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CIEC ECONOMIC BRIEF
VOL.162
June 11, 2001
C a t a l o g
The Financial and Economic Committee of the National People's Congress (NPC) has basically agreed with the existing framework for the legislation on investment fund after hearing the report of the Committee's working group responsible for drafting the Investment Fund Law, and it has approved the three key issue-unified legislation, further protection of the interests and rights of investors and the institution of independent board directors. According to Wei Lianzhou, head of the working group, securities, industrial and venture funds are all covered by the law. The basic legal relations between the principals of the fund of these three categories are the same. Without unified legislation, it will be hard to avoid legislation by various departments over stepping their authority, redundant legislation, and higher cost of legislation, or even redundancy and contradictions of various laws and rules and regulations.
The core of the legislation of the Investment Fund Law is to protect investors' interests and rights and not affect the operation efficiency of the fund market. Therefore, it is stipulated in the Investment Fund Law (draft): 1. The fund is independent of the assets of the fund administers and trustees, and the assets of the fund do not belong to them in assets liquidation in cases where their duties are abrogated because of disbanding, bankruptcy or withdrawal; 2. In undertaking fund trading activities fund administers and trustees and other institutions or individuals involved in founding the fund, fund trading and invest operation shall stick to the principle of being fair and trustworthy, and should be faithful and prudent in fulfilling their bounded duties. There are also stipulations prohibiting transactions which would impair the interests of investors. Investors can file a law suit if their interests are impaired. Corresponding legal responsibilities are stipulated for those who fail to fulfill their duty.
The institution of independent board directors is defined: There should be a certain proportion of independent board directors among the fund administers. There is a defect in the existing fund administration corporal structures, in that stockholders consist almost entirely of stock or trust investment companies and their capital can be used for securities underwriting or operation on their own. There exists, therefore, potential conflict between the interests of the stockholder in administration of the fund, the fund administer and the investors. It is learned the independent board directors will be chosen from securities and economic experts or specialists with no connection with the fund administers or related institutions; they will represent the fund holders' interest, take pat in decisions on important matters related to fund operation, the approval of engaging fund managers, and the selection of trust banks. The choice has yet to be made whether independent board directors will be instituted by fund administrative corporations or by fund. It will quite possibly need some innovation of the existing system. The Investment Fund Law (draft) is expected to be submitted to the NPC Financial and Economic Committee for discussion and for examination and discussion by the NPC Standing Committee within the year.
A new foreign insurance company management provision will make it clearer for foreign insurers to apply for operational licenses in China, according to the China Insurance Regulatory Commission (CIRC). CIRC mapped out the new provision last year and submitted it to the State Council for approval. The new provision is based on the Shanghai Foreign Insurance Company Management Temporary Provision that was issued in 1992, but has been readjusted to reflect the present situation, said Meng Zhaoyi, director with CIRC's international supervision department. One important aspect will be improving management transparency. CIRC will regulate and supervise foreign insurers on the basis of laws and regulations.
Some foreign insurers who are seeking an operational license in China have complained that there are no rules to follow. Meng said there were some misunderstandings about the procedures due to some insurers not being familiar with China's insurance industry. CIRC already has market admission rules and the situation will be further clarified with China's entry to the WTO. But he admitted that there was a gap between China's own situation and the WTO requirements. The CIRC will do more work in this regard. The improvement will be accelerated with China's WTO accession. He did not reveal whether China would issue more operational licenses to foreign insurers this year before China's WTO entry, but said the country would continue with its reform policy. The final debut of the new management provision would depend on the progress of the matter in the State Council.
