F REIGN TRADE the Export-Import Bank of China: Want to Be the Best in a Better World ?

CHINA’S F REIGN TRADE The Export-Import Bank of China: Want to Be the Best in A Better World ?

Special report Year-End Review: China’s Foreign Trade and Investment 2010

WORLD EXPO Unforgettable Shanghai Expo

Guy Lam, Chairman of Pacrim International Capital Inc.,and Wah Sang Paper Products (Shenzhen) Co.,Ltd.

国内邮发代号：80-799 国际邮发代号：SM1581 国内刊号：CN11-1020/F 国际刊号：ISSN0009-4498

MOVIE Lifestyle January: Family affaires Cinema Theater, French Cultural Center French ﬁ lms with Chinese (and sometimes English) subtitles Fidelity card: RMB 100 /5 ﬁ lms + 1 free (Students: RMB 50) Free entrance on Monday More information: www.ccfpekin.org

Sunday1/9 – 19:30 Making Plans for Lena Sunday 1/16 – 15:00 France Saturday 1/22 – 19:30 2009, 105 min, Comedy, Drama Saturday 1/29 – 17:00 Director: Christophe Honoré Sunday 1/30 – 15:00 With: Chiara Mastroianni, Ma- Monday 1/31 – 19:30 rina Foïs, Marie-Christine Barrault French with Chinese & English Bad Faith subtitles France 2006, 86 min, Comedy Ever since she broke up with Nigel, Lena soldiers on Director: Roschdy Zem through life as best she can with her two kids. She valiantly With: Roschdy Zem, Cécile de France, Pascal Elbé overcomes the obstacles put in her way. But she has yet to French, with Chinese subtitles Friday 1/7 – 17:00 confront the worst of them: Saturday 1/8 – 15:00 her unstoppable family has She’s a Jew, he’s an Arab, they’re having a baby. Every- Sunday1/9 – 17:00 decided, by any means neces- thing seems going ﬁ ne, but the respective families doesn’t exult Monday 1/10 – 19:30 at the news… sary, to make her happy.

A Christmas Tale Family Resemblances France France 2008, 150 min, Comedy, 1996, 110 min, Comedy, Drama Drama Director: Cédric Klapisch Director: Arnaud Desplechin With: Jean-Pierre Bacri, Catherine With: Catherine Deneuve, Frot, Vladimir Yordanoff Hyppolite Girardot, Mathieu French with Chinese & English sub- Amalric titles French with Chinese subtitles The Vuillard family is no An upper middle-class French fam- stranger to physical/mental illness, ily cel- ebrates loss, and banishment. But a birthday in a restaurant. In one Wednesday 1/5 – 19:30 Saturday 1/15 – 15:00 when the matriarch be- evening and during one meal, Friday 1/7 – 19:30 Sunday 1/16 – 19:30 comes in need of a trans- family history, tensions, collec- Saturday 1/8 – 17:00 Friday 1/21 – 17:00 plant, the whole family is tive and separate grudges, de- Wednesday 1/12 – 19:30 Sunday 1/23 – 19:30 forced to come together, Wednesday 1/26 – 19:30 lights, and memories both clash just for Christmas time… and coalesce.

Tout est pardonné LOL France, Austria France 2007, 105 min, Drama 2007, 107 min, Comedy Director: Mia Hansen- Director: Lisa Azuelos Love With: Sophie Marceau, Christa Theret, Joc- With: Paul Blain, elyn Quivrin Hebrew, with French with English & Marie-Christine Friedrich, Chinese subtitles Victoire Rousseau French with Chinese LOL (Laughing Out Loud) is the nickname subtitles Lola’s friends have given to her. Neverthe- less, at start of the new school year, she Saturday 1/8 – 19:30 A father and his does not feel like laughing. Friday 1/14 – 19:30 Saturday 1/15 – 17:00 daughter are reunited Arthur, her boyfriend, says that he has Sunday 1/16 – 17:00 Friday 1/21 – 19:30 some 11 years after the fa- met another girl during summer holidays and Saturday 1/22 – 15:00 Monday 1/24 – 19:30 ther’s drug addiction tore the relationship with his friends and his moth- Sunday 1/23 – 19:30 Saturday 1/29 – 15:00 the family apart. er is getting more and more complicated… Friday 1/28 – 19:30 ART & GALLARY

84 Days, 84 Works

Lu Zhengyuan 84 Days, 84 Works 2010 Exhibition Scene Photo: Danny Chen Courtesy of UCCA

with disappointing or failed artworks? What artist said Is art essential to life? How do I shake off my inertia and move forward? How can I use my imagination to Produce a work of art a day. Put no restrictions on the make life and art more appealing? creative process. Any work is okay, as long as I consider it art. —Lu Zhengyuan I first tried this method when I was studying at CAFA with Professor Sui Jianguo. After making 100 works in 100 days, Over the course of his exhibition, I wanted to keep going because I felt there was a lot more to Lu Zhengyuan will confront these learn. Having a creative process that combines deadlines, con- questions and more. Reinventing what tinuity and ﬂ exibility is a good way to stumble on new ideas. It it means to be a dedicated artist, 84 also raises a lot of questions: if anything can be made into art, Days, 84 Works combines blogging, what does that make art? How do you rebel against systems daily content and production, artistic and traditions? What happens to individual identity and values process, inspiration, and the pressure when information is global and everything is converging? How of daily deadlines to create a meta-work of art that will change do I ﬁ nd the real me? What does art provide? What uncertain- daily, in tandem with the artist’s own creativity. ties and leaps does it require? What’s the source of inspiration, and can it ever run dry? Can art be laid bare? How do I deal Review

Thukral & Tagra It was 11:46 pm in New York on October 16, 2010, when I Match Fixed received a text message from artist Lu Zhengyuan saying that 2010 he had just started work on a new project for UCCA, for which Exhibition Scene his goal was to create 84 works of art in 84 days. Photo: Danny Chen The project would involve two stages: from October 17- Courtesy of UCCA November 17, the artist would produce one new work per day, so that when the exhibition opened on Nov. 17, it would include 31 artworks. After that, he would continue his “one-work-a-day” schedule until the exhibition closed on January 9, 2011, with 84 works in total. 84 Days, 84 Works grew out of a project Lu Zhengyuan and I developed several years ago when he was a student of mine at CAFA. This exhibition promises to be an intensely exciting period for him, both intellectually and artistically. He seems to enjoy the stimulus of this sort of challenge, and the excitement of sharing it with UCCA visitors. During his 84 days here, he will also record his progress by blogging about his creations and daily experiences. When he sent his text message from Beijing, it was midday his time on October 17. On the other side of the globe, at Cor- nell University in New York, it was still October 16, and there were stars in my sky. I knew that eventually the earth’s rotation would bring morning to New York, and evening to Beijing. It occurred to me that if you calculated time as a function of distance, then every time the earth rotated on its axis, my former student would have ﬁ nished one new work of art. And by the time he completed all 84 works, our planet would have trav- elled approximately 230 million kilometers on its orbit around the sun. While an artist working every day with an unchanging deadline might appear to be standing still, he or she is in fact hurtling through the universe at a dizzying speed. — Sui Jianguo, Guest Curator October 16th, 2010, Cornell University ON STAGE Lifestyle

National Academic Ballet Theater Presenter: Symphonia Vienna of the Republic of Belarus 2010 Conductor: Gottfried Rabl China Tour-Swan Lake Symphonia Vienna comprises ex- ceptional musicians from all over the Time: 2010/12/24 world. Whether principally soloists, Venue: Great Hall of the People chamber musicians or leading orches- Price: RMB 180/280/380/680/980/1280/ tral musicians, all share the passion 1680/2011 and joy of making music together. Package ticket: RMB1000 (680*2), The ensemble is equally comfortable RMB1600 (980*2) performing the most intimate chamber Tickets are available at 400-610- music as the large symphonic orches- 3721：86-10-64177845 tral repertoire. The performance of son’s later success and began teach- classical music is in danger of becoming him how to play at a very young ing an obsolete art form if it only ap- age. It is said that, at the age of six, peals to a limited and specialized audi- Richard Clayderman could read music ence. more adeptly than his native French. The Symphonia Vienna aims to When he was twelve years old he perform repertoire both traditional and was accepted at the Conservatoire of new as well as exploring music from Music where, at sixteen, he won first other cultures. Performing in less tra- prize. He was predicted a promising ditional venues also enables the com- career as a classical pianist. However, munication of their musical legacy to a shortly after this, and much to every- wider audience. one's surprise, he cast aside his classical training and turned to con- temporary music. “I wanted to do something different”, Clayderman says, “So, with some friends, I created a rock group ; it was a tough time..... a hard tine..... and the little money we could make was devoted to Richard Clayderman 2010 Beijing buying equipment. In Christmas Concert fact, I used to feed my- self so badly — mainly Time: 201012/25 on sandwiches — that I Venue: Great Hall of the People had to have an opera- Price: RMB 180/380/680/980/1280/ tion for an ulcer when I 1680/2010 was only seventeen.” Package price: RMB 1500 (RMB 680*3), “Love Is Blue” In Memory of the RMB 1600 (RMB 980*2) Early Music Christmas Concert French Music Legend-Paul Mauriat Tickets are available at 400-610- Beijing New Year Concert 3721；86-10-64177845 Time: 2010/12/27 Venue: Forbidden City Music Hall Time: 2010/12/28 A romantic and wonderful night Price: RMB 30/60/90/120/180/380 Venue: Beijing Exhibition Theater will be made by Richard Clayderman, Tickets are available at 400-610- Price: RMB 180/280/380/480/680/880/ who is well-known to the world to be a 3721；86-10-64177845 1280 piano prince. Tickets are available at 400-610- Richard Clayderman has done what Voices of Spring-Symphonia 3721；86-10-64177845 virtually no other French act has ever Vienna 2011 New Year Concert done..... established a truly interna- Paul Mauriat (Marseille, 4 March tional career as a best selling recording Time: 2010/12/27-2011/1/3 1925 – 3 November 2006 in Perpignan) artist and concert performer. Venue: Poly Theatre was a French orchestra leader, special- Born Philippe Pagès on December Price: RMB 100/180/280/380/580/880/ izing in light music. He is best known 28th, 1953, he encountered the piano 1080 in the United States for his million early in his life. His father, a piano Tickets are available at 400-610- selling remake of André Popp’s “Love teacher, laid the foundation for his 3721；86-10-64177845 is Blue”, which was No. 1 for 5 weeks in 1968. Other recordings for which he Moscow Philharmonic Orchestra Venue: Poly Theatre is known include El Bimbo, “Toccata” Beijing New Year Concert Price: RMB 80/180/280/380/580/880 and “Penelope”. Tickets are available at 400-610- Mauriat grew up in Marseilles and Time: 2010/12/31 3721；86-10-64177845 began leading his own band during Venue: Great Hall of the People Conductor: Gabriel Sakakeeny the Second World War. In the 1950s he Price: RMB 200/500/800/1200/1800/ Violin: Solon Seguillon became musical director to at least two VIP/5800 Piano: Marilyn Thomson well-known French singers, Charles Package tickets: 2000RMB (800*3), Aznavour and Maurice Chevalier, tour- 2000RMB (1280*2) Tango Passion—Mora Godoy ing with them respectively. Tickets are available at 400-610- For several decades, some of Mauri- 3721；86-10-64177845 Time: 2011/1/7-2011/1/8 at's compositions served as musical tracks Venue: Minorities Cultural Palace The- for Soviet TV programs, such as “In the Winter Sonata-Brassissimo Vienna atre world of animals” (V mire zhivotnykh) New Year Concert Price: RMB 180/280/380/580/680/880/ and “Kinopanorama”, among others. 1080 Relative to his peers, Paul Mauriat Time: 2010/12/31 Package Ticket: RMB 1000 has one of the largest recording cata- Venue: Century Theater Tickets are available at 400-610- logs, featuring more than 1,000 titles Price: RMB 120/180/280/380/580 3721；86-10-64177845 just from his Polygram era (1965-1993). Package Ticket: RMB 500/700 He was awarded with the Grand Prix Tickets are available at 400-610- The heat release of the warm soul — from the French recording industry, a 3721；86-10-64177845 Only Tango! MIDEN trophy, and in 1997 won the The origin of Tango is from the prestigious distinction of “Comman- BRASSISSIMO VIENNA - a dy- Midwest of Africa, it’s a folk African’s deur des Arts et des Lettres” from the namic young brass quintet - was founded dance, during the 19th century Argen- French Ministry of Culture. He has in 1989. Its debut occurred on the Austri- tina creates what we now know as Tango. sold over 40 million albums worldwide an television program “The Big Chance”, Tango Mass said:“Tango is not only a and held 28 tours in Japan from 1969 and with the appearance of each new CD dance with rhythm, is also a complete to 1998. the musicians - Freddy Staudigl, Andreas way of thinking about the life.” Kretz, Marcus Schmidinger, Johann Tango of the sadness, the anger, China National Symphony Schodl and Antal Fenyvesi - win us over the unrestrained, passionate music and Orchestra 2011 New Year Concert once again. Thanks to numerous perfor- dance with concise at the same time and mances in Austria and abroad, “BRAS- place, no matter what is your skin color, Time: 2010/12/30 SISSIMO” is considered one of the most no matter what religion, no matter who is Venue: Great Hall of the People important brass ensembles today. the rich or poor people, it will be exposed Price: RMB 100/180/380/680/980/1280/ in front of their own soul, willing to ac- 1680/2011 American Philharmonic 2011 New cept with a good faith and hypocrisy, Package Ticket: RMB 1000/1600 Year Concert noble and humble, subtle and warm bap- Tickets are available at 400-610- tism and this is the charm of the tango, 3721；86-10-64177845 Time: 2011/1/4 either American or African street, we can readily see his shadow…….. The performance shows the history and culture of Argentina, in South Amer- ica and the rhythm of the passion with the Latin style, combines many elements of the tango in Argentina, modern tango, classical tango, and traditional tango, and music by Piazzolla with modern style of dance and the interpretation of the most beautiful Milonga, with the unrestrained male masculinity and the female beauty, combined with modern technology to create the effect of a classic stage production, which enchanted all the audience in Eu- rope, America, Asia and Australia. This show gives us rhythms and melodies that will thrill the hearts and feelings of the audience completely free. To feel the real Argentine tango, the show has a live band accompaniment, playing specific Argentina’s songs, they are musicians from Argentina as the most outstanding musicians, piano, tango accordion, cello, violin and other compo- nents. 2010 No.24/493

BI-WEEKly WATCH 8 Figure 9 Agriculture 10 Environment 11 Energy 12 Steel 13 Auto 14 Consumer 15 Textile 16 Electronics 17 Transportation 18 Investment 19 Finance

Special report Weathering through the global financial tsunami in 2009, 20 and tiding over the 2010, China’s foreign trade and foreign 20 Year-End Review: China’s Foreign Trade and investment sectors were strenuously blazing its trail to a new phase. where are the foreign trade and foreign investment Investment 2010 sectors going in the coming year? It is hoped to provide some 22 Is the End of Cheap Chinese Labor Force Getting clues with the Special Report in our final issue of 2010 by reviewing the most influential events in the relevant fields. Closer? 23 Can Made-in-China Hold On Any More? 26 China-ASEAN FTA Better Off, yet Much Room for Improvement 28 Chinese Enterprises’ Overseas M&A Spree 30 Has China’s Investment Environment Really Become Less Friendly? 33 The Twelfth Five-year Plan About to Come Clear: China’s Foreign Trade Accelerate to Transform

Dalian is a young city with only a 100-year history. Situated 38 at the tip of China’s Liaodong Peninsular, it is a trading and financial center in northeastern Asia and has gained the name update the “Hong Kong of Northern China”. 36 Im/Ex in November, 2010: Trade Surplus Jumps to Second Highest

CITY 38 Dalian: A Beautiful City of Northern China

ECONOMY 42 China: Global Crisis Avoided, Robust Economic Growth Sustained (Ⅱ)

“Shanghai Expo will be the driving engine for transformation 48 in 21st century.” said Vicente Gonzalez Loscertales, secretary- general of Bureau International des Expositions. World Expo 48 Unforgettable Shanghai Expo 50 China Told Us: Why the World Still Needs Expo Sponsored by (主管) CCPIT(中国国际贸易促进委员会)

Fair info Published by (主办) Media and Press Center of CCPIT 52 China Fairs & Expos 中国国际贸易促进委员会宣传出版中心

社长 President 杨晓东 Yang Xiaodong 总编辑 Editor-in-Chief 王晓同 Wang Xiaotong cover STORY 副社长 Vice President 石净 Shi Jing 副总编辑 Vice Editor-in-Chief 孟燕星 Meng Yanxing 54 Keeping Exploring New Frontiers 编辑部副主任杨蔚 Editorial Deputy Director Yang Wei 编辑部 Editorial Department 郭艳 Guo Yan exchange Tel:86-10-68053271 李振 Li Zhen 阎漫漫 Yan Manman 58 Relocating China’s New Role in Global Business in 竹子俊 Zhu Zijun 英文校审 English Polisher 泰瑞·克兰丹农(美) TY Clendenen Future 经营部总经理石净（兼） Marketing Department Director Shi Jing 副总经理 Deputy Director 白义峰 Bai Yifeng SURVEY 石林峰 Shi Linfeng 项目经理 Manager 游万龙 You Wanlong 61 Econometric Analysis of Overseas Investment by Tel:86-10-88075934 李小冬 Li Xiaodong 88075494 丁秋珍 Ding Qiuzhen Chinese Enterprises 高嵩 Gao Song

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License Mark of General Administration of Press and Publication, the People’s Republic of China CPI: 5.1% ↑ in November ing of 3 percent for the year. The sales rate of industrial prod- The producer price index (PPI) ucts dropped to 97.5 percent in Novem- China’s consumer price index for China’s industrial products rose 6.1 ber, down 0.4 percentage points from (CPI), a major gauge of inflation, rose percent year on year in November, com- the same month last year. The delivery to a 28-month high of 5.1 percent in pared with a 5.0 percent gain in October. value of industrial exports rose 20.8 November, the National Bureau of Sta- Rising prices have prompted the percent year-on-year to RMB 828.7 bil- tistics (NBS) said on December 11. government to take measures to rein lion (US$125.56 billion) in November. The growth rate picked up from in rising prices. The measures include (NBS) 4.4 percent in October, according to boosting supply of essential goods, giv- the NBS. An 11.7 percent surge in ing financial aid to the needy, and mop- Urban fixed-asset invest- food prices drove the CPI higher. Food ping up excessive liquidity. Economists ment: 24.9% ↑ in first 11 prices have a one-third weighting in the have blamed excess liquidity for helping months calculation of China’s CPI. to push up prices. (NBS) The year-on-year increase in food China’s urban fixed asset invest- prices grew from rises of 10.1 percent in Industrial value added out- ment rose 24.9 percent in the first 11 October, 8 percent in September and 7.5 put: 13.3% ↑ in November months year on year to hit RMB 21.07 percent in August. trillion (US$3.19 trillion), China’s sta- “November’s price rises are beyond China’s industrial value-added tistics authority said on December 11. people’s expectations,” NBS spokesman output year-on-year growth quickened The growth rate was 0.5 percent- Sheng Laiyun said, citing rises in food to 13.3 percent in November from 13.1 age points higher than that during the percent in October, the National first ten months, according to figures Bureau of Statistics (NBS) said released by the National Bureau of Sta- on December 11. tistics (NBS). The growth rate for the The urban investment in the pri- first 11 months was 15.8 per- mary, secondary and tertiary industries cent year on year, down 0.3 rose by 16.6 percent, 22.7 percent and percentage points from the 26.9 percent respectively. January-to-October period, the During the first 11 months, in- NBS said. vestment in central government proj- The industrial value-add- ects rose 10.2 percent year on year to ed output of state-owned and RMB 1.68 trillion, while investment in state-holding companies grew local government projects was up 26.4 10.9 percent in November and percent to reach RMB 19.39 trillion, that of collectively-owned and according to the NBS figures. prices and housing utility costs as the joint-stock enterprises expanded 10.8 Property development investment main drivers of the inflation increase. percent and 14.4 percent, respectively. was up 36.5 percent year on year to Food price rises contributed 74 Companies with overseas investment reach RMB 4.27 trillion, the figures percent to the November CPI figure, posted a rise of 11.7 percent. showed. During the same period, state- he said. Measures taken by the central For heavy industries, industrial owned and state-controlled investment government to control prices need time value-added output was up 13.6 percent reached RMB 8.75 trillion, up 19 per- to take effect, he added. year on year in November, and that for cent from a year earlier. “Prices will be stable as long as light industries climbed 12.7percent, Investment in railway construc- ministries and regional authorities ear- according to the NBS data. tions and transportation jumped nestly implement the central govern- Industrial value-added output 25.3 percent to RMB 582.2 billion, ment’s measures,” he said. The data also measures the final results of industrial while investment in petroleum and showed that China’s CPI rose 3.2 per- production, which is the value of gross gas exploration climbed 5.8 percent cent year on year in the first 11 months, industrial output minus intermediate to RMB 219.4 billion for the first 11 surpassing the government’s target ceil- input such as raw materials and labor. months. (NBS) 8 A griculture

Policies announced to said a spokesman with the committee. and 296,000 tonnes of soybean, the boost modern agriculture in In Shandong, neighboring Henan NDRC said. northeast region and Anhui, the drought had dried out Previous figures showed a total of more than 1.4 million hectares of wheat 25.5 million tonnes of stockpiled grain China’s central government crops, or 40 percent of the province’s and cooking oil had been released on to pledged on December 3 to support wheat growing area, said the provincial the market since the end of October. northeastern region by boosting its de- flood control and drought relief head- The NDRC said the reserve grain velopment of modern agriculture. quarters. put on the market had begun to be ef- A guideline, mapped out by the Yang Chengfang, deputy head of fective in ensuring supplies and stabiliz- National Development and Reform the provincial meteorological observa- ing prices. Commission and the Ministry of Agri- tory, said in the past two months, Shan- Corn coming into the market last culture, was publicized by the General dong received an average rainfall of 7 week was traded at 1,843 yuan a ton, Office of the State Council, or cabinet. millimeters, an 86 percent decrease year down 9 yuan from the previous week, The guideline expects the region to on year. and rice at 1,960 yuan a ton, down 1 harvest more than 100 million tonnes In Hebei Province, 547,000 hect- yuan, while wheat prices rose 1 yuan to of grain annually by 2015. Northeastern ares of wheat crops were hit by the trade at 1,900 yuan per ton. China should catch up with developed drought, said Guo Yingchun, an expert Meanwhile, the contraction in countries in terms of land output rates with the provincial meteorological ob- trade volume last week indicated an and labor production rates, according to servatory. (Xinhua) ample supply of grain on the market, it the guideline. said. The northeastern region in the China puts more grain re- Corn trade fell by 85,000 tonnes to guideline refers to Liaoning, Jilin, Hei- serve on market 340,000 tonnes from the previous week, longjiang Provinces and the Inner Mon- while that of wheat dropped by 448,000 golia Autonomous Region. (Xinhua) China state grain reserve released tonnes to 627,000 tonnes and rice by 8.6 million tonnes of grain on to the 259,000 tonnes to 416,000 tonnes. Drought plagues China’s market from November 29 to December With the consumer price index, major wheat-growing re- 3 to ensure market supply and stabilize the main gauge of inflation, at a 25- gions prices, said the country’s top economic month high of 4.4 percent in October, planner on December 9. the government has been striving to A two-month drought is plagu- The figure was up by 136,000 ease commodity price increases and ing China’s major wheat production tonnes from the amount the previous withdraw liquidity. areas, according to local agricultural and week, with market prices seeing small The government has also been drought relief authorities. declines and trade shrinking visibly, said trying to boost agricultural produc- The four drought-hit provinces of the National Development and Reform tion, increase supplies of farm produce Henan, Anhui, Shandong and Hebei Commission (NDRC). and energy and crack down on specu- produce over half of the country’s sum- The reserve included 1.8 million lation. It has pledged to enforce price mer grain, 90 percent of which is wheat, tonnes of corn, 4.5 million tonnes controls when it considers them neces- and account for 22 percent of China’s of wheat, 2.1 million tonnes of rice sary. (Xinhua) arable land. Since October, lack of rain and high temperatures has restricted wheat growth in the provinces. In Henan, China’s biggest grain- producing province, the dry weather has affected some 730,000 hectares of wheat crops, accounting for 10 percent of the province’s total arable land, said Yang Biantong, spokesman with the provincial flood control and drought relief headquarters. In neighboring Anhui Province, more than 667,000 hectares of wheat crops were affected, according to the provincial agricultural work committee. “Some 400,000 hectares of drought-hit wheat crops were in urgent need of water. The dry weather will have a significant impact on wheat output,” 9 China to meet year-end goal a prospectus released yesterday. It plans company said today in a statement. of cutting energy intensity to set up factories and offshore wind Production capacity will climb to 2,400 nvironment by 20%, NDRC Says projects to benefit from China’s demand megawatts by the end of next year E for cleaner energy. from 1,800 megawatts at the end of China, the world’s fastest-growing The company applied to sell 105.1 this year. major economy, will meet its year-end million shares for a listing in Shanghai, Suntech gained 24 cents, or 2.9 energy conservation targets, said Zhao the CSRC said yesterday. percent, to $8.52 at 9:53 a.m. in New Jiarong, a deputy secretary general at Sinovel mainly makes 1.5- and York Stock Exchange composite trad- the National Development and Reform 3-megawatt wind turbines. It had pro- ing. The stock has dropped 49 percent Commission. The country will meet its duction capacity of 3.3 gigawatts at the this year. (Bloomberg) goal of cutting energy consumption per end of last year, with 99.6 percent of unit of gross domestic product between sales from 1.5-megawatt turbines. Chinese renewable energy 2006 and 2010 “on time,” Zhao said at a The company has supplied tur- firms encouraged to invest forum in Beijing on Dec 3. bines to domestic power producers in- in U.S. market China aims to reduce energy including China Huaneng Group, China tensity by 20 percent in the five years Guodian Corp., China Datang Corp., A senior official of China’s Nation- ending this month. Energy use per unit China Huadian Corp. and project deal Energy Administration (NEA) en- of GDP fell about 3 percent in the first veloper China WindPower Group Ltd. couraged Chinese firms to invest in the nine months after the government took Beijing-based Sinovel said Oct. 15 renewable energy market of the United steps to curb consumption, including it completed the production of China’s States to boost their competitiveness in shutting factories, Zhao said. the international market. The nation will “fully reform” its The statement was resources tax during the five years from made by Wang Jun, head 2011, and will set up a trading system of the department of new for energy conservation, according to energy and renewable en- the transcript of Zhao’s speech posted ergy at the NEA, during on the NDRC’s website today. She the wind power section didn’t give more details. (Bloomberg) at the China-US Renew- able Energy Investment Sinovel aims to raise $510 Forum, also attended by million from revised share officials from the U.S. sale in Shanghai Department of Energy and the Department of Sinovel Wind Group Co., a Chi- Commerce. nese wind turbine maker, sought new “While a number approval for an initial public offering in of U.S. companies are Shanghai after the review of a previous establishing firms manu- proposal was canceled by the country’s facturing wind turbines, industry regulator. bearings and current Sinovel seeks 3.4 billion yuan ($510 converters, thus making million) from the share sale to fund first 5-megawatt prototype, the nation’s China an important part of their global expansion, according to a statement largest, and plans to start producing business, the U.S. wind power market posted on the website of the China 6-megawatt wind turbines in the first remains relatively unknown to Chinese Securities Regulatory Commission yes- half of 2011. (Bloomberg) firms,” said Wang. terday. The commission said Oct. 27 it He noted that the U.S. wind canceled a meeting to consider Sinovel’s Suntech expects 2011 so- power market has great potential but original IPO proposal because “certain lar panel sales to increase is short of funding in the wake of the matters” needed investigation. It didn’t 20%, raises guidance international financial crisis. However, say what they they were. there remains opportunities for many CSRC will review the new IPO Suntech Power Holdings Co., Chinese wind power enterprises with application on Dec. 10, it said in a sepa- China’s largest solar panel maker, ex- strong expertise and funding. rate statement. pects sales to climb at least 20 percent Wang also identified the lack of Sinovel aims to be the world’s next year and plans to increase produc- knowledge about rules for operating largest wind-turbine maker in five years tion capacity to meet surging demand. in the U.S. market rules, regulations, and plans to sell about 10 percent of Revenue next year will be $3.4 policies and financing channels about its enlarged share capital to fund the billion to $3.6 billion, up from revised renewable energy investment, as barri- construction of a research center and 2010 guidance of $2.78 billion to ers for Chinese firms to enter the U.S. two manufacturing bases, according to $2.83 billion, the Wuxi, China-based market. (English.news.cn) 10 E nergy

