A nationwide logging ban is anticipated that will force fundamental changes on China¬šs timber industry. The logging prohibition will benefit the country in the long run, but it puts great pressure on the timber industry. An upsurge in timber prices can be expected next year when the radical measure for protecting natural forests is fully implemented.

Logging ban was announced on September 1 in the 4.63 million hectares of the Chuanxi Forest, which covers 54 counties in Sichuan Province. The ban is expected to become effective nationwide next year to help prevent floods such as those that have devastated the Yangtze River areas and Northeast China for more than two months this year. Unrestrained logging along the upper reaches of the Yangtze River has caused serious erosion, raising water levels and silting up channels.

Yunnan Province¬šs forestry department has also decided to stop cutting the primeval forest along Jinshajiang, the upper reach of Yangtze River, beginning September 1, with the aim of conserving water and soil in the province¬šs eight regions on the upper reaches of the Yangtze River, as well as in Xishuangbanna prefecture. Local governments at all levels have been urged to implement the decision at once without preconditions. The upper reaches of the Yangtze River basin¬šs forests and ecosystems have a direct effect on the middle and lower reaches of the Yangtze River. The provincial government has already adopted some measures to protect remaining forests. The measures took Yunnan Province 10 years and 170 million yuan (”ē20 million) to implement. Of that, 120 million yuan (”ē14 million) was raised by the province itself to save the forests, as a result of ­·The Project of Yangtze Upper_Stream Shelter_Forest System".

The timber industry had to abandon its traditional dependence on forestry and develop new materials as the sector cannot rely completely on imports. Some timber plants are already using bamboo, sorghum and hemp to produce plywood. Such technology is expected to be applied widely in the coming years. The ban will also be an opportunity for the industry to sharpen its competitive edge as it will be forced to introduce advanced technologies and improve efficiency. China¬šs timber resources cannot be effectively utilized as long as China¬šs timber industry continues to operate at a low level. The development of alternative materials can also ease the pressure from increased imports brought by the logging ban. Planting market_oriented trees could be another alternative business option for the sector.

Forest plantations have contributed more than 30 million cubic meters of timber to the Chinese industry. They still have huge potential to be explored__China has become the world¬šs top tree planter with 31.83 million hectares of forest plantation. The timber industry is expected to adjust its operational strategies to meet emerging market demands. The robust development of residential housing will expand timber demand significantly. It is predicted that China will consume 119 million cubic meters of timber annually by 2000. The decoration and furniture industries, which have been stimulated by increasing personal income, will also spur timber consumption.
Back to index

The central government is establishing price controls to protect the viability of domestic machinery and equipment manufacturers. The move is expected to halt abnormal competition, assist an overhaul of markets for the products, and to stimulate demand, according to the State Machine Building Industry Bureau (SMBIB). SMBIB recently required machinery and equipment producers trapped in a vicious price war to adopt price controls, by either setting price floors or ceilings. The products first affected included passenger cars, computerized digitally controlled machine_tools, farm trucks, loading machines, and power generating equipment. Final measures are under discussion, and results are expected to be publicized soon.

Analysts said even though the move ignores the free market mechanism, the Chinese Government has no choice but to intervene in the hotly contested market to prevent some large State enterprises from losing more money and laying off workers. A statement issued early in September by the State Economic and Trade Commission (SETC) established principles for exercising price controls.

The SETC price control document lists 21 products, ranging from machinery, to chemical products and building materials. Because of duplication of projects, an over_supply of industrial products has prompted various enterprises to undercut each other, taking a big bite out of their regular profit margin, according to the statement. As a result, State tax revenues would be significantly reduced and the bank loans extended in line with administrative orders to the State projects could barely be repaid, analysts said.

On another front, the SETC and the State Development Planning Commission (SDPC) issued a proposal urging project owners, construction contractors and building teams involved in infrastructure projects to use domestically made equipment and to source raw materials locally.
Back to index

Regulations on the management of bar codes, the first of its kind in China, will take effect on December 1, 1998, officials from the State Bureau of Quality and Technical Supervision announced on September 11. Product article numbers, widely known as bar codes, are attached to commodities to distinguish them from other kinds of commodities. The regulations clarify the privileges of those using bar codes to label their products as well as their obligations. The printing quality of the bar codes are highlighted in the regulations, while legal liabilities borne by people involved in making or using false bar codes are clearly stated.