Meng said many foreign insurance representative offices had conducted business without official permission. Both foreign and domestic firms will soon be inspected to make sure they are abiding by the required laws and procedures. The inspection will focus on irregular business activities and the financial conditions of foreign insurers. Profitability is also high with most companies abiding by existing laws and regulations. Foreign companies generally have more stringent internal controls compared with domestic insurers. By the end of last year, total income in the Shanghai insurance sector stood at 12.7 billion yuan ($2.6 billion). Of that figure, 1.4 billion yuan ($168.7 million), or 13%, was earned by foreign insurers. Domestic insurance companies in Shanghai had learnt product design and internal management skills from their foreign competitors. Since the opening of the insurance market in 1992, China has granted licenses to 19 foreign insurance operators, who have launched a total of 27 institutions in China.
It is reported recently that China is to further improve the foreign exchange (forex) management system under the capital account. Laws relating to foreign exchange administration under the capital account will be improved this year. The State Administration of Foreign Exchange (SAFE) will review the existing laws and formulate a series of laws and regulations relating to foreign exchange administration. At the same time it will cooperate closely with related departments and research and formulate measures governing foreign exchange for foreign investment utilization in restructuring, investment funds and investment in securities and assets transfer to Chinese enterprises both at home and abroad.
China has an examination, registration and approval system for foreign exchange control for the capital account. Documents issued by SAFE are the basis for bank's handling of foreign exchange receipts and payments for capital account items. This year, the Administration is to formulate an internal control system, revise the ¡°operating instructions of foreign exchange business under capital account", standardize authorization, auditing standards and procedures and examination standards, and enhance the effectiveness of supervision. Moreover the State is also to strengthen the monitoring of statistics, revise the statistics statements of foreign exchange control, and bring the major changes and trends under capital account into supervision and monitoring.
China Administration of Exit-Entry Inspection and Quarantine, the Ministry of Finance and the General Administration of Customs jointly issued a regulation recently concerning strengthening the appraisal of foreign investment assets. Under the regulation, Chinese exit-entry inspection and quarantine departments should inspect and appraise the value of imported equipment when it arrives in Chinese ports prior to the Customs inspection. It is understood the aim is to prevent foreign investors from over-invoicing their imports, taking substandard products as good ones and seeking to gain unreasonable profit prices. It is learned that when operating a joint venture, some foreign investors choose to import equipment as an investment, and some have adopted fraudulent means and lied about the prices of imports. From l994 to November 2000, China exit-entry inspection and quarantine department appraised $26.154 billion worth of imported equipment reported by foreign investors only to find the actual value of these imports was $24.111 billion, over $2 billion less than the amount reported.
Furthermore, when appraising the value of foreign investment assets in 2000, the inspection and quarantine department also found that some foreign investors have earned illicit profits by avoiding and evading taxes. The measures included: over-invoicing imports to reap staggering profits from their Chinese partners; entrusting foreign dealers to purchase equipment abroad with the cash that has already been examined and entered into the account to evade appraisement of the value; and lowering the price of high-priced imports to evade tariff. These activities have not only harmed China's national interests and the interests of Chinese enterprises but also disrupted the order of use of foreign capital, making a very bad impression.
Foreign currency control in Shanghai's state-level special export processing zones is expected to be liberalized, thanks to new rules introduced by the People's Bank of China's (PBOC) Shanghai branch. So far, the regulations only apply to the Shanghai Songjiang Export Processing Zone, which the State Council approved as a state-level zone with its own customs system. The rules have not yet been applied to two other special export processing zones-the Waigaoqiao Free Trade Zone and the Jinqiao Export Processing Zone. The reason, according to one official from the foreign currency administration section of the PBOC's Shanghai branch, is that companies in the Waigaoqiao zone are more complex than those in the Songjiang zone. The Jinqiao Export Processing Zone has not been included because it does not yet have a separate customs system. However, Shanghai expects there will be more export processing zones like the Songjiang one in the future, to which the new rules will be applied. The Jinqiao Export Processing Zone is now applying for the same status as Songjiang.