Serbia, China sign agree- to be raised by EPS itself. Work is ex- a ton on average in 2011 after climb- ment to upgrade thermal pected to begin in three months once ing 22 percent to 740 yuan this year, plant funding comes available. Helen Lau, a coal analyst with UOB “This is a project of extreme impor- Kay Hian Ltd., said by telephone from As part of a 1.25-billion-dollar tance for our economy,” said Minister Hong Kong today. Government ef- agreement, Serbian and Chinese officials Skundric, stressing the strategic signifi- forts to conserve energy and policies signed a 344-million-dollar contract for cance of Serbian and Chinese interstate to control economic growth will affect the first phase of work to upgrade the cooperation. demand for coal next year, she said. outdated Kostolac thermal generating Chinese ambassador Wei said that The contract volume set by the plant, on December 8 in Belgrade. this agreement represented the begin- government will be 23 percent of Chi- Dragomir Markovic, general direc- ning of bilateral cooperation in the en- nese coalminers’ estimated 2011 sales of tor of the Electrical Power Company of ergy sector and paved the way for further 3.4 billion tons, Lau said. The average Serbia (EPS), Dragan Jovanovic, direc- cooperation. power-station coal price under 2010 tor of the Kostolac thermal generating contracts is 570 yuan a ton, according to plant and Jin Chunsheng of China Na- China orders power-station Lau. (Bloomberg) tional Machinery and Equipment Im- coal contract price freeze port and Export Corporation (CMEC) CNOOC accesses 5 Austra- signed the agreement at a ceremony be- China, the world’s biggest coal lian gas blocks fore the Serbian Minister of Mining and producer and consumer, has ordered that Energy Petar Skundric and the Chinese 2011 contract prices to supply the fuel China National Offshore Oil Corp ambassador Wei Jinghua. to power stations be frozen at this year’s will pay A$50 million (US$49 mil- The Kostolac B plant is located levels to curb inflation. lion) for a 50-percent interest in Exoma East of the capital Belgrade, near the China also increased the amount of Energy Ltd’s coal seam gas blocks in Romanian border. The scheduled up- thermal coal it will allow to be sold un- Australia. grades are expected to bring the plant der contract to 769 million metric tons, “This project is CNOOC’s first to its full capacity of 700 megawatts, to the China Coal Transport and Distri- relatively large-scale exploration of prolong its useful life by a decade, and to bution Association said on its website overseas onshore unconventional gas. If bring the coal-powered thermal generat- today. It cited a notice issued by the Na- the exploration is successful, it will give ing plant in line with European environ- tional Development and Reform Com- CNOOC access to substantial natural mental standards, with the construction mission, the nation’s economic planner. gas resources overseas and provide a of a desulfurization facility, according to This year’s volume was about 700 mil- guarantee for stable liquefied natural EPS director Markovic. lion tons, said David Fang, a director at gas supply,” Fu Chengyu, president of Markovic also told reporters that the association. CNOOC, said in a statement on De- the project scope encompassed railway Chinese inflation rose to the high- cember 9. and port facilities on the Danube River, est in more than two years in October on Under the agreement, signed in for the movement of limestone for the climbing food costs. The price move is Beijing on Wednesday, CNOOC will desulfurization system and transporta- also aimed at helping the nation’s power gain access to five exploration blocks in tion equipment. Approximately 220 producers, half of which are making Galilee Basin in Queensland. CNOOC million dollars is to be financed through losses after their coal costs gained more also has an option to purchase a 19.9 China Eximbank with the remainder than 20 percent this year, said Fang. percent stake in Exoma, the Australian “Coal producers will have firm said. to follow the order without too The Galilee blocks may contain much complaint as everybody more than 100 trillion cubic feet of gas knows that the country’s top resources, according to Exoma. priority now is to fight inflation,” Unconventional gas, including he said by telephone from Beijing shale gas, is expected to account for today. “The contract coal price more than a quarter of China’s gas sup- is effectively the floor for spot plies by 2030, and become a long-term prices, so the cap will more or solution to China’s energy demand less affect prices” of the fuel for needs, according to Wood Mackenzie, immediate delivery. a consultant. Power producers and coal Two months ago CNOOC’s mining companies will start an- Hong Kong-listed unit, CNOOC nual negotiations over coal supplies Ltd, committed to spend US$2.2 from around Dec. 20, Fang said. billion over the next two years in The spot price for ther- Chesapeake Energy Corp’s shale oil mal coal may gain 15 percent and gas deposits in the United States. to about 850 yuan (US$127) (Shanghai Daily) 11 teel s Steelmaker eyes ore stake proval from the Australian government re-emergence in the European market for a A$271 million (US$249 million) after hearing about the World Trade Wuhan Iron & Steel Group, investment in Centrex Metals Ltd in Organization’s decision,” said Ji Aiqun, China’s third-largest steelmaker, is in November, and also for a 60-percent export manager of Ningbo Jinding Fas- discussions with Canada-listed Adri- stake in the iron ore rights to five Cen- tening Piece Co Ltd. ana Resource Inc for a stake in the Lac trex projects in South Australia. (China “But the EU market is no longer Otelnuk iron ore project in Quebec, a Daily) our sole choice. We have entered other senior executive said on November 17. foreign markets, including the United “We have reached a preliminary Steel fastener makers hope States and Canada, which have yielded agreement with Adriana Resource to EU sales can recover on WTO reasonable profits,” Ji added. jointly develop the iron ore project,” ruling The company in Ningbo, Zhejiang said a senior executive from Wuhan province, one of China’s largest fastener Steel, who declined to be named. Chinese manufacturers and ex- exporters, suffered nearly devastating He also said Wuhan Steel plans porters have welcomed a World Trade losses in 2008, when the EU, then its to organize a Chinese company union Organization (WTO) ruling hand- sole source of foreign orders, hit it with a to jointly develop an iron ore project in 67.3 percent anti-dumping duty. Cameroon, West Africa. The China Ji said expansion in other State Construction Engineering Cor- markets saved the company from poration has expressed an interest in going under and that its key for- joining the union. The Lac Otelunk eign strategy in the future will ore project contains more than 6 billion entail developing in various mar- tons of ore reserves available for exploi- kets. tation, with a 29 percent ore content. Wang Feng, business man- Adriana Resource is a junior ager of Jiashan Yujin Fastening exploration-stage company, engaged Co Ltd, said it will take a long in the acquisition and exploration of time for the company to regain resource properties including the Lac its European customers, who Otelnuk project and the development stopped importing the fasteners of an iron ore port facility in Brazil. two years ago because of the high Donald K. Charter, chairman of tariff. (China Daily) the board of Adriana Resource visited Wuhan Steel in May to discuss poten- Crude steel consump- tial opportunities for cooperation with tion to hit 596 mln tons Wuhan Steel’s Chairman Deng Qilin. ing China a victory in a trade dispute The Chinese steel company has with the European Union (EU) over China’s apparent consumption of been seeking to invest in more overseas Chinese-made steel fasteners, and they crude steel is likely to reach 596 million iron ore assets to cut its reliance on expect their EU exports to rebound. tons this year, a year-on-year increase of expensive imports. “We aim to be self- However, they said, they will no 5.6 percent, according to a steel associa- sufficient in iron ore supplies in three to longer rely solely on the EU market tion official. five years,” Deng Qilin said in March. and have developed global business Apparent consumption represents Wuhan Steel in May received ap- profiles in the two years that the EU the sum of net imports and output, and proval from the National Development anti-dumping tariff on Chinese-made can be used to estimate real consump- and Reform Commission for two ac- fasteners was in force. tion excluding inventory. quisitions in Africa that are expected to The WTO ruled that the EU Luo Bingsheng, deputy head of the contribute nearly 2 billion tons of iron policy imposing a 63 to 87 percent tariff China Iron and Steel Association, ex- ore deposits. on the products discriminates against pected the country’s crude steel output to Last October, the company agreed Chinese exporters, according to a state- climb 8.2 percent this year from one year to buy more than 40 million tons of ment on its website on Dec 3. earlier, to reach 624 million tons. iron ore under a seven-year contract The decision comes a year and a Luo further noted that a rising with Corp Venezolana de Guayanathe, half after China appealed to the trade investment in 2011 would result in an a Venezuelan company, at a “China body, after the EU placed a five-year increase in China’s steel demand. Price” separate from what the big three anti-dumping duty on Chinese steel If the year-on-year growth of the global miners are charging. fasteners worth 575 million euros country’s social fixed assets investment Wuhan Steel also acquired a 21.52 (US$765 million) in 2007. maintained itself at around 20 percent percent stake in Brazilian iron ore This is the first time China has next year, China’s crude steel apparent miner MMX Mineracao e Metalicos won a case against the EU. consumption would see an annual in- SA for US$400 million last year. “It’s good news, and our European crease of 40 million to 50 million tons The company also received ap- clients have contacted us to discuss our next year, said Luo. (Xinhua) 12 A UTO

Chinese brands make gains improve the comfort of their vehicles’ 41,600 units; and SUV sales jumped in satisfaction survey third row seats, fuel efficiency, the 77.3% y/y and 16% m/m to 130,000 smell of interiors and the quality of units. When it comes to customer sat- interior materials, Chao said. Auto sales in China - including isfaction, Chinese car brands are clos- The top-ranked models in each medium- and heavy-duty commercial ing the gap with their international product segment and their scores were: trucks - will grow more than 30 percent rivals, concludes a new study by J.D. * Compact: Chevrolet Spark, 776 to 18 million units this year, predicts Power and Associates. points J.D. Power and Associates, according to The gap between domestic and * Premium compact: Chevrolet Automotive News China. (Gasgoo.com) international brands narrowed from Sail, 833 74 points in 2009 to 68 points in * Entry midsize: Honda Fit, 848 China’s auto rental sector 2010, according to the U.S. research * Midsize: Volkswagen Golf, 890 picking up as foreign invest- company’s annual APEAL (automo- * Lower premium midsize: FAW ment grows tive performance, execution and lay- Besturn B70, 838 out) study. * Upper premium midsize: Honda China’s auto rental sector-a mar- The auto industry’s overall score Accord, 869 ket seen as one with great potential averaged 807 on a 1,000-point scale, * Luxury: Toyota Crown, 886 and risks-has recently attracted con- up eight points from 2009. J.D. * SUV: Toyota RAV4, 880 siderable interest from foreign inves- Power did not disclose the scores of * Minivan: Wuling Rongguang, tors: Mitsubishi Corp, Japan’s largest individual brands or the cumulative 777 trading company signed November 18 scores of domestic and international * Industry average: 807 an agreement to invest US$20 million brands. (Automotive News China) in a joint venture car rental firm with Winners in individual product Zhejiang Cheeyo Auto Rental. segments ranged from the Volkswa- China’s Nov. passenger car Prior to this, a consortium head- gen Golf midsized car, with a score sales hit 1.28 mln, up 27% ed by Goldman Sachs Group Inc. in- of 890, to the Wuling Rongguang jected US$70 million into Shanghai- minivan (777). International brands Passenger car sales in China hit based eHi Car Rental Ltd; Legend finished on top in six of eight catego- a record high in November, up 27% Holdings injected 1.2 billion yuan in ries. from a year earlier to 1.28 million cash in China Auto Rental to acquire J.D. Power polled 14,600 con- units, First Financial Daily reported more than 50% stake in the car rental sumers who purchased their vehicles December 8, citing data from the service provider. from October 2009 through June China Passenger Car Association. China’s auto rental sector is 2010. Owners were asked to evaluate The data released today also growing very fast and has good po- their vehicles after two to six months showed that passenger car produc- tential to develop further. While the of ownership. tion in the same month reached 1.35 auto rental market in the U.S. is al- Vehicles were rated by exterior, million units, up 25.6% compared to ready quite mature-the rental vehicles interior, storage and roominess, info- November 2009. On a monthly basis, consist of 55% of the country’s entire tainment system, seats, air condition- passenger car sales and output went auto industry, said Yorihiko Kojima, ing, driving dynamics, powertrain, up 27% and 13.80% respectively in Mitsubishi Corporation President visibility, safety and fuel economy. November. and CEO. In contrast to J.D. Power’s Ini- From the perspective of car China’s car rental market used to tial Quality Study, which measures type, sedan sales grew 22% year the be unanimously favored by industrial “things gone wrong” with a vehicle, year and 10.3% month on month to insiders, and experts were predict- the APEAL study measures “things 888,900 units in November; MPV ing that by 2015, the demand would gone right.” sales rose 50.9% y/y and 3.1% m/m to reach 300,000-400,000 units, and Domestic brands improved the operating turnover would top most notably in seats, visibility, 18 billion yuan. driving safety, heating and air Nevertheless, due to the conditioning, said Hannah Chao, lack of a credit rating system and J.D. Power’s Shanghai-based Asia risk prevention mechanism, there research director, in a statement. are hurdles for potential demand To improve their scores, being converted into real demand Chinese brands should reduce in the market, which, on the one vehicle noise during bumpy driv- hand, is still in an initial stage ing while improving improve seat of development and on the other materials, audio controls and fuel hand, the operation mode of car efficiency. rental enterprises is being ques- International brands should tioned. (Gasgoo.com) 13 ONSUMER China’s retail sales of con- products through 7,100 stores world- cent being earmarked for the grassroots

c sumer goods up 18.7 pct in wide. Ares Management and the On- market, including second- and third- November tario Teachers’ Pension Plan bought tier cities, and rural areas. GNC in 2007 from Apollo Manage- To penetrate the grassroots mar- China’s retail sales of consumer ment LP in a deal worth US$1.65 bil- ket, the US-based company needs to goods grew 18.7 percent in November lion. develop products that meet local de- year on year, the National Bureau of Bright Food partnered GNC in mand, establish a sales network, and Statistics (NBS) said on December 11. February to sell GNC nutrient prod- provide tailored services based on local Retail sales of consumer goods ucts in China to tap increasing demand products and networks, she said. stood at RMB 1.39 trillion (US$208.1 from Chinese consumers. “All in all, our expansion (in the billion) in November and the growth Bright Food has been active in grassroots areas) is based on innovation rate was 0.1 percentage points higher venturing abroad this year under a of products and services,” said Duan. than that in October, the NBS spokes- strategy of sniffing out merger and GE Healthcare now has more man Sheng Laiyun said at a press con- acquisition opportunities over the next than 600 engineers in China, who are ference. three years. The government-backed focusing on the development of 17 new Retail sales of consumer goods group has laid its eyes on buying as- types of equipment and technology, in the January-to-November period sets including sugar, dairy, winery and 80 percent of which are targeted at the reached 13.92 trillion yuan, up 18.4 wholesale business. grassroots market. percent from the same period last year. Ideally, these products should be The growth rate in the January-to- simple to use, highly portable, low in November period was 0.1 percentage cost and high in efficiency. points higher than that in the January- They’re developed for the Chinese to-October period. market by adapting global technologies, The NBS said urban consumption and are made by Chinese engineers, hit RMB 1.2 trillion in November, up according to GE Healthcare President 19 percent year on year. and CEO John Dineen. The company’s Rural residents spent 186.5 billion portable and multi-functional B30 yuan on consumption goods in Novem- Patient Monitor, launched in China in ber, up 17 percent year on year. mid-November, is a prime example. In breakdown, catering sector sales A 500-member sales team has rose 19.6 percent to RMB 160.1 billion But the M&A road has not been been set up to cover China’s second- in November from a year earlier, while quite smooth for Bright Food as it lost and third-tier cities and the underde- retail sales increased 18.6 percent to to Singapore’s Wilmar in a bid to buy veloped rural areas. RMB 1.23 trillion in November year Australia’s largest sugar refinery, a di- “We are optimizing our long- on year. (Xinhua) vision of CSR Ltd, in late January. distance and online services, which are Bright Food’s exclusive talks to more convenient and more efficient in Bright Food nears to acquir- buy UK’s United Biscuits in September this vast market,” said Duan, who took ing GNC also reportedly sank. (Shanghai Daily) up her current post in October. The strategy is timely, comple- Bright Food Group, Shanghai’s GE Healthcare eyes grass- menting the Chinese government’s biggest food and dairy company, is re- roots three-year, 850 billion yuan (US$128 portedly close to a deal to buy United billion) reform of the medical system, States vitamin retailer GNC Holdings Multinational medical device and which was launched in January 2009 Inc for between US$2.5 billion and solutions provider GE Healthcare has and aims to expand access to healthcare US$3 billion, according to the Wall started exploring China’s vast grassroots throughout the country. Street Journal. market through technological innova- Although GE Healthcare won’t Citing people familiar with the tion. reveal its exact investment in the ex- matter, the newspaper said that the “We plan to increase the propor- pansion plan, the funds are part of potential deal to buy GNC from Ares tion of business in China’s grassroots US$2 billion that the company has set Management and Ontario Teach- market, but it will take time,” said Ra- aside for the Chinese market through ers’ Pension Plan Board could be an- chel Duan, president and chief execu- 2012, as it focuses on strengthening its nounced in the next few days. tive officer of GE Healthcare China, innovative capabilities in the emerging But the newspaper also said that at the 96th Scientific Assembly and market. the deal could still fall through. Of- Annual Meeting of the Radiological GE Healthcare’s business in Chi- ficials from Bright Food declined to Society of North America. na has seen compound annual growth comment yesterday. So far, the niche sector accounts of 20 percent in recent years, and sales GNC sells nutrition supplements, for 80 percent of GE Healthcare’s busi- will exceed US$1 billion this year. vitamins, sports drinks and other diet ness in China, the remaining 20 per- (China Daily) 14 T extile

China has world’s most com- port tax breaks. We hope to be treated Industry Minister M.S. Hidayat petitive textile industry like an Indonesian company. said that Chinese businessmen came in Ade Sudrajat, the Indonesian response to the results of recent meet- A research report recently released Textile Association Chairman, said ings held by the government in Beijing by the China Customs Magazine under the Chinese delegates along with nine last month. Within the next five years, the General Customs Administration representatives of their subsidiaries China’s investments are expected to shows that although China experienced are here to conduct a survey. China’s include the production of textile ma- adverse effects from the international investments have been rising, as evi- chines and spinners, waving, and all financial crisis, the competitive advan- dent in the opening of a service center kinds of industrial textile machines. tages of China’s textile industry exports in Semarang. Gradually, investments At present, textile machine im- have been further enhanced. are expected to include the spare parts ports for the restructure program have According to the survey, the eval- industry and the construction of an as- been 10 percent subsidized by the gov- uation index of the global competitive- sembling plant. ernment. The subsidy will be increased ness of China’s textile industry stood The spare parts manufacturing to 15 percent if the machine manu- at more than 102.8 in 2009, making investment is planned after four million facturers agree to build their plants in China the most competitive country units of China??s textile machines have Indonesia. (KARTIKA CANDRA) worldwide in the textile industry. been absorbed back home in China. Statistics from the General Cus- When eight million units have been Garment enterprises took toms Administration show that China’s absorbed, then China will invest in ma- measures to relieve cost textile export amounts decreased 9 chine assembling. pressure percent in 2009 compared with that of If China invests in machine as- 2008. This figure is 7 percentage points sembling, production of textile ma- Although fabric price has been less than the overall average decline chines will no longer be intended to soaring in the second half of this year, rate of China’s total exports. Therefore, meet local demand. The machines will few enterprises will consider raising the textile industry has become one of be exported to other developing coun- product price due to the heavy pressure the Chinese industries that are most tries that are also the main producers from fierce market competition. There- capable to do a good job in risks. in the textile industry, like India and fore, price has mounted up by merely In the first 10 months of 2010, Pakistan. 5%-10% this year, while enterprises China exported a total of more than The change towards Chinese have to burden the upstream costs and 62.6 billion U.S. dollars worth of textile products because the quality of the ease the pressure from price rise on yarns, fabrics and textile products, an machine and production is as good as their own by taking various measures. increase of more than 29 percent com- that of Japan and Europe. Moreover, Many garment enterprises have begun pared with the same period of 2009, Chinese machines are more energy- to budget carefully on fabric selection and exported a total of 105 billion U.S. saving. Chinese investors have been and design concept. They have rein- dollars’ worth of clothes, an increase of invited to invest in Indonesia to support forced production cost and adjusted nearly 20 percent. (People’s Daily Online) the government??s plan to restructure staff and organization structures to en- the industry. sure every staff member is appropriately China interested in investing Currently, out of eight million appointed so that labor cost can be kept in textile machinery textile machines in Indonesia, two mil- well under control. In addition, some lion are made in China, while the other enterprises have to adopt the means of The Vice President of China Hi- six million are over 20 years old. industrial transfer. (CNGA) tech Group Corporations, Maoxin Ye, is very enthusiastic about building a machine spare parts factory for the textile industry in Indonesia. We are ready to transfer the technology and we are financially ready to fund the project, he said yesterday. Compared to China, which owns 100 million mills, Indonesia only has eight units. So, China is very interested in taking part in the textile machine restructuring program in Indonesia. However, Maoxin did not men- tion the amount of investment that will be carried out. He only hoped that the government will facilitate their plans, for instance by providing tax and im- 15 Chinese company releases and provide uniform, standardized wang’s online book store will include and automated management during 200,000 books, a rise of 50 percent from lectronics cloud computing platform the entire life cycle of the applications this year, about one-third of Amazon’s E Jinan Yinquan Technology Co., including development, deployment, 600,000 books now. Ltd., one of the wholly-owned subsid- execution, update and offline. The Calm “We have entered a new three-year iaries of China Intelligence Information platform realizes on-demand creation, period to establish a strong platform for Systems, Inc. (OTC Bulletin Board: rapid deployment and intelligent man- e-books in China, not only selling de- IICN) today releases the first version of agement, and represents a new innova- vices,” Liu said. its Green2C cloud computing platform: tive way to reconfigure solutions from Hanwang aims to expand its Calm 1.0. the cloud resources for its next version. online store to provide downloads of IT infrastructures have become The Company will operate this books, magazines and newspapers. increasingly complex and brittle. The Beijing-based firm has Currently, 70% of IT invest- launched an 8-inch e-book reader ment focuses on maintenance, that allows users to use online leaving little time to support social-networking services strategic business develop- like Weibo, the Chinese ments. With users demand- equivalent of Twitter. ing faster response times and In China, e-books management demanding have great potential due lower costs, IT requires a bet- to the booming market and ter strategy. Cloud computing government support. is a new solution to reducing IT In 2010, China’s e-book complexity. It has become an invalu- reader sales are expected to rise four- able consumer service by leveraging fold year-on-year to 3 million units, the efficiency by pooling demand and platform as a carrier to provide virtual according to US-based research firm self-managed virtual infrastructure. machine leasing services to organiza- Display Search. (Shanghai Daily) Cloud computing is central to an en- tions. It will also develop customized hanced IT strategy. cloud computing platforms and provide Apple delays mass produc- As the leading virtualization soon-demand services to the companies tion of iPad 2: report lutions provider in China, CIISI sees with IDCs and other datacenters. how cloud computing is changing the The Company expects to release Apple had postponed its plans to IT industry by its business model and updated versions of the cloud comput- start mass production of iPad 2 in Janu- infrastructure advantages. The company ing platform on a regular basis and will ary, it was reported on December 7. also foresees that cloud computing will integrate a Software-as-a-Service (SaaS) Apple had planned to possibly be the development super-trend for the model. start mass production of the next- gen- virtualization industry. In order to cap- For customers, Calm 1.0 of the eration iPad in January, but those plans ture the first mover opportunity of the Green2C Cloud Computing Platform were postponed until about February, as market, the Company has decided to makes CIISI an even better vehicle the tablet’s hardware and specifications develop the cloud computing platform. for cost savings coupled with revenue have not been finalized by Apple, the The platform, based on virtualiza- generation. For investors, the Green2C DigiTimes news website said. tion technology, is developed as a basic platform showcases CIISI’s leadership in Once production started in Febru- cloud computing infrastructure with technological innovation. (China. org. cn) ary, the first shipment of iPad 2 could various cloud modules, including private start as soon as the same month, the cloud, government cloud and business Hanwang to expand online report said, quoting unnamed sources at cloud. The platform aims to provide store Chinese manufacturer Foxconn Electron- uniform, standardized and automated ics, which builds some Apple products. management services to organizations Hanwang Technology Co (Han- Apple spokeswoman Trudy Muller which have IDCs (Internet Datacenters) von) will invest heavily to expand its said the company “declines to comment and other datacenters, such as telecom online book store to catch up with the on rumors.” carriers. The platform, designed under world’s market leader Amazon, the Apple has sold more than seven the “service-oriented infrastructure company said on December 8. million iPads so far this year despite the management” concept, focuses on inte- Sales of Hanwang’s e-book reader lack of features found in lower-priced de- grating basic infrastructures in organi- have reached more than 1 million units vices such as the iPod and the iPhone — zations’ datacenters by abstracting and due to booming sales in Shanghai, namely cameras. managing computing resources within Beijing and Guangdong Province, ac- A new generation of iPad might the environment. The Calm platform’s cording to Hanwang’s Chairman Liu include cameras, FaceTime video chat core technology is to deploy applications Yingjian. and mini-USB port, according to an in the Cloud (web-based environment) By the end of next year, Han- earlier report from PC World. (Xinhua) 16 T r a nsport

Southern Airline to start Kaohsiung city and Qingdao city in traffic and the improving economy also eastern Shandong province. brought an increase in revenue from

flights to New Zealand a

The service will operate on Sat- retail operations, which made a sig- tion China Southern Airlines will urdays. It is the first direct service nificant contribution to the authority’s begin flying to Guangzhou from Auck- between the two cities. The flight will interim profit growth. land three times a week from next increase the number of direct flights The authority’s Chief Executive April. between Qingdao and Taiwan to 20 per Officer Stanley Hui said the pace and Auckland Airport made the an- week, according to Qingdao Airport. force of the recovery in air traffic de- nouncement at a news conference on Thanks to increased people-to- mand in the first half of this fiscal year Sunday afternoon. was better than China Southern Airlines will run expected. three f lights between the cities (via “The out- Melbourne) each week, offering 88,000 s t a n d i n g 5 0 more seats annually than are currently percent bottom- available. line increase was Auckland Airport’s chief execu- mainly the result tive Simon Moutter said better con- of strong perfor- nections to the city are critical for trade mance in both air and tourism. traffic volumes and He expected the new services to retail operations,” inject NZ$50 million (US$37.5 mil- he said, adding lion) into New Zealand’s local visitor that with signs economy alone. (Xinhua) of sustained economic growth, Tibet’s first expressway the company is on soon open next year track for new records in passenger Construction of Tibet’s first ex- and cargo volume pressway, a four-lane road linking Lha- people exchange between Taiwan and as well as aircraft movements. (One U.S. sa’s city proper and Gongkar Airport, the mainland, Qingdao Airport’s pas- dollar equals 7.763 Hong Kong dollars) has entered its final stage and will open senger traffic to and from Taiwan this (Xinhua) in six months as expected. year reached 145,495 on Nov 15, a 55 About 85 percent of the 38-km percent year-on-year increase. (Xinhua) Ford to start building new expressway has been completed, and HK Airport Authority profit up plant in east China next year construction workers are now working 50 percentThe Hong Kong Airport Au- on a 389-meter tunnel in the craggy thority announced on November 29 the Ford Motor said on December mountains near Gongkar Airport, said unaudited interim financial results for 13 it will begin construction on a new Li Dingkun, leader of the construction the six months ending September 30, plant in Nanchang City, capital of east team. which saw profit attributable to equity China’s Jiangxi Province, next year. He said the tunnel would be com- shareholders rise 50 percent over same The plant will begin operations pleted by March, in time for the ex- period last year to 1.961 billion Hong in 2013, Ford Asia-Pacific and Africa pressway to open in May as scheduled. Kong dollars. Revenue for the first half President Joe Hinrichs said at a meet- The Lhasa-Gongkar Expressway of the current fiscal year reached 5. 142 ing with Jiangxi Governor Wu Xinx- runs along the southern bank of the billion Hong Kong dollars, up 19 per- iong. Lhasa River and will have a maximum cent year-on-year. Hinrichs did not give further de- speed limit of 80 km per hour. All three categories of air traffic tails concerning the plant. RMB 1.55 billion (US$232.7 mil- showed strong growth as the industry Ford hopes to boost Nanchang’s lion) project will ease traffic pressure continued to recover from the impact of automobile industry and will increase along the Lhasa section of the No. 318 the global financial crisis, the company its stake in Nanchang-based Jiangling national highway that sees frequent said in the financial result report. Motors Co. (JMC), Hinrichs added. flooding and traffic jams. (Xinhua) In the first half of the current fis- Ford has a 30 percent stake in cal year, the airport received 26 million JMC. The two companies have been Taiwan launches weekly passengers, handled 2.1 million tonnes strategic partners since 1995. Kaohsiung-Qingdao flight of cargo and processed 154,834 aircraft Jiangxi provides Ford with a great movements, representing year- on-year opportunity for development as the Taiwan-based EVA Airways Corp growth of 13 percent, 27 percent and province has low costs and huge po- Saturday launched a weekly direct 12 percent. tential for economic growth, Wu said. flight service linking southern Taiwan’s The robust growth in passenger (Xinhua) 17 Chinese firm seeking invest- 24,239 rooms, accommodating around experience in the east. 2.1 million foreign tourists last year. This marked a new round of Chi- nvestment ment opportunity in Cambo- I dia Sok Cheda, the CDC’s secretary na’s efforts to narrow the development general, said that the delegation comes gap between the west and the east. China’s COFCO, the largest to Cambodia after Jiang Jianqing, In 2010, besides increasing capital oils and food importer and exporter in President of Industrial and Commercial investment and policy support, the cen- China and a leading food manufacturer, Bank of China (ICBC) met with Prime tral government decided to begin a new on November 30 afternoon expresses Minister Hun Sen on November 5 in round of assistance to Tibet Autono- its interest to invest in rice exports and Phnom Penh and expressed the bank’s mous Region and Xinjiang by pairing tourism in Cambodia. purpose to open its branch in Cambo- relatively developed provinces and cities “We are very interesting in rice dia and he promised with the prime with the two regions. exports from Cambodia and hotel in- minister to attract more Chinese inves- Observers said the three meetings dustry in Cambodia,” Yang Hong, vice tors to Cambodia. (Xinhua) were milestones in working out the president of China Oil and Foodstuff plan for narrowing the east-west gap as Corporation (COFCO), said on No- China aims to narrow east- the western region is a difficult but key vember 30 during a meeting with the west gap with more invest- point in building a well-off society in a officials at the Council for the Develop- ment comprehensive way. (Xinhua) ment of Cambodia (CDC). She said that the Beijing-based On December 5, Wang Jinjian GE, China’s CSR to invest COFCO Group is a leading firm in the joined residents of Huocheng County US$50 million on high- businesses of bio-fuel and biochemi- in far west China’s Xinjiang Uygur speed railways cal production, oilseed processing, rice Autonomous Region to clear streets trading and processing for exports, blanketed by heavy snow. General Electric Co. (GE) and brewing materials production, and Wang, who just arrived in China’s largest rail vehicle maker are to wheat processing, moreover, the group Huocheng two weeks ago after be- invest US$50 million in a U.S.-based also engages in real estate businesses. ing appointed the head of the county joint venture to make high-speed rail Vongsey Vissoth, secretary general committee of the Communist Party of (HSR) trains. of the Ministry of Finance, said that China (CPC), wanted to get acquainted GE would sign a cooperative Cambodia has produced 7.3 million with local people as soon as possible. framework agreement with CSR Cor- tons of rice paddy in 2010, of which the “I will work here in the next five poration Limited (CSR) to establish a surpass quantity is 3.5 million tones of years,” said Wang, who came from Ji- venture to advance high-speed and oth- rice paddy or 2.1 million tons of pro- angyin City of economically-developed er rail technology in the United States, cessed rice that is available for exports. Jiangsu Province in the east. “I wish my said a statement from GE. “China just signed a rice inspec- hometown’s experiences in socioeco- The joint venture would create 250 tion and quarantine cooperation agree- nomic development could help boost jobs in the United States by 2012 in the ment with Cambodia in October that the development of Huocheng.” first phase of the agreement, it said. is easier for Chinese investors to export Wang is among thousands of The GE Transportation-CSR rice from Cambodia,” he said. cadres and experts who were being venture was expected to be the first Tith Chantha, director general of dispatched by the central government U.S. manufacturer ready to supply the Ministry of Tourism, said that cur- to Xinjiang to assist local development HSR passenger trains for projects in rently Cambodia has 438 hotels with by using their expertise and successful Florida and California, GE vice chairman John Rice said. It would also manufacture medium-speed passenger trains and transit rail vehicles for urban areas in the United States, he noted. “We are committed to advancing the global high-speed rail technology market and this agreement provides a significant opportunity for infrastructure and business growth,” he said. The agreement marks a critical step to support and advance passenger rail development in the United States, after a memorandum of understanding was signed by GE and China’s Ministry of Railways in November 2009. (Xinhua) 18 F in a nce

