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Trade US Chamber China Trade & Investment News IPR October 15, 2008 Political and International News National People's Congress Trade Economy October 15: Dongfeng Motor Group Company announced its auto sales in September Foreign Investments dropped 1.656 percent year-on-year to 85,729 vehicles. Of the total, sales of passenger Food/Consumer Product vehicles and commercial vehicles amounted to 67,268 units and 18,461 units respectively, Safety Issues representing a year-on-year increase of 12.9 percent and 33.1 percent. Energy & Environment http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18133 Insurance & Finance Internet October 15: Shenzhen-listed TCL Corporation, a major Chinese television and mobile phone manufacturer, announced that its sales of liquid crystal display (LCD) TV sets Defense & Exports Control soared 189.5 percent from 2007 in September to 458,830 units. 169,876 units were sold in Cross - Straits the domestic market, which is 50.1 percent higher from 2007. General News http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18137

October 15: General Motors Corporation Asia Pacific President Nick Reilly said the company's vehicle sales in China were down in both August and September, compared with the same months of 2007. Overall auto sales in China fell 6.34 percent in August and 2.74 percent in September, compared with the same months of 2007. http://online.wsj.com/article/BT-CO-20081014-718277-search.html? KEYWORDS=China&COLLECTION=autowire/6month

October 14: Bayerische Motoren Werke AG sales in Chinese mainland rose 30.4 percent from 2007 to hit a record of 47,342 vehicles during the first nine months of 2008. Sales of the BMW brand went up 29 percent over the same period of 2007, to reach 44,980 vehicles including 25,026 units BMW 3 and BMW 5 made in China. Meanwhile, sales of Mini brand totaled 2.362 vehicles in the Jan-Sep period, representing a year-on-year increase of 65.9 percent. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18103

October 14: Processing trade (assembly) accounts for over half of China's exports, its share in total trade is falling. Export growth in the processing trade moderated to 14.8 percent year on year; imports rose by 12.6 percent year on year. Higher prices especially of transportation and the removal of processing trade incentives beginning in 2006 account for this shift. http://www.rgemonitor.com/26/China

IPR October 15: Shenzhen Intellectual Property Office has recently drafted the "Regulations on Protection of the Internet Software Intellectual Property Rights of Shenzhen" to fight the software infringements. This is the first time for the Shenzhen government to raise the fight against the Internet software infringements to a legal level. The regulations are currently undergoing a public consultation, which will end on October 25, 2008. http://www.chinatechnews.com/2008/10/15/7738-shenzhen-fights-online-id-theft-through- legislation/

Political and International News October 15: Pakistan's president Asif Ali Zardari began a four-day state visit to China, seeking aid for his near-bankrupt nation from an increasingly powerful ally. Pakistan's economy was already in a critical state before the global financial crisis. Mr. Zardari is reaching out to China, the US and Saudi Arabia, among other so-called Friends of Pakistan, to make the case that the world has an interest in helping to stabilize the nuclear-armed nation, which has been shaken by Islamist militancy. http://online.wsj.com/article/SB122400985382133155-search.html? KEYWORDS=China&COLLECTION=wsjie/6month

October 15: IMF working group releases voluntary principles for SWFs. http://www.chinatradeextra.com/

October 15: IMF committee endorses G7 action plan on financial crisis, SWF principles. http://www.chinatradeextra.com/

October 15: Hong Kong will soon establish a task force charged with monitoring and assessing the impact of the financial tsunami and proposing specific options for the Hong Kong Special Administrative Region (HKSAR) government and the business community. The task force will be chaired by the Chief Executive and its members will include top government officials, finance experts, economists and people from major industries. http://news.xinhuanet.com/english/2008-10/15/content_10198035.htm

October 15: Third Plenary Session of the 17th Central Committee, where China's Communist Party leaders were expected to finally enact a bold land reform program allowing farmers eventually to buy, sell or lease their fields. And President Hu Jintao made a high-profile trip to rural Anhui province, where state media said he told farmers that they would be able to transfer their land rights. The issue had all but disappeared from public view. It wasn't even mentioned in the final communique from the 368-member decision- making body. http://www.latimes.com/news/nationworld/world/la-fg-land15-2008oct15,0,362260.story

