Special issue concerning the 2003 NPC Session

War in Iraq

China's oil needs make Iraq war serious concern
A long, messy war against Iraq waged by the U.S. may cause a spike in oil prices which could in turn pose a threat to China - a key economy with a growing thirst for fuel and increasingly tighter ties to global markets, the China Academy of Social Sciences said. China 'doesn't have strategic oil reserves - an emergency supply that countries like the U.S. and Japan use as a cushion against wild swings in fuel prices. Last year, China imported 76.3 million tons of crude oil - a 15% increase from 2001. About 40% of the oil came from the Middle East. (Dow Jones, 21 March)

Taiwan to allow flights to use China's air space during war
Taiwan will allow domestic airlines to fly over China's airspace on their way to European destinations to avoid the Middle East war zone. This would be the first time Taiwanese commercial aircraft would be allowed to fly over China. The Administration of Civil Aviation of China quickly welcomed the plan and called on Taiwanese airlines to apply to China for the flights. (AP, 21 Mar) There seems to be something good in everything.

Economy

China's economy to grow 7-8% in 2003
China's economy is expected to keep a fast and healthy development this year, most likely to growby seven to eight%, Qiu Xiaohua, deputy director of the National Bureau of Statistics, said. His prediction is based on the assumption that the military action against Iraq would not have much effect upon the world economy. China witnessed a trade deficit of USD600 million in the first two months of this year, the first of its kind since 1996, resulting from increased petroleum imports and price rises. The contracted foreign investment in the first two months has achieved a growth rate of 59.1% and that of actual foreign investment was 53.6%. (China Daily, 23 March)

China's fixed-assets spending up 32.8%
China's fixed-assets investment rose 32.8% in the first two months of this year to CNY193.6 billion. Of that, CNY93.9 billion was spent on infrastructure projects, a year-on-year increase of 27.7%. Spending on renovation and upgrades rose 41.8% to CNY32 billion, while that on real estate development rose 37% to CNY59.8 billion. (China Daily, 19 March)

China's retail sales climb as city spending continues
Retail sales in China rose 9.2% to CNY761.4 billion in the first two months of the year, though the data underlined the disparity between increasingly wealthier urban consumers and the laggard rural sector. Urban sales rose 10.7%, 1.4%age points faster than the growth for the same period in 2002. Meantime, the pace of rural sales growth slowed 0.4%age point to 6.6%. (Dow Jones, 16 Mar)

Finance

Sino-Swiss venture capital fund set up in Beijing
Sino-Swiss Venture Capital Fund Management Co Ltd (SSVC) announced its establishment in Beijing, with a registered capital of CNY10 million. China Development Bank holds a 67% stake in SSVC and the State Secretariat for Economic Affairs of Switzerland (SECO) holds 33%. SSVC's main business is managing the Sino-Swiss Partnership Fund (SSPF) and providing relevant advisory services. In 1998, the CDB and the SECO jointly founded SSPF, aimed at encouraging the small and medium-sized companies from Switzerland to increase the level of their direct investment in China. (China Daily, 21 March)

Foreign-funded life assurance gets government approval
Sweden's Skandia Insurance Company was given the green light to start preparation for a life assurance joint venture in Beijing. The joint venture - the first of its kind approved by CIRC to start preparation for operation - is expected to begin providing services to Chinese clients in the first quarter of next year. The new life insurance company has a registered capital of CNY200 million and is 50% owned by the Swedish firm. The other 50% is owned by the Beijing State-owned Assets Management Corporation Ltd. (China Daily, 21 Mar)

Shenzhen bourse set to resume new listings
China's Shenzhen stock exchange could resume listings as early as the second quarter after a hiatus of more than two years, industry sources said. It would be a further blow to plans to merge the mainland's two bourses. The Shenzhen government lost significant tax revenues after floats choked off from September 2000. (SCMP, 21 Mar)

