U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 147
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: Matthew Gettman
Contributors: CS Guangzhou,Xi Xianmin, Peggy Zhao, Sun Shuyu, Pingping Xie, Michael Mei
News Briefs
In addition to the article summaries CS Beijing provides , 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 Guangzhou post.
1. The World Bank Plans RMB 8 Billion (USD 1 Billion) Loans to Treat the Pearl River
2. China's Online Gaming Witnesses Explosive Growth
3. Industrial production in China sustained growth in October
4. Food Safety Mark Starts to be Used next year
5. Steel Frame Housing Market Develops in China
6. China is redefining its energy strategy
1.The World Bank Plans RMB 8 Billion (USD 1 Billion) Loans to Treat the Pearl River
According to the Guangdong Provincial World Bank Loans Office, the World Bank is considering loans totaling RMB 8 billion (USD 1 billion) to treat the Pearl River over the next eight years.
Since 2001, with approval from China's State Planning Commission and the Ministry of Finance, the World Bank has studied the urban environment in the Pearl River Delta. Based on this study, the World Bank has plans to provide loans up to RMB 8 billion (USD 1 billion) to treat the Pearl River. The pre-evaluation of Guangzhou has been completed; evaluation on Shenzhen will be completed soon.
The Guangzhou projects, to be financed by loans up to RMB1.6 billion (USD 200 million), will include the construction of a 300 km-long urban sewage pipe system, a sewage treatment facility with daily treatment capacity of 200,000 tons, and the first-phase of a hazardous solid waste treatment center with a capacity of 150,000 cubic meters. Shenzhen will also receive loans amounting to a total of RMB 2 billion (USD 250 million), mainly for water treatment and supply.
(Source: Nanfang Daily, 11/22/2003 - Translated by FCS Guangzhou)
2. China's Online Gaming Witnesses Explosive Growth
According to a recent report in the China Business Times, the online gaming market witnessed explosive growth from RMB 300 million (USD 37 million) in 2002 to an estimated RMB 1 billion (USD 120 million) in 2003. This market is expected to increase up to RMB 8.34 billion (USD 1.04 billion) by 2006, with a compound growth rate of 92.6% between 2001 and 2006.
According to another source, the China Center of Information Industry Development (CCID) estimates the 2003 market size for on-line gaming industry is RMB 1.76 billion (USD 220 million), increasing 73% over the previous year. CCID predicts the market in 2004 will be RMB 3.5 billion (USD 430 million) and RMB 6.2 billion (USD 770 million) by 2005, increasing 78%. According to CCID statistics, the number of on-line game users increased to 14 million by August 2003. The figure is expected to increase to 19 million by end of 2003, 32 million by 2004, and 48 million by 2005, increases year-on-year of 72% and 51%, respectively.
There are now 113 on-line games which have been approved to run in China, according to a report published by the Science and Technology Daily. Most of the games are imported from oveaseas, particularly South Korea and Japan.
The big margin growth of the on-line gaming industry will also promote the growth of many related industries, including: telecommunications, computer hardware and software, media and publishing.
(Source: China Business Times, 10/22/2003; Science and Technology Daily – 11/13/2003 - Translated by Xi Xianmin)
3.Industrial production in China sustained growth in October
According to the National Statistics Bureau, industrial enterprises added values above norms, reaching RMB 363.2 billion (US$45.4 billion), representing an increase of 17.2%, 0.9 percentage points higher than the previous month's increase, which is also faster than the first three quarters' average monthly increase of 16.6%. From January-October, 2003, China's industrial added value amounted to RMB 3.268 trillion (US$396 billion) with an increase of 16.7%.
In October, industrial production saw rapid growth in both light and heavy industries.
(Sources: China Electronic and Machinery News,11/12/2003 - Translated Peggy Zhao)
4. Food Safety Mark Starts to be Used next year
At a recent press conference, Mr. Wang Qinping, Deputy Commissioner of China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) revealed that beginning January 1, 2004, China will officially start to use Quality Safety (QS) marks for its food quality and safety. Production and processing will not be permitted without food production licenses for the following 5 categories of food: rice, flower, vegetable oil, soybean sauce, and vinegar. Any products from these 5 categories without a QS mark will not be allowed to be removed from the factories, nor sold into the marketplace.
