Dec. 24, 2001
C a t a l o g
A barrier to overseas investment in Chinese telecommunications is to be eradicated with the abolition of two regulations, the Ministry of the Information Industry said. The two regulations were issued in 1993 and 1995 and banned overseas investment in China's telecoms carriers but they will be abolished on December 11. The move is in line with China's commitment to the WTO. Detailed proposals have been worked out to further open the telecoms market after China's accession to the WTO. Companies can get further information from the ministry. As the world's fastest developing telecoms market, China has become a priority target of telecoms carriers throughout the world. Due to the regulations, previously overseas capital could only invest in domestic telecoms operators in a roundabout way. For example, buying public listed stocks became the only gateway for foreign companies.
China Mobile and China Unicom, the country's two public listed mobile carriers, have been targeted by overseas investors. The world's major telecoms carriers have all launched subsidiaries or representative office in China. However, experts believe that the abolition of the two regulations is unlikely to lead to an overwhelming flow of overseas investment, because the country's telecoms regulations are still not clear enough. The most important regulation for the sector is the Telecoms Regulation issued in September 2000. But this is already out of date. Although China has the world's biggest telecoms market, the country still has no telecoms law. A clear and stable regulatory environment would help attract more overseas investors, experts said.
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On November 22 China lifted the lid on its commitments to the WTO for the first time by releasing procedure details for foreigners entering the insurance market. Industry watchdog China Insurance Regulatory Commission (CIRC) set out the process in anticipation of a flood of interest from overseas firms. China's insurance industry will follow WTO rules and the commitments to foreign insurers involve forms of establishment, geographic coverage, business scope and licenses.
1. For the establishment of models following China's entry to the WTO, foreign non-life insurers may set up their branches or joint ventures in China, and a joint venture with foreign equity can be 51%. Within two years after China's entry, wholly foreign-owned subsidiaries of non-life insurers will be permitted with no limitation on business models.
2. Concerning geographic coverage, foreign life and non-life insurers will be permitted to provide services in Shanghai, Guangzhou, Dallian, Shenzhen and Foshan on China's accession. Within two years, such companies' business could be expanded to another 10 cities.
3. For business scope, foreign non-life insurers will be permitted to provide identified services in specified areas on China's entry into the WTO, and business limitation will be abolished within two years. Within two years after entry, foreign non-life insurers may provide individual insurance to foreigners and Chinese.
4. For license approval, business licenses will be issued to foreign insurers with no quantitative limits upon China's entry to the WTO. Qualifications for establishing a foreign insurance company are as follows: The investor shall be a foreign insurance company which has more than 30 years' business experience in a WTO member. It shall have a representative office for two consecutive years in China. And it shall have total assets of more than $5 billion at the end of the year prior to application.
Official statistics show China's insurance sector has registered 10%to 15% revenue growth for several consecutive years. Total income from pre-miums hit $19.27 billion last year and is likely to exceed $20 billion this year. Foreign insurers shared just 1% of the Chinese insurance market.
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The China Securities Regulatory Commission and the Ministry of Foreign Trade and Economic Cooperation released a document on November 14 stating that any qualified company with overseas investment could float either yuan-denominated A shares or hard-currency B shares on the mainland. The document also gives foreign-funded enterprises (FFEs) permission to purchase non-tradable shares in domestically listed firms. Analysts predicted overseas-funded joint ventures may be allowed to sell shares on the mainland's stock markets as early as the first half of next year. The green light is primarily the outcome of China's entry into the WTO and has opened a path for the listing of FFEs in a real sense. Until China won access to the WTO in November, the stock market on the mainland was largely regarded as a financing ground for cash-strapped state-owned enterprises and remained off-limits to FFEs.
