USITO Weekly 3/6/2009: Twin Conferences Commit to Stimulate Economy

Twin Conferences Commit to Stimulate Economy

Two annual top national-level conferences kicked off in Beijing this week: the National People's Congress (NPC), China's top legislature, and the Chinese People's Political Consultative Conference (CPPCC), China's top advisory body. The two sessions, held in the moment of global economic meltdown, have received wide attention from the mass media, the Chinese general public and the industries. Senior leaders presenting the meeting admitted China is now facing "unprecedented difficulties and challenges" as economic growth slows, employment pressure mounts and social uncertainties increase, and 2009 will be the most difficult year since the new millennium.

During the twin sessions, government leaders reiterated that China will be able to keep its economic growth at about 8 percent in 2009 despite worsening world economy. China's economy cooled to a 7-year low of 9 percent last year, and broke a 5-year streak of double-digit expansion.

It is widely expected that NPC deputies and CPPCC members will conduct extensive discussions on the country's stimulus plans and programs to rejuvenate 10 industries (covered in the last issue of USITO weekly). According to a Xinhua report, key discussion agenda on the two sessions include: employment; medical care system reform; social security system; anti-corruption; food security; farmers' incomes; and economic restructuring.

In his 35-page work report, Premier Wen Jiabao outlined a massive package plan (about similar to the RMB 4 trillion plan), which included huge government investment, tax reform, industrial restructuring, scientific innovation, social welfare and promoting employment. Wen said the government will adopt "a proactive fiscal policy" and significantly increase government spending to expand domestic demand. xinhuanet.com, 3/5/2009

USITO Notes: Chinese government insists that the most efficient way in fighting downturn is to increase government spending in infrastructures and the like; and it is able to do so due to China's huge foreign reserves, budget surplus and current account surplus. The RMB 4 trillion (USD 586 bln) stimulus package proposal drafted in early November 2008 is now going through approval process in the two sessions. In addition to the 4 trillion stimulus, Wen's work report stated an extra budgeted fiscal deficit of RMB 950 billion (USD 139 billion) for 2009, the highest in the Communist Party's history. However, more spending beyond the 4 trillion proposal remains absent.

Chinese situation is growingly challenging right now. Official figures stated that thanks to shrinking foreign orders, over 20% of coastal factories have shut down, laying off at least 20 million out of the total 130 million migrant work force. The real situation could be worse, as official figures are often times only half true. Social unrest and sustained growth are the two most dominant threats to the government, so stimulating the economy from a variety of angles looks more necessary.

USITO has been closely following the stimulus issue lately, and is closely involved in the discussions with Chinese policy think tanks. At the current stage, though quite a lot overarching stimulus guidelines are made available in China, we are yet to see the corresponding implementation or enforcement details for most of the guidelines. Wen didn't mention any measures on how to spend the 4 trillion money, making the details remain vague since its unveiling.

China WEEE is Signed Into Law

According to MIIT website, on 3/4/2009, China's State Council officially approved the long-awaited "Regulation for the Management of the Recycling and Disposal of Waste Electrical and Electronic Products" ("China WEEE"). The Regulation, containing 5 chapters and 35 articles, will enter into force on January 1, 2011.

WEEE, first regulated in Europe, has spread to many countries including China in recent years. The WEEE Directive is the European Community directive 2002/96/EC on waste electrical and electronic equipment (WEEE) which, together with the RoHS Directive 2002/95/EC, became European Law in February 2003, setting collection, recycling and recovery targets for all types of electrical goods.

Similar to the EU directive, the China WEEE imposes the responsibility for the disposal of waste electrical and electronic equipment on the manufacturers of such equipment. Those companies should establish an infrastructure for collecting WEEE and are requested to use the collected waste in an ecologically-friendly manner, either by ecological disposal or by reuse/refurbishment of the collected WEEE. For more details please click here for the MIIT release (in Chinese).

USITO Notes: The official passage of China WEEE could be a landmark development in the management framework for waste electronics products. It indicates that China has shaped a national regulatory program aimed at the take-back and recycling system. We have not yet received an English version for the circular, interested members are welcome to contact us to share your English version or sponsor a translation. We'll also continue watching the following udpates in the China WEEE implementation process.

3G Mobile Terminals Subject to CCC Certification Next Year

According to Certification and Accreditation Administration of (CNCA), from 1/1/2010, all 3G mobile terminal equipment sold or used in China must obtain CCC(China Compulsory Certification) licenses from CNCA. It will cover TD-SCDMA, WCDMA and CDMA2000 technologies. CNCA stated that the "First-Batch CCC Product Catalog" formulated by CNCA earlier included GSM and CDMA mobile terminals, since 3G terminals are derived from the GSM and CDMA technologies, it is justified to include them into the CCC scope. CNCA website, 3/5/2009

USITO Notes : CNCA again has increased its regulatory oversight regarding telecom equipment, especially handheld devices. In the past, CNCA had certified mobile network equipment along with MII, which created burdens for companies as in order to be compliant, one would have to acquire two separate certificates. In reality, it appears the testing requirements for 3G equipment is focused on safety and EMC, not going attempting to mandate what technology should be used. Ultimately though this does raise burdensome and unnecessary testing requirements for foreign industry.