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Citibank Adds New Consumer Outlets

Citibank plans to add three new consumer-banking outlets in Shanghai, Beijing and Tianjin in October. The move comes as China plans to fully open its financial markets by the end of 2006 in keeping with its commitments to the World Trade Organization, said Lee Ah-Boon, country business manager for Citibank China. The new outlets will offer services to local and foreign companies, Chinese residents and foreign nationals, Lee said.

“China remains a top strategic focus for Citigroup globally,” he said. Citigroup’s precursor, The National City Bank of New York, first established an office in Shanghai in 1902. A financial services company, Citigroup serves about 200 million customer accounts in more than 100 countries. It has six branches and 12 outlets in Beijing, Shanghai, Guangzhou, Shenzhen and Tianjin.

Auto Emissions Targeted

The Chinese Government has issued new regulations designed to reduce auto emissions by as much as 30 percent. The regulations will take effect in 2007, and even tougher standards can be expected in 2010, according to the State Environmental Protection Administration (SEPA) of China. Zhao Yingmin of the SEPA Science and Standards Department said two new rules are expected to reduce nitrous oxides by 1.8 million tons, carbon monoxide by 16 million tons and various carbon and hydrogen compounds by 2.2 million tons. In addition to clearing China’s air, the reduced emissions are also expected to make more Chinese-car exports possible. China is the world’s third-largest car manufacturer, with an annual production of more than five million vehicles. There are about 33 million cars on the country’s roads. The government has been tightening auto emissions standards since the 1980s and adopted the equivalent of Euro 2 and 3 emissions standards in 1999.

Airlines Accommodate Bigger Passengers

Bulkier passengers are forcing Chinese airlines to re-configure seating arrangements on their aircraft. The airlines are responding to larger Chinese who are complaining about the discomfort of seats that are too small. Passengers, including some who are overweight, have complained that airlines often try to squeeze too many seats into a plane to increase their profits. A source with China Eastern Airlines said the company had imported all its aircraft from the West where people were generally bigger in the past, but now, the company plans cut about 20 seats from its new Airbus 321 airplanes to accommodate larger domestic travellers. The airline will also increase first class seats offered from 8 to 20 seats, according to the source.

Beijing Auto Registration Leads Country

Beijingers buy more autos than people in any other Chinese metropolis, according to statistics provided by the Beijing-based Polk-Catarc Vehicle Information Consulting Company. The capital is trailed by Shanghai and Tianjin.

Beijing registered 155,936 vehicles in the first six months of the year, 7 percent of the national total, according to the survey, which was conducted in association with the Beijing Traffic Management Bureau. The increase means there are more than 2.7 million vehicles registered in the capital, where car ownership is increasing by about 15 percent annually. Almost 1,000 new cars hit the roads each day. Shanghai and Tianjin registered more than 80,000 and 60,000 automobiles.

But there are various downsides to the car-ownership phenomenon. Apart from poorer urban air quality and longer commuting times stemming from increased traffic congestion, some experts warn that the new cars could interfere with the 2008 Olympic Games. To avoid traffic congestion during the Games, Beijing residents will not be allowed to park at Olympic venues, said Li Xiaopeng, deputy head of the Beijing Municipal Communication Committee. Beijing will also use vehicle-exhaust monitoring devices to check vehicles for harmful emissions, which are believed to contribute to half of the city’s air pollution, according to the Beijing Municipal Bureau of Environmental Protection.

