The government's decision in July to relax its control over foreign-invested companies' import and export rights is a key way to boost slack export growth this year. The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) will now allow foreign-invested manufacturing companies to export any non-monopolized products not under quota or license management, regardless of who made the products, according to a notice in July. Although MOFTEC also ruled that these companies must export at least $10 million each year and must not have broken laws and rules on taxation, foreign exchange and foreign trade in the last two years, experts said the measure is extensive and could have considerable impact on China's export growth this year.

Manufacturing companies are the pillar force in foreign-invested companies' export and the threshold of $10 million each year is not very high for them. The measure is a big step towards relaxing government control over trading rights. This could enable foreign-invested companies to make full use of their sales networks and channels abroad to boost China's exports.

China's export growth is expected to slow dramatically from last year's 28% increase due to weak external demand and last year's particularly large increase. Some economists say there could be no growth year-on-year for 2001. But others say it could still grow up to 8% from last year if the government adopts more trade liberalization measures like this one. Foreign-invested companies accounted for half of China's total exports in the first six months of the year. Their export volume increased 16.9% in that period to $62.3 billion, while the overall increase for China was 8.8%. China's overall export growth could accelerate by a half of a percentage point of extra growth by foreign-invested companies' export. MOFTEC said the measure was taken to prepare China for its pending entry into the WTO. China has promised to let all companies conduct foreign trade business within three years of WTO accession, widely expected by the end of the year.

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China is expected to end its decades-long use of a production-oriented value-added tax system soon and institute a dramatically different new consumption-oriented tax system to better promote the well-structured development of its economy. The overall plan for the new system has already been mapped out and is ready to be put into practice, according to Dai Beihua, a senior official with the Ministry of Finance. The core difference between the two system rests in the fact that the new system will give more tax rebates to enterprises' investment in fixed assets. Deduction of the value-added taxes in buying production equipment is one area that will be affected by the change. At present, the value-added tax rate stands at 17% and an enterprise has to pay such tax in buying raw materials and production equipment or selling products. The new system will single out the capital-intensive sectors and the high-tech enterprises for comparatively greater tax benefits than labor intensive industries, which usually require less investment in fixed assets than other industries.

The move should also be very good for the country's efforts to build up a well-structured economy that should see sustainable and healthy growth in the coming decades, said Dai. The new tax system will mainly bring more tax benefits to the group of enterprises that China is try to develop in the coming decades in the process of restructuring its economy from the traditional sectors to a modern business structure with more competitive power in the world market. The development of China's high-tech industry, which usually demands heavier investment but takes a longer time to bring in returns, obviously will benefit. The move will run parallel with the country aim of opening up its high-tech industries. The new system will also help enterprises lessen their financial burdens while gearing up to face international competition, which is sure to come with China's accession into the WTO.

Dai revealed that the planned new value-added tax system is currently being reviewed by a number of related authorities before being given a final go-ahead. China levies a 17% production-based value-added tax on enterprises regardless of business sector, but some business sectors, such as the software industry, could get some extra rebates and sometimes under-the-table tax rebates are also garnered by some other business sectors. The new system is expected to make the tax rebates more transparent and fairer to all enterprises. Another benefit of the new system is that it will bring China's tax system in line with the systems of WTO member countries, as the consumption-oriented system has long been the common practice in other countries.

However, some experts worry there is a possibility that the new system may hurt the growth of China's booming labor-intensive industries, as it seems that the new system will levy comparatively more taxes on such sectors. There will definitely not be any increase in the absolute amount of tax levied on the labor-intensive sectors, but the rebates to some sectors might make it seem like they face a comparative surge. Even more discouraging is the fact that the move could further widen the gap between the coastal areas and the western hinterland areas, which will host comparatively more labor-intensive industries in the future. Another danger with the launch of the new system is that there could be billions of yuan in tax losses after the launch of the new system because of extensive tax rebates in sectors with major fixed asset investment, which could pose threats to the country's financial system and need cautious treatment. But officials seem optimistic nonetheless, citing that the move has to be made sooner or later, as China's WTO accession will require the country to implement a tax system that complies with WTO rules.

