China forecasts a slowing of inflation

Helen Yuan Bloomberg News Monday, October 11, 2004

SHANGHAI Growth in Chinese consumer prices is showing signs of slowing and will ease further in the fourth quarter because of stabilizing grain prices and a glut in most domestic products, a government department said.
.The government's measures to keep price increases from accelerating are working, the National Development and Reform Commission said Saturday on its Web site. Food prices in China's major cities were stable during the weeklong national holiday, which ended last weekend.
.The average grain price, already at its highest level since 1995, will be subdued by lower international prices, the commission said. Food costs such as meat, poultry and milk will stabilize following a stable domestic grain market, it said.
.China's inflation rate was at a seven-year high of 5.3 percent in August on rising food costs. Producer prices rose 6.8 percent from a year earlier, their largest increase in eight years, the Beijing-based statistics bureau said in September.
.The government has clamped down on lending to certain industries to damp an investment boom that it blames for power shortages, clogged transport networks and accelerating inflation. U.S. officials have said that China should raise interest rates and relax the yuan's peg to the U.S. dollar to help cool the economy.
.Excessive investment has spurred increases in energy, transport and housing costs. Yet 446 of 600 main products in China remained in oversupply, the commission said in the statement.
.Food prices, which account for about a third of China's consumer price index, jumped 14 percent in August, the statistics bureau said. Grain prices surged 32 percent, meat prices gained 24 percent and the cost of eggs climbed 30 percent, it said.
.Consumer goods prices rose 6.3 percent, service costs increased 2 percent and housing prices climbed 6 percent.
.Textile curbs sought in U.S.
.U.S. textile makers have asked the Bush administration to limit increases in the import of cotton trousers from China, a Commerce Department spokeswoman, Mary Brown Brewer, said. The agency has 60 days to decide whether it will review the case and consider restricting Chinese imports.
.The textile makers' petition covers what was $280 million of imported goods last year and is the first of what the industry has promised will be dozens of trade complaints to prevent more Chinese imports when global quotas on textile and apparel expire at the end of this year.
.National Spinning, Milliken and other U.S. textile companies are warning that as many as 600,000 of the 700,000 American textile and apparel jobs will be lost next year. Once the textile quotas are eliminated, China will dominate the global trade in clothing, according to the U.S. International Trade Commission and other analysts.
.Last year the Bush administration limited the increase in imports of Chinese-made brassieres, robes and knit shirts to 7 percent a year. The specific China limits, called safeguards, were negotiated as part of that nation's acceptance into the World Trade Organization in 2001.
.Lloyd Wood, a spokesman for the industry, declined to comment. The U.S. industry has scheduled a press conference Tuesday to discuss its petitions.
.Apparel and shoe imports from China grew to more than $27 billion last year, a 50 percent increase from 1999. China will grow to supply 50 percent of U.S. clothing imports after the system ends, from 16 percent in 1995, the trade body said in an August report.

.Bloomberg News

China to Discuss Currency Policy With G-7 Nations

By Paul BlusteinWashington Post Staff WriterThursday, September 23, 2004; Page E01

