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The study is by Qiu Du, a China native who currently [June 2016] lives in San Francisco; this study presents the Hong Kong government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2013. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
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CHINA - QIU DU
CHINA: ECONOMIC POLICY ANALYSIS BASED ON MIEPA POLICY LIST
RATING SUMMARY POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 4.0 12.0 15.0 80 % 2 4.5 13.5 15.0 90 3 3.0 9.0 15.0 60 4 3.0 9.0 15.0 60 5 4.5 13.5 15.0 90 6 4.5 13.5 15.0 90 7 4.5 13.5 15.0 90 8 3.5 10.5 15.0 70 9 3.5 7.5 15.0 50 10 4.5 13.5 15.0 90 11 4.0 12.0 15.0 80 12 5.0 10.0 10.0 100 13 4.5 9.0 10.0 90 14 4.5 9.0 10.0 90 15 4.5 9.0 10.0 90 16 4.0 8.0 10.0 80 17 5.0 10.0 10.0 100 18 2.5 5.0 10.0 50 19 3.0 6.0 10.0 60 20 3.5 7.0 10.0 70 21 3.0 6.0 10.0 60 22 2.0 4.0 10.0 40 23 2.0 4.0 10.0 40 24 2.5 5.0 10.0 50 25 2.0 4.0 10.0 40 26 1.0 2.0 10.0 20 27 5.0 10.0 10.0 100 28 2.0 4.0 10.0 40 29 4.5 4.5 5.0 90 30 1.5 1.5 5.0 30 31 4.0 4.0 5.0 80 32 4.5 4.5 5.0 90 33 4.5 4.5 5.0 90 34 4.0 4.0 5.0 80 TOTAL 122.5 262.5 365.0 72.0% ===== ====== ===== =====
CHINA: INDIVIDUAL POLICIES
1. Freedom from central control 4.0
Nowadays in China, Chinses residents can go anywhere in China except HongKong and Macao which require special permission to go through. They can live anywhere in mainland of China. They can do business anywhere in China. Big cities have high population. For example Beijing, Shanghai, Guangzhou. Many people from different cities come to those place to find a job, start business. But in twenty years ago, some special places in mainland of China also require permission to go through. For instance, people who went to Shenzhen twenty years ago would require permission to go through.
Source: personal experience
2. Freedom of speech 1.5
China is not allowed freedom of political speech for ordinary citizens. For the average Chinese citizen freedom of publication is actually nothing more than the freedom to submit. Anyone wants to publish their opinions may submit their article or book to a government-licensed publisher, but if they are unable to find a licensed publisher, then the only way they can legally exercise their constitutional right to freedom of publication is to "enjoy their works themselves, or give copies to friends and family." All news need to check by government before newspaper and media released to public. Only the news passed by government can release on newspaper and media.
3. Effective, fair police force 3.0
Police officers in China are not very effective. Police department only solve half criminal case each year. Another half criminal case cannot be solved. China doesn’t have enough police officers to protect communities. In 2007, China has 1.6 million police officers, but average 10,000 people are protected by 12 police officers. Sometimes. Police officers corruption let police protect some special group of people even break laws.
4. Private property 3.0
In China, government owe all the land of China. the ownership of house in China is only 70 years. People buy house don’t own the land. They only have the authority to use the property or sell it. When 70 years is over. People need pay in order to get other years authority to use the property. Intellectual in China is not protect very well. many small companies make fake brand bags, shoes to get profit. But government doesn’t spend a lot law enforcement on it.
5. Commercial banks 4.5
Commercial banks in China are almost owned by government. 100% owned by government bank are Industrial and Commercial Bank of China which is ranked #1 in the world, Agricultural Bank of China which is ranked #3 in the world, Bank of China which is ranked #5 in the world, China Construction Bank which is ranked #2 in the world. Loans are the most part of profit that commercial banks make. People who want to get loans from bank need to satisfied the requirement which banks require.
6. Communication systems 4.5
in 2004, China had 295 million subscribers to main telephone lines and 305 million cellular telephone subscribers, the highest numbers in both categories. Both categories showed substantial increases over the previous decade; in 1995 there were only 3.6 million cellular telephone subscribers and around 20 million main-line telephone subscribers. By 2003 there were 42 telephones per 100 population. Internet use also has soared in China from about 60,000 Internet users in 1995 to 22.5 million users in 2000; by 2005 the number had reached 103 million. By the June 2010, China had 420 million internet users. Incidentally, this is greater than the population of the USA, however penetration rate is still relatively low at just under 32%
7. Transportation 4.5
Airplane and train are most common ways to travel long distance in China. most of rich cities have airport. But some poor places don’t have airport. Traveling by trains is the best way to those poor places. Bullet trains offers high speed, convenience and economy. In cities, subways, taxies, buses are public transportation. They are cheap and convenience.