However, investment rules have to change to fall in line with WTO principles that say FFEs should compete on a level playing field with domestic firms. Analysts predict it will take half a year or so before the first FFEs trade shares on the Shanghai or Shenshen exchanges. Investors will also benefit from the new rules by having more and better investment choices for their stock portfolios. The two-decade-old markets on China's mainland, now home to 1,152 publicly traded companies with a combined market capitalization of 4.37 trillion yuan ($527 billion), appear to be an attractive proposition for foreign partners of joint-ventures hoping to tap 7.06 trillion yuan held by the Chinese citizens in bank deposits. Nearly all the foreign companies say they want to diversify into the huge Chinese market, now they've got a chance to use domestic funds to develop their business.
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3. In the service field, China's promises are mainly embodied in the market accession in the sector of telecommunications, banking and insurance. Upon China's WTO entry, foreign telecoms service suppliers will be permitted to establish joint venture enterprises. Foreign investment in the joint ventures shall be no more than 25%. Within one year of accession, the areas will be expanded to include services in other cities and foreign investment shall be no more than 35%. Within three years of accession, foreign investment shall be no more than 49%. Within five years of accession, there will be no geographic restrictions.
In the banking sector, foreign financial institutions will be permitted to provide services in China without client restrictions for foreign currency business upon China's accession. Within two years of accession, foreign financial institutions will be permitted to provide services to Chinese enterprises. Within five years of accession, foreign financial institutions will be permitted to provide services to all Chinese clients.
In insurance, foreign non-life insurers will be permitted to establish as a branch or as a joint venture with 51% foreign ownership. Within two years of China's accession, foreign non-life insurers will be permitted to establish wholly owned subsidiaries. Upon accession, foreign life insurers will be permitted to have 50% foreign ownership in a joint venture. For large-scale commercial risks, reinsurance and international marine, aviation and transport insurance and reinsurance, upon accession, joint ventures with foreign equity of no more than 50% will be permitted; within three years of China's accession, foreign equity share shall be increased to 51%; within five years of China's accession, wholly foreign-owned subsidiaries will be permitted.
In addition, China also agreed to open a wide range of other service industries gradually after its accession into the WTO. Foreign players will be allowed to establish wholly-owned commercial facilities such as travel agents, cinemas, and transportation companies three to five years after the country's WTO accession.
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In order to face the new conditions after joining the WTO, China will make breakthroughs in expanding the fields for foreign investment, improving the policy environment, streamlining the management mechanism, strengthening the administration according to law and shifting the functions of the government, said recently Hu Jingyan, director of the Foreign Investment Department under the Ministry of Foreign Trade and Economic cooperation.
The government will open its service and trade sectors wider to the outside world. After China joins the WTO, it will gradually open all sectors, which are still closed to the outside world. Included are hotels, foreign trade, transport, medical treatment, education, insurance, banking, telecommunications and intermediate organizations and other services and gradually relax restrictions in foreign investment. Joint ventures will be permitted in the telecoms industry in both added value telecoms and basic telecoms, but the proportion of foreign investment will be limited. Foreign business people will be allowed to set up joint ventures with limited investment in the security sector. Foreign business people are permitted to build and invest in transforming cinemas, and undertake shipping agency in the form of joint venture. The fields scheduled to open wider to the outside world include expanding foreign-funded banks' Renminbi business in China, allowing foreign-funded enterprises to open life insurance business in the form of joint venture, and lifting the ban on foreign business people opening their own travel agencies and retail business.
China will keep its promise to gradually revise, supplement and abolish laws, regulations and part of the stipulations concerning foreign investment, and strive to improve foreign-funded laws and regulations in line with the international convention. Besides, the government will look into new ways for foreign investment. Multinational merger and purchase have become a major form of direct global investment in recent years. Merger and purchase mainly concentrates on banking, insurance, petrochemical industry, telecoms and aviation sectors, which China has not opened to the outside world. After joining the WTO, the country has to open these sectors and allow foreign business people to make investments in the form of merger and purchase.
