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Market Watch
Business> Market Watch
UPDATED: April 23, 2007 NO.17 APR.26, 2007
MARKET WATCH NO.17 2007
In the first quarter, both the Chinese property and stock markets enjoyed rapid growth
 
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TO THE POINT: In the first quarter, both the Chinese property and stock markets enjoyed rapid growth. Since the beginning of the year, the benchmark Shanghai Composite Index has jumped more than 20 percent. The Bank of Communications, China’s fifth largest bank, will soon be listed on the Shanghai A-share market, giving it the ability to throw its hat into the bullish ring. Housing prices have also increased substantially despite harsh regulative measures and the property market is seeing rapid foreign and domestic investment growth, with money from abroad pouring in the fastest. China Life, which returned to the Shanghai A-share market last year, left its competitors far behind in 2006, seeing its net profit more than doubled from the year before. U.S. software guru Microsoft is forming a partnership with China’s computer giant Lenovo Group on the construction of a research and development (R&D) facility. It will be Microsoft’s first ever R&D center partnership worldwide. In an attempt to narrow the trade gap with the United States, China is seeking the procurement of a variety of imports from the United States worth $12 billion. China’s total trade surplus with the United States was $144 billion in 2006.

By LIU YUNYUN

Narrowing the Trade Gap

Despite U.S. Treasury Department’s complaint that China had failed to offer new proposals on renminbi appreciation at April 16’s annual meeting of the U.S.-China Joint Economic Committee, China is finding its own ways to compensate for the huge trade surplus between the two trading partners.

According to an Oriental Morning Post report, China will ink millions of dollars worth of new import from the United States as it seeks to trim the trade gap. Details are expected to be hammered out during the second round of high-level strategic economic dialogues to be held in Washington in late May.

Vice Minister of Commerce Ma Xiuhong is expected to head the procurement delegation. The proposed deals cover a variety of U.S. agricultural and industrial products-from soybeans and cotton to manufacturing machinery and electronic products-worth an estimated $12 billion. A detailed plan for the delegation’s visit is expected in May, though reported stops include Atlanta, Chicago, San Francisco as well as Washington, D.C.

Experts believe this move demonstrates China’s determination to curb the trade surplus with the United States, and is an effort to ease short-term trade tensions between the two countries.

Whether the goodwill effort can help mend trade relations or not remains to be seen.

Microsoft & Lenovo Discuss Prenuptials

Chinese computer giant Lenovo Group is seeking a marriage made in geek heaven.

The day before Microsoft Chairman Bill Gates visited China for the 10th time, in an unprecedented move, the U.S. software behemoth announced that an agreement had been reached with Lenovo to create an R&D facility in China-Microsoft’s first ever such project with another company. The joint facility will be housed at Lenovo’s R&D center in Beijing, with engineers from Lenovo, as well as tools, training and staff contributed by Microsoft.

Craig Mundie, Chief Research and Strategy Officer with Microsoft, said the two companies hope to identify new opportunities in the Chinese consumer and mobile markets for products in the digital photography, digital media and the Internet sectors.

George He, Senior Vice President and Chief Technology Officer of Lenovo, said China has become one of the most sophisticated markets in the world-especially in the complex IT networks used by banks and telecom companies-and has a solid base of mature high-end users.

Lenovo, which holds 30 percent of the computer market share in China, has played a critical role in Microsoft’s success in the Chinese computer market. In 2005, Lenovo announced that it would only use legitimate operating systems on its computers. During last year alone, 5 million of the 8 million units sold by Lenovo included Microsoft Windows operating systems.

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