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Business Travel Costs Soar

About 53 percent of Chinese firms expect business travel costs to increase next year, as trade and investment in the Asia-Pacific region grows, according to a survey released recently by American Express.

With China's business travel market rapidly developing, more local and foreign companies here are increasing their travel and entertainment (T&E) budgets, the report said.

Of the 230 local and foreign firms surveyed, each with more than 100 employees in Shanghai, Beijing and Guangzhou, more than 46 percent increased their T&E budgets in 2007, compared with the 28 percent in 2006.

“We are impressed by the strong growth momentum of business travel in China, and its rapid pace of developing into managed business travel,” said Gregor Lochtie, vice-president and general manager of the China business travel unit of American Express.

Business travel has become the second-largest controllable cost for companies after salaries, according to the survey.

China Turns to Tight Monetary Policies for 2008

The nation's monetary policies for 2008 will be shifted from “prudent” to “tight” even as it adheres to its prudent fiscal policy, according to Chinese media reports on the 2007 Central Economic Work Conference that closed on December 5 in Beijing.

The conference, an annual event initiated more than a decade ago, serves as a crucial mechanism for the Communist Party of China (CPC) Central Committee and the State Council, China’s cabinet, to set policies that govern the Chinese economy for the coming year. President Hu Jintao attended and spoke at the 2007 conference.

Prudent monetary policies have been in place for a decade.

Commentators said monetary policy should play a greater role in the country’s macroeconomic-control policies; they asserted that China will strictly control the volume and pace of granting loans to regulate domestic demand and its balance of international payments.

Following these policies, spokesmen said, the government will be able to keep the economy from overheating and to control inflation.

Second National Economic

Census Planned

China will conduct its second national economic census in 2008 to gather data for scientific policy-making, the State Council said in a notice on November 19.

The census will make more effective macroeconomic controls and more scientific mid- and long-term economic planning possible, the notice on the central government's Web site said.

The census will gather information about the physical layouts and energy consumption of all industrial and service-sector entities in 2008.

Statisticians will also collect data on ownership, financial results, production capacities, personnel and research and development activities, the notice stated.

The State Council has ordered local governments to ensure that the data they provide is accurate and complete and to ensure that the census process goes smoothly.

High Self-Sufficiency in Grain Sought

China will remain 95 percent self-sufficient in grain in the future by expanding its output and reserves, said a senior official with the National Development and Reform Commission.

Fang Yan, deputy director of the Department of the Rural Economy under the commission told a conference on edible oils held in Guangzhou that the domestic supply of grain is sufficient, but will likely fall short of demand in the long run.

“With the rural population moving into urban areas, fodder grain and oil-bearing crops such as soybeans are already in short supply," said Fang.

To ensure an adequate supply and to improve the quality of its farm produce, China has turned to large-scale production rather than production by scattered small farms for the period 2006–10.

Fang said China will try to increase the output of wheat and rice per unit area and expand the area sown to corn.

To keep up with the supply of edible oils, the country will mainly develop the colza-growing areas along the Yangtze River while stablizing soybean production in Northeast China.

Incentives Offered for Energy Conservation

The Chinese Government will rely on a 7-billion-yuan (US$933-million) incentive plan to get companies around the country to conserve energy and reduce emissions.

The plan comes as part of a 23.5-billion-yuan (US$3.1-billion) package announced on November 26 by the Ministry of Finance to promote energy efficiency and reduce pollution.

Zhang Shaochun, vice-minister of finance, said enterprises that fulfil the requirements for emissions reduction will be recognized and rewarded with funds that can be used to support technical innovation.

“Instead of giving stipends in advance, we have chosen to reward enterprises and governments that take effective actions to conserve energy," said Zhang.

He said the shift in strategy would help spur the enthusiasm for energy conservation at the grass-roots level.

In addition, a fund of 6.5 billion yuan (US$845 million) will be used to build sewerage networks in central and western cities in China. Official figures report that one-third of China's 660 cities have no sewage-treatment plants, while many sewage pipelines were plagued by leakages, resulting in existing treatment plants operating below capacity.

Special Treasury Bonds Issued

The Chinese Ministry of Finance issued 750 billion yuan (US$101.5 billion) in 15-year special treasury bonds on December 4.

The new issue has an annual interest rate of 4.45 percent paid half-yearly and were tradable on their date of issuance, the ministry said in a statement. The People's Bank of China, or the central bank, will buy the bonds via the Agricultural Bank of China.

As with previous offerings, this issuance will have little effect on the market, said Gao Zhanjun, a Citic Securities analyst.

The sale is part of a planned 1.55 trillion yuan (US$201.5 billion) basket the ministry will issue to purchase US$200 billion in foreign exchange from the central bank for the funding of the China Investment Corporation. The State-owned foreign exchange investment firm, created in September to make better use the country's huge foreign exchange reserves, the focus of some trade disputes involving China and some of its major trading partners.

