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CIEC ECONOMIC BRIEF
NO.19 (VOL.91)
Sep. 8, 1998
C a t a l o g
Unified contract law drafted
Laws to regulate China leasing firms
Cotton sales to adopt new pricing system
Suzhou offers preferential policy for overseas investors
Rules on genetic material passed
Export achieve continued increase
Investment areas expanded to stimulate demands
Guizhou tries hard to attract investment
Guangdong vows to meet target
New capital floods into Zhejiang
Chengdu to entice overseas investors
Qinhuangdao offers projects for overseas cooperation(continued)
Ample room for cooperation in agromachinery
China to generate more wind power
Rongcheng__a fast growing investment haven
Health products find smooth way abroad
Australia have also approved a dozen traditional Chinese medicines.
New Sino_Russian trade channel opened
Sino_American cooperation on energy development
Water supply BOT contract signed
First public relations JV with Japan
China's lawmakers are working on the country's first unified contract law,
said Wang Shengming, director of the Civil Law Department of the Commission
of Legislative Affairs on August 19. The new statute is designed to plug
legal loopholes that permit sharp practice in commercial dealings. In recent
years, abuse of contracts has become a more serious problem, harming the
interests of both State and individuals. Official statistics show that more
than 4 billion contracts were signed nationwide last year and Chinese courts
handle about 3 million contract disputes each year. Therefore, a unified,
comprehensive contract law is fundamental to China's market economy, in
view of the fact that the nation now controls only five commodities: crude
oil, oil products, petroleum, coal and automobiles. The contract law will
touch on many new issues not included in China's three current laws
relating to contracts. The issues include such new economic practices as
financial leasing and real estate and securities brokerage.
China has previously promulgated three contract laws__the Law on Economic
Contracts adopted in December 1981, the Law on Economic Contracts Concerning
Foreign Interests adopted in 1985 and the Law on Technology Contracts
adopted in 1987. As China has shifted from a planned economy to a
market_oriented system, some provisions of the existing laws are no longer
appropriate for solving current problems. For instance, the long_distance
transportation of goods for sale was an illegal act a decade ago. The Law on
Economic Contracts was amended in 1993, in an attempt to adapt to the new
economic situation. As the three laws were drafted at different times and by
different people, they sometimes differ on the same subject, such as dealing
with liquidated damages. All these problems would be solved in the new
contract law. It comprises 441 articles, a record for Chinese laws.
The contract law will lay down strict provisions on the prevention of
contract fraud and other issues concerning breach of contract. This is very
important for safeguarding social and economic order. The new law will cover
credit_and_debt relationships between subjects with equal status, and will
fall into the category of civil relations. It will mainly regulate economic
and trade relationships between enterprises, and it will also cover
contractual relationships between individuals. According to the general
practice of the NPC, the draft law will be discussed at least twice more at
the NPC Standing Committee sessions. It will not be officially promulgated
until the middle or end of next year.
China's first acts pertaining to leasing contracts were reportedly
discussed at the meeting of the standing committee of the National People's
Congress held recently. A set of clauses included in the contracting law
will create a more regulated, fair and flexible climate for the development
of China's fledgling leasing industry. The leasing firms are expected to
plan their business with an eye to the great potential of the country's
leasing industry. Since a buyer's market and sluggish market demand are
plaguing the Chinese economy, leasing is surely one effective way out for
businesses in China.
In a related issue, outstanding rental fees owed to leasing firms,
especially those which had been guaranteed by local government agencies
before 1988, have nearly been settled. Using ¡ç200 million in special loans
provided by the Bank of China, local government agencies have signed pay
back contracts with leasing firms for 92£¥ of the ¡ç396 million rental fees
they guaranteed through the end of last June. Government agencies were
forbidden to guarantee leases after 1988.
The industry has been affected by Asian financial turmoil. Japanese invested
firms account for more than half of the leasing firms with foreign
investment in China. Consequently, starting at beginning of this year, many
firms have had to reduce their business and stop the expansion of new
businesses. The leasing industry, initiated in the country in 1981, reported
a business volume of ¡ç700 million last year, according to the statistics.
