TO THE POINT: China's stock market must have a touch of spring fever. Just two weeks ago, the number of new fund accounts in January surged to 1.85 million, five times more than the same period of the previous year. But a week later fund management companies suffered from customers pulling out. Experts warned of a bubble in the stock market but securities companies seemed confident. Meanwhile, Agricultural Bank of China has a lot more spring in its step toward listing. Seeing three other Big Four banks being listed, Agricultural Bank of China certainly doesn't want to be left behind. It is sparing no efforts in delving into its inner problems and the Big Four banks will likely enjoy a complete family reunion in the stock markets in 2008. In other news, China's no spring chicken. It knows its way around the international trade game, and is dealing with unfair trade allegations from both the United States and the European Union. China is also fighting back, protecting itself from dumping from other nations as well. Finally, Lenovo isn't full of the joys of spring. Its lack of profitability in America is becoming an eyesore on the company's financial reports.

 Stock Bubble to Burst?

The Chinese stock market seems a bit manic depressive lately.

After recent record highs, the market now shows signs of cooling down.

On February 5, the total trading volume of the Shanghai Stock Exchange hit a record low in the new year to 55.4 billion yuan, only half of one of the "good old days" in January. The Shanghai Composite Index closed at 2612.54 points on February 5, down from the previous 2975 points on January 24.

Triggered by the stock slump, fund management companies are also suffering. A large number of speculators and individual investors are redeeming funds, ushering in a cold wind just when the market was getting heated. The once coveted bank shares and real estate shares are being dumped relentlessly due to expected tough macroeconomic control policies.

Heavily pressured by the pulling out request, some fund management companies are calling for rational investment. Guotai Asset Management Co. Ltd. admitted that the nose-diving market hurt investors' confidence and the market would need a readjustment period.

However, most of the securities companies are optimistic about the market. Considering the upcoming Spring Festival, the most celebrated festival in China, people-especially small investors-tend to save money for all the holiday events. As a result, there will likely be a rebound in the stock market after the festival.

China Says NO to Dumping

Foreign countries dumping in China won't remain unchecked.

Potato starch has, in effect, ushered in a new era in Chinese agricultural trading history, when China's Ministry of Commerce (MOFCOM) decided to impose punitive duties between 17 and 35 percent on European potato starch dumpers after a one-year investigation.

Let's rewind to December 2005. At that time, 17 Chinese starch manufacturers from all over the country filed a petition to MOFCOM against their European rivals, claiming the European rivals sold potato starch at a lower-than-cost price. According to Zhou Qingfeng, Director of the Chinese commission on potato starch, the case will benefit millions of Chinese farmers, as the average potato price increased to 0.48 yuan per kg last year from 0.34 in 2005 after China levied a primary tariff on imports from Europe.

China Daily reported an agricultural institution in Yunnan Province said local farmers would have suffered losses of some 120 million yuan if the anti-dumping charge had not been imposed.

Late last year, MOFCOM embarked on an investigation against Indian medical raw materials like sulfamethazine, and decided on February 1 this year that the Indian side is dumping. As a result, domestic importers dealing with India have been ordered to leave deposits with Chinese customs which they can get back if no dumping has occurred.

China, or its companies, has been subject to the most antidumping tariffs and cases in the world, yet seldom treats foreign countries to a taste of their own medicine. But as the country becomes defter in talks and gets accustomed to how the international trade game is played, this will likely start to change.

Flimsy Subsidy Charges

The United States is pushing China's trade buttons, but perhaps for the wrong reasons.

U.S. Trade Representative (USTR) Susan Schwab claimed China's state subsidies for steel, paper, information technology and other industries allow China to export its goods on the cheap, preventing U.S. firms from being able to compete fairly both at home and in other markets.

The United States threatened to bring the case to WTO if dialogue doesn't work, but it failed to provide any concrete evidence. China's MOFCOM "regrets" the U.S. complaint. Experts believe the real motive is to force renminbi appreciation.

"The reason for filing the case is largely because the USTR wants to show the Democratic Congress is being forceful against China, at a time it is seeking to renew trade authority," said Robert Cassidy, a former Clinton administration official who focused on China trade issues, as Dow Jones & Company Inc.'s Market Watch reported.

Japan and the European Union didn't join the U.S. complaint, which suggested they are not optimistic about the complaint.

Chinese experts pointed out the subsidy charge won't hurt much of the bilateral trade and that it was just a continuation of U.S. political infighting between donkeys and elephants.

Lenovo's Predicament

Lenovo is doing just fine-that is if the U.S. market isn't taken into account.

According to Lenovo's fiscal third quarter report from October 1 to December 31, the company saw strong growth in the Chinese market and other Asian markets and made a total turnover of $4 billion, a slight increase from the same period in the previous year.

"Lenovo has made a profit in the cutthroat international market, except in the American market," stated Lenovo's President Yang Yuanqing.

Sales in America dropped 4 percent from $1.2 billion to $1 billion.

Lenovo bought IBM's personal computer division for $1.25 billion and is still stumbling in the American market.

Big multinational companies like Siemens, which was once a big fan of IBM computers, is turning to Dell Inc. for personal computer procurement for its employees.

So is the U.S. market a mission impossible?

Yang is defensive, stating that Lenovo will switch to U.S. small and middle-sized companies and ordinary consumers rather than rely on the shrinking number of big accounts.

Yang hoped to regain a profitable status in the U.S. market in two or three years.

Steel Gets Pummeled

China is considering reducing tax rebates on some steel exports from 11 percent to 5 percent and other steel products like wires and panels will receive no rebates whatsoever.

"We are waiting for an official statement, but the tax rebate reduction doesn't come as a surprise," said Yu Ruitai, an expert in the Shanghai steel industry.

From January to September last year, China's steel exports increased by 81 percent year on year and Europe was a major steel export destination. The European Union has been ceaselessly wrangling with Chinese over steel and plans to file a large-scale antidumping litigation involving Chinese steel exports.

Confronted with the increasing international trade frictions, China "should get used to trade frictions and litigation as it is now the third largest trading country in the world," said Jin Bosheng, an expert from the Chinese Academy of International Trade and Economic Cooperation.

Last But Not Least Agricultural Bank of China (ABC), the fourth largest bank in China, is undertaking mammoth reform so as to meet listing requirements. Currently, almost 800 million of China's population are farmers. The ABC was originally created to serve Chinese farmers, agriculture and rural areas. Its non-performing assets-740 billion yuan by the end of 2005-remain a hindrance. "The nature of the bank decides it will be more arduous and tougher to reform the ABC in line with a qualified listed company," said Han Zhongqi, ABC Vice President. Han said the bank will introduce domestic or overseas strategic investors, adding it is still early to talk about details. Han said the Central Government hasn't decided where the bank should be listed. China Securities Journal cited unnamed sources as saying the Central Huijin Investment Co., a state-owned investment institution, would inject $25-30 billion into the bank. The other three big state-owned banks, Industrial and Commercial Bank of China, China Construction Bank, Bank of China, had all benefited substantially by the Central Huijin Investment. The bank has more than 24,900 branches in China with over 450,000 employees, making it the largest of all the Big Four banks.