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CIEC ECONOMIC BRIEF
VOL.169
Sept. 17, 2001

C a t a l o g

  • China to remove many restrictions on economic fields
  • "Go-West" rules to lure overseas funds
  • Nation close to opening doors to US TV shows
  • China to improve laws governing mergers and acquisitions
  • Foreign venture capital granted access to Chinese market
  • Investment and trade fair fruitful
  • Shanghai's economy keeps on rolling
  • Guizhou to fully tap bounteous natural resources
  • Xi'an becomes an attractive place for investors and tourists
  • Projects initiated for overseas investment:
  • Water works: foreign profitable business in China
  • Tianzhu Zone focuses on export-orientated production
  • Golden times ahead for insurance
  • Sinopec in $2.7b deal with BP
  • Messer grabs China's gas products market
  • Hitachi increases investment in China
  • CA puts an eye on China's software

  • China to remove many restrictions on economic fields

  • Issued date: October 15, 2001
  • Content:

    China's integration with the international economy is becoming irreversible, especially with the nation's imminent accession into the WTO, Vice-Premier Wu Bangguo said on September 9 at the Fifth China International Fair for Investment and Trade (CIFIT). The country will take an even more active position to seize the opportunities and push forward a comprehensive opening-up in order to ensure its modernization. China's chief WTO negotiator Long Yongtu, vice- minister of foreign trade and economic cooperation (MOFTEC), also expressed the country's determination to incorporate with other markets in the world. The reform and opening-up policy China adopts is the basic condition for China to participate in world economy.

    The nation will lift many restrictions on economic fields and regions, and expand its service trade in the years after China joins WTO. Foreign businesses will be able to enter the service trades of finance, insurance and tourism, as well as infrastructure industries like telecommunications, transports and energy. Long said the service industries will be crucial for China's sustainable economic development, so they'll be emphasized in the period after entering the WTO. China looks forward to enjoying benefits from this openness, too. New access to overseas markets will yield opportunities for both local businesses and foreign-invested companies in China. MOFTEC, working to tap the potential of Chinese businesses in this realm, made a so-called ”°go-out" strategy a major theme of CIFIT. A dozen seminars and talks to encourage domestic companies to invest overseas will be held in coming months.

    China has also been revising its laws to build a legal system that will be fair and equal to all businesses and help their development. In that spirit of change, local officials and businesses are urged to update their economic structures to focus more on how to best use foreign investment. China will open up all trades and services instead of those of limited at the present after it becomes a WTO member. The country will shift from the present experimental and policy-guided opening to that of predictable the framework of law and from single lateral opening of one's self to mutual opening among WTO members. China will take further steps to improve the laws concerning the utilization of foreign capital under requirements of the socialist market economy and its commitments to WTO to create a sound legal environment for foreign investors.

    In addition, China will examine all the rules and regulations concerning foreign investment and take further steps to create a unified, stable, transparent and predictable policy environment for foreign investment. The government departments will play a better role and raise their work efficiency by giving greater awareness their role of extending to services and exercising their administrative powers according to law so as to create an open, fair, clean and highly efficient administrative environment. The whole country will conscientiously implement the spirit of rectifying and standardizing the market and economic order so as to create a unified, open and fair competition market environment.


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  • "Go-West" rules to lure overseas funds
  • China International Economic Consultants Co.,Ltd(CIEC)
  • Issued date: October 15, 2001
  • Content:

    China is working on rules which will allow overseas investors to enjoy better advantages in the development of its western regions--in such sectors as banking, insurance and telecommunications--and will also offer them bigger controlling stakes in infrastructure projects. Overseas bankers may be allowed to conduct loan business in renminbi in the hinterland's major cities, while overseas investors will also be able to get in the market with investment funds. Though minor revisions may be made, as related ministries in Beijing are consulting on the details of the guideline since it was delivered to the State Council earlier this year, Li Zibin, a top policy-maker of the ”°go-west" campaign, confirmed in September that the regulations will be unveiled by this year-end. According to the new guideline, overseas investors will have more freedom in their business operations and financing than those involved in the coastal areas.

