Overseas-invested businesses operating in Shanghai have been faring slightly worse in terms of foreign trade growth compared to the city’s average foreign trade growth in 2008.

A spokesman for the Shanghai Municipal Commission of Commerce said the slowdown in foreign trade began six months ago and the downturn would continue in the last quarter of the year. He cited the adverse impact of the global financial meltdown as the cause.

According to commission statistics, businesses financed with overseas money, which contribute to two-thirds of Shanghai’s foreign trade, did 186.28 billion US dollars worth of foreign trade in the first 10 months of the year, up 19.37 percent year on year.

The growth rate, however, was 0.4 percentage points smaller than the average of foreign trade done by all the other businesses in the city for the same period.

In a breakdown, overseas-invested businesses exported goods worth 95.8 billion US dollars, up 21.82 percent. The growth rate was 0.8 percentage points less than the average growth rate of exports from all companies in the city.

Overseas-backed ventures imported 90.48 billion US dollars worth of goods in the past 10 months. That’s up 16.88 percent from one year ago, which is the same average import growth of all the businesses in the city.

As of late October, more than 50,000 overseas-backed ventures had been approved for establishment in Shanghai. That results in 80 billion US dollars worth of overseas direct investment.

China Levels Field with Fixed Fee for Messages

China will set 0.10 yuan (1.5 US cents) as a uniform fee for short messages nationwide in 2009, its telecommunications regulator said on December 3.

The move helps to establish a fair and open telecommunications market, industry insiders said. China has more than 627 million mobile phone users, ranking it No.1 in the world,

China will cancel the different mobile short message fee packages among telecom carriers from January 1, 2009. The uniform price for short messages will take effect on January 15, the Ministry of Industry and Information Technology said.

Starting in December, telecom carriers, including China Mobile and China Unicom, will be asked to cancel all new packages with varying mobile message charges, according to the ministry.

Under the different fee packages, China Unicom’s users are charged 50 percent more if they send short messages to subscribers of China Mobile, the country’s No.1 telco, and vice versa.

“The current packages limit the rights of consumers to choose the carriers and it’s not suitable now,” said Yang Peifang, an engineer at China Academy of Telecommunication Research, which is under the ministry.

Relatively small carriers, like China Unicom and China Telecom, will benefit from the policy, industry insiders said.

There are more than 400 million China Mobile users by the end of October, accounting for 70 percent of the market. China Unicom has more than 100 million users. China Telecom, which acquired China Unicom’s CDMA (code division multiple access) network, has only 40 million users.

China started its long-awaited industry reorganization in June which saw China Mobile acquiring China Tietong while China Unicom sold its CDMA business to China Telecom. China Unicom GSM (global system for mobile communications) and other businesses merged with China Netcom.

Other policies to be launched may include adjustment of interconnection charges and national roaming and infrastructure sharing, according to consulting firm Ovum.

“We believe these asymmetric regulations would assist the small mobile operators like China Telecom to compete better against China Mobile,” Ovum said in a recent note.

China’s State Administration of Grain on December 3 said it would buy another 14 million tons of grain to expand temporary state reserves.

The purchase is aimed at stabilizing grain prices and protect farmers’ interests, the agency said. It includes 7.5 million tons of rice, 5 million tons of corn and 1.5 million tons of soybeans.

The agency has earlier announced plans to buy 16.5 million tons of grains as state reserves.

China expects a record-high grain output of 525 million tons in 2008, Du Ying, deputy director of the National Development and Reform Commission (NDRC), said on December 1.

Among other measures to raise farmers’ income and motivate them to increase production, the NDRC, or the top economic planning agency, announced in October that it would raise the minimum purchasing price for wheat and rice in 2009.

Chinese Building-sector SOEs Link up to Weather Financial Turmoil

Sinohydro Corp. said on December 15 that it signed a strategic partnership agreement with the China National Building Material Group Corp., the nation’s largest building materials firm, to work together amid the financial crisis.

The two leading state-owned enterprises (SOEs) will cooperate in the areas of project contracting, investment, real estate development and management.

The move was taken in response to a call by the nation’s SOE regulator, the State-owned Assets Supervision and Administration Commission, for SOEs to cooperate to weather the financial crisis, said Beijing-based water projects company Sinohydro.

The company said “this effort can enhance both sides’ competitiveness and help secure our leading market roles.”

The Guangzhou Development District (GDD), the largest of its kind in China in terms of GDP, will spend 30 billion yuan (USD 4.38 billion) in the coming three years to help thousands of enterprises cope with the global financial crisis.