The new specifications say that all companies in the zone, either Chinese and foreign, will be able to open foreign currency accounts, which Chinese companies are usually not able to do. This will give Chinese firms greater ability to carry out international trade. Companies in the export processing zone will be allowed to open one foreign currency account for all their business. Previously, they had to have two for different businesses. The purpose of requiring two accounts was to give the government better supervision over the flow of foreign currency. But this caused a lot of trouble. Many foreign com-panies in Waigaoqiao had complained about that situation. Companies inside the zone have also been given new rights. For instance, a new rule stipulates that companies established with renminbi investment are also allowed to purchase foreign currencies with proper certificates. They can also ask for loans from foreign organizations without the need to get approval from the PBOC in advance.
The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) vowed recently to make more efforts to help domestic firms respond to dumping charges. MOFTEC set up a special coordinating committee to help firms respond to foreign countries' dumping charges in March. Sun Zhenyu, vice-minister of MOFTEC and also director of the coordinating committee, said MOFTEC was improving its rules to create a better legal framework for domestic firms to respond to foreign dumping charges. MOFTEC will enhance its efforts on clearing up operations in the export business and increase penalties against extraordinarily low-priced exports. Sun urged officials to improve the warning systems which advise domestic firms on prices and potential charges to help in the prevention of foreign dumping charges. MOFTEC has set up warning systems on foreign dumping charges in major markets such as the United States, the European Union, Australia and South Korea.
Sun promised that MOFTEC will continue to negotiate with foreign governments on their recognition of China as a market economy. With non-market economies, prices are widely viewed as being arbitrarily set and the normal values of exports are often computed by referring to prices in another country to determine if goods from the target country are being dumped. Many Chinese companies have lost their cases in the past because countries, such as Singapore, that have higher labor and material costs than China were chosen as substitutes in computing the normal values of their exports. Sun said domestic firms' reluctance to respond to foreign dumping charges is also a major reason why China has lost many cases in the past and now calls for more measures to encourage firms to respond. The response of firms to foreign dumping charges is very important in ensuring steady increases in China's exports. Owing to rapid increases in China's exports in the past few years, Chinese products have become major targets of foreign dumping charges.
China has the largest number of foreign dumping charges among all countries, according to WTO statistics. Up to the end of March, 29 countries and regions had initiated 422 cases of anti-dumping investigations on Chinese exports. These investigations involve more than 4,000 kinds of commodities such as metals, chemicals, textiles, food, machines, electronic goods and medical products with a total value of ¡ç10 billion. WTO statistics show about 35.7% of these dumping cases have concluded with no anti-dumping taxes being levied on China's exports. MOFTEC officials said although the value of the commodities involved in foreign dumping charges is small compared with China's total exports, they have had considerable impact on involved companies and even on an entire sector of industry. China's exports increased 27.8% year-on-year to $249.2 billion last year.
Relying on its rich scenic beauty, Northeast China's Heilongjiang Province has developed many tourism programs in recent years. Located in the northernmost part of China, the province has the finest winter wonders in China. The mountainous regions, with snowfall of 100 to 300 centimeters a year, are perfect for skiing. Ski touring has become the most important tourism program in Heilongjiang. Since the Third Asian Winter Games, the province has hosted three International Skiing Festivals to attract ski enthusiasts from home and abroad. The province attracted 600,000 skiers from December last year to February this year, which generated a revenue of 780 million yuan ($94 million), accounting for 70% the country's total revenue from ski touring. During the 10th Five-Year Plan period (2001-2005), the province plans to build 49 ski slopes of different scale. It is estimated that these ski slopes will handle 1 million tourists every year.
