U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 141

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 Shenyang,Shen yan, Michael Mei, Sun shuyu, Bai Ying, Michael Wang

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 Shenyang post.

1.Campaign to Revive Northeast Economy to be Unveiled Soon
2.Chinese Government Encourages Higher Imports
3.Chinese Government Puts Brakes on Electrolytic Aluminum Expansion
4.China Revised GLP and GCP
5.Beijing Sees Increased Automotive Parts Imports
6.USDOC and AQSIQ to Hold 3rd Roundtable on ICT Standards and Accreditation

1.Campaign to Revive Northeast Economy to be Unveiled Soon

During an inspection tour of the Northeast region from August 1-3, 2003, Premier Wen Jiabao gave the keynote address at a forum on revitalization of the regional economy. He stated that "Revitalizing old industrial bases is not only a pressing need for the Northeast, but it is an important strategic step to achieve coordinated national economic and social development." Premier Wen indicated that the "Reinvigorate the Northeast" policy will receive strong Central Government support, similar to the effort that launched the "Develop the West" campaign in 2000. If financial support is forthcoming for the Northeast regional campaign, U.S. equipment manufacturers may find their business prospects will improve for increased exports early next year.

The new policy is an important adjustment of the Central Government’s strategy for addressing the economic consequences of state-owned enterprise (SOE) reform, rising unemployment, and labor unrest relating to the inability of some SOEs to pay pensions and unemployment benefits after factory closures. At the end of June, while the urban unemployment rate in China is about 4.2 percent (7.95 million persons ), unemployment in Liaoning is much higher, and reported to be 7.8 percent. During this same time, unemployment in Helongjiang reportedly reached 5.1 percent by the end of June this year.

The extent to which the Central Government is prepared to commit political and financial resources to the "Rejuvenate the Northeast" campaign remains unclear. The State Council is considering the possibility of using Central Government funds to cover loans that have not been repaid by SOEs in the Northeast. With liabilities exceeding RMB 400 billion, it is unlikely that nearly bankrupt SOEs could qualify for loans based upon commercial banking criteria. More details will be forthcoming after the second session of the 16th Chinese Communist Party Congress to be held in October of this year.

At the regional economic forum held in Changchun, Jilin Province, on 3 August, Premier Wen enumerated several policy priorities to support economic rejuvenation of the Northeast, but the remarks were vague about funding sources. The priorities are: strengthen technical renovation of enterprises; coordinate sustainable development; vigorously support construction of an effective employment and social security system; accelerate development of technical professions; and, move forward with reform and opening.

"Reform and opening" refers to the policy launched by Deng Xiaoping in l978 to open China to the West through international trade and foreign investment. The Northeast region lags significantly behind other areas in southern China and along China's eastern coast. Nevertheless, regional trade and investment trends indicate that Liaoning is on the path toward becoming the fourth great coastal area to draw in direct foreign investment and intensify international ties through trade. In 2002, Liaoning’s imports from the United States totalled USD 729 million a 37.5% increase over 2001's USD 530 million total. The province’s total trade value reached USD 21.74 billion in 2002, an increase of 9.8% over 2001.
(Source: FCS Shenyang)

2. Chinese Government Encourages Higher Imports

Chinese Minister of Commerce Lu Fu Yuan encourages Chinese domestic companies to increase their imports from overseas. The policy turnaround is a result of China’s ample foreign-exchange reserves and the Chinese Government’s desire to promote world economic growth.

Minister Lu made the remarks at a press conference at the conclusion of the fifth Asia-Europe Economic Ministers’ Meeting. "China will import USD1 trillion in the next three years and in 20 years will become the world’s second largest purchaser, behind only the United States." Minster Lu said.

Minister Lu stressed that the Chinese Government encourages domestic companies to increase imports as well as expand exports because increased imports are expected to also fuel domestic economic growth and make a contribution towards world economic growth.

Minister Lu indicated he is not worried about the 44% faster-than-exports growth in imports in the first half of this year, which China has not seen for years since the 1997 Asian Financial crisis. "The rapid growth in imports is mainly driven by robust domestic economic growth. It is a natural result of high economic growth." he said.
(Source: Beijing Youth Daily, 07/25/03 - Translated by Shen Yan)

3.Chinese Government Puts Brakes on Electrolytic Aluminum Expansion

China, already the top electrolytic aluminum producer in the world with an annual capacity of 5.1 million tons, would likely have doubled its capacity if the projects under construction or those to be launched in the next few years come to fruition. Basic economics could show that output will far exceed market demand. As the cost of electricity continues to climb and prices of raw materials continue to soar, most of the electrolytic aluminum plants were expected to lose money in the next few years.

On August 18, the Chinese Government put the brakes on the feverish expansion of electrolytic aluminum production by stopping the approval of any projects to expand or construct electrolytic aluminum plants.

An official from the National Development and Reform Commission announced 5 key points this policy change.

First, the Chinese Government would not allow new electrolytic aluminum projects in any form to be started. Proposed foreign-invested electrolytic aluminum projects would also undergo strict scrutiny according to these procedures.

Second, supervision would be strengthened and financial risk would be minimized. The related national financial management departments and commercial banks are required to impose strict scrutiny procedures upon the approval of bank loans to new electrolytic aluminum projects. Bank loans and funds raised from the security market could not be used for the construction of electrolytic aluminum plants without Government approval.

