25 February - 03 March 2002

No 86

Tourism revenue reaches USD 60 billion in 2001
Tourism revenue last year reached RMB 499.5 billion, an increase of 10.5% compared with the previous year. This revenue included foreign-currency earnings of USD 17.8 billion from overseas tourists, and income of RMB 352.2 billion from domestic tourism. The Chinese mainland received 89 million overseas visitors last year, a growth of 6.7%. The total comprised 11.23 million foreign tourists, 58.57 million from Hong Kong SAR, 15.78 million from the Macao SAR and 3.44 million from Taiwan. (China Daily, 25 February)

Factory managers killed in pay rows
Managers at three state-owned factories have been killed in separate incidents that highlight the difficult reform process. In all three cases, workers or their families were dissatisfied with the compensation they received for lost jobs. The murders last year in Hubei province were reported for the first time yesterday in the national media. (SCMP, 25 February)

WTO drives Beijing Jeep into trouble
The first joint venture vehicle company in China is running heavy losses and could go bankrupt, the sector's first casualty of accession to the WTO. The firm was set up in 1984 between state-owned companies in Beijing and American Motors, which was later acquired by Chrysler Corp, which has since merged with Daimler-Benz. The company has long been handicapped by its inability to obtain a license to make passenger cars, the fastest-growing segment of the market. (SCMP, 25 February)

China tightens rule on overdue interest income
Chinese financial institutions are no longer allowed to book overdue interest payments beyond 90 days as accrued income. Previously, the cut-off period was 180 days. The 90-day period is expected to affect the bottom-line of domestic financial institutions, which have a high level of problem loans. (Dow Jones Newswires, 25 February)

China's bourses issue stricter delisting criteria
China's stock exchanges issued rules for the delisting criteria for chronically unprofitable companies as well as stricter requirements for their trading resumption. There are about 40 companies that posted two years of losses as of the end of 2000 and could face suspension if they post losses in 2001. Only three companies in the 11-year history of China's stock markets have been delisted so far. (Dow Jones Newswires, 25 February)

ECB head in China for talks with Chinese top banker
European Central Bank president Wim Duisenberg was holding talks with Dai Xianglong, governor of China's central bank in Beijing. European diplomatic sources in Beijing said the visit would provide Duisenberg with the opportunity to promote Euro in China. (People's Daily, 25 February)

Minsheng discloses RMB 108 million fraud probe
China Minsheng Bank, the country's only private bank, has become the latest bank to reveal it is investigating officials for fraud. China Minsheng is one of the nation's three listed banks and has the reputation of being better run than most. (SCMP, 26 February)

Leaders signal need for further reform
China's top leaders held a meeting on entry into the WTO, a week before a parliamentary session. Analysts expect WTO to be a top agenda item when the nearly 3'000 members of China's legislature meet next week in Beijing for their annual session. (SCMP, 26 February)

China's Hainan Airlines to take 49% in Air Cambodia
Hainan Airlines, a publicly-owned regional air carrier in China, has signed an agreement with the Cambodian government to set up a new carrier called Air Cambodia. Hainan Airlines biggest shareholder is a fund controlled by international financier George Soros. (Dow Jones Newswires, 26 February)

Switzerland issues temporary ban on Chinese poultry meat
When tests revealed residues of antibiotic substances which are not allowed in Switzerland, federal authorities decided to impose a new system of controls and certificates on Chinese poultry meat. Until the new system will have been established, the import of poultry meat from China has been temporarily suspended. (Embassy of Switzerland, 27 February)

Workers at Minolta factory in China go on strike
About 3'000 Chinese workers at a Minolta factory in Guangdong Province are refusing to return to work in protest over a wage and retirement package put forward by the company. The factory produces about 70% of Minolta's total output of office equipment such as copiers and printers. (Dow Jones Newswires, 27 February)

Growth expected to defy unemployment
This year's economic growth forecast for China has been set at 7%, a target analysts say it can comfortably achieve despite worsening unemployment. The figure, to be approved during an annual meeting of legislators starting next week, compares with last year's economic expansion of 7.3%. (SCMP, 27 February) Legislators approve the forecast?

Job creation promised for rural workers
The Ministry of Agriculture pledged to speed up the structural reform of rural employment to help solve the problem of China's surplus rural workforce of 100 million. The country had a total of 480 million rural workers at the end of 2000, with 328 million of them engaged in agricultural production. The number of surplus rural laborers in China is expected to increase by over 8 million a year over the next five years. (China Daily, 27 February)

China enacts new regulation to attract foreign capital
The central government approved a fresh regulation to attract foreign capital. The regulation appeals for capital particularly in agricultural technology, transportation, energy and new material industry. The service industry will gradually become another focal point of cooperation, including banking, telecommunications, securities, insurance and tourism. The country also hopes that foreign investors start businesses in the western regions, where they will enjoy more favorable taxation policies. In addition, the government encourages foreigners to take part in key State-owned enterprises reform. (People's Daily, 27 February)

Sino-Italian insurance company set up
An insurance joint venture between Assicurazioni Generali of Italy and China National Petroleum Corporation went into operation in Guangzhou. The joint venture will provide a series of insurance and financial services such as life insurance, accident and health insurance, investment insurance and family insurance. (People's Daily, 27 February)

