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[quote=MRCT,365491]China Economic Scan Weekly Economic Review – 1 May 2009

1/05/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

In the past week SASAC revealed SOE profits dropped 42%, and the government announced it would spend an additional 70 billion yuan of its 4 trillion yuan stimulus package. Internationally, China and Taiwan finished talks productively and positively, and China signed a free trade deal with Peru after a year of negotiations.

The Chinese government announced it is preparing to spend an additional 70 billion yuan ($10.3 billion), mostly on infrastructure projects. The spending will be the 3rd installment of the 4 trillion yuan ($586 billion) package, which was announced in November. The central government has so far spent 230 billion yuan ($33.8 billion) of the package: 100 billion yuan ($14.6 billion) in Q4 08 and 130 billion yuan ($19 billion) in Q1 09.

The 138 SOEs directly controlled by the central government, reported profits of 119.49 billion yuan in the first quarter, down 41.8% year on year, on sales revenue of 2.36 trillion yuan, down 9.1% year on year, according to the State-owned Assets Supervision and Administration Commission (SASAC).

The profit for March was 62.29 billion yuan, up 85.7% from February, on sales of 935.54 billion yuan, up 26.8% versus Feb. In 2008, SOEs recorded the first annual decline since 2002, falling more than 30% year on year to 665.29 billion yuan.

Internationally, talks last Sunday between the Association for Relations Across the Taiwan Straits (ARATS) and the Straits Exchange Foundation (SEF) resulted in an initiative that will see Chinese mainland companies being allowed to invest in Taiwan for the first time in 60 years.  Another initiative involves setting up a regulatory framework for financial services firms to operate in both markets. Including gradually setting up a clearing system for the Taiwan dollar and the yuan.

"This will drive new investment in the domestic market and bring strong interest from foreigners as well," Standard Chartered economist Tony Phoo was quoted as saying. A few days following this development, China Mobile said it would buy a 12% stake in Taiwan's Far EasTone for $529 million; one of the biggest investments by a Chinese firm in Taiwan.

Chinese Vice President Xi Jinping and his Peruvian counterpart Luis Giampietri Rojas witnessed the signing of a free trade agreement (FTA) between China and Peru, after a year in the making. "The pact covers a wide range of fields and features a high-degree of openness," said Zhu Hong, deputy director general of the International Department of China's Ministry of Commerce. The FTA includes opening service sectors and offering favourable treatment of each other’s investors. Trade between the 2 countries reached $7.5 billion in 2008.

see the rest here: http://www.chinaeconomicscan.com/weekreview1may09econ.html

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