U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 127
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, Michael Mei, Wang Yi, Zhao Peining, Xi Xianmin, Sun Shuyu
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. Guangzhou City to Launch Construction Boom (CS Guangzhou)
2. Power Industry Achieves Milestone Against Monopoly
3. Beijing Raises Water Tariff on January 20th
4. China Will Upgrade Quality Control in 2003
5. Three Main Features of China's IT Industry in 2002
6. China Issues Policy to Promote Industrialization of Biological Products
1. Guangzhou City to Launch Construction Boom
Guangzhou City is launching a new round of construction boom. The city recently announced a plan to invest RMB118 billion ($14.3 billion) in 38 key projects, of which RMB11.5 billion ($1.4 billion) is earmarked for the year of 2003. The 38 key projects are:
I. Urban Transportation & Infrastructure Projects
1. Guangzhou Metro No. 2 Phase II
2. Guangzhou Metro No. 3
3. Guangzhou Metro Special Line to the University Town
4. Guangzhou to Foshan Section of the Pearl River Delta City-to-City Light Rail
5. Guangzhou New Baiyun International Airport
6. Guangzhou Port Nansha District Phase I
7. Radiation Lines for the Guangzhou Ring Road
8. Highway between Cantou and Longxue Island
9. New Guangzhou Baiyun Airport Highway
10. Phase II of Guangyuan Dong Road
11. Xinguang Highway
12. Pearl River Delta Ring Road
II. Environmental Protection Projects
1. Likeng Domestic Waste Incineration Power Plant
2. Xilang Sewage Treatment Project
3. Liede Sewage Treatment Plant Phase II
4. Lijiao Sewage Treatment System, Phase I
III. High-tech Industrial Projects
1. Guangzhou Broad-Band Trunk Network Phase II
2. Tianhe Software Park Expansion Project Phase I
3. Infrastructure Projects for Guangzhou Scientific City
4. Guangzhou International Bio-Island Phase I
IV. Pillar and Basic Industrial Projects
1. Guangzhou Honda Expansion Project
2. Guangzhou Honda Sedan Export Base
3. Guangzhou Fengsheng Auto Expansion
4. Guangzhou Cement Factory Environmental Project Re-settlement
5. Zhujiang LNG Power Plant
6. Guangzhou Opera House
7. Guangzhou Paper Mill Forest-Paper Integration Project
8. Guangzhou Economic Development Zone Automobile Industrial Base
V. Education Projects
1. Establishment of 24 Demonstration High Schools in Guangzhou
Guangzhou Executive Vice Mayor Shen Bonian told a city-planning meeting that investment for the above-mentioned projects in Guangzhou would be in tremendous demand in the future. Guangzhou would like to reach the level of developed countries by the year of 2020. To that end, key projects in infrastructure, ecological and education facilities, and industrial projects have been planned in phases. An investment of RMB16.8 billion ($2.03 billion) has been earmarked for building highways and rail connections. In terms of funding for those projects, investment from private and foreign sources would be treated equally with government investment. Monopoly would be broken up and private investment would be encouraged in the construction and operation of public utilities.
(Source: Guangzhou Daily, Nanfang Dushi Newspaper, translated by CS Guangzhou, 01/09/2003)
2. Power Industry Achieves Milestone Against Monopoly
China dismantled the State Power Corporation on December 29, 2002 and set up 11 smaller companies in a move to end the corporation's monopoly of the power industry.
The former State Power Corporation owned 46 percent of the country's electricity generation assets and 90 percent of the electricity supply assets.
The smaller companies include two electric power grid operators, five electric power generation companies and four relevant business companies. The two electric power grid operators are State Power Grid Corporation and China Southern Power Grid Corporation. The five electric power generation companies are China Huaneng Group, China Datang Group, China Huadian Group, China Guodian Group and China Power Investment Group. The four relevant business companies are China electric Power Engineering Consulting Group, China HydroPower Engineering Consulting Group, China Water Conservancy and hydropower Construction Group and China Gezhouba Group.
Each of the five electric power generation companies own less than 20 percent of China's market share on electric power generation. They will compete with each other for signing contracts with the electric power grid operators. Each electric power generation companies’ average generation capacity is 32 gigawatts.
The State Electricity Regulatory Commission will be set up to supervise China's electric power industry. It will be responsible for making proposals on electric power tariff adjustments and issuing and managing electric power service licenses.
The regulatory commission, charged with the efficient supervision of electric power companies, will send agencies to regional electricity network enterprises. The commission will also take charge of setting market rules, regulating the market and resolving disputes.
(Source: China Electric Power News, 12/31/2002 - Translated by Michael Mei)
3. Beijing Raises Water Tariff on January 20th
Approved by the Beijing Municipal government, water tariffs in Beijing will be raised from January 20, 2003. With this adjustment, water tariffs for household usage will be RMB2.9 /m3 (as opposed to RMB2.5 /m3 in the past) , which is composed of RMB2.3 (as opposed to RMB2.0 in the past) for water resources and tap water fee, and RMB0.6 yuan (as opposed to RMB0.5 in the past) for sewage treatment.
According to the requirement provided by “sustainable utilization plan for the capital water resources in early 21st century,” which has been approved by the State Council, the average increase of water tariffs (including water for various usage) in Beijing this year will be RMB0.64 /m3, among which RMB0.3 is for water resources fee, RMB0.18 for tap water fee, and RMB0.16 for sewage treatment.
