Li visit a boost for market reforms

CHINESE Prime Minister Mr Li Peng will today continue a visit to Shenzhen seen as a boost to market reforms as well as his own credentials as a reformist.

Mr Li's trip, which was timed for the relocation of the Shenzhen Stock Exchange to new premises, triggered a small rally on the domestic shares market.

Sources last night confirmed that Mr Li would today tour the Overseas Chinese Town in Shenzhen Bay, which features the Splendid China miniature park and a national minorities' cultural theme park, before leaving Shenzhen in the afternoon.

Yesterday, the Head of the State Council toured one of his favourite projects, the Daya Bay Nuclear Plant, which he has visited eight times before.

He also toured the Yantian Deep Water Port and discussed its development with Hongkong tycoon Mr Li Ka-shing and a representative of Mr Peter Woo, chairman of the Wharf Group.

The official New China News Agency said Mr Li thanked the Hongkong businessmen for being willing to invest in infrastructure projects in the mainland.

It is understood Mr Li invited the chairman of Cheung Kong and Hutchison Whampoa to dinner at the Shenzhen Government Guesthouse last night.

A Shenzhen stock exchange official said that Mr Li and other members of his Beijing entourage inspected the new trading floor and computer systems soon after their arrival on Sunday.

The A shares market, which was restricted to domestic investors, was open for full-day trading on Sunday to compensate for its Friday close for the New Year.

On the back of Mr Li's visit, the Credit Lyonnais Shenzhen A Index was driven up 6.07 per cent to 2,396.36.

The stock market returned to normal yesterday with the A index slightly down and B shares in featureless trading.

''The confirmed news of Mr Li's visit is expected to spur buying interest in the market, but people here will not believe that the coming of a high-ranking official will have any long lasting effect,'' a Shenzhen broker said.

Security near the building was still tight yesterday, according to Shenzhen sources.

In Beijing, the Information Office of the State Council refused immediate comment on Mr Li's visit.

Spokesman for the Shenzhen government, Mr Huang Xinhua, said it was not unusual for senior leaders to visit Shenzhen because they were concerned about the development of the city.

He noted that many Chinese leaders like senior leader Mr Deng Xiaoping and party chief Mr Jiang Zemin had visited Shenzhen before.

''Such visits show that the central leaders are concerned about Shenzhen's construction and development,'' Mr Huang said.

A source said a special cultural performance would be arranged for Mr Li and his entourage.

Political analysts said visits by senior officials were usually significant. Mr Deng used his trip in late January and early February last year to launch a new drive for economic reform.

The result was a surge in China's economic growth to 12 per cent last year, double the original target set by Mr Li, a hardline conservative.

Official media have yet to report Mr Li's trip to Shenzhen, which as China's first special economic zone pioneered Mr Deng's free market reform policies more than a decade ago.

It has been reported that China would expand its stock market experiment this year by encouraging every province to list top companies and stringing together its first national network of securities brokers.

Shenzhen has proved an outstanding success in attracting billions of dollars of foreign investment, mostly through Hongkong. The stock market officially opened for Chinese citizens in 1991 and last February foreign investors were allowed to trade special B shares.

But last August a stock issuing exercise went disastrously wrong, provoking anti-corruption riots. While the stock market experiment was allowed to go ahead, Chinese leaders expressed concern that the market was overheating.