BRIEFS

GENERAL

Mandelson wants further market opening EU Trade Commissioner Peter Mandelson called on China to open its markets wider to foreign competition and become more proactive in free trade talks. Speaking at Tsinghua University in Beijing, Mandelson said: "China is now in a position not only to accept new responsibility in key policy areas, but also to show strong leadership in the WTO and the open global trading system." Mandelson argued that, although China is ahead of other developing countries in terms of market-opening, the fact it is poised to become the world's largest exporter means it should be setting itself higher targets. In a report published in October, the EU claimed that European companies compete on "unfair terms" in China due to poor legal protection and obstructive trade policies.

China to be top for gas emissions by 2009

China will overtake the US to become the world's biggest source of carbon dioxide emissions by 2009, nearly 10 years ahead of earlier predictions, the International Energy Agency (IEA) has said. Emissions of the gas, thought to be the key cause of global warming, are being driven up by China's dependency on coal. As a developing country, China is exempt from the requirements set out in the Kyoto Protocol for reduced greenhouse gas emissions. Beijing predicted four years ago that its carbon dioxide emissions would not reach US levels until 2020 and Xu Huaqing, the National Development and Reform Commission's climate change expert, said the IEA's revised projection will only stand if China fails to reduce its reliance on coal. Another NDRC official said developing nations were dependent on technology transfers from the West to achieve this.

China's forex reserves hit US$1 trillion

China's foreign exchange reserves have hit US$1 trillion, state media reported. Economists and analysts had been expecting the announcement for some time. The country's reserves hit US$987.9 billion at the end of September and have been growing at an average rate of US$18.8 billion per month this year. The figure is one more indicator of China's meteoric rise in the world economy. Foreign exchange reserves stood at US$165.5 billion at the end of 2000. Now China accounts for almost 20 percent of the world's foreign exchange reserves. "The problems come when they rise at a very fast rate. It's kind of like shooting cocaine into the veins of the economy, it's a stimulant," said Stephen Green, senior economist at Standard Chartered. According to official statistics, China's economy grew by 10.7 percent in the first three quarters of this year.

Lehman, IBM plan joint China fund

Lehman Brothers and IBM plan to announce a new US$180 million joint-venture fund to invest in China. The fund may be the first venture of its kind by an investment bank and an industrial company and plans to target a range of sectors for investment including technology, telecoms and industry. The fund will officially operate out of Lehman's Hong Kong offices and will focus on better-developed groups that show potential for growth. Lehman Brothers said earlier this year that Asian expansion was its top priority. Investment banks and global corporations have been scrambling to increase their presence in China.

Ping An to take foreign currency premiums

Ping An Insurance has been selected as the first Chinese life insurer to take foreign currency premiums under a trial program. According to the State Administration for Foreign Exchange, Ping An will be able to make payments to clients in foreign cur rency as well as collect foreign currency premiums. It can use this money to invest domestically or internationally but will not be allowed to convert the revenues into other currencies. The development is seen as a further effort from Beijing to liberalize China's capital account. It has already approved short-term foreign currency products for casualty-insurance services.

China growth slows in Q3

The pace of economic growth eased in the third quarter as fixed asset investment slowed down and macroeconomic measures kicked in. GDP growth was 10.4 percent in the July-September period, compared to 11.3 percent in the previous quarter, according to National Bureau of Statistics spokesman Li Xiaochao. The economy expanded 10.7 percent in the first nine months of the year, slightly slower than the 10.9 percent registered in the first half. "Excessive economic growth has been basically brought under control. This data shows that the tightening policies adopted by the central government have been timely and effective," Li said. Property and fixed asset investment grew 27.3 percent in the first three quarters, compared to 29.8 percent in the first half. BANKING

BOCOM plans home listing

Bank of Communications, the country's fifth-biggest lender, plans to raise almost US$2.5 billion in a Shanghai initial public offering in the first half of next year. The lender, whose Hong Kong public offering in June last year was the first by a mainland bank, mandated Citic Securities, China Galaxy Securities, Haitong Securities and Goldman Sachs Gao Hua Securities to underwrite the sale. Many mainland banks are considering A-share sales next year. Industrial Bank, a Shanghai-based lender in which Hang Seng Bank has a stake, Citic Bank, and a number of city commercial banks, are among those eyeing sales. China Construction Bank, the country's fourth-largest lender, said in July that it will consider an A-share sale in the future.

SPDB keen to sell more shares to Citigroup

Citigroup will increase its shareholding in Shanghai Pudong Development Bank (SPDB) from 4.2 percent to the maximum permitted 19.9 percent in the first half of next year. SPDB vice-president Zhang Yaolin said the bank wanted to complete the sale in order to strengthen its capital. He also confirmed reports that SPDB is considering a Hong Kong listing in addition to a plan to issue 700 million new A-shares to institutional investors by the end of the year. Some of the funds will go towards systems underpinning the lender's retail banking operations. Meanwhile, Australia and New Zealand Banking Group (ANZ) is said to be closing in on a deal to buy 19.9 percent of Shanghai Rural Commercial Bank for around US$500 million. ANZ bought 19.9 percent of Tianjin City Commercial Bank last year for US$120 million.

