxes and maintain moderate credit growth.

The government will beef up support for key projects and implement policies that allow private capital to play a bigger role, the committee said, adding that foreign trade policies will remain consistent.

It also vowed to expand domestic demand, develop the real economy, accelerate reform and improve living standards in the second half.

At the same time, the committee said it will firmly implement cooling policies to curb speculative demand and increase supplies of smaller apartments and subsidized housing.

Confidence in H2

Chinese economists expect to see lower inflation and more government stimulus in the third quarter, and higher confidence in the second half of this year.

The quarterly survey from the China Economic Monitoring and Analysis Center under the National Bureau of Statistics was conducted among 78 leading economists, and showed that 72 percent of them expected higher than 8 percent growth this year supported by further economic policies.

The survey's overall index, which indicates respondents' confidence in the country's economic situation, is expected to rebound to 4.8 in the second quarter, compared with 4.48 in the first three months. The evaluation range for the index is from 1 to 9.

Respondents said they expected China's inflation rate to ease in July, because of continued low food prices, giving the government more leeway to loosen price policies, economists said.

Capital Account Deficit

China's capital and financial account shifted to a deficit of $71.4 billion in the second quarter this year from a surplus of $56.1 billion in the first quarter, said the State Administration of Foreign Exchange (SAFE).

In the first half of this year, the capital and financial account deficit was $20.3 billion. The country has suffered a certain degree of capital outflow in the first half, but this does not suggest a massive retreat of foreign investment, said the SAFE.

The country's current account surplus widened to $59.7 billion in the second quarter from $23.5 billion in the first quarter.

Current account surplus in the first half of the year was $83.2 billion, down 5 percent from one year earlier. The surplus was equivalent to 2.3 percent of the country's GDP in the first half, down from 2.8 percent in the same period of 2011, offering new evidence that the world's second largest economy is relying less on external demand.

PMI New Low

Manufacturing sector expanded at its slowest pace in eight months, with the purchasing managers index (PMI) easing to 50.1 percent in July, according to data released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics on August 1.

PMI in July was 0.1 percentage point lower than that in June, but it suggested the manufacturing sector is still expanding even though growth has slowed. A reading of 50 percent means expansion from contraction.

However, July's PMI reading was below market expectations. Analysts have forecast that the official data may inch up from one month earlier as the Chinese economy stabilizes.

Luxury Boom

China's increasing luxury market was still a growth driver for some main international luxury groups, despite the slight slowdown in market growth.

According to French-owned PPR SA, the world's third largest luxury group by turnover, which owns Gucci and Bottega Veneta, the Gucci brand gained huge popularity in China, said CFO Jean-Marc Duplaix. Sales soared by 35.6 percent across China in the first half of 2011, including Hong Kong, Macao and Taiwan, and 17.2 percent on the mainland in the first half of 2012.

At rival LVMH Moet Hennessy Louis Vuitton SA, the leading luxury group which owns a stable of top names including LV, Fendi and Kenzo, revenues were also boosted from Asia. "Sales to customers from China and America were particularly strong during the period," LVMH said.

"The growth of China's luxury market was going slow in the first half of 2012, along with the slowdown in China's economy, but the market will continue to increase," said Zhou Ting, a researcher on luxury goods and services at the University of International Business and Economics.

She said that it won't just be first-tier cities which will continue to sell plenty of luxury goods, as there is also huge potential in the country's smaller cities.