US crackdown on illegal Cosmetics labels...

US consultant, FDAImports.com, LLC has warned that the U.S. Food & Drug Administration (US FDA) is to take up major enforcement action against Cosmetics Manufacturers with illegal “Anti-Aging” Labelling Claims.

The U.S. Food & Drug Administration's Center for Drug Evaluation and Research (CDER) will soon crackdown on cosmetics product labels bearing illegal drug claims, including “SPF,” “anti-aging,” or “anti-wrinkle,” according to Benjamin L. England, former 17-year FDA veteran and FDAImports.com, LLC Founder.

A cosmetics manufacturer or importer in the USA will be potentially subject to IA 66-38, and may face product labelling compliance challenges that could lead to financial losses if no action is taken.

FDA issued Import Alert #66-38, “Skin Care Products Labeled As Anti-Aging Creams” (IA 66-38) in 1988, subjecting cosmetic manufacturers - including several large, non-U.S. cosmetics importers Estee Lauder, L’Oreal, Avon, Almay and Fleur de Sante - to “intensive surveillance” for importing cosmetics with drug claims on cosmetic product labeling.

FDA appears to be cracking down on importers whose cosmetic product labels bear illegal drug claims. As recently as April 2010, FDA added 93 cosmetics products and four firms to the IA 66-38 “Yellow List,” which subjects those companies’ imported cosmetics to “intensive FDA surveillance” including increased import field examinations.

These additions to the alert show that FDA is getting serious,” said England.

We are not sure if this crackdown will impact Chinese exporters of cosmetic products to the USA, but it is better to be forewarned.

Warning over potential crisis looming

About 40% of new loans in the first quarter went to local government bodies, with analysts warning that a potential crisis is looming, according to a China Daily report.

Wei Jianing, deputy head of macroeconomic research department at the DRC, said the scale and debts of these local government-owned bodies - mainly financing companies using land and fiscal revenue as collateral - has been swelling rapidly, and may pose great risks to the economy.

"In the past, a government usually had two to four financing arms under its jurisdiction, but the number grew to 10 in 2009 under the country's proactive fiscal policy and loose monetary policy needs," he said, adding that the various levels of government investment and financing companies totaled more than 3,800, 70 percent of which are at district or county level.

The debts of these arms have surged to 6 trillion yuan (US$879.12 billion) in 2009 from 1 trillion yuan in early 2008, said Wei. In 2009, new loans to those financial arms reached about 3.8 trillion yuan, 40 percent of the 9.59 trillion in new credit from China's banks, he said.

Jia Kang, director of the Institute of Research at the Ministry of Finance, also said this month that he is not sure about the exact amount of local government debts, but said some researchers estimate they could amount to more than 8 trillion or even 11 trillion yuan.

Analysts said the central government's recent tightening of the housing market would greatly affect local fiscal revenue and make it very difficult for the governments to pay their debts.

According to the Ministry of Finance, in 2009 the nation pocketed 1.42 trillion yuan in land transfer revenue, about 3 percent of gross domestic product during that period.

Even when interest payments are not taken into account, it would take local governments four to five years to repay the 6 trillion yuan in loans.

"Revenue generated by selling land accounted for 45 percent of total local fiscal revenue last year. If the real estate market slumps and developers become hesitant about buying land, a crisis would erupt in local finances," said Tao Dong, chief analyst with UBS Securities in Asia.

Experts concerned over huge loans to local govts 12 listed banks' property loans total 5t yuan
As the firms were set up mainly to attract capital used in infrastructure and the construction of other public facilities, a major driving force of China's economic growth, the whole economy may be dragged down as crisis fans out, said Wang Zhihao, China research director of Standard Chartered Bank.

But some are more optimistic about the impact of the debts. "I don't believe the debts could pose much threat," said Jia, adding the biggest problem in local financing lies in the severe irregularities of borrowing.

He said the irregularities were reflected in the huge mismatch between the borrowed amount and the ability to repay in some regions. "But if we fight the fire only when the problems are already very evident, the social impact would be much greater."

In addition, the financing firms' executives, mainly government officials, often lack the necessary experience in management and risk prevention, added Wei.

Shanghai multiple house owners to pay tax...

Shanghai is mulling tough measures, including imposing a property tax on owners of multiple houses, as early as this month in order to cool the overheated real estate market, according to an official Shanghai Securities News report.

The draft rules, which are still under discussion and subject to change, include applying existing commercial-use property taxes to owners of multiple residential properties, the newspaper quoted an unnamed source close to the Shanghai municipal government as saying.

Extending existing commercial-use property taxes to owners of multiple residential properties would simplify the legislative process, and property owners would be evaluated by their families' per capita living space, China Watch Blog reported, citing a source.

If property owners meet the tax-paying threshold, they would pay 0.8 percentage point of their property's assessed market value annually, the source said.

