Outstanding loans of all financial institutions stood at 25.0793 trillion yuan, growing 16.5 percent over last year. Outstanding deposits of all financial institutions reached 36.9368 trillion yuan, growing 16 percent. The growth of household savings deposits was 9.4 percent.

Insurance Funds Rush in

In an attempt to save the stumbling stock market, the China Insurance Regulatory Commission allowed insurance companies to double the proportion of assets they can invest in the domestic stock market. Greatly encouraged by the news, the benchmark Shanghai Composite Index climbed moderately for two consecutive days after the decision was officially announced on July 17.

Insurance companies are allowed to invest 10 percent of their total assets as of the end of last year in the stock market. The previous cap was 5 percent.

The domestic insurers' assets totaled 1.97 trillion yuan by the end of 2006. According to the new policy, about 200 billion yuan could be invested in the stock market. By the end of 2006, insurers' stock investments were almost five times that of the beginning of 2006, reaching 92.92 billion yuan.

However, the proportion of insurance assets that can be invested in funds was reduced to 10 percent from the previous 15 percent. This was previously believed to be an indirect way for insurance assets to be invested in the stock market.

It is believed that fund management companies may be confronted with large scales of redemption from insurance companies, eventually squeezing the fund management companies' investments in the stock market. This is why the stock market has lingered under 4,000 points.

Wu Yonggang, a researcher at Guotai Jun'an Securities, said insurance companies direct investments in the stock market will optimize their portfolio and investment ability. The insurance companies aim to use their assets for long-term stock market investment which can serve as a good example for stock market speculators.

More Tax on Ores

China will tax resources more heavily, according to a State Administration of Taxation announcement. From August 1 the resource tax on lead, zinc, copper mines and tungsten mines will be raised substantially. It is the first time in 14 years that China has raised the resource tax on these products.

According to the policy, there will be five new tax brackets for lead and zinc mines, ranging from 10 to 20 yuan per ton of lead and zinc ore, up roughly 400 percent from the previous tax of 2-4 yuan per ton established in 1993.

The five new tax brackets for copper mines range from 5 to 7 yuan per ton of copper ore. Tungsten ore resource tax brackets will range from 7 yuan per ton to 9 yuan per ton.

The profitability of listed companies relating to those ores will be affected, reflecting a plummeting stock price on July, 17, the day the news was announced.

Jiang Yukun, an analyst with Everbright Securities, argues that the new policy will have limited impact on those companies' overall performance because prices of nonferrous metals have grown in recent years.

Conflict Over Food

In the past few months, the United States and China have been fighting a pitched battle over food safety issues. The U.S. Food and Drug Administration (FDA) said in late June it would not allow three types of farm-raised fish, as well as shrimp and eel, from Chinese suppliers to enter its market till the companies prove their products didn't contain harmful residue. Though it said the food was contaminated, the FDA couldn't provide any concrete evidence that the Chinese products were hurting the U.S. consumers.

While the United States lashed out against Chinese food, its own food imports to China were found out tainted by salmonella, feed additives and veterinary drugs.

According to General Administration of Quality Supervision, Inspection and Quarantine, China has suspended the import of tainted meat products from seven U.S. companies, including Tyson Foods Inc., Sanderson Farms Inc., Intervision Foods, AJC International Inc., Cargill Meat Solutions Corp., Van Luin Foods USA Inc. and "Thumph Foods," which most likely is Missouri-based Triumph Foods, according to press accounts.

The administration said on July 15 that the local entry-exit inspection and quarantine department in China's Shanxi Province had found excessive amounts of selenium in protein powder imported from U.S.-based Jarrow Formulas Inc. The products have been sent back. Excessive amounts of selenium could lead to gastrointestinal disorders, hair loss, neurological damage, cirrhosis of the liver and even death.

The Wall Street Journal cited the U.S. Department of Agriculture as saying that officials from the two countries will talk about food issues in the next two or three months.