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WTO Membership Help China’s Foreign Trade

December 21, 2002

China's foreign trade is expected to exceed US$620 billion this year, while foreign investment will reach US$50 billion. In the first 11 months, China saw a US$28 billion trade surplus, far outstripping last year's US$22.5 billion figure.

China attracted US$46.8 billion of FDI last year, a 14.6% year-on-year increase. The World Bank has estimated that half of FDI attracted by China may in fact originate from mainland companies. The phenomenon is due to firms taking advantage of loopholes in tax, foreign exchange and investment laws and recycling funds through places like Hong Kong.

This as does other misleading figures, leads to FDI flows which are often used as an indicator.

(Source: AGENCY FRANCE-PRESS and ASSOCIATED PRESS)

More Power Tariff Cuts

December 19, 2000

Cuts in residential electricity tariffs in Guangdong resulted in savings of US$ 1.9 billion for the first 11 months of the year but increased demand, with consumption up 14% - almost doubling the 7.2% target. Power rates had been reduced from US$ 8 cents kWh at the end of last year to US$ 7 cents kWh, while tariffs have been cut by US$ 1.32 cents on average.

The cuts are part of measures implemented by the Guangdong government over the past two years to improve the investment environment, expand domestic demand and reduce the financial burden of farmers. Since 1999, power tariffs have fallen by 26.6%, bringing savings of US$ 3.4 billion, still Guangdong's rates are still higher than the national average, of US 5 cent/ kWh at the end of last year. Any further cuts would take into account the capital outlay of power firms, their profits, the need to further develop the electricity grid and consumers' interests. Still, there was been no mention of the effect on foreign companies involved in China’s power industry in Guangdong.

Guangdong's high tariffs can be traced back to the development plans between 1991 and 2000, when the government offered high rates of return to power developers to meet a huge demand. As China's export stronghold, Guangdong still uses a lot of electricity. Last year, total consumption rose 19% to 146 billion kWh, exceeding the 140 billion kWh output.

China Justifies its Massive Foreign Exchange Reserves

December 18, 2002

By the end of last year China had a record US$300 billion in foreign exchange reserves. Many Critics claim China has been miserly in order to lend money to Americans, who pay interest of less than 2% which is lower than that China is paying on its foreign debt.

In 1980 there was a deficit of US$1.3 billion, 1990, there were reserves of US$11 billion and at the end of 2000, reserves stood at US$165.5 billion.The current level is equal to nearly a year of exports and 15 times China's short-term debt of US$17 billion. Because of its surplus reserves China has lost the right to receive low-interest loans from the International Monetary Fund. Several foreign countries, especially Japan, are suggesting to revalue the renminbi.

About US$150 billion is in Treasury Bonds so in theory it becomes a loan to the US. There are other Chinese that feel that the money should be invested in providing universal education and medical care, an improved social welfare system and better protection for the environment.

Japan Snubs China on WTO Commitments

December 18, 2002

After China first year as a member of the WTO Japanese companies assert that China does a poor job of protecting intellectual property rights (IPR), its laws and policies are not transparent and serious contradictions persist between central and local government. This view has also been shared by others countries.

The most serious problem is with counterfeiting and piracy which constitute major obstacles to the development of doing business in China. A large number of patent applications were denied in China, even though they were granted in Japan, the United States and Europe. Stronger criminal and administrative sanctions on IPR, strict enforcement of court decisions, strengthening of customs controls and elimination of local protectionism, especially prevalent in Fujian, Guangdong and Jiangsu are needed.

China fulfilled its pledge to cut tariffs on January 1 this year, but to offset tariff reductions, it had imposed specific taxes on certain types of photosensitive materials, such as photographic film, which led to very high tariffs on these goods. It called for more transparency and fairness in the implementation of import quotas for cars and motorcycles.
Even with China wanting and welcoming of foreign capital, there is no standard time for the review of projects and approval of projects.

