WORK IT: Staff members from China Railway Tunnel Co. Ltd. work on the highway linking Sanmenxia and Xichuan of Henan Province amid extreme hot weather on August 3 (WANG SONG)

Price-Fixing Fines

China has issued record fines of 670 million yuan ($108 million) on six baby formula companies on the mainland following an anti-trust probe, according to an announcement by the National Development and Reform Commission (NDRC) on August 7.

Biostime was fined 163 million yuan ($26.63 million), or 6 percent of its sales revenue in 2012, as it "seriously violated anti-monopoly laws and failed to actively take corrective action," said Xu Kunlin, Director of the Price Department of the NDRC.

Mead Johnson was fined 204 million yuan ($33.33 million), or 4 percent of its previous year's revenue last year, because it "did not actively cooperate with the investigation while taking active self-rectification measures," said Xu.

Dumex, Abbott, Friesland and Fonterra each received a fine equal to 3 percent of their 2012 revenue. Xu said these four companies cooperated in the probe and actively moved to correct their practices.

Wyeth, Beingmate and Meiji were exempt from punishment, because they cooperated with the investigation, provided evidence and actively took self-rectification measures, said Xu.

Xu said in the probe into these nine companies initiated in March, the NDRC found the involved formula producers set minimum resale prices for distributors. The distributors that sold their products at a price lower than the fixed minimum price were punished.

Liquidity Injection

The People's Bank of China (PBC), the central bank, continued to inject liquidity into the banking system on August 6, with 12 billion yuan ($1.96 billion) of seven-day reverse repurchase agreement (repo) operations.

The yield of the reverse repo, a process whereby the central bank purchases securities from commercial banks with an agreement to resell them at a future date, fell from 4.4 percent to 4 percent, according to a PBC statement.

Changes in the yields of the reverse repo rate usually reflect how the central bank views the current borrowing costs in the market and how it will guide future lending rates.

The injection is the third since July 30, when the central bank resumed the reverse repo sales after a suspension of about six months. But experts said the central bank's move does not mean a change in its prudent monetary policy.

Economic Stabilizing

China's official Purchasing Managers' Index (PMI) for the manufacturing sector picked up slightly to 50.3 in July from 50.1 in June, signaling a stabilizing trend in the country's economy.

Zhao Qinghe, a senior economist with the National Bureau of Statistics (NBS), said it was the 10th consecutive month that the PMI has hovered around 50.5 since October 2012. A reading below 50 indicates a contraction of activity. Most sub-indices also increased from a month earlier.

Zhang attributed the rise in confidence to a series of "mini-stimulus" measures adopted since early July, which include tax breaks for micro-sized businesses and accelerated spending on subsidized housing, urban infrastructure, high-speed rail and energy-saving industries.

The non-manufacturing PMI stood at 54.1 percent in July, up from 53.9 percent for June, according to the NBS. The PMI for China's non-manufacturing sector rebounded after falling for three consecutive months.