By Herbert Lash

World stocks bounced back from multiyear lows on Wednesday, buoyed by signs of economic recovery in China and plans by its government to increase fiscal spending, news that helped lift oil and metals prices.

U.S. crude oil futures jumped more than 7 percent, extending gains to top $45 a barrel after inventory of crude in the United States declined unexpectedly and demand for gasoline rose.

Euro zone and U.S. government debt prices mostly fell as the rebound in equities undermined investors’ appetite for less risky fixed-income assets.

But the cost of borrowing dollars over three months nudged higher as ongoing worries over the financial sector, where counterparty risks have risen, kept banks wary about lending to each other.

A key gauge of Chinese manufacturing rose in February for the third straight month, hitting a five-month high and lifting investor optimism on hopes the data signaled that China, a major driver of global growth, may be on the brink of economic recovery. China also said it will boost spending on infrastructure and manufacturing under a second stimulus package.

The Shanghai Composite Index .SSEC, the main Chinese stock index, surged 6.1 percent in its biggest gain since November.

European shares rallied, breaking three straight sessions of losses, and U.S. stocks snapped a five-day sell-off. Higher prices for oil and other commodities — driven by China hopes — spurred energy and natural resource stocks.

“The market is encouraged by the news from China,” said Joe Arsenio, president of Arsenio Capital Management in Larkspur, California. “They believe (China) will gain traction in the second quarter.”

Exxon Mobil (XOM.N) gained 2.1 percent while miner Freeport-McMoRan Copper & Gold Inc (FCX.N) rose 14 percent.

Shares of Caterpillar Inc (CAT.N), a big exporter to China and a major seller of equipment to the mining industry, rose 13.7 percent.

After 1 p.m., the Dow Jones industrial average DJI rose 117.08 points, or 1.74 percent, at 6,843.10. The Standard & Poor’s 500 Index .SPX gained 12.03 points, or 1.73 percent, at 708.36. The Nasdaq Composite Index .IXIC added 27.05 points, or 2.05 percent, at 1,348.06.

The FTSEurofirst 300 .FTEU3 index of top European shares closed at 696.23 points, up 4 percent.

Miners Rio Tinto (RIO.L) gained 14 percent and BHP Billiton (BLT.L) rose 12.9 percent on the back of higher copper prices, while steelmaker ArcelorMittal (ISPA.AS) rose 12.4 percent.

Copper jumped over 5 percent to its highest level in more than three months as investors pinned hopes on demand from China, the world’s largest consumer of the red metal.

The rise in equity markets around the world overshadowed more dire economic data suggesting that the U.S. and euro zone recessions have yet to hit bottom.

U.S. private companies hemorrhaged 697,000 jobs in February and the service sector slump deepened.

The dollar vaulted to a four-month high against the yen as another slide in the U.S. private-employer payrolls and persistent worries about the world economy boosted safe-haven flows into the U.S. currency.

But the dollar cut earlier gains against the euro and sterling as stocks rallied and investors took profits ahead of Friday’s government payrolls report and interest rate decisions due Thursday from the European Central Bank and Bank of England.

The dollar rose as much as 99.48 yen, closing in on 100 for the first time since early November, as investors worried about Japan’s struggling economy and the U.S. jobless data.

The dollar rose 0.97 percent at 99.25 against the yen, but it fell against a basket of major currencies, with the U.S. Dollar Index .DXY down 0.49 percent at 88.751.

The euro rose 0.40 percent at $1.2615.

U.S. government debt fell. The benchmark 10-year U.S. Treasury note fell 36/32 in price to yield 3.02 percent. The 2-year U.S. Treasury note slipped 6/32 in price to yield 0.98 percent.

U.S. light sweet crude oil rose $2.73 to $44.38 per barrel.

Gold fell in Europe, flirting with three-week lows, as the bounce in equities lured investors back into riskier assets.

Spot gold prices fell $8.40 to $906.85 an ounce.

Asian stocks rallied on Wednesday on hopes Beijing will step up efforts to support the Chinese economy,

Japan’s Nikkei share average .N225 rose 0.9 percent, after sliding to a 25-year low on Tuesday. The MSCI index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.3 percent.

(Reporting by Edward Krudy, John Parry, Steven C. Johnson in New York and Emelia Sithole-Matarise, Ian Chua, Christopher Johnson, Jan Harvey and Rebekah Curtis in London and Peter Starck in Frankfurt; writing by Herbert Lash; Editing by Leslie Adler)

02/27/2009 Source: SAFE.gov.cn

On January 21, the State Administration of Foreign Exchange (SAFE) issued the Notice on Submission by Chinese-Funded Financial Institutions of Their Statistics Statements on Foreign Exchange Assets and Liabilities (Doc. No.: Hui Fa [2009] No. 6).

