TO THE POINT: The hottest financial market topic of the moment could be the subprime loan crisis in the United States. The crisis has stormed the U.S. stock market, dragging it to its biggest falls in a single trading day. Other markets, such as Japan’s, were also vulnerable to the crisis, but the Chinese stock market shrugged off the U.S. nightmare and continually hit record highs. Several big Chinese banks were involved in buying subprime mortgage securities and their profits could be affected moderately. Lenovo Group has a new ambition to acquire the high-end European Packard Bell PC business but is facing strong rivals. The Chinese Government is trying to revitalize the old industrial base in the northeastern provinces. In the meantime, it has promised to invest more to maintain food safety. Foreign capital flowed into the property sector, jacking up housing prices on the mainland. By LIU YUNYUN

Record High Clichés

The Chinese stock market defied the stock crisis that has hit other countries and soared to record highs on successive days, along with sharp ups and downs in the middle.

The Shanghai Composite Index, the benchmark index, surged to 4754 points on August 9 from around 4,000 points in July, mainly driven by big blue chips like Baosteel Group, Industrial and Commercial Bank of China (ICBC), and Bank of China (BOC).

Most of the special treatment stocks and bad performing companies have seen their stock prices drop, however. Xu Jianqiang, analyst with CITIC Securities, stated that in the future the market belongs to the blue chips and that bad performing companies will be abandoned by stockholders.

The U.S. stock market experienced its gloomiest moment in the first week of August, hit by a large number of hedge fund redemptions on the waves of the subprime loan crisis. The U.S. market plunge negatively impacted other markets such as Japan, but China was less affected. “This is because the Chinese market is a relatively closed market and the capital flow is closely watched by the government,” Tao Dong, chief economist with the Asia-Pacific region of Credit Suisse First Boston.

NumberS of the Week $1.17 billion In the second quarter of this year, the amount of venture capital invested in China totaled $1.169 billion, soaring 64.6 percent compared with the first quarter, according to the venture capital research institution SeekFortune. Over 52 percent of the venture capital went to the TMT industry (technology, media and telecommunications). 5 billions A new coalfield, capable of producing 5 billion tons of coal, was discovered in Inner Mongolia Autonomous Region. Because of the discovery, Inner Mongolia has supplanted Shanxi Province as the largest coal resource base in China.

No Optimists for Subprime

The U.S. banks were not alone in suffering a subprime loan crisis--three of the Chinese “big four” state-owned banks were also involved. BOC, ICBC and China Construction Bank, as well as some city commercial banks, have been broadsided by the crisis.

Subprime loans are offered at a rate above the prime rate to individuals who do not qualify for prime rate loans. In July, U.S. Federal Reserve Chairman Ben Bernanke said losses from subprime loans that borrowers have defaulted on could add up to $50-100 billion.

A U.S. report said Chinese financial institutions had bought $107.5 billion worth of U.S. mortgage securities by the end of June last year, accounting for 47.6 percent of similar investments among Asian countries.

The U.S. crisis didn’t dent the buoyant Chinese stock market, however. After the news came out, the stock price of BOC and ICBC steadily increased and almost soared to the upper limit of 10 percent on August 8, which was an unprecedented surge.

The two banks stated that the U.S. crisis will not seriously affect their annual performances because they are only allowed to buy collateralized debt obligation and AAA grade mortgage securities.

Zhu Min, Vice President of BOC, said the bank did invest several billion dollars in subprime loan bonds, but the loss is thought to be only in the millions, slightly impacting the bank’s overall operations.

Tao believes it will take 18-24 months to resolve the crisis. In the meantime, the global markets could be affected heavily.

Northeast to See Boost

The old industrial bases in three northeastern provinces will be revitalized again. The State Council has approved a revitalization plan proposed by the National Development and Reform Commission (NDRC) on August 2.

The NDRC plans to create four industrial bases in northeast China centered on equipment manufacturing, new technology and energy, commodity grain and animal husbandry production, and research and development of key technologies.

Areas involved in the plan include Liaoning, Jilin, and Heilongjiang provinces, the Inner Mongolia Autonomous Region cities of Hulun Buir, Tongliao, and Chifeng, etc.

The regions have a total population of 122 million and cover a land area of 1.45 million square km.

The State Council ordered relevant departments to strengthen supervision, support and implementation of the revival plan, and create a sound policy environment for the revitalization of the old industrial bases.

The State Council also pointed out that administrative division barriers should be broken down to promote reasonable allocation of resources and prerequisites of production flow.

Foreign Funds Fatten Property Market

The National Bureau of Statistics reported an increase in the amount of foreign investment capital flowing into the Chinese