Speculation over interest tax adjustment affected the stock market for several days. The Shanghai Composite Index dropped 3.68 percent on June 22, and further tumbled another 3.29 percent on the next trading day on June 25.

Stock Market Ups and Downs

The Chinese yuan-denominated A-share market has been hovering around 4,000 points in late June, leaving investors dejected and impatient.

After the stock panic from May 30 to June 4 coming on the heels of the stamp tax rise, the benchmark Shanghai Composite Index once jumped to 4,269 points on June 19, the third record high so far this year.

However, many have decided to sell their stocks when the benchmark index nose-dived to 3,941 on June 25.

The stock market slump is caused by several factors. The greatest of these were over expectations of another hike in interest rates and the abolition of the interest tax. However, when the interest tax was indeed canceled, the market rebounded again as it had already absorbed the negative influence of the previous turbulences.

Another factor is the release of state-owned stocks. Starting from June this year, a large number of state-owned stocks began to be made tradable on the Chinese mainland stock market. The China Securities Journal reported that the total shares made tradable this year would probably surmount 88.1 billion, with aggregate market value surpassing 934.7 billion yuan.

The shares will be set free gradually but its impact on the stock prices can never be ignored. On June 14, the China Nonferrous Metal Industry's Foreign Engineering and Construction Co. Ltd. made 29 million of its shares tradable in the stock market, generating consecutive sharp plunges in its stock price from the peak 36.58 yuan on June 13 to mere 27.41 yuan on June 26, resulting in a huge loss of profits of many holders.

The government believes that after the past several market corrections, the Chinese stock market will probably be back on a healthy track.

Wahaha vs. Danone: Not Done Yet

Chinese beverage giant Wahaha Group will file a counter suit against its French joint venture partner Danone and seek compensation of up to 5 billion euros, the company confirmed in late June.

Wahaha spokesman Shan Qining said Wahaha had decided to "demand justice by legal procedures," after Danone had filed for arbitration and lawsuits against the beverage giant.

Wahaha said in a separate statement, "We will respond actively to the lawsuits filed by Danone in Stockholm and the United States, and we plan to launch a counter suit demanding compensation of 2 billion, 3 billion or 5 billion euros."

The statement contended that Wahaha had concrete evidence that Danone had broken the law.

Wahaha has applied for arbitration over a trademark dispute with Danone with the Hangzhou Arbitration Committee, asking the committee to terminate a trademark transfer contract signed between Hangzhou Wahaha Group and the joint venture of Wahaha and Danone in 1996.

Wahaha has said that its contract with Danone was never approved by China's trademark authority, which meant the transfer was invalid and the contract should be terminated.

Shan said the Wahaha trademark belonged to Hangzhou Wahaha Group and not to Danone.

Danone hasn't commented yet on the counter suit proposal.

The Ministry of Commerce hoped the two sides could settle the disputes through peaceful dialogue and negotiation, "as many foreign media manipulate the Wahaha and Danone case to pose negative impact on China," said Gao Hucheng, Vice Minister of Commerce.

Financial Revenue Soared

Revenues of the central and local governments of China soared almost 24 percent to 2.17 trillion yuan in the first five months of the year, said Chinese Finance Minister Jin Renqing on June 27.

The Central Government's revenue reached 1.22 trillion yuan, up 298.3 billion yuan year on year, while local governments' revenues reached 951.4 billion yuan, up 210.9 billion yuan, Jin said in his report to the Standing Committee of the National People's Congress on June 27.

In 2006, China's national financial revenue totaled 3.9 trillion yuan. The national financial expenditures totaled 4 trillion yuan, said the minister.

Last year, the Central Government ran a deficit of 274.8 billion yuan with revenues of 2.1 trillion yuan and expenditures of 2.3 trillion yuan.

Industrial Profits Up

According to the National Bureau of Statistics, the total profits of large state-owned and non-state industrial enterprises (with an annual sales over 5 million yuan) in the first five months reached 902.6 billion yuan, up 42.1 percent from a year earlier.

Among all 39 industrial sectors, chemical fiber and iron and steel sectors achieved the largest profit growth, which were 2.2 and 1.2 times, respectively, compared with the same period of last year.

Guided by the prosperous macroeconomic situation, industrial profits have increased substantially this year.