Hainan rated over 70 percent empty, Beijing 66 percent and Shanghai 51 percent, based on counting the number of apartments with no lights at night time, on more than 1000 real estate projects

Lu Qilin, a Shanghai-based researcher at Uwin, said “Investors and speculators are the owners of the vacant houses as they wait to sell their properties at an appropriate time. It’s important for the government to introduce more measures to curb speculation.”

Pre-sales by developers has been restricted, third home loans curbed, minimum mortgage rates raised on second-home purchases, and down-payment requirements tightened on second-home purchases.

Almost 90 percent of the 10,000 people surveyed said property prices are still being pushed up by speculators buying several homes and leaving them vacant, and over 90 percent said unoccupied property numbers in their cities is high.

However, property price increases are slowing, with the rate standing at 10.3 percent in July from a year earlier, the slowest pace in six months, China Information News reported last month.

China Mobile has the world’s largest number of mobile subscribers, guaranteeing an instant and enormous audience on the mobile front.

Xinhua, China’s official state-run news service, and can provide instant media content and online presence, and will be the dominant member of the joint venture, although its exact role is not yet known.

Working under the name Search Engine New Media International Communications Company, the two companies say the venture is part of a wider move by China to build a stronger presence online to “safeguard its information security and push forward the robust, healthy and orderly development of China’s new media industry.”

The details are still sketchy, but despite the backing of the government and two such powerful media players, the venture faces a tough and uncertain market, with local search engine Baidu already holding 70% of the market, and Google holding about 25%.

The advantages are that China’s internet market is the world’s largest, with over 420 million users, and a massive mobile market of more than 800 million subscribers, of which China Mobile has 550 million.

Google recently shifted its operations from mainland China to Hong Kong amid controversy over internet censoring by the Chinese government.

The exemption, in place from July 1 2010 until December 31 2013, assists firms which specialize in information technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO) in 21 Chinese cities.

The 21 cities are: Beijing, Tianjin, Dalian, Harbin, Daqing, Shanghai, Nanjing, Suzhou, Wuxi, Hangzhou, Hefei, Nanchang, Xiamen, Ji’nan, Wuhan, Changsha, Guangzhou, Shenzhen, Chongqing, Chengdu and Xi’an.

Xinhua news agency reported that companies already taxed since July 1 could expect a refund by the end of this year.

Currently, China ranks second worldwide, in the outsourcing market for such services, with India ranking first.

China’s revenue from these types of outsourcing services increased by more than 150 percent in 2009 to over $10 billion, according to data from the Ministry of Commerce.

Accounting firm KPMG said last month that China had already surpassed India as the number one destination for Asia-Pacific companies utilising outsourcing and shared services, after securing business worth around $20 billion.

The KPMG survey covered 280 senior company executives across Asia, and confirmed that China’s outsourcing and shared services are quickly escalating, and that China had won a significant market share over India and other Asian destinations.

Global Head, IT Advisory at KPMG China, Edge Zarrella, said “Though at the moment the country has still not reached the level of maturity seen in India, the growth of China’s outsourcing market is significant. Many Western companies may still see India as their location of choice, but for executives within Asia Pacific the message is clear; China is now leading the way.”

Liu, speaking at a reception in Beijing, added that China sees significant value to increasing friendly relationships with Switzerland, one of the first Western countries to recognize the People’s Republic of China.

Liu pointed out that China is Switzerland’s second largest Asian trading partner, and Switzerland is also a key partner of China in Europe.

President of the Swiss Confederation and Head of Federal Department of Economic Affairs, Doris Leuthard, , said the Swiss-Chinese bond has deeply developed since the commencement of diplomatic ties in 1950.

Leuthard said the two economies are complementary and can achieve mutually beneficial results in various fields, including environment, machinery and financial services.

Leuthard was on a working visit to China during mid-August, at the invitation of Chinese President Hu Jintao.

The call was made in Beijing at an exhibition to showcase China’s international aid efforts, this year marking the 60th anniversary of the nation’s international aid program.

“As a developing country, China, while devoted to its own development, has been providing aid as best as it could for other countries in economic difficulties,” Li said.

He cited the disproportion in the economic development in different regions worldwide, stressing that China’s policy must continue and aim for improvement.

“All aid workers have made noble contributions to our country’s international aid cause, and some of them even sacrificed their lives. People will never forget them,” Li said.

The Beijing exhibition ran from August 12-16 and was a joint venture between 28 ministries and organizations, including the ministries of commerce, foreign affairs and finance.

It also highlights the need for foreign companies to enlist business advisory firms with proven track records in assisting foreign companies to establish in China.

Arizona-based First Solar signed a “memorandum of understanding” to build the plant in the Inner Mongolian desert, with commencement scheduled for June 1.

However, the Inner Mongolian government now say they intend to open the project to competitive bidding, apparently in response to complaints by the many Chinese competitors in the solar energy field.