    The regulations will detail a barrage of rules on business start-up, application, approval, taxes, business range, fund access and what is off limits, all the things that foreigners must know before opening up a business in the region. At present, the central government has pumped in billions of dollars to upgrade inadequate infrastructure, but experts have said state subsides and state-owned bank loans are far from being enough to fill capital needs over the next few years.

    Meanwhile, the country is studying regulations to give overseas-funded companies in its western regions the same shot at financial help as their domestic counterparts after the nation joins the WTO. Qualified overseas companies will start to get loans from state banks after China joins the WTO. The government is also studying whether to allow joint ventures to list on domestic stock markets. The move is expected to attract more investment from overseas companies to the economically backward but resource-rich areas.

    China is also preparing to take various measures to lure overseas funds after the WTO entry, including allowing overseas companies to purchase state enterprises in the region. State enterprises account for 70% of the economy in the west, more than the 40% share it handles in the east. Overseas investment accounts for 5% of what it is in the east. China's entry into the WTO will provide unprecedented opportunities to overseas companies to invest in its western regions, especially in those sectors such as infrastructure construction, mining and tourism. Overseas companies also will be encouraged to run banking, insurance, retailing and construction in the area.


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  • Nation close to opening doors to US TV shows
  • China International Economic Consultants Co.,Ltd(CIEC)
  • Issued date: October 15, 2001
  • Content:

    The country's TV broadcasting sector is likely to open the door to foreign entertainment companies in the immediate future, as negotiations between the industry watchdog and two US media giants reach their final stage. The State Administration of Radio, Film and Television stated on September 5 its negotiations with AOL-Time Warner and News Corp may be finalized soon with a happy ending. The administration's head, Xu Guangchun, had earlier said that the two companies will be allowed to directly send TV programs to residents in some parts of South China's Guangdong Province. In return, the two have to guarantee that an English language channel, run by China Central TV (CCTV), will be broadcast and accessible to all American TV watchers.

    The negotiations have been going on for quite some time. If the plans are finalized, it will be a major breakthrough in the country's TV broadcasting sector, as foreign companies are currently banned from entering this field. Although more than 20 overseas TV channels, including HBO, Discovery, Star TV and CNBC, can be received by mainland hotels with three stars or above, this would be the first time that the average resident will legally be able to receive overseas channels at home. AOL-Time Warner and News Corp will mainly provide entertainment-related program, while Channel 9, of CCTV, is a newly launched English language channel that mainly provide news and cultural programs. Guangdong Province, where the two are expected to be broadcast first, is one of the most wealthy regions in the country neighboring Hong Kong and Macao. Residents there are expected to receive numerous TV programs, including those from Hong Kong and Macao, more than most other mainland people.


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  • China to improve laws governing mergers and acquisitions
  • China International Economic Consultants Co.,Ltd(CIEC)
  • Issued date: October 15, 2001
  • Content:

    Global multinational investment has become a very important channel with a total investment of over $l,000 billion last year, over 80% of which was realized through mergers and acquisitions. In response to this, assistant foreign trade minister Ma Xiahong said recently that China is considering the use of foreign investment through merger and acquisition to keep pace with the international trend. According to Ma, last year mergers and acquisitions actually accounted for a very small proportion of the total ($40.7 billion) foreign investment in China, a sharp contrast to developed nations. The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) is working on improvement of related laws and regulations to standardize the mergers and acquisitions by foreign investors in cooperation with related departments.

    Ma also said that China has revised its Law on Chinese-Foreign Equity Joint Ventures, Law on Chinese-Foreign Contractual Joint Ventures and Law on Foreign Capital Enterprises, and the revision of their implementing rules is also under way. The three laws do not prohibit mergers and acquisitions by foreign investors. Furthermore, the MOFTEC promulgated rules on merger and separation of foreign-funded enterprises long ago, and now it is necessary to improve them for standardizing mergers and acquisitions by foreign investors. The improvement work is scheduled for completion soon.


