BEIJING (Dow Jones)–China President Hu Jintao on Wednesday urged the country to speed up the transformation of its economic development, according to a statement posted on the central government’s Web site.

China should rely less on investment and exports for economic growth and instead shift to a balanced reliance on a mix of consumption, exports and investment, Hu said, according to the statement.

China must also increase the contribution of services and the agricultural industry to economic growth, he said.

The foundation of economic recovery is still not solid and the financial crisis has highlighted problems in China’s development, he said.

Hu reiterated that China will strive to maintain fast and stable economic growth.

Hu’s comments are among the strongest yet from the Chinese leadership on the long-standing goal of adjusting China’s economic growth pattern.

Transforming China’s economic growth model is the only way to fulfill the Communist Party’s commitment to improve the daily lives of the Chinese people, he said.

-By Aaron Back and Patricia Jiayi Ho, Dow Jones Newswires; (8610) 8400 7702; patricia.ho@dowjones.com

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Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, and rivals fell in Hong Kong trading after the People’s Bank of China unexpectedly raised the proportion of deposits banks must set aside as reserves.

ICBC dropped 2.4 percent to HK$6 as of 10:06 a.m. local time, the lowest since Oct. 7. China Construction Bank Corp., the nation’s second-largest lender, declined 2.5 percent, while Bank of China Ltd. fell 2.4 percent and Bank of Communications Ltd. lost 2.9 percent. Shares of smaller lenders also declined.

China’s central bank boosted the reserve-ratio by 50 basis points starting Jan. 18 to cool the world’s fastest-growing major economy as a credit boom threatens to stoke inflation and create asset bubbles. Economists hadn’t anticipated such a move until at least April and the policy shift may foreshadow higher interest rates and a relaxation in the nation’s currency peg against the dollar.

“The move in itself is not a surprise, but the timing is a bit earlier” than analysts had expected, Credit Suisse Group AG Hong Kong-based analysts Sherry Lin and Daisy Wu wrote in a note today. “Banks’ shares are likely to be sold off in the near term as the fear of tightening looms.”

Yesterday’s decision will help remove about 300 billion yuan ($43.9 billion) of liquidity, according to estimates by Xing Ziqiang, an economist in Beijing at China International Capital Corp. Chinese banks extended a record 9.21 trillion yuan of loans in the first 11 months of 2009, more than double the total for the same period a year earlier, according to the central bank.

New Loans

In Shanghai trading, Industrial Bank Co., part-owned by Hong Kong-based Hang Seng Bank Ltd., tumbled 5 percent to 35.02 yuan, while Bank of Beijing Co. dropped 4 percent. Shenzhen Development Bank Co. fell 3.8 percent.

The move by the country’s central bank was partly triggered by faster-than-expected growth in new loans in the first week of 2010, according to Ma Jun, the Hong Kong-based chief economist at Deutsche Bank AG.

China’s banks lent 600 billion yuan in the first week of January, the Economic Information Daily, a newspaper affiliated to the state-run Xinhua news agency, reported on Jan. 11. That compared with 294.8 billion yuan for the whole of November.

The existing reserve-requirement level for large banks is 15.5 percent, and 13.5 percent for smaller lenders. In November 2008, the central bank named ICBC, Agricultural Bank of China, Bank of China, China Construction Bank and Bank of Communication among those classed as bigger lenders for such requirements.

–Luo Jun. With assistance from Li Yanping, Paul Panckhurst, Stephanie Wong and Irene Shen. Editors: Joost Akkermans, Malcolm Scott.

To contact the reporter on this story: Jun Luo in Shanghai at +86-21-6104-7021 or jluo6@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at +852-2977-6626 or lagerkranser@bloomberg.net

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A rarely seen 400-year-old map that identified Florida as “the Land of Flowers” and put China at the centre of the world went on display Tuesday at the Library of Congress.

The map created by Matteo Ricci was the first in Chinese to show the Americas. Ricci, a Jesuit missionary from Italy, was among the first westerners to live in what is now Beijing in the early 1600s. Known for introducing western science to China, Ricci created the map in 1602 at the request of Emperor Wanli.

Ricci’s map includes pictures and annotations describing different regions of the world. Africa was noted to have the world’s highest mountain and longest river. The brief description of North America mentions “humped oxen” or bison, wild horses and a region named “Ka-na-ta.”

