State to revise related laws for new FDI model
China is considering revising its policies concerning cross-country mergers and acquisitions to attract foreign direct investment. Over 95% of China's FDI is directed towards building new enterprises, but a recent UNCTAD report shows that the proportion of this traditional pattern in total FDI has been dropping while mergers and acquisitions increased by 50% last year. (Business Weekly, 25 September)

China's real estate industry in a boom
According to the China Real Estates Association, China is expected to increase 5.5 to 6 billion square meters' of housing floor space, or 70 million sets of houses in the coming ten years. From 1980 to 2000, China's real estate industry had kept a rapid growth momentum with newly-built houses in rural and urban areas to have reached 20.3 billion square meters, an increase of two folds as compared with the past 30 years. (People's Daily, 25 September)

China sets up export credit insurance corporation
China's cabinet has approved the creation of an export credit insurer as part of a campaign to improve the country's waning trade performance. The China Export Credit Insurance Corp. has been formed by merging the export credit insurance units of the People's Insurance Corp. of China and the China Export-Import Bank. The new state-run insurer hopes to specifically encourage exports of high-tech and value-added electronic products. (AWSJ, 25 September)

Bank of Communications seeks foreign alliance
The Bank of Communications, China's fifth largest, and its largest shareholding commercial bank, plans to sell 15% of its assets to two or three foreign financial conglomerates. Citibank, Hong Kong and Shanghai Banking Corporation and Deutsche Bank are said to be interested in taking a stake. (www.cbiz.cn, 25 September)

Profits pace slows down at state firms
Mainland industrial firms made profits of RMB 286.15 billion between January and August, up 15.8% from the same period last year. However, profit growth for August was 4.6 percentage points lower than in the first seven months of this year. Economists said the softening profit growth was probably plagued by a slowing increase in exports amid the global economic slowdown. (SCMP, 26 September) The article also mentions that "Analysts have questioned such figures [on SOE's profits and losses] because they are calculated using domestic accounting standards [!] instead of international accounting standards."

Sony to shift parts supplies to China
Sony Corp, the second-largest consumer-electronics maker, will reduce parts procurement from Japanese suppliers and boost purchases from China's mainland, Taiwan region and Malaysia to cut costs. (People's Daily, 27 September)

IMF expects China's economy to continue growing strongly
The International Monetary Fund projected that China's economy would continue growing strongly despite the heightened risks of deeper global downturn following the terror attacks in the United States. The IMF projected China's economy to increase 7.5% in 2001, up from its previous forecast of 7% in May. (People's Daily, 27 September)

Foreign firms face tighter controls
Foreign-invested enterprises will have to minimize tax costs as mainland authorities take steps to ensure their tax base after the country joins the WTO. According to PricewaterhouseCoopers, transactions between FIEs that are sister companies under the same multinational group could be subject to double taxation. The government was concerned transfer pricing had become a convenient mechanism for FIEs to avoid tax and repatriate profits without declaring a dividend. (SCMP, 27 September)

China boosts auto industry with "Auto City" project
Shanghai will begin construction on a sweeping new automobile complex that combines manufacturing, trading and logistical facilities, in an effort to boost growth in one of the country's most important industries. The so-called Shanghai International Automobile City, will cost an estimated USD 600 million and take 10 years to complete. (AWSJ, 27 September)

China's corporate discipline 'not that bad' - UBS Warburg
China's crackdown on poor disclosure and alleged accounting fraud at listed companies has dealt a blow to the mainland's stock markets, but investors need not be excessively worried. "It's not that bad," said a senior UBS Warburg research analyst. "It happens in the rest of the world. The reality is things are improving." (AWSJ, 27 September) What a relief!