China will participate in a special meeting with the Group of Seven industrialized countries on Oct. 1, the U.S. Treasury said yesterday, an announcement that could herald Beijing's eventual membership in the elite economic club.
John B. Taylor, the undersecretary of the Treasury for international affairs, said one major purpose of the meeting will be "high-level engagement" with the Chinese on their currency policy, which has become a politically charged issue in the United States.
Beijing's longtime policy of fixing its exchange rate at 8.3 yuan per dollar is viewed by many economists, manufacturers and labor groups as giving Chinese products an unfair price advantage in world markets, and the Bush administration has come under criticism for failing to press the matter more aggressively.
Calling the meeting "a historic first engagement," Taylor said it will be held over dinner in Washington after a regular session of top G-7 policymakers on global economic issues. Jin Renqing, the Chinese finance minister, and Zhou Xiaochuan, governor of the People's Bank of China, will join counterparts including Treasury Secretary John W. Snow and Federal Reserve Board Chairman Alan Greenspan.
Asked whether the Chinese will be invited to future meetings or given full membership in the group, Taylor declined to rule either possibility in or out.
"The next steps will depend on how this meeting goes," he said. But he strongly indicated that more such meetings are likely, saying that they "are useful in making progress on economic reform" and that the currency issue "is a very natural one for the G-7 to discuss with China" given its implications for global trade and finance.
With member nations that account for well over half the world's gross domestic product, the G-7 has often played an influential role in steering and coordinating global economic policy, though some contend that its importance has withered in recent years. It was launched in 1975 with five members -- the United States, Japan, Britain, Germany and France -- in response to the world oil-price shock. Italy and Canada joined later.
Following the end of the Cold War, Russia was also invited to join the group's annual leaders' summit, which was re-christened the G-8. Russian officials also attend some of the meetings of finance ministers and central bank governors, though they do not participate in the sessions dealing with matters such as exchange rates. Russian officials will not attend the meeting with the Chinese, Taylor said.
Bringing China into the group -- at least the economic policymaking sessions -- is an idea that many analysts have long urged because of the enormous global impact of the fast-growing Chinese economy, the world's sixth largest. In an op-ed article published in the Financial Times in June, for example, Matthew P. Goodman, the recently departed head of Asian economic affairs at the National Security Council, argued for bringing Beijing to the G-7 table to give the Chinese a greater stake in addressing matters of global concern, including the overheating of its own economy as well as its trade and macroeconomic policies.
Yesterday's announcement is a "significant step forward," said Goodman, now vice president at Stonebridge International LLC, a firm that advises corporations on global issues. "I would stress that it doesn't necessarily mean that there's already a decision taken to invite China to become a permanent member of the group, but certainly that would be kind of a logical conclusion of this progression." Chinese officials have been attending some lower-level meetings with G-7 counterparts for quite a few months, he noted.
Goodman said he thinks the administration is partly motivated by politics because of the attacks that Democratic presidential candidate John F. Kerry, among others, have made on the White House for rejecting a tougher stance on the currency issue. "Treasury has very little to show" for its efforts to nudge Beijing toward changing its policy, "so they need to show they're engaging," Goodman said.
"But what this is really about goes back to the original reason for the G-5, managing the big supply shock of the day," Goodman said. "Arguably, China is the big supply shock in the world today, so to not have them in the room is a bit odd."
Defending the Treasury approach, Taylor said, "There is movement toward a flexible exchange rate," which China has said it would like to have. De-linking the yuan from the dollar would presumably allow the yuan to rise and make Chinese exports more expensive.
"They've been opening the banking sector, relaxing controls on capital movements. . . . These are all steps on the way," Taylor said, adding, "The best way to move toward that goal [of currency flexibility] is to have a meeting at this [G-7] level."

Hu's grip on power in China tightens

By James Kynge in Beijing
Published: September 19 2004 19:50 | Last updated: September 19 2004 19:50

China's president, Hu Jintao, has consolidated power during a key Communist party plenum that ended on Sunday as his rival and predecessor Jiang Zemin stepped down as head of the armed forces and lost a campaign to get his chief prot��漏g��漏 promoted to a position of influence.

Mr Jiang, 78, stepped down as chairman of the party's Central Military Commission (CMC) and Mr Hu will take his place, Xinhua, the official news agency, said. The move completes a transfer of power to Mr Hu, 61, that started in late 2002 when he took over from Mr Jiang as general secretary of the Communist party.

In a surprise sign of his waning influence, Mr Jiang failed at the plenum to secure a post for Zeng Qinghong, his prot��漏g��漏, within the CMC. Party sources said Mr Jiang had been insisting that Mr Zeng, who is a politburo member and vice-president, be appointed to a role as vice-chairman.

