Auto sales down despite price deregulation
After experiencing consistent growth during the first four months this year, China's automobile market has taken an unexpected dive following the government's recent announcement that it had relaxed its controls on prices of domestic cars. The government's intention in deregulating had been to stimulate demand in the auto sector but the decision has had the opposite effect. Experts say, the sudden market downturn was a result of unmet expectations. Consumers were looking forward to a drop in auto prices after the announcement but manufacturers had not actively responded. (China Daily, 18 June)

Kingman second delisting victim
Foods group Guangdong Kingman - once hailed as one of China's top businesses - has been officially stripped of its listing on the Shenzhen exchange, making it the second delisting from the mainland's stock markets. (South China Morning Post, 19 June)

Mao's seal on capitalist drive
A leading Communist Party academic argued that Mao Zedong supported capitalism. Party sources said the comments were a prelude to a propaganda campaign to rally support for President Jiang Zemin after leftists stepped up their attacks against market reforms. In recent months, some leftists have circulated articles claiming a number of the party's decisions have run close to abandoning communism. (SCMP, 19 June)

Shanghai cracks down on illegal foreign-exchange trading
The Shanghai municipal government rolled out an intensive crackdown on illegal foreign-exchange trading activities. Some illegal traders were arrested and some trading centers were destroyed. Confiscated foreign currency was valued at more than RMB 10 billion. (ChinaOnline, 19 June)

1.6 million pirated VCDs and DVDs seized
Police from the city of Nanhai, in Guangdong province, have seized 1.6 million pirated VCDs and DVDs, worth RMB 40 million. Guangdong has become a popular location for this form of piracy. (China News Service, 19 June)

CSRC cracks whip on illegal H-share trading
The China Securities Regulatory Commission has issued an immediate ban on illegal trade in Hong Kong-listed stocks by Chinese nationals. Since opening to Chinese citizens last February, most B-share stock prices had nearly doubled by June 1. This rise led some people to think that the H-share market, which is also undervalued, would be the next vehicle headed for sudden riches. (ChinaOnline, 19 June)

Purge nets dozens in illegal markets
Beijing's purge of illegal stock trading activities continued with a crackdown on 10 "black stock markets" in Guangxi province that also traded Hong Kong-related shares. (SCMP, 20 June)

Nobody wants China's Internet portals
China's portals suffer from a chronic lack of revenue. While last year the number of visitors, or eyeballs, were the major indicator for success, those Chinese eyeballs refuse to generate money. Revenue from advertisements has dropped since most banners were occupied by other troubled Internet ventures. Nasdaq-listed Chinese portals Sina.com and Sohu.com lost 95% of their value from last year. Netease just announced the end of talk on its acquisition by Hong Kong based I-Cable. The expected consolidation, whether merges or acquisitions, has yet to occur. (www.cbiz.cn, 20 June)

China reaches consensus on WTO entry with EU
China and the European Union reached a comprehensive consensus on outstanding problems over China's entry into the WTO. This "created important conditions" for an overall conclusion of substantial talks at the 16th session of the permanent Working Party on China's WTO membership, which is due to be held in Geneva from June 28 to July 4. The EU and China had reached a bilateral agreement on China joining the WTO in May last year but later disagreed over the interpretation of several parts of the pact. According to sources in Geneva, the EU still wanted stronger pledges on access for European companies to the Chinese insurance market. It was also seeking clarification on trading rights that companies from its 15 member states will have within China. Various technical issues on insurance were also discussed. (China Daily, 21 June)

CSRC sanctions Hong Kong listings for 60 hi-tech firms
The China Securities Regulatory Commission has given approval to more than 60 companies to seek listings in Hong Kong. Many of the listing candidates were small- and medium-sized civilian-owned technology companies eyeing Hong Kong's Growth Enterprise Market (GEM). The move is believed to be part of Beijing's measures to introduce more quality and private domestic enterprises into the stock market and help them establish corporate governance. (SCMP, 21 June)

State Intellectual Property Office decisions now subject to appellation
Starting July 1, people who want to contest a patent decision made by the State Intellectual Property Office can appeal to Beijing's Intermediate People's Court No.1. This is the result of a new amendment to the Patent Law. Previously, only people filing to patent their inventions could take the patent office to court. (China Daily, 21 June)

