Swiss exports to China up 9.8%, January to September
From January to September, trade between Switzerland and China was CHF 3.072 billion (+1.8%). Imports from China to Switzerland stood at CHF 1.70 billion (down 5.0%), exports at CHF 1.371 billion (up 9.8%). The latter hints at a particularly strong month of September for Swiss exports. Machinery again took the lion share (63.0%) of total exports as it increased 8.7% to CHF 864 million. Watches (up 111.2% to CHF 54.8 million) and jewelry (up 162.9% to CHF 5.3 million) showed particularly strong growth. Plastics (up 27.4% to CHF 33.6 million) and metals/metal products (up 31.9% to CHF 28.9 million) performed well. Swiss exports to Hong Kong increased 11.5% to CHF 3.398 billion during the same period; imports from Hong Kong increased 25.1% to CHF 651 million. In total, Swiss exports to China (incl. Hong Kong) went up 10.7% to CHF 4.769 billion, representing 4.68% of worldwide Swiss exports during the period. Imports increased 2.7% to CHF 2.351 billion. Swiss exports to Taiwan decreased -14.6% to CHF 863 million from January to September; imports from Taiwan went down -29.2% to CHF 454 million. (Embassy of Switzerland, 22 Nov)

Economy

Decline in producer prices slows
Producer prices in China fell 1.1% last month compared with October last year - slower than September's 1.4% drop. For the first 10 months of the year, prices slid 2.7% from the year-earlier period. (SCMP, 20 Nov)

EU to lift ban on seafood imports from China
The European Union will soon resume imports of some animal-origin seafood from China. China and the EU are still negotiating regarding bans on other Chinese animal-origin products. The EU banned imports of Chinese poultry, rabbit meat, honey, mollusks, pet food and crustaceans, such as frozen shrimps and prawns, this January. The ban met vehement opposition from Chinese trade officials, who said it as trade protectionism in the guise of sanitary measures. (China Daily, 22 Nov)

Taiwan investment in mainland up 30%
Taiwan businesses invested USD 3.0328 billion in mainland China in the first 10 months of 2002, up 30.23% from the same period last year. In contrast, total investment by Taiwan businesses in other countries and regions excluding the mainland dropped 37.19% year on year to USD 2.68 billion. (ChinaOnline, 22 Nov)

Moody's upgrades China ratings
Citing rapid growth in foreign exchange reserves, positive prospects for exports and hence the current account, and a WTO-led boost to investment, Rating agency Moody's Investors Service changed its outlook on the A3-rated long-term foreign currency bonds of the government from stable to positive. Its action was in sharp contrast to a recent decision by rival agency Standard & Poor's as well as an OECD report which warned that foot-dragging over reform threatened to throw the brakes on China's economic growth. (SCMP, 23 Nov)

Finance

China central bank cuts foreign currency deposit rates
China's central bank has cut rates on deposits denominated in foreign currencies including the U.S. dollar, euro, U.K. sterling and Swiss franc. Rates were also cut on the Hong Kong dollar and the Canadian dollar. (Dow Jones, 18 Nov)

Construction Bank to start venture with German bank
China Construction Bank, the country's third-largest lender, received approval to form a venture with Bausparkasse Schwaebisch Hall AG, the mortgage bank of DG Bank AG, to operate a property loan business. (Bloomberg, 18 Nov)

More foreign insurers to debut in China
A number of foreign insurers are busy preparing to launch their operations in the burgeoning market. Leading the queue are the Britain-based Standard Life Insurance Co, US-based Liberty Mutual Insurance Co, Japan-based Sompo Japan Insurance Inc and Switzerland-based Swiss Re, the world's largest insurance company by assets. Swiss Re was given the licence to establish a wholly owned branch to offer national reinsurance coverage to its targeted Chinese customers, which will include both life insurance and non-life insurance companies. The company is now required to inject paid-in capital worth CNY 300 million as a registered fund to start its business in the market. (Business Weekly, 19 Nov)

