BEIJING - China's airlines are not allowed to pay a charge on carbon emissions imposed by the Europe Union (EU), and neither to hike freights nor to add other fees accordingly without government permission, the Civil Aviation Administration of China (CAAC) said Monday.

The CAAC said in a statement that it had been authorized by the State Council, China's Cabinet, to notify the ban to all domestic airlines.

The statement said the EU's decision to charge flights into and out of EU airports for carbon emission "runs contrary to relevant principles of the United Nations Framework Convention on Climate Change and the international civil aviation regulations."

The EU's Emissions Trading Scheme, which has taken effect on January 1, is one of the widest-reaching measures adopted by any country or regional bloc to regulate emissions of greenhouse gases blamed for climate change. It is estimated that around 4,000 airlines will pay the EU for their carbon emissions.

"China objects to the EU's decision to impose the scheme on non-EU airlines, and has expressed its concerns over the scheme through various channels," the statement said.

"China will consider adopting necessary measures to protect interests of Chinese individuals and companies, pending the development of the issue," the statement said.

It added that China hopes the EU can find proper solutions to the issue with considerations of the overall bilateral relations, the two sides' combined efforts to combat climate change as well as the sustainable development of the international airline industry.
 

BEIJING - A proactive fiscal policy is a "feasible and indispensable" option to allow China to maintain steady development amid the global economic downturn, said Finance Minister Xie Xuren on Wednesday.

Analysts said an aggressive fiscal policy would be on a "controllable level", and the focus of further fiscal operations will fall on structural tax cuts.

"Domestic and global turmoil have not changed the fundamentals of China's economy, and fiscal policies will have to continue playing a vital role in maintaining steady development," Xie wrote in an article for the latest issue of Qiushi Magazine.

Xie said that further expenditure is needed in areas such as key projects under construction and those in the planning stage. Other areas include improving people's livelihoods and bolstering the upgrading of smaller businesses.

At an executive meeting of the State Council, China's cabinet, on Tuesday, Premier Wen Jiabao said that the government will work to ensure capital flow in key projects to keep investment growing at a steady level.

The government will also step up credit support for the real economy, especially for small and medium-sized enterprises (SMEs), said Wen, who also promised wider market access to invigorate private business.

"China has paid great attention to risk control when implementing proactive fiscal policies, and its fiscal deficit and debt level is still within the safe zone," Xie said.

"Therefore, to continue to carry out such policies is both necessary and possible," he said.

China's fiscal revenue surged by nearly a quarter to a record 10.37 trillion yuan ($1.64 trillion) in 2011, while annual fiscal spending stood at 10.89 trillion yuan, leaving the country with a deficit level at 1.1 percent of GDP.

"In 2012, the deficit level will remain equivalent to, if not slightly above, that of the previous year," said Gao Peiyong, head of the Finance and Trade Economics Institute under the Chinese Academy of Social Sciences.

Gao denied that incremental expenditure will be the focus of policy guidance, and said tax cuts will be the main carrier of further fiscal operations.

"To stabilize prices is still a relatively more important issue, thus the fiscal policy will only be controllably aggressive," he said.

To achieve "structural" tax cuts and lower the overall tax burden, Gao called for less indirect tax to be paid by companies - which currently provides 70 percent of China's tax income with the costs eventually being passed on to customers - and more direct taxes on consumers.

Jia Kang, director of the Finance Ministry's Fiscal Science Research Center, said last year's tax cuts generated a lot of headlines, but actually provided very little help for SMEs.

"These tax cuts are more of a policy signal, or a gesture. In practice, the financing difficulties are a more urgent problem for SMEs," Jia said.

"The central government's ambition on tax cuts may encounter strong resistance from local authorities," said Ye Tan, a financial commentator and professor at Shanghai's Fudan University.

Some experts say they're confident that China can control any risks.

"In the event of a further slowdown in the global economy, our sense is that China and most Asian economies have room for a looser fiscal policy response," said Anoop Singh, director of the Asia and Pacific Department at the International Monetary Fund (IMF).

Singh said the IMF doesn't expect China to experience a "hard landing", with growth likely to remain well above 8 percent this year and in 2013.

"There are risks, but they're not systemic. I don't think they will derail growth," according to Singh.
 

BEIJING - China's State Council on Wednesday called for more efforts to support the sound development of small and micro-sized enterprises.

"Small and micro-sized firms serve as a significant channel for creating jobs, a major platform for the growth of entrepreneurship, and an important force of scientific innovation," according to a statement released on Wednesday after a State Council executive meeting presided over by Premier Wen Jiabao.

