Automobile sales to leap
China's automobile market is forecast to have a total volume of up to 3 million units next year. The forecast is based on an anticipated surge in auto imports stemming from sharp tariff cuts next year and on a continuous rise in the sales of domestic manufacturers as they are expected to decrease prices and are likely to launch more new models on the market. (China Daily, 17 December)
Bank of China Insurance opens office In Shenzhen
Bank of China Group Insurance Co. Ltd. has opened its first mainland branch in Shenzhen. The branch will initially sell property insurance policies to foreign-invested enterprises. While the company's parent is one of China's biggest state-owned commercial banks, the Hong Kong-based insurance firm is still considered a foreign company and is thereby subject to geographic restrictions accorded to foreign insurers. (Dow Jones Newswires, 17 December)
China to invest up to 40% of national pension fund in stocks
China's government will invest a large portion of its national pension fund in stocks under the direction of private investment managers, in a major reform to the country's overburdened social security system. Giving the pension fund increased flexibility in its investments is essential if its value is to grow fast enough to keep up with the needs of China's rapidly-aging population. (Dow Jones Newswires, 17 December)
More nuclear power plants on the way
China National Nuclear Corporation (CNNC), the sole State-owned nuclear energy conglomerate, wants to build a new nuclear power plant in East China's Zhejiang Province. Besides another four 6.6-million-kilowatt plants under construction now, the central government has indicated it will build more nuclear power plants in the next five years, though the exact number has not yet been decided. Nuclear power represents 1% of the country's total power output, much lower than the 17% average for nuclear power as opposed to conventional power in advanced countries. (China Daily, 17 December)
Investors left in dark by flawed economic data
China's National Bureau of Statistics said last week it had uncovered 62'000 violations of regulations for collecting and compiling economic figures, and punished offenders. For analysts trying to make sense of the lumbering economy, it was a stark reminder of the low quality of statistics. Also at issue are billions of foreign-investment dollars, since official Chinese figures are often all overseas firms have to go by when they make a decision about investing in the country. (AFP, 17 December)
China air growth slows
A leading consultancy has warned that growth in China's much-vaunted domestic commercial aviation market may be slowing, despite hopes the country's strong domestic economy would shield it from the worst of the sector's international decline. China's aviation authority, the Civil Aviation Administration Commission, earlier estimated that the sector made a combined loss of up to RMB two billion in the first half of the year, largely on domestic competition. (SCMP, 17 December)
China ranks world's 2nd in expressway mileage
More than 3'000 km of expressways opened to traffic in China this year, bringing the total expressway mileage in the country to 19'000 km. China is now ranking second in the world in expressway mileage. A national expressway network, which will consist of two vertical roads and two horizontal roads, is expected to take shape in 2002. (Xinhua, 17 December)
China again offers long holidays in '02 to boost spending
China will once again give workers at state-owned enterprises the entire week off surrounding three holidays next year in a bid to boost spending and ward off deflation. China began offering the extended breaks in 1999 to stimulate consumption, but some economists and business leaders have complained that the "golden weeks" do more harm than good. (Dow Jones Newswire, 17 December)
Premier Zhu backs new state-share sale
Premier Zhu Rongji urged China's China Securities Regulatory Commission to develop fresh measures to continue the sell-off of State-owned shares. Zhu said the recent suspension of the sale of State-owned shares was due to pricing and selling methods, which caused consecutive falls on the stock market. (China Daily, 18 December)
State to take a bite of local income tax
The central government is considering co-sharing individual income tax with local governments from next year as part of tax reforms. Figures from the State Administration of Taxation indicate that the amount of personal income tax collected in China soared from RMB 7.27 billion in 1994 to RMB 51.1 billion last year. During the first seven months of this year, individual income tax rose more than 50% to RMB 54.7 billion. (China Daily, 18 December)
Cross-investing pushed
China's major financial institutions and conglomerates are pushing for changes in existing regulatory framework in the financial sector. The institutions want to wipe out barriers separating sectors of banking, securities, insurance and trust. (China Daily, 18 December)
Bonds-supported sewage plants for Three Gorges Project start construction
Chongqing Municipality started the building of 19 sewage treatment plants in its 13 prefectures and counties around the Three Gorges Reservoir project area. The plants will be completed before June 2003. Their building costs USD 2.3 billion which includes USD 1.5 billion from national bonds. (People's Daily, 18 January)
Output expected to rebound in line with US
The mainland's economic growth will drop from 7.4% this year to 7% next year but will rebound to 8% in 2003, Salomon Smith Barney has forecast. This forecast was based on an assumption that the U.S. economy would grow more than 5% in the second half of next year. (SCMP, 18 December)
China's investment growth slowed to 9.4% in November
