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CIEC ECONOMIC BRIEF
NO.18 (VOL.90)
Aug. 25, 1998
C a t a l o g
Commercial banks to face new evaluation
Legal service sector to open wider
Accounting market opens wider
Shenzhen's private enterprises to lure foreign investment
Ningxia eases rules for foreign investors
RMB to maintain its value
US and Europe to invest more in China
Liaoning opens its doors wider to the world
Panxi lures investment to tap natural resources
Qinhuangdao offers projects for foreign investment
China to double natural gas output
China to invest more in highways
Beihai's economy forges ahead
Technology exports rise sharply
Italian investment bank helps rubbish project in Shenyang
Airbus aims at half of China's airline market
Seagate to raise investment
Ericsson to double its investment in China
BASF set foot in Dalian
China's commercial banks will be required to offer a more accurate
appraisal of their financial health next year using an internationally
recognized evaluating system, Liu Mingkang, deputy governor of the People's
Bank of China, said on August 11. Tests of the system which started in
Guangdong Province in April will be completed by the end of this month. All
commercial banks are required to use this system to finalize evaluation in
the first quarter of 1998.
China's banks are believed by some observers to gave a heavy bad debts
burden inherited from the years the economy was centrally planned. Bad
debts, loans which cannot be recovered, account for between 6_7£¥ of Chinese
commercial banks¬ð assets. But international observers say they cannot
accurately evaluate China's banks using these figures because China has
until recently been calculating its bad debts based on a system not
internationally recognized. Under the old evaluating system, loans are
categorized as sound debts, overdue debts, debts without interest payment
and bad debts__vague definitions which led to an incomplete understanding of
a bank's true financial standing. The new system will rate loans on a scale
of one to five according to the repayment ability of the borrowers. It will
provide timely and accurate information on commercial banks¬ð assets
fluidity, net assets and solvency. That information will serve as a basis
for financial risk management by the central commercial banks.
China is willing to open up more of its fledging legal service sector
following the remarkable achievements made in the past six years, according
to the Ministry of Justice. By the end of February, the ministry had allowed
67 overseas law firms__21 of them from the United States__and 26 firms from
the Hong Kong Special Administrative Region to open offices in the Chinese
mainland. China's system of lawyers, abolished in 1959, was restored in
1979. In terms of the depth of the opening up of the legal service sector,
what China has achieved is remarkable since it has only recently restored
its system of lawyers. Now the country has over 100,000 lawyers and some
8,400 law firms.
By the end of last June, 140 law firms from 20 countries and 50 from Hong
Kong had applied to the ministry. Well_established firms experienced in
dealing with cases concerning China are more likely to be approved to open
offices, and they must also come from countries with a good relationship
with China, according to related sources. The country has pledged that once
it is admitted to the World Trade Organization, it will allow more foreign
law firms to open offices in more Chinese cities. They will also be allowed
to open in more than one city. They are now allowed to have offices in 15
cities, with Beijing topping the list with 43, followed by Shanghai with 32.
The main work of foreign lawyers is in introducing foreign investment,
representing Chinese clients in law suits in foreign countries, and
providing advice in matters of trade, technology transfer, real estate,
intellectual property rights, bonds and securities. As in other countries,
they cannot take part in the litigation process in China. Neither can they
interpret Chinese laws nor provide advisory papers concerning Chinese law.
Sources from the ministry noted that some foreign firms, including some with
offices in China and some which failed to win approval to do so, have set up
consultation companies in Chinese cities to provide legal service. This has
violated the regulation co_issued by the ministry and the State
Administration of Industry and Commerce, and has brought some confusion to
the legal service market. However, the majority of foreign law office in the
Chinese mainland are doing well.
Overseas firms have recently been granted wider access in China's
accounting market. Financial authorities have eased their restrictions on
the establishment of branches by joint venture accounting firms. Earnest £¦
Young's joint venture in Beijing received the green light to establish a
subsidiary in Shanghai. Meanwhile, DTT's Shanghai_based joint venture was
allowed to set up a branch in Beijing. Senior Chinese officials have pledged
to open the country's accounting market wider. The first practicing
licenses for foreign individuals are expected to be granted in the near
future.
Practicing licences in China, long desired by overseas accountants, means
auditing reports signed by the license holders will be valid in the country.
