29 May - 04 June 2000

No 01

Environmental improvement in the western region
China will spend as much as RMB 110 billion (USD 13 billion) during the next five years on environmental improvement projects in its western region, State Finance Minister Xiang Huaicheng said last week. The funding program is part of a long-term plan for the region which encourages individuals as well as companies from home and abroad to invest in the west. The State has announced it will provide preferential policies for those who invest in the region. The environment is a key issue in the long-term strategy for the region's development, Xiang said. The region's environmental quality, affected by serious water shortages and frequent sandstorms, is one of the worst in the country. (China Daily, 29 May)

900 million square meters of empty apartments
The State Council has issued the "Housing Security Management Tentative Measures" to "support the individual housing consumption program through developing individual housing loan business and protecting the realization of credit rights". 
These new regulations basically put into place the requirements for establishing mortgage guarantee companies. If one wants to establish such a company, their actual capital cannot be less than RMB 10 million. The other key requirement is that these companies must own a certain number of apartments which are in use or on the market. Despite these seeming easy conditions it is understood that each city and region will only permit one such company to operate, creating virtual regional monopolies with the risk of further corruption.
It is estimated that there are now more than 900 million square meters of empty apartments in China which cannot be sold to anyone. (various sources, 29 May)

China steps up urban subway construction
The Chinese government is encouraging big cities to build more subways to relieve urban traffic congestion and air pollution caused by the increase of urban population and vehicles, according to the Ministry of Construction in Beijing. China now has subways in Beijing, Shanghai, Tianjin, and Guangzhou. And major cities such as Nanjing, Chongqing, Qingdao, and Shenyang are planning to construct them. (Xinhua, 29 May)

Toyota wins final go-ahead for China JV
Japan's biggest auto-maker Toyota Motor Corp said on Monday it had won approval from the Chinese government to launch a joint car venture in Tianjin, its first move into the potentially lucrative China market. In a widely-anticipated move, the world's third-largest auto-maker said it and China's Tianjin Automotive Xiali Co Ltd., will form a fifty-fifty joint venture, with a total investment of $100 million. (China Daily, 29 May)

Saving deposit continues to grow in China
China's money supply amounted to RMB 12'258 trillion ( USD 1.48 trillion) by the end of March, up steadily from the previous month, but currency in circulation declined as savings continued to post positive growth. (Xinhua, 29 May)

Premier envisions perfect social welfare
Premier Zhu Rongji is urging the quick formulation of a standardized - and perfect - national social welfare system. 
The premier made the remarks last Friday at a social welfare forum held the Zhongnanhai compound in Beijing, headquarters of the Communist Party of China and the central government. Zhu stressed the importance and urgency of improving social welfare. Securing basic rights and quality living conditions for working people is the fundamental goal of the Party, he noted. The premier said the system must be independent from all enterprises and institutions and compatible with the economy. He said the country should first set up a pension system, welfare for laid-off factory workers and the jobless and a security system for the basic living needs of urban residents. The key is a continuous money source, he said. The government plans to set up a national social welfare. (China Daily, 30 May)

Not So Fast
The Far Eastern Economic Review in its June 1st edition cautions against any predictions that China will join the WTO this year or by early next year. They believe that "The normally lengthy process [of a final accession protocol] is sure to take even longer in China's case" as "the WTO has never before had to digest a 'monster' such as China, with its tangle of non-tariff barriers and its great importance to world trade." Furthermore, they point out that "Beijing is also likely to be hampered by its own slow-moving internal bureaucracy [...] with only a dozen officials at the foreign trade ministry concentrating solely on WTO accession, and coordination between different ministries less than perfect..."

China Official Presents Plan to Protect Agricultural Sector from WTO Membership
Finance Minister Xiang Huaicheng said recently that the government will further strengthen the nation's agriculture to support and protect this sector following China's accession to the WTO. Xiang explained that according to the stipulations of the WTO Agricultural Agreement, once China joins the trade group, the country must improve market-access opportunities for imported agricultural products, which will produce severe challenges to its agricultural sector. The minister pointed out, however, that China may invoke the agreement's protective clauses-namely its "Green Box" policies-to support and protect its agriculture. (ChinaOnline, 31 May)

China's textiles machinery industry, hit hard by recession, is on its way to recovery
Worthwhile brief on the current situation of the Chinese textiles machinery industry. (ChinaOnline, 31 May)

They're Back: China State Companies on Upswing
Worthwhile brief on the current state of China's state-owned enterprises (SOEs). The article, quoting several analysts, reports that the SOE's recovery continued in April with yet another large increase in profits. The sector's recovery is attributed to several factors: 
- China's steady economic growth environment; 
- A slowdown in price deflation; 
- Price recovery in some key raw materials, such as chemicals and petrochemicals; 
- Price stability "in many other sectors such as airlines"; 
- "Capacity destruction" in many "oversupplied sectors, such as textiles"; 
- Current unwillingness of Chinese banks to make loans for SOE expansion;
- Recent debt/equity swaps with government asset management corporations and
- management improvements.
(ChinaOnline, 1 June)

China's GDP Expected to Grow By Eight Percent This Year
People's Daily (2 June) reports an article from the latest issue of the news weekly Outlook, which says that "China's gross domestic product (GDP) is expected to grow by eight percent this year since major economic indicators have showed improvements". After listing those indicators the article ends noting that "despite the good performance of the economy, . it will be very difficult to achieve faster economic growth after the economy has entered a period of relative balance. Future efforts should be focused more on upgrading the country' s economic quality and efficiency. 
Earlier this week, the Asia Wallstreet Journal published an article questioning the accuracy of Chinese statistics. According to American scholars, the figures given by Chinese authorities are quite often the result of negotiations rather than scientific calculation. Based on their own calculations, said scholars estimate China's GDP growth in 1999 to be below 5%.

China Takes Bold Measures to Boost Auto Consumption
The Chinese government Friday announced the cancellation of 238 kinds of charges in relation to transportation and vehicles, in a bold move to encourage automobile consumption. A press release by the Ministry of Finance and the State Development Planning Commission said the move could save consumers up to 14.5 billion yuan a year. (People's Daily 2 June)

China Tightens Procedures For Shareholders' Meetings
The China Securities Regulatory Commission (CSRC) released the revised "Suggestions for Standardizing Shareholders' Meetings of Listed Companies," which replaced an earlier version issued on Feb. 23, 1998. (Xiinhua)

500th stock listed on Shanghai Stock Exchange (06/2/2000)
The Shanghai Stock Exchange today listed its 500th stock.
The bourse was launched in 1990 with just eight stocks. Over the past decade, it has developed from a regional market dominated by local stocks into a national market with companies from over 30 regions nationwide listed on it. (Xinhua, 2 June)