U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 131
The China Commercial Brief is a biweekly publication including summaries about developments in China's various commercial sectors, tips on doing business in China, and U.S. Embassy news. This publication is free of charge: please forward it to your colleagues and friends who are interested in China.
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Editor: David Snodgrass
Contributing Specialists: CS Guangzhou, Peng Aiqun, Shen Yan, Cindy Wang, Qiu Jing, Cao Yue
News Briefs
In the interests of providing news from all over China, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit summaries of commercial articles from their local press to the CCB on a rotating schedule, in addition to the five article summaries provided by CS Beijing.
1.Guangdong to Invest RMB 210.2 Billion in Ten Projects (CS Guangzhou)
2. Three Foreign Banks Allowed To Be Custodians of QFII
3. Overseas Travelers Visiting Beijing Hit 3.1 Million in 2002
4. A Review of China’s 2002 Petroleum & Petrochemical Industries and Prospects for 2003
5. Steady Growth in China’s Publishing Industry
6. Domestic Demand for Imported Waste Paper To Increase
1. Guangdong to Invest RMB 210.2 Billion in Ten Projects
(Source: Guangzhou Daily, Feb. 28, 2003, Prepared by Guangzhou.Office.Box@mail.doc.gov)
In order to assist the development of the Greater Pearl River Delta area, Guangdong province will invest up to RMB 210.2 billion (about $25.45 billion) in 10 key projects. The 10 projects will include as many as 125 sub-projects ranging from transportation and energy to industrial development. Implementation of those projects is expected to start later this year and completed by 2006.
Guangdong Executive Vice Governor Li Hongzhong revealed at a recent meeting that the 10 projects were the first initiative put forth by the newly elected provincial government to push for development. According to Li Hongzhong, the 10 projects should stimulate the development of the local economy on a sustainable basis. From a long-term perspective, the 10 key projects will constitute the basis for future development of transportation, energy, and industry, and provide educational and talent support to sustainable development.
Li Hongzhong also stressed that the implementation of the 10 projects would further promote the integration of infrastructure facilities with industrial resources. It would help form a development pattern in Greater Pearl River Delta and link Guangdong with neighboring provinces by highways. As a result, Guangdong would be able to further explore the hinterland for future development.
The 10 projects are:
I. Highways
1. Seven new highways with total distance of 2,800 kilometers by 2005
II. Energy
1. Four LNG power plants
2. The 11th generating unit of Shaoguan Power Plant
3. The 3rd and 4th generating units of Taishan Power Plant
4. Phrase II of Shantou Power Plant
5. Shanwei Power Plant
III. Natural Gas
1. LNG terminal and gas supply trunk line
2. Gas pipeline networks in four cities
IV. Petrochemical
1. Start construction of CNOOC Shell Nanhai Petrochemical Project
2. Construction of Maoming Polythene Expansion Project
3. Guangdong Petrochemical Oil Refinery Expansion
4. Sinopec Zhanjiang Dongxing Oil Refinery Project
V. Automotive
1. Expansion of Guangzhou Honda Automotive Company
2. Guangzhou Honda Sedan Export Base
3. Production and function transformation of Nissan Auto
VI. Urban Expressway Transportation
1. Construction of two rail connection projects
2. Construction of two expressways in two central cities
VII. Environmental Protection
1. Starting operation of Xilang Sewage Plant
2. Construction of Urban Sewage Treatment Projects in Shantou City with daily treatment capacity of 2.2 million tons
3. Construction of 10 Desulphurization Projects of Coal-Fired Power Plants including Shajiao Power Plant
VIII. Hi-Tech Industry
1. 60 Hi-Tech Industrialization Projects
2. Construction of two national software parks, namely Nanfang Software Park in Zhuhai city and Tianhe Software Park in Guangzhou city
IX. Water Conservancy
1. Completion of Dongshen Water Supply Transformation Project
2. Reinforcing Beijiang River Dam
X. Cultural
1. Completing construction of Social Welfare Information Networks in the Province
2. TV Digitalization Transformation and Auxiliary Projects for School Enrollment Enlargement
3. Construction of Guangzhou University Town
2. Three Foreign Banks Allowed To Be Custodians of QFII
(Source: China Securities Journal, 03/20/2003 - Translated by Aiqun.Peng@mail.doc.gov)
China Securities Regulatory Commission (CSRC) recently approved three foreign banks in Shanghai, i.e., CitiBank, HSBC and Standard Charted Bank Plc., to act as custodians of Qualified Foreign Institutional Investors (QFII). The QFII scheme was launched in December 2002.
