Foreign investment in SME encouraged
China is drafting regulations allowing foreign investors to buy the country's small and medium-sized enterprises. The new rules will enable foreign investors to control or hold shares in Chinese SME or even buy out the shares. Certain industries would be off limits, however, though it was not known which. (China Daily, 11 September)

Registration hits foreign-funded retailers
The government plans a stricter attitude towards the more than 350 foreign-funded retailers and wholesalers in the country. Before the end of the year, these companies have to register at national level, and let their business fully correspond to Chinese law and regulations. At the moment, most foreign-funded retailers and wholesalers operating in China are approved by local governments, but lack the necessary official approval of the State. (www.cbiz.cn, 11 September)

Favorable treatment for FIE to remain in coming years
The preferential treatment enjoyed by foreign-invested enterprises will remain intact in the coming years, despite China's soon expected accession into the WTO. To comply with WTO rules, government is working on a revision of several laws and regulations to put FIE at the same level as domestic businesses, but implementation of these new policies will take 'a few years'. Once FIE get similar treatment as national enterprises, there will be new preferences for those companies investing in regions the government encourages. (www.cbiz.cn, 12 September)

China's first open-ended fund sells well at launch
China's first open-ended mutual fund, the Hua'an Innovation Fund, sold well across the country on the day it was launched despite official warnings that such funds can be risky. (People's Daily, 12 September) See the following. Titles are original. Who said there was no diversity in Chinese newspapers?

Cool debut for open-ended fund
The country's first open-ended fund, Hua'an Innovation, debuted on Tuesday and had a wait-and-see reception from investors. (China Daily, 12 September)

China's industrial output expanded 8.1% in August
Chinese industrial output expanded 8.1% in August amid indications government spending that has kept the economy afloat for the past three years was having less of an impact. August's figure was unchanged from 8.1% year-on-year growth recorded in July, but down steeply from a 12.8% gain in August last year. The fact that output growth in heavy industries is now slowing could indicate the government's spending is less effective in boosting growth than before. (People's Daily, 12 September)

Chinese investors react to U.S. tragedy
Chinese investors reacted to the terrorist attacks in New York and Washington, D.C. like investors in other parts of Asia with hard-currency B shares ending down more than 4% with huge volumes. Chinese investors rarely react to global markets, but analysts predict a period of strong action in the Chinese market due to the severity of the attacks in the United States and the uncertainty created by the temporary close of the financial markets there. (ChinaOnline, 12 September)

Blasts cause mixed reactions
Business people in China spent their day on Wednesday in a similar mood to that of their peers in other parts of the world. With sympathy in their hearts for the lives lost in New York, they have to face declining stock markets, surging oil prices and possible uncertainties that may come with the tragedy in the United States. The crashes, which are expected to bring new difficulties to the US economy, may influence US-related transactions and plans ranging from trade and investment to Chinese companies' listing in the US stock market and the country's entry into the WTO. (China Daily, 13 September)

China encourages foreign mergers to attract more investment
Economists believe that China has decided to absorb more foreign investment through mergers and acquisitions, and accelerate change and upgrading of its industrial structure to give a boost to economic development. According to UNCTAC, transnational mergers and acquisitions in 1999 made up 83.2% of world's total foreign direct investment. In the case of China, over 70% of the foreign investment entered the country in forms of joint-ventures, cooperation, or sole investment. Experts say that China's way of absorbing foreign investment, which is different from the international practice, contributed to the slowdown of China's use of foreign investment over the past few years. (Xinhua, 13 September)

Plan for Beijing Central Business District published
Beijing has unveiled plans for a Central Business District of skyscrapers up to 350 metres high. The construction scale of CBD will include 10 million square meters, of which 50% are for office buildings, 25% for apartment houses and the remaining 25% are facilities for commerce, service, culture and recreation. The main business facilities will be distributed along the East Third Ring Road and on both sides of Jiangguomen Wai Street. (People's Daily, 14 September)

China's forex deposits keep rising
China's outstanding foreign exchange deposits reached USD 134.74 billion by the end of August, up 13.8% from the same period last year. (People's Daily, 14 September)

Strong retail sales growth in August
Total volume of retail sales of consumer goods reached RMB 288.9 billion in August, an increase of 9.6% over the same month last year. The increase in the cities was 3.8 percentage points higher than that in counties and regions under the county level. (ChinaOnline, 14 September)

China's exports hits new high in August
China's foreign trade sector achieved a record USD 23.54 billion in export volume in August, but the increase rate of exports was only 0.9%, compared with the 6. 6% rise of imports (USD 22.16 billion). Total volume of foreign trade in August hit USD 45.7 billion. The international economic slowdown has been affecting the fast growth of China's foreign trade sector, which was indicated by the sluggish increase of exports during the first eight months of this year. (People's Daily, 14 September)

Slow export growth hits surplus
China's trade surplus plunged 32.4% year on year to USD 11.45 billion in the first eight months as imports continued to outpace exports. Analysts expressed alarm at sluggish exports last month, which render doubtful - if not completely impossible - Beijing's target for 8.0% export growth this year. (SCMP, 15 September)

China and the WTO: Ready for the competition?
The Economist looks at China's imminent entry to WTO and evokes that it will be impossible to honor the kind of promises China has made without upsetting a lot of people whose livelihoods will be undermined or whose privileges will be whittled away by the country's increasing exposure to foreign competition. Scholars worry about the possibility of rising unemployment as uncompetitive enterprises are forced to lay off workers and consumers turn to imports. They fear also that what China gains from dismantling bloated government monopolies it will lose by surrendering more of its markets to control by big foreign companies. (Economist, 14 September) www.economist.com/world/asia/displayStory.cfm?Story_ID=780479

Negotiators reach accord on China's entry to WTO
China clinched one of its top economic and political goals, with an agreement on the terms of its membership of the WTO after 15 years of tough and complex talks. Clearance by WTO members would open the way for China to be formally approved at the WTO's meeting of trade ministers in Doha, Qatar, in November. It would then become a full member early next year. As a sign of its supreme confidence, China has built a new mission to the WTO, a high-tech building on the lake shore with stunning views of the Alps -- a far cry from the modest U.S. and EU trade missions. (AWSJ, 15 September)

Weekly Market update		14 September 2001	7 September 2001
Shanghai A		1901.14	1888.44
Shanghai B		152.49	162.99
Shenzhen A		564.35	567.30
Shenzhen B		256.20	277.53
Hong Kong Red Chip		765.18	895.51
Hong Kong H		381.03	411.28
Source: South China Morning Post