The upshot of the plenum, foreign diplomats said, was that Mr Hu might encounter less resistance now that the influence of Mr Jiang and his supporters appeared so clearly to have diminished.

"Some of the officials that have been thought of as loyal to Jiang have actually been courting favour from Hu recently," said one senior party source. "It was becoming clear that Jiang's era is over."

But Mr Hu's consolidation of power was not expected to have immediate policy implications. Although he and Mr Jiang sparred over issues of emphasis in foreign policy, domestic politics and economics, their basic approaches were similar, party sources said.

Mr Hu and Wen Jiabao, premier, have been associated with efforts to cool China's torrid economy with "macro-economic controls". They are also known for their emphasis on a more transparent and accountable form of government.

Beijing CBD striving for development

By Liu Jie (China Daily)
Updated: 2004-09-17 08:40

Beijing's Central Business District (CBD) is to draw on the experiences of foreign counterparts to attract multinationals to move their headquarters into the area.

Beijing is to sign a contract in exchange with "La Defense" of Paris, the French capital city's CBD, during the ongoing fifth Beijing Chaoyang International Business Festival.

Zhang Mao, Beijing's vice-mayor, said on Tuesday at the Forum on CBD Multinationals Headquarters & Regional Development that the Beijing CBD had also signed a Letter of Intent of Friendly Exchange with Manhattan borough in New York City, the world's leading CBD, in May.

"We are striving to establish sound relations with similar areas, in a bid to introduce their advanced administrative and management skills to speed up the development of the Beijing CBD and make it a real hub for headquarters of transnational companies," said Zhang.

Official statistics show that 31 multinationals have set up regional headquarters in the capital city, of which more than 80 per cent are in the CBD.

More than 170 of the world's top 500 enterprises have launched joint ventures or subsidiaries in Beijing, and 83 of them have chosen to settle down in the CBD.

So far, more than 800 overseas companies, about 500 transnationals and 570 foreign representative offices have located in the CBD.

A group of foreign entrepreneurs provided suggestions at the forum to accelerate the fast growth of the Beijing CBD.

Joel Epstein, AIG Country Manager for China a transnational company in the Beijing CBD, said that the CBD should develop its polycentric urban design and invest heavily in public transportation, given the city's high population density and traditional urban design.

"To maximize success in attracting multinationals' headquarters to relocate to the CBD, I believe that the area needs to develop a stimulating living and working environment," Epstein said.

China Business Info Center

Ministry sets up anti-monopoly office

By Yan Yang (China Daily)
Updated: 2004-09-17 08:27

The Ministry of Commerce has set up an anti-monopoly office, to give teeth to legislation and to strengthen investigations into monopolies.

The office, a temporary mechanism, is responsible for helping draft upcoming anti-monopoly law, and for related investigations and international communications on prevention of monopolies.

Shang Ming, director of the ministry's treaty and law department is head of the office.

Shang said the office will focus on work to establish a unified and open national market.

A draft of the anti-monopoly law was submitted to the State Council's Legislative Affairs Office in March and distributed to related departments and local governments for comment.

The law is listed on the legislative agenda of the 10th National People's Congress in its five-year tenure, which ends in 2008, but the draft will still have to undergo further revision.

Analysts say the special office is the latest effort by the ministry to speed up the process.

Wang Xiaoye, a researcher at the institute of legal studies of the Chinese Academy of Social Sciences, said the establishment of the office indicated that work on curtailing monopolies is one of the most important tasks for the ministry at present.

Drafting of anti-trust law has been going on for a decade, but there have been numerous revisions because of controversies.

"While China's economy is opening wider and is more market-oriented, the absence of such a law is proving to be a source of major concern," Wang said.

Some multinational companies are exploiting the situation and abusing their dominant position to curb competition, warned a report from the State Administration for Industry and Commerce, which called for the legislative process to be accelerated.

Assistant Minister of Commerce Huang Hai said earlier that local protectionism is serious in China and threatens the establishment of a national market system.

