12 March - 18 March 2001

No 38

Enclosure
China's parliament session ends with few surprises

Minister vows war on monopolies
Minister Li Rongrong of the State Economic and Trade Commission announced more monopolies in China would be dissolved. He mentioned civil aviation, the railways and banking as concrete examples. Ending monopolies and introducing a market-driven economy meets much internal resistance of those government departments whose power depend on those monopolies. (www.cbiz.cn, 11 March)

Private businesses to garner more support
In order to promote private businesses, the government will perfect a credit system for private businesses, enabling them easier domestic and overseas bank loans and other financial support. All the country's sectors which have been opened to overseas investment will be available to private businesses. (China Daily, 12 March)

Beijing salaries see double-digit growth in '00
The average salary of Beijing workers was RMB 15'726 in 2000, up 10.3% over 1999. The municipal government raised the minimum wage standard for enterprises and increased the basic living allowances for laid-off workers in 2000. Salaries in Beijing grew at an annual rate of 9.1% during the Ninth Five-Year Plan period (1996 to 2000). (ChinaOnline, 15 March)

China consumers' association monitors Panasonic cell-phone problems
China Consumers' Association's requests Panasonic to compensate consumers who have suffered economic losses caused by the malfunctioning of the two cell-phone models. (ChinaOnline, 15 March)

Two insurance intermediary companies established
The China Insurance Regulatory Commission has approved the establishment of two domestic insurance loss adjustment companies, the first of their kind in China. Loss adjusters, a component of the insurance intermediary sector, can be entrusted by both the insurer and the insured. When the two sides hold diverging views, the loss adjuster will make an evaluation and provide related services independently. (Xinhua, 15 March)

Mercedes considers becoming mainland producer
Mercedes-Benz will consider producing passenger cars in the mainland after China joins the WTO, turning from an importer to a producer. (SCMP, 15 March)

Buying on credit popular in Shanghai
People in Shanghai demonstrated an increasing willingness to finance personal consumption with loans from commercial banks during the first two months of this year. Housing loans increased by RMB 3.86 billion to a record RMB 16. 4 billion by the end of February. Loans for other purposes rose by some RMB 3. 9 billion. The most popular usage for consumption loans remain houses, automobiles and education. Other outlets for loans include mortgages, weddings, tourism and purchase of durable goods. (Xinhua, 16 March)

Retail sales up 10.6%
China's retail sales totaled RMB 638 billion in the first two months of this year (up 10.6%), according to the State Bureau of Statistics. Sales came mainly from Lunar New Year shopping. (China News Service, 16 March)

Fixed assets investment increased 16.7% in first two months
The fixed assets investment in China totaled RMB 113.1 billion in the first two months, up 16.7% from last year. The capital construction investment was RMB 58.9 billion (up 11.4 %). The investment in technical renovation totaled RMB 17.6 billion (up 22.6%), while real estate investment was RMB 32 billion (up 23.0%). The investment in the western areas totaled RMB 17.8 billion, increasing 40.2%, much faster than that of the east and central areas. (People's Daily, 16 March)

Counterfeit goods worth RMB 3.88 billion confiscated in 2000
Industry and commerce authorities confiscated RMB 3.88 billion worth of fake and poorly made merchandise as part of 230'000 arrests made last year. Counterfeiting affects every industry, from food to medicine, automobile parts and electric products. Clothing, CDs, software and even a famous brand of green tea have been copied. But poor-quality products and bad service sparked the most complaints. Many manufacturers produce merchandise banned by the government, and shops sometimes refuse customer requests for repairs, exchanges or returns. (SCMP, 16 March)

Destruction of half-finished buildings
The city of Sanya, Hainan province, announced it would demolish 61 half-finished buildings and 56 villas, as well as apartments and commercial buildings, that lack money for completion. The floor space to be razed totals 80,000 square meters. Construction has stopped because property owners are short of money or cannot find buyers. (China Nation Radio 16 March)

Enclosure

China's parliament session ends with few surprises

As China's parliament gathered for its final session today in Beijing, it did some surprising and not-so-surprising things. The tasks that faced the National People's Congress at the close of its two-week meeting included passing the 10th Five-Year Plan (2001 to 2005), this year's budget and several annual work reports.
Joint Venture Law
On the not-so-surprising front, the NPC prepared China further for WTO entry by passing an amendment to the Law on Chinese-Foreign Equity Joint Ventures by an overwhelming majority. Although the amendment made only a few modifications to the original law, it gave Chinese-foreign JV full decision-making power compared with the earlier version. The amendment eliminated the requirement for JV to file their production and operation plans with the government. Specifically, it removed the provision in Article 9, Section 1 of the original law, which states, "The production plan of an equity joint venture must be reported to the relevant department for the record and shall be implemented through the form of an economic contract." According to one NPC delegate, the change indicates that these joint ventures will be treated on an equal footing with other domestic firms in China. The amendment also modifies Article 9, Section 2 of the original law, which are restrictive clauses requiring JVs to buy raw materials within China whenever possible. In the original version, "Chinese-foreign joint ventures shall give priority to China-made raw materials, fuel and fittings when they have such demands, or they may raise foreign currencies by themselves to make such purchases on the international market." In the revised law, this provision is changed to read, "Chinese-foreign joint ventures may purchase goods and materials needed within the approved scope of business, including raw materials and dyestuff, from both domestic and overseas markets on the principles of fairness and rationalization." The passed amendment also added provisions concerning labor protection and insurance and arbitration of disputes involving joint ventures.
Corruption, state spending
On the more unexpected front, NPC lawmakers challenged their reputation for rubber-stamping proposals by giving reports on official corruption a tough passage. Although they endorsed work reports from the Supreme People's Court and Supreme People's Procuratorate, which vowed to wipe out official graft, over 30% of the delegates voted against them or abstained. While the NPC has never rejected a Communist Party proposal, the votes in this year's session reflect greater protest than last year, when 29% of the delegates voted against or abstained from voting on the two documents. This time around, 530 delegates voted against the Supreme Court's report, while 337 either abstained or did not vote and 1'953 backed it. The prosecutor's report was rejected by 584 lawmakers, with 346 either not voting or abstaining, but still passed with 1'873 votes.
Delegates also had qualms about state spending, with approximately 25% withholding support for a 2001 budget that stipulates a RMB 259.81 billion deficit and a 17.7% hike in defense spending to RMB 141 billion. Dissatisfaction with the budget increased from last year, when 14% either rejected it or abstained from the vote. However, Premier Zhu Rongji said the government was not worried about China's increasing debt and that it could easily repay what it owes. "We are able to pay back twice as much of the debt that we owe. I don't see any real risk."
Economy, stock markets
Overall, however, the norm ruled during the last day of the NPC, and as expected, lawmakers also endorsed the outline for the 10th Five-Year Plan (2001 to 2005). The economic blueprint calls for an annual growth rate of about 7% over the next five years and focuses on developing China's impoverished western regions. During the closing session's press conference, Premier Zhu Rongji also indicated that a merger between the A- and B-share markets is still a long way off. Zhu's comments echoed those made last week by the chairman of the China Securities Regulatory Commission, when he announced that the government would not merge the two markets for between five and 10 years. (ChinaOnline, 15 March)
This article has been only slightly edited by the Swiss Embassy.