Jan - May Swiss exports to China up 15.1%
While global Swiss exports in the first five months of the year decreased 4.8%, Swiss exports to China saw a 15.1% rise to CHF 748 million. Machinery (+16.6%) continued to dominate Swiss exports to China with a share of 62.8%. Export of watches increased a spectacular 107.1% to CHF 28.5 million (3.8% of total exports). Chinese imports to Switzerland went down 3.4% to CHF 932 million. Total Swiss-Sino trade was CHF 1.68 billion with a trade deficit of CHF 184 million. Swiss exports to Hong Kong increased 9.2% to CHF 1.79 billion, while imports from Hong Kong went up by 31.3% to CHF 390 million. The latter was due to an extraordinary increase in imports of precious metal and jewelry by 173.3% to CHF 203 million. Swiss exports to Taiwan slowed down 27.6% to CHF 441 million, and imports from Taiwan decreased by 30.2% to CHF 285 million. (Embassy of Switzerland, 11 July)

Swiss Re gets go-ahead for China reinsurance license
Swiss Re has received Chinese regulatory authorization to prepare for branch operation in China. The approval by CIRC covers both property/casualty as well as life reinsurance. The approval - which represents the first step towards a full license - will enable Swiss Re to establish local services within the country. Swiss Re opened its representative offices in Beijing and Shanghai in 1996 and 1997 respectively. (Swiss Re, 12 July)

Telecom war escalates
China's telecom war is spreading with reports of new cases of rival companies damaging each other's network or harming the competitor's employees. In Tangshan, employees of Netcom cut telephone lines belonging to rival China Railway Communications. According to Netcom, the Railcom lines were placed illegally and right on top of its own lines. On the other hand, China Telecom accuses Railcom workers of beating two of its employees who had removed what they regarded as illegal cables in Ningxia province. (www.cbiz.cn, 7 July)

Number of lawyers in China rising rapidly
The All-China Lawyers Association says the number of attorneys in China now stands at 110'000, up from a mere 200 two decades ago. 104 foreign law firms and 28 Hong Kong law offices have set up branches on the Chinese mainland. (Dow Jones Newswires, 8 July)

China plans new reforms to streamline judicial system
China's Supreme People's Court has announced plans to streamline the judiciary and to promote "fairness and efficiency" in its legal system. China's court system was largely dismantled during the Cultural Revolution of 1966-76. The judiciary was restored in the late 1970s. (Dow Jones Newswires, 8 July)

China to unveil updated rules for franchisers
China will unveil a new regulation on commercial franchises to boost the development of the country's new business model. The new regulation is aimed at ensuring franchise store runners carry out their commitment to franchise brand owners and should ensure the quality of the stores. Although not big in scale, the franchise sector has witnessed a rocketing growth in China as a new business mode introduced less than a decade ago. (China Daily, 8 July)

Reuters: China 2002 GDP forecast to grow 7.6%
China's economy is likely to reverse last year's slowdown by growing 7.6% in 2002 and 7.7% in 2003, according to the latest Reuters poll. Eight out of 10 regional economists polled raised their forecasts for China's GDP growth in 2002 due to better-than-expected export growth and strong state investment. (Reuters, 8 July)

Survey: China is venture capitalists' favorite Asian destination
A survey shows that venture capitalists are optimistic about investment returns and economic prospects in Hong Kong and mainland China, and their confidence in the region's technology, media and telecommunications sectors is recovering. Among all the Asian countries where venture capital firms operate, 87% of those surveyed indicated their intention to increase investment in China, while 61% chose South Korea. (ChinaOnline, 8 July)

Philips moves Mexican production lines to China
Royal Philips Electronics will move two television-screen production lines from Mexico to Suzhou. The move is made because China has more competitive advantages than Mexico in areas such as labor costs and taxation policies. (ChinaOnline, 8 July)

Mexico may bring WTO case against China as plants close
The Mexican trade ministry is investigating whether China offers companies hidden subsidies to shift production there. If Mexico determines that China is offering companies unfair incentives, then Mexico will take its case to the WTO. (Dow Jones Newswires, 10 July)

Multinationals evade USD 3.6 billion a year in taxes
An official from the State Administration of Taxation revealed that during the latter part of the 1990s multinationals in China evaded as much as RMB 30 billion in taxes every year, accounting for one-thirtieth of the 2001's fiscal revenue of the China. The figure would be even more astonishing if evaded taxes by other types of enterprises across the country were included. (ChinaOnline, 8 July)

Money laundering challenges China's economy
Inside sources say money laundering on the Chinese mainland must be up to a yearly sum of RMB 200 billion, a figure about 2% of the nation's GDP. The said loss from money laundering can be divided into three parts: RMB 70 billion of smuggling gain, RMB 30 billion of embezzlement, and a transferred amount of tax evasion from foreign-funded companies. (People's Daily, 9 July) Mind you, the article implies that half of all the money laundering in China is due to foreign-funded companies transferring money abroad for tax evasion...

