Economy

Vehicle imports in first eight months already top 2001
China imported 80'900 vehicles during the first eight months, up from 72'000 units last year. Vehicle imports in August alone reached 13'900 units. Meanwhile, total sales of domestically made vehicles increased more than 32% to over 2 million units. Sales of domestically made passenger cars reached 680'300 units during the period, up more than 42%. There are around 30'000 foreign-made vehicles in the Chinese mainland's bonded areas because they do not have import licences. (People's Daily, 30 September)

Mainland GDP growth better than last year, says Premier Zhu
Ahead of China's National Day and next month's all-important party congress, Premier Zhu Rongji gave a rosy forecast for the mainland economy. He said, China's economy could grow by 7.8% this year, again making it the best performer of the world's major economies. Stronger-than-expected foreign investment and exports have been the key drivers of this year's robust economic growth, supported by state spending and domestic demand. (SCMP, 1 October)

Trade gap overshadows Jiang trip to U.S.
China's entry into WTO was supposed to cut its trade surplus with the United States, but the opposite has happened. According to Chinese figures, China's exports in the first 8 months were USD 43 billion, up 22.7%, and imports were USD 17.18 billion, down 1.7%, for a surplus of USD 25.82 billion. US figures, which use a different method of calculation that includes Chinese goods shipped through Hong Kong and other transit points, show a substantially higher deficit. Economists expect the US to overtake Japan this year as China's biggest trading partner for the first time. (SCMP, 4 October)

China gives foreign groups more access to encourage M&As
China will allow private and foreign investors to acquire controlling stakes in domestically listed companies, laying the groundwork for more mergers and acquisitions. Holdings of 30% or more are considered controlling stakes, according to the rules due to take effect on 1st December. Currently, none of about 1'200 listed companies is majority foreign-owned and only a handful are privately held. The vast majority are state-owned corporations in which only a minority stake is floated. Foreigners are forbidden from buying unlisted shares of quoted companies. (various sources, 9 October)

National Day holiday spurs 81 million travelers
The tourism and travel industry earned CNY 30.6 billion in revenue over the weeklong National Day holiday, up 22.4% over last year. Approximately 80.7 million people traveled during the holiday, up 26.2%. Some 58.35 million travelers took day trips, while 22.36 million stayed overnight. During the period, China had a total of 35.4 million people traveling on the railways, up 1.5% year on year. Due to the Ministry of Railways' coordination, 99.96% of trains departed on time, and 98.66% arrived on time. (ChinaOnline, 9 October) I love the amazing accuracy of that last bit of information, and I wish the MOR had coordinated my own air travel during the holidays.

Finance

HSBC receives online banking license
HSBC, the foreign bank with the most branches on the mainland, has been approved to provide online banking services to local residents and international customers. (ChinaOnline, 2 October)

Tax noose tightens even more
Stepping up a national campaign against tax evasion, the tax office will tighten regulations for companies from October 15. In 12 pages of new bylaws, China's State Council directed all companies to register with the tax office within 30 days of their business registration. The new rules also seek to prevent companies from escaping taxes by passing tax liabilities between related business units. (FEER, 3 October)

HSBC takes 10% of insurer
HSBC is to invest USD 600 million for a minority stake in China's Ping An Insurance, representing the biggest investment in the mainland's insurance industry by a foreign firm. The agreement is the second direct investment by a foreign firm in the mainland insurance industry since China joined the WTO. (SCMP, 9 October)

China prepares to allow offshore yuan trading
The Chinese government is drafting rules to allow an offshore market -- probably in Hong Kong -- for its currency, in a step toward eventually making it fully convertible. The Chinese government restricts foreign exchange dealings in the yuan, which can only be converted into other currencies for foreign trade purposes and a limited range of other purposes, a policy long viewed as an impediment for both Chinese businesses and for multinational companies wanting to do business in China. Beijing also requires companies to deposit most of their export revenues at state-owned commercial banks. Despite China's capital controls, as much as CNY 50 billion is thought to be circulating in Hong Kong. Setting up an offshore market there would help draw that currency into the banking system. (AP, 11 October)

