The Ministry of Finance said it might improve its fiscal and tax policies for small and midsize companies to support their technical innovations and help them upgrade their product mixes. The ministry will set aside about 1.4 billion yuan ($205 million) in a central innovation fund for hi-tech smaller companies-about 27.3 percent more than last year.

Mixed Sentiments in Capital Markets

Investors continued to lose large sum because of falling share prices in the bearish mainland A-share markets. The benchmark Shanghai Composite Index lost 48 percent from the beginning of this year until July 31, when it closed at 2,775.72.

The Central Government and stock supervisory body, the China Securities Regulatory Commission (CSRC), have held multiple meetings to discuss how they could stabilize the capital markets. "Maintaining stability" has become a key phrase in government supervisory actions.

On July 28, the CSRC rejected two companies' proposals to issue additional A-shares. Gemdale Group Co. Ltd., a real estate developer, and NARI Technology Development Co. Ltd. intended to issue more shares to boost their capital.

Insiders said the CSRC declined the companies' requests to issue the shares because of sluggish market conditions and recent domestic disputes over the profitability of property development companies. Gemdale Group said it respected the decision and would continue operating as usual.

That same day, the supervisory body also approved the companies' requests to issue bonds with attached warrants.

The CSRC has encouraged companies to seek other options to raise funds rather than from the stock markets.

J&J Expands in China

Johnson & Johnson (China) Investment Co. Ltd. said on July 30 that it acquired Beijing Dabao Cosmetics Co. Ltd., a well-known Chinese cosmetics brand, after receiving approvals from various state supervisory bodies.

The two sides declined to disclose the details of the transaction, which was two years in the making. According to a public notice that Dabao issued to the China Beijing Equity Exchange, the price was estimated to be no less than 2.3 billion yuan ($337 million).

Dabao has become a household cosmetics brand since it was introduced in 1985. It is now the best-selling domestic cosmetics brand on the mainland. It mainly targets the country's low-end consumers and second and third-tier markets. Its skin-care products include SOD Milk, Beauty Day/Night Cream, and SOD Protein Milk.