Further supports for small and micro enterprises are crucial as they are still facing great operating pressures, rising costs and financing difficulties, the statement said.

The central government will earmark 15 billion yuan ($2.38 billion) to establish a development fund for small and medium-sized enterprises, particularly focusing on newly-formed ones.

The country will strive to relieve the financing difficulties of those small companies, the statement said.

It will establish an evaluation system to provide incentives for commercial banks offering credit to small firms, and support qualified banks to issue financial bonds to get funds to lend to those firms.

China will also improve services for small companies by establishing 4,000 public service platforms for those firms, according to the statement.

The statement was one of the first concrete measures announced by the central government following repeated pledges to help entrepreneurs who have been squeezed by a slump in demand from the United States and Europe, as well as by curbs on bank lending.

It gave no details but promised a cut in taxes and fees and said small and micro businesses will be guaranteed a portion of government purchases of goods and services.

Entrepreneurs said they welcome the good news and still have some concerns.

"Fifteen billion is not a very big figure given that there are so many small and medium-sized enterprises in China. Moreover, details have not been disclosed about what kind of companies are eligible to use the money and which are not, so it's hard to say now if it will benefit our company," said Gui Ming, deputy general manager with Qianjiang Import and Export, a motorcycle maker in Zhejiang province.

"It is definitely good news for small and micro-sized enterprises. The measures that Premier Wen talked about cover a broad range of areas," said Zheng Shili, general manager of Wenzhou Golden Emperor Shoes in Zhejiang province. "I think what China's small businesses most urgently need is financial aid."

"In fact, the central government has been giving more and more attention to small businesses, so I think the environment will keep getting better for us to develop in China."
 

China Shipbuilding Industry Corp (CSIC), one of the country's major shipbuilding conglomerates, plans to expand its business in the wind-power industry as it looks for ways of coping with a declining shipping market, said a senior company official.

"Given the (likely) difficult market conditions in the next few years, we will adjust our business structure by developing non-marine production," said CSIC's Senior Executive, Sun Bo.

"We will invest more in extending our production chain and increasing the manufacturing capacity of wind-power equipment," he added.

According to Sun, most of the company's wind-power products are currently sold in the domestic market, with only a small proportion exported to the United States.

"We intend to reach more overseas markets through the US in the next few years," he added.

Last year was a difficult one for the global shipping industry, mainly because of the fragile world economic recovery, according to analysts. In the meantime, the surging price of oil and an oversupply of vessels have compounded the industry's woes, they added.

The lackluster market has also hurt the shipbuilding industry. For the January-October period in 2011, Chinese shipbuilders reported total losses of 3.03 billion yuan ($475 million), up 40.6 percent from the same period a year earlier, according to the China Association of the National Shipbuilding Industry.

More than 15 percent of shipbuilding companies in China reported losses in 2011 - "a large increase from the previous year", according to the association.

CSIC's Sun admitted that he does not expect an immediate recovery this year. "The shipping market (in 2012) might be even worse than last year," he said.

According to Sun, the company will dedicate more resources to non-marine production, such as wind-power and equipment for offshore oil and gas exploration.

"We are a big company with a strong book balance and we have technological advantages in the manufacture of wind-power equipment," he added.

Currently, the company has four wind farms across China in the Inner Mongolia autonomous region, the Xinjiang Uygur autonomous region, Jiangsu province and Chongqing.

According to the company, sales revenue from wind-power components and whole-set equipment jumped to 7.8 billion yuan in 2011 from 6 billion yuan in the previous year. It accounted for "a small percentage" of the company's total 2011 revenue, the company said.

Yang Huanzhi, vice-director of the administration department, said the company's goal is to become one of China's top three manufacturers of wind-power equipment (by production capacity) during the next few years.

Analysts have praised the company for its technological advantages in core-component manufacturing. However, they said it still faces challenges as it seeks to expand further in the wind-power industry.

Wang Hexu, an analyst with Hwabao Securities Co Ltd, said CSIC might have to triple its production capacity to become one of the nation's top three manufacturers.

"China's wind-power industry has matured after nearly a decade of development. Leading companies in the industry are very competitive and industry consolidation, amid fierce competition, is expected to take place in the coming years," he said.

"These factors may pose some challenges for newcomers such as CSIC," Wang added.

Meanwhile, the wind-power sector still boasts a bright future, Wang said. According to a development blueprint by the State Grid Corp, China's biggest electric-power transmission company, the nation's wind-power capacity is expected to jump from 45 gigawatts (gW) in 2010 to 90 gW in 2015.