Extensive forest coverage is another advantage for Heilongjiang's tourism development. The province has 190,000 square kilometers of forest coverage, 41.9% of its total land area, making Heilongjiang an ideal place for forest tours. To date, Heilongjiang has established 17 national and 32 provincial forest parks. The province has the richest water resources in the northern part of China. The Heilong, Songhua, Wusuli and Nenjiang rivers, and Jingpo and Xingkai lakes are major tourism attractions. The Heilong and Wusuli rivers and the Xingkai Lake are on the China-Russia border. Travelers who visit this area get a great chance to compare the cultures on either side of the border. Actually, the influence of Russian culture can be also seen in the architecture of Harbin, the provincial capital, and in many other boundary cities. The province is also famous for its rich and colorful ethnic cultures. It is the birthplace of the Jin and Manchu ethnic cultures. The sites of the Bohai Kingdom in the Tang Dynasty (618-907), Shangjin - capital of the Jin Dynasty (1115 -1234), and the Longquan Prefecture City are well preserved. The virgin forests, lakes, rivers and the well-preserved wetlands make Heilongjiang a paradise for diverse wild animals and plants. Those who love nature may take trips to the Manchurian Tiger Garden in Harbin, and the red-crowned crane reserves in the wetlands and the forests.
During recent years, Heilongjiang's tourism has expanded greatly. It has established many tourist resorts including Yabuli, Erlong Mountain and Jingpo Lake and developed more than 50 tourism routes. In addition, activities and festivals including the China Harbin International Ice and Snow Festival, the Heilongjiang International Ski Festival, the Heilongjiang International Eco-Tour Festival, the Qiqihar Crane Festival, the Harbin Summer Concerts and the Jingpo Lake Golden Autumn Festival are regularly held every year to attract tourists as well as enhance cooperation with domestic and international tourism enterprises. The province has also made great efforts to improve tourism facilities and services. To date, it has built 130 state-level hotels, established 238 travel agencies and opened 65 domestic flight routes and 6 international routes. During the 10th Five-Year Plan period, Heilongjiang plans to make tourism the backbone industry of the province with a total annual revenue of 30 billion yuan (¡ç3.6 billion), or 6.36% of its targeted gross domestic product. To achieve this goal, the province plans to attract more foreign investment for its tourism sector.
1. Indoor ski slope. Total investment: ¡ç16 million. Cooperative form: joint venture.
2. Weihu Mountain Movie Production Base. Total investment: ¡ç3.18 million. Cooperative form: joint venture, solely-funded enterprise or share holding.
3. Jinyuan Cultural Tourism Town. Total investment: ¡ç11.62 million. Cooperative form: joint venture or cooperation.
4. Heilongjiang Scientific Era Amusement Park. Total investment: ¡ç35 million. Cooperative form: share-holding or loan.
5. Second phase of the Yabuli Ski Slope Construction. Total investment: ¡ç68 million. Cooperative form: joint venture.
6. Erlong Mountain Ski Slope. Total investment: ¡ç16.96 million. Co-operative form: joint venture.
7. Yuqun Weihu Mountain International Ski Club. Total investment: ¡ç3.1 million. Cooperative form: joint venture or cooperation.
8. Longmen Castle. Total investment: ¡ç25 million. Cooperative form: joint venture or cooperation.
9. Reserve Tourism Project. Total investment: ¡ç46.45 million. Cooperative form: joint venture or cooperation.
10. Renovation of the Russian-style street in Hengdao Town. Total investment: ¡ç3.15 million. Cooperative form: share-holding, joint venture or solely funded enterprise.
11. Weihu Mountain Skiing Resort. Total investment: ¡ç107 million. Cooperative form: solely funded enterprise, joint venture or share-holding.
12. Suifenhe National Forest Park. Total investment: ¡ç2.4 million. Cooperative form: joint venture or solely funded enterprise.
Guangdong Province, China's largest exporter, is hoping to put a high-tech engine in its export machine to revive brisk growth. In its development blueprint for the next five years, the province has said that growth of exported high-tech commodities should be at least 10 percentage points higher than average. By 2005 when provincial exports soar an expected 46.8% to $135 billion, it is hoped that high-tech commodities will take a big 30% share, up 12.5 percentage points over 2000. Simple processing industry had made the province a large exporter, but it is the high-tech sector that will upgrade it into a strong exporter.
