The reason behind the feverish forays into China, analysts estimate, is the country's expanding vaccine market, which grew 15 percent year on year thanks to the government's commitment to health care reforms. Now the sweeping A/H1N1 virus and the demand for vaccines have added to the market demand.

China has maintained tight control over the domestic vaccine market, imposing stringent restrictions for foreign players. Having a Chinese partner would make it much easier for foreign companies to do business in China. By building a plant without a Chinese partner, Novartis could spend between three to five years attaining approval, said analysts.

Guo Fanli, a senior analyst with the China Investment and Consulting Co. Ltd., said foreign players with more advanced technologies are bound to grab market shares from their Chinese counterparts.

Intensified competition, despite the shortcomings for local companies, is favorable for the overall improvement of the market, particularly the high-end self-paid vaccines, he added.

HK Liquidity Flood

International hot money is pouring into Hong Kong to cash in on the region's economic boom or the possibility of a strengthened renminbi, which is closely related to the value of the Hong Kong dollar.

Norman Chan, Chief Executive of the Hong Kong Monetary Authority, estimated that more than HK$50 billion ($6.45 billion) has made its way into the city, causing volatility to local markets.

The Hong Kong stock market experienced a prolonged rally this year as speculative capital snapped up shares of profitable Chinese state-owned enterprises. Property prices have additionally risen some 30 percent this year, promoting fears that any abrupt withdrawal of capital will deal a deadly blow to the local economy.

While the hot money seeks access to mainland markets, Hong Kong could act as a springboard as close financial ties with the mainland offer channels around stringent regulatory controls, said Francis T. Lui, a professor with the Hong Kong University of Science and Technology.

The liquidity explosion is putting policymakers in a quandary—asset bubbles are immeasurably dangerous when the economy has yet to recover, yet increasing interest rates could only exacerbate the problem.

But Jerry Lou, an analyst with Morgan Stanley China, downplayed the worries, citing the improved financial strength of Hong Kong to stabilize the financial system. Learning lessons from the 1997 Asian financial crisis, Hong Kong has significantly reduced its vulnerability to financial shocks, he said.

SOEs Prove Profitability

China's state-owned enterprises administered by the Central Government (central SOEs) are making sizable gains after bottoming out, a clear sign of accelerating economic momentum.

The 132 central SOEs reaped a profit of 79.5 billion yuan ($11.64 billion) in October, up 151 percent year on year, according to data from the State-owned Assets Supervision and Administration Commission (SASAC). October revenues surged 22 percent from a year ago to nearly 1.16 trillion yuan ($169.7 billion).

Profits from January to October were 633.8 billion yuan ($92.7 billion), down 6 percent from the same period last year.

But the enterprises still face serious headwinds, said Huang Shuhe, Vice Minister of the SASAC, at the 2009 Annual CEO Forum held in Beijing.

Soaring commodity prices, mounting environmental pressures and rampant protectionism are casting an ominous shadow over their profitability prospects, said Huang.

Companies should further enhance independent innovations, improve corporate governance and accelerate the pace of "going global" to compete with foreign brands, he added.

Overseas Expansion

Baosteel Group Corp., China's leading steel maker, recently announced an agreement to pay 286 million Australian dollars ($263 million) for a 15-percent stake in Aquila Resources Ltd., an Australian iron ore and coal company.

The deal, already approved by both governments, makes Baosteel the second largest shareholder of Aquila, and is a high point on Baosteel's path to overseas expansion for long-term resource supplies, said the Shanghai-based company.

"We see a profitable outlook for the future growth of Aquila and expect to create a win-win situation," said Xu Lejiang, Chairman of the Board of Baosteel.

For Aquila, the deal will help source low-cost financing from Chinese institutions to support its projects. Aquila is a listed iron ore and coal miner with a presence in Australia and South Africa.

"We are now looking forward to developing relations with Baosteel for the benefit of both companies," said Tony Poli, Executive Chairman of the Australian company.

Bolstering Tourism

As the economy improves, Chinese tourists are once again reaching for their cameras and suitcases, providing proof the tourism industry is regaining its strength.

The State Council on November 25 approved a program to assist the tourism sector in line with the government's campaign to spur consumption.

The sector is instrumental in bolstering employment and consumption, but efforts are still needed to improve services for tourists, as outlined by the program.

The State Council additionally announced a series of measures to support the sector by allowing more private and foreign players into the sector to increase competition. Improving traffic and security infrastructures and strengthening industrial supervision to boost service qualities are also priorities.