There is a high incidence of discretionary provisions concerning approval procedures and a lack of transparency on the conditions for obtaining it. Unpublished internal regulations continue to form the basis for substantive review and a high degree of discretionary powers is still exercised by governmental authorities. There are ongoing contradictions between central and local government policies.

China Has a Record Trading Year

December 12, 2002

Chinese authorities were upbeat on the first anniversary of their membership into the WTO despite complaints by foreign partners that they have been slower than promised in opening its markets. Economic planners expected total foreign trade to hit US$600 billion for the year, with foreign investment hitting a record US$50 billion.

The impact of WTO membership on Chinese industry, jobs and agriculture had yet to be felt but will be noticeable in the future according some Chinese officials. Many believe that China's service, tourism and information technology sectors would reach new levels with the continuing influx of foreign capital.

Workers from the state sector have complained that foreign competition has cost millions of jobs and many of those laid-off can now only make a basic living with help from the government. This problem was present even before China’s entry into WTO. The world is watching to see if Beijing will keep its promise to cap spending on subsidies at 8.5% of the value of domestic farm production.

Workers Protest Blocking Railway

December 12, 2002

More than 2,000 workers in the northeast blocked a railway, linking the city of Jiamusi with Beijing, during a day-long anti-corruption protest that led to clashes riot police and the paramilitary People's Armed Police ending up in several arrests.

The protesters, employees at a textile factory, waved banners with slogans such as, ''We want to live, we want to work, we want to eat''. The workers were protesting because government funds earmarked for worker benefits had allegedly been embezzled by the company's management,. They clashed with hundreds of, and more than 10 were arrested, the group said. The workers remained determined to continue their appeals to the government to help them with their difficulties.

(Source: AGENCY FRANCE-PRESS)

Patents Filed by Foreign Firms Seen as a Threat

December 12, 2002

Applications by foreign companies to register patents in China have increased greatly in the past year. China officials are some what worried by the increase since it has been the foreign companies that have applied for the largest number of patents since WTO entry and are fearful that they are marking out their territory which others may not enter and from which they will attack the market. China will be faced the challenge of higher costs of buying foreign patents and of how to protect their own IPR. The patents brought new technologies; they presented obstacles to Chinese companies trying to develop technology especially in the pharmaceuticals, software, petrochemicals and domestic appliances areas.

The enforcement of IPR protection has still remained weak and ineffective in most parts of China. Compensation is invariably low, and often does not even cover the legal costs especially those awards to foreign litigants. Also the burden of proof for the plaintiff is high. The court system has a shortage of adequately trained or unbiased judges, lack of the resources and impartiality of the police, prosecutors and relevant administrative agencies are insufficient. Basically local protectionism and corruption continues to favor IPR violators.
It is ironic, as it often is in China, that China wants foreign investment and high technology from advanced countries but now the want to assert that too many patents awarded to foreign firms is a potential threat to domestic companies. They don’t only want their cake and eat too, but they want someone else to bake it and pay for it.

According to official figures, in the first 10 months of this year China attracted US$44.72 billion in foreign investment, a year-on-year increase of 20.05 per cent, and is likely to attract more than US$50 billion for the full year.

Foreign Telecom Firms Cautious about China Despite WTO

December 10, 2002

Still after one year of China opening up one of the world's most enticing markets, no one has followed the lead of the country's first telecommunications service joint venture between AT&T and Shanghai Symphony. Hopefully the venture goes smoother than the contract negotiations which took seven years.

Under WTO China agreed to allow foreign operators to take a 25% stake in mobile telecom firms but the takers are slim. Many foreign firms have found that the current guidelines don't allow for profit making business. The AT&T venture was negotiated on more favorable terms, before China entered WTO. Still, AT&T is restricted to operating only in Pudong. Many experts expected a charge of foreign companies into China’s telecom market, but they seemed to have forgotten, about transparency, arbitrary government intervention, and a proper legal system.

One good example is during China Telecom’s initial public offering (IPO) campaign, when it got the Ministry of Information Industry agreed to a massive increase on interconnection charges to connect overseas calls hoping to increase the IPO. Just the opposite happened, making many businesses mad and ultimately to scale back the offering at the last minute. This interference or local protectionism often happens one only needs to think about the foreign express carrier issue last year.

