20 May - 26 May 2002

No 96

Beijingers target incomes of RMB 20'000 by 2008
Beijingers are expected to have much more disposable money in five years, according to a development plan for the Chinese capital. Beijing has set itself a target of an annual 6% increase in per capita income in the next five years. Calculated on this growth rate, the annual per capita income for urban residents in Beijing is expected to near RMB 20'000 by 2008 and for its farmers will be more than RMB 8'000. (People's Daily, 20 May)

Sony plans to build plant in China
Sony Corp. is planning to build a semiconductor assembly plant in China in an effort to cut costs and keep up with increasing production shifts there by its client electric-equipment makers. Many Japanese electric-equipment makers from whom Sony buys chip components have been shifting production to China, to take advantage of the country's ample and inexpensive work force. (WSJ, 20 May)

Nestlé (China) assures customers in wake of U.S. chocolate lawsuit
In the wake of a lawsuit in the United States against six major chocolate manufacturers, Nestlé (China) Ltd. has issued a statement, reassuring customers of the complete safety of its products in the Chinese market. An industry insider said, Nestlé's statement was the quickest response in the Chinese market in recent history by a multinational company facing a potential public-relations crisis. (ChinaOnline, 20 May)

China State investment expanded 27.1% in first 4 months of year
China's government accelerated investment in public works and development projects in the first four months of the year as it uses spending to try to keep the nation's growth above 7%. Investment rose 27.1% in the January-April period from a year ago. Premier Zhu Rongji has vowed to spend more on water projects, railways and other public works to cap unemployment and prod growth. (Bloomberg, 20 May)

Interbank lending push to aid SMEs
The central bank will allow joint-stock commercial banks and city commercial banks to engage in yuan interbank lending as part of a series of measures designed to increase fund flows to small and medium-size enterprises. (SCMP, 21 May)

China's demand drives recovery in Asian exports
Asian exports are rebounding, but it is demand from China, rather than the U.S. that so far is driving the recovery. Economists say the trend highlights the extent to which China is becoming an engine of economic growth for some of its Asian neighbors. (WSJ, 21 May)

China's real estate sector continues to grow
China's real estate sector continued to grow in April, propelled by soaring investment and land development. A total area of 27.99 million square meters of land were developed during January-April, a rise of 48.3% over the same period last year. In the same period, investment in real estate development totaled RMB 146.7 billion, a leap of 38.8%. However, real estates prices dipped around the country, as stockpiles of unsold buildings increased 6.4% over the 12 months to April. (People's Daily, 22 May)

Mainland markets rally on return of IPO rule
China has moved to boost its flagging stock markets by re-introducing initial public offering rules that give subscription priority to investors already holding shares. The rules require underwriters to set aside between 50 and 100% of new offers for investors who already have holdings in the secondary market. (SCMP, 22 May)

Mainland ministries resist Cepa
Several mainland ministries are resisting opening up early to Hong Kong companies under the closer economic partnership arrangement (Cepa). Hong Kong General Chamber of Commerce director Eden Woon Yi-teng said these ministries - particularly those that governed telecommunications, financial services and insurance - could be left to the second phase of negotiations. The first stage of the Cepa could include clauses on zero tariff for Hong Kong-made goods and trade facilitation issues, such as easing customs procedures. (SCMP, 23 May)

China takes defensive measures against US
China announced temporary safeguard measures on imports of nine steel products. The measures come shortly after MOFTEC declared it would begin a safeguard-measure investigation into surging steel imports. Long Yongtu, vice-minister at MOFTEC, said China will also take countermeasures against the new US farm bill in a week. (China Daily, 23 May)

China rising to 31st in World Competitiveness
According to the World Competitiveness Yearbook 2002 issued by the Lausanne Institute of Management and Development of Switzerland, China has been raised to 31st position from 33rd last year. (People's Daily, 23 May) Switzerland is 7th, up from last year's 10th position.

Lee Kuan Yew: China to overtake the US in 2050
Lee Kuan Yew, senior minister of Singapore, predicted that China would keep pace with the United States in 2050. Lee made these remarks Wednesday at the annual seminar "Future of the Asia", organized by Japan's Nihon Keizai economic newspaper. (People's Daily, 24 May) Given Lee's age, I would call this a safe bet.

China's environment protection industry getting stronger
The output value of China's environmental protection industry may hit USD 26.4 billion by 2005 and China will become a major exporter of environmental protection technology by 2010, says a study released by German-based Helmut Kaiser Consultancy. According to the study, technology most in need now includes the treatment of waste water, the utilization of drinking water resources, the treatment of wastes and air cleaning. (People's Daily, 24 May)

Foreigners now can take out car mortgage in Shanghai
The Shanghai Branch of the China Construction Bank now provides a car mortgage service to foreigners living in the city. As part of a series of new policies, the bank branch is also offering vehicle mortgages to people from the other parts of the country and living in the city. (People's Daily, 24 May)

PICC seeks multinational partnerships
The mainland's dominant insurer, People's Insurance of China Co, is seeking multinational companies as strategic partners after opening a representative office in New York. It was reported that about 150 representatives from the United States insurance sector attended the opening of PICC's representative office in New York, hoping for a partnership to develop the Chinese market. (SCMP, 25 May)

Weekly Market update		24 May 2002	17 May 2002
Shanghai A		1616.89	1635.63
Shanghai B		141.81	143.78
Shenzhen A		483.21	483.64
Shenzhen B		221.01	222.21
Hong Kong Red Chip		1331.08	1382.60
Hong Kong H		2119.25	2123.87
Source: South China Morning Post