8. Education 3.5
Education in China is a state-run system of public education run by the Ministry of Education. All citizens must attend school for at least nine years, known as the nine-year compulsory education, which the government funds. It includes six years of primary education, starting at age six or seven, and three years of junior secondary education (middle school) for ages 12 to 15. After middle school, there are three years of high school. the national higher education entrance examination, known as GaoKao, is an academic examination held annually in China. this exam is a prerequisite for entrance into college. To enter college doesn’t base on average grades. It bases on the grade of GaoKao which is not really good system.
9. Social mobility 3.5
As second largest economic country in the world, China social mobility has increased many times compare with twenty years. Personal income has increased 35 times from 1981 to 2008. But compare living cost right now, the income is still low. The average income in China in 2015 is 4,134 RMB, but the normal cost per month to raise a kid when kid is young is around 2500, when kid goes to college, tuition fees and living costs every month are around 4,000 RMB. Most of the families can only raise one kid base on their income.
10. Freedom from outer control 4.5
China is a very powerful country, and China government spend a lot money on military. In 2015, the Chinese government’s official defense spending figure was 146 billion dollars, an increase of 11% from the budget of 131 billion dollars in 2014. China is ranked as number 3 powerful country in the world. So China doesn’t threaten by any country.
11. Protection of Domestic Enterprises 4.0
After China joint in WTO in 2001, many foreigner companies come to China to invest, and China GDP has increased very quickly. Foreigner companies bring technology to China. it increases China company productivity. China has done good job to protect domestic enterprises. All goods which are produced by China industries export to overseas will return taxes which industries paid in China. in order to China products’ prices are more competitive than other countries products. All goods which import from overseas will need to pay import taxes. It makes import products’ price higher than domestic products a lot. In 2013, China exported 2.25 trillion dollars, but imported only 1.56 trillion dollars. Net export was 690 billion dollars.
12. Foreign currency transactions 5.0
RMB is the only currency that can use in China. All domestic transactions are required to pay by RMB. Any other foreign currency is prohibited to use in China. foreign currency has to be exchange to RMB in bank in order to buy products in China.
13. border control 4.5
Every foreigner needs a visa to enter China unless otherwise provided by law. There are four types of visas: diplomatic, courtesy, service, and ordinary. Foreigners illegally entering, staying, or working in China may be deported. According to the exit and entry law, foreigners upon entering or exiting China must submit their passports and visas to the border inspection organs for examination and go through prescribed formalities. China has constantly carried out actions against smuggling. China has launched a campaign against smuggling, investigated a number of major smuggling cases and punished a group of smugglers as well as people bribed to facilitate smuggling activities. China improves the legal system and regulations at customs, establishing a guard line against people cheating on prices at customs as well as the system of credit administration of importers and exporters, and strengthening the monitoring system of goods crossing the border.
14. Currency 4.5
RMB is the only official currency to use by law in China. the People’s Bank of China is the only institute which design and print money. The unit for RMB is yuan. RMB symbol is ¥. Foreigner currency is not acceptable. It must exchange to RMB in order to buy productions.
15. Cultural, language homogeneity 4.5
Although China has 56 different ethnics, but Chinese cultural and language are homogeneous. In 221 BC, Qin dynasty defeated other six states (Han, Zhao, Wei, Yan, Chu and Qi). Qin Shi Huang who is the king of Qin dynasty established a unified and centralized country and declared Xianyang, in Shaanxi Province, the capital city of the Qin. He united whole country with the main language Mandarin to communicate, only use Hanzi to write. He also united the country culture together. Even China has 56 different ethnics with many different dialect, but they only write Hanzi, and they all know how to speak Mandarin.
16. Political effectiveness 4.0
China has really good political effectiveness after big events happened. For example, in 2008, many consumers complained that their kids were sick after taking Sanlu milk powder. China government had immediately prohibited to sell Sanlu milk powder in the market and investigated. After proving Sanlu milk power contain melamine, the company’s chairman and CEO were arrest. Sanlu also faced 0.2 billion RMB penalties.
17. Institutional stability 5.0
Since the people’s republic of China were founded in 1949, China is leaded by the Communist Party. For this non-competition, it keeps China long term goals stable. It won’t change by different parties with different opinion.
