EMBASSY OF SWITZERLAND IN CHINA - CHINESE BUSINESS BRIEFING N° 31 15 January

China to reduce non-tariff measures on imports
Starting from January 15, China will reduce non-tariff measures concerning the import of 22 categories of electrical and mechanical products. These products include snow mobiles and golf carts of different types, sources from the Chinese Ministry of Foreign Trade and Economic Cooperation (MOFTEC) said in Beijing. China's non-tariff measures on electrical and mechanical products include import quota and some particular means of import management. Except these non-tariff measures, China's imports are also managed through an automatic registration system. (Xinhua, 14 January)

CIRC to grant equal legal status to foreign insurance firms
The China Insurance Regulatory Commission (CIRC), the country's insurance watchdog, has drafted new regulations that would afford all insurance companies-regardless of national origin-equal legal status, which have been submitted to the State Council for review. (ChinaOnline, 14 January)

Chrysler to make new luxury sport utility vehicle
DaimlerChrysler will launch its Grand Cherokee, a luxury sports utility vehicle (SUV), produced by its Chinese joint venture Beijing Jeep Co Ltd from July this year. The move was another bold step following an agreement with the firm's Chinese partner, Beijing Automotive Industry (Group) Corp, to pump USD 226 million into their joint venture at the end of last September. Analysts predicted SUV demand on the home market will double in 10 years from the current level of around 100,000 units. The joint venture planned to manufacture about 1,000 Grand Cherokees this year. (China Daily, 15 January)

Chinese firms raise record capital from securities market
Chinese firms raised a record RMB 324.9 billion from the domestic and overseas securities market in 2000. By the end of 2000, 1,211 Chinese firms were listed on domestic or overseas stock exchanges, according to the chairman of the China Securities Regulatory Commission (CSRC). (Xinhua, 15 January)

China cuts prices for gasoline, diesel oil
Beijing has cut the prices of both petrol and diesel, the 11th adjustment in just 14 months. The State Development Planning Commission reduced the price of petrol by 4.1%, while slashing the cost of diesel to RMB 2,675, down 11.1%. The adjustment was made in response to movements in global oil prices. In November 1999 China began to adjust its oil prices roughly once a month - basing the new prices on the average in international markets during the preceding month. (South China Morning Post, 15 January)

Country to keep stock deals clean
China's securities regulator vowed to step up efforts to crack down on fraud, price manipulation and other irregularities this year as part of the country's drive to build up a healthy stock market and pave the way for more economic reforms. The irregularities in the stock market had greatly affected investors' confidence in the past year. (China Daily, 16 January)

Industrial growth surges 11.4%
China's industrial growth reached 11.4% last year on the back of the government's two-year-old infrastructure construction programme and a recovering export volume. The country's industrial added-value totalled RMB 2.37 trillion (USD 286 billion) in 2000, according to the National Bureau of Statistics. As in the prior two years, the industrial sector was driven mainly by the heavy industrial segment, the direct beneficiary of the stimulation programme launched in mid-1998. Bureau figures show heavy industries' added-value output grew 13% last year. A revived foreign trade sector also considerably contributed to industrial growth, which represented an impressive annual growth of 24.6%, nearly tripled the figure of 8.8% posted in 1999. (China Daily, 16 January)

Premiums to double by 2005
Income from premiums will grow to RMB 280 billion by 2005, almost doubling last year's figures, according to an official from the China Insurance Regulatory Commission. Chairman Ma Yongwei said the figure would equal about 2.3% of gross domestic product. Last year, insurance penetration in the mainland was just 1.5% of GDP. (SCMP, 16 January)

HK to become major regional hub of e-commerce
Hong Kong is developing into a major regional hub of electronic commerce, said a senior official of the Hong Kong Special Administrative Region (HKSAR). He noted that Hong Kong has put in place a world-class telecommunications infrastructure, which forms the backbone for e-commerce to flourish. A London-based economist intelligence unit has ranked Hong Kong 's e-commerce readiness among the top 10 in the world. (China Daily 17 January)

Cold weather, holiday factors push up values in basic needs
China's benchmark consumer price index (CPI) rose 1.5% year on year last month as cold weather and New Year holidays pushed up values in basic needs. The increase, its highest since October 1997, exceeded the 1.3% year-on-year rise in November last year. The State Statistical Bureau said the unusual cold winter season has pushed up the prices of vegetables and clothing in some areas, the main reason for the rise. The approach of the New Year on January 1 and the Lunar New Year on January 24 also stimulated spending last month, the bureau said. (SCMP, 17 January)

Internet usage in China grows steadily
China Internet Network Information Center, the Internet watchdog in China, has issued its seventh report on China's Internet development. The report showed a steady increase in Internet users. The number of Internet users (who browse the Web for at least one hour per week) has soared to 22.50 million from 16.9 million six months ago. 80% of people use Internet to get news, send e-mails or seek entertainment, only 31.67% of Internet users shopped online. Less than 10% of users have ever taken part in online auctions. (China Daily, 17 January)

China uses more overseas investment in 2000
China approved the establishment of 22,532 overseas-funded enterprises in 2000, up 31.76 % over the previous year, according to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC). The statistics shows that the contracted overseas investment was USD 62.657 billion in the year, an increase of 50.84%. Overseas investment in real terms amounted to USD 40.772 billion, up 0.93%. By the end of 2000, China had approved a total of 364,345 overseas-funded enterprises with contracted investment of USD 676.718 billion, and used USD 348.624 billion in real terms. (Xinhua, 17 January)