Shanghai gas network seeks RMB 3 billion investor
Shanghai is seeking foreign investment in a RMB 3 billion project to build a city-wide arterial gas network. The 330km network to be built by state-owned Shanghai Gas Networks will distribute natural gas from Xinjiang and the East China Sea to homes and factories. Shanghai is shifting away from coal as its main fuel source in favour of gas to help reduce pollution. (People's Daily, 9 July)

China's economy feels deflationary pressure
Lacklustre consumption and oversupply in the market are expected to continue adding deflationary pressure on China's economy. The consumer price index registered a year-on-year drop of 0.8% in the first five months of this year. Urban consumer prices declined by 1.1%, rural prices fell by 0.2%, and the trend is expected to continue into the second half of this year. (Business Weekly, 9 July)

China under pressure to cut interest rates again
The government is coming under pressure to cut interest rates again in the face of continuing deflation and the desire by top policy makers at the 16th Communist Party Congress in September to ensure continuing economic growth. However, the People's Bank of China is more likely to increase the money supply and loosen regulations on lending than launch its second interest rate cut of 2002. (AFX News, 9 July)

Chinese opt for slow lane when buying cars
While 76% of car consumers worldwide choose to purchase vehicles by borrowing money from banks, only 5 to 10% of Chinese car owners choose to borrow money to make their purchases. (Business Weekly, 9 July)

Workplace accidents take over 50'000 lives
According to the State Administration on Work Safety, 53'302 people have been killed in 447'234 workplace accidents during the first half of this year. On July 1, a law on work safety was put into effect, giving SAWS the right to implement comprehensive supervision and administration measures for workplace safety. (Xinhua, 10 July)

Bad loans at Chinese banks paint a grim picture
According to a new report by Ernst & Young LLP, non-performing loans at China's four state-owned commercial banks loans currently total USD 480 billion. They account for about 34% of total lending. The figures stand in stark contrast with central bank figures published in April that put non-performing loans of the country's four large state owned banks at 24.54% of total lending. (Dow Jones Newswires, 10 July)

Airlines keep plugging away at promising Chinese market
For major airlines, no market can match the allure of China. Although the future may be bright, the present is grim. Many airlines post losses flying to China even in good times. The problem is that for most airlines flying to China, far too many of the passengers are tourists on a budget rather than executives on expense accounts. (WSJ, 10 July)

Honda to build export-only car plant in China
Honda Motor has confirmed a plan to build China's first export-only car factory. The new plant is supposed to have initial annual production capacity of 300'000 units. The plant would export subcompact cars to markets in Asia and Europe. Honda's latest move makes more sense from a strategic perspective than from an economic one. Honda along with everybody else is desperate to establish a firm foothold in China. But is it more cost-effective than building cars [for export] in Japan? Absolutely not. (SCMP, 11 July)

Taiwan exports to mainland rise 74.2%
In the first half of this year, Taiwan recorded USD 3.88 billion worth of exports to the mainland, surging 74.2% year-over-year. Production materials and half-finished electronic products took a substantial portion of Taiwan's exports to the mainland, and most were ordered by Taiwanese plants on the mainland. (ChinaOnline, 11 July)

Insurance companies not trusted, but coverage still desired
A survey shows that more than a quarter of consumers do not trust insurance companies, though as many as 50% of city residents said they were going to buy in the next three years. Consumers generally expressed dissatisfaction with the after-sale services of the insurance companies. (ChinaOnline, 11 July)

New visa rules for foreigners
China has adopted flexible new visa rules to make it convenient for foreign professionals and investors to work and invest in the country. Qualified foreigners may apply for a special multiple-entry visitor's visa which is valid for 2-5 years, allowing a maximum of 12 months' stay per visit. (Shanghai Daily News, 11 July)