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  • Foreign venture capital granted access to Chinese market
  • China International Economic Consultants Co.,Ltd(CIEC)
  • Issued date: October 15, 2001
  • Content:

    Foreign investors have recently been granted official access to the Chinese venture capital market. The Ministry of Foreign Trade and Economic Cooperation (MOFTEC), the Ministry of Science and Technology and the State Administration for Industry and Commerce issued a notice announcing that foreign companies would be allowed to set up wholly owned or Sino-foreign cooperative venture capital firms in China. Foreign-invested venture capital firms will be able to withdraw their capital through share transfers, buybacks or selling their shares in the company if and when it becomes listed on a domestic or overseas stock market. said the notice. MOFTEC officials said the measure aims to encourage foreign investors to input capital into China's high-tech industries and to improve China's venture capital mechanisms.

    The policy has created very good conditions for foreign investors¬š entry into the Chinese market. But foreign-invested venture capital firms are forbidden to invest in securities, futures and other financial markets as well as real estate and other industries that the government does not allow foreign investors to enter. They are also not allowed to make loans or underwrite or invest with borrowed money. Before applying to set up wholly owned or Sino-foreign cooperative venture capital firms in China, one of the foreign investors must have managed assets of over $100 million in total and invested over $50 million of these assets in the past three years and own at least 3% of the new firm's capital. On top of that, one foreign investor must have more than $100 million in net assets and agree to put at least $20 million in the new venture capital firm. said the notice.


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  • Investment and trade fair fruitful
  • Issued date: October 15, 2001
  • Content:

    Overseas investors eyeing the market potential brought by China's pending WTO entry flocked to the China International Fair for Investment and Trade (CIFIT). According to statistics from CIFIT, $4.8 billion foreign investment was introduced to 1,027 projects, while 368 projects of intent were signed with a volume totaling $3.3 billion at the fair. A large proportion of the capital will flow to industrial and high-tech projects, real estate and tourism. Overseas investors are showing interest in large and medium-sized projects, which have attracted a contractual investment of more than $3.2 billion divided among 146 projects. The development of the central and western regions of China, which has become a priority for the country, also was highlighted at the fair. Delegations from those regions signed 278 contracts and letters of intent totaling $4.3 billion. The enthusiasm from businesses and organizations remained high at ClFIT.

    More than 8.900 officials from governments and trade associations and business people from 97 countries and regions came to the fair. Participants from Taiwan numbered 3,221 and accounted for more than 36% of the total. It shows that with the improvement of the investment environment in the Chinese mainland, Taiwanese businesses' interests in investing in the mainland is growing stronger. The challenges China faces after its WTO entry became one of the hottest topics at the event. Vice-Premier Wu Bangguo and chief negotiator for WTO membership Long Yongtu delivered speeches at an international Investment Forum during the fair to express China's determination to keep its promises to WTO members and participate in international economic cooperation. Thirteen seminars were also held at the event by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and other state departments to brief participants on the latest policy changes made to embrace WTO membership and measures to keep attracting foreign investment.

    MOFTEC also acted as a coordinator for the domestic businesses that face particularly severe challenges from WTO entry such as the textile, petrochemical and steel industries. MOFTEC encouraged them to provide their supporting products to multinational companies, and they signed contracts worth of 19 million yuan ($2.3 million). CIFlT also built a platform for China's go-out strategy which encourages domestic companies to invest or export their expertise and technologies overseas.


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  • Shanghai's economy keeps on rolling
  • Issued date: October 15, 2001
  • Content:

    Shanghai's economy remained good in the first half of the year despite the world economic slowdown. The city's GDP rose 10% year-on-year to 230.3 billion yuan ($27.8 billion). Industry has played an important role in promoting the city's economic growth. High-tech industries and pillar industries, including automobile, petroleum chemicals and bio-medical items, have become the main forces in promoting the city's economy. It is estimated 85% of the new industrial output comes from these sectors. The city's investment in fixed assets also rose markedly during the period, ending three years of little change. The city aims to achieve 190 billion yuan ($22.9 billion) in fixed assets by year's end. Despite fluctuations in the stock market, the city's service sector maintained steady growth. Retail,wholesale and real estate contributed most.

