Lawmakers to draft law on government's purchases
The Standing Committee of the Ninth National People's Congress will deliberate a draft law this week to better regulate governmental purchases and prevent corruption. During 2000, the volume of government purchases was RMB 32.8 billion, accounting for 2.07% of total fiscal expenditure. (China Daily, 23 October)

AOL Time Warner allowed to launch cable TV services in China
AOL Time Warner Inc. signed a historic agreement with the Chinese side under which its CETV channel will be distributed to cable television subscribers in the Southern region of China. As part of the agreement, CCTV's English language news and information channel (CCTV 9) will be carried on select Time Warner Cable systems, the first time a CCTV network will be carried on a 24-hour basis on any U.S. cable system. (People's Daily, 23 October)

Call for relaxing monetary policy
Economists have urged Beijing to ease its monetary policy to combat mounting global deflationary pressure since September 11. The PBOC left the benchmark one-year interest rate on RMB deposits at 2.25%, a notch higher than the one-year US deposit rate of 2%, putting pressure on the exchange rate. (SCMP, 23 October)

State Council approves USD 3 billion petrochemical plant
The State Council is to approve construction of a petrochemical base in Quanzhou, Fujian province, with an investment of USD 3 billion from Chinese, United States and Saudi Arabian companies. Work is due to begin at the end of next year and be completed by 2006. (SCMP, 23 October)

European Commission launches a euro info-campaign in China
The European Chamber of Commerce held a forum in Beijing, starting a nation-wide campaign to introduce the euro to the Chinese public. (People's Daily, 23 October)

China suspends state sales of equity stakes
The China Securities Regulatory Commission said it was suspending sales of shares owned by the government, reversing a policy issued earlier this year to raise funds for the country's depleted pension system and reduce the government's role in managing publicly traded companies. The share sales were central to Beijing's market-reform campaign, as more than two-thirds of all outstanding shares in China are owned by the government. But the volume of new shares entering the market had fueled a substantial three-month decline in stock valuations and stirred fears that a financial crisis could spread through the banking and brokerage industries. (Dow Jones Newswires, 23 October)

Suspension of a state-share sale pushes up stock market
Both Shanghai and Shenzhen's indices shot up nearly 10% as wary investors, relishing the news that a market-depressing sales program was suspended, leapt back into markets that had been down about 30% since July. (China Daily, 24 October) See below weekly market update for confirmation that the positive market sentiment was rather short-lived.

Analysts applaud ban on shares sale
The plan to sell state shares to finance China's new social security fund had been formulated by the Ministry of Finance, but opposed by the securities commission and major market players who feared what eventually happened - sharply declining share prices and a rush to move funds out of the market. Since the new rule on selling state shares was implemented about RMB 1 billion in state shares were sold, but trading contracted so sharply that the two exchanges lost about RMB 7 to 8 billion in trading revenues. Because securities firms and banks were virtually all state-owned, the government stood to pay out more than the RMB 1 billion the finance ministry had gained for its pension fund. (SCMP, 24 October)

Alcatel takes over controls of Shanghai venture
Alcatel of France is paying USD 312 million for a majority stake in its successful Shanghai joint venture which will be consolidated with other China operations. Alcatel Shanghai Bell (ASB) has been one of the most profitable joint ventures in the mainland, employing 4'500 people and holding a 33% market share for voice-switching equipment used in fixed and mobile applications. A reason for its success was because its partner was the government body in charge of telecoms. (SCMP, 24 October)

30'000 Beijing businesses face loss of licenses
After examining more than a half a million business licenses, the Beijing Administration for Industry and Commerce has decided to revoke 30'000 licenses by the end of the year. Of those to be revoked, 2'300 are for foreign-funded enterprises that remained closed even after obtaining their business licenses or suspended operations without registration, (ChinaOnline, 23 October)

China acts to halt bankruptcy of state companies
China has ordered a virtual freeze on the bankruptcy of its larger state-owned enterprises in a sign that crucial industrial reforms are being slowed as Beijing seeks to ward off social unrest. People inside the government said the supreme court had told provincial courts not to proceed with bankruptcy cases of state-owned enterprises with assets of more than RMB 50 million unless they had supreme court approval. (Financial Times, 24 October)