Bar codes, recognized as being important in facilitating the production and circulation of commodities, are used widely around the world, especially in developed countries. Before 1986, Chinese exporters often found themselves in a frustrating situation where their goods were refused entry into other countries¬š markets or they were forced to under_quote their exports. To sharpen the competitiveness of Chinese products on the global market, product quality supervisors in China found it essential that China join the universally_recognized bar code system established by EAN International, the European Article Number Organization rounded in Europe in 1981. The Article Numbering Center of China, which was formally established in December 1988, became an EAN International member in April 1991.

The use of bar codes has spread rapidly. More than 40,000 enterprises have gained the approval to use bar codes for about 500,000 categories of goods in chain stores and supermarkets. A survey conducted in 1997 showed that 56.4£„ of commodities on the market were labeled with bar codes, while 95.2£„ of the numbers could be recognized by scanning machines. However, the burgeoning growth of this field has been accompanied by rising numbers of cases involving the improper use of bar codes or even the use of fake bar codes. In 1997, only 70£„ of bar codes attached to commodities met requirements set by the State Bureau of Quality and Technical Supervision. In a survey conducted last year by the Beijing Bureau of Technical Supervision along with the Beijing Article Number Quality Supervision Station, the improper use of bar codes was found to have occurred in the labeling of more than 465 categories of food and articles of daily use in Carre Four and the Lufthansa Wangjing Shopping Center in Beijing.
Back to index

Tianjin has recently promulgated Regulations for Further Encouraging Foreign Investment to facilitate the inflow of foreign investment. Major contents are as follows.

1. Foreign_funded projects that are encouraged by the State will enjoy a easing of restriction of the portions of the products for domestic and overseas sales and prior to actual investment input foreign investors may import the prototypes of their products to be shown in the bonded zone after going through the Customs formalities.

2. Foreign_funded new and high_tech projects in the Tianjin Economic and Technological Development Zone, the Tianjin Port Bonded Zone, the Tianjin New Technology Industry Park and Tianjin Export_Oriented High_Tech Agricultural Modernization Demonstration Zone will enjoy deductions of land transfer fees if the land use rights are acquired through direct transfers. Newly established enterprises with good economic returns in the above_mentioned zones will have half of their land transfer fee refunded if, for three consecutive years since they become operational the ratio between their annual payment of value added tax(value added tax in the import phase excluded), business tax and corporate income tax and land use area is no less than RMB500 per sq m.

3. With an approval of competent authority, foreign investors may establish FFEs through purchasing the stock right of the existing enterprises or joint_stock companies in Tianjin through bidding, auction, contractual or other means of transfer. They may also purchase, contract for and lease the existing enterprises in Tianjin to expand their business scope and scale.

4. Foreign businesses are encouraged to invest in new and high_tech enterprises in Tianjin. Foreign_funded new and high_tech enterprises in the ”°incubation period" may use the Taida International Pioneering Center of the Tianjin Economic and Technological Development Zone, the offices, labs and factory buildings of the Tianjin Port Bonded Zone and the Pioneering Center of the Tianjin New and High_Tech Industrial Park free of charge.

5. Certified high_tech productive agricultural projects funded by foreign investors with an operation term of more than 10 years will enjoy preferential treatment. New technology and new product areas established for trial in the Tianjin Export_Oriented High_Tech Agricultural Modernization Demonstration Zone and the Tianjin Agricultural Science Import and Absorption Center are exempt from farming and forestry special product tax for three years. FFEs engaged in the development and production of six agricultural and sideline products__fruits, vegetables, livestock and poultry products, sea water and fresh water aquatic products, green food and handicraft__will enjoy the support of special preferential loans for the industrialization of agriculture if the variety and quality of their products is superior to the same kinds of products and can lead farmers and supporting enterprises to expand export.

Foreign_funded communications and public utilities projects in Tianjin that are operational for more than l5 years will enjoy relatively more preferential treatment in taxation.
Back to index

In recent years, there has been a series of fowl flu outbreaks in certain American fowl farms. Different serums of fowl flue viruses have been found in fowl products from more than 10 countries. To prevent the threat of the disease spreading to this country, China¬šs State Animal and Plant Quarantine Administration recently laid down the following regulations:

1. Those who want to import fowl or fowl products from the United States must go through quarantine application procedures in advance at the state animal and plant quarantine authorities.

2. On applying for the import of fowl or fowl products, importers must give the name, detailed address and official registration document and number of the producer or processor.

