Families Find Their Babies

　　 Confiscating babies born to families without permission to have a child, charging parents steep fees, and moving children for adoptions were among the lucrative practices at a family planning agency in Hunan Province’s Longhui County. The agency thus forced many parents down a long road in search of their children. The practices spanned three years and ended in 2005, but not until 2009 were some families reunited.

　　Most of the children were found in China. Others were discovered as far as Netherlands and United States.

　　The agency took babies to meet local population growth quotas under the one-child policy. Parents sought redress, but with limited success.

　　CHINA RIDING FOREX ROCKET

　　 China’s foreign trade surplus shrank as quarterly imports topped exports recently for the first time in seven years, resulting in a US$ 1.02 billion deficit. But the nation’s huge foreign exchange reserves continue to grow. China added US$ 197 billion to the reserves in the first quarter, outgunning the previous growth record set in the fourth quarter last year. A source close to China’s forex regulator attributed the phenomenon to strong speculation of yuan appreciation, and the gap between domestic and overseas interest and exchange rates.

　　Moreover, China’s expanding program for cross-border trade yuan settlements has contributed to the rise for forex reserves. And that’s led to concerns among experts who wonder whether the government’s efforts to push yuan internationalization will affect its ability to strike a balance between cross-border yuan settlements and rocketing forex reserves.

　　HIGH TIMES FOR CHINA’S BANKS

　　 International investor confidence in China’s banks is growing after average quarterly profits for the largest commercial banks rose 30 percent for several consecutive quarters. The growth came despite concerns about bad loan risks. At major banks that recently released annual financial reports, executives said U.S. and European investors remain concerned about the impact of China’s macroeconomic policies on banks. Concerns about potential bad loans loom large, too, after last year’s borrowing spree by local government financing platforms.

　　The ratings agency Fitch recently said bank asset quality may worsen due to risky loans to financing platforms and property developers. But overall ratings remained unchanged thanks to government support for banks and better risk buffers affecting provision and capital adequacy ratios. On May 3, the banking regulator issued new orders designed to strengthen capital supervision at banks.

　　HALT TO RAILWAY INVESTMENT SPREE

　　 A high-speed railway linking Beijing and Shanghai is scheduled to be completed in June. The landmark line features the longest span of track, highest standards and steepest costs of all the projects in China’s ongoing, nationwide high-speed railway build-out. But the new line also marks the end of an eight-year railroad investment spree. Former rail minister Liu Zhijun was removed in February on allegations of corruption. Gone with him was his leapfrog development pattern and its focus on costly tracks, trains and stations.

　　Liu’s successor, Minister of Railways Sheng Guangzu, said recently high-speed railway construction projects should not go beyond passenger affordability levels and disregard market demand. Sheng promised to push ahead with railway system reform by separating administrative and operational functions. In addition, local railway bureaus will be given more independence and financial responsibility.

　　PUBLIC HOUSING FINDS FUNDING

　　 Public housing projects are sprouting as local governments follow Beijing orders to balance rising demand and skyrocketing prices for new homes. In Huangshi, Hubei Province, a government-backed non-profit entity is now orchestrating a 6 billion yuan project, with more than 4.5 billion yuan in loans from China Development Bank and a projected return of 5.3 percent.

　　In Shanghai, a 10 billion yuan fund is taking shape to invest in public housing projects. With government support for land and purchase promises, the fund manager is aiming for at least a 10 percent return. Public housing construction is also under way in Chongqing, with most funds from local government investment platforms. Key questions revolve around making these projects commercially viable and sustainable after government funding is eventually phased out.