News

Tobacco Advertising Doomed

 

All tobacco advertising, including

promotions and sponsorships, will be banned

across China beginning in January 2011,

according to a leading non-governmental

organization.

 

Xu Guihua, deputy leader and secretarygeneral

of the Chinese Association

on Tobacco Control, announced the

deadline on August 27 in a report on

China's implementation of the Framework

Convention on Tobacco Control of the World

Health Organization (WH O) in Guangzhou,

the capital of Guangdong Province.

 

The deadline was confirmed by Jiang Yuan,

deputy head of the State Tobacco Control

Office affiliated with the Ministry of Health, who

said the timing should coincide with China's

commitments as a signatory to the Framework

Convention on Tobacco Control.

 

The WHO convention requires its

signatories to ban tobacco advertising and

related promotions and sponsorships within

five years of its ratification by signatory states.

 

China joined the international fight

against tobacco consumption when it

signed the Framework in March 2003. It

ratified the convention in October 2005,

and the convention came into effect on

January 9, 2006.

 

By June 2008, smoking bans should be

enforced in all hotels that provide services

for athletes and other workers of the Olympic

Games and at all competition venues and

restaurants in the Olympic Village.

 

Legislators Consider Draft Law on

Circular Economy

 

In a first for China, a draft law on a

circular economy on August 26, 2007,

was submitted to the Standing Committee

of National People's Congress (NPC), the

country’s top legislature, for deliberation.

 

The draft stipulates that governments

at all levels should make plans for the

development of a circular economy. Those

responsible should establish systems

to control energy use and pollutant

emissions, strengthen the management

of companies that use large amounts of

energy and water and implement policies

to divert capital toward environmentally

friendly industries.

 

Feng Zhijun, vice-chairman of the NPC

Environmental Protection and Resources

Conservation Committee, said, “A circular

economy will help exploit new resources,

reduce pollutant emissions and enhance

the efficiency of our economy. Only with a

unified social rule and coordinated legislative

framework can we support economic

development, resource-conservation and

environmental protection.”

 

Feng said the draft creates an incentive

system for companies, encouraging them

to develop a recycling economy and making

them responsible for recycling their own

products. Companies that do not comply

will face sanctions.

 

According to the draft law, officials

found to be derelict in their duties will be

administratively punished or prosecuted.

 

Anti-Monopoly Law Adopted

 

The Standing Committee of the National

People's Congress (NPC), China's top

legislature, adopted an anti-monopoly law to

ensure fair competition and regulate market

order on August 30, 2007.

 

The law, which took 13 years to finalize,

will come into effect on August 1, 2008.

 

The law, with eight chapters and 57

articles, bans monopolistic agreements,

such as cartels and other forms of

collusion, and provides for investigations

and prosecutions of monopolistic

practices, while protecting monopolistic

agreements that promote innovation and

technological advance.

 

It also requires national security checks

prior to any foreign purchases of Chinese

companies, as other laws require with

foreign mergers and acquisitions.

 

Foreign companies have begun to

acquire major State-owned enterprises or

companies with famous brands in recent

years, arousing concerns about China's

economic security.

 

Foreign investors may seek approvals

from the Ministry of Commerce (MOC) if

their purchases of domestic companies

affect national economic security, take

place in key sectors or cause a transfer of

the operating rights of famous domestic

brands, according to a regulation issued by

the Ministry of Commerce along with five

other government organs in 2006.

 

Prior to the new law, only mergers

and acquisitions worth more than US$100

million needed MOC checks and approvals.

 

NDRC Orders Oil Giants to Keep

Prices Stable

 

The National Development and Reform

Commission (NDRC) has required the China

National Petroleum Corporation (CNPC) and

China Petroleum and Chemical Corporation

(SINOPEC) to implement national price

policies to maintain stable oil prices, the

Shanghai Securities News reported on

August 23, quoting Cao Changqing, director

of the NDRC's price department.

 

The international crude oil price hit

a record high for 2007 of US$78.40

per barrel in July. CNPC and SINOPEC,

therefore reduced production in their own

oil refineries, leaving some local private oil

stations with inadequate supplies.

 

The central government has demanded

that the oil giants operate at full capacity

and that they control exports to ensure an

adequate supply to the domestic market.

 

The NDRC has also promised five million

tons of oil annually to fill private pumps, and

it also asked CNPC and SINOPEC to treat

private oil refineries the same as with their

own subsidiaries.

 

"Special War" Launched to

Raise Quality

 

The Chinese Government declared a

four-month "special war" on poor product

quality on August 22, after a spate of safety

concerns over Chinese products worldwide.

 

China Daily reported that eight

categories of products are involved: pork,

drugs, agricultural products, processed

food, food in the catering sector, imported

and exported products, and other products

related to public health such as toys and

electric wiring.

 

Vice-Premier Wu Yi, speaking during a

national teleconference in Beijing, said, “This

is a special war to protect the safety and

interests of the general public, as well as

a war to safeguard the made-in-China label

and the country's image.”

 

The campaign is the latest by the

government to improve product quality.

