China is to take hefty measures to speed up the reform of its banking sectors in a move to make them more competitive in the market after the country's accession to the WTO, said recently Vice-Governor Wu Xiaoling of the People's Bank of China. At the top of the list of major measures will be an acceleration of the commercialization reform of China's ailing state-owned commercial banks, mainly referring to the reform of the ¡°Big Four" commercial banks. The establishment of a modern cooperate governance system will top the agenda for the state-owned commercial banks, and an internationally accepted, cautious, accounting standard that will help them better ward off risks will also be implemented. State-owned commercial banks should not have to lend policy-oriented loans, their business should cater to market demands and be under their strict risk control system.

In answer to a question regarding the listing prospective of state-owned commercial banks, Wu said the Bank of China, one of the four largest commercial banks, is now working out some internal structural changes believed to be a prerequisite to public flotation. The central bank is hoping to aid the development of China's fledging medium and small commercial banks by offering them more opportunity to go public on the equity market, in a move to provide them easier access to funds. In the queue waiting for public flotation, according to earlier reports, are the Huaxia Bank, the Everbright Bank, China Merchants' Bank, other smaller banks and the Bank of Communication--China's fifth largest commercial bank. All this follows the successful listing of the Minsheng Bank and Shanghai Pudong Development Bank last year. Wu also said progress in accountancy transparency and disclosure standards and improvements in the legal and regulatory framework and supervision and monitoring systems are steps that will be taken in the next few years.

Wu pointed out that China's domestic banking sector will be put under heavy pressure by foreign rivals after the WTO accession in areas such as competition for high-quality customers and high-profile personnel and because of superior management systems, supervision mechanisms and capabilities. However, it will not be a live-or-die situation for all China's commercial banks as there is much that links foreign and domestic banks. Zhu Min, economic adviser to the president of the Bank of China, said domestic banks will be concentrating more on their retail businesses, backed by extensive networks nationwide, while their foreign rivals will be concentrating more on the development of their wholesale businesses in the China market, where it might be too expensive for them to develop extensive networks.

To stimulate the healthier development of China's banking sector and sharpen the competitive edge of domestic banks in the face of intensified competition, China will gradually eliminate the preferential treatment given to foreign-funded banks to ensure fairer competition between Chinese and foreign banks. The country will also step up the opening of the banking sector to increase the presence of foreign banks in China. Currently foreign banks operating in China enjoy preferential treatment compared to domestic banks in income tax rates, foreign exchange deposits and loan rates, financing of foreign currency and inter-bank lending terms. Foreign-funded banks will be able to provide foreign currency services to Chinese enterprises and citizens when China enters the WTO. They will be able to provide renminbi services to enterprise customers two years after China's WTO entry and renminbi businesses to individual customers after another three years. Five years after China's WTO entry, foreign banks will not be limited in geographical region when conducting renininbi businesses.

Wu also talked about the general principles that would govern the liberalizing of interest rates over the next several years. The foreign currency rate should be liberalized before the renminbi rate; rural before urban areas; loans before deposits; and flotation of the rate before total liberalization. Meanwhile, it is also important to deepen the reform of domestic banks to better prepare them for increased competition. The state-owned commercial banks will be transformed into state-owned companies with corporate gover nance. Some will even be converted into shareholding companies. The central bank will increase the capital assets of these banks through various methods including listing on the stock market and the introduction of shareholders. They will also be required to lower their non-performing assets ratio through stringent internal controls and business innovation. In two years time, state-owned commercial banks will be required to release information on their non-performing assets and financial matters. And in three to four years, all financial institutions that handle deposits will have to set up information release systems as transparent as those required of listed companies.

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China's securities authority vowed recently to strengthen management of securities clearance funds to avoid embezzlement of the funds by brokerages. On May 11, the China Securities Regulatory Commission (CSRC) announced regulations managing stock-trading funds placed into securities companies and banks by traders. Starting from next year, all funds in trading accounts for domestic securities trading and clearance, including deposits, securities proceeds, dividends and interest, must be put in special accounts in designated commercial banks and securities clearing companies at the exchanges. Transactions and settlement of funds can only occur between accounts that have been officially registered and that are clearly separated from accounts owned by the securities companies.

