U.S Commercial Service - American Embassy, Beijing
Vol. 2 No. 170
The China Commercial Brief is a biweekly publication featuring 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: Matt Gettman
Contributors: CS Shanghai & Chengdu, Xu Ye, Wang Yi, Mei Baochun, Xie Pingping, Qiu Jing, Cao Shujuan, Bai Ying, Wan Xiaolei, Shen Yan, Cao Yue, Ling Wang
News Briefs
In addition to the article summaries provided by CS Beijing, 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. This week we are pleased to feature a contribution from our Shanghai & Chengdu post.
1. Resolving Power Woes - China will focus on efficient energy usage and cut coal use
2. Dow Jones’ New Service - China Capital Markets Service (CCMS)
3. Beijing to begin water conservation campaign at public places
4. Beijing will close all township-owned coalmines
5. Capital to go all out to build rail system
6. China has large shortage in operators of digitally controlled machine tools
7. China’s Robot Market Grows Rapidly
8. As a result of WTO, China's Five IT Sales Channels are Prospering
9. China opens Logistics Industry to Foreign Investors
10. Chengdu to Construct Biggest Trash-Fired Power Station
11. Mandatory Requirement to Install Industrial On-Line Monitoring Equipment in Sichuan
12. State-owned Enterprises receive more profit
13. Five More Cities Open Up RMB Services to Foreign Banks
14. China To Make More Efforts on Food Safety Issues
15. Great Market Potentials for Pyridine Compound
1. Resolving Power Woes - China will Focus on Efficient energy usage and cut coal use
China will try to relieve the pressure of its huge power industry on its resources and environment while increasing its power generation to meet growing demand, officials with the country's top planning body said in Shanghai yesterday. The focus will be on enhancing energy usage efficiency with high technology and reducing coal use, and using clean-burning fuel while building a healthy power market.
"Limited energy resources hinder the development of the power industry," said Zhang Guobao, Vice Chairman of China National Development and Reform Commission, on the opening day of the 15th Conference of the Electric Power Supply Industry. "The conflict between the increasing demand for power and resources, and the environment, is escalating," Zhang said before more than 2,000 delegates from 37 countries and regions around the world who are attending the five-day biennial conference.
The ongoing power shortages since late 2002 have spurred massive construction of power infrastructure around the country. But some projects started without the approval of the authorities. This year, generating plants with a combined capacity of about 260 million kilowatts are under construction. But most of them are small ones -- less than 135,000 kilowatts of capacity -- and are dependant on coal, according to the Commission's statistics. The small generators are not efficient in coal utilization, and they pollute the environment as well.
"It seems every province wants to build power plants within its territory, and the big power companies fight against one another for control of resources," said Zhang, referring to the condition as "in disorder."
Based on the current speed of construction, the country will have generators of 2.4 billion kw by 2020, and around 5 billion tons of coal will be consumed each year. The result would be more acid rain. The massive exploitation of coal would cause land sinkage in the coal mine areas. Huge amounts of fresh water, a limited resource in the country, would be used in the process of power generation instead of for drinking, said Zhang.
The country will encourage construction of big generators that are more efficient in coal use, according to Zhang.
(Source:Shanghai Daily, 10/19/2004, Edited by CS Shanghai)
2.Dow Jones’ New Service - China Capital Markets Service (CCMS)
Dow Jones launched the China Capital Markets Service (CCMS), a Chinese-language service that provides real-time information and analysis to investors and traders on China's money and bond markets.
CCMS will analyze China’s money and financial policy, report economic information related to the Chinese market and provide information on money matters and financial policy on international markets.
(Source: China Economic Times, 11/09/2004 -Translated by Xu Ye)
3. Beijing to begin water conservation campaign at public places
The Beijing government is planning to put water-saving utilities into full use at public places like government agencies, schools, hospitals, hotels and shopping centers within the next two years. The water-saving plan will also affect local households. It will take four years for the Beijing government to guide local residents to change into water-saving utilities, thus increasing the usage rate by 10 per cent each year.
Meanwhile, related government agencies will take strict measures to ensure the authenticity of the water conservation certification for the water-using utilities, and issue the Beijing Water-saving Utilities List and the List of water-using utilities to be strictly eliminated in Beijing.
(Source: China Environmental News, 11/9/2004, - Translated by Wang Yi)
4. Beijing will close all township-owned coalmines
Beijing will close all township- owned coalmines by 2010, in attempt to reorganize the coal industry and improve safety. Some local township coalmines will be regrouped to form larger scale coalmines that can guarantee production safety. At the same time, Beijing encourages Beijing Coalmine Group to establish new coal production base out of Beijing.
