BEIJING, May 9 – Beijing’s subway system will soon implement security checks by the end of June. According to sources, passengers carrying unidentified beverages will be asked to consume them before entering.

Passengers will be subject to security checks by machines, dogs or police officers at all subway stations. Subway entries have been equipped by Butno security excluding the Dongzhimen station in eastern Beijing along Line 2.

The Beijing subway system is used by millions of people. Last month alone, passenger volume was estimated at 4.3 million passengers a day.

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May 9 – China’s Ministry of Agriculture reported that first quarter trade of agricultural products incurred a deficit of US$3.66 billion in contrast to last year’s surplus of US$460 million for the same period. No explanation was provided by the ministry although sources speculate it could stem from a decrease in grain exports and increasing pork and oilseed imports.

For the first three months of the year, exports reached US$9.35 billion, an increase 9.6 percent year compared to the previous year while imports jumped by 61 percent to US$13.01 billion.

China exported 1.04 million tons of grain for the first quarter, a decrease of 72.8 percent. On the other hand, pork imports almost quadrupled and oilseed imports increased by 36.8 percent from last year.

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May 8 - As Myanmar struggles to respond to a disaster of epic proportions, the ruling military junta is coming under increasingly strident calls by the world community to open the nation’s doors to international aid organizations. This has put the reclusive government in a position it extremely dislikes, having to ask the outside world for help.

“The devastation of Saturday’s cyclone, which took more than 22,000 lives, has forced the junta to soften its pose of self-sufficiency and ask for help from a world it fears and resents,” says the New York Times’ Seth Mydans in a recent analysis for the newspaper. “The government is showing its reluctance now by accepting the aid it requested only slowly, complicating visa procedures for international donors and apparently seeking to limit the access of foreign relief workers.” (more…)

May 8 - The Olympic Flame has reached the world’s tallest mountain. Chinese climbers reached the summit of Mt. Everest this morning, hoisting the flame at 9:18 am Beijing time.

After a turbulent world relay in which protests dogged the torch, and strict measures by both China and neighboring Nepal to bar access to Mt. Everest during throughout the torch’s ascent drew controversy, Cering Wangmo, a 21-year-old Tibetan woman and the youngest member of the expedition, carried the flame atop the peak. (more…)

May 7 - China’s policy group, the State Information Center, predicts that inflation rates could ease to 7.5 percent from 8 percent come the second quarter of the year. It cautions that inflationary pressures will remain due to high grain prices and continued investment.

“Seasonal changes and government measures to boost agricultural supplies may cause consumer prices to slide in the second quarter,” reported the State Information Center. “But inflationary pressure is still mounting because of domestic and international factors.”

In February, the consumer price index (CPI) gained 8.7 percent - the highest gain in 12 years. Fluctuations in food prices account for an estimated one-third of China’s consumer price index. The CPI indicates the average price of consumer goods and services purchased by households and is used as a measure of inflation. Last year, rising food prices accounted for 70 percent of inflation.

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May 5 - China’s trade with the Association of Southeast Asian Nations increased to US$54.4 billion in the first quarter of 2008, a 26 percent increase over the same period last year, sources with the Ministry of Commerce reported on Friday.

According to Xinhua, bilateral trade reached US$202.5 billion last year, representing a year-on-year increase of 26 percent and achieving the trade target of US$200 billion three years ahead of schedule.

Besides trade, two-way investment, contracted engineering and labor cooperation between China and ASEAN members have developed rapidly. (more…)

May 1 - The May issue of China Briefing magazine is out now and available for download (please click on the picture at the right).

In this issue, we examine the complexities of managing a joint venture partner in China, including handling due diligence and risk issues. Specifically, we look at regulatory risks, political risks, legal and financial risks, and operational, environmental and motivational risks. We also discuss how, from a minority equity position, JVs may still be effectively controlled, and identify the role technology transfer agreements can play within this situation. We discuss other managerial issues concerning JVs, and also look at the investment environment in some more of China’s second- and third-tier cities.

Included in this issue:

Managing your China joint venture risk

Using technology transfer agreements to manage your joint venture partner

The second- and third-tier cities of Dandong, Shaoxing, Zhaoqing, Nanchang and Yinchuan.

By Jean-Charles Briand, Noemie Lanes and Anna Sellger

SHANGHAI, April 30 - To understand how China’s economy is evolving, just look at the Yangtze River Delta. With 30 percent of the country’s private sector, this populous and wealthy region including Shanghai, Jiangsu and Zhejiang provinces has relied heavily on its secondary market for growth. But that’s changing as more and more foreign direct investment pours into tertiary businesses focused on finance, wholesale and retail, information technology and real estate. The result is a rising service sector that many believe is China’s next step toward developing a modern economy.

Industrial strengths
With China’s most developed private sector, the delta now accounts for roughly 20 percent of the national GDP, its own total reaching some RMB4,775.4 billion two years ago. Jiangsu contributed most to the region’s GDP, about 45 percent, while Zhejiang and Shanghai represented about 33 percent and 22 percent, respectively. After Shanghai the most economically vibrant cities were, in descending order by economic size, Suzhou, Hangzhou, Wuxi, Ningbo and Nanjing. (more…)

By Andy Scott

WUHAN, April 28 - The Expo Central China 2008 came to a close today in the city of Wuhan, the provincial capital of Hubei province. The third of its kind, the expo is an opportunity for the Central China provinces of Anhui, Henan, Hubei, Hunan, Jiangxi and Shanxi to attract investor attention to a region that has historically lagged in development behind China’s coastal provinces. As investor sentiment has waned for China’s coastal regions where the rising costs of doing business are beginning to force large corporations to rethink their China strategy, the Central China region, and especially Wuhan with its perfectly centered location in China, is looking to take advantage. Long considered a secondary market, the completion of the new, expanded Wuhan Tianhe International airport as well as the continued dredging of the Yangtze downriver is turning Wuhan into destination for foreign investment.

The expo’s theme focused on the region’s belief that industry inside China is indeed beginning to shift, and the main focus of many of the provincial officials at the expo was directing inbound investment from the coast. At the opening ceremony, Vice-Premier Wang Qishan stressed that the region needed further reform and opening-up, stressing awareness of reform, innovation, and the rule of law as keys. (more…)

Fundamental dynamics in understanding RMB purchasing power is key

April 28 - Jack Perkowski of Asimco fame has been in the press a lot recently, not least because of the launch of his new book “Managing The Dragon : How I’m Building a Billion-Dollar Business in China.”

We caught up with him at the YPO event in Beijing last week where he was one of the guest speakers. In his presentation, he told of how he came to China, and began to build his company. In doing so, he made an interesting observation about staffing a business in China. Taking from his pocket a US$100 bill and a RMB100 bill, he then considered the similarities:

* Both are the highest value note in their respective countries
* Both feature previous national leaders on their front
* Both employ similar anti-forging technology with ultraviolet lights, a metal strip and dual colored inks.

Yet, as he pointed out, Americans by and large do not feel US$100 is a lot of money. But Chinese view RMB100 as a lot of money, despite the fact that at current exchange rates, the RMB100 is worth just US$14. (more…)