The China Banking Regulatory Commission said last week that the country will allow investors to purchase controlling stakes in its smaller banks and will only maintain State control in the five biggest lenders.

Tang Shuangning, vice-chairman of the commission, said Beijing's policy of State control would only apply to Bank of China, the Agricultural Bank of China, the Industrial and the Commercial Bank of China, the China Construction Bank Corp and the Bank of Communications.

The State control principle only suits large banks and will not apply to small and medium-sized lenders, Tang said.

Sugar auctions

The National Development and Reform Commission said last week that the country would sell 368,000 tons of reserve white sugar through four auctions.

The first auction will be held on Tuesday this week, with the three others on April 25, May 23 and May 30.

The sugar auction is due to "output reduction and the need to stabilize market supply and prices", the commission said.

The auction price is set at 3,800 yuan (US$475) a ton, a price that analysts say is surprisingly low.

Controls relaxed

China's central bank announced the relaxation of controls on foreign exchange accounts last Thursday, simplifying approval procedures for foreign exchange payments in the service trade, and procedures for individuals to buy foreign exchange.

The People's Bank of China will also allow qualified banks to pool capital in renminbi, the Chinese currency, from domestic institutions and individuals for overseas investment in products with fixed returns under an unspecified quota system.

It will allow fund management firms and other securities institutions to invest in a combination of stocks and other overseas securities using foreign exchange currency gathered from domestic institutions and private sources.

'Gradual steps'

China will take gradual steps to make the yuan fully convertible while guarding against the inflow of speculative capital, the foreign exchange regulator said last Wednesday. China would make the yuan convertible eventually, but it would tread cautiously in the process, the State Administration of Foreign Exchange said in a statement, reaffirming its policy.

The regulator would step up monitoring of short-term capital flows and take steps to prevent inflows of speculative capital to help maintain financial security, the administration said.

Car demand

Both China's vehicle output and sales jumped by more than one-third during the first quarter of this year compared with a year ago, mainly because of robust demand for cars.

Figures from the China Association of Automobile Manufacturers indicated last week that the nation's first quarter vehicle output reached 1.78 million units, up 36.3 per cent from a year ago. Sales of domestically made vehicles rose 36.9 per cent year-on-year to 1.73 million units during the same period.

Vehicle output and sales in March alone hit an all-time monthly record of 732,000 and 721,500 units respectively, up 28.5 per cent and 23.9 per cent from March 2005.

Import tariffs

The Ministry of Commerce said last week China has agreed to hold consultations with the United States and the European Union (EU) over import tariffs on spare parts for cars.

The United States and the European Union jointly filed a complaint on March 30 with the World Trade Organization (WTO), accusing China of violating its commitment to the WTO by imposing a discriminatory tariff regime on foreign car parts.

The commerce ministry said that Sun Zhenyu, China's commissioner to the WTO, has informed his US and EU counterparts that Beijing has accepted their request to participate in consultations.

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