    The city's efforts to revive state-owned enterprises also have been successful. Among 275 state-owned enterprises listed in the past as significant money-losers, 245 have reversed that trend in the first half. However, the city must prepare for the worst in the second half of the year. It should give full consideration to the negative influence brought about by the sluggish world economy and have the worst conditions in mind, Mayor Xu said recently. Beijing's successful bid to host the 2008 Olympic Games may bring new opportunities to Shanghai's industry and construction sectors. Local businesses are encouraged to go after bids by offering high-quality services.

    Shanghai is making steady headway in achieving its foreign investment target for 2001, because overseas investors are keen to secure a foothold in the city. In the first 7 months of this year, the city attracted $4.57 billion in foreign funds, up 66.8% from a year earlier. At the beginning of 2001, the city set the target this year for foreign investment at $5.5 billion. The foreign funds received in the January-July period reached $2.44 billion--a 52.8% jump over the same period last year. Shanghai recently lowered the threshold for domestic companies applying for foreign-trade rights in an apparent effort to boost city exports. Pudong-based home-grown companies, with a minimum registered capital of 3 million yuan ($360,000), are eligible to export goods on their own regardless of the industry they deal with. In July, the city's foreign trade authority allowed all companies in the manufacturing sectors to conduct foreign trade on their own. The decision can be viewed as a breakthrough and the regulation will increase overseas shipping. Small companies are generally unable to meet the current tough requirements and must use the services of state-owned export-import agents. The city's new policy encourages small and private firms to try to sell more goods outside the country without suffering the penalty of high fees.

    An important reason behind Shanghai's great absorption of foreign investment is that foreign investors are eyeing Shanghai's development prospect and its constantly improved investment environment. For the time being, Shanghai is more and more close to international levels in terms of hardware, such as telecommunications, road, harbor, airport, municipal construction, and living environment. Great changes have also been there in soft environment construction including customs clearance, project examination and approval, laws and policies, work efficiency. Since this year the examination and approval process of foreign projects conducted by various development zones and various counties, districts and departments in Shanghai has also been improved. Gone are the old practices of ”°traveling of archives", now the various related departments conduct examination and approval of a project at the same time, greatly enhanced the work efficiency of foreign investment absorption. At present feedback to Letter of Project Acceptance submitted by the various districts and counties to the municipal committee in charge of foreign investment administration will be given within a working day under normal circumstances. The time of clearance for the customs, inspection and quarantine, and air transportation is shortened from 3 days in the past to l.47 days at present, and that of Waigaoqiao Bonded Zone, shortened to l0 hours.

    The city enjoyed an unprecedented leap in the number of investment projects from Taiwan during the first half of the year. There were 194 more projects involving $507 million in investment in that period compared with the same period in 2000. The contractual capital is five times that in the same period last year. So far, Taiwan investors have plunged $6 billion into more than 4,000 projects in Shanghai, accounting for 13% of all overseas investment. The quality of the projects is also improving. About 70% of Taiwan-related projects are industrial, including high-tech and high added-value ventures such as microelectronics and software. Service and recreation endeavors are only one-quarter of the total projects, down significantly from the early 1990s when they accounted for most of the efforts. Shanghai's skilled workforce is another draw. By the end of June, more than 10 research and development centers with Taiwanese funding involving the integrated circuit business had registered at the Caohejing High-Tech Development Zone because of the cheap, skilled labor there.


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  • Guizhou to fully tap bounteous natural resources
  • Issued date: October 15, 2001
  • Content:

    Located in the inner land of Southwest China, Guizhou province boasts a territory of 176,000 square kilometers with a population of 37.5 million. Guizhou holds the transportation lifeline in South-west China. The 9th Five-Year (1996-2000) Plan and 10th Five-Year Plan (2001-05) consider Guizhou the communications hub in Southwest China. The 10th Five-Year Plan foresees that Guizhou will become the key area joining Southwest China and coastal areas in South China. Many top transportation projects are on the agenda for this province. Guizhou has plenty of natural resources. For example, the proved coal reserve is the same amount as that of nearby nine southern China provinces.

