The U.S. rejection of the $18.5 billion bid by China's top offshore oil company, CNOOC Ltd, for  Unocal in 2005 was not a move worthy of a world power such as the United States, asserts a Chinese academic with the government's top economic planning agency.

"If you are weak, then I can understand," said Chen Dongqi, deputy director of the Academy of
Macro-Economic Research under the National Development and Reform Commission (NDRC).

"The United States is a strong country. What is it afraid of?" he said at the Reuters China Investment Summit.

"There is a problem there."

Chen was responding to a question about rising protectionism in China, and criticism that Beijing had blocked Coca-Cola Co from buying China's Huiyuan Juice.

Chen also said that blaming China for global climate change was also off the mark, as climate is affected by hundreds of years of human activity, not just a few decades.

"China's economy has been growing for only 30 years," he said. "I don't believe a few years of fast economic growth from one country is responsible for climate change."

Photo caption: Chen Dongqi, vice-head of the macro-economic institute under the National Development and Reform Commission (NDRC), speaks during the Reuters China Investment Summit in Beijing. REUTERS/Christina Hu

Chinese banking regulators should monitor more closely the lending activities of underground banks, where interest rates react more quickly to changing economic conditions than do rigid state-set interest rates.

"Historically, these interest rates change more rapidly to changes in market liquidity," Gao Shanwen, Essence Securities' chief economist, said at the Reuters China Investment Summit.

"They are an important barometer that should be monitored more closely," he said.

According to market lore, some of these illegal banks are formed by bank employees or others with access to bank funds, which are then lent outside of official channels, said Gao.

Such banks flourish along China's east coast, where there are a multitude of private firms that need cash to run their operations but have traditionally been shunned by the country's large state-run banks, which prefer making loans to large state-run firms.

Monitoring the illegal lending, which plays an important role in China's largely state-run banking system, would be relatively easy, because there are established brokers, who regularly advertise their services through mass distribution of cell phone alerts.

Photo Caption: Gao Shanwen, chief economist at Essence Securities, speaking at the Reuters China Investment Summit in Beijing. REUTERS/Christina Hu

By Michael Wei

Don't count on a recent spike in home loans to greatly improve earnings at Chinese banks. That's because they are still a relatively small part of overall lending.

"It is not expected to have a huge impact on banks' overall earnings," Gao Shanwen, Essence Securities' chief economist said at the Reuters China Investment Summit, speaking about the rise in mortgage lending. Mortages make up only about 10 percent of total lending at present.

New lending in China has surged in recent months, and some of that has gone into the recovering housing market. Mortgages are considered quality loans in China because of their longer term
and relatively higher margins.

Gao said that such loans are one of the key areas that
commercial banks have been pushing during a lending surge in the first half of the year under a loose monetary policy.

Photo Caption: Gao Shanwen, chief economist at Essence Securities, attends the Reuters China Investment Summit in Beijing. REUTERS/Christina Hu

Chinese mining companies are expanding overseas because they are cost-effective and willing to work in dangerous and risky areas where others are unwilling to go, Yang Junmin, vice general
manager of Beijing Sinodrill, asserted at the Reuters China Investment Summit.

Some critics accuse Beijing of supporting corrupt regimes in Africa, the Middle East and Latin American, where Chinese companies are investing aggressively to secure access to raw materials to fuel the country's rapid economic growth.

"If we could find an African company to do the work, nobody would need a Chinese company," Yang said. "Africans are very impressed with the work we do there."

"It's a simple matter of economics," he said, pointing out that Chinese companies are also willing to take on risks of working in countries such as Afghanistan.

Sinodrill still relies on the domestic market for 80 percent of its exploration and drilling services, but the contribution from Australia, Southeast Asia, Africa and the Americas is growing fast.

The company also has a lower cost structure than foreign companies looking to penetrate the Chinese market.

"Foreign drilling teams who come to China to work need at least one trip back to their home country every two months," he said. "Their costs are very high."

Photo Caption: Yang Junmin, vice-general manager of Beijing Sinodrill, speaks during the Reuters China Investment Summit. REUTERS/Christina Hu