The new rule is intended to prevent securities companies from embezzling the clearance funds of clients, a rampant practice in the country in recent years. Separate management of the client trading accounts and funds owned by the brokerages will also increase investor's safety if securities companies face financial difficulties. In the past, many stock traders put their money directly in securities houses for convenience. Management and custody of the funds were controlled by the securities companies. Faced with limited legal financial channels, the companies would misuse the funds they controlled. Such behavior caused disorder in the clearing system and seriously damaged the interests of investors when it got out of control. Many securities companies have not fully realized the serious impact of embezzlement. Investors may possibly not even have enough money in their accounts to trade stocks. Limited cash flow and poor credit could trigger panic and have investors flocking to withdraw money. This could fuel a major crisis in the entire securities and financial markets.

In order to open more legal financial sources to the securities companies, the CSRC has taken several concrete measures over the past few years, including allowing them to acquire bank loans by using securities as collateral. All securities companies must come up with practical plans to return the embezzled funds. Those who can not repay on time will face a loss of business and punishment according to the Securities Law. The situation has already improved as a result of the authority's regulating efforts. The rate of embezzlement of client funds in securities companies dropped to 2.33% by the end of last year.

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According to Ma Xiuhong, Assistant Minister of Foreign Trade and Economic Cooperation, four laws covering the leasing industry are taking shape, and the environment for the development of the industry is showing a marked turn for the better. Ma pointed out that in the two decades since China's opening, Sino-foreign leasing joint ventures have imported capital totaling $7.4 billion, to become an important channel for introducing foreign investment and advanced technology required for promoting technological updating of domestic enterprises and infrastructure construction. The business turnover of Sino-foreign JVs from leasing last year is estimated at a record amount of $500 million.

It is learned the four laws covering leasing include the following content:

1. Concerning the rules of the transactions of leasing, there are stipulations in the new Contract Law relating to the contracts of leasing and financial leasing promulgated in March l999, and relevant judicial interpretation is in draft. Promulgation of the Contract Law provides leasing transactions with legal guarantee.

2. Concerning the principles of accounting of leasing, the Finance Ministry will soon promulgate the criteria of accounting. Transactions of leasing in diversified and flexible forms will be specified in accounting, disclosing information of the lessor and lessee will be standardized and these will greatly promote the standardization and development of long and medium term management leasing.

3. For supervision and administration of the leasing business, the central bank promulgated the ¡°Method of Administration of Finance Leasing Companies" on June 30, 2000. The document released by the central government last August makes clear that the qualification of Sino-foreign JV leasing companies as the main body of management and the scope of management shall be approved by the Ministry of Foreign Trade and Economic Cooperation. The ministry is now drafting the ¡°Method of Management of Foreign-Funded Financial Leasing Companies" to further standardize and promote the development of the JV leasing industry.

4. The Association of Foreign-Funded Enterprises¬ð Leasing committee had proposed to develop the leasing industry to promote the circulation of domestic equipment. The written instructions of Vice Premier Li Lanqing and State Councilor Wu Yi on the proposal last year require the attention of the leadership of the relevant departments. The State Planning and Development Commission, the State Economic and Trade Commission, the Ministry of Finance and the State Administration of Taxation are studying the finance and taxation policy concerning the development of the leasing industry for promoting the circulation of domestic airplanes and large size equipment.

Ma Xiuhong added that JV leasing companies set up in the l980s are in the rather unitary form of finance leasing for purchase of equipment. In recent years, more and more Sino-foreign JVs have taken diversified forms including sell and lease back, leverage lease, entrusted lease, sub lease, and management lease, etc. to cope with different demands. There has been increasing demand for domestically produced equipment and for sales and purchases counted in local currency because of the improved quality of domestic equipment and sales promotion of the products made in China by multinational companies. With the increase of China's investment overseas, export leasing is on the agenda. For this purpose, while actively probing for different forms of business, corresponding laws and regulations need to be studied as soon as possible in order to have relevant laws and to protect fair competition.

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China's use of foreign direct investments (FDI) soared by 12.4% year-on-year to $11 billion in the first four months of this year, according to statistics from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC). The sharp rise reflects the success of MOFTEC's efforts to attract foreign investors. The rise in the same period from 1999 to 2000 was just 1%, and that followed stagnation in the wake of the 1997 Southeast Asian financial tumult. But MOFTEC officials said it is still too early to conclude China's use of foreign direct investments has walked out of the shadow of that crisis. MOFTEC Assistant Minister Ma Xiuhong said recently that she hoped China's actual use of foreign investment would jump 5% for all of 2001 compared with 2000. Many Chinese economists gave more optimistic predictions than that, saying officials tend to be conservative in order to be safe. Long Guoqiang, a senior researcher with the Development Research Center, a think-tank of the State Council, said he based his optimism on the big upswing of contracted foreign direct investments last year.