3. After entering the country, fowl products imported from the United States must be processed and used exclusively by registered units. Special storage facilities should be built, and a registration system for putting the products into and taking them out of storage should be established. Garbage, slops, leftovers and other wastes created during the course of usage should undergo immediate treatment.
Back to index

China needs to utilize foreign investment better to ensure sustained and rapid economic development, Foreign Trade Minister Shi Guangsheng said on September 9. China¬šs reforms to its economic system and development mode are at a critical juncture. The country needs to resolve some major problems such as an irrational economic structure, a shortage of capital, technology and skilled professionals, and rising unemployment. Moreover, this year¬šs floods, which affected 223 million people and 21.2 million hectares of farmland, have caused more than 160 billion yuan (”ē19.28 billion) of direct losses.

To help resolve these problems, China must open up further to the outside world. During the first seven months of this year, China¬šs contractual foreign investment, after declining for three consecutive years, grew by 7.25£„ year_on_year to reach ”ē28.02 billion. China will step up its efforts to attract more foreign direct investment (FDI) from North America, Japan and the European Union. It will strengthen cooperation with multinationals, which have become major investors in the global economy.

Large State_owned firms are encouraged to cooperate with multinationals to speed up development of new and pillar industries. Meanwhile, China will continue to open up more areas for foreign investors. The petrochemical and construction sectors will encourage more FDI, while the mining industry will assimilate FDI on a selective basis. The service sector will open up further, with more pilot projects in the fields of tourism, transportation, wholesale, retail and foreign trade. The financial and telecommunication sectors are also expected to become more open. China will also do its best to improve the investment climate by supporting and protecting existing foreign_funded firms, improving the legal system and eliminating random fees and charges.
Back to index

China¬šs economy maintained its recovering momentum in August, with major indices progressing more rapidly than in July, according to government statistics released on September 13. Growth rates of investment, industrial output and consumption all accelerated in August over the previous month, driven by the country¬šs stimuli policies and demand generated by the anti_flood fights.

According to the monthly macroeconomic report, fixed assets investment of the State sector soared 26.9£„ in August from the rate recorded a year ago. In July, the State¬šs fixed assets investment stood at 22.8£„. Industrial added_value growth rate increased by 7.9£„, representing a 0.3_percentage point rise over July, while domestic consumption expanded by 9.3£„, up from 8.1£„. However, as expected, the indices generally have not reached the levels needed to support the country¬šs 8£„ economic goal.

China is banking on the expansion of investment to generate domestic demand and propel economic growth. The country has launched a massive infrastructure construction campaign in the first half of the year and has just decided to escalate the investment spree in the remaining part of 1998 with funds raised through an impressive special treasury bonds issue worth 100 billion yuan (”ē12 billion). So far, the State sector has reached the country¬šs annual fixed asset investment growth target of 15£„, averaging at 17.4£„ during the first eight months of the year. However, investment by the non_State sector, which usually accounts for more than 40£„ of the total investment growth, remained on a dropping track, indicating that total investment growth is still under the 15£„ target.

In a market where supply of every commodity exceeds demand, industrial growth depends on new investments.Consumption growth can also expect a strong push from demand generated by new investments. However, as the effects of the stimuli measures have not fully shown up, industrial growth, which stood at 7.8£„during the first eight months, was under the 1998 goal of 11£„. There is no official target for domestic consumption growth. But the January_August rate of 7.3£„ was much lower than the ra te of 11.1£„ in 1997. Prices continued to fall last month on a year_on_year basis. The consumer price index dipped 1.4£„ in August alone and dropped by an average 0.6£„ in the first eight months. The corresponding figures for the retail price index were 3.3£„ and 2.4£„.
Back to index

The second China Fair for International Investment and Trade closed on September 12 with eye_catching results. The five_day event secured commitments worth ”ē14.2 billion in the form of foreign investment in 2,766 projects. Of this amount, ”ē5.52 billion aimed at 1,606 projects were officially approved and formally contracted. Agreements on ”ē5.18 billion for 707 projects were signed and await official consent, and 453 letters of intent worth ”ē3.5 billion were tent worth ”ē3.5 billion were inked.

Trade transaction agreements totaled ”ē1.05 billion, with imports reaching ”ē189 million, and exports ”ē864 million, Moftec statistics indicated. Last year, when the Xiamen Investment and Trade Fair was transformed into a national event tantamount to the China Export Commodities Fair, foreign investment clinched at the fair amounted to ”ē4.63 billion and trade transaction volume stood at ”ē1.1 billion.

