Airline regulator targets regional expansion
The Civil Aviation Administration of China (CAAC) is developing a regional airport incentive scheme to encourage regional airlines to connect to second and third-tier cities, the Beijing Daily reported. The scheme would also promote the establishment of small and midsize airports in less-developed regions. Key targets for new routes include central and western China, tourist areas, remote areas and areas between regional aviation hubs. The CAAC trialed an incentive scheme with four routes in northwest China in 2006. The number of flights have since doubled on each route, and prices have dropped.

DEM listing plan advances on asset deal
Dongfeng Electrical Machinery (DEM) announced it would issue 367 million shares to its major stakeholder, China Dongfeng Electric Corporation (DEC), and pay the company US$1.94 billion (RMB15.01 billion) for a 68.08% stake in DEC’s Dongfeng Boiler subsidiary and a 100% stake in DEC’s Dongfeng Steam Turbine, Guangzhou Daily reported. In a statement, DEM said the deal, which doubled the company’s asset holdings, was part of the company’s preparation for a public listing of the company’s core assets. The deal still required approval from the State-Owned Assets Supervision and Admission Commission.

CIRC to issue new non-life insurance regs
The China Insurance Regulatory Commission (CIRC) will soon announce new regulations to facilitate the development of non-life investment-oriented insurance products, the China Securities Journal reported. Since being introduced to China in 2000, more than 30 such products have been launched by eight insurers, attracting US$4.25 billion (RMB32.9 billion) in premiums. CIRC said the regulations, which supplement but do not replace existing regulations, would govern all aspects of the industry from product design and development to management and sales. Sun Jianyong, CIRC’s capital operation department head, told the newspaper the regulator also planned to draft regulations covering investment scope, product ratios, risk controls, valuations and information disclosure.

Growth of new funds slows
China Insurance Regulatory Commission (CIRC) data shows the rate of growth of new funds has slowed, the China Securities Journal reported. Only three new funds have been launched since May, all of which were closed-end funds, and there are no funds currently in line for regulatory approval. Industry analysts said the slowdown was a result of recent calls from the regulator for fund agents to minimize their exposure to risk and launch investor education programs. Concerns have risen that unprecedented investor interest is leading to a bubble in mainland markets

SASAC calls for SOE target setting
State-owned enterprises (SOEs) will be asked to lodge business targets with the State-Owned Assets Supervision and Admission Commission (SASAC) for evaluation, the China Securities Journal reported. Zhang Zhonglin, deputy director of SASAC’s planning and development bureau, said core-business planning should look three-years ahead and include clear evaluation criteria. SOEs would be asked to report annually to SASAC on progress towards targets.  Annual targets for non-core businesses would also be required. 141 SOEs have already identified core business areas, and this would serve as the basis for business planning. SASAC evaluation bureau head Zhao Shitang added that SOEs should adopt Economic Value Added (EVA) accounting standards to evaluate operating success. SOEs should begin introducing the standard as a supplementary evaluation index now, he said, and adopt it fully by 2009.