Among the series of measures unveiled recently to increase the added value in the export commodities, one big move is the establishment of a special fund valued at over tens of million yuan. Launched by the provincial government, the fund is earmarked to help nurture enterprises which export self-patented high-tech goods and to encourage enterprises to apply for patents in the overseas markets. Information from the provincial government said that another dozen policies would come out this summer making project examination, taxes and customs procedures easier for high-tech exporters. In other developments, three surging industries-electronics and information, electric appliances and machinery, and petrochemistry are labeled as the pillar industries of the province for the next half-decade. Cities in the Pearl River Delta, such as Guangzhou, Shenzhen and Dongguan, are re-positioning themselves as international manufacturing bases for high-tech products.
Guangdong promised to further break the province's transportation, telecommunications, tourism and urban public utilities monopolies this year. The province will introduce competition mechanisms to allow more investors to become shareholders in Guangdong's enterprises. More foreign investors will be encouraged into partnerships in both the construction and management of the province's former monopoly sectors this year. Meanwhile Guangdong will reform its electricity supply system to separate the network from the power plants.All the power plants, including state-owned companies, overseas-funded firms and joint ventures, will be able to compete in supplying electricity to the provincial electricity grid. The current water and gas supply systems will also be reformed this year. The move aims to further improve the province's competition capacity and prepare itself for fierce market competition after China becomes a member of the WTO.
The province also pledged to remove regulatory obstacles that go against the rules of a market economy and the WTO this year. Guangdong will pay special heed to expanding contact with overseas Chinese who can trace their roots back to Guangdong province. Overseas Chinese can play even a greater part in the province's economic development and the expansion of Sino-foreign cooperation and exchanges. Guangdong promised to open wider to the outside world this year. In addition to allowing overseas investors to develop the province's tourism, architecture and service industries, foreign investment will be encouraged to help bail out Guangdong's state-owned enterprises in a variety of ways. Moreover, Guangdong will expand its cooperation with Hong Kong, Macao and Taiwan in new and high-tech field.
Guangdong outlined the development targets this year. The province's economy is planned to grow 9%, and its social retail volume has been set to increase 12%. The export volume will rise by 9%, while the province's unemployment rate will be held at under 3%. To achieve these goals, Guangdong will make developing new and high-tech industries a priority this year. More investment will still be needed to further improve the province's infrastructure facilities this year. During the coming five years, Guangdong's GDP is expected to annually grow 9% while social fixed asset investment will climb 8%. The social retail volume will increase 12.5% annually. And the export volume growth rate is expected to be 8.5%. Last year, Guangdong reached a GDP of 950.6 billion yuan (¡ç115 billion), up 10.5% over 1999. And its export volume increased 18.3% to hit ¡ç91.92 billion, with 19.2% coming from the export of new and high-tech products.
Yibin City in Sichuan Province is located on the southern fringe of the Sichuan Basin and at the intersection of Sichuan, Yunnan and Guizhou provinces. The area is l3,283 square kilometers and the population, five million. The city is a traffic hub as well as a commercial and trade center. It was, historically, an important city in the southern part of Sichuan Province and is renowned as the ¡°half screen in Southwestern China." It is part of the Yangtze River economic belt and part of the Panxi-Liupanshui energy and raw materials production base. lt. constitutes a major part of the resources development and biological protection zone in the upper reaches of the Yangtze River. Yibin plays an important role in the economic development in the middle and west area and in the Yangtze River valley.
