Bank interest tax may be scrapped
China may scrap a 20% interest tax on bank deposits to encourage saving over share speculation, the Shanghai Securities News reported. The official announcement may come if the stock market bounces back from a 16% slump since May 29, which started when the government tripled the stamp duty from 0.1% to 0.3%. Inflation dwarfing the after-tax gains on bank deposits has driven households to the stock market. Former US Federal Reserve Chairman Alan Greenspan warned on May 23 that Chinese stocks may face a “dramatic contraction”. “Scrapping the interest tax may attract money back from the stock market to bank deposits,” a tax researcher said. “Transaction fee increases will remain the government’s first option while interest-tax reform may be an option that follows.” Household bank deposits dipped RMB167.4 billion (US$21.8 billion) in April from March.

IBM, Lehman to take Chinese software stake
IBM and Lehman Brothers Holdings paid US$17 million (HK$132 million) to buy a 7.7% stake in Chinese corporate management software company Kingdee International, the 21st Century Business Herald reported. The deal was the first investment since IBM and Lehman jointly set up a US$180 million venture capital fund aimed at expanding their business in China. Hong Kong-listed Kingdee International is China’s second largest corporate management software developer. The 7.7% stake will shared equally between IBM and Lehman. Thanks to the deal, IBM will obtain domestic distribution channels and Kingdee will obtain capital, advanced experience and outsourced orders from IBM. Kingdee holds over 10% of the market for corporate management software in China, which was worth US$925 million (RMB 7.13 billion) in 2006. Ufida Software is the market leader, holding more than 20% market share.

Anshan Steel buys into Aussie firms
Anshan Iron & Steel Group – one of China’s top steel mills – will buy a 12.94% stake in Australian iron ore producer Gindalbie Metals Ltd for A$39 million, the China Daily reported. The deal will make Anshan – based in northeastern China – the second largest shareholder of the Perth-based iron ore firm. The money will be invested in the two parties’ joint iron ore operations in Western Australia. Overseas iron ore projects owned by Chinese firms now have a combined capacity of less than 40 million tons a year. China’s steel industry – the biggest in the world since 1996 – will depend increasingly on foreign iron ore as a result of growing domestic demand. China’s iron ore imports are predicted to hit 400 million tons in 2007 and 500 million tons in 2010. The majority of iron ore China needs is bought from the world’s top three suppliers - CVRD from Brazil and Australia’s BHP Billiton and Rio Tinto.

Amazon renames Chinese website
Amazon.com renamed its Chinese website Joyo Amazon to strengthen its brand in the world’s second largest Internet market, the China Business News reported. Amazon.com bought Joyo.com for US$75 million in 2004. It has tens of thousands of products online including books, watches, makeup, clothes, kitchenware and electronics. The company said it allows cash-on-delivery payment in more than 330 Chinese cities. One-day delivery is available in Beijing, Shanghai and Guangzhou. Shares of Amazon.com rose 2.7% to US$70.42 and have more than doubled in the past year.

Sinopec Confirms Major Discovery in Xinjiang
China Petroleum & Chemical Corporation – Asia’s top refiner known as Sinopec – has confirmed its oil and gas discovery in the Xinjiang Uygur Autonomous Region, the China Times reported. It was discovered in Block 12 of the Tahe oilfield, which covers 899.5 square km and holds geological reserves of up to 200 million tons of oil (approx 1.47 billion barrels). Sinopec concentrates its exploration in oil- and gas-rich areas, such as Sichuan province and Xinjiang. “Our exploitation is in full swing in northeastern Sichuan. I’m confident that something bigger will come out of it,” said Chen Ge, Sinopec’s secretary. Sinopec’s Puguang gasfield – China’s second largest – in Sichuan boasts a proven exploitable reserve of 356 billion cubic meters. Currently the largest gasfield – the Sulige gasfield in Inner Mongoloia – boasts a proven reserve of almost 534 billion cubic meters.

Performance Fibers announces expansion
Performance Fibers has announced it will expand its tire cord fabric capacity by 30% in the southern city of Kaiping to continue to meet growing demand in Asia, the China Textile News reported. The company will install new advanced equipment and machinery to convert its polyester yarns into treated fabrics used in radial automotive tires. The new capacity is expected to be operational by the third quarter of 2007. The investment by Performance Fibers is the latest in a series of planned growth in, where it has more than tripled capacity since early 2004, including a greenfield expansion in 2006 to expand production of dimensionally stable polyester fiber and fabrics. Performance Fibers is the leading supplier of HMLS polyester fibers in China and was the first industrial polyester tire fibers provider to enter China in 1993.