Numbers of the Week

4%

The registered urban and township unemployment rate in China stood at 4 percent in the first half of this year, down 0.2 percentage points from the same period last year.

15.73 billion

The Chinese mainland, Hong Kong, and Macao will jointly spend 15.73 billion yuan ($2.3 billion) to build a giant bridge connecting Hong Kong, Zhuhai and Macao.

TO THE POINT: The Chinese mainland and Taiwan officially started local currency exchange services just before they resumed direct flights and opened up the Taiwan tourism market to mainland visitors. A government report warned that China was overly dependent on foreign economies that transferred international inflation to it. The government raised the textile export tax rebate 2 percentage points to 13 percent to boost textile manufacturers' competitiveness in overseas markets. China opened two exchanges so companies can trade their pollution discharge rights. The government also issued new rules regarding karaoke copyright fees. By LIU YUNYUN

Currency Exchange

Residents of the Chinese mainland and Taiwan have been able to directly exchange renminbi and the Taiwan currency, NT dollars, in both places as of June 30.

This landmark policy has won high praise from both mainland and Taiwan residents who believe it has better facilitated their trips to the other place. Before the direct currency exchange, Taiwan and mainland residents first had to change their renminbi or NT dollars into U.S. dollars or another major foreign currency, then change those notes into the other currency. It had been a routine for decades.

But the increasing economic ties between the two places prompted local authorities to loosen currency controls. Taiwan banks and their branches, which are certified to conduct currency exchange services, have been able to exchange NT dollars for renminbi since the beginning of this month.

On June 30, the bid price of the NT dollar to the renminbi was NT$4.339, while the offer price was NT$4.552. On the same day, Taiwan's financial institutions sold a total of about 16 million yuan ($2.34 million).

No Easy Bailout

Export tax rebates for silk, wool yarn, chemical fiber and cotton products were increased by 2 percentage points to 13 percent on August 1, according to the State Administration of Taxation. This means export companies' revenue will increase 2 percentage points.

The textile and garment industries have been hurt by the fast appreciating Chinese currency (which makes made-in-China products more expensive); the government's stringent monetary policy (which makes it harder for small and medium-sized textile manufacturers to get financing); and higher prices for labor and raw material.

Despite the government's good intentions, small and midsize textile companies are still grumbling about worsening market conditions, saying their overseas trade partners are forcing down prices and in turn hurting their revenue.

Zhang Bin, an analyst at Sinolink Securities Co. Ltd., argues that the export tax rebate hike will be useless and fail to ease sagging company profits. "It might be good for small and medium-sized companies, but it is definitely not good for industry integration and optimization," Zhang told China Securities Journal.

Zhang believes that fierce market competition would determine the process of "natural selection and survival of the fittest" among the textile manufacturers. He said the rebate hike would prevent companies from upgrading their production technology.

Over-dependence on Foreign Trade

Imported inflation has become a major cause of runaway inflation in China, the National Bureau of Statistics (NBS) said in a recent research report.

It said 60 percent of the Chinese economy depends on foreign economies, and that the international market fluctuations can be quickly transferred to the domestic market and cause significant changes.

The NBS also said international inflation exerted influence on China through crude oil, edible oil and iron ore price surges. With imports accounting for about 50 percent of the country's crude oil supply, the international crude oil price surge caused losses of 50 billion yuan ($7.32 billion) in the first half of this year, the report said.

The country's consumer price index growth rate hit a 12-year high of 8.7 percent in February, and averaged 7.9 percent in the first half of this year.

The NBS concluded that China must be cautious about imported inflation and that domestic inflation pressure would not disappear in a short period of time.