TO THE POINT:After four days of breathtaking plunges, the Chinese stock market recovered to a period of steady growth thanks to encouragement from various government departments. The Chinese central bank will probably raise the interest rate in June after food prices increased dramatically in May. More good news for foreign banks. Early this month, the central bank allowed foreign banks to trade gold on the Chinese gold market and they are now able to issue bankcards in the country. Lenovo Group, China's leading PC producer, is dedicated to exploring the rural market to boost its competitiveness. China Mobile will seek bidders to offer cell-phone handsets, a package worth 4-6 billion yuan.

By LIU YUNYUN 

The Chinese gold market has made the first attempt to connect itself into the international market.

On June 6, the central bank approved the Shanghai Gold Exchange's application to absorb foreign banks into its once exclusive club.

HSBC China, Standard Chartered China, The Bank of Nova Scotia, the Swiss bank UBS, and the French bank Société Générale, are the first five foreign banks to be licensed.

Shanghai Securities News quoted a central bank official as saying "the central bank is examining appropriate ways to loosen restrictions on gold imports and exports."

Foreign banks serve as a legitimate channel for overseas capital to enter the Chinese gold market, which will further break boundaries between domestic and international markets.

Lenovo Stakes on Rural Market

Lenovo Group, China's leading computer maker, announced it will expand its presence in rural areas to maintain its competitive edge.

"China's fourth- to sixth-tier cities will become our major growth engine," said Chen Shaopeng, President of Lenovo Greater China and Senior Vice President of Lenovo Group. "We plan to intensify cooperation with local partners and roll out new products to fulfill our customers' needs."

China's rural areas are considered a potentially huge market as income there continues to rise steadily. On seeing urban areas become saturated, Lenovo is ready to take its chances in rural areas.

According to figures from the research firm International Data Corp., the average growth rate of the Chinese personal computer (PC) market in the next five years is expected to reach 11.7 percent, while the growth rate in China's fourth- to sixth-tier cities is estimated to hit 23 percent-twice as much as urban demand.

In 2004, Lenovo launched a low-end PC priced at 2,999 yuan in an effort to lure lower-income customers. This effort was followed by PC giants like Hewlett-Packard, Dell and Acer.

"As China's economy booms, increasing numbers of people in poor areas will join the PC age," said Chen. Chen pointed out that towns and villages in south China's Pearl River Delta and east China's Yangtze River Delta are no longer poor areas and local residents have a strong demand for computers.

Since 2004, Lenovo has increased its presence in rural areas but didn't see much profit last year.

China Mobile to Invite Bidders

In October, China Mobile Communications Corp. will allow bidding on contracts worth up to 4-6 billion yuan on third-generation (3G) cell-phone handsets based on TD-SCDMA (Time Division Synchronous Code Division Multiple Access) standard-China's locally developed standard.

"The contract involves 2 to 3 million handsets using the TD-SCDMA platform," stated Chen Haofei, Secretary General of TD-SCDMA Forum. "The bulk of handsets will be due for delivery early next year."

Compared with the internationally accepted WCDMA and CDMA 2000, the Chinese standard has not been tested for commercial use. Chen said major domestic handset producers will join in this bid. Major Chinese equipment manufacturers, including ZTE Corp. and Datang Telecom Technology Co., are expected to benefit from this incredible 3G feast.

The 3G mobile phones are expected to combine various utilities. Users will be able to watch TV shows, connect to the Internet, read books, and access many other modern entertainment and communications functions.

However, Kan Kaili, professor with Beijing University of Posts and Telecommunications, isn't optimistic about the future of 3G technology. "Among all 3G operators, 80 percent of the income comes from voice box services, and most of the operators are losing money." Kan explained further that people rarely use other functions and that 3G technology is almost useless.

Market Rebound

The Chinese stock market picked up momentum after four consecutive trading days (May 30 to June 1 and June 4) of dropping-the fall coming largely from the 0.2 percent increase in the stock stamp tax. Market value fell 17 percent during the four trading days to 15.79 trillion yuan on June 4.

The benchmark Shanghai Composite Index rose to 3891 on June 7 due to encouragement from the government, though it is still 443 points lower than the record high of 4334 points on May 29.

Confidence in the stock market had been deeply hurt by the sudden rise in stamp tax, leading to a stock selling stampede.