SCI to hit 8,000 points, “doom monger” predicts
Marc Faber, an investor and “disaster predictor” known for several unexpectedly correct predictions, thinks China’s stock market may surge to 8,000 points, Shanghai Securities News reported. Faber, the manager of an asset management company worth US$300 million, is considered a “doomsday doctor” by many, having made pessimistic forecasts before Japan’s stock market bubble burst and the Asian financial crisis hit in the 1990s. However, he is tolerant of China’s stock market. “The asset bubble that happened in the 1990s was a result of an accumulated 10-50 times growth in gold, silver and oil prices, but China’s stock market has just bounced back by three times from its record low,” he told the newspaper. “Therefore, although I’m pretty sure the stock market has a bubble, it doesn’t mean the stock market won’t double its current size.” The Shanghai Composite Index closed up yesterday at 4,173 points.

Tariffs changed to chase balanced trade
China will levy additional export taxes and slash import duties from June 1 in an effort to cut its trade surplus, the China Daily reported. The Ministry of Finance said the extra export taxes will be imposed on 142 energy-consuming, highly polluting and resource-intensive products. For instance, the export taxes levied on over 80 steel products will be raised by between 5% and 10%. Import taxes on construction materials, electronics, kitchenware and infant food will be lowered by between 6% and 17%, and taxes on components for TVs, refrigerators and machinery will be levied at between 2% and 6%. China’s soaring trade surplus is a sticking point in the ongoing second round of the strategic economic dialogue with the US. The tariff adjustment is China’s latest attempt to ease concerns over its trade surplus by optimizing exports and encouraging imports and domestic consumption.

China not US to set pace on financial reform, prof says
Zhao Xijun, a professor at the China People’s University, told China Economy that China would not bow to US pressure on financial reform. His coments came during the ongoing second round of the strategic economic dialogue between China and the US, which is focusing on the issue. “China’s financial reform will be done gradually and in line with the commitments it made on accession to the WTO,” Zhao said. “It’s subject to China’s own conditions rather than any pressure from the US.” According to Zhao, China did not promise the WTO it would fully open its financial market. What it promised was to gradually open the market in five years, but with a foreign ownership cap of 49%. Professor Zhao added that US pressure to make the yuan fully convertible would also be unlikely to have any effect on the Chinese government. “China has reiterated it would further deregulate the exchange rate but the US government had better not expect that the rate will be revalued at a faster pace, or even turned into a floating exchange rate overnight,” he said.

China may cut second-hand car auction tax
Government officials said value-added taxes on second-hand car auction firms could be cut to boost the used-vehicle market, China Auto News reported. The current tax rate of 4% for used-vehicle auction firms could even be completely scrapped, they said. The lowered tax is aimed at boosting trading of second-hand vehicles in the world’s second-largest auto market. More than 1.9 million used cars were traded in China last year, up 31.5% from 2005. Growth was 6.37 percentage points higher than that for new vehicles sales, and marked the third consecutive year that used-vehicles sales outpaced those of new vehicles. The market grew a further 12.5% to 225,000 units in the first two months of this year, lead by Shanghai and Beijing. China has allowed foreign companies, such as US-based Manheim Auto Auction Corp, and private investors to enter the used-vehicle market, diversifying the operator base to meet growing demand and boost the markets development.

Shanghai unions focus on foreign firms
The Shanghai Trade Union said that the government has targeted the percentage of foreign-funded firms with trade unions to exceed 80% by the end of this year, according to a report carried on online.sh.cn. By the end of March this year, 9,063 of the 11,600-plus foreign-funded firms in the city had established trade unions – a threefold increase from 2003. “Trade unions are can be a double-edged sword,” a manager at a Japanese company said. “On the one hand, employees are looked after through their contracts and hence will work harder; on the other, obviously, they have more bargaining power, which the employer tends not to see.”

Nuclear deal imminent
Talks over bringing third-generation nuclear power technology into China with US-based Westinghouse Electric are entering their final stages, the State Nuclear Power Technology Co said yesterday. Company chairman Wang Binghua told eastday.com that conditions for a possible contract with America’s biggest nuclear power builder will be “mature” next month. The State Nuclear Power Technology Co, managed by the central government, is financed by the State Council, China Power Investment Corp, China Nuclear & Construction Group, China Guangdong Nuclear Holding Co and the National Technical Import & Export Co. China now has 10 nuclear reactors in use or under construction and plans to spend more than US$50 billion to build another 30 nuclear reactors by 2020 as a key part of its plans for clean energy development. Westinghouse is to supply reactors for power plants in the eastern cities of Sanmen in Zhejiang province and Haiyang in Shandong province.

Hotel, catering retail sales up 18%
China’s retail sales in the hotel and catering sectors surged 17.6% year-on-year to US$50.7 billion in the first four months of 2007, 21st Century Business Herald reported. The sectors accounted for 13.9% of total retail sales in China over this period, Ministry of Commerce figures showed. Analysts said the high sales growth came as higher incomes prompted more people to travel and eat out. The commerce ministry also said the number of newly-approved foreign-funded hotels and catering projects dropped 26% year-on-year to 248 in the first four months. Contracted foreign investments dipped 28.2% year-on-year to US$650 million, while foreign funds actually used climbed 5.6% to US$240 billion.

Ice bar hints at entertainment opportunities
Shanghai residents will soon have a new way to cool down this summer – visiting an ice bar. A 40-ton ice crystal has been transported to Shanghai from the Torne River in northern Sweden, Xinmin Evening News reported. Workers will carve out all the interior fittings, furniture and artworks from the giant block, according to Absolute Icebar Shanghai. A team of Icebar designers have also arrived in Shanghai and will work on the ice before it opens in downtown Huaihai Zhong Road late next month. The project highlights for foreign investors the potential for bringing exotic entertainment to the world’s fastest-expanding economy and especially to its largest and most advanced city, Shanghai.

Hukou system set for change
China’s hukou (literally household registration) system is to be gradually reformed, China Daily reported. New policies allowing freer migration between urban and rural areas are currently being studied, the Ministry of Public Security said. China’s hukou system was set up in 1958 to control population migration from rural to urban areas. It involves a two-tier system, which divides the population into urban and rural residents. Even in urban areas, the hukou differs between different cities, with a hukou for large cities like Shanghai, Beijing, or Guangzhou being most coveted. Under the current system, rural dwellers have little opportunity to change their registered residency, regardless of how long they may have lived or worked in a city, and hence are not entitled to higher social welfare benefits. Once the system is scraped, or a less strict replacement enacted, the cities could receive a huge influx of labor..