EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

11 December - 17 December 2000

No 27


Foreign household appliance makers returning to the China market
US-based Electrolux, South Korea's Samsung and Germany's Siemens, are entering or returning to the China market. They seem to concentrate on "white household appliances" such as refrigerators, washing machines and microwaves and to avoid "black household appliances" such as televisions and video compact disc player, in which domestic brands have become especially strong. (Business Weekly, 10 December)

Mazda to start minivan production in China
Japanese auto maker Mazda Motor Corp. will produce minivans in China next year with a local partner. (China Daily, 10 December)

Private sector gets equal export rights
The Central Government has promised to give private companies the same export rights as their state-owned counterparts. China started granting export rights to private manufacturing enterprises in January last year. Before that, private enterprises had been forced to go through state-owned enterprises with export rights to sell their products in overseas markets. (South China Morning Post, 11 December)

Germany to give Shanghai maglev train a lift with millions of marks
Sources in Germany have confirmed a pledge of substantial loans or outright aid (in the range of DEM 500 million to 1 billion) to help lift the Shanghai magnetic levitation (maglev) train project. The project extends more than 40 kilometres connecting the Pudong Financial Zone with Pudong International Airport. It is worth an estimated USD 20 billion and expected to take three to four years to complete. (ChinaOnline, 11 December)

China reaches taxation goal ahead of schedule
China met its annual target of tax revenue by the end of November, with a record annual increase of RMB 200 billion this year. The rapid increase of tax revenue is due to stable economic growth, a surge in corporate profits, the impact of one-off factors and stricter tax administration. (Xinhua, 11 December)

China's industrial output growth slows to 10.6%
China's growth in industrial output (+10.6%) was 0.8 percentage points slower in November than in October and 2.2 percentage points lower than the 12.8% gain in both August and July. (China Daily, 11 December)

ADB support for sewage treatment in Tianjin
The Asian Development Bank will offer USD 130 million of loans to help Tianjin strengthen its sewage treatment ability and protect its water resources. The project, to be completed by 2005, needs investment totalling USD 340 million. (Xinhua, 12 December)

Growing number of Chinese wine drinkers
China National Cereals, Oils & Foodstuffs Imports & Exports Corp. projects that China's wine market will grow at a rate of 11% in 2001 and is expected to reach RMB 6.7 billion in 2005. (ChinaOnline, 12 December)

30'000 counterfeit auto parts seized
A joint action by Chinese industrial and commercial inspectors seized more than 30'000 counterfeit auto parts worth RMB 11.68 million. (China News Service, 12 December)

Consolidation, reform of SOEs to be stepped up
Beijing has set another priority for its state sector, following its recent announcement that it had achieved its three-year target of turning the sector around. The government will close ailing enterprises and create 50 to 100 giant state-owned enterprises which will be the pillars of the national economy. (SCMP, 12 December)

Taiwan to allow hi-tech investments to the mainland
Taiwan is expected to lift a ban on hi-tech investments in Chinese mainland, and allow local enterprises to invest in semiconductor, digital consumer products, liquid-crystal displays, wireless telecommunication items and advanced personal computers. Taiwan currently bans investments in 195 items mainly in the hi-tech and infrastructure sectors, as well as any project worth more than USD 50 million in the mainland. (China Daily, 12 December)

China's consumer prices rise in November
Consumer prices in China rose 0.7% in November over the previous month owing to seasonal hikes of vegetable prices. Other factors contributing to the rise were higher rent, gas and water prices in some areas of the country. In November, the national average of consumer prices was 1.3% higher than one year ago. The accumulated average during January-November was 0.2% higher than in the same period last year. (Xinhua, 12 December)

Nanjing starts subway construction
Construction of a 16.9 kilometres subway line in Nanjing has started. The first phase of the project has an investment value of over RMB 7 billion and is scheduled to be completed by the end of 2005. (Xinhua, 12 December)

