Although Zhao believes 2009 will be the toughest year for China's economy, he underlined the importance of the country's healthy financial system and said the stock market would boom again once investors believe that the economy is improving.

Stumbling Steel Mills

Mainland steel mills encountered heavy losses in November, with 71 large and medium-sized steelmakers in the red to the tune of a total 12.77 billion yuan ($1.87 billion).

Analysts attributed the losses to high iron ore prices, which were set at the beginning of the year, and declining iron and steel prices in the spot market.

Chinese mills agreed to pay a record $92 per ton for iron ore in their long-term contracts last year, while steel prices had dropped about 40 percent since last June as a result of the global economic recession.

Li Yizhong, Minister of Industry and Information Technology, said in December that the government was considering measures, including buying some steel products for reserves, to help the industry survive the rough situation.

The government also tried to boost iron and steel demand by encouraging the export of electromechanical products, a major industry that requires steel. On December 29, it announced that it was increasing the export rebate for electromechanical products to 17 percent from 13 percent and 14 percent.

Analysts were pessimistic about the December figures, as demand for iron and steel continued to slide because of factory closures and economic uncertainties.

Companies' Response: No Job Cuts

More than 200 privately owned enterprises, joint ventures and wholly foreign-owned companies in Shanghai, the mainland's financial hub, jointly pledged in a statement that they would not lay off employees or cut salaries despite the economic slowdown in 2009.

The statement came after Li Rongrong, Minister of the State-owned Assets Supervision and Administration Commission of the State Council, asked the centrally administered state-owned enterprises in early December not to cut jobs and to maintain stable economic development in the midst of the downturn.

The "no job cuts" event, attended by managers from more than 200 enterprises, was organized by the Shanghai Municipal Trade Union Council.

"Enterprises should face up to the tough economic situation and strive to fulfill social responsibilities," the joint statement said. "We will not lay off workers, as it would add a burden to society."

Trade unions of all levels in Shanghai are expected to raise more than 140 million yuan ($20.5 million) before the Spring Festival holiday week (January 25-31) to help more than 300,000 workers who are facing tough times.

Sanlu Goes Bankrupt

Sanlu Group Co., the melamine-tainted baby-formula producer, officially entered bankruptcy procedures on December 24, a much-anticipated denouement for the whole tainted milk scandal, which eroded citizens' confidence in domestic dairy products.

The Shijiazhuang-based company was found to have added melamine to its baby formula, which claimed several lives and made hundreds of thousands of infants sick. Sanlu was shut down in September.

The Shijiazhuang Municipal Government said on December 24 that Sanlu, in which it had a controlling stake, declared bankruptcy with a total debt of 2.66 billion yuan ($388 million) against assets valued at 1.56 billion yuan ($228 million). It also said Sanlu had already paid back 30 percent of the money it owed to its distributors. The local government estimated that the entire debt to distributors would be paid off in the second half of 2009.

Stable Premium Growth

China's insurance industry grew steadily in 2008 despite major challenges imposed by claims from the country's snowstorm-hit southern regions and earthquake-stricken areas.

Wu Dingfu, Chairman of the China Insurance Regulatory Commission (CIRC), said at an annual national insurance conference in Beijing on December 27, that the premiums of all domestic insurers totaled 915 billion yuan ($134 billion) in the first 11 months in 2008, a 42-percent increase year on year.

Wu also noted that sales of life insurance grew the most by 51.8 percent to 700 billion yuan ($102 billion) year on year, according to the CIRC. But insurance investment profits plummeted 66.7 percent year on year to about 93 billion yuan ($14 billion).

Wu said the country's insurance industry remained in good shape despite the domestic and global economic downturns, but he expected more challenges in 2009.

Joint Venture in Financial Turmoil

The joint venture agreement between Swiss bank Credit Suisse Group AG and China's Founder Securities Co. was officially approved by the China Securities Regulatory Commission on December 30.

The joint venture-Credit Suisse Founder Securities Ltd.-will mainly provide financial services to clients in mainland markets, including sponsoring and underwriting A-shares and government and corporate bonds in China.

The Swiss bank will own a 33.3-percent stake in the joint venture, while Founder Securities holds the remainder.

"Many international banks are longing for a share of investment banking services in emerging markets, including China," said Kai Nargolwala, Credit Suisse's CEO in the Asia Pacific. He added that his company would continue to invest in China despite the international economic downturn.