EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

20 August - 26 August 2001

No 61


South Korean report: China ranks 8th in world auto production in 2000
According to a South Korean research report, China built more than 2 million automobiles in 2000 and thus ranked 8th in world auto production. The report predicts that it will not be long before China poses a threat to South Korea in terms of small-car production. China is not the only nation making gains, however. Mexico made it onto the top-10 list last year for the first time, taking the ninth spot. (ChinaOnline, 20 August)

Honda Motor to produce minivans in China
Honda Motor Co. will invest RMB 4.0 billion to boost production in China to introduce its popular minivan. Honda will start mass producing Odyssey minivans by 2003 at a factory in Guangzhou. (China Daily, 21 August)

Prospects clouded for China mobiles
The precipitous fall in share prices of China's leading mobile phone operators suggests investors are becoming more wary about the sector's growth prospects. While subscriber numbers are rising fast, analysts and fund managers are concerned operators will see their earnings growth hit by shrinking average revenue per user. Another main concern was that China's mobile market was facing tremendous regulatory changes, which was also discouraging investors from the sector. (SCMP, 21 August)

Fakes flourish on eve of WTO entry
Just four months after China's crackdown on fake designer goods in the ''counterfeit capital'' of Shenzhen, it's almost business as usual. Some shops that once prominently displayed copies of fashion's leading brand names are taking pains to avoid the wrath of China's authorities. Experts say it is nearly impossible to come up with accurate figures on how large the counterfeiting problem is or how much it costs legitimate businesses. But they are sure about one thing - after China enters the WTO and further eases controls, the volume of fake goods moving from the mainland to world markets is likely to rocket. (Reuters, 21 August)

China launches 100 high-tech industrial projects
China's State Development Planning Commission (SDPC) held a ceremony to award certificates to 100 outstanding high-tech industrial projects in Beijing Monday. In the last two years, China has arranged for over 500 projects of this kind, of which over 130 are expected to be put into production by the end of this year. The over 500 projects attracted RMB 51.7 billion (USD 6.23 billion) investment, including governmental funding of RMB 6.05 billion (USD 728.9 million). (China Daily, 21 August)

192'225 consumer complaints in 2nd quarter
China is planning to allow foreign investors to enter the wholesale market a year after it enters the WTO. The retail market will be opened gradually within two to three years. Controls on all other merchandise will be relaxed for foreign investors within five years, with the exception of state monopolies like tobacco and salt. (China News Service, 22 August)

Foreign investors to enter the wholesale market
China is planning to allow foreign investors to enter the wholesale market a year after it enters the WTO. The retail market will be opened gradually within two to three years. Controls on all other merchandise will be relaxed for foreign investors within five years, with the exception of state monopolies like tobacco and salt. (China News Service, 22 August)

Pizza Hut conquering the country
Pizza Hut, he US fast-food company, opened it 50th stores in China and plans to open 50 more in two years. Pizza Hut opened its first store in Beijing in 1990. (China Daily, 22 August)

New system to improve corporate governance
China's securities authorities released formalized regulations establishing an independent director system for listed companies, a major move to improve corporate governance in public firms. Analysts say that China still lacks a qualified pool of candidates to be independent directors. (China Daily, 22 August)

Minister vows to maintain spending for further growth
Finance Minister Xiang Huaicheng defended China's expansionary fiscal policy as necessary to keep the economy moving amid slowing export growth. Beijing plans to issue RMB 150 billion worth of special bonds to fund state spending on infrastructure this year and has forecast a budget deficit of RMB 259.81 billion (<3% of GDP). The expansionary fiscal policy added 1.7 percentage points to economic growth last year, two percentage points in 1999 and 1.5 percentage points in 1998, Xiang said. Some government economists are lobbying for monetary policy to play a greater role in the economy and are urging the central People's Bank of China to further loosen credit. (Reuters, 22 August)

