Asia Focus

Last Thursday the Chinese Labor Ministry confirm will transfer more than $9.1 billion in company pension plans to selected fund managers by the end of this year. China's market for enterprise annuities, as the plans are known, is expected to grow by 30 billion to 50 billion yuan, or $3.9 billion to $6.5 billion, in 2007.

According with labor authorities China's company pensions market was valued at about 90 billion yuan at the end of last year, of which 20 billion yuan has already been transferred to fund managers. All company pension plans rolled out in the future will be handled by fund professionals.

China allows 37 firms to handle these funds. Of these, four are joint-venture fund houses, according to a KPMG-Reuters research report. These include Harvest Fund Management, 19.5 percent owned by Deutsche Bank, and China Merchants Fund Management, in which ING holds 30 percent. The government will also gradually expand the scope for insurers to invest directly in stocks, confirm the responsible of the insurance regulator, China Insurance Regulatory Commission.

China is allowing pension funds and insurers greater access to stocks to help boost returns as it dismantles the nation's cradle-to-grave welfare system. The benchmark CSI 300 Index gained 121 percent last year.

Preparations are under way to lift a ceiling that limits insurers' direct investment in the stock market to 5 percent of assets, and progress will be made according to the needs of insurance firms. China also bans investments by insurance firms in stocks that have more than doubled in the previous 12 months. There are no current plans to remove this restriction.

Written: by LuisB

About 1.24 million Chinese college graduates have failed to land jobs that require their qualifications upon graduation this year, the county's top labour official said.

A total of 4.13 million students graduated from higher education institutions this year, 750,000 more than last year, as the country enters its ninth year of expanding college enrolment.

Tian Chengping, minister of labour and social security, said on Thursday (Nov 23) he estimates about 70 per cent of college graduates have been employed since graduation, according to the China Youth Daily.

He said the central government has set up an inter-ministerial joint team, including the Ministry of Education, to help address employment problems.

Meanwhile, the Labour and Social Security Ministry has established a mechanism to provide guidance and training for unemployed graduates, the minister said.

Only 22 per cent of China's new jobs last year were for college graduates, estimates a ministry study of 114 urban labour markets.

Tian said the country should create more jobs in the process of economic development and urged college graduates to work in grassroots units and undeveloped areas where they are most needed.

China's official registered unemployment rate stood at 4.1 per cent in the first nine months of 2006.

The demand for college graduates was down 22 per cent in 24 provinces and 15 major cities from last year, said a report issued by the Ministry of Personnel in March.

A survey showed 52.14 per cent of bachelor degree holders considered lack of experience as the biggest obstacle in finding work.

Colleges and universities should organize internships to prepare students for employment, said Lin Zeyan, a researcher with the Development Research Centre of the State Council at a forum this month.

The country needs to develop its service sector and promote small and medium-sized enterprises to create more jobs, said Mo Rong, deputy chief of the Labour Science Research Institute.

Written: by LuisB

North Korea's nuclear test Oct. 9 may have created a crisis atmosphere in the world but, at the same time, it has greatly improved China's relations with the United States as the two countries work closely together to put pressure on Pyongyang to give up its nuclear-arms program.

This new situation is recognized by both Washington and Beijing. U.S. Secretary of State Condoleezza Rice said on a swing through Japan, South Korea, China and Russia - which along with the U.S. and North Korea make up the countries taking part in the "six-party talks" - that some developments suggest that Beijing was becoming more of a partner on issues important to Washington. 

Christopher Hill, the assistant secretary of state for East Asia responsible for the North Korea talks, said at a forum in Washington that the two countries have "really come closer together as a result of this terrible provocation by the North Koreans."

"So perhaps someday in the history books, Kim Jong Il will get a lot of credit for bringing the U.S. and China closer together," he added facetiously.

Both Rice and Hill have underlined the significance of China actually joining the other 14 members of the United Nations Security Council to denounce North Korea, its erstwhile ally.

"Not bad for a couple of years' work," Rice said, apparently referring to the time Washington and Beijing had spent working together on the North Korean nuclear issue.

China, too, recognizes its increased importance to the U.S. When President Hu Jintao received Rice last Friday, he said her visit showed "that U.S. President George (W.) Bush and the U.S. government attach great importance to U.S.- China relations."

Actually, the North Korean nuclear issue has provided a geostrategic rationale for the Chinese-American relationship for the last few years, ever since Beijing became both mediator and host in the international talks to get Pyongyang to end its nuclear-weapons program. Such a rationale had been largely missing since the end of the Cold War and the disintegration of the Soviet Union.

China and North Korea were allies during the Korean War in the 1950s against the Union States and South Korea. The two are still technically allies, since a treaty of friendship signed in 1961 obligates each to go to the assistance of the other if one of them should come under military attack from a third country.

Now, though, the rift between the two is palpable, with Beijing joining the U.S. and the other members of the U.N. Security Council twice in three months in voting for a resolution denouncing North Korea.

While the North Korean media has not criticized China by name, some recent articles clearly were directed at Beijing. Reserving most of its venom for the U.S., Pyongyang has denounced all the other members of the Security Council - including China - for supporting the resolution.

According to a North Korean spokesman, the resolution "cannot be construed otherwise than a declaration of war" against Pyongyang and was intended to "destroy the socialist system" in the country. Such a charge would be especially hurtful to China, which still considers itself a socialist country.

In fact, the day after the resolution was adopted, the Korean Central News Agency publicized a signed article in the official newspaper Rodong Sinmun that called for the maintenance of "revolutionary principles."

To shrink back from revolutionary principles, it said, "means surrender and ruin" and would ultimately lead to "subordination and slavery."

"This has been proved by the situation of some countries," it said. "Those countries that were building socialism in the past deviated from the revolutionary principles with no faith in socialism when facing difficulties and ordeals. And they were afraid of the threat and blackmail by the imperialists and yielded to them."

These words seem a clear allusion to China, which after the death of Chairman Mao Zedong gave up class struggle and embraced capitalist principles, even though China insists it has not abandoned socialism and is merely employing the market economy as a tool. 

China's growing closeness to the U.S. is likely to lead to increased trust, which will help resolve other problems. If there was doubt in Washington before about China's attitude to a fellow Communist country, that has no doubt been laid to rest.

The rift with North Korea is not likely to heal in the near term. The days when China described its relationship with North Korea as being as close as that between lips and teeth are gone forever.

Source: The Japan Times

Written: by Frank Ching is a Hong Kong-based journalist and commentator.

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Publish: by LuisB