The local Consumer Price Index (CPI) should be used to help set the minimum wage for workers, according to a new plan expected to be finalized by the end of this year.

Yang Yongqi, legal expert at the Chinese Academy of Labor Security Sciences, told China Business News that a draft of salary regulations was finished and could be approved by the State Council this year.

The regulations, requested by the Ministry of Human Resources and Social Security (MHRSS) and All China Federation of Trade Unions in 2008, said the provincial governments must take the local CPI into consideration before setting the minimum wage.

The salaries of employees in State-owned enterprises (SOE), especially those in industries that are monopolized, would be limited under the regulations, Yang said. Statistics showed that the average incomes of workers in such industries as electricity and tobacco were five to 10 times higher than those of the other industries.

Some researchers were skeptical about the impact of the new regulations.

Di Huang, a researcher at the institute of workers’ salary under the MHRSS, said some questions must be answered in the draft including the definition of salary, the function of the government and the mechanism of raising the salary, the Economic Information Daily reported.

Wang Jian, a commentator on public issues, told China News Radio that laborers should not expect to see a sudden increase in wages since cheap labor is widely available in the country.

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Profit outlook for July still remains bleak despite sporadic rebounds

BEIJING – Falling steel prices will continue to cloud the profit outlook for domestic steel mills in July, but there are indications that the tide will change over the next few months, a top official from the China Iron & Steel Association (CISA) said on Tuesday.

“China’s 77 large and medium-sized steel companies reported combined profits of 6.25 billion yuan ($922 million) in June, down nearly 40 percent from 10 billion yuan in May, ” said Qi Xiangdong, deputy secretary-general of CISA.

“The situation in July could be even worse, but it might change in August as the market is already seeing sporadic price rebounds.”

Production cutbacks by the steel mills have helped boost prices after 20 companies hiked product prices by 30 yuan to 200 yuan per ton last week.

“We should not be pessimistic about steel prices in the coming months as the global economy will continue to recover and the nation’s macroeconomic polices may see changes,” he said.

Domestic steel mills started cutting product prices in June, signaling a market adjustment due to weak downstream demand.

Most of the big steel mills, like Baosteel and Wuhan Iron & Steel cut August prices by 5 percent to about 300 yuan per ton from July.

Average steel prices in China peaked the most in April since August 2009. But steel prices began to fall after the government released its macroeconomic polices to control property prices, part of the nation’s efforts to slow gross domestic product growth, which eased to 10.3 percent in the second quarter from 11.9 percent in the first.

Steel production in China reached a four-month low due to weak demand from real estate companies and the automobile industry.

The nation produced 53.77 million tons of crude steel in June, down 4 percent from 56.1 million tons in May.

During the first 10 days of this month, daily steel output fell to 1.69 million tons, according to steel lobby CISA.

Most of the steel mills will incur losses in July due to higher raw material costs and falling product prices, said Zhang Xiaogang, chairman of Anshan Iron & Steel Group.

The government’s decision to end the steel rebate from the 15th of this month will put further pressure on the mills.

“It will force more mills to cut production, with construction steel products and hot-rolled products filling the breach, ” Zhang said.

Steel production cutbacks have also contributed to a fall in iron ore prices this year.

Iron ore prices have dropped to about $122 per ton, after peaking to $185 per ton in April.

China’s iron ore imports dropped for a third straight month to 47.2 million tons in June.

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China will lend financial support to companies in the tourism industry and encourage them to sell bonds and shares to raise funds, according to a statement from the State Council on a government website.

Foreign-invested tourism companies will be allowed on a trial basis to operate tours for Chinese citizens outside of the country, the statement said.

China International Travel Service Corp rose to the highest in more than seven months in Shanghai trading after the policy released.

The stock rose 1.6 percent to 22.28 yuan as of 9:32 am local time, heading for the highest close since Oct 15.

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