China is likely to abolish its purchasing price controls over cotton next
year, one of the strategically important products which enjoy government
protection. The government has formulated a plan to make cotton fully
market_oriented in the second half of this year. The measure is likely to be
initiated next year but the schedule will be ultimately approved by the
State Council. In an effort to balance the stockpile of domestic cotton, the
government for the first time introduced market mechanisms to this
long_protected sector in April by allowing the purchasing price to float
between 5£¥ on a basis of 650 yuan (¡ç78.4) per kilogram. The cotton
purchasing price had been set at the government_fixed price of 700 yuan
(¡ç84.4) per kilogram.
It's estimated that nearly 4 million tons of cotton is stockpiled
across the country. The country has experienced good cotton harvests for the
past three years, reaching 4.3 million tons last year. However, the market
demand was on average merely 3.5 million tons during the past few years. The
large price differences between the domestic and international cotton market
has stimulated textile producers to buy from overseas. Since 1994, China on
average imported 600,000 tons of cotton a year, topping 800,000 tons
last year.
The government offered a series of special policies to encourage textile
producers to use domestic cotton early this year instead of imported one.
The export of textile products made from Xinjiang cotton enjoy tariff
exemption. Experts said that the cancellation of limits on cotton prices is
also part of government measures to save costs for textile companies, most
of which are suffering from deficits.
The government's new policies have worked as cotton imports witnessed a big
plunge while exports grew. Cotton imports in the first five months of this
year plummeted 64.2£¥ from the corresponding period last year to 140,000
tons, according to the General Administration of Customs. Cotton exports
gained a record 750£¥ increase from the same period of last year to reach
818 tons in the first five months of this year. Experts said that the export
boom made the abolishment of the cotton price control more appropriate.
Suzhou, an open coastal city with five State_level development zones and ten
provincial_level development zones in Jiangsu Province, has recently
announced new tax preferential policies for foreign investors to further
step up its opening_up drive. The preferential policy covers the following
fields:
1. Productive foreign_funded enterprises (FFEs) in nature will enjoy at most
a 24£¥ reduction of enterprise income taxes and FFEs under the category of
technology intensive projects, energy, communications, and port construction
projects, projects each with a foreign investment exceeding ¡ç30 million and
long investment return period, State policy_supporting ones, and production
ones in State_level economic and technological development zones, high_tech
development zones, and the Suzhou Industrial Park, will have to pay only
15£¥ enterprise income taxes. Enterprises enjoying the 15£¥ tax rate will be
exempted from local income taxes at the same time.
2. Productive FFEs with operation term of exceeding ten years can enjoy
exemption of enterprise income tax in the first two profit_making years,
and 50£¥ exemption of enterprises income tax in the third to fifth years.
3. FFEs engaging in planting, animal husbandry, forestry and horticulture
production, upon expiration of their terms of tax exemption and reduction
according to related regulations, can continue to enjoy the preferential
treatment to have their enterprise income tax reduced to 15_30£¥ for the
following ten years upon approval from related department. Foreign_funded
agricultural development projects involving high or new technologies can be
exempted from relevant tax on land and charges on construction, and the
supply of land can be in the form of leasing, rental or administrative
allocation.
4. Sino_foreign joint ventures engaging in port, harbor and highway
construction can have the rate of their enterprise income tax reduced to
15£¥. Those with operation term of more than 15 years can enjoy exemption
of enterprise income tax in the first five profit_making years, and 50£¥
exemption of the income from the six to tenth years.
China has issued regulations to step up management of human genome resources
and promote international cooperation in the field. Without approval from
the scientific and health administrations of the State Council, no domestic
or foreign individuals or work units can be allowed to collect, develop,
trade in or export anything related to human genome resources, according to
the regulation issued on August 20 by the Ministry of Health and the
Ministry of Science and Technology.