A license will also enable its holder to join with other license holders to
set up their own accounting firms in China. The nation opened its Certified
Public Accountant (CPA) examination to foreign individuals in 1994. So far,
more than 220 overseas people, including applicants from Hong Kong, Macao
and Taiwan, have passed the exams and obtained non_practicing membership of
Chinese Institute of Certified Public Accountant.
China has decided to allow the international accounting firms longer periods
than set previously to transform their joint ventures in China into member
firms. Chinese financial authorities in 1996 required international firms to
finish the transformation by 2001. But the timetable has recently been
changed to meet the firms¬ð demand for longer time periods needed to improve
the standard of local accountants. The new deadline is not available right
now. Major international accounting giants__Price Waterhouse, Coopers £¦
Lybrant, KPMG Peat Marwick, Earnest £¦ Young, Authur Anderson and DTT_have
all set up joint ventures in China.
As the joint ventures¬ð accounting firms are generally under de facto
control by foreigners due to their technology advantage, authorities have
urged the joint ventures to transform themselves into member firms because
the latter means the complete localization of staff. Therefore, achieving
the improvement of the overall level of China's CPAs is most important.
Currently, the joint ventures¬ð clients are mainly big multinationals and
Chinese firms listed overseas or on domestic hard_currency B_share markets.
The Shenzhen municipal government decided to grant import and export rights
to private enterprises as well as allow them to woo foreign investment and
engage in processing trade. The government also has decided to draw up new
policies to cut what foreign investors have to pay when placing investment
in the city.
Processing has always played a principal part in Shenzhen's foreign trade,
contributing 83£¥ in such a trade in 1997. Subject to the financial crisis
in Southeast Asia, growth of Shenzhen's processing trade dropped 1.16
percentage points in last January_April from a year earlier and processing
with provided materials saw a palpable fall in this period. To cope with
this situation, the Shenzhen government issued the Notice on Encouraging
Short_Term Foreign Processing and Assembling Business involving the
following three aspects:
1. Lift the restriction of only allowing commercial units to sign contracts
with overseas businesses. Any Chinese production enterprises that are
entitled to import and export are now free to directly sign processing and
assembling contracts with overseas businesses.
2. When foreign trade enterprises and commercial units in China signed
contracts of short_term processing and assembling with overseas businesses,
the production enterprises in the country can be those of State, collective,
privately owned, and foreign_funded that has appropriate production
capacity.
3. Ease the regulations to restrict private and foreign_funded enterprises
to engage in foreign_related processing and assembling business.
Shenzhen also adjusted costs in placement of foreign investment. The
appraisal fees for foreign investment were cut from 0.3£¥_0.4£¥ to 0.3£¥,
0.25£¥, 0.2£¥, 0.1£¥ and 0.05£¥ for the total equipment value of RMB0.5, 1,
5, 10 and 100 million. The minimum package fee to be changed has also been
reduced from RMB 500 to RMB100.
To increase capital stock and revamp the State_dominated economy, the Hui
Autonomous Region in Northwest China has removed restrictions on foreign
investment while preparing a better environment for capital inflows. The
regional government has introduced tax breaks for direct foreign investment
that are more favorable than similar policies set by the central government,
which are designed to guarantee higher returns for investments. To match
central government policies encouraging the formation of an open economy,
regional authorities have also decided to allow foreign investors to snap up
stakes in all State_owned enterprises (SOEs).
Ma Qizhi, chairman of the regional government, said that a consensus on new
policies had been reached and restrictions were no longer placed on foreign
investors to buy shares of SOEs, even to the extent that they were now
allowed to hold controlling shares in SOEs. Foreign investors are encouraged
to take shares in all 82 large and medium_sized State enterprises in the
region.
In trying to find low_cost ways for foreign investors to gain footholds in
the region, government officials are planning bold steps to woo bids for
stakes in SOEs. Ninety projects in agriculture, coal processing, metallurgy,
chemicals, light industry, pharmaceuticals, machinery, construction and
building materials, and tourism services, involving a total investment of
6.6 billion yuan (¡ç800 million), are to be promoted at an investment and
trade symposium in September in Yinchuan, the region's capital. Next year
the region will launch a foreign investment and trade campaign in Hong Kong,
the first event of its kind ever held by the region outside the mainland.