    The Southwest province is rich in metal resources. It is one of the country's biggest metal resource treasure houses, with plenty of bauxite, phosphorus, manganese and mercury. It has the country's biggest aluminum processing factory and phosphate fertilizer plant. Guizhou, in fact, is the country's largest producer and exporter of man-made diamonds. The natural resource processing and utilization sector has become one of the province's pillar industries. Guizhou also has a promising power industry which is critical for transporting electricity from west to east. Water resources have been widely used in Guizhou. Hydropower accounts for a large share of electricity used in the province.

    Located in a subtropical region in the country's southwestern mountain areas, Guizhou boasts vast bio-diversity. As one of the country's four major traditional Chinese medicine bases, the province has 3,700 kinds of medicinal herbs. 80% of them have already been used by the medical industry. Thanks to its mystical mountain landscape, long history and traditions of various ethnic groups, Guizhou has become one of the most attractive tourist destinations in recent years. Natural reserve parks are scattered across the province. In addition, Guizhou has 49 ethnic groups, including 17 native ones. The country has 56 ethnic groups. Governments at all levels in the province have tried to protect the culture and traditions of those ethnic groups to maintain their original flavor. Traditional Chinese medicine and subtropical food have been greatly welcomed by other areas of the country as well as overseas markets. Guizhou has used its cheap laborers and abundant natural resources to attract an increasing number of investors. And thanks to the central government's "go west" policy, the high-tech sector has been greatly boosted. Other promising industries in the province include culture, health care, education and tourism.


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  • Xi'an becomes an attractive place for investors and tourists
  • Issued date: October 15, 2001
  • Content:

    A key city in China's western development strategy, the ancient capital of Xi'an is becoming a more attractive destination for investors and tourists. With a population of 6.75 million, the city is the capital of Northwest China's Shaanxi Province. Called Chang'an in ancient times, the city has a history of more than 3,100 years. It served as the capital of 12 dynasties over a period of more than 1,100 years. It was also the first city in human history to have more than 1 million residents. As the starting point of the Silk Road, which extended to South Asia and Europe, Chang'an made great contributions to the exchanges between the East and West in economy and culture. Today Xi'an is an important center of science, technology, culture, education, finance and manufacturing industry in central and western China. It is also a tourist destination of worldwide fame.

    Through 50 years of development, Xi'an has grown into one of the most important bases for scientific research and higher education in China. It has more than 4,000 technological research and development institutes and 36 higher learning institutions. More than 380,000 professionals of different technical backgrounds work in research, manufacturing and testing bases in the city's industrial sectors. A large number of research achievements are accomplished each year, some of which are of international and national advanced level, especially in the areas of space technology, electronics and information technology, electro-mechanic integration, new materials and energy conservation. The state-level Xi'an High-Tech Industrial Development Zone, home to more than 2,500 technology enterprises, is becoming a powerful engine for Xi'an's high-tech development and economic growth.

    Xi'an is situated in the center of China. This advantageous location makes Xi'an a converging point of highways, railroads, air routes and communication cables, offering an easy access to the vast market in the inland of China. The city has improved its infrastructure facilities in past decades. It has built a local telephone network with a capacity of 1.45 million lines. Xi'an's daily water supply has reached 1.4 million tons and the Heihe River Water Diversion Project is going ahead smoothly. In 1999, the electric power supply reached 7.18 billion kilowatt-hours. A 150,000-kilovolt thermal power plant is currently under construction in the western suburb. With the promotion of such clean fuels as natural gas, the city has also made positive headway in ecological and environmental protection.

    Rich historical and cultural heritage, natural beauty and improved service facilities have made Xi'an an attractive international tourist destination. The city's famous historical relics include the Terra Cotta Soldiers, the Mausoleum of the Yellow Emperor -- the ancestor of the Chinese nation, -- the Famen Buddhist Temple, the Forest of Steles, the Ming Dynasty (1368-1644) city wall, the ruins of palaces and the 72 imperial landscapes of the Huashan, Taibai and Qinling mountains are also a feast for the eyes of tourists. The city has also greatly improved its tourist facilities. It has 40 star hotels and more than 100 travel agencies with a total annual accommodating capacity of 7.67 million visitors. In recent years, Xi'an has made a bigger investment in the tourist industry. Efforts have also been made to integrate cultural tours with entertainment and sports, thus enriching the content of tourism.

