Economy

Despite risks, the economy is tipped to expand
China's economy should do well this year despite a number of risks, according to the National Bureau of Statistics. A tight job market, growing income gap and lagging development in the countryside could dampen economic growth this year after an 8% expansion last year. The sluggish global economy and the volatile prices of oil and grain could also set back the country's growth. (SCMP, 1 Mar)

China-ASEAN economic cooperation upgraded
China-ASEAN trade volume hit USD 54.77 billion in 2002, up 31.7% year-on-year. Last year, 8.8% of China's total foreign trade was with ASEAN, while in 1991, the ratio was only 5.8%. ASEAN is now China's fifth largest trading partner and China is ASEAN's sixth. Apart from trade, mutual investment and economic and technological cooperation in agriculture, tourism and the processing industry have also benefited. ASEAN countries had 19'281 investment projects in China by September last year, involving USD 28.68 billion, and China had invested USD 690 million in 769 projects in ASEAN countries. (People's Daily, 25 Feb)

China, India to offer more favorable tariff conditions
China and India are to offer each other a more preferential tariff status, after they agreed to apply the so called Bangkok Agreement in 2003. Signed in 1975, the Bangkok Agreement is a trade arrangement between Asian-Pacific developing nations that features preferential tariff and non-tariff favorable conditions. (Xinhua, 24 Feb)

State Owned Enterprises' transfer speeds up
The Central Government is accelerating the withdrawal from its industrial ownership of a number of SOEs. Mainland economists say the government's change in state ownership policy and the rebuilding of the administration system of State-owned assets, will lead to a breakthrough in economic reform. China had CNY 10.93 trillion in State-owned assets at the end of 2001. SOEs totalled about 170'000. The forthcoming transfer and restructuring of SOE ownership would cover some CNY 10 trillion worth of industrial assets. (Chinabiz, 24 Feb)

Finance

Five banks win status as QFII custodians
China's five largest commercial banks plus Shanghai-based Bank of Communications have been approved as custodians of the scheme, which will allow selected foreign investors to buy publicly traded yuan A shares (QFII). The qualifications of three foreign custodian candidates - Citibank, HSBC and Standard Chartered Bank - were under review. (SCMP, 1 Mar)

ABN Amro buys into China fund
ABN Amro Asset Management is to acquire a 33% stake in Beijing-based Xiangcai Hefeng Fund Management in a ground-breaking deal. ABN Amro will become the first foreign fund manager to take a stake in an operating Chinese fund management firm. Five foreign fund managers have won initial licences from the CSRC to launch JV fund management firms - ING Group, Societe Generale of France, Invesco of the US, Fortis and Allianz. But few have wanted to co-operate with an established partner because it involves lengthy negotiations on pricing and valuation with multiple domestic shareholders. (SCMP, 27 Feb) see also below

Much trumpeted JF Funds-Huaan mainland venture runs out of steam
JF Funds, under JP Morgan Fleming Asset Management, said talks to buy 33% of Shanghai-based Huaan Fund Management from its existing shareholders had been "put on hold". Thus it seems that the two-year courtship, once thought to be the mainland's first fund joint venture, would come to nothing. (SCMP, 27 Feb)

Former CSRC vice-chairman lands fund job
Former CSRC vice-chairman Gao Xiqing has been installed as deputy head of the National Council for Social Security Fund, overseeing a CNY 124.1 billion fund to plug provincial social security gaps. Analysts were divided on whether the re-assignment of the high-profile Western-minded official to a relatively low-key position represented a reversal of the CSRC's regulatory aggressiveness in the past few years. The national fund, so far parked mostly in bank deposits and state bonds, is due to invest up to 40% of its holdings in domestic stocks to boost earnings and inject fresh liquidity into the sluggish stock market. (SCMP, 26 Feb)

China's Central Bank may allow more flexibility in interest rates
China's central bank intends to permit more flexibility in interest rates this year before moving to a system of base lending rates. The state-run China Securities Journal predicted full liberalization of China's interest-rate regime to be completed within two years. How to allow banks to set the costs of credit on their own without choking key sectors of the economy is among the most important challenges facing Chinese policy makers. (Dow Jones, 26 Feb)

Top ten overseas investors for 2002 announced
Hong Kong remained the largest overseas investor in the Chinese mainland in 2002 with a total investment of USD 19.1 billion. The British Virgin Islands ranked second with USD 6.1 billion. The top two investors were followed by the United States, Taiwan, Japan, the Republic of Korea, Singapore, the Cayman Islands, Germany and Great Britain. (People's Daily, 25 Feb)