Business people who have recognized the central government's priority in
developing the country's less developed west are seeking opportunities by
sinking cash into the Ningxia region. Encouraged by the regional
government's policies, business people from other parts of the country and
from overseas, are contacting nearly all profitable enterprises in Ningxia,
including those which are not profitable at present but show promise in the
long run in terms of acquisition or cooperation.
Foreign investment began to flow into the region as early as 1984 in the
form of a joint venture. The regional government has decided on bolder
actions to further woo foreign partners. The region's policies indicate a
completion of the strategy shift to an open economy from the remnant of past
decades of isolation. Government officials said they are now pursuing
outward_oriented policies. Foreign investors engaged in manufacturing
projects and government_set key projects for corporate renovation and
expansion will enjoy tax breaks. The regional government, willing to offer
overseas investors with generous guarantees against interference such as the
imposition of exorbitant fees, will also subsidize projects which require
transportation costs to be offset.
Liu Mingkang, deputy governor of the People's Bank of China, said on August
11 that the renminbi (yuan) does not need to be devalued and will not be
devalued. Pressure posed by a weak Japanese currency on the renminbi has
prompted rampant speculation in Chinese currency. Liu rebutted the
speculation that Chinese currency will be devalued and warned speculators
not miscalculate. He pointed out that the speculators had mistakenly ignored
China's great power to defend its currency, which is reflected in the
country's effective control over foreign capital inflow, its hefty foreign
exchange reserves and its ever_swelling trade surplus.
Reports said the central bank this week entered the market to defend the
renminbi's exchange rate. Liu did not reveal the size of the intervention,
but hinted that the Chinese government would take timely and forceful action
to defend its currency. He also dismissed the devaluation of the renminbi to
stimulate exports as inadvisable. Devaluation of the renminbi would deal a
fierce blow to the crisis_hit economies in the region. As a responsible
member of the international community, China has decided not to devalue its
currency to contribute to the recovery of Asian economies.
Liu announced the central bank's decision to allow foreign banks in the
Shenzhen Special Economic Zone to conduct local currency transactions.
Shenzhen will be the country's second city to open renminbi business to
foreign banks. The first was Shanghai, where nine foreign banks were granted
licenses at the end of 1996. The central bank has also decided to increase
the number of foreign_bank branches in Shanghai licensed for renminbi
business. He said China would broaden the scope of yuan business foreign
banks could conduct, and ease some operating restrictions.
While Japan and the Republic of Korea (ROK) are reducing their planned
investment in China, US and European companies are expanding, according to
Wang Zhile, official of China's Ministry of Foreign Trade and Economic
Cooperation (Moftec). The Southeast Asian financial turmoil has greatly
influenced the policies of international corporations towards China.
According to his investigation, ROK enterprises have to stop or are even
selling off some of their existing investment projects. But, since China is
a key strategic point in the global development plans of such companies as
Samsung and Daewoo, they will resume investment as soon as possible.
Japanese companies are also making strategic adjustment. With their overseas
investment depressed by the Yen's depreciation, they are experiencing
difficulties in increasing their Chinese investment.
In contrast, structural reform at the end of 1980s has greatly improved the
international competitiveness of American enterprises. A number of US
investment projects in China have become more competitive than others.
Facing the regional financial crisis, they have decided to invest more in
China. For example, Motorola has decided to invest another ¡çI billion by
the year 2000 in addition to the ¡ç1.2 billion already injected; Kodak will
invest ¡ç1 billion to establish two joint ventures; General Motors is
pumping more than ¡ç1.5 billion into a sedan car project in Shanghai that
will go into operation next spring.
European companies have also been less influenced by the Southeast Asian
financial crisis because of smaller scale of their investments in China,
enabling them now to take a more aggressive approach. In March 1998, the
European Union issued a new document on establishing a wide_ranging
partnership with China. It noted that the financial turmoil has reduced
China's foreign investment from Asia, forcing the former to seek more
direct investment from Europe and the United States. Therefore, the EU
should encourage companies, including small_ and mediumsized enterprises, to
invest in China. One sign of this was the announcement in May by
the Ericcson Group of Sweden that it would double its investment in China to
reach ¡ç600 million in the coming three years.
