Deadly Train Crash Linked to Construction Detour

A Caijing investigation found that a construction-related track detour with a sharp, half-circle turn contributed to a derailment that killed 71 people and injured 416 in Shandong Province. Officials blamed the April 28 accident on speed and human error. The train was rounding the bend at 131 kilometers per hour -- above the 80 kph maximum set for the detour, which was built to steer trains around a village and a railway land bridge under construction.

But a detour speed-warning system that may have overwhelmed railway controllers apparently failed. During the construction project, begun in March, controllers are supposed to alert 160 trains a day about the slowdown. The bridge is being built to handle faster trains and should open before the Olympics in August.
 
Sinosteel Bid for Iron Ore Firm Turns Friendly

Sinosteel, one of China's largest steelmakers, hiked its offer for Midwest Corp. Ltd. to AU＄ 6.38 per share and won over the previously reluctant board at the Australian iron ore supplier. The takeover proposal follows Sinosteel's move to block rival takeover attempts by another Australian miner, Murchison Metals, to protect the steelmaker's cooperation with Midwest.

The new price is 14 percent above an offer from Sinosteel in March that was rejected by Midwest's board, turning the first overseas hostile bid by a Chinese enterprise into a friendly offer. If Midwest shareholders approve June 5, Sinosteel would buy a majority stake for the first overseas resource project controlled by a Chinese enterprise. The deal is seen as a key opportunity for China to secure Australian iron ore.
 
Medium-term Notes Challenge Bond Market

Backed by the central bank, a trade association called the National Association of Financial Market Institutional Investors started offering medium-term notes on the inter-bank market in late April. The first seven companies issuing notes found enthusiastic institutional buyers who snapped up the paper for high premiums at low interest rates.

The three- to five-year notes require a relatively short review period. Companies enjoy the flexibility of determining interest rates and issue method. The new product, however, is likely to stir a turf war among regulators. Currently, the National Development and Reform Commission and China Securities Regulatory Commission oversee private and public company bonds, respectively, with long review processes and complicated requirements that turn off some investors. The central bank's method is considered more market-oriented.
 
Mystery Money Pouring Into China

China's foreign reserves continued soaring in the first quarter, rising by US＄ 153.9 billion. But after subtracting trade surplus cash and foreign investment, officials cannot explain US＄ 85.1 billion of the inflow. In late April, the State Council and finance officials met to discuss this apparent flood of hot money, indicating China's decision makers want to solve the mystery.

Economists offered several explanations: expectations that the Chinese currency will continue appreciating; high returns on China's stock and real estate markets; and a tight credit environment forcing enterprises to seek alternative financing, such as underground banks and overseas investors. Hot money also underscores the problem that the yuan's gradual appreciation has attracted speculators. Some economists suggest a big, one-time increase in China's currency value to silence speculation.
 
TD Chipmaker COMMIT Dies

COMMIT Inc., a major research and development company for mobile device chips using China's third generation standard TD-SCDMA, ceased operations due to disruption in capital flow.

 Insiders said the uncertain outlook of the TD network, which China developed and China Mobile is pushing, created conflicts among major COMMITT stockholders over future investments. While differences between stockholders and flaws in operations might account for the company’s collapse, it also demonstrated the hard conditions facing China's TD industry.

After years of delay, China started trial commercial operations of TD on April 1. But only 60,000 TD cell phones were delivered in eight cities. And when it will enter the market is still unknown. The unclear perspective of TD has diminished industry's confidence and cast shadow over manufacture specified in TD, which may face a bleak future due to big investment and small output.