Several Central and South American places are named, including “Wa-ti-ma-la” (Guatemala), “Yu-ho-t’ang” (Yucatan) and “Chih-Li” (Chile).

Ricci gave a brief description of the discovery of the Americas.

“In olden days, nobody had ever known that there were such places as North and South America or Magellanica,” he wrote, using a label that early mapmakers gave to Australia and Antarctica. “But a hundred years ago, Europeans came sailing in their ships to parts of the sea coast, and so discovered them.”

The Ricci map gained the nickname the “Impossible Black Tulip of Cartography” because it was so hard to find.

This map – one of only two in good condition – was purchased by the James Ford Bell Trust in October for $1 million, making it the second most expensive rare map ever sold. The library bought another of the world’s rarest maps, the Waldseemuller world map, which was the first to name “America,” for $10 million in 2003.

The Ricci map going on display had been held for years by a private collector in Japan and will eventually be housed at the Bell Library at the University of Minnesota. It map symbolizes the first connection between Eastern and Western thinking and commerce, said Ford W. Bell, co-trustee of the fund started by his grandfather, General Mills founder James Ford Bell.

Custodians at the Bell Library focus “on the development of trade and how that drove civilization – how that constant desire to find new markets to sell new products led to exchanges of knowledge, science, technology and really drove civilization,” said Bell, who is also president of the American Association of Museums. “So (the map) fits in beautifully.”

The map was being shown publicly for the first time in North America. It measures about 3.7 by 1.5 metres and is printed on six rolls of rice paper.

The Library of Congress rarely exhibits artifacts it does not own because its holdings are so vast, but curators made an exception for the Ricci map. It will be on view through April alongside the Waldseemuller map and later will be shown at the Minneapolis Institute of Arts.

The library also will create a digital image of the map to be posted online for researchers and students.

Ti Bin Zhang, first secretary for cultural affairs at the Chinese Embassy, said the map represents “the momentous first meeting of East and West” and was the “catalyst for commerce.”

No examples of the map are known to exist in China, where Ricci was revered and buried. Only a few original copies are known to exist, held by the Vatican’s libraries and collectors in France and Japan.

Source: Canadian Press

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China’s economy is forecast to be in the fast lane in 2010, but mounting difficulties are still on the way ahead, leading economists told Xinhua.

RAPID GROWTH FORECAST

“The investment and economic growth have gained great momentum, and China’s gross domestic product (GDP) is likely to grow at 10 percent year on year in 2010,” said Hu Angang, director of the Center for China Study of Beijing-based Tsinghua University.

China’s GDP expanded 8.9 percent in the third quarter in 2009,accelerating from 7.9 percent in the second quarter and 6.1 percent in the first, fueled by the growing domestic consumption and the government’s economic stimulus package rolled out since November 2008.

“China’s investment and industrial growth have picked up steam, and the domestic consumption has stabilized due to an array of governmental stimulus measures,” said Jia Kang, president of the Research Institute for Fiscal Science of the Ministry of Finance.

Lian Ping, chief economist with the Bank of Communications, believed that China’s economy would see a more robust growth compared with last year, as rising domestic consumption on the back of residents’ income rise and improving exports would bolster the economic growth through the year.

Lian held that the strong real estate and automobile markets in China would continue to give a boost to investment and consumption in relevant sectors.

Auto sales hit 12.23 million units in first 11 months last year in China, up 42.39 percent year on year, boosted by the government’s policy to halve purchase tax on autos with engines of up to 1.6 liters or less. China’s property sales and price began to pick up since February in 2009.

Lian’s view was echoed by Isaac Souede, chairman and chief executive officer of U.S.-based Permal Group Inc., a leading asset management firm.

“China’s economy is full of vitality, as the country’s industrial upgrading and urbanization are in process, which mean plenty of investment opportunities and growth potential,” Souede said, adding that the country’s economy might register a growth higher than 10 percent this year.

SUSTAINABLE GROWTH

Despite expectations for the economy’s robust growth, experts held that China should lay more focus on its economic restructuring.

“China doubtless needs growth, but a more sustainable development pattern featuring improved growth quality and a better economic structure is essential to the economy,” Hu said.

More efforts would be made to promote the transformation of the economic development pattern and structural adjustments in 2010, according to the Central Economic Work Conference last month, setting the tone for the economic work this year.