Due to the Southeast Asian financial tumult, China's use of FDI stalled in 1998, declined by 11.37% in 1999 and rose only by 0.93% year-on-year last year. A slowdown in the world's economic growth would cause investors to be cautious and even delay their investment decisions. But, China's rapid economic growth for three years and the country's good economic performance in the first quarter of this year would make the country a favored target for foreign investors against the gloomy background of a poor world economic outlook. China's gross domestic product increased by 8.1% in the first quarter, higher than many economists had predicted. The government will also try its best to attract foreign investors into the country. The government is revising the directory of industries that foreign investors are either encouraged or restrained or forbidden to enter. MOFTEC officials say it is possible that the directory will come out before China joins the WTO.

MOFTEC statistics show pledged foreign direct investments increased 50.8% year-on-year to $62.7 billion in 2000. Promised foreign direct investments are generally gradually put into use over the subsequent 18 months. Many analysts consider China a rare bright spot in an otherwise gloomy outlook for world economic growth this year. International organizations have lowered their anticipation of world economic growth to about 1% from an earlier 3% projection. But China's growth rate is still expected to hit 7.5% this year. China's pending entry into the WTO is also expected to boost investors' confidence in the market. Investors are enthusiastic about entering the China market with anticipation of improved and more transparent legal framework. China remains the second most popular country for foreign investors behind the United States. As of the end of April, China had made use of $359.6 billion in foreign direct investment, with $697 billion in contracted foreign capital and 371,778 newly approved foreign-invested companies, according to MOFTEC's statistics.

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The Tibet Autonomous Region is aiming for a record gross domestic product (GDP) growth rate over the next five years to be the fastest growing region among China's western areas. Legqog, chairman of the region, said that by reinforcing the agriculture and animal husbandry sectors and stepping up infrastructure construction, Tibet will register an annual GDP growth of 12% between 2001 and 2005--five percentage points higher than the projected national level. Under the regional government's five-year plan, farmers and herdsmen -- which account for 85% of the region's total population of 2.6 million -- are expected to see their income increase by 8.5% annually and each of them will earn more than 2,000 yuan ($240.9) a year by 2005. The region will allocate more funds to develop transport, irrigation, energy and telecommunications over the next five years. As well as upgrading the Gonggar and Bamda airports, the region plans to build four airports in Nyingchi, Lhasa, Ngari and in north Tibet. More than 3,200 kilometers of roads are expected to be built on the roof of the world by 2005, to link up 90% of Tibet's towns and 70% of its villages.

To ease electricity shortages, the region, which lacks coal, oil and natural gas resources, has decided to tap into hydropower, terrestrial heat and solar energy so that power can be supplied to most of its remote villages. The region is to build two ¡°backbone" hydropower plants, with a combined installed capacity of 160,000 kilowatts by 2005 in eastern and central Tibet. The two hydropower plants, located in Modrogongkar and Chamdu, will absorb a total investment of up to 1.8 billion yuan ($217 million). By 2005, the total installed capacity of power plants in the region is expected to reach over 500,000 kilowatts. Most of the capacity comes from hydropower. Tibet is actively lobbying the central government to build two more hydropower plants, with a combined capacity of 46,000 kilowatts, in Nyingchi and Ari in five years. The region has decided to rely on its hydropower resources to help cope with power demand in its populous areas. But Tibet's mountainous region is the least densely populated area in China, and it is difficult to transmit power to the area. To solve the problem, the central government will invest 3 million yuan ($363,000) every year to fund household solar power generators for over 2,000 families in villages and meadows, to satisfy their electricity needs.

Singing high praise for the central government and other regions and provinces for their help in developing Tibet, Legqog said the region's economic growth should rely on its unique industries, such as tourism, Tibetan medicine and organic food. Over the past five years, 716 aid projects. costing 3.156 billion yuan ($380.2 million), have been completed in Tibet, significantly bolstering the region's economic strength. Tibet, seen as a mysterious and adventurous paradise for many trekkers, will step up its efforts, to attract more visitors from home and abroad. The region has vowed to invest more in sustaining research into Tibetan medicine in a bid to raise its profit margin. Legqog said recently that it would promote Tibetan medicine as the region's pillar industry. The region will attract foreign investment in developing its mineral ores, such as copper, chromium and antimony to fuel their exports. Companies from the United States have contacted the region to help in developing the Yulong copper mine, which is the second largest of its kind in China, after the Dexing copper mine in Jiangxi Province. The cooperation is promising because production costs would be reduced with the development of transport, especially with the debut of the first railway in Tibet--the Qinghai-Tibet railway--in six years.