Investment growth in China slowed unexpectedly in November as an anticipated flood of government spending on capital projects failed to materialize. In November, the value of fixed-asset investment, China's benchmark measure of capital expenditure rose 9.4% compared with the year-earlier month. That is down from 13% growth in October and well below the 16% increase expected by the financial markets. The negative effect on GDP of the surprisingly slow growth in fixed-asset investment should be balanced out by a stronger-than-expected export performance. (Dow Jones Newswires, 18 December)
Credit insurance company unveiled
China's first specialized export credit insurance company was unveiled in a bid to stimulate the country's export growth. China Export and Credit Insurance Corporation (Sinosure) - a RMB 4 billion policy-oriented company - is the amalgamation of the existing export credit insurance businesses of the People's Insurance Company of China and the Export and Import Bank of China. (China Daily, 19 December)
Ex-officials put to death for major graft role
China executed two former top Shenyang officials in connection with a major corruption scandal that jolted the Liaoning capital's leadership. It still remains unclear, however, how many officials have been sentenced. (SCMP, 20 December)
China GDP likely to grow 7.3% '01; to worsen '02
A survey by Dow Jones Newswires of 13 market economists found forecasts for China's GDP center on a rise of 7.3% in 2001, and 7.0% in 2002. The Dow Jones Newswires survey consensus is based on a median of forecasts provided by regional economists. (Dow Jones Newswires, 20 December)
Deficit to grow in 2002
The ministry of Finance has warned for an inflated deficit in the coming year. The shortfall will rise, as Beijing continues to pour money into the economy to spur growth. China will extend into a fifth year its policy of generating growth through heavy investment in infrastructure and the technological upgrading of state enterprises. (www.cbiz.cn, 20 December)
China plans RMB 400 billion injection for water-conservation
China is to inject more than RMB 400 billion into water-conservation projects over the next five years. Of the funds, RMB 130 billion will be investment left over from the previous five-year plan period (1996-2000). Priority for investment will be given to reinforcing the key levees of China's major flood-prone rivers such as the Yangtze and the Yellow River, renovating large reservoirs with potential problems throughout the country and improving western China's fragile ecosystems, particularly chronic water loss and soil erosion - the root cause of poverty for millions of rural people. (China Daily, 21 December)
Nokia kicks off largest project
Mobile phone maker Nokia formally launched its largest production base in China and promised to inject additional investment to make its project in Beijing a multibillion-dollar venture in the coming years. The Xingwang (International) Industrial Park, which incorporates Nokia's mobile phone plant in Beijing and 15 of its international component suppliers, involves an initial investment of around RMB 10 billion and will be the largest single foreign-funded project in Beijing. (China Daily, 21 December)
Tourism doors opened to foreign players
Beijing will allow foreign-invested travel agencies to conduct inbound and domestic tours from early next year. The State Council has revised tourism industry regulations to fulfil its pledge to the WTO. However, outbound tours, including those to Hong Kong, Macau and Taiwan, for mainland Chinese will still be off-limits to foreign-invested travel agencies. They also will be banned from opening branches in the country. (SCMP, 21 December)
China, Japan resolve trade row
A decision by Japan not to extend safeguard measures against imports of stone leeks, shiitake mushrooms and rushes used to make tatami mats prompted China to remove punitive tariffs imposed on Japanese autos, mobile phone handsets and air conditioners. The two sides also agreed to set up a trade panel to investigate methods to avoid future trade disputes. (Dow Jones Newswires, 21 December)
Foreign businesses encouraged to invest in Western China
The Chinese government published a series of specific measures for attracting foreign businessmen to invest in the development of the western region, providing overseas personages with unprecedented, preferential policies. (People's Daily, 21 December)
China issues draft rules for fund management JVs
China issued draft rules for the establishment of joint venture fund management companies, a set of rules that foreign financial firms are eagerly awaiting as they prepare to enter the potentially huge market. The rules comprise a detailed set up of steps that foreign fund management companies need to take to buy a stake in a local fund management company or to establish a fund management company in conjunction with a local partner. (Dow Jones Newswires, 21 December)
Weekly Market update
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21 December 2001
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14 December 2001
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Shanghai A
|
|
1706.85
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1745.21
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Shanghai B
|
|
169.39
|
166.72
|
Shenzhen A
|
|
500.02
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510.42
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Shenzhen B
|
|
263.61
|
265.61
|
Hong Kong Red Chip
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|
1311.06
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1362.58
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Hong Kong H
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|
1714.35
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1717.58
|
Source: South China Morning Post
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