The United States and EU complained to the WTO about the practice and claimed it damaged the interests of their automakers.

On February 13, the WTO ruled against China, accusing it of imposing large import duties on imported car parts which violated trade rules. It was the first defeat of China in all of its WTO-related disputes.

Mei Xinyu, a researcher with the Interna-tional Trade and Economic Cooperation Research Institute under the Ministry of Commerce, said China’s practice was legitimate. “It prevented foreign automakers from sneaking into the country in the form of spare parts to escape import duties,” said Mei, adding that “leveling the tariff gap is equivalent to publicly encouraging auto smuggling.”

The February 13 ruling was a preliminary ruling, but experts said the WTO seldom changed its stance after it gave a preliminary judgment.

“It is hard to predict the final ruling,” said Han Liyu, Associate Professor in law at Renmin University of China. “Even if we lose the case, we could still win some interests under WTO regulations.” The final judgment is expected to be issued in early March.

Agricultural Bank’s Predicament

Among China’s major state-owned commercial banks, Agricultural Bank of China (ABC) is the only one that isn’t listed on the stock market. The bank’s newly added non-performing loans in 2007 stood at 84 billion yuan ($11.75 billion), accounting for 23.64 percent of all loans.

Caijing Magazine quoted an ABC insider saying that in order to carry out shareholding reform, the bank had reconfirmed the losses in previous years, leading to sharp rise in non-performing loans.”

ABC has been working to go public. However, Chinese laws required the non-performing loan ratio of a qualified listed bank must be under 8 percent. The 23 percent-plus rate posed an urgent task for ABC if it hopes to be listed.

ABC President Xiang Junbo said the bank would strive to reform and become a public bank in three years. Central Huijin was expected to inject funds to support ABC’s effort.

Guo Tianyong, financial professor with Central University of Finance and Economics, said the tightening credit policy last year cut the capital supply chain of some companies, thus the previous loans turned out to be non-performing.

Japan Calling Iron Ore Shots

Major steel companies in Japan agreed with the world’s largest iron ore producer Cia. Vale do Rio Doce (Vale) to a 65-percent price jump in iron ore, setting a benchmark price for agreements between other mills and iron ore producers. The new price will start from April 1 this year and the contract runs for 12 months after April. It is a tradition that other steel manufacturers will follow suit and accept the same price raise.

Iron ore prices have increased for six consecutive years since 2003, which was also the year China surpassed Japan to be the largest iron ore importer in the world. The biggest gain previously was 71.5 percent in the year starting April 1, 2005.

Last year, Baosteel Group Corp. won the benchmark pricing agreement, setting the price increase only at 9.5 percent.

Some analysts said Japan had its own motive behind the sharp rise. For a small and resource-limited country like Japan, it should have loved to see a price drop instead of a large increase. However, many years ago, Japanese companies went abroad to take shares in overseas energy and resource companies.

“Japanese companies indeed have shares in lots of mines in Australia and Brazil,” said Feng Bingwen, Secretary General of Guangdong Association of Iron and Steel Industry.

Baosteel was still in talks with Vale, but the result would not differ much from the 65-percent agreement.

Domestic mills can increase the iron and steel prices to cope with the cost pressure.

400 billion

China’s government procurement of goods and services reached 400 billion yuan ($55.6 billion) in 2007, a new high in history, growing almost 9 percent year on year, according to Ministry of Finance.

9 billion

The Chinese Government vowed to spend 9 billion yuan ($1.25 billion) assisting people in snow-hit areas to help them weather the current difficulties.