Huang said many local governments have a huge stake in fostering a number of local enterprises as their tax base and source of financial revenue and consequently erected barriers to prevent outsiders from entering local markets.

"The office also means power to crack down on monopolistic behaviour will be strengthened," Wang said.

The office can curb such activities by relevant provisions in the law about unfair competition, price law, bid and tender law, provisional rules on mergers with and acquisitions of domestic enterprises by foreign investors, and other department rules, Wang said.

Analysts estimate the office will be the administration to monitor monopolies when the law is passed, though the ministry says it is temporary.

The latest version of the anti-monopoly draft law has dropped an article about setting up an independent anti-monopoly administration.

The Ministry of Commerce which has power over foreign and internal trade seems to be the most suitable authority.

But the State Administration of Industry and Commerce also has some power in the area since it oversees the implementation of the Law Against Unfair Competition, which has stipulations about monopolies.

The administrative level of the specific department responsible for implementating the law has not been decided.

China Business Info Center

Ministry sets up anti-monopoly office

By Yan Yang (China Daily)
Updated: 2004-09-17 08:27

The Ministry of Commerce has set up an anti-monopoly office, to give teeth to legislation and to strengthen investigations into monopolies.

The office, a temporary mechanism, is responsible for helping draft upcoming anti-monopoly law, and for related investigations and international communications on prevention of monopolies.

Shang Ming, director of the ministry's treaty and law department is head of the office.

Shang said the office will focus on work to establish a unified and open national market.

A draft of the anti-monopoly law was submitted to the State Council's Legislative Affairs Office in March and distributed to related departments and local governments for comment.

The law is listed on the legislative agenda of the 10th National People's Congress in its five-year tenure, which ends in 2008, but the draft will still have to undergo further revision.

Analysts say the special office is the latest effort by the ministry to speed up the process.

Wang Xiaoye, a researcher at the institute of legal studies of the Chinese Academy of Social Sciences, said the establishment of the office indicated that work on curtailing monopolies is one of the most important tasks for the ministry at present.

Drafting of anti-trust law has been going on for a decade, but there have been numerous revisions because of controversies.

"While China's economy is opening wider and is more market-oriented, the absence of such a law is proving to be a source of major concern," Wang said.

Some multinational companies are exploiting the situation and abusing their dominant position to curb competition, warned a report from the State Administration for Industry and Commerce, which called for the legislative process to be accelerated.

Assistant Minister of Commerce Huang Hai said earlier that local protectionism is serious in China and threatens the establishment of a national market system.

Huang said many local governments have a huge stake in fostering a number of local enterprises as their tax base and source of financial revenue and consequently erected barriers to prevent outsiders from entering local markets.

"The office also means power to crack down on monopolistic behaviour will be strengthened," Wang said.

The office can curb such activities by relevant provisions in the law about unfair competition, price law, bid and tender law, provisional rules on mergers with and acquisitions of domestic enterprises by foreign investors, and other department rules, Wang said.

Analysts estimate the office will be the administration to monitor monopolies when the law is passed, though the ministry says it is temporary.

The latest version of the anti-monopoly draft law has dropped an article about setting up an independent anti-monopoly administration.

The Ministry of Commerce which has power over foreign and internal trade seems to be the most suitable authority.

But the State Administration of Industry and Commerce also has some power in the area since it oversees the implementation of the Law Against Unfair Competition, which has stipulations about monopolies.

The administrative level of the specific department responsible for implementating the law has not been decided.

China Business Info Center

7-Eleven store debuts in Beijing

( 2004-02-05 09:09) (China Daily by Liu Jie)

The residents of Beijing's busy Beixinqiao area will soon get the chance to shop any time they like, thanks to the opening of the capital's first 7-Eleven convenience store.

The world's No 1 convenience store operator will open its first 24-hour outlet in eastern downtown Beijing this Spring.