Often foreign firms try to get around the laws that may ban or severely restrict them in a certain sector. Often local and provincial government agencies give approvals for projects that they don’t have the authority to. Later after the business is up an running the central government or provincial governments often declare the business entity illegal which the foreign company losing most if not all of its investment. Carrefour’s expansions are a good example of this.

(Source: Reuters)

US Gives Mixed Report on China’s WTO Progress

December 7, 2002

China's efforts to open its markets to foreign goods since joining the WTO last year have had been mixed under an annual assessment the US is required by law to issue. The US has criticized China for delays in opening its markets in agriculture and other sectors, while praising its overall effort to issue the necessary regulations to meet its first-year commitments.

The US Chamber of Commerce own 2002 report found problems with China's compliance in the six areas it examined: agriculture, distribution, information technology, intellectual property rights, services and transportation and asserts that China must do a much better job in 2003 of meeting its WTO obligations. Although China has adopted laws and regulations to implement its commitments there had been signs of discrimination against foreign goods and services.

The government had to work hard to protect a US$1 billion export market for US soya beans after China issued a set of interim regulations regarding the use of biotechnology since about 70% of US soya beans are genetically modified.
China was also late establishing tariff-rate quotas for imports of wheat, cotton and other commodities. Contrary to what had been widely predicted, China's imports of many farm goods fell this year.

In the first 10 months, imports of grain were 2.39 million tons, down from 2.52 million in the same period of 2001, imports of soyabean fell from 12.06 million tons to 8.71 million, and those of wool fell from 193,000 tons to 145,000. But imports of cotton rose from 50,000 tons to 120,000.

(Source: REUTERS in Washington)

China Market Entry Needs Thought and Planning

December 2, 2002

China has been the death or many a corporate dreams. The car market maybe next. For years, foreign companies have anticipated and waited for when tens of millions of middle-class Chinese would become car owners. By 1994, foreign carmakers had laid plans for 13 joint ventures with a combined capacity of more than 2.7 million vehicles a year even thought the most optimistic estimate was for about 1.3 million units by 2000.

By the end of the decade, only seven of the joint ventures were in business and they produced totally, just 540,000 vehicles. The only foreign manufacturer to “make” any money was Volkswagen. It appears to be happening again since car sales were up more than 55% on last year with sales for the year reaching 1.02 million. Foreign carmakers are rushing in, promising far more capacity than the market can absorb which will only lead a price war that will destroy car manufactures profits, if any at all.

China finally does have a genuine car market. The growth in 2002 was some what artificial as many individuals had waited to buy since tariffs and taxes where reduced under China’s WTO admittance terms. With China’s increased urban wealth, car loans, and lower prices should help to maintain a 10-15% annual growth in car sales equating to three million cars a year by 2010. Still, foreign carmakers are optimistic and together plan to build well over four million cars a year by then. Simple economic laws apply, supply and demand means overcapacity and more price wars. Even this year's growth was triggered by 20% price cuts at the low end of the market.

Honda business approach seems right when in 1998 it took over the failed Guangzhou Peugeot plant for a low price and has made large profits selling luxury sedans were demand exceeds supply. This year, while competitors were busy signing ill-fated 50-50 joint-venture deals targeting the domestic market, Guangzhou Honda broke new ground by getting approval for an export-only car factory in which it will have a controlling 65% stake.

China First Anti-dumping Case

November 27, 2002

After years of anti-dumping actions against its products, China is initiating its first such case since joining the WTO, against US, Japanese and South Korean paper exporters. Beijing is demanding that domestic companies importing paper used in copperplate printing from the three countries must pay deposits to Customs to ensure that the shipments are not sold too cheaply.

More than 16 companies from the three exporting countries could be affected as the mainland importers of their products will have to pay the deposit based on the value of the paper they receive. The Ministry of Foreign Trade and Economic Co-operation said there was evidence that the domestic industry had been hurt by cheap paper imports. The four domestic companies which initiated the anti-dumping case had reportedly lost more than US $25 million.

