China unveils new Internet, telecom regulations
Among the provisions of the new "Management Methods on Internet Content and Service Provision" is the requirement that Internet content providers (ICPs) and Internet service providers (ISPs) maintain records of all users for 60 days and submit them to the government on demand. The rules also stipulate that ICPs must practice self-censorship and ensure that published content does not criticize the government, endanger social stability, reveal state secrets or threaten China's national security. Internet companies that do not comply with the regulations face stiff fines or closure. In addition to the Ministry of Information Industry, the regulators of ICPs and ISPs now include government agencies in news, publishing, education, public health, pharmaceuticals, industry and commerce, public security, and national security. They are all authorized to exert supervision on Internet content.
The Government also unveiled "Telecommunications Regulations of the People's Republic of China". The new telecom rules stipulate that state ownership should be no less than 51% for companies that provide basic telecom services, thus giving room, for the first time, to private businesses. (ChinaOnline, 2 October)

China Internet stocks slide as investors react to new regulations
China Internet stocks took a beating this week on Wall Street after Beijing released new regulations governing Web firms. (ChinaOnlie, 6 October)

Major step by a foreign company to enter China's telecomm sector
In Asia's biggest ever take-over deal, the mainland's leading mobile phone operator yesterday announced the USD 32.84 billion purchase of seven provincial networks from its parent. The acquisition will make SAR-listed China Mobile (Hong Kong) the world's second largest operator in subscriber numbers after Vodafone, which has 59 million subscribers. 
As part of the deal, UK-based Vodafone will invest USD 2.5 billion in China Mobile, receiving in exchange about 2% of new shares in the company and access to a market forecast to be the world's second largest by the end of the year. The tie-up signalled the first major step by a foreign company to enter the mainland's telecommunications sector ahead of the country's entry to the WTO. (South China Morning Post, 5 October)

China becomes crucial in plans for telecom giants
Vodafone's agreement to take a 2% stake in China Mobile (Hong Kong) underscores the increasing importance of China to global telecom players. Today, China has 60 million mobile users and analysts predict that by 2005 over 250 million Chinese will be subscribers. (ChinaOnline, 7 October)

Foreign firms find ways to bypass Internet services provider laws
Foreign investors are finding ways to circumvent Beijing's strict regulations banning foreign investment in China's Internet sector. Australian-listed ViaGold Capital has reportedly secured a Chinese ISP licence through a complex share transfer arrangement. Another common practice used by foreign investors to circumvent mainland regulations is to tie up with China's ISP licence-holders through joint ventures. (South China Morning Post, 2 October)

China's first auction of Web companies a disappointment 
China's first auction of Web sites failed to achieve the results that participants had hoped for. Of the 35 Internet companies on the auction block, only one, a 9-month-old legal services Web site, www.elawchina.com, actually sold any shares. (ChinaOnline, 2 October)

WTO obstacles to be overcome on a higher level
The chief trade negotiators of the United States and the European Union are expected to visit Beijing this month for talks with Premier Zhu Rongji to clear obstacles to China's entry into the WTO. Apparently, the main problems stem from the agreements the US and the EU signed with China, as they leave many details to be worked out between the negotiators. In addition, Beijing is very unhappy about monitoring and supervision mechanisms which Brussels and Washington are proposing, to ensure that China abides by the agreements. (South China Morning Post, 4 October)

WTO membership may be delayed
China may be forced to wait until next year to join the WTO, due to slow progress in talks in Geneva. US Trade Representative Charlene Barshefsky said she planned to deliver that message in person to Premier Zhu Rongji and other leaders later this month or early in November, hoping to break a stalemate that threatens to delay Beijing's accession to the trade body. (Reuters/South China Morning Post, 8 October)

China FDI inflows to soar after WTO entry
In its latest annual World Investment Report, the U.N. trade and development agency UNCTAD forecast that China's foreign direct investment (FDI) could top USD 60 billion a year after it joins the WTO, compared with 1999's USD 40 billion. FDI could even top USD 100 billion a year if China allows cross-border mergers and acquisitions. (Reuters, 4 October)

More people buy houses on loans
China's individual domestic mortgage business is booming because of the country's policy to privatize its housing sector. China Construction Bank (CCB), whose individual housing loans account for more than 50% of the country's total, was owed RMB 129.3 billion in domestic mortgages by the end of July, an increase of RMB 43 billion from the beginning of the year. CCB intends to increase the amount of domestic mortgages to between 20% and 25% of the bank's loans business in the next five years, from the current 8.3%. (China Daily, 3 October)

State names most profitable sectors
The Information Centre under the State Economic and Trade Commission named the petroleum, petroleum chemical, power, motor vehicle and metallurgical sectors as the most profitable industries on the mainland in its eight-month statistics, while the agricultural, shipbuilding, aviation, forestry and defense industries were the top losers. Early in 1998, the government selected 123 of the biggest companies across 19 sectors in a bid to monitor the performance of its three-year SOE reforms. More than 100 of those only managed to record a 2.4% increase in gross profits. The less than impressive growth casts strong doubts over the effectiveness of reform program. (South China Morning Post, 4 October)

