TO THE POINT: Beijing has set a new mission to become an internationally recognized financial center. The mainland stock market rally slowed down and met with heavy selling pressure from those who gained a big profit from the previous market slump. In accordance with market performance, listed companies readjusted their refinancing schemes and cut refinancing prices. Agricultural Bank of China marched toward listing, though problems still exist. China Eastern Airlines denied rumors of recent negotiations with Singapore Airlines and vowed to concentrate on securing sound travel conditions before the Beijing Olympic Games. China Customs strengthened efforts to block illegal grain exports. By LIU YUNYUN

Beijing's New Mission

Beijing, a city with rich history, is strengthening its efforts to become an internationally acknowledged financial center.

Beijing has long been recognized as the political center of China, while Shanghai remains an international financial center.

The Beijing Municipal Government issued a draft notice on promoting financial industry development, which raised the notion of forging a new image for the city as a financial center with global influence for the first time. It suggested Beijing become the national financial decision-making center, financial management center, financial information and service center. In the draft notice, the financial street, located inside the West Second Ring Road, will become the major financial center, while the central business district, situated on the East Third Ring Road, will become the sub-financial center.

Currently, there are 677 financial institutions in Beijing, outpacing that of other cities including Shanghai. Beijing's financial industry contributed 12.5 percent to the city's GDP in 2007, the highest proportion of all cities in China.

Huo Xuewen, Director of Beijing Municipal Financial Service Office, stated Beijing's new goal will not pose any competition to other cities and that China will see a pattern of multiple financial centers.

ABC Performs Well

The Agricultural Bank of China (ABC), one of the "big four" state-owned lenders and the only one which has not been listed yet, reported a 71-percent jump on domestic operating profits in the first quarter year on year to 14.1 billion yuan ($2 billion).

ABC attributed the rise to intermediate service growth and an improved business structure. But it did not reveal overseas figures. New loans to support agriculture and farming and county-level economic development reached 68.3 billion yuan ($9.8 billion), accounting for 48 percent of total first-quarter loan growth.

ABC is now conducting shareholding reform, and is expected to be listed in 2009. The hovering non-performing loan ratio prevents any quick action. According to ABC's first quarter report, its non-performing loan ratio fell by 1.14 percentage points from 23.64 percent at the end of last year, with the total amount of non-performing loans dropping 7.3 billion yuan ($1.04 billion) in the first quarter from the end of last year.

In spite of the improvement, ABC is still lagging far behind the other "big four" banks, whose non-performing loan ratios are maintained at around 2.5 percent.

The capital adequacy ratio is another hurdle toward ABC listing. The bank did not give any information on this matter in its recent yearly reports. Analysts guessed the ratio would remain minus, while a listing bank's capital adequacy ratio must be above 8 percent.

Putting aside the aforementioned two factors, ABC was actually doing well. In the 2007 fiscal year, its economic value-added and operating profits reached 40.5 billion yuan ($5.79 billion) and 96 billion yuan ($13.7 billion), both ranking the first among domestic banks.

No Quick Deal

China Eastern Airlines Co. Ltd. (China Eastern), one of China's major state-owned carriers, clarified that it would not consider any major moves in terms of introducing strategic investors before the Beijing Olympic Games in August.

Rumors spread among foreign media that China Eastern would soon resume talks with Singapore Airlines Ltd. in which the latter would buy a big proportion of China Eastern's stake. Spurred by the news, China Eastern's share price in the mainland stock market surged 20 percent in early May.

China Eastern stated its major responsibility at present is to secure sound travel conditions for travelers as the Beijing 2008 Olympic Games approach.

Luo Zhuping, Secretary to the Board of Directors of China Eastern, said cooperation with Singapore Airlines would be pushed further, but added, "We need patience."

China Eastern had a hard time in persuading its small and medium-sized shareholders to agree to a 24-percent stake purchase by Singapore Airlines four months ago. China National Aviation Holding Co. (CNAC), the parent company of Air China (China Eastern's major competitor), dampened the deal by offering HK$5 per share, HK$1.2 higher than that offered by Singapore Airlines.

China Eastern turned down CNAC's generous offer, and was still keen on cooperation with Singapore Airlines. The company believed Singapore Airlines would bring advanced management and cost control mechanisms to it.

Solving Refinancing Puzzle

Widespread feelings against the large refinancing plans of listed companies impacted company behavior. Some reduced the price of refinancing shares, or curtailed the number of refinancing shares. Some chose to give up refinancing plans.