Human genome resources are defined in the new rule as organs, tissues,
cells, blood, DNA and other bodily material. The two ministries will jointly
set up an office to administer China's human genome resources. Any Chinese
institutions engaged in human genome_related work must apply to the office
before their programs begin operations. Organizations involved in already
approved Sino_overseas projects set up before the regulation's passage must
get certificates from the office if they want to be involved in export
trade. The office will conduct quarterly inspections of Sino_overseas
projects and applications for transporting human genome resources out of
China. Overseas institutions or individuals will penalized if they violate
the regulation. The regulation also stressed enhancing intellectual property
rights protection of human genome resources study and development. Before
the regulation was implemented, enterprises took genetic materials out of
China without official permission.
Many Chinese scientists have worried about the drain of human genetic
resources and have written letters to national leaders. They said that China
should protect human genome resources, which are essential to future
developments in the pharmaceutical and health care industries and that
protective methods will not affect cooperation with foreign scientists.
Scientists are looking for more opportunities for international cooperation,
and the regulations are not going to be a barrier, according to Qiang Boqin,
vice_president of the Chinese Academy of Medical Sciences and director of
the Beijing Human Genome Research Center.
Genetic research in China is still underdeveloped and should be open to
international cooperation based on the equality of responsibility. There are
now 30 laboratories in China involved in human genome research, and two gene
sequencing centers will be set up in Beijing and Shanghai as part of the
global human gnome project. Genetic research on leukemia and liver, stomach
and oesophagus cancers, high blood pressure, and other major diseases has
already reached a high level.
China's export volume continued to rise in July, according to a report from
the General Administration of Customs on August 10. The total export volume
rose 3.5£¥ from the same period of last year to reach ¡ç16.16 billion, up
1.9£¥ from the 1.6£¥ growth rate of June. The report attributed the upbeat
export trend in July to the gradual adaptation of Chinese foreign trade
companies to the harsh export situation, the series of governmental
incentives and the increased credit support from the banking sector.
The central government has raised export tax rebate rates for products such
as coal, steel, concrete and ships since June 1 and canceled the export
licenses needed by some export products. The abundant domestic supply of
export products, which has led to a drop in export prices, has also
sharpened the competitive edge of Chinese exporters. The steep decline in
China's export volumes to crisis_hit Asian countries, including members of
the Association of Southeast Asian Nations (Asean), Japan and South Korea,
has been brought under control in the past three months. China's exports to
those three areas dropped 13.7£¥, 4.3£¥ and 30.3£¥ respectively in the first
seven months of this year.
The market diversification strategy of China's foreign trade sector
continued to prove successful in July. China's exports to the United States
jumped 18.2£¥ in the first seven months from the same period of last year to
reach ¡ç20.19 billion. Exports to the European Union, Russian Federation and
Australia surged respectively by 25.6£¥, 39.2£¥ and 20.2£¥ over last year.
Due to the still weak domestic market demand, China's import volume
continued to be low in July. The total import volume mounted to ¡ç76.39
billion in the first seven months of this year, 0.7£¥ higher than the same
period last year.
The foreign trade aggregate over the seven months rose 4.2£¥ over the 1997
figure to reach ¡ç179.49 billion, of which exports accounted for ¡ç103.1
billion. The foreign trade volume of foreign_invested companies started to
surpass that of State_owned enterprises in July. The former achieved ¡ç87.13
billion import and export volume in the first seven months, compared to the
¡ç86.82 billion of State_owned enterprises. Imports and exports of
machinery and electronics products both develop rapidly in the first seven
months. Their import volume leaped 9.7£¥, and exports soared 16.8 over last
year.
Persistent slow economic growth in the first half of the year has prompted
the central government to expand designated areas for new investment and to
brew plans to modify its 1998 budget to increase government spending. After
launching a national railway and highway building craze during the past
several months, the government has decided to intensify investment in
construction of rural power grids and grain depots and expansion of forestry
in a bid to further invigorate domestic demand. The economic growth was
estimated at 7£¥ during the January_June period and it will be a formidable
challenge for the country to reach the 8£¥ goal for the whole year.
Bleak prospects for exports resulting from the Asian financial malaise and
stagnant consumption growth have projected the role of investment growth,
especially in the infrastructure sector, as the driving force for China's
economic growth this year. The government's efforts in the first half of
the year have pushed the investment growth velocity from 10£¥ in 1997 to
over 13£¥ during the January_June period. But the pace was below the goal
agreed upon by officials and economists, who have said investment should
increase by at least 15£¥ for the 8£¥ growth in gross domestic product. The
investment's influence on economic growth has not shown up. Finance
Vice_Minister Zhang Youcai said recently the government will this year
intensify its investing activities to lever funds from other investors into
the infrastructural projects. The government's involvement in these
projects will greatly encourage non_government investors.
