EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

18 September - 24 September 2000

No 15


Beijing plans massive USD 17.8 billion facelift for 2008 Olympic bid
Beijing, has earmarked USD 17.8 billion to get ready for next year's decision on which city is to host the 2008 Olympics. The Chinese capital will start 50 environmental and transportation projects before the end of the year. As part of the facelift, nine central thoroughfares will be widened, two subway lines with 82km of new track will be built and coal-fired boilers will be replaced with heaters which burn natural gas. (China Daily, 18 September)

Expert: Preparations of economic sector for WTO Accession inadequate
In an interview with China Daily, Lu Zhiqiang, deputy director of the Development Research Centre under the State Council, said China has not yet prepared itself for the challenges of economic globalization expected after its entry into the WTO. While central government departments have a clear understanding about the upcoming impact of economic globalization, preparations by local governments, industrial administrations and enterprises are inadequate, said Lu. The lack of face-to-face competition from powerful foreign counterparts has contributed to Chinese firms' failure to sense the urgency of finding ways to tackle the growing trend of economic globalization, Lu said. (China Daily, 18 September)
Note that the interview made headlines on the exact day when negotiations on China's WTO-accession were resumed in Geneva.

Central bank grants loans to rural credit co-ops
The People's Bank of China announced it would lend RMB 33.3 billion to rural credit co- operatives. The move showes that the State is enhancing its efforts to increase rural consumption. As farmers account for two-thirds of the country's total population, if consumption in rural areas cannot be stimulated, the full expansion of domestic demands, a strong engine for economic growth, will not be realized. (Xinhua, 18 September)

China calms down rising cotton price
China will auction about 200,000 tons of cotton reserve around October 1 to calm down rising prices. Insiders estimate China has about two million tons of cotton in stock. (Xinhua, 18 September)

RMB 800 billion highway improvements for western region
Along with the launch of the go-west development strategy, China has started large-scale construction of roads to help boost local economies. China will invest up to RMB 800 billion to build or renovate 350'000km of highways in the country's western region over the next 10 years. (Economic Daily, 18 September)

Drug manufacturers, wholesalers, retailers to cut prices
As part of its efforts to decrease the cost of medicines for patients, the government says it is determined to make domestic drug manufacturers and distributors cut the prices of their products. The State Development Planning Commission Price Department intends to re-examine the overall price of medicines in China and will at the same time decrease the cost of oversupplied drugs. SDPC will also set new prices for those drugs with large differences between their wholesale and retail prices. (ChinaOnline, 19 September)

China sees 11.4% power surge from January to July
China witnessed simultaneous growth in both power consumption and generating capacities during 2000. Power consumption totalled 746.9 billion kilowatts from January to July, up 11.4%. Meanwhile, China's nationwide power output rose 10.5% to 745.3 billion kilowatts. (Zhongguo Jingji Shibao China Economic Times, 19 September)

A-share market to open to foreigners by 2003
China will open its A-share market to select foreign investors by early 2003, Anthony Neoh, chief adviser to the China Securities Regulatory Commission, told analysts. The A-share market is currently off limits to foreigners. (ChinaOnline, 19 September)

More double-digit growth seen in fixed-asset investment
China's investment in fixed assets for the first eight months of this year increased by 12.7% over last year to RMB 1.12 trillion. Investment in fixed assets for August (at RMB 181.2 billion) was 1.7 percentage points lower than July's growth rate. (ChinaOnline, 19 September)

China opens commercial services sector to foreign investment
It now appears that the country's service sector will become the new focus of foreign investment in China following reforms being adopted by the government. Many of the country's provinces and cities have expressed a strong desire to attract foreign investment to their service sector. China is gradually opening up its commercial services sector and is easing its restrictions on foreign investment in this sector. (ChinaOnline, 19 September)

Faster GDP growth predicted
Both the World Bank and the Asian Development Bank (ADB) projected that China's gross domestic product would grow faster this year than last thanks to the country's active fiscal policy, robust domestic demand and surging foreign trade. The World Bank predicted that China's GDP would grow by 8% and by 7.5% next year. ADB said that China's GDP was expected to grow 7.5% in 2000. (China Daily, 19 September)