And according to Li Yong, deputy general manager of Beijing 7-Eleven Co Ltd, a newly established joint venture, around 150 outlets will open in Beijing this year, with a total of 500 convenience stores opening up within the next five years.

The convenience store king Seven-Eleven (7-Eleven) Inc got long-awaited approval from the central government at the end of last year to set up a joint venture in China.

Seven-Eleven Japan, a division of Japan-based Ito Yokado, Beijing Shoulian Group and the China National Sugar & Alcohol Group Corporation, hold 65 per cent, 25 per cent and 10 per cent stakes in the joint venture.

In a bid to get greater access to China's increasingly wealthy consumers, the joint venture is engaged in expanding 7-Eleven convenience stores in Beijing and the surrounding provinces.

China plans to lift the restriction on foreign ownership of chain stores - currently set at 65 per cent - by 2005, in line with its commitments to the World Trade Organization.

Yan Ligang, a spokesman of the Beijing Commerce Bureau, says that the time is ripe for the 7-Eleven to enter the market.

"They may use the one-year period to get familiar with the local market and gather experiences for the establishment of a wholly-funded enterprise in China and explore the South China and East China markets, where convenience stores have been well established," said Yan.

Domestic and overseas convenience store operators, including Shanghai's Hualian and Lianhau, Taiwan-based President Chain Store Corporation, Hong Kong's Dairy and Thailand's Charoen Pokphand Group, are engaged in stiff competition in South and East China.

But in Beijing, Superchain, Chaoshifa and Wumei just started to enter the convenience store market in 2002, with a properly established network of such stores yet to take shape in the capital, according to Chen Jian, a researcher at the policy study office of the Beijing municipal government.

Concerning the make-up of the 7-Eleven Beijing, Li indicated that selecting Shoulian as one of the joint venture's partners was due to Shoulian's strong position and experience in running chain stores.

"Shoulian's mature and complete sales network offers a shortcut for the 7-Eleven to get established in the capital," said Yan.

Shoulian, is composed of over 10 chain retailers, including Beijing Yikelong Commercial Co Ltd, Beijing Lufthansa & Wangjing Shopping Centre and Xiaobaiyang Supermarket, whose sales network has covered Beijing's urban area after more than 10 years of development.

But some of the stores will only open from 7:00 am until 11:00 pm, to suit the lifestyle of Beijingers.

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Sina reports record Q4 revenues

( 2004-02-04 23:05) (China Daily)

Sina Corp, the biggest Internet portal in China, yesterday reported record revenues for the fourth quarter, mainly due to strong growth in mobile messaging and online advertising business.

Wang Yan, CEO of Sina Corp. [file/newsphoto]

The company, the first Chinese-mainland-based Internet company listed on the NASDAQ stock market in 2000, said its income for the past quarter achieved a record high of US$38.3 million, rising 197 per cent year-on-year and 20 per cent quarter-on-quarter.

The results beat Sina's projections for the quarter at US$35.2-36.2 million made in October.

Sina's profits in the fourth quarter reached US$9.3 million, or 16 US cents per share.

"Both our advertising and mobile message businesses performed very well in the past quarter and are big contributing factors to our growth," said Hurst Lin, Sina's chief operating officer (COO), in a telephone interview with China Daily.

Sina's advertising revenues grew 13 per cent over the third quarter to US$12.9 million.

Lin pointed out that an increasing recognition of online advertising and the strengthening of its leadership were major factors.

According to market consulting firm Shanghai iResearch Co Ltd, China's online advertising market in 2003 grew 120 per cent over 2002 to 1.08 billion yuan (US$130 million) and Sina took about 300 million yuan (US$36 million) out of the pie, leading other players on the arena.

The company's non-advertising revenues reached US$25.3 million with a 24 per cent quarter-on-quarter increase.

The Sina COO attributed the growth to factors including strong offline sales forces, its online marketing platform, and the launch of new products.