Starting January 1, 2004, all enterprises granted food production licenses will be publicly promoted via AQSIQ related websites.
This food quality and safety program includes three dimensions: first, to implement the inspection system, i.e. the food production licencing system that is necessary to guarantee the quality and safety for food manufacturers and food processing firms; second, implement compulsory inspection system to foods; and, third, implement the market entry permit system to food in conformity with quality and safety requirments. A QS mark must be placed onto foods that meet the inspection requirements. To date, the department under AQSIQ responsible for these QS marks has issued food licenses to 11260 different manufacturers.
(Source: China Medical newspaper, 11/15/2003 - Translated by Sun Shuyu)
5. Steel Frame Housing Market Develops in China
China recently witnessed its first large development of upscale " villa" class homes incorporating steel frame construction. The Napa Valley development, just north and west of Beijing, includes very posh homes in the 3,500-4,000 square foot range, incorporating the very best interior design features and amenities. Steel frame technology was used throughout the development, making Napa Valley a steel frame demonstration project for China.
China is actively seeking alternative building technologies and products, as they seek to replace traditional cement block construction with modern, energy efficient, cheaper building methods. As China has limited timber resources and traditional Chinese building methods are expensive and energy inefficient, steel frame systems are of great interest to both government planners and private developers.
(Translated by Xie Pingping)
6. China is redefining its energy strategy
During the three-day session of China's Energy Strategy and Reform International Seminar as part of the China Development Forum held in Beijing from November 15 to 17, 2003, more than 200 Chinese and foreign experts, entrepreneurs and government officials got together and explored China’s energy problems and corresponding strategies to solve them.
According to some of the forum's participants, over the next two years, rather than only focus on securing enough resources to sustain economic development, China’s energy policy should elevate the importance of conservation and environmental protection. Such a transformation would be challenging and expansive, requiring billions of dollars of investment to upgrade oil refineries, install sulfur-removal facilities in power plants, improve the efficiency of automobiles, and offer tax rebates to support clean energy.
Chen Qingtai, Deputy Director of the Development Research Center under the State Council, said China’s economy has relied too heavily on huge energy consumption, which cannot be sustained due to dwindling domestic energy supplies and increased pollution. He said the government should optimize the energy consumption structure to increase the proportion of clean fuels such as natural gas and renewable energy sources
China plans to quadruple its economy by 2020. If it continues on the traditional growth path, energy consumption in China will surge to 3.3 billion tons of standard coal by 2020 from the current 1.4 billion tons. This means China will have to import over 60 percent of the oil we consume. If appropriate policies are adopted to improve conservation and optimize the consumption mix, China will keep its consumption at 2.5 billion tons of standard coal by 2020 and reduce the proportion of coal from its current 67 percent of the energy mix to 60 percent.
It is generally agreed that there is great potential for China to increase energy efficiency through the adoption of proper technology and economic incentives for energy conservation and for the application of clean energy.
(Sources: China Electric Power News,11/18/2003 - Translated by Michael Mei)
Embassy News
Preparing for his first visit to the United States as China's top economic official, Premier Wen Jiabao faces a full slate of difficult issues - from mounting trade tensions to the potentially explosive question of Taiwan.
Wen, whose four-day trip begins Dec. 7, will meet President Bush in Washington and visit New York and Boston, Foreign Ministry spokesman Liu Jianchao said Tuesday.
Among the most pressing points is Taiwan, a "very core and sensitive issue between the two countries," Liu said.
He did not say whether Wen would bring up tensions over China's rising trade surplus. But the subject seems inevitable, given the increasing rancor of the spat as Washington pushes Beijing to move faster in meeting its market-opening commitments to the World Trade Organization.