Five other domestic banks were approved by CSRC in February to be custodians of QFII. These banks included the Industrial and Commercial Bank of China (ICBC), Bank of China, the Agricultural Bank of China, the Bank of Communications and China Construction Bank. Currently, a total of eight Chinese and foreign banks are allowed to provide custodian services to foreign investors in domestic securities markets under the QFII scheme.
According to CSRC, some other commercial banks also applied for the custodian status. CSRC is reviewing their application materials.
With custodian status, commercial banks can provide all-round services for QFIIs, including the opening of accounts, asset custody, capital clearing and information consulting service.
3. Overseas Travelers Visiting Beijing Hit 3.1 Million in 2002
(Source: Beijing Daily, 11/02/2003 - Translated by Yan.Shen@mail.doc.gov)
In 2002 Beijing’s international tourist industry yielded an excellent result. According to figures provided by the Municipal Statistics Bureau, Beijing received 3.104 million overseas travelers last year earning 3.4 billion dollars in revenue, each of the two figures being record high in history.
Last year, tourist authorities in Beijing actively carried out various promotion activities in a bid to expand international market share while continuing to standardize market order. The number of overseas travelers that visited Beijing last year increased by 8.6 percent, only second to Guangdong, and ranked No.2 in the whole country. Overseas travelers stayed in Beijing for 4.3 days on average, indicating that Beijing is quite an attractive tourist destination.
Japan, Korea and the U.S. were the most important traveler source markets for Beijing’s international tourism industry last year. Japanese travelers to Beijing last year numbered 565,000, increasing by 11.4%, Korean travelers totaled 380,000, increasing by 16.1%, and American travelers totaled 374,000, increasing by 13%. Meanwhile, five Southeast Asian countries including Malaysia, Singapore, Thailand, Indonesia and Philippines are quickly becoming emerging traveler source markets for the city, and the number of travelers from these countries all increased by double-digit.
The fast development of the tourist industry has also resulted in the increased revenues for relevant industries such as hotel and apartment rental. In 2002, hotels and apartments in the city earned RMB 15.35 billion, an increase of 8.4% over the same period last year.
4. A Review of China’s 2002 Petroleum & Petrochemical Industries and Prospects for 2003
(Source: China Petroleum Economics, Vol. 2, 2003 - Translated by Cindy Wang)
In 2002, satisfactory achievements were made in China’s petroleum and chemical industries. There were five main developments in the past year.
First of all, the main economic indicators were better than those in the previous year. Total industrial output value rose 8.43% while industrial value-added increased by 8.43%. Meanwhile, profits rose by 9.75 % and product sales increased by 8.73%. Additionally, enterprise losses dropped 0.58% and product sales rate reached 98.93%, up 0.04%.
Second, the major products saw sustainable growth in output. Based on a monitoring of 112 products in 2002, 104 witnessed an increase in production over the previous year, accounting for 92.86% of the total monitored products. The country’s crude oil production totaled 169 million tons, up 2.5% from the previous year, while crude processing volume reached 220 million tons, up 4.6%. Ethylene production stood at 5.414 million tons, up 13.0%.
Third, the structure of products steadily improved. In 2002, crude processing enterprises produced 128.6 million tons of kerosene and diesel, a 3.81% increase. Fourth, trade volume rose 16.4% compared to the previous year, of which the imports grew by 18.9%, while exports increased 10.7%.
Fifth, remarkable achievements were made in workforce reduction and increase in efficiency.
According to some economic experts, the GDP growth rate in 2003 will be 7.9-8.2%. Therefore, it is estimated that 2003 will see positive economic trends at home and abroad. Domestic oil and chemical production is expected to be higher than 2002. Total industrial production value will rise 8.5%, while industrial value-added will increase 8%. Profits will rise 2 percent and product sales 7%. The product sales rate is expected to reach 98.9%, the same as that in 2002.