Environmental industry welcomes foreign funding
Foreign investors are being encouraged to enter China's billion-dollar environmental protection industry, a "blue-chip sector growing in double digits annually", said Zhang Zhigang, vice-minister of the State Economic and Trade Commission. China will invest RMB 700 billion in controlling pollution over the next five years. The total value of China's environmental protection industry is expected to reach RMB 200 billion by the end of 2005. (China Daily, 28 September)

Airline censured over big aircraft deal
The Shanghai Stock Exchange has censured China Eastern Airlines for failing to disclose a major aircraft purchase deal last year. The company also did not convene a board meeting or a shareholders' meeting to approve the deal as required under listing rules. (SCMP, 29 September)

China launches new website for imports bidding
A new website designed specially for international bidding of China's imports of machinery and electronic products was officially launched in Beijing. Under the mandate of the Ministry of Foreign Trade and Economic Cooperation, www.chinabidding.com offers to overseas tenderers on-line opportunities to export to China USD 5 billion worth of machinery and electronic products annually. In addition, the website includes information service, data transmission, data statistics, e-commerce and on-line consulting. (Xinhua, 29 September)

China to pour USD 120 billion in information industry
China is to spend RMB 1 trillion over the next five years to spur its information industry, according to the Ministry of Information Industry. RMB 500 billion will go for telecommunications, RMB 50 billion for post service, and RMB 400 billion for electronic information technology. China's information industry is to develop steadily, with its value added accounting for 7.0% of the nation's GDP by the year 2005. (Xinhua, 29 September)

Growth goal likely as World Bank lowers China's GDP forecast
In an economic assessment report, the World Bank expected China's GDP to grow by 7.0% this year, compared to the originally predicted rate of 7.3%. The bank expected China's exports growth to dwindle in the second half of the year in the light of slowing global demand but it said high investment and strong private consumption will still support a favorable economic outlook in China. "WTO accession and the 'Olympic effect' are expected to have positive effects on investment and expectations (in China), more than enough to offset the negative global effects that are expected to flow from the September 11 incidents." China's resilience comes from its vast internal market and low dependence on the high-tech sectors. (China Daily, 29 September)

Economy heads in right direction
At a reception hosted by the State Council to mark the 52nd anniversary of the founding of the People's Republic of China, Premier Zhu Rongji said China's economy is gaining momentum and heading in the right direction. Sustained economic growth, significantly improved efficiency, big increases in fiscal revenue, the sound operation of the financial sector and rising foreign exchange reserves were all positive indicators. (China Daily, 1 October)

National day holiday sparks spending spree in China
China's seven-day National Day holiday has ignited a spending spree among consumers which economists say will benefit the economy overall - especially the tourism and commerce sectors. (Xinhua, 2 October)

China orders 30 Boeing 737 jetliners
Boeing received a firm order, worth about USD 1.6 billion at list prices, from China Aviation Supplies Import & Export Corp. for 30 Boeing 737 jetliners. The airplanes will be delivered from 2002 through 2005. Boeing expects that in the next 20 years, China will require 1'764 new airplanes valued at USD 144 billion, making it the second largest market for airplanes after the U.S. (AWSJ, 2 October)

China Life Insurance sets up fund management unit
China Life Insurance has set up a fund management center that will manage RMB 110 billion of the insurer's RMB 180 billion in assets. The center will also manage third-party assets, and will invest in the currency and securities markets. China's insurance companies aren't allowed to invest in stocks directly, though they can put up to 15% of their premiums in stock investment funds. (People's Daily, 4 October)

Over half of China's cars owned by individuals
More than half of the cars sold in China since 1998 have been bought by individuals for private use. The number of private cars in China grew to 5.34 million in 1999 from 816'000 in 1990, at an average rate annual rate of 23.2%. China has been encouraging individuals to buy cars in a bid to develop its auto industry and promote economic development. (People's Daily, 5 October)

70% of investors report losses
According to a survey conducted by the Shenzhen Huading Market Research Co., 70% of investors in China say they have lost money on the stock market. Only 10% of those polled said they had made a profit, while 20% said they broke even. (ChinaOnline, 5 October)

Beijing police seize 271'000 pirated discs
Beijing police have seized 271'000 pirated VCDs, DVDs and CDs in a two-month anti-piracy operation. Sources from the Ministry of Culture said that all large marketplaces dealing in pirated discs nationwide will be closed by the end of this year. In addition, relevant departments will re-register all retailers of audio and visual products as well as gradually eliminating all public video projection houses. (People's Daily, 7 October)

Weekly Market update		28 September 2001	21 September 2001
Shanghai A		1844.29	1890.40
Shanghai B		151.55	146.89
Shenzhen A		541.61	557.09
Shenzhen B		241.83	229.24
Hong Kong Red Chip		----	730.79
Hong Kong H		----	375.27
Source: South China Morning Post