EU Anti-dumping Duties Opposed

The Chinese Government on October 5 expressed dissatisfaction with anti-dumping duties on Chinese shoes authorized by the European Union (EU). EU members on October 4 agreed to impose tariffs on Chinese and Vietnamese shoe imports for two years “to prevent cheap imports from flooding local markets.” But Ministry of Commerce spokesman Chong Quan said the filing, the investigation and the ruling in the case are legally defective and are counter to World Trade Organization rules and the EU’s own anti-dumping laws. “The latest EU anti-dumping measures against Chinese shoe imports lack a legal and factual basis and will damage the legitimate rights of Chinese shoe enterprises,” Chong said. “Chinese enterprises and the shoe-making industry are dissatisfied with the EU decision.” Chong said China would monitor and assess the situation, but reserves the right to respond to the EU action. The European Union began levying an extra charge of 16.5 percent and 11 percent on shoes from China and Vietnam beginning on October 7. About 11 percent of the shoes sold in Europe, including children’s footwear, are from those two countries. The European Commission said the ruling could add 1.40 euros (US$1.80) to the price of Chinese shoes, whose average retail price is 35 euros (US$44.80), if importers and retailers pass the increases on to their customers. European business and consumer groups criticized the EU decision, saying it will harm consumers and businesses.

Market Used for Currency Control

China is allowing the market to play an increasing role in setting the exchange rate value of the renminbi, China’s currency, while weakening the influence of a reference to a basket of currencies, according to Zhou Xiaochuan, governor of the People’s Bank of China, China’s central bank.

Zhou said Beijing is committed to moving gradually towards a more flexible exchange rate mechanism. His remarks will fuel expectations that Beijing plans to allow further appreciation of the renminbi against the US dollar and tolerate greater exchange-rate volatility. It may also help to soften criticism from the United States where some critics argue the renminbi is an undervalued currency that gives Chinese exporters an unfair trade advantage. Following a recent visit to Beijing by new US Treasury Secretary Henry M. Paulson Jr., US Senators Charles Schumer and Lindsey Graham abandoned a bill that would have imposed a 27.5 percent tariff on Chinese imports, but they said they might pursue a broader attempt next year to get China to revalue its currency. Since a one-off 2.1 percent revaluation against the dollar last year, Beijing has maintained what it calls a “managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies.” The currency “basket’s” role is “gradually diminishing” in favour of market supply and demand, according to Zhou. The renminbi has risen just 2.5 percent against the dollar since last July’s revaluation, but recent appreciations have been faster than in the first year of the new exchange rate regime and intra-day volatility is being reported.

Chile, China Sign FTA Agreement

A free trade agreement involving China and Chile that is expected to eventually exempt 97 percent of all traded goods between the two countries from import tariffs, went into effect on October 1. China lifted tariffs on 2,834 products imported from Chile, including copper, and Chile awarded duty free status to 5,891 commodities in return, including vegetables, fruit and mechanical and electrical equipment. China has agreed to maintain tariffs on 7,391 products imported from Chile, while 7,750 exported products will be assessed levies by Chile, according to spokesmen from the Ministry of Finance. China is Chile’s second largest trading partner, with copper contributing to 30 percent of China’s imports from Chile. Statistics from the International Copper Association (China) indicate that 50 percent of China’s imported copper comes from Chile. China and Chile initiated free trade talks in November 2004. It took five rounds of negotiations before a consensus was reached on November 18, 2005. Chile is the first Latin American country to sign a free-trade agreement with China.

 McDonald’s Opens More Drive-Thru Outlets

Fast-food-maker McDonald’s China opened its sixth drive-thru service on the Chinese mainland on September 30 in Tianjin, a leading economic centre and port city in North China. Since its debut in Shenzhen in 1990, McDonald’s has opened more than 760 restaurants across China, with more than 50,000 employees. The company has more than 31,000 local restaurants that serve nearly 50 million customers in more than 100 countries and regions. With increasing car ownership in China, a land that had few private cars just a few years ago, opening drive-thru outlets is part of McDonald’s plan to win in China, even if such outlets are still rare. According to the China Association of Automobile Manufacturers, about 5.6 million autos were sold in China last year, an increase of 10 percent year on year.

DaimlerChrysler/BAIC JV Begins BDA Operations

The Beijing Benz-DaimlerChrysler Automotive Corporation, a joint venture between Daimler Chrysler and Beijing Automotive Industry Holding Company (BAIC), opened its new factory in the Beijing Development Area (BDA) in September.