Against the backdrop of the one_year_old Asian financial turmoil, the results of this year¬šs fair indicate that overseas business people still have a strong interest in investing in China. Although ”ē4.74 billion of the contractual foreign investment came from Hong Kong, Macao and Taiwan Province, the number of projects attracting European and American investors increased remarkably. This indicates the diversification of foreign investment in China, a goal which the country is aspiring to. Foreign investment into the infrastructure and industrial sectors accounted for a large portion of the committed investments. Foreign investment into China¬šs central and western regions soared remarkably. Preliminary statistics indicated that ”ē5.13 billion or 18.3£„ of the committed foreign investment was aimed at 505 projects in those regions.
Back to index

Southwest China¬šs Yunnan Province has recently put on its agenda the transformation of its development strategy. This province, bordering Viet Nam and Myanmar, was late opening_up its economy and found itself far behind other eastern provinces. The province is now facing an unprecedented opportunity to accelerate its development as the central government takes fresh measures to stimulate foreign investment throughout the country.

Moreover, the Southeast Asian financial crisis, although it did hurt Yunnan¬šs use of foreign funds, as well as its exports and tourism industries, also created a high time for Yunnan to enter the capital market of Southeast Asia. Enterprises could edge into the market through takeovers, or through holding dominant stakes, and purchasing stocks in sound listed firms in the region. The province¬šs investment in the region is expected to be reinforced because Southeast Asia, despite its economic spasm, remains the leading export market for Yunnan.

Hong Kong, Thailand and Singapore will become the bridgeheads of the province¬šs massive investment move, it is predicted. The province is also trying to improve its investment environment by simplifying approval procedures and reducing fees and charges for foreign_funded firms. Priorities will be given to infrastructure industries, high_technology development, agriculture, and the province¬šs four pillar industries__tobacco, biotech, tourism and minerals. Meanwhile, the province is also exploring ways to open its service sector. The retail industry, financial services, insurance and travel agencies will be made more accessible to foreign investors. Foreign cooperation will also help the technological advancement of State_owned enterprises.
Back to index

Despite much difficulty, Sichuan Province will invest a total of 118 billion yuan (”ē14 billion) in infrastructure to ensure that its goal for the year__a 9£„ economic growth rate__will be reached. This year, the State has decided to increase investment in agriculture, forestry, irrigation works, railways, highways, telecommunications and environmental protection nationwide. Those fields have long been vulnerable spots in Sichuan¬šs infrastructure construction. The province will treasure the opportunity to reinforce its infrastructure in order to lay a solid foundation for its long_term development.

In the first half of this year, the growth in Sichuan¬šs GDP was 0.7£„ lower than planned. The economic growth rate for the next half of this year should rise to 9.5£„ to ensure the realization of a 9£„ growth rate. Sichuan¬šs GDP in the first half of this year totaled 145.8 billion yuan (”ē18 billion), up 8.3£„ over the same period of last year and 1.3£„ more than the national average. Its investment in fixed assets totaled 33.5 billion yuan (”ē4 billion), up 10.3£„ over the same period last year and 1.7£„ higher than the national average.
Back to index

Nanjing, Asia¬šs largest river port city and capital city of Jiangsu Province, located near Shanghai, proposed 241 infrastructure development projects for soliciting ”ē4.5 billion in direct foreign investment when it hosted an international investment promotion forum, in September to carry out infrastructure expansion and corporate reform. Nanjing, like other parts of the country, is pinning its hopes on direct foreign investment to revive its many SOEs, some of which are now losing money due to their failure to adapt to the market economy. 49 projects involve State_owned enterprises (SOEs) to require at least ”ē10 million of direct foreign investment for each. The municipal government hopes to invigorate some SOEs which are in the brink of bankruptcy or in heavy red.

In fact, of the 241 projects, 152 are in pharmaceutical and building material sectors. Planned investment in infrastructure and real estate projects comes to ”ē2. 5 billion, or 55.5£„ of total sum of targeted direct foreign investment. Major efforts have been made this year to encourage capital inflow from overseas. Senior government officials have led six delegations on promotional tours to Europe, the United States, Canada, Japan and Hong Kong and signed agreements relating to 78 projects involving ”ē640 million.

