EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

27 May - 02 June 2002

No 97


Further reform of State ownership needed
A new World Bank report entitled "Corporate Governance and Enterprise Reform in China: Building the Institutions of Modern Markets" was released in Beijing. The study demonstrates how the universally complex issue of corporate governance is further complicated by the weaknesses of partially reformed state ownership. (Worldbank Beijing, 26 May)
http://www.worldbank.org.cn/English/Content/257m6320898.shtml

China's vehicle sales rose 22% in first four months
China's vehicle sales rose to 982'186 (up 22%) in the first four months of 2002. Heavy truck sales gained most, doubling to 87'907 units in the first four months. Passenger car sales rose 28% to 288'476 units from 224'821 a year earlier. (Bloomberg, 26 May)

New car loan regulations expected by June
Industry sources said that the People's Bank of China will announce the long-awaited stipulations governing the establishment and operations of jointly-owned auto financing companies on China's mainland by June, a move that will eventually open the huge market to overseas financiers. Analysts said that the involvement of world auto giants, such as General Motors and Volkswagen AG, in the Chinese auto financing industry may boost vehicle sales by up to 5%. (www.cbiz.cn, 27 May)

Unemployment to rise due to WTO-membership
According to the Chinese Academy of Social Sciences, an estimated 3 to 4 million people a year will lose their jobs in the first years of China's membership of the WTO. On the long term, the same membership will create millions of jobs annually. (www.cbiz.cn, 27 May)

Prices of Chinese industrial products drop in April
Factory prices of industrial products in China dropped by 3.1% in April compared with the same month last year. Consumer goods dropped 2.3% from April last year, with food down 0.7%, garments 1.5%, ordinary household items 1.8% and durable goods 5.5%. (People's Daily, 27 May)

23 million Chinese in foreign funded firms
Up to now China sees 23 million people working in the foreign-funded enterprises, accounting for over 10% of all workforces in Chinese cities and towns. Up to last April the Chinese government has approved the establishment of over 398'900 foreign invested enterprises with actual use of foreign funds to reach USD 409.3 billion. (People's Daily, 27 May)

China considers implementing new mobile-phone standards
China is considering the world's toughest standards on mobile-phone radiation that could saddle phone manufacturers with a huge financial burden and hobble Chinese companies as they attempt to go global. Under draft regulations being discussed, the government would cap handset radiation emissions at half the levels allowed internationally. (WSJ, 27 May)

China seeks WTO ruling on US steel tariffs
China urged the WTO to set up a dispute settlement panel over steel tariffs imposed by the U.S. Eight countries and regions have filed complaints about the U.S. measure with the WTO. (Dow Jones Newswires, 27 May)

Central Asian accord proposed
China would consider forming a free-trade zone with Russia and four central Asian countries, Trade Minister Shi Guangsheng said at the first meeting of trade ministers of the Shanghai Co-operation Organisation, which groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and newcomer Uzbekistan. (SCMP, 29 May)

First auto joint venture established after China's WTO entry
Beijing Motor Co. signed a contract with Hyundai Motor Co. for jointly establishing the Beijing Hyundai Motor Co. The joint venture is the first cooperation approved in the field of motor production after China's WTO entry. Hyundai will make use of China's huge market aiming to achieve its strategic goal of becoming the fifth of the world top five auto manufacturers by 2010. (People's Daily, 29 May)

Big bucks earmarked to build Beijing into a Metropolis
Beijing's fixed-assets investment will grow at an annual rate of 9% and to an accumulated total of RMB 850 billion in the coming five years, a 5.6-fold growth over those in past five years past. (People's Daily, 29 May)

CCTV to stop airing commercials with foreign celebrities
China Central Television has been requested to ban TV commercials featuring foreign celebrities. Lately, it has become very popular for domestic manufacturers to invite foreign celebrities to act as spokespeople for their brands. With the 2002 World Cup set to begin, the hottest celebrity is currently Milutinovic, the coach of China's national team. Korean movie stars are also among the top choices of most Chinese manufacturers. (ChinaOnline, 29 May) Way to go, China, until Beijing 2008!

Weaker dollar eases pressure on China yuan reform
The weakening of the U.S. dollar should take some pressure off China to widen the paper-thin trading band of its yuan currency this year. The slide of the dollar, which has lost 5% of its value against the yen and the Euro since January, makes the yuan and China's exports look cheaper, and it eases deflationary pressures to which a strong dollar had added, economists said. (Reuters, 30 Mai)

Bank charges service fee
The Industrial and Commercial Bank of China plans to impose additional service charges on "small accounts". Of the bank's 100 million individual accounts and 400'000 business accounts, some 20.18 million are small accounts with balances less than RMB 100. (Shanghai Daily News, 30 May)

MBAs lose perspective
Foreign consultants are reporting signs of "MBA-itis" - Chinese business school graduates so focused on Western-derived business cases and financial models that they don't have the local perspectives and skills to solve problems. More than 60 schools in China offer MBA degrees and 30'000 students are enrolled in MBA courses. (FEER, 30 May)

Korea tourism aim is blocked by China
The heavy-handed tendencies of China's authoritarian government are hitting the World Cup soccer tournament, reducing the number of Chinese tourists traveling to South Korea and crimping that country's expectations for a tourism windfall. For instance, China's police agency is requiring all World Cup tour operators to provide each tourist a ticket for at least one match, in an attempt to weed-out potential tour-jumpers by raising the cost of the tour. (WSJ, 31 May)

China's Forex reserves hit USD 233.8 billion
China's foreign exchange reserves reached USD 233.8 billion by the end of April, up USD 21.6 billion over the beginning of this year. (People's Daily, 31 May)

EU envoy warns Beijing on import rows
More Chinese action against European products, such as recent bans on make-up and Mercedes vans, could chill business ties between the two trading giants, the European Union's ambassador to Beijing said. (SCMP, 1 June)

China wins contract to build another 'Three Gorges' dam in Africa
One of the major Chinese contractors of the Three Gorges on China's Yangtze River has won the bidding to contract the largest hydro-power project in Africa. The China National Water Resources and Hydropower Engineering Corporation (CWHEC) will be contracted to build the Tekeze Hydro-Power Project in Ethiopia. The contract, involving 224 million U.S. dollars of investment, will be the largest cooperative project between China and an African country. (People's Daily, 1 June)

Central bank moves to ease deflation pressure
People's Bank of China will pursue a more rapid credit growth in the remaining part of the year than originally planned. Target for growth of the broad money supply (M2) in 2002 is now set at 14%, one point higher than the original goal. Furthermore, the central bank will allow commercial banks to float their lending rate in a wider range to make them more willing to issue loans to smaller enterprises. (China Daily, 1 June)

DaimlerChrysler, Beijing renew SUV joint venture
DaimlerChrysler and Beijing Automotive Industry Group Company renewed a joint venture agreement to produce Jeeps for the Chinese market. The partners plan to add another two vehicles to their line-up, details of which will be announced later this year. (China Daily, 1 June)

Weekly Market update  31 May 2002  24 May 2002
Shanghai A 1581.82 1616.89
Shanghai B 138.16 141.81
Shenzhen A 472.44 483.21
Shenzhen B 207.64 221.01
Hong Kong Red Chip  1282.82 1331.08
Hong Kong H 2130.60 2119.25
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 
3.6.2002

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