Beijing's coal industry accounts for less than 1 percent of local GDP, but death toll from the industry accounts for more than 25 percent of work- related causalities reported in Beijing. It is due to complicated geological structure that adds difficulties and danger to mining.
Excessive coal mining does not fall in line with the overall development of Beijing, said Mr. Chen Huaiwei, a leader of Beijing Development and Reform Commission. According to the future economic development strategy, Beijing will focus on the development of modern manufacturing, which includes auto production, the electronics industry, the petrochemical industry, equipment manufacturing and the pharmaceuticals industry.
Currently, Beijing has 213 coalmines with a combined annual output of 16 million tons. Townships coalmines generate half of the coal output. According to Mr. Chen, Beijing's coal output would be reduced to 9 million tons by the end of 2007. By then, the number of township coalmines would drop to 60, or one-third of the current figure.
(Source: China Mining News, 10/26/2004 - Translated by Mei Baochun)
5.Capital to go all out to build rail system
The Beijing Municipal Commission of Transportation is planning to build more rails, a new subway loop line is among the proposals.
The rail development plans call for 16 subway lines, six light rail lines and six suburban railways. Among the 16 subway lines, two would connect to set up another loop that would run under the Zhongguancun High-tech Park, the central business district and the Olympic Park, where a new Beijing city center is taking shape.
The municipal government plans to invest more than USD3.6 billion ( RMB 30 billion ) in the þNew Beijing Transportation System þto relieve traffic.
Subway lines 4, 5 and 10 as well as an Olympic branch line, all under construction now, are expected to open to traffic by 2008. When completed, the total length of rails of the city will reach about 300 kilometers, forming the preliminary framework of a metro network.
(Source: China Daily, 11/2/2004 – Translated by Xie Pingping)
6. China has large shortage in operators of digitally controlled machine tools
China has a shortfall of more than 600,000 operators of numerical control machine tools, who are much in demand with the country's fast growing economy, according to the organizing committee of the first China Numerical Control Competition (CNCC 2004) that ended on November 24.
A senior official with the Ministry of Labor and Social Security (MOLSS) said workers with numerical control skills remain scarce, as the application of the technology has just been popularized in China's manufacturing sector.
Operators of numerical control machine tools, who combine theoretical knowledge with practical technical skills, account for less than 5 percent of the staff in China's manufacturing businesses.
Aiming to better cultivate skilled workers, CNCC 2004 was jointly sponsored by six governmental agencies, including the MOLSS, the Ministry of Education, and the Ministry of Science and Technology.
(Source: CEI news, 11/25/2004 – Translated by Qiu Jing)
7. China’s Robot Market Grows Rapidly
China’s robot market has more and more potential. It is estimated that the number of robots in China will be 7,600 by 2005, 17,300 by 2010 and over 100,000 by 2015.
In terms of the robots sales in China, ABB, which occupies 35% of Chinese market, sold 600 robots this year versus a total of mere 2,000 during the past nine years.
Currently, there are two major types of robots: industrial robots used for manufacturing, such as welding, assembling, spraying and moving and special robots used for non-manufacturing like underwater, agricultural, medical, military and entertainment robots.
So far China-made robots occupies 1/5 of the market share leaving the rest imported from more than 40 countries including Japan, U.S., Sweden, Russia etc.
(Source: China Business Times, 11/18/2004– Translated by Xu Ye)
8. As a result of WTO, China's Five IT Sales Channels are Prospering
On December 11, 2004, China's accession to the WTO will enter its fourth year. In accordance with the WTO Information Technology Agreement, China has already cancelled two thirds of its import tariffs on the information technology products. By January 1, 2005, China will reduce to zero the tariff on the imports of information technology products. As a result, the information technology market for imported products continues grow. Sales channels for imported IT products are expected to receive a boost on January 1, 2005, when China eliminates restrictions on foreign-owned retail operations. Accordingly, some experts predict that there will be five prime channels in which IT products will be sold in China: 1) Private Chinese chain stores such as GuoMei and SuNing corporations, 2) Direct from electronic manufactures, 3) Traditional state-owned enterprises such as Yihaojia corporation, 4) Foreign invested electronic products retail stores, and 5) Comprehensive retail chain stores such as Walmart and Carefour. Within the retail sales channel, the following are the most prominent current sales channels: 1) computer chain stores, 2) independently-owned computer stores, 3) direct sales, 4) electronic home appliance stores, 5) department stores, and 6) supermarkets. On-line shopping, although a growing channel, is still in its relative infancy in China, but is expected to experience exponential growth in the years to come.