Between last January and June, 96 foreign_funded projects were approved with the contractual foreign investment 32£„ more than the same period of last year. Direct foreign investment has injected a great vigor into the city¬šs economy, especially exports therefrom, which have faced pressure from the Asian financial turmoil. Municipal statistics show that FFEs accounted for 55£„ of the city¬šs exports in the period. Taiwan people investment continued to grow in the Taiwan Industrial Park, which is located in the Nanjing Economic Development Zone in spite of the devaluation of Taiwan¬šs currency. Taiwan investors recently agreed to set up 10 more projects in the park with a total agreed input of ”ē232 million to bring the total number of Taiwan_funded projects to 38, with an overall input of nearly ”ē500 million.
Back to index

Based on state industrial policies and its own economic development plan, the Ningxia Hui Autonomous Region encourages foreign investment in the following fields in terms of funds, advanced technology and equipment.

1. High_tech industries, infrastructure construction of energy, transportation and communication facilities, and basic raw material industries encouraged by the state and the autonomous regional government.

2. Petrochemical, metallurgical, machine building, pharmaceutical, and building material industries, as well as agricultural and sideline products processing and other pillar industries.

3. Projects for the technological renovation of large and medium_sized industrial enterprises to improve product quality and grade, lower costs, expand exports and increase economic efficiency.

4. Export products made in the Yinchuan High_Tech Development Zone with high added value.

5. Projects for comprehensive development and utilization of agricultural resources, expansion of plantation and breeding sectors, as well as the processing of farm and sideline products.

6. Technologies for energy_conservation, the renewal and comprehensive utilization of resources; environmental pollution control, and urban infrastructure construction.

7. Commerce, tourism, catering, information, consultation and other service sectors.

Key projects

1. Construction of Natural Gas Chemical Corp (with annual production of 1.5 million tons of methyl alcohol and 300,000 tons of ethylene). Investment: ”ē1.2 billion.

2. Third_stage project of Big Dam Power Plant. The project calls for the addition of two 600,000 kw thermal power generators. Investment is expected to be ”ē1.08 billion.

3. Comprehensive development of licorice root industry. The project to control and fix 6,666 hectares of sand will have an annual output of 10,000 tons of licorice root, and process 250 tons of licorice root acid (75£„ pure) and 50 tons of mono_ammonium salt of licorice root acid (98£„ pure). Total investment is ”ē25.3 million.

4. Jinlian heat_clearing medicine (to produce 30 million packs of Jinlian heat_clearing medicine annually). Investment: ”ē1.9 million.

5. Hard tooth faced cylindrical gear speed reducer and planet gear speed reducer. The project is to turn out 10,000 sets of hard tooth faced cylindrical gear speed reducer and planet gear speed reducer annually. Investment: ”ē26.2 million.(to be continued)
Back to index

China¬šs Real Estate Comprehensive Index rose steadily in July, according to a report from the State Statistics Bureau. The comprehensive index, a statistical indicator for the country¬šs real estate market, rested at 103.75 points in July, up 0.81 point from June and up 5.58 points from July 1997. The index is based on three major factors: land, capital and the real estate market. It is obtained by calculating 8 basic reference indices: land transfer fees, the amount of land which has been developed, the amount of property investment and development, paid_in investment, sales prices for commercial housing, land acreage dedicated to new buildings, the total floor area of completed housing and the amount of unsold commercial housing.

According to the report, the reference index for property investment rose from 103.09 points in June to 105.97 point in July while that for land transfer fees dropped from 110.72 points to 109.43 points. The reference index for housing prices rose from 101.93 points in July while that for unsold commercial housing dropped from 103.88 points to 102.18 points. Since its April recovery from a year of stagnation, pushed by growing joint investments, China¬šs real estate sector has maintained relatively strong momentum.
Back to index

China plans to beef up investment in railways and roads to sustain economic growth, especially in the wake of the loss of some transport facilities to the recent floods. According to incomplete statistics to the end of August issued by the Ministry of Communications, the floods had damaged 46 State_level and 483 provincial_level highways and 2,393 county roads to varying degrees. The damage has disrupted traffic and seriously affected construction work in the sector. Some 29,000 kilometers of roads have been damaged, about 2.5£„ of the country¬šs total.

