EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

24 June - 30 June 2002

No 101


Stocks rally as Beijing drops share sales
China's stock prices surged 9% in one day as the government announced it would scrap an unpopular plan to sell state-owned shares. Trading volume was more than triple the usual average as investors rushed back into the market. Stock prices have been held down for months by the possible unloading of massive state holdings in state-owned enterprises. (ChinaOnline, 24 June)

West-East pipeline in sight
A billion-dollar deal between PetroChina and Royal/Dutch Shell on a west-east gas pipeline is likely to be reached at the end of this month. The joint venture, which is worth USD 5.6 billion, aims to build a 3'900 km pipeline to transport natural gas from northwest China's Xinjiang Uygur Autonomous Region to Shanghai. The project is the second largest in China, next only to the Three Gorges Dam. (Xinhua, 24 June)

China hosted 33.2 million tourists last year
The World Tourism Organization reported that China welcomed 33.2 million tourists in 2001, making it the fifth largest destination nation in the world, while France remains the world's No. 1 tourist destination. (China Online, 25 June)

Auto show signals end to small firms
Although they were overshadowed by foreign big names, in terms of products, technologies and exhibition knowhow, Chinese automakers far outnumbered their global counterparts at the Seventh Beijing International Auto Show. However, it is likely that most of the Chinese automakers will stand subsidiary to their major domestic and foreign rivals, or may even disappear in Beijing auto shows in the years to come. (Business Weekly, 25 June)

Carrefour revamps business to follow local rule
French supermarket giant Carrefour will reorganize its Chinese operations and bring in local partners a year after Chinese officials said it broke rules by opening stores without their permission. The retailer is now restructuring its joint ventures to make sure its Chinese partners have ownership stakes of up to 35% and to reduce the number of ventures to 13 from 27. (Business Weekly, 25 June)

Giant automobile park to be built in Beijing
Tianfa Investment Holding Co, a Chinese financial and manufacturing company announced that it would invest around RMB 2 billion over the next two to three years to build the biggest automobile park in Beijing's Tongzhou District. The strategic decision was made based on the rapid growth of the Chinese automobile market after the nation's entry into the WTO. (Business Weekly, 25 June)

Sino-European aviation cooperation achieves milestone
China and Airbus Company have achieved a significant milestone in the A320 Wing Cooperation Program. Trial installation of all parts manufactured at two China Aviation Industry Corporation factories in Shenyang and Xi'an for A320 wings has been satisfactorily completed in Britain, the Airbus wing assembly base. (Xinhua, 26 June)

China's drug retailers rise to foreign challenge
Chinese pharmacies are undergoing a dramatic transformation as the retail medicine market prepares to open to foreign competition from January 1, 2003. Foreign pharmacies or joint ventures will snatch a considerable market share from domestic medicine retailers after they enter the Chinese market. (People's Daily, 26 June)

Policy on tourism forex adjusted
The State Administration of Foreign Exchange of China announced that starting from July 1, people touring overseas should buy their foreign exchange themselves from banks. (Xinhua, 26 June)

More foreign firms become sole investors in China
To many foreign investors in China, it is no longer enough to own some shares in a joint venture. The country's improved investment environment, immense opportunities and adoption of internationally accepted practices have encouraged many foreign firms to be sole investors in their China operation. (Xinhua, 26 June)

Prices of Chinese industrial products drop in May
The factory prices for industrial products in China dropped 2.6% in May from the same month last year. The decrease rate was 0.5 percentage points lower than that in April. (People's Daily, 27 June)

Allianz, Guotai Junan establish JV fund manager
Allianz Group subsidiary Allianz Dresdner Asset Management has reached an agreement with China's largest securities brokerage to establish the first Sino-foreign fund-management company. (ChinaOnline, 27 June)

Foreigners may be allowed to invest in yuan
The Ministry of Foreign Trade and Economic Cooperation is considering allowing foreign investors to invest in yuan. Currently, foreign companies can only make investment in foreign exchange within China. This regulation has brought much inconvenience to investors if they covert shares within China or withdraw their investment. (ChinaOnline, 27 June)

Beijing favors project financing for olympic construction
Beijing plans to rely on project financing rather than government debt issues to fund its Olympic Games construction program, estimated to cost several billions of dollars. Project financing refers to specialized loans for big ticket construction in which repayments are tied to the expected cash flow of the completed facilities. Beijing Mayor Liu Qi said Games organizers are hoping to establish cooperative arrangements with several overseas financial institutions to help develop project financing agreements. (Dow Jones Newswires, 27 June)

Microsoft intends to invest USD 750 million in Chinese market
Microsoft unveiled plans to invest about USD 750 million in China during the next three years, marking the largest foreign software venture ever in the country. Microsoft also agreed to set up a joint committee with China's State Development Planning Commission to review and discuss the company's investments. (Dow Jones Newwire, 28 June)

Alarm sounds on state revenues
China's fiscal revenue rose a meagre 3% year on year in the first five months, far off the 8.1% full-year target set by the state. The thinner inflow raises the spectre of a widening fiscal deficit this year, already projected to surge 19% over last year to a record RMB 309.8 billion. Central government expenditures were up 31.4% in the first five months, beating the budgetary growth target of 10.1%. Analysts say the dramatic revenue slowdown, following a run of double-digit growth, is likely to force Beijing to review years of expansionary fiscal policy, and highlight the urgency of improving tax collection. (SCMP, 28 June)

Scores hurt in 3-day riot at HK-owned factory
Thousands of workers at a Hong Kong-owned textile factory in Guangdong fought running battles with security guards in a three-day riot that left scores injured. Paramilitary police had to be called to put down one of the most violent cases of labour unrest in recent years, local officials said. (SCMP, 29 June)

China pushes government procurement closer to global standard
China took a decisive step in adopting transparent and indiscriminative practices in government procurement under the WTO rules as the country's legislature passed the Government Procurement Law. The law stipulates the scope, means and procedure of government procurement. China has yet to join the government procurement protocol of the WTO. However, it is committed to carrying out all governmental entities' procurement in a transparent and indiscriminative manner. (People's Daily, 29 June)

Reform crucial to avert environment crisis, warns study
A scathing UN-sponsored report urged Beijing to implement political reforms if it is to head off a mounting environmental catastrophe as well as growing social unrest. The "China Human Development Report 2002" spells out a dismal environment on the mainland, exacerbated by huge population pressures, land and resource scarcities, worsening pollution, increased urbanisation and uncertain food and water supplies. (AFP, 29 June)

France's SUEZ to set up Asian headquarters in Shanghai
SUEZ, the world's leading company in energy, water and waste services, will set up its Asian headquarters in Shanghai. (Xinhua, 30 June)

Weekly Market update  28 June 2002  21 June 2002
Shanghai A 1799.71 1631.02
Shanghai B 152.70 141.74
Shenzhen A 537.87 495.80
Shenzhen B 240.04 220.33
Hong Kong Red Chip  1176.28 1187.19
Hong Kong H 2141.10 2129.92
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 
1.7.2002

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