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China’s Ministry of Finance is to end tariff exemptions on 192 types of equipment imported for use in Chinese-invested projects from March 1.

The list of equipment to lose tariff-free status includes general machinery, smelting and mining machinery, packing materials and electronic devices, the ministry announced on Monday.

The change will apply to Chinese-funded projects approved after March 1. Those approved before March 1 can maintain the tariff-free status on imports until January 1, 2008.

Meanwhile, the tariff-free policy on equipment used in foreign-funded projects, which includes 20 items such as cars and electronic office fittings, will be maintained.

The ministry said the move would create a fair environment for domestic equipment makers to compete with foreign rivals through innovation.

The tariff-exemption policy on equipment used in projects where domestic and foreign investment was encouraged began in 1998, but 580 types of equipment for use in Chinese-invested projects and 20 types for foreign-funded ones were excluded in order to protect domestic industries.

Chinese enterprises have been suggesting that more types of equipment be removed from the list, as the country has been able to develop more equipment with higher technological standards and the old threshold for import tariff exemption was hurting domestic producers.

The government shortened the list of tariff-free equipment imported for Chinese-invested projects for the first time in 2000, but has kept that for foreign-invested projects unchanged.

Experts say while China gave foreign investors tariff benefits to address a lack of investment after the Asian financial crisis, they were less necessary now the country had seen an improving investing environment after joining the World Trade Organization.

A unified tariff policy on equipment import for domestic and foreign investors will effectively boost the country’s own equipment manufacturing industry, experts say.

Shanghai on Monday launched a major energy supply project that will transmit liquefied natural gas (LNG) from Malaysia to the east China economic hub over 25 years.

Construction started on Monday on the first phase of the Shanghai LNG project, which would become operational in 2009, Shanghai Mayor Han Zheng announced on Monday.

Shanghai LNG Co. Ltd. reached a deal with a subsidiary of Petronas, Malaysia’s national petroleum corporation, on July 31, under which the terminal will receive LNG from Malaysia from 2009.

The project was approved by National Development and Reform Commission in December.

The annual supply will be around 1.1 million tons in the first three years and rise to 3 million tons from 2012.

The Shanghai terminal will be located in the Yangshan deep-water port, an international shipping center in Shengsi County in neighboring Zhejiang Province, at the mouth of the Yangtze River, about 45 km from the Pudong International Airport.

The first phase involves a total investment of 7 billion yuan (900 million U.S. dollars) and includes three 165,000-ton concrete tanks and a dock that can anchor ships from 80,000 to 200,000 cubic meters.

Sources with the Shanghai LNG Co. Ltd. said the second phase of the project was designed to increase import capacity by another 3 million tons a year, but no detailed timetable was available.

The project, along with China’s west-to-east gas pipeline and the East China Sea gas project, is expected to help meet Shanghai’s energy demands, improve energy efficiency and cut emissions, said a spokesman with the National Development and Reform Commission.

The deal is the largest trade contract between China and Malaysia.

Petronas company draws its natural gas supplies from the Bintulu region, one of the world’s largest LNG production bases in eastern Malaysia. It boasts an annual output of 23 million tons and supplies mainly to countries like Japan and the Republic of Korea.

China will restrict its coal production to 2.6 billion tons in 2010 to maintain equilibrium with demand, the country’s top industry planner said yesterday.
Last year, coal output was 2.33 billion tons against a demand of about 2.25 billion tons.
Large-scale mines will be the favored suppliers for future demand, the National Development and Reform Commission said yesterday.

Power and steel companies will be the key sectors driving domestic demand over the next few years, along with the fledgling coal-chemical industry, the commission said in a five-year planning report.

“The key mission during the period is to control output, form big players, consolidate small and medium-sized suppliers and eliminate those with low recovery rates and potential dangers,” the commission said.

Reaffirming that coal will remain the country’s primary energy source, the commission said that China will add output of good-quality coal to help reduce pollution and boost its extraction technology.

“This could lead the domestic industry toward a more environmentally friendly future and contribute to a conservation-oriented society,” the planners said.

The commission said it will speed efforts to crack down on small mines to curb overcapacity and improve work safety.

Small mines have played a large part in China’s growing number of deaths and injuries over the past few years, experts said.

Some were built without permission or resumed operations after being closed for safety reasons.

The commission said it will allow no more than 700 million tons of coal to come from small mines in 2010. In 2005, the figure was 1.08 billion tons.

By 2010, China intends to form six to eight large-scale coal producers, each with annual capacity to produce more than 100 million tons.

