TO THE POINT: Although China's stock market tanked on February 27, with the Shanghai Composite Index dropping 9 percent in a single day, it's still too soon to tell whether this year of the pig will attract a bear or bull as its financial mate. Here's what is known: China Premier Wen Jiabao expects GDP to grow at 8 percent this year, which would be a major decline from last year but obviously still strong. And Chinese blue chip companies are still looking for ways to list back home, like CNOOC. Shanghai is also looking to open its stock exchange to Hong Kong investors, and let's face it, when China opens up anything, business usually comes rushing in. The running of the bulls in China hasn't been cancelled yet, even if some see thunderstorms in the financial forecast. In other news, China is getting tough on domestic automakers, Sinopec is planning big expansions, Baotou Iron and Steel isn't, and stock index futures are in the works in China.

GDP Set to Grow by 8 Percent

China's Premier Wen Jiabao stated that China plans to decelerate its gross domestic product (GDP) growth rate to 8 percent this year rather than the astounding 10.7 percent last year. Wen said this in his government work report at the Fifth Session of the 10th National People's Congress (NPC).

"The paramount task for us is to promote sound and fast economic development," Wen said to legislators from around the country, adding, "We need to greatly improve the quality and efficiency of economic growth." A higher growth rate will give rise to overheating and a lower one is less helpful in resolving social problems, Wen said.

Experts said that the target can help ensure smooth economic growth and avoid substantial ups and downs.

Chen Derong, an NPC deputy, said that the goal will be good for shifting the focus of local governments from blind economic competition to structural optimization of industries, improvement of efficiency and energy saving.

However, whether China can meet this goal is still doubtful. At exactly the same time last year, Wen proposed the same goal, which was also 8 percent. As is known to all, China's GDP growth in 2006 surged to 10.7 percent, despite warnings of overheating and precautions of cooling down.

With the approaching Beijing 2008 Olympic Games, China will further attract investment. It remains to be seen whether the premier's goal is a mission impossible.

Stock Index Futures to Be Launched

Chinese regulators are aiming to open the country's markets to stock index futures in the first half of this year.

Fan Fuchun, Vice Chairman of the CSRC, made the announcement and said CSRC had performed systematic research on the issues of fund companies' involvement in stock index futures, without elaborating.

International financial tycoons have reportedly been lobbying Chinese regulatory departments to let them join the first batch of investors to trade the nation's pioneering stock index futures.

The trade of stock index futures would be launched on the Shanghai-based China Financial Futures Exchange, stated CSRC Chairman Shang Fulin in October last year.

Experts believe the introduction of such financial derivatives might provide institutions with a tool to avoid market risks, but may also spur speculation and widen volatility.

HK Investors May Get Shanghai Stock Opportunity

The major Shanghai Stock Exchange is considering opening its door to Hong Kong investors and working out how Hong Kong residents can invest, although there are problems about how such investment would be affected by the country's capital controls.

Fang Xinghai, Deputy Director General in the Shanghai Municipal Government's Office for Financial Services, said the measure would help avoid bubbles in the mainland market and would promote higher standards of corporate governance.

Zhu Congjiu, President of Shanghai Stock Exchange, also said there were no plans to integrate A shares, the main class of mainland shares, with B shares, a separate class created to allow foreigners to invest in the Shanghai market.

CNOOC Plans A Share Market Return

Various subsidiaries of China National Offshore Oil Corp. (CNOOC) are working closely with the mainland's stock watchdog China Securities Regulatory Commission (CSRC) for A share listing plans, said Fu Chengyu, President of CNOOC, on March 5.

These include CNOOC Ltd., the Hong-Kong listed subsidiary, China Oilfield Services Ltd. and China BlueChemical Ltd. Fu said it is just a matter of time and internal planning to carry out these new listings.

Liu Gu, an oil analyst with Shanghai-based Guotai Junan Securities Co., said it is natural that the three oil subsidiaries are seeking to return.

"CNOOC Ltd. needs great financial support to expand in oil and gas exploration and production. China Oilfield Services requires more investment to boost its capacity, and China BlueChemical needs more funding in case that an industrial consolidation takes place in about two years," Liu said.

The development of China' s mainland stock market has triggered overseas-listed Chinese companies to return home for further funding.

Fu said China Oilfield Services Ltd. plans to list in the yuan-denominated A share market this year.

Automakers Reshuffled

The Ministry of Commerce is getting tough on automakers. It recently made a list of 480 automakers and dealers allowed to export vehicles in 2007-less than half the number in 2006-starting from March 1.

By the end of 2005, a total of 1,025 enterprises had participated in auto exports. However, more than 600 enterprises could export no more than 10 cars on average each year and 160 enterprises only exported one car. By the end of last year, the number of exporting automakers was still around 1,000.

Currently, China only exports middle and low rank vehicles and its target markets are developing countries and regions. The large-scale export of low value-added vehicles had scrambled the exporting order and led to a vicious price war.

Shang Yugui, liaison officer with Great Wall Motor, said after those carmakers exported their cars to foreign countries through traders, they failed to build up sufficient after-sale service networks. This greatly affected the image of Chinese cars.

According to the China Association of Automobile Manufacturers, the average price of exported Chinese cars was $9,156 last year, while that of the imported cars was around $34,000.

Vehicle analyst Jia Xinguang said the new regulation would help prevent vicious competition, but won't do much to greatly improve the exporting order.

Sinopec Eyes Fujian

Top Asian refined oil giant China Petroleum & Chemical Corp. (Sinopec) signed landmark agreements on February 25 to expand the petrochemical project in southeast China's Fujian Province and to jointly market its product with foreign counterparts Saudi Aramco and Exxon Mobil.

"It is a positive move for us to strike a refining capacity enhancement deal and marketing agreement with our overseas partners," said Zhang Zhiguo, a press official with Beijing-based Sinopec. "We expect to meet ever-growing local demand for fuel by combining the strength of parties involved," he added.

Joint venture contracts mark a significant milestone in the development of China's first fully integrated Sino-foreign project involving refining, petrochemicals and fuels marketing, Saudi Aramco said.

Han Xuegong, veteran analyst with China National Petroleum Corp., said that Chinese oil companies are strong in upstream operations including exploration and production, but not in downstream business such as refining and petrochemical manufacturing.

"Our capability in sour crude refining is not mature yet. Sinopec is China's leading refiner, but still lags behind global powerhouses such as Exxon Mobil in refining expertise," Han said. "That's why Sinopec prefers to collaborate with foreign partners."

The Fujian joint venture refining project will see Sinopec take a 50 percent stake, and Exxon Mobil and Saudi Aramco each 25 percent.

China-Foreign Steel Talk Ended

Baotou Iron and Steel Group (Baotou Steel) stated that it had ended talks with Arcelor Mittal, the world's largest steel maker, about selling a stake and forming a joint venture.

"Arcelor Mittal wanted to take a 50-percent stake or so in the joint venture, but we failed to negotiate any more," said Lin Donglu, Chairman of Baotou Steel, adding the company is looking for a local partner like Shanghai-based Baosteel.

Arcelor Mittal has been developing aggressively in China by holding a 29.5- percent stake in Hunan Valin Steel Tube & Wire Co. and plans to buy more of Hunan Valin's new shares. It is also seeking to take a stake in Shandong-based Laiwu Iron & Steel Group.

"Arcelor Mittal is a foreign company, and this kind of nature doomed taking an overwhelming position in Baotou Steel," commented Jia Liangqun, chief consultant with Mysteel.com, a steel information website. "The steel industry is a pillar industry in our country and the government is clear that foreign companies cannot control a Chinese steel company."