TO THE POINT: The mainland stock market hurdled to record highs on consecutive days. China Reinsurance Group eyed a mainland stock market debut by restructuring into a shareholding company. The Shanghai-listed China Minsheng Banking Corp. announced plans to buy 20 percent of the U.S. UCBH Holdings Inc., becoming the first Chinese bank to enter the U.S. market. On the foreign trade front, the European Commission decided to end quotas on Chinese textile imports and will introduce a "double checking system" instead. Meanwhile, to boost imports, China cut the import tariff on audio and video products in a bid to curb the surging trade surplus. By LIU YUNYUN

EU Textile Quotas Axed

In its latest effort to promote free textile trade, the European Commission agreed with China to end quota restrictions on Chinese textile imports, while a "double checking system" will be implemented in 2008.

The "double checking system" will track the issuing of licenses for export in China and the importation of goods into the EU, the European Commission said in a statement. It will operate for one year in 2008 following the end of quota restrictions on Chinese textiles and clothing.

Following the final stage of global liberalization on January 1, 2005, the amount of Chinese textile and clothing exports to Europe surged, while unit prices dropped.

The European Commission and China then negotiated a memorandum of understanding in June 2005 capping imports of the 10 key textile products from China at agreed levels until 2008.

"I welcome this further step in the cooperation between the EU and China in ensuring a smooth transition to free trade in textiles in 2009," EU Trade Commissioner Peter Mandelson said in a statement.

"A system of joint monitoring means predictability for EU producers and traders as well as a clear picture of future developments as we make the final step to free global trade in textiles and clothing," he added.

According to the European Commission, the joint surveillance system will cover eight categories of textiles and clothing from China, namely T-shirts, pullovers, men's pants, blouses, dresses, bras, bed linen and flax yarn.

Domestic experts worried that a "price war" between Chinese textile exporters would be unavoidable if the restrictions were gone. Some suggested the Chinese Government should impose a voluntary textile quota on its textile exports, but this was strongly opposed by small and medium-sized companies. They feared it would add cost to companies and the policy would favor large companies.

"China has already agreed with the EU to track down Chinese textile exports, which means that the EU has switched its monitoring focus from quantity to quality," said Mei Xinyu, assistant researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. Other experts worried the quota would be disguised in the form of non-quota barriers.

Therefore, the most urgent task confronting Chinese textile exporters is to raise the added value of their products and create independent brands. "As long as we do better in terms of quality and delivery, the international clients will turn to us after they compare textile products made in other countries," said Mei.

Tariffs on Electronic Imports Cut

The import tariff on audio and video products and other electronic products has been cut, according to a statement on the Ministry of Finance website.

The government reduced the import tax from 17 percent to 13 percent on recorded cassettes, compact and digital video discs and floppy discs, effective September 15.

It is widely believed that the move aims to encourage imports of these products in an effort to help reduce the country's trade surplus and rebalance its international payments.

Last year, China imported $30.79 million worth of these products, an increase of almost 80 percent on the previous year. Based on that figure, the reduced tax rate may lead to a loss of about $1.2 million in tax revenues.

The move would help increase imports and reduce the surplus. China mainly imports audio, video and electronic products from developed countries, where most of its trade surplus originates.

China has cut the import tariff on key equipment and reduced export rebates on some energy-intensive products in its overall macroeconomic regulations this year designed to narrow the trade surplus.

In August, China registered a trade surplus of $24.98 billion, up 32.8 percent. However, economists warned if China does not change its economic structure, it will be difficult to substantially reduce the trade surplus.

Minsheng's Ambition

China Minsheng Banking Corp., the country's seventh largest bank by market value, announced on October 8 that it planned to buy up to 20 percent of UCBH Holdings Inc.-the biggest bank serving the Chinese community in the United States.