China’s Bank Ratings Mixed

November 23, 2002

Moody's Investors Service upgraded the ratings of China’s government and the country's big banks. The up-grade seemed unusual as action was the opposite of Standard & Poor's as well as an Organization for Economic Co-operation and Development (OECD) report. Both warned that slow reforms may stop China's economic growth. S&P left its outlook rating for the mainland banking sector at stable.

Moody based their decision on rapid growth in foreign exchange reserves, positive prospects for exports and hence the current account, and a WTO-led boost to investment. Moody's changed its rating on the A3-rated long-term foreign currency bonds of the government from stable to positive. The A3 rating is six levels below top-rated AAA. Now China now shares the rankings of Hong Kong and South Korea.

S&P has expressed doubts about the ability of China's banks to increase financial health on a strongly performing economy at the same time since the banks would need US$518 billion of capital injection to bring bad loans down to acceptable levels.

China’s Continues Currency Controls

November 21, 2002

China is not ready to relax its rigid foreign exchange regime, despite a landmark stock market reform next month that allows qualified foreign institutional investors (QFII) to buy yuan-denominated A shares.

But restrictions slapped on foreign investors - such as a minimum one to three-year investment period - showed China's wariness in allowing the yuan to be freely convertible on the capital account. The launch of QFII is faster than expected, but the high requirements show the government still holds a careful attitude towards opening the capital market. The QFII scheme has specific requirements on how long capital has to stay in China and how funds can flow out of the country.

"The central bank keeps the yuan in a thin range of 8.27 to 8.28 to the dollar. China likes exchange rate stability and says it is a pillar of macro-economic policy. The launch of the QFII scheme would not greatly influence the exchange rate, analysts said.

(Source: REUTERS)

China Considers New Team of Anti-graft Inspectors

November 20, 2002

China is considering the establishment of a nationwide network of anti-corruption investigators that are only accountable to Beijing and not to local or provincial bodies.

The committee for discipline inspection (CDI) is subject to the authority of the local governments. Under the current system, local governments are able to quash investigations of favored officials and business people and prevent their wrongdoings becoming known to Beijing.

Beijing to Build Domestic Chain Store Image

November 18, 2002

The State Economic and Trade Commission (SETC) has a blueprint to change China's image as a chain store owner planning for the emergence of five to 10 large domestic chain stores that can compete internationally by 2005. It also sets a target to expand chain store contribution to mainland retail sales and catering turnover more than fourfold to 20 per cent in 2005.

Overall the plan will focus on the stimulating the development of chain store operations in underdeveloped areas, expanding the business scopes of chain businesses, accelerating the restructuring of chain stores, cultivating a crop of large chain stores, building brand names and increasing the utilization of foreign capital.

The plan also refers to foreign competitors, for "planned control of the blind development of hypermarkets and warehouse stores. It asked cities to adopt clear rules in urban planning on the location, size and number of such outlets allowed. Basically another move by the Chinese government to hinder foreign chain stores expansions and more protectionism measures for domestic chain stores.

Chain stores are a relatively new development spurred by the arrival of foreign giants, such as fast-food chain McDonald's and the French Carrefour. The SETC plan envisions 100,000 chain store outlets by 2005, with a combined turnover of US$ 82 billion. Chain store operations will be encouraged in running petrol stations, distributing tobacco, books and medicine, as well as in the telecommunications sector. Industrial firms will be encouraged to use or consolidate their sales channels and outlets, or team up with distribution firms for chain businesses.

Unlike its eagerness to attract foreign capital to industrial production, Beijing still heavily restricts foreign investment in commercial firms. Foreign stakes in retail chain joint ventures are capped at 65 per cent. A few foreign chains have prospered in China since a 1992 rule paved the way for a pilot program of Sino-foreign retail joint ventures to be set up in 11 mainland cities and provinces. Of the 356 foreign-invested retail businesses in China by mid-year, only 40 were sanctioned by Beijing.