October 15: Hong Kong's cooperation with Guangdong over 2007 has been fruitful thanks to the efforts of both Governments. Delivering the 2008-09 Policy Address at the Legislative Council, Tsang said the governments of Guangdong, Hong Kong and Macao have reached a consensus on funding the Hong Kong-Zhuhai-Macao Bridge, which has allowed Hong Kong to advance the start of construction to no later than 2010. http://news.xinhuanet.com/english/2008-10/15/content_10198157.htm

October 15: Cambodian Prime Minister Hun Sen said Cambodia should view China's economic prosperity as an opportunity but not a threat. In addition, the premier said that China could help deal with the current global financial crisis because China still has a large amount of foreign-exchange reserves and potential of economic growth. China is currently the second largest investing country and the fourth largest donor country for Cambodia. http://english.people.com.cn/90001/90778/90858/90863/6515367.html

October 14: Chinese State Councilor Ma Kai met with World Petroleum Council (WPC) president Randy Gossen, who is to attend an international energy forum in Beijing. Ma told the visiting Canadian, "As the world's biggest developing country, China has not only met the energy demand required by its economic development, but also endeavored to strike a balance between energy utilization and environmental protection." http://english.sina.com/china/2008/1014/191774.html

October 14: China and Russia will further promote trade and economic cooperation while bilateral trade volume is expected to exceed $50 billion in 2008. Chinese Minister of Commerce Chen Deming and his Russian counterpart Elvira Nabiullina said China and Russia will carry out a series of big projects in fields such as civil aviation, space exploration, and energy machinery. http://news.xinhuanet.com/english/2008-10/14/content_10194468.htm

October 14: Trade union leaders of China and several African countries met in Beijing, and the two sides expressed the hope to further advance their cooperation. Wang Zhaoguo, chairman of the All-China Federation of Trade Unions said "The trade unions of China and African countries are trusty good friends and partners. The China visits are believed to further promote an in-depth development of our relations." http://english.people.com.cn/90001/90776/90883/6514950.html

October 14: Chinese Vice Foreign Minister Liu Jieyi said leaders from Asia and Europe will discuss the global financial crisis at the Asia-Europe Meeting in Beijing. The meeting will be attended by 38 heads of state from European and Asian countries. The meeting will be held October 24-25. They will discuss how to deepen cooperation to restore investor confidence following the recent financial turmoil. Global warming and energy and food security will also be discussed. http://online.wsj.com/article/BT-CO-20081014-702742-search.html? KEYWORDS=China&COLLECTION=autowire/6month

National People's Congress October 15: Hong Kong Special Administrative Region Chief Executive Donald Tsang delivered the 2008-09 Policy Address at the Legislative Council, outlining the HKSAR government's policy direction in 2009. Tsang focused on the current global financial crisis while responded to other challenges such as food safety in his one and half hour policy address titled "Embracing New Challenges." http://news.xinhuanet.com/english/2008-10/15/content_10197465.htm

October 15: Hong Kong Special Administrative Region Chief Executive Donald Tsang said that the HKSAR government will proceed with the legislative work on a statutory minimum wage. Tsang said the HKSAR government is inclined to go for an across-the- board statutory minimum wage and aim to introduce a bill into the Council in the 2008-09 legislative session. http://news.xinhuanet.com/english/2008-10/15/content_10198219.htm

October 15: Hong Kong Special Administrative Region Chief Executive Donald Tsang announced that to better ensure food safety, the SAR government has been working on a comprehensive Food Safety Bill for introduction in the current legislative session. Tsang said the recent milk product incidents have highlighted the inadequacies of existing laws and the need to speed up the legislative work. http://news.xinhuanet.com/english/2008-10/15/content_10198137.htm

Economy October 14: China reaffirmed its resolve to keep its economy on track amid the global financial turmoil. In a meeting with visiting US Senator Chuck Hagel, Vice Premier Wang Qishan said the financial crisis, triggered by the US credit crunch, had exerted a grave impact on the global financial market. Wang said China would make great efforts to keep its economy on the right track, which would be the country's greatest contribution to the world. http://www.chinadaily.com.cn/china/2008-10/14/content_7105756.htm

October 14: China has not yet changed to a consumption-based growth mode. China among countries more resilient to slowing US demand, could increase domestic spending to compensate for lower external demand slowing external demand might hit corporate profits enough to exposure financial vulnerabilities hidden until now. http://www.rgemonitor.com/26/China

