News and Updates

China Raises Individual Income Tax Threshold

个税起征点调至2000元/月

China's top legislature adopted an amendment to its tax law raising the country's individual income tax threshold from 1,600 yuan (US$224) a month to 2,000 yuan (US$280) on December 29.

This means people earning less than 2,000 yuan a month will not have to pay the income tax; they account for about 70 percent of China's wage-earning population. The current threshold of 1,600 yuan frees about 50 percent of wage earners from paying the tax.

 The individual income tax threshold increase is expected to relieve the economic burdens of medium- and low-income earners arising from recent increases in the prices of some consumer goods, including food and fuel.

The amendment, which will go into effect on March 1, 2008, will reduce State revenues by 30 billion yuan (US$4.2 billion) per year, according to official statistics.

China's consumer price index climbed 6.9 percent in November, marking the fourth consecutive month the index had been above 6 percent, greatly affecting the lives of ordinary people and low-income families.

The individual income tax cut-off point was raised from 800 yuan (US$112) a month to 1,600 yuan in 2006.

2007年12月29日，中国十一届全国人大常委会第三十一次会议表决通过了《全国人民代表大会常务委员会关于修改<中华人民共和国个人所得税法>的决定》。根据决定，2008年3月1日起，中国个税起征点将从1600元/月上调至2000元/月。

根据中国国家统计局有关数据测算，将个人所得税起征点提高至2000元/月后，工薪阶层纳税人数占中国职工总人数比例将由目前的50％左右下降到30％左右，也就是说工薪阶层有70%左右的人不需要负担个人所得税。由此，中国年税收总体减收幅度将达到300亿元左右。

中国财政部部长谢旭人此前在十届全国人大常委会上，就《个人所得税法修正案（草案）》做说明时表示，将个人所得税工薪费用减除标准调整至2000元/月，既可满足居民基本生活消费支出需要，也统筹兼顾了财政承受能力，并体现了重点照顾中低收入者的政策调整意图。

2007年，北京市共征得个人所得税308.2亿元，同比增长34.1%。其中，工资薪金所得、劳务报酬所得、财产转让所得同比增幅分别达到34.6%、19.2%和165.7%。个税起征点调整后，北京地区将有约60万人免征个人所得税。据北京市地方税务局计会处处长金燕齐介绍，北京地方税收可能会因此减收40亿元左右。

Export Quotas on Wheat, Rice Flour and Corn Meal

粮食制粉出口启动配额管理

China imposed temporary quotas on exports of wheat and rice flour and corn meal on January 1 to guarantee an adequate domestic supply of these products in response to exports stimulated by climbing international prices.

The move was expected to stabilize domestic food prices, the Ministry of Commerce announced on its Web site, without specifying the details.

The life of the quota policy will be decided by supply and demand in related domestic markets, the announcement said. The step added to a string of governmental measures taken to restrain food price inflation stemming from shortages of pork, edible oils, grain and other food products.

The quotas will be implemented through a permit policy.

The Ministry of Finance had announced on December 30 that it would levy export taxes on wheat, corn, rice, soybeans and various processed grains in 2008, just a week after China scrapped tax rebates for grain exports.

The export tax rates will range from 5 percent to 25 percent and will affect 57 types of grain and grain products. 

The country exported 4.87 million tons of corn in the first 11 months of 2007, up 85.3 percent from the previous year. Exports of rice rose 5.8 percent to 1.13 million tons and exports of wheat soared by 206.51 percent to 1.85 million tons.

中国商务部日前表示，为稳定当前国内粮价，中国从2008年1月1日起对小麦粉、玉米粉、大米粉等粮食制粉实行出口配额许可证管理。

近期以来，随着国际粮价的不断攀升，中国粮食制粉出口快速增长。为适度调整出口规模，避免影响国内供应，以稳定当前国内粮价，确保国内粮食安全，中国决定对粮食制粉出口政策做出上述调整。此项政策为临时政策，符合世贸组织规则，实施期限视国内相关市场供需变化情况而定。该项政策是继2007年12月20日取消粮食及其制粉出口退税和2008年1月1日实施加征临时关税之后，为稳定国内粮价、确保国内粮食安全而采取的另一项重要措施。

中国商务部有关负责人指出，2007年中国粮食连续四年丰收，供需总量基本平衡，国内粮食市场运行总体平稳。从长远来看，中国完全有能力保持国内粮食市场的稳定和人民生活安定。

Thermal Power Capacity Cut in 2007

中国关停小火电机组约1440万千瓦

China shut down 553 small thermal power generators with a total capacity of 14.38 million kilowatts in 2007, the National Development and Reform Commission (NDRC) said on December 31, 2007.

Shandong, Henan, Guangdong, Jiangsu and Shanxi are the top five provincial regions affected by the closures, with 6.7 million kilowatts of thermal power capacity taken off line, accounting for 46.6 percent of the total.