BOC posts Q3 profits of US$1.6bn

Bank of China (BOC) announced third-quarter profits of US$1.6 billion on the back of strong economic growth that boosted demand for corporate loans and high-end personal financial services such as credit cards. Net income for the first nine months of 2006 was US$3.99 billion, at which point the bank had US$309.7 billion in loans on its books and as much as US$570 billion in deposits. Net interest income was US$4.11 billion and income from fees and commissions was US$410 million. It gave no comparable figures from 2005. BOC's share of the local currency lending market was 7.6 percent but it managed to capture 34.4 percent of the foreign currency market, over which it had a monopoly from 1949 until 1994. The bank's domestic-listed stock has risen 5.8 percent since its US$2.5 billion IPO in July. BOC expects profit growth of 27 percent this year while China Merchant's Bank expects to post a 47 percent gain.

ICBC raises US$19.1 billion on first day

Industrial and Commercial Bank of China (ICBC) raised a record US$19.1 billion during its trading debut on October 27 as shares surged 15 percent in Hong Kong alongside a relatively modest 5.1 percent in Shanghai. Hong Kong shares opened at US$.46 (HK$3.60) - up from the US$.39 (HK$3.07) IPO price - and closed at US$0.45 (HK$3.52). Shares in Shanghai opened at US$.43 (RMB3.40) up from the IPO price of RMB3.12 and closed at RMB3.28. The initial public offering became the world's largest IPO, ahead of Japan's DoCoMo which once raised US$18 billion. However, ICBC shares did not surge as much as those of Bank of China, which jumped as much as 32 percent during intraday trading on their first day of trading earlier this year.

MEDIA

EBay, Baidu.com sign ad deal

EBay, the world's biggest online auctioneer, has signed a deal with Baidu.com allowing China's biggest search engine to run advertising on eBay's site on the mainland. The two companies will begin testing Baidu's search-based advertising on eBay's China site in the first quarter of next year and begin operations in the second quarter. Advertising revenue from China's search market may rise more than sevenfold to US$1.4 billion in 2011 from US$194 million this year, according to a September 28 Credit Suisse report. Working with eBay may help Baidu win a bigger share of that market from rivals Google and Yahoo.

Lenovo signs NBA deal

Chinese computer maker Lenovo Group signed a multi-year marketing deal with the National Basketball Association, making it the "Official PC Partner of the NBA" with marketing rights in both the US and China. The deal comes as Lenovo is in the early stages of weaning itself of the IBM brand name, which it acquired last year when it purchased the company's PC division for US$1.25 billion. As part of the deal with IBM, Lenovo earned the right to use the brand name until 2010 but it cannot use IBM's name in marketing campaigns. The NBA deal is the latest in a series of sports partnerships for the company. Last summer, Lenovo signed Ronaldinho to a campaign pegged to the World Cup. Lenovo will also sponsor the 2008 Summer Games in Beijing.

China touts real names for blogs

The Internet Society of China says bloggers should be required to use their real names when they register blogs according to state media. The society, which is affiliated with the Ministry of Information Industry, said no decision has been made but that a 'real name system' is inevitable. "A real name system will be an unavoidable choice if China wants to standardize and develop its blog industry," the Internet Society's secretary general, Huang Chengqing, told state media. Under the proposed rule, users would be required to register under their real name to open a blog but would still be allowed to write under a pseudonym.

AUTOMOTIVE

GM to sell hybrid cars in China by 2008

General Motors is to start selling hybrid cars in China from 2008 in collaboration with its joint venture partner Shanghai Automotive Industry Corp. The plan to launch alternative energy vehicles in China was announced by GM chief executive Rick Wagoner during a visit to Shanghai where he test-drove the company's Sequel car. It runs on hydrogen fuel-cell technology, which is still some way from commercial application. GM's decision comes after Toyota began selling its Prius petrol-electric hybrid car at the start of the year. Volkswagen also plans to introduce hybrid vehicles in China by 2008. Although China has an escalating thirst for oil, it has yet to develop the expensive gasoline infrastructure present in more developed countries and so some analysts believe it could more easily adapt to alternative energy vehicles.