Liaoning Province has steadily expanded its opening and has made new
progress in various fields. In spite of a nationwide 30£¥ decline in the use
of foreign capital last year, Liaoning registered a stable increase, with
the amount of negotiated foreign capital reaching ¡ç5.51 billion, a rise of
9.6£¥ on previous year. The amount of capital actually used was ¡ç4.94
billion, 3.3£¥ higher. The province also obtained ¡ç570 million of foreign
loans, up 130.3£¥. Last year, the province approved the establishment of
1,717 foreign_funded enterprises, with the volume of negotiated foreign
capital reaching ¡ç4.39 billion, 1.5£¥ less than the previous year, while
the amount actually used was ¡ç3.06 billion, up 28.6£¥, ranking Liaoning in
the forefront in the growth rate of paid_in foreign capital. By the end of
last year, the province had approved a total of 16,472 foreign_funded
enterprises, with contracted and paid_in foreign capital totaling ¡ç26.17
billion and ¡ç15 billion respectively.
The province's use of foreign capital has the following features: 1. New
breakthroughs in the method of using foreign capital and diversified
financing methods, which are manifested in new progress made in key
financing projects, including ¡ç500 million by stock_financing. 2. New
breakthroughs have been made in using foreign capital to renovate old
enterprises. The provincial government approved 67 new technical_upgrading
projects to be conducted by large and medium_sized enterprises, involving
negotiated foreign capital of ¡ç560 million. 3. More overseas investment
has gone to large projects. Negotiated investment in newly approved
individual items averaged ¡ç2.58 million, up 10£¥ on the previous year. Of
the 1,717 newly approved projects, 132 involved more
than ¡ç5 million each in foreign investment, with most being high_tech and
capital_intensive projects. 4. Many foreign_funded enterprises increased
investment to expand production, with the total amount exceeding ¡ç500
million.
Last year, the province's total volume of foreign trade reached ¡ç12.96
billion, up 14.46£¥ on the previous year. Exports maintained double_digit
growth and showed a trend of steady increase. Foreign_funded and private
enterprises registered a considerable increase in exports, with respective
amount rising by 16.8£¥ and 36.9£¥ to ¡ç3.04 billion and ¡ç1.61 billion. The
general composition of export commodities has further improved. Last year,
exports of industrial manufactured products were worth ¡ç5.25 billion,
accounting for 79.53£¥ of the local total, except for petroleum. Among
these, the volume of machinery and electrical products reached ¡ç2.38
billion, up 25.39£¥. The financial situation of state_owned foreign trade
enterprises has taken a favorable turn, netting 9.67 million yuan in profit
after two successive loss_making years.
In 1997, the province signed 1,002 contracts with overseas businesses on
contracting for engineering projects, and providing labor, design and
consulting services abroad, worth ¡ç630 million, up 30£¥ on 1996. The
province recorded an overall business volume of ¡ç380 billion, an increase
of 27£¥. More than 24,000 laborers were sent to work abroad, up 12£¥. Last
year, the province signed 167 contracts on importing technology and
equipment valued at ¡ç799 million, an increase of 33£¥. In addition, it
signed 267 technology export contracts worth ¡ç497 million, up 24.3£¥.
Shaanxi encourages foreign investment in environmental protection
A new policy was announced recently in China's mid_west Shaanxi Province to
encourage foreign investment in its environmental protection industry. The
province plans to import a great amount of advanced environmental protection
equipment, products and technology, and encourages foreign businesses to
directly invest in the industry or participate the reorganization or
renovation of state_owned enterprises.
The provincial government encourages local advanced enterprises to cooperate
with overseas businesses and supports related state_
owned enterprises to set up Sino_foreign joint or cooperative ventures with
their factory buildings and sites converted into shares, or partially
offering their property or management rights. Foreign businesses are
encouraged to participate in the reorganization of small and medium_sized
state_owned enterprises by means of purchasing or controlling their shares,
leasing, merging or buying over, for which they can enjoy the same
preferential policy offered to non_public enterprises.
The new policy includes use rights contracted for 50_70 years, during which
they can be inherited, transferred, mortgaged or subject to shareholding by
all foreign businesses involved in the purchase, contracting and leasing of
remote mountains, gullies, beaches, waters and deserts for organic farming.
In order to guarantee that the output of environmental protection products
maintains an annual growth of 25_30£¥, the province plans to support 10 key
enterprises with annual exceeding 100 million yuan each in the next three to
five years, so that the industry's output value will hit 7 billion yuan by
2000, and 30 billion yuan by 2010.