The RMB will move to a 'managed float'
As part of efforts to open up the economy in preparation for entry into the World Trade Organization, China is planning to take steps to liberalize its exchange rate, China's central banker told a news conference. Beijing has already taken tentative steps in this direction, allowing the RMB to occasionally trade outside the unofficial trading band of 8.277 to 8.28. For example, the currency ended the day at 8.2763 to the U.S. dollar. (ChinaOnline, 17 January)

Interest rates cut for small USD, HKD deposits
The China Banking Industry Association (CBIA) has cut the interest rates for small deposits in U.S. dollars and Hong Kong dollars. The interest rate for one-year small deposits in U.S. dollars was cut from 5 percent to 4.125 percent, while the interest rate for deposits in Hong Kong dollars was cut from 4.9375 percent to 4%, effective Jan. 13.
(ChinaOnline, 17 January)

China's tourism industry earns USD 54.58B in 2000
China's tourism industry revenue totalled RMB 451.9 billion (USD 54.58 billion) in 2000, an increase of nearly 13% over 1999. 83.48 million tourists entered China in 2000, up 15% over 1999. The number of foreign visitors broke the 10 million mark for the first time to reach 10.19 million, an increase of 20% over 1999. (ChinaOnline, 17 January)

Foreign exchange reserves continue increasing
China finished last year with foreign reserves of USD165.6 billion, up USD10.9 billion on the year, the People's Bank of China (PBOC) Announced 17 January. (SCMP 18 January)

China's stock market to become largest in Asia by 2010
China's stock market will overtake Japan's and become the largest in Asia by 2010, if the current momentum continues, a group of economist on international investment here said on Thursday. Currently, the Shanghai and Shenzhen stock exchanges each has more than 500 listed companies, with a total market capitalisation of RMB 4.6 trillion (USD 559 billion). According to this measure, China's mainland is probably one of the largest stock markets in Asia, smaller only to Japan's and Hong Kong's. Economists believed that three factors, including opening up the domestic financial sector to foreign investors, point to the immense potential of the Chinese stock markets. In two to three years, foreign investors and investment banks are expected to play an active role in the A-share market. Despite the vulnerable international stock market in 2000, China's stock indices rose sharply with the A-share indices up 53.3% in Shanghai and 46.7% in Shenzhen. (Xinhua, 18 January)

China bad bank loans dive 10%
China's big four state banks cut their proportion of bad loans by 10% points last year by moving a huge amount to asset-management companies (AMCs), but a quarter of these loans are now overdue. Dai Xianglong, governor of the People's Bank of China, said the banks - Bank of China, Agriculture Bank of China, Industrial and Commercial Bank and Construction Bank - had transferred RMB 1.4 trillion worth of bad loans last year to the four AMCs. Analysts said the bad loan problem has improved since the AMCs were set up, but that banks must avoid repeating old mistakes of lending to ailing state firms. According to Mr Dai, the proportion of bank loans given to non-state companies would continue to rise this year from 48% last year and 46% in 1999. (SCMP, 18 January)

Financial adjustment and control targets achieved in 2000
The People's Bank of China recently announced in Beijing that China basically achieved its financial macro-adjustment and control targets in 2000. By the end of 2000, M2 amounted to RMB 13.46 trillion (USD 1.63 trillion), up 12% from the beginning of the year. M1 totaled RMB 5.29 trillion (USD640.10 billion), up 16% from the beginning of the year. M0 totaled RMB 1.47 trillion (USD177.54 billion), up 9% from the beginning of the year. In China, M0 represents cash in circulation; M1 is M0 plus demand deposits; M2 is M1 plus savings, time and other deposits. At the end of December, deposits in RMB and foreign currencies totaled RMB 13.44 trillion (USD 1.62 trillion), up 14.6 percent from the beginning of the year. Loans in RMB and foreign currencies totaled RMB 10.44 trillion (USD 1.26 trillion), up 12.1%. Loans to non state-owned enterprises (SOEs) accounted for 48% of all loans extended by financial institutions in 2000, up 2%. (ChinaOnline, 19 January)

China promulgates regulations on trust investment companies
The People's Bank of China (PBOC) promulgated a procedures on the administration of trust investment companies in a bid to step up its supervision and regulate these companies' operational practices. According to the procedures, trust investment companies are allowed to operate in capital trust business; trust businesses in movables, immovables and other properties; legal trust fund businesses; and intermediate businesses and are forbidden to do savings businesses, nor are they allowed to issue bonds or borrow capital from overseas. (Xinhua, 19 January)

Siemens to invest US$1 billion in China in next 5 years
Siemens will invest US$1 billion in China over the next five years, about two thirds of its total investment in Asia, said Heinrich Von Pierer, chairman of the board of directors and president of Siemens recently, when attending the inauguration ceremony of the Siemens Industrial District in the Pudong District in Shanghai. China has become Siemens's third largest market following Europe and the United States and the third largest share holder in China's mobile phone market. (Xinhua, 20 January)

China's hi-tech exports up 50 percent in 2000
China's export of high and new technology products reached US$37 billion in 2000, surging 50 percent year on year and accounting for 15 percent of the country's total exports that year, sources from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) said in Beijing. Analysts in Beijing attributed the rapid growth in high-tech product export to China's strategy of promoting foreign trade by relying on science and technology. According to MOFTEC officials, China's high-tech exports are mainly IT products, which include computers, telecommunication systems and accessories. (Xinhua, 20 January)