To safeguard the transportation of relief materials, the ministry has earmarked 60 million yuan (”ē7.23 million) for repairs to the damaged roads. Despite the huge losses caused by the floods, the ministry is determined to fulfill the target it set earlier this year. It is fully committed to completing its 180 billion yuan (”ē21.7 billion) investment program in the sector. To ensure a smooth flow of traffic on the highways, personnel have been working day and night to repair damaged bridges and roads in the face of almost insuperable difficulties.

In another development, the Ministry of Railways is to readjust its construction schedule in an effort to do more to expand internal demand and stimulate economic growth in the remaining four months of the year. Railway construction in the past few months has been slower than expected due to a lack of preparatory work. Major problems have arisen in acquiring the land required for building the lines. These problems have been compounded by the prolonged flooding in certain areas of the country since June.

In spite of flood damage and the abnormally high temperatures this year in some parts of China, the ministry completed investment of 10.37 billion yuan (”ē1.25 billion) in the three months from June to August. This amount is about 1.4 billion yuan (”ē169 million) more than that completed in the first five months of this year. The State recently decided to increase investment in the sector by 4.2 billion yuan (”ē506 million) to give further stimulus to railway development. Adding in funds from local authorities and foreign investors, investment in the railway sector this year is expected to amount to 53 billion yuan (”ē6.4 billion).
Back to index

The Chongqing Economic and Technological Development Zone (ETDZ) located at Nanping, was founded in 1990 and approved by the State Council in 1993 to be the sole State_level ETDZ in Southwest China. Taking up an area of 9.6 sq km, the zone is near to the Chongqing_ Guizhou expressway to the east and faces the Yangtze to the west and north. The Yangtze Bridge and the Egongyan Bridge link the zone to downtown Chongqing. The zone is easy of access__3 km from the railway station, 5 km from a port and 28 km from an airport. An investment of RMB1.7 billion had been pumped into the zone to build water, power, gas, telecom, road and other infrastructural facilities.

Up to October 1997, 270 foreign_funded enterprises (FFEs) have been approved in the zone with a total investment of ”ē1 billion and ”ē380 million in foreign funds under contract. 890 Chinese enterprises have entered the zone with registered capital totaling RMB2.8 billion. 67.5£„ of the FFEs are industrial enterprises whose investment makes up 72.5£„ of the total and there are 22 industrial projects each with an investment of over ”ē3 million, forming four pillar industries focusing on motor vehicles, their parts and components, telecom, biotech, medicine and foodstuffs. Renowned multi_nationals have made headway in the zone. The zone enjoys preferential terms given to development zones, municipalities under the jurisdiction of the central government, the 3_Gorges Area and the New Pudong Area in Shanghai. The zone is entitled to preferential terms worked out on its own.

Taking advantage of its position at the joint of the Yangtze economic belt and the big market in Southwest China. the zone will stand on a vantage point in terms of opening up and economic development level, become a window for the export_led economy of Chongqing and play an exemplary role for the whole three_Gorges area and the economic growth in Southwest China. Making full use of Chongqing¬šs industrial basis and the resources edge in Southwest China, and the new_type industrial area linking in an overall way to the international economies, the zone will optimize its environment for investment and fully develop its tertiary industry revolving monetary, trade, services, transportation and information.

At the turn of the century, Chongqing will spend 15 years to give play to the edges of its own, rev up development and turn the zone into a modern industrial park focusing on motor vehicles, their parts and components, telecom, bio_products and food_processing.
Back to index

Despite the sharp economic downturn experienced by its neighbors, China¬šs exports of electrical and machinery products stood at ”ē30.12 billion in the first half this year, jumping 17.7£„ from the same period last year. Exports of high technology and value_added products have experienced dramatic upturn over the past six months. Exports of automatic data processing equipment and components were valued at ”ē3.7 billion in the first five months, up 38£„ on a year_on_year basis. Diversifying the market for exports has helped keep the total on the upswing. Europe, North America, Africa, and Latin America are increasingly becoming the primary consumer markets for China¬šs exports.

Processing trade exports for machinery and electrical products gained a big boost, accounting for 60£„ of the total. There was also a stable increase in the exports of State_run enterprises. China has set the goal for the exports of electrical and machinery products at ”ē65 billion this year, up 10£„ from last year. The figure accounts for more than one_third of the target of total exports by China set at the beginning of this year.