The factory is the first DaimlerChrysler factory in China and will manufacture Mercedes E-Class, Chrysler 300C sedans and Mitsubishi’s Outlander sports utility vehicles. The 210,000-square-metre new plant has can produce 100,000 new sedans per year. When the second phase of the factory is completed in the BDA, southeast of Downtown Beijing, annual production could increase to 300,000 sedans; Mercedes-Benz C-Class sedans will also be produced.

BAIC Chairman An Qingheng said the new factory’s opening signals that China’s auto manufacturing industry has reached a new level. DaimlerChrysler and BAIC each have a 50 percent stake in the 30-year joint venture.

Chinese “Wind” at Paris Motor Show

Chinese auto-makers presented five models in their first outing to the Paris Motor Show in September, adding to the Chinese presence in the European auto market.

Landwind and Great Wall Motors epitomized China’s ambition to become a world-class car manufacturer and have been received as new players on the world auto scene. Landwind’s 4x4 X-Pedition, manufactured by the Jiangling Group, is available in Germany and the Netherlands and will be the first Chinese car available for sale in France in January 2007. Not far from the Landwind display at the auto show, the four-wheel-drive Hover, manufactured by Great Wall Motors, was shown, attracting visitors and journalists from various countries.

“I hope that after the Landwind, many Chinese auto manufacturers will realize the importance of the European and French markets,” Hang Tieching, a representative from the Chinese Embassy said at a press conference concerning the Landwind. He said French consumers will realize that the Chinese people make more than clothes and shoes; they also make fashionable cars and sturdy aircraft.

According to Elisabeth Young, head of Asie Auto, a company preparing to import the first Chinese vehicle into France, X-Pedition will be 20 percent–30 percent cheaper than its competitors’ models with a price tag of about 16,000 euros (US$20,000).

Ministry Develops Global Business Law Database

China plans to build a database of global business laws and regulations within five years to serve the needs of domestic and foreign companies. The database will cover most of the business laws and regulations in the world, with versions in Chinese, English and other languages, said sources with the Ministry of Commerce. When available, the database will offer online interactions, consultations and online forums. The database will be used to provide information and reference services to foreign companies in China and to Chinese companies with overseas business operations, said the ministry. Most of the world top-500 companies are doing business through local offices in China and the Chinese Government has adopted a policy that encourages Chinese companies to get involved in international markets.

Lenovo Recalls Sony Batteries

The Lenovo Group Limited on September 29 authorized a worldwide recall of a half-million batteries installed in ThinkPad and Lenovo laptop computers because of possible explosive risks. With the announcement, all the world’s top PC makers–Dell, Hewlett Packard and Lenovo–will have recalled Sony-made lithium-ion batteries that have been found to overheat, and, in a few cases, to catch fire. Lenovo, China’s No. 1 and the world’s No. 3 personal computer-maker, will recall 526,000 batteries used in ThinkPad’s and 2,460 batteries used in Lenovo laptops. In doing so, Lenovo is cooperating with the US Consumer Product Safety Commission and other regulatory agencies. The batteries involved in the recall were installed in ThinkPad T series, R series and X series and X60s, as well as Lenovo Tianyi F40 and F40A models. The batteries were sold from February to this month in 2006; about 5 percent–10 percent of the total sold during the period need to be recalled, Lenovo said in a statement. Sony is providing financial support for the recall, according to the statement. Before Lenovo’s action, HP, the world’s No. 2 PC maker, recalled 135,000 Sony batteries, and Dell, the world’s No. 1 PC maker, recalled 4.1 million Sony batteries, the biggest recall in the history of the electronics industry. Other PC vendors, including Apple Computer, Toshiba and Panasonic, also recalled the batteries. Lenovo, which acquired IBM’s PC unit in 2005, held 30 percent of the domestic laptop computer market in the second quarter of 2006, with sales of 900,000 units, according to CCID Consulting, a Beijing-based IT consulting firm under the Ministry of Information Industry.