According to Lin, his firm has about 40 people covering almost every provincial region in China to communicate with mobile operators and promote new products, while other companies have a presence in key markets only.

Cash flow from operations during the quarter was US$19.5 million, in contrast with US$3.2 million during the same period in 2002.

Sina's annual revenues also achieved US$114.3 million, almost tripling 2002 sales, while its full-year profits stood at US$31.4 million, or 58 US cents by the end of 2003, compared with a net loss of US$4.9 million and an 11 US cent loss per share over the previous year.

By December 31, Sina's cash funds, cash equivalents and investments in marketable securities were US$227.2 million, an increase of US$18.9 million over three months ago.

Sina Corp's stock price suffered a fall of 8 per cent to US$3.10 on Tuesday US time due to the market's reaction to Sina's peer Sohu.com Inc, but gained 2.3 per cent to US$44.09 after announcing its financial results.

Sohu reported annual revenues of US$80.4 million last year and US$26.4 million in profits, but its quarter-on-quarter growth was only 11 per cent in the past quarter with revenues of US$24.6 million.

"Sina's performance is very good." said Chang H. Qiu, an analyst with US consulting firm Forun Technologies, "Both revenues and profits exceeded market expectations."

Sina estimates its revenues in this quarter will be US$39.5-40.5 million, with US$12.7-13.2 million in advertising revenues and US$26.8-27.3 million in non-advertising revenues. Its earnings per share are expected to be 27-29 US cents.

Lin said his company will continue to focus on advertising and wireless services, while investing in online gaming, search engines and e-commerce.

He believes the markets for new value-added wireless services like multimedia messaging services, wireless application protocols and interactive voice response will see breakthroughs this year after several years of preparation by the industry.

The company will also launch its second online game Lineage 2 free of charge in the next quarter and commercially launch it in the third quarter, but Lin said the contribution from online games to his company won't be significant due to fierce competition.

He said Sina will continue to seek acquisition opportunities in online gaming, wireless services, advertising and e-commerce.

Lin believes more and more Chinese Internet users will accept online shopping this year and in 2005, and Sina will spend more resources on developing this market.

The company said it has paid US$600,000 for professional services related to several acquisition transactions that did not materialize.

 

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Strong China Demand to Sustain Prices: BHP Billiton

MELBOURNE, Sept 16 Asia Pulse - Strong demand out of China will sustain commodity prices at higher levels than experienced in recent years, according to Global miner BHP Billiton Ltd (ASX:BHP).

The miner said that broad-based world growth, strong demand out of China and low inventory levels would sustain commodity prices at higher levels.

BHP Billiton chairman Don Argus today said the high prices would encourage producers to increase output, bringing the supply and demand fundamentals into balance over the medium term.

BHP Billiton would contribute to the new supply, by expanding its operations in a number of commodities, Mr Argus said in the group's annual report.

"BHP Billiton is well-placed to exercise the growth options within our portfolio and increase production capacity for many commodities currently in short supply," he said.

"Many of these expansions can be brought to market quickly and at low cost, a key competitive advantage that ensures we can be profitable."

Analysts expect strong demand to drive BHP Billiton's 2004/05 net profit to around $A5 billion ($US3.47 billion) up from $3.4 billion in 2003/04.

Mr Argus said while China's economy was expected to ease slightly from double digit growth rates, the country would remain a large and sustainable consumer of raw materials and resources in coming years.

While the rate of growth would vary, this should not alter the country's course of long-term growth and development, he said.

BHP Billiton's chief executive Chip Goodyear said rising raw material demand from the developing world would benefit the dual-listed miner in year's to come.

China's growth and effect on the global economy would face inevitable disruptions but would continue to impact on product demand, Mr Goodyear said.

"The impact of China's growth had shaped BHP Billiton's operating and development performance over the past year and we expect this to continue over the medium to long-term," he said.

Mr Goodyear's 2003/04 salary package totalled more than $US4.44 million ($A6.4 million) for the year compared to his 2002/03 remuneration of $US3.54 million (or $A5.24 million according to the exchange rate at the time).

