Premier Li Keqiang has approved a milestone plan to allow foreign banks to directly set up wholly-owned subsidiaries in Shanghai’s new free-trade zone in a move designed to accelerate the opening of its financial services sector to global players. Foreign banks will be permitted to set up shop directly in the free-trade zone in the Pudong New Area. They will also be allowed to establish joint-venture banks with Chinese partners, either state-backed or from the private sector. The overseas partner can own the majority stake. The move potentially cuts years from the time foreign banks must otherwise spend following a step-by-step regulatory roadmap before opening branches or subsidiaries and is being seen as a sign of renewed efforts to kick-start financial reform. The government would also encourage domestic private firms and foreign enterprises to set up financial services companies, such as accounting and rating agencies, in the zone, widely expected to be a testing ground for major policy reforms to free up cross-border commodity and capital flows. Normally, a foreign bank needs to first set up a representative office, which will be used for communication and consulting purposes. It can apply to the China Banking Regulatory Commission (CBRC) to upgrade the office to a full-scale bank branch after two years, provided it has not breached any financial rules. If the foreign bank wants to set up more branches, particularly to expand into new cities, or establish a wholly-owned unit, it has to undergo a long approval process involving the banking regulator and relevant government bodies, such as the tax department. “The biggest hurdle to Shanghai becoming a regional financial center is to allow foreign banks to set up subsidiaries and enter the market freely,” said a source with close ties to the State Information Center, the think tank affiliated to the National Development and Reform Commission (NDRC).

The Ministry of Public Security accused executives of pharmaceutical supplier GlaxoSmithKline (GSK) of conducting a large, long-running bribery campaign to expand the UK company’s market and raise the price of its medicine by persuading doctors to prescribe its products. The suspects are believed to have offered large bribes laundered through travel agencies to government officials, medical industry associations and foundations, hospitals and doctors “to open new sales channels and increase drug revenues,” the Ministry said. The GSK executives are also suspected of tax offenses involving collusion with travel agencies to issue false invoices. The Ministry of Public Security identified the employees as “high officials” of GSK but gave no details of the size of payments or who received them. “After questioning, the suspects confessed to the crime,” the Ministry statement said. Doctors have a major say about what kind of prescription drugs to give to patients and sales from hospitals account for at least 70% of overall drug sales in China, according to Sinohealth Intelligence. GSK’s China operations are currently the subject of a joint investigation by police in Shanghai, Changsha in  Hunan, and Zhengzhou in Henan province. GSK said it was cooperating with the authorities but didn’t say how many of its staff were being questioned. The nationalities of the GSK executives under investigation are not known. Last month, GSK said it found no evidence of corruption or bribery in its Chinese business after an internal investigation which had lasted several months. GSK entered the Chinese market in 1987 when it formed the Tianjin Smith Kline & French Laboratories with Tianjin Zhongxin Pharmaceuticals and Tianjin Taiping (Group) Co. The UK drug maker operates a global research and development center in Shanghai and six manufacturing sites throughout China with a total investment exceeding CNY500 million, the Shanghai Daily reports.

China’s exports fell 3.1% in June from a year earlier, the first decline since January last year, while imports dropped 0.7%, leaving the country with a trade surplus of USD27.1 billion for the month. That compared with market expectations of a 4.0% rise in exports, an 8.0% increase in imports and a trade surplus of USD27.0 billion.

A number of publishers and copyright owners protested against a promotion campaign by China’s largest online bookseller Dangdang.com more than two months ago. As part of World Book Day, Dangdang organized a “zero yuan promotion” from April 17 to 19, when all copyrighted digital books on the portal could be downloaded for free. Publishers delayed their reaction because Dangdang is an important distribution channel for their paperback books, said Bi Yu, Vice General Manager of ZZHW Digital Media Co, a subsidiary of the China Writers Publishing House. Ge Xiaozheng, head of the publisher, said the e-book portal did not ask permission from copyright owners before it launched the campaign.

A total of 95 Chinese companies have made it onto the list of Fortune 500 companies compiled by Fortune magazine, with combined gross revenue of USD5.2 trillion, or 17% of the Fortune 500’s total revenue. In 2012, China Petrochemical Corp (Sinopec Group) had the largest revenue of USD428.17 billion among all Chinese companies. China National Petroleum Corp was close behind, with annual revenue of USD408.6 billion. Sinopec Group ranked fourth and China National Petroleum (CNPC) ranked fifth on the global list, each up by one spot from the previous year. Globally, Royal Dutch Shell is the largest company in terms of annual revenue, with USD481.7 billion. Wal-Mart Stores and Exxon Mobil took the second and third spots. Besides ten Taiwan or Hong Kong-headquartered corporations, there are 85 Chinese mainland-headquartered companies, mostly state-owned enterprises (SOEs). Most are concentrated in the energy, resources, banking and telecommunication sectors. Fortune’s Chinese website pointed out there are both positive and worrying aspects in the Chinese listings. Besides the dominant share of SOEs and the underdeveloped service sector, it said profits are unequally distributed among all listed Chinese companies. The nine top commercial banks account for 55.2% of all Chinese mainland companies’ profits. Chinese companies’ high-leverage ratios are also a source of concern.