Closing down small thermal power plants is part of the nation's energy saving and pollution reduction efforts. The State Council, or cabinet, set the annual goal of shutting down 10 million kilowatts thermal power capacity at the beginning of 2007, which had been achieved by October 26, 2007.

On average, the power generators shut down have a single-set capacity of 26,000 kilowatts and have been operating for 28 years.

After shutting down these obsolete plants, large thermal power generators (with single-set capacities exceeding 50,000 kilowatts) will take their place in generating power. The large-scale facilities will help the country reduce coal consumption by about 18.8 million tonnes, eliminating 290,000 tons of sulphur dioxide and 37.6 million tons of carbon dioxide from the power production waste stream every year, according to an official with the NDRC.

截至2007年12月底，中国关停小火电机组约1440万千瓦，共计553台发电机组，超额完成年初关停1000万千瓦的目标。

2007年，中国关停小火电工作进展顺利，超额43%完成关停任务，节能减排效果明显。此次关停的机组，平均单机容量为2.6万千瓦。关停机组中，五大发电公司（全资和控股）、地方投资公司和地方国有企业关停小火电机组256台，关停容量1052万千瓦，占关停总量的73.1%；民营及其他企业关停小火电机组297台，关停容量386万千瓦，占关停总量的26.9%。山东、河南、广东、江苏、山西等省份关停容量位居前5位，分别关停了171.7万千瓦、154.3万千瓦、129.4万千瓦、113.9万千瓦、100.7万千瓦。国家发改委有关负责人称，这些机组关停后，同等电量都转由大机组发，每年将减少原煤消耗1880万吨，减少二氧化硫排放29万吨，减少二氧化碳排放3760万吨。另一方面，这也为2008年的电力供求平衡增加压力。

First JV Financial Leasing Company Established

建行金融租赁公司成立

China's biggest financial leasing company, a joint venture between the China Construction Bank (CCB) and the Bank of America, was established on December 28, 2007.

CCB, one of the four big State-owned commercial banks, has a 75.1-percent stake in the 4.5-billion-yuan (US$616 million) venture, and Bank of America owns 24.9 percent.

"In addition to airplanes and ships, the new company will lease facilities for railway transport and power generation," a CCB official said. The venture will also issue bonds and provide inter-bank loans.

On the same day, the Bank of Communications (BOCOM) Financial Leasing Company, with 2 billion yuan (US$280 million) in registered capital, was set up in Shanghai. The company will focus on equipment leasing (aircraft, ships and construction equipment).

The Chinese Banking Regulatory Commission lifted a decade-long ban on commercial banks investing in financial leasing companies in March 2007. China Merchants Bank and China Minsheng Banking Corporation Limited are preparing to set up financial leasing companies.

中国国内银行系统金融租赁公司又添新成员，2007年12月28日，中国建设银行与美国银行合资成立建信金融租赁股份有限公司，该合资公司注册资本总额为45亿元，是目前中国国内银行业唯一一家引入境外商业银行的金融租赁公司。

建信金融租赁股份有限公司普通股总计45亿股，其中，中国建设银行出资33.795亿元，占注册资本75.1%；美国银行出资11.205亿元，拥有剩余24.9%的股份。该合资公司经营范围包括融资租赁、吸收股东1年期(含)以上定期存款、向商业银行转让应收租赁款、经批准发行金融债券、同业拆借以及中国银监会批准的其它业务等。

建信董事会由5名董事组成，4名由中国建设银行提名，1名由美国银行提名。通过设立建信金融租赁股份有限公司，中国建设银行可以积极参与发展潜力巨大的金融租赁市场，满足客户需求，优化业务结构。

经国务院批准试办金融租赁公司的5家银行分别是中国工商银行、中国建设银行、交通银行、招商银行和民生银行。

Sixth Year of Double-Digit Growth in 2008

2008年中国经济将保持平稳发展

China's economy is likely to see its sixth consecutive year of double-digit growth in 2008, with inflation remaining near 10-year highs, the State media reported on January 2, citing an influential think tank.

The country’s gross domestic product (GDP) is expected to grow by 10.8 percent in 2008, compared with an estimated 11.5 percent in 2007, the State Information Centre said in a report published in the Shanghai Securities News.

Consumer inflation will hover at about 4.5 percent for 2008 from an estimated 4.7 percent in 2007, a decade high, said the centre, a research body under the National Development and Reform Commission, the State economic planner.

The centre reiterated the government's pledge to "prevent fast economic growth from becoming overheating" and to control inflation.

The report said growth in the trade surplus would decline in 2008 because of "foreign protectionism," uncertainties in the US economy and the removal or reduction of tax incentives for Chinese-based exporters.

Growth in urban fixed asset investment, another driver of economic growth, is expected to slow to 24 percent from 26.3 percent, it said.