The central government will inject adequate capital into the new State
projects and subsidize loan interest payment for other investors of some
infrastructural projects. These expenditures will require modification of
this year's budget and the flotation of more treasury bonds than originally
planned. The additional bonds will be issued in batches, targeting domestic
institutional investors and foreign institutional investors respectively. As
local governments do not have the right to issue bonds, the central
government may issue some special construction bonds for them to fund the
provincial projects. The government's measures introduced so far may
generate an investment growth of over 17£¥ for the whole year. The 2
percentage point margin over the officially set 15£¥ target will be
necessary considering the uncertainties in other aspects of the economy.
Southwest China's Guizhou Province is doing everything it can to attract
investment. Its latest program is the ¬ð98 Guizhou Projects and Assets
Regrouping Seminar held in the capital city Guiyang late in August. At the
seminar, 209 projects for assets regrouping and 901 for investment were
presented. The projects were carefully chosen for their attractiveness to
potential investors. Most of them are related to the province's key
industries. The projects included energy, machinery, electronics,
metallurgy, non_ferrous metals, chemicals, textiles, building materials,
pharmaceuticals, agriculture, forestry and tourism.
High ranking officials with the province said the fair is intended to help
raise more funds through both domestic and foreign channels to accelerate
reform of State enterprises in the province. It is expected to bring
attention to the province's State enterprises and their competitive
products. Guizhou encourages investors at home and abroad to remain flexible
when considering ways to participate in the reform of the province's State
enterprises and ways to exploit the province's abundant resources. Methods
include possible share purchasing, stock holding, joint operations, mergers,
acquisitions, leases, trusteeships and contracting. Besides improving
infrastructure, Guizhou will emphasize soft aspects of the investment
climate by improving the efficiency of government organs, providing quicker
responses and solutions to investors¬ð complaints and simplifying procedures
for investors.
Guangdong Province, engaged in the country's largest amount of foreign
trade and absorbing the highest degree of foreign investment, vows to strive
during the second half of this year to fulfill its targets in foreign trade
and investment. To achieve the proince's target of 10£¥ growth in foreign
trade more attention will be given to Shenzhen, Dongguan and Guangzhou, the
three largest exporting bases in Guangdong. Preferential treatment will be
given to overseas_funded enterprises exceeding ¡ç100 million each in yearly
export volume. Supports include simplified exporting procedures, reduced
expenses, shortened time in processing tax refunds.
With over 80£¥ of the province's exports going to Hong Kong, local traders
in export business will consolidate markets in Hong Kong. They will also
move to expand trade ties with North America and Europe which have suffered
less from the Asian financial crisis. More attention will also be paid in
tapping new growing markets in South America, East Europe, Africa and the
Middle East. From January to June, local traders in export business were
greatly encouraged by snowballing exports to the former Soviet Union and
Africa, up 67£¥ and 62.2£¥ respectively from a year earlier. In South Korean
markets however, exports nose_dived by a sharp 17.8£¥ while exports to Asean
went up 7.7£¥, much lower than the double digital growth achieved before the
onset of the Asian financial crisis.
In foreign investment, Guangdong will also strengthen its efforts to
maintain its position as the powerhouse of China. High_profile visits and
fairs will be organized to tighten trade ties with Hong Kong, North America
and Europe. As scheduled, the ¬ð98 Guangdong High_Tech Fair was held in
Hong Kong early in August to promote 200 projects seeking cooperation in
capital, technology or management. The ¬ð98 Guangdong Economic and
Technological Trade Fair will be held this October in the United States.
In early November, the Introduction Conference of Mountain_Area Investment
Environment will also be held in Guangzhou. The province will actively
participate in fairs being held elsewhere in the country.