18. Honest government 2.5
Transparency and corruption are the major issue between government and republic. For some reasons of china culture, when people has power, most of them corrupted. Government only releases the data and news that they want public to know. government won’t release news which may affect the government honest. And people don’t trust government because of old-age pension. 30 years ago, government promised they will give pension to retire people for birth control. But they didn’t. 10 years ago, government changes it to citizens have to pay social security in order to get pension after retire. But now when citizens old, government postpones pension to pay pension. Citizens start to pay social security when they were 25 years old until 65. But they only get pension eight years.
19. Common laws 3.0
China common laws have great improvement compare to old time. But China common laws are more complicated than western country, and there are many loopholes in the china legislation. Many people use those loopholes to avoid taxes and corrupt. Rich people and poor people are not fair when they face a court. Because of corruption, rich people most time will spend money to get special condition. if poor people sue rich people, most of time will lose. Rich people know some powerful people and spend money to solve it.
20. Central banks 3.5
The People’s Bank of China(PBC) is the central bank of the People’s Republic of China with the power to control monetary policy and regulate financial institutions in mainland China. the People’s Bank of China has more financial assets than any single public institution, and is second only to the Federal Reserve System of the United States in terms of overall central bank assets. The People’s Bank of China isn’t politically independent. It is controlled by the top bodies of government.
21. Domestic Budget Management 3.0
China’s Budget deficit in 2015 were 2.3 percent of GDP which were higher than 2.1 percent of GDP in 2014. There were 200 billion RMB of planned spending was excluded from the original calculation for technical reasons, and incorporating it brought the deficit to around 2.7 percent of GDP.
22. Government Debt 2.0
China recorded a Government Debt to GDP of 41.14 percent of the country’s GDP in 2014. China’s general government debt increased to about 53.2% of the country’s GDP by the end of 2015. And this number will keep increasing in 2016.
23. Economic Statistics 2.0
The official economic statistics which are released to public are not credible and accountable. The data which share to public is the data that government want public to know. If there are some data that government doesn’t want public to know, they don’t share it to public. Every three months, China releases what's called its Gross Domestic Product (GDP) - and economists look at the percentage at which the economy grew compared to the same period the previous year. And every time, there's doubt that the numbers might be inflated and therefore can't be trusted.
24. Protection of Public health and safety 2.5
The situation of occupational health and safety was found to be still serious in China. Enterprises with occupational hazards were widely distributed, the exposed population and cases of occupational diseases were numerous, and occupational risks were being transferred from the city to the countryside and from developed areas to developing ones. In china food safety is a highly topical issue with significant public health, economic and social implications. China has one of the lowest capital crime rate in the world. it is generally safe to walk the streets at night and cases of outright robbery or theft is still pretty uncommon. However, petty crime such as pick pocketing is common. Another area to watch out for are con artistes and cheats. In general, china public safety is pretty good.
25. High wage policy 2.0
Although China economic has grown very fast, as second largest economic country, China average wages were only 47,593 RMB in 2012. In 2014, china had reach highest average wages 57,361 RMB. The highest White collar average incomes in china are in shanghai about 7,214 RMB in 2014. According to the 2015 mercer Cost of living in Shanghai is the highest in China. It’s also the 6th most expensive city out of the 207 that were polled around the world. Unfurnished 2-bedroom apartment rent is 9,000 RMB. Average electricity bill per month is 380 RMB. Uncapped ADSL internet per month is 150 RMB. Average transportation per month is 300 RMB. Telephone bill per month is 100 RMB.
26. Environment Protection 1.0
The environment of China is very bad. China is one of the fastest economic growth country. To be grow faster, China drops many environment problems behind. Air pollution is the biggest problem that China faces. In 2000, China had issued 19,950,000 tons of carbon dioxide, 11,650,000 tons of smoke, 10,920,000 tons of industrial dust. Water pollution is the second biggest problem that China faces. Almost half of the all rivers in China which human beings can drink are polluted. Because of smog, in Beijing most of day people go out wear breathing masks.
27. Strong Army 5.0
China, as the largest economic country in the world, is also one of most powerful country in army in the world. The GFP (global firepower) power index rating of China is 0.2318 (0.0000 being perfect).
Manpower of China: The total population of China is 1,367,485,388. Available manpower is 750,000,000. Fit for service 619,000,000. Reaching military age annually 19,550,000. Active frontline personnel 2,335,000. Active reserve personnel 2,300,000.
Land systems: Tanks 9,150. Armored Fighting Vehicles 4,788. Self-Propelled Guns 1,710. Towed-Artillery 6,246. Multiple-Launch Rocket Systems 1,770.