Potential inflation brought by the record new bank credit in 2009, residents’ income gap, lack of a sound social safety net, financing difficulties for smaller firms are among the top 10 concerns of China’s long-term sustainable development, according to a recent survey targeted at 50 leading Chinese economists conducted by the Economy and Nation Weekly, a magazine run by Xinhua.

Problems including overcapacity in some industries and weak private investment loomed large against the backdrop of the economic downturn, Zhang Xiaoqiang, vice minister of the National Development and Reform Commission, the top economic planning agency, said on Tuesday.

Robert Kuhn, an international investment banker and author of a series of books about China, said that China’s growth should continue in 2010 as it did, remarkably, in 2009, with the major concern being the quality of the massive loans that were made in 2009.

“Investment in industries with overcapacity and redundant infrastructure projects threatens the quality of the bank credit,” China’s central bank governor Zhou Xiaochuan, said earlier this month.

“The financial crisis has catalyzed what I believe to be a permanent shift in the economic order in the world. China must adapt to this historic shift — and this should be praised by the Chinese people, since they will have to spend more, consume more, to sustain the economy — and in this process their standards of living will increase,” Kuhn said.

Kuhn held that the challenge for China was to increase the value-added elements of products, primarily through technology and branding, as it would enable companies to pay higher wages to workers, whose buying power would stimulate and sustain the economy.

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China took a major step Friday toward making its capital market system more sophisticated and perhaps more stable as it agreed to give investors a new and powerful set of risk-management tools, The New York Times’s David Barboza reports from Shanghai.

The government said it had approved, “in principle,” the creation of stock index futures, trading on margin and short selling, investment tools that are commonly used in New York, Chicago, London and many other financial markets, according to Xinhua, China’s state run news agency.

The announcement means that for the first time investors in China have more options than simply buying and selling their favorite stocks. They will soon be able to invest in a stock index (or set of stocks, collectively) and borrow money to trade stocks on margin.

Investors will also be able to make financial bets that stock prices will fall, a practice called short selling.

“This is a major step for China’s capital markets,” Chang Chun, a professor of finance at the China Europe International Business School in Shanghai, told The Times. “The government has been studying this for a long time.”

The China Securities Regulatory Commission said on its Web site Friday that it may take three months to complete preparations for the new investing tools to become available.

“This improves the stability and the healthy development of the capital markets,” the C.S.R.C. said in its statement.

By approving the new tools, the government hopes to accomplish several goals, including giving Shanghai more credibility as a financial capital and encouraging more ordinary Chinese to invest in equity markets. Many households still keep a large amount of their savings in low-interest accounts at state banks.

The announcement Friday did not come as a surprise to investors here.

Rumors that such an announcement was imminent have excited market players in recent days.

They drove up the share prices of Chinese brokerage houses, which expect to cash in on the new rules by making margin loans to investors and giving them additional options to hedge their risk.

Jing Ulrich, chairman of China Equities and Commodities at JPMorgan Chase, said in a report released late Friday that the new investment tools will help institutional investors who want to hedge and reduce volatility in a market that is known for wild price swings.

Mainland China’s benchmark Shanghai Composite index almost doubled in 2007, then slumped 65 percent in 2008 before rebounding about 80 percent last year.

The government has been eager to offer investors additional tools for some time.

In 2006, Beijing established the China Financial Futures Exchange in Shanghai. Since then, regulators have been testing stock index futures, short selling and margin trading.

But regulators delayed approving the practices because of the global financial crisis and because of worries that such trading could disrupt the country’s volatile stock exchanges in Shanghai and Shenzhen, analysts say.

The Chinese government has worried that short selling and trading on margin in particular could be abused by investors and increase speculation and chaos in the market.

Short selling and derivatives trading have come under sharp scrutiny in the United States and elsewhere, because of similar worries about whether they improve or distort markets. In 2008, the United States and other countries imposed a temporary ban on short selling of financial stocks. The bans were lifted after several months.

The Shanghai and Shenzhen exchanges only began to take shape in the early 1990s, when Beijing pushed to develop a financial market system. Exchanges in Hong Kong, a former British territory that reverted to Chinese control in 1997, have long had such offerings, because they operate independently of Beijing.

Now, Shanghai is eager to establish itself as a financial center that can compete with Hong Kong, and even New York. The city is building a huge financial center in the Pudong district, trying to lure Wall Street executives and giving private equity firms incentives to establish offices here.

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