Investors must be over the moon right now. The burgeoning Chinese economy has pushed an ebullient Chinese stock market to record highs, with the Shanghai Composite Index soaring to 2,800 points on January 4, the first day of trading after China's three-day New Year celebrations. Industrial and Commercial Bank of China emerged as the biggest winner of this stock feast with its market value climbing to $251.1 billion, making the bank the second largest in the world by market value. Publicly listed companies reveled in their excitement, small and medium-sized start-ups were also greeted with good news: The first industrial investment fund, entitled to give loans to emerging hi-tech SMEs, was established in Tianjin Municipality, the emerging Chinese northern economic hub. Additionally, the doors have been shut on 30 heavily indebted, badly performing securities firms, an indication of the move towards sound market order. From a macroeconomic perspective, the average tariff rate has been reduced by 0.1 percent to 9.8 percent and China is being more proactive in the promotion of service exports.

ICBC Steals the Show

All eyes have been on the impressive flexing of financial muscle by Industrial and Commercial Bank of China (ICBC) in recent times as it races from one trail- blazing announcement to another.

On December 29, 2006, ICBC was reported to become the second largest bank in the world by market value of $251.1 billion, which surpassed that of Bank of America and was second only to Citigroup.

On December 30, ICBC signed an acquisition agreement with Halim, an Indonesian bank, to purchase 90 percent of its stock. It is the first ever transnational bank acquisition for ICBC, which is striving to become an influential group in the world banking industry.

In October, ICBC boasted the biggest initial public offering (IPO) in the world, stunning its rivals by collecting $21.9 billion after being listed on the Shanghai and Hong Kong stock markets.

Investors' increasing interest in ICBC has helped the market value of the bank as well as the Shanghai Composite Index hit record highs recently. The bank's nonperforming loans, reaching 20 percent a few years ago, are now vague memories for most people in the industry.

Despite its bullish performance, some experts called for calm amid ICBC's volcanic stock rise. Galaxy Securities analyst Zhang Xi pointed out, "ICBC's performance this week has not been very rational. There are downward correction possibilities for ICBC."

Stock Market Remains Bullish

In the last week of 2006, London-based Financial Times reported that global equities rounded off their best year since 2003 and that China was ranked the best performer with the FTEX China index up 94 percent in dollar terms.

Chinese citizens are no longer easily surprised by the burgeoning equities market, as the Shanghai Composite Index was frequently reported to hit new record highs at 2,800 points and 2,600 points.

Xu Jianqiang, an analyst with CITIC Securities, is in confident mood. "I can earn one month's salary in just one day from investing in the stock market." Xu said now was probably the best year to invest in China's securities, stocks and warrants. Last year he suffered a considerable loss in the market.

There is a ring of confidence in the air. Many experts, as well as individual Chinese investors, believe that, driven by the Beijing 2008 Olympic Games and the World Expo 2010 Shanghai, the Chinese equities market is unlikely to fall.

More "Made-by-China" Service, Please

Being inured to "Made in China" toys, "Made in China" clothes, and other cheap "Made in China" knick-knacks, citizens of the world can easily find something to attribute China's huge trade surplus to. However, in the service industry, which is largely intangible, China has remained locked in a trade deficit for a long, long time.

Statistics from the Ministry of Commerce show that China's service exports account for less than 10 percent of the total exports, only half of the world's average ratio.

In the first half of 2006, China's service trade deficit stood at $5.7 billion, increasing by 44 percent compared with the same period a year earlier.

Technology-intensive and knowledge-intensive industries like finance, insurance, consultancies, and post and communications are the wings of the fast service trade in the world. But China is still lingering in the primary development stage.

Compared with the ambitious 11th Five-Year Plan, which prescribes that the total service import and export trade volume will reach $400 billion, the actual total service trade volume of $157.08 billion in 2005 was a blip on the radar.

Hu Jingyan, Director General of the Service and Trade Department under the Ministry of Commerce, pointed out that China should develop its service trade as it has with its commodity trade. Hu noted that currently, the service industry is being transferred to developing countries, just like the transference of manufacturing industry many years ago.

Hu said the Ministry of Commerce will strive to boost the export of cultural products, computer and information services, logistics, finance and insurance so as to build up a competitive industry chain.