Party Session Bolsters Land-Use Policies

Land policy was a key issue for the ongoing Third Plenary Session of the 17th Central Committee of the Communist Party of China. Caijing learned that decision makers intend to keep in place contracted land-use rights for farmers, based on a 30-year-old policy that ushered in market reforms. Meanwhile, the party plans to amend a land requisition policy to limit the scope of compulsory acquisitions. According to the new regulation, the state but not commercial interests may expropriate land for public use. Rural land is still collectively owned. But use rights can transfer to the real estate market if farmers collectively negotiate prices with intended users. The new policies will focus on managing land-use rights, emphasizing rule of law to enforce planning, and using tax policy tools to control land use costs and efficiency.

Trial for Wumart Stores Founder Under Way

The trial of Zhang Wenzhong, founder and chairman of Beijing’s largest supermarket chain Wumart Stores Inc., began September 24 in a Hebei Province court. He’s charged with bribery, embezzlement and fraud. The case dates to late 2006, when Beijing’s former deputy mayor Liu Zhihua was removed for corruption. An investigation into Liu’s activity led to several probes of area business leaders, including Zhang.

Zhang’s close relationship with Liu is believed to have provided  numerous business advantages for Wumart. But since Zhang’s resignation in November 2006, capital shortages and personnel problems have caused tension at Wumart. The chain scrapped a financing plan and slowed business expansion. Now, as the Zhang case unfolds, the company is being forced to consider a future development model that’s less dependent on government relations.

Nuclear Power Expands to China’s Interior

Nuclear power development in China’s vast inland region is ready for takeoff now that a technology base has been confirmed. But while the country speeds up nuclear development beyond the eastern provinces, where most of the country’s nuclear stations are now operating, industry experts warn that security should be a top concern for inland projects.

China decided its next batch of power plants would adopt the AP1000  nuclear power technology standard designed by U.S.-based Westinghouse. Officials have been preparing to promote inland nuclear projects based on AP1000 technology through the site selection process, technological research and development, and the drafting of standards. The first include the Sanmen and Haiyang power plants, which in late September settled contracts for major equipment purchases. Several other projects are now getting under way.

CNTIEC Official Held for Nuclear Bid Leaks

The president of China National Technical Import & Export Co. was detained recently by a Communist Party disciplinary agency for leaking confidential information. Sources familiar with the case told Caijing that Jiang Xinsheng, 54, was charged with disclosing bid information to the French nuclear power plant supplier Areva, which participated in a 2004 bid for China’s inland nuclear program. Caijing learned that several other officials also have been detained, and that Jiang’s fall may just be the first to shake China’s nuclear power industry.

Areva competed against U.S.-based Westinghouse in a fierce contest  for the rights to supply a reactor technology standard for inland plants. After years of competition between Areva’s EPR technology and Westinghouse’s AP1000, the Chinese government in September adopted the U.S. technology for future projects.

Red Flags Fly Over Stock Buybacks

An initiative that lets major stakeholders repurchase stock on the secondary market was designed to boost market confidence. But the buyback program has not improved corporate performance. What’s worse, it may have triggered insider trading.

In responding to an A-share market slump, the central bank had  decided to let companies buy back common stock with money raised by issuing medium-term notes. Between August 1 and October 8, the value of repurchased stock topped 973 million yuan. At the same time, lockup periods ended for 571 million yuan worth of shares that had been non-tradable. Since the ongoing stock repurchases represent a relatively small percentage of the outstanding shares for large, state-owned companies, and repurchases do not have to be publicly declared, non-transparency and market manipulation may have been inevitable.