Foreign insurers pull out of mainland
Japan's Dai-ichi Mutual Life Insurance Co and Germany's Gerling decided to pull out of China with one saying it will take too long to make money and the other that operating restrictions are excessive. In May, Swiss Life said it would withdraw from China, closing offices in Beijing and Shanghai. Chinese insurance regulatory officials said such cases were rare and that foreign insurers remained upbeat on their prospects in a market that was slowly opening. (SCMP, 19 Nov)

China mulls new transfer of state banks' bad loans
China is considering providing another "free lunch" for its state banks, shifting a large number of bad loans off their books and parking them in asset management companies where they may be bought by foreign and domestic institutions. Concern has grown among policymakers that leaving banks to whittle down their bad loan ratios by themselves could significantly delay their restructuring to well beyond the time that foreign banks are allowed to compete with them on a more equal footing in 2007. (Dow Jones, 19 Nov)

Time to valuate the renminbi
"I personally feel lots of pressure", said Finance Minister Xiang Huaicheng about the heat building up over the valuation of the renminbi. There is pressure now from various countries, including Japan and the US, for China to unpeg its currency from the dollar. With the current CNY 8.3 to the dollar, China's export is so cheap that it is hard for other countries to compete. In theory there is room for valuation of the Renminbi, but economists doubt there will be a change in China's foreign exchange policy in the near future. (Chinabiz, 19 Nov)

Foreign banks get RMB go-ahead in 5 more Chinese cities
Foreign-funded financial institutions will be allowed to conduct RMB business in five more cities, Guangzhou, Zhuhai, Qinagdao, Nanjing and Wuhan from this December 1st. Earlier, China had removed restrictions on the foreign exchange clients of foreign banks and allowed them to conduct RMB business in Shanghai, Shenzhen, Tianjin and Dalian. Foreign banks have set up 181 business agencies in China by the end of last September, with 45 agencies already granted with RMB business licenses. (People's Daily, 20 Nov)

China's deficit under the safety line
Minister of Finance Xiang Huaicheng pointed out that China's financial deficit and liabilities balance make up a respective 2.7% and 16.3% of the nation's GDP, both under the international-recognized safety line. He added that the Chinese government will continue to practice a proactive financial policy in an effort to boost the economy for a sustainable growth. (People's Daily, 20 Nov)

Currency controls unlikely to end soon
China is not ready to relax its rigid foreign exchange regime, despite the imminent launch of a long-awaited scheme that allows qualified foreign institutional investors (QFII) to buy yuan-denominated A shares. Restrictions slapped on foreign investors - such as a minimum one to three-year investment period - showed China's wariness in allowing the yuan to be freely convertible on the capital account. (SCMP, 21 Nov)

Bank upbeat about China's equity markets
Global investment bank Credit Suisse First Boston said it was optimistic about China's equity markets and would apply for qualified foreign institutional investor (QFII) status. "The QFII system is a major step towards liberalizing China's capital markets and the renminbi rate,'' said Paul Calello, CEO of CSFB for the Asia-Pacific region. "This current direct investment boom will undoubtedly be followed by a tremendous internationalization of portfolio investments in China, that is, foreign investments in Chinese corporate stocks and bonds.'' (China Daily, 23 Nov)

Business

Car sales in China keep shooting up
In the first nine months of this year, more than 800'000 automobiles were sold in China, up 47% from the same period last year. Production for the period rose almost 33%. By Nov. 1, more than 1.88 million motor vehicles were registered in Beijing - 1.18 million of them privately owned. The number of newly registered motor vehicles in the city for the first eight months of this year was 120'000, equal to the combined figure for the previous three years. (AP, 18 Nov)

China to expand its helicopter manufacturing industry
China Aviation Industry Corporation, a major helicopter producer and research institute, will intensify research and strengthen international cooperation over the next ten years in order to promote the country's helicopter manufacturing industry. The EC120 light helicopter, jointly developed by China, France and Singapore, will have 40% of its production based in China. The annual production of this helicopter in China will be expanded to 150 starting from this year. (Xinhua, 19 Nov)

Energy

Beijing eyes two-tier system for power sector
A two-tier regulatory system for the mainland power industry, designed to separate the state's oversight and business roles, is expected to form part of sweeping reforms to be unveiled this year. A proposed State Electricity Regulatory Commission (SERC) will oversee day-to-day industry policies. The State Development and Planning Commission will continue to set key policies and decide on electricity tariffs and construction of new power plants. (SCMP, 19 Nov)