(Sources: China Information World 10/18/2004 and 11/22/2004 – Translated by Cao Shujuan)
9. China Opens Logistics Industry to Foreign Investors
According to Mr. Zhang Zhigang, China’s Vice Commerce Minister, China will fully open its logistic industry to the foreign investment by the end of 2004.
In compliance with its WTO commitment, China will abolish the territory and share limits on the foreign investment in the cargo transport, release, wholesales, retail and distribution by the end of 2004.
In preparation of opening up the logistics market to foreign investors, China started trial joint ventures in logistic industry in eight provinces and municipalities in 2002, including Jiangsu, Zhejiang, Guangdong, Beijing, Tianjin, Chongqing, Shanghai and Shenzhen. By the end of 2004, China has set up more than 20 pilot logistic joint ventures.
According to China Logistics Information Center, China’s logistics market reached USD 74 billion (RMB 612 billion) in 2003, increasing 12 percent over the previous year. By the end of 2004, China has 730,000 logistics companies.
(Source: China Communication News, 11/24/2004 – Translated by Bai Ying)
10. Chengdu to Construct Biggest Trash-Fired Power Station
On December 2, 2004, Chengdu Municipal Development and Reform Commission announced the city would invite bidders to bid on a municipal trash fired power station project in Luodai Township, Chengdu. When the bid is awarded, the bidder will construct the power station project as a BOT project. The Chengdu Municipal Government will assist the bidder in purchasing the organic garbage. This project will be the biggest trash treatment project in Chengdu.
This trash-fired power station is located at Changtie Village, Luodai Township in Chengdu. The planned area is 7.06 hectare. When it is completed, the capacity for trash treatment will be 1200 ton per day or 400,000 ton per year. The total investment of the project is about USD 60 million (RMB 500 million), and the construction period will be 24 months.
(Sources: Chengdu Commercial News 12/03/2004, Translated by CS Chengdu)
11.Mandatory Requirement to Install Industrial On-Line Monitoring Equipment in Sichuan
Up to the end of November 2004, 376 enterprises in Sichuan have installed on-line monitoring equipment. Among which, 160 enterprises are connected to the network.
Sichuan Municipal Government issued an order to mandate that all enterprises that discharges pollutant emission install on-line monitoring equipment. In order to encourage local enterprises to meet the requirement, Sichuan Municipal Government decided to subsidize USD 6,000 (RMB 50, 000) for each on-line monitoring equipment installation. The subsidization will be allocated after installation and inspection.
(Sources: China Environment News, 11/30/2004 – Translated by Wan Xiaolei)
12.State-owned Enterprises receive more profit
China’s big state-owned enterprises saw a sharp profit growth in the first three quarters of the year thanks to the strong performance of oil, power and transportation sectors.
474 key stated-owned enterprise, considered as the flagships of their industries, earned profits of USD 55.66 billion (RMB 460 billion) in the year’s first nice months, a 44.9 per cent increase over the same period last year.
The growth rate was 6.3 per cent higher than that of the first six months, per the statistics from the State-owned Assets Supervision and Administration Commission.
(Source: Beijing Daily, 11/08/2004 - Translated by Shen Yan)
13. Five More Cities Open Up RMB Services to Foreign Banks
Beginning December 1, 2004, foreign banks can apply to conduct RMB business with Chinese enterprises in five more cities in China, i.e., Beijing, Kunming, Xiamen, Xi’an and Shenyang. Therefore, the total number of cities that foreign banks can conduct RMB business has increased from 13 to 18.
On the first day of the opening-up, more than half of the foreign banks in Beijing submitted their written or oral application for conducting RMB business. This means that the foreign banks can conduct all the banking services, except RMB business, with individual citizens.
Through October 2004, there are a total of 24 foreign bank branches and 92 foreign financial institutions’ representative offices in Beijing. Foreign banks’ total assets amounts to US$6.4 billion, an increase of 29.46% comparing with the last year.
(Source: Beijing Business Today, 12/02/2004 - Translated by Peng Aiqun)
14.China To Make More Efforts on Food Safety Issues
In 2003 the output value of the food industry in China totaled USD 156 billion (RMB 1.29 trillion), about one fifth higher than the previous year. In the first half year in 2003, food industry reached an output value of nearly USD 85.9 billion (RMB 710 billion), a 20 percent increase over the same period in 2002.
