SARS

Misinformation fuels fear in Beijing
A lack of consistent or reliable information about SARS has fanned panic in Beijing, where increasing numbers of people are donning face masks and speculation is rife about the spread of the disease. Clinics have reported a flood of public inquiries, while work units are disinfecting phones and computer keyboards and giving out preventative Chinese medicine to staff. A leading factor is suspicion that many Beijing hospitals have seen SARS patients despite official government reports of only 22 cases, four deaths and one recovery. (SCMP, 13 Apr)

Suspected SARS cases left off the official list
Mainland officials admitted that they did not include all cases or suspected cases of SARS patients in their official statistics. The Ministry of Health has come under attack for not revealing the full extent of the disease in Beijing. Official statistics list 1'290 Sars patients on the mainland, with 55 deaths. The ministry says there have been 22 cases and four deaths in the capital. But according to a retired director of general surgery from PLA Hospital 301, there have been 146 cases of infections and 10 deaths in three major PLA hospitals alone in Beijing. (SCMP, 12 Apr)

S&P: SARS more damaging to Greater China's economy than Iraq war
Standard and Poor's said the outbreak of SARS in greater China is proving to be more damaging to economic activity than the US-led war in Iraq. The ratings agency noted that following the outbreak of SARS, tourism bookings in Hong Kong fell 80% year on year, restaurant patronage was down by more than 50% and retail sales were down by a similar amount. (AFP, 11 Apr)

Buyers pulling out of Chinese trade fair on SARS fears
Adding to economic losses, uneasy foreign buyers are canceling plans to attend China's biggest trade fair this month in its hard-hit south. The Chinese Export Commodities Fair in the southern city of Guangzhou last year drew more than 120'000 visitors. Other events in China that depend on foreign participation have been called off when too many guests pulled out. But gatherings over which Beijing has more influence are going ahead as planned. (AP, 11 Apr)

Buyers weigh options
Microsoft has asked one of its key suppliers for contingency plans to shift production from the Pearl River Delta to Mexico, in a development that illustrates overseas buyers' nervousness about the vulnerability of their global supply chains to the SARS virus. (SCMP, 10 Apr)

China's slow SARS handling exposes investment risks
China's sluggish response to the outbreak of a deadly flu-like virus and stonewalling of information shows the hidden investment risks lurking behind the country's sizzling growth numbers. Foreign investors infatuated with China, the world's fastest growing economy and the region's economic powerhouse, have poured in billions of dollars to take advantage of the nation's cheap labour. But now many say China's handling of the disease may give multinational firms a cause to pause and take a harder look at the risks of putting all eggs in one basket. (Reuters, 9 April)

Hard to count ultimate toll of SARS
The SARS outbreak triggered a flurry of research reports by investment banks, all of which featured downward growth estimates for countries in the region. The economic consequences of SARS thus far have been limited to the demand side - mainly reduced economic activity as consumers stay at home for fear of contracting the illness. The longer the health crisis persists, the greater impact it will have on the supply side as production is reduced due to workdays lost through quarantine, sickness or death. (Dow Jones, 7 Apr)

War in Iraq

Iraq war disturbs tranquil business picture
Domestic petrol prices have remained stable since the beginning of March, after climbing 55% in February. Experts acknowledge the war is affecting business in China, but note the impacts have been limited to large cities frequented by foreigners. Experts predict post-war Iraq will offer great business opportunities to Chinese firms. China's clothing, metal products and household electrical appliances, in particular, will be in great demand. Some sectors are profiting from the war. Expensive maritime satellite telephones, for example, have been selling well in recent days. (Business Weekly, 8 Apr) The article was obviously written before SARS was officially admitted.

Economy

Spike in oil prices blamed for a rare trade deficit
China reported its first quarterly trade deficit in seven years, as the high cost of imported oil overshadowed resurgent exports. Exports rose more than 33% (to USD86.3 billion) in the first quarter of 2003 from a year earlier, but a 52% (to USD87.3 billion) leap in imports led to a trade deficit of more than USD1 billion. Higher oil prices stemming from uncertainty over Iraq forced the dollar value of imports higher in the first quarter of this year for China, the world's third-biggest crude oil consumer. China, which buys a third of its oil abroad, imported nearly 15 million tonnes in the first two months, a rise of 62% from a year ago. China has also seen a flood of other imports, as the WTO impact seems to become more apparent. Following the strong trade figures and robust industrial output, mainland economists have forecast the GDP to grow between 9 to 10% year on year - the highest quarterly growth since 1997. (SCMP, 12 Apr) A Dow Jones survey showed GDP expectations centering on a rise of 8.2%, up slightly from the 4thQ quarter's 8.1%. Official figures for the 1stQ will be announced on 17 April.

