Imported Inflation

On August 5, the government set up two exchanges in Shanghai and Beijing to let companies trade their pollution discharge rights and environment-related quotas. The move is intended to promote companies' enthusiasm in developing new environmentally friendly technologies.

Such exchanges were first set up in the United States in the 1970s. Many other countries also have established the exchanges.

In China, a polluting enterprise has certain carbon and pollution emissions quotas. If the enterprise produces more pollution than the quota allows, it must pay higher fees to the government. But if the enterprise improves its technology and emits less carbon, it can sell the quota to another company through the new platforms in Beijing and Shanghai.

The marketization of pollution discharge rights is expected to encourage companies to develop environmentally friendly technologies to boost their production.

Xiong Yan, President of the Beijing Environment Exchange, said at the launching ceremony that the exchange's establishment helped legalize the existing underground trade of pollution discharge rights. He said overseas companies constituted a big portion of quota buyers. In the international market, the price of emitting 1 ton of carbon is about 17 euros, while it is around 8-10 euros in China.

The exchanges also will serve as a platform for trading environmentally friendly technologies. But detailed trading rules for this have yet to be determined.

New Effort to Protect Copyrights

After years of disputes over karaoke copyright fee charges in KTV establishments, Chinese authorities finally came up with rules regarding fee collections.

The China Audio-Video Copyright Association issued a notice on August 1 that said each compartment in a KTV establishment must charge users a certain amount for karaoke copyright fees in accordance with local consumption levels. The rules said Shanghai should charge 11.1 yuan ($1.625) per day per room (the highest of all cities), while in Beijing the price is 11 yuan ($1.61) per day per room. It also prescribed standard fee charges for other provinces.

The association also said KTV establishments that refuse to pay the fees will be fined 12 yuan ($1.757) per day per room, according to the number of days they default on payment. Those that use pirated songs also will be fined.

Liu Chuntian, an intellectual property right expert and professor at Renmin University of China, said the detailed rules of karaoke copyright fee collection was a big improvement in the country's copyright protection efforts.

Catering Website Gets Funding

Fantong.com, a Chinese restaurant search engine and reservation service provider, received a total of $4 million in venture capital from Japan Asia Investment Co. Ltd., Itochu Corp. and CA-JAIC China Internet Fund.

Many Internet observers say that after the Internet craze at the beginning of the century, the online market now has entered a phase where investments in Internet-related companies have decreased.

But Fantong.com received funding, because it created a new concept. Netizens can make reservations through the website and write comments about their meals. The site initially had 1 million yuan ($150,000) in registered capital in 2003 and managed to break even at the end of 2005. At present, its annual revenue is 10 million yuan ($1.5 million), according to the website.

Analysts believe the combination of Internet and traditional industries such as catering, accommodations and transportation will be the future development trend of Internet-related companies.

Zhao Xueqin, Chief Financial Officer of Fantong.com, said Japan's catering market is worth about 1.5 trillion yuan ($220 billion) annually on average but is growing slowly. China's catering market is worth 1.2 trillion yuan ($176 billion) annually. Although it is smaller than Japan's, it is growing at a rate of 15 percent annually.

"When economic growth slows down, people will cut consumption in other places," Zhao told Xinhua News Agency. "But food and beverages are two things that they cannot live without."