In 2003, production of ethylene, propylene and synthetic resin is estimated to increase 9.6%, 8.6%, and 10.5% respectively; fertilizer production will continue to increase at a consistent rate (total output will reach 380 million tons. But, competition will increase because of an increase in the import quota on fertilizer); refined oil consumption demand will be 124 million tons which is 5 million tons more than that of 2002 (the increase of crude oil production and processing will increase steadily.
Crude oil production and crude processing will have a 1.2% and 2.3% increase, among which gasoline, kerosene and diesel will increase 2.4%, 2.5%, and 6.4%; pesticides exports will increase; soda ash production is expected to be 10.4 million tons which is a 2.1% increase compared with that in 2002; it is estimated that caustic soda production will be 8.7 million tons which represents a 5.7% increase.
With the quick development of highways in China, the advantages of road transportation are obvious. Meanwhile, influenced by the increase of sales and production of Chinese automobile industry, tire production is expected to increase at a rate of 11.5%.
5. Steady Growth in China’s Publishing Industry
(Source: China Press and Publishing Journal 3/11/2003 - Translated by Jing.Qiu@mail.doc.gov)
China’s publishing industry experienced steady growth in 2002, according to the information center of China’s General Administration of Press and Publication. Below please find some related statistics.
Book Publishing and Distribution - China published 178,880 books in 2002, a 12% increase over 2001. Among them, 99,959 were new books, 78,921 were reprinted books.
The total volume of books published in 2002 reached 6.75 billion, a 6.5% increase over 2001. China sold 15.59 billion books, a 0.2% decrease over 2001, and sales reached $11.5 billion in 2002, a 3.9% increase over 2001.
Periodical Publishing - China published 9,002 periodicals in 2002, a 1.1% increase over 2001. The total volume of periodicals published in 2002 reached 2.96 billion, a 2% increase over 2001.
Central and Provincial Level Newspaper Publishing - China published 985 different newspapers in 2002, a 3.3% decrease over 2001. The total number of newspapers published in 2002 reached 22.97 billion, a 6.4% increase over 2001.
6. Domestic Demand for Imported Waste Paper To Increase
(Source: China Packaging News, 03/20/2003 - Translated by Yue.Cao@mail.doc.gov)
According to Mr. Guo from the China Light Industry Information Center, imported waste paper plays a mainstay role in the Chinese paper industry’s development. In recent years, China’s imports of waste paper have kept up a fast rate of growth, much higher than the expanding rate of domestic paper and paperboard production.
In 2001, China’s consumption of waste paper reached 8.97% of the global consumption total of waste paper. In so far as the composition of raw materials used in the domestic paper making industry, waste paper represents 44%. This compares with an average of 34% in other counties, highlighting the China paper industry’s dependence on waste paper resources.
In 2002, China imported 6.87 million tons of waste paper with a total value of $732 million; a 7.06% volume increase and 11.18% increase in dollar value from 2001.
Imported waste paper holds a firm position in terms of low price and high quality in the China market. Many domestic papers utilize imported waste paper as the primary raw material. Some newsprint manufacturers rely upon 100% imported waste paper.
The domestic demand for waste paper imports will continue to rise. This trend may also lead to a price increase in waste paper – over 8% estimated by industry experts. Domestic paper and packaging manufacturers importing waste paper as their raw material will have to raise costs, leaving opportunities for foreign high-grade paper products to take a larger share of the domestic middle-grade paper market.
Embassy News
The “Breakfast With China” video teleconference series continues to attract a lot of attention. The next scheduled briefings will take place on April 11th with the Nashville, Tennessee Export Assistance Center and on May 9th with Indianapolis, IN Export Assistance Center. The briefings are conducted by Commercial Officers in China, offering up-to-date market information. Contact your nearest Export Assistance Center to sign up. http://www.buyusa.gov/home/us.html
ACE Trade Mission - CS China is preparing for the upcoming Architecture, Construction and Engineering mission in April and looks forward to working with Deputy Assistant Secretary Burnham to make this a successful one.