Investment from the North American and Latin American regions increased
dramatically in the first half of this year. The province approved 482 new
foreign_funded projects in the period, with aggregate contractual foreign
capital of ¡ç880 million, a jump of 66.9£¥ over the same period of last
year. Actual use of foreign capital reached ¡ç803 million, up 4.7£¥.
Contractual overseas investment from American countries accounted for 40.6£¥
of the total, whereas in 1997 their share was only 23.3£¥. Of the 482
projects approved in the first half of this year, 47 involve investment of
over ¡ç10 million.
Investment in manufacturing industry, agriculture and infrastructure has
increased sharply this year. Contracted foreign funds jumped 666.8£¥ in
agriculture in the first six months, 156.1£¥ in the transportation and power
sectors and 102.4£¥ in manufacturing industry. Foreign trade was worth ¡ç7.1
billion, an increase of 5.3£¥ over the same period of last year. Exports
were worth ¡ç5.8 billion, surging 15.6£¥. Influenced by the Asian financial
crisis, Zhejiang's exports to Asian countries have been falling month by
month since January. In June, exports to Asian countries were worth ¡ç345
million, down 15.3£¥ from the same month in 1997. However, Zhejiang's
exports to Asian countries still managed to grow by 4.4£¥ in the six month
period.
The municipal government of Chengdu, capital of Sichuan Province, will set
up a foreign investment joint office this year. According to a recently
unveiled plan to improve the investment environment and expand funding
channels, the office will be operated by the city's Development Planning
Commission, the Industrial and Commercial Administrative Bureau, and
Customs. The Chengdu government will continue to lower charges on foreign
investors, and foreign_funded enterprises will not be charged for items that
are not included in the official policy worked out last year.
The measures were designed to narrow the investment gap between Chengdu and
more developed areas of the country. The city accounted for only 0.2£¥ of
the international funds flowing into China last year. Chengdu will make the
most out of the opportunity as overseas investment now moves to central and
western China. Foreign businesses such as the World Bank Investment Corp and
Sumitomo Corp are now discussing possible joint ventures with local
companies. Toyota Motor Corp has recently signed a ¡ç99 million agreement
with a local tour bus manufacturer.
The Chengdu High and New Technology Industrial Development Zone has
achieved considerable success this year by implementing a policy of actively
wooing foreign investment rather than merely waiting for its arrival.
Covering 40 square kilometers, the zone is one of two State_level high and
new technology development zones in Sichuan. The other is in Mianyang. The
zone's administrative committee has simplified the approval procedure for
the establishment of foreign_funded enterprises and improved its services to
foreign_funded enterprises which have settled in the zone. In the first half
of this year, the zone introduced 27 foreign_funded projects with pledged
foreign investment totaling ¡ç24 million, compared with ¡ç14.73 million in
the same period last year. The actual amount of foreign investment
introduced into the zone reached ¡ç15.72 million, compared with ¡ç9.8
million in the same period last year.
As the largest development zone in Sichuan, the Chengdu zone has become a
leading force behind the city's economic development. In the first half of
this year, the gross domestic product of Chengdu's 12 development zones was
nearly 1.9 billion yuan (¡ç229 million), 1.4 billion yuan (¡ç169 million) of
which came from the Chengdu High and New Technology Industrial Development
Zone.
21. BOPET production (annual production of 10,000 tons). Investment: ¡ç26.1
million, including ¡ç15.66 million foreign funds. Form: joint venture.
22. Wine production (annual production of 10,000 tons of Bardolino).
Investment: ¡ç30.47 million, including ¡ç16.21 million foreign investment.
Form: joint venture or cooperation.
23. Production line with annual production of 1 billion pieces of bottles
for antibiotic. Investment: ¡ç17.13 million, including ¡ç10.28 million
foreign investment. Form: joint venture.
24. Production line with annual production of 5 tons of liquid ketone.
Investment: ¡ç864,000, including ¡ç400,000 foreign investment. Form: joint
venture or cooperation.
25. Production line of 200,000 square kilometers of granite. Investment:
¡ç8.25 million, including ¡ç4 million foreign investment. Form: joint
venture or cooperation.