WTO

WTO chief pledges serious review of China progress
Stressing the need for China to disclose more information, the new chief of the WTO promised a thorough review of how well the communist-run nation is meeting its commitments to open its market to more foreign goods and services. China is subject to an annual review of its performance under the terms of its WTO accession agreement. Several U.S. business groups have recently complained of gaps in China's compliance, calling for independent regulation in some sectors such as insurance. (Reuters, 27 September)

Mainland allows car finance firms to be set up
Car finance companies are to be allowed on the mainland for the first time. According to a draft proposal published by the the People's Bank of China, foreign, as well as Chinese firms, with no less than CNY 8 billion in total assets will be able to apply to set up ventures offering car loans. Allowing loans will spur sales in a market that's already one of the fastest-growing in the world, carmakers said. China's passenger car market is expected to grow as much as 25% annually between 2000 and 2005, according to General Motors. At present, about 7 million Chinese families can afford to buy a car and the U.S. automaker expects that to grow to 42 million by 2005. Most customers in China paid cash for cars, whereas more than 80% of car purchases in the US are financed by loans. (SCMP, 9 October)

Foreign insurers pull out of China
Foreign insurance firms have closed a total of 11 offices in China so far this year. The closures included Lincoln National offices in Beijing, Shanghai and Guangzhou, the Shanghai office of Japan First Life and the Beijing and Guangzhou offices of Swiss Life. Insurance officials blamed the closures on the small size of the market and the continuing restrictions on the operations of foreign insurance firms. Chinese media said in September that the premium income of foreign insurers last year was 1.55% of the total, with a maximum of 12.7% in Shanghai. Much of the foreign share is accounted for by the US firm AIG, which entered the market in 1992 and is free from the requirement to take a Chinese partner. (China Economic Review, October)

Business

Chinese companies making acquisitions overseas for bigger profits
More and more successful Chinese companies have set their aims on foreign companies able to compete internationally. For example, Schneider company, one of the last remaining TV set manufacturers in Germany, which went bancrupt early this year, will open its doors again soon -- this time under the ownership of TCL Group, a Chinese electronic appliance company. (People's Daily, 30 September)

Mainland to spend USD 1 billion a year on foreign studies
China is the biggest source of foreign students in the world, with a total at 460'000 in 103 countries and territories, spending an estimated USD 1 billion a year. Education has become an enormous money-spinner for foreign schools and colleges that actively recruit on the mainland. They see in China the biggest market for students that pay the highest fees. It is also a huge industry for an army of brokers and middlemen. Traditionally, immigrant countries have been the most favored because parents want their children to obtain not only an education and language skills but also residency rights and, if possible, citizenship, offering the whole family the possibility of emigration. (SCMP, 7 October)

Volkswagen plans to sell cheap car in China
Volkswagen AG will introduce one of its existing small cars in China next year and hopes to sell 50'000 of those vehicles to maintain its market-leading position in the country. In 2001, VW sold 360'000 cars in China but its position as the leading car maker in the country is under threat following China's recent accession to the WTO. (Reuters, 7 October)

China-made Toyota sedan makes debut
Toyota Motor has rolled out its first Chinese-made car as Japan's top car-maker muscles its way into one of the world's fastest growing markets. At stake is a market for passenger cars expected to grow 40% to a record one million cars this year, making China one of the world's most rapidly growing car markets. (Reuters, 9 October)

Chinese carriers to merge, set sights on overseas listings
China's biggest airlines announced sweeping mergers that lay the groundwork for Air China, the country's flagship international carrier, to list on overseas stock markets. The mergers of nine airlines into three - Air China, China Southern Airlines and China Eastern Airlines - are part of a state-ordered consolidation of the industry intended to create several big, world-class carriers. Together, the airlines will hold 80% of the market and control most international routes. Chinese carriers expanded rapidly after the breakup of the monopoly carrier CAAC in the early 1980s, but increased capacity led to losses when a slowing economy cut into air travel. (AP, 11 October)

China Shanghai Automotive to take 10% stake in GM Daewoo
Shanghai Automotive Industry Corp. will become the first Chinese automaker to take an equity stake in a foreign car company, after it agreed to buy a 10% share in a South Korean venture created by General Motors. China's third-largest automaker said it is investing USD 59.7 million to acquire the share in GM Daewoo Auto & Technology Co. (Dow Jones Newswires, 13 October)