In the country's implementation of the strategy of massive development of the west, the government will encourage foreign investment in the infrastructure, development of mineral and tourism resources, ecological protection, processing of farm and animal products, technical transformation, and development and manufacture of new electronic components in the west. China will strengthen the cooperation amongst small and medium-sized Chinese and foreign enterprises, and encourage FFEs to import or develop new technology, open capital-and technical-intensive projects, and set up projects to produce export-oriented machinery and electrical equipment and parts.
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China will take the opportunity of its WTO entry to open up wider to the outside world and continue to strive for sustained economic growth and social progress in 2002, according to the three-day Central Economic Working Conference, which concluded on November 29. The conference said that expanding domestic demand is a strategic policy that China will adhere to for the long term. The conference pointed out that domestic demand expansion should be integrated with strategic adjustment of economic structure, deepening of economic reform, increasing employment, improving the living standards of people and ensuring sustainable development. The country will also continue its proactive fiscal policy, issue long-term State treasury bonds and make necessary investments to realize sustained and fast development of national economy. China will continue to pursue a stable monetary policy and reinforce the supporting role of finance in economic development. More funds will be earmarked for technical innovation of enterprises, the development of small and medium-sized enterprises, and the readjustment of the agricultural structure. This readjustment plus deepening of rural reform and increasing farmers' income were stated as major goals for next year.
The country will continue to readjust its economic structure and concentrate on successfully upgrading technology in enterprises. The speeding up technical upgrading in existing enterprises and the improvement of technical standards of production will lay the groundwork to boost China's international competitiveness. This will also spur investment demand and improve supply capacity. It is necessary to use high technologies and other advanced techniques to upgrade an important group of industries and enterprises, and new economic powerhouses should be built up. Efforts should be made to accelerate the development of selected and prioritized high-tech industries so that high-tech industrial chains with Chinese characteristics and competitive advantages will be formed as early as possible. It is imperative to carefully carry out a series of strategic plans and policies for exploring the vast western region. Reform of state-owned enterprises will remain the core of the overall economic restructuring plan. Large and medium-sized SOEs should speed up work of becoming share-holding entities. The conference also urged the nation to fully take into consideration the challenges brought by the WTO entry, make the best use of the advantages and minimize the negative impact.
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Chongqing, China's youngest municipality established in 1997, is working with all its might to build itself into an economic center on the upper reaches of the Yangtze River by pushing ahead with its opening up campaign. The city welcomes cooperation in the form of capital, technology and management. Chongqing, a traditional industrial center with a solid industrial base and strong technological expertise, is the largest municipal city in China with a population of 30.7 million. The 3,000-year-old city is rich in natural, tourism and labor resources. The opening-up of this young municipality is thus expected to generate tremendous business opportunities for outside investors. The city has outlined its preferred investment fields as infrastructure construction, the technological transformation of enterprises, the development of modern agriculture, the service industry and the protection of the environment. Included in the massive campaign to develop China's western regions, Chongqing enjoys all the preferential policies granted by the State.
The city is determined to improve its infrastructure and investment environment to facilitate the introduction of foreign capital. With the support of the State, Chongqing will take the lead in China in the opening up of its finance, insurance and telecommunications sectors. Emphasis is also being given to the exploration of international markets for electrical and mechanical products and motorcycles, which are important products of the city. Several local motorcycle manufacturers have built assembly plants in Southeast Asian countries to guarantee sales in these countries. Chongqing's foreign trade and investment began to pick up last October. Its total export volume doubled last year from 1999.
As an active force in the economic development of the western region, Chongqing is attractive to enterprises and products from eastern and coastal regions. The city aims to transform its image as an industrial city into a commercial, tourist and information center of China's western areas. To boost its foreign investment and tourism, Chongqing hosted the 6th Chongqing Investment and Trade Fair and the Three Gorges International Tourist Festival in April. A series of activities, such as international seminars, exhibitions, motorcycle racing and folk customs festivals were organized.