26. Daily production of 1,000 tons of cement grog. Investment:¡ç16.39
million, including ¡ç10 million foreign investment. Form: joint venture or
cooperation.
27. Production line with annual production of 150 million pieces of hollow
brick. Investment: ¡ç3.61 million, including ¡ç2.41 million foreign
investment. Form: joint venture, cooperation or solely foreign_funded.
28. Hollow brick. Investment: ¡ç2.76 million, including ¡ç1.51 million
foreign investment. Form: joint venture or cooperation.
29. Sulphuric acid and cement production (annual production of 80,000 tons
of sulphuric acid and 120,000 tons of cement). Investment:¡ç10.84 million,
including ¡ç7.23 million foreign investment. Form: joint venture or
cooperation.
30. Oil refinery factory with annual processing capacity of 12 million tons
of crude oil. Investment: estimated ¡ç960 million foreign investment. Form:
joint venture or cooperation.
31. Industrialization of animal husbandry. Investment: ¡ç11 million,
including ¡ç3 million foreign investment. Form: joint venture or
co_operation.
32. Vegetable production base (with annual production of 300,000 kilograms).
Investment: ¡ç255,000, including ¡ç181,000 foreign investment. Form: joint
venture.
33. Shanhaiguan base for aquatic products. Investment: ¡ç2.62 million with
¡ç1.45 million foreign investment. Form: joint venture.
34. Expansion of deer raising farm (with more buying of 4,000 deer and
construction of relative processing factories). Investment: ¡ç13.29 million,
including ¡ç4.88 million foreign investment. Form: joint venture or
cooperation.
35. Colorful cotton planting base. Investment: ¡ç7.5 million, including
¡ç4.5 million foreign investment. Form: joint venture or cooperation.
36. Starch production (with annual starch production of 10,000 tons).
Investment: ¡ç4 million, including ¡ç2.8 .million foreign investment. Form:
joint venture.
37. Future construction of the Nandaihe tourism and vacation region, in
Funing County. Investment: ¡ç54.37 million, including ¡ç44.58 million
foreign investment. Form: joint venture.
38. Zushan tourism exploitation. Investment: ¡ç13.5 million, including ¡ç5.4
million foreign investment. Form: joint venture or cooperation.
39. Construction of Yansai Lake water paradise. Investment: ¡ç410,000,
including ¡ç205,000 foreign investment. Form: joint venture.
40. Comprehensive exploitation of Shanhaiguan SETDZ. Investment: ¡ç11.2
million, including ¡ç5.6 million foreign investment. Form: joint venture or
cooperation.
China is expected to formulate a rather ambitious plan for its agricultural
machinery development. By the year 2000, the nation will realizes a total
output value of agricultural machinery to reach RMB100 billion generated by
100,000 large and medium_sized tractors, 2 million small tractors, 3
million agricultural vehicles, 25,000 large and medium_sized combines,
210,000 large and medium_sized tractor implements, 700,000 processors for
agricultural products, and 100 million kw internal combustion engines plus a
corresponding development of other kinds of agricultural machinery. In terms
of technical development, quality of more than 50£¥ of China's major
agricultural machinery products should have reached international level of
the 1980s; over 60£¥ of the newly developed products should have come up
to the 1990s¬ð international standards by 2000 and by 2010, reliability of
the products should be up to the then international standards; categories of
machinery should have met 95£¥ of the market demandand general technological
levels of the products should have been up to international level.
In fact, the great market potential of China's agricultural machinery has
already lured many well_established companies to come to China one after
another. Officials in charge of China's agricultural machinery industry
were quoted to say that cooperation with foreign counterpart to enhance the
domestic ability of developing agricultural machinery is one of the
effective ways to realize the country's agricultural machinery development
strategy. The country is to develop its agricultural machines in a selective
way under a combining process of introduction, assimilation, and research
and development. To develop its own products by learning the introduced
technologies, some of the backbone enterprises capable enough to develop
advanced products will have a free hand to introduce foreign technologies
and equipment. Introduction efforts will be focused on seeders, harvesters,
and processors for rice, wheat, corn, soy beans, and cotton as well as
auxiliary equipment used to process seeds, raise cattle and oultry, and
protect environment. Meanwhile the research development and application of
agricultural vehicles, equipment for drying, storing and freshness
preservation shall also be encouraged.