    As the largest trade and financial center in Northwest China, Xi'an takes up 45% of the total retail volume of all the five northwestern provincial capitals. To date, the city has more than 2,700 financial institutions and subsidiaries. Three hundred subsidiaries of seven banks conduct foreign exchange business and maintain business relations with more than 100 financial institutions in foreign countries. A comprehensive industrial system has taken shape in Xi'an, with large and medium-sized enterprises as its backbone and the manufacturing sectors as its mainstay. The city is now China's important base of aviation and astronautics, power transformation and distribution equipment, electronics, instruments and meters, machine building, textile and national defense industries. Through opening up to both domestic and foreign interests, Xi'an has attracted investment from enterprises from home and abroad. From 1983 to June 2000, the city has registered 2,087 foreign-funded enterprises, with a total investment amounting to $6.79 billion. Foreign investors come from 54 countries and regions in the world. They mainly invested in fields of capital and technology-intensive industries and primary industries. Meanwhile, the city has stepped up the construction of the Xi'an Modern Agriculture Development Zone and the Qujiang Tourism and Holiday Resort, further expanding the horizon for foreign investment. During the past 20 years, Xi'an has set up cooperative ties with more than 100 countries and regions in the world. And it has forged sister city relations with 15 foreign cities.


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  • Projects initiated for overseas investment:
  • Issued date: October 15, 2001
  • Content:

    1. Construction of Xi'an Lijiahe Reservoir. Investment: $81 million.

    2. Agricultural Biological Engineering Research Center. Investment: $12.4 million.

    3. Xi'an Wufeng Modern Agricultural Science Demonstration Park. Investment: $11.4 million.

    4. Xi¬šan Weiyang Lake Ostrich Farm. Investment: $17.4 million.

    5. Production of electronic balance and other electronic products. Investment: $7.8 million.

    6. Rotary air conditioner compressor. Investment: $7.8 million.

    7. Production line for automobile-used compressed natural gas container. Investment: $16.8 million.

    8. Development and production of bus and chassis. Investment: $13.6 million.

    9. Computer-controlled three-dimension engraving machine. Investment: $8.4 million.

    10. Multi-purpose liquid crystal projection photon engine. Investment: $13.5 million.

    11. Production of TV sets for deaf-mutes. Investment: $31.4 million.

    12. Production of DK2 low-voltage vacuum circuit breaker. Investment: $9.6 million.

    13. Development of the herb of Huluba. Investment: $12.3 million.

    14. Production of intelligent sealing rubber. Investment: $23.9 million.

    15. Production of kaolin powder and barite powder. Investment: $19.9 million.

    16. DNA chips. Investment: $7.2 million.

    l7. Production line for oxide matrine. Investment: $l2.3 million.

    18. Production of capsule for liver, kidney and heart disease. Investment: $6.9 million.

    19. Production of Shengchunwan brand health products. Investment: $30 million.

    20. Production line for glass bottle and pot. Investment: $15.7 million. (to be continued)


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  • Water works: foreign profitable business in China
  • Issued date: October 15, 2001
  • Content:

    A report recently released by the State Statistical Bureau indicates that the most profitable business for foreign investors in 2000 is water works, which yield as high as 24.48% profits among all foreign-funded projects. It is already ten years since foreign investors got involved in urban water supply in China. This was headed by Suez Lyonnaise des Eaux S. A. and Compagnie Generale Des Eaux. They engage in cooperation usually by way of purchasing water works. At present, foreign investors have invested in water works in more than l0 cities including Shenyang and Tianjin. China's water works market has not been optimistic. Water shortages are prevalent. The spring and summer drought last year induced a dearth of water, causing more than 400 cities to run short of water supply. There are l08 cities suffering from serious water shortages. Some cities have to ration the use of water.