Foreign Investments October 15: China's foreign exchange reserves surged 32.92 percent from a year earlier to hit $ 1.9056 trillion by the end of September. In the first nine months of 2008, the foreign-exchange reserves increased by $377.3 billion, a year-on-year increase of $10 billion, or an average monthly rise of $41.9 billion which was higher than $38.5 billion in 2007. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18142

October 15: Capital flows into China have slowed sharply and even reversed in recent months, according to official data that reflect how the financial crisis has disheartened investors and disrupted banks in this fast-growing nation. The inflow shift is part of the dramatic turnaround in China's economic situation in the past few months. http://online.wsj.com/article/SB122400533456933005-search.html? KEYWORDS=China&COLLECTION=wsjie/6month

October 14: Anshan Iron and Steel Group, parent of Angang Steel Company Limited, has acquired 60 percent stake in Italian steel service center Vigano. The acquisition will give the Chinese company its first overseas steel processing center and further extend to the downstream steel industry. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18122

October 14: Reserve accumulation was $21 billion in September alone, indicating that capital outflows partly offset the more than $30 billion trade surplus and FDI inflows. Chinese central bank buys most capital inflows, adding to its reserves. USD rally against Euro and pound not only reduced the value of the SAFE's stock of those assets and allowed Chinese authorities to slow appreciation pace. http://www.rgemonitor.com/26/China

Food/Consumer Product Safety Issues October 15: China sought to reassure Taiwanese consumers that its dairy products were safe, a day after authorities confirmed that a baby in Hong Kong developed kidney stones from consuming milk and cookies laced with melamine. Spokesman Yang Yi of China's Taiwan Affairs Office said that "China has launched a thorough investigation into this issue to help restore the trust of Taiwanese consumers. http://www.washingtonpost.com/wp- dyn/content/article/2008/10/15/AR2008101500208.html

October 15: The Chinese government ordered a recall of all milk products produced before September 14 those are still on the shelves so the products can be tested for the toxic chemical melamine. The government said if the recalled products meet the new standards, they will be put back on the market. http://www.nytimes.com/2008/10/15/world/asia/15china.html?_r=1&oref=slogin http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aT2_n0NHHK4I http://online.wsj.com/article/SB122400743889833079-search.html? KEYWORDS=China&COLLECTION=wsjie/6month

Energy & Environment October 15: Huaneng Power International Incorporation, China's largest publicly traded power company, has been approved by the regulator to build a coal-fired power plant in Jiangsu province. The plant, with a total investment of about $755.3 million, is designed to have an annual capacity of 1,000 megawatt. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18144

October 15: China's fuel-demand growth may ease to an average 4 percent in the next two to three months as slowing economy cuts consumption. Fuel consumption growth may also fall because of higher domestic gasoline and diesel prices. Fuel demand has climbed by about 5.5 percent in the first eight months from 2007. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXUqDa8kSYHE

October 15: Center for China International Nuclear Fusion Energy Plan was established recently in the Ministry of Science and Technology. This center headed by Academician Cheng Jinpei will focus on the implementation of International Thermonuclear Experimental Reactor plan (ITER plan). http://english.people.com.cn/90001/90776/90881/6515510.html

October 14: Datang International Power Generation Company Limited, China's second largest publicly traded electricity producer, announced its power output, including its subsidiaries and affiliates, rose 11.3 percent in the first nine months of 2008, to hit 96.38 billion kilowatt hours (kWh). http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18124

October 14: China Petroleum and Chemical Corporation (Sinopec Group), parent of Sinopec, will launch an integrated refinery and petrochemical project in Shanghai. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18121

October 14: China will speed up the enhancement of its power grid to better prepare against the looming winter, as the specter of devastating snowstorms the country experienced earlier 2008 still lingers. Zhang Guobao, vice director of the National Development and Reform Commission, said faced with increasing natural disasters, such as the severe snowstorms and earthquakes, greater challenges were imposed on the safety and stability of the power system. http://english.people.com.cn/90001/90776/90882/6514957.html

Insurance & Finance October 15: Aluminum Corporation of China Company Limited plans to issue up to $1.46 billion corporate bonds. The maturity of the bonds will be not more than 10 years. The yield will be determined during the process of book building. Proceeds from the bond issuance will be used to optimize the company's debt structure and replenish working capital. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18149