Air Power: total Aircraft 2,942. Fighters 1,230. Fixed-Wing Attack Aircraft 1,385. Transport Aircraft 782. Trainer Aircraft 352. Helicopters 802. Attack Helicopters 200.
Naval Power: total Naval Strength 714. Aircraft Carriers 1. Frigates 48. Destroyers 32. Corvettes 26. Submarines 68. Coastal defense craft 138. Mine warfare 4.
Resources: oil production 4,189,000 bbl/day. Oil consumption 10,120,000 bbl/day. Proven oil reserves 24,650,000,000 bbl/day.
Logistical: labor force: 804,200,000. Merchant marine strength 2,030. Major ports and terminals 15. Roadway coverage 3,860,800. Railway coverage 86,000. Serviceable airports 507.
Financial: defense budget $155,600,000,000. External debt $949,600,000,000. Reserves of foreign exchange and gold $3,217,000,000,000. Purchasing power parity $18,090,000,000,000.
Geography: square land area 9,596,961 km. coastline 14,500 km. shared border 22,457 km. waterways 110,000 km.
28.Foreigh trade impact 2.0
China is the largest export economic in the world. In 2013, China exported $2.25T and import $1.56T. the total of export and import is 41% of the GDP of 9.2 T. China’s economic is very depending on foreign trade. China economic will drop down quickly if the export and import drop down.
29. Management of foreign currency budget 4.5
China is the largest foreign currency saver country. It has $3.34T dollars even it dropped 99.5B dollars last month. China use foreign currency to pay international trades, influence currency exchange rate, keep Chinese yuan stable. For example, as the Chinese economy slows down right now, many investors are trying to move funds out of the country in search of better returns elsewhere. When money leaves China, it means people are trading their Chinese yuan for dollars, euros and other currencies. This puts pressure on the yuan, which is down about 1.2% against the dollar since the start of the year. It has lost about 5% over the past 12 months. China is trying to balance that by using its reserves of foreign currencies to buy yuan.
30. Layers of Collective Action 1.5
In 1949, the People’s Republic of China were established. Mao Zedong was the first leader of China by the internal election. because China only have one political party, every chairman of China since Mao Zedong was elected by internal election. it never opens to the public. Communities do not have rights to vote chairman. The governors of provinces in China are selected by the central control of China. the mayors of cities are selected by the central control of provinces etc. Government officers have to work for government many years and have great achievement from working.
31: Pro-business climate 4.0
As China enters a new period geared towards higher-quality GDP growth, investors are worried about rising labors costs are now considered as great a business risk as a Chinese economic slowdown. Investors also continued concerns over difficulties in obtaining business licenses, pressure to transfer technology, inadequate protection of intellectual property rights, and the potential for corporate data breaches. But investors are optimistic about their two-year outlook in China. Meanwhile, a steadily-growing majority of them aim to sell to China’s fast-growing consumer and business markets (as opposed to exporting China-made goods abroad). Investors’ main goal is to produce or source goods in China for Chinese market.
In China, when people hang out with friends or join parties, if you tell people that you are a businessman, most of time people will think you are success person and rich. They would like to make friends with you.
Source: http://www.amchamchina.org/policy-advocacy/business-climate-survey/2013-business- climate-survey
32. Government Enterprises 4.5
The government enterprises of China almost control all different kind of the most profitable business. China has 98 companies on the Fortune Global 500 list which only 22 are private. The rest are stated-owned enterprises. For example, the top 12 biggest companies in China are state- owned enterprises. The total revenue of those 12 companies are $2,307.1 billion dollars. The total profit of those 12 companies are around $200 billion dollars. This is only 12 China Government enterprises. There are many state-owned companies in China. Government enterprises are doing well. But the most of profitable business belongs to the government. For private investors get less chance to make organization grow bigger and stronger.
33. International Security Agreements 4.5
The military of China is very strong in the world. These keeps China in safe environment. And China had signed international security agreements with many countries. The United Stated and Russian which two countries’ militaries are most powerful, and economics are better than China had signed the international security agreements with China. There are many other countries had signed those agreements with China. So China is very safe.
Source: http://www.russia-direct.org/analysis/china-russia-cyber-security-pact-should-us-be- concerned
34. Protection of domestic enterprises from government mandated costs 4.0
China government sets high import taxes to raise the price of product which import from outside the country. To help domestic enterprises a competing price with import price. For example, if you buy a Toyota which is made by China, it costs you half price of a Toyota which is made by Japan.
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