Chongqing has accomplished a lot in communications construction, providing the city with a variety of means of transportation. The city had 30 navigable rivers with 3,004-kilometers of river shipping lanes, and 33 ports with 1,221 berths by the end of 2000. The annual cargo handling capacity has reached 47.61 million tons and the annual passenger handling capacity was 57.75 million persons. Chongqing is connected with 25 harbor cities along the Yangtze River, including Yibin, Wuhan, Nanjing and Shanghai. Furthermore, it is also the only port in western China that conducts foreign trade through combined transport of freight by river and by sea. Cargo ships can sail directly to Japan, Indonesia and Thailand from Chongqing through Shanghai. The combined sea and river transportation involving these two cities shortens the time and reduces transport costs for both exports and imports, as goods can go out or come in directly.
The highway system offers businesses further transportation choices. Two of the 12 major national highways run through the city, one from Chengdu to Shanghai and the other from Chongqing to Zhanjiang in Guangdong Provinces. By the end of 2000, there were 29,252 kilometers of highways, of which 1,578 kilometers were national highways and 3,832 kilometers, provincial level highways. Some 60% of the yearly total passengers travel by highway. The municipality plans to build a radiating fast-speed highway network with large state-level highways forming the core and provincial highways extending outwards. Chongqing has also made great efforts to improve its railway system. Following electrification, the annual freight handling capacity of the Chengdu-Chongqing Railway increased from 6.1 million to 13 million tons, that of the Sichuan-Guizhou Railway from 9 million to 18.54 million tons and that of the Xiangfan-Chengdu Railway from 8.5 million to 17.24 million tons. Chongqing has 69 railway stations that are able to directly ship cargoes to stations around the country.
Chongqing has one of the country's 10 biggest airports, Jiangbei Airport. It is a class one national airport with advanced facilities and infrastructure. In its 10 years of operation, there has not been a single accident. It also has international connections to Bangkok, Nagoya, Munich and Seoul. In 2000, the airport handled 2.78 million passengers and 76,000 tons of mail and cargo. In a bid to further enhance the municipality's air transport capacity Chongqing is building two more air transport facilities: the Wanzhou and Wuqiao Airports. Chongqing's oil and gas pipeline transmission systems have already taken shape. Natural gas transmission pipelines, whose length and daily handling capacity both rank first among China's major cities, comprise the major part of the system. In addition, the municipality has constructed pipelines to transport oil, coal gas and chemicals.
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Since China adopted its reform and opening-up policies in the 1970s, Jilin Province has developed and maintained an economy aimed at foreign investment and trade. By 2000, the province's accumulated actual foreign investment had topped $3.09 billion. A total of 3,495 Foreign-funded enterprises (FFEs) have been established in the province. In 2000, committed overseas investment rose by 32.3% to $596 million while actual foreign investment surged to $337 million, up 11.9% from the previous year.
During the past two decades, tax revenues from FFEs in the province have reached 15.04 billion yuan ($1.8 billion). A number of joint ventures have been established in the automobile and petrochemical industries, two of the province's pillar industries. FFEs have also entered the agricultural sector, which has stimulated the province's agricultural industrialization. Joint ventures have also fueled the province's exports to a large extent. From 1996 to 2000, around one-third of the province's export volume was realized by FFEs, registering $1.54 billion. Meanwhile, Jilin has maintained a steady growth in foreign trade. During the past two decades, the province accumulated a total trade volume hitting $29.9 billion and export volume standing at $17.7 billion. Despite the effects of the Asian financial crisis, the province's foreign trade between 1996-2000 topped $10.4 billion while export value increased at an average annual growth rate of 5.02% to $4.92 billion. In the first five months this year, trade volume surged by 33.2% to $1.22 billion with export value reaching $590 million, up 38.5%. In addition, Jilin has seen a booming trend in contracted overseas labor services. In the last 20 years, the province has sent a total of 138,000 contracted workers abroad.
