Value-added tax, sales tax, corporate and personal income taxes and customs duties all dropped considerably, while the consumption tax was the only one to grow, increasing 13.2 percent amid the government's call to expand domestic consumption to boost the economy.

The Ministry of Finance attributed the other declines to three reasons. First, taxable corporate income slipped substantially because of the economic slowdown. Second, tax cuts in various fields also resulted in less fiscal revenue. Third, this January had five fewer work days than last year, as the Spring Festival fell in January this year, but in February in 2008.

The result of shrinking fiscal revenue could be devastating, economists warned. If fiscal revenue failed to reach the targeted 8-percent growth this year, the government's actions to stimulate the economy might be hampered by the lack of cash, they said.

The Ministry of Finance found it difficult to come up with an easy solution to replenish its depleting treasury at a time when most countries are cutting taxes to shore up their shattered economies.

FDI Switches Into Low Gear

Foreign countries have been slowing the pace of their investments in China, given the deteriorating global economy.

Paid-in foreign direct investment (FDI) in January plummeted almost 33 percent year on year to $7.5 billion, marking the fourth negative growth for four months in a row.

In January, a total of 1,496 foreign-funded companies were allowed to set up in China, a year-on-year decrease of 48.73 percent.

Foreign companies rushed to dump Chinese assets and shares they held as a result of the exacerbating financial woes.

But MOFCOM spokesman Yao Jian said he believes FDI will grow steadily this year without major setbacks, thanks in part to improvements in China's legal environment, government services and accelerated urbanization.

Chinalco Courts Rio Tinto

Despite a stunning $8-billion book loss after buying about 12 percent of Rio Tinto Plc, the London-listed branch of Rio Tinto Group, 10 months ago, China Aluminum Corp. (Chinalco) held out another olive branch to the heavily indebted mining company.

Chinalco vowed to inject $19.5 billion into the miner for convertible bonds and stakes in some assets, which would increase its current 9 percent stake in Rio to 18 percent.

With the market value of the whole Rio group now lingering around $40 billion, some have criticized Chinalco's offer as too much for too little.

"We don't care if the share price drops or soars," said Xiao Yaqing, former President of Chinalco, in an interview with the China Securities Journal, "The mining resources are getting fewer and fewer. What we are really concerned about is choosing the right time to buy."

Xiao was in charge of the negotiations until he was transferred to the State Council as deputy secretary general on February 17.

Chinalco is aware that many of Rio's shareholders are dissatisfied with the offer, but it has refused to increase it. The deal awaits further approval by Rio's shareholders and Australian authorities.

China Minmetals Bids for OZ Minerals

OZ Minerals Ltd., the world's second largest zinc ore producer, agreed to a takeover by China Minmetals Non-ferrous Metals Co. Ltd.

China Minmetals offered an all-cash acquisition worth $1.7 billion for the struggling Australian miner, which was found to have debts of hundreds of millions of dollars after the financial crisis exposed them. China Minmetals promised to repay all of OZ Minerals' outstanding debt upon implementation of the transaction.

The offer price represented a 50-percent premium over the last traded price of OZ Minerals on November 27, 2008.

The offer had won unanimous support from OZ Minerals' board of directors. Andrew Michelmore, the company's Managing Director and CEO, said in a statement posted on the company website, that "the offer can resolve investor uncertainty (in a volatile market). The offer also provides OZ Minerals' shareholders with a substantial premium to our last traded share price and the certainty of cash consideration."

Jiao Jian, a senior China Minmetals manager in charge of the transaction, told 21st Century Business Herald that buying the Australian company could ensure zinc and copper supplies for Minmetals and that OZ Minerals might be delisted from trading after the completion of the acquisition.