China's first rural bank, Huaxi Rural Cooperative Bank, was born in Guizhou Province in southwest China at the end of May. The joint-stock rural bank absorbed shares from farmers, enterprises and employees of the very successful former RCC(rural credit cooperative) on which it was based. Another four such banks are to be slated within this year in Guizhou. 7 provinces and a municipality have been chosen as the sites of a pilot reform scheme, including Guizhou, Shannxi, Jiangxi, Zhejiang, Shandong, Jilin and Chongqing.

The bank has already attracted attention from foreign capital. International Financial News, a prominent Chinese specialized newspaper, reported on July 2 that Robobank from Holland had been watching closely the process of the reform of China's rural credit co-operatives. It is interested in bringing its techniques and ideas to China through holding shares in China's rural banks.China to innovate upon rural financial system

Like the reform on land system, the key issue for rural financial system is the ownership. Although the land is still owned by the state, farmers enjoy great freedom to use it. The solution to the financial sector is the introduction of private capital and foreign investment.

In China's rural areas, rural credit co-operatives (RCC) record bad performance and offer bad service to farmers, the real investors to the institutions. The problem and the necessity of reform were recognized widely as early as a decade ago. But the issue is too complicated to be addressed at that time as it involves too many fields.

Now things have changed and improved a lot. Increasing farmers' income has been given top priority in the country's development agenda. The reform on land system goes on successfully. The reform on grain circulation system is under way. It is time to speed up the reform on rural financial system which cannot cater to the needs of farmers.

In the front of the reform on banking in urban areas, Cinda, one of China's four asset management companies to dispose bad loans of the "Big Four", bought a bulk of NPL from Bank of China and China Construction Bank. The was a competition for the deal. Cinda signs deal on bad loans

Policy watch

China's revised Foreign Trade Law takes effect on July 1. A registration system replaces the licensing system. Even individuals can engage in this business after legal procedures are gone through. China's exports increased by 33.4 percent for the first five months of the year and trade surplus was back again in May. China plans four measures to deepen foreign trade system reform

The same day saw China securities watchdog issue detailed regulations on investment funds and China Environment Protection Administration impose stricter auto emission standards. CSRC issues rules on investment fundsChina adopts Europe II auto emission standards

China is getting closer to 3G application. The Ministry of Information has repeated several times that the timetable for licensing of 3G is subject to the "market" situation. There are three 3G standards: CDMA2000 developed by US, TD-SCDMA by China, and WCDMA by Europe. In principle, operators are free to choose any one of them for their services. Alcatel, for example, will bring TV programmes to Chinese users through its 3G network based on Chinese standard. China to issue high-speed mobile licenses in 2005

Newly issued rules on foreign debts held by foreign-funded banks in China have aroused great concerns among these banks. China's forex watchdog is busy with explaining to these foreign banks why the rules have been devised. The balance of China's foreign debts stands at a high level of more than 200 billion USD.Business of foreign banks not to be affected by rules on foreign debts

From June 30 to July, China International Service Industries Convention and Expo was held in Beijing. This was the first time that China had hosted an international event for the service industries since its WTO accession. Financial services and logistics were two main themes. Vice Premier: China to boost development, opening-up of service industrySynergy to build efficient modern logistics

Rosy vs. uncertain

"Economic upturn, expected end to deflation and rising consumer confidence" make a rosy picture for Hong Kong. BOCHK raises HK's full year economic growth estimates S&P outlook for HK's local currency rating boosted to stable

The European Union refuses to grant China the market economy status. This is based on a newly issued preliminary assessment. Although some people, including EU trade commissioner Lamy, said that there was no need to take the assessment too seriously and it was not a conclusion, this still disappointed China. EU ruling on China's market status 'unfair'

Chinese textile exporters do not have an easy time before 2005 when the quota system is lifted globally. US businesses seem to waste no remaining time wielding the stick of quotas. Yet the future for Chinese textile exporters will not be rosy even after 2005. The reluctance of some countries, including US, to remove the quotas system has foreshadowed narrowing access of Chinese textiles to these markets. There are enough other hurdles to block Chinese products and "safeguard" their home interest groups when quotas are not allowed to use.US may impose quota on Chinese textile

For a better life

China Life has its assets management company make a high-profile debut. Wu Dingfu, Chairman of China Insurance Regulatory Commission (CIRC), was at the inauguration ceremony of the company and released something inspiring. He said the watchdog was busy with building a firewall against market risks for insurance capital. Days are expected to be "numbered" before insurance capital invades into the market. Wu also unveiled at the occasion that CIRC was studying on investing overseas by insurers. "Things are going on well".

China Life is the second insurer to have an assets management company, following PICC. But as the largest domestic institutional investor with a registered capital of 800 million yuan and 410 billion yuan, or 39.6 percent of the total assets in the sector under its management, this move of China's Life is regarded as the real milestone for China's insurance assets management. The company will seek for foreign strategic investors on its way to a conglomerate in "mixed", or comprehensive financial business..Green light to overseas investment by Chinese insurers

The US Fed has done what it had been expected to do for months: gearing up its interest rate by a quarter of a percent. The American economy is on robust rebound and under mounting inflationary pressure. The American Bankers Association predicts Greenspan would push the interest rates to 2 percent by the end of this year. On the other hand, emerging markets has irresistible temptation to companies holding dreams of broader visions. The most irresistible is from China. And experts do not think China would follow the suit of US in interest rate hike. China overtakes US as investment target: report

For broader visions

Changhong Electric will introduce the world's leading IT technologies and software from Microsoft. This will reinforce Microsoft's commitment to common development with local industries in Sichuan which has built good cooperative relationship with the software giant. Both sides believe it is a win-win deal promising bright prospect. But Microsoft dismissed the speculation about its action of taking over Changhong's shares so far.China's TV giant, Microsoft cooperate on multi-media field

China will upgrade its economic ties with South Africa and Argentine. Besides agriculture and infrastructure projects, the south American country welcomes cooperation with China on electronics. China will launch talks on free trade zones with another country in the region, Chile. South Africa has the same intention. And it recognizes China's status of full market economy. China, Argentina sign co-op agreementsSteel, energy projects highlight China-S.Africa co-operation accords China, S.Africa to launch free trade negotiations

Bill Gates had a packed timetable in his stay in China this week. He spoke at the first China International Service Industries Convention and Expo, met with Chinese Premier Wen Jiabao, and preached to Chinese young students. And what he packed into his luggage for his China trip include both expansion ambitions in this fastest-growing economy in the world and a 10 million USD-aid plan to help teachers and students in rural areas in this most populous country. Premier emphasizes int'l cooperation on software developmentMicrosoft to expand China research

Shanghai Chengxi Shipyard Corporation: China's largest ship-repairing company. Qinghai: home of China's largest strontium carbonate baseChina's largest ship-repairing company formed China's largest celestite concentration plant, strontium carbonate base built

LNM will have the value of its shopping list in China forty to sixty fold in the year to come to feed its bulging stomach for rolled sheet production. Besides being a buyer, the world's second largest steel behemoth from Netherland will be a big producer in China and it is already a big exporter to China. Netherlandish steel giant expands purchasing in China

By People's Daily Online