According to a ministry plan, the remainder of the bonds specified will be issued before the end of December 2007.

Low-Cost Housing Measures

take Effect

National guidelines on low-cost housing were released on November 30 along with new State measures on housing for low-income families that went into effect on December 1.

Low-cost housing shall be limited to 60 square metres in floor space per unit, according to the guidelines jointly released by the Ministry of Construction, the National Development and Reform Commission, and five other ministries.

Moreover, owners of low-cost flats have limited property right. Such flats must be used by their owners for at least five years before they can be sold.

In another development, eligible applicants for low-rent housing are no longer limited to low-income urban families. Migrants from the countryside may also apply provided they belong to the low-income group in their host cities.

Corporate Bonds, Financial Derivatives Coming

China will gradually develop corporate bonds and financial derivatives to provide investors with effective risk management tools, Shang Fulin, chairman of China Securities Regulatory Commission (CSRC), said on December 2.

The CSRC will continue to increase the ratio and scale of its investment in capital markets by turning to insurance, annuities, and social security funds, Shang told a forum held in the southeastern Chinese city of Shenzhen.

He urged institutional investors to explore new, effective ways to educate individual investors of risks involved in buying securities.

The CSRC will work to improve industry regulation and clamp down on illegal activities in the market, the chairman said.

To achieve its goals, the CSRC has implemented a "real-name registration system," one of the preparations made for the debut of stock index futures.

It ordered investors to open accounts carrying their own ID cards and futures brokers to take pictures of the investors.

Ping An takes Stake in Fortis

Chinese insurer Ping An of China announced jointly with Fortis on November 29 that it has purchased 4.18 percent of the Belgian company via stock markets for 1.81 billion euros.

The announcement said the deal made Ping An Life Insurance Company Limited under the Ping An Group the biggest single shareholder in any major European financial institution.

The deal will allow Ping An to optimize its global asset allocations and enhance its investment returns, said Ping An Chairman Ma Mingzhe.

The purchase will make it possible for Ping An to use Fortis' expertise in cross-selling, risk management and product-design innovation, he said.

Fortis has decided to invite Ping An Group General Manager Zhang Zixin to join its board of directors. Once ratified by the Belgian supervisory department, Fortis will apply for shareholders' approval in April 2008 for Zhang's appointment.

In addition, the two sides also indicated an intent to explore cooperative opportunities in other business fields.

Fortis is an international financial service provider in the banking and insurance businesses. On October 31, 2007, its market capitalization was reported to be 48.6 billion euros, making it one of the top 15 European financial institutions.

China Turns to Tight Monetary Policies for 2008

The nation's monetary policies for 2008 will be shifted from “prudent” to “tight” even as it adheres to its prudent fiscal policy, according to Chinese media reports on the 2007 Central Economic Work Conference that closed on December 5 in Beijing.

The conference, an annual event initiated more than a decade ago, serves as a crucial mechanism for the Communist Party of China (CPC) Central Committee and the State Council, China’s cabinet, to set policies that govern the Chinese economy for the coming year. President Hu Jintao attended and spoke at the 2007 conference.

Prudent monetary policies have been in place for a decade.

Commentators said monetary policy should play a greater role in the country’s macroeconomic-control policies; they asserted that China will strictly control the volume and pace of granting loans to regulate domestic demand and its balance of international payments.

Following these policies, spokesmen said, the government will be able to keep the economy from overheating and to control inflation.

Second National Economic

Census Planned

China will conduct its second national economic census in 2008 to gather data for scientific policy-making, the State Council said in a notice on November 19.

The census will make more effective macroeconomic controls and more scientific mid- and long-term economic planning possible, the notice on the central government's Web site said.

The census will gather information about the physical layouts and energy consumption of all industrial and service-sector entities in 2008.

Statisticians will also collect data on ownership, financial results, production capacities, personnel and research and development activities, the notice stated.

The State Council has ordered local governments to ensure that the data they provide is accurate and complete and to ensure that the census process goes smoothly.

High Self-Sufficiency in Grain Sought

China will remain 95 percent self-sufficient in grain in the future by expanding its output and reserves, said a senior official with the National Development and Reform Commission.

Fang Yan, deputy director of the Department of the Rural Economy under the commission told a conference on edible oils held in Guangzhou that the domestic supply of grain is sufficient, but will likely fall short of demand in the long run.

“With the rural population moving into urban areas, fodder grain and oil-bearing crops such as soybeans are already in short supply," said Fang.

To ensure an adequate supply and to improve the quality of its farm produce, China has turned to large-scale production rather than production by scattered small farms for the period 2006–10.

Fang said China will try to increase the output of wheat and rice per unit area and expand the area sown to corn.

To keep up with the supply of edible oils, the country will mainly develop the colza-growing areas along the Yangtze River while stablizing soybean production in Northeast China.

Incentives Offered for Energy Conservation

The Chinese Government will rely on a 7-billion-yuan (US$933-million) incentive plan to get companies around the country to conserve energy and reduce emissions.