Yunnan turns from cigarettes to wine
Yunnan Province, the country's major production base for quality tobacco
and cigarettes, is trying to develop wine production as a newly_emerging
pillar industry. A sub_tropical region_rich in abundant land and ecological
resources suitable for growing tobacco, Yunnan Province was one of China's
biggest quality cigarette makers, with its tobacco industry realizing a
total of profits and taxes of 150 billlion yuan (¡ç18 billion) from 1993 to
1997. During the past few years, the tobacco industry has remained as the
province's single pillar industry, accounting for 70£¥ of the province's
total financial income.
However, in 1997, due to the effects of the Asian financial crisis and
regional protectionism, competition on the global and home tobacco market
became more fierce. Yunnan's tobacco industry has for the first time
suffered severe setbacks, with its profits and taxes dropping below 1
billion yuan (¡ç120 million). As a result, a large number of tobacco has
been stockpiled in warehouses, absorbing a large mount of capital while
greatly hindering Yunnan's economic development. The situation became more
severe for Yunnan's tobacco industry this year after the central government
decided to regulate tobacco production and cut half of Yunnan's tobacco
planting area.
Realizing the high risk of developing only one pillar industry, the
provincial government decided to develop a more diversified economic
structure. According to careful research of Yunnan's soil, climate and
annual rainfall conducted by experts, Yunnan's Jinsha River and Nanpan
River regions have been proven to be ideal areas for planting high_grade
grapes, while the local government has decided to develop wine making as
another pillar industry. Mile County, which is acting as the province's
vanguard in developing this new industry, has grown to become the region's
major production base for quality grapes and grape wine. The province's
earliest and most famous brand is ·Gaoyuanhong" wine, evaluated to be
one of China's best wines by experts within the field. The Yunan Plateau
Wine Production Company began production of the wine last year with grape
seeds imported from France, meeting immediate market recognition. So far,
Mile County has adopted a series of preferential pelicies to stimulate the
development of this newly_emerging pillar industry, such as by providing
local farmers with quality grape seeds, advanced cultivation technology and
low_interest loans.
With rich natural resources, the Panxi region in Southwest China's Sichuan
Province woos investment from both home and abroad. The Panxi region refers
to Panzhihua and the Liangshan Yi Autonomous Prefecture. Covering only 0.7£¥
of China's territory, the region boasts 10£¥ of the country's timber, 11£¥
of its water resources, 13£¥ of its iron, 93£¥ of its titanium, 69£¥ of its
vanadium and 82£¥ of its cobalt. The Chinese Government has decided to build
the Panxi region into China's largest titanium, vanadium and hydropower
base. To reach the goal, the State has invested 50 million yuan (¡ç6
million) in the Panxi region from the end of the Eighth Five_Year Plan (
1991_95 ) to the beginning of the Ninth Five_Year Plan (1996_2000) period.
While investing in Panxi, domestic and overseas investors will enjoy equal
treatment, certified by the Chinese Government's industrial policy.
The central government has stressed the development of the Panxi region's
rich natural resources since the mid_1960s. In 1965, it started the
region's first round of development by launching the Panzhihua Iron and
Steel Complex. Now the complex has become West China's largest steel,
titanium and vanadium producing center. With the complex as its backbone,
the Panxi region produces 3 million tons of steel a year, ranking first in
Southwest China. It produces 200,000 tons of primary products made from
titanium and vanadium a year, ranking first in China.
In 1987, the government started its second_round of development of the Panxi
region by embarking on the construction of the Er¬ðtan Hydropower Station.
With an installed capacity of 3.3 million kilowatt, the station is expected
to produce 17 billion kilowatt_hours of electricity a year upon completion
of its construction by the year 2000. At present, less than 1£¥ of the Panxi
region's rich water resources is developed. When the station's
construction is completed, nearly 10£¥ of them will be developed. After over
three decades of development, the once_remote Panxi region has witnessed
much improvement in its infrastructure. The national trunk railway line, the
Chengdu_Kunming Railway, and the No 108 National Expressway cross the
region. The region's Xichang Airport has opened flights to Chengdu, capital
of Sichuan, and Kunming, capital of neighboring Yunnan Province.
Construction of the Panzhihua Airport has been approved by the State
Council.