Investors sign up for BOC (SAFE) website was the second such China Construction Bank cash call disclosure after SAFE published the opens Sydney Branch first list in November. Bank of China said investors The illegal transactions included China Construction Bank Cor- representing 99.1 percent of its Hong the use of fake contracts and false claims poration (CCB) formally opened its Kong-listed shares signed up for its to obtain speculative capital. All those Sydney Branch here on November 30, US$9 billion rights share issue, which named had been fined for their law- the first of its branch in Oceania, with will boost the company’s capital in re- breaking. Australian former Prime Minister Bob sponse to tighter rules. Fourteen companies based in eight Hawke, Chinese Ambassador to Aus- The country’s No. 4 lender had provinces, including northeast China’s tralia Chen Yuming and around 400 received valid acceptances in respect of Liaoning Province and the eastern local dignitaries attending. about 7.5 billion new Hong Kong-listed provinces of Zhejiang and Fujian, were Zhang Furong, CCB Chairman H-shares offered to shareholders, it named in the statement. of the board of supervisors, said at the said in a statement posted on the Hong In one case, Shenzhen-based Ye- opening ceremony held at Sydney’s Kong exchange on December 10. stock Information Technology (Shen- Four Seasons Hotel, that CCB Sydney Total gross proceeds from the zhen) Co., Ltd. and Shenzhen Chuang- Branch will provide a wide range of Hong Kong-listed H-share rights issue tou Electronic Information Technology commercial banking services including clocked in at HK$20.8 billion (US$2.7 Co., Ltd., used a fake contract worth deposits, loans, trade finance, Forex billion), on top of the RMB 41.8 billion HK$10.65 million (US$1.37 million) business and other commercial bank- (US$6.3 billion) raised ing business. from its Shanghai-listed Rooted in Austra- A-share rights issue, the lia, CCB Sydney Branch bank said. will extend its operation Excess shares not throughout neighboring taken up will be avail- regions. able to investors who He also said the want them, with pref- fast growing com- erence given to those m e r c i a l a n d t r a d e wanting to top up odd exchanges bet ween lots, the bank said. China and Australia Chinese banks in- provided huge op- cluding Bank of China portunities for CCB’s are in the process of operation in Australia. raising tens of billions The establishment of of dollars in an effort CCB Sydney Branch to meet tighter capital will enable CCB to requirements demanded follow the steps of its by regulators to preempt globalized custom- a rise in bad loans and ers, broaden its service to cool the country’s siz- supply chain and better zling economy. service its globalized Rivals such as China Construction to send RMB 9.9 million into the stock customers. Bank and ICBC have all embarked on market. Zhang added that CCB Sydney similar cash calls in a bid to shore up It also named a Chinese national Branch will strictly abide by the princi- their capital positions. (Global Times) surnamed Huang, who illegally received ples of prudence and compliance, com- US$1.75 million in November and plying with the guidance and supervi- Forex regulator releases December 2008, by using 18 outdated sion of both Australian and Chinese controls on hot money in- export cargo declarations. regulators. flows Previously, the SAFE listed nine CCB has opened seven branches bank branches and outlets found to have abroad so far, but Sydney Branch is the China’s foreign exchange regula- been involved in illegal foreign exchange first in Oceania and it is also the first tor on December 10 published a list of transactions. Chinese bank that has won the approval companies and one individual involved By the end of October, China’s for- to operate in Australia after the global in illegal foreign exchange deals, in an eign exchange regulator had uncovered financial crisis in 2008. effort to tighten controls on hot money 197 cases of illegal foreign exchange CCB is one of the biggest banks inflows. transactions worth US$7.34 billion since in China and is the market leader in The statement posted on the State its crackdown on hot money inflows wholesale, retail and investment bank- Administration of Foreign Exchange was launched in February. (Xinhua) ing business. (Xinhua) 19 Year-End Review: China’s Foreign Trade and

Investment 2010 By Yan Manman

eathering through the global financial worker shortage shocked the Pearl River Delta, which tsunami in 2009, and tiding over the actually is the cradle and clustering zone for the 2010, China’s foreign trade and foreign export-oriented sectors. Low wage was one important investment sectors were strenuously factor accounting for the labor shortage. Therefore, blazing its trail to a new phase. the companies had to raise the wages in order to at- WAdmittedly, 2009 was a hard year for China’s tract the labors. Pay-rise wave spreads among foreign- foreign trade sector, while 2010 was also not easy. funded and joint manufacturing enterprises in China. Just at the beginning of the 2010, migrant Foxconn, Honda and TPV Technology Limited, etc.

20 all moved to raise their payment for the demonstrates the exciting results of workers. For decades, China has been Chinese enterprises’ outbound M&A relying on its low labor cost as the big- in 2010. From the second half of 2009 gest competitive advantage of manu- to the first half of 2010, there was an facturing industry; low labor cost has explosive surge in the overseas merger been one major advantage that Chinese and acquisition by Chinese enterprises. export enjoys over the products of other All the transitions were worth a total of countries. Now the labor cost is rising, USD 34.2 billion, covering 143 cases, and this advantage is losing, then how which means 36 cases every quarter. will the foreign trade-related industries By contrast, between 2003 and the cope with this challenge? first half of 2009, only 16 cases were Nonetheless, labor cost rising concluded quarterly. At the same time, was never the most annoying issue for the amount involved has been on the Chinese foreign trade-related indus- rise. In the first half of 2010, among all tries. For them, the biggest headache overseas merger and acquisition cases, throughout the whole 2010 was the those worth more than USD 0.5 billion unpredictability and uncertainty of the accounted for 79%, while it was 73% in RMB appreciation. For export-oriented 2009, and 74% for the entire report pe- enterprises, the time lag between or- riod. And transactions worth between der receiving and exchange settlement USD 15 million and USD 0.1 billion directly decides whether the enterprise only accounted for 6% of all cases in the will make profits or not due to a stron- first half of 2010, compared to 8% in ger currency. The continuous and sharp 2009. Though with much achievement, appreciation of RMB in the past several there were still many problems ham- months has imposed considerable risks pering the success of Chinese overseas on enterprises for exchange settlement. M&A. Then what are these problems? Reuters reported on October 25th that While Chinese outbound invest- the Global Sourcing Fair, based on the ment was surging up, however, the latest survey, claimed that more than scolding of China’s inward investment 2/3 of China’s suppliers surveyed would environment worsening also sprang. suffer a decrease in export volume if the From December 1st, 2010, all foreign exchange rate of RMB appreciated by corporations in China would be subject over 2%. Can Made-in-China hold on to the “Interim Regulation of Tax on any more under the pressure of RMB City Maintenance and Construction appreciation? of People’s Republic of China”, and Though it is really not the spring the “Interim Regulation of Imposi- for the foreign trade sector in 2010, tion of Additional Education Fee”, two there was still some spring breeze brac- regulations issued by the State Council ing for the foreign trade-related com- in 1985 and 1986 respectively. This panies. The establishment of China- marked the end of the super national ASEAN Free Trade Area and the treatments that once favored foreign signing of ECFA between the main- corporations investing in China because land and Taiwan undoubtedly provided both Chinese and foreign corporations some consolation for those companies had to pay the same taxes from that day. struggling in the straits. So what have The gradual removal of foreign corpora- those moves brought to Chinese foreign tions’ super national identity was always trade-related sectors? accompanied by their complaints and Facing the multiple pressures, the dissatisfactions. But has China’s invest- foreign trade industries had no choice ment environment really become less but transform the way of development, friendly? which is just the focus of 12th five-year Reviewing the past, one shall plan on foreign trade sectors. know the future. So where are the Compared with China’s foreign foreign trade and foreign investment trade sector, as for China’s foreign in- sectors going in the coming year? It is vestment, 2010 could be an extraordi- hoped to provide some clues with the nary year. A report in 2010 of Deloitte, Special Report in our final issue of 2010 Emerging from the Twilight: the New by reviewing the most influential events Chapter of China’s Outbound M&A, in the relevant fields.

21 his year pay-rise wave spreads Rise of labor cost among foreign-funded and joint manufacturing enterprises in China. After increasing wages for workers at the Tproduction line by 30 percent on June Is the End of Cheap Chi- 1st, Foxconn announced a further 66 percent rise of minimum wages from October 1st 2010; Honda offered a 24 nese Labor Force Getting percent increase in pay and benefits for its production-line workers; TPV Technology Limited is considering to Closer? raise worker wages by 15 percent to 20 By Zhou Zixun percent after the 15 percent hike earlier this year; and Glorious Sun Industries Limited is also working on a pay-rise agenda this year. Many westerners worried that China would transfer the increased labor cost to the rest of the world as wages for Chinese workers keep rising. In fact, this is just one of the concerns related to the pay-rise wave. A much more important problem is that there is going to be an inevitable interest battle between China and the countries or regions that bear labor cost, as someone must pay for the increased labor cost. The labor cost in emerging economies is going to rise whatsoever along with the development of economic globalization; it’s unrealistic to expect an everlasting low labor cost. For decades, China has been relying on its low labor cost as the biggest competitive advantage of manufacturing industry; countries. Therefore, it’s reasonable for they will threaten by claiming to move and thanks to the development model developed countries to surrender part of to other places, like India or Vietnam. of low-wage for workers “blessed” by the profits to adapt to China’s new labor In the past, “exodus” has been a “magic demographic dividend, large numbers cost. spell” to threaten Chinese local govern- of labor intensive enterprises have been China’s bargaining power ments, a trick that has never failed. prospering and primitive capital have It’s time to test Chinese manufac- been accumulated. A non-neglectable However, it’s not easy to resist the turing industry, especially export enter- problem, however, relates to a higher lure of profits. Enterprises from the prises. Globally, for western companies development cost for manufacturing in- developed world, spoilt by easy high there are not many other places to go, if dustry resulted from lack of investment margin and high income, will surely they are seeking countries by the only in facilities in accordance with develop- evade the responsibility for China’s pay standard of low labor cost. It’s not a ment environment, though local econo- rise in one way or another. It’s predict- low threshold to enter Southeast Asian mies witness some growth while worker able that western countries will restore countries, even though you don’t expect wages are pressed as low as possible. manufacturing industry and balance mature industrial base or industrial Chinese workers have long been at the the price pressure of “Made-in-China” chain there. India’s legal environment lowest point of downstream along the by reducing import; at the same time, and social development pale in com- industry value chain. In many cases, for they will use an “iron fist” to negoti- parison to China’s. a product of the developed world with ate with Chinese export businesses to What’s more, China is becoming intellectual property rights, China’s force export prices down. Moreover, the engine of economic development labor cost only takes a proportion of foreign enterprises which have set up for neighboring countries. Driven by about only 1 percent to 5 percent, while factories in China will try to demand China’s demand, the economic recovery 30 percent or even 50 percent of the more preferential policies from Chinese of China’s neighboring countries has profits are taken away by developed local governments; if ever they get a “no”, actually exceeded expectations. Now it’s

22 obvious that the closer to Chinese mar- high value-added products? Thanks Of course, this does not mean that ket and Chinese consumers, the more should be paid to the country’s special Chinese export enterprises and local profitable the businesses. Therefore, we talents nurturing mode, i.e. training governments can rest and do nothing to can conclude by saying that for foreign program to nurture skilled technicians. further enhance themselves; the coun- capital it’s not only difficult to establish In Germany there’re two ways to train try must make reparation for the wage- enterprises outside China, but also risky technical personnel: one for engineers hike. China can re-operate and recount of losing Chinese market. Chinese local and the other for technicians, who cost in weak fields, such as procure- governments don’t have to compromise enjoy the same payment with the for- ment, transportation, and inventory, to when threatened by foreign firms to mer. Sometimes technicians even earn improve facilities in accordance with move away. higher pay than engineers for they are development environment. Researches Additionally, even if western able to make exquisite products like have shown that the cost at these weak countries restore local manufacturing BMW and Mercedes-Benz. High- fields is more than two times of that of businesses, “Made-in-China” still en- skilled workforce perfectly makes the Japanese companies in China. If we can joy competitive edge to some degree in clincher for the success of Germany’s reduce the cost of the industrial chain the short term, telling from the cost- unique talent strategy. in China, “Made-in-China” will cer- performance ratio of current Chinese Undeniably, there is going to be a tainly keep its competitiveness. In addi- manufacturing industry. According to brutal game between China and West- tion, China could also take the chance the latest statistics, China remains one ern countries over the prices of “Made- to upgrade its export products. “Made- of the world’s most attractive foreign in-China”. For China, worker wages in-China” used to be “cheap and good”; investment destinations. Therefore, local will surely rise and there’s no way for in the future, “Made-in-China” could governments and enterprises in China pay to go down; and Chinese export be “better” and “reasonably priced.” must have confidence and global vision businesses won’t conduct businesses In summary, it’s reasonable for concerning this matter. that lost money; on the other hand, China to increase the price of “Made- Germany is a country with the western companies, which have been in-China” as labor cost in the country highest manufacturing cost in the enjoying high profits in China for such is climbing up. However, the upward world. However, their production main- a long time, should have more profit movement of prices does not mean to ly includes high value-added products, room to share. At this point, it’s confi- charge exorbitantly high, but a long- such as BMW and Mercedes-Benz. dence and self-possession that matters term adjustment until China and the Even a big country as China imports in this competition. Whoever lost con- rest of the world can get used to it. subway equipment from Germany. fidence will lose the field in a battle for Why is Germany able to turn out these interest. (Author: from Zaobao.com)

RMB Appreciation Can Made-in-China Hold On Any More?

By Wang Pan, Song Yuan, Chen Gang, Zhang Ran, Zhang Yao

he sales volume will exports of accessories to such coun- was on the decline again in March fluctuate in response tries as India and Russia. Gan cashes and April. And the sales volume of to the change of the in an annual export volume worth my store decreased by 5%-10%,” Gan RMB’s exchange rate,” RMB 10 million. “Foreign trade added. said Gan Jianying, a merchant in the began to recover earlier this year in It was during March to April, Yiwu“T Commodity Market engaged in the wake of the financial crisis, but mid April to be exact, that the US 23 “For some small low-profit export-led enterprises in South China, appreciation of RMB will deprive them of profits,” Zhao Xijun, Vice President of the School of Finance and Banking of Renmin University of China told International Herald Leader. The critical point sends orders uncertain For export-oriented enterprises, the time lag between order receiving and exchange settlement directly decides whether the enterprise will make profits or not due to a stronger currency. The continuous and sharp appreciation of RMB in the past several months has imposed considerable risks on enterprises for exchange settlement. The reporter learned that during the past six months, many export- led enterprises struggled to survive against the evil anticipation for RMB Treasury Department considered to appreciate, our factory will be on appreciation, especially the sharper ap- whether to regard China as a currency the verge of bankruptcy,” complained preciation of the RMB’s exchange rate manipulator in its exchange rate pol- Yang. against the US dollar in September, icy report and the dispute around the Sharp appreciation beats when the exchange rate of the RMB RMB’s exchange rate between China enterprises rose 1.74% per US dollar, the biggest and the US was reaching its climax. monthly increase since the reform of The US put off the release of On June 19th, China’s Central the RMB’s exchange rate regime. the report, while China announced a Bank announced a reform of the Confronted with this plight, reform of its currency’s exchange rate RMB’s exchange rate regime; and many enterprises are reduced to be regime in June. Afterwards, the con- three days later, the central parity rate helpless. On one hand, they had to siderable appreciation of RMB began of the RMB was set by the to exert its impact. Central Bank at 6.798 per “Last month, a Korean client can- US dollar, 295 basis points “In fact, since the latter half of the celed an additional order because he higher within one day. With year, the RMB’s exchange rate against would make no profits by the new ex- processing and export of the US dollar has been approaching change rate,” said Li Ling, a merchant crafts and gifts as its pri- engaged in foreign trade of handicrafts mary business, Longpeng the ‘critical point’ for many export-led in the Yiwu Commodity Market, “Af- Group Co,. Ltd., Quanzhou enterprises.” ter the RMB appreciates, orders can City, Fujian Province lost not be guaranteed even from regular several hundred thousand yuan of turn to the short-term orders rather clients.” profits in one day resulted from the than the long-term ones and to raise “I hope the RMB appreciation unsettlement of foreign exchange for the price temporarily; on the other will come to an end!” blurted out Yang an order worth over USD 4 million. “It hand, they had to skillfully deal with Ping who was engaged in handcrafted usually lasts about five months from clients. For the purpose of maintain- curtains in the Yiwu Commodity negotiation with foreign merchants to ing good relations with key clients, Market when speaking of the RMB’s goods delivery, and what concern us they had to bear consequential loss, exchange rate. Yang’s homemade cur- most is the unstable foreign exchange because as a common practice, foreign tains are mainly sold to Middle East, rate,” Chen Shaohui, Deputy General enterprises seldom negotiate problems and in the past the export volume Manager of the Longpeng Group told resulted from RMB appreciation and stood at five to six containers within the reporter. dollar depreciation after having nailed one month, while since this year ex- A sharp appreciation of currency down the price. port has been halved. Profit margin is a nightmare for export-led enter- “Enterprises may cope with has thus decreased to around 3% from prises, as profits will hemorrhage over- gradual appreciation by controlling last year’s 8%. “If the RMB continues night. cost through reasonable anticipation,

24 while sharp appreciation will run out either to wait for a stable exchange rate stricter standards on environment proof control!” said Yin Botao, General at the cost of losing clients or to lose tection lead to a surge in the packaging Manager of Kuishan Yanghao PV Co., profits in order to retain clients.” cost; labor shortage results in higher Ltd. Some export-led enterprises from If the RMB appreciation cost of labor… Jiangsu Province told the reporter continues… According to the October report that they could hedge against risks released by the Shenzhen Science by such technical means as pegging “Prices for exports need to in- & Industry Trade and Information exchange rate and shortening quota- crease for offsetting profit loss, while Commission, a bilateral 3% surge in tion period when the RMB’s exchange consumers are reluctant to accept a rise the RMB’s exchange rate in 2011 will rate against the US dollar steadily rose in prices. Worse still, prices for raw reduce the employment population of during 2006 to 2008. However, in the materials are on the rise. All of these Shenzhen by 0.6 million and the trade presence of the current unpredictable have exerted impact on orders! To volume by USD 9 billion. exchange rate, export-led enterprises some extent, enterprises have felt huge The garment, shoe manufactur- are more inclined to receive short-term pressure similar to that in the period ing, toys, handicrafts and ceramics orders and have to give up many high- of the financial crisis,” a responsible industries of Shenzhen suffer a high end clients who prefer to sign long- official from the Sheng’s Group situ- cost in terms of production and raw term contracts. ated in Wujiang City of Jiangsu Prov- materials, and over 60% of the ex- The uncertain appreciation range ince told International Herald Leader ported products in these industries of RMB will even make the orders go on October 19th.“Some small textile are finished domestically for added nowhere. enterprises in Jiangsu Province have value. Against the backdrop of a low “Appreciation of RMB may stopped receiving orders to avoid pos- net profit of around 3% and lack of force foreign importers to offer higher sible risks, while for the large-scale core competitiveness, a 3% rise in the prices,” Guo Tianyong, Director of the enterprises that can bear the pressure RMB’s exchange rate will throw the Research Center for China’s Bank- of the RMB appreciation, profit loss is enterprises into red. ing Industry of the Central University inevitable.” Reuters reported on October of Finance and Economics told the The reporter learned the general 25th that the Global Sourcing Fair, reporter, “Taking profits into account, status quo of the textile industry in based on the latest survey, claimed importers expect a currency bounce to Jiangsu Province: enterprises with that more than 2/3 of China’s suppli- minimize loss caused by objective fac- meager profits accounts for around ers surveyed would suffer a decrease in tors. Importers, therefore, try to delay 50%, and the overall profit margin is export volume if the exchange rate of goods delivery under various pretexts.” between 3%-4%. If RMB appreci- RMB appreciated by over 2%. In the “In fact, since the latter half of ates by over 5%, 2/3 of the textile survey, 238 suppliers from China were the year, the RMB’s exchange rate and garment enterprises will go interviewed, 32% of whom pointed against the US dollar has been ap- bankrupt.” out that export would decline once proaching the ‘critical point’ for many Similarly, an upward RMB ex- RMB rose by 3% in value. Experts export-led enterprises. Now every ba- change rate against the US dollar has told the reporter that if the RMB’s sis point change is anguished to them. imposed considerable impact on the exchange rate surged by 3% in a short As far as I am concerned, China lacks traditional industries such as manu- term, enterprises engaged in house- an optimal industrial structure for a facturing of garment, machinery, elec- hold appliances, automobiles and cell sharp appreciation of RBM,” Zhen tronics and toys. As costs of resources, phones would see a 30%-50% drop in Zhiqiang, Assistant General Manager raw materials and labor surged in the profits. of the marketing center of the color past years, most of the TV set manufacturer — Skyworth export-led enterprises in Multimedia (Shenzhen) Co., Ltd. these traditional industries told the reporter on the 108th Canton have low or meager profits, Fair held during October 15th to No- difficult to respond to the vember 4th. On the Fair, the unstable continuous RMB appre- RMB’s exchange rate was one of the ciation and rise in costs. most thorny problems for the buyers “China’s export-led and sellers. enterprises are losing their “The optimal exchange rate of advantages in terms of RMB we envisage is around 6.5 per costs,” said Li Haijun when US dollar, but we are still negotiating recounting his plights to with our clients,” said Gong Huajian, the reporter — hike in Head of the Foreign Trade Depart- prices of various raw mate- ment of Weixi Group in Jiangsu Prov- rials has imposed pressure ince, “Confronted with the dilemma, on enterprises to different enterprises have to make sacrifices, extents; foreign countries’ (Author: from International Herald Leader)

25 China-ASEAN FTA billion, the FTA is the world’s largest free trade area composed of developing countries. In the course of the construction of the FTA, China and the ASEAN countries started bilateral tariff reduction in 2005. So far, the average tariff on goods from ASEAN nations to China has been cut down to 1.0% and the six original ASEAN members have slashed the average tariff on Chinese goods to 1.6%. The trade volume between China and the ASEAN nations has been mounting thanks to the tariff reductions in recent years,. According to Lv Kejian, Direc- tor of the Department of Asian Affairs under the Ministry of Commerce of China, since the establishment of the CAFTA, bilateral economic and trade relations have been undergoing rapid development in an all-round man- ner. In the first three quarters of this China-ASEAN FTA year, the China-ASEAN trade volume amounted to USD 211.3 billion, up by 44% year on year. China has now become the largest trade partner of the ASEAN, and the ASEAN has become China-ASEAN FTA Better the fourth largest trade partner of Chi- na. In addition, as of August this year two-way investments between the two Off, yet Much Room for sides totaled USD 71.1 billion and are still expanding,. The rapidly-growing trade volume Improvement between China and Malaysia in the By Yan Liang & Zhen Jie past five years was indispensable to the construction of the FTA; and since 2009, China had been Malaysia’s largest trade partner, said Datuk Abdul nder the concerted efforts of FTA, there is still room for improve- Majid Ahmad Khan, President of the China and members of the ment in terms of unifying product stan- Malaysian-China Friendly Association Association of Southeast dards, reducing technical barriers and and former Malaysian Ambassador to Asian Nations (ASEAN), expanding the information dissemina- China when recently interviewed by the China-ASEAN Free Trade Area tion mechanism. Therefore, all parties Xinhua News Agency. (CAFTA)U officially completed and concerned still need to further deepen Fang Tianxing, President of the initiated earlier this year is becoming cooperation so that the FTA will ben- Federation of Chinese Associations a high-quality economic entity. Trade efit the general public and merchants to of Malaysia and a steel magnate, said and investment volume in the FTA a larger extent. that based on strategic needs and good- keeps hitting a record high, domains Trade and investment hit a new neighborly relations, China and the for cooperation continue to expand, and high ASEAN countries had been endeavor- exchanges in various aspects increasing to construct the FTA, an economy ingly deepen. Having brought tangible China and ASEAN established a of great significance across the world, economic benefits for participants, the strategic partnership for peace and pros- which had brought enormous economic FTA has become a model for develop- perity in 2003 and then accomplished benefits to participating countries. ing countries to conduct regional free the FTA as scheduled on January 1st, Benefiting both consumers and trade. 2010 out of their joint efforts. With an merchants However, analysts hold that in aggregate GDP of around USD 6 tril- spite of some achievements made in the lion and a beneficiary population of 1.9 Since the establishment of the