With China's entry into the WTO, Jilin is determined to step up its foreign trade and attract more overseas investment. To court more foreign investment and increase exports is on top of the province's work agenda for the next few years. During the 10th Five-Year Plan period (200l-2005), the province's committed overseas investment is expected to reach $2.9 billion, increasing by 2.6% year-on-year. Actual overseas investment will increase 4% annually to $1.83 billion.
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1. Agriculture, animal husbandry and fishery. Emphasis will be put on deep processing of grains, domestic animal raising and processing, comprehensive development of agricultural resources, application of new technology irrigation, and animal breeding.
2. Automobile and petrochemical industries, including auto, spare parts and auto electronic cell manufacturing, fine chemical and ethylene products deep processing, food, medicine, electronics industries, and the development of new products and technology.
3. Raw materials and related processing industries, which include chemical fiber, new building materials, forestry products processing, paper-making and energy-saving metallurgical products.
4. High-tech industries. Emphasis is put on new materials, biopharmaceuticals, modernization of traditional Chinese medicine, information technology, software and new energy.
5. Energy, transportation and other infrastructure sectors. Priority will be given to the building of wind power stations, highways, bridges, tunnels and airports.
6. Public facilities and housing. They mainly refer to the building of water, heating and gas supplies, transportation facilities and houses for medium and low-income citizens.
7. Natural resources exploitation and environmental protection. Emphasis will be the exploitation of crude oil, natural gas, nonmetal minerals, renewable resources and environmental protection.
8. Technical upgrading of enterprises. The province welcomes foreign investors to help revitalize state-owned enterprises, including technical upgrading, developing new products, improving products quality and reducing energy and materials consumption.
Overseas capital is also expected to flow into the fields of finance, insurance, telecommunication, business and trade, tourism, education and other service industries. The province has pledged to provide a better investment environment in line with internationally accepted practices. Besides offering preferential policies in terms of tax levies and land use, Jilin will draft and issue and amplify local regulations pertaining to overseas investment to guarantee the legitimate rights of investors. It will also standardize fees-collecting system and improve all-around services for FFEs. To promote exports will also be a heavy task for the province during the next five years. By 2005, export volume is expected to register $1.85 billion, increasing on average by 9% annually
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As one of the key economic centers in Northeast China, Jinzhou City has sought to create a more pleasant environment for overseas investment. In 1992, it ranked 40th among China's top 50 cities in terms of comprehensive strength. The city's pillar industries include petrochemical, metallurgy, electronics, light industry, medicine, building materials, textiles, and food processing. Jinzhou is also an important agricultural base in Northeast China. Its total output value for agriculture, forestry, husbandry and fishery ranks third in Liaoning.
After 15 years of opening up, Jinzhou has become a key export-oriented city. In 1985, the State Council approved the city to be one of the first cities to open up to the outside world. Since Jinzhou formally launched its opening-up campaign, the city has made great efforts to enhance its economic ties with the international community and build its investment environment by improving infrastructure and government services. Recently, the municipal government has drafted a new regulation to further improve investment services. It promises to provide an all-weather service to companies applying for customs declaration and approval. A time limit will be set for customs approval for foreign companies. For bonding applications, customs will be required to complete work within a day The names, rate and reasons for fees and taxes foreign firms have to pay will all be made public. Procedures will be made simpler for investors.
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1. For those FFEs with an operation term of more than 10 years the first two years¬š corporate income tax from the date of operation will be exempted in the third, fourth and fifth years. 2. For those FFEs in the Jinzhou Economic and Technological Development Zone, or in the Jinzhou Economic Development Pilot Zone, 9% of the corporate income tax on the portion of local dividends will be refunded after paying corporate income tax at a reduced rate of 24%. 3. For those FFEs in Heishan and Yixian counties and the city of Beining, 6% of corporate income tax on the portion of local dividends will be refunded after paying the corporate income tax at a reduced rate of 30%. The refunding will be implemented semi-annually. 4. For those FFEs that have registered in the Jinzhou Economic and Technological Development Zone, the corporate income tax could be levied at a reduced rate of 15% upon approval from the State Administration of Taxation. Such projects include: energy supply projects transport system and port construction; technology-intensive projects and enterprises that involve more than $30 million investment with a long-term return on investment. 5. For those Sino-foreign joint ventures that engage in port building and operate for more than 15 years, the first five years¬š corporate income tax from the date of making profits will be exempted and half of the sixth to tenth years¬š corporate income tax will be exempted. 6. After the term of preferential policies expires, for those FFEs involved in the agriculture, husbandry and forestry sectors, 15% to 30% of corporate income tax could be reduced upon approval of the provincial taxation department during an additional 10-year period.