Third, the Chinese environmental protection agencies should strictly implement environmental protection laws and regulations and close the poorly designed soderberg cell electrolytic aluminum plants according to relevant regulations.

Fourth, associations and consulting companies’ professional function is will be unrestricted. By strengthening market research and information releasing to this industry, these enterprises will be hopefully make correct investment decisions.

Fifth, by increasing the capacity of existing electrolytic aluminum plants and encouraging the regrouping of the existing electrolytic aluminum companies of merger or acquisition, the sector can improve efficiency and international competitiveness.
(Source: China Mining News, 08/21/2003 - Translated by Michael Mei)

4.China Revised GLP and GCP

The State Food and Drug Administration (SFDA) issued the newly revised regulations on Standards and Norms for Clinical Drug Research Quality Control (formerly known as GLP) and the Quality Control Standard for Clinical Drug Tests (formerly known as GCP). The revised regulations will be come effective on September 1, 2003.

The former GLP regulation was issued in December of 1993 and first revised in October of 1999. The former GCP regulation was issued in March of 1993 and first revised in September of 1999. Both regulations have been revised this time on the basis of wide solicited opinions from SFDA at provincial levels, research institutions, and industry experts and by reference using WHO principles and those from developed countries. Although changes have been made to the terms and wording and additional content has been added, the revised regulations are said to be more in compliance with international practice.
(Source: China Medical Newspaper, 08/19/2003 & 8/21/2003 - Translated by Sun Shuyu)

5.Beijing Sees Increased Automotive Parts Imports

According to the statistics from Beijing Customs, Beijing imported USD157 million automotive parts, an increase of over 400% from last year.

North Korea, Japan, Germany and the U.S. are four major automotive parts exporting countries represented in Beijing, accounting for 59.2%, 26.5%, 6.05% and 6.5% respectively of the total import volumes. Import from North Korea, Japan and Germany have increased greatly from January to July of this year. The import value of automotive parts from North Korea, Japan and Germany is USD 93.08 million, USD 41.68 million and USD 9.52 million respectively. The import volume of North Korean automotive parts from January to July, 2003 increased 180,000% from the same period last year.

Beijing Jeep Corporation Ltd. and Beijing Hyundai Motor Company are two the biggest importers of automotive parts. From January to July, 2003, Beijing Jeep Corporation Ltd. imported USD 44.01 million of automotive parts, accounting for 28% of Beijing's total import volume. Beijing Hyundai Motor Company imported a total of USD47 million, accounting for 30.5% of Beijing's total import volume.

Transmissions and automobile body parts are two major imports items. Auto body parts and transmission imports reached USD 66.70 million and USD 21 million respectively in July 2003.

Joint Ventures and Foreign Wholly Owned automotive manufacturers dramatically increased their automotive parts imports from January to July 2003. The import value from these two types of enterprises is USD 117 million and USD 23 million respectively, an increase of 600% for Joint Ventures and 240,000% for Foreign Wholly Owned automotive companies.
(Source: China Auto News, 08/26/2003 - Translated by Bai Ying)

6. USDOC and AQSIQ to Hold the 3rd Roundtable on ICT Standards and
Accreditation

The U.S. Department of Commerce (USDOC) and China’s State General Administration for Quality Supervision, Inspection, and Quarantine(AQSIQ) will co-organize a seminar on information and communications technologies (ICT) standards development, regulation, and accreditation in Beijing on September 19, 2003.The forthcoming event is the third such seminar organized by USDOC and AQSIQ. Senior U.S. and Chinese Government officials will participate in the seminar. U.S. information and communication company executives are welcome to attend. For more information, please contact Michael Wang, Senior Commercial
Specialist at the Foreign Commercial Service of the U.S. Embassy at telephone: (86-10) 8529-6655 ext. 865, fax: (86-10) 8529-6559 and email: jianhong.wang@mail.doc.gov
(Source: Foreign Commercial Service Beijing - Translated by Michael Wang)

Embassy News:

FCS hosted Human Rights Training on August 25 in Beijing, including all China FCS officers and several U.S. Embassy Beijing ECON officers. The training, which focused on Human Rights, Rule of Law and Corporate Stewardship, was followed by a one-day FCS China Officers Conference in August 26, coinciding with the FCS China IT Managers Conference, August 25-26 led by our systems administrators, webmasters and librarians from China, including AIT and Hong Kong. The conferences resulted in productive dialogue on improved communication and coordination among posts, reiterating the SCO Allen’s goals for FCS China and to better improve our customer services. The IT conference foremost resulted in a new vision for the China website to become more interactive and promote greater outreach to our Chinese clients.

Consulate News: Shenyang

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 Shenyang.

CS Shenyang will participate in the China International Equipment Manufacturing Exposition (CIEME) on September 6, 2003. Post will exhibit equipment catalogs that were featured last year in the Commerce Department’s New Product Catalog Exhibition. This second showing will reinforce business contacts made last year, while introducing a new group of prospective sales agents and distributors to American manufacturing equipment.

Ambassador Clark T. Randt, Jr. visited Shenyang on August 14, 2003. He met with non-government organizations, American citizens, and reviewed U.S. Consulate operations.

For more information on CS Shenyang and the Shenyang consular region, visit our website at http://www.buyusa.gov/china/en/Shenyang.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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