26 FTA, a lot of Chinese and ASEAN en- Dongfeng Liuzhou Motor Co., Ltd. said Many merchants know little about terprises have enjoyed the convenience that due to the revival of the world econ- the relevant agreements and are not and benefits brought about by the FTA, omy and the launch of the CAFTA, its active to apply for the certificates of and consumers can buy certain com- sales volume in the Vietnamese market origin which will grant zero tariff, said modities at more favorable prices. during the past six months had exceeded Majid Ahmad Khan. The problem lies Woo Ser Chai, a businessman that of the previous whole year. in the inadequacy release of the relevant engaged in facial cosmetics in South- Shi Fangfan, Vice President of agreements, which makes some mer- east Asia, has felt the benefits brought China Shipping (Southeast Asia) Share chants uninformed about the agree- by low tariffs. After the establishment Holding Company, Ltd., told Xinhua ments. Majid believes that if merchants of the FTA, the ASEAN countries News Agency that the FTA had greatly have better understanding about the sharply cut the import and export tar- pushed forward the development of relevant regulations, the FTA will ben- iffs on cosmetics; the tariffs on cosmet- the marine shipping business in South- efit merchants more effectively over the ics in the Philippines, for instance, have east Asia, and the freight volume of upcoming three to four years. been reduced to 5% from 60%, which his company had seen steady increase Moreover, some ASEAN coun- not only has benefited consumers, but in the past several years. A statistical tries are concerned that China’s labor- also has increased the profits made by report made by Indonesia showed that intensive enterprise will edge out their merchants. Wu also expected a mini- since the implementation of the zero- like enterprises. Yang Mo, Senior Re- mal 10% rise in this year’s sales profits. tariff policy this January, the shipment searcher from the East Asian Institute Liu Junguang, a renowned tea freight volume between China and In- of the National University of Singapore, dealer from Malaysia, said that he had donesia had doubled. noted that it was out of the questions paid close attention to the development Much room for improvement for China’s labor-intensive enterprises of the FTA, as he imported large quan- to pour into the ASEAN countries, tities of tea from China every year. In Although the FTA has gained as China had to take the domestic the framework of the FTA, the import much popularity, there is still much employment issues into consideration. tariff on tea in Malaysia has been grad- room for improvement. Currently, such With regard to this issue, the parties ually decreased, from 8% in 2008 down problems as non-tariff barriers and non- concerned should remove misunder- to 5% in 2009 and to zero in 2010. uniform quarantine standards still exist standings. With cost reduced due to zero tariff, tea in the FTA, which need to be solved As the FTA has exposed en- dealers offer more reasonable prices to via further negotiation by all parties; terprises and merchants to broader customers. besides, misunderstandings among the competition, it is necessary for all the Since the tariff reduction, China- parties on some issues need to be elimi- countries to make their enterprises and made engineering vehicles have become nated. merchants aware of the positive long- more and more popular among mer- Chen Kaixi, Secretary-General of term significance of such competition. chants from the ASEAN countries. the Malaysia-China Friendship Asso- Teoh Kok Lin, Managing Director of Dongfeng Liuzhou Motor Co., Ltd. said ciation, said that administrative devia- Malaysia Singular Asset management that due to the revival of the world econ- tion appeared in the implementation of pointed out that the FTA, in essence, omy and the launch of the CAFTA, its the China-ASEAN FTA Agreement. had reduced trade barriers to expand sales volume in the Vietnamese market For example, some countries still im- the market for merchants. Challenges during the past six months had exceeded pose tariff on a few tariff-free products; from severe competition will prompt that of the previous whole year. despite of the cancellation of import merchants to enhance competitiveness Shi Fangfan, Vice President of and export tariffs, some countries retain by means of improving efficiency and China Shipping (Southeast Asia) Share non-tariff barriers regarding techni- lowering cost. Holding Company, Ltd., told Xinhua cal standards and News Agency that the FTA had greatly production licens- pushed forward the development of es; some products the marine shipping business in South- may not be al- east Asia, and the freight volume of lowed to enter his company had seen steady increase from one country in the past several years. A statistical to another due to report made by Indonesia showed that different quar- since the implementation of the zero- antine standards. tariff policy this January, the shipment Therefore, all the freight volume between China and In- parties need to donesia had doubled. conduct further Since the tariff reduction, China- negotiation with made engineering vehicles have become the aim of carry- more and more popular among mer- ing out free trade chants from the ASEAN countries. to a larger extent. (Author: from Xinhua New Agency)

27 erger and acquisition is of 2009, only 16 cases were concluded tion of overseas M& A the most important move quarterly. At the same time, the amount transactions in each indus- and shortest cut in an involved has been on the rise. In the first try by Chinese enterprises enterprise’s growth strat- half of 2010, among all overseas merger during the first half of egy to expand itself. George Stigler, a and acquisition cases, those worth more 2010. Acquisition in en- Mfamous American economist, once said than USD 0.5 billion accounted for ergy, mining industry and that there was not a large American 79%, while it was 73% in 2009, and 74% public utilities was on the rise along with the growth of merger and acquisition in all fields, reaching 40% Overseas M&A of all the transactions, up from only 30% in the period between 2003 and the first half of 2010. In 2009, transactions in Chinese Enterprises’ energy and resources accounted for 32% of the Overseas M&A Spree total, and those in industry and chemical industry accounted for 20%. And the figure rose from 11% in By State-owned Enterprise Magazine 2009 to 14% for telecommunications, high technology and medium. However, judging from the transaction amount, despite that overseas enterprise that did not grow up through for the entire report period. And trans- M&A by Chinese enterprises in the merger and acquisition to some extent in actions of between USD 15 million and first half of 2010 saw 74% of the total some way, and almost no large compa- USD 0.1 billion only accounted for 6% transaction amount, as the transaction nies grew up by internal accumulation. of all cases in the first half of 2010, com- amount grew for traditional indus- Opportunities come side by side pared to 8% in 2009. tries in defensive sector and chemical with challenges in the financial crisis. Chinese enterprises are also industry which accounted for 10% of Comparatively less attacked by the searching for more targets. Over the the total transactions, so the amount financial crisis, and holding an enor- past seven and a half year, Chinese involved in the financial services which mous foreign reserve and great capital enterprises got 80% of their outbound constituted 8% of the total transactions vitality, China has stridden forward as M&A confined to five countries. But still lessened to some extent. the second largest investing country, as in the first half of 2010 alone, only 75% As China strives to meet its con- proved by a craze of outbound merger of the outbound M&A were concluded tinuously growing demands for mineral and acquisition in 2009 by Chinese in the five countries mentioned above. resources, a notable increase has been enterprises. In 2010 when the global They are seeking for M&A opportuni- seen in Chinese enterprises’ overseas economy is stepping out of the shadow ties in other countries and regions. M&A in the mining industry. The of the financial crisis, Chinese enter- Focus of M&A:three fields year of 2009 saw 28 cases of M&A in prises’ enthusiasm for overseas merger this field, which was definitely a sharp and acquisition remains unabated. According to the research report, contrast to the global economic reces- Overseas M& A: remarkable the three fields that most attract Chi- sion, reaching the peak in recent years, achievement nese overseas investors remain to be: with a transaction amount of USD 8.73 energy, mining industry and public billion. M&A transactions concluded A report in 2010 of Deloitte, utilities; chemical industry; telecom- in the first half of 2010 prove that the Emerging from the Twilight: the New munications, medium and technology transaction scope has become more Chapter of China’s Outbound M&A, (TMT). Since the beginning of 2003, extensive. The second largest transac- demonstrates the exciting results in a total of 372 transactions have been tion in this period is the acquisition of Chinese enterprises’ outbound M&A. concluded, accounting for 67% of all 12.5% of the equities of AML, an Af- From the second half of 2009 M&A transactions. Transactions in rican mining company, for USD 0.244 to the first half of 2010, there was an consumer goods and financial services billion by China Railway Material explosive surge in the overseas merger both rank the fourth, accounting for Commercial Corp. and acquisition by Chinese enterprises. 7% respectively; while in 2009, M&A In the first half of this year, the All the transitions were worth a total of transactions in financial services ac- M& A activities arrived at its peak USD 34.2 billion, covering 143 cases, counted for 20%. in the gas and oil industries, with 8 which means 36 cases every quarter. By It merits our attention that no ap- transactions concluded and USD 11.6 contrast, between 2003 and the first half parent changes occurred to the propor- billion involved. This is almost the total

28 21,000 billion Yuan, with the owner’s acquire a company. Sinopec acquired equities being 1,844.54 billion Yuan. 9.03% of a Canadian oil sand company The operation of overseas assets was ob- Syncrude’s equities; PetroChina joined viously better than that at home. Over- hands with Shell in acquiring 100% of seas sectors brought about one fourth of the equities of Arrow, the largest coal- the total profits of those enterprises by bed gas producing company in Austra- using about one fifth of their assets. lia, for AUD 3.5 billion. The statistics of SASAC show that, 2. A number of enterprises have for overseas assets, the average return merger with or acquire foreign enter- rate of net assets is 13.4% and of gross prises to improve their own industrial assets is 9.1%. However, for state-owned chain and promote their comprehensive enterprises supervised by the central strength. For instance, by acquiring government in 2009, the average return 80% of Pacific Coffee’s equities, China rate of gross assets was only 5.3%, 3.8% Resources gained an access to the coffee less than that for overseas assets. This chain store market, perfecting its prod- may from one aspect testifies to the ne- uct layout; Midea’s acquisition of 32.5% cessity of those enterprises under direct equities of Miraco, an Egyptian house- leadership of the central government to hold appliance company, enabled it to transaction amount in the whole year “walk out of the country”. Another set expand into Egyptian market and at of 2009. The accumulative investment of figures of SASAC can also justify the same time radiate to Africa, Middle in this field is also growing; in 2009, it this trend. According to SASAC, up till East and South Europe. was only USD 10.9 billion. The average the end of 2009, those enterprises in the 3. M& A serves as a move to transaction amount in gas and oil in the charge of the central government saw a build a bridgehead in the international first half of 2010 alone was USD 1.4 growth of 27.1% in their overseas assets market. HNA Group buying the plane billion, almost twice the yearly average compared to the same period last year, charter business of Australia’s Allco transaction amount between 2003 and surpassing the average growth rate of Company serves as a stepping stone for 2009, which was USD 0.795 billion. their gross assets, and the owner’s equity the company to enter Australian market Main force in M&A: State- also increased by 14.3%. and expand to global market. owned Enterprises Scope for M&A: expanded 4. M&A in the energy field con- centrates in countries in good political Considering the amount involved Fu Zhiyong, partner of Adfaith terms with China. For example, Wisco in M&A, private enterprises are no Management Consulting, when having invested USD 0.4 billion in buying equal to state-owned enterprises, so the an interview with the reporter from this 21.52% equities of MMX, a Brazilian latter is still the main force in M&A. magazine, pointed out, after a prelimi- mining company, to construct factories The research report says in the nary analysis of the successful cases of jointly, and China National Offshore overseas M& A in energy, mining Chinese enterprises’ M&A in 2010, it Oil Corporation bought BEH, an Ar- industry and public utilities, which ac- was found that state-owned enterprises gentinean oil and gas supplier for USD counts for 74% of all transactions, state- easily defeat private enterprises by their 3.1 billion. owned enterprises conducted 6 out of transaction amount, while the latter Looking into the future, Xie Qi- the ten M&A in the first half of 2010. excels in the quantity and fields. long, Managing Partner of M&A Ser- The other four were conducted by com- Of the 20 successful cases, only vices, Deloitte China, predicted the ar- panies from Hong Kong. Five overseas 4 are in the mining industry. More rival of significant changes to overseas M&As in the gas and oil field in the industries are involved in the overseas M&A by Chinese enterprises. He said, first half of 2010 were all concluded M&A, including semi-conductor, “I cannot say that we are going through by state-owned enterprises. In 2009, games, network operation, household a transformation in M&A pattern. But transaction amount by SOE accounted appliance, automobile, automobile I do believe another round of overseas for about 80% of the total amount in spare parts, consumption chain store M&A spree is probably on the road. ” that year. and other industries, with the internet Asked for explanations, he continued, During recent years, enterprises and online games becoming the leading “Chinese enterprises are seeking to supervised by the central government role in M&A of 2010. The expansion expand overseas, to realize diversified have sped up the progress of investing of M&A fields have the following fea- operation. As a result, the first round of overseas. According to Review of 2009 tures: overseas M&A craze concentrating in by State Council SASAC (State-owned 1. M& A of resource-intensive the mining industry and oil & gas field Assets Supervision and Administra- enterprises are shifting from buying the are giving way to a new round targeting tion Commission), till the end of 2009, company 100% or become a holding at agriculture, manufacturing, financial the overseas assets of these enterprises company, but only seeking to have a services and automobile. This trend is amounted to 4,015.34 billion Yuan, presence in the company and also trying best proven by the recent acquisition of almost one fifth of their total assets of to ally with other enterprises to jointly Volvo by Geely for USD 1.8 billion.”

29 The end of super national treatment Has China’s Investment Environ- ment Really Become Less Friendly?

By Zhang Moning

rom Dec.1st, 2010, all foreign ness environment for foreign corpora- ronment would worsen became afloat. corporations in China would tions in China. Foreign complaints about be subject to the “Interim Reg- The gradual removal of foreign deprivation of super national ulation of Tax on City Main- corporations’ super national identity treatment tenance and Construction of People’s was always accompanied by their com- RepublicF of China”, and the “Interim plaints and dissatisfactions. In this “The combination of two taxes Regulation of Imposition of Additional background, China’s business environ- in 2007 and the imposition of city Education Fee”, two regulations issued ment became the focus of world media. maintenance and construction tax and by the State Council in 1985 and 1986 In the first half of 2010, the Finan- additional education fees in December respectively. This marked the end of cial Times in London and the Wall would pose little impact on foreign cor- the super national treatments that once Street Journals in the U.S. published porations in China” said Wang Zhile, favored foreign corporations investing “Complaints of Foreign Corporations researcher of the Chinese Academy in China because both Chinese and increase in China” and “Foreign Busi- of International Trade and Economic foreign corporations had to pay the ness leaders attack Chinese policies Cooperation under the Ministry of same taxes from that day. Since new tax more bluntly” respectively, highlighting Commerce, who has been working laws were issued in 2007, an integration foreign corporations’ complaints about on transnational corporation research of corporate taxes had been under way, Chinese investment environment. Ru- for many years. In his opinion, some which led to a more competitive busi- mors that the Chinese investment envi- foreign corporations did not complain

30 about the disappearance of super na- the board of directors and stock hold- “Corporations would consider positive tional treatment, but the difficulty in ers. The “risk” mentioned here refers to and negative factors when making both receiving national identity in the cur- the uncertainties about Chinese regula- operation strategies and investment rent competitive environment. tory environment and limitations on decisions. The positive factors include Compared with the loss of fa- the market entry. market attraction and profit margins, vorable taxation policy and the rise of But Mr. Jacques de Boisseson, while the negative factors mainly derive labor costs, foreign corporations seem chairman of the European Union from the risks of market, consumer and to complain more about the identi- Chamber of Commerce in China, institutions. We should strike a balance fication of independently innovated pointed out in an interview that “the between risk and return, benefits and products, Chinese government’s pur- labor cost is very important and nec- difficulties.” Mr. Jacques de Boisseson chasing policies and the protection of essary in economic growth. The cost also commented that although the intellectual property rights. Since the must rise as the economy develops and Chinese market is huge, corporations beginning of this year, leading officers this is a trade-off issue. Our companies would make negative judgments if the of transnational corporations issued understand this point very well. As for risks overbalance the market factors. their complaints in many different oc- the tax environment, I think it is not a A changing era casions: Christopher Adams, minister big problem for us, because we did not counselor for trade affairs at the US expect too many benefits from the taxa- “In the past we gave foreign cor- embassy in China, said that Chinese tion policy.” He claimed that to main- porations super national treatments government has made unclear state- tain an equal competitive market is mainly because we lacked capital. But ments about its government purchasing very important to foreign corporations. the Chinese economic scale has become policies, which would lead to unneces- Although the Chinese government very large, with its foreign exchange re- sary worries of the U.S. corporations; was very friendly to foreign investors, serve surpassing 2 trillion USD already. Steve Ballmer, CEO of Microsoft Cor- the truth is the investment has become Especially in the background of global poration, commented that the Chinese more and more difficult. financial crisis, almost all foreign gov- weak protection system about intellec- The foreign corporations’ worries ernments run short of capital, but the tual property rights would drag down reached the peak in the year 2009. On Chinese tax revenue still kept an annual the science and technology industry; Dec.30th 2009, the Ministry of Sci- increase rate of 30%. Therefore at this Jurgen Hambrecht, CEO of BASF ence and Technology, the Development moment we should attach great impor- Europe, attacked the Chinese govern- and Reform Commission, the Ministry tance to the quality of foreign capital.” ment measures against foreign funded of Finance jointly issued the “Notice said Wang Jicheng, vice researcher of corporations, complaining that for- of Launching the Identification Work the Corporate Research department of eign corporations had to transfer their about National Self Innovation Prod- the Development Research Center of unique technologies or business opera- ucts for the year 2009”, the appendix the State Council. tions to Chinese funded corporations to of which clarified the identification From the year 2007, foreign cor- enter certain markets; Peter Loescher, terms about the national self-innovated porations have clearly felt the change in CEO of Siemens, hoped that Ger- products: “the proposing units have the new economic background. In Sep- many corporations would receive equal the rights of using, disposing and re- tember that year, the Development and treatments in China and the technol- developing the intellectual property Reform Commission and the Ministry ogy transfer should be carried out on rights, which is subject to no foreign of Commerce jointly issued the newest a voluntary basis. He also advocated units.” Also, the “initial registration of edition of “Industry Catalogue for the that limitations on foreign investments products’ labels should be carried out Guidance of Foreign Investments”, to in car and financial sectors should be in China, and it is subject to no foreign encourage foreign investments in new removed; Jeffrey Immelt, CEO of Gen- related product labels.” Under these energy and environmental protection eral Electric, also said that “it is becom- terms, foreign corporations thought technologies and set limits to foreign ing more difficult for foreign companies that their products would be removed investments in real estate, high energy to do business in China.” from the list of “self-innovated prod- consumption projects and rare mining The complaints filed by transna- ucts” and would be at a disadvantaged resources. The new catalogue put great tional corporations exemplified their position in the government purchase emphasis on optimizing foreign capi- widespread worries. According to the and national project purchase. tal structures and activating the role “2010-2011 Suggestion Letter for Eu- Although the term was revised played by foreign capital in promoting ropean Corporations in China”, in the in 2010 as “production units that have self innovation, industry upgrading year 2008 only less than 3% of Euro- Chinese corporate capacity and are lo- and regional coordinated development. pean investments flowed into China. cated in China could apply for the self- Foreign investors were not allowed to This was not because these European innovated product identification on a exploit some important non-renewable corporations did not want to expand voluntary basis”, it did not alleviate the mining resources or carry out projects their business in China, but that the criticism from foreign investors. Com- that consume high materials, energies obstacles and risks they were faced with ments about China’s worsening invest- or cause severe pollutions. Also foreign were really beyond the expectations of ment environment could also be heard. capital was led to transfer to those in-

31 dustries with high additional values. Although the door has been closed for those foreign corporations that were no longer suitable for the new economic growth model, the Chinese government has issued 94 terms to encourage investments compared with the 5 restrictive terms. Corporations subject to encouraging terms continue to enjoy the value-added tax rebate policies. The making of these regulating terms was to guide foreign capital into those fields with high-grade, precision and technological advancements. On April 6th, 2010, the State Council issued the No. 9 document of “A Few Suggestions for Furthering the Foreign Investment Management Work ”, in which the quality became the priority standard for choosing foreign capital. “From this perspective, the environment for foreign investment did not worsen, but actually has improved.” Wang Jicheng thought that the change of foreign in- on foreign corporations. According to corporations that have operations and vestment trend was an opportunity for the “Research on 2010 Business Con- production business in China. Wang the European and American corpora- fidence” issued by the European Union Zhile thought that foreign corporations because they could make use of Chamber of Commerce in China, com- tions should learn how to be compatible their technological advantage to win petition from Chinese local companies with their changed identities in the the future competition. has ranked third in the list of five risks new competitive environment and give Another change of the Chinese faced by the Chinese business of foreign priority to localization in its operation business environment for foreign capital corporations. strategy adjustment, especially intro- was the rising demands on corporate Industrial trend, rising labor wage ducing the R&D session into China. energy saving, emission reduction, and environmental standard, and the They should conduct research and and protections on labors. “In the past growth of local competitors combined development suitable to the Chinese foreign corporations benefited from constitute the change of external en- market and also undertake basic R&D huge profits in China because many of vironment for foreign corporations in meeting the needs of global market their costs were transferred to external China. Under the impacts of these three and future market. Another important factors, such as the environment costs factors, it is very reasonable that foreign thing is to transform the current facto- and cheap labor. If the standard for corporations would feel the change. ries into low-carbon ones and promote environmental protection and labor More fierce competition the low-carbon industrial chain among costs rise, the total costs for foreign cor- suppliers in China. porations would also increase.” Wang As China has finished its transi- “Europe is the source of technol- Jicheng thought that compared with tion period after joining WTO, the ogy transfer to China, accounting for some large-scaled corporations and Eu- removal of the super national treatment 40% of China’s total technology trans- ropean and American corporations who for foreign corporations and the cre- fers. China would develop technology bear great advantages in environmental ation of a new environment to facilitate intensive, low carbon and service- standards and labor wages, some medi- fair competition and reciprocal promo- oriented economy, a goal that could um-sized and small companies, includ- tion among state-owned enterprise, be realized with the help rendered by ing Korean, Japanese, Hong Kong and civil corporations and foreign corpora- European corporations. The Chinese Taiwan companies, would suffer from tions in China are inevitable choices for market is broader and more attractive more intense pressures. Therefore, this China. Also the Chinese government than ever. If we are given equal oppor- optimization of business environment is seeking to improve the investment tunities to compete with other players, would wash out from the Chinese mar- environment and issued “A Few Sug- the only thing we will do is getting ket those corporations that could not gestions for Furthering the Foreign fully prepared” said Mr. Jacques de reach new standards. Investment Management Work ”, a Boisseson. In addition, the rising competi- document considered to highlight the tiveness of Chinese domestic companies fair national treatment for foreign in- (Author: from Southern Win- also imposed unprecedented challenges vested companies and all other types of dow Magazine)

32 From energy-saving & environment-friendly to Transformation of China’s foreign trade market integration: China’s foreign trade formulates guideline for the 12th five-year period The Twelfth Five-year For foreign trade enterprises and some businessmen, the blueprint for China’s foreign trade set by the unfold- Plan About to Come Clear: ing 12th Five-year Plan does not just focus on foreign trade industry itself; the guiding effect of China’s macroeco- China’s Foreign Trade Acceler- nomic policy is more noteworthy. Official analysis points out that one of the most important guidelines ate to Transform is a high standard of ecological civili- zation construction. The Communist By Zhou Guanglian Party of China (CPC) Central Com- mittee’s Proposal on Formulating the Twelfth Five-year Program (2011-2015) on National Economic and Social De- esources velopment clearly states that “to treat say that the construction of a resource-conserv- China’s ing, environment-friendly society as a t o t a l focus to accelerate the transformation of volume of import economic growth pattern.” Rand export trade “Businesses can get support from will hopefully the government to tackle any difficul- reach or exceed ties but one, which relates to market USD 2.6 trillion direction that doesn’t go along with in 2010; and trade or even violates the country’s endeavor surplus will stay at to save energy and reduce emission.” around USD 180 Speaking to foreign trade firms and billion, which not business associations, Minister Chen only will turn last emphasized that “the bottom line is year’s downward that China’s foreign trade redevelop- trend around, but ment can’t be achieved at the expense of also indicates an resources and environment.” overall positive Another important guideline trend. is the inevitable demand to integrate According to a report by Xinhua fair where foreign trade enterprises, domestic market with overseas mar- News Agency on November 1st 2010, foreign channels, and local commerce ket. The Communist Party of China the latest relative statistics show that the administrations are gathering, however, (CPC) Central Committee’s Proposal turnover of the 108th of China Import everyone is talking about how China on Formulating the Twelfth Five-year and Export Fair (also known as Canton will meet the challenge in the next five Program (2011-2015) on National Eco- Fair) has exceeded USD 25 billion by years in such a “complicated” recovery. nomic and Social Development clearly now as half of the session has passed, “We must see the current need to states that “we must insist strategy to climbing up by 11 percent from a year deal with difficulties; at the same time, expand domestic demand” and “accel- earlier. It’s noteworthy that the num- we must have long-term vision. This is erate to seek a new phase of economic ber was achieved in spite of decreased where the challenge lies.” commented by growth boosted by consumption, in- trader attendance to the fair. Mr. Chen. “During the 12th five years’ vestment and exports.” “The numbers show that though period, China’s foreign trade develop- In this regard, Minister Chen De- global economic recovery is underway, ment mode mainly relates to the trans- ming noted that the Ministry of Com- the recovery is slow, complicated and formation of structure, quality, technol- merce (MOC) would continue to help weak”, said Chen Deming, Minister of ogy and standards. I believe China’s foreign trade enterprises to enter the the Chinese Ministry of Commerce, foreign trade structure will make great domestic market gradually. He said: “I during a visit to the fair. At the Canton progress in the five years’ period.” believe China’s foreign trade structure

33 will be greatly changed and improved According to some field research and Reduce the mass of China’s and domestic market will integrate with investigation, in the short run Chinese foreign traders to a smaller overseas market after a few years’ time, foreign trade businesses are affected “go-get” army especially in the 12th Five-year period. by the slowing recovery of global mar- I believe the future Chinese domestic ket, “squeezed” export prices, as well Resources say that China’s total market will surpass Japan’s market sig- as volatile exchange rate and cost; in volume of import and export trade will nificantly to become the world’s second the long run they are faced with com- hopefully reach or exceed USD 2.6 largest domestic market.” plicated problems, such as accelerated trillion in 2010; and trade surplus will Learning the good news, some moving and upgrading of manufactur- stay at around USD 180 billion, which foreign trade businesses have been ing industry, labor-related changes, not only will turn last year’s downward shifting their focus from overseas mar- higher financing cost, commented by trend around, but also indicates an kets to the domestic market. “As the the Deputy Mayor of Xiamen city, overall positive trend. And according government is calling for a focus on do- Huang Ling, who has long been tak- to the forecast of some research institu- mestic market, we are considering how ing charge of the government work tions under the Ministry of Commerce to keep up with this trend to develop concerning foreign trade. “That’s why (MOC), total trade volume, includ- the company’s potential in the domestic it’s really urgent to restructure foreign ing goods trade and service trade, will market when making our own five-year trade industry; or, we’ll be thrown out. double the current number in ten year’s plan”, said Shang Jinsong, the president Not just industry structure, but we also time, amounting to USD 5.3 trillion. of Shandong Shanhai Glass Products need to adjust factor structure to form a “Based on this forecast it is esti- Co., Ltd.. According to Shang, the growth built mainly on technology and mated that the total volume of China’s Shandong glass company began to sell human resources and driven by innova- foreign trade will exceed USD 3.3 on the domestic market from 2008; tion” remarked Mr. Huang. trillion by the end of the 12th Five- till now there are altogether 100 “Liv- One of the indications signaling year period, which will maintain and ing Element” counters or so in China; changes in the 12th Five-year Plan, as strengthen China’s position in the now domestic sales take a 10 percent showed in the Canton Fair, is to quick- global market”, noted Huang Jingbo, a proportion of total sales this year which en the construction of China’s “export professor at the Department of Interna- increased from 5 percent in 2009 and is bases”. The Chinese Wood-Plant-Wil- tional Business of Lingnan College of still expanding.” low Export Base of Heze city, Shan- Sun Yat-sen University. From building export base dong Province made a debut during the Some people engaged in foreign to “going-out” speeding up: fair; more than ten firms attended the trade thought that China’s foreign trad- China actively creates new fair with a unified corporate logo and ers will shift fundamentally as both international competitive product label. A consolidated march by the international market pattern and advantages Chinese foreign trade companies into China’s economic growth pattern are international market is forthcoming. undergoing some changes. Lin Daofan, the General Manager What’s more, businesses and rel- According to Yu Danhua, China’s of Guangdong Songfa Ceramics Co., evant departments are generally calling foreign trade will shift from a “mass- Ltd., noted at the Canton Fair that it for large paces to “go out”. The govern- trader pattern” to a “go-getter pattern” is stressed in The Communist Party of ment should increase its support for in the next five years; companies with China (CPC) Central Committee’s Pro- Chinese businesses to set up “windows” few variations of products and weak posal on Formulating the Twelfth Five- to sell products overseas directly, so that bargaining power will be eliminated year Program (2011-2015) on National more foreign trade enterprises can shift gradually, which is expected to happen Economic and Social Development to to quote for domestic market rather in the new era of post financial crisis, encourage China’s foreign traders to “ac- than overseas market, commented by when competition on global trade mar- tively create new competitive advantage Yu Danhua, the Director General of ket will intensify. to participate in international economic the Ningbo Foreign Trade & Economic In addition, it’s predicted that the cooperation and competition.” Cooperation Bureau. product chain and industry chain of “To create new competitive edge, Some companies also believe that Chinese foreign trade enterprises will be it requires Chinese businesses to con- considering the more important role further “extended” in the future, similar front their own long-standing problems assumed by new strategic industries in to the production and operation mode head-on and assume a positive attitude China’s foreign trade during the com- of current multinational enterprises in to do adjustment, rather than wait ing five years to 2015, the government developed countries; and it will become passively to be challenged by changes should accelerate to establish an export a trend for manufacturing companies, brought about by international eco- products catalog for the strategic new based on their own needs, to enter the nomic restructure.” said Mr. Lin. industries, improve product catalog of businesses of logistics, retail, or image As seen by market participants, the new and hi-tech industry and for- promotion in various ways. although China has a foreign trade mulate supporting policies to seize the of large scale, the country also has strategic high ground of strategic new (Author: from Shihua Financial “worries” of both long and short term. industries in the international market. News)