    It has become common to introduce competition and use foreign capital in water supply. The three biggest water companies in the world, including Vivendi Group, Thames Water PLC and Suez Lyonnaise Des Eaux, have made China part of their global market. The Vivendi Group of France has invested over $l billion since l998 and the Suez Lyonnaise Des Eaux, which was the earliest to come to China, has participated in the building of more than l00 water works in China. The Thames Water PLC has won the $68 million water treatment BOT contract from Shanghai. The British water delegations composed of many well known companies has shown their presence in Guangzhou, Harbin, Hefei and Kunming. The chief representative of Suez Lyonnaise said that China's water works market is profitable in five major aspects. They are: the treatment of industrial waste and sewage water, the transformation of the urban water supply pipeline networks, the deep purification of running water in cities and the water efficient irrigation. The utilization of foreign capital in water affairs has indeed solved the fund shortages of Chinese companies and brought in advanced technology and management methods.

    The Chinese government has listed the reform of water prices in the tenth five-year plan period. Recently, the regulations on the management of water prices have been produced. This will raise the annual output value of water supply companies from RMB60-70 billion up to RMB l50-200 billion. In addition, waste water treatment also promises bright prospects. Officials from the Ministry of Construction pointed out that China's water companies must take the road of intensive operation, if they are to compete with their foreign counterparts from the same starting line and they must form groups in central cities and intensify the force of research and engage in trans-regional operations. Signs show that the zeal of the foreign water companies in investing in China's water works is unabated. The bidding for the No. l0 water works in Beijing has attracted many companies from France, Britain, Italy and Japan.


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  • Tianzhu Zone focuses on export-orientated production
  • Issued date: October 15, 2001
  • Content:

    As part of an action plan taken by Beijing to meet the challenges brought about by China's forthcoming entry into the WTO, a new export processing zone went into operation on June 13 in the city's suburbs. Located in Tianzhu Town, Shunyi District, the Beijing Tianzhu Export Processing Zone covers an area of 2.73 square kilometers. Its first phase project, covering 1.25 square kilometers, is expected to be completed by the end of the year. Nine enterprises from six countries and regions, inducing Japan, the Republic of Korea, Switzerland and Italy have settled in the zone. Their projects involve $300 million of investment. Japan's SMC plans to invest $250 million over the next three years in the construction of a large base for the production of components for air-driven equipment.

    Like Zhongguancun High-Tech Development Area and Beijing Economic and Technology Development Zone, the Tianzhu Export Processing Zone is designed to be one of the city's most prosperous areas. According to a development plan, 30 to 50 enterprises with a combined investment of $500 million are expected to be settled in the zone in the next three years. Their total sales are expected to reach $1.5 billion annually and exports are expected to total $1 billion. A representative of the zone's administrative committee said the zone is specially designed for export-oriented enterprises which make finished goods with both local and imported materials. Technology-intensive enterprises which produce valued-added or pollution-free products are being encouraged to settle in the area. An export processing zone processes products mainly for overseas sale. Domestic raw materials and goods used in the zone are regarded as exports and must go through suctions procedures. If the zone's products are sold outside the processing zone but within China, they are taxed by customs as imported finished products.


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  • Golden times ahead for insurance
  • Issued date: October 15, 2001
  • Content:

    China has announced plans to increase the number of participants it will allow in its insurance market, signaling golden opportunities ahead for foreign and domestic insurers. The opining-up of China's insurance market will be boosted with a distinctive increase of market players in the next five years. The move was designed to spark competition and build up a fully developed insurance market in China. The increase in market players will include not only insurance companies, but also insurance agent companies, brokerage companies, loss adjustment companies, and merger and acquisition agent companies. In the final months before China's entry into the WTO, the move is expected to expand the scope of development for China's fledgling insurance market, billed as a promising virgin land for foreign insurance conglomerates. China is currently thirsty for the management and product development expertise that foreign financial conglomerates enjoy.

    The reform of China's state-owned insurers, which are still very fragile and facing competition from foreign superpowers, is another hot topic. The reform is still in the planning stages but is likely going to require state-owned companies to increase efficiency by reshuffling their stakes to diversify their shareholding structures, said one analyst. The opening-up of China's insurance market will run parallel with a strengthened regulatory framework. Strengthening the framework is now a major concern on China Insurance Regulatory Commission's agenda.