The plan comes as part of a 23.5-billion-yuan (US$3.1-billion) package announced on November 26 by the Ministry of Finance to promote energy efficiency and reduce pollution.

Zhang Shaochun, vice-minister of finance, said enterprises that fulfil the requirements for emissions reduction will be recognized and rewarded with funds that can be used to support technical innovation.

“Instead of giving stipends in advance, we have chosen to reward enterprises and governments that take effective actions to conserve energy," said Zhang.

He said the shift in strategy would help spur the enthusiasm for energy conservation at the grass-roots level.

In addition, a fund of 6.5 billion yuan (US$845 million) will be used to build sewerage networks in central and western cities in China. Official figures report that one-third of China's 660 cities have no sewage-treatment plants, while many sewage pipelines were plagued by leakages, resulting in existing treatment plants operating below capacity.

Special Treasury Bonds Issued

The Chinese Ministry of Finance issued 750 billion yuan (US$101.5 billion) in 15-year special treasury bonds on December 4.

The new issue has an annual interest rate of 4.45 percent paid half-yearly and were tradable on their date of issuance, the ministry said in a statement. The People's Bank of China, or the central bank, will buy the bonds via the Agricultural Bank of China.

As with previous offerings, this issuance will have little effect on the market, said Gao Zhanjun, a Citic Securities analyst.

The sale is part of a planned 1.55 trillion yuan (US$201.5 billion) basket the ministry will issue to purchase US$200 billion in foreign exchange from the central bank for the funding of the China Investment Corporation. The State-owned foreign exchange investment firm, created in September to make better use the country's huge foreign exchange reserves, the focus of some trade disputes involving China and some of its major trading partners.

According to a ministry plan, the remainder of the bonds specified will be issued before the end of December 2007.

Low-Cost Housing Measures

take Effect

National guidelines on low-cost housing were released on November 30 along with new State measures on housing for low-income families that went into effect on December 1.

Low-cost housing shall be limited to 60 square metres in floor space per unit, according to the guidelines jointly released by the Ministry of Construction, the National Development and Reform Commission, and five other ministries.

Moreover, owners of low-cost flats have limited property right. Such flats must be used by their owners for at least five years before they can be sold.

In another development, eligible applicants for low-rent housing are no longer limited to low-income urban families. Migrants from the countryside may also apply provided they belong to the low-income group in their host cities.

Corporate Bonds, Financial Derivatives Coming

China will gradually develop corporate bonds and financial derivatives to provide investors with effective risk management tools, Shang Fulin, chairman of China Securities Regulatory Commission (CSRC), said on December 2.

The CSRC will continue to increase the ratio and scale of its investment in capital markets by turning to insurance, annuities, and social security funds, Shang told a forum held in the southeastern Chinese city of Shenzhen.

He urged institutional investors to explore new, effective ways to educate individual investors of risks involved in buying securities.

The CSRC will work to improve industry regulation and clamp down on illegal activities in the market, the chairman said.

To achieve its goals, the CSRC has implemented a "real-name registration system," one of the preparations made for the debut of stock index futures.

It ordered investors to open accounts carrying their own ID cards and futures brokers to take pictures of the investors.

Ping An takes Stake in Fortis

Chinese insurer Ping An of China announced jointly with Fortis on November 29 that it has purchased 4.18 percent of the Belgian company via stock markets for 1.81 billion euros.

The announcement said the deal made Ping An Life Insurance Company Limited under the Ping An Group the biggest single shareholder in any major European financial institution.

The deal will allow Ping An to optimize its global asset allocations and enhance its investment returns, said Ping An Chairman Ma Mingzhe.

The purchase will make it possible for Ping An to use Fortis' expertise in cross-selling, risk management and product-design innovation, he said.

Fortis has decided to invite Ping An Group General Manager Zhang Zixin to join its board of directors. Once ratified by the Belgian supervisory department, Fortis will apply for shareholders' approval in April 2008 for Zhang's appointment.

In addition, the two sides also indicated an intent to explore cooperative opportunities in other business fields.

Fortis is an international financial service provider in the banking and insurance businesses. On October 31, 2007, its market capitalization was reported to be 48.6 billion euros, making it one of the top 15 European financial institutions.

NASDAQ in Beijing seeks

Local Business

The NASDAQ Stock Market opened a representative office in Beijing on December 3 to serve its fastest growing market outside the United States, including Chinese firms listed or seeking to list on the NASDAQ, the company said.

Xu Guangxun, NASDAQ's chief representative in China, told a press conference in Beijing that NASDAQ has plans to list on the Shanghai Stock Exchange.

Xu's remark came two days after China's top securities official, Shang Fulin, said China would lure overseas firms and Hong Kong-listed domestic firms to the mainland stock market.

The statement said that 19 mainland firms had chosen to list on NASDAQ in 2007 and that 52 mainland listings had a combined global market capitalization of US$57 billion.