Tibet is expected to double its foreign trade volume by 2005. The region's foreign trade volume is to rise by 15% a year to $266 million by 2005, compared with last year's $130 million. The ambitious target, echoing the State's pledge to pool efforts to tap China's western areas over the next five years, is achievable with central and regional governments' support for exports. The region's exports account for 85% of its foreign trade. The central government is putting $1 billion in to stimulate foreign trade in western areas, and Tibet is one of the major beneficiaries of the fund. The region will use the fund to develop new export products, such as traditional Tibetan medicine, mineral ore, timber, beer and mineral water. Tibetan medicine has potential to grow as a major export product in the region if adequately processed, instead of being sold as a preliminary product or as raw material.

To buoy up exports, the region will create the best environment for companies to sell their products abroad, by granting preferential policies such as export rebates and low-interest loans. lt. will also spur on companies, especially construction firms, to go abroad to seek business opportunities in the international market. Companies are being encouraged to set up factories in neighboring countries such as Nepal and India. Manufacture can be carried out there before they are exported to Western countries. More products will then be sold because Western countries impose quotas on products from China, but not from countries like Nepal and India. Foreign investment in the region is to increase by 15% a year to 138 million yuan ($16.6 million) by 2005. The foreign donation will also rise by 15% a year to 20 million yuan ($2.4 million).

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The number of foreign-funded enterprises established last year in Zhejiang Province showed a big increase over the previous year. Foreign investment has entered a new round of fast-growth. The province last year registered l,452 foreign-funded enterprises involving $3.32l billion of investment and $2.053 billion registered capital. Among them, 857 were Sino-foreign joint ventures, 49 Sino-foreign cooperative ventures and 545 solely foreign-funded ventures, showing a rise of 5l.09%, 78.74% and 85.96% from the previous year respectively. Solely foreign-funded venture has become the most favorable form of investment for foreign investors.

According to the provincial administration of industry and commerce, the manufacturing industry remains the hot spot for foreign investment and foreign investment in the social services industry also grew sharply. The manufacturing industry last year registered l,268 foreign-funded enterprises with registered capital reaching $l.398 billion, ranking first among the various industries. Foreign investment in high technology industries such as pharmaceutical, electronics and other manufacturing industries grew by 66.3%. Computer application, information consultancy and tourism were also eyed by foreign investors. Last year, six foreign-funded tourism enterprises were established and they introduced $l2.7l million of foreign investment, showing a year-on-year growth of 500% and 265.2% respectively. In a bid to actively support the development of foreign-funded enterprises, the province reformed the foreign-funded enterprise registration system and allowed domestic solely individual-funded enterprises, partnership businesses and individuals to team up with foreign investors to build foreign-funded enterprises. These efforts have given a strong boost to the use of foreign investment.

Zhejiang realized a trade surplus of $2.679 billion in the first quarter of this year, accounting for nearly half of the country's total foreign trade surplus. Customs statistics indicate that over the past three months, Zhejiang's total foreign trade volume has reached $7.043 billion, an increase of 27.1% over the same period last year. Exports increased 28.5% to $4.861 billion. Local officials attributed the province's improved performance in foreign trade volumes mainly to its continuous efforts to diversify foreign trade operations over the past years. Last year, a total of 1,107 enterprises were given permission to conduct foreign trade independently. Another 224 enterprises were granted permission over the first three months of this year. So far, 3,407 enterprises in the province have the right to foreign trade. State-owned enterprises, foreign-invested enterprises, collectively owned enterprises and private enterprises have all combined to form a tremendous force in tapping overseas markets. In the first season, foreign-invested enterprises in the province realized a foreign trade volume of some $1.47 billion, accounting for 30% of the province's total. The collectively owned and private enterprises realized a foreign trade volume of $1.05 billion, a surge of 103%over the same period last year But state-owned enterprises remained the major force in foreign trade. They realized a total trade volume of $2.3 billion, accounting 47.7% of the total.