By the said Notice, the SAFE announced that it had revised the statistics statement on foreign exchange assets and liabilities of Chinese-funded financial institutions (CFFIs) and announced the application of official submission of the statement.

The Notice also contains details on matters like who is to submit the statement, concept of CFFIs, time frame and requirement for filling out and submitting the statement.

02/23/2009 Source: Xinhua

China cracked down on 6,227 business-related briberies involving 1.65 billion yuan (about 241 million U.S. dollars) in 2008, State Administration for Industry and Commerce (SAIC) said on Monday.

Among them, 726 briberies involved medicine sales. Construction projects accounted for 216 cases.

Industry and commerce departments across the country will this year focus on briberies emerging in the post-earthquake reconstruction and the government funded projects designed for economic expansion, according to Shi Jianyuan, a discipline-inspection official of the Chinese Communist Party posted at SAIC.

Regulators would also watch for briberies in fields such as land transactions and resources exploitation.

SAIC director Zhou Bohua called for severe punishments for officials of industry and commerce departments who accept bribes.

02/23/2009 Source: www.chinaview.cn

China’s central bank on Monday warned of deflation in the near term caused by continuing downward pressure on prices.Commodities prices were low and weak external demand could exacerbate domestic over-capacity, the People’s Bank of China (PBOC) said in an assessment of fourth-quarter monetary policy.

“Against the backdrop of shrinking general demand, the power to push up prices is weak and that to drive down prices is strong,” the PBOC said. “There exists a big risk of deflation.”

China’s consumer price index (CPI), a major gauge of inflation, rose 1 percent in January from a year earlier. In that period, the producer price index (PPI), a measure of inflation at the wholesale level, dropped 3.3 percent.

But the PBOC also warned of medium and long-term inflation risks.

As the central banks worldwide injected a huge amount of liquidity into the financial system, commodities prices could repeat earlier rallies if market confidence recovered, it said.

The PBOC stated that China’s economy faced further downside risks because of slackening external demand, over-capacity in some sectors and increases in urban job losses.

The gross domestic product expanded at a slower rate of 6.8 percent in the fourth quarter of 2008, as exports slumped and the property sector sagged, dragging down growth for the whole of 2008 to a seven-year low of 9 percent

But China had huge market potential and as the macro controls started to take effect, its economy was likely to maintain stable and relatively fast growth, it said.

To spur growth, the PBOC said it would ensure ample liquidity in the banking system and promote the reasonable and stable growth of credit.

It also reaffirmed that China would keep the Renminbi (RMB) exchange rate basically stable, while making it more flexible in a self-initiated, gradual and controllable manner.

02/19/2009 Source: Xin Hua

China’s draft law on social insurance, which aims to create a universal safety net for all the country’s 1.3 billion people, has fueled nationwide debate since it was opened to public comment last December.

Over a 50-day time span ending Feb. 15, the country’s top legislature had received a total of 70,501 suggestions and proposals, the Commission for Legislative Affairs of the National People’s Congress (NPC) Standing Committee said in a statement Thursday.

The proposals, written on the NPC website by netizens or sent to the top legislature by letter, were from people all over the country, including Hong Kong, Macao and Taiwan, the statement said.

The social insurance draft, which underwent its second reading by the NPC Standing Committee last December, specifies a common right for citizens, urban and rural alike, to pay premiums and enjoy old-age pensions and insurance for medical care, work injuries, unemployment and childbirth.

Many netizens agreed that the law is urgently needed as the government strives to expand domestic consumption in the face of the international financial crisis.

“I believe domestic consumption will increase if people don’t have to worry about old age and expensive medical fees,” an anonymous netizen wrote on the NPC website.

China has established several policies concerning social welfare since 1984. By 2008, about 219 million people have pensions and about 317 million have basic medical insurance. An additional 124 million have unemployment insurance, 138 million have work injury insurance and 91 million have childbirth insurance.

Fu Yan, a migrant worker employed by a Beijing household management company, said both she and her husband do not have any insurance. “I didn’t know anything about insurance when I signed a contract with the company. All I wanted then was a job,” said 28-year-old Fu, who is from southwest China’s Sichuan Province.

“There are a lot of migrant workers like me. It’s OK now since I am still young, but I do worry about the future. I definitely hope the law could help us have insurance, like pension and medical insurance,” she said.

To address the concerns of migrant workers, the social insurance draft law allows Chinese citizens to pay pension premiums in one place and draw money in another, if they migrate to other cities or provinces. This stipulation is particularly significant as the country has a much more mobile population than in the past.