State Council approves new rules on Net content, telecom
While approving new rules on Internet Content and Telecommunications, China's State Council concluded that the purpose of the Internet rules is to "strengthen the supervision and management of Internet content and prevent unhealthy information from harming society, especially information that poses threats to national security, social stability and social order". (ChinaOnline, 20 September)

US Senate approves China PNTR
The US Senate approved a bill granting permanent normal trade relations to China, which is considered a prerequisite for China's entry into WTO. After heated discussion, the Senate rejected amendments trying to link the PNTR bill with weapons proliferation, Taiwan, human rights and other issues. (Various agencies, 20 September)
It is worth noting that both MOFTEC and the Ministry of Foreign Affairs have expressed a cautious welcome to the passing of PNTR by the U.S. Senate, largely due to clauses in the decision which are viewed as being unfavorable to China or more specifically calling for interference in China's local political activities. (China Watcher, 22 September)

First private firm allowed to offer foreign currency B shares
In a modest step towards opening the mainland's stock markets to private interests, a textile firm has become the first fully private company to offer foreign currency B shares. In the past, Beijing had made it difficult for private companies to list their shares, preferring to keep access to capital almost exclusively for state-run companies. The change partly reflects the dismal performance of many of the state companies that have listed to date. (South China Morning Post, 20 September)

USD 26.6 billion of state-owned shares to become negotiable
A new plan to reduce the proportion of state-owned shares from 67.8% to 30% in two steps was unveiled by the State Council Economic Restructuring Office. A total of 33 enterprises constitute the first group for the experiment, which will complete the cashing by stages and by groups within five years. (ChinaOnline, 22 September)

China Telecom to eliminate 200,000 jobs, preparing for overseas listing
China Telecom, the country's flagship information colossal, is planning to lay off 200,000 of its total 530,000 employees within five years. According to analysts, it is imperative for China Telecom to cut its swollen workforce, since its operation efficiency is calculated at only half of its international counterparts. Apparently, only 11 of the company's 31 branches are now profitable. (China Daily, 20 September)

73 million mobile-phone subscribers predicted by year-end
China is expected to have 73.7 million mobile-phone users by year-end. The capacity of the country's mobile-phone communication network is also expected to grow to 126 million lines by year-end, up from 96 million lines at the end of June. Mobile-phone communication is developing very fast, making China the largest mobile-phone community in Asia. (South China Morning Post, 23 September)

China to build more dams
China is going to build more large dams to control floodwaters and tap hydroelectric power the Chinese vice-premier in charge of water resources projects, Wen Jiabao, said. The country is designing over 30 large dams more than 100 metres in depth. China has constructed 85'000 dams in fifty years, of which 22'000 are large dams with walls over 15 metres high. Total storage capacity topped 460 billion cubic metres. (South China Morning Post, 23 September)

New investment guidelines released
China has released revised investment guidelines for government-backed industries, products and technology projects. Investors in listed industries, product development and technological innovations will be granted incentives such as tax breaks and import and export inducements. The list includes 28 sectors and 256 product development programmes and projects. It aims to give high priority to industries, products and technologies that will help develop the new economy and to encourage more investments in the listed projects. (South China Morning Post, 23 September)

Living standards improving in China
China's per capita GDP is expected to top USD 800 by the end of the year. The urban per capita income hit RMB 5'854 while farmers' average per capita net income reached RMB 2'210 last year. The Engel Index (representing the ratio of expenditure on food against the whole expenditure) in China's urban areas went down from 49.9% in 1995 to 41.9% in 1999. While the Index in rural areas decreased from 58.6% to 52.6%. (Xinhua, 24 September)

AMCs open to foreign investors
China's four assets management companies, which have purchased combined non-performing assets of over RMB 1.1 trillion (USD 132.5 billion) from the big four State-owned commercial banks, showed welcome signs to foreign investors as they entered the second phase of their work - dealing the assets. Foreign investors may thus gain access to some of China's tightly controlled sectors. (China Daily, 24 September)


China Business Briefing is a random selection of business related news gathered from various media and news services covering China, edited by the Embassy of Switzerland in Beijing and distributed among Swiss Government Offices and other interested parties. The Embassy does not accept responsibility for accuracy of quotes or truthfulness of content. Upon request and depending on the resources available, the Embassy will provide further information on the subjects mentioned in the China Business Briefing.
vertretung@bei.rep.admin.ch 

17.11.2000

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