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Chinese Economy Shows No Sign of Slowing

The Chinese economy shows no sign of slowing down, and foreign banks continue to buy stakes in Chinese lending institutes.

China's economy continues to expand briskly despite the government's attempts to control it. It was up 9.4 percent in the third quarter of this year compared with a year earlier, fueled by surging exports, strong investments in infrastructure and solid retail sales.

National Bureau of Statistics spokesman Zheng Jingping said he was confident the economy would meet the government's expectations of nine percent growth for the whole year. He also said specific problems continue to exist.

Mr. Zheng says problems include weak agriculture infrastructure, which has held back improvements in grain production and farmers' incomes, too much investment in fixed assets, and imbalances in foreign trade.

Two German banks - Deutsche Bank and Salomon Oppenheim Bank - are the latest foreign banks to buy into China. They announced they would buy a combined 14 percent stake in China's Huaxia Bank.

Huaxia said the deal would enable it to bring its commercial operations and products up to international standards. Foreign investment is providing Chinese banks with much-needed capital and expertise as they look to expand their services.

Foreign firms are currently limited to owning 25 percent of Chinese banks. But these restrictions will be relaxed at the end of next year, under commitments China made to the World Trade Organization to open its banking system to foreign competition.

In other news from China, Hainan Airlines, China's fourth-largest carrier, said it would combine with three smaller airlines to form a new company called Grand China Air.

The announcement said U.S. financier George Soros, Hainan Airline's biggest overseas shareholder, will invest a further $25 million, for a four-percent stake in the new company. The investment is part of Hainan Airlines's plan to raise more than $1 billion, to buy planes and expand its route network ahead of the 2008 Beijing Olympics and the 2010 Shanghai World Expo.

North Korea says it is going to re-examine its relationship with its largest South Korean business partner, Hyundai. The threat was made after Hyundai Asan, Hyundai Group's North Korean business arm, fired its vice-chairman, Kim Yoon-Kyu, over alleged corruption.

Mr. Kim had developed close ties with North Korean officials, including leader Kim Jong Il. Kim Yoon-Kyu was credited with opening the Hyundai-operated Diamond Mountain tourist resort near the two countries' mutual border, a symbol of South Korea's Sunshine Policy of engagement with the North.

Mr. Kim was demoted by Hyundai in August. Pyongyang showed its displeasure then by halving the number of daily tourists allowed to visit the resort.