China's economy keeps expanding, driven by exports and massive state spending
China's economy grew 7.9% (GDP) to CNY 7.1682 trillion in the first nine months of this year. 3rd quarter growth was recorded at 8.1%, ahead of 1st (7.6%) and 2nd (8.0%) quarter growth.
China's total foreign trade volume was USD 445.135 billion during the period, up 18.3% compared with the same period last year. Imports stood at USD 212.572 billion, up 17.2%, while exports reached USD 232.564 billion, up 19.4%. The trade surplus was USD 19.992 billion, 49.4% more than for the same period last year. Foreign-invested factories account for about half of China's exports now, compared with low-single digits in the early 1980s.
Actual foreign direct investment rose 22.6% to USD 39.6 billion, slightly slower than the 25.5% gain seen in the first eight months. Pledged FDI rose 38.4% to USD 68.4 billion, also slowing from the January-August period, which had 42.4% growth. During the first nine months, China approved 24'771 foreign-funded firms, up 33.36% year-on-year.
Fixed asset investment, China's benchmark measure of capital expenditure, rose 21.8% year on year to CNY 2.58 trillion, 2.6 percentage points slower than the first-half result.
Tax revenue grew 11.8% during the first nine months of this year to CNY 1,253 trillion.
Value-added industrial output rose 12.2% to CNY 2.25 trillion in the first nine months, mostly driven by export and auto production. Three major industries - electronics, telecommunications equipment and transportation equipment manufacturing - accounted for 36.7% of the output.
By the end of September, outstanding broad money supply (M2) was CNY 17.7 trillion, up 16.5% from the same period last year. Outstanding narrow money (M1) stood at CNY 6.7 trillion, up 15.9%, while money in circulation (M0) was CNY 1.62 trillion yuan, up 7.8%. Outstanding deposits in both RMB and foreign exchanges totaled CNY 17.77 trillion, increasing CNY 2.3 trillion over the beginning of the year. Corporate deposits in RMB amounted to CNY 5.69 trillion, up 15.9%, while private savings deposits reached CNY 8.41 trillion, up 18.1% from a year earlier. Foreign reserves rose USD 46.5 billion in the first nine months to USD 258.6 billion as of September 30. China's consumer price index (CPI) fell 0.8% during the period of January to September. Retail sales rose 8.7% year on year to CNY 2.91 trillion, a percentage point faster growth than the first half of 2002.
China's economic growth continues to be driven by export-related industrial production, foreign direct investment and government spending on fixed assets. Analysts expect GDP growth to reach 7.8% year on year, a slight increase on the 7.3% achieved in 2001, despite the global economic slowdown. Economists see a healthy growth rate as crucial for China if it is to continue creating jobs for the growing number of workers being laid off from ailing state-owned enterprises. Even as the latest figures underscored the economy's strong growth momentum during the third quarter, Foreign Trade Minister Shi Guangsheng warned that next year's outlook is "rather complicated. We should be prepared to face difficulties and strive to maintain development."
(various sources)

Swiss exports to China up 7.7%, January to August
From January to August, trade between Switzerland and China was CHF 2.696 billion (-0.4%). Imports from China to Switzerland stood at CHF 1.495 billion (down 6.1%), exports at CHF 1.202 billion (up 7.7%). Machinery again took the lion share (62.1%) of total exports as it increased 5% to CHF 746 million. Watches (up 102.2% to CHF 47.3 million) and jewelry (up 133.6% to CHF 4.6 million) showed particularly strong growth. Chemical (up 10.9% to CHF 143 million) and pharmaceutical products (up 6.2% to CHF 76 million) as well as precision instruments (up 6.3% to CHF 83 million) performed well. Swiss exports to Hong Kong increased 10.2% to CHF 2.934 billion during the same period; imports from Hong Kong increased 33.0% to CHF 609 million. In total, Swiss exports to China (incl. Hong Kong) went up 9.4% to CHF 4.136 billion representing 4.6% of worldwide Swiss exports during the period. Imports increased 2.6% to CHF 2.103 billion. Swiss exports to Taiwan decreased -15.6% to CHF 762 million from January to August; imports from Taiwan went down -30.6% to CHF 410 million. (Embassy of Switzerland, 14 October)

Economy

IMF says China will fuel global economy next year
The global economic recovery next year will be weaker than expected as risks pile up, with China being one of the few countries projected to give it a boost. According to IMF chief economist Kenneth Rogoff China is likely to match the United States in the coming decades as the dominant driver of world economic growth. (SCMP, 15 Oct)

Real estate bubble loom in China
Over the first eight months of this year, the total area of vacant houses across China increased by 14.1%. Of the unsold houses, about 43.97 million square meters, which are 11.5% more than those of the same period last year, have been idle for over a year. By July of this year, capital held standstill by the vacant houses shot up to CNY 250 billion, the No 1 non-performing assets in terms of its size in all the industries in current China. (People's Daily, 16 October)