October 15: China's Central Huijin Investment Company Limited, a wholly-owned subsidiary of the country's sovereign wealth fund China Investment Corporation, will continue to increase its shareholding in China's three leading commercial banks, Industrial and Commercial Bank of China, Bank of China and China Construction Bank Corporation within the next 12 months. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18146

October 15: China, the world's biggest railway operator, will push ahead with plans to sell shares in state- owned train companies even after a 64 percent slump in the mainland stock market in 2008. Wang Yongping, a Ministry of Railways spokesman said that it will sell shares once conditions are ripe. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaolpLxEl6tE

October 15: The People's Bank of China (PBOC) has sold $8.78 billion one-year bills with a coupon rate of 3.7022 percent in the regular open-market operations. The central bank might further cut interest rates, as the yield of one-year bills, regarded as an interest rate indicator, tumbled 20.4 basis points from 3.9069 percent. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18141

October 14: This East Asian financial center Hong Kong became the first in the region to fully guarantee all bank deposits and announced a new facility to provide capital to banks. The moves, aimed at restoring confidence to the rattled local market, mirror similar deposit guarantees made recently in Ireland, Germany, Australia, the United Arab Emirates and other countries. http://online.wsj.com/article/SB122398159696132309-search.html? KEYWORDS=China&COLLECTION=wsjie/6month

October 14: Wuhan General Group (China) Incorporation raised around $1 million in gross proceeds from the exercise of a portion of the company's Series J warrants. The Chinese company said the warrant holder exercised part of its Series J warrant for 429,185 shares of its Series B convertible preferred stock, which is convertible on a one- to-one basis for the company's common stock. http://online.wsj.com/article/BT-CO-20081014-712881-search.html? KEYWORDS=China&COLLECTION=autowire/6month

October 14: The investment volume in China's venture capital market reaches $ 1.026 billion in the third quarter, up by 51.8 percent compared with the second quarter, down by 6.8 percent compared with the same period of 2007. http://news.alibaba.com/article/detail/china/100012702-1-china-venture-capital-investment- hits.html

October 14: Agricultural Development Bank of China plans to issue up to $2.2 billion worth of 10-year bonds on October 24, 2008. It will sell the bonds on the interbank market. Agricultural Development Bank is one of China's three policy lenders. http://online.wsj.com/article/BT-CO-20081014-718497-search.html? KEYWORDS=China&COLLECTION=autowire/6month

October 14: China's government says state-owned enterprises (SOEs) should exercise prudence when investing in 2009 to prevent financial crisis as the global economy teeters on the brink of collapse. The State-owned Assets Supervision and Administration Commission (SASAC) made the request in a circular issued. It's the first time SOEs have been asked to be cautious about investment budgets in stock markets and futures markets. http://news.xinhuanet.com/english/2008-10/14/content_10193773.htm

October 14: PCCW Limited Chairman Richard Li and China Netcom Group Corporation (Hong Kong) Limited, the second-biggest shareholder of PCCW, plan to take the dominant fixed-line operator in Hong Kong private. A proposal from Li and China Netcom was expected to be tabled at an emergency board meeting later October 15. HSBC Holdings PLC (HBC) is arranging the financing for the planned buyout. http://online.wsj.com/article/BT-CO-20081014-718244-search.html? KEYWORDS=China&COLLECTION=autowire/6month

October 14: China's Ministry of Finance plans to auction $3.52 billion worth of 30-year fixed-rate bonds on October 22, 2008. The bonds will be traded on the interbank market and the Shanghai Stock Exchange from October 31. http://online.wsj.com/article/BT-CO-20081014-717967-search.html? KEYWORDS=China&COLLECTION=autowire/6month

Internet October 15: About 84.5 million Chinese were using their mobile phone to log onto the Internet, which accounted for nearly 30 percent of the country's total netizens. Yang Zemin, director of the Telecom Research Institute under the Ministry of Industry and Information Technology, said China registered 68.7 million new cell phone users in the first eight months, which brought country's mobile phone user population to about 616 million. http://www.chinadaily.com.cn/china/2008-10/15/content_7108039.htm