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Foreign financial institutions have currently set up more than 400 branches in China, but there are only a limited number of business areas they are allowed to develop in. At the same time, domestic private companies and individuals are not licensed to carry out financial business such as insurance in China. The country's imminent entry into the WTO means that 45 Chinese laws and regulations will have to be revised, among which 9 concern financial sectors, such as the Commercial Bank Law, the Insurance Law and the Securities Law. Former chairman of the China Securities Regulatory Commission, Zhou Zhenqing said the current Securities Law is insufficient in some aspects because the provisions are too general. On the other hand, the Securities Law has not taken into consideration the challenges that the securities industry will face after accession the WTO. Moreover, the laws are necessary to ensure businesses play on a level playing field in entering the market alongside state-owned or state-controlled enterprises. China should concentrate on transparency in reforming its financial legal system, a group of senior officials and experts have agreed. Consistent rules and a standard framework in the sector are vital to first attract and then safeguard the interests of foreigners coming into the Chinese market, said Wang Yi, vice-president of the China Development Bank (CDB).

Another plan under consideration is a savings insurance system, which would ensure all deposits can safely be withdrawn by customers if the commercial bank goes bankrupt. The draft of the deposit insurance system has been revised many times in the past three years, but was still waiting for a final go-ahead from the authorities. Experts called for the financial market to be opened up to domestic private companies. The four main state-owned commercial banks should also be given tax relief to put them on the same footing as foreign rivals. To compete better with the conglomerate of foreign rivals expected to flow into the fledging China market after WTO accession, Wang suggests that five tycoon financial shareholding groups be set up on the bases of the four big commercial banks and CDB. The development of these five conglomerate enterprises will be an important move to strengthen the competitive edge of domestic financial enterprises.

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China is now revising its trademark law for the second time since its promulgation in l982, in a bid to facilitate its imminent entry into the WTO. By the end of 2000, 220,000 trademark registration applications had been filed in China, the latest statistics indicate. If calculated from l979, the number of valid registered trademarks has reached more than l.31 million. China leads the world in both annual trademark registration applications and the overall number of valid trademark registrations. According to Gan Guopin, deputy head of the State Administration of Industry and Commerce, many new situation and problems will appear in terms of trademark rights protection as China integrates the global economy. China will strengthen its exchanges and cooperation with the World Intellectual Property Organization and trademark administration authorities of foreign countries to jointly address the problems facing intellectual property protection.

China enacted its Trademark Law in l982, and now exercises both judiciary and administrative protection of registered trademarks. The State Administration of Industry and Commerce, at various levels, has strengthened its law-enforcement measures over the years amid mounting trademark registration applications and trademark-related disputes. The administration has designated a number of well-established trademarks as ”°Famous Trademarks" which enjoy preferential protection. It exercises comprehensive supervision and control of the printing, production and circulation of trademarks. Many infamous trademark infringement cases were prosecuted in the process.

By last year, the State Administration of Industry and Commerce and its local branches had processed over 250,000 trademark infringement cases and those found responsible were meted out up to RMB650 million in fines. To facilitate the needs of the county's trademark registration and administration, China started to allow trademark agencies to handle trademark application and registration and introduced market competition into such services in 1990. At the end of last year, China had 151 trademark agencies and l,000 certified trademark agents.

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China will work hard to improve its investment environment for foreign companies, State Councilor Wu Yi said recently. It is especially important to improve the government's efficiency and the market order to attract more foreign investments. Shi Guangsheng, Minister of the Ministry of Foreign Trade and Economic Cooperation, said that the China Association of Enterprises with Foreign Investment would work hard to enhance communication between foreign investors and the Chinese Government. The government must learn not to decide for companies and clear up laws and rules to create a level playing field for home and overseas companies.

Companies backed by investment from abroad are becoming an increasingly important part of the national economy. China approved 373,766 such companies with promised overseas capital of $702.688 billion and an actual use of $363.681 billion up to May. About 180,000 of these companies have been put into production or operation in China. Companies backed by foreign investment also make up about half of China's total exports.

The foreign trade minister said a State Council meeting on foreign investment held between July 3 and July 4 in Beijing has decided that the government is to encourage foreign investment in agriculture, science and technology, education, environmental protection and tourism. China will take measures to direct foreign investment from the east of the country to the middle and west, from the processing industry to the high-tech industry and from the secondary industry into the tertiary industry. Money will be transferred to service industries such as finance, trade, consulting, advertising and intermediary organizations in assets evaluation, auditing, law and advertising. Transnational companies will be encouraged to enter China through mergers and acquisitions, an important means of transnational investment in the world. The Chinese Government is exploring new ways for foreign investors to take part in asset management companies¬š handling of state-owned enterprises¬š non-performing assets. The government is also planning to expand foreign-invested companies¬š rights of importing and exporting, and to help small and medium-sized enterprises cooperate with overseas counterparts to compete with large enterprises.

