China's economy grows 8.2% in 1st half
The latest figures fuel the hope of many that by year-end GDP growth will reach or even surpass the predicted 7.0%. But analysts say there were still dark spots in the economy, including weak domestic demand and the possibility of an export slowdown in the second half. GDP growth in the first six months depended largely on export. (China Daily, 14 July)

Imports, Exports rise to record highs
China's exports surged 38.3% to USD 114.5 billion and imports rose 36.2% to USD 102.1 billion in the first half of this year. The country's trade volume reported an accumulative surplus of USD 12.3 billion (up 37.3%). Exports of steel, machinery, electronics, garments and furniture continued to rapidly increase. But the country's exports of some labour-intensive products such as clothes, shoes and toys fell below the overall increase rate of China's exports. China's imports of primary products such as oil, minerals, wood and paper surged 77% in the first half year from the same period last year. But industrial products such as machinery, electronics, steel, textiles and chemical products still account for 80% of China's imports. The United States, Hong Kong, Japan and the European Union led China's exports in the first half year with about US$20 billion each. (People's Daily, 13 July)

Actual foreign investment contracting
In the first half of 2000, China approved 10,101 foreign investment contracts (up 25.5%) worth a total of USD 24.17 billion (up 24.6%). Meanwhile actual foreign investment contracted by 7.5% to USD 17.167 billion. (ChinaOnline, 13 July)

China's tax revenue up
China's tax revenue hit a record RMB 597.26 billion (up 20%) in the first half of this year, accounting for 54% of the target set for the year. Domestic value-added tax revenue rose by 13.7% (to RMB 218.25 billion), while revenue from domestic consumption tax gained by 2.4% (to stand at RMB 40.25 billion). Income taxes from overseas-funded enterprises increased by 35.4% (to RMB 15 billion). Import duties collected by customs rose by 32.5% (to RMB 65.37), while securities stamp tax soared 147.6% (to RMB 26.77). (Xinhua, 13 July)

Customs revenue keeps climbing
A booming economy, tight government control over smuggling, international price surges of some commodities and improved management of taxation increased China's customs revenue in the first half of this year. During this period customs taxed RMB 98.93 billion (up 29.3%). (China Daily, 13 July)

Rise in industrial profits
From January to May 2000, net profits achieved by industrial enterprises amounted to RMB 125.4 billion, up 130%. Net profits by state-owned and controlled industrial companies was RMB 69.2 billion, up 310%. (South China Morning Post, 11 July)

Textile sector increasingly Profitable
The roughly 18,300 textile enterprises in China reported net profits of RMB 8 billion in the first five months of this year, compared with RMB 800 million for the whole year of 1999. Experts attributed the rapid increase of profits to buoyant Chinese and international markets.
In the first five months, China exported about USD 19.31 billion worth of garments and textile products, up 40.3% from the same period last year. The textile sector earned USD 14.02 billion in foreign exchange in the first five months of this year, accounting for about 13.4% of the country's total net foreign exchange earnings. (People's Daily, 11 July)

Bank of China goes abroad to raise funds
Since the beginning of this year, the Bank of China has been going overseas to raise money for infrastructure projects. The Bank has received USD 470 million in government loans, mixed loans and discounted loans from Finland, Australia, Sweden, Canada and Israel. (People's Daily, 10 July 2000)

Foreign investment incentives for China's central and western regions
The Ministry of Foreign Trade and Economic Cooperation has announced imminent relaxation of foreign investment restrictions and specific preferential measures to encourage foreign investment into China's central and western regions. Two measures stand out:
- Extensions on income tax exemptions and reductions for foreign investors with existing investments on China's coastal regions which invest in the interior (maintaining at least 25% foreign equity). Here's an interesting way of soft-pressuring foreign investors to extend their activities from the coast to the central and western regions.
- Admission of foreign investment enterprises "which meet the conditions" to list on the A and B share markets in China. This might well announce a revolution in the foreign investment landscape and present a breakthrough for foreign investors as it allows for the first real exit strategy for China investments.
(ChinaOnline, 11 July)