Yibin boasts of the fastest economic growth in Sichuan Province. With ample agricultural resources, it has constructed grain and oil, forest and bamboo, tea and oil palm commodity production bases. It abounds in mineral resources and has created seven pillar industries: wine making, paper making, energy, chemicals, machinery and electronics, chemical fiber and building materials. Yibin Port is one of the six hubs on the Yangtze River. The Neijiang-Kunming Railway passes through it, and the airport has connected it with Beijing, Shanghai, Guangzhou, Chengdu, Kunming, and Shenzhen. The city's total road mileage is 4,700 kilometers. The Neijiang-Yibin expressway opened to traffic in l999. Construction of the Neijiang-Yibin Railway will create China's shortest land-to-sea passage from Yibin to Fangcheng. With all these, the city's geological advantage is obvious.
In line with China's western development drive, Yibin has promulgated a series of preferential policies to encourage foreign investment. Contents of the policy include:
l. Foreign investors investing in projects encouraged by the State will be exempted from tariff and import link VAT when they import equipment and auxiliary technologies, spares and fittings by contract.
2. They may enjoy export rebates when exporting goods.
3. Productive foreign-invested enterprises with an operation period above l0 years will be exempted from enterprise income tax in the first two years after it begins to make a profit, and will have the tax reduced by half in the third and fifth year. After these exemptions and reductions, they may continue enjoying a l5% discount in income tax payment for three years. All productive foreign-invested enterprises are exempted from local income tax.
4. Productive foreign-invested enterprises engaged in prospecting and mining mineral resources and with an operation period above l0 years may apply for city subsidy in the fourth year after the exemption and reduction preferential treatment period expires.
5. Non-productive enterprises will be exempted from real estate tax and vehicle and vessel license tax for three years, while the exemption period for productive enterprises is l0 years. If they still have difficulties paying taxes after the exemption period expires, they may enjoy prolonged tax exemptions and reductions after being approved.
6. Foreign investors that reinvest their profit either in enterprises themselves or launch new foreign-funded firms, with an operation period no less than five years and the investment proportion no less than 25% may enjoy corresponding preferential policies. After being approved, they may even have a rebate of the income tax they have already paid for the reinvested profit from the city's revenue.
China's multi-billion dollar west-east gas transmission project has received strong support from areas it will pass through. Operator PetroChina signed letters of intent for gas sales on February 28 with 33 companies from five provinces and municipalities the pipeline will be laid in. It is hoped that the move will lead to massive economic benefits for the millions of people living in the region. The ¡ç14.5 billion project aims to pipe 12 billion cubic meters of natural gas annually from Xinjiang's Tarim Basin to the energy-starved Shanghai and Yangtze River Delta by 2005. It is deemed to be central to China's plan to develop its economically backward but resource-rich western regions and to better protect the environment in eastern regions. Gas consumption preliminarily confirmed by the 33 companies is expected to reach 9 billion cubic meters per year by 2005, the break-even point for the project to cover the costs. By 2007, consumption is expected to rise to 13 billion cubic meters per year. The construction of the 4,000-odd kilometer pipeline is expected to begin in the second half of this year.
The signings will likely further spark the interest of foreign investors in the project. Last year, project managers had sent more than 60 invitations to foreign investors to bid. Bidding is expected to end in June. By February, 19 foreign energy companies had submitted bids to help China build the pipeline, including BP Amoco, Royal/Dutch Shell, Exxon Mobil and TotalFinaElf. By published bids, foreign investors can cooperate with the Chinese sponsor of the project-China Petroleum and Natural Gas Co Ltd and both sides will decide cooperation methods and details. Then the new partners will set up a new company in charge of building, operating and managing the pipeline.
China is seeking foreign investment to lay the pipelines to convey natural gas from the western part of the country to the eastern coastal areas. The government issued six favorable policies related to the project.
1. Foreign investors can hold the controlling stake. According to previous policies, Chinese partners had to hold the controlling stakes or majority shares in gas pipeline projects. But this project is allowed to break such restrictions.
2. The Chinese Government will open up the urban construction of a natural gas network to foreign investors. Previously, foreign investors could not be involved in constructing natural gas network in cities. But in light of the importance of this project, the Government decided to add the natural gas supply system for the affected cities to the list of cooperative fields.