China’s imports and exports of diamonds hit a record high of 610 million U.S. dollars in 2006, jumping 44.4 percent year on year.

The Shanghai Diamond Exchange revealed the figure in its latest report, attributing the surge to the country’s tax cut on diamond imports last year. The figure excludes volumes for the processing trade.

On July 1, 2006, China scrapped value added tax on imported rough diamonds, and lowered the tax rate on imported refined diamonds from 17 percent to 4 percent.

In the latter half of 2006, China’s refined diamond imports jumped 194 percent year on year to 147 million U.S. dollars, according to the Shanghai Diamond Exchange.

The bourse is now the only channel by which commonly-traded diamonds can legally flow in and out of China.

In 2006, the Shanghai Diamond Exchange collected value added tax of 131 million yuan (16.8 million U.S. dollars) on imported diamonds, slightly lower than that in 2005, figures show.

Retail giant Carrefour plans to open 20 new branches in China this year with an investment of about 150 million euros, said Eric Legros, newly-appointed president of Carrefour China.

Carrefour will continue to regard metropolises such as Beijing and Shanghai as the focus of its expansion in China. Meanwhile, it will quicken development in China’s medium and small-sized cities, Legros said in an interview.

It will open more branches in northeast and northwest China, according to Legros.

Carrefour entered China in 1995 and had 92 branches in the country at the end of 2006.

Carrefour currently has no plans to acquire local retailers in China, and will not compete with other rivals in terms of the number of stores, said Legros.

U.S.-based Wal-Mart, Carrefour’s global rival, has now set up 73 stores in China, and plans to open another 50 stores this year.

SHANGHAI: Former Shanghai real estate tycoon Zhou Zhengyi has been charged with bribery and forging VAT receipts, just months after completing a three-year prison sentence, local authorities said yesterday.

They gave no other details of the charges against Zhou, also known as Chau Ching-ngai.

Zhou was released from prison in May after completing a three-year sentence for fraud and manipulating the stock market.

But five months later, in October, Zhou was again taken into custody as prosecutors found new evidence against him. He was formally arrested by the municipal procuratorate yesterday.

Zhou, 45, who started business as a teenager with a wonton noodle shop, was one of China’s richest business people, with a fortune estimated by business magazine Forbes in 2002 at $320 million, ranking him No 11 on Forbes’ list of 100 richest mainlanders.

He was the majority shareholder of Hong Kong-listed Shanghai Land Holdings and Shanghai Merchants Holdings.

The authorities have not said whether Zhou’s case is linked to a sweeping corruption investigation in Shanghai that has led to the ouster of the city’s Party chief Chen Liangyu. Other Shanghai officials have also been detained.

The head of a jail where Zhou was imprisoned is also being investigated for taking bribes in exchange for giving him preferential treatment

Huang Jian, head of the Shanghai Detention Center, was reportedly detained at the end of December after being accused of accepting 490,000 yuan ($63,000) and jewelry to allow Zhou access to a cell phone and better meals.

Zhou also has been the target of lawsuits by Shanghai residents who say he failed to compensate them adequately for homes that were demolished in a redevelopment project.

Zhou’s wife Mao Yuping was sentenced to 32 months in prison in April last year by a Hong Kong court on charges of conspiracy to defraud letters of credits worth HK$49 million ($6.3 million).

A steel company in north China’s Shanxi Province has been fined 185 million yuan (23.7 million U.S. dollars) for tax evasion and 11 employees have received prison sentences ranging from two to eleven years, according to the local court.

Shanxi Yujin Iron & Steel Co., controlled by steel giant Shougang Group, was accused of making up fake sales invoices for scrap steel in order to evade 182 million yuan (23.3 million U.S. dollars) of taxes from January 2002 to March 2005, according to Linfen Intermediate People’s Court.

The company was fined 185 million yuan, according to the court.

Wang Mingshan, manager of supply and marketing and chief organizer of the tax evasion, was sentenced to 11 years in jail after he delivered himself to the police and paid 200,000 yuan (25,641 U.S. dollars) in fines.

Six others were given suspended sentences besides the 11 sentenced to jail, according to the court.

Founded in October 2001, Shanxi Yujin Iron & Steel Co. now has a yearly production capacity of one million tons of iron and two million tons of steel.

The Beijing-based Shougang group signed a strategic cooperation agreement with Linfen City on November 19, 2004 and bought 51 percent shares of Shanxi Yujin Iron & Steel Co. Ltd.

The company was encouraged to expand its presence in Africa following the China-Africa Cooperation Forum last November, which was the largest gathering of Chinese and African leaders in history.