In 1997, exports of electrical and machinery products were valued at ”ē59.32 billion, making up 32.5£„ of total exports, a record figure. The financial and economic crises in China¬šs neighboring countries have yet to produce much impact on exports of technology_intensive industries. In fact, electrical and machinery exports reported a month_on_month 2_3£„ fall during the first half this year. However, the Central Government has implemented urgent measures to encourage exports, which usually account for one_fifth of the nation¬šs gross domestic product and is crucial to making up the targeted national economic growth for 1998. These measures include favorable credits for exporters, an increase in tax rebates for manufacturers and a streamlined export administration system. The vessel export tax rebate rate was given a sizable increase recently, from 9£„ to 14£„. Industry insiders suggest that the government should also increase export tax reimbursement rates for such items as power generation equipment transmission and distribution equipment, telecommunications facilities, household appliances and auto components.
Back to index

Italy will join to explore 850 square kilometers of Bohai Bay. China National Offshore Oil Corp and Agip Division of ENI SpA signed the contract recently in Beijing. The 09/11 contracted block is located in northern Qikou Sag of western Bohai Bay where the average depth of water is 10 meters. Under the contract, Agip will shoulder all exploration risks and conduct geophysical and geological research, three_dimensional seismological data collecting and well_drilling operations. Geologists at home and abroad believe the block will yield substantial oil reserves, because many oil and gas finds have been reported recently in neighboring areas of the block. More and more foreign oil firms are becoming interested in promising exploration prospects in the Bohai Bay and are eager to develop the area with CNOOC.
Back to index

Motorola will invest ”ē225 million in Sichuan Province. The funds will be used for the third_phase expansion project of Leshan_Phoenix Semiconductor Co Ltd, the first joint venture between Motorola and a Chinese partner. When the project is completed, the company¬šs annual output of semiconductor devices will increase from 2.5 billion to 7.5 billion units. In addition, it will turn out 1 billion integrated circuits and 250 million transistors annually. Motorola is satisfied with its arrangements in Sichuan, and plans to build an electronic spare parts and semiconductor plant in the Chengdu New and High Technology Development Zone. Sichuan has approved 6,740 foreign_funded projects, with a contractual value of ”ē8.1 billion, ranking first in Southwest China.
Back to index

The Australia_based Broken Hill Proprietary Co LTD (BHP) has signed a contract with Guizhou Province to jointly seek gold deposits in the province¬šs Nanpan River Valley over the next six years. The venture expects to discover gold mines with reserves exceeding 100 tons in the area. As a new gold production base, Guizhou has witnessed a rapid growth of gold output since 1987 when it began gold_mining, and output achieved a year_to_year increase of 35.7£„ during 1991__95. So far, some 300 tons of gold deposits have been found in the province¬šs Buyi_Miao Autonomous Prefecture, where the cooperative exploration will begin. Under the six_year contract. the firm will invest ”ē6 million in the first phase of prospecting. The Carlin_type gold mines to be explored in the autonomous prefecture are of low_grade and metallurgical refractory type. The company has promised to apply the latest exploring theories and technologies to this undertaking.
Back to index

China¬šs first credit rating joint venture was established on September 11 in Beijing, a move believed to hold great significance for the development of China¬šs financial market. The two major shareholders of China Chengxin International Credit Rating Co are China Chengxin Credit Rating Co, the country¬šs biggest rating firm, and international investor service provider Fitch IBCA. Another source of capital stock for the new firm is International Finance Corp, a member of the World Bank Group involved in the private sector, and China Business Times Industrial Development Co, the investment arm of the national business newspaper. The business scope of the new firm covers the credit rating of bonds, funds and financial institutions. Experts said credit ratings, reflecting credit risks of securities and the credit worthiness of financial institutions, are indispensable benchmarks in a modern financial system.
Back to index

After dealing with dozens of cooperative projects with Chinese joint ventures, the World Bank¬šs private sector arm recently signed its first contract with a fully private Chinese manufacturing business. The International Finance Corp (IFC) will set up a joint venture with the Zhenjing Leather Products Co, in Leshan, in Sichuan Province. The local firm is Sichuan¬šs biggest non_State exporter. IFC will invest ”ē2 million in the joint venture, holding a 12.5£„ share of the new firm¬šs capital stock. It will also provide ”ē4.5 million in loans to the joint venture. The IFC is greatly encouraged by China¬šs decision last year to upgrade the private sector from a supplementary part of the economy to a significant component of the economy. They expect the private sector to play a more important role in the country, which will create more opportunities for IFC operations in China.
Back to index