2008年初，由联合国经济和社会事务部、贸易和发展会议以及五个区域委员会联合编制的《2008世界经济形势与展望》报告发布，报告针对目前世界经济增长面临的严峻挑战，预测2008年世界经济增长率为3.4%，比起2007年3.7%略有放缓，但中国经济的增长率仍将达10%。

在此之前，中国社会科学院于2007年底发布了《2008年经济蓝皮书》，作为中国社会科学界对中国经济形势进行分析和预测的重要平台，发布了对2008年中国经济指标的预测。

2007年，北京经济进入了加速发展期。据初步估算，全年国内生产总值增长率为11.6%，第一、二、三产业增加值的增长率分别为4.6%、13.5%和10.7%；全社会固定资产投资实际增长率为21.6%；对外贸易进口总额达到9520亿美元，增长率为20.3%，出口总额达到12120亿美元，增长率为25.1%。

此外，根据北京奥组委对于2008年奥运会做的财政预算，主办奥运会将有16.85亿美元的预算收入，支出约为16.09亿美元，收支相抵后有1600万美元结余；北京奥组委市场开发收入有望超过悉尼奥运会和雅典奥运会，达到20亿美元；奥运旅游收入将大幅增长，并带动相关产业发展。根据预测，2008年北京旅游外汇收入将达到48至49亿美元，国内旅游收入将达到1390至1490亿元人民币。奥运会后，北京的经济将平稳发展。

CBD Gets US$20 Billion Injection

中央汇金公司向国开行注资

The China Investment Corporation (CIC) signed an agreement with the China Development Bank (CDB) on December 31, injecting US$20 billion into the policy bank to help its commercialization drive.

The deal was conducted via Central Huijin, an investment arm that had been incorporated into the CIC before the latter was formally launched at the end of September, according to a central bank announcement on its Web site.

Lou Jiwei, head of CIC, the country's US$200 billion sovereign fund, said that the company will "soon" execute recapitalization moves.

The CDB, with a non-performing loans ratio below 1 percent—much lower than that of China's major commercial banks—has seen its lending expand rapidly, which is a built-in factor for the recapitalization, analysts said.

The injection will raise the capital adequacy ratio and push the CDB further on the way to a more commercialized operation, said the central bank statement.

Central Huijin has injected capital into major Chinese banks such as the Industrial and Commercial Bank of China and China Construction Bank to help their shareholding reform.

CIC Buys into Morgan Stanley

中投公司入股摩根斯坦利公司

China Investment Corporation (CIC), the nation's State-owned foreign exchange investment firm, said on December 19 it has agreed to invest US$5 billion in the No. 2 US investment bank Morgan Stanley.

The Chinese firm, which invested US$3 billion in the US private equity firm Blackstone Group earlier 2007, will purchase equity units that are mandatorily convertible into 9.9 percent of Morgan Stanley common shares.

The equity units carry a fixed annual interest rate of 9 percent before conversion on August 17, 2010.

The purchase is "a long term, passive financial investment" and does not lead to a role in management of Morgan Stanley, said a statement from CIC.

"It is a good opportunity to invest in US-based financial institutions, many of which are being undervalued when the subprime mortgage crisis has had an impact on them," said Li Yang, director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences.

On the same day, Morgan Stanley reported a larger-than-expected loss in the fourth fiscal quarter due to a US$9.4-billion write down from its exposure to subprime and other mortgage-related investments.

It lost US$3.61 billion in the fourth quarter, compared to a profit of US$2.27 billion dollars in the same period a year earlier.

"CIC believes that Morgan Stanley has potential for long-term growth, particularly in its investment banking, asset management and wealth management businesses, as well as new business development opportunities in emerging markets," said the statement.

中国投资有限责任公司（以下简称中投公司）2007年12月19日宣布斥资约50亿美元入股摩根斯坦利公司（以下简称大摩），成为大摩的第二大股东。

根据交易协议，中投公司将购买约50亿美元大摩发行的一种到期后须转为普通股的可转换股权单位。此种可转换股权单位期限为两年零七个月，按照年息9％按季支付利息，到期后转换成大摩上市交易的股票，转换价格最高不超过参考价格的120％。股权单位全部转换后中投公司持有大摩的股份将不超过9.9％。

中投公司表示，看中的是大摩的长期增长潜力，特别是其在投资银行、资产管理等业务上的市场地位，以及在新兴市场面临的业务发展机会。此次购买大摩可转换股权单位的目的是进行长期财务性投资，并不参与大摩的日常管理。

有报道称，中投公司在完成全部股权单位转换后，将成为大摩的第二大股东，仅次于美国道富银行。

大摩是美国老牌投资银行，在33个国家设有600多家分支机构。

中投公司于2007年9月29日成立，目前所从事的外汇投资业务以境外金融组合产品为主。大摩是中投公司做出的第三笔投资，另外两笔分别是投资30亿美元购买美国黑石集团的部分股权和出资约1亿美元认购中铁H股。