Capital flight decreasing
Due to the recovering economy and a more stable currency, capital flight from the China is expected to slow down this year. Independent experts estimated capital flight for the past three years to amount to USD 36.4 billion, 38.6 billion and 23.8 billion, respectively, or nearly double the sum official figures indicate. (South China Morning Post, 12 July)

On-line advertising to require licences
To protect the interests and rights of consumers, and standardize Internet advertising, the Advertisement Supervision and Management Bureau has decided to register 27 well-established Web-based companies in Beijing, Shanghai and Guangzhou to pilot on-line advertising (and its licensing). The sites are required to abide by traditional advertisement regulations, and have their content examined when posting ads for special commodities. None of China's current 15'000 registered websites have obtained government approval to post advertisements online. (China Daily, 12 July)

Number of bank safe deposit box rentals increasing rapidly
Following the abolition of numbered accounts at China's various commercial banks, it has been recorded that the number of bank safe deposit box rentals has increased rapidly. With the abolition on the numbered account system earlier this year to take a stab at corruption, it appears that the problem has been solved by just taking out safe deposit boxes for which anonymity can still be somewhat retained. Current interest rates are not worth leaving the cash in accounts anyway. (China Watcher, 12 July)

Ten Chinese Companies in Fortune Global 500
Ten Chinese companies are in this year's Fortune Global 500 list, up from six last year: Sinopec (58), State Power Corporation (83), Industrial & Commercial Bank of China (208), China Telecommunications (236), Bank of China (255), Sinochem (307), Agricultural Bank of China (341), China Construction Bank (364), China National Cereals, Oils & Foodstuffs Import & Export Corporation (COFCO) (413) and Cathay Life (489). (People's Daily, 13 July)

China's drowning in counterfeits
A report, released only to domestic Chinese media, blamed local government officials for protecting factories that produced USD 16 billion worth of counterfeit goods in 1998. Foreign firms estimate sales losses to counterfeiting at more than 20% per year, equaling tens of billions of U.S. dollars. The problem is spreading with China being the center of counterfeiting for export. If imitation is the sincerest form of flattery, Western companies can feel fully complimented. (ChinaOnline, 13 July)

Pipeline Project Open to Foreign Investors
China will allow foreign participation and even a majority stake in the west-east natural gas pipeline project. Overseas investment will also be allowed in urban gas pipeline networks. These are significant changes in China's policy frameworks. According to existing State regulations, the Chinese side should hold a controlling stake in the construction and operation of natural gas pipelines. Foreign investors are currently prohibited from investing in urban gas pipe projects. The project's total investment is expected to be RMB 120 billion. Construction of the pipeline will begin next year and be complete by 2003. (People's Daily, 13 July)
South China Morning Post (14 July) sees this as a sign for further relaxation of energy-sector regulations and as an attempt to speed up urban development and to promote the use of under-utilized and environmentally friendly natural gas resources. Other experts suggest that it is a move to proof China's openness following its entry to WTO, to acquire critical western management experience and technology and to seriously further the development of the Western and central Regions.

RMB controls relaxed further
Exporters may now retain foreign exchange equivalent to 30% of their annual foreign trade turnover (earlier limit: 15%). To qualify, exporters must have an annual export turnover of more than USD 200 million and be able to collect at least 85% of exports earnings. Firms typically must sell hard currency earnings after concluding each deal, only to buy hard currency from the banks again to meet demand for other deals. (South China Morning Post, 14 July)

China further raises oil price
A circular issued by the State Development Planning Commission (SDPC) announced a further increase in the prices of refined oil products, the fifth price hike in eight months. SDPC said the price hike is to further attune China's domestic oil price with the international market and establish a pricing mechanism that could respond to fluctuations in the international oil market. It urged crude oil producers and refineries to increase their diesel production to ease the shortage of supply. (Xinhua, 14 July)