MAINLAND company Baoding Swan Chemical Fibre Group Co, has postponed its issue of B shares on the Shenzhen exchange because of the unfavourable market sentiment. Head of the Hebei Baoding Textiles Industry Bureau, Tong Jiangong said the company was waiting for J & A Securities, its intermediate, to advise a suitable time for its issue to raise 80 million yuan (about HK$74.4 million). The company is one of the best performers in the new city of Baoding, formed last year by the merger of the former Baoding region and Baoding city. The company has plans for a 720 million yuan expansion project, which envisages the technical transformation to allow annual production of 7,500 tonnes of viscose filament, starting from next year if adequate capital is available. It wants foreign participation to increase its production scale and production efficiency. With annual exports worth more than US$10 million, the company would be affected by the further reduction in value-added tax (VAT) rebate next year, Baoding's vice-mayor Zhou Lizhu said. Ms Tong said that some enterprises no longer required links with foreign trade companies. Enterprises which had direct export rights did not have to export through foreign trade companies and were not involved with VAT tax and rebates. As a result, the foreign trade companies should be reformed to form joint ventures with those production companies which did not have export rights. Ms Tong said tariff cuts on some import items announced by China at the Asia Pacific Economic Co-operation leaders conference would instil more competition and prompt state enterprises to sharpen their competitive edge. She spoke after the signing of contracts for projects worth more than US$73 million in Baoding. Among them was a letter-of-intent between Merrill Lynch and Baoding Tianwei Group Co for a US$30 million project to make large transformers. Baoding Tianwei vice-chairman and vice-general manager Yang Shihe said the project was included in China's ninth five-year plan, and would involve investment of about 100 million yuan during the period. Director at Merrill Lynch (Asia Pacific), Henry Tsang said the investment house was positive about the transformer-manufacturing company, which was the second largest enterprise in the industry in China. Merrill Lynch has been involved in more than 30 mainland projects, with more than US$5.5 billion invested since 1993. Mr Zhou said it was hoped the joint venture would be owned 30 per cent by Merrill Lynch, 30 per cent by Mitsubishi, which would offer technological assistance, and the rest held by the mainland party. Baoding mayor Yao Jinduo said the municipal government planned to invest more than 100 billion yuan to speed up economic development in the city during the next five-year period. Its target was to achieve 20 per cent annual growth in gross domestic product.