With the deepening of the reform of its foreign trade system, the province is establishing several large state-owned foreign trade enterprises and groups. In line with its far-reaching foreign trade strategy, the province is encouraging domestic enterprises and investors to establish branches and commodity markets overseas. The economic development zones in the province have emerged as a rising force in foreign trade. Some of them have become leading exporters in the local economy. Last year, economic development zones in the province realized a total foreign trade volume of some $4.04 billion, a huge rise of 56% over the previous year. Zhejiang's total foreign trade volume increased 52% to reach $27.834 billion in the year 2000, putting it first in growth rate among the coastal provinces in the Chinese mainland.

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Anshan City in Northeast China's Liaoning Province is gearing up for a wide-range opening up to the outside world in the new millennium. It has stepped up efforts to optimize its economic structure and enhance the city's international competitiveness at the beginning of the 10th Five-Year Plan period (2001-2005). The local government has attached great importance to improving the laws and regulations that govern business transactions with foreign businesses. In a bid to attract more domestic and overseas funds and technology, Anshan has issued a series of regulations to protect the legitimate rights of investors. Development strategies were put in place to improve the investment environment and provide good service and supporting polices to businesses there. Government offices at various levels in Anshan are urged to improve their efficiency and transparency to create a favorable environment for investors.

So far, the city has established a high-efficiency management system and provides high-quality services to enterprises in the city with simplified procedures and formalities for setting up businesses. Businesses there can expect ¡°one stop" service, getting through all application and registration procedures quickly and efficiently. Large-scale and important projects will enjoy special preferential treatment. It will concentrate its efforts on optimizing investment structure, adjusting investment policies, widening fields and methods to utilize investment and providing a reasonable orientation to investors. As many multinational corporations are setting off an upsurge of mergers and acquisitions, Anshan also plans to help money-losing state-owned enterprises through restructuring, merging and assets transfer and reorganization. Meanwhile, in an effort to widen the city's international market and capacity to earn more foreign exchange through exports, Anshan will continue to promote reforms in foreign trade, investment and fund-raising systems. It will keep on strengthening the fundamental role of the market in the allocation of resources.

To sharpen the competitive edge of export-oriented enterprises and their products, the city has gone to great lengths to develop foreign markets, diversify the forms of trade transactions and optimize the composition of exported products. While supporting the state-owned export-oriented enterprises, helping other businesses develop globally is another important step taken by Anshan to improve its international competitiveness. So far, Anshan has made great efforts to guide the sound development of individually owned, private-owned, foreign-invested and other non-public sectors of the economy. It has attached great importance to supporting 26 state-owned export-oriented enterprises including the Anshan Steel Corporation, the Xiyang Refractory Material Corp, the Anshan Bicycle Factory and the Houying Magnesium Mine. Priority has also been given to four key industries including steel, textile and garment manufacturing, machinery and electricity, and the processing of magnesium and talcum.

It will also enhance the exports of equipment, technology and labor services as well as bidding on contract projects in foreign countries. Furthermore, the city of Anshan will quicken the pace of construction of various development zones. Those development zones are expected to act as a window for Anshan's opening up to the outside world, and bases to promote high-tech research and to accelerate the application of research results to production. They are urged to introduce and develop projects with large scale, high added value and good market potential.

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1. Wheel loader. Investment: $25 million.

