Foreign direct investment continued to surge into China, growing 18.77% in the first eight months of 2004 and sealing China's position as the top destination for overseas cash.

According to the Ministry of Commerce, FDI hit US$43.559 billion to August, while in the same period contracted foreign investment, a measure of future business, increased 38.89% year-on-year to US$93.792 billion.

The figures underscored reports from the United Nations and the Organization for Economic Cooperation and Development stating that in 2003 China overtook the United States as the world's number one foreign investment destination.

The UN Conference on Trade and Development (UNCTAD) said China attracted FDI worth US$53.5 billion, compared with US$52.7 billion in 2002. Investment in the US meanwhile plunged by 53% in 2003 to US$30 billion, the lowest level in 12 years, although the US itself remained the largest overseas investor.

UNCTAD said China's strong manufacturing industry was the main attraction, although investment in services was also gaining ground. It forecast that FDI to China in 2004 would surpass US$60 billion.

To August the Ministry of Commerce said it had approved 28,748 new foreign-invested ventures, a growth of 11.73%. Analysts said the especially high growth was partially attributable to the low base in August 2003, when investment slumped by 28% in the wake of the SARS outbreak.

Speculation about the swings between power shortages and power gluts continued with reports from Hong Kong-based China Light & Power (CLP) that Mainland power supplies could exceed demand next year and up to 2007.

However, a leading government official said he expected power supply and demand to be back to something approaching a reasonable balance by 2006.

Zhao Xizheng, president of China's State Grid Corp, told the World Industrial and Commercial Organization summit in Beijing that the government's macroeconomic control measures for reducing investment into energy-intense industries would help restore a balance.

Zhao said preliminary estimates suggested consumption would reach the 3.092 trillion kilowatt-hour range by 2010, approximately a 6% annual increase on average.

State media had reported that demand for power this year would be in the 2.115 trillion to 2.173 trillion kWh range, up from 1. 9107 trillion kWh last year. Zhao said power demand would reach about 4.6 trillion kWh by 2020.

His comments contrasted with those of CLP Executive Director Stefan Robertson, who told a Singapore conference that with new plants coming on line China would see a power oversupply for the next three years. While China would add 30,000 megawatts of power supply a year, he said, demand growth would slow, resulting in excess capacity.

China has said it wants to double power generation capacity to about 900,000 mW by 2020 – from 400,000 mW now.

Online travel agency eLong Inc made its NASDAQ debut unscathed by the People's Bank of China's first interest rate hike in nine years. eLong's American Depositary Receipts, which were priced at US$13.50, rose 15%, to US$15.54, as other China stocks slipped down, a slide analysts blamed on the central bank's 27 basis point rate hike. The Beijing-based travel agency, which is focused on corporate as well as consumer travel, was started in 1999 just ahead of the NASDAQ technology and dotcom crash. Sentiment for Chinese counters has revived after accounting irregularities emerged at China Life and other companies. Recruiting company 51job Inc started trading on the NASDAQ at US$14 in late September and on eLong's first day of trading, shares were selling for over US$30.

China Development Bank is reportedly seeking clearance from the People's Bank of China to securitize RMB10 billion in infrastructure loans, making for the country's largest asset-backed securitization issue if approved. Quoting a CDB official, the South China Morning Post said new debt issued by the bank would be in future tied to performing assets, not non-performing loans. The issue is expected to be yuan-denominated and sell to domestic investors. China's last significant securitization effort was China Cinda Asset Management's RMB2.55 billion issue.

Australia and New Zealand Banking Group (ANZ) said it is considering taking a up to a 19.9% stake in the Shanghai Rural Credit Co-operatives Union, once the organization completes its restructuring as a commercial bank as planned next year. ANZ has worked with the group in developing its credit card business and in other areas for nearly a year. With 300 branches in the Shanghai area and over a million individual and business accounts, Shanghai Rural Credit Co-operatives Union is one of the largest such institutions in China. If the deal comes off, it will mark the first time a foreign bank used China's cooperative segment to become a full mainland player.