You'll Be Paying More for Luxuries

In 2007, Chinese citizens will be happy to buy imported strawberries at a less expensive price. But ladies are in for a shock, as Calvin Klein perfume goes on sale for 30 percent more than in 2006.

In line with China's World Trade Organization commitment, import duties on 44 items, including agricultural products and fertilizers, will be slashed. However, the Ministry of Finance stated that China will hike the import duty on luxury items like golf equipment and watches from 10 to 30 percent. Looking good is going to be more expensive too, with cosmetics taxed at 50 percent, up from the original 20 percent.

China will impose heavy export duties on resources and energy to restrict their export. Overall, China's tariff will be cut by 0.1 percent.

Wu Jiahuang, Vice Chairman of the China Society for WTO Studies, said, "This round of tariff readjustment won't affect much as it involves a limited number of items."

According to various trade agreements signed by China and other countries and regions, in 2007, China will offer a more favorable tariff, even lower than the most-favorable-nation tariff, for some commodities imported from the Association of Southeast Asian Nations, Chile, South Korea, India, Sri Lanka, Bangladesh and Pakistan.

New Option for 21st-century Start-Ups

No idea of where to get enough money to start a potentially profitable business? Why not turn to Tianjin Municipality's industrial investment fund for help?

On December 30, 2006, Bohai industrial investment fund was launched as a trial financing service. The fund serves as a direct financing channel and will mainly invest in hi-tech and start-up companies.

As Meng Hao, finance professor with Tianjin University of Finance and Economics, said, the current thirst for money of many start-up companies will benefit a lot from this fund, which will help them to grow like Microsoft and Yahoo!.

At present, companies only have limited access to finance: venture capital, getting listed in the stock market, corporate bonds issued by the National Development and Reform Commission (NDRC) and the short-term financing bonds issued by the People's Bank of China. Some other companies are started with angel funds from abroad.

After the establishment of the Bohai industrial investment fund, emerging small and medium-sized enterprises (SMEs) and private companies will be glad to have a new financing option. Instead of being at the mercy of the banks, they can now get loans directly from the industrial investment fund.

SMEs are playing an increasingly significant role in the Chinese market. The Vice Chairman of the NDRC, Ou Xinqian, said on December 29 that about 60 percent of the total foreign trade volume has been achieved by SMEs.

The initial fund scale is 6 billion yuan invested by six Chinese institutional investors.

The majority of the fund will be invested in Tianjin Municipality and Bohai Sea Rim Economic Circle.

Indebted Securities Companies Cleaned Up

The China Securities Regulatory Commission (CSRC) said on December 28 that since 2004, China had dealt with 30 heavily indebted securities companies, 24 of which were closed or dissolved, and the remainder subject to rectification like capital infusions, stock ownership transfers or restructuring.

The securities watchdog noted that currently 90 percent of China's securities dealers are able to meet the government's financial requirements.

A number of securities brokers have been found illegally appropriating customers' funds for investment, which often result in losses and company debt, especially in the previously bearish Chinese stock market.

The government plans to entrust investors' funds to commercial banks for independent management. The new system will be fully carried out in August this year.

The recent rise in the stock market has boosted the profits of securities firms, which is expected to end the entire industry's consecutive losses for the past four years.

By the end of October 2006, 92 of the 107 securities companies had recorded profits, with industry profits at 18 billion yuan, according to the CSRC.