MOFTEC cautious about future foreign trade growth
A "Report on China's Foreign Trade" (blue paper) written by experts from the Ministry of Foreign Trade and Economic Cooperation and the Research Institute of International Trade and Economic Cooperation predicts that despite a robust trading volume, China's foreign trade growth next year will drop significantly to around 8%. Factors restricting foreign trade growth are: Products exported from China still show low added value, weak overall competitiveness and low resilience against risk. Coastal areas are losing their competitive edge in production costs as restrictions by resources and environment are becoming increasingly serious. State-owned foreign trade enterprises are still plagued by outmoded operational mechanisms and poor competitiveness while non-state-owned ones are yet to exploit their advantages in the international market. (ChinaOnline, 12 December)

Loans and deposits up
By the end of November, Chinese financial institutions had reported RMB 12'187 billion of combined deposits, up 13.6% year-on-year. Meanwhile, the increase of deposits slowed down as many people spent more purchasing houses, treasury bonds and stocks. Total amount of loans by financial institutions rose 14.7% to RMB 9'818 billion. Loans to assist individual house purchases, education and consumption increased by the biggest margin. (SCMP, 12 December)

US reduction of textile quota strongly objected by Chinese Government
China said that the United States' decision to reduce the import quota of China's textile products has seriously violated the bilateral agreements. The U.S. had decided to cut the import quota of China's textile products claiming that garments from China were finding their way into the U.S. through third countries. China is particularly sensitive about protecting overseas textile markets since the labour-intensive industry is one where populous China has an advantage. The country is the world's biggest textile manufacturing base and the U.S. the world's biggest market for textile products. (Xinhua, 13 December/SCMP, 14 December)

Government to down-size its share-holding
The Central Government is planning to cut down the size of its holdings of shares so that more funds can be raised to replenish the country's pension funds. At present, only about one third of the total stocks in China are tradable as most of them are held by the State and are prohibited from entering the secondary market. (China Daily, 13 December)

Insurance premium gains soaring
According to statistics from China Insurance Regulatory Commission, the country's insurance sector has reported RMB 128.2 billion premium gains in the first ten months. This year's total is expected to exceed RMB 150 billion and maintain two-digit growth. (SCMP, 13 December)

New GM family car opens competition among global car-makers
Shanghai General Motors has unveiled its new mainland family car. The four-door Buick Sail, based on the German-designed Opel Corsa, will be sold from RMB 100'000. The launch should help Shanghai GM at a time when sales of its flagship Buick sedan are faltering due to lacklustre demand in the luxury car segment. (SCMP, 13 December)

Exports growth sharply lower, imports hit monthly record
Exports, a key growth engine for the mainland economy, rose 13.8% year on year to USD 22.16 billion in November. Imports jumped 28% to USD 21.64 billion, a record volume for a single month. This produced a trade surplus of USD 520 million, down from USD 2.6 billion a year earlier. (SCMP, 13 December)

Spending growth rate dips
Sales of consumer goods stood at RMB 311 billion in November, an increase of 8.7% on the same month last year, but 1.7 percentage points lower than October's figure, making it the lowest growth rate this year. (China Daily, 14 December)

New compact cars get off production line in Tianjin
The first batch of the new type of Xiali compact cars, manufactured by China's Tianjin Auto Group and Japan's Toyota, rolled off the production line. The sale price of the car is expected to be RMB 132'000. (Xinhua, 14 December) 

Overseas investment to China up
Overseas investment to China from January to November this year increased to USD 48.6 billion (+36.28%) from the same period last year. The total number of newly-approved overseas invested companies in China amounted to 19'700 (+29.12%). The amount of actually used overseas investment declined to USD 36.2 billion (-2.29%), mainly because of a decline in contractual investment volume last year as a result of the Asian financial crisis. The total number of overseas-invested companies reached 361'513, involving a contractual overseas investment volume of USD 663 billion. Materialized overseas investment was USD 344 billion. (Xinhua, 14 December)

Freight sector to open up
Beijing will allow foreign investors to invest in the mainland railway freight transport sector, which was previously closed to overseas investors. (SCMP, 15 December)

Central Bank shuts down another debt-ridden Itic
China has shut another indebted trust firm, the Ningbo International Trust and Investment Corp in eastern Zhejiang province, for failure to repay debt. (SCMP, 15 December)

Courts hand down sentences for fake merchandise
Courts around the country gave prison terms to manufacturers and sellers of pirate goods. The sentences were part of an autumn 2000 campaign against fake merchandise. (SCMP, 16 December)


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 

27.12.2000

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