CHINA BANKING AND FINANCE NEWSLETTER
Vol. 4, No. 4 - April 4, 2003
TOPICS THIS ISSUE:
- State Administration of Foreign Exchange Issues Joint Venture Foreign Exchange Rules
- Bank Fund To Aid Small Firms
- Central Bank to Steadily Promote Interest Rate Reform
- Chinese Premier Calls For Taxation Collection, Promotion
- Over 100 Top World Businesses Invest In Shandong
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State Administration of Foreign Exchange Issues Joint Venture Foreign Exchange Rules
The State Administration of Foreign Exchange (SAFE) has issued a directive detailing regulations concerning Sino-foreign joint venture fund management companies.
The directive, which will take effect on May 1, stipulates that these types of joint venture firms must seek SAFE approval to borrow overseas or write guarantees for overseas institutions and they must secure written consent from SAFE to open forex capital accounts, the Securities Times reported yesterday.
Further, these joint venture firms may only accept investment funds from overseas partners through approved forex capital accounts, which are to be opened at designated banks, while international payments are to be made under trade-based current accounts, unless otherwise specified by SAFE.
To meet the country's World Trade Organization (WTO) commitments, the China Securities Regulatory Commission issued rules governing the establishment of joint venture fund management companies in June last year, to establish a mechanism for those firms to enter the burgeoning sector.
Under the WTO, China's current ceiling for foreign investment is set at 33 per cent and is scheduled to rise to 49 per cent no later than the end of 2004.
Such joint ventures have the same business scope as their solely Chinese-funded counterparts and are subject to the same regulations, the commission has said.
The past two months witnessed the launch of China's first two Sino-foreign joint venture fund management companies - Huabao SG Fund Management Co, by Huabao Trust and Investment Company and SG Asset Management, and China Merchants Fund Management Co, by China Merchants Securities and ING Asset Management.
Several other firms have won regulatory approval but are still in the preparation phase, including Guotai Allianz Fund Management Co, by Guotai Jun'an Securities Co and Allianz AG.
Source: China Daily
Bank Fund To Aid Small Firms
The China Development Bank has decided to allocate an initial fund of 5 billion yuan (US$604 million) as a credit guarantee for Shanghai's small and medium-sized enterprises, under an agreement signed by the bank and city government yesterday.
The bank will launch a loan re-guarantee service to smaller firms in Shanghai later this year using the fund.
Shanghai is the first pilot city to benefit from such a new service, which is expected to cover other major Chinese cities in the following years, according to the bank.
The China Development Bank was established in March 1994 and is a policy-making financial institution directly under the State Council.
Loans from the bank mainly go to key infrastructure construction projects and pillar and high-tech industries in China.
Shanghai currently has more than 218,000 small and medium-sized firms. They are mostly privately owned and provide jobs for more than 80 per cent of employees in Shanghai.
However, only 1.4 per cent of Shanghai's smaller firms have received any credit guarantees, compared with 25 per cent in Japan.
The percentage is even lower in China's hinterland, according to officials at the bank.
Shanghai government officials state that the city will need at least 7 billion yuan (US$846 million) in capital for loan guarantees to meet demand for the following three to five years.
Source: China Daily
Central Bank to Steadily Promote Interest Rate Reform
China's central bank governor, Zhou Xiaochuan, stated that market-oriented reforms of interest rates will be steadily carried Zhou told a working meeting of the Peoples Bank of China (PBC), the central bank, that efforts would be made to improve monetary policy operations and maintain an appropriate increase in money supply and credit volume.
He indicated that the central bank should do its work carefully on the key tasks of promoting financial reform, supporting economic growth and improving the central bank's efficiency.
He also indicated that the central bank should carry out institutional restructuring and functional readjustment; take prompt measures to tackle problems with new developments in the world and domestic economies; increase loans to quality enterprises, the rural economy and service industry; step up administration of foreign exchange and protect the stability of the Renminbi.
Source: People's Daily
Chinese Premier Calls For Taxation Collection, Promotion
Chinese Premier Wen Jiabao has called on all sectors of Chinese society to pay their taxes and make still greater contributions to the fulfillment of the country's economic goals.
Premier Wen made the appeal after reading a report by the State Administration of Taxation, which proposes to launch the 12th "National Taxation Publicity Month".
Premier Wen, also a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, highlighted the importance of taxation, citing taxation as a main source of revenue for the state and one of the government's means of macroeconomic control.
He stated that greater efforts should be made to increase the publicity and education on the relevant laws, regulations and policies concerning taxation, educate the public in the awareness of taxation, enhance tax collections and management, and crack down on any crimes of tax evasion and cheating according to law.
The premier also urged that all taxpayers must fulfill their obligations to pay taxes according to law and that all tax officials need to perform their duties to effectively collect taxes according to the law.
Source: Xinhuanet
Over 100 Top World Businesses Invest In Shandong
Some 107 companies of the world's top 500 companies have invested in east China's Shandong Province, one of the country's economic powerhouses.
Shandong saw an annual 14.1 percent rise in foreign trade during the past five years, with exports rising 14.2 percent.
In 2002 alone, the province conducted 33.94 billion US dollars in foreign trade, up 17.2 percent year-on-year, and used 6.52 billion dollars of overseas investment, up 47 percent.
So far, some 13,000 overseas-funded projects have been approved in Shandong, using 21.93 billion dollars of overseas money.
The increase in foreign investment is attributed to the further improvement of local services provided for overseas investors, which has turned out to be successful in boosting the local economy despite the world's economic downturn.
Shandong enhanced cooperation and exchange with more than 160 countries and regions over the past five years and has seen local cities establish bonds of friendship with 111 cities worldwide.
Source:Xinhuanet
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