Detailed rules would be issued as early as this month, the source said.

The Shanghai Municipal Housing Support and Building Administration Bureau didn't comment on the rules when contacted by the Global Times Wednesday.

Experts said imposing a property tax would be the toughest measure yet to combat property speculators.

"The tax measure is aimed at increasing the efficiency of residential property usage, lessening the gap between the rich and the poor, and increasing local governments' fiscal revenues," said Yin Zhongli, a researcher with the Institute of Finance and Banking at the China Academy of Social Sciences. "It is definitely a trend for the whole country in the future."

Media reported in April that China would impose trial property taxes in Beijing, Shanghai, Shenzhen and Chongqing. However, Beijing and Shenzhen did not adopt a property tax in their recently-released local housing market measures. Chongqing mayor Huang Qifan told local media on April 20 that the city had proposed to the central government a plan for a property tax for high-end properties.

"Shanghai may be the first city in China to impose a property tax," said Yang Hongxu, an analyst with Shanghai-based E-House China Research Development Institute. "The property bubble is similar in Shanghai, Beijing and Shenzhen, but the Shanghai government faces more pressure due to limited land supply for commercial residential property this year."

Shanghai plans to supply 330 hectares of land for commercial residential property this year, while Beijing plans to supply about 1,250 hectares of land for the same purpose.

China reports April CPI up 2.8pc...

China's consumer price index (CPI), a main gauge of inflation, picked up faster in April by rising 2.8% year on year, and was up 0.4 percentage point from 2.4% in March, Xinhua reported, citing the National Bureau of Statistics (NBS). The CPI dropped 1.5% in the same month last year.

For the first four months, China's CPI rose 2.4% year on year. The producer price index (PPI), a major measure of inflation at the wholesale level, grew 6.8% year on year in April and was up 0.9 percentage point from March.

In April, consumer prices in China's urban areas increased 2.7% and in rural regions by 3%. Food prices, which accounted for about a third of the weighting in calculating the CPI, gained 5.9% during the month.

China is targeting a rise in consumer prices of around 3% this year, according to a government work report delivered by Premier Wen Jiabao in March at the annual legislative session.

China's CPI ended nine months of decline in November of 2009, when it rose 0.6 percentage point, as the nation's economy rebounded strongly ever since.

Property price woes in China...

According to China Watch Blog, industry experts said at a forum on Monday that China's property prices will stabilize in the second quarter of this year due to the government's tightening of real estate policies and attempt to improve imbalances between supply and demand. That's good news, but others are worried about what this means to property prices.

"In cities that have experienced excessive property price growth, there will be bigger fluctuations in the following three months, but the decrease will differ from city to city," says Nie Meisheng, president of China Real Estate Chamber of Commerce.

However, experts are worried that tightening policies may deter property developers from starting new projects and purchasing land, thereby cutting the supply and pushing up prices next year.

Both central and local governments have launched a string of measures to curb soaring property prices and investment-oriented home purchases, such as raising down-payments and mortgage rates for second and third homes, and even restricting the number of apartments a family can purchase, People's Daily reported.

Those measures instantly chilled the property market in key cities, with transactions and prices falling. Statistics from the China Index Academy show that among the 35 major cities it monitors, 26 cities saw transactions dip last week, with an average fall of more than 20 percent.

The average price of home deals in the southern city of Shenzhen was 19,271 yuan ($2,823) per square metre, down 25.44% from the previous week, leading to the biggest drop among 35 cities.

Beijing was down 18% to 15,707 yuan per sq m, and Shanghai was down 12.2% to 13,246 yuan per sq m. Hangzhou, capital of East China's Zhejiang province, however, reported a 49.2% increase in transactions and 25% growth in price, with the average price reaching 25,409 yuan last week.

Let's wait and see what happens in the next few months.

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Carbon tax likely, expert forecasts...

China may start levying a carbon tax and further boost prices of fossil fuel for the next five years as a crucial incentive to cut greenhouse gas emissions and help realize green targets, Xinhua reported, citing a government-affiliated expert forecast.

"We expect China will start to levy various taxes only if they are helpful in mitigating greenhouse emissions and developing a low-carbon economy," Jiang Kejun, a senior researcher with the Energy Research Institute under the National Development and Reform Commission, was quoted as saying.

"I think a carbon tax is likely to be levied during the 12th Five-year plan (2011-15) period," said Jiang. The National Development and Reform Commission is a Cabinet department responsible for the country's mid- and long-term development plan.

Apart from a carbon tax, Jiang said the government may begin to levy environmental and resource taxes, and the country will greatly boost subsidies to support low-carbon technology research and development.

At a weekend climate change forum organized by the China Centre for International Economic Exchanges, Jiang said that the government is serious about realizing its target of cutting carbon intensity by 40-45% by 2020 from 2005 levels and the government will implement "tougher measures" in the coming five years to realize the green goal.