    Up until 1985, China's insurance market was dominated by one state-owned insurer, the People's Insurance Company of China. In 1985, the Xin Jiang Corps Insurance Co was launched, introducing competition into the market for the first time. Following the move, more shareholding insurers, including PingAn and China Pacific, began to surface. A market-driven opening-up was implemented in the following years. By the end of 1996, seven other private insurance companies also opened to create a competitive market. Currently, there are 33 insurance companies established nationwide, among which 19 are foreign-funded. China also has 199 representative offices owned by 112 foreign insurance companies looking to tap the China market. The insurance sectors that will see the toughest competition by foreign rivals will be the life insurance industry, where Chinese companies have all-round drawbacks in management expertise, stake structures and product development, it is predicated.


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  • Sinopec in $2.7b deal with BP
  • Issued date: October 15, 2001
  • Content:

    China Petroleum and Chemical Corp (Sinopec) signed on August 31 a contract with a British firm to build a petrochemicals complex that is expected to be the largest of its kind in Asia when it comes on stream in 2005. Under the $2.7 billion deal, BP Chemicals controls 50% of the Shanghai-based joint venture. Sinopec takes a 30% stake while Sinopec subsidiary Shanghai Petrochemical Co takes the remaining 20%. The venture is expected to be set up in mid-September, with the aim of developing the capacity to produce 900,000 tons of ethylene a year. With the deal, BP, one of the foreign shareholders in Sinopec, has become one of the biggest foreign investors in China. BP's success is mirrored by Sinopec's other foreign shareholder, Enon Mobil, which is at work on another large petrochemicals project. In August, Sinopec said it plans to build a 600,000-ton-a-year ethylene cracker in a Sinopec refinery in Fujian Province, with Exxon Mobil and Saudi Aramco. Sinopec takes half the stake while the other two share the rest.


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  • Messer grabs China's gas products market
  • Issued date: October 15, 2001
  • Content:

    The world's fifth largest gas company Messer Group of Germany has lorded itself above all other companies in the market share of liquefied gas in Southwest China area. In Sichuan, it has grabbed 70% of the liquefied gas market. In Yunnan, the rate is 80%. It is learned that the group, headquartered in Frankfurt, is one of the oldest gas companies in Germany. It now owns l77 companies in 55 countries and is the fifth largest of its kind in the world. The company started to invest in China in l995. It launched three companies in Sichuan and Yunnan provinces in l996 and signed long-term gas supply contracts with local iron and steel companies and building materials enterprises. Up to present, the company has opened l5 companies in China, of which seven are in Southwest China, and the total investment has reached $l80 million.


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  • Hitachi increases investment in China
  • Issued date: October 15, 2001
  • Content:

    The Hitachi Digital Media Group announced recently to establish a new company, the Hitachi Fujian Digital Media Company Ltd, in Fujian province based on the Fujian Hitachi Television Company Limited, a manufacturer and vendor of (Fujian Hitachi) television sets. The new company has an investment of 4 billion Japanese yen with the Hitachi Group to account for 51% of the investment, the Fujian Electronics £¦ Information Group, to account for 47%, and Kobe, the Japan-based Toei Shoko Ltd, 2%. Hitachi has indicated that it would bring its best products in terms of technology to the new company as a start point for the Hitachi Digital Media Group to open up the China market. The original Fujian Hitachi Company started producing projection TV sets in 1998 with an annual output of 15,000 sets at present. The Fujian Hitachi Television will be transformed into a specialized OEM producer of tube-type TV sets.


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  • CA puts an eye on China's software
  • Issued date: October 15, 2001
  • Content:

    The Computer Associates (CA) of the United States will invest $60 million to establish a strategic partnership with China's software giant, the Neusoft Group Co Ltd, by taking up a certain part of the stake of the group and entering its Board of Directors. Such a big investment of CA in a Chinese software enterprise show a real enchanting prospect of China's software market. Through the cooperation of setting up a joint equity venture with Neusoft Group, CA is to pace a way of joint development with local Chinese software enterprises and help them march into the international market. Moreover, CA likes to share its accumulative experiences with Neusoft, jointly develop wholly new solutions for the industry and then extend better service to China's large enterprises. According to the agreements, many of CA's famous e-commerce management solution will be integrated into Neusoft's application solution for Chinese users as a universal and independent solution.


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