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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 100

China Business Intelligence No. 100

Samsung Economic Research Institute Beijing Office

Dec. 24, 2008

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Highlights:

I. Economy

The State Development and Reform Committee announced a plan to introduce a long-debated fuel oil tax at the beginning of 2009. The tax, first proposed in 1994, would benefit occasional drivers and be a burden to frequent drivers would suffer to varying degrees. Instead of imposing the fuel oil tax separately, the government will adjust the existing gasoline and diesel taxes upward. The per-liter tax for gasoline will go up to 1 yuan from 0.2 yuan, while that for diesel will go up to 0.8 yuan from 0.1 yuan. At the same time, six fixed fees applied uniformly for road or waterway maintenance and management will be abolished.

II. Industry

Wal-Mart has formulated a global strategy that directs its energies towards emerging economies. Wal-Mart has been particularly focused on China in light of the rapid development of the Chinese retail industry and the opening of the Chinese market. The growth of Wal-Mart in China, however, lags far behind French rival Carrefour. Carrefour entered the Chinese market in 1995, one year earlier than Wal-Mart, and attained profitability in 2002, the first foreign retailer in China ever to do so. In contrast, Wal-Mart is still in the red.

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