Energy

Electric power firm set up for Three Gorges Project
The China Yangtze Electric Power Corporation was set up in a bid to finance the Three Gorges dam project by raising funds on the stock markets next year. It is a spin-off company of the China Yangtze River Three Gorges Project Development Corporation, which is building the world's largest hydropower project at a cost of about CNY 182 billion. The Three Gorges Electric Power Corporation will gradually acquire all power-generation assets from the parent company and aims to become the world's top power-generation firm by 2020. (People's Daily, 30 September)

Shanghai

Shanghai turns private too
Every day 170 new private enterprises register in Shanghai. Traditionally Shanghai was dominated by larger and middle-sized state-owned companies with only a very small private economy, but the city is increasingly turns away from the state-led enterprises and allows the market to do its work. One out of three Shanghainese employees is now working for a private boss, 2.3 million people working for 210'000 enterprises. (Chinabiz, 6 October)

Various

Tycoon flees to LA for fear of prosecution
Former Brilliance chairman Yang Rong, the third richest Chinese business man according to last years' Forbes magazine, has fled to Los Angeles to avoid local prosecution in Liaoning. His company announced in June Yang Rong was replaced as chairman and chief executive in a dispute over his assets. Yang Rong was under investigation by state security, because he failed to comply with an order of the central government to transfer shares of an educational foundation in the company to the Liaoning provincial government. (chinabiz, 1 October)

Businessman named to head N Korea zone under house arrest
Yang Bin, the Chinese-born billionaire named chief executive of North Korea's first special free-trade zone, is under house arrest in Shenyang. Yang was taken into police custody for questioning about tax evasion charges. Yang, one of China's richest men, made his fortune in orchid and vegetable growing. (ChinaOnline, 4 October)

Migrant population tops 120 million
China has a migrant population of more than 120 million. Of the total, 35% have floated between provinces, with 16.4% migrating out of Sichuan province, 10.2% out of Anhui province and 10.2% out of Hunan province. Meanwhile, 35.5% floated into Guangdong province, 8.7% into Zhejiang province, 7.4% into Shanghai and 5.8% into Beijing. Of the total migrant population, 27% moved out of urban areas, while 73% left rural areas. (ChinaOnline, 8 October 2002)

Ex-China Everbright chairman receives 15 years for corruption
More than three years after he stepped down, Zhu Xiaohua, the former chairman of China's sixth-largest bank, was convicted of corruption and sentenced to 15 years in prison. Between 1997 and 1999, while Mr. Zhu was running the China Everbright Bank, he took bribes of cash and stocks worth of CNY 4.1 million. (AP, 10 October)

China unveils new rules regarding internet cafes
China has imposed strict new limits on Internet cafes, banning minors and demanding that operators keep records of customers and the information they access. The regulations also impose tougher safety standards for the popular cafes. Smoking is banned, no cafe can operated within 124 feet of a school, and the businesses must close by midnight. Customers are also prohibited from viewing Internet sites offering gambling, pornography or prostitution. The new rules also reflect the fear of China's communist leaders that the Internet could nurture subversion, as the regulations ban Internet cafe patrons from accessing a broad array of politically sensitive Internet sites, including ones that discuss independence movements in Tibet and the western region of Xinjiang or the sovereignty of Taiwan. (AP, 11 October)

Markets

China United debut disappoints
China United Telecommunications disappointed investors as its A shares made a weak debut in Shanghai. Investors had placed high hopes on China United, expecting its shares to surge as much as 80% on debut, but the counter ended up with a 24.78% advance from its 2.3-yuan issue price. The A-share company is a shell company that the mainland's No 2 cellular carrier created to hold an indirect 50.72% stake of SAR-listed China Unicom, allowing domestic investors to indirectly invest in the red chip. (SCMP, 10 October)

China Telecom plans to launch IPO in Hong Kong
China Telecommunications Corp. is planning to make its initial public offering in Hong Kong this year. China Telecom's planned IPO will be valued at between USD 3.19 billion and 3.68 billion, making it Hong Kong's largest public share offer this year. (People's Daily, 13 October)