WTO auto arbitration to proceed

The World Trade Organization will establish an arbitration panel to rule on a dispute between China and several western countries over Chinese import tariffs on car parts according to a WTO official. It will be the first such arbitration panel involving China since it joined the global free trade system in 2001. China blocked an attempt by the European Union, the United States and Canada to seek a WTO ruling on Beijing's tariffs on foreign parts for local vehicle assembly in September, but the countries renewed their request in October, automatically triggering the WTO's intervention. China has a minimum local content requirement for cars produced on its soil and charges tariffs if the value of the foreign parts exceeds the threshold. The plaintiffs argued that the tariff rule violates China's accession agreement to the WTO.

China car maker in Detroit auto show

China's Changfeng Group Co will take four vehicles to the North American International Auto Show in Detroit in January. The move is aimed at jump-starting an incursion into the North American market. This will be the second time in as many years that a Chinese company has used the largest auto show in the US to introduce products and gauge reaction. Geely Automobile Co brought a compact sedan to this year's show. The company will display two SUVs and two pickups sold under the name Liebao or cheetah. This will be the first time Changfeng ventures to a show outside China in an effort to boost the company profile among Chinese buyers who prefer foreign brands.

TECHNOLOGY

Open source software more popular in China

Demand for open-source software is rising in China. The country's newfound taste for open-source products, which are a low-cost alternative to expensive proprietary software, is due partly to initiatives by Oracle and Microsoft. The two companies have taken steps to provide better support and products, according to Red Flag Software, the country's largest open-source system supplier. Oracle's Unbreakable Linux initiative provides high quality support to users of products from US-based Red Hat Linux while Microsoft has launched an initiative with open-source proponent Novell. The Linux operating system undermines sales from software giants because it is available without royalty payments. Companies like Red Hat and Red Flag make money from pre-packaged support programs.

IT firms under fire at UN forum

Leading IT firms drew flak at a four day United Nations forum on Internet governance for colluding with Chinese authorities in exchange for market access. The forum, held in Greece, is billed as a first-ever attempt to encourage hard talk between states, lawmakers, companies and users. Among other controversies, Cisco Systems has been accused by Reporters Without Borders of selling technology to Chinese police that allows for the monitoring of dissidents, Yahoo! has been criticised for disclosing the identity of a journalist leading to his subsequent arrest, and Google is under fire for agreeing to censor results on its search engine in China. The companies responded that their operations in China benefit millions of Internet users by giving them access to information. "I don't accept the accusation that we're colluding, I think we are maximising the access to information for users," Microsoft senior policy counsel Fred Tipson said. A Chinese delegate said there were "no restrictions at all" on the flow of information in China.

TCL to close TV factories in Europe

TCL Multimedia Technology Holdings will close most of its European television-making operations and return the Thomson trademark to the French video-technology giant. The Hong Kong-listed mainland company announced the closure after reporting US$195.4 million in losses in nine months, which it said was entirely due to the European operations, originally part of a joint venture with Thomson. The European business had accumulated losses of US$257 million as of September 30, Li Dongsheng said. The closure comes after Thomson exercised an option to end its agreement to grant TCL a 20-year licence to use Thomson trademarks in Europe, North America and other countries when TCL Multimedia failed to meet minimum sales targets. TCL will now focus on contract manufacturing television sets for Europe, Li said.

Sony targeting China growth

Sony expects China to surpass Japan to become its second largest market after the US within the next few years. "China is the fastest growing geographic region in which we operate," Sony CEO Howard Stringer said at the opening ceremony of the company's ExploraScience museum in Beijing. Stringer and acting Sony China chairman Shizuo Takashino hope to install a Chinese management team to oversee the technology company's operations in the country. However, Stringer refused to comment on the recall of millions of defective laptop computer batteries, which has cost the company US$428.9 million. Sony has a range of China-focused products in the pipeline following the April release of the Walkman P series, a music player with in-built voice recorder that displays Chinese lyrics and photos on its screen. The company plans to launch its 16-millimetre thick liquid-crystal-display television exclusively in China.

ENERGY

China may run out of water by 2030

A senior environmental official warned that China could run out of water by 2030. Hu Siyi, vice-minister of water resources said China is expected to use 700-800 billion cubic metres of water per year but according to state media there may be only 800-900 billion cubic metres available. "If we don't adopt effective measures soon our country will face a daunting water resource crisis," Hu said during a two-day academic conference in Hefei, Anhui Province. The country has been battling water shortages in the northern and western provinces for more than a decade. Burgeoning economic growth has only aggravated the problem.

Oil imports require 70 supertankers

China needs at least 70 supertankers to carry all of its oil imports, according to the CEO of China Overseas Shipping Co (COSCO), the country's top shipping group. Speaking to reporters in Shenzhen in November, Wei Jiafu said COSCO was constructing seven Very Large Crude Carriers (VLCCs) to operate in addition to its existing eight vessels. But he believes 70 VLCCs - each with 2 million barrel capacity - are required in total. China Shipping signed a US$450 million contract last week to build four VLCCs for delivery in 2009 and 2010, which will boost its carrying capacity to 100 million tonnes a year. China imported 127 million tonnes of crude oil and more than 30 million tonnes in oil products in 2005. Crude imports are expected to surpass 200 million tonnes in 2010 and the government wants domestic ships to carry 50 percent of oil imports by then, up from less than 20 percent now.