Beijing to take the lead in opening service sector
Beijing has applied to the central government to be an experimental city in opening its telecom, banking, insurance and other sectors after the WTO entry. The service industry is expected to account for some 63% of the city's total GDP by 2005, rising from the current 58.3%.(People's Daily, 25 October)

OECD questions Develop the West policy
The Organization for Economic Cooperation and Development said a drive to lure investment to poor inland provinces was unlikely to improve their economies much. The OECD said government steps--mainly infrastructure spending and investment incentives--could fail to alter large inequalities between provinces. (FEER, 25 October)

China spends 1% of GDP on R&D
China's first detailed survey of research-and-development spending revealed that it used RMB 89.6 billion for R&D last year, representing the equivalent of 1% of GDP. That percentage puts China behind rich countries like the United States (2.7%), Japan (3%) and the nations of the European Union (1.8%) but ahead of comparable countries such as India (0.86%) and Russia (0.93%). (FEER, 25 October) Switzerland spends almost 3% on R&D.

China: Growth at a price
This week's Economic Monitor (a column by the Far Eastern Economic Review) looks at China. It starts by stating: "Right now China is the pin-up economy of Asia, the country best placed to ride out the world's first synchronized global recession." (FEER, 25 October)
http://www.feer.com/

Instruments future said to be upbeat
The measurement and instrument industry will become instrumental to the economy as China plans to boost the sector over the coming five years. The industry's sales could hit USD 1.5 trillion by 2005, which would account for 1.5% of the nation's GDP. China will build as many as 20 technology development centres to advance this field. (China Daily, 25 October)

Shenzhen Zhonghao delisted
Shenzhen Zhonghao Group has become the third company to be delisted from a mainland exchange. Shenzhen Zhonghao had been losing money for four consecutive years. The company had announced an interim net profit of RMB 1.12 million for this year's first half. However, independent auditors and the commission discovered the firm had actually suffered a net loss. (SCMP, 25 October)

State think-tank forecasts shrinking exports growth
China's exports are expected to rise 3% next year from this year, while imports could rise 10%, according to a mainland government think-tank. Fewer import curbs after China's entry into the World Trade Organisation could help boost imports while the global slowdown could depress exports. (SCMP, 25 October)

Industrial profits up RMB 326 billion
Mainland industrial firms made profits of RMB 326 billion in the first nine months of this year, up 12.6% from a year earlier. However, profit growth was 3.2 percentage points lower than in the first eight months of this year. (SCMP, 25 October)

Pay, perks go up for workers at foreign firms
A recent research by Hewitt Associates LLC at 191 foreign companies in Beijing showed that in 2001 employees in Beijing's foreign firms got, on average, an 8% raise in pay. In addition to salary, foreign firms in Beijing are providing more in the way of perks and benefits to attract and keep talent. (ChinaOnline, 24 October)

Civil servants to get bonus month pay
Li Rongrong, director of the State Economic and Trade Commission, said that Civil servants will get a pay raise this month, and they will receive 13-month salaries starting this year. The Chinese government will also think of ways to raise farmers' income. (ChinaOnline, 24 October)

Insurance premium collection up 30.3% in 3rd quarter
China's insurance premium collection jumped 30.3% year-on-year in the third quarter to RMB 149.3 billion. The increase is due to the growing popularity of new insurance products such as investment-linked insurance policies and policies that give out annual dividends. (Dow Jones Newswires, 25 October)

China's Jan-Sep car output rises 15.5%
China's car production has increased 15.5% year-on-year in the first nine months of the year to 533'500 units. In September, car production increased 25.4% to 75'100 units, the highest monthly output in China's history. The increase in output was due to rising car demand, especially from individual buyers. (Dow Jones Newswires, 25 October)

Minolta shifts bulk of production to Shanghai
Japanese camera giant Minolta has decided to move most of its production facilities to Shanghai. So far, Malaysia, had been the Japanese firm's former chief production base in Asia. (SCMP, 26 October)