Carrefour had been illegally signing contracts with local governments to set up joint ventures since entering the mainland in 1995, bypassing the SETC. Earlier this year, it was forced to reorganize the shareholding structure of its 28 stores on the mainland to reduce its holdings in them to below 65 per cent.

Ningbo's Port to Open Up

November 15, 2002

The Daxie harbor area of Ningbo, an open coastal city in the eastern province of Zhejiang, has permission from the State Council to open up to the outside world. Situated in the eastern port of Ningbo, across the sea from Shanghai, the Daxie harbor has a 10.7km deep-water coastline that is silt free and surrounded by sheltered water.

The harbor has room for another 30 berths, of which some could accommodate vessels of 300,000 deadweight tons (dwt). There are six oil and liquefied gas wharves in the eastern part of Daxie harbor, and four container and bulk cargo wharves in the western part.

Work is scheduled to start soon on another four wharves to accommodate ships of 250,000 dwt, 50,000 dwt and 20,000 dwt. When completed, the harbor's annual handling capacity will top 40 million tons. To prepare for the opening, Daxie Island, a nearby state-level industrial development zone, has launched a special customs office directly under Ningbo customs.

China Starts JV to Produce Jets

November 4, 2002

A joint venture between China Aviation Industry Corp II (AVIC II) and Embraer of Brazil to produce regional jets for the mainland and overseas markets will start operations by the end of the year. The venture is expected to begin delivering 30 to 50-seat turbofan jets by late next year with an annual capacity of 24 aircraft.

The co-operative agreement will should upgrade the manufacturing capability of China's national aviation industry to meet the urgent demands of air transport". It is estimated that China would need up to 140 regional aircraft by 2005, and 110 of these would be 30 to 60-seaters. AVIC II and Embraer hope to meet domestic demand as soon as possible and then start exporting jets. Production will be based on domestic manufacturing of components and final assembly at the joint venture factory based in Harbin.

China is keen to make its own aircraft to meet air-travel demand within the country, which has soared despite the global industry slump following September 11 last year.

In September, mainland media reported Beijing had approved a rival project by AVIC I, another major Chinese aircraft maker, to make a jet with room for up to 79 passengers. Although production of the ARJ21 appears not to involve foreign participants directly, AVIC I officials have said engines, avionics and other equipment will be procured globally.

(Source: AGENCE FRANCE-PRESS)

Shell and China CNOOC Enter US$4 billion Deal

November 1, 2002

After 10 years of talks between Shell and CNOO (China National Offshore Oil Corporation), a deal to build a US$4.3 billion chemicals plant and plans to award US$1 billion in construction contracts have been finalized.

The plant is due to start production in the third quarter 2005 and to supply 800,000 tons of ethylene and 430,000 tons of propylene per year with annual expected sales of US$1.7 billion. Also major contracts for plants, automation and project management would be worth more than US$1 billion and would be awarded before the end of the year.

REUTERS in Singapore

International express operators have appealed to China Post to withdraw new regulations the couriers say will damage the development of an efficient logistics industry.

China Post wants entrustment basically making it the regulator of companies. This contradicts the "economic liberalization and fair competition" enshrined in World Trade Organization principles. Failure to file, China Post insists, will result in the foreign express operators being banned. Deadlines have come and gone in the long-running dispute which first emerged in December, but China Post last month reminded all operators they must file this time.

In February, China Post informed foreign express operators they would be restricted from carrying packages over 500 grams unless they charged more than China Post. But the restriction was not mentioned in the last directive and deadline issued on September 5.

Still the new directive is rather vague. Many couriers don’t know what they are being asked to sign. It had twice in the past three months asked China Post for clarification on the issue but had received no response, the spokesman said.

At stake is a piece of China's burgeoning international express parcel and document industry, which Capec estimates has grown at 25 to 35 per cent per annum in the past five years.

While market data is sketchy, China Post subsidiary Express Mail Service (EMS) registered sales of 1.04 billion yuan (about HK$974.8 million) in 2000, a sum thought to represent roughly 40 per cent of the market.
The entrustment process is seen by outsiders as China Post's bid to hive off the lucrative international express market for EMS, one of its few profit centres.