2. Auto wheel rim steel. Investment: $27.71 million.

3. Production line for steel cord for auto radial tires. Investment: $60.24 million.

4. Ductile iron tube. Investment: $20.48 million.

5. Steel production line. Investment: $20 million.

6. High-purity magnesium carbonate production. Investment: $48 million.

7. High-activity magnesia. Investment: $11 million.

8. Monocrystal magnesia. Investment: $18 million.

9. Cement clinker production line. Investment: $24.18 million.

10. Paper making sewage treatment plant. Investment: $24 million.

11. Upgrading the looms of Anshan Weaving Mill. Investment: $49.6 million.

12. High-grade artificial clothing materials. Investment: $14.46 million.

13. Production line for high-grade extra-width printed ornamental cloth. Investment: $2.4 million.

14. Digital network broadcast TV transmitter. Investment: $5 million.

15. GPS automatic navigators. Investment: $25.4 million.

16. Food-grade Xanthan gum. Investment: $23.7 million.

17. Anshan Zhanqian street construction. Investment: $60.46 million.

18. Construction of Xiuyan Universal Giant Jade Body Exhibition Garden. Investment: $120.48 million.

19. Xiuyan Shihu Reservoir Construction. Investment: $241 million.

20. Agriculture demonstration area along Beijing-Shenyang Expressway. Investment: $20 million.

21. Talcum products. Investment: $29 million.

22. Electrofused magnesite. Investment: $5 million.

23. Magnesite plant upgrading. Investment: $14.75 million.

24. Construction of a high-grade cement plant. Investment: $240 million.

25. Processing of chestnuts. Investment: $11.8 million.

26. Heavy calcium carbonate synthetic plastic paper. Investment: $12 million.

27. Local railway from Xiuyan to Zhuanghe. Investment: $75 million.

28. Crude phenol concentrate refining. Investment: $65 million.

29. Large-diameter straight welded pipe. Investment: $45 million.

30. High strength PC strands. Investment: $19.57 million.

31. Importing head lever looms for weaving equipment renewal. Investment: $7.5 million.

32. Steel-reinforced plastic section. Investment: $5.97 million.

33. Aerosol workshop for western and traditional Chinese medicines. Investment. $5 million.

34. Production and development of folium ginkgo products. Investment: $10 million.

35. Iron ore mining and dressing. Investment: $5 million.

36. Importing continuous casting line. Investment: $24.18 million.

37. High-grade furniture. Investment: $5 million.

38. Electric steel pipe pole tower. Investment: $5 million

39. Aluminum hot-dip steel. Investment: $6 million.

40. Aloe deep processing. Investment: $10 million.

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Industrial textile production has been listed as a key industrial and technological project by the State Economic and Trade Commission and will be the new focus of China's textile sector, according to Du Yuzhou, director of the State Textile Industry Bureau. Industrial textiles will be one of the three pillars of the textile industry alongside fashion and home textiles. Industrial textiles will account for 45% of the country's textile production in the next 10 years, rising significantly from its current rate of 15%. Industrial textile products are expected to reach 3 million tons by 2010. While output in 2000 is expected to be 1.8 million tons. The development of industrial textiles will be focusing on textile products in fields such as agricultural planting, construction, medical care and automobiles. In the automobile industry for example, the demand for textile products used in the production of automobiles will increase along with the rapid expansion of the industry. Experts believe the demand for chemical fiber textiles for the automobile industry will reach 178,500 tons this year and 367,300 tons by 2010.

The past performance of the textile industry has provided a solid foundation for industrial textiles, while the vigorous progress being made by the national economy and rising demand for industrial textiles from various sectors will lead to rosy prospects for industrial textiles. Statistics indicate that between January and October in 2000 textile profits jumped by 170% from the same period of 1999 to 22.8 billion yuan ($2.75 billion). Meanwhile, the government is investing heavily in infrastructure construction, especially in the western region. Industrial textiles are vital to the construction of irrigation works, railways and roads. Consequently the demand for construction textiles will increase by 8-9% in the next 5 years, according to the China Non-woven and Industrial Textiles Association. Experts said the United States focused much of its attention on developing its industrial textiles in the 1980s, which provided new momentum for its textile industry. This is a good example for China to follow.

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Fushan New and High-Tech Industrial Zone, the ¡°dark-horse" of East China's Shandong Province, has become a popular place for domestic and overseas investors. Located in the coastal city of Yantai, the zone attracted 25 large foreign projects in 2000. Last year, industrial output chalked up 430 million yuan ($51.8 million) and pre-tax profits notched up 42 million yuan ($5.1 million). Fushan enjoys all the preferential policies offered to state-level development zones as part of the APEC Yantai Industrial Zone. Focusing on electronics, integrating machinery new materials and bio-engineering, the zone is aimed to grow into a modern industrial area which centralizes on new and high-tech industries and integrates finance, commerce, trade, tourism, recreation and entertainment. So far, Fushan has invested 230 million yuan ($27.7 million) in building and upgrading its infrastructure. The improved investment environment and good location has made the zone a popular place for domestic and overseas investors. At present a dozen countries and regions have set up more than 60 projects in Fushan. Total investment has reached 2 billion yuan ($240 million), which includes $110 million of overseas funding. There are six large projects containing investments of more than $10 million each.