AIG opens Suzhou Life Insurance operation
American International Group's AIA unit received approval to open a wholly owned life insurance operation in Suzhou. AIG said it is the first foreign insurance organization to be licensed there. In June, a China Insurance Regulatory Commission official said that AIG wouldn't be allowed to open additional wholly owned life insurance branches in China. AIG's latest coup gives reason to speculate that the company will continue to operate outside the rules that determine the scope and location of the operations of other foreign life insurance companies in China. (Dow Jones Newswires, 11 July)

Chinese government shuts down over 800 polluting businesses
The government has shut down 823 businesses accused of polluting China as part of a nationwide environmental campaign. 283 people suspected of illegally discharging pollutants have been investigated. (Dow Jones Newswires, 11 July)

Mixed 1st half earnings expected for China's listed firms
Even though the country's economy remained robust in the first half of 2002, it benefited only certain sectors. Construction material companies will be among the biggest beneficiaries from the construction boom. Rebounding petrochemical prices in the second quarter are expected to help chemical companies, hurt by weak prices early this year. On the flip side, household appliance makers will likely post poor six-month earnings. Price cuts in the auto industry have hurt listed vehicle makers. Telecommunications equipment makers are also expected to be on the losing side, hit by competition and slack demand. (Dow Jones Newswires, 11 July)

Direct remittance links Straits
Financial authorities on both sides of the Taiwan Straits have given permission to banks to open direct remittance links, a move hailed as conducive to cross-Straits exchanges. Taiwanese investors had poured USD 60 billion of investment on the mainland, but had to make remittances and account settlements through third parties, mostly banks in Hong Kong or the United States. The shortened routes will save bank clients an average of USD 15-25 per remittance and the duration will be almost halved to within one day. (China Daily, 12 July)

Large auto-making center to be built in Shenyang
A large automobile manufacturing base is to be set up in Shenyang. Shenyang plans to invest RMB 20 billion to build the new industrial center, which is designed to have an annual capacity of 100'000 vehicles, generate RMB 50 billion in sales, and create 100'000 jobs. The project is expected to be launched at the end of the year, and to be completed by 2005. Currently, Shenyang's auto industry produces a quarter of the country's automobile products, and last year, it achieved RMB 18 billion in sales. (People's Daily, 12 July)

Chinese insurers report increase in premium income
Chinese insurance companies reported RMB 160.82 billion in premium income for the first half year, up 58.01% on a yearly basis. Premiums from life insurance totaled RMB 118.68 billion, up 84.37%. Property insurance premiums rose 12.65% to RMB 42.14 billion (People's Daily, 12 July)

China issues RMB 26.5 billion National Bond
China is to issue RMB 26.5 billion in national bonds from July 12 to 15. The initial price will be RMB 98.13 per RMB 100 face value, and the actual income through the issuance will be RMB 26 billion. (People's Daily, 12 July)

Ten Chinese SOEs listed among Fortune Global 500
Ten state-owned enterprises of China were recently listed among world top 500 companies published by Fortune: State Power Corporation of China (60 Place), China National Petroleum Corporation (81), China Petrochemical Corporation (86), China Telecom (214), Bank of China (277), China Mobile (287), China National Chemical Import & Export Corporation (311), China Construction Bank (389), China National Cereals, Oils & Foodstuffs Imp. & Exp. Corp (392), Agricultural Bank of China (471). Fortune pointed out that China only took up 2% of the world 500, and all of them turned out to be overstaffed state-owned ones. (People's Daily, 12 July)

China clarifies fund management rules
Foreign and local institutions can take control of only one fund management company in China and invest in up to two, according to a China Securities Regulatory Commission spokesman. The spokesperson also said that local and foreign joint venture fund management companies will have the same business scope and foreign joint venture companies can install qualified foreigners as independent directors on the board. (SCMP, 12 July)

State gives green light to Brilliance-BMW factory
The first China-made BMW car is set to roll off the production line next year after a venture between Brilliance China Automotive Holdings and BMW Group was approved by Beijing. (SCMP, 13 July)

Taiwan to lift half-century ban on direct investment in mainland
Taiwan plans to lift a half-century ban on direct investment in the Chinese mainland as the two sides inch towards closer economic ties despite a political deadlock. Once the ban is lifted, Taiwan businesses will be able to invest directly in the mainland rather than going through third places, such as Hong Kong. (China Daily, 14 July)