Business advisors operating in China have stated that such “memorandums of understanding” are often signed when foreign notaries are visiting, but then never come to fruition.

Chinese competitors questioned why such a large project was granted to a foreign company, without any chance for local companies to bid.

These are just some of the issues foreign companies need to consider when entering into business in China.

China supplies 95% of the world’s rare-earth oxides, so therefore Baotou and Jianxi will virtually control the market, good news for China as it can control use and price by foreign companies.

Yu Zongsen, former secretary-general of the Chinese Society of Rare Earths, was reported as saying “Enhancing the concentration of the rare-earth sector will benefit the Chinese side and give it a bigger say in global markets.”

Since the end of last year, the price of some rare-earths has risen 60% , China Daily added.

Wu further stated that it is crucial for China to bring into being indigenous brands, pointing to the large amounts spent on foreign intellectual property each year.

In spite of China’s surplus in commodity trade, a huge shortfall in services trade exists, with the number two factor of the services trade deficit last year being royalties and license fees, Wu added.

The services trade deficit increased last year by a factor of 1.6 on the 2008 figure, to stand at almost US$30 billion, with more than US$10 billion being paid to foreign companies in royalties and licensing fees.

Liu Feng, of the China Consumer Protection Foundation said low-end processing by many Chinese manufacturers resulted in thin profit margins, citing the Chinese produced vuvuzelas at the South Africa World Cup, which made on 1.5 US cents each for the Chinese manufacturers.

Zhang Yuncai, Secretary of the China Intellectual Property Society, called for a greater role by government in IPR protection, stating “Innovation cannot thrive unless there is a protective environment.”

Zhang added “In other countries, it is companies that promote IPR protection. But in China, due to low IPR literacy, a number of companies still have only a vague understanding of IPR protection. Therefore the government still have to play a major role.”

However, the true figures will probably never be known, because there is little transparency in such statistical information, which has led to calls for accurate information to be published.

Without this information, policy-makers face an uphill battle, because the actual size of China’s unused apartment stock is crucial to measuring the extent and seriousness of the nation’s property-market bubble.

It is also highly likely that such data would also reveal a quantity bubble as well as a price bubble.

Price bubbles, which generally last a long time, occur primarily because of government regulation, like height limits that almost eradicate the possibility of increasing supply in accordance with demand, such as occurred in Tokyo in the past, and are occurring in London right now.

China also is experiencing an urban price bubble nationwide, but high prices in major cities cannot be rationally explained.

Rising rents can be explained easily, because it can be linked to inflation expectation, with landlords fearing the cost of repairing user wear and tear will be higher in the future.

However, China’s property bubble is exceptional, in that there is an unprecedented amount of living space available, the large number of empty apartments, which equates to the nation’s quantity bubble.

Quantity bubbles are less common than price bubbles, and usually don’t last as long, as rising supply normally forces prices down, but the influx of money in China seems to be keeping the prices higher, even though supply is still rising.

Price bubbles cause economic damage in three ways: a banking crisis; a weakening economy for several years; and adverse effect on other supply industries.

A quantity bubble ends when the building cycle changes, new supply causing prices to crash, as happened in the United States in the late 1980s, and in turn causing a banking crisis.

Quantity bubbles occurred in Southeast Asia during the 1990s, causing a market crash, and finally the Asian Financial Crisis.

In Taiwan’s quantity bubble of the late 1980s, analysts used electricity meter data to establish the number of empty flats, and concluded that 15% were empty, and today, analysts are trying the same tactic in China, compounded by the lack of reliable availability of such data.

The data that is available concludes that China does not have a housing shortage, and it’s per capita living space of one person per 28-30 square meters is higher than in Europe or Japan, and using Japan’s standard, China has enough living space for every man, woman and child in the country.

Of far greater importance, however, are the housing figures showing a huge amount of empty flats being held for speculation, and no other reason.

The total normal vacancy rate in a normal economy is determined by a world standard calculation, and is normally about 3%, compared with an estimated 25-30% vacancy rate in China.

This is speculative inventory; property is being stockpiled just as copper and other commodities are stockpiled in expectation of price rises, and are probably worth about 15% of China’s GDP.

China needs a reasoned property strategy, to avoid the problems that America is experiencing from its property bubbles; failure in America caused a crash that has lasted, and will continue to last, for many years.

Rio has announced plans to spend about US$13 billion over the next 18 months, displaying its confidence in Chinese demand, even though China has started the process of slowing its rapidly expanding economy.

In its 2007 report on resource demand, re-released in March this year, Rio compared China’s demand for resources to that of Japan and South Korea in the latter half of the 20th century, and believes that China’s demand for iron ore, and other resources, will continue to grow.

In the report, Rio pointed to the fact that China’s level of exports was already higher than Japan, is still rising strongly, and will continue to do so.

Rio also believed there is much to be learned from, and a likely relationship between, economic and resource growth and demand in China, and the experience of its north-eastern neighbours during their industrial and economic changes.