Foreign companies can enter China's funds industry by next year
According to the China Securities Regulatory Commission, foreign-funded securities firms will be permitted to establish joint ventures with mainland securities firms, after China becomes a member of the WTO. They will be able to control a maximum of 33% of the stock and to enter mainland China's capital market and participate in the securities management, investment banking and funds management sectors. (ChinaOnline, 2 October)

China's publishing industry developing rapidly
China has seen a marked development in its publishing industry in the 1996-2000 period. In the year 1999 alone, books published reached an equivalent of 39.14 billion printed sheets, up 23.5% from 1995, with book sales amounting to 7.33 billion volumes, up 9.7%. Periodicals published that year was equal to 9.68 billion printed sheets, growing by 44.4% from 1995. (People's Daily, 3 October)

Regulator aborts bid by airlines for merger
A merger plan between two of China's largest airlines - Air China and Southern Airlines has been aborted. The plan was rejected by the Civil Aviation Administration of China to avert the merged company having a monopoly in the sector. (South China Morning Post, 3 October)

Shanghai B-share exchange leads world
According to Merrill Lynch, the Shanghai B-share market appreciated 62.1% from January through September to lead all world stock markets. Analysts warned, however, that with Chinese securities firms and investors already having reached their profit goals for this year, mainland China's stock market probably will slow down in the fourth quarter. (ChinaOnline, 4 October)

Report points to looming water crisis
The Chinese Academy of Engineering (CAE) said in a report that the mainland's per capita water resources will fall from the current level of 2,200 cubic metres to 1,760 cubic metres in 30 years when the Chinese population peaks at 1.6 billion. China thus faces a serious water crisis along with rapid economic development and population growth, the researchers warned and urged the government to introduce water-saving measures and pollution control. (South China Morning Post, 5 October)

Chinese optimistic about future income increase
More than 45% of Chinese interviewees feel confident that their income will rise in the future, a latest survey shows. Research indicates that people in their 20s, city residents, and people who have received higher education or have ideal working positions, such as managers and technicians, are quite optimistic about their income. (Xinhua, 5 October)

China steadfast on plan to send man onto moon
A Chinese space official stressed the country's determination to land its man on the moon and to participate actively in the international exploration of Mars. (People's Daily, 6 October)

Death sentence for factory director
A director of Liancheng Aluminium Plant, in Lanzhou, capital of Gansu province, one of the biggest factories in the west of China, has been sentenced to death for taking bribes worth RMB 1 million and losing assets equal to a third of the plant's worth. The case illustrates the corruption and abuse of power common in the state sector, the lack of external supervision and neglect of employees' interests. (South China Morning Post, 7 October)

Oil price shock brings more pain as mainland runs on empty
The South China Morning Post looks at the oil price situation and tells a story which differs dramatically from the one told by the mainland's media (see People's Daily: "Oil price hike not to damage China's economic recovery" in cbb No. 16).
The tripling of oil prices to more than USD 30 a barrel has been a severe blow to China, increasing industrial costs and leading to an import bill that could reach USD 15 billion this year. During the two oil shocks of the 1970s, the country relied on domestic production, setting prices unrelated to those on the world market. This year, China will import about 70 million tonnes of crude, accounting for 30% of demand. Merrill Lynch said in a report that rising oil prices would hit the economy and balance of payments and, if sustained for an extended period of time, would hit demand in the global economy, on which China depends for export growth. China has no strategic reserve and it is very difficult to increase production. A report published this month by the economic research centre of the State Economic and Trade Commission said that for each US Dollar increase in the price of one barrel, China's import bill rose by USD 500 million. Mainly due to the bulging oil bill, imports in the first eight months rose 39.2% to USD 142.4 billion, while exports went up 35% to USD 159 billion. The trade commission report said rich countries were better prepared for the price rises after the experience of the 1970s, having invested in alternative sources of energy and more energy-efficient technology. (South China Morning Post, 2 October)

China likely to face minor stagflation next year
The Economic Forecasting Department (EFD) under the State Council Information Office warned that China is likely to face minor stagflation in 2001. According to the report, China's "holiday-spending economics" has stimulated domestic consumption. However, if no new economic growth areas appear, consumer spending will probably slow next year. A government stimulus package has contributed to growth in China's fixed-asset investments. This package includes the abolition of a regulatory business tax in fixed-asset investments, a scheme to develop the western region, government subsidies of technology upgrades and the reform of state-owned enterprises. The effects of these stimuli could fade next year, which would cause a drop in fixed-asset investments. In regards to China's exports, the expected slowdown in international economic growth next year due to surging oil prices will in turn lead to a corresponding decline in the global market demand for Chinese products. This means that China's export growth could stagnate considerably in 2001. Similarly, the increase in China's trade surplus will slow down. It is even possible that a trade deficit may occur. The oil price hike will add to operation costs for transportation and petrochemical consumers and also indirectly increase operation costs for the majority of China's other business sectors. Higher production costs will inflate overall prices. (ChinaOnline, 3 October)