Im/Ex in November, 2010: Trade Surplus Jumps to Second Highest

By Li Zhen

Table 1 Brief on China’s Import and Export in Nov. 2010 n December 10, 2010, General Administration of Customs of the People’s Republic of China Unit: Billion USD (GAC) released the profile of China’s import and November Jan. – Nov. Item Increase Increase export in November and the first eleven months Absolute Value ±% (y-y) Absolute Value ±% (y-y) of this year. China’s foreign trade in the first eleven months Total Import and Export Value 283.76 36.2 2677.28 36.3 Total Export Value 153.33 34.9 1423.84 33.0 totaled US$2.68 trillion, a year-on-year increase of 36.3 per- Total Import Value 130.44 37.7 1253.43 40.3 O Import and Export Balance cent, according to the GAC. Trade surplus for the first eleven (surplus is +; deficit is -) 22.89 170.41 months of the year totaled US$170.41 billion. Source: GAC China’s exports increased 34.9 percent in November from a year earlier to US$153.33 billion, the GAC said. The country’s imports climbed 37.7 percent year on year to reach Table 2 Brief on China’s Import and Export from Jan. to Nov. 2010 US$130.43 billion last month. (See Table 1) Unit: Billion USD According to the customs’ statistics, the total im- Increase port and export value for the first eleven months of 2010 Month Item Absolute Value ±% (y-y) amounted to US$2677.28 billion, 36.3% increasing com- Total Import and Export Value 204.78 -15.7 Jan. Total Export Value 109.48 -16.3 pared with the same period last year. Among the total value, Total Import Value 95.31 -15.1 the export value amounted to US$1423.84 billion, up 33.0% Total Import and Export Value 181.43 -11.5 year-on-year, while the import reached US$1253.43 bil- Feb. Total Export Value 94.52 -13.7 Total Import Value 86.91 -8.9 lion, skyrocketed 40.3% year-on-year. And the accumulated Total Import and Export Value 231.46 27.6 trade surplus in the first eleven months of the year arrived Mar. Total Export Value 112.11 18.6 Total Import Value 119.35 37.3 US$170.41 billion. Total Import and Export Value 238.16 39.4 Apr. Total Export Value 119.92 30.5 Total Import Value 118.24 49.7 Total Import and Export Value 243.99 48.4 May Total Export Value 131.76 48.5 Total Import Value 112.23 48.3 Total Import and Export Value 254.77 39.2 June Total Export Value 137.40 43.9 Total Import Value 117.37 34.1 Total Import and Export Value 262.31 30.8 July Total Export Value 145.52 38.1 Total Import Value 116.79 22.7 Total Import and Export Value 258.57 34.7 Aug. Total Export Value 139.30 34.4 Total Import Value 119.27 35.2 Total Import and Export Value 273.10 24.7 Sep. Total Export Value 144.99 25.1 Total Import Value 128.11 24.1 Total Import and Export Value 244.81 24.0 Oct. Total Export Value 135.98 22.9 Total Import Value 108.83 25.3 Total Import and Export Value 283.76 36.2 Nov. Total Export Value 153.33 34.9 Total Import Value 130.44 37.7 Source: GAC

36 Figure 1 China’s Import and Export from Jan.-Nov. 2010 Table 3 Bilateral trade of China’s top trading partners from Unit: Billion USD Jan. - Nov. 2010 Unit: Billion USD 300 Increase 250 Rank Partner November Jan. – Nov. ±% (y-y) 200 1 EU 45.47 433.88 33.1 150 2 US 36.19 346.89 30.2 100 3 Japan 28.53 267.79 31.7 50 4 ASEAN 27.55 263.01 40.6 0 Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. 5 Hong Kong 24.66 204.96 33.0 Total IM/EX Total EX Total IM 6 South Korea 19.34 188.25 34.9 Source: GAC Source: GAC

Trading partners US$153.3 billion, up from October’s for its goods lagged far behind that of 22.9 percent growth, the Chinese cus- Russia, South Africa and some other In the first eleven months of 2010, toms agency reported on December 10. developing economies. E.U., U.S., and Japan remain the Chi- Imports also grew strongly, rising 37.7 Exports to Russia rose 72.7 per- na’s top 3 trading partners (See Table 3). percent to US$130.4 billion, up from cent over a year earlier, while exports In this period, the bilateral trade volume October’s 25.3 percent growth. to South Africa grew 48 percent. By between China and E.U. amounted to Stronger imports could give a contrast, exports to the United States US$433.88 billion, up 33.1% year on boost to the United States, Europe and rose 29.5 percent and those to Europe year. Sino-U.S. bilateral trade value was other economies that are looking to grew by 33.3 percent. US$346.89 billion, increased 30.2% China’s relatively robust growth to help Import figures reflected Chinese year on year. China’s trade volume with drive a global recovery. industry’s strong appetite for oil, iron Japan in the first eleven months reached The politically sensitive trade ore and other raw materials from de- US$267.79 billion, 31.7% increase year surplus widened to US$22.9 billion, veloping countries. Chinese purchases on year. up 15 percent from US$19.9 billion in from Australia and South Africa, both China’s trade growth rebounded in October 2009. China’s surplus with major miners, grew 55.4 percent and November, boosted by strong demand the United States was US$16.8 bil- 64.1 percent, respectively. from developing economies, and its lion. global trade surplus widened 15 percent The United States and Europe (Notes: All the data referred in over a year earlier. remained by far China’s biggest trading the article are based on the statis- Exports rose 34.9 percent to partners but growth in their demand tics from China Customs)

37 CITY

Dalian: A Beautiful City of Northern China

alian is a young city with only a 100-year history. Situ- ated at the tip of China’s Liaodong Peninsular, it is a trading and financial center in northeastern Asia and has gained the name the “Hong Kong of Northern China”. The old name of Dalian was first used by an official in his- me morialD to Emperor Guangxu in the Qing Dynasty referring to the present Dalian Gulf. In the early 20th century, the gulf area developed quickly and Dalian expanded into a city of significant size and importance. The impression Dalian gives to the world is of a city of lawns, squares, fountains and gardens. There are two things that have earned the city a great reputation. One is Football and the other is Fashion. Given the name of “Oriental Brazil”, it hosts many Chi- nese football matches and has the most successful football teams in China. The enthusiastic fans in the football club of the four-star Wanda International Hotel tell everyone how much the Chinese like this game. Another carnival event in the city is Dalian International Fash- ion Festival, during which thousands of dazzling celebrities, design- ers, pop stars and clothing merchants from both home and abroad get together to present an In-Fashion feast to the world. Consequently, Dalian stirs shopping lovers’ blood with all sorts of skyscraper shop-

38 ping malls and markets. If you are lucky enough to come to the city around September, a sea of world-class fashion brands will delight you. Running from downtown Dalian there is a 40-kilometer road known as Binhai Lu wind- ing along the coastline, northeast to southwest. This coastal area is a paradise for beach vacation- ers. The famous scenic spots of Bangchuidao Scenic Area, Laohutan Scenic Area, Jinshitan Scenic Area and Xinghai Square are scattered around this region. In addition to the stunning cliffs and scenic parks, numerous places along the coastline are good for beach resort visitors and water sports lovers. Meanwhile, you can sample the authentic Dalian-style seafood in a fisherman’s house at an incredibly low Numerous bathing places and beaches in the city are price. popular venues for Dalian’s locals to relax from everyday work Located to the southwest of Dalian is Lushun. Today it and stress. Young people, like those in many other is a place with museums and historical sites for tourists to learn metropolitan cities in China are trend pursuers the history of the city. Bingyu Valley, 240 kilometers north who spend their evenings in bars and pubs of Dalian is home to an astonishing array of rock formations throughout the city. amidst limpid waters, similar to those found in Guilin.

Tourism

There are three main scenic areas in the city - the Downtown Area, Binhai Road Area and Xinghai Park Sce- nic Area. Downtown Area The busy downtown area presents the historical heritage, exotic flavor and modern charm of the city. Zhongshan Square is the central landmark of the city, where the governmental financial institutions are located. It was a colonial construction built by Russian engineer decades ago. The square has more than ten avenues radiating outwards and forms the central commercial area of the city. In the Russian and Japanese colonial pe- riods, the invaders dreamed of building an oriental city in the style of Paris or Tokyo. As a result, many varieties of buildings were built in the city. Like the Bund area in Shanghai, Zhongshan Square is a result of that period with a mixture of western style buildings of Romanesque, Gothic

39 CITY

and Renaissance designs. At present, banks and financial of- fices dominate these buildings giving it the name of “Oriental Wall Street”. Dalian Hotel on the southern side of the square has Art Exhibition Hall. an imposing European-style architecture with dignified There are more than 30 squares in Dalian with artistic royal court buildings and Baroque sculptures, hush lawns and western-style fountains. These vaulting. Walking further formed the architectural style of the city, taking squares as southward you will find the center and radiate outwards. A square sightseeing tour by a Japanese flavor street Tourist Buses 801 and 801 (B) include Victory Square, Ren- with Japanese restau- min Square, Olympic Square, Haizhiyun (Sea of Melody) rants, teahouses and Square and Youhao Square. flower shops. Another Another touring highlight would be a tram tour by German-designed antique trolley cars from the early 1900s. It recalls the olden building houses Dalian days when the city was ruled by the Japanese invaders.

40 500 meters north of the square is a landmark of the city, Xinghai Exhibition Center. This is a venue where big events and ceremonial activities such as the Spring Fireworks Festival, International Beer Festival and Dalian International Fashion Festival are held. A park in this area with the same name has Shengya Aquarium and the best bathing place in Dalian with all necessary amenities. Three docks Binhai Road Area inside the Xinghai Gulf In addition to the historical stories in the downtown have ferries to Laohutan area, Dalian is also a bathing paradise. It has an amazing 40- and Baochuidao sce- kilometer long beachscape along Binhai Road. Originally nic areas. a military defense road built in the 1970s. Binhai Road is a Around Dalian national scenic area with imposing mountain scenery on one side and ragged cliffs and seaside on the other. Starting from Lushun occupies the west end of Dalian City and the Haizhiyun Square, it follows the coastline of Dalian from south edge of the Liaodong Peninsula. As an important mili- the east via the south part and on to the west. Driving along tary strategic port, Lushun has many historical stories and the road, tourists will find a dozen attractions, like a string of contains a rich treasure of relics. The pretty Bingyu Valley pearls scattered along it including Bangchuidao Scenic Area, Scenic Area, 240 kilometers north of Dalian, is Liaoning’s Laohutan Ocean Park, Yanwoling (Swallow Nest Mountain), answer to Guilin and Yangshuo with many towering, vertical Fujiazhuang bathing place and Yuexiu Villa. The southern rock formations with limpid rivers running through it. Jinshi- section starting from Hutan Paradise to Fujianzhuang bath- tan Scenic Area, located 50 kilometers northeast of the city is ing place is the most popular part. a popular national park. Another featured tourist choice would be the any of the Xinghai Square Area bathing places along the coastline of the city. As a coastal city In the western part of the city is the largest square in at the tip of Liaodong Peninsular, Dalian is a paradise for wa- Asia, Xinhai Square. It was a great project built to commem- ter sports lovers and those looking for a beach holiday. orate Hong Kong’s return to China in 1997 and imprints of 1000 pairs of footprints of Dalian people symbolize the en- terprising spirit of Dalian people.

Food

Though the city area of Dalian is not very large, it has numerous restaurants providing a variety of best seafood. Surrounded by the Yellow Sea and inland Bohai Sea, Dalian has a coastline of nearly 2,000 kilometers. The north temperate zone climate with high rainfalls endow Dalian with an ideal seawater environment to produce a variety of rich nutritious marine products including fish, prawns, crabs, shells, echinus, sea cucumbers, abalone and algae and so on. Therefore sea food is undoubtedly king of the Dalian’s dining scene. Actually, a more budget choice is to choose a home restaurant in the scenic coastal area and cook the fresh sea food yourself.

41 CONOMY E

China: Global Crisis Avoided, Robust Economic Growth

Sustained (Ⅱ) By Gallina Andronova Vincelette, Alvaro Manoel, Ardo Hansson and Louis Kuijs

III. Global crisis: impact and policy response

he fi nancial crisis that originated in the developed world intensifi ed in September 2008 in the United States and began to spread globally. Since Lehman Brothers’ bankruptcy, many other systemically relevant financial institutions (such as Freddie Mac, Fannie Mae, AIG, Merrill Lynch, and CitiGroup) have faced serious fi nancing diffi culties. In spreading beyond the United States and beyond the fi nancial sector into the international money andT capital markets, the previously heavy capital infl ows to emerging market economies quickly and abruptly reversed. ese developments did not leave China unaff ected.

Channels of transmission in China

Limited exposure to toxic assets in the developed world and a fairly closed capital account shielded China from the initial fi nancial turmoil of 2008. Furthermore, China’s strong fi scal position, highly regulated domestic and recently recapitalized banking sector, large foreign reserves, - and low short term debt helped the country mitigate the external shock. Despite its favorable initial macroeconomic position, China began to feel the eff ects of the crisis in November 2008. e impact has been mainly through the trade channel, and not so much through private capital fl ows and the fi nancial sector.

42 Trade channel. The real sector has been the main far below the record US$890 billion in 2007. channel through which the global crisis has aff ected China. While China as a net capital exporter is less aff ected by In the last quarter of 2008, China’s exports declined dra- such developments, virtually all categories of capital fl ows matically. Since the onset of the crisis, exports shifted from to China were hurt after September 2008. Nonresidents 20 percent annual growth to an annualized contraction continued to sell equities; they also shifted to selling debt of more than 25 percent in early 2009. The sharp fall in securities and selectively withdrawing deposits held with exports cut growth in the fourth quarter of 2008 to its low- domestic banks. Infl ows of FDI slowed sharply as compa- est rate in more than a decade. A large part of the export nies began delaying new commitments and new construc- contraction was the result of reduced exports of machinery, tion. Lending by foreign banks also slowed. transport equipment, and manufactured goods (fi gure 8). More recently, capital flows to China have begun to Negative growth in China’s major trading partners-namely, recover, and offi cial foreign exchange reserve accumulation Europe and the United States, where demand plunged- has regained strength. After an abrupt decline in foreign is the main reason for the steep drop in Chinese exports. investment in the fourth quarter of 2008 and fi rst quarter Export growth continued to remain subdued throughout of 2009, gross FDI infl ows revived in the second quarter of 2009, with exports to all markets contracting. is strong 2009. Despite the shrinking current account surplus, which decline had 14 additional eff ects on the real economy, in- narrowed by about a third in the first half of 2009 (rela- cluding on investment in the manufacturing sector and in tive to the previous year), China’s offi cial foreign exchange the labor market. reserve accumulation has regained momentum because of valuation gains and net infl ows of fi nancial capital (fi gure 9). Figure 8 Export Growth (Year-on-Year) by Commodity Group e headline reserves fi gure reached a record US$2.3 trillion as of September 30, 2009. 30 China is likely to continue to attract capital inflows 21 21 20 19 in the near term. Good growth prospects and strong asset market performance are expected to support the attractive- 10 ness of China as a destination for foreign capital. 0 Financial channel. In contrast to other emerging— -2 market economies, China’s financial sector has not been -10 -3

growth yoy rate,% seriously aff ected by the crisis. Its banks were largely un- -20 -18 -17 touched because of the following: -23 • Th e banking reforms undertaken in early 2000, when -30 -26 -26 Aug Sep Oct Nov Dec Jan Feb Mar Apr May the state asset trust cleaned up the nonperforming loans of 2008 2009 the banking sector and left the banking system solvent machinery and transport equipment manufactured goods • Th e fi nancial system’s limited exposure to the toxic miscellaneous manufacturing articles chemicals and related products assets of the developed world primary products total exports • Th e country’s minimal reliance on foreign capital for Source: World Bank; China Monthly Update (April, May, June, July 2009). fi nancing economic growth in recent years While the Chinese government generally does not report in detail on the holdings of fi nancial entities, some e outlook is for exports to remain restrained given the subdued global economy. As the global economy gradu- Figure 9 Foreign Exchange Reserve Accumulation ally starts to recover, China’s export growth is expected 2,500 100 to improve. However, a sharp rebound is unlikely. Import June growth, on the other hand, has risen substantially, as the 80 stimulus package has increased China’s appetite for invest- 2,000 ment goods and raw materials. Indeed, real imports re- 60 bounded to levels higher than before the crisis. e growth 1,500 billions in import volumes has shifted to positive territory for all 40 billions USS USS types of products except electronics and light manufactures, 20 which are aff ected by still-subdued processing trade. Owing 1,000 to these strong imports, China’s trade surplus is narrowing 0 substantially. And, in combination with the unlikelihood of 500 a sharp export rebound, China’s trade surplus may shrink -20 further in the near term before it recovers. 0 -40 Private capital flows. For many countries, another 2001 2002 2003 2004 2005 2006 2007 2008 2009 major source of vulnerability in the face of the global crisis monthly increase of foreign exchange reserve(right axis) is the massive contraction of private capital flows world- heading foreign exchange reserve wide. Net private capital fl ows to emerging economies in CEIC China Database; World Bank. 2009 are less than half of the US$392 billion of 2008, and Source:

43 CONOMY Figure 10 New Banking Lending E commercial banks have disclosed their low levels of exposure to sub-prime U.S. mortgages relative to their total in- 35 5 vestments. For example, the Bank of China (one of China’s 30 largest state-owned commercial banks and the largest for- 4 eign exchange lender) is among the banks with the greatest 25 exposure to U.S. asset-backed securities. Still, its reported

exposure to U.S. mortgage-related securities fell from some 20 3 ,sa,3mma 3.5 percent of its overall investment securities portfolio in 15 March 2008 to only 1.4 percent in October 2008. growth,%yoy 2 Instead of relying on foreign savings to finance eco- 10 % annual GDP nomic activity, China’s banks have de-leveraged in recent 1 years. With a considerable saving-investment surplus, China 5 has been able to generate and intermediate financing do- 0 0 mestically. Unlike many other emerging markets, the coun- 2001 2002 2003 2004 2005 2006 2007 2008 2009 try has remained self-suﬃ cient and was able to continue to lend to domestic agents soon after the crisis broke out. A loan growth monthly new lending (right axis) sharp expansion in domestic bank lending is expected to Sources: CEIC China Database; World Bank. keep fueling growth in the short term.

Policy responses and the strong fi scal stimulus movement relative to other currencies, changes in China’s trade-weighted exchange rate have differed significantly In contrast to other crises, policy makers around the from movements against the dollar. China’s nominal eff ec- world have responded speedily and forcefully to limit the ef- tive exchange rate (NEER) appreciated 12.3 percent be- fects of the rapidly deteriorating fi nancial conditions of late tween July 2005 and early March 2010, after depreciating in 2008. Like many other countries, China launched expan- 2000–05, and is now roughly at the level prevailing in 2000 sionary monetary and fi scal policies to off set the fast slowing (fi gure 5). is is also true for the Consumer Price Index– in economic activity worldwide, cushioning the drag from based real eff ective exchange rate (REER). Moreover, large declining world demand and falling private investment. movements in the U.S. dollar versus other currencies have Loose monetary policy. China radically changed its meant that since the re-pegging against the dollar at the monetary policy stance in the last quarter of 2008 following end of 2008, the renminbi has moved up and down recently a collapse in export markets, a freezing of upstream indus- against the currencies of most of its trading partners. With trial activity, and declining housing prices. From a tight respect to China’s largest trade partner’s currency, the EU’s monetary policy incorporating inflation expectations, the euro, the renminbi has appreciated since November 2009. authorities switched to looser monetary policies aimed at Fiscal expansion. China’s fi scal policy response to the boosting credit expansion and supporting economic activity. crisis has been bold and eff ective. In November 2008, the e central bank began injecting substantial liquidity into government announced a two-year fi scal stimulus package the banking system, starting in the last quarter of 2008. amounting to RMB 4 trillion (US$590 billion). e expan- The aggressive easing of monetary policy supported sionary fi scal policy aimed to dampen the impact of falling an extraordinary expansion in bank lending. e year-on- exports and weaker private domestic demand. year increase in bank lending climbed from 18.8 percent in Substantial fi scal space combined with strong external the last quarter of 2008 to 29.8 percent in the fi rst quarter confi dence allowed the authorities to adopt such a large fi s- of 2009, and to 34.3 in the second quarter. New lending cal package. China had huge fi scal space (unlike most other amounted to about 30 percent of GDP in 2009 (fi gure 10). emerging countries) thanks to its high level of domestic sav- To ease bank lending in late 2008, the central bank ings, strong external confi dence, and low interest rates and lifted credit quotas and cut interest rates five times (by a spreads. Furthermore, a long track record of fi scal discipline total of 216 basis points) during September–December. has reduced public debt, allowing China to increase spend- In large part, the injection came about because of lower ing and lower taxes without triggering fi scal sustainability required reserve ratios, which went from 17.5 percent to concerns. is is true even though total public debt is higher 14–15 percent. Most banks have sizable capital bases and, so than the headline number of 20 percent of GDP, including far, low nonperforming loans. Loan-loss reserves have also the debts incurred by investment platforms associated with been increased. Bank profi ts are, however, being squeezed local governments. by falling loan rates and higher provisioning costs, and In addition to the magnitude of the fi scal stimulus, the many need to raise capital after the lending surge. government front-loaded investment spending and deployed China’s effective exchange rate continues to hover it rapidly. Starting in the last quarter of 2008, the quickly around its U.S. dollar peg. Since the end of 2008, the ren- deployed public investment included major infrastructure minbi has been re-pegged to the dollar. However, a large projects and rebuilding eff orts after the Sichuan earthquake. and increasing part of China’s trade is with countries other Additional measures supported domestic demand more than the United States. Thus, as a result of the dollar’s generally. ese included lower taxes, subsidies, and pension

44 increases. Other fi scal policies targeting specifi c industries fers; lower consumption taxes for small cars; and subsidies were also introduced. Strategic plans have been designed to for rural consumption of electronic appliances. support individual industries, retooling factories, improving IV. China’s short-and medium-term prospects energy effi ciency, encouraging innovation and research and development spending, and consolidating those industries China’s large fiscal and monetary stimulus has sup- with excess capacity. ported an economic recovery, despite the sharp fall in ex- China’s fiscal stance has changed dramatically with ports associated with the global recession. e stimulus was the stimulus that has boosted aggregate demand. The the main cause of China’s real GDP growth of 8.7 percent country’s robust growth in 2009 was linked to a massive in 2009. Although most of the stimulus has shown up in investment-led stimulus (5.9 percent of GDP) centered on infrastructure-oriented, government-sponsored invest- infrastructure, combined with increases in transfers, con- ment, some has been consumption-oriented; and domestic sumer subsidies, and tax cuts. Only a small portion of the demand growth has been broad-based. Consumption has fi scal stimulus was refl ected in the budget; the defi cit rose remained robust, in large part because the labor market has moderately from 0.4 percent of GDP in 2008 to 2.8 percent held up well. e strong domestic demand has buoyed im- in 2009. Bank lending contributed most of the fi scal stimu- port volumes, and the current account surplus narrowed to lus (almost two-thirds) and the lending surge was fairly 6.1 percent of GDP from 11 percent of GDP in 2007, even broad—based: infrastructure made up half of total medium- with sharp declines in import prices. and long-term lending in 2009, but medium-and long-term Real GDP growth is likely to remain strong this year, lending to manufacturing, real estate (including mortgages), with the composition of growth set to shift markedly. e and other sectors also more than doubled (fi gure 11). strong growth momentum at the end of 2009 carried into the fi rst months of 2010, with particularly strong exports, Figure 11 New Medium-to Long-Term Banking Lending, 2006–09 retail sales, and industrial production. We project real GDP growth of 9.5 percent for 2010 as a whole. Exports are set 8,000 to grow robustly as global demand recovers. Although imports should outpace exports somewhat, net external trade 7,000 should add modestly to real GDP growth. Real investment 6,000 growth, however, may be only about half the rate it was last year. In a heated housing market, real estate investment 5,000 should grow well. On the other hand, government—led 4,000

billions investment, the key driver of growth in 2009, is bound to decelerate considerably. In 2011, we expect overall GDP

RMB 3,000 growth to remain strong, with a broadly similar composi- 2,000 tion as this year’s. 1,000 With this scenario, the trade surplus (in U.S. dollar terms) may narrow in 2010 because of a projected decline in 0 2006 2007 2008 2009 the terms of trade. e current-account surplus may expand somewhat this year and the next, owing mainly to higher infrastructure manufacturing real estate other income earned on China’s foreign reserve holdings.

Source: The People’s Bank of China; World Bank. While infl ation has turned positive, it is likely to remain modest in 2010. Consumer prices picked up in the second half of 2009, led by higher food prices. Nonetheless, Overall, China has shown a large capacity for coun- infl ation will likely average a modest 3.5–4 percent in 2010 tercyclical fi scal spending, especially on government invest- as global price pressures remain subdued, China-specific ment projects (notably, infrastructure) that have helped put factors behind food price increases abate, and the authori- the economy back on a growth path. Besides the positive, ties act decisively to curb core infl ation pressures. short-term Keynesian impact on aggregate demand, which The heated real estate market, however, will keep was felt in late 2008 and in 2009, infrastructure invest- property prices rising rapidly. Prices inthe large cities in ments also tend to be good for medium-and long-term February 2010 averaged more than 30 percent above those growth, as they relieve constraints by boosting productive of the previous year, and further increases are in sight. is capacity and GDP potential. has prompted policy measures to expand supply and curb Although the impact of consumption—oriented fis- speculation, although the government is cautious in its pol- cal measures was more modest, household consumption icy response and does not want to reduce real estate activity. growth has remained steady. After weakening in early China will need to take a less accommodative mac- 2009, labor market conditions have improved and employ- roeconomic policy stance in 2010 to contain the emerging ment and wage growth have held up well through early risks. e world economy is still subdued, with output below 2010. Income and consumption have also been further potential in many countries. China’s growth, however, has supported by falling consumer prices during much of 2009, been strong and, unlike most other countries, its overall which boosted purchasing power; higher government trans- output is near potential. e absence of a signifi cant output

45 CONOMY

E In the medium term, China’s recovery can be sustained only with a successful rebalancing of its economy. This calls for more emphasis on consumption and services and less on investment and industry. As China’s leaders have noted, the global crisis makes rebalancing China’s economy all the more urgent.

gap means that China needs to assume a macro- main strong in 2010 (9.5 percent). Another mitigating factor economic stance diff erent from that of most other is the expected deceleration of government-led investment, economies. Even though inflation risks remain the driver of credit growth in 2009. modest because of the weak global environment, Furthermore, the authorities have outlined a less ex- the macro stance should be considerably tighter in pansionary monetary policy stance for 2010: overall credit 2010 than in 2009; this will be necessary to man- growth is targeted at about 18 percent (versus 30 percent in age infl ation expectations and contain the risks of 2009), monthly credit quotas should keep lending growth a property bubble and strained local government in check, and the reserve requirement ratio has been raised fi nances. twice to withdraw liquidity. In general, the key economic issues in Chi- • Ensuring fi nancial stability includes mitigating the na are quite diff erent from what they are in most risk of a property price bubble and ensuring the sustain- other countries: ability of local government finances. With regard to the • Th e 2010 budget presented to the National property market, stability calls for an appropriate macro People’s Congress rightly implies a broadly neu- stance and improving the functioning of markets. Concerns tral fiscal stance. The 2010 fiscal deficit is now about the aff ordability of housing for lower-income people targeted to remain largely unchanged from 2009. are best addressed by a long-term government support However, world economic prospects are still un- framework. e authorities have rightly increased vigilance certain, and fl exibility in implementation is im- over lending by local government investment platforms. portant. is points to the need for contingency Given China’s solid macroeconomic position, local fi nancial plans and, equally important, room for automatic problems are unlikely to cause systemic stress; however, the stabilizers to work. fl ow of new lending to the various platforms needs to be • Monetary policy needs to be tighter than contained, and local government revenues need to be less last year, and the case for exchange rate dependent on land transaction revenues. fl exibility and increased monetary indepen- In the medium term, China’s recovery can be sustained dence from the United States (and the dollar) is only with a successful rebalancing of its economy. is calls getting stronger. A higher renminbi exchange rate for more emphasis on consumption and services and less can help reduce infl ation pressures and rebalance on investment and industry. As China’s leaders have noted, the economy. e case for a larger role for interest the global crisis makes rebalancing China’s economy all rates in monetary policy is strong. Also, if policy the more urgent. is is because global demand and export makers remain concerned about interest rate–sen- growth are expected to be weak, even in the medium term, sitive capital fl ows, more exchange rate fl exibility reducing GDP growth, all else being equal. In addition, would help. China’s rebalancing will be helpful in addressing the global • Given that most of the stimulus package imbalances, whose resolution requires that countries like took the form of increased bank lending, concerns China pursue policies to lower their surpluses. have arisen about the eff ect this will have on the Following on earlier initiatives, the government took quality of bank portfolios. A potential risk is that steps in 2009 to rebalance and boost domestic demand. overall economic growth in China could mark- For example, it expanded the role of the government in fi - edly slow in 2010 (and beyond), cutting into the nancing health, education, and social safety nets; improved profi ts of private and state entities, which would access to fi nance and small and medium enterprise develop- in turn create problems in repaying outstanding ment; and contained resource use and environmental dam- bank loans. is risk appears minimal, however, age. ese are useful steps, but more policy measures are and building on the momentum shown in the fi rst needed to rebalance growth, given the strong underlying months of 2010, economic growth is likely to re- momentum of the traditional pattern. More must be done

