Half-year economic growth better than expected
China's economy grew 7.8% (GDP) to RMB 4'553.6 billion in the first half of 2002, thanks to strong growth in exports and heavy investment. 2nd quarter growth was recorded at 8%, ahead of forecasts and of 1st quarter growth of 7.6%, which prompted economists to raise full-year projections. Most now expect 7.5 to 8% growth.
China's foreign trade totaled USD 270.71 billion, a rise of 12.3% over the same period last year. Exports totaled USD 142.06 billion, up 14.1%, while imports totaled USD 128.65 billion, up 10.4%. A weak currency is making China's exports more competitive.
China's foreign direct investment in the first six months of this year increased by 18.7% from the same period last year to USD 24.58 billion. In the same period, investment commitments or "contracted FDI" reached USD 44 billion, rising a remarkable 31.5%.
Fixed asset investment, an indicator for Government expenses, rose by 21.5% to RMB 1.44 trillion, with spending on infrastructure projects up 23% and on real estate up 33%.
Tax revenue rose to RMB 841.3 billion, up 10.9% from the corresponding period last year.
Industrial output value reached RMB 1'446 billion, a year-on-year increase of 11.7%. Auto products, and electronics and telecommunications products have become the major driving forces for industrial production growth.
The balance of China's broad money supply (M2) reached RMB 17 trillion at the end of June, up 14.7% from the same time last year. The balance of narrow money supply (M1) was RMB 6.3 trillion, up 12.8%; and the balance of cash in circulation (M0) was RMB 1.5 trillion, up 8.3%. Total renminbi deposits grew 16.5% to reach RMB 15.8 trillion. Total renminbi loans amounted to RMB 12.1 trillion, up 12.2%. Total foreign currency deposits reached USD 144.5 billion, up 3.8%, while total foreign currency loans went up to USD 98.2 billion. Forex reserves were up 34.2% year-on-year to USD 242.76 billion by the end of June.
China's consumer price index (CPI) fell 0.8% during the period of January to June. Retail sales of consumer goods were RMB 1.945 trillion, up 8.6% over the same period last year.
The average income of Chinese urban residents reached RMB 3'942 in the first half of this year, up 17.5%. The average cash income of rural residents grew 5.9% to RMB 1'123.
(various sources)

Taipei and Beijing clash over links
Taipei accused Beijing of politicising attempts to build financial links between the two rivals, saying a state-controlled Chinese bank was demanding Taiwanese counterparts pay allegiance to a "One China" policy before it would allow fund transfers. (FT, 12 July)

China plans tougher rules on financial fraud
Chinese courts are to dish out tougher sentences to those conducting illegal financial activities to ensure better market order and guarantee the nation's fiscal security. Special attention will be paid to fraud involving loans, fund-raising, commercial instruments, letters of credit, credit cards, stock and insurance contracts. (China Daily, 15 July)

2002 auto sales to reach 1 million
Domestic sales of passenger cars made in China will exceed 1 million units this year, according to a forecast by the China Association of Automobile Manufacturers. Car sales totaled 470'200 units during the first half of this year, an increase of 36.2% from the same period of last year. Although China cut its tariffs from 70 to 80% to 43.8 to 50.7% at the beginning of this year, China only imported 23'500 passenger cars during the first five months of this year, less than 6% of the total domestic market volume. (China Daily, 15 July)

Public pledge on self-discipline for China internet industry
Internet portals in China have signed a voluntary pledge to purge the Web of content that China's communist government deems subversive. Those who sign must refrain from "producing, posting or disseminating pernicious information that may jeopardize state security and disrupt social stability" or spreads "superstition and obscenity." The pledge conforms closely to government policies making Internet service providers responsible for content posted on Web sites they host. It is a strategy to give the Internet enough room to blossom while keeping operators on notice not to push the envelope politically. (AP, 15 July)

Stamp-tax revenue plunges 68%
Tax authorities collected RMB 5.7 billion in securities-trading stamp taxes in the first half of this year, down 68.3%, or RMB 12.3 billion from the same period last year. The slump is attributed to the sluggish stock market and a shrinking trading volume. Another reason is the reduction in the stamp-tax rates imposed at the end of last year from 0.4% to 0.2% for A-share trading and from 0.3% to 0.2% for B shares. (ChinaOnline, 15 July)

Pressure on to cut RMB rate
Pressure to cut bank interest rates is rising once again, though China's central bank is more likely to increase the money supply and loosen regulations on lending rather than make a ninth consecutive interest rate cut since 1996. China's current loan interest rate is 5.31%. Together with the minus 0.8% CPI and 30% range banks are allowed to float upward, the actual loan interest is more around 7%. In comparison, the listed enterprises in China recorded an average profit rate of only 6% last year. (Business Weekly, 16 June)

Beijing to spend billions to expand rail network
Spending USD 42 billion in the five years to 2005, the government plans to add 4'400 miles of track to the country's sprawling 43'000-mile rail network. The goal is to clear major transport bottlenecks that threaten to choke economic growth. One byproduct could be huge contracts for foreign companies selling next-generation rail technologies. (FEER, 16 July)