According to the China International Freight Forwarding Association, EMS has been losing 4 per cent of the market a year to foreign companies since 1995.

It now controls just 33 per cent of the market compared with 97 per cent a few years ago.

China Post, which will see government subsidies removed within a year, is also under pressure to correct its loss-making ways before hiving off its six most profitable regions for a Hong Kong listing.

Capec, whose members traditionally have been regulated by the Ministry of Foreign Trade and Economic Co-operation (Moftec), favours a return to that system.

"We have been regulated by Moftec for a long time, they do a good job and we are comfortable with them," said the spokesman. "Why change now?"

October 30, 2002

China's Internet development is expected to receive a boost in December when the .CN domain name will be made available to businesses outside China under a new liberalized policy. A deal between the US registry NeuStar and the China Internet Network Information Center (CNNIC) will allow businesses outside China to acquire URLs (universal resource locators) with the .CN extension, which is the geographical top-level domain name for China.

Previously, CNNIC allowed only companies with either Chinese ownership or physical business addresses in China to use the .CN domain name. Until recently, personal domain names were not allowed in China.

Neustar and CNNIC plan to accept .CN domain name registrations through accredited registrars outside China beginning in December.

China tops WTO Complaints List

October 25, 2002

China was the most frequent target of anti-dumping investigations in the first half of the year, according to the World Trade Organization with 16 investigations into its exports.

The United States and India were the two importers that initiated most investigations on Chinese exports, four from the former and three from the latter in the first half.

Exports from China were also the subject of the largest number of final anti-dumping measures imposed during the first half of this year. The number surged to 19, a significant increase from the nine measures imposed against Chinese exports during the same period last year.
Taiwan, which joined the trade body after China's entry, was a distant second, with nine anti-dumping measures imposed on its exports in the first half.

China to Overtake US in FDI

October 25, 2002

China is poised to overtake the United States as the largest recipient of foreign direct investment (FDI) in the world this year, according to the United Nations. FDI in China is expected to reach a record US$50 billion this year, up from US$46.8 billion last year, while inflows to the US are expected to slump by two-thirds to US$44 billion.

Industrial restructuring and economic liberalization, further accelerated by China's World Trade Organization are helping FDI growth in the mainland's medium and hi-tech manufacturing and services industries.

Tsingtao to use Anheuser To Expand in US

October 24, 2002

Tsingtao Brewery, which purchased 45 smaller Chinese rivals in the past three years, may use some of a planned US$182 million investment by Anheuser-Busch to buy breweries in the United States. Tsingtao, China's largest brewer, will build plants, create new advertisements and buy rivals at home and abroad with the money.

Missouri-based Anheuser-Busch will help Tsingtao find smaller breweries in the US to acquire. US companies can expect more competition in the US markets for Chinese goods once the Chinese companies are armed with the technology and management skills. Most of technology has been provided by foreign companies either through legal methods or IP thefts.

Beijing Seeks No 2 Trade Position

October 24, 2002

China will become the world's second-largest trading power within the next few years if it keeps up its rapid growth.

In 1989 China was No 15 in world trade, but by last year had become the sixth-largest importer and exporter. China already ranks as the No 1 exporter of many labor-intensive products such as garments, shoes, clocks and bicycles.

The mainland economy grew 7.9 per cent in the first nine months of this year.

(Source: AGENCE FRANCE-PRESS)

China Leads Multinationals to Traps

October 24, 2002

More than half the multinationals in China's consumer products and retail sectors are suffering persistent and significant losses. Despite its vast market and strong headline economic growth, multinationals have found it difficult to make money in China. Few of these companies are willing to admit publicly they are not making a profit after many years of investing in China. I recently spoke to major US engineering firm who had spoke to one of their competitors CEO. The competitor claimed their business in China was outstanding. I know the company has been having financial difficulties in China for some time. As the saying goes “misery loves company”.