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1. Berth for containers. The 200 meter-long berth has an annual handling capacity of 120,000 TEU. Investment: $40.1 million. Form: Joint venture.
2. Berth for processed petroleum. The berth has an annual handling capacity of 5 million tons. Investment: $42.2 million. Form: To be negotiated.
3. Expansion of a thermo-power plant. New generating units will be installed. Investment: $26.9 million. Form: Joint venture.
4. Development of Mount Bijia (Penholder) Scenic Area. A hotel, an amusement area and a convention center will be constructed. Investment: $50 million. Form: To be negotiated.
5. Development of economic zone. A 0.8 square-kilometer area will be developed. Investment: $15.7 million. Form: To be negotiated.
6. Processing lamb. The Chinese partner offers fixed assets valued at $6.3 million. Investment: $15.7 million. Form: To be negotiated.
7. Shellfish farming. Covering an area of 6,600 hectares, the tidal-flat area will produce 30,000 tons of shellfish every year. Investment: $7 million. Form: To be negotiated.
8. Production of forklift. The annual production capacity will be 3,000 forklifts. Investment: $15.8 million. Form: To be negotiated.
9. Production of equipment for processing grains, including removing foreign substance, stripping hulls, sorting and drying. Patented technology will be adopted to produce this equipment. Investment: $3.4 million. Form: To be negotiated.
10. Production of mutual inductor. Advanced technology will be adopted. The annual production capacity will be 100 mutual inductors. Investment: $5.7 million. Form: Joint venture.
11. Production of zirconium. The annual production capacity will be 3,000 tons of oxygenized and chlorinated zirconium. Investment: $13.5 million. Form: Joint venture or cooperation.
12. Production of trimellitic acid anhydrides. By introducing advanced technology and equipment, the annual production capacity will be 10,000 tons. Investment: $31.3 million. Form: To be negotiated.
13. Production of rayox. The annual production capacity will be 30,000 tons. Investment: $124.1 million. Form: To be negotiated.
14. Production of spandex fiber. The original production line will be renovated, with an annual production of 1,000 tons. Investment: 43.9 million. Form: To be negotiated.
15. Production of coating for greenhouse. The annual production capacity will be 10,000 tons. Investment: $412.2 million. Form: To be negotiated.
16. Production of transfusion bags. The annual production capacity will be 12 million transfusion bags. Investment: $3.4 million. Form: To be negotiated.
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China will follow the requirement of the WTO to speed up the formulation of policies and regulations to encourage foreign investment in its railway sector. According to Wang Linshu, general engineer of the Ministry of Railways, by the end of 2000, a total of 23,700 kilometers of railways in western China was in operation, accounting for 34.8% of the country's total. Focus on west railway construction in the next five years will include the acceleration of double-tracking the Baoji-Lanzhou section of the Lanzhou-Lianyungang Railway, construction of the Xi'an-Hefei section of the Xi¬šan-Nanjing Railway, double-tracking of the Zhuzhou-Liupanshui Railway, the Suining-Chongqing-Huaihua Rail-way, double-tracking of the Lanzhou-Wuwei Nan section of the Lanzhou-Xinjiang Railway, the Wanzhou-Zhicheng (Yichang) Railway, double-tracking of the Kunming-.Zhanyi section of the Guiyang-Kunming Railway, and the study of a shortcut railway linking northwest China with north China.