Some experts predicted that there would be three major breakthroughs in
China's agricultural machinery industry. The first one is a substantial
increase in the quality of the products, which is to be brought about by
standardization, generalization, and serialization of major agricultural
machinery equipment, and the replacement of the energy and resource
consuming, low efficiency, and highly polluting equipment by those that are
more efficient, higher quality ones. The second one is an expected change of
the ·scattering and disordering" and ·small and comprehensive" condition
of the agricultural machinery industry with a number of large and strong
enterprises that have sound economy of scale being expected to dominate the
market. The third breakthrough is that the agricultural machine production
will bend on large and medium instead of small and medium ones so as to meet
the industrialization, modernization, and the demand of the scales of
economy within the industry.
China plans to raise its wind power generation capacity to 1 million kw by
2000. According to official sources, the country has thus far installed 10
million small windmill generators with combined installed capacity of
20,000 kw, and is able to produce 30,000 windmill generators annually.
There are 15 large wind power plants nationwide with a total installed
capacity of 30,000 kw. In addition, household mini_windmill generators
will be promoted in remote areas and on islands which are difficult to hook
up to the local power grid. Meanwhile, wind power plants with a considerable
scale will be built in provinces where the resources are plenty and power
consumption is enormous. Two_thirds of China's territory are windy, making
the use of windmills feasible. Initial estimates show the country has 253
million kw of wind power resources.
Shanghai plans to use wind to generate electricity as part of its increasing
efforts to reduce coal consumption. 34 modern windmills will be set up at
Kongwangsha in Chongming County and on the east beach of Nanhui County. They
can generate a combined 20 megawatts of electricity per hour. The project
will be completed in 2000. Shanghai has plenty of breeze at the mouth of the
Yangtze River, where wind blows at 7 meters per second. The estuary has 900
square kilometers of beaches suitable for windpower plants. Experts said if
half the area is covered with generating units, the city will have
additional electricity of 5.8 billion kilowatt_hours a year.
The port city on Rongcheng at the east tip of the Shandong Peninsula now
ranks high among the country_level cities in Shandong province in export
trade and it has attracted 1,400 foreign projects valued at ¡ç500 million.
The port city has built in the last few years four development zones, a
trade and holiday resort involving an investment of over RMB 1 billion. The
city is seeking State Council approval to garnet its Shidao Port and Longyan
Port the status of first_class and second_class open ports.
The secret to Rongcheng's success in speeding up the construction of an
external_oriented economy lies in its offering a series of preferential
land and taxation policies. The municipal government's aim has been to
increase its attractiveness for foreign investment in the fields of
electronics, machinery, apparel, toys, fishery and tourism. As many as 98£¥
of the 320 FFEs are making profits. Rongcheng has also gone out to set up 11
offices in the ROK, Japan, Russia and other regions, 13 businesses overseas,
and joint equity and cooperative ventures with more than 20 overseas firms
and financial institutions, covering 16 different industries. Among these
projects, more than 100 are million_dollar or bigger businesses. Rongcheng
is rich in agricultural resources. Overseas investors have started more than
200 projects in this sector involving an outlay of more than RMB100 million.
The city's export of vegetable, fruits and aquatics now amount to ¡ç300
million a year.
Despite the buffeting of Asian financial turmoil, exports of Chinese
medicines and health products will have a bright prospect in the long run.
Exports of Chinese medicines and health products, totaling around ¡ç600
million each year, are traditionally targeted at East and Southeast Asian
countries, which appreciate Chinese herbal medicines. However, the
devastating financial turmoil has reduced the demand for such products.
During the first five months of this year, exports of Chinese medicines and
health products dropped 12.5£¥ from a year ago to ¡ç120 million.