Currently, there are five industrial groups in the zone, including electronic information, machinery, new materials, bioengineering and environmentally friendly food. The Yantai Binglun (group) Co Ltd and foreign investors have spent $35 million in setting up two projects in the zone: the Yantai Moon-win Reefer Container Co Ltd and the Yantai Ebara Air Conditioning Equipment Co Ltd. The two companies are now in operation and the reefer containers are being exported to more than 10 countries and regions. The environmentally friendly refrigerators have been used in more than 300 hotels and shopping malls in more than 20 big cities in China. The Shougang Group, China High and New Investment group Co and Yantai Magnetic King Group, have invested $11.3 million to set up the Yantai Shougang Co Ltd, the largest high-performance permanent magnetic materials production center in China.

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Intensified competition and declining profit margins in China's glass manufacturing market are forcing industry heavyweights to polish up their business strategies to survive. China's glass industry had been severely hurt by the Asian financial turmoil and a domestic market glut for two years before the central government brought glass production under strict control in 1999. After hundreds of small glass factories were closed down, glassmakers started to shine again in the first half of 2000 when the sector became the most profitable in the construction material industry. But the glory lasted only half a year as competition heightened. A new batch of Chinese companies were lured by lucrative prospects into the glass industry, resulting in a sharp increase in output and plunging sales prices. Earlier this year, the government intervened again by limiting the number of glass making projects nationwide. Though the move is easing the pressure from the glut and lifting prices, domestic glassmakers are still facing challenges. Supply is still surpassing demand.

The nation's glass industry is in urgent need of restructuring to increase its competitiveness in the global market. China currently has more than 600 glassmakers, producing 26% of the global plate glass output. The world's top five multinational glass manufacturers control 68%. Size and scope have become critical for a company to survive. This irreversible trend will be further reinforced after China's imminent accession to the WTO. By buying a 75% stake in Guangdong Float Glass Co Ltd for $17.6 million, Shanghai Yaohua Pilkington Glass Co Ltd kicked off its acquisition campaign last year. China's leading glass maker later acquired a 40% stake in Shanghai Fuhua Glass Co for $2.47 million, and is in the process of purchasing a Sino-Japanese plant in Tianjin City. Two other heavyweights, China Luoyang Float Glass Group Co Ltd and Qinhuangdao Yaohua Glass Co Ltd, also are poised to start their acquisition drive.

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Shanghai's hospital market is going to be opened to foreign investment with the establishment of a joint venture general hospital. The Pudong Huashan Hospital is the city's first approved joint-venture hospital following the institution of China's new regulation on joint-venture and Sino-overseas cooperative medical institutions issued last year. The hospital, with a total investment of $29.5 million, is financed jointly by the city's Huashan Hospital and Tai-I (Singapore) Pte Ltd. The 100-bed general hospital will be the largest overseas-invested medical project in Shanghai. Huashan Hospital, the city's leading medical institution, has invested $8.55 million, 30% of the total, for the construction and preliminary preparation work. The other 70% share is held by Tai-I (Singapore) Pte Ltd, with a total investment of $20.65 million. With the further opening of the medical and health-care market in China, more overseas companies and institutions are focusing on this potentially big market.

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Nortel Networks announced recently new optical infrastructure contracts--collectively estimated to be worth $44 million--with three China Telecom regional carriers. The deals include what is believed to be the largest provincial optical networking contract announced to date--a 12-month, estimated $34 million agreement with Hebei Telecom for delivery and installation of a 10 giga bitsper-second (Gbps) optical network to link 11 major cities of Hebei Province. This is expected to increase Hebei Telecom's network capacity by more than 50 folds. Jiangsu Telecom and Jiangxi Telecom have also signed contracts for 10 Gbps optical solutions, bringing the estimated value of Nortel Networks' optical contracts announced in China to $172 million and strengthening Nortel Networks' lead in delivering the new, high-performance Optical Internet to China.

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Lanzhou Lubricant-Lanlian Additive Co Ltd, an oil lubricating additive production and sales enterprise recently started operations in Lanzhou City, the provincial capital of Gansu. The company is jointly formed by China Oil Stock Company and the US Lubricant Company, with total investment of $60 million. The company is established on the basis of the Additive Plant of Lanzhou Oil Refining Company. Its production technology and quality of products lead the country and it occupies about a 50% share of the domestic market. The American Lubricant Company has been dedicated to the production and development of lubricating oil additives for a long time and has strong technological advantages and rich marketing experience. On the basis of the principle of being mutually complementary, the two companies jointly invested $60 million to expand and renovate Lanzhou Oil Refining Company additive plant. The annual production capacity will be expanded from the current 35,000 tons to 70,000 tons and the up-grading of products will also be realized.

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