China encourages domestic firms to invest overseas
China's overseas direct investment registered USD2.3 billion last year. China had set up 6'960 enterprises overseas with a total investment of USD13.7 billion by the end of 2002, of which USD9.3 billion was invested by Chinese side. The total business volume of China's overseas project contracting and labour co-operation projects reached USD144.2 billion, with 2.73 million Chinese working overseas in various service export projects, up 432'000 compared with the figure at the end of 1989. China has invested in about 160 countries and regions in areas ranging from trade, shipping and catering to manufacturing, processing, mining, project contracting, agricultural co-operation and research and development. The government has already mapped out a plan to aid the establishment of hundreds of multinational enterprises operating with different scales. The goal is for 50 Chinese enterprises to be among the top 500 of the world by 2015. (People's Daily, 11 April)

IMF upbeat about China's economic growth
The International Monetary Fund confirmed its view that China will continue to grow strongly in the coming years. IMF chief economist Kenneth Rogoff said China is growing very strongly and will achieve an annual growth rate of 7.5% in both 2003 and 2004. In its latest World Economic Outlook, the IMF said China's real GDP grew by 8% in 2002. (People's Daily, 10 Apr)

China's industrial output rises 17.2% in first quarter
China's industrial output rose 17.2% to CNY834.3 billion in the first three months of 2003. The growth rate was 6.3% percentage points higher than the same period last year. Six major industries including telecommunications, computers, electronics and transportation equipment led the fast rise in industrial output. Car production rose a year-on-year 120% to 399'000, while output of all types of vehicles rose 54% to 1.05 million. Industrial output is an important indicator of China's economic development as it contributes about 60% to GDP. (China Daily, 10 Apr)

China to inject CNY130 billion for West development in 2003
China will put in CNY130 billion to start 14 new projects in the western regions during the year 2003. It is estimated that by the end of the year there would be 50 newly started key projects under construction, with a total investment over CNY700 billion. (People's Daily, 8 Apr)

Finance

China insurance records losses
China's insurance sector recorded a 21.3% loss on fund investment in 2002, against a 20% return a year earlier. The loss on fund investment reduced the average capital return of the insurance sector to 3.14% for 2002, from 4.3% in 2001, despite a 44.3% year-on-year increase in premium revenues last year. (FT, 8 Apr)

WTO

China revises Foreign Trade Law
A draft to amend laws pertaining to foreign trade seeks to offer domestic enterprises more avenues of redress to resolve disputes involving foreign trade barriers. Under the new law, Chinese enterprises will be able to conduct investigations, turn to arbitration and even resort to the WTO to solve trade barrier or discrimination cases which go against WTO principles. Once ratified, the draft will also further reform the legal system to meet China's commitments to the WTO while striking a better balance between compliance to the WTO's rules and the needs of domestic enterprises. (China Daily, 8 Apr) A better balance?

Legal

Three provinces move to curb protectionism
Provincial governments in the Yangtze River Delta are striving to curb regional protectionism and facilitate mutual cooperation in investment, trade and business. According to a memorandum of cooperation, Zhejiang and Jiangsu Province and Shanghai will give equal access to investment from the two other areas. (People's Daily, 11 April)

Audits discover illegal accounts in China banks
The Construction Bank and the Agricultural Bank of China were the two targets of nationwide audits the National Audit Bureau carried out last year. The bureau investigated 20 branches and units of Construction Bank and found 88 illegal accounts with CNY101.78 million. At the Agricultural Bank the bureau found illegal accounts totalling CNY87 million. They also discovered 51 economic crimes, involving 74 people and CNY2.27 billion, with the problem especially serious in CCB branches in one provincial capital. (SCMP, 7 Apr)

Business

Toyota and FAW to build new China car plant
Toyota has signed a deal to expand its alliance with First Automotive Works, including the construction of a new plant Tianjin to produce cars based on a Toyota luxury model from 2005, with output targeted initially at 50'000 vehicles a year. Toyota, in a bid to muscle its way into one of the world's fastest growing markets, formed a broad alliance last August with FAW to make 300'000 to 400'000 luxury sedans, compacts and sport utility vehicles annually in China by 2010. (Reuters, 10 Apr)

Chinese manufacturers build plane parts for Airbus
Until now, Airbus Industrie has subcontracted over USD500 million worth of airplane parts production to Chinese manufacturers, and one fourth of the 3'000-strong Airbus passenger jet fleet worldwide has Chinese-made parts and components. (ChinaOnline, 9 Apr)