46 in all these areas. 2002–07, to an annual average of 11 percent. China’s pow- More generally, in the years ahead, China will need to erful investment-heavy, industry-led pattern of growth was undertake two types of structural reform to ensure a suc- fueled by the recovery from the Asian crisis, a strong reform cessful economic rebalancing and sustained growth: agenda, and an active public investment program. Amid a • Policy reforms to help channel resources to sec- favorable global environment characterized by expanding tors that should grow in the new environment, instead of global demand, Chinese exports surged by about 20 percent to sectors that have traditionally been favored and done annually during 2002–07. While China attracted a large well. Financial sector reform can improve the allocation of amount of FDI during this period, equal to 3–4 percent of capital (and access to fi nance) for the private sector, service GDP, current account surpluses stayed large, averaging more -oriented and smaller fi rms, and households. Also, the ex- than 6 percent of GDP. Domestic savings have been the key pansion of the dividend payment policy for SOEs can im- source of investment fi nancing in China. Were it not for the prove the allocation of SOE profi ts. Adjustment of prices global crisis, China’s potential annual growth rate would and taxation of resources and strengthening of the ren- have been about 10 percent. minbi exchange rate can shift When the crisis hit, China production from industry had strong macroeconomic fun- to services. A stronger real damentals with large current ac- exchange rate would support count surpluses, low public and consumption by reducing external debt, and substantial the prices of tradable goods foreign exchange reserves. More- domestically and increas- over, China’s limited exposure ing labor income at home. to toxic assets in the developed It would also give incentives world and its relatively closed for greater investment in do- capital account shielded it from mestically oriented sectors by the initial financial turmoil of increasing their relative com- 2008. But beginning in Novem- petitiveness. us, despite the ber 2008, China’s real economy problems that it may cause began to feel the effects of the for exporters, further real crisis, especially through the appreciation of the renminbi trade channel. Export growth is desirable, given China’s plummeted in early 2009, con- policy priorities. In addition, tracting by 25 percent year on opening up several service sectors to the private sector and year. To counter the effects of the rapidly deteriorating removing unnecessary regulation and restrictions could economic conditions of late 2008, the Chinese authorities boost growth and employment. took strong and quick action: a huge fi scal stimulus package • Policy reforms to support more thriving domestic equivalent to 12.5 percent of 2008 GDP and a substantial markets; to encourage successful, permanent urbanization; loosening of monetary policy. e measures limited the im- and to achieve a more vigorous, services sector–oriented do- pact of the crisis, and economic growth reached 8.8 percent mestic economy. China needs more migrants to settle per- in 2009. manently in the cities. Urban dwellers consume more than Looking beyond the global crisis, the growth slowdown rural people and spend much more on services. In addition in advanced countries, and especially slower export demand, to opening up services sectors, other key policies to promote can be expected to have a signifi cant impact on China’s medi- successful, permanent migration are further liberalization um-term potential growth. All else being equal, we estimate of the Hukou (household registration) system; land reform; that a 10-percentagepoint drop in the growth of exports will and reform of the intergovernmental fi scal system (to give result in a 2-percentage-point reduction in GDP growth over municipalities the resources and incentives to provide basic the medium term-down to about 8 percent annually. public services to migrants). Signifi cant increases in house- While signs of stronger domestic demand were already hold debt are also feasible. In 2007, the household debt-to- evident in 2009, it remains unclear how much the recovery GDP ratiowas below 20 percent in China, compared with can be sustained in the absence of government stimulus. e 100 percent in other Asian countries, and 110 percent in the government’s ability to adopt a more active and sustained United States and United Kingdom. With regard to inter- policy of rebalancing its economic structure away from de- national economic relations, China must (as its leaders have pendence on exports and investment to domestic consump- stressed) avoid protectionism, as exports are critical to the tion, accompanied by other structural reforms, will be critical. recovery of the world economy. Only such a rebalancing will mitigate the impact of the crisis V. Summary and concluding remarks and put China on a renewed long-term growth path (The End). Since the late 1970s, China has experienced impres- sive GDP growth, averaging 8.9 percent per year during (Authors: from the Poverty Reduction and Eco- 1995–2001. GDP growth accelerated even further during nomic Management Department, the World Bank)

47 orld Expo W

Unforgettable Shanghai ExpoBy Guo Yan

ith the announcement from Premier Wen Jiabao, the 2010 Shanghai Expo closed its curtain after operating for 184 days. It became the largest expo since the first expo was held in London in 1851. China realized the promise it made before the expo: that the Shanghai World Expo would be successful, splendid and unforgettable event. The themeW of the expo was Better City, Better Life, a concept that was displayed by the many creative pavilions through their development themes, pavilion design, and especially their innovative application of new technology. They not only expressed the concept of a “Better City and Better Life” to all of the visitors, but also saw records made at the Shanghai Expo. 1. 246 countries, regions and international organizations were involved in this fabulous event. Their creative pavilions displayed the theme of the Shanghai Expo, “Better City, Better Life”, highlighted by the China Pavilion, UK pavilion, Saudi Arabia Pavilion, and Japan Pavilion. They also witnessed the many records that were set at the Shanghai Expo. 2. 73.08 million visitors attended the Shanghai Expo. From May 1 to October 31, the Shanghai Expo attracted 73.08 million visitors. The number of visitors exceeded the previous record of 64.21 million visitors that attended the 1970 Osaka World Expo. According to the Expo’s organizers, the Expo zone handled an average of 400,000 visitors per day. The highest number of daily visitors was 1.03 million on October 16. In addition, the number of overseas tourists exceeded 3.5 million. 3. Two creations —UBPA and Shanghai Expo on the Web UBPA collected 80 cases from around the world that showcased advanced city development concepts and details for promoting the communication and development among cities, and also helped cooperate on some projects. For instance, Shanghai and Madrid signed a plan to provide apartments with low rent. The Shanghai Expo on the web is the first time that the excitement of the expo was brought to the world through the Internet. It not only strengthened the interaction between the Shanghai Expo and audiences, but also allowed people all over the world to be involved with the Shanghai Expo, making the Shanghai Expo “Never close”. 4. 79965 volunteers were impressed. The volunteers were called “White vegetables” because of their white and green uniforms. Due to their kind and professional service, they impressed visitors in countless ways. The success of the Shanghai Expo would not have been possible, if not for their effort. In addition, several new technologies were applied to the Expo for the first time, from the Expo tickets with the “China Chip” to new energy buses in the area around the Shanghai Expo; from the Expo theme pavilions equipped with Solar photovoltaic equipment to the LED lights shining throughout the Expo park; from Shanghai Expo on the Web to the technology for cooling the pavilions and visitors, etc, the Shanghai Expo demonstrated several amazing feats of technology. This not only served to benefit the show, but will also influence the world in the future, and they are not far from citizens now, in the near future they will become part of our everyday lives. This is the meaning of the World Expo. 48 3 Better 2 City

1. Germany Pavilion— This is the “Balancity,” a magnificent crystallization Better of Germanic originality and technology. Life 2. UK Pavilion— known as the “Seed Cathedral”. It is designed like a wrapping paper, making it seem as if the wrappers have fallen open to reveal a sparkling jewel of life. 3. The moon boat in Saudi Arabia Pavilion is loaded with dreams and friendship.

4. Estonia Pavilion— Let’s save our wits about how to make the dream of “Better City, Better Life” come into reality. 5 5. The ideal cities of different countries that were designed 6 by famous architects across the world display in the pavilion of Armenia. 6. Giant Baby in Spain Pavilion is very popular at the Shanghai Expo. 7. Robot will enter into the citizen life in the future. 8. In the future, green 4 8 transport will be the trend. 49 China Told Us: Why the World Still Needs Expo —Interview with Vicente Gonzalez Loscertales, secretary-general of Bureau International des Expositions By Fu Ligang

hanghai Expo will be the driving engine for and abstract ways through construc- transformation in 21st century.” tions, urban planning, services, culture and education. While countries and : You said that Shanghai Expo will be a driver for the trans- cities around the world are trying to “SQformation in 21st century at the closing ceremony, why do find sustainable city development plans you have this comment? and practices, Shanghai Expo sets a : 2010 Shanghai Expo has made milestone in the field. Shanghai Expo Aa sound basis for the following sowed the seeds of creativity and prac- expos to be held in 21st century. tices, and they will grow in 2012 Yosu And it successfully demonstrated Expo and 2015 Milan Expo, searching that the Expo can provide a site to for better ways to create a sustainable join people of various countries and future. Expos are not only an exhibition regions and global organizations platform for countries to show culture, together, to cope with common history, high technologies, but also an challenges of human race and make important way for communication and their respective contributions. cooperation among countries and in- China is a developing country, ternational organizations. A successful but also a powerful country. 2008 expo will promote harmony develop- Beijing Olympic Games makes China be realized by the world as the sponsors, ment of the world, social and economic while 2010 Shanghai Expo provides a different platform. During a period of 184 cooperation between countries, and days, all these pavilions and Urban Best Practices Area of participant countries and bring the people with peace and prog- regions exhibited to China and the world the ideas and achievements in city life. ress -- this is the purpose and final con- After the visits to these UBPAs, many delegations from different cities had a deep cept of expos, meaning reality beyond impression on the urban concept and immediately got in touch with the respec- dreams. tive city authorities, for future communication and cooperation. Also, many of the : How do you image this expo be- municipal utilities are pressed to show themselves to the world, in hope of creat- Qfore Shanghai Expo uncovered its ing more industry opportunities. Through the Expos, both sides can realize their curtain? wishes. : What I see is beyond my imagina- Shanghai Expo turns complex and cut-edge concepts into easy-to-understand Ation. Shanghai Expo really tested my visible languages, and directly exhibits the changing world to people in material poor imagination. 400,000 to 500,000 50 person time visits per day, numberless which moved me a lot and encour- amazing performances, beautiful pavil- aged me to enter exhibition industry. I ions, open space, and people enjoying got a chance to work in CCPIT. How the expo, all these deeply touched me. do you think of the role of CCPIT I should thank all the stuffs who played in biding, organizing and oper- have had contributed to the success of Shanghai ating Shanghai Expo? pleasant cooperation and close contacts, Expo, which made significant pro- : (laugh) I’m glad you made that and the good interaction between the gresses on the number of participant Achoice, and congratulate you on two institutions is undoubtedly an im- countries and regions and international entering CCPIT, the most professional portant reason for the success of Shang- organizations, number of visitors, qual- exhibition and trade promotion organi- hai Expo. In addition, CCPIT was ity of pavilions, environmental manage- zation with the longest history. In my also responsible for reception of VIP ment and innovative exhibition ways. opinion, CCPIT is the most important to China Pavilion and coordination of Meanwhile, the organizers have added bridge between BIE and the Chinese provincial and municipal pavilions. It their understanding of the future for government. According to BIE, Shang- was glad to China Pavilion always had Expos and practices into the creative hai Municipal government must hand the most visitors, and received all heads job. We really appreciate the energetic, in a formal written application through of states and governments, national active and hard work of Chinese gov- CCPIT to BIE first, to gain the right and international organizations that ernments and participants. of an applicant. The 132nd BIE general attended Shanghai Expo, besides mil- What Shanghai Expo meeting in 2002 decided that lions of people from all over the world. touched me most was “Ev- Shanghai would hold 2010 It showed the glory history of China, eryday Progress”, which Expo. From the just prosperous present and bright future, differed Shanghai beginning, CCPIT and has become a landmark of Shang- Expo from the others. played an important hai Expo. I wish China will be stronger The pavilions used to role. and stronger. run in a fixed pattern Since 1993 : Before you leave Shanghai, could after opening cer- China formally Qyou tell me your feelings? emony, but Shanghai joined BIE, CCPIT : It is difficult to describe. Looking Expo was different. I has, on behalf of Aout from the window, I still can see saw the sponsor prog- Chinese government, all the pavilions, particularly the grand ress every day, and their participates in the work China Pavilion. I’d like to say, Shang- seriousness, efforts and en- of BIE, and is responsible hai Expo is a milestone in the history of thusiasm reflected in the way for overall contact and coop- expo. It established so high standards, they work: they treated each day as the eration with BIE. Since China joined and it may take decades for us surpass. first day. BIE and became an important member I sincerely wish Chinese government of Expos, to successful hosted the first and Chinese people a good future, and CCPIT was the important factor Expo of 1999 Kunming International thank them for their contribution to to promote the success of Horticultural Exposition, to actively this expo. Historically, China has a rich Shanghai Expo cooperated with concerned parties for and successful experience in urbaniza- the success bid of 2010 Expo, CCPIT tion, and today China has an acceler- : Four years ago, I listened to the always played an important role and ating urbanization process. I believe Rspeech you made at China Foreign directly participated in carrying out in the future of China, and give best Affairs University as a student there, 2010 Shanghai Expo. BIE and CCPIT wishes to China! 51 Fair info Exhibition Center Exhibition Bobaoshan Nanlu, Shijingshan District, Beijing, Beijing, 100043District, Shijingshan Nanlu, Bobaoshan Tel: Fax: Add: Exhibits: Venue: Date: 2011 &Expo Conference Industry Power Wind International Fuzhou Web: Fax: Tel: Add: Exhibits: Venue: Frequency: Date: Fair Products Agricultural International China Western 2011 Chongqing Email: Fax: Tel: Organizer: Exhibits: Venue: Date: Exhibition Equipment and Technology Processing and Breeding Product Aquatic and Poultry Trade &Livestock, Fair Feed Livestock 2011 International Anhui products, etc products, Gaoxin District, Chongqing, China, 400039 China, Chongqing, District, Gaoxin tural products, processing enterprises. Etc enterprises. processing products, tural facturers, power grids, transmission and distribu equipment tion and transmission grids, power facturers, China FairsChina &Expos 52 Agriculture, Fishery, Animal Husbandry Animal Fishery, Agriculture, Energy and resources, Mining Industry, Industry, Mining resources, and Energy Metallurgy, Welding, Electric Power, Electric Welding, Metallurgy, 86-10-68666067 86-23-68670183 86-551-2664086 86-10-68660512 86-23-8988396 86-551-2678744 Rm 605, Building 6#, Chongqing Jia Yuan, Yuan, Jia Chongqing 6#, Building 605, Rm [email protected] 27Floor, Dihaomingdu,Chenjiaping, March 11-March 13, 2011 11-March 13, March 11, 2011 8-January January 7, 5-March 2011 March [email protected] Fuzhou Jinshan Exhibition Center Exhibition Jinshan Fuzhou and Convention International Chongqing Gymnasium Hefei Wind power generation unit, fan manu fan unit, generation power Wind Agricultural production bases, agricul bases, production Agricultural Feed materials, feed additives, feed feed additives, feed materials, Feed Yearly Hefei Chuangbo Exhibition Co., Ltd Co., Exhibition Chuangbo Hefei - - - Exhibition Center Exhibition Center Exhibition Center Exhibition ter, Beijing Construction Energy-Saving Exhibition Energy-Saving Construction No.6 Beisanhuan East Rd, Chaoyang Dist, Bei Dist, 100028 China, jing, Chaoyang Rd, East Beisanhuan No.6 Exhibition Center, No.6 East Beisanhuan Road, Road, Beisanhuan East No.6 Center, Exhibition bei, Chongqing, 400020 400020 Chongqing, bei, 400020 Chongqing, bei, 400020 Chongqing, bei, Add: Venue: Frequency: Date: 7 The Email: Fax: Tel: Add: Exhibits: Venue: Date: Exhibition Industry Tools Mould and Machine 2011 West International China Fax: Tel: Add: Exhibits: Venue: Date: Exhibition Tool Industry Mould and Machine 2011 West International China Email: Fax: Tel: Add: Exhibits: Venue: Date: Exhibitions Forgings Precision Stamping, Forging, 2011 West International China Email: Fax: Tel: Add: Venue: Frequency: Date: 13The Email: Products and Technology Expo Technology and Products Heat-Pump and Ventilation Conditioning, 86-23-67745022 86-23-67745022 86-23-67745022 86-10-64630548 86-23-67753176 86-23-67753176 86-23-67753176 86-10-84540980 A3609 Hongdingguoji, Guanyinqiao Jiang Guanyinqiao Hongdingguoji, A3609 Jiang Guanyinqiao Hongdingguoji, A3609 Jiang Guanyinqiao Hongdingguoji, A3609 Rm 380, 4F, Hall 1, China International International China 1, Hall 4F, 380, Rm China International Exhibition Center, Center, Exhibition International China March 15-March 17, 15-March 2011 March 2011 11-March 13, March 2011 11-March 13, March 2011 11-March 13, March 2011 18, 15-March March th [email protected] [email protected] [email protected] [email protected] China International Exhibition Center Exhibition International China and Convention International Chongqing and Convention International Chongqing and Convention International Chongqing Cen Exhibition International New China China International Air- International China th China International Shading & Shading International China Metal and associated equipment, etc equipment, associated and Metal etc equipment, associated and Metal Metal and associated equipment, etc equipment, associated and Metal Yearly Yearly - - - - - hibition Center hibition Center hibition strips, steel pipes, etc pipes, steel strips, etc pipes, steel strips, and Gas Exhibition 2011 Exhibition Gas and Exhibition Center, No.6 East Beisanhuan Road, Road, 100028 Beijing, Beisanhuan East No.6 Center, Exhibition Beijing, 100028 Beijing, dong, China dong, China dong, Add: Venue: Frequency: Date: 11The Email: Fax: Tel: Exhibits: Venue: Frequency: Date: 8 The Email: Web: Fax: Tel: Add: Exhibits: Venue: Frequency: Date: 2011 5 The Email: Web: Fax: Tel: Add: Exhibits: Venue: Frequency: Date: 2011 5 The Email: Fax: Tel: Exhibition Fair Industry Metal systems-GPS, explosion-proof equipment, etc equipment, explosion-proof systems-GPS, positioning global and services, technology acquisition data information consulting, and services netic mag equipment, construction oilfield logging, and digitalizing log equipment, pipeline and gas service, Products and Accessories Exhibition Accessories and Products 86-10-84600666 86-757-83284305 86-757-83284305 86-10-84600666 86-10-84600669 86-757-83284326 86-757-83284326 86-10-84600669 Rm 1606, 13 Fuhua Road, Foshan Guang Rm 1606, 13 Fuhua Road, Foshan Guang Rm 380, 4F, Hall 1, China International International China 1, Hall 4F, 380, Rm www.cz-exhibition.com www.cz-exhibition.com March 15-March 17, 15-March 2011 March March 22-March 24, 2011 24, 22-March March 2011 20, 18-March March 2011 20, 18-March March th [email protected] [email protected] [email protected] [email protected] China International Exhibition Center Exhibition International China New China International Exhibition Center Exhibition International China New Ex and Conference International Foshan Ex and Conference International Foshan th China International Offshore Oil Oil Offshore International China China International Radiator Radiator International China Brand special equipment, stainless steel, steel, stainless equipment, special Brand steel, stainless equipment, special Brand Offshore oil equipment and technology technology and equipment oil Offshore Yearly Yearly Yearly Yearly th th China Stainless Steel Industry Industry Steel Stainless China International Foshan China - - - - - th Host: Beijing Zhenwei Exhibition Co., Ltd, Exhibition Center, No.6 East Beisanhuan Road, The 12 China International Floor Covering China Petroleum and Petro-Chemical Equipment Beijing, 100028 and Carpet Fair Industry Association, China Council for the Pro- Tel: 86-10-84600666 Date: March 15-March 18, 2011 motion of International Trade Chemical Industry Fax: 86-10-84600669 Frequency: Yearly Sub-Council Email: [email protected] Venue: China New International Exhibition Center Add: Rm 801, Building E. Kaixuancheng, No.170 The 11th China Beijing International Kitchen Add: China International Exhibition Center, Beiyuan Road, Chaoyang Dist, Beijing, China, Cabinet, Wall Cabinet, Partition Wall and No.6 Beisanhuan East Rd, Chaoyang Dist, Bei- 100101 Wood Products Fair jing, China, 100028 Tel: 86-10-58236588 Tel: 86-10-64630548 Fax: 86-10-58236567 Date: March 15-March 18, 2011 Fax: 86-10-84540980 Email: [email protected] Frequency: Yearly Email: [email protected] Venue: China International Exhibition Center Commercial Trade Exhibits: kitchen cabinet and integrated kitchen, Auto tools and Fittings closet, wood products, etc 2011 China Hefei Consumer Goods Fair for 2011 Guangzhou International Automobile Spring Festival Add: China International Exhibition Center, No.6 Beisanhuan East Rd, Chaoyang Dist, Bei- Manufacturing Technology & Equipment Date: January 30-February 7, 2011 jing, China, 100028 Exhibition Venue: Anhui International Convention and Ex- Tel: 86-10-84494460 Date: March 3-March 5, 2011 hibition Center Fax: 86-10-84494457 Venue: Guangzhou International Convention and Exhibits: Garments, shoes and beddings, art Email: [email protected] Exhibition Center gifts, sugars, cigarettes, specialty foods, etc The 2011 Beijing Kitchen and Bathroom Exhibits: Automobile parts, etc Host: The Organizing Committee of 2011 China Appliances Fair Add: No.5 Huacheng Road, Zhujiang New City, Consumer Goods Fair for Spring Festival Tianhe District, Guangdong, China, 510620 Organizer: Anhui Daming International Exhibi- Date: March 15-March 18, 2011 Tel: 86-20-38106261 tion Service Co., Ltd Frequency: Yearly Fax: 86-20-38106200 Add: Rm 109, Tongshan International Shopping Venue: New China International Exhibition Center Web: www.signchina-gz.com Mall, Economic Development Zone, Hefei, 230601 Exhibits: Bathroom appliances and auxiliaries, etc Email: [email protected] Tel: 86-551-2783338 Organizer: China B&D Exhibition Co., Ltd, Fax: 86-551-2783397 Beijing Zhongzhuanghuagang Exhibition Co., Ltd Email: [email protected] Add: China International Exhibition Center, Contact Person: Xue Chao No.6 Beisanhuandong Road, Chaoyang District, 2011 Fuzhou Spring Festival Goods Fair Beijing, China, 100028 Tel: 86-10-84606672 Date: January 30-February 10, 2011 Fax: 86-10-84606597 Venue: Fuzhou International Conference & Exhi- Web: www.build-expo.com bition Center The 2011 Beijing Wood Door Fair Exhibits: Food, beverage, wine, grocery, etc Add: No.4 Xiyang Road Fuzhou Date: March 15-March 18, 2011 Fax: 86-591-83300308 Venue: New China International Exhibition Center Exhibits: Solid wood door, molded door, lami- Furniture, Household Decorations, Floor nated wood door, partition door, etc Decorations Add: 4th Floor, No.1 Hall China International Transportation, Logistics, Storage 2011 China Quanzhou International Brick Exhibition Center, No.6 Beisanhuandong Road, Technology and Equipment Exhibition Chaoyang Dist, Beijing, China, 100028 The 10th China International Auto Web: www.build-door.cn Accessories Commercial Expo Date: March 5-March 8, 2011 Tel: 86-10-84494457 Venue: Quanzhou Exhibition Center 2011 The 18th China Beijing International Date: March 12-March 14, 2011 Add: Rm 210 Kangren Building Huxin Street Building Decorations & Building Materials Venue: China National Agriculture Exhibition Center Quanzhou, Fujian, 362000 Exhibition Exhibits: Auto products, auto refitting, auto parts Tel: 86-595-22774799 refitting, etc Fax: 86-595-22771411 Date: March 15-March 18, 2011 Add: Rm 505, A Building, Beihuan Center, Web: www.qzzjz.cn Frequency: Yearly No.18 Yumin Road, Xicheng Dist, Beijing, China, The 10th China International Wall Paper& Venue: China New International Exhibition Center 100029 Decoration Textile Expo Add: China International Exhibition Center, Tel: 86-10-82250016 No.6 Beisanhuan East Rd, Chaoyang Dist, Bei- Fax: 86-10-82254766 Date: March 15-March 18, 2011 jing, China, 100028 Web: www.yasn.com.cn Frequency: Yearly Tel: 86-10-64630548 Email: [email protected] Venue: China New International Exhibition Center Fax: 86-10-84540980 Contact person: Qiu Shuai Add: China International Exhibition Center, Email: [email protected] 2011 The 4th Cross-strait Boat Industry Expo No.6 Beisanhuan East Rd, Chaoyang Dist, Bei- The 18th China Construction Decoration jing, China, 100028 Industry Fair Date: March 29-March 31, 2011 Tel: 86-10-64630548 Venue: Xiamen International Conference and Ex- Fax: 86-10-84540980 Date: March 15-March 18, 2011 hibition Center Email: [email protected] Frequency: Yearly Exhibits: Shipping manufacture, shipping manu- The 6th China International Floor Heating Venue: China New International Exhibition Center facture materials and fittings, shipping technology System Exhibition Add: China International Exhibition Center, and service system, etc No.6 Beisanhuan East Rd, Chaoyang Dist, Bei- Add: Rm 26C, Qiaowang Building, No.295 Jiahe Date: March 15-March 17, 2011 jing, China, 100028 Road, Xiamen, Fujian, China Frequency: Yearly Tel: 86-10-64630548 Tel: 86-592-3119622 Venue: China International Exhibition Center Fax: 86-10-84540980 Fax: 86-592-3119768 Add: Rm 380, 4F, Hall 1, China International Email: [email protected] Email: [email protected]

53 Mr. Guy Lam Chairman Pacrim International Capital Inc. Wah Sang Paper Products (Shenzhen) Co.,Ltd. Keeping Exploring New Frontiers

By Yan Manman

“To live fully is to surge ahead constantly. After achieving what you have aimed at, you should aim higher. erefore, success doesn’t mean what level you are at, but the journey of achieving next level.” is is the meaning of success in the eyes of Guy Lam, Chairman of Pacrim International Capital Inc, Over 20 years since he began to engage in business, He has been keeping it in mind that the value of life lies in the journey to new creation but not the level of ownership. erefore, when he achieved one success after another in diﬀ erent ﬁ elds, Guy was never content with the achievement he had obtained, but more eager to explore new frontiers. Guy Lam was born in Guangzhou in 1954, and moved to Hong Kong with his family when he was young. When he was 18, Guy Lam went to Canada alone for overseas education, obtain-

54 ing Bachelor Degree for mechanical engineering in University of Toronto and then Bachelor Degree of Law in Canada Queen University. And later he got the graduate law degree in Co- lumbia University in the US. Mr. Lam had obtained the lawyer professional qualifi cation in Canada, Hong Kong, the UK and Australia. Now Guy Lam is not only the founder, chairman and CEO of Pacrim International Capital Inc.,(stock code: PCN) in Canada, but also Chairman of Wah Sang Pa- per Products (Shenzhen) Co.,Ltd in China. Founding PICI overseas — a brilliant start When he was staying abroad for his overseas education, Guy had Mr. Guy Lam already displayed his extraordinary Chairman Pacrim International Capital Inc. business talent. In 1990, with his foresight for the future in business and keen insight for investment, Lam founded Pacrim International Capital Inc. Wah Sang Paper Products (Shenzhen) Co.,Ltd. (“PICI”). Over years of development, PICI had gradually grown up to be a diversifi ed international group of which the businesses include management of investment funds, hotels, real estate developments, manufacturing and medicine. Now PICI has more than a thousand employees with the total assets exceeding hundreds of millions. PICI got listed on TSX main board in Canada, and was one of the fi rst overseas Chinese founded companies which

55 less than 1 million and later sold as Packing Companies as well as Guang- a hotel with over 88% occupancy for dong Model Company in 2009. This more than 10 million. PICI subsid- year Wah Sang is named a National iary, Pacrim Hospitality Services Inc., Innovative Enterprise in China, a managed more than 60 hotels, busi- rather unusual achievement for a tradi- nesses and real estate projects. It won tional industrial factory. the 2009 National Award for Tourism Currently, Wah Sang enjoys the Excellence, and the Pinnacle Award as best opportunity to grow. Packaging Canada’s Hotel Company of the Year. & printing industrial output value ac- A new frontier at home—a counts for 1.7% ~ 2.5% market share constantly growing and of the gross domestic product (GDP) innovative Wah Sang in China, ranking the 14th in the 42 major sectors of the national economy. While making brilliant success Yet it’s a very fragmented industry overseas, Guy Lam also keenly ob- with few industry leaders. Mergers and served the up and coming of the Chi- acquisition will be the next phase of nese market. So in the spring of 2004, development in the packaging indus- the Board of Directors of PICI made try, according to the chairman of Wah a decision to exit the Canadian real Sang. estate market to take advantage of very “Wah Sang will take the op- favorable economic market conditions portunity to acquire other companies in the Middle Kingdom. and continue organic growth, striving PICI’s property portfolio was to build itself a well-known brand in sold to a real estate investment trust, China and even the world with ad- Pacrim has reached agreement to ac- vanced packaging & printing design quire an interest in Wah Sang totaling and manufacturing technology.” Guy 34.5% of the company, with the inten- Lam said confi dently. tion of taking controlling interest soon More frontiers and using Wah Sang as a platform to pursue a consolidation strategy of Meanwhile, Guy Lam also took the corrugated packaging industry in full advantage of his east-west know China. how and international connection Since beginning, with a new to tap the international market for management model, Wah Sang has more frontiers. With the ever grow- got listed in the western world. become a leading enterprise in the ing diabetic population in China, In 1990, PICI made an exact packaging industry in the Pear River partly because of the change in diet of analysis to the future development of Delta, otherwise known as the heart a growing westernized middle class, the city Calgary in Canada, and de- of the world’s factory. The Company Guy decided to import from the US cided to build Sheraton Suites Calgary is the first to use the advanced com- a newly invented medical therapy to in the city, which was the only new- prehensive computerized manage- reduce various unpleasant symptoms built local hotel for over 20 years at the ment, and imported the world’s most of diabetics--the Cellular Activation time. Since the opening of Sheraton advanced corrugated board production erapy (“”CAT ). Suites Calgary in 1990, it soon became equipment, color printing equipment. With 18 years of research, the the most luxurious and successful hotel Wah Sang’s entire production chain US inventor has developed this pat- locally. And for its excellent manage- adopts the ERP systems for production ented therapy, now proved to be the ment, Sheraton Suites Calgary was management, financial management only therapy globally, for preventing, granted the most popular hotel for and risk control. alleviating and reversing the diabetic the best service among more than 100 With such modern infrastructure, chronic disease. This therapy, which Sheraton hotels in North America, it’s no surprise that the customer list of has gained the certifi cation of FDA in and also was awarded the prize of best Wah Sang include household names the US, will soon be available in Hong managed Sheraton Suites. such as Walmart, Sony, IBM, Fox- Kong and then Mainland China, at a Apart from Sheraton Suites Cal- conn, International Paper and other price, according to Mr. Lam, that is af- gary, PICI also opened Radisson Hotel Fortune 500 companies. fordable by most of his fellow Chinese in eastern Canada which was awarded Under the leadership of Guy citizens. the best one among over 300 Radis- Lam, Wah Sang has gained 12 pat- e number of diabetes suff erers son Hotels worldwide. is is quite an ents and 2 software copyrights, and in China had reached up 92 million, achievement, considering the building was granted the titles China Top 100 and what’s more, there were 148 mil- was a vacant offi ce building bought for Printing Companies, China Top 20 lion prophase diabetes sufferers. The