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The 2001 Hunan (Hong Kong) Investment and Trade Fair was held on July 10-13. The fair is expected to enhance economic ties between Hunan, a central China province, and Hong Kong Special Administrative Region. Hong Kong has a mature market economy and great financial muscle while Hunan has rich natural resources and a large number of promising sectors that need investment, including resource exploration, high-tech, finance and infrastructure. Hunan Province, located at the transition zone between China's coastal area and the central and western regions, serves as a link between the east and west and a hub connecting the north and south. The province has rich natural resources. Forest coverage is 52.4%, 30% higher than China's average. Its inland navigable waterways account for 10% of the country's total. Of all the 134 minerals discovered in Hunan, 22 reserves rank top three in the country. The province also boasts 10 distinguished tourist resorts and more than 100 scenic spots.

A hinterland province, Hunan's development potential will be fully explored. With the growth of the market economy, the demand for a better business climate is on the up. That's why the province has improved its investment environment in the 9th Five-Year Plan period (1996-2000). Within the five years a total of 425.1 billion yuan ($51.2 billion) was injected into infrastructure construction. A large number of major projects have been finished, which greatly enhances the province's transport, power supply and telecommunications. The province's economic growth looks healthy. During the same period, its GDP increased from 215.1 billion yuan ($25.2 billion) to 369.2 billion yuan ($44.5 billion). The growth rate averaged 9.7%, higher than the country's average. The five years' export and import totaled $9.8 billion, an increase of $1.1 billion compared with the 8th Five-Year Plan period (1990-1995), and the actual foreign investment rocketed to $5.8 billion, an increase of $3 billion compared with the 8th Five-Year Plan period. Its total export and import volume registered $2.51 billion in 2000. By the end of last year, the province had approved 5,712 overseas direct investment projects, with pledged overseas investment of $5.7 billion. Overseas investment covers a wide range of sectors, including agriculture, infrastructure, high-tech, trade and commerce, and financial services.

Entering the new century, the province has outlined its specific development goals. Its annual average growth rate of GDP is projected at 9%, a little higher than the country's central and western regions. According to the province's 10th Five-Year Plan (2001-05), Hunan will speed up its reform and opening-up drive in a wide range of sectors, including finance, insurance, telecommunications and commerce. The province will follow international common practices when seeking overseas funding and cooperation. Major sectors will be targeted for overseas investment, such as eco-agriculture, infrastructure, technological upgrading and high-tech.

Here is a brief introduction to four major events of the 2001 Hunan (Hong Kong) Investment and Trade Fair held in Hong Kong.

1. Promotion of Hunan enterprises that attract overseas financing and will be listed overseas, and promotion of investment projects of the Changsha High-Tech Industrial Development Zone. The fair aims to bring together Hong Kong financial institutions and Hunan enterprises. Hunan Province has selected 32 technology intensive enterprises and projects with great market potential. Most of them cover high and new technology sectors, such as the information industry, bio-pharmaceuticals and new materials.

2. Forum on the economic integration of Changsha, Zhuzhou and Xiangtan. These three cities, 45 kilometers away from each other, are located on the middle reaches of the Xiangjiang River. They have relatively powerful economic strength. As early as the 1950s, there had been suggestions of merging them. In the 1980s, some Hunan researchers proposed establishing a Changsha-Zhuzhou-Xiangtan economic zone. After a long term in-depth study, the province decided on the strategy of three cities' economic integration. According to the province's overall plan, during the 10th Five-Year Plan period, the three cities' annual economic growth rate will be above 11%. By the end of 2005, their total GDP will exceed 200 billion yuan ($24.1 billion), accounting for 35% of the province's total figure. The promotion of the three cities' economic integration has been listed as one of the country's major projects during the l0th Five-Year Plan period.