The China value trap is real. Once companies invest substantial capital here, often they are trapped and still disillusioned by the market potential. Often they dump more money and other resources into the China operations. Many companies are caught in it today and have seen significant shareholder value destroyed.

Many continued losses of multinationals were triggered by initial success in large cities which led them to expand into new locations and categories. However, they typically ran into a wall of new problems, including fragmented markets; low prices in areas beyond the large urban centers; different competitors in different regions, each employing different market approaches; immature distribution infrastructures and players; and extraordinary strains on organizational capabilities and infrastructure.

In the beer industry, for example, international brewers had experienced annual losses that ran into tens of millions of US dollars, on top of hundreds of millions in failed investments that had been written off.

Guangdong Court Chief Faces Graft Charges

October 24, 2002

The former head of Guangdong's highest court is to be handed over to state prosecutors to face corruption charges of accepting bribes totaling US$1.5 million.

He is also accused of using his influence to help his son secure bank loans to support his business. Mai served in Guangdong's highest court for more than nine years, from January 1989 to February 1998, making him one of the highest-ranking judicial officers to be arrested for corruption on the mainland. In addition to his position in the court, Mai also served as vice-party secretary of the Guangdong Party Committee's Judicial Committee.

In the run-up the 16th Communist Party Congress, the government wants to appease popular anger about corruption, which remains widespread on the mainland.

Allegations of corruption have recently been leveled against many high-profile officials, including the missing Gao Yan, director of China's giant State Power Corporation.

China Closes 90,000 Internet Bars

October 17, 2002

China has closed nearly half of the Internet cafes around the country in the past five months, Since a fire at an Internet cafe in Beijing killed 24 young people in June, as it toughens regulations on the operation of the popular businesses.
There are more than 200,000 Internet bars in China, of which only 46,000 are legally registered, according to the Ministry of Culture. The closures, as well as new regulations tightening rules on cafes' operations, are meant to ensure (disguised as to) public safety, but authorities have also used the clampdown to curtail access to information on the Web.

Last week, China passed a set of new laws regarding cyberspace, further restricting freedom of access to the Internet and the operation of Internet cafes by requiring online cafe owners to put in place mechanisms that prevent users from creating, downloading, copying, browsing, sending or spreading content considered "anti-constitutional" and which may harm national unity, sovereignty and territorial integrity, the regulations state.
The government hopes the massive interest in the Internet will help spread technological know-how and boost economic growth in the longer run, but is wary of the Internet's capability of spreading news and opinions in a society where the Communist Party has traditionally controlled all information.

The cafes are not permitted software that blocks monitoring and computers must keep a record of all content for more than 60 days and filter "unhealthy" content. For every 50 computers, the cafes must reserve one for a security officer with a license issued by the Public Security Bureau.

China's Exports and Production Still Up

October 16, 2002

China's economy is still moving forward. Exports rose 33.1 per cent last month compared with a year earlier, according to the Ministry of Foreign Trade and Economic Co-operation, while industrial production rose 13.8 per cent.

The value of goods and commodities made in China and sold abroad reached US$31.9 billion last month, while imports rose 36.4 per cent to US$29.8 billion. Mainland exports have risen 19.4 per cent this year, sharply above official estimates of a seven per cent increase.

Foreign Investment Increases in Shanghai

October 8, 2002

Shanghai's contracted foreign investment hit a record high for the first nine months of this year, surpassing last year's total. Contracted foreign investment - an indicator of the future trends - surged 37.6 per cent year on year in the first nine months to US$8.03 billion, Shanghai media reported. Contracted foreign investment was US$7.37 billion last year.
The local government approved 2,245 new projects with foreign investment during the first nine months of this year, up 21.7 per cent, the reports said.

Investment in property was among the most popular sectors, rising nearly twofold to US$1.1 billion - about 14 per cent of total contracted foreign investment. Overseas Chinese investors have bought into the Shanghai property in hopes of speculative gains from the booming mainland economy.

BASF Get Green Light for New JV in Shanghai

September 28, 2002