China Life secures four banks to co-ordinate global share listing
Four investment banks, among them Credit Suisse First Boston, have been named to jointly underwrite the global share sale of China Life Insurance. The mainland's largest life insurer, is reportedly aiming to raise between USD2 billion and USD3 billion through its listing, preferably in Hong Kong. (SCMP, 20 Mar)

Unlocking securities market
The China Securities Regulatory Commission (CSRC) revealed that qualified foreign institutional investors (QFII) can now get wider access to the domestic securities market, besides listed A shares and bonds. They can also invest in closed-end and open-end funds, with no investment ratio limits. They will also be able to buy into initial public offerings, additional share issues, rights shares and convertible bonds, said the circular published on the CSRC website. A number of foreign institutions are working on their applications to the CSRC, including Deutsche Bank, UBS Warburg and Goldman Sachs. (China Daily, 20 March)

Second board market pushed onto debate
The debate over the need for a second board stock market in China has re-emerged at the National People's Congress session, where supporters of a second board stock market - which, with less strict listing requirements than the main board, could help small high-tech companies raise funds - lobbied strongly for their idea. China Securities Regulatory Commission made no significant comments on the debate. (China Daily, 18 Mar)

Government

Ministry to better control goods, quotas
China will better regulate circulation of goods under the new ministry of commerce, but experts warn distribution of import quotas could be affected during the transition period. While the new ministry will fit into China's market reforms, there could be difficulties in co-ordinating the departments' functions and personnel, and the new department could have a tough time solving the oversupply of workers. (Business Weekly, 18 Mar)

China falls short on tax rebates
Exporters in the Pearl River Delta are having to wait years to collect overdue value-added tax rebates from local tax bureaus. Local governments have fallen behind on their rebate obligations. They do not have the money to allocate rebates while the central government is still encouraging exports by giving refunds. In some cities local tax authorities are believed to owe exporters more than USD1 billion. (SCMP, 21 Mar)

Business

Software makers get hard drive
The Chinese Government is pondering implementing more concrete policies in a bid to foster the fledgling, but promising, domestic software industry. One measure might require central and local government agencies to buy most of their software products from home-grown companies. Meanwhile, analysts and industry observers suggest that it would be very hard for the government to implement such proposals, as government users could become frustrated migrating to home-grown systems and office software after using Microsoft's Windows platforms and office software. The proposals are expected to stir up debates about whether such measures breach China's WTO commitments. (Business Weekly, 18 Mar)

Building materials industry embraces big boon
China's building materials industry is expected to grow about 10% over the next five to 10 years. Overseas building materials, especially high-quality, high-tech and environmentally friendly products, are urgently needed in China's cosmopolitan cities such Shanghai, Beijing and Guangzhou. Lack of unified standards and knock-off products are two major issues facing overseas building materials suppliers. (Business Weekly, 18 Mar)

China postal service plans listing
Deprived of the government subsidy it has received for the past 53 years, the mainland postal service has submitted a plan to list its six most profitable regions overseas. The flotation would most likely occur in Hong Kong. China's postal system had a profit of CNY100 million on revenue of CNY51 billion, last year. But taking the subsidy into account, it actually lost CNY900 million. The losses stem from a requirement that it provides a universal service - delivering a letter to wherever it is posted, no matter how remote or inaccessible. (SCMP, 17 Mar) I wonder how postal services will be "re-organized" outside the six profitable regions.

Beijing 2008

China launches tender for designs of Olympic venues
An international architecture competition is being held in Beijing for designs for the Beijing Shooting Range and Laoshan Cycling Velodrome - two of the key competition venues for the 2008 Olympic Games. (People's Daily, 20 March)

Various

4'000 bogus joint ventures nabbed in Hainan province
A total of 4'000 companies have had their business licenses revoked in Hainan province for illegally registering as joint ventures. After the massive check, the number of joint ventures in Hainan has been slashed from 6'600 in 2000 to 2'251 now. (People's Daily, 22 March) Where does this leave us with national statistics on number of JVs?