Japan renews call for China to drop the US dollar peg
Following a meeting of finance ministers and central bank governors from the G-7, Japan has renewed calls for China to drop its currency peg to the US dollar, a move which would strengthen the renminbi and make Japanese products more competitive. The Goldman Sachs Group has estimated the renminbi is undervalued by 15%. It expects China to expand the renminbi's trading range within the next 12 to 18 months, initially moving to a 1% band from the current 0.2%. (Bloomberg, 24 Feb)

Government

Corrupt NPC deputy dismissed
The National People's Congress removed deputy Li Hezhong due to bribery charges. Li was a former deputy secretary of the Political and Legal Committee under the Anhui Provincial Committee of the CPC. He had also served as Party secretary of Tongling City and as mayor of Fuyang City. (Xinhua, 1 March)

China Communist party approves leadership reshuffle
China's Communist Party approved a sweeping reshuffle of the country's top leadership and a plan to streamline the bloated bureaucracy, which is expected to be submitted to the National People's Congress for final approval during its annual session which begins on March 5. Analysts expect China to restructure key ministries with sweeping powers over trade, economic policy and state assets as part of the third major overhaul in 20 years. (Reuters, 26 Feb)

Legal

China issues first long-term foreign residency permits
China issued its first long-term residency permits to 46 foreigners, letting them live in the country for up to five years instead of being required to renew annually like most other foreigners. The new residency policy is part of China's attempt to attract high-level professional skills in computers and other fields. (AP, 25 Feb)

Business

BMW confident of China approval in weeks
BMW expects China's State Council to formally approve its planned joint venture with Brilliance China Automotive Holdings "during the next few weeks" in a development that will pave the way for the German manufacturer to launch its first mainland production line. (SCMP, 28 Feb)

ICBC ties up with Microsoft
The Industrial and Commercial Bank of China signed an agreement with Microsoft to further the development of the bank's personal Internet banking services. Microsoft will help the bank optimize the security of its Internet banking system. The bank will employ Microsoft enterprise-class products to provide customers with more individualized services. (China Daily, 28 Feb)

Carrefour aims to get bigger niche of Chinese market
France-based Carrefour, one of the three leading retailers in the world, has vowed to get a bigger niche on China's retail market. Carrefour had opened 35 stores in 20 Chinese cities by the end of last year since it first entered China in 1995. The number is expected to reach 49 this year. By contrast, Wal-Mart has 23 stores in China and Metro of Germany has 16 stores in China. (People's Daily, 28 Feb)

LG Electronics to make plasma display panels in Nanjing
South Korea's LG Electronics plans to invest CNY 65 million in a Nanjing plant that it hopes will be the world's biggest producer of plasma display panels (PDPs) for colour televisions. (SCMP, 27 Feb)

China blow to foreign TV hopes
CCTV vice-president Zhang Changming said that AOL Time Warner's Chinese Entertainment Television (CETV) and Star TV's Xing Kong Wei Shi channels were not likely to be permitted to extend their services beyond the Pearl River Delta region in the near future. "After all, the TV business is about ideology and propaganda," he added. "For us, social responsibility is more important." (SCMP, 24 Feb) It appears, he really ment it.

IT

Microsoft will give China access to Windows code
Microsoft Corp. said it would allow the Chinese government limited access to the proprietary source code of its Windows operating system, a move that could go a long way toward dispelling lingering distrust of the company in China. (Dow Jones, 28 Feb)

China's software industry saw 40% growth in 2002
China's software industry in 2002 developed by 40% over the previous year, coupled with a sales value hitting CNY 110 billion. In the coming years the software industry is forecast to maintain a growth rate of 30 to 35%. (People's Daily, 28 Feb) Unable to confirm the figures.

China develops home-grown digital chip
Chinese scientists announced a breakthrough for the country's high-tech sector with the development of the first home-grown digital signal processor (DSP) chip. DSP technologies, which can transfer real signals into digital ones at a high speed, are now widely used in cellphones, household electrical appliances, computers and cars. China is the world's largest consumer of DSP chips. (China Daily, 27 Feb)

China IT services industry to grow 18%
China's information-technology services market could reach USD 4.9 billion in 2003, up 18.9% from 2002, making it the world's second-fastest growing country for IT services, research firm Gartner Dataquest said. (Reuters, 25 Feb)

China computer maker seeks to expand abroad
Legend Group, the biggest Chinese maker of personal computers, is planning a big push into foreign markets. Legend's goal is to make 25% to 30% of its sales outside mainland China by 2006, compared with very little now. (IHT, 22 Feb)

Energy

Energy industry set to power ahead in 2003
China's energy industry is set to power further ahead this year as rapid economic growth, oil price hikes and industrial reform lay the conditions for wider expansion. The output of coal, electricity and natural gas is expected to grow more than 8% this year while domestic oil production could increase by 2%. China's demand for oil will slightly rise from 120 million tons in 2002 to 125 million tons this year. (Business Weekly, 26 Feb)