Beijing to be hub for int'l exhibition
Beijing plans to build a group of downtown exhibition centres, each with around 10'000-square-metres of floor space. Several other centres of between 30'000 to 50'000 square metres will be built around the city. In rural Beijing, some centres exceeding 200'000 square metres will be built. The total area set aside for the construction of these exhibition centres is estimated to be between 500'000 to 800'000 square metres. (China Daily, 26 October) 

Eight foreign-funded insurance companies enter China
A total of eight foreign-funded insurance companies were recently approved by the Chinese government to operate or expand their business in the country, among them Swiss-based Zurich Insurance*. Apart from the latest group of newcomers, 27 foreign-funded institutions under 19 foreign insurance companies are offering insurance services in China at present. Over 100 such companies have established some 200 liaison offices across the country so far. (Xinhua, 26 October) *The Article in fact referred to:"Swedish Surich Insurance".

New survey on 'hidden peril' of jobless
Admitting that official figures had underestimated the "hidden peril" of jobless workers, China has ordered a new survey to get a better picture of unemployment. The official urban unemployment rate was 3.3% at the end of June, or 6.19 million people. However, analysts say that figure vastly underestimates the true number because it includes only those who register as unemployed and omits so-called xiagang, or laid-off, workers kept on payrolls at token salaries. (SCMP, 26 October)

Stock market policy needs consistency
With regard to recent developments at China's stockmarkets (see above news reports), China Daily published an article severely criticizing the Securities Regulatory Commission (CSRC):
"[ ] CSRC's reversal points to the inconsistent way it administers the market. That's much scarier than market fluctuations themselves. [.] The commission, as young as the decade-old market, is still not very clear about when to step in and when to step aside. Investors are looking forward to a more considerate, consistent watchdog, not one that makes random decisions and must clean up its own messes later." (China Daily, 26 October)

Expenses boost executive pay
Expense claims by senior executives of China's state-owned enterprises amount to an average of 10 times their salary, according to a report by the Ministry of Labour and Social Security. The survey found that 86% of these executives had a car assigned to them, 23.3% had more than two cars and 3.5% had more than five cars. More than 60% of the cars had been imported. Average monthly spending on phone calls amounted to several thousand yuan for each senior executive. (SCMP, 26 October)

China mulls share plan for RMB 20 billion in pension funds
China's industry regulators are considering plans to allow enterprises to invest some of their welfare funds in equities in a move that will both improve market liquidity and also ensure a better return on the pooled savings held by state firms. (Dow Jones Newswires, 26 October)

Bayer to spend USD 3.1 billion to build plant near Shanghai
German pharmaceutical giant Bayer AG plans to spend USD 3.1 billion to build a plant in Caojing, near Shanghai. The plant will manufacture coating raw materials, thermoplastics, polyurethane raw materials and basic chemicals. (Dow Jones Newswires, 26 October)

BMW to start joint-venture in China
Well-known luxury car manufacturer BMW said its plan to start a joint-venture in China is making swift progress. BMW will team up with Brilliance Automotive Holdings. In the first nine months, BMW sold over 4'600 cars in China, up 72% over the corresponding period of last year. (People's Daily, 27 October)

Punished Carrefour forgiven
Six months after punishing French retail giant Carrefour for illegally opening stores, Beijing has given the firm permission to set up five purchasing centres. Only one other foreign retailer, Wal-Mart of the United States, has been given approval to build such purchasing centres. (SCMP, 27 October)

World Bank arm to invest in Minsheng
International Finance Corp (IFC) is poised to take an equity stake in the mainland's only privately-run bank, China Minsheng Bank, by the end of the year. The long-anticipated deal suggests with other recent events a turning point in opening up China's banking sector to foreign investment. (SCMP, 27 October)

Pirates target commodities fair
Up to 3'000 pirates were reported to have infiltrated the 90th biannual China Export Commodities Fair to investigate the latest goods they could counterfeit. Some would size up the important features of a new design then hurry away to develop a copy in the evening, returning with their copied finished product for display the next day. (SCMP, 27 October)

Weekly Market update		26 October 2001	19 October 2001
Shanghai A		1750.37	1640.40
Shanghai B		156.09	146.25
Shenzhen A		509.50	476.45
Shenzhen B		251.76	235.11
Hong Kong Red Chip		1222.40	1117.50
Hong Kong H		1775.92	1684.46
Source: South China Morning Post