The construction of the industrial zone in which the new Hisense plant will be built is to be completed by the end of 2009, the company said.

Ninety percent of Hisense’s employees in South Africa are locals, who now produced 200,000 color TVs per year.

Since the Hisense Group launched its first production line in South Africa in 1997, its operations there have maintained annual production, sales and profit growth averaging 20-30 percent.

In 2006, the South Africa branch of Hisense registered sales income of 47 million U.S. dollars, with profit of 1.26 million dollars.

The company was encouraged to expand its presence in Africa following the China-Africa Cooperation Forum last November, which was the largest gathering of Chinese and African leaders in history.

The construction of the industrial zone in which the new Hisense plant will be built is to be completed by the end of 2009, the company said.

Ninety percent of Hisense’s employees in South Africa are locals, who now produced 200,000 color TVs per year.

Since the Hisense Group launched its first production line in South Africa in 1997, its operations there have maintained annual production, sales and profit growth averaging 20-30 percent.

In 2006, the South Africa branch of Hisense registered sales income of 47 million U.S. dollars, with profit of 1.26 million dollars.

The Industrial Bank has announced that shares in its initial public offering (IPO) will be priced between 15 to 15.98 yuan.

The company has been approved by the Securities Regulatory Commission to issue 1.001 billion Renminbi-denominated A-shares on the Shanghai Stock Exchange, which means the bank will raise at least 15 billion.

About 29.97 percent or 300 million shares will go to strategic investors. Another 300.3 million shares or 30 percent are available to off-line subscribers, with the on-line public offering involving 400.7 million shares. Subscription will start on Monday morning.

The Industrial Bank said funds raised from the IPO will be used to boost its capital adequacy ratio, strengthen its risk-prevention capability and profitability and support its business development.

The Industrial Bank, headquartered in Fuzhou, capital of east China’s Fujian province, is a joint venture controlled by the provincial government. The Hang Seng Bank owns nearly 16 percent of its shares.

The Bank, which used to be called the Fujian Industrial Bank, was founded in 1998. At the end of June 2006, its capital adequacy ratio stood at 7.17 percent, lower than the eight percent set by the China Banking Regulatory Commission.

BOC International (China) Limited will be the lead underwriter for the IPO — the largest IPO by a company in Fujian.

Nine other commercial banks have already gone public on either home or overseas bourses, including Bank of China, Industrial and Commercial Bank of China and China Construction Bank.

Unlike the “big four” state-owned commercial banks, the Industrial Bank — the country’s tenth-ranking commercial bank — is still developing. In the last three years, the bank has branched into derivative products, asset trusteeship, and investment banking.

Its compound annual growth rate of capital, deposits and loans are all above average. The company reported net income of 14.34 billion yuan in 2003, 17.66 billion yuan in 2004, and 24.65 billion yuan in 2005. Its compound annual growth rate reached 31.11 percent.

By the end of 2006, the bank’s total assets exceeded 532.6 billion yuan, and it realized a net profit of 1.746 billion yuan during the first 6 months of 2006, earning 0.44 yuan per share.

Capital assets cannot keep up with business expansion, and so a public listing is needed, said the company.

China saw a number of banks list on both domestic and foreign markets last year. The Bank of China, which issued A shares, and Industrial and Commercial Bank of China, which issued A and H shares, quickly became major blue chips on the domestic securities market.

The Industrial and Commercial Bank of China has also become the largest listed bank in Asia and the fifth largest listed bank in the world.

China’s consumer price index (CPI),a major inflation indicator, could jump by 3 percent this year or double last year’s CPI increase, said Wang Jian, secretary-general of the Chinese Academy of Macro-Economy.

Inflation control will be a major priority of the government, Wang said in an interview, adding that a CPI increase beyond three percent can’t be ruled out.

The recent hikes in grain prices are sure to cause the CPI to rise, he said.

Despite bumper crops last year the price of wheat, corn and soybean, have been on the rise since November 2006, due to increasing prices on international markets. The Chinese government released some of its national stockpiles in an attempt to offset price jumps, but they have still risen beyond the government’s target level.

In the first 11 months of 2006, China’s CPI rose 1.3 percent over the same 2005 period, but in November it rose 1.9 percent compared to the same month in the previous year. It was the highest monthly rise of the year.

Some economists predicted the December’s CPI would jump to 2.5 percent due to rising cost of food, which is a major component of the CPI.

While maintaining a GDP growth rate of around 10 percent annually over the past number of years, China has controlled inflation at a fairly low level. The CPI in 2005 rose by 1.8 percent.