The country will speed up the construction of passageways linking up all provinces and regions in the west. It will build the Shenmu (N)- Yan'an (N) Railway, the Xi'an-Ankang Railway, An bian-Meihuashan section of the Neijiang-Kunming Railway, the Shuicheng-Baiguo railway and the Xilinhot-Sanggin Dalai Railway. It will expand the capacity of Xi'ning-Golmud section of the Qinghai-Tibet Railway and the Nanning-Kunming Railway, double-track Litang-Naning section of the Hunan-Guangxi Railway, and electrify the Zhanyi-Baiguo Railway and the Neijiang-Yibin Railway. Projects Under construction, double-tracking or electrification including Golmud-Lhasa section of the Qinghai-Tibet Railway, Ankang-Daxian section of the Xiangfan-Chongqing line, the Yongzhou-Yulin section of the Hunan-Guangxi line, the Yan'an (N)-Xinfengzhen Railway, the Guizhou-Guangxi Railway, the north Xinjiang Railway and Houma-Xi'an Railway.
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The Langfang Economic and Technological Development Zone has demonstrated it has many advantages to attract investors. So far, the zone has put an accumulated 1.08 billion yuan ($130 million) into the construction of facilities. All the administrative institutions of the zone are set in accordance with international practice. Each functional organization has an office inside the zone to simplify the relevant procedures and enable the investors to handle all related affairs within the zone. Lower operational costs are another advantage of the zone. On one hand, the zone lies between Beijing and Tianjin, which makes it share the market and information resources with these two cities. On the other hand, the land price, construction and labor cost are much lower than those in Beijing and Tianjin. Furthermore, Langfang has built the Oriental University City, the largest of its kind in China with eight campuses with more than 10,000 students enrolled. And within the next decade, another 30 universities with 150,000 students will settle in the university city, providing various talents to the investors in the zone.
Langfang ETDZ has made great achievements in attracting investment during the past several years. To date, 687 enterprises with a total investment of 20.8 billion yuan ($2.51 billion) have been set up in the zone. About 30 large-sized domestic companies and many national research institutes have established their enterprises in the zone. A great number of transnational companies have opened businesses in the zone. Most of the enterprises are involved in the manufacturing sectors and high-tech industries. The manufacturing enterprises account for 70% of the zone's total. About 37 high-tech firms have been established in the zone, making up 40% of the total number of enterprises. These firms are mainly engaged in fields such as microelectronics, electronic information, space navigation, biological engineering and pharmaceuticals. Between January and June this year, the zone had registered 66 cooperative projects with pledged investment of 3.2 billion yuan ($386 million). 27 of the projects are overseas-funded with pledged investment of $96 million. By the end of 2000, the accumulated gross domestic product reached 4.63 billion yuan ($558 million), increasing by 53.4% from the same period of the previous year. The total industrial output value reached 7.6 billion yuan ($916 million), up 79.3% from last year.
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China's coal sector, which had been stuck in the red for years, is expected to make its first profit by this year's end, Shi Wanpeng, vice-minister of the State Economic and Trade Commission, said recently. The coal sector made 1.1 billion yuan ($128.1 million) between January and July a dramatic reversal from last year's deficit of 820 million yuan ($99.2 million). Eighty leading state coal mines, which are subsidized by the central government, have already recorded profits of 480 million yuan ($58 million). Last year they faced a combined deficit of 450 million yuan ($54 million). Shi attributed the dramatic reversal to the government's efforts to curtail production and boost coal exports. Those two moves eased the glut of coal in the domestic market.