Faced with the soaring food industry in China, the government pays more and more attention to the food safety issue.
Global Food Safety (Beijing) Forum was held in Beijing on November 18-19, 2004. Jointly sponsored by the Development Research Center of the State Council, the Ministry of Science and Technology (MOST), the Ministry of Commerce (MOFCOM), and the Canada International Development Agency, this forum focused on the theme to promote food safety technological innovation and set up an effective food safety system showing the effort China is making to improve the current situation in food safety field.
The forum mainly studied and addressed the following subjects:
to establish and polish the national food safety strategies;
to meet the new challenge on global food safety issues;
to promote technological innovation in food safety industry;
to polish food safety standards and promote international trade in food industry;
to develop food safety management system and related regulations;
to reinforce the international cooperation in food safety.
In addition, a thorough report named Study on China’s National Food Safety Strategy was published in November, illustrating related food safety topics in China, such as the current situation, existing problems, standards system, regulations.
(Source: China Food Newspaper, 11/19/2004 - Translated by Yue Cao)
15. Great Market Potentials for Pyridine Compound
Pyridine compound is used as a very important material in industry of fine chemicals. The main application will be in industries like medical intermediate, agricultural pesticide, feed additives, etc. In global market, U.S. European countries, Japan and China are major pyridine compound producers. The total production of those regions accounts for 86.75% of the world total production.
It is estimated that China’s pyridine compound production capacity will reach 20,000 tons per year in 2010. In 2003, the actual consumption of pyridine compound was 10,540 tons. For the time being, 50% of the total pyridine compound consumption is widely used in producing agricultural chemicals, 20% in food or feed additives, 15% in household chemicals, 10% in medical intermediate, 5% in dye stuff and other intermediates.
At present, demand of pyridine compound in China will have a large increase. The following reasons indicate why there is a great potential.
Great demand from compound fiber and rubber production industry because high-end adhesives: butadiene-vinylpyridine latex relies on import from our countries and there is a huge demand in China
With the development of feed industry, there is an increase in demand of nicotinic acid and niacinamide. The raw material of producing nicotinic acid and niacinamide is pyridine compound
Huge demand of nicotinic acid and niacinamide also comes from medical and food industry because the domestic production capacity is very low and the market in China is promising. The raw material of producing those is þmethylpiridine.
According to the forecast, the total consumption of pyridine compound in China in 2005 will reach 20,000 tons and in 2010 will be 34,000 tons.
(Source: China Chemical News, Vol. 47, 12/6/2004 - Translated by Cindy Wang)
Consulate News: Shanghai & Chengdu
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 Shanghai & Chengdu.
Shanghai has never been so busy! The entire major and many minor hotels have been at 100% occupancy for the entire months of October and November, with no let up in sight. Flights to and from Shanghai are near capacity. 1000s of new cars are added to the streets every month. All this means booming restaurants, packed malls, and, on many business people, smiling faces. International groups are pouring in: Shanghai Formula One kicked off the autumn season with a very successful first race ever in China and soon thereafter the NBA brought about 1000 people for an exhibition game that featured Houston Rockets star (and Shanghai native) Yao Ming. The large number of high-level political visitors have kept Shanghai officials busy, and an unending parade of tourists are keeping the markets full, while the buyers and sellers at the numerous large trade shows at this time of year are leading to longer waits at upscale restaurants. That and all the new cars are increasing traffic woes. If you are a big-city person, this is the place. If not, brace yourself!
For more information on CS Shanghai and the Shanghai consular region, visit our website at http://www.buyusa.gov/china/en/shanghai.html
On November 10-12, 2004, the U.S. Public Transportation Trade Mission Delegation visited Chongqing and Chengdu. Organized by Federal Transit Administration of the United States Department of Transportation (FTA) and the American Public Transportation Association(APTA), this delegation included government and industry executives from FTA, APTA, Allison Transmission, Cubic Transportation Systems, Inc, Impulse NC, Inc and Wabtec Passenger Transit Group that provide many products and services essential to providing good public transportation including: vehicle equipment, traction power, transmissions, electric drives and automatic fare collection equipment. PCO Denny Barnes, CA Cui Shiyang and CA Chen Ling helped arrange the visit to Chongqing and Chengdu.
For more information on CS Chengdu and the Chengdu consular region, visit our website at http://www.buyusa.gov/china/en/Chengdu.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, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.