China Online denies and clings on
China Online affirms that the article "China Online bites the bullet" could not be more incorrect. According to the company, they are actually in the process of buying out their original investors and have recently obtained several million dollars of new financing. (www.cbiz.cn, 13 August) Last week's CBB also had the allegedly incorrect article.

China Railcom launches operation
China Railcom, the country's second biggest fixed-line telecom carrier, has started operation in 14 provinces and municipalities. The new fixed-line operator was delayed from starting a nationwide operation, as negotiations for network interconnection with the dominant China Telecom were unresolved. (China Daily, 13 August)

Exports up 6.6% in July
China's exports grew 6.6% year on year to USD 22.9 billion in July, against a 0.6% year-on-year contraction in June. Meanwhile, imports grew 7.5% to USD 20.95 billion, resulting in a trade surplus of USD 1.94 billion for July. (Xinhua, 13 August)

Deflation still a threat
The Chinese economy will not suffer inflationary pressure despite a 1.1% rise in the consumer price index during the first half of this year (see also article below). Indeed, there could even be deflation. Though there has been some easing, deflationary pressure is still a concern. The persisting unbalance between supply and demand (supply is greater than demand for more than 90% of the country's industrial products) and the falling export growth (due to a slowdown in the global economy) could eventually lead to falling prices and falling profits for China's producers. (China Daily, 13 August) Edited excerpt from a lengthy article.

Consumer price index down 0.5%
The CPI for July slipped 0.5% from the previous month, registering the third consecutive monthly drop, because of a seasonal decrease in prices for July. Only a few coastal provinces saw the index climb as a result of shortages brought about by typhoons and heavy storms. (China News Service, 15 August)

Urban residents' disposable income up 6.7% in 1st half
During the first half of this year, the average per capita disposable income of city residents was RMB 3'424, up 6.7% in nominal terms from the same period last year. In Shanghai, per capita disposable income was the highest, at RMB 6'018. (ChinaOnline, 13 August)

China has 120.6 million mobile phone users
China ranks first in the world in term of the number of mobile phone users, with 120.6 million mobile phone users by the end of July of this year. China has just narrowly surpassed the United States, whose mobile phone users hit 120.1 million. (Xinhua, 14 August)

Government to clean up public bidding process
The Central Government will take steps to make certain that the Public Bidding Law is carried out more thoroughly. These include removing regional or industrial barriers to a more unified market, making bidding principles more open to ensure equal access to information for bidders, standardizing bidding appraisals, monitoring agents involved, and breaking their connections with government departments. (Xinhua, 14 August)

More sales revenue allowed to go into advertisement
The State Tax Administration has increased the amount of sales revenues that can be used for advertisements. Previously, the Chinese government had ruled that only 2% of a company's profits could be used for advertising. That has now been changed to 8% in some areas such as pharmaceuticals, foodstuff, household appliances, communications, software development, real estate, sports, furniture, and building materials. (Xinhua, 14 August)

Forex deposits up 14.2%
China's foreign exchange deposits were up 14.2% year-on-year to USD 133.57 billion by the end of July. Foreign exchange loans were down USD 2.5 billion to USD 82.44 billion. (Xinhua, 14 August)

Legend, Siemens conclude agreement to develop wireless hand-held technology
Legend Holdings Co. announced that it had concluded a partnership agreement with Germany's electronics giant Siemens AG. The two companies indicated that they plan to manufacture the first batch of wireless hand-held communications devices in Shanghai using China's existing 2.5G communications technology. (ChinaOnline, 14 August)

Beijing bids to attract top retailers
Beijing will encourage a deeper involvement of foreign investment in its commercial sector by opening access to wholesale, logistics and other pilot areas, originally reserved for domestic State-owned firms. Compared with Shanghai and Shenzhen, where foreign investments have already become pillars of their commercial businesses, Beijing lags far behind in opening-up its commercial sectors. The move is seen as terrific news by a number of large commercial enterprises, such as Carrefour, Wal-Mart and other big brands in Europe and Japan. (Business Weekly, 14 August)

17'100 foreign funded companies in Shanghai
The number of foreign funded companies in Shanghai increased more than 8% in the first six months of the year to 17'100, with 73% of the new ventures wholly owned by foreign investors. (Economic Daily, 15 August)