56 total number had surpassed India, and and making recommendations to the China became the country with most government in Hong Kong and in Chi- diabetes suff erers in the world. So CAT na.” In 2009, he was honored as one of could be successfully introduced into Hong Kong’s Top Ten Outstanding In- China, the Chinese diabetes sufferers dividuals Infl uencing the Past 60 years could gain great benefi t. of China, China Outstanding Innova- Whether it is at home or abroad, tive Entrepreneurs 2009, and China Guy Lam keeps unleashing different Outstanding Private Entrepreneur. surprises. Behind the various success Earlier this year, Guy Lam pub- stories is Mr. Lam’s foresight and en- lished an article entitled The First ergy which keep propelling him to seek Step for RMB replacing the USD, the next level of achievement, a con- advocating RMB to become a new stant surge ahead. international currency: by fi rst becom- Motherland always in his heart ing the reserve currency for the Hong Kong Dollar, instead of the US Dollar. From Hong Kong to Canada and Since the Hong Kong Dollar is already the US, and back to China, no matter a hard currency recognized worldwide, where Guy is, the motherland has al- RMB would eff ectively become a hard ways been on his heart. currency. Guy also pointed out that if As early as when he studied for RMB were to become a hard his master degree in the US, before currency itself, Beijing Hong Kong’s sovereignty was taken may be advised back by China, at a time when there on how Hong was still much doubt on the issue in Kong achieved Hong Kong, Guy, as an overseas Chi- it – not just by nese, fi rmly believed that China would the hardware, take back the sovereignty of Hong l i k e G D P Kong as stated in his thesis for the and volume master degree at Columbia University. of trade; but He currently predicted Shenzhen as a also the soft- special economic zone acting as a buff er ware, such as an between two very diff erent systems. In open society, the 1982, he took the initiative to send to rule of law, and the the Beijing Government a “blueprint” democratic institutions, which are uni- of the Hong Kong constitution. In this versal value recognized internationally. “blueprint”, Guy pioneered the concept As a private entrepreneur, seeking of autonomy for a capitalistic Hong profit is natural, but many things Guy Kong within a communist China; as has done have nothing to do with mak- well as the separation of powers within ing profi t. ese “Citizen duties”, as he the different branches of government calls it, cost large amount of his time, in Hong Kong, including the indepen- energy and money. When Hong Kong dence of the judiciary, and details on was still under the British rule, Mr. Lam how such legal system best protects the founded a political group that cham- rights of the Hong Kong Citizens. All pions the rights of the minorities. And these suggestions were adopted in the he volunteered to teach law in China in Hong Kong Basic Law. Now Hong 1980’s when there was no law school in Kong has been returned to China for the country, paying for his own travel more than a decade, the present Hong expense. His friend often asked him, Kong governance system fully proved “Guy, why not put all that money and Mr. Lam's foresight. energy in your public company for the Guy has also been active in com- benefit of the shareholders?” However, munity affairs. He became a mem- Mr. Lam just shook his head and said “I ber of the Association of Experts for enjoy building some thing new, I like to Modernization, which was founded in be the ‘underdog’, because this will make 1979 to propel China into a modern me work hardest”. Guy Lam is his own nation. In 2009, Guy Lam was elected man, who keeps pursuing the next level chairman of the Association. At this of achievement that he considers worth- position, Guy keeps providing advice while. .

57 e xchang E Relocating China’s New Role in Global Business in Future By You Wanlong, Guo Yan

s we enter the 21st century, transfer from exports and attracting for- during the first decade in eign investment as in the previous peri- this fully international- ods, and instead the government would ized new world, Chinese attach equal importance to both exports commerce has experienced conf lict, & imports, absorbing foreign capital compromiseA and cooperation with the and investing overseas, while carrying existing economic order. Based on out- out open policies and boosting a sus- standing performance in both the fields tainable going-out strategy. According of marketing and manufacturing, Chi- to statistics from the UN Conference nese businesses have made a real global on Trade and Development, the stock impact. Although facing the financial of direct Chinese investment in overseas crisis, Chinese enterprises continued companies rose from US$116.5 billion overseas M&As; not satisfied with their in 2000-2008 to US$220 billion in role as a low-cost manufacturing base, 2009. In 2008, Chinese had directly in- they are seeking to boost themselves vested enterprises in 127 countries with in the global industrial value chain, a total asset value of US$179.1 billion, and rise to a position in the global- while accumulated direct investment leading commercial “club”. China will totaled US$116.5 billion. Until now it still be the “factory of the world”, but, seems that many large Chinese enter- this “factory” will be restructured and prises are still in the early or developing a “market for the world” will be estab- stages of establishing their international Wei Jiafu lished. As the global economy recovers business, with the overall size, industrial from the crisis, the economic structure structure and multinational operation will be reformed. Meanwhile, emerging ability falling behind their counterparts In his opinion, Chinese enter- markets represented by China are rising in other countries. Combined research prises should establish global thinking quickly, and gradually leading global on globalization and major Chinese en- like other multinational companies, economic development. On Decem- terprises by professors from Cambridge and transform from national enterprises ber 1st, the 2010 Global Entrepreneur University and Peking University shows into global companies that participate Summit Forum was held by the Global that major Chinese enterprises have less in international competition. “COSCO Entrepreneur in Beijing, under the title presence and influence in high income Group has made great progress in glob- “Restructuring and Leading the role countries, with no more than one tenth al competition in recent years, by insist- of China in Global Business in the of the direct investment stock in these ing on mutually beneficial cooperation future”, many well-known domestic locations. Nearly two thirds of these and making use of global resources and foreign scholars and entrepreneurs investments went to Hong Kong and to compete. In 1997, we formed the shared their opinions on this topic. Macao. The direct investment stock in world’s largest container transportation Chinese enterprises should high-income countries only accounts for service union, CKYH, together with be positive to engage into the less than 5% of the foreign direct invest- K-Line of Japan, Yangming of Taiwan global competation ment stock in China. COSCO Group and Hanjin of South Korea. In June Chairman Wei Jiafu has a deep concern 2008, we won the tender for a 35-year Both state-owned and private en- that Chinese enterprises still have a franchise of the No. 2 and 3 container terprises should establish a global strat- limited influence in the international terminals in Peiraias, Greece. This year, egy, and make use of global resources to market, and it’s getting more difficult the Pacific Group of COSCO fully participate in global competition. The for most industries to catch up with the th took over the other container terminals “12 Five-year Plan” clearly showed leaders. Therefore, the gap is widening in Greece, which means that COSCO that government policy would favor a further. has achieved an important periodic suc-

58 period, to prevent failure in a possible China is working hard. According to downturn. Just as my name indicates, statistics from the Financial Summit of we should consider the risks even dur- New Energy, China has investment in ing peace.” new energy growing at an average rate New energy becomes the of 43% per year, with last year’s level of investment the highest in the world.” engine for future growth th It clearly shows that the 12 -Five The global carbon dioxide emis- Year Plan will focus on new energy sion totals 26.4 billion tons at present, industries as the key driving forces for and the pressure on energy savings and China’s future development. As Zhu emission reduction is increasing. Both Yanfeng, vice-governor of Jilin Prov- developed and developing countries are ince, said, “many industries in China responsible for cutting carbon emis- will become new engines for growth, sions. Former Vice Chairman of the such as photovoltaic electronics with Standing Committee of the National low carbon emissions, of which China People’s Congress, Cheng Siwei, ex- has large exports. Now China is car- pressed his view that “developed coun- rying out jumbo jet projects, looking tries have emitted a great deal of carbon at the developing opportunities for Wang Wenjing dioxide in the industrialization process, a global aviation industry, where the and they have reduced emissions as Zhuhai Airshow demonstrated the cess in the implementation of our Greek they developed. In history, China has great potential of China. Wind energy Port Project, and thus has made an accounted for only 9% of the emis- is also developing, China is one of important landmark in overseas busi- sions. As China and other developing the leading countries in wind energy ness development and global network countries are the process of industrial- utilization, the small province of Jilin deployment. We now have terminals in izing now, they have been increasing can generate power of 20 million kw Singapore, Hong Kong, Shanghai and emissions each year. It is not equal for from this energy source. In addition, other major ports. Through various joint developed and developing countries to the Internet of Things is turning from a ventures and cooperation, COSCO has have the same reduction plan. Secondly, combination of the virtual and the real, entered the international port market, the per capita carbon dioxide emis- towards more realistic economies. With and COSCO Pacific is rapidly growing sions of China is only a quarter that of these developments I am confident that into the world’s fifth largest container the United States. Third, many foreign China will play a significant role in the transportation service provider,” Wei companies have relocated their high energy field.” said proudly. pollution production units to China, China is a major factor for While, the opinion of UFIDA’s and then sell the finished products out- future global restructuring board chairman Wang Wenjing, feels side China, leaving China accountable that the Chinese economy has entered for the high carbon dioxide emissions, Cho Dong-sung, professor from a period of high labor costs as well as and taking away the profits. In this way, the Business College of South Korea high resource and environmental costs; developed countries can earn fame, Seoul National University, made an enterprises and institutions need to while leaving developing countries interesting comparison. Two hundred utilize new technologies to improve with the blame. However, in order to years ago when Napoleon escaped from the efficiency of their manpower and further protect the global environment, the Island of Elba to Paris, the media resources, and focus on green growth. Like the introduction of information systems to help eliminate unwanted logistics and improve energy efficiency, and e-business systems that can significantly reduce waste at facilities, logistics and commodities. Product life cycle management systems can help enterprises create energy-saving and environmentally-friendly products, and minimizing sample production. Manu- facturing management systems can also directly reduce energy consumption and logistics. Regarding future development, Cheng Siwei suggested that enterprises should “calm down in the booming 59 e xchang reports gave different descriptions of tured the world economy. The global E him. On the 12th, Napoleon was a economy is always changing, bringing a “monster sleeping in Grenoble”; on the sudden surprise to people when compar- 15th and 16th, he was a “tyrant and ing the economic strengths of emerging predator”; by the 17th and the 21st he economic entities and developed west- was called “Emperor” or “Noble Em- ern countries from time to time. As for peror”. In just 14 days, the mainstream China, it is obvious that China is now media in Paris changed their attitude leading the current restructuring. Even to Napoleon. Today, reports from the though global direct foreign investment international media on China have also is declining overall, developing countries seen dramatic changes. Professor Cho and emerging economies have a better Dong-sung summarized the trend in chance to attract foreign investments media reports on China’s development, than developed countries. Due to ro- saying that before 2003 no report com- bust economic development, especially pared China with the United States, during the financial crisis, China has and in 2004 Goldman Sachs estimated become an important force in maintain- for the first time that China would ing global economic stability. In 2001, top the U.S. and become the largest China had a ratio of 2.98% in the IMF, economic entity in the world by 2030. and now 6.19%, ranking the third. In In 2006, the BBC forecasted that this addition, with a total trade value of US$ Zhao DongCheng would happen by 2026, and in July of 2,207.54 billion and a total retail sales this year the date has been pushed for- value of US$12 trillion, China’s voting construction. All of these factors will ward again to 2019. share at the World Bank rose from 2.7% contribute to the economic restructur- Zhu Yanfeng said, “Global restruc- to 4.42%. However, the per capita sta- ing. There is also the advantage of low turing is a gradual process, and one that tistics of China are only equal to 16% of costs. Though China is adjusting its won’t be realized in a single day. The that in the U.S., which means we have industrial structure and reports esti- restructuring goes back through 30 plus great potential for further development. mate that its demographic bonus will years of Chinese economic reforms and In other words, China has great market come to an end, China still has great opening up, and began even before 1978. space.” potential in human resources. Lastly, For example, in the 1960s the “Asian “There are several other factors advancing technologies, such as the Tigers Times” which predicted the rise which support China as the main progresses made in high-speed rail- of four Asian tigers, and in the 1970s contributor to global restructuring, ways, wind-driven generators, aero- when Japanese economy saw quick and its huge market is perhaps the space and other sectors, all these are development, both events have restruc- most remarkable. The Prime Minister the results of a constantly increasing once said that even the most serious market,” Zhu said. problem will not be a problem if it Hong Qi, president of CMBC, said, is undertaken by a population of 1.3 “Only through continuous ‘changes’ can billion. Due to its large population, China sustain its smooth development. anything in China can be great. For We need to expand market demand, es- example, the mobile communica- pecially our domestic demand, therefore tions system, for which there is a huge it is important to increase income levels. market. Automobiles are another ex- The government should also pay attention ample, where the number of civilian to urbanization problems. For example, vehicles in China has already exceeded peasant workers can’t play a role in stimu- 70 million. Additionally, China has lating spending if they keep a migrant made great progress in space technol- lifestyle. Meanwhile, we should work to ogy and aeromechanics, it has made develop invisible markets. As the indus- great achievements in high-speed trialization in China is moving towards rail operation and foreign exchange scale and centralization, M&A will be an reserves, it has showed strong social important way for enterprises to catch up management capability during natural with the times, including international disasters (such as earthquakes) and M& A, such as when IBM personal other issues. Meanwhile, crude steel computers was purchased by Lenovo and production in China reached nearly Volvo by Geely. These are the ‘changes’ 600 million tons, and the proportion we need.” From a technical perspective, of high quality finished steel products it is vital to make a strategic plan and is increasing further, and a large num- strengthen the industrial restructuring Hong Qi ber of infrastructure projects are under and post M&A technical digestion.

60 S URVEY

Survey on Current Conditions and Intention of Outbound Investment by Chinese Enterprises Econometric Analysis of Overseas Investment by Chinese Enterprises

By CCPIT

The analysis contained in this chapter focuses in partic- revenue coming from exports are considered as exporters. ular on those Chinese companies that already have overseas These screening criteria lead to the following sample: operations. The purpose of the chapter is threefold: i) to iden- 28% of firms are active only on the domestic market, 49% tify the main characteristics of the Chinese companies active of firms are active on the export markets, and 22% of firms in foreign markets, ii) to investigate the privileged locations are engaged in multinational activities (among which 60% abroad and iii) to understand the main driving forces leading are also engaged in the domestic and exports market). Chinese companies to invest abroad. Table 9.1 presents the distribution of the gross revenue 1. Characteristics of Chinese companies investing among respondent firms, for firms active on the domestic mar- abroad ket, for exporting firm, and for firms with overseas operations, respectively. Nearly 55% of domestic firms have a gross revenue The chapter one of this report highlights that the size inferior to 100 million yuan and only 5% of domestic firms of Chinese companies in terms of turnover and employment have a gross revenue in excess of 1 000 million yuan. Hence, varies significantly. It is hence important to identify the char- the majority of domestic firms are small in terms of turnover. acteristics of the Chinese companies that engage in multi- In addition, the distribution of respondent firms regarding the national activities as compared to those of other firms active gross revenue is quite similar to exporting firms. However, only in the domestic market. Besides, these characteristics the characteristics of the firms engaged in multinational also must be compared to those of companies active on the activities are very different from those of firms on domestic export markets but not having invested abroad directly. In- market and exporting firms. Only 26% of firms involving deed, firms having overseas operations are also likely to be overseas operations have a revenue inferior to 100 million yuan the most productive and the largest ones in terms of employ- and 54% of the Chinese firms engaged in multinational activi- ment and turnover, due to the existence of high fixed costs of ties have a gross revenue superior or equal to 1 000 million entry to foreign markets. yuan. Therefore, the Chinese companies active abroad seem to In order to perform this analysis, the Chinese firms have be the largest ones in terms of turnover among all respondents. been classified into three categories: firms active on the domestic market only Table 9.1 Turnover distribution of domestic firms, exporting firms active on the export markets only firms and multinational firms firms engaged in multinational activities Domestic One might, however, be concerned about methodologi- Revenue Firms Exporting firms Multinationals cal issues when exploiting the questionnaire with regards to sample % sample % sample % identifying the actual number of firms having overseas opera- Under 10 000 000 yuan 91 23,76 160 23,29 25 8,14 tions. Depending on different questions, the answers regarding More or equal 10,000,000 the number of companies with foreign operations differ. The & under 100,000,000yuan 122 31,85 256 37,26 57 18,57 possible explanation of this could be the variation in response More or equal 100,000,000 rates among questions. As the purpose of this chapter is to & under 1,000,000,000yuan 70 18,28 118 17,18 57 18,57 study the destinations and the determinants of Chinese over- M o r e o r e q u a l t o seas investment, only companies engaged in multinational 1,000,000,000yuan 19 4,96 37 5,39 167 54,40 activities, i.e., those which could provide information about at least one of the destinations of the foreign investment at the Missing 81 21,15 116 16,89 1 0,33 country level, are taken into account. Total 383 100 687 100 307 100 For the identification of exporting firms, all the firms pro- Average revenue 665 000 000 599 000 000 000 2 480 000 000 viding strictly positive information about the share of their business

61 URVEY S Table 9.2 presents the distribution of the number of em- The results show that multinationals firms have signifi- ployees among respondent, for firms active on the domestic cantly higher gross revenue and are significantly bigger in market, for exporting firm, and for firms with overseas opera- terms of number of employees than domestic firms. However, tions, respectively. The picture is very similar to the turnover there is not a significant difference in size between export- distribution observed in the table 47. Most domestic firms ing firms and domestic firms, confirming that there is a are characterised by a relatively low number of employees. multinational premium in terms of size. In other words, firms Indeed, nearly 66% of domestic firms have less than 500 em- engaging in overseas operation are the largest both in terms ployees, while only 22% of domestic firms have more than 500 of turnover and number of employees. This suggests that employees. Exporting firms are quite similar. In contrast, firms’ characteristics are an important driver of the firm’s 48 % of multinational companies have a number of employees probability to enter a foreign market. superior or equal to 500 employees (with 34% having more Not only identifying the characteristics of Chinese firms that than 1 000 employees). So among Chinese respondent firms, engage in overseas operation is important to better understand the those engaged in multinational activities seem also to be the internationalisation patterns of Chinese firms, but also it is crucial largest firms in terms of employment among all respondents. to identify the privileged locations of Chinese companies abroad. This is the aim of the second subsection of this chapter. Table 9.2 Number of employees for domestic firms, exporting firms and multinational firms 2. Where do Chinese firms locate abroad Number of Employees Domestic Firms Exporting firms Multinationals The survey contained questions about the locations of over- sample % sample % sample % seas investments at the country level. Respondents were asked to Under 100 137 35,77 263 38,28 55 17,92 quote up to five countries in which they had operations abroad. 307 companies have given information about at least one foreign More or equal 100 & under 500 121 31,59 256 37,26 86 28,01 country of operation, while 58 companies gave information More or equal 500 & about five countries in which they were engaged in multinational under 1 000 28 7,31 65 9,46 44 14,33 activities. In total, respondent firms active abroad have made 720 More than 1 000 59 15,40 85 12,37 105 34,20 investments between 1972 and 2010, which corresponds to an average of two destination countries of investment per firm. Missing 38 9,92 38 5,53 17 5,54 Chinese companies declare to have overseas invest- Total 383 100 687 100,00 307 100,00 ments in 93 different countries. However it is important A v e r a g e n u m b e r o f 1079 558 3358 to investigate in detail what are the most attractive foreign employees countries for Chinese companies. Figure 9.1 presents the twenty top destination countries of Chinese overseas in- This analysis suggests that although the number of vestment by decreasing order of importance. The five most Chinese respondent firms having overseas operations is attractive countries/regions for Chinese companies are the quite small, those firms are larger than domestic firms and United States, followed by Japan, France, Germany and exporting firms, both in terms of gross revenue and em- China Hong Kong. Chinese companies seem thus to ployment. These observations are consistent with recent prefer big markets by investing in the Triad but also geo- empirical evidence based on firm-level data. graphically close markets by locating an important part In order to verify whether there is a significant differ- of their overseas operations investments in Asia ( China ence in size among multinational firms, exporting firms, and Hong Kong, Vietnam, Korea). domestic firms, Table 9.3 presents the results of ordinary least Figure 9.1 The twenty top destination countries/regions of square regressions of Chinese firms characteristics on multi- Chinese multinational firms nationals and exporters dummies.

Table 9.3 Is there a multinational premium in firm size? 100 dependant variable log turnover log employment 90 80 multinationals 1.870*** 1.113*** 70 (0.220) (0.136) 60 50 exporters 0.0304 -0.102 40 (0.173) (0.114) 30 20 Constant 18.84*** 3.676*** 10 (0.834) (0.635) 0 Italy India JapanFrance Korea Spain Poland Observations 1038 1265 Australia Canada Sweden GermanyHongKong Viet Nam Singapore NetherlandsSouth Africa Pseudo R2 0.119 0.193 United States UnitedKingdom Russian Federation All results are from ordinary least square regressions of Chinese firms character- United Arab Emirates istics on multinationals and exporters dummies. All regressions include industry fixed effects. Standard errors are in parentheses. *, **,*** indicate that coef- Number of Investments ficients are significant at 10%, 5% and 1%, respectively.

62 In order to investigate further how market size in- by a given country as a function of the distance of this 2 fluences the location of Chinese overseas investments, country to China. The distance is measured here as the Figure 9.2 below presents the number of received Chi- geodesic distance between capitals or most important cit- nese investments by a given country as a function of the ies in terms of population of the two countries. The graph 1 market potential of the country. The market potential shows that there is a decreasing relationship between the of a country is a measure of market size which takes into number of Chinese investments received by a country and account the proximity of a country to world markets. the distance of this country to China. This suggests that Clearly, the graph shows that there is a positive rela- geography is also an important determinant of Chinese tionship between the market potential of a country and overseas investment, other things being equal. However, the number of Chinese Investments this country re- the adjustment is highly imperfect, pointing to many other ceives. So market size seems to be an important pull fac- correlates for which are not controlled in this bivariate tor of Chinese overseas investments. This suggests that analysis. Chinese companies invest abroad mainly for demand- Figure 9.3 Number of Received Chinese Investments and driven considerations. Distance to China Figure 9.2 Number of Received Chinese Investments and Market Potential 5 5 4 4 3 3 2 2 1 Log (Number of Chinese Investments) 1 Log (Number of Chinese Investments) 0 6 7 8 9 10 0 12 14 16 18 20 22 log (Distance)

log (Market Potential) Country Fitted values

Country Fitted values

While this analysis suggests that Chinese overseas However, the size of a destination market cannot operations are influenced by market potential and geogra- be the only factor influencing Chinese companies’ loca- phy, these two graphs only present correlations. An econo- tion decisions. As noted below, many Chinese companies metric analysis can shed further light on the main location invest in the Asian region. The distance of a destination determinants of Chinese overseas operations. This is the market to China, however, could also affect the decisions aim of the next subsection. of locations to the Chinese multinational firms since the 3. What are the location determinants of Chinese costs of entering foreign markets are likely to rise with overseas operations geographic distance, other things being equal. In order to evaluate more precisely how geography Obtaining information on the location decisions of affects Chinese overseas investments, the Figure 9.3 be- Chinese companies abroad at the country level is par- low presents the number of Chinese investments received ticularly valuable for understanding the determinants

1 The data used in this study come from the cepii, see in particular: Mayer (2008), “Market Potential and Development”, CEPII working paper n°2009-24. 2 This dataset come from the cepii, see in particular dist_cepii.

63 URVEY S of Chinese overseas investments. Indeed a large body of synthetic indicator of the easiness of doing business. academic literature identifies the location determinants of The data come from the World Band Indicators (Doing multinational firms based on the observed location deci- Business). They are available for the period 2004-2010, sion of these firms. The intuition is the following: Firms but the computed average by country over period avail- are assumed to choose the location that maximizes their ability rather than using all time series data have been profit. The econometrician is not able to observe directly included in the present analysis. We then introduce four the profitability of different destination countries. Howev- different sub-indicators of the easiness of doing busi- er the econometrician knows the location decisions made ness. The first one is starting a business. It accounts for by firms in countries which have observable characteris- the procedures, time, cost and paid-in minimum capital tics. It is therefore possible to assess the influence of coun- to open a new business. The second is the protection of try characteristics on location decisions. Our econometric investors which is a measure of the strength of investors’ analysis follows this literature. protection. The third one is paying taxes. It accounts Dependent variable for the number of tax payments, time to prepare and file tax returns and to pay taxes, total taxes as a share The dependent variable is defined as the number of of profit before all taxes borne. The last one is trading Chinese Investments received by a Country j over the pe- across border and corresponds to the documents, time riod of study. In a second step, the dependant variable is and costs associated with exports and import. Finally, rather defined as the number of Chinese investments re- we introduce a synthetic index of Employment Protec- ceived by a Country j in Industry i over the period of study tion developed by the OECD to account for the degree to account for the potential heterogeneity of industries in of labour market regulation. location decisions. All explanatory variables are expressed in logarithm. Independent variables All results are from ordinary Poisson regressions. Econometric analysis The existing literatures have identified mainly four categories of determinants: the size of the market, the Table 9.4 presents the results of ordinary Poisson re- distance, the cost and quality of factors and the insti- gressions in which the dependent variable is the number tutional environment. The explanatory variables intro- of Chinese investments received by a given country. duced in the analysis are thus the following ones. The first column confirms that the market poten- Market size: Market size is approximated in this tial has a strong impact on the location of Chinese study by the market potential of the country. As noted investments while the effect of distance is no longer above, this measure of market size presents the advan- significant when only the market potential is control- tage of taking into account not only the economic size led, though additional country characteristics should be of a country but also this country’s proximity to world controlled. markets. The data comes from the Cepii (rmp_cepii), In column 2, we control for GDP per capita in or- where market potential measures are available over the der to take into account the quality and cost of labour. period 1996-2003. However the data used in this study A high GDP per capita has a positive effect on Chinese correspond to the year 2000, as most Chinese compa- investment location decisions. Chinese firms not only nies’ first investment abroad started in year 2000. One invest in large markets but also in rich markets. Fur- should expect that market size affects positively the lo- thermore, as expected, the effect of distance becomes cation decisions of Chinese overseas investments. negative and significant. Distance: Distances are calculated by using the In column 3 we control for the easiness of doing latitudes and longitudes of the capital cities or the most business. The effect is, however, not significant, partly important cities (in terms of population) of respective because the ease of doing business is linked to countries’ countries. The data comes from the Cepii (dist_cepii). level of development. Cost and quality of production factors: The costs and In column 4 we introduced four different sub-indi- quality of production factors are approximated in this cators of institutional business environment. Interest- analysis by countries’ GDP per capita. Indeed, control- ingly, the easiness of doing business has a strong posi- ling for market size, the GDP per capita is often a good tive impact on Chinese overseas investments. Chinese approximation of labour costs. However, a high cost of firms invest in priority in countries having low entry labour can also reflect a higher productivity and qualifi- costs. cation of workers. Should one expect that a higher cost In the last column, we control for the degree of la- of labour affects negatively on location decision, higher bour market regulation, however the number of observa- qualification of labour can affect positively location tions is too low to be interpreted with caution. decision on the other hand. The expected coefficient of All these results show that Chinese companies in- this factor is thus undetermined. vest abroad in order to be near the largest and richest Institutional Environment: Several variables have markets. However, such estimations do not necessarily been introduced in the analysis in order to account for account for potential heterogeneity in location deci- the institutional environment. The first variable is a sions.