Xue Xiaofeng, director of the GDD administrative commission, said on December 16 the government spending would trigger another 70-billion-yuan investment from the private sector.

“We are kind of placing orders of 100 billion yuan (USD 14.3 billion) for enterprises in the district. We hope to give them timely assistance when the global financial crisis is still worsening,” Xue said.

Among the GDD’s massive investment, 25 billion yuan (USD 3.6 billion) will be used to improve infrastructure, 2.3 billion yuan (USD 328.6 million) for innovation fostering, one billion yuan (USD 142.9 million) for high-tech development and the rest for human resources, social security and other fields.

The GDD was established in 2002 in Guangzhou, capital of Guangdong Province, and has now 2,600 enterprises with foreign investment and 3,800 domestic enterprises.

In 2007 the district’s GDP grew by 20.18 percent to 94.8 billion yuan (USD 13.5 billion), becoming the country’s largest economic development district in terms of GDP for the fourth straight year.

As a result of the global financial crisis, some enterprises in the GDD have fewer orders from overseas and those engaged in metal metallurgy, one of the district’s six leading industries, made cutbacks, said Xue.

However, Xue said none of the enterprises in the district has gone bankrupt because of the international crisis.

China explained more on fuel con sumption taxes hikes after revealing a seven- to eight-fold increase on gasoline and diesel products a day earlier, part of a reform of fuel taxation and pricing approved along with slashing retail fuel prices.

Consumption tax on naphtha, solvents and lubricant oil would be raised from 0.2 yuan (three US cents) to one yuan per liter, and tax on jet kerosene and fuel oil would rise from 0.1 yuan (1.5 US cents) to 0.8 yuan (12 US cents) per liter, the Ministry of Finance (MOF) and Ministry of Taxation said in a joint statement on December 19, offering more details of the day-earlier announcement.

The National Development and Reform Commission said on December 18 that the country will raise the gasoline consumption tax from the current 0.2 yuan (three US cents) to one yuan (15 us cents)per liter and diesel consumption tax from 0.1 yuan (1.5 US cents) to 0.8 yuan (12 US cents) per liter.

The two ministries also said consumption tax on imported naphtha would be reinstalled, while tax on jet kerosene would be temporarily postponed.

In addition, consumption tax on naphtha produced domestically and used for production of ethylene and aromatic hydrocarbon products would be exempt by the end of 2010, according to the statement. Tax already paid on imported naphtha for the same usages would be returned, it added.

The ministries said the country would exempt consumption tax onethanol gasoline produced with imported and already-taxed domestic oil, and ethanol gasoline produced with domestic gasoline would be taxed for gasoline used in the production only.

The amount of non-cash payments in China in the third quarter declined for the first time, according to a central bank report released December 30, 2008.

The amount of money involved in non-cash payments, including commercial papers and bank cards, was about 157.3 trillion yuan (USD 22.97 trillion) in the third quarter, down 8.3 percent year on year, according to the People’s Bank of China.

The first-ever fall was a proof of a less active economy, as the country saw its third quarter growth slow to 9 percent, the slowest pace in five years.

The central bank said the biggest drop, without giving the exact number, was reported with the use of commercial papers, which are more often used by small and medium-sized enterprises.

Transactions made with bank cards continued to rise, with the amount of money involved up 4.1 percent in the third quarter from the same period in 2007. But the growth rate was 58.8 percentage points lower than the figure in 2007.

The use of bank cards, instead of cash, continued to be more popular among consumers. The report said transactions using bank cards, excluding large commodities like real estate and wholesale purchases, took up 25.7 percent of the country’s total retail sales in the third quarter. The figure was 1.8 % higher than in the second quarter of 2008.

The average spending on each bank card was 592 yuan (USD 86.8) in the third quarter, up 0.7 percent than in the second quarter, and spending for each transaction was 1,435 yuan (USD 210.3), down 8.7 percent than in the second quarter, according to the report.

The report also said the use of credit cards continued to spread quickly despite a slowdown in economic growth. As of the end of the third quarter, more than 130 million credit cards had been issued, representing a year-on-year increase of more than 70 percent.

In the meantime, outstanding credit on these cards reached 891 billion yuan (USD 130.6 billion), up 70.9 percent year on year, and the credit figure was 3.5 times that of the end of third quarter in 2006.

China Q3 Non-cash Payments Fall for First Time, in Line with Economic Slowdown