3. Promotion of tourism. Hunan has a lot of tourism resources. Most notable is the Wulingyuan Scenic Spot with an area of more than 360 square kilometers. Zhangjiajie, located there, was inscribed on the World Heritage List by the United Nations Educational, Scientific and Cultural Organization in 1992. Changsha, capital of Hunan Province, is one of the 24 historical and cultural cities approved by the State Council, with a large number of well preserved historical sites. In October, the province will host grand celebrations for the Double Ninth Festival, which falls on the ninth day of the ninth lunar month, at the Emperor Yan tomb. The emperor is said to be an ancestor of Chinese people. Distinguished Chinese descendants all over the world will be invited to participate in the celebrations.

4. Forum on Hunan's role in China's western development program. The province is determined to boost the development of its western region. It will increase investment, explore new financing channels, make full use of natural resources, and usher in talented human resources. At present the province is improving the region's infra-structure and welcomes investment into the region's major projects.

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Tianjin, a port city in northern China, is implementing three measures to create a better investment environment for foreign enterprises.

First, the collection of administrative fees is regulated. A collection license and identity papers issued by the pricing department must be produced and collection standards must be strictly adhered to when collecting fees from foreign enterprises. Meanwhile, brochures listing the Index of Administrative for Foreign-invested Enterprises in Tianjin have been delivered to foreign enterprises, which have the right to refuse payment for items not listed.

Second, preferential policies on investment in infrastructure projects have been formulated. Foreign investors are encouraged to invest in infrastructure projects, including roads, bridges, railways, airports, ports, rail transit, electric power and heating. Various measures have been adopted to guarantee reasonable investment returns.

Third, a service center to promote foreign trade has been established to provide policy consultation, import and export information, marketing and logistics services for foreign investors. An investment and start-up center for small- and medium-sized enterprises from foreign countries and Hong Kong, Macao and Taiwan has been established to minimize their investment risk.

Foreign investment became an active part of Tianjin in the 1980s. At the time, Tianjin followed the overseas practice, and enforced the regulations that Chinese partners should hold not less than 5l% of the shares in the joint venture, and the foreign partner's share should not exceed 49%. Such apportionment set by the city played a positive role in the early period in the development of joint ventures, but later it became an unnecessary ”°capital barrier".

With the development of the market, more and more Sino-foreign joint venture enterprises have called for cancellation of the restriction, in order to utilize funds fully and increase efficiency. The Tianjin Otis Elevator Co Ltd, a joint venture between China and the United States, took the lead. The company's shares were divided on the basis of 7:3 between the Chinese and foreign partners when it first started operation in l984. With the surging demand for Otis elevators, the two sides agreed that the US side would add $20.30 million to the venture to increase its proportion of shares to 5l%. As a result, the output of elevators has increased eight fold and the annual sale has reached RMB2.4 billion. At the same time, the two sides gained good economic returns, with efficiency rising five fold. The company has edged into the top ten Sino-foreign joint venture companies in China.

Encouraged by the achievement of Tianjin Otis, the l44 large and mid-size enterprises in Tianjin have been busy attracting foreign funds, by using their workshops, equipment and land as their stock capital. Of them, the Tianjin Refrigerator Company had conducted successful negotiations with the LG Electronic Co of the Republic of Korea to set up a joint venture on l:4 stocks apportionment between Chinese and foreign partners. The joint venture, the LG Electronic (Tianjin) Electric Appliance Co Ltd, now generates RMB7 billion in output value annually and $120 million in exports. Both sides' efficiency has increased three fold. Other enterprises have been also successful in using overseas capital.

Since Tianjin abolished the restrictions on stocks apportionment in Sino-foreign joint ventures six years ago, foreign investors in the 760 joint venture companies have added a total of $4 billion in their cooperation projects. As a result, Tianjin economic development, and efficiency has gained to the amount of more than RMB l0 billion. Tianjin now has foreign investment from l3,500 enterprises, of which more than l80 are multinationals and big financial groups. At present, the first group of 110 foreign investors in the Tianjing Economic and Technological Development Zone, such as Motorola, P&G, Samsung, Yamaha and Matsushita, have launched another round of investment to open new businesses in the outskirts of Tianjin, in the districts of Xiqing, Hangu and Wuqing.