(Source: Beijing Youth Daily, 01/19/2003 - Translated by Wang Yi)
4. China Will Upgrade Quality Control in 2003
China has vowed to intensify its production quality control standards and fully implement compulsory certification in 2003 to fulfill its commitments to the World Trade Organization. The country's quality control workflow will be greatly improved when it comes to supervising every step of production, transportation, and sales and quarantining imports and exports.
In 2003, China will also strengthen safety management and registration examinations for food and farm produce exports. State General Administration for Quality Supervision and Inspection and Quarantine will tighten the control over pesticide and veterinary drug residue, and put vets and plant protection technicians in businesses where they can help ensure quality.
From May this year, China began to issue certificates to enterprises that produced certain new products, which are closely related to the health and safety of consumers and animals, the environment and national security.
(Source: China Mechanical and Electrical Trade News - Translated by Zhao Peining )
5. Three Main Features of China's IT industry in 2002
China's IT industry demonstrated three main features in 2002. First, growth rate dropped by 10 percentage points from 30% of the previous year to 20% as a result of global recession, with monthly growth shown in the following table:
Month % Y-o-y growth % Y-o-y growth rate
rate in 2001 in 2002
February 28.9 21.6
March 32.9 18.6
April 31.4 19.0
May 32.1 22.1
June 32.9 22.1
July 31.1 20.4
August 30.3 20.2
September 30.1 20.6
October 29.9 20.4
November 28.8 20.9
December 26.8 -
Second, consumer electronics like color TV and DVD players were the main factors behind the rapid growth, with products contribution to the industry shown in the following table:
Product % Production % Contribution Percentage
sectors growth to industrial point growth
Contribution
to industrial growth
Investment 12.5 29.5 5.9
products
Consumer 30.6 40.3 8.1
products
Basic elements 24.7 30.1 6.2
and devices
And estimates of color TV production and sales are shown in the following table:
(unit: 1,000 sets)
First 3 Whole year % Change y-o-y
quarters
Production 38,220 52,000 30
Sales 39,620 53,000 30
Export 12,603 17,000 45
And third, foreign-funded enterprises gave the strongest push to the economy. With their shares in the electronics and information industry standing at 30%, they produced 52% of the total output, exported 78.9% of the total exports, and paid more than 60% of the total
tax payable. Guangdong, Jiangsu and Shanghai were the three most rapid developing regions, and the industry in the western part of the country made remarkable growth thanks to the implementation of the Great Western China Development Strategy.
(Source: January 22, 2003 China Economic Information Service)
6. China Issues Policy to Promote Industrialization of Biological Products
According to a recent announcement from the State Development and Planning Commission (SDPC), SDPC will provide key support in 2003 to the high technology industrialization of biological products and new drugs including modern traditional Chinese medicine (TCM).
In 2003, SDPC will greatly promote the establishment and development of the emerging biological and new drug industry with a focus on high-tech industrialization. SDPC will adopt the following three types of support:
- Support projects favoring obtaining permits for market entry and those which demonstrate proven effects, especially achievements with intellectual property and industrialized technology.
- Help enterprises to form initiatives for sustainable development, encouraging them to combine with the resources from scientific and research institutions and universities, establishing national engineering research centers of corporation type with creativity and engineering integration.
- Build trial high-tech industrial bases in key high-growth locations which will strengthen technical creativity of enterprises and promote integration.
(China Pharmaceutical Daily, 12/24/02 - Translated by: Sun Shuyu)
Embassy News
On January 22-24, the US Commercial Service - Beijing participated in Stadia & Arena Infrasport: 2003 at the China World Trade Center in Beijing. The event was the show's debut in China, and focused on the construction of Olympic stadiums for the Beijing 2008 Olympics.
For complete details, including pictures, visit our website at http://www.buyusa.gov/china/en/stadiabooth.html.
On January 16, 2003, CS Shanghai hosted a caffeine-charged signing ceremony for The Coffee Beanery, a Michigan-based franchise company. At the event, The Coffee Beanery's Master Franchisee for China signed agreements with four Shanghai firms to open 17 Coffee Beanery stores in Shanghai in the next year.
For complete details including pictures, visit our website at http://www.buyusa.gov/china/en/coffeebean.html.
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:
Consul General and Commercial Service Guangzhou Attend Opening of Guangzhou Metro No. 2 Line
Consul General John Norris, Principal Commercial Officer Eric Zheng, and Commercial Specialist Lena Yang attended the opening ceremony of Guangzhou Metro No. 2 Line on December 29, 2002. They also joined Guangdong Party Secretary Zhang Dejiang, Guangzhou Mayor Lin Shusen, and other guests in riding the first train of No. 2 Line.
The construction of Guangzhou Metro No. 2 Line began in November 1999. The second Metro line is approximately 23km long and has 20 stations with a total cost of over RMB11.3 billion (about $1.36 billion). The opening on December 29 put into operation No. 2 Line's first section of 9.1km and nine stations. The second section to be completed by June 28, 2003 will add another 9.1km and 7 stations.
While domestic vendors captured over 70% of Guangzhou Metro No. 2 Line's procurement, several U.S. companies were successful in providing equipment to No. 2 Line. For instance, Otis Elevator Co. had a major contract to provide platform screen doors (PSD). Guangzhou Metro No.2 Line is the first Metro system in China to install PSDs. CS Guangzhou provided advocacy support to Otis in securing the PSD project.
For more information on CS Guangzhou and the Guangzhou consular region, visit our website at http://www.buyusa.gov/china/en/guangzhou.html.
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, 2003. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.
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