After the government loosened price controls on December 1, the NDRC ordered local authorities to ensure stable market development and closely monitor market volatility to prevent producers from abusing their pricing power.

No More Risky Bets

China's sovereign wealth fund stopped buying assets in developed countries amid concerns about whether the global financial market would further deteriorate, said Lou Jiwei, Chairman of the China Investment Corp. (CIC), at a meeting of the Clinton Global Initiative in Hong Kong on December 3.

The CIC was established in September 2007 to invest $200 billion of China's foreign reserves, but so far, its efforts have not paid off. Its first investment, purchasing $3 billion worth of shares of Blackstone Group LP, resulted in an astounding loss of about $2.4 billion when Blackstone's share price plummeted. Likewise, the CIC's $5.6 billion investment in Morgan Stanley also lost money when the U.S. financial firm's share value fell dramatically.

The CIC has come under harsh fire from citizens who blame it for abusing the country's wealth built up by so many for so long.

Lou said at the moment the fund's directors did not have the "courage" to invest in the developed world's financial institutions, because "we do not know what trouble they are in."

Lou added he had lost confidence in Western government policies to rescue banks because they "lack coherence." He said the CIC had to wait for a time when there would not be "a massive collapse of financial institutions, and when the governments invest in them." He said the CIC would start looking at investments in emerging markets.

CDB Becomes Incorporated

China Development Bank (CDB), one of the nation's three policy banks, was officially incorporated as a commercial lender on December 1.

CDB was established in 1994 to provide loans to public works along with the other two policy banks-the China Export and Import Bank and the China Agricultural Development Bank.

Last December, CDB received a $20-billion capital injection from China Central Huijin Investment Co. as part of the long-anticipated restructuring fund. This increased CDB's capital adequacy ratio to 12.77 percent and improved its risk-prevention capabilities.

It has been widely reported that CDB's ultimate goal of incorporation was to become listed on the stock market next year at the earliest.