64 Table 9.4 The determinants of Chinese Overseas to modify the results, but as noted before, the number of Investments observations drops sharply, which is likely to affect the estimated coefficients. Dependant Variable: Number of Investments in Destination Country j Table 9.5 The determinants of Chinese Overseas Investments (1) (2) (3) (4) (5) Dependant Variable : Number of Investment in Industry i and Destination Country j Ln Market Potential 0.357*** 0.110*** 0.229** 0.454*** -0.288 (1) (2) (3) (4) (5) (6)

(0.0177) (0.0304) (0.112) (0.134) (0.331) Ln Market Potential 0.221*** 0.0486 0.367*** 0.523*** -0.148 -0.236

ln (0.0188) (0.0324) (0.112) (0.124) (0.347) (0.334) Distance -0.0310 -0.304*** -0.506** -1.540*** -7.281*** ln Distance 0.200*** 0.0534 0.308 -0.463 -3.854** -6.618*** (0.0609) (0.0670) (0.244) (0.362) (1.797) (0.0608) (0.0659) (0.237) (0.333) (1.751) (1.803) Ln GDP per capita 0.415*** 0.263** 0.558*** -1.209** Ln GDP per capita 0.265*** 0.133 0.327* -0.632 -1.198** (0.0397) (0.108) (0.173) (0.513) (0.0386) (0.111) (0.175) (0.520) (0.520) Ln (Ease of Doing Business) 0.131 Ln (Ease of Doing 0.296*** Business) (0.105) (0.111)

Ln (Starting A Business) -0.0997 -2.214*** Ln (Starting A Business) -0.0236 -1.150*** -2.083***

(0.111) (0.408) (0.128) (0.390) (0.410) Ln (Protection -0.145 0.820* 1.661*** Ln (Protection of investors) -0.333** 1.757*** of investors)

(0.148) (0.472) (0.148) (0.468) (0.478) Ln (Paying Ln (Paying Taxes) 1.027*** -5.389*** Taxes) 0.768*** -3.746** -5.190*** (0.217) (1.518) (1.505) (0.226) (1.499) Ln (Trading Across 0.313** 0.716* 0.712* Ln (Trading Across Borders) 0.375** 0.741* Borders) (0.158) (0.411) (0.404) (0.147) (0.402) Ln (Employment 3.036* 3.019* Protection) Ln (Employment Protection) 3.025* (1.769) (1.681)

(1.670) Industry Fixed Effects No No No No No Yes

Observations 91 88 22 22 10 Observations 173 169 46 46 25 25

Pseudo R2 0.279 0.359 0.433 0.547 0.676 Pseudo R2 0.09 0.108 0.112 0.155 0.145 0.712 All results are from Poisson regressions. Standard errors are in parenthesis. *,**,*** indicate respectively that coefficients are significant at 10%, 5% and 1%. All results are from ordinary poison regressions. Standard errors are in parenthesis. *,**,*** indicate respectively that coefficients are significant at 10%, 5% and 1%. The results of this econometric analysis show that Chi- nese companies tend to invest in countries characterized Table 9.5 presents the results of ordinary Poisson re- by large market size, a high level of economic development gression in which the dependent variable is the number of and a good trading environment. One should now compare Chinese investments received by a given country j in in- these results to the answers given by Chinese companies re- dustry i. In the first column, we only have introduced grav- garding the pull factors that affect their overseas investments. ity variables. In column 2 is added a control for GDP per Interestingly, most Chinese companies have rated market capita. In column 3 we control for the ease of doing busi- potential as a decisive or very important factor in determining ness. The results are quite similar to the previous ones. The their overseas investment in EU countries and other devel- market potential and the easiness of doing business have oped countries. Accessibility to skilled labor also appeared strong and positive impacts on location decisions. These to be an important factor regarding investments in these re- results hold when we control for different characteristics gions. These results confirm that accessing the world’s largest of business environment (column 4). Adding a variable of markets is the main driving force of the current internation- labour market regulations and industries fixed effects seem alization strategies of Chinese companies. (The End)

65 nvestment Dr. Alyce Su, founder of China Queen Capital, specializes in investment I management managing portfolios consisted of investment opportunities originated from China’s growth and internationalization, both outbound and inbound. Hereinafter is her advice on investment strategy in the four countries of BRICs except China, UAE, South Africa, Europe and Asia. Dr. Alyce SU on China Overseas Investment Strategy

lion, occupying 70% of MSCI Latin Part. Rio Polimeros, Brenco, OuroFi- America’s total market capitalization no, Valepar. of US$1.4 trillion. Internally Brazil (ii) Brazilian domestic con- has five economic zones. The rise of sumption targets including Brasil Brazil’s middle class will bring oppor- Foods. tunities in bank, real-estate, telecom, (iii) Brazilian China export tar- and consumer finance. gets including Petrobras, Vale. Brazil Investment Logic Russia For China investing in Brazil, three potential tactics: Russia Investment Background (i) BNDES and BNDESPar’s Russian economy is driven by holdings in the financial, natural re- (a) oil price (b) Ruble/USD exchange source, infrastructure/railway, food/ rate, managed externally via the agriculture, utilities, both 26 listed energy-stabilization fund, internally and 8 unlisted companies, where (a) through tax and price control, to Brazil Shares BNDESPar wants to sell, Chi- buffer its sensitivity to commodity na can buy if price is right (b) Shares cycle. Three major state-owned banks Brazil Investment Background BNDESPar does not want to sell, Sberbank, VEB, VTB, provided li- Brazil’s National Bank for China can extend loans (c) Industries quidity during 2008 financial crisis. Economic and Social Development BNDESPar want to support by mak- Debt level is high for almost all Rus- (BNDES) (similar role to China De- ing loans, China can invest in industry sian enterprises, with revolving loans. velopment Bank) is Brazil’s leading leaders. Recently, Ruble’s appreciation pres- long term loan provider to Brazilian (ii) Brazilian companies benefit- sure against the USD came from (i) domestic enterprises. BNDES’s subsid- ting from Brazil’s domestic consump- stronger energy price (ii) weaker dol- iary BNDESPar holds shares of Brazil’s tion growth. lar (iii) global liquidity into emerging listed and unlisted companies. Since (iii) Brazilian companies benefit- market. Russia would tax the energy 2010, BNDES and BNDESPar have ting from exporting to China. income into the fiscal gap first, once been restructuring investment portfolio filled put into the energy stabilization by selling shares in Fibria and 2.4% of Brazil Investment Targets fund, while pegging Ruble to a bas- Banco de Brasil for cash for making fu- Applying the above investment ket of USD and Euro. This handles ture loans. It’s 5.3% shares in VALE is logic, we have: stronger energy price and weaker widely expected to be the next liquidity (i) BNDES and BNDESPar dollar well, except global inflow into event. owned targets including (listed) Fi- Russia. Russian resource companies Brazil’s external position in bria, Klabin, Vale, Gerdau, Brasil have begun the wave listing in Hong Latin America is similar to China in Foods, Copel, Light, CESP, CPFL Kong Stock Exchange, much Russian Asia, producing 43% of 2009 Latin Energia, MPX Energia (unlisted) wealth has also been accumulated in America’s total GDP of US$3.7 tril- Brasiliana, BomGosto, CEG, Telmar Russia’s sovereign wealth fund.

66 IRR 27% to 60%, payback period less than 5 years. India Investment Logic China’s investment logic towards India may leverage India’s younger demographics, playing LP to India’s GP, or playing co-GP to India leading conglomerates, extracting IRR out of India. Once China has taken a position in India, China can export its infrastructure building capability, benefitting its own investment. Such “infrastructure for equity” strategy is different from the “loan for resource” strategy deployed elsewhere. India Investment Targets Applying the above investment logic to India’s key industries, we have these Indian companies: Russia Investment Logic chocolate, ice cream. (i) Auto:MarutiSuzuki. Hero For China investing in Russia, (vi) Fertilizers: Good chemical Honda. the key is who you know, not what you producing capability. (ii) Consumer Staples:Colgate know, so Russian private equity deals (vii) Financial Services: PSU, Palmolive (India). Dabur India. have often been done by giving an Private Bank, NBFC, 3 categories. Car (iii) Fertilizers:Tata Chemicals. interest-rate-free personal loan to the loan CAGR 13% to 15%. Mortgage United Phosphorus. owner of a company in exchange for a CAGR 13% to 18%. (iv) Financial Services: PSU stake in the company. (viii) Healthcare: Generics indus- (Bank of Baroda), Private Bank (Axis try strong, US$53 bn to expire in the Bank), NBFC (Housing Development Russia Investment Targets near future. Finance Corporation). For China investing in Russia, co- (ix) Industries/Infrastructure: In- (v) Healthcare: Apollo Hospitals. investment may be key: dia 11-5 Plan budgeted US$500 bn for Biocon. Cadila Healthcare. (i) Co-invest with private equity new infrastructure. (vi) Industries/Infrastructure: divisions of major state banks, Sber- (x) Information Technology: 2010 Everest Kanto Cylinder. Sintex Indus- bank, VEB, VTB. CAGR 15% to 20%, adding 75,000 tries. (ii) Co-invest with Russian’s sov- new employees. (vii) Information Technology: ereign wealth fund for Russian resource (xi) Material/Cement: Oversup- HCL Technologies Ltd. Infosys Tech- IPOs in Hong Kong. ply, low capacity utilization. nologies. (xii) Material/Metal: Steel de- (viii) Material/Cement: ACC. India mand still strong. Ambuja Cements. (xiii) Media: FY10-12E digital (ix) Material/Metal: Hindalco India Investment Background entertainment 39% CAGR. Advertis- Industries. Hindustan Zinc. India’s fledgling logistic system ing CAGR 15%. (x) Media: Dish TV India. Sun forced India to traditionally export its (xiv) Oil & Gas: Empowered TV Network. Zee Entertainment En- human resource to the west by software Group of Ministers increased price for terprises. outsourcing, pegging its growth to de- Gasoline, Diesel, etc. (xi) Oil & Gas: Bharat Petro- veloped countries’ capital expenditure. (xv) Real Estate: 7 categories: leum. Cairn India Ltd. Gas Authority Today, India’s major industry develop- Mumbai, Gurgaon, Noida, Greater of India. ments are as follows: Noida, Bangalore, Chennai, Hydera- (xii) Real Estate: Anant Raj In- (iv) Auto: 30,000R to 50,000R bad, average inventory 11-month dustries. DLF. Housing Development priced cars experience the most compe- (compared with 2008 4Q inventory 37- & Infrastructure. tition. month). (xiii) Telecom: BhartiAirtel. Idea (v) Consumer Staples: High (xvi) Telecom: 3G and Broadband Cellular. Reliance Communications. penetration low growth goods include Wireless Access licenses have been Tata Communications. soaps, detergents, tea. Low penetra- granted. (xiv) Utilities: Adani Power. JSW tion high growth goods include coffee, (xvii) Utilities: Power generators Energy. LancoInfratech.

67 United Arab Emirates rich reserve underground, is not short nvestment

I United Arab Emirates Investment of capital, except Dubai. Dubai tried to Background become the financial center in United Arab Emirates by offering real estate Oil and natural gas are key asset to and infrastructure projects but over- the region. American Energy Informa- leveraged itself. Case in point, Dubai tion Administration counts the follow- Port World (DPW.DI), which is 80% ing 16 Middle East countries “Saudi owned by Dubai World, 20% owned Arabia, Iran, United Arab Emirates, by public. If Dubai World needs to Kuwait, Iraq, Algeria, Libya, Qatar, partially sell off for debt repayment, it’s Oman, Egypt, Syria, Yemen, Tunisia, holding Dubai Port World is the 4th Bahrain, Israel, Morocco” occupying largest port in the world, after PSA, global oil reserve 65%, and global natural HPH, APMT, these four ports occupy gas reserve 46%. Countries in the Gulf 29% of the entire world’s throughput Cooperation Council (GCC) included: measured in million TEU. Dubai Port Kuwait, Bahrain, Saudi Arabia, Qatar, World’s market share from 2005 to Oman, and the United Arab Emirates 2008 has risen from 2.5%, 5.9%, 5.8%, (UAE). Within the United Arab Emir- to 6.3%, since most of its counterpar- ates, there are Abu Dhabi, Dubai, Shar- ties are in the emerging markets such as data, of proven global reserves, South jah, Ajman, Umm al-Quwain, Ras al- China, India, Brazil, Russia, Indonesia, Africa owns 80% of platinum and 57% Khaimah, and Fujairah. 2010 first half Mexico, Turkey etc, its estimated 2010 of palladium, yet Johnson Matthey 2010 China imported oil from “Angola, Saudi to 2015 market share CAGR is 9.1%. platinum survey suggested South Af- Arabia, Iran, Sudan, Russia, Kuwait, Dubai Port World’s 2009 net profit is rica’s production has topped at 2006 and Venezuela, Oman, Iraq, Kazakhstan, US$332.9 million, 2010 estimated net been declining since. On the contrary, Brazil, Yemen, Congo-Brazzavile, and profit US$424.1 million, with an EBIT China’s demand of platinum and pal- the United Arab Emirates”, i.e. mostly margin of around 20%. ladium has been rising from domestic Middle East countries. jewelry and auto consumption growth. United Arab Emirates Investment South Africa South Africa Investment Logic Logic South Africa Investment Back- For China investing in South China’s investment logic towards ground Africa, Platinum and Palladium are a the United Arab Emirates, since China South Africa has been a leading pure supply-demand play, i.e. a declin- imports so much energy from the re- producer of precious metal (defined as ing supply (South Africa) to a growing gion, is what China can make from gold, silver, plus the platinum group demand (China). investing above the land, minus what metals including ruthenium, rhodium, China must pay for below the land. palladium, osmium, iridium, and plati- South Africa Investment Targets United Arab Emirates Investment num, a total of eight elements) which Applying the above investment Targets are often used in the jewelry and auto logic, we have: industry. According to MEG 2007 (xviii) ETF of Platinum and Pal- United Arab Emirates, given its ladium. (xix) Companies such as Eastern Platinum (a producing junior), or We- sizwe Platinum.

Europe Europe Investment Background European companies that can still secure consumers from Brazil, Russia, India, China (BRIC) will continue to grow, when synergistic they may also introduce BRIC shareholders. Instead of “haves and have-nots”, this secular trend will separate the ones that still want to compete globally vs. the ones who just want to collect social welfare. Countries such as Germany, France, Switzerland, Czech, the Nordic, still

68 AG (43%), Wartsila Asia Investment Logic (B) (45%), Weir Group America is likely to befriend (41%), Swiss Re (47%), Asian countries such as Japan, Ko- Cairn Energy Plc rea, India, Australia, and Taiwan.For (100%), Saipem (48%), China investing in Asia, the scarcity SBM Offshore (68%), is clean natural resource and political Seven Marine (63%), stability. Asian countries valuable to Beiersdorf (36%), Brisith both America and China are benefi- American Tobacco ciaries. (35%), Richemont (33%), ASML Holding NW Asia Investment Targets (50%), CSR plc (52%), Applying the above investment Ericsson (50%), Nokia logic, we have: (57%), STMicroelectron- (i) North Korea: peace. ics (50%), Portugal Tele- (ii) Japan: government debt. com (46%), Telefonica (iii) Taiwan: TDR. (41%). (iv) Malaysia, Australia, New (ii) European Zealand: natural resources, beaches, have high-tech manufacturing core companies with significant German real estates. competency to export. Countries that revenue, including Porsche Aml. (v) Papua New Guinea: natural consider finance expertise are com- Hldg (Xet) (28.6%), Volkswagen (Xet) resources. ing to Asia to acquire Asian high-net- (28.4%), Geberit ‘R’ (33.9%), Sued- “Sinosteel-Monaro MOU” worth customers. The rest European zucker (Xet) (32.1%), Tomra Systems countries are selling down shares of (39.2%), Allianz (Xet) (34.4%), Sky China Overseas Investment Strat- state-owned enterprises, real-estates, Deutschland (100%), Axel Springer egy done by Dr. Alyce SU of China and remodeling museums for tourism. (79.0%), Prosieben Sat 1 Media Queen Capital (HK) Ltd, helping an Besides BRIC consumers, European (69.5%), Kabel Deutschland Hldg. Australian Stock Exchange (ASX) companies that can secure German (100%), Loewe (59.6%), Schulthess listed company Monaro (MRO) selling consumers may also be considered Group (30.7%), Gagfah (100%), Fiel- its Kyrgyz Uranium asset to China’s relatively competitive. mann (81.4%), PraktikerBauheim. leading state-owned enterprise Sinos- Hldg (71.4%), Douglas Holding teel. Below please find the official- an Europe Investment Logic (64.9%), Metro (Xet) (40.5%), Charles nouncement. For China investing in Europe, Vogele (38.5%), Wincor Nixdorf (Xet) 30 January 2008 ASX announce- the strategy might be “selectively in- (27.9%), Deutsche Telecom (Xet) ment vesting in Europe’s productivity to help (36.9%), Bwin Intact. Entm (32.0%), MONARO SIGNS MoU protect Europe’s competitiveness”. Two Tui Travel (27.1%), Thomas Cook WITH SINOSTEEL FOR THE types of European companies can be of Group (30.0%). STRATEGIC ASSESSMENT AND particular interest: DEVELOPMENT OF KYRGYZ (i) European companies with sig- Asia URANIUM PROJECTS nificant BRIC revenue. (ii) European companies with Asia Investment Background Highlights significant German revenue. Asia at the end of 2010 has rela- • Agreement with Sinosteel Cor- tively strong space-time boundary condi- poration to assess and develop Kyrgyz Europe Investment Targets tions. Leadership changes for China and uranium projects. Applying the above investment America by 2012 call for policy initiation • On individual licenses Sinosteel logic, we have: and continuation 2011-2012, Asian coun- can earn: (i) European companies with tries between China and America will be 40% interest in selected projects significant BRIC revenue, including influenced accordingly. America has ties by conducting exploration and scoping Pirelli (40%), Grupo Santander (42%), over China’s three corners of Northeast studies; and 60% interest in selected HSBC (46%), Standard Chartered (Japan, South Korea), India, and Singa- projects by completing feasibility studies. (71%), Anglo American Plc (42%), pore, granting Singapore a strategic role. • Sinosteel may be issued share- BHP Billiton Plc (45%), Kazakhmys By investing in China’s financial industry, price options of up to 1.9 million shares (40%), Holcim (53%), Marie Tec- increasing linkage between Singaporean in Monaro, exercisable atAU$1.00 nimont (68%), Wienberger (55%), and Australian stock exchange, discuss- each. Danone (40%), Uniever (43%), ABB ing FTA with Taiwan, Singapore is in a Ltd (42%), Intertek Group (42%), good position advising America in Asia To contact Dr. Alyce SU, please MTU Aero Engines (40%), Outotec by helping America managing its Asian email alyce.su@chinaqueencapital. (55%), Rolls-Royce (48%), Sulzer exposure. com, or call +(852) 6187 3268.

69 Member List of Council of China’s Foreign Trade

Honorary Chairmen: Gao Kecheng Chairman of Jibao Enterprise Development (Singapore) Co., Ltd. Wan Jifei Chairman of China’s Council for the Promotion of Inter- Geng Jian Chairman of F&J Int’l Group / Shanghai F&J Investment national Trade and Management Co., Ltd. He Guangwei Former Director General of China National Tourism Ad- Gong Liming Chairman of Li-Ming Gong Enterprise Ltd. ministration Guo Dong Chairman of Guostar Group Ltd., Uganda Li Kenong Vice Minister of General Administration of China Customs Han Qiangchou Managing Director of Muhibbah Engineering Cambodia Co., Ltd. Consultants: He Chaoqiong Managing Director of Shun Tak Holdings Limited He Jinsheng President of e-Phone Group (USA) Shi Guangsheng Vice Director of Financial and Economic Committee of He Manguang CEO of Asian Products (HK) Co., Ltd. NPC’s Standing Committee Hu Jieguo Chairman of Nigeria Golden Gate Group of Companies Former Minister of the Administration of Foreign Eco- Hu Zhiqiang Chairman of Foster, Andrew & Co., Inc. nomic and Trade Cooperation Hu Anhua Chairman of Neonlite Electronic & Lighting (HK) Ltd. Gan Ziyu Vice Director of Financial and Economic Committee of Huo Zhenyu Director of Fok Ying Tung Group Hong Kong NPC’s Standing Committee Huang Jinyi Chairman of the board of Pacific Plywood Holdings Ltd. Former Vice Director of National Development and Re- Huang Guoyu Founder and Chairman of 4th World Chinese Entrepreneurs form Commission Convention and of Canada Founding & Development Society Yu Xiaosong Consultant of China’s Council for the Promotion of Inter- Huang Guozhong President of Wee Boon Ding Group, Malaysia national Trade Huang Junjie Chairman of Ericorps Group Former Chairman of China’s Council for the Promotion of Huang Zhiyuan Chairman of Sinar Mas Group-APP China International Trade Huang Tianwen President of Sinosteel Corporation Huang Yihong Chairman of Qin Jia Yuan Media Services Company Litmited Chairman of the Council: Jacky Chen Chairman of Thailand Council for the Promotion of Econ- omy and Trade of Small and Medium-Sized Enterprises Zhang Wei Vice Chairman of China’s Council for the Promotion of Jiang Lili President of Eco-Tek Holdings Limited International Trade Jiang Qingde President of Sumber Mas Group, Indonesia Jiang Qifeng Chairman of SBC Bank, Singapore Standing Vice Chairmen: Jorge Mora Asia-Pacific President of Veolia water Kong Lingfa President and General Manager of Tianxiang Group (An- Mr. Benjamin Fok Board Member of Fok Ying Tung Group Co., Ltd . hui) Co., Ltd. Mr. William Chiu Beijing Badaling Cableway Ltd. Leow Yoon Loy President of IPC Shopping Services Ltd., Malaysia Liu Jingzhen President of China National Automotive Industry Interna- Vice Chairmen: (Names in Alphabetical Order) tional Corp. Lu Dehua General Manager of Prime International Conference Exhibition Alan Liu President of AXL Musical Instruments Co., Ltd. Corp. Li Hexun President of Tetra Pak China Ltd. (Shanghai) Li Houlin Executive President of Hong Kong Hiersun International Angela A. Chao Vice President of Foremost Group Diamond Organization Alyce Su Founder of China Queen Capital (HK) Ltd. Li Jinyou Managing Director of County Height Holdings, Malaysia Bao Yifang Managing Director of Florence Town (Tianjin) Co., Ltd. Li Jiafu President of Majestic Group Int’l Ltd. Cai Xiyou General Manager of China International United Petroleum Li Songzhi Chairman of Myanmar International Business Promotion Centre. & Chemicals Co., Ltd. Li Xinzhu Chairman of Trade Manufacturing Ltd. Cai Tianzhen Chairman of Titan (Holdings) Ltd. Li Jinyuan Chairman & President of Tianjin TIENS Group Co., Ltd. Cao Heping Chairman of SKALA Investment Co., Ltd. Liang Gongbi Chairman of Orient Int’l Group, Ecuador Cao Weide President of IMC Shipping (China) Co., Ltd. Liang Jiaqiang President of Transpac Capital PTE Ltd., Singapore Cao Xiaopeng Chairman of Rongji Investment Ltd., Macao Lin Xinping Chairman of Nines (USA) Corp. Chau Pui Yin Director of Accordion Troupe Hong Kong Lin Guoguang Chairman of Greatwall Group S.R.O, Czech Cheng Yong Chairman of Glee Int’l Holdings Inc., Former Director of Lin Dexiang Chairman of GITI Tire (China) Investment Co., Ltd. Int’l Association of Lion Club Lin Jindan Chairman of LINNS INVESTMENT CPTY, LTD, Namibia Chen Chengxiu Chairman of Daching Holdings, Ltd. Lin Xuming Chairman of Hong Kong Minhoong Group Ltd. Chen Jinlong Senior Director of Far East Holding Group Co., Ltd. Lin Lisheng Chairman of Thaihua Rubber Public Company Ltd. Chen Renai Chairman of Jinghua Trade Company, Societa Montag- Lin Jianzhong Chairman of eBiz Anywhere Technologies Ltd. nora dei Servi Ass, China-Italia per le aree Marittime Lim Chee Oun Executive Chairman of Keppei Corporation Ltd., Singapore Chen Hanzhong Chariman of Chenshi Trade Group Ltd, Spain Liu Zhengchang Chairman and General Manager of Columbia Group, Indonesia Chen Xiaoping General Manager of Haining Hongyang Group Liu Jianmin Chairman of Empire Capital Group, Hong Kong Chen Xiaofeng Chairman of Wenzhou Chengwen Import & Export Co,. Ltd. Liu Shaorong Chairman and Executive President of Baltrans Holdings Ltd. Chen Xiaozhong Chairman of Wenzhou Xingyu Stationery & Sports Manu- Mimy Mock de Fung Chairman of General Committee of Sino-Venezuela facturing Co., Ltd. Trade, Industry, Agriculture and Tourism Chen Wenyue CEO of ASIAEP BERHAD Ma Li Chairman of Macao International Education Development Centre Chen Zhiling Operating Chairman of Wynn Macau Ma Renlin General Manager of Shanghai Meiheng Investment Co., Dato’ Sri Joseph Chong Managing Director of Westmont Power Ltd. Ltd. Dato’ Lim Hock San Managing Director of LBS BINA Group Berhad, Malaysia Mr. Banthoon Lamsam Chief Executive Officer of The KASIKORNBANK Public Deng Tengda CEO of International Trade Co., Ltd, Singapore Company Limited Ding Jiayan Board Chairman of Thai Guohuo Group Co., Ltd. Mr. Kampol Srethbhakdi President of The Thai Malleable Iron and Steel Co.,Ltd. Dong Rui’e Chairman of Western Meral Products Co., Ltd. Ren Zhijie President of Beijing Century Boai International Medicine Eddie Chng Chairman of Ternary Technologies PTE. Ltd. Technology Development Ltd. Fan Yifei Vice President of China Construction Bank Ouyang Riping Chairman of the board of DaTong Group (West Africa) Feng Shaoyu Chairman and Executive President of Hongkong Aon Asia Group Qi Xianjin Executive Consultant of Puente China Espana. S.L. Feng Minghui Chairman of Jincheng Investment Co., Ltd. Qiu Dachang Vice Chariman & Executive President of Far East Devel- Gallant Y.T. Hong Kong Philanthropist opment Co., Ltd. Steven LEOW President of IPC Shopping Service (M) Sdn Bhd Zhuang Yaozhi Honorary Chairman of Global Petrolum Industry Devel- Shen Qinhua Chairman of Head Force Development Ltd., Hong Kong opment Co. Ltd. Shen Yaozhang Chairman of Shanghai Baoyao Minmetals Import & Ex- Zou Weimin Chairman and General Manager of Metallurgical Corpo- port Trade Co., Ltd. ration of China Overseas Ltd. Shi Huamin Chairman of Beauty Bond Holdings Ltd. Chairman of China General Chamber of Commerce in Executive Directors: Brazil Shi Zhenyuan Chairman of Kingsland Enterprises, Inc. / Agusan Planta- Chen Mingzong Chairman of Intan Group Indonesia tions, Inc. Cen Shunguo General Manager of Inversions Nueva China Shu Rongbin President of Shanghai Waigaoqiao (Group) Co., Ltd. Hong Guiren Wijayakusuma Group Coal Mining and Power Station Sun Ziyu Managing Director of China Harbor Engineering Com- Indonasia-China Cooperative Investment pany Ltd. Li Zhimin Chairman, Xinjiang Tianhai Lvzhou Group Co., Ltd. Tang Chai Yoong Chairman of Kumplan Langkawi Resorts, Malaysia She Wenmin President of Singapore Technologies Electronics Ltd. Wu Duanjing Vice Chairman of New Lakeside Holdings Limited Mr. Michael Kwan Associate Director of Shun Tak Holdings Limited Wu Huiquan Chairman of Fusion Int’l Holdings Ltd. Yang Chisheng Chairman of China Audit Certified Public Accountants Wang Shousong Chairman of Wang’s Corporate Group, Holland Ltd. Wang Zhenling Chairman of Hanxing (China) Group Ltd. Yao Yuntao Director of Administration Committee of Gu’an Develop- Wang Huizhen Managing Director of Wang Xinxing Co., Ltd. ment Area Wang Jiahou Chairman of the Dynasty, Italy Yu Mingquan President of Juhai Group (Russia) Wang Jiayi Chairman of Yi Ni Int’l, New Zealand Zheng Jingxin Chairman of Tee The Sdn Bhd Malaysia Wang Jiaming Chairman of Canada Ebridge International Ltd. Zhang Dongxiao Chairman of REDAS, Singapore Wang Qiandong President of Suntec City Development PTE, Ltd. Wang Qinghai General Manager of Shougang Group Council of China’s Directors: Foreign Wang Shufang Chairman of Chinese Committee of Golden Coast, Aus- Cai Zhipeng Chairman of Shantou Diming Trading Co., Ltd. tralia Cha Meilong Managing Director of CHA Textiles Wang Renqing Chairman of Aims Financial Group, Australia Chen Caiji Chairman of PT. Gunung Garuda Brazil Wang Wu Managing Director of Central Huijin (Beijing) Investment Chen Dan Managing Director of Leawell International Ltd. Ltd. Chen Ming Chairman of FORWARD Group Logistics Companies Wang Zhanhua Managing Director of Global One Headwear Co., Ltd. Chen Guangdi Mang Gai International Golf Committee of Vietnam Hong Wu Shuqing Chen Liqun General Manager of Asia Satellite Telecommunications Chairman of Hong Kong Executive Committee of World Co., Ltd. Trade Centre Chen Gongwei Executive Director of Weili International Investment Vice Chairman of Beijing Air Catering Ltd. Holdings Co., Ltd. Wu Xiaobin Chairman of LOXCO., Ltd. Dato’ Yan Mengjie Executive Chairman of VIBRANTWAVES S.D.H.BHD, Wu Yingmei Executive Director of Kowloon Motor Bus Co., Ltd. Malaysia Managing Director of Roadshow Co., Ltd. He Haitang Director of Shanghai Haitang Helmet Factory Xiao Dexiong Chairman of Tw Fok Holding Co., Ltd. Hu Zhimin Chairman of Woo