The draft also determined that a new rural medical system, in which farmers and governments raise funds together, would be included in the medical insurance plan.

Meanwhile, governments will cover medical insurance expenses for citizens who live on low-income subsidies, have serious disabilities or are older than 60 years, the draft said.

The draft also highlights more efficient fund management. Governments at municipal, provincial and the state-level should encourage and support the public’s participation in supervising insurance funds. Any individual or organization has a right to complain or report illegalities.

Many netizens agreed that the law will be a “blessing” to many people once it was adopted, especially to low-income groups.

“Many migrant workers, laid off workers and unemployed people don’t have any insurance. I think government should increase investment and put them under the safety net to build a harmonious and stable society,” one netizen wrote.

But not all feedback was positive. Some people complained the draft was too general.

“Articles in the draft are too simple and authorize too much power to the local government,” Tan Zhongxiao from central Hunan Province wrote on the NPC website. “Social insurance law has a direct bearing on everyone. I think the law should be more specific so that there will be no problem when being implemented in the future.”

The draft will be further revised based on the public’s proposals before it is passed on to lawmakers for the third reading later this year, according to the Commission for Legislative Affairs.

02/19/2009 Source: www. chinaview.cn

An official of China’s National Audit Office (CNAO) said Thursday that the agency had not found any serious misuse of economic stimulus funds, but he vowed to step up supervision to ensure economic and social stability.

“I am gratified to tell you that the government policies have been implemented well across the local departments, and swift measures have been taken to ensure economic growth,” Liu Jiayi, the head of CNAO, told reporters.

The audits focused on whether funds were used in line with industrial restructuring policies, and whether the money went to high-pollution or energy-intensive projects.

Expensive projects and those concerning environmental protection, as well as money spent to tackle public emergencies, would be closely watched, he said.

Expenditures to improve living standards, including farm subsidies and investments in drinking water projects, would be fully audited, he said.

China unveiled the 4 trillion yuan (580 billion U.S. dollars) stimulus package in November to revive the economy. Growth slowed to 6.8 percent in the fourth quarter.

Auditors will reveal extravagance, large losses and waste in stimulus spending, as well as other serious violations and crimes, Liu said.

Although no major problems were found during the audits, “there was still room to improve,” he said.

He noted that money hadn’t become available quickly enough in some underdeveloped areas with limited fiscal revenue, and overlapping construction persisted in some areas due to poor planning.

About 6 billion yuan was misused in 2008. Most of the money has been confiscated, according to Liu.

“We will hit hard against violations. No mercy will be shown when dealing with illegal activities,” Liu said.

Liu said the CNAO would start a full-scale audit this year of how funds were used for the Beijing Olympic projects. The income and expenses of the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) would also be audited.

Last year, selective audits were conducted on several Olympic projects and irregularities were found “in one or two”– meaning very few, Zhang said, without giving details. He added that the BOCOG had made immediate corrections.

The CNAO was now focused on checking the quality, fund management and land use of reconstruction projects in quake-stricken Sichuan Province, said Zhang.

02/10/2009 Source: www.news.cnWu Shu-zhen, the wife of former Taiwan leader Chen Shui-bian, confessed Tuesday in a Taipei court to some of the crimes she was accused of, and she apologized for her family’s actions.

On Tuesday, Wu stood trial in a corruption case involving her husband and other relatives. She told the court she had accepted 200 million New Taiwan dollars (6.66 million U.S. dollars) in political donations, instead of the alleged 300 million New Taiwan dollars.

She also confessed to involvement in counterfeiting documents, but did not confess to embezzling ‘confidential fund’. She also confessed to laundering 2.2 million U.S. dollars overseas.

At the end of the hearing, Wu apologized. Wu said she would appear in court whenever summoned, if her health allowed. Wu said she would do as much as possible to cooperate with prosecutors.

Wheelchair-bound Wu was taken into the Taipei District Court soon after she arrived at about 2:10 p.m., through a throng of journalists and to shouts from supporters and protesters outside.

It was her first court appearance since she collapsed at the start of her trial in late 2006 and was excused on health grounds from all court sessions on 17 further occasions.

She and Chen are charged with embezzling 104 million New Taiwan dollars in public funds and accepting bribes of about 9 million U.S. dollars in a land purchase deal.

Chen, who has been detained in a Taipei jail since Nov. 12, was elected leader over eight years ago but lost an election in May last year. He was first indicted by prosecutors on Dec. 12 for money laundering and bribery.

Nine of the 14 defendants in the corruption case linked to Chen have pled guilty to the charges against them.

Three relatives of Chen, including son Chen Chih-chung, daughter-in-law Huang Jui-ching and brother-in-law Wu Chin-mao, pled guilty to money laundering on Jan. 21.