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The city of Penglai in East China's Shandong Province maintained a strong momentum of economic development in the Ninth Five-Year Plan period (1996-2000). Penglai is located in the northern end of the Jiaodong Peninsula. Dubbed ”°the Worldly Paradise" for thousands of years, the city is one of the best tourist destinations in Shandong. In the past 20 years, especially the Ninth Five-Year Plan period, the city has seen the most rapid development in its economy. In 2000, its GDP reached 7.2 billion yuan ($867 million), a 1.8-fold increase on 1995. Local revenue was 246 million yuan ($29.6 million) last year, an average annual growth of 20.4% or a 2.5-fold increase on 1995. In the past five years, the city has made a fixed asset investment of 6.14 billion yuan ($740 million) to improve infrastructure and support its backbone industries.

Tourism is the pillar industry of the city. Penglai received 2.8 million tourists and earned 750 million yuan ($90.4 million) in tourism revenue in 2000. The average annual increase of tourism revenue was 31.5% in the past five years. Last year the city spent 100 million yuan ($12 million) on constructing and renovating tourist resorts, expanding the total area of the resorts to 10 square kilometers. At the same time, it invested 80 million yuan ($9.6 million) in building a seaside sightseeing avenue. The city has also seen rapid growth in the manufacturing sector. In recent years, the industrial output value of Penglai increased by 20% each year. To date, the city has a complete industrial sector consisting of machinery, gold mining and smelting, beverages, food, wine, timber processing, car parts and chemicals. Priority has also been given to the development of high-tech industries, which have played an important role in upgrading the city's traditional industries.

Marine fishing is also a pillar industry of Penglai. In 2000, the total revenue in this sector was 1.9 billion yuan ($228 million). With more and more new technologies used in agriculture, Pengai has made great improvements in both the quantity and quality of its farm products. The city has now become an important base in China for the export of fruit, vegetables, fungus and raw materials for wine-making. The city will step up its development through reform and opening up in this new century. In the next five years, Penglai is expected to keep an annual economic growth rate of 12%. By 2005, the GDP is estimated to be 12.7 billion yuan ($1.53 billion). It plans to realize a total fixed asset investment of 15 billion yuan ($1.8 billion) in the next five years, increasing by 17.6% annually. By 2010, GDP is expected to increase 1.5 fold on 2000, and the per capita GDP is expected to reach $4,500. The city hopes to cooperate with foreign investors to build a more prosperous Penglai.

Projects initiated for overseas investment and cooperation:

1. International Youth Peace and Culture Palace. Investment: $48.1 million.

2. Penglai City Garden. Total investment: $42.2 million.

3. Aishan Tourist Resort. Total investment: $2.1 million.

4. Penglai Entertainment Town. Total investment: $48.1 million.

5. Penglai Fishermen's Village. Total investment: $2.4 million.

6. Commercial-purpose washing equipment. Investment: $20.6 million.

7. Production of wooden furniture. Total investment: $9 million.

8. Development of sugar-making equipment. Investment: $5 million.

9. Production of biological marine product. Investment: $10 million.

10. Upgrading technology and purchasing equipment. Investment: $7.2 million.

11. Production of organic and inorganic pigment. Investment: $10 million.

12. Deep-sea fishing. Investment: $10 million.

13. Production of wine with annual output of 30,000 tons. Total investment: $10 million.

14. Production of sugar. Total investment: $1.8 million.

15. Construction of freezer and butchering production lines. Total investment: $6 million.

16. Construction of the Golden Mansion. Investment: $17.5 million.

17. High-standard intelligent residential quarter. Investment: $18 million.

18. Urban natural gas supply project. Total investment: $6 million.

19. Timber processing industrial park. Total investment: $80 million.

20. Wohu Mountain-Rim Industrial Park. Investment: $96-120 million.

21. Construction of a 35,000-ton wharf in Penglai New Port. Total investment: $21.7 million.

22. Aquatic Products and Food Industrial Park. Investment: $24 million.

23. Processing of non-polluting vegetables. Investment: $7 million.

24. A stay-fresh warehouse for fruit and vegetables. Investment: $18 million.

25. Production of polyurethane cloth. Total investment: $16 million.

26. Construction of a 60,000-ton wharf in Luanjiakou Port. Total investment: $12 million.

27. Fengtai Mountain Tourist Resort. Investment: $12 million.

28. Technological upgrading for cement production. Investment: $27.5 million.

29. Zhenlong Industrial Park. Total investment: $10 million.

30. Development of South Korean and Taiwan Industrial Park. Total investment: $20 million.

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China is increasing its wind power generation by up to four times over the next five years under plans to diversify the country's energy sources. By 2005, power generated by wind will have increased by up to 1.6 megawatts. New plants will be built in Xinjiang Uygur Autonomous Region, Inner Mongolia Autonomous Region, Jiling, Guangdong and Hebei provinces, Shanghai Municipality as well as an unspecific location on the sea. Li Kejun, president of the non-official China Classification Society, said the central government had promised to issue preferential policies to accelerate the development of the industry in an effort to reduce the pollution caused by more traditional electricity sources, such as coal-fired electricity generators. The Society said it is working to establish China's first certification system for wind generators to help the industry develop under related international technical standards. The Society released its first draft of certification requirements in April. A formal certification system will be worked out by the end of this year if related preparation work can be carried out smoothly.

Wind power is a bit more expensive than electricity from more traditional sources, so the government will subsidize wind generator operators with tax rebates until the industry makes profits. High costs is one of the major factors holding wind power back from becoming a competitive option in China's power networks. One official from the State Development Planning Commission suggested State policy should provide 15-year preferential loans for the project. If 70% of the total funds invested in the project were provided by 15-year loans, the average cost of power would go down by 0.1 yuan (1.2 US cent) per kilowatt hour.

Wind power is of special significance for eastern coastal provinces -- windy areas that has long suffered from power shortages. China has 253 million kilowatts of potential wind resources that could be used to generate electricity. Most of it is in eastern coastal regions and western China's Gansu Province, the Xinjiang Uygur Autonomous Region and the Inner Mongolia Autonomous Region. The growth of the wind power industry is providing good opportunities for foreign investors. For the first time, the central government will invite international tendering for a pilot 100,000-kilowatt wind power project in a bid to spur on the development of the industry. The winning investor will be given the chance to establish a joint venture or a single ownership wind farm. Wind farms are estimated to be worth up to $2 million. China currently has some 20 enterprises engaged in manufacturing wind turbine generator systems, 7 of them joint ventures. China began looking into wind as a power source 20 years ago. In its embryonic stage, the industry was dominated by small wind-power generators that provided power to individual households.

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The Wuxi New District in Jiangsu Province has become one of the nation's most important bases for the export of high-tech products and one of the best among the 53 high-tech zones in China. The export volume of the district has been more than $1 billion for three consecutive years since 1998. Set up in 1992, the district has endeavored to develop high-tech industries. The district has borrowed experience from foreign industrial parks to become a high-standard park. Last year, import and export volume in the district totaled over $2.6 billion in which the export volume was $1.27 billion. The export volume of high-tech products made up 91.5% of the total export volume. This shows how the district has become an export-oriented high-tech zone with great potential. The district has a strategy to make full use of foreign investment and introduce technological projects from big domestic and foreign companies. Up to now, 410 foreign-funded enterprises have been set up in the district by world-famous companies, with a total foreign investment of $4 billion. A total of 28 companies that are listed among the world's top 500 have set up their regional production bases in the district with an investment of $1.1 billion.

Based on cooperation with these companies, the district has become the production and export base of 16 high-tech products, including hard disk drives and liquid crystal displays. Industries like electronic information, precision apparatus, biological engineering and pharmaceuticals, fine chemicals and new materials have become pillar industries in the district. High-tech and export-oriented enterprises account for over 80% of the enterprises. To create a good business environment, the district offers high-quality services to entrepreneurs by simplifying administrative procedures. The district gives priority to environmental protection. It has established ”°the national ISO14000 demonstration zone" to promote the implementation of the international environment management system ISO14000, helping sharpen the competitiveness of enterprises in the international market where strict environmental protection standards are practiced.

To facilitate the export and import of products, the Wuxi New District has set up its Customs Supervision Station and the Public Bonded Warehouses Area. The customs supervision station, equipped with an advanced computer network system, electronic supervisory system and security and fire control system, aims to offer high-efficiency service to businesses in the district. The computer network system is connected with the Nanjing and Wuxi customs houses through DDN line. Enterprises can apply for customs declaration by logging on to the network of the customs. The electronic supervisory system includes 13 video probes and TV displays through which the inflow and outflow of goods can be monitored. The station has also established a logistics center. Equipped with an advanced computer management network, it can offer efficient service to customers.

