ChinaWatch: Win-Win Envisioned

Welcome to ChinaWatch, WMB’s weekly digest of news from the country with the world’s second largest economy. More info on the topic is available by following the link.

Building Partnership

China seeks a win-win partnership featuring equality and mutual trust with the United States, as the two countries' interests are deeply correlated in the era of globalization, Chinese Foreign Minister Yang Jiechi says.

"Relations between China and the United States should be cooperative and win-win and not a zero-sum game," Yang says.

Applauding the two countries' consensus to build a positive, cooperative and comprehensive bilateral relationship in the 21st century, Yang says China and America should boost mutual understanding and learn to trust and respect one another.

Mutual understanding is the basis for cooperation and a precondition for avoiding misjudgments, Yang says, adding that China's peaceful development is not only in the interests of the Chinese people but also for the whole world.

Wild Over Wine

With its explosive economic growth, China is tapping many of the world's major commodities such as metals and minerals and — perhaps most surprising — red wine.

Traditionally, the Chinese are not wine drinkers. But as the middle classes earn more money, it seems they are developing a taste for Bordeaux, reports NPR.

At a recent Christie's wine auction in Hong Kong, a case of 12 bottles of Chateau Lafite 1982 sold for roughly $90,000. Auctioneer David Elswood says the same case would have sold for about $10,000 just five years ago.

Surging Inflation

China’s consumer price index rose to its highest level in 28 months, the government says, reinforcing the need for more monetary tightening.

The consumer price index (CPI), a key measure of inflation, rose 5.1 percent last month from a year earlier, up from 4.4 percent growth in October, according to the National Bureau of Statistics. The on-year rise was higher than market estimates, which averaged 4.8 percent.

The inflation was driven by an 11.7 percent surge in food prices, which accounts for one third of the basket of goods used to calculate China’s CPI. The year-on-year increase in food prices grew from rises of 10.1 percent in October, 8 percent in September and 7.5 percent in August.

According to the bureau, the producer price index, a barometer of future consumer inflation, rose 6.1 percent in November from a year earlier, accelerating from a 5.0 percent advance in October.

The numbers were released as the Chinese government has started to move toward tightening its monetary policy in order to fight the country’s overheated asset markets and inflation risks, and are expected to put more pressure on the world’s second-largest economy.

Taxman Cometh

China aims to introduce a U.S.-style property tax in the future through reform of the existing real estate tax system, says Jia Kang, director of the fiscal science institute under the Ministry of Finance.

Jia, speaking to Dow Jones Newswires on the sidelines of an economic forum, also suggests local governments in China's central and eastern regions should make property taxes a major source of income in the future, and local governments in western China should try to make resource taxes a major source of income.

Analysts have raised concerns that local governments in China are too dependent on land sales for revenue. Jia didn't give any more details on China's planned tax reforms.

Unlike a U.S.-style property tax, which is based on a property's updated market value, China's tax on commercial real estate is based on the original purchase price.