U.S. officials have warned that failure to act could jeopardize Beijing's access to American markets. They also want China to ease controls on its currency and say its fixed exchange rate is unfairly low, hurting U.S. companies trying to compete with Chinese exports.
Apparently trying to mollify American anger, Wen said in an interview published Sunday in The Washington Post that his country does not want "excessive and long-term" trade surpluses.
"We are willing to open up our markets to buy more from the United States and other countries," he was quoted as saying.
The United States recently imposed quotas on Chinese textiles amid complaints about China's trade surplus, which hit $103 billion last year and could top $130 billion in 2003.
China last week threatened to hike import duties on some U.S. products after a World Trade Organization ruling that Washington's tariffs on steel are illegal. It also said it was delaying the departure of a U.S.-bound official trade delegation that was to follow up a $6 billion buying spree by a similar delegation.
Beijing had been hoping to use the shopping expeditions to counter growing U.S. discontent.
While the Bush administration might use Wen's visit to press for movement on trade, China publicly worries more about Taiwan - claimed by Beijing as its own territory.
Chinese authorities accuse Taiwan's president, Chen Shui-bian, of plotting to declare formal independence for the island, which has been ruled separately since 1949. They have threatened repeatedly to attack if the island's democratically elected leadership takes such a step.
In his comments to the Post, Wen warned Washington against sending "mixed signals" about its stance on Taiwanese independence.
Washington cut formal ties with Taiwan when it recognized the communist Beijing government in 1979 but is still the island's unofficial ally and biggest arms supplier.
Chinese officials complained when Chen stopped in New York to speak to supporters en route to Panama to attend centenary celebrations for the country's independence.
In Panama, Chen shook hands with U.S. Secretary of State Colin Powell, who became the highest-ranking American official known to have spoken with a Taiwanese president since 1979.
The action angered China, which rejects any gestures that appear to treat Taiwan as a sovereign nation.
"The Chinese leaders, people from both the mainland and Taiwan are not satisfied with the U.S. because its attitude toward the Taiwan issue is vague and the signals are confusing," said Xu Bodong, director of the Institute of Taiwan at Beijing Union University.
"The U.S. received Chen Shui-bian's visit at a high level and allowed him to deliver speeches on Taiwan independence. What the U.S. did is irresponsible and greatly inspired the Taiwan separatist, Xu said.
Washington should "realize the seriousness and danger of the issue of Taiwan independence," Xu said. "Otherwise, Sino-U.S. relations may go backwards."
A Chinese official in charge of Taiwan policy was quoted by state media last week as saying, "Taiwan independence means war" - one of the mainland's strongest statements in years on the issue.
Speaking to the Post, Wen said Washington must recognize the danger of Chen's "separatist agenda" and oppose any effort toward formal independence.
"I hope the leaders of the two countries fully communicate with each other," Xu said, and "do not let the Taiwan issue to be the gunpowder to the regional security."
(Source: Audra Ang, The Associated Press, posted November 26, 2003)
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.
CS Guangzhou Participates in the 5th (Guangzhou) International Environmental Protection Exhibition
The 5th (Guangzhou) International Environmental Protection Exhibition was held during November 19-22 in Guangzhou. The exhibition is considered a top trade show in China on environmental protection products. CS Guangzhou teamed up with AmCham Guangdongto organize a joint program during the exhibition to promote U.S. technologies and products, including a joint booth and a seminar on environmental technologies. Three U.S. companies participated in the show, including Earth Tech, Global Water Group, and Hach Company. A subsidiary of Tyco International, Earth Tech is building Xi Lang Wastewater Treatment Plant in Guangzhou. It is the first BOT wastewater treatment project in China with a total investment of RMB 960 million (USD120 million). Speakers at the half-day seminar included representatives from the U.S. Environmental Protection Agency, Earth Tech, Global Water, GE Power Systems, etc. Topics covered ranged from SO2 emission control policies in the U.S. andnew water purification systems to wastewater treatment projects in China. The program proved to be an excellent opportunity for U.S. environmental companies to market their products to potential end-users, agents and partners in China.
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.