Multinationals to Enter Forex Trade

China is considering the possibility of allowing subsidiaries of multinationals to complete inter-company transactions using foreign exchange (forex), said Deng Xianhong, Vice Director the State Administration of Foreign Exchange (SAFE), the country’s forex watchdog.

Deng said this would allow multinationals the ability to bypass the SAFE. The watchdog now requires foreign companies to purchase forex from the SAFE, Deng stated without elaborating.

China will also strengthen the monitoring of irregular cross-border cash flows and illegal forex dealings. SAFE will ease restrictions on individual and company use of forex as well as broaden the scale and type of institutions that can conduct overseas financial investment.

China has announced a series of plans in an effort to trim the country’s huge international payment surplus earlier this month. The country’s forex reserve had reached $1.2 trillion by the end of this March, up 37.36 percent year on year.

Central China Overhaul

Following China’s great undertaking of the large-scale development of western China, development of the central part of the country is now being considered equally important.

Vice Premier Wu Yi said on April 26 that the rise of central China is of great importance to the country and that the government will push central China to be an important base for manufacturing, hi-tech, energy and raw material, and labor resources development.

Minister of Commerce Bo Xilai stated that the government will adopt measures to support the development of central China, vowing to improve the infrastructure and conduct training for employees in the region.

Transportation has long been considered a key to economic development in China. Li Yongqi, a senior official with the General Administration of Civil Aviation of China, announced that the airports in the capitals (Zhengzhou, Wuhan, Taiyuan, Changsha, Nanchang and Hefei) of the six central provinces will be further enlarged and expanded and another six small airports will be built in major central cities.

Foreign banks also showed their interest. Bryan Stiles, Deputy CEO of HSBC Bank (China) Co. Ltd. said that central China will become another investment target for foreign banks. He explained the stable policies and high economic growth will attract more international capital, investment and companies into the central region, providing a good opportunity for foreign banks operating in China.

Stiles stated that HSBC’s plan for central China is to provide all-round industrial and commercial services for local and transnational companies, including deposit, loan, financing and wealth management. HSBC established its first representative office in the central city of Wuhan in 1985.

Huawei on Top

China is considered something of a greenhorn when it comes to software research and development, but some Chinese IT companies are ready to show their strengths and challenge that stereotype.

According to statistics jointly released by the NBS and the Ministry of Information Industry (MII) on April 25, Huawei Tech-nologies topped China’s domestic enterprises in terms of income generated from software business in 2006, hitting 29.778 billion yuan ($3.9 billion).

Huawei Technologies was followed by ZTE at 13.4 billion yuan, and Haier Group with 8.106 billion yuan.

NBS and MII’s list of the top 100 profitable software companies showed that their total revenue reached 143.76 billion yuan ($18.7 billion) last year, growing 27.5 percent over the previous year’s group of 100. This year’s group accounted for 30 percent of the total revenue in the domestic software industry.