Nonetheless, Chinese herbal medicines and health products, with their
special charm, have opened the gates of the US market, which consume 35£¥ of
the world's annual drug output, and some European countries. Late last
year, the US Food and Drug Administration (FDA) approved a Chinese medicine
for the treatment of cardiovascular and cephalovascular diseases. This was
the first time that a Chinese medicine had been approved by the FDA to be
sold on the US market after clinical confirmation. It can be called a
breakthrough because Chinese medicine, which differs significantly in
composition and prescription from its western counterparts, usually has to
be exported to the United States and European markets as food additive or
health products for the use of overseas Chinese. A more remarkable thing was
that the medicine could go directly into the second phase of clinical
experiment, which meant it would take much less time for the medicine to be
available on the US market.
As the pursuit of natural solutions spread worldwide in 1996, foreign
countries gradually came to recognize the value of Chinese herbal medicine.
Germany, the United States, Japan and other countries are also developing
medicines extracted from herbs, which do not have the side effects of
chemical compound medicines. Recently, another Chinese herbal treatment,
extracted from ginkgo to cure cardiovascular and cephalovascular diseases,
has received the FDA's preliminary approval. Another Xiamen_origineted
herbal medicine for the treatment of asthma is expected to get FDA approval
soon. Drug licensing authorities in Germany and
Italy's Aster focuses on Chinese buildings
Italy's Aster Group, a world leader in electrical and mechanical services
for the building industries, including air conditioning, plumbing and fire
protection, has just clinched a business contract with its first Chinese
mainland partner, China State Construction Engineering Co. According to the
contract, Aster will be responsible for the mechanical part of the
Headquarters Building of the Bank of China, which was designed by the
prestigious architect Ieoh Ming Pei. The contract also marked an important
watershed for Aster, which had mainly teamed up with foreign investors in
its previous two business operations in China.
A new border trading port with Russia has been opened on northeast China's
Suifenhe River as the main export base for Chinese products. It encompassed
warehousing, transportation and wholesale facilities, and an exhibition
center. On the Russian side, Artem is the designated trading base, including
a free trade area and wholesale market. By encouraging business in China,
the channel transports household appliances, building materials, metals,
foods, health products and garments badly needed by the Russian market to
the Suifenhe Port. Through exhibition and wholesale export agents, the
channel management committee will oversee the deals made. The China
Investment Bank and the Russian Far East Fishery Bank will undertake the
accounting business of the two sides.
A principle agreement on Sichuan Province's energy exploration and
infrastructure development has been signed between the pro_vincial
government and Enron International of the United States. The two sides will
cooperate on the development of oil and natural gas products, as well as
projects related to urban gas pipelines and gas supplies, the water supply
and disposal and the establishment of power stations. Enron Oil and Natural
Gas Corp, a branch of Enron International, is carrying out a 30_year_term
contract signed with the China Oil and Natural Gas Corp on appraising and
developing reserves of oil in the blocks in central Sichuan. The new
contract will help Enron International further participate in the energy
infrastructure construction in Sichuan.
A BOT (build_operate_transfer) contract was signed recently by French
company Generale des Eaux (CGDE), the world's largest water supplier, on
designing, building and operating the B Plant of the No. 6 Waterworks
of Chengdu, Sichuan Province. It is the first water supply BOT contract
approved by the Chinese government. An integration composed of CGDE (60£¥
shareholding) and Japan's Marubeni Corp. (40£¥ shareholding) won the public
bidding held by the State Development Planning Commission and the Chengdu
Tap Water Co. According to the 18_year_term contract, a waterworks with a
daily output of 400,000 cubic meters of potable water will be built together
with a 27_km water pipeline. The French side will also be responsible for
the operation and maintenance of all water intake facilities which will be
transferred to the Chengdu municipal government when the contract expires.
The initial investment totals ¡ç100 million.
The Prap Public Relations Planning Co was founded recently in Beijing as the
first Sino_Japanese public relations joint venture with Prap Japan holding
60£¥ of the stake. The company will introduce to China enterprises of Japan
and other countries and offer backing to the Japanese and other countries¬ð
enterprises in China in the fields of public relations and foreign related
business. It will also introduce to Japan and other countries noted Chinese
enterprises and name_brands. For those Chinese enterprises operating in
Japan or having their products marketed in Japan, the company will offer
package services including image design, market survey, media publicity,
management consulting and channel opening for their further development to
enable them to claim great market shares in Japan.
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