TDA: Natural Gas Training Institute Briefing - On March 14, CS Beijing and the US-China Business Council hosted representatives of the Gas Technology Institute (GTI) in a briefing session for 10 private sector representatives to provide U.S. energy industry with an understanding of how they might benefit from the $500,000 grant from TDA to China's State Development Reform Commission (SDRC). The grant will fund natural gas training courses offered through SDRC's Petroleum University under the heading of U.S.-China Natural Gas Training Institute.
Anti-Trust Seminar - The Economic Section of the American Embassy and the Trade Facilitation Office (TFO) cooperated to hold a 1 1/2 day program March 5-6 on US antitrust law and experience, with guest speakers from the Department of Justice and Federal Trade Commission. Participants included representatives from SETC, MOFTEC, SAIC, MII, CAAC and the Railway Ministry. Guest speakers also met with PRC lawyers and later with the American Chamber of Commerce Law Committee.
Am-Cham Luncheon - On March 14, the American Chamber of Commerce – China (AmCham) hosted a luncheon to introduce the Trade Facilitation Office (TFO) to the AmCham community. Sharon Mann (Market Access and Compliance) and Chris Cloutier (Import Administration) gave presentations on the responsibilities of the two divisions within the TFO, followed by questions fielded by all four officers. About 60 individuals from the greater Beijing business community were in attendance.
Consulate News: Guangzhou
In keeping with our goal of making the CCB a more integrated publication, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit consulate news to the CCB on a rotating schedule. This week, we are pleased to feature a contribution from CS Guangzhou:
Subway, the largest fast-food sandwich chain in the world and the largest fast-food franchise in the US, has made its debut in South China. The world’s favorite sandwich restaurant opened two restaurants in Shenzhen in March 2003.
Principal Commercial Officer Eric Zheng and Commercial Assistant Cathy Wang of CS Guangzhou participated in the opening ceremony on March 14 in Shenzhen. The opening of the two restaurants in Shenzhen was a culmination of CS Guangzhou’s support for Subway throughout the process of its market entry into Guangdong. CS Guangzhou has counseled Subway on regulatory environment for franchises, opportunities in South China, potential partners, and possible locations. “I am so lucky to have CS Guangzhou’s great assistance,” Mr. Laurent Basse, Co-owner & General Manager of the two Subway restaurants in Shenzhen, said, “You guided me in a right way to start my investment in China.”
Subway is famous for its made-to-order 12-inch and 6-inch submarine sandwiches. Customers create their own hot or cold sandwich by choosing from a variety of fresh vegetables, cheeses, and condiments, while viewing the sandwich being made right in front of them. Subway has now joined other U.S. fast-food restaurant brands such as McDonald’s, KFC, Pizza Hut, and Nathan’s Famous in establishing a presence in South China.
For more information on CS Guangzhou and the Guangzhou consular region, visit our website at http://www.buyusa.gov/china/en/guangzhou.html
Sherry’s Picks
Finding out what you need to know is often difficult to do in China. To make the process easier, we feature a different source of commercial information in this section every week.
The government of China has introduced a new safety license system. The new system requires manufacturers in 132 product categories to obtain the China Compulsory Certification (CCC) mark before exporting to or selling in the China market. The new system, implemented on May 1, 2002 and fully effective on May 1, 2003, will impact many U.S. exporters, across a wide range of manufacturing sectors. Products not meeting CCC requirements may be held at the border by Chinese Customs and will be subject to other penalties.
Timothy Wineland, of the Department of Commerce Market Access and Compliance office in Washington, D.C., has compiled “China’s CCC Mark – A Guide for U.S. Exporters” to help you understand the new regulation. The guide can be viewed at the following link:
http://www.mac.doc.gov/China/Docs/BusinessGuides/cccguide.htm
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Sherry Cai is the Information Guru for CS Beijing.
DISCLAIMER: CS China does not guarantee the veracity of the original sources of our news summaries. While we do our best to report accurate and timely articles and news sources, you should always check the source for further information.
The China Commercial Brief is a free newsletter published by the U.S. Embassy- Beijing.
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INTERNATIONAL COPYRIGHT, U.S. COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2002. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.
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