Asset and property tax likely
Jia Kang, the president of the Research Institute for Fiscal Science at the Ministry of Finance, told the China Securities Journal the government was planning to expand a trial of new asset and property taxes in northeastern China to cover the rest of the country this year. The tax is targeted at the assets of the wealthy and aimed to help reduce the gap between the rich and the poor. Foreign firms could become targets for similar value-added taxes next year following the introduction of corporate tax reforms, which will abolish tax exemptions for certain foreign firms, Jia said.
China Reinsurance recapitalized
Central Huijin Investment injected US$4 billion into China Reinsurance Co (CRC) as part of a restructuring and recapitalization program to prepare the company for an eventual listing, the Shanghai Securities Journal reported. The capital injection was approved by the State Council. Yuan Li, a spokesman for the China Insurance Regulatory Commission (CIRC), which is overseeing the restructuring and listing of the CRC, declined to give a timetable for the listing. The CRC is China’s only state-owned reinsurance firm, specializing in life reinsurance, casualty reinsurance and direct property insurance. It’s total assets increased from US$3.83 billion (RMB29.7 billion) as of June 2006 to US$5.189 billion (RMB40.176 billion) at the end of the first quarter this year as a result of business expansion, causing a capital shortfall, Yuan said.
Mainland home furnishing market grows
The mainland furniture and interior decoration and design industry is forecast to be worth US$270.96 billion (RMB2.1 trillion) this year, Economic Information Daily reported, citing a Hong Kong Trade Development Council (HKTDC) research report. The report, which was based on a forecast from the China Building Decoration Association (CBDA), said that 70% of this value would come from household decorations. Increasing property consumption, growth in average urban residence floor size from 26 square meters in 2005 to 35 square meters this year, and rising disposable incomes would drive demand for high-end furniture, decoration and interior design services in first and second-tier cities, the report said. European, Hong Kong and mainland goods are preferred by mainland buyers.
Five red chips earmarked for homecoming
Five red chip stocks, including China Mobile, Lenovo, China Netcom, CNOOC and an unknown electronic maker, plan to list on the mainland A-share market in due time, the Shanghai Securities Journal reported. A market source said the stock market regulator would formally approve the five applications. The State-owned Assets Supervision and Administration Commission (SASAC) has welcomed large red chips to return and list on the mainland A-share market to increase the number of quality companies available for investors. A senior manager at Morgan Chase told the journal that the return of red chips would increase stock market liquidity, raise the involvement of institutional investors and satisfy strong investment demand. There are no legal obstacles preventing red chips from directly issuing A-shares. Red chips are Hong Kong-incorporated and listed companies with a mainland-listed parent. They derive a majority of their earnings from China and often have substantial government ownership.