China crude imports rise; further growth expected
In the first 10 months this year, crude imports rose 9.3% on year, to 56.9 million tons, with imports in October alone 27.5% higher, at 5.1 million tons. Economic expansion could push full-year crude imports above 65 million tons in 2002, and to 70 million tons next year. About 50% of China's crude imports came from the Middle East. China also exported 429'477 tons of crude in October, up 48% on year, but exports in the first 10 months fell by 19% to 4.99 million tons. Japan continues to soak up most of China's crude exports. (Dow Jones, 20 Nov)

Beijing

7 foreign chain stores to open in Beijing 2003
Seven foreign chain-store companies - including well-known American retailer Wal-Mart Inc. - will open outlets in Beijing next year, injecting China's capital with a large dose of competition. All seven already have stores in Shanghai or other cities in eastern China. Joint venture retailers like those with Swedish furniture dealer Ikea and the French retailer Carrefour are expected to expand their existing Beijing operations soon. (Dow Jones, 19 Nov)

Tianjin to invest CNY 180 billion in its infrastructure
Tianjin, the largest port city near Beijing, has announced plans to invest CNY 180 billion to build the city into a major tourist attraction in the coming five years. The projects, scheduled to be completed by 2007, are aimed at turning the Haihe River into a huge commercial and tourist complex. (People's Daily, 24 Nov)

Shanghai

Shanghai to have 21 underwater tunnels by 2010
Shanghai will become the city with the most underwater tunnels in the world. To improve traffic across the Huangpu River, which separates the Pudong new area and downtown Shanghai, the city plans to build 10 more tunnels underneath the river and have a total of 21 tunnels by 2010. (ChinaOnline, 21 Nov)

Shanghai foreign banks to reform foreign exchange business
Seventeen foreign banks in Shanghai received the go-ahead to initiate a series of reforms on a trial basis with respect to their foreign exchange business. The move is aimed at creating an environment for Chinese and foreign banks to compete on an equal footing after foreign exchange-related business is completely opened to foreign banks, the official said. (People's Daily, 22 Nov)

Foreign investors encouraged to acquire firms in Shanghai
Authorities in Shanghai are drafting policies to encourage foreign investors to annex or acquire local firms in seven fields, including high technology, new products and environmental protection. Foreign investors in Shanghai have recently shifted their focus from setting up joint ventures or solely-invested companies to annexing or acquiring local companies directly. (People's Daily, 24 Nov)

Various

China continues its crackdown on corruption
According to the working report of the CPC Central Commission for Discipline Inspection, a total of 98 ministerial-level leaders have been punished by the Communist Party for corruption and other violations from October 1997 to September 2002. More than 840'000 people at various levels were punished for corruption and other transgressions in the past five years. (China Daily, 20 Nov)

More options for Chinese tourists
Local newspapers in Shanghai and Guangzhou reported that residents of Beijing, Shanghai and Guangzhou are expected to achieve access to European Union countries next year. Although Germany was appointed a tourist destination last year, travel agencies still cannot organize tour groups to this European country because of restrictive policies related to the 1985 Schengen Agreement and the 1990 Schengen Convention. The number of Chinese citizens travelling abroad is predicted to reach 100 million by 2020, making it the fourth largest overseas tourism market in the world. (China Daily, 23 Nov)

Three Gorges clean-up
The government said it would spend USD 4.7 billion by 2009 to clean up waste from public toilets, tombs, abattoirs and other sites flooded by the Yangtze River for the Three Gorges dam. (FEER, 28 Nov)

Markets

Mixed Messages in share offers
In the debut of its tarnished initial public offering, China Telecom fell 5% in New York and 1.4% in Hong Kong on its first day of trading. The largest telephone company in the world's fastest growing telecoms market raised USD 1.43 billion--compared with its aim two weeks earlier of raising up to USD 3.68 billion. In contrast, however, China Oilfield Services managed to price its shares at HKD 1.68, at the top of its range. The offshore oilfield services provider said its Hong Kong offering was 18.7 times oversubscribed and its international offering was "significantly oversubscribed." (FEER, 28 Nov)