The New Dominion

In this week’s economic news roundup: Australia’s Arrow Energy and Korea’s ecoeye set their sites on Xinjiang’s natural resources. Tax is going high-tech. Sugar beets are getting more expensive.

Last week, we reported on a joint venture by Australia’s Arrow Energy and the XUAR regional government with the aim of opening up and exploiting coal seams in northern Xinjiang (Jungharia), looking especially to the abstraction of “coal bed methane”. The company has reported more details
of the coal-mining venture, reportedly taken up with the Ürümchi Geological Exploration and Development Company of the Xinjiang Geological Survey. Now the same company is planning to begin work on exploiting the PRC’s largest condensate gasfield, the Dina-II field, located in the Tarim Basin. The gas will go straight to Shanghai through the West-East Pipeline (WEP). China National Petroleum is building the site itself, which is planned to open in June 2009. Now, it seems, a Korean company, ecoeye, wants to get in on the action. The company approached the XUAR Investment and Development Office with overtures towards cooperation on 21 March. ecoeye has already invested in coal fields in Qäshqär and in Henan Province. (From this last article, one gets a sense that ecoeye is dedicated to safety, though this is not directly stated. Indeed, the author implies that, although 70-80% of coal mine accidents in the PRC are from coal gas explosions, coal gas is a low-pollutant energy source, so it’s all cool.)

It’s tax time in Xinjiang. Statistics show that the average small business in Ürümchi pays 325 RMB of National Tax every month, an average that increases to 375 RMB in Tianshan District and gets as low as 151 RMB elsewhere. The Ürümchi City National Tax Office announced on 26 March the creation of a computerized system for calculating individual household and business tax quotas, to be completed by early May. It will be activated on 1 July.

The XUAR and Ürümchi governments still seem unable to keep a hold on those prices and their rapid increase under the influence of perfectly natural market forces. There has actually been an agreement formed between the Sugar Manufacturing Industry Working Committee and sugar beet farmers nationally – Xinjiang is #4 for sugar beet farming in the PRC – to increase the price of sugar beets by 20% to 300 RMB/metric ton. Sugar prices fell in the autumn, but now, in order to keep the area of sugar beet cultivation land steady, the government has intervened in the price of beets, taking advantage of its stores of sugar in Xinjiang. Since 29 January, the City of Ürümchi has also been monitoring the pricing practices of seven major companies operating in the city, tracking the prices of six different products. The investigation found inconsistencies in bookkeeping which are meant to have contributed to the overall trend towards inflation. Still, it seems like the government is trying to trivialize the global problem of inflation by passing it off as a temporary, locally-based problem caused by a few major corporations. Supposedly, some of the inconsistencies in their accounting were related to cooking oil. Perhaps that’s why the price of cooking oil is meant to be dropping?

In this week’s international trade news: foreign trade with the XUAR increased75.7% from January to February. This was most likely a result of land routes being opened to motor travel. However, on 20 March, Kazakhstan announced that it is implementing a temporary ban on the importation of flowers from the PRC, most of which would flow through Xinjiang, owing to the discovery of parasites (western flower thrips) on Chinese plants.