The 2003/04 package included a fixed $US1.25 million base salary, $600,000 in retirement benefits and $US321,071 of other fixed benefits including medical and professional fees.

On top of this he received a performance based cash bonus of $US1.070 million and deferred shares valued at $US997,504.

The group's second highest paid executive was Group President of Energy, Philip Aitken who received a remuneration package of $US3.23 million up from the $US2.81 million previously.

This included a base salary of $US882,427, retirement benefits worth $US318,556 and a performance based cash and deferred shares bonus worth $US1.242 million.

The group's chief financial officer Chris Lynch received a total salary package of $US2.34 million including a fixed salary of $716,480, retirement benefits of $US248,619 and a performance based cash and deferred shares bonus worth $US1.19 million.

At 1125 AEST BHP Billiton shares were five cents lower at $13.16.

ASIA PULSE e

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China shares rally on speculation of change in stock market regulator

Share prices on China's exchanges rebounded from a five-year low this week amid rumors of a reshuffle of market regulators.

Reports in the state-run media that the chairman of the China Securities Regulatory Commission, Shang Fulin, would be replaced by a former Shanghai official have raised market players' hopes that the government will take action to revive share prices.

Shares began rebounding Tuesday amid rumors that Huang Qifan, who is currently deputy mayor of the city of Chongqing, would take Shang's place.

Sources at the commission, speaking on condition they not be named, confirmed news of the reshuffle. It has not yet been publicly announced, possibly pending approval by a top level Communist Party meeting that began Thursday in Beijing.

The state-run newspaper Guangzhou Daily and several Web sites also reported the expected change.

Shang's departure would follow that of former top Hong Kong stock regulator, Laura Cha, who has quit her job as a vice chairman of the commission for reasons the government has not explained.

A report in the financial newspaper 21st Century Business Herald said Cha's main reason for leaving was frustration over her lack of power within the government bureaucracy.

China's stock markets, located in Shanghai and Shenzhen, remain hybrids of capitalism and the country's planned economy. Authorities have encouraged speculative buying by small investors while relying on the markets to raise money for state firms.

Prices have languished in recent months, hurt by government efforts to slow economic growth by tightening credit. A flood of share offerings and speculation that the central bank might raise interest rates for the first time in nine years have also hurt investor sentiment.

The commission recently reported that the 1,380 listed companies suffered their biggest losses ever last month, with the market value of circulating stocks shrinking 49.4 billion yuan (US$6 billion; euro 4.9 billion), or by about a quarter since April. Trading volume shrank 26.5 percent.

"Stock market investors have been experiencing the equivalent of a roller-coaster ride over the past four months," the state-run newspaper China Business Weekly said in a recent commentary.

Huang is a former top leader of Pudong, Shanghai's newly developed financial center, where the stock exchange is located. As head of the city's economic commission in the late 1990s, he also oversaw the reorganization of major state-owned companies in preparation for stock market listings.

Huang is considered a longtime ally of former Communist Party chief and President Jiang Zemin, an advocate of rapid economic growth.

Local media reports and analysts said they expected Huang to take a systematic approach in reforming the market, while avoiding sudden moves that could spook already jittery investors.

On Wednesday, state media reported that the State Council, or Cabinet, has agreed in principle to let commercial banks launch their own fund management units, a move expected to draw funds into the market.

Until now, banks have been restricted to marketing funds produced for outside fund management companies.

"Investors expect that this move will channel more money into the stock market and bring about new revenue for banks," said Zhou Lin, an analyst at Huatai Securities in Nanjing.

Stock regulators also recently suspended new initial public offerings pending the creation of rules that would allow companies and lead managers to set IPO share prices _ a move aimed at preventing artificially high valuations and limiting volatility.

It remains unclear whether the change in command would do more to curb stock market abuses, which seem as rampant as ever despite efforts to clean up the industry.

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