In February, the Chinese trade surplus amounted to $23.757 billion, the second highest ever single month total. SAFE stated that most international speculative hot money clusters in three major areas: import and export, real estate, and fake foreign currency.

Deng Xianhong, Deputy Director of SAFE, said the campaign would cover foreign currency exchanges, companies, foreign agencies and individuals in China's 10 wealthiest regions, though he didn't specify which 10 would be targeted.

In 2006, the administration inspected 2,027 branches of 29 domestic and foreign banks, over one 10th of which were fined 16 million yuan for misconduct in foreign exchange services.

I'll Walk the Line

The Ministry of Commerce has spoken.

Service sector and hi-tech companies are favored in China. The Chinese Government promotes healthy mergers and acquisitions; monopolistic and malicious takeovers will be forcefully prohibited. In the financial sector, foreign capital is being encouraged to invest in domestic capital markets. Moreover, foreign investors' cooperation with peers from China's non-state economy will be facilitated.

These guidelines also require that foreign investment should be strictly restricted in the real estate industry, and low-end projects with high energy consumption and serious pollution problems.

According to the Ministry of Commerce, last year China approved establishment of 41,485 foreign-funded enterprises, down 5.76 percent from the previous year. Paid-in foreign capital was $69.5 billion, down again by 4.06 percent.

CITIC Bank Duel Listing

CITIC Bank, the seventh largest bank in China, is expected to list on both the Hong Kong and Shanghai stock exchanges in late April, following suit of Industrial and Commercial Bank of China, the nation's biggest lender.

CITIC Bank is a joint-stock commercial bank under CITIC Group. On April 3, the bank was approved by the China Securities Regulatory Commission to issue 2.3 billion yuan-denominated A shares on the Shanghai Stock Exchange and 4.95 billion Hong Kong Dollar-denominated H shares on the Hong Kong market. The initial public offering date is set for April 27.

Before CITIC, several other banks have made successful debuts in the stock markets. Bank shares are believed to be one of the major driving forces for the strong growth of the Chinese stock market, though Chinese banks are known to be plagued by bad loans and lax risk control. The Chinese Government has woken to the value and significance of banks' influence on the stock market, and banks are usually restructured and injected with new capital before they go public. Therefore, bank shares, like ICBC and China Merchants Bank, are categorized as blue chips for investors.

Analysts believe the current Chinese stock market is structurally bullish and the involvement of CITIC Bank will certainly add color to the burgeoning market.

Reach Out, Touch Me

China's direct investment in foreign countries surged last year, the Ministry of Commerce released in early April.

More than 10,000 Chinese enterprises had spread their businesses to nearly 200 foreign countries and regions by late 2006. Last year, direct investment (excluding the financial sector) by domestic investors in overseas countries reached $16.1 billion, growing nearly 31 percent compared with the previous year.

Overseas contractual projects generated $30 billion in 2006, with an annual increase of 38 percent. Meanwhile, newly signed foreign contracted projects also saw a robust yearly growth of 123 percent, or $66 billion.

According to the ministry report, Latin America now tops Asia as the largest market for Chinese investors. China had 60 percent of its direct investments in Latin America and 30 percent in Asia last year.