Qinhuangdao, a famous summer resort with a long history, hopes to become
modern city with much industrial potential. Located at the junction of the
Northeast and North China economic zones, the city ranks as one of the best
ports in the world with its annual cargo handling capacity of 124 million
tons. Recently, the city offered a batch of projects for overseas
cooperation.
1. Qinhuangdao New Port No 14 _ No 17 10,000T deep water berth. Investment:
¡ç98.795 million (including ¡ç48.4096 million in foreign investment). Form:
joint venture, cooperation or other forms.
2. Qinhuangdao one point mooring wharf. Investment: ¡ç15 million (including
¡ç7 million in foreign investment). Form: joint venture, co_operation.
3. Shanhaiguan Fishing Harbor (deep water wharf which can moor 1,500 medium
and small sized fishing vessels, with a water area of 306,000 square meters
and a yearly handling capacity of 10,000 tons). Investment: ¡ç13.29
million (including ¡ç6.645 million). Form: joint venture, cooperation or
other forms.
4. Qinhuangdao Jidong Airport (4D class). Investment: ¡ç108.434 million
(including ¡ç54.217 in foreign investment). Form: joint venture.
5. Qinhuangdao West Industry Area Railway Project. Investment: ¡ç25.2228
million (including ¡ç10.0891 million in foreign investment). Form:
cooperation.
6. 10,000T metal magnesium with dolomite as raw material. Investment:
¡ç30.19 million (including ¡ç15 in foreign investment). Form: joint venture,
cooperation.
7. Electric furnace steel making. Investment: ¡ç99.40 million (including
¡ç77.71 million in foreign investment) for electric flo_casting slab line
with a yearly capacity of 600,000 tons; ¡ç240.9638 million (including
¡ç120.4819 million in foreign investment) for electric flo_casting steel
bloom line with a yearly capacity of 1,200,000 tons (600,000 tons of slab,
600,000 tons of square blank); ¡ç144.5783 million (including ¡ç120.4819
million in foreign investment) for high quality wire line with a yearly.
capacity of 600,000 tons; ¡ç96.3855 million (including ¡ç72.289 million in
foreign investment) for high quality wire line with a yearly capacity of
300,000 tons. Form: joint venture, cooperation.
8. Production line of 100,000 ton of special s teel per year. Investment:
¡ç22.94 million (including ¡ç12 million in foreign investment). Form: joint
venture, cooperation.
9. Zhalanzhangzi Iron Mine (a new ore dressing factory which handles
2,000,000 tons of iron ore, and produces 660,000 tons of dressed ore
powder). Investment: ¡ç60 million (including ¡ç40 million in foreign
investment). Form: joint venture, cooperation.
10. Slab and blank flo_casting crystallizer production line (producing
20,000 sets of blank crystallizer, 150 sets of slab crystallizer and 100
vibrators per year). Investment: ¡ç9.759 million (including ¡ç5 million in
foreign investment). Form: joint venture, cooperation.
11. 50,000 tons of polyester per year. Investment: ¡ç165.038 million
(including ¡ç69.913 million in foreign investment). Form: joint venture,
cooperation.
12. Automobile air bags project (1,500,000 air bags per year). Investment:
¡ç10 million (including ¡ç6 million in foreign investment). Form: joint
venture, cooperation.
13. Expansion of knitted tights project (2,000,000 pairs of knitted tights a
year). Investment: ¡ç2 million (including ¡ç1 million in foreign
investment). Form: joint venture, cooperation or compensation trade.
14. Rare_earth ceramic bearings (annual production of 2 million sets of
ceramic bearings). Investment: ¡ç7.23 million, including ¡ç5.78 million
foreign investment. Form: joint venture.
15. Expansion of IMW monocrystalline silicon solar cell production.
Investment: estimated ¡ç3.59 million, including ¡ç2 million foreign
investment. Form: joint venture.
16. Optical fiber and cable production (annual production of prefabricated
optical fiber stick of 15 tons, optical fiber of 500,000 kilometers and
optical cable of 200,000 kilometers). Investment: estimated ¡ç112.9
million, including ¡ç56.45 million foreign investment. Form: joint venture
or cooperation.
17. Ceramic tubes for electronic vacuum switch (annual production of 150,000
ceramic tubes). Investment: ¡ç4.518 million, including ¡ç2 million foreign
investment. Form: joint venture or cooperation.
