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A briefing on the week's top news in Shanghai
September 6, 1997
CONGRESS: With the Communist Party's 15th Congress approaching, everyone is watching the political weathervanes more closely that usual, even in apolitical Shanghai. There are suggestions of differences of opinion -- rare enough in the top Chinese leadership -- on the speed with which the state (and Party) control of the economy should be rolled back. There have been some small demonstrations in Sichuan by disgruntled workers. The stock markets have been cooled down by order, with the television ordered to downplay reports on market activity as we move towards opening day on September 12. But as is culturally required, little in the way of surprises is expected out of the congress. Everything of importance has already been leaked. Zhu Rongji, the man who rules the economy, will be named as the new premier. The party will publicly acknowledge more clearly than ever before that the state sector of the economy must be reduced in size. The timetable for solving the state enterprise problem will be speeded up. The value and role of the capital markets will be re-affirmed. How will investors react? While they fear Zhu Rongji, everyone knows he's the best choice and the only man who can make the Chinese capital markets real and solid. That's a positive factor. Re-affirming the role of the capital markets ditto. Nothing sudden is expected in terms of listings are issues after the congress. But the direction will be clear -- the markets will grow.
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MARKETS: China's leaders have been closely watching the recent panic and turmoil in the Southeast Asian financial markets. Not that they would use it as a justification for not proceeding with their own reforms, but it will make them more cautious about moving away from central control towards allowing market forces full rein. The Financial news, published in Beijing, said Beijing should learn particularly from Thailand's financial crisis and maintain strict controls on the flows foreign capital into and out of the country. The Chinese yuan is basically convertible under the current account, but Beijing is being very careful about when to expand convertibility to include the capital account. The trouble, which will presumably lead to a scaling-back of development plans in many countries, is unlikely to slow China's rush to complete its many major infrastructure projects.
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ECONOMY: Chinese firms outside the state sector now account for about one-third of China's gross domestic product. The vice-minister for the State Commission for Economic Restructuring said issuing stock to shareholders would push state firms to modernize
faster, increase efficiency and improve management.
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FOREIGN BUSINESS: The U.S. company 3M has opened its China head office in Shanghai. The company has invested $100 million in the country over the past 12 years.
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AIR: China Eastern Airlines registered year-on-year revenue growth of 19.6 percent in the first half of 1997. The airline, based in Shanghai, now has 66 aircraft operating on 121 routes, 12 of them international. Shanghai is by far the biggest point of entry and exit for goods moving betweeen Hong Kong and the Chinese mainland, according to statistics published by Hong Kong's Civil Aviation Authority.
June'97
Unloaded Loaded
BEIJING
Air China 358 559
China Southern 123 89
Dragonair 50 278
FUZHOU
China Eastern 40 106
GUANGZHOU
China Southern 63 204
SHANGHAI
China Eastern 681 856
Dragonair 75 592
TIANJIN
Air China 58 50
XIAMEN
China Southern 119 121
Dragonair 85 80
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AUTOS: The General Motors joint venture in Shanghai will start selling Buick sedans produced at its $1.5 billion Shanghai plant into the Chinese market from late 1998.
The local content rate of the Shanghai-produced Buicks will initially be 40 percent, a GM official said. Production capacity would eventually reach 100,000 cars a year. China replaced 167,500 automobiles in the first half of 1997, including 23,558 passenger cars, 95,818 trucks and 8,653 jeeps. China is expected the produce 1.59 million automobiles and import 144,000 more in 1997. It will have about 13 million vehicles on the roads by the end of the year. Meanwhile, taxis and buses in Shanghai will soon start using liquefied petroleum gas (LPG). Shanghai is due to ban the sale of leaded petrol this year, following Beijing, to reduce air pollution.
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REAL ESTATE: There is now 6.3 million square metres of empty buildings in Shanghai, most of it apartments, thanks to several years of over-building, officials said. They reported a sharp recovery in property sales in the first half of the year, but construction continues to outstrip sales. Officials want less building of luxury accomodation, more for ordinary residents and they want to create a mortgage market, a precondition for a proper housing market. But with banks unable to repossess property from people who fail to make payments, it is still some way off.
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PUDONG: The Pudong development zone has approved projects by 4,616 foreign firms since 1990, attracting investment of $21.762 billion.
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CULTURE: Shanghai's film festival rolls again this year, with 200 new domestic and foreign films being screened from October 25 to November 2. The top movies will be vying for the Shanghai festival's Golden Cup award.
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