Finance

New rules for the establishment of reinsurance operations
The China Insurance Regulatory Commission has issued rules for the establishment of reinsurance operations. Chinese investment in such reinsurance operations is covered by CIRC regulations, while WTO provisions cover foreign investment. Foreign reinsurance companies will have to meet the conditions on operational capital and the like before they can open subsidiaries in China. (AFX News, 11 October)

China's largest corporate bond sales kicked off
China's top overseas listed company, China Mobile (Hong Kong), kicked off the country's largest ever corporate debt sale of CNY 8 billion in bonds. The company is the Hong Kong-listed subsidiary of China's dominant mobile telecom carrier, China Mobile Communications Corp, which has the world's most number of subscribers. All the accumulated money will be used to buy network assets in eight provinces on the Chinese mainland. (People's Daily, 15 October)

Guotai Junan and Allianz in funds first
Guotai Junan Securities and German financial giant Allianz Group have become the first to win Beijing's approval to set up a joint venture fund management company in China. The approval marks an important step in fulfilling China's pledge to open up its financial services sector to foreign competition following its entry to the WTO. China has more than 61 domestic funds, with more than RMB 116 billion - or a small share of its total stock market capitalisation (USD 500 billion) - under management. (SCMP, 17 October) In fact, the very first Sino-foreign JV Fund Management Company was the Sino-Swiss Venture Capital Fund Management Co. Ltd. (SSVC).

Rapid pace of growth vital, say experts
The Chinese Academy of Social Sciences warned that the mainland faced deflation, rising unemployment and bad debts if fast economic growth was not maintained. The warning is contained in its autumn report saying: "The level of domestic demand is inadequate, especially that of consumer demand. This problem has not been solved. There is a gap between the actual economic growth and its potential". Despite the warnings, the report gives optimistic forecasts of 7.8% or higher GDP growth this year, with next year also topping 7% if there are no major natural disasters or turbulence in the international arena. (SCMP, 19 October)

WTO

Lamy sure of China pledge
An expected reshuffle of China's top leadership over the coming months is unlikely to affect the country's implementation of its commitments as a WTO member, according to Trade Commissioner Pascal Lamy. The world should be patient as China reforms itself in line with the rules of the global trade club it joined in December, Lamy said in Beijing. (SCMP, 18 October)

Business

E-government sparks business
The decision by the central government to push forward with the adoption of information technology (IT) in government offices has effectively opened a market worth billions of yuan. Multi-national IT companies have been encouraged by the news and are making preparations to seize opportunities as when they arise. (China Daily, 15 October)

Benetton joins fashion's parade into China
Benetton, Italy's largest fashion retailer, opened its largest store in the world in Shanghai to tap rising wealth and interest in fashion in the world's most populous nation. Benetton joins a wave of European fashion companies hoping to dress China's swelling ranks of wealthy and fashion-conscious urbanites. Giorgio Armani said it planned to open 20 to 30 boutiques in the country within three to five years. (Reuters, 16 October)

Honda may get majority stake in new China JV
The Guangzhou municipal government is striving to win approval from the central government to construct the nation's first automobile joint venture with a foreign investor as the major shareholder. Negotiations about the project have basically been completed between the Guangzhou Automobile Group and its Japanese partner, the Honda Company. (China Daily, 17 October)

Car makers face bubble trouble
Experts have requested to bring China's motor manufacturing industry down a gear in order to avoid "bubbles" in the sector. China's vehicle-production capacity will increase to 10 million units a year by 2005 if the current development continues. But even the most optimistic estimates talk of an annual domestic demand of 5 million units by then. (Business Weekly, 15 October)

Coca-Cola plans six more bottling plants in China
Coca-Cola (China) plans to invest USD 150 million in six new bottling plants in China in the next two or three years. This would increase the company's total number of bottling plants in China to 34. (People's Daily, 16 October)

China's IT industry maintains high growth despite world slump
Despite global recession in the industry, China's IT output soared by 20% in the last decade and is expected to exceed CNY 1.6 trillion this year. China has become the world's biggest producer of mobile phones, DVD players, color TV sets, program controled switches and other electronic equipment. IT exports have become China's pillar export industry. With a total volume of USD 38.59 billion, IT exports rose by 33.3% in the first half of this year, more than one quarter of total exports. (People's Daily, 20 October)

Energy

China State Power president's whereabouts a mystery
China State Power Corp. President Gao Yan hasn't returned to work after the country's National Day holiday. His office says his whereabouts are unknown. The Hong Kong Economic Journal reported that Gao had been arrested on suspicion of corruption. There has been no official comment by the Chinese government, which owns the company. (Bloomberg, 11 October)

Second power chief probed
Lao Derong, the head of Shenzhen Energy Group is under official investigation. News of Lao's apparent fall from grace comes after the disappearance of State Power Corp. president Gao Yan. Both events are being seen by some as signs of score settling by feuding factions within China's communist hierarchy as they jostle for power ahead of the party congress. The disappearance of Mr. Gao, widely regarded as an ally of NPC chairman Li Peng, is seen by some as revenge for the downfall of Zhu Xiaohua, former head of China Everbright Group and a protege of reform-minded Premier Zhu Rongji. (SCMP, 15 October)

