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Selling The Social Security Tax
The internal debate over the shape of the social security system went
public in the Business Weekly on Sunday.
Finance Minister Xiang Huai-cheng endorsed
large-scale selling of shares in state-owned enterprises to
generate revenue, a move which would have clear ideological
implications. Official estimates indicate that reducing state
holdings in listed firms from an average of 70 percent to 51 percent
could raise $12 billion. According to state media, another major
issue is apparently the scope of the new system – whether to limit
its coverage to "just" unemployment compensation, pension benefits
and health care.
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Social security will no doubt be discussed at Beidaihe but they might
as well be talking on Mars. There are nothing like the cash available
for unemployment, pension, and health care, so that having a debate
over whether that's enough is ludicrous. A major problem with selling
large amounts of government-held shares is that it would depress the
stock market. So, naturally, the press is filled with commentary
about how social security funds could be invested to drive up the
market. There has been no evaluation of how the existing tax
structure should be changed in response to a social security tax nor
any movement toward a mechanism to distribute benefits without
leading to massive corruption. Social security may become real at the
2002 Party Congress; right now the government is just going through
the motions.
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China
E-Bytes
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| Top domestic manufacturer Shanghai Tire and Rubber wants to sell
$320 million in assets to its planned joint venture with Michelin.
Michelin is to hold 70 percent of the firm, which has an initial
capitalization of $150 million. |
| Adatom has been selected by China Product Trade Net Center to be
the agent for a fiber-optic production project valued at $150 million.
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| Private hospitals are to be allowed for the first time to determine
their own prices. |
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| Keep
up with the fast changing business environment in
China, the world's biggest and fastest-growing emerging
economy. Sinomania! recommends Orbis
Publications, Experts in Emerging Markets, for
a full range of in-depth coverage on China including
daily/weekly/monthly reports and more. |
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