Swiss ice cream maker ready for hot market fight
Swiss food giant Nestle plans to speed up investment in its Chinese ice cream operations in an effort to outdistance its rivals. "Our investment this year will be much bigger than last year, and we believe we will find a territory in China's market," said Ken Donaldson, head of Nestle's ice cream business in China. "The increasing GDP in China provides a positive environment for development of the ice cream market," he said. There is huge growth potential in China's market, as Chinese people's per capita ice cream consumption is at a very low level, he said. Currently, per capita ice cream consumption in China is less than 1 litre a year, compared with nearly 23 litres in the United States, Donaldson said. Nestle began its ice cream business in China in 1992. It now has four ice cream factories - in Tianjin, Shanghai, Guangzhou and Hong Kong. There are around 4'000 ice cream companies in China. (Business Weekly, 8 Apr)

Roche aims to expand sales in Chinese market
Roche, one of the world's leading pharmaceutical companies, has announced that it aims to raise the ratio of its Chinese sales as a percentage of its global sales from the current 1% to between 3% and 5% in five years. Although Chinese sales account for 25% of its Asian sales, (excluding Japan), last year's Chinese sales, totaling USD319 million, accounted for only 1% of Roche's global sales, and Chinese sales are expected to rise as Chinese spend more money on health, according to Zhou Pingshan, the newly-appointed general manager of Shanghai Roche Pharmaceuticals Ltd. Since 1994, Roche has set up three enterprises with its own capital and three joint ventures, a total investment of USD236 million. "In the nine years since entering the Chinese market, Roche has maintained remarkable growth, and annual sales have grown at double-digit rates for several consecutive years," Zhou said. (People's Daily, 7 Apr)

Energy

Nuclear energy to take 3% of China's total by 2005
China is to cut its reliance on fossil fuels by increasing the energy output of its nuclear power plants. Atomic energy officials set a goal of 3% of the total national power output coming from nuclear plants by 2005. China's nuclear power plants are expected to reach 8.7 million kilowatts in two years, when four new generating units will be put into operation, joining the current seven sets. (People's Daily, 10 Apr)

Beijing

Overseas investment in Tianjin surges in first quarter
Tianjin used USD368 million of overseas investment in the first three months of 2003, up 55% from last year. The city approved 230 overseas-invested enterprises during the period - 175 of them wholly foreign owned -, with total contracted investment reaching USD934 million, a rise of 143% year on year. The service sector in the city absorbed 45% of the overall overseas investment, becoming the major field luring overseas investment. (People's Daily, 13 Apr)

Shanghai

Shanghai's economy up 11.8% 1st Q
Shanghai's economy grew at an annual 11.8% in the first quarter, faster than at any time last year, thanks to strong exports and foreign investment. Exports surged 34% to USD9.1 billion and contracted foreign investment rose 59.2% to USD3.4 billion. (FEER, 17 Apr)

Shanghai issues regulation on delayed salary payments
Shanghai has issued a regulation prohibiting companies from withholding or delaying payment of their employees' salaries. The regulation stipulates that a delay of more than one month without prior permission from employees is illegal. Employers found guilty of delayed payment of salaries will be required to pay the wages due in full plus 25% of the delayed salary payment. Tens of thousands of employees across China had their salaries withheld this year, mostly migrant workers from rural China. As a result, the Chinese central government has moved to crack down on this illegal practice. (People's Daily, 12 April) The central government may want to make sure that migrant workers are able to read and understand what they sign when they give permission to delay their salary payment. And why does only Shanghai need such regulation?

BoC eases loan restrictions on private sector
The Bank of Communications has lifted restrictions on loans to private enterprises in Shanghai. Self-employed business people or the owners of private companies, for the first time during the past five decades in Shanghai, will be eligible for loans of up to five CNY5 million as floating capital. State-owned banks, which dominate the financial market in China, used to shun private enterprises when granting loans, but things are changing as the political status of the private sector has improved. (People's Daily, 11 Apr)

Various

China plans new rail to shorten north-south travel
A new trunk rail line from Beijing to Guangdong Province could make history in Chinese railway by cutting the travel time by more than half. The new link is expected to run a distance of more than 2'000 kilometres long at a speed of 200 kilometres per hour, double that of the old one. The new railway will be devoted to passenger transportation, while the existing link from Beijing to Guangzhou will continue to be used for the movement of cargo as well. (China Daily, 8 Apr)

Domestic media publishes list of richest Chinese people
The April issue of Guangdong-based "New Fortune" published the nation's first ranking list of richest Chinese people. Rong Zhijian of CITIC Pacific Limited toped the list to become the richest Chinese with a fortune of CNY6.11 billion. The average fortune for the top 400 is CNY760 million. The list shows that China's rich are mainly from real estate industry and traditional manufacturing industries. (People's Daily, 7 Apr)

Markets

China shares end higher; blue chips rise on QFII hopes
China shares closed higher Friday, with the benchmark Shanghai Composite Index hitting a six-month high as institutional investors bought up blue chips. Institutional investors are actively buying blue chips, which they believe will be the targets of qualified foreign institutional investors, said an analyst. (Dow Jones, 11 Apr) What virus? A war?