Food ban, continued
Britain's food watchdog urged that Chinese honey be removed from British shops after finding traces of an antibiotic that can stop humans producing blood cells. The Food Standards Agency said tests showed the honey was tainted with chloramphenicol. (FEER, 28 February)

Shanghai Grand Prix
Shanghai's municipal government set up a company tasked with building a RMB 2 billion car-racing track in the hope of attracting a Formula One race by 2005. (FEER, 28 February)

IPO fund-raising plunges
The amount of money that Chinese companies raised through initial public offers plunged by 42% year-on-year in 2001 because of the stockmarket decline. Funds raised through IPOs totaled RMB 46.1 billion in 2001, compared with RMB 78.99 billion in 2000. The number of companies that listed on domestic and overseas stock exchanges declined to 74 last year from 139 in 2000. (FEER, 28 February)

Central bank rules out relaxation of prudent monetary policy
The People's Bank of China defended its three-year-old "prudent monetary policy", saying it would continue to pursue it rather than relax spending as advocated by many experts. The bank said it will aim at loan growth of RMB 1.3 trillion this year -- the same as the actual figure of 2001. The central bank also insisted that the main problem of the Chinese economy is structural problems rather than an insufficient money supply. (China Daily, 28 February)

GE to build international R&D center in Shanghai
General Electric signed an agreement with Zhangjiang Hi-Tech Zone in Pudong on the establishment of an international research and development center in China. (People's Daily, 28 February)

NEC moving Japan-market PC production to mainland
NEC, Japan's largest personal-computer supplier, plans to shift 70% of production for the Japan market to China within the next fiscal year. The move, expected to deliver a 30% cost saving, also responds to expected relaxation of Taiwanese curbs on investment in the mainland chip industry. (SCMP, 28 February)

China's Economy grew 7.3% in 2001
China confirmed that its GDP grew by 7.3% in 2001, exceeding the government's target of 7%. The value of GDP came to RMB 9.593 trillion, compared with RMB 8.940 trillion in 2000. Fixed asset investment increased by 12.1% to RMB 3.690 trillion, while retail sales rose 10.1% to RMB 3.760 trillion. Total volume of imports and exports increased 7.5% to USD 509.8 billion. Exports increased 6.8% to USD 266.2 billion, while imports rose 8.2% to USD to 243.6 billion. (Dow Jones Newswires, 28 February)

McDonald's Beijing arches to go
McDonald's has been ordered to demolish its 30 biggest golden arches around Beijing after being told that as part of the capital's makeover for the 2008 Olympics, companies must remove signboards erected on pavements. There is suspicion that envy could also be a factor. McDonald's, which has 81 outlets in Beijing, has been a runaway success since its first branch opened in 1992. (SCMP, 1 March)

Nation lowers car tax to prop up purchases
China lowered the automobile sales tax in the wake of a car price drop in the domestic market. (China Daily, 2 March)

First Chinese firm makes disk drives for IBM
IBM and Great Wall Technology Ltd. signed a groundbreaking agreement, which will make Great Wall Technology the first Chinese company to manufacture and sell computer hard disk drives to the worldwide market. (People's Daily, 2 March)

World Bank private financial arm opens joint venture in China
The International Finance Corporation struck a deal with two other overseas companies (Hong Kong-based Advantage Services Holding Ltd. and the Netherlands Development Finance Company) to launch a joint venture to develop the infant housing financing business in China. Working together with the local banks, the new company will mainly concentrate on offering technological know-how and expertise in mortgage lending management, risk controls, and even the designing of security plans for the large pool of mortgage lending. (People's Daily, 2 March)

Beijing to boost pharmaceutical industry
Beijing plans to boost its bio-engineering and pharmaceutical industries and expects the two sectors to grow at the rate of 30% annually. Beijing aims to make the bio-engineering and pharmaceutical industries pillars of its economy. (People's Daily, 2 March)

Probe confirms fears over inflated figures
The head of the National Bureau of Statistics acknowledged an investigation had uncovered widespread misreporting of China's economic data, mostly by local officials who inflated growth figures to advance their careers. The statistics bureau found at least 60'000 violations of the nation's official data between May and October last year and dished out punishment to officials involved in 19'000 cases. (SCMP, 2 March)

Shrinking county tax base leaves many rural cadres unpaid
According to a study by the Chinese People's Political Consultative wages were owed to rural cadres in 26 of the country's 31 provinces. The main reason for the problem was a decline in the price of agricultural products, which cut farmers' incomes and, in turn, lowered the revenue raised by county governments. Farm produce has been oversupplied since 1997 and market prices have continued to drop. Many debt-ridden rural governments have been forced to collect extra levies. (SCMP, 2 March)

Tough audit rules eased after outcry from interest groups
Fierce domestic opposition has forced the China Securities Regulatory Commission to backtrack from rules enlisting international help to tackle rampant stock-market accounting fraud. In a dramatically watered-down version of the December provisional rules, CSRC announced the removal of the requirement that all candidates of yuan-denominated A-share issues seek an adjunct, or secondary, audit report from an international accounting firm. (SCMP, 2 March)

Weekly Market update		01 March 2002	08 February 2002
Shanghai A		1566.84	1571.11
Shanghai B		142.00	142.29
Shenzhen A		449.41	449.74
Shenzhen B		216.64	218.70
			22 February 2002
Hong Kong Red Chip		1169.17	1190.06
Hong Kong H		1966.66	2011.25
Source: South China Morning Post