Individual income taxation surges
Statistics from the State Administration of Taxation indicate that the country collected RMB 38.4 billion (USD 4.62 billion) of personal income tax and RMB 16.3 billion (USD 1.96 billion) of tax on interests of individual's bank deposits during the January-July period, an increase of 32%and 132.2%, respectively, compared with the same period last year. (China Daily, 22 August)

Beijing Universiade Opens as Early Rehearsal for 2008
The 21st World University Games opened Wednesday night as a test trial of Beijing's Olympic abilities and a showcase for what the Chinese capital has planned for 2008. A record 6,800 athletes from 168 delegations will vie for 168 gold medals from 12 sports in the 11-day Games which runs through to September 1. (People's Daily, 23 August)

Computer networking equipment imports double in first seven months
From January to July, China's imports of computer networking equipment totalled USD 900 million, double the value of imports in the same period last year. The increase was 150 percentage points higher than the average increase of all imported commodities in China. The imported products mainly consisted of network switches, network cards, hubs and routers. (ChinaOnline, 23 August)

HSBC to shift software development to Guangzhou
The Hong Kong and Shanghai Banking Corp. (HSBC) has decided to shift all of its software-development work to Guangzhou. HSBC also plans to recruit between 1,000 and 2,000 software developers from the mainland in the next few years to work at the centre. (China News Service, 23 August)

Beijing opens water supply to foreign firms
China plans to put an end to the state monopoly of the country's vast urban water supply system by allowing private investors to build tap water distribution systems. Insiders believe the move will improve the tap water quality of many cities and will help revamp the country's loss-making water supply businesses. (SCMP, 24 August)

Tax cuts for environmentally friendly cars
The State Economic and Trade Commission, along with the Ministry of Finance and the State Environmental Protection Administration, stipulated last week that the State will cut down consumption tax by 30% for cars, which meets the European II Environment Protection Criteria. The State hopes to see private consumers account for 70% of total auto sales within the next 10 years from the current 30%. (China Daily, 24 August)

Alcatel sets sights on digital role in Games
Telecommunications equipment giant Alcatel plans to play a leading role in helping Beijing plan, build and deploy a high-speed, digital platform for the 2008 summer Olympic Games. (SCMP, 24 August)

Consumer confidence index picked up by Olympic
With encouragement from Beijing's successful Olympic bid, the consumer confidence index picked up 0.7 of a point, from June, to 98.1 in July, the National Statistics Bureau reported. As many as 96% of the people surveyed said they believed that the Olympic Games gave China a great opportunity to speed up economic growth and increase employment and incomes. (China News Service, 24 August)

Job Market Becoming More Competitive in China
China's job searches are becoming more competitive, with more people looking for jobs than there are openings, according to the Labour and Social Security Ministry. A recent Ministry survey showed that 2.2 million people had registered at employment centres, and that only 1.54 million jobs were available. Meanwhile, the number of jobless is increasing and employment opportunities remain hard to come by. People below the age of 35 accounted for more than 50% of the unemployed. (Xinhua News Agency , 24 August)

IFC Provides US$25 Million in Financing to China's Power Sector
The International Finance Corporation (IFC) announced on Thursday that it has signed an agreement to provide USD 25 million in financing to Peak Pacific Investment Corporation, Ltd. (Peak Pacific) to help fund the company's investments in combined heat and power (CHP) plants in China. (People's Daily, 24 August)

Coal Export Exceeds 50 Million Tons by August
Sources with the State Economic and Trade Commission (SETC) said Thursday that domestic coal enterprises exported 51.59 million tons of coal from January to August, up 53% from the same period of last year. Export revenue was up 69% by July, and coal prices were steadily on the rise, bringing more profits to coal enterprises. (People's Daily, 24 August)

Weekly Market update  24 August 2001  17 August 2001
Shanghai A 1970.67 2012.69
Shanghai B 166.55 156.94
Shenzhen A 595.88 602.41
Shenzhen B 291.62 269.92
Hong Kong Red Chip  962.18 1027.88
Hong Kong H 429.39 438.99
Source: South China Morning Post

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 

27.8.2001

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