Citic inks US$1.9 billion Kazakhstan oil deal

Citic Group, one of China's largest state-owned conglomerates, clinched a deal to buy the Kazakhstan assets of Nations Energy of Canada for US$1.9 billion. The acquisition includes a 100 percent stake in Karazhanbasmunai, which has exclusive rights until 2020 to develop the Karazhanbas oil and gas field in southwestern Kazakhstan, according to a joint statement by the two companies. The field has proven reserves of more than 340 million barrels of oil and a daily output of more than 50,000 barrels. Citic director Zhang Jijing said the firm plans to do a feasibility study on building a medium-sized refinery mainly to serve the local market. The deal still needs approval from the Kazakh government.

REAL ESTATE

Guangzhou targets dead developments

Guangzhou is moving forward with plans to rid itself of 141 property projects that have been abandoned for more than a decade. The city government is now encouraging citizens to sue developers for compensation and make claims to accept cash compensation rather than the right to return to their former homes. "The courts will recover the land and auction it. The priority of the auction funds will be to pay displaced residents," the bureau said in a statement. "If needed, the Legal Affairs Bureau will provide free legal advice. The Housing Management Bureau's prices section will provide free land assessment services." Many developers that have bought land have either gone bust or disappeared.

CONSUMER

China may spin off postal system

Plans to turn China's postal system into a US$10 billion stand-alone company may be moving forward. In a document published at the end of October the State Council detailed the plan finalized in August. The plan would see China Post injected into a new state-owned company with the State Postal Bureau becoming a purely regulatory organization. China Post is one of the last businesses still run directly by the government. The plan, if it goes ahead, could address some of the criticisms from the world's largest express delivery companies over the country's rules on the delivery of documents and parcels. Companies like FedEx, UPS, DHL and Deutsche Post AG say the government acts as regulator and competitor.

IBM to move division HQ to China

IBM plans to move the headquarters of its procurement division, one of its biggest, from Somers, New York, to Shenzhen. The move underscores a growing outward shift for one of the US' leading technology companies and the second largest software seller in the world. IBM has been buying resources in Asia for five decades but most of its purchases have supplied the hardware-manufacturing side of the business. Now the company wants to expand its supply base for software products and its service division, the largest in the world. IBM spends about 30 percent of its US$40 billion procurement budget in Asia-Pacific and about half of that in China.

AVIATION

Airbus nails order during Chirac visit

Airbus won a Chinese order for 150 A320 aircraft and agreed to set up a plant in China in one of 13 deals signed during a visit by French President Jacques Chirac to Beijing. The deal, which could be worth up to US$10 billion, was accompanied by an option for China to buy 20 of Airbus' new wide-body A350 planes. The Airbus A320 assembly plant, to be located in the north Chinese port city of Tianjin, will complete its first aircraft in 2009 and will subsequently manufacture four a month, the aircraft maker said. "It's clear that building the planes in China will give the Chinese an incentive to buy more of our aircraft," Louis Gallois, the chief executive of the European aerospace giant said. Airbus will hold a 51 percent stake in the Tianjin facility, sources close to the negotiations told AFP. The deal follows China's order last year of another 150 Airbus planes, also with a list price of nearly US$10 billion, signed when Chinese Premier Wen Jiabao visited France.

METALS

Growth in iron ore imports to China lower

Growth in iron ore imports slowed during the first three quarters of the year to 24.2 percent. This is the first time growth has dipped below 30 percent since 2003, state media reported. China imported 247 million tons of iron ore from January to September, said Lu Jianhua of the Ministry of Commerce's Foreign Trade Department. Lu predicted total imports for the year would hit 320 million tons. Imports for 2006 are expected to be 12 percent lower than in 2005. China has been demanding a larger say in global benchmark prices for iron ore following large price hikes of 71.5 percent in 2005 and 19 percent this year. "A new oversupply situation is brewing. Iron ore prices are going to slip back up," Lu said.

TELECOMS

China issues new broadcast standard

Beijing has set new technical standards for broadcasting multimedia content to mobile devices. In a statement, the State Administration of Radio, Film and Television said that a homegrown standard "is very important for the growth of our indigenous industry and multimedia broadcasts for mobile devices". The agency did not say if the new standard, which was not named, would be the only one for mobile multimedia broadcasts. China is pushing forward with its own technology standards, including a homegrown one for 3G mobile-phone technology, to cut down on patent payments to foreign companies. Mobile phone operators are now waiting for the government to issue 3G licenses, a technology that would allow phone users to surf the internet and watch movies on their phones.