Jiang said the taxation and fiscal incentives are just part of a portfolio of possible policy changes, which may turn into reality when China implements its low-carbon development pathway.

"We can possibly surpass the United States between 2020 to 2025 in terms of research and development investment," said Jiang. "If this comes true, we can start to dream of becoming a low-carbon technology leader in the world."

However, Jiang is pessimistic about the coming 10 years. China's total 400-billion-yuan ($59 billion) investment in scientific research and development, Jiang said, "is only about one sixth of the US's total, or only equal to what the US invests in clean energy research."

In clean technology research, Jiang said: "If we don't strive for radical efforts, we will still be left behind by the US, Europe and some other countries and regions."

China's April trade surplus dips...

Picked this up from GCTL8.com's China Watch Blog that China posted a trade surplus of $1.68 billion in April, down 87% from a year earlier.

The report quoted a Xinhua report, citing the General Administration of Customs (GAC), as saying that China's exports in April totaled $119.92 billion, up 30.5% from a year ago and 6.3% from March. While imports reached $118.24 billion, up 49.7% year-on-year.

Combining imports and exports, China's April external trade rose 39.4 percent year-on-year to $238.16 billion.

Taking the first four months together, China's January-April external trade increased 42.7 percent from a year earlier to $855.99 billion.

From January to April, China's exports rose 29.2% year-on-year to $436.05 billion while imports grew 60.1% to $419.94 billion, resulting in a trade surplus of $16.11 billion in the first four months, sharply down 78.6% from a year earlier.

According to the GAC figures for the January-April period, the European Union remained China's largest trading partner, with China-EU bilateral trade topping $137.77 billion, up 34.6% from the same period last year.

January-April trade between China and the United States, the country's second largest trading partner, increased 25 percent year-on-year to $107.18 billion.

Japan outpaced the Association of Southeast Asian Nations (ASEAN) as China's third largest trading partner in the first four months, revealed the GAC statistics.

January-April trade between China and Japan gained 37.5% to $88.66 billion, up 34.6% from a year ago. In the first four months, China's trade deficit with Japan more than doubled to $17.72 billion.

China also recorded a trade deficit of $5.87 billion with ASEAN from January to April, compared with $830 million of trade surplus with ASEAN in the same period last year.

Think tank urges widening of yuan band...

China should widen the yuan's daily trading transaction band and return to the exchange rate mechanism that was in place before the global financial crisis, the Business Post reported, citing a government think tank's report.

We picked this report up from China Watch Blog, which said it learnt that Beijing allowed the yuan to gradually rise 19% against the US dollar, after a 2.1% revaluation in July 2005, before freezing it near 6.83 to the dollar in July 2008 to provide stability during the worldwide credit crunch.

"In response to constantly growing pressure for renminbi (yuan) appreciation, we should consider appropriately expanding the currency''s floating band," said the State Information Centre (SIC), a research outfit under the National Development and Reform Commission, the powerful economic planning agency.

The People's Bank of China now lets the yuan rise or fall by 0.5 percentage point a day against the US dollar from a midpoint it sets each morning. In practice, the full width of the band has rarely been used.

In a report published in the official China Securities Journal, the SIC recommended that moves in the yuan should be gradual and "controllable" - the long-standing formula used by mainland policymakers.

"With expectations of yuan appreciation gradually building in the international community, it would be better to time the widening of the yuan's band before more hot money rushes into China," it said.

The think tank also said economic growth was likely to slow moderately this quarter, while inflation would accelerate. Gross domestic product growth from a year earlier would ease to 10.% form 11.9% in the first quarter, the SIC forecast.

Consumer inflation is expected to rise 4.2% in the first three months, owing to rising import prices, a low base effect from 2009, and the impact of bad weather. Private economists also expect inflation to rise and growth to slow down this quarter.

Exporters, retailers struggle over biz...

The Chinese Ministry of Commerce's attempts to encourage struggling exporters to seal supply deals with local retailers as a way of offsetting a slump in overseas shipments do not appear to be working, according to a Business Post report. The difficulties of selling products to local stores, intellectual property theft, unattractive payments terms and the small orders involved make the domestic market unattractive even for companies still riding out the economic slump. Exporters signed deals worth US$34.4b with overseas buyers during the spring session of the Canton Fair, which closed on May 5, 2010, up 12.6% from the trade fair's previous sessions six months ago. The volume of deals was reportedly 10.3% behind the pre-financial crisis level in early 2008, the Ministry of Commerce said. But it did not disclose figures on how much business the manufacturers had secured from domestic buyers. That was despite an announcement that 8,000 large and medium-sized supermarket chains will be purchasing from manufacturers at the twice-a-year event. It had said 70% of the exhibitors were interested in the trade-matching.