October 14: A sampling survey released revealed about 85.6 percent of Chinese minors between nine and 16 were Internet users. The survey found about 90 percent of minors living in cities had used the Internet, while the proportion in urban areas was 70 percent. http://www.chinadaily.com.cn/china/2008-10/14/content_7105612.htm

Defense & Exports Control October 14: Chinese Defense Minister Liang Guanglie pledged to increase military cooperation with Ecuador. Liang, also a State Councilor, made the remarks during his talk with Ecuador Minister of Defense Javier Ponce. Hailing the smooth growth of Sino- Ecuadorian relations, Liang said to enhance cooperation accorded with the fundamental interests of the two peoples. http://english.people.com.cn/90001/90776/90883/6514994.html

Cross - Straits October 15: Hong Kong's Chief Executive Donald Tsang said Hong Kong will introduce two new measures in January 2009 to provide greater convenience for frequent business visitors and tourists from Taiwan. The Immigration Department of the HKSAR government will remove the restriction that limits a person to two iPermit applications within each 30- day period, and extend the limit of stay in Hong Kong from 14 days to 30 days for holders of iPermits and multiple-entry permits. http://news.xinhuanet.com/english/2008-10/15/content_10198219.htm

October 15: More than 4,000 people from the mainland traveled to Taiwan during the National Day holiday. That's twice as many when compared to the 2007 holiday. State Council Taiwan Affairs Office Spokesman Yang Yi said "The average daily number of mainland tourists to Taiwan was 270 before the Golden Week." "The number reached 576 a day between September 29 and October 05." http://news.xinhuanet.com/english/2008-10/15/content_10197827.htm

General News October 15: Chinese researchers said that China should help fund the bailout of the US financial system to protect the value of the Asian nation's dollar assets and sustain export demand. Guo Tianyong and Guo Hongjian of the Central University of Finance and Economics said without assistance, the US may print more dollars, which would spur inflation and diminish the value of Chinese-owned US assets. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUj8n85O1pt8

October 15: The National Basketball Association (NBA) and Germany-based AEG, a unit of Anschutz Company, are mulling building at least 12 facilities in China to pave the way for an NBA-branded league in the country. The 19,000-seat arenas are likely to be situated in major Chinese cities, including Shanghai, Guangzhou and Shenzhen. http://www.chinaknowledge.com/News/news-detail.aspx?type=1&id=18148

October 15: A Chinese company best-known for making cellphone batteries says it is on the verge of launching the country's first mass-produced electric car and may also have lined up its first large purchase order. BYD Company Chairman Wang Chuanfu said the car, known as the F3DM, will be on sale in China by the end of November 2008, pending government approval. http://online.wsj.com/article/SB122404344374235725-search.html? KEYWORDS=China&COLLECTION=wsjie/6month

October 15: The State Reserve Bureau in China, the world's largest consumer of metals, may increase stockpiles of copper by as much as 74 percent in the next two years after prices plunged to a 33-month low. The SRB might now hold some 1.15 million tons of copper and might want to re-stock to a level above 2 million tons over the next two years when the opportunity arises. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al2z5dC2ZArE

October 15: Report lays out 'massive' subsidies given to Chinese steel industry. http://www.chinatradeextra.com/

October 15: Global miner Rio Tinto warned of slowing Chinese demand for commodities because of the global financial crisis, and signaled a possible delay in plans to sell $10 billion in assets. "In the near term, the Chinese economy is pausing for breath. China is not completely insulated from an OECD recession and we will see an impact on Chinese exports," Albanese said, adding any upturn in China's net demand would not occur before 2009. http://www.washingtonpost.com/wp- dyn/content/article/2008/10/15/AR2008101500317.html

October 14: Hong Kong's High Court approved the proposed merger between China Unicom Limited and China Netcom Group Corporation (Hong Kong) Limited. The companies said in a joint statement the merger will take effect on October 15, and China Netcom will be delisted from the Hong Kong stock exchange. http://online.wsj.com/article/BT-CO-20081014-702649-search.html? KEYWORDS=China&COLLECTION=autowire/6month ======This message and its contents are intended solely for the use of the Asia Task Force addressee. If you have received this message in error, please notify the sender immediately.

Prepared by: PSi, Inc., 9 East 38th Street, 12th Floor, New York, NY 10016. [email protected]

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