Big spenders drive Shanghai growth
The first half of the year saw Shanghai's economy race ahead 10%, outpacing the 7.8% national growth, supported by massive spending on property and solid consumer demand for cars and other goods. First-half investments in fixed assets, a measure of government spending, surged 31.7%. But exports rose just 5.6% in the first half. Retail sales rose 9.8%, helped by strong car sales. Shenzhen recorded first-half economic growth of 13.5% Guangdong province recorded economic growth of 10.7% in the first half, while Beijing came in at 9.1%. (SCMP, 17 July)

New China Life plans share sale, first by a Chinese Insurer
New China Life plans to sell shares to the public, giving investors their first piece of an industry that grew 84% in the first six months of this year. Foreign investors, including Zurich Financial Services AG, own 25% of New China Life. (Bloomberg, 17 July)

Beijing's motor sales up 19% in first half year
A total of 133'000 cars were sold in Beijing in the first six months of the year, up 19.2% on a year-on-year basis. The sale of new cars soared 30% in the same period to 99'000. Nearly 90% of cars sold at the three markets were bought by individuals. Drastic price cuts by manufacturers of small cars and a government tax rebate early this year has greatly encouraged people to buy. (People's Daily, 17 July)

China's textile industry reaps more profit
China's textile industry reversed its downward trend in the first half of this year, in both its exports and domestic consumption. It is predicted that the total profits for the first half year could reach RMB 12.5 billion, up 10%. The improvement in efficiency of the textile industry results from the opportunities brought by China's entry into the WTO and the steady growth of domestic garment market. In the first half of this year China's textile exports reached 26.25 billion U.S. dollars, up 6.8% on the same period last year, while the domestic retail volume increased about 10% in constant terms. (People's Daily, 17 July)

China ranks world's 3rd in economic competitiveness
China ranks 31st in world competitiveness in 2002, improving by two positions from last year; and its economic competitiveness has risen from last year's seventh place to 3rd, according to the 2002 ranking of major countries' and regions' competitiveness published by the International Institute for Management Development (IMD). (ChinaOnline, 17 July)

Beijing plans to launch investment fund for Olympics
In an effort to raise RMB 50 billion for projects related to the 2008 Olympic Games, Beijing plans to launch an Olympic Industrial Investment Fund next year. The fund could be launched in Beijing and Hong Kong for domestic and overseas investors respectively. The State Development Planning Commission is drafting a new regulation which would legitimate and regulate such funds, currently not allowed in China. Beijing plans to spend USD 34 billion in total on the Olympics. (chinabiz.org, 17 July)

More tourists enter and leave mainland
In the first six months of 2002, 6.14 million foreigners entered China, up 15.97% compared to the same period last year. Most came from Japan, South Korea, Russia, the United States, Malaysia, the Philippines, Singapore, Mongolia, Thailand and Britain. In the same period, 7.35 million Chinese crossed the border to temporarily leave the mainland, up 33.78%. Hong Kong, Macao, Thailand, Japan and Russia were the most popular travel destinations. For the first time the number of outgoing Chinese tourists outflanked the incoming foreign tourists. (chinabiz.org, 18 July)

China's foreign investment set for record high in 2002
China expects foreign investment for 2002 to reach a record high of over USD 50 billion. 15'155 foreign-funded businesses were approved to operate in China in the first half of this year, up 26.39% compared with the same period last year. Multinational corporations are adjusting their investment structures in China by shifting their R&D centers and regional headquarters to China. China's cheap labor is no longer the only consideration of global investors. (People's Daily, 18 July)

Bad loan ratios decline as quality improves
Banks have posted a sharp decline in non-performing loans in the first half as China's lending quality improved and operating efficiency was enhanced. During the first half, the big four banks' bad loans fell RMB 10.5 billion or a decline of 1.9 percentage points from the beginning of this year. (SCMP, 19 July) I recommend to read this with a grain of salt.

Beijing to have China's first medicine logistics center
China's first modern pharmaceutical logistics distribution center is to be built in Beijing using investment totaling RMB 30 million. Siemens Dematic, the world's leading automatic logistics system supplier, signed a contract to develop the project jointly with Beijing Pharmaceutical Co Ltd, the biggest pharmaceutical company in the capital. (China Daily, 19 July)

GM's sales in China soared in first half
General Motors said its sales in China nearly tripled in the first half, underlining the sudden revival of this country's once languid auto market and suggesting the company's massive China bet may yet pay off. The U.S. auto giant sold a record 47'818 autos, the vast majority of which were produced at GM's USD 1.5 billion Shanghai plant. (WSJ, 19 July)

China to set up Wuhu export processing zone
Anhui Province is to launch its first export processing zone in the port city of Wuhu. Such zones in China are exempt from tariffs and goods produced in the zones are also exempt from value-added tax. (People's Daily, 19 July)

Shanghai City targets 6 key industries
The Shanghai Economic Commission released a atalogue of different industrial categories that are encouraged, prohibited or restricted. The package is designed to serve as a guideline for the future development of manufacturing. Shanghai will focus on the development of six pillar industries - electronics and information technology, cars, power and large-scale electromechanical equipment, petrochemicals, high-grade steel and biopharmaceutical products. Prohibited and restricted sectors include paper pulp making, chemical fertilizer production, and electronic or light industrial goods with low added value. The expansion of these sectors is banned within the Inner and Outer Ring areas. (People's Daily, 20 July)