3. Foreign investors can choose the method of cooperation, such as joint venture, association or other approaches.
4. Equipment can be imported duty-free. Customs will exempt equipment imported for the project from Customs and value-added duties.
5. Foreign investors can expand their business to related fields. The Interim Stipulations issued by the State Development Planning Commission, State Economic and Trade Commission and Ministry of Foreign Trade and Economic Cooperation encourage foreign investment. The Interim Stipulations say that foreign investors who specialize in transportation, energy and other facilities may also enter their enterprises to other related fields. Those policies are suitable for this project.
6. Preferential land policies. The Government will adopt more flexible and timely policies on the acquisition of land needed for the project.
Shenyang Economic and Technological Development Zone is located in the southwestern part of Shenyang city, l2 kilometers away from the central part of the city and near Tiexie Industrial Zone. With a planned area of 32 square kilometers, it was founded in l988 and upgraded into a state class economic and technology development zone in l993 upon approval of the State Council. As an economic zone oriented to the state industrial policies, it is entitled to preferential treatment and flexible measures drafted for special economic zones and the majority of enterprises set up within the zone are Sino-foreign joint equity enterprises, Sino-foreign cooperative enterprises and solely foreign funded enterprises. Its goal is to grow into a multi-functional, open, modern and international new city with high tech as a leading force and modern industry having the dominant position.
Shenyang, a renowned industrial and commercial city, boasts a complete variety of industries, including metallurgy, chemicals, pharmacy, light textiles, electronics, automobile, aviation, and building materials, dominated by the machinery processing industry. At present, the city has more than 5,800 industrial enterprises in more than l40 industrial categories. Among which, more than 50 enterprises rank top in their respective industrial sectors in the country. As the largest commercial and trading center and materials gathering place in Northeast China, Shenyang's tertiary industry, such as financial, insurance, information and consulting, commercial and trade, tourism, real estate development and others has experienced rapid development and the city is able to meet the various demands of investors.
The development zone is located within the center of a group of cities of Liaoning province. 7 large-scale industrial and commercial cities surround the development zone, namely, Anshan, the steel base; Fushun, the coal base; Liaoyang, the chemical fiber base; Benxi, the coal and iron base; Panjin, the petroleum base; Tieling, the coal and grains base; Fuxin, the electricity base; thus, constituting a vast market. This not only provides inexhaustible mineral resources to the development zone, but also constitutes a market with strong purchasing power. Products manufactured by the enterprises within the zone may be sold locally.
At present, 32 countries and regions have invested in the zone. 693 projects were launched in the zone, with total contractual investment amounting to RMB 25.7 billion, of which 527 are foreign invested ones, with total contractual value standing at ¡ç2.3 billion, total contractual foreign capital, ¡çl.2 billion, actual foreign investment, ¡ç330 million. Many world renowned multinationals have established companies within the development zone, such as Coca Cola of the US, Michelin of France, Novo of Denmark, ITT of Sweden, Oriental Group of ROK, Wenshi Development Co Ltd of Singapore, and Tongyi of Taiwan. The development zone encourages the establishment of high-tech, export-oriented projects and projects with sound social and environmental benefits. Sectors which fall within this scope include electronics, machinery, pharmacy, new type materials, petrochemicals, wastewater processing, processing of industrial and human waste, traffic and energy, as well as development of land.
The expansion of the fisheries industry in China is expected to make more food and money available for the people. In the coming five years, China's aquatic output is projected to hit 46 million tons, with the greater portion-65% of the total amount-contributed by aquatic breeding rather than offshore fishing. The per capita annual income of fishermen will reach 6,000 yuan (¡ç722.8) by the year 2005. Between 1995 and 2000, earnings by fishermen posted a yearly rise of 7.5%- a faster growth pace than other agricultural sectors. The fisheries sector is set to progress faster in China in the years ahead. The population explosion, economic expansion and the depletion of terrestrial resources have prompted people to look to the sea, which covers 71% of the planet's surface, to support their existence and help them develop.