From Paper to Coins: RMB’s Fen Evolves

China will cease circulating 1 fen, 2 fen and 5 fen (cents) paper money of the second version of the renminbi currency beginning on April 1, 2007, the People’s Bank of China announced on September 25. The notes will be replaced by coins with values of 1 fen, 2 fen and 5 fen. Notes can be exchanged for coins at commercial banks from October 1, 2006–March 31, 2007, the announcement said. Except in rural areas and in sectors such as banks, supermarkets, hospitals, and telecommunications, the fen (1/100th of a yuan) is seldom used, a spokesman with the central bank said. The second version of the renminbi was issued in 1953. Five versions of the currency have been issued in China since New China was founded in October 1949; the first three versions have been removed from circulation.

Fangshan on World Geoparks List

Beijing Fangshan Geopark was one of six Chinese geoparks listed on the World Geoparks list of the United Nations Educational Scientific and Cultural Organization (UNESCO) on September 18 at the Second International Geoparks Conference in Belfast, Northern Ireland.

Beijing thus became the world’s first capital city to have a World Geopark.

The five other geoparks were: Mount Tai in Shandong Province, Mount Wangwu-Daimei and Mount Funiu in Henan Province, Leiqiong Geoparks (Volcanic Geoparks) in Guangdong Province, the Guangxi Zhuang Autonomous Region and in Hainan Province, and Jingpo Lake in Heilongjiang Province. China now has 18 World Geoparks.

The Fangshan World Geopark lies in Beijing Municipality and Hebei Province, about 50 kilometres southwest of Central Beijing in Beijing’s Fangshan District and in Laishui and Liayuan counties in Hebei Province. The 953.95-square-kilometre World Geopark has eight key areas: the Zhoukoudian Peking Man site, Shihua Cave, Shidu, Shangfang Mountain, Shenglian Mountain, Baihua Mountain, Yesanpo and Baishi Mountain. It contains one World Cultural Heritage list site, one site on the Reserve List for World Cultural Heritage listing, four National Forest Parks, four National Geoparks, eight National Priority Protected Sites and two National Key Scenic Spots.

The presence of traces of ancient humans, geological relics of intracontinental orogenesis and orogenic belts, karst landforms, its attraction to geologists and its Buddhist culture were six advantages cited in Fangshan World Geopark’s application. Fangshan Geopark will open to the public in 2008.

US Economist Wins Nobel Prize

A US-based economist who participated in the 2005 Nobel Laureates Forum in Beijing in 2005 has himself become a Nobel Laureate.

Columbia University Professor Edmund S. Phelps has “deepened our understanding of the relation between short-run and long-run effects of economic policy” and has had “a decisive impact on economic research as well as policy,” the jury of the Royal Swedish Academy said in awarding the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Phelps. In a citation, the jury said, “Phelps’ work has fundamentally altered our views on how the macroeconomy operates.”

When in Beijing in 2005, Phelps discounted clamour over trade imbalances between the United States and China, saying, the imbalances were a result of natural processes that were “optimal” from both the Chinese and US points of view, according to China Daily. Phelps was quoted as saying China needed current-account surpluses to pay for technology purchases or licensing fees for technologies needed in China.

As winner of the Nobel in economic sciences, Phelps will receive an award of US$1.37 million.

China’s Fourth Largest Diamond to Glitter in Capital City

A diamond weighing more than 100 carats (20 grams), the fourth largest ever found in China, will be displayed publicly in November in Beijing, sources close to the discoverers of the valuable stone said on October 10. The 101.4695-carat (20.2939 grams) diamond, which is 29.4 millimetres in length and 17.853 millimetres in height, was discovered in May in a diamond mine in Mengyin, East China’s Shandong Province. The three larger diamonds, weighing 158.786, 124.27 and 119 carats, were discovered in 1977, 1981 and 1983, also in Shandong Province, Ye Danian, an academician with the Chinese Academy of Sciences, said. Two of them were still in the possession of the People’s Bank of China, and the 124.27-carat one was bought by a company in Shanghai. The newly discovered diamond, under protection at the central bank is yellowish, translucent and an oblong octahedron, according to an assessment report made by the National Gemstone Testing Centre.