10% of workforce employed by foreign companies
Twenty-one million Chinese, or about a tenth of the mainland's work force, are employed by foreign-backed firms. China has about 180,000 foreign-backed companies currently in operation. (Worker's Daily, 21 June)

China to regulate franchises
Regulations for franchised operations in China are currently being drafted based on the Management Rules for Commercial Franchised Business issued in 1997. At the end of 2000, there were more than 400 franchised companies in China involving more than 30 industries. The number of franchised stores exceeded 1'000. Copyright issues and other problems have cropped up in line with the rapid growth in franchised businesses. (ChinaOnline, 21 June)

Telecom statistics
The number of fixed phone users in China was 270 million by the end of May. Of these 42.26 million were added this year. The number of registered Internet users was 11.62 million, with 3.47 million new customers added this year. The mainland is expected to have 116 million mobile phone users by the end of this month. That will be 30 million users added this year. (Xinhua, 21 June)

Air China uses backdoor for Hong Kong listing
Continuous losses will most likely force Air China to use a shell company to enter the HK stock market. In that way Air China could get listed and raise capital rather fast for the upcoming consolidation of the airline industry into five groups. Just like in domestic stock market, the Hong Kong stock exchange demands three consecutive years of profitability before a listing is permitted. None of China's airline companies is making a profit at this stage. (www.cbiz.cn, 21 June) And I thought Hong Kong IPOs were also meant to bring international standard business practices to mainland companies.

Consumer product sales grow 11.1% in May
Total retail sales of consumer products shot up by 11.1% from the same period last year. Cumulative retail sales of consumer products during the period of January to May totaled RMB 1.5 billion, an increase of 10.3% from the same period last year. Experts believe that the prosperity of May's consumer market was due to holiday consumption patterns that resulted in another spike following the Chinese New Year in January. At the same time, the weather in most parts of China was unusually hot, which creates a phenomenon known as "summer consumption." (ChinaOnline, 21 June)

Foreign pharmaceutical makers grab market share
Foreign companies are becoming more active in China's pharmaceutical market. Imported pharmaceuticals and joint-venture products now account for one-third of the Chinese market. However, foreign-made pharmaceuticals entering China via illegal channels account for more than half of all imported pharmaceuticals. About 40% of domestic pharmaceutical firms have cooperative projects with foreign manufacturers. Twenty out of the 25 largest international pharmaceuticals firms have established operations in China. (ChinaOnline, 21 June)

People's Republic Of Cheats
Under the above title, FEER reports on the endemic curse of corruption and cheating in China's business environment. According to officially published figures:
50% of the 4 billion contracts signed in China are fraudulent in some respect.
Economic corruption eats up 13%-17% of the country's annual GDP.
Tax evasion accounts for 50% of taxes due in the private economy, while total losses from tax evasion are RMB 100 billion a year.
Counterfeit goods and substandard goods account for 40% of all products made in China, with losses running at RMB 200 billion a year.
Two-thirds of the biggest state firms produce false accounts.
The underground economy is the equivalent of 20% of GDP (actually twice that, say independent estimates).
15%-20% of the spending on an average infrastructure or building project is lost to bribery, fraud, and poor-quality work.
(Far Eastern Economic Review, 21 June)

First processing zone for export in West China operational
An export processing zone went into operation in Chengdu, Sichuan Province. It is one of the first 15 state-level export processing zones and the only one in west China. The zone is expected to attract USD 1 billion of investment and export USD 1.5 billion by 2005. Six world famous companies, such as Toyota from Japan, have settled in the zone, involving a total investment of USD 180 million. (Xinhua, 22 June)

364 cities experiencing water shortage
Millions of Chinese living in 364 cities are suffering from a severe water shortage. Although recent rainfall has alleviated the situation somewhat, a lack of drinking water remains widespread. (ChinaOnline, 22 June)

Japanese cars, phones and air conditioners face punitive tariffs
China has decided to retaliate against tough Tokyo trade curbs. The two countries have been locked in a trade dispute since April when Japan raised tariffs on imports of some Chinese goods, including shiitake mushrooms, spring onions and straw for tatami mats. Representatives of the Tariff Policy Commission of the State Council announced a 100% special tariff on imports of Japanese made automobiles, cellphones and telephones in vehicles. A total of 60 specific products made in Japan will be subjected to the special duty. (SCMP, 19 June/ChinaOnline, 22 June)