 

In the past month, apart from setting

up a cabinet-level panel on food safety and

product quality, it has drawn up a blacklist

of illegal importers and exporters, issued

a special regulation on better quality

supervision, and released a white paper

concerning food safety.

 

Major Gas Pipeline for Central,

East China

 

China on August 31 launched a gas

pipeline from gas fields in Sichuan Province

in Southwest China to various locations in

Central and East China, including Shanghai.

 

The 1,700-kilometre-long project has

been likened to the previously completed,

more than 4,000-kilometre-long, West-

East gas project that brings natural gas

from northwestern Xinjiang to Beijing and

Shanghai. The new pipeline will supply 12

billion cubic metres of natural gas annually

from the Puguang field in Sichuan Province

to Hubei, Anhui, Jiangxi, Jiangsu and Zhejiang

provinces and to Shanghai Municipality.

 

At the launching ceremony, Vice-

Premier Zeng Peiyan said the 62.7 billion

yuan (US$8.25 billion) project will serve as

another "energy artery" of the country after

the pipeline comes on line in 2010.

 

Zeng said the project offers an

opportunity for the country's West, which

has rich resources but lags far behind

the East in economic growth, to tap its

advantages in resources for development.

 

CCB seeks A-share Listing Approval

 

China Construction Bank Corporation will

sell shares valued in billions of US dollars in

October in what will be the second-biggest

stock float on the Chinese mainland.

 

The listing committee of China's

securities regulator will meet on September

7 to review the Beijing-based bank's plan to

sell nine billion yuan-backed A shares.

 

The new shares account for just 3.85

percent of the lender's stake.

 

The lender didn't disclose how much it

plans to raise, but the shares may be worth

as much as HK$59.85 billion (US$7.67

billion) based on the lender's closing price of

HK$6.65 per share on September 4 in Hong

Kong. The A-share price may be discounted

on its H-share price.

 

NYSE Coming to Beijing

 

The New York Stock Exchange (NYSE)

has been given the green light to open

a representative office in Beijing, the

Chinese securities regulator announced on

September 2, according to a September 4

Xinhua News Agency report.

 

The approval, the first after China's rules

allowing overseas bourses to set up offices

went into effect on July 1, will enable the

NYSE to woo more initial public offerings in

the world’s fastest-growing major economy.

 

Previously, in 2003, only Hong Kong

Exchanges and Clearing Limited had a

representative office in Beijing, under the Closer

Economic Partnership Arrangement between

the Chinese mainland and Hong Kong.

 

China's approval of the NYSE

representative office is a direct result of the

first strategic economic dialogue with the

United States held in December 2006, the

China Securities Regulatory Commission

(CSRC) said.

 

On May 20, 2007, China gave a give

a green light to the establishment of

representative offices of overseas stock

exchanges in the country.

 

Sulphur Dioxide Emissions Reduced

 

China’s sulphur dioxide emissions fell

a year-on-year 0.88 percent in the first

half of 2007, the first decrease in several

years, said China's top economic planner on

August 26.

 

Ma Kai, minister of the National

Development and Reform Commission

(NDRC), in his report to the 29th Session

of the Standing Committee of the National

People's Congress (NPC), said the

decreases in sulphur dioxide could be

attributed to the use of sulphur-removal

equipment at coal-fired power plants and

efforts to close down high-energy consuming

and heavily polluting small industrial plants.

 

He said energy consumption as a portion

of the gross domestic product decreased by

2.78 percent in the first six months of 2007 if

compared with that of 2006.

 

However, chemical oxygen demand

(COD) still increased by 0.24 percent over

that of 2006, Ma said.

 

“We can find from the figures that China is

still facing serious problems in energy saving

and pollutants emission reduction,” Ma said.

 

He said economic growth, especially the

growth of high-energy consuming and polluting

industries, was still too rapid, which makes

it more difficult to meet energy-savings and

pollutant-discharge reduction goals.

 

China Eastern, Singapore Airlines

Announce Strategic Investment,

Partnership Framework

 

China Eastern Airlines (CEA), one

of the country's leading air carriers,

announced on September 2 that it will sell

a 26-percent stake to Singapore Airlines

Limited (SIA).

 

The two signed a “Heads of Agreement”

(HOA) with China Eastern Air Holding

Company and Lentor Investments Pte.

Limited, a wholly

owned subsidiary of the

Singaporean-Governmentcontrolled

investment

holding company, Temasek

Holdings (Private) Limited.

 

The document sets

out the framework for a

cooperative partnership

in conjunction with a

proposed strategic

investment in CEA by SIA

and Temasek, which owns

54.8 percent of SIA.

 

The HOA identifies

several elements, including the financial

investment, management participation,

commercial partnership and cooperation.

 

Details of terms identified in the HOA

are subject to definitive and legally binding

agreements to be discussed between, and

entered into by, the parties, and are also

subject to approvals by relevant regulatory

authorities and shareholders of CEA.

 

Under the HOA, it is proposed that SIA

will subscribe for new H-shares of CEA at a

subscription price of HK$3.80 per H-share.

september 2007

Notebook