China has worked out a plan, in which the fisheries sector is expected to contribute more to improving people's nutrition levels and alleviating the pressure on grain production, according to sources with the State Development Planning Commission. In the newly fashioned ¡°Food Development Program for China in 2010", the commission said that by the end of the first decade of the century, the country's per capita aquatic product consumption will increase by 10 kilograms. At present it stands at 32.4 kilograms. But water contamination, overfishing and other pressures put on aquatic resources are blocking further growth of the fisheries industry. This accounts for why China's newly revised Fishery Law has stipulated that the country will strictly limit the amount of fish caught. China is now the only country in the world where aquatic breeding output exceeds the offshore catch.
The Canadian SNC-Lavalin Company has recently signed a cooperation agreement with Beijing on participating in construction of the N0.5 subway line in Beijing. Based on the agreement, SNC Lavalin will inject RMB l.5 billion (about $l80 million) into the construction. This is the first direct commercial investment by foreign businesses in such public welfare construction projects in Beijing and in China as a whole. The Chinese partners involved in the construction are the Beijing Shouchuang Group, the Beijing Subway Corporation and the Beijing State-owned Assets Investment Company. The Chinese side will contribute a total of RMB2.5 billion of the investment, of which, RMBl.9 billion will be given by Beijing Shouchuang, and the remainder, by the other two parties on the 50-50 basis. They will jointly launch a joint venture company, the Beijing No.5 Subway Line Investment Company. The joint venture has a registered capital of RMB4 billion, which is in keeping with the state policy that registered capital in large infrastructure construction project should not be less than 30% of the total investment. The total investment in the No.5 subway line is estimated at RMBl2 billion.
The American Cable and Satellite Communication Corporation (AMK) has invested $29.9 million in setting up a solely owned venture in Yantai, the coastal city in East China's Shandong Province. The new company AMK (China) Satellite Cable Networks Enterprise Co Ltd, will focus on the wideband information Internet industry. The firm is one of the first foreign companies to enter China's satellite network communications field. AMK would focus on information industry investment and development, the production of wideband Internet hardware products, Internet data services, software development and online business. Slow online speeds and high costs have restricted the development of China's Internet. Since 1999 the country has been trying hard to improve Internet speed, which will enhance its wideband cable information network. AMK adopts the most advanced wideband network technologies, providing hardware and software for high-speed information networks, so that the Internet will be a fast, cheap and easy public information network. The company will later set up in other coastal cities in China.
South Korea-based Samsung Electronics said it is in talks with Chinese partners to establish three cellular phone producing bases on the mainland to strengthen its foothold in the largest mobile phone market in Asia. Though it holds about 4% of China's mobile market, Samsung currently has no handset manufacturing firms on the mainland. The construction of a production base in Tianjin received government approval recently. The company plans to launch its latest mobile handset. Samsung is working on setting up another factory in Shenzhen, where the company, teaming up with Kejian Group, one of the nation's largest mobile phone markers, established a joint research and development center in 1999. Both factories are scheduled to start operation in the second half of this year. In addition, Samsung said it is planning to launch a joint venture in Shanghai, for research and manufacturing CDMA, or code division multiple access, mobile handsets.
The Eastman Chemical Company and the Sinopec Tianjin Petrochemical Corporation (TPC) penned an agreement to boost China's textile industry in April. A letter of intent was signed between the two sides to produce 5,000 tons of a type of optically brightened polyester staple fiber, for China's multi-billion US dollar textile industry. Eastman said the alliance with TPC, one of China's largest producers of raw fibers, would help boost the Chinese textile industry. China's pending entry into the WTO and subsequent full access to the global textile market call for producers to meet international quality, cost and environmental standards with respect to whiteners.