Quick look

3b yuan fund for SMEs

The China Association of Small and Medium Enterprises (CASME) has initiated a 3-billion-yuan venture investment fund as a step to help the country's SMEs raise capital, the body announced in its website last Monday. The fund will be established by the end of this year. Other efforts include the joint issue of an SME corporate bond with the northeastern Liaoning provincial government and the founding of a bank with a planned registered capital of 10 billion yuan, according to CASME.

"Upon its establishment, the bank will provide loans only for the small- and medium-sized enterprises. Companies may get as much as 5 million yuan each for their investment and development," said CASME head Li Zibin without specifying when the bank would open. Any industrial company with sales revenue up to 300 million yuan would be eligible for assistance from the fund and the bank, Li added.

Interest rate cut

The People's Bank of China, the central bank, cut the benchmark interest rate by 1.08 percentage points last Wednesday, the highest in 11 years, to stimulate the economy battered by the global financial and other economic woes.

It also cut the proportion of money six big commercial banks have to hold as reserves by 1 percentage point to 16 percent. The cut in the reserve requirement, which comes into effect from December 5, for the smaller banks is 2 percentage points to 14 percent. The interest rate cut, which took effect from last Thursday, is substantially larger than the previous three this year, 0.27 percentage points each, since mid September. After the cut, the one-year deposit interest rate will drop from 3.6 to 2.52 percent, and the one-year lending rate will fall from 6.66 to 5.58 percent, said a statement on the central bank website.

GDP growth

China's economic growth may slow down to 7.5 percent next year, the lowest since 1990, the World Bank said last Tuesday. The bank cut its forecast for next year from 9.2 percent but said the country has "adequate tools" to keep the economy moving at a healthy pace. Though the bank expects a 9.4 percent growth this year, it said the global financial crisis would take a greater toll on the world's fourth-largest economy in 2009. The growth slowed to 9 percent in the third quarter of this year against 11.4 percent for the whole of last year.

European firms remain optimistic

European firms in China are still optimistic in spite of the global economic turmoil and remain firmly committed to the country, according to the survey conducted by the European Union Chamber of Commerce in China. The survey shows most of the European companies in the country are still profitable. Over 70 percent of the firms said profitability for 2007 was positive, while 62 percent of those surveyed said they expect to stay profitable in 2008.

"This year's survey re-confirms that the Chinese market is the most important emerging market for European businesses, and given the global slowdown it might actually rise in significance," said Joerg Wuttke, president of the European Chamber.

EU imposes higher tariffs

The European Union plans to impose tariffs as high as 87 percent on Chinese screws and bolts in a case that may prompt China to complain to the World Trade Organization, said the Jiaxing Association of Fastener Import and Export Companies last week. Fasteners, used for everything from automotive parts to furniture, are made in the EU by companies, such as Italy's Fontana Luigi SpA, that say trade protection is needed to counter below-cost - or "dumped" - sales in Europe by Chinese competitors.

Cosco deal with Greek port

Cosco Pacific Ltd's agreement to take over container operations at Greece's biggest port will enable China and Greece to boost cooperation, particularly in the maritime field, visiting President Hu Jintao said last Tuesday during his visit to the European country. Under the agreement, Asia's third-biggest container-terminal operator will receive a 35-year concession to operate and manage two container terminals at Greece's main port of Piraeus. The deal worth 831.2 million euros was signed after Hu met Greek Prime Minister Costas Karamanlis for talks on the second day of an official visit to Greece.

Company guilty of copying

A Shanghai firm has been ordered to pay Dutch liquor-maker Diageo 1.25 million yuan for copying its packaging, as the city concluded a campaign to fight intellectual property infringement. In 2006, Diageo Brands B.V. and its Shanghai branch found Blueblood (Shanghai) Wine Co had used a packaging similar to that of its Black Label on a whisky named Polonius, and lodged a complaint to the local commerce bureau. Blueblood was fined but continued to use the packaging. As a result, Diageo filed a suit with the Shanghai No 2 Intermediate People's Court, demanding 2 million yuan compensation.

XCMG's overseas plans

Xuzhou Construction Machinery Group (XCMG), China's biggest construction machinery maker, expects its overseas sales to grow 25 percent next year to $1 billion despite the global financial crisis, company chairman Wang Min said last week. The group is also considering establishing plants in Poland and Iran. The group is on track to record $800 million overseas sales this year, up over 40 percent from last year, said Wang, adding that the firm hopes to get 30-40 percent of its revenue from overseas over the next few years.

Fuel-hedging losses

China Eastern Airlines is evaluating potential losses from its fuel-hedging contracts, but declined to verify reports that the cost may be as much as $690 million by November 14, the company said last week. "We are assessing the possible losses on fuel-hedging operations, but not able to comment until accurate figures are released," said Luo Zhuping, board secretary of the Shanghai-based carrier, who refuted previous reports that the company was asked to suspend its hedging contracts by the central government.

(China Daily 12/01/2008 page2)