China Unicom Group cuts staff by 39%
China Unicom Group announced that it had cut its staff by 34'478 employees, or 39%, since the beginning of this year. China Unicom Group was the first telecommunications operator in China to implement a large reduction in staff. Most of the reductions were made by turning official employees into contractors. (ChinaOnline, 15 August)

Consumer market grows steadily
The retail sales of consumer goods reached RMB 180.4 billion in July, an increase of 9.8% compared with the same period last year. The month of July is traditionally busy for sales of home appliances, including air-conditioners. (China Daily, 16 August)

RMB 100 billion planned for forestry projects
China plans to inject more than RMB 100 billion into a 10-year project to transform millions of hectares of erosion-hit farmland into forest and grassland. The project will concentrate on China's Western region (Sichuan, Gansu and Shaanxi province), where more than two billion tons of soil is washed into the Yangtze and the Yellow rivers annually, making the region one of the areas most vulnerable to soil erosion in the world. (Xinhua, 16 August)

Moody's retains ratings for mainland
Moody's Investors Service has reaffirmed China's A3 rating on the issuance of foreign currency bonds and notes, and the Baa1 rating on its foreign currency bank deposits. Moody's said the ratings reflected the country's favorable balance of payments position, manageable level of foreign debt, and exceptionally large holdings of official foreign-exchange reserves. A3 indicates a ranking in the lower end of the A rating category but still possesses many favorable investment attributes. (SCMP, 16 August)

Video-on-demand TV channel in Hebei
The Hebei Television Network has begun trial operations of what is reported to be China's first video-on-demand TV channel. Subscribers can call up movies, made-for-TV dramas, news, and other information with this service. They can also get involved in online stock trading. (Xinhua, 16 August)

China is largest manufacturer and consumer of solar heaters
China became the world's largest manufacturer and consumer of solar heaters in 2000. The country's more than 1'000 manufacturers of solar heaters sold RMB 6 billion worth last year. By the end of last year, Chinese were using 26 million square meters of solar heaters, saving an estimated four million tons of coal a year. (People's Daily, 16 August)

Government spurs domestic demand
Fixed asset investment went up 18.4% year-on-year in the first seven months of this year to USD 134 billion, year-on-year increase in July was 20.4%. About half of the investments went into infrastructure. Public spending has thus gone up to a level equal to that during the Asian Economic Crisis at the end of the 1990s, as the government spending has to reverse yet again the negative effects of the global slowdown on the Chinese economy. (Wall Street Journal, 17 August)

Free movement of labor seen within 5 years
China will scrap policies limiting the movement of labor in the next five years as the government tries to find jobs for tens of millions of jobless rural workers. The number of excess workers in rural areas has already exceeded 150 million and was forecast to increase five to six million annually. More than 46 million people will enter the urban labor force in the next five years. (Xinhua, 17 August)

China to launch first open-ended fund in September
The China Securities Regulatory Commission gave the go-ahead for the launch of the Huaan Chuangxin Fund with an initial value of RMB 5 billion. The fund will be sold to Chinese retail and institutional investors. China now has nearly 40 closed-end securities mutual funds with a combined value of around RMB 80 billion. China prohibits foreign fund management firms from operating in the domestic share market but has pledged to allow Sino-foreign joint venture fund firms equal access to the market after it joins the WTO. (SCMP, 17 August)

Crackdown on illegal food brands
China's health authority pledged to take tougher measures against illegal food brands, cosmetics and health products which are becoming rampant throughout the country. In the past three months, 23'000 tons of fake food, cosmetics and disposable syringes were confiscated. More than 180'000 counterfeiting places were closed. (Xinhua, 17 August)

Three social security funds get green light
Three of China's social security funds will be formally allowed to invest in the nation's stock markets as soon as next year. Guidelines on the types of investable assets and their proportion in the security fund's portfolio will be announced later this year. (SCMP, 18 August)

Weekly Market update		17 August 2001	10 August 2001
Shanghai A		2012.69	2042.67
Shanghai B		156.94	169.55
Shenzhen A		602.41	612.91
Shenzhen B		269.92	280.22
Hong Kong Red Chip		1027.88	988.76
Hong Kong H		438.99	432.94
Source: South China Morning Post