TO THE POINT: China shed U.S. Treasury securities in June in an attempt to diversify its investment portfolio of foreign exchange reserves. China maintained its attractiveness to overseas investments, as indicated by the FDI that rose 29.2 percent year on year in July. The country's e-commerce is bursting with vitality, with B2B businesses and online shopping burning hot. China's credit card sector is booming, but still needs regulation to ensure healthy development. The Internet portal operator Sina Corp. fared well in the second quarter, drawing strength from an online advertising boom. The global consumer products behemoth P&G makes forays into China by pledging at least $1-billion investments in the country over next five years.

By HU YUE

U.S. Treasuries Shed

China trimmed its holdings of U.S. Treasury securities in June to $843.7 billion, according to the U.S. Department of the Treasury.

This was the second straight decline, but China remains the largest foreign holder of U.S. Treasury securities, followed by Japan and the UK.

Meanwhile, by the end of June, China's foreign exchange reserves stood at more than $2.45 trillion, with the bulk in low-yielding U.S. Treasury securities.

With U.S. deficits piling up, risks of investing in U.S. dollar assets are on the rise, prompting China to diversify its portfolio of foreign exchange investments, said Zhang Ming, a senior researcher at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences.

In its latest move, China snapped up $5.3 billion worth of Japanese government bonds in June, the sixth straight month of net buying, said the Ministry of Finance of Japan.

FDI Holding Up

Despite a slight economic slowdown in July, China still maintained its appeal to foreign investors.

The foreign direct investment (FDI) that flowed into China in July rose 29.2 percent year on year to reach $6.924 billion, said the Ministry of Commerce at a press conference on August 17.

The figure brought the FDI flow to China in the first seven months of the year to $58.35 billion, an increase of 20.65 percent from a year earlier, said Yao Jian, a spokesman of the ministry.

From January to July, a total of 14,459 foreign-invested companies were approved for establishment in China, up 17.9 percent year on year.

Analyzed by sector, the manufacturing industry received 47.94 percent of the FDI inflows in the first seven months, compared with 45.09 percent for the service sector.

"A stable economy, unmatched market opportunities and favorable policy environment will continue to spark interest among foreign investors," said Zuo Xiaolei, chief economist at the Beijing-based China Galaxy Securities Co. Ltd., in a report.

E-commerce Thrives

The Internet is becoming a hotbed for businesses as e-commerce takes off in China.

China's e-commerce transaction volume continued its growth streak, reaching 2.25 trillion yuan ($331.9 billion) in the first half this year and accounting for 62.5 percent of last year's total value, said the Hangzhou-based China e-Business Research Center, in a recent report.

B2B remains the most vibrant activity, accounting for 89 percent of the e-commerce market. Alibaba.com remains the market leader with a majority 54.6 percent of B2B market shares.

As a ripple effect from the financial crisis looms, small enterprises look for business opportunities on the Internet in order to save costs and bolster efficiency, said the report.

Alibaba.com raked in a juicy profit of 693 million yuan ($102.2 million) from January to June 2010, soaring nearly 40 percent, as the economy recovered and a rebound in exports boosted product listings on its website.

Meanwhile, online shopping is also experiencing a surge as Chinese consumers search for bargains on everything from cosmetics to clothes, said the report.

Credit Card Boom

Despite China's reputation as a nation of savers, credit cards are establishing a presence.

By the end of June 2010, Chinese banks issued 207 million credit cards, extending credit of 1.64 trillion yuan ($241.9 billion), said the People's Bank of China, the central bank.

Guo Tianyong, Director of the Research Center of China's Banking Industry under the Central University of Finance and Economics said the sector has deep growth potential.

According to a report from the accounting firm McKinsey & Co., just 14 percent of eligible customers have a credit card in China, compared to 81 percent in Hong Kong and 70 percent in Taiwan.

But it is still necessary to strengthen regulations over the sector and to strike hard against credit fraud and relevant crimes, Guo said.

The current boom was in part boosted by unscrupulous card issuers that recklessly put their cards into the wallets of many under-qualified low-income consumers, planting the seeds of bad debt.

Policymakers have stepped up controls over the exploding business and warned issuers against potential risks. In response, the China Merchants Bank has suspended card issuance to university students and slowed the pace of increasing credit limits to card holders.

Regulation efforts seem to be paying off. Credit card debt that was overdue for at least six months was 7.3 billion yuan ($1.1 billion) by the end of June 2010, a decline of 17.7 percent from the end of March 2010, said the central bank.

Sina Cashes In

Sina Corp., a major Chinese Internet portal provider, reaped windfall profits, as online advertising boomed amid the economic recovery.

The company said its second-quarter profit surged 89 percent to reach $25.2 million, as the company sold more online advertising in the world's biggest Internet market. Revenues rose 10 percent to $99.4 million in the second quarter, supported by a 27-percent increase in online advertising sales.

The Shanghai-headquartered company plans to raise prices for advertisers this year, capitalizing on demand from companies marketing their products and services in the world's second biggest economy.

"Our cost controls have been efficient and the advertising income received a substantial boost from the simmering FIFA World Cup in South Africa and the World Expo in Shanghai," said Charles Chao, CEO of Sina. "The demands from auto, telecom and financial industries were especially robust."

But Sina's mobile service businesses have been buckling since December 2009. Cao said he expects revenues from mobile services to stabilize in the third quarter and the company will strengthen marketing efforts in emerging businesses, such as Microblog, a Twitter-like social messaging network.

P&G's Expansion

The global consumer products giant Procter & Gamble (P&G) plans to invest at least $1 billion in China over the next five years. That is more than it has poured into the country during the past decade.

In its latest move, the conglomerate inaugurated a $79 million innovation center in Beijing on August 18. This is the company's sixth research facility globally and is expected to be one of its few innovation centers, supporting its global business, especially in emerging markets.

"China is P&G's second largest consumer market in the world following the United States, but per-capita consumption is still far less than in America," Bob McDonald, CEO of P&G, said.

For that reason, P&G is compelled to "continue to increase investment in the market and take advantage of the robust economic growth here," he said.

P&G generated $5 billion in sales in China for fiscal year 2009, accounting for 7 percent of its global sales revenues of $75 billion.