Highlights from the last week of China business news: The Olympics countdown begins, and spin doctors get out their toolkits; the central bank warns of more rate hikes to keep inflation in check, even as trading accounts proliferate.
Games and gamesmanship
As the one-year countdown to the Olympics kicked off this week, the PR spin on the Olympics from all sides began in earnest. For China, there were both laurels and losses. An example of the latter occurred on August 8, when the International Olympic Committee’s president, Jacques Rogge, told CNN that some endurance events may have to be postponed because of Beijing’s terrible air pollution. Two days before that, Beijing police detained foreign journalists reporting on a press conference by Reporters Without Borders. The detention merely underlined the media freedom activists’ point, that China was not living up to its promise of giving the international media “complete freedom to report.”
Beijing played its part in trying to drum up positive publicity for itself. It held a massive event in Tiananmen Square to mark the one-year countdown to the games. BOCOG, the Beijing Olympic organizing committee, also announced a series of extraordinary of measures it would put in place to guarantee food safety for athletes next year, including satellite-monitored food production and rearing pigs fed with organic food in secret locations. The committee also fined two contractors producing Olympic souvenirs for forcing workers to work overtime, confirming a report by an international labor activist group released in June.
And what of the actual games, rather than PR gamesmanship, themselves? As we mentioned last week, China’s deputy sports minister noted that China probably would not be topping the medal table next year. “American and Russia are stronger, especially in athletics, swimming and water sports,” he said. A dose of realism (or at least carefully managed expectations) in a week of media obfuscation, from the government, of all sources.
Up, up and away
The upward spiral of interest rates, stock trading accounts and inflation threatens to continue anew, as the central bank warned that it might raise interest rates again because of rising food prices. “The current price rise is not caused by just chance or temporary factors. The direction of inflationary risk is up,” the People’s Bank of China said in its quarterly monetary policy report.
Measures that are more concrete than rate hikes are also being implemented to control food prices. Premier Wen Jiabao visited Beijing wet markets and proclaimed that price-fixing food merchants should be caught and punished. The government emphasized its point with a notice outlining price control measures for pork posted on its website. Inflation, which drove rising pork and grain prices, reached a three-year high of 4.4% in June. The PBOC raised interest rates and the reserve requirement ratio in July.
Some lucky Chinese investors, at least, may not be too bothered by rising pork prices, because their stock portfolios are growing at an even faster pace. Up to a million new stock trading accounts are opened each week, and the Shanghai composite index hit a new high of 4,651 points this week, up 28% from early July. The more money one has, it seems, the dearer goods become.
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