The three-day meeting, which involved bureaucrats from six departments, was believed to be the first of its kind in China to deal with a corporate takeover. It came as domestic pressure mounted to block foreign investment in strategic sectors due to fears that foreign firms were gaining too much power.
Other deals to face the backlash include a US$252 million bid by a Goldman Sachs-led group to acquire China's largest meat processor Shineway Group, a proposed US$138 million takeover of state-owned machinery maker Luoyang Bearing by German bearings company Schaeffler, and Hong Kong-listed Shanghai Industrial Holdings' plan to take a controlling stake in the Lianhua Supermarket chain.
The National Development and Reform Commission's research institute of investment weighed in, calling for a special government department to be set up to "rigorously examine" foreign takeovers of state-owned companies. While the government should try to stay out of corporate matters, the institute said, it should step in to "guard against all the kinds of hidden dangers that such investment brings".
To streamline acquisitions going forward, the commerce ministry published new rules standardizing foreign takeovers of local companies while protecting "national economic security". However, it remains unclear whether the changes, due to take effect on September 8, will help or hinder foreign takeovers.
The onus appears to be on foreign firms to complete due diligence on behalf of the government. They must report in advance any acquisition "where there is a possibility that it would affect national economic security, or lead to a change in control over a famous trademark or old Chinese brand".
Failure to do so will be punishable by the cancellation of the acquisition. This effectively forces all attempts to invest in China onto uncertain territory. The country may owe a large part of its economic success to foreign capital and expertise, but as it develops still further, it looks keen to do so under its own steam.
Typhoons wreak havoc
The official death toll in China from Typhoon Saomai, the strongest typhoon to hit China in 50 years, hit 325 amid outrage that authorities had been of no help and had covered up the number of fatalities. It was feared the death toll would rise considerably as many people were still missing, presumed dead in southeastern Fujian province, as well as neighboring Zhejiang and Jiangxi provinces. More than one million were forced from their homes. Saomai was the eighth typhoon of the season, which began a month earlier than usual. Typhoon Prapiroon, which landed on August 3, killed at least 80 people and Tropical Storm Bilis, which hit on July 14, took more than 600 lives.
Bird flu death toll hits 14
The health ministry confirmed China's 14th bird flu fatality, a 62-year-old farmer from the northwest Xinjiang region who fell ill on June 19 and died on July 12. The announcement came shortly after China confirmed its first human bird flu victim was in November 2003, two years earlier than previously reported. This means the current outbreak of the H5N1 virus may not have started in South Korea in December 2003 as originally thought. The new diagnosis also raises concerns over other cases that may have gone unnoticed. The Ministry of Health said the victim, a 24-year-old soldier from Beijing, was first thought to have contracted SARS.
Killer antibiotic banned
An antibiotic made by Anhui Huayuan Worldbest Biology Pharmacy, a unit of China Worldbest Group, was linked to six deaths and dozens of illnesses in China. Almost half of the 3.2 million bottles of clindamycin phosphate glucose, which is sold in China under the brand Xinfu to treat kidney infections, were recalled and a ban imposed on August 4. The State Food and Drug Administration found the company had broken the country's pharmaceutical production rules by using "inappropriate temperatures" to sterilize and ship the drug. The company's main factory in Anhui province was closed, with as many as 2,000 workers laid off.
Executives from Wal-Mart met with officials from the All-China Federation of Trade Unions (ACFTU) to discuss the introduction of unions into all the retailer's 60 Chinese stores. The talks came after workers set up unions in at least 15 stores in two weeks following the unionization by stealth of the Quanzhou city Wal-Mart on July 29. The ACFTU sees Wal-Mart as its main target in a campaign to establish unions in all foreign companies in China, but the giant retailer, which has no unionized stores in the US, has until now resisted. Labor advocates say the ACFTU is merely a means of helping authorities control workers and prevent the development of independent unions.
War shrine spat returns
Japanese Prime Minister Junichiro Koizumi visited the Yasukuni war shrine August 15, prompting China to claim that such an act "tramples on the conscience of mankind". The visit to the shrine, which honors 2.5 million war dead but also enshrines 14 Class A war criminals, coincided with the anniversary of Japan's World War Two surrender. The incident came shortly after China National Offshore Oil Corp (CNOOC) said it had begun production in an East China Sea oil and gas field claimed by both China and Japan. The dispute over Chunxiao field is acrimonious and long-running; despite several rounds of talks, there has yet to be a resolution.
Bohai polluters targeted
The government announced it will impose strict environmental control measures on the Bohai Sea area and close down pollution-causing projects. Vice Premier Zeng Peiyan said at least 80% of waste entering the Bohai Sea is to be treated by 2010. The Bohai Sea holds 1.5 billion barrels of oil, which equates to 8% of China's proven reserves, according to the US Department of Energy. PetroChina, the country's largest energy company, is one of the oil producers with exploration stakes in the area.
Movies to mark massacre
A Hollywood co-production inspired by Iris Chang's book The Rape of Nanking was unveiled as of one three movies likely to be screened in China next year to mark the 70th anniversary of the slaughter. Produced by US company Viridian Entertainment, a number of British investors and the Jiangsu Cultural Industry Group, the movie will focus on a mother and daughter who try to help others escape the massacre. "We hope we can make the film a classic on the massacre … just like Schindler's List about the miserable experience of Jewish people during the war," said producer Gerald Green.
New corruption probe
Civil servants were implicated in 1,603 out of 6,972 cases of commercial bribery investigated by the Ministry of Supervision since it was set up last year. The cases involved a total of US$246 million. Construction, land transactions, property rights exchanges, medicine sales, government procurement and resource development were highlighted as areas requiring special attention as the ministry vowed to investigate civil servants who accepted bribes from bidders for government contracts.
Church demolition clash
Three thousand protesting Christians clashed with some 500 police officers on the outskirts of Hangzhou at the site of a partially-built church facing demolition. Around 20 people were hurt, four of them seriously, the Information Center for Human Rights and Democracy said. It was claimed the order to tear down the church came in June as part of a provincial government and religious affairs bureau drive to crack down on "illegal religious buildings".
Third-largest food donor
China was the world's third-largest food donor last year thanks to its growing shipments of wheat, flower and grain to North Korea, UN World Food Program figures showed. China accounted for 90% of the 576,582 tonnes of cross-border food aid received by Pyongyang in 2005, driving a 260% year-on-year increase in China's total food donations. It is now in third place in global standings behind the US and EU.
Coal blamed for pollution
China's increasing reliance on coal was blamed for a 27% rise in emissions of acid rain-causing sulfur dioxide since 2000. The 25.5 million tons of sulfur dioxide produced last year is also 42% more than the government goal, set in 2000, of cutting emissions to 18 million tons a year. The figures were announced by the State Environmental Protection Agency (SEPA) as part of a government bid to be more transparent about China's environmental challenges. SEPA insisted that conditions will be suitable for the 2008 Olympics in Beijing.
Restrictions were imposed on the broadcast of foreign cartoons such as The Simpsons during primetime in favor of China-made cartoons so as to boost the country's nascent animation industry, international media reported. However, the industry regulator said the rules are "not formal". "Chinese cartoons only are encouraged to be on TV from 5pm to 8pm," said Zhu Hong of China's State Administration of Radio, Film and Television. However, broadcasters complained that it is difficult to find China-made cartoons that can attract viewers and advertisers.
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