Wuxi Entry-Exit Inspection and Quarantine Bureau, as well as other relevant institutions, companies and banks, have been sited in the station, allowing enterprises to complete their business under one roof. The Public Bonded Warehouses Area covers 15,000 square meters, in which 2,526 square meters of warehouses have already been built. The area mainly deals with storage and transportation of imported and exported cargoes. The area neighbors the Shanghai-Nanjing Railway, Shanghai-Nanjing Highway, Wuxi Airport and the Beijing-Shanghai Express Railway which is at the planning stage. The warehouses are equipped with an office automation system, security monitoring system and a fire control system. Since the warehouses were put into use last year, more than l10 firms, including Kodak and Sharp, have been there to hold talks on renting warehouses.

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China will invest 350 billion yuan ($42 billion) to develop its railways during the 10th Five-Year Plan period (2001-05), a document from the Ministry of Railways revealed recently. The record-high investment is 24 billion yuan ($2.9 billion) more than the 9th Five-Year blueprint (1996-2000) and will pay to lay about 7,000 kilometers of new rails across the nation. The western part of China will enjoy the greatest percentage of the investment. The region's 1,118-kilometer-long Qinghai-Tibet railway project alone will cost some 100 billion yuan ($12 billion). The ministry wrote in the document that their attention to the west is critical for the region's economic development. ”°Most construction materials and goods will be carried in and out of the region as its economy gears up, which will provide great opportunities for railway transportation," the document showed.

By the end of 2005, the ministry predicted, China will have 75,000 kilometers of rail tracks. About 14,000 kilometers of rail will be built or renovated to allow higher speeds. Rides between major cities within 1,500 kilometers of one another will take less than 15 hours and rides between cities 2,000 to 2,500 kilometers apart will take 24 hours. Passengers in Beijing, Shanghai and Guangzhou will have easy access to any part of the country, the documents predicted.

The ministry expects a 4.4% increase in cargo traffic and a 0.9%increase in passenger volume by 2005, prompting the unprecedented investment in the sector. New, more comfortable trains and renovations of older ones will consume about 80 billion yuan ($9.6 billion). The ministry is promising that speed, comfort standards and on-board service will improve dramatically during the five-year period. The document is a general blueprint of the ministry's goals through 2005. More details will be released in the near future.

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China Cinda Asset Management Corporation and Lonestar Investment Co Ltd concluded a frame agreement to set up a Sino-foreign joint venture to handle non-performing assets. According to the agreement, the foreign party will offer cash and Cinda will provide non-cash assets to the joint venture to deal with Cinda's non-performing financial assets. This form of cooperation is the first of its kind applied to China's asset management companies. Lonestar Investment Foundation is an investment foundation in Dallas, USA, and its shareholders include major US companies, the pension fund of Texas government, the pension fund of Quebec, Canada, the Kuwait government and the Singapore government investment company. The cooperation is the first beneficial attempt to handle non-performing assets between a Chinese capital management company and an overseas banking institution. The joint venture will go into operation after approval from related departments.

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Lion Corp said it will at least double its investment in China this year and expects sales to jump four times to 240 million yuan ($28.9 million) by 2005. Lion China, the Japan-based household products maker's unit in Shandong Province plans to boost production capacity at its factory in Qingdao City by three times this year to meet demand from market expansion. Last year, Lion's domestic sales rose 90% to 60 million yuan, mostly realized by its oral-care products. Its sales for the first six months of this year exceeded those of the whole 2000. Annual sales in China, however, account for less than 0.5% of Lion's international revenues. Given the difficulty of challenging the complete product portfolios of P&G and Unilever, Lion will temporarily focus on developing individual products like toothbrushes and toothpaste.

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China will become the most important market for electronic giant Siemens' mobile telecom business, according to the German company. The mobile telecom branch of Siemens will invest $60 million in its Shanghai base to increase production capacity from 10 million to 14 million mobile phones a year by the end of 2002. Another $250 million will be poured into research institutions in Beijing, Shanghai and Singapore. The German firm plans to invest a total of $1.5 billion in the Asia Pacific market before 2003, of which $1 billion will be spent in China. Siemens is presently No 3 in China's mobile handset market after Finland's Nokia and Motorola from the US. The company hopes to become No 2 in the Chinese market as well as other countries in the Asia-Pacific region.

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