Since China's economy showed some signs of overheating at the end of last year, there has been grave concern about a possible rise in interest rates. Some economists are again calling for hikes.
 China's interest rates have either been cut or kept at low levels since the People's Bank of China (PBOC), the nation's central bank, raised them in 1995. Therefore, it is natural that people would think of raising interest rates at the first hint of inflation.
 However, there does not appear to be a compelling reason for PBOC to make such a decision, especially hastily, at the present time.
 PBOC may have had such plans, but recent changes in the situation have rendered it unnecessary -- for the time being.
 The strongest argument for raising interest rates is that the consumer price index (CPI) reached 5 per cent by the end of June, a level generally believed to herald inflation.
 That is much higher than banks' deposit rates, and very close to rates for loans.
 Interest rates would normally be raised in such cases.
 Reality, however, often contradicts reason.
 Experts with the National Bureau of Statistics (NBS) attributed 4.4 percentage points in the 5-per-cent CPI increase to the price rise of food. That hike was the result of the central government's moves to fatten farmers' incomes.
 Higher incomes for farmers is a blessing for the national economy, not an indication of inflation.
 The CPI rise in June also delayed price hikes of non-food products during last year's fourth quarter.
 The causes that triggered that hike have diminished as a result of the nation's efforts, late last year and early this year, to cool down some overheated sectors.
 It is likely the CPI will drop in the next few months, probably to 3 or 4 per cent.
 That should be regarded as a return to normal, given the fact the CPI growth was low, or even near zero, in recent years.
 The national economy showed signs of overheating at the beginning of the year.
 That was probably the right time to raise interest rates.
 The government chose several administrative measures to chill the fever in some industrial sectors, but refrained from raising interest rates.
 Matters in China are always complicated.
 Overheating in some industrial sectors was caused by over investment by local governments or government-favoured enterprises.

 A higher loan interest rate would have done little to deter those governments from borrowing money.
 But raising interest rates on loans would have greatly affected small and medium-sized non-governmental enterprises. That explains, in addition to other considerations, why the central government hesitated to use the magic wand to repel inflation.
 Overheating countermeasures taken by the government have taken effect, and investment in some sectors has ebbed and prices of some materials, such as steel and cement, have dropped.
 The measures unavoidably have led to some unwanted side effects -- non-government investment has been stymied. In some places, Fujian Province for example, some private companies have had to receive loans from private banking houses -- with interest rates as high as 12 per cent.
 Under such circumstances, the central bank has even less reason to raise interest rates.

  IN BRIEF
  BY PENG FEI

 The Ministry of Commerce, one of the sponsors of the Eighth China International Fair for Investment and Trade (CIFIT), announced recently that a number of Fortune 500 companies will send delegations to the fair, which will be held from Sept 8 to 11 in Xiamen, in East China's Fujian Province.
 The ministry said it has received confirmation letters from companies such as US-based Eastman Kokak, Japan-based Hitachi and Canon, and Sweden-based Volvo.
 "CIFIT will offer a good opportunity for Kodak to display its corporate image and various products," said Tian Geng, manager of the public relations department of Kodak (China) Co Ltd.
Kodak has attended all past seven CIFIT sessions, effectively promoted its products and held successful exchanges with other participating businesses, Tian said.
"We have three important production bases in Xiamen, the fair's host city, therefore CIFIT has a special meaning to Kodak, " he added.
In 1998, Kodak invested US$1.2 billion in China's sensitive materials industry. Most of the investment was channeled to Xiamen, where Kodak successively built a sensitive film plant and two disposable camera plants.
Last year, Kodak earned more than US$1billion from its businesses in China. The China branches have become one of the major profit sources for Kodak.
"We hope our products will become better and more comprehensively known to business people form home and abroad through this year's fair," Tian said.
According to CIFIT's organizing committee, another business giant, Hitachi, has ordered 55 booths covering 495 square metres. It will be the company's first appearance at CIFIT.
"We look forward to promoting our brand image, meeting with new business partners and looking for new investment opportunities during the fair," said an official with Hitachi (China) Co Ltd.
At the fair, Hitachi will showcase its wide range of products, including household electrical appliances, automobiles and telecommunication system, to make people more aware of its technical strength.
Both Kodak and Hitachi have shown great interest in the fair's International Investment Forum, an economic forum with international influence and also the biggest highlight for each session of CIFIT.
The two companies also said that their high-level leaders are expected to attend the upcoming CIFIT and deliver speeches at the forum.
The number of foreign business delegates to the fair is predicted to be larger than last year's, CIFIT's organizers said.
Statistics from the fair's organizing committee show that 11,781 foreign delegates from companies and governments and business organizations in 102 countries and regions attended last year's fair.
Furthermore, nearly 200 famous entrepreneurs, experts and high-rank governmental officials from more than 40 countries and regions gave speeches at various forums and seminars during last year's fair, drawing about 7,000 participants.

 

Agriculture
  The Eighth China International Fair for Trade and Investment (CIFIT) is highlighting agricultural investment by scheduling a special forum on international agricultural investment and project promotion. The forum will serve as a platform for international financing and co-operation in China's agricultural sector.The forum is co-sponsored by the Ministry of Commerce and the Ministry of Agriculture. Leaders of related departments will introduce the latest policies in the agricultural industry and some experts will discuss the advances in agricultural science and technology.
Investment institutions and corporations from countries such as the United States, Japan, Germany, UK, France, Canada and Australia have already forwarded background materials on their delegations to the Organizing Committee of the forum in an attempt to seek opportunities for future collaboration.


Attendance
 Chairman of US-China Business Council and UPS CEO Michael L. Eskew and President of the council Robert Kapp will be heading a delegation of member enterprises to the Eighth CIFIT on September 8. Eskew is making his first visit to this Fair.
Kapp delivered a speech at the "International Investment Forum" during the Seventh CIFIT. President Eskew's decision to attend the fair in person this year is interpreted as recognition and approval of CIFIT by a major international business council as a key investment promotion event both in China itself and around the world.
So far, more than 40 internationally known business chambers have confirmed their attendance at the Fair.
Symposiums
 The Matchmaking Symposium for FDI and Domestic Investment Projects has had 4,512 domestic projects registered via the Internet, according the Zeng Junsheng, the project chief of the organization committee of the Eighth CIFIT. The symposium has attracted more than 400 agriculture and service projects.
Overseas investors are mainly from the United States, Canada, Britain and other countries from Europe and Southeast Asia.
Project matchmaking is expected to make a breakthrough in terms of scale and yields.

Projects
 Investment promotion organizations and enterprises from more than 50 countries and up to 60 corporations from China have registered for the Matchmaking Symposium for Chinese enterprises to go global. Investment targeting overseas countries is to be the highlight of the Eight CIFIT this year.
This symposium enjoys high prestige and trust because of its official background. More than 10 seminars and project promotion meetings will offer policy and trade information. Overseas organizations and their Chinese counterparts will hold "face to face, one to one" consultations, showcasing their advantages in tailor-made service.
More project and trade information is available on the official website of CIFIT, consultations are scheduled in the order of registration.