China is the world's largest coal producer. From January to August 2001, China produced 654 million tons of coal, an increase of 6.1% year-on-year. Sales grew by 7.3% at the same time, while the social stockpile dropped by 12.4% to 132 million tons. Balancing out the supply and demand during that time also helped push the average sales price up by 10 yuan ($1.2) a ton, which added 6 billion yuan ($725.5 million) to the sector. To curtail output, China has closed 54,500 small coal mines with an annual production of less than 10,000 tons since 1998. Most of the remaining 250,000 county-level small coal mines have halted production for inspection. In all, China has slowed coal production down to 910 million tons from its peak of 1.3 billion tons in 1997. Large state coal mines now account for 80% of the national total, up from 57% in 1997. Shi said the nation will continue to limit small coal mines. To alleviate the excess coal on the domestic front, the country has offered tax rebates and other preferential policies to encourage domestic coal companies to sell abroad. From January to August 2001, the country exported 56 million of coal, up 54.6% from the same period last year. The price for exports also increased by $5 a ton, contributing $400 million to the sector. Shi hoped exports would rise to 85 million tons by year's end.
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Bayer of Germany and the Shanghai Chloro Alkali Chemicals Co Ltd officially signed a $340 million deal recently in Shanghai to establish the ”°Bayer Polymers Shanghai Co Ltd", a joint equity venture for the production of polycarbonate in Shanghai Chemical Industry Park. Polycarbonate is a kind of versatile heat- and impact-resistant engineering plastic of high technological content and added-value, widely used, especially as key raw material in compact disks, automated equipment, glass panel walls, pure water containers, optical instruments, lighting fixtures, medical equipment and home appliances. The JV started its construction in October 2001. The first phase of the project, which will be completed and become operational in 2003, will include facilities that produce 50,000 tons per year of thermoplastic products and 20,000 tons of bisphnol. The annual output will rise to l00,000 tons in 2005, when the second phase of the project is expected to be completed. Bayer will provide 90% of the capital while Shanghai Chloro Alkali will hold a l0% stake in the joint venture company. The joint venture's products will be focused at the Asia-Pacific market as a whole.
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Minolta Co, one of the world's largest camera makers, said recently that it plans to shift the majority of its camera production from Malaysia and Japan to Shanghai by 2003, as it seeks to restructure its camera business. Japan-based Minolta will gradually transfer the production of single-lens reflex and digital cameras to its local joint venture, Shanghai Minolta Optical Products Co Ltd. The company however, will keep the production of some high-end cameras and lens in Japan. Minolta aims to turn its Shanghai factory into a global camera manufacturing, development and design complex, not just a production center. The move comes as Minolta is seeking to make a turnaround after reporting losses for two consecutive fiscal years. At present, Minolta has three camera manufacturing centers in Japan, China and Malaysia. Its 20-year-old Malaysian plant produces half of the company's global camera output, compared with 35% made by Shanghai Minolta.
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US electronics giant Motorola will keep its title as the biggest foreign investor in China with an accumulated investment of $10 billion by 2005, company Chairman and President Chris Galvin announced in Beijing in early November. Motorola's five-year development strategy in China can be described with three ”°tens": $10 billion in annual production, $10 billion in local purchasing and $10 billion in accumulated investment. Motorola will also become the single biggest tax contributor among foreign companies with an accumulated tax payment of $5.6 billion in the next five years. Motorola also announced it will make Beijing one of its major research and development (R&D) centers with an additional investment of more than $1 billion over the next five years. By 2006, some 5,000 R&D and software engineers are expected to be working for Motorola in China.
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French carmaker PSA Peugeot Citroen and its Chinese partner Dongfeng Motor announced recently they would invest 1 billion yuan ($120 million) in a new-phase cooperation. Under the agreement, PSA Peugeot Citroen will contribute 630 million yuan ($76.2 million) to the projected investment, while Dongfeng Motor, one of China's top three automakers -- will make up the remainder. The cooperation will include increased production of their car joint venture in Wuhan--the Dongfeng Citroen--and the setting up of two marketing joint ventures in charge of selling Citroen and Peugeot-brand vehicles. The plan was expected to be approved by the central government next year. The French company wants to introduce four models into Dongfeng Citroen by 2004 and make full use of the joint venture's annual capacity of 150,000 units to expand its business in China.
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