Beijing 2008

Beijing to invite foreign investment for Olympic projects
The Chinese government plans to invite foreign investors to bid for tenders for seven infrastructure projects in preparation for the 2008 Olympic Games in the city. Beijing is planning some 261 projects, including 12 Olympic field stadiums, an Olympic park, and a cultural and sports center. The projects require a total investment of USD 20.77 billion. The tender procedure for all the other projects should be completed by April 2003. (Dow Jones, 16 October)

Beijing

Beijing residents can pay income tax online
Beijing residents will be able to report and pay their income taxes online by registering at the Web site of the municipal land and taxation bureau. (ChinaOnline, 14 October)

Beijing's GDP goes up 9.6% in 9 months
Beijing municipality's GDP reached nearly CNY 215.3 billion in the first nine months of this year, a rise of 9.6% over the same period last year. The main areas of positive change were in the fields of investment and consumption, import and export, local government revenue, as well as the income of urban and rural residents. Automobiles, housing, and catering sectors were the highlights of the consumer market. Outstanding personal car loans for the first eight months of the year has amounted to CNY 8.3 billion, up 328% from a year earlier. (China Daily, 15 October)

Beijing plans huge investment in Light Rail System
Beijing plans to invest a total of CNY 63.8 billion in eight planned light rail projects in the next six years. The projects include two links from the city proper to the Olympic village for the 2008 Olympic Games and to Beijing's international airport. (People's Daily, 15 October)

Beijing starts building Science Park for environmental protection
Beijing began construction of its first science park for environmental protection technologies in Zhongguancun, the well-known "Silicon Valley of China." According to the State Environment Protection Administration, the current level of environmental protection industries in China is comparable to that of advanced countries in the 1980s. The park will focus on recycling and the production of highly advanced environment-friendly technologies. (China Daily, 17 October)

Universal theme park planned for Beijing
Universal Studios plans to build a USD 900 million theme park in Beijing, its first venture into China. The Hollywood entertainment group signed a preliminary agreement with one of the mainland's largest travel enterprises, the Beijing Tourism Group, to build a park of American-style attractions with Chinese cultural characteristics. (SCMP, 18 October)

Shanghai

Shanghai moves all international flights to Pudong Airport
Starting Oct. 27, Pudong International Airport will handle all international flights to and from Shanghai, including Hong Kong and Macau ones, and some domestic flights. The second phase of Pudong Airport, including a 3'800-meter runway and Terminal 2, will start construction next year. (ChinaOnline, 14 October)

Pearl River

The Pearl River delta: A new workshop of the world
China's Pearl River is an industrial region so huge as to transform global trading patterns and investment flows. Even without counting Hong Kong, the delta draws in one-quarter of China's FDI and generates one-third of its exports. It has become the contemporary equivalent of 19th-century Manchester, a workshop of the world. The other big point, though, is the difficulty of knitting together this macro-region to allow it to achieve its full potential. (Economist, 12 October)
http://www.economist.com/World/asia/displayStory.cfm?story_id=1382626

Lean times hit China Hi-Tech Fair in Shenzhen
Despite mainland authorities' wish to attract foreign investment with its annual China Hi-Tech Fair, few foreigners showed up last weekend and many of the displays were aimed at a local audience. (SCMP, 14 October)

Various

Farmers' pension scheme in pipeline
A new system to provide individual farmers with a pension is being drawn up. To finance the scheme it will be necessary for farmers to pay into a collective fund during their working lives. The pension moneys will be managed by professional fund managers who will increase its worth by investing in various markets. (China Daily, 15 October) The promise sounds familiar.

EU Trade Commissioner visits China
The EU's trade commissioner met with his Chinese counterpart to discuss a "loaded agenda", including a spat over both sides' banning of animal and food products. In January, the EU barred some Chinese produce after saying it found traces of banned antibiotics in shrimp, rabbit meat and honey. Beijing called the ban unjustifiable and protectionist, and retaliated with a ban on European cosmetics imports, citing fears of contamination with animal byproducts that might contain mad-cow disease. (AP, 17 October)

Burying the competition
Rather than enriching foreigners blinded by its market size, China is proving victorious in the manufacturing war. Its power is adding to global deflation and changing the way industries supply the world. (FEER, 17 October)
http://www.feer.com/

China factory staff's protest blocks road in Xi'an
Hundreds of factory workers in Xi'an have blocked a road since the start of the week. The protesters are denouncing what they say is the sale of the factory and surrounding land to a supposed 'high-tech company' for well-below market values, insisting factory bosses have taken significant bribes in the deal, the Hong Kong-based center said. (Straits Times, 17 October)

China overture offers hope of transport link
In an interview with a Taiwan newspaper, Chinese Vice Premier Qian Qichen indicated that Beijing is increasingly willing to set aside thorny political issues in the pursuit of direct links. Taiwan's government welcomed the new overture, kindling hopes that the two rivals might still find a way to compromise on the decades-old impasse. The ban is the biggest remaining barrier to the growing investment and trade across the Taiwan Strait. (WSJ, 18 October)