18. Transparent conductive glass for colorful LD production lines (with a
monthly production of 800,000 pieces of transparent conductive glass and
introduction of a colorful printing equipment and relative technologies).
Investment: ¡ç25 million, including ¡ç12.25 million foreign investment.
Form: joint venture or cooperation.
19. Production line of CD_ROM with annual production of 2.4 million pieces.
Investment: ¡ç14.22 million, including ¡ç6.97 million foreign investment.
Form: joint venture.
20. High_class glass bottles production (with an annual production of 47,000
tons). Investment: ¡ç19.92 million, including ¡ç11.95 million foreign
investment. Form: joint venture. (to be continued)
China plans to double the output of natural gas to 30 billion cubic meters
by 2005. The reason is the drop of the oil price in international market,
and reduced crude oil production both at home and abroad. However,
natural gas, as a clean energy resource, is less polluting and is not
influenced by the fluctuation of the international oil price. China's
expansion efforts are expected to increase the verified reserves of natural
gas by 1,000 billion cubic meters to a total of 2,000 billion cubic
meters, and raise the national productive capacity by 10 billion cubic
meters to a total of 25 billion cubic meters, according to the China Oil and
Natural Gas Group Co.
Moreover, China is enhancing its cooperation with neighboring countries.
This includes the Middle Asian natural gas cooperation project, which
plans to construct a long pipeline crossing China, Japan and the Republic of
Korea for the import of 25 billion cubic meters of natural gas. Another
project is a Sino_Russian pipeline to import 25 billion cubic meters of gas
from East Siberia.
China is considering further increasing investment in highway construction
as part of its effort to bolster the country's economic growth. The
investment will be used to support this year's 172 highway construction
projects and will increase to 33,000 kilometers the length of highways being
built nationwide. China had earlier planned to invest 160 billion yuan
(¡ç19.3 billion) to build 24,000 kilometers of roads this year, bringing
the highway network to 1.25 million kilometers. The move is seen as an
important step to stimulate domestic demand to ward off adverse effects from
the Southeast Asian financial crises.
Communication departments at all levels are urged to speed up their efforts
to keeping economic growth on target. By the end of June, some 46.5 billion
yuan(¡ç5.62 billion), or 29£¥ of the 160 billion yuan (¡ç19.3 billion)
originally earmarked for highway projects, had been used. Construction of
most of the 11 national key highway projects is going on smoothly. According
to ministry sources the government is considering a further increase on the
already increased 160 billion yuan investment to support the construction of
key projects
This city, one of China's first 14 coastal cities open to the outside world
in Guangxi Zhuang Autonomous Region, has chalked up impressive growth in
its economy in recent years. Statistics show that in the first half of this
year the GDP (growth domestic product) of Beihai reached 6.34 billion yuan
(¡ç764 million). This indicates an increase of 14.5£¥ over that of the
previous year, well above the national GDP level. Of this, added_value
growth achieved in primary and secondary industries topped 1.85 billion yuan
(¡ç223 million) and 1.9 billion yuan (¡ç228 million) respectively, up 9.98£¥
and 16.58£¥ from the corresponding period last year. Value_added growth in
tertiary industries grew most rapidly, increasing by 16.61£¥ to reach 2.59
billion yuan (¡ç312 million).
Surging economic growth in Beihai has buoyed the success of Beihai Yinhe
Company, a high_tech manufacturing company which issued 21 million shares at
the beginning of this year. The company has attracted 41.9 billion yuan
(¡ç5.05 billion) of the total investment flow into the city. Only a few
minutes after the opening of the Shenzhen Stock Exchange on the first day of
the issue of the Yinhe shares their value grew by three times. Beihai's
rapidly growing tourist industry, municipal construction and growth of
high_technology industries led to the sharp growth of its economy.
Facing the sea in three directions, Beihai's beautiful seaside landscapes
attracts thousands of overseas and domestic tourists each year. During the
past several years, it has invested over 60 million yuan (¡ç7.23 million) to
beautify its environment. In addition, the city has achieved rapid
development in municipal construction, expanding the city's area to 32
square kilometers this year from 9.8 square kilometers in 1984. The city has
completed building four deep_water berths for ships with 10,000 tonnages,
assisted in the opening of a sea passage from Beihai to Viet Nam and it has
built a new airport and railway.
