CHINA BANKING AND FINANCE NEWSLETTER
Vol. 2, No.5 - November 15, 2001
TOPICS THIS ISSUE:
- China Approves Several WTO Related Laws
- China Delays Plan For Nasdaq Style Second Board
- Foreign Firms Acquire Interest In AMC Non-Performing Assets
- Everbright Bank Wins Award For Liquidation Service
- China Plans Further Stock Market Liberalization
China Approves Several WTO Related Laws
China's top legislative body enacted a series of laws in the past two weeks that will strengthen its copyright and patent laws, protect workers and ratify two treaties on terrorism.
Much of the work of the National People's Congress (NPC) was aimed at fixing laws related to the World Trade Organization to bring domestic practices in line with world rules, said Li Peng, chairman of the NPC's Standing Committee.
The NPC Standing Committee also approved amendments to the Trade Union Law and passed laws to prevent and treat on-the-job illnesses and to regulated the use of maritime space.
The amendment to Trade Union Law focuses on organizing trade unions and safeguarding workers' rights. It also urges workers to help maintain economic and technological development and social stability. These changes are effective immediately.
Amendments to the Trademark Law will become effective on December 1 and law on use of maritime space on January 1. A draft law on workplace illnesses becomes effective on May 1, 2002.
The NPC Standing Committee also ratified the International Convention for the Suppression of Terrorist Bombings and the Shanghai Convention on Combating Terrorism, Separatism and the Extremism. Li reiterated China's condemnation of any form of terrorism as well as any act aimed at separating the nation. Both threaten the safety of the public interest, he said.
The six-day meeting featured State Council's reports on social security reform and on the application of the monetary policy over the past three years.
(Source: China Daily)
China Delays Plan For Nasdaq Style Second Board
China originally planned to launch a second board in Shenzhen this year to help hi-tech and private start-ups raise capital. However, it has been reported that the launch of the planned board will be delayed as China does not have enough high-technology companies to support a Nasdaq style second board.
Cheng Siwei, vice-chairman of the National People's Congress, said China might set up a hi-tech sector on the Shenzhen stock exchange before launching a second board, the official China Securities newspaper reported.
A second board would need about 300 listings to be active and China did not have enough mature hi-tech firms, Mr Cheng was quoted as telling a seminar in Shanghai.
Mr. Cheng also stated that it is proposed to first set up a high-technology sector on the Shenzhen stock exchange to support the funding of a small number of mature high-technology and new-economy enterprises.
(Source: South China Morning Post)
Foreign Firms Acquire Interest In AMC Non-Performing Assets
A milestone contract is to be signed to set up a giant financial joint venture to help Chinese asset management companies (AMCs) dispose of their massive non-performing assets.
By this remarkable marriage, four high-profile local and international financial enterprises, including leading investment bank Goldman Sachs, financial conglomerate Deutsche Bank AG, the China Xinda AMC and another foreign firm possibly from the United States, will be brought together to combat the huge accumulation of non-performing assets in China over the past few decades.
The new company, expected to have a total stake of about US $300 million, will first specialize in resolving Xinda's non-performing assets, with the three foreign partners getting a return on recovered assets, said Mr. Zhu, chief executive of the China Xinda Asset Management Co.
The deal will mark a new era in the arena of domestic and foreign co-operation of resolving non-performing assets, as previously foreign firms were only involved in providing consultancy services to domestic firms.
Xinda aims to draw on foreign experience in debt resolution. However, the planned company still needs the final green light from the People's Bank of China (PBOC), the central bank and some other government institutions.
Analysts speculate that if the new deal is successful, China will likely see a new wave of follow-up ventures between domestic and foreign asset management firms, as foreign giants may be anxious to tap the potential market.
Reports state that three other AMCs - Huarong, Great Wall and Orient are also in talks with foreign firms for similar deals in a move to help them dispose of bad debts.
(Source: Business Weekly)
Everbright Bank Wins Award For Liquidation Service
The Everbright Bank of China won the Quality Recognition Award granted by the U.S.-based Morgan-Chase Manhattan Corp. for its high-quality liquidation service, according to a bank spokesman.
The bank was selected from among more than 10,000 banks worldwide, as it had shown an outstanding performance in liquidation services in U.S. dollars.
It is the first Chinese mainland bank to win the prize for five years, said Zhao Baofu, the spokesman.
He noted that the bank has provided prompt and quick liquidation service with low risks, especially when clients need to transfer their money internationally.
Morgan-Chase Manhattan Corp. is a global financial service institution, with branches in more than 60 countries and regions across the world. It ranked 12th among the Top 500 U.S. companies listed by Fortune Magazine last year.
(Source: People's Daily)
China Plans Further Stock Market Liberalization
China will allow foreigners to buy into funds investing in the domestic stock market after its entry of the World Trade Organization, the official Shanghai Securities said on November 5.
Under the current regulations, foreigners can trade on the very limited hard currency B-share market but not permitted to invest in China's A-share market.
Regulators have said that they will gradually relax the restrictions on foreigners' access to the RMB-denominated A shares through a qualified foreign institutional investor (QFII) scheme modeled after Taiwan's, but have made very slow progress.
Analysts said a structured opening of the domestic market, such as a QFII scheme, would allow foreigners more access while avoiding the volatile hot money flows that battered much of Asia during the 1997 financial crisis.
China's government is planning to liberalize its financial markets as China gradually opens its economy wider after WTO entry, expected by the end of this year.
This year, regulators have allowed Chinese citizens to buy the formerly foreigners-only B shares and introduced the country's first Western-style mutual funds.
Under WTO-related pacts, China has also promised to allow foreign firms to hold minority stakes in joint venture securities firms three years after China joins the global trade body.
(Source: South China Morning Post)
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