The hot discussion in China market these days are around practice of equity-for-debts. This means that parent companies can have their debts to their subsidiaries written off by giving up part, or all of their stakes in the subsidiaries.

There is no doubt that controlling parties with very limited liquidity would prefer such a scheme. Fund appropriation by holding firms has been one of the major factors to be blamed for bad performance of listed companies.

According to Chinese law, shares bought back by a listed company should be waived. So the stakes-for-debts practice reduces shares of the listed company.

Although temporarily it facilitate the disposal of fund used by non-floating share holders, it does not provide sufficient protection for the rights and interests of small and medium share holders. What's more, the price is a problem.

So experts would rather regard this practice of vintage China as something expedient than anything like an innovative solution. Debt repay plan fails to curb irregularities

Investing in visions

The new version of investment system allows and encourages private investors to invest in any sector "that is not forbidden by law". While bank loans is not so easily accessible, private capital may be a good source of fund. If you are in the hi-tech sector like telecommunication and integrated circuit, you will have better chance of getting it.

Foreign venture capital is quite active in China. Foreign investors have richer experience in fostering, packaging and harvesting start-up businesses. The influx and leading role of foreign VC signals the enormous possibilities in China market.

Economists have their own observations of the prospect of the world's fastest growing economy. But businesses and investors have their more realistic logics. And their choices mirror and guide the trend of the economy.

It is expected that Chinese capital would catch up. But more exit channels should be in place. Venture capital up 31% in first half

The whole west-east natural gas pipeline project is estimated to need an investment of more than 150 billion yuan. Enormous returns are expected as it is put into operation.

For China National Petroleum Corporation, its equity investment of 22.6 billion yuan will generate an after-tax returns of more than 12 percent and 15 percent from the pipeline and upstream project. Interested stocks gained at the news of completion of pipeline construction.

As a quality energy, the west-east pipeline project will improve the structure of energy supply in east China. The next step is how to use the gas in the most efficient way.East-west gas pipeline wrapped up

HSBC leads the foreign banks again in terms of building partnership with Chinese bank by taking as much as stakes a foreign investor can under the present Chinese policy.

Though China's financial sector is not fully open to foreign capital, foreign banks are gaining significance in China market. Although HSBC has taken aggressive moves in China, foreign banks are generally cautious about their expansion here. As they hold positive attitude toward China's economy, their proliferation at the time when the country 's financial sector is freely accessible is beyond doubt. Chinese leader hails deal between communications bank, HSBC

There is chill in China's car market. New car models keep emerging. Consumers have much more choices than ever. But they are more confused than delighted. And the life cycle of some new models lasts about a year. How can buyers do with their cars in this case if their cars need repairing?

Price is another major concern that affects their decision on buying cars. Price wars have not propped up sales as it had been thought. Potential buyers are worried that they may be only too haste to miss another round of price cuts.

Compared with foreign markets, profit margin in Chinese auto market is still high. That's why investment in auto industry is hot. But Insiders forecast only seven or eight auto makers can survive in the future.

For foreign auto makers, they choose to set up finance companies in the hopes of securing their dominance and developing another source of revenue. The absence of a credit system is the problem. But when Chinese banks are shrinking their auto loan business, foreign auto giants are stepping up the launch of their auto financing operation.

In the stock market, share sales of four executive board members of Brilliance Auto sparked plunge of auto shares. Many factors affect car sales in ChinaFord offshoot approved for auto loan services

As the leading foreign consortium in Chinese insurance market, AIG enters into fund management. Foreign insurers in China are pacing up to add their value. Prudential, the second largest life insurer from Britain hoped its plan for the assets management operation in China would begin to be carried out at the end of this year.

Although the sector of fund management in China is far from full-fledged, the growth is remarkable and the potential is worth attention. Unlike Chinese companies, foreign businesses seem to be more inclined to invest in "version" rather than in some kind of already crowded market.AIG to open fund management joint venture

China Banking Regulatory Commission has made it easier for companies to set up their own finance arms and foreign banks to expand their presence in China.

Although foreign banks are not allowed to offer renminbi service to Chinese individuals now, their existing operation in China will help them get familiar with the local market and customers. Now as the door is open wider to them, Chinese banks should be very clear about the fact that one of their edges now, a better understanding of local individual clients, will not be there when the market is fully liberalized at the end of 2006. China's door now wide-open for foreign banksCBRC relaxes rule on finance companies

It is not easy to achieve a trade-off between openness and supervision. This is especially true when the People's Bank of China extends the RMB business to Macao.

The amount of RMB in circulation in Macao is not as much as that in HK. But Macao's economy depends too much on casino and prevention of money laundering is one of the main considerations of watchdog.

Making sure the RMB business is operating well to boost the local economy is a challenge both to Macao banks to offer the service and to China's supervision system. Anyhow, for both, this step is positive and expectable. Macao gets green light for RMB services

Core competitiveness

The Chinese government has been eager to increase the income of farmers. This year has seen the highest income hike in seven years for farmers. Subsides and tax cuts, rises of agricultural products sales and more remittance of migrant workers, cash earnings from the second and tertiary industries and farm produces exports are all cash cows of rural households in China.

The breakthrough of the Doha round on agriculture promises wider access to foreign markets of Chinese farm produces. But the access will not be easy. First, it is conditional: foreign businesses to be let in to more industries with fewer restrictions. Second, more technical progress should be made in the agricultural sector to enter into developed countries where stringent environmental and technical standards are in the way.First half year witnessed increase in agricultural exports

The lessons that Chinese DVD players makers have been taught are always mentioned in talks about intellectual property rights protection. For others, it is not more than a morning call. But for those Chinese DVD player exporters, it is the lost market. Innovation is still the biggest bottleneck hindering Chinese enterprises to get strong. More Chinese manufacturing businesses have been nudged into the world's top 500. But one thing is common for the 15 Chinese companies on the list of 500: they are rich in natural resources. Patent fees drag down DVD player exports