China to begin filling three gorges dam reservoir
China will begin filling the reservoir behind its mammoth Three Gorges Dam this summer, blocking tourist and commercial vessels from the area for two months. The Three Gorges Dam is to start producing power this year. Construction began in 1993 and is expected to be completed by 2009 when 26 power-generating units with a combined capacity of 18.2 million kilowatts will be in operation. Interest payments and inflation are expected to push the total cost of the project to CNY 180 billion. (AP, 25 Feb)

Beijing

Tianjin opens container shipping route to Europe
Tianjin Port, the largest port city in north China, opened a direct container shipping route to Europe. Tianjin port leads container transport in China and serves as an outlet for goods from central and western parts of China. It has established trade ties with 300 ports in 170 countries and regions. (People's Daily, 1 March)

Beijing sets up new bureau to promote investment
Beijing founded the Beijing Investment Promotion Bureau in an effort to provide better service to investors. The BIPB is based on the former foreign investment service center, set up in 1998. The BIPB will mainly publicize relevant policies, respond to investor requests and provide comprehensive services for potential investors. (People's Daily, 28 Feb)

Private sector witnesses rapid growth in Beijing
The registered capital of the private sector in China's capital exceeded USD 24 billion last year. The private sector submitted tax revenues totaling USD 740 million last year, up nearly 50% from the previous year. It meant that among every USD 100 of tax collected, USD 11.20 came from the private sector. Meanwhile, the private sector also invested nearly CNY 64 million in fixed assets last year, an increase of 230% over the previous year. (People's Daily, 28 Feb)

Microsoft, Beijing sign MOU on USD 2.2 million R&D lab
Microsoft is to invest USD 2.2 million to build a PC Innovations Lab in China's capital, as part of a memorandum of understanding signed with the Beijing government. (Dow Jones, 26 Feb)

Shanghai

China's first watch trading center established in Shanghai
China's first special trading center for timepieces was established in Shanghai. Located in the Pudong District, the center will focus on international trade, entrepot trade and trade agencies for watches, clocks and parts. Famous brands including Omega, Tissot and Rolex have agreed to be members of the trading center. China abolished quotas on imported clocks and watches beginning this year. (People's Daily, 1 March)

China's first travel JV opens in Shanghai
China's first corporate travel joint venture, CITS American Express Air Services Ltd, has opened in Shanghai. (China Daily, 27 Feb)

Pearl River

Ban on mainland Chinese jobseekers in Hong Kong to end
Due to a change in Hong Kong immigration policy Mainland Chinese skilled workers are welcome to work in Hong Kong. The new policy, widely expected to receive approval from the city's legislature, would go into effect in July. The change answers to the needs of Hong Kong's business community, which has lobbied for years to be allowed to tap into talent on the mainland. (Chinabiz, 28 Feb)

Survey reveals salary raises in South China
A Guangzhou Labor and Management Association survey found average salary increases of 6.1% year-on-year were paid to senior staff in Guangzhou-based foreign firms in the 2002-2003 fiscal year; 0.3 percentage points higher than in the previous year. General managers would earn an average annual salary of CNY 476'000 with top managers earning up to CNY 1.16 million. The average annual salaries for deputy general managers, chief sales managers, financial controllers and chief human resources managers are CNY 413'462, CNY 312'609, CNY 238'737 and CNY 212'582 Renminbi, respectively. (Chinabiz, 21 Feb)

Various

Siemens to be chief sponsor of China soccer league
Siemens Mobile, the cell phone unit of the German electronics company Siemens, will become the chief sponsor of the Chinese first soccer division. The deal will cost Siemens about USD 8 million. The Germany company would replace Pepsi Cola as the chief sponsor of the Chinese league. (Wirtschaftswoche, 27 Feb)

Taiwan semiconductor legally allowed to invest in China
Taiwan Semiconductor Manufacturing Co. is the first Taiwanese chipmaker to gain government approval to invest in China, after the island's government conditionally lifted curbs last year on chip investments in China. (Dow Jones, 26 Feb)

Taiwan: Job fears rise as China beckons
Taiwan is losing jobs as consumer spending flags and electronics makers move factories to China, where wages and land are cheaper. The exodus of jobs and investment is damping growth. Manufacturers' shift to China helped push the jobless rate to a record 5.2% last year and has drained cash from the country. Taiwanese investment in China rose about 39% in 2002 to USD 3.86 billion, while overseas investment in Taiwan dropped by more than a third to USD 3.27 billion. (Bloomberg, 21, Feb)