unnamed customs official who said the number of shoe manufacturers with annual sales of more than $100 million grew to four from two in the first five months of 2008.

Stabilizing the U.S. Dollar

Soaring international crude oil prices and the quickly depreciating U.S. dollar has caused jitters among Chinese citizens.

In his talks with U.S. Secretary of State Condoleezza Rice, China's Premier Wen Jiabao urged the United States to take effective measures to stabilize the dollar and prevent the global economy from entering a recession.

Some analysts argued that the depreciating U.S. dollar caused the value of China's foreign reserves, mostly dollar assets, to shrink sharply.

China has taken steps to safeguard its economic development and hopes the United States would overcome its credit crisis soon, Wen said.

Overseas Acquisition: Not So Good a Deal

Investors responded unenthusiastically to two overseas acquisitions by Chinese financial institutions by selling shares in the acquiring companies.

The two deals were China Merchants Bank Co.'s (CMB) 17.2-billion-yuan ($2.46 billion) acquisition of Hong Kong-based Wing Lung Bank Ltd., and Ping An Insurance (Group) Co. of China Ltd.'s 2.15-billion-euro purchase of a 50-percent stake in Fortis Investment Management NV/SA, the global asset management arm of Fortis SA/NV.

CMB's shares on the mainland A-share market lost more than 30 percent of their value one month after the company announced its acquisition of the loss-generating Hong Kong company on June 3. Ping An's share price dropped 20 percent to around 40 yuan ($5.7) per share three days after it issued its acquisition statement on June 30.

The bad performance of the two weighted stocks further dragged down the already stumbling mainland A-share market, which nosedived 48 percent.

Both investors and analysts complained CMB paid too much for a mediocre bank, which lost HK$82.5 million ($11.8 million) in the first quarter. CMB agreed to offer HK$156.50 a share, or HK$1.50 more than Wing Lung's record high share price. Wing Lung traded for less than HK$90 a share last year, but had soared to more than HK$150 since this March, defying the bearish Hong Kong stock market.

CMB was once one of the favorites of fund managers. But after it announced the Wing Lung acquisition, they rushed to sell the bank's shares to show their discontent with the company's decision.

International investment banks also sold their positions in the bank. A Goldman Sachs & Co. research report said CMB's capital adequacy ratio would be greatly reduced after the acquisition. Standard & Poors Ratings Services put CMB in the "credit watch with negative implications" category.

Deng Ting, an analyst at Guodu Securities Co. Ltd., said in a report that tightening measures as well as risks from real estate industry would place pressure on banks. She said the banking sector's growth rate would slow to 15-20 percent next year from around 50 percent this year, which would negatively impact the evaluation of the bank's shares.

Futures: an Alternative

The gloomy stock markets have dampened investor sentiment and are increasingly forcing investors to turn to futures.

The China Futures Association issued a report on July 1, which said that the futures trade volume hit 35 trillion yuan ($5 trillion), an increase of 142 percent over the first half last year. Futures markets nationwide realized 577 million contracts in the first six months, up 148 percent over the same period in 2007.

Market analysts attributed the increase to an improving domestic market environment as well as fluctuating domestic farm product prices caused by surging grain prices in the world market, China's snowstorm earlier this year, and the massive Wenchuan earthquake in May.