The first half of this year presented two surprises in China's technology
trade__soaring exports and dipping imports. Contracted technology exports
surged 43.5£¥ from the same period of last year to hit ¡ç2.54 billion, while
the contracted import volume slid 16£¥to ¡ç3.24 billion, according to
statistics compiled by the Ministry of Foreign Trade and Economic
Cooperation (Moftec). The rate of export growth was extraordinary, compared
to the 7.6£¥ growth rate of general exports in the same period last year.
The growth momentum is expected to be maintained during the rest of the
year. More large technology export projects are being negotiated. The
country's successful market diversification strategy is the key to the
impressive growth of technology exports. In addition, a circular on how to
support and encourage the export of high_tech products is expected to be
promulgated soon. Moftec is consulting with the Export_Import Bank of China
about more export credits for exporters as well as the possibility of
reducing interest rates for export credits.
Trade experts had expected hikes in technology imports, as tariffs have been
exempted for imports of high_tech equipment since the beginning of this year
and most Chinese firms are in need of technological upgrading. However, to
the surprise of these firms, things have not turned out as expected. The
financial turmoil is also partly responsible for the decline of technology
imports during the first half of this year. With currencies declining in
many Asian countries, cheaper imports of raw material products from these
countries has eroded the market shares of domestic manufacturers in China.
This has dampened the enthusiasm of Chinese firms to carry out technological
upgrading. Profits earned by industrial firms plunged by 49.5£¥ during the
first half of this year, according to statistics compiled by the State
Statistical Bureau. Therefore, the tariff breaks have failed to have the
expected stimulating effect on China's technology imports during the first
six months of this year.
A leading Italian consulting company is assisting the Northeast capital city
of Liaoning Province to deal with daily waste produced by hundreds of
factories and families. The consulting company, Top Services International,
has won the agreement of an Italian investment bank to pour over ¡ç62
million into Shenyang for a garbage_treating centre which can handle a daily
processing capacity of 1,000 tons. Highly advanced Spanish techniques will
be applied in the rubbish processing centre, a result of the Italian
company's close involvement with the European market. The Italian
consulting firm has 20 years of business history in the fields of
communication, consulting, company organization, financial strategies,
marketing, and in trade and international relationships. When the planned
treatment centre is completed all of the city's garbage is expected to be
recycled into various useful articles.
Airbus aims to grab half of China's airline market share, said recently
Roll Rue, Airbus Industry China's general manager. Airbus is more confident
of cooperation with China after the Chinese new government took office in
March. China is intensifying efforts to open wider to the outside world,
offering greator opportunity for the company to develop business in China.
Airbus started its China operations in 1985, and has received orders for 92
aircraft, 47 of which are now operational. In 1997 Airbus delivered 19
planes to China's airlines, an all_time high. It predicts that by 2014
China will need 1,320 aircraft valued at ¡ç100 billion. Now, more than 20
multinational aviation equipment companies have opened businesses in the
centre and established maintenance services.
US_basesd hard_disk manufacturer Seagate Technology Inc announced recently
it will increase by more than ¡ç100 million its investment in a plant in the
Shenzhen Special Economic Zone. Seagate plans to raise the investment at the
¡ç20 million Shenzhen plant to ¡ç122 million in three to five years and the
extra investment will not change its stake in the plant, a joint venture
between Seagate and China Electronics Corp. Seagate holds the majority
stake. Seagate in Shenzhen has been ranked by the Ministry of Foreign Trade
and Economic Cooperation as the largest foreign_funded exporter in 1997 with
total exports worth ¡ç930 million. Seagate also opened a factory in Wuxi,
Jiangsu Province, with a start_up of ¡ç30 million. The company ranked fourth
in terms of exports in 1997.
Ericsson, the Swedish telecommunication giant, could double its investment
in China to ¡ç600 million over the coming three years. The company will
establish subsidiaries in manufacturing, trading and finance and expand the
manufacturing capacity of its local subsidiaries. The investment will also
be used to enhance the company's engineering service capability in China
and to strengthen its research and development base in Shanghai. According
to Nilsson, Ericsson will set up a new wholly owned company in Sou_thwest
China's Chongqing as a production and trading base.
The German BASF Group set up its representative office, the fifth of its
kind in China, in Dalian earlier, aiming at giving a push to the managing
and marketing business in North China while turning Dalian into a new
managing marketing and retailing cneter.
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