Forex reserves
China is not deliberately pursuing expansion of its foreign exchange reserves
or any particular level of reserves, the People's Bank of China said last week.
Wu Xiaoling, vice-governor of the central bank, said that an excessive trade
surplus, the source of much of China's reserves, was not desirable and needed to
be addressed through policies.
The central bank was looking to increase access for individuals and
corporations to foreign exchange trade to make it less dominated by the
government, she said, offering no details on how that would be done.
China's forex reserves at the end of February totalled US$853.6 billion,
exceeding Japan's for the first time, which stood at US$850.1 billion at the end
of February.
Mine closures
China will close small-scale coal mines, with production capacity of less
than 30,000 metric tons a year, by the end of 2007 to improve work safety.
The government also wants the small coal mining companies to merge with
larger ones to better utilize the country's resources of the fuel, improve
technologies for mining, and boost training of workers and management, the State
Administration of Work Safety said last week.
China is trying to reduce industrial accidents that have killed thousands in
mines and chemical plants. Authorities are cracking down on poorly managed,
privately-run pits that are kept open to meet rising demand for fuel and iron
ore.
Oil tax
China's windfall tax on oil production will apply to crude pumped within the
country's land and sea borders, the Ministry of Finance said last week.
All companies engaged in exploring and selling oil in Chinese territory and
within its sea borders would be subject to taxes ranging from 20 to 40 per cent
on any oil sold for more than US$40 a barrel.
Oil companies had to pay the new tax to the finance ministry on a quarterly
basis, it said. Details of the new taxes were posted on the websites of the
Shanghai National Accounting Institute and major domestic oil companies last
Tuesday.
The move was aimed at promoting the country's healthy economic development
and oil price reform.
Improving order
China issued a regulation last week on how to deal with irregularities
arising from securities issues in an attempt to improve order in the securities
industry and on the stock market.
The regulation, issued by the China Securities Regulatory Commission, said
the commission has the right to freeze and close down an institution's illegal
cash, securities, property and anything that might be important evidence
relating to an illegal securities case.
The new regulation, based on the new Securities Law in force since January 1
this year, will come into effect immediately.
Pandemic 'unlikely'
The avian influenza virus is unlikely to cause a pandemic among humans, it
has been claimed.
Zeng Guang, chief epidemiologist of the Chinese Centre for Disease Control
and Prevention, said last week although the virus has killed more than 100
people around the world, it is not spread easily between people.
So far 16 cases of human infections have been reported in China.
"We have found that some of the patients had immune deficiencies and two were
pregnant," Zeng said.
The reason why they were infected is still unclear, but "we know that human
beings are not generally susceptible to the virus," he said.
Overseas turnover
China's turnover in overseas project contracting is expected to reach US$50
billion by 2010, the China International Contractors Association said last week.
It said the volume is likely to increase by 15 per cent year-on-year in the
country's 11th Five-Year Plan (2006-10).
The association said it expects that Chinese contractors will not only gain
access to more countries but also enter more business sectors. If added Chinese
firms enjoyed great potential in contracting in the electricity, petroleum
chemical and communications sectors. Chinese contractors signed more than
US$29.6 billion worth of overseas projects last year, an increase of 24.2 per
cent from 2004.
Derivatives development
China plans to speed up development of derivatives to help companies and
financial institutions hedge risks as the country moves toward a more
market-oriented exchange rate system, the China Banking Regulatory Commission
said last week.
The ending of the yuan's decade-old peg to the dollar last year has led to a
"significant increase" in foreign currency risks, Zhang Guangping, a deputy
director of the commission said.
The Shanghai-based foreign-exchange interbank market should accelerate the
pace of development of China's derivatives market, central bank deputy governor
Xiang Junbo said.
A derivative is a financial obligation whose value is derived from interest
rates, the outcome of specific events, or the price of underlying assets such as
debt, equities and commodities.
Announcement anger
The China Iron and Steel Association (CISA) last week criticized the world's
leading iron ore supplier for its move to unilaterally announce its annual price
while international negotiations are continuing. A spokesman for Companhia Vale
do Rio Doce (CVRD) of Brazil announced on March 29 that it will raise its 2006
iron ore price by 24 per cent over last year's price. The CISA regards the move
by CVRD to be "extremely ill-considered and in violation of the rules of the
international iron ore price negotiation." An official with the CISA said that
the iron ore price proposed by CVRD is "unacceptable." He said following the
international rules of ore price negotiation, price information should only be
released to the media after at least one ore provider has made a pricing
agreement with a steel plant.
Land protection
China has vowed to take a firmer stance on the protection of arable land. Its
farmland area stood at 122 million hectares last year, 8 million hectares less
than 10 years ago.
Sun Wensheng, minister of land and resources, said last week China should
strengthen administration over land resources and adhere to strict protection
mechanisms on farmland.
Rapid industrialization and urbanization and the large-scale restoration of
farmland for other purposes, are regarded as the main reasons behind the
shrinking farmland.
(China Daily 04/10/2006 page2)
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