TRADE

Shanghai seems to be finally making a breakthrough on container traffic volume. It may not sound so important, but the number of containers the city can shift is a crucial factor in terms of how important Shanghai will be as a regional center in the 21st century. The problem is that there is no deep water wharf near the city, and the super container ships which sail with ease into Yokohama, Keelung and Hong Kong's Kwai Chung cannot get anywhere near us due to the shallow waters of the Yangtze and Huangpu Rivers and the incredible silting caused by the millions of tons of mud carried down from the West by the Yangtze River and dumped in the delta. In the first six months of 1999, Shanghai handled 1.91 million containers, 37 percent more than last year, which is an incredible increase. The city will handle at least four million containers this year, an increase of 20 percent on the year. By contrast, Hong Kong handles 12 million containers a year with ease.

INTERNET

China.com, the Hong Kong internet conmpany with close ties to Xinhua News Agency, conducted a successful IPO on NASDAQ, and saw its share price double on the first day. Not a bad profit for those lucky enough to get their hands on some of the stock. The shares trade under the symbol "China".

The page view war between the main China portals is now in full swing. Sina.com says it was averaging 2.8 million page views a day in mid-June, and Sohu.com claims it's up to 2.3 million page views a day. China.com, the darling of Wall Street, doesn't even make the list.

Meanwhile, NetEase (http://www.netease.com) has formed an alliance with Hong Kong's Netvigator (http://www.netvigator.com) and Taiwan's Kimo (http://www.kimo.com.tw) to form the Greater China Portal Alliance (GPCA). the Chinese language portal war is going to get even more intense before the great shake-out comes. And when will that be? Before the end of next year, is our prediction.

Another China tech IPO in the offing: China Unicom, number two telecommunications firm after China telecom, will list shares an a stock exchange (as yet unnamed, but probably Hong Kong) in September. It will also list some shares on the relatively bubbly domestic A-share markets.

The B-share market remains pretty illiquid and of little interest to companies that want to raise serious amounts of money. (There are new suggestions floating around that to resucitate the B-share market, supposedly open only to foreign investors, it should be opened to domestic investors with foreign currency bank deposits.) The China Unicom flosat could be the largest public offering of any Chinse company this year. It is a major player in the cellphone and beeper markets and reported profits last year of around RMB 100 million.

Microsoft says its sales in China have risen for the fifth year in succession, but didn't give any specific numbers. Shanghai's Huangpu District (the Bund and behind) has authorised three companies to open e-commerce websites allowing local firms to offer goods and services in return for credit card payments. The three websites are due to go live on October 1. The three are Shanghai No. 1 Medicine Store, Shanghai Da Donghai Shareholding Co. Ltd., and Shanghai Xin Shiji Shareholding Co. Ltd.

CURRENCY

The People's Bank of China, China's central bank, is continuing to hold to its position that the renminmbi will not be devalued anytime soon, despite any number of predictions to the contrary from any number of so-called experts around the world. Dai Xianglong, the bank's governor said the present exchange rate should be maintained because foreign direct investment has "generally been on the rise" and China's international balance of payments continues to be strong.

ECONOMY

Premier Zhu Rongji has said China holds to the market-opening proposals he made during WTO talks with the U.S. in April, but aded that China is not yet ready to resume WTO entry talks. China has recently reached agreement with both Japan and Australia on the terms of China's entry to the WTO.

Private and collectively-owned firms are now allowed to seek a share listing on a foreign exchange. Share issues overseas was previously the exclusive preserve of state-run companies. There are currently a total of 45 Chinese companies listed on overseas exchanges. Only one of them -- Guangdong Kelong Electrical Co., Ltd., -- is not a state firm. The conditions for listings include net assets of at least RMB 400 million, after-tax profits of at least RMB 60 million, and a regular source of foreign currency revenue.

China's economic growth touched 7.6 percent in the first half of 1999, after achieving 8.3 percent growth in the first quarter due largely to infrastructure spending. Beijing says it is aiming for seven percent growth this year after hitting 7.8 percent in 1998.

Standard & Poor, one of the world's main credit rating agencies, has reduced its ratings for China and a handful of Chinese institutions citing a number of issues including poorer growth prospects, problems in pushing through economic reforms and higher unemployment. S&P lowered its senior unsecured rating for China to "BBB" from BBB+, long-term sovereign debt to "BBB" from "BBB+" and short-term rating from "A-2" to "A-3."

Coca-Cola's sales volume dropped nine percent in the second quarter due to outrage engendered by the bombing of the Chinese Embassy in Belgrade. One the other hand, Coke sales also fell in some other parts of Asia.

Shanghai racked up 9.2 percent growth in industrial added value output in the first half of the year. Export volume was up 17.7 percent, while that of foreign-invested enterprises rose 33.95 percent.

One of Shanghai's main television component companies -- Shanghai Yongxin Color Tube Co. Ltd -- along with seven other major tube producers around China, has resumed production after a halt of two weeks aimed at "maintaining prices by suspending production". The market price of TV tubs has been falling steadily since March.

Sincere is closing one of its two Shanghai department stores due to fierce competition in the market. They are closing the store on Huai Hai Zhong Lu. Sincere was first founded in Shanghai in 1900 and as one of the great shopping emporia on Naking Road in the old Shanghai. It returned in 1993 with a new store on Nanjing Lu. The Huaihai Lu store opened in 1997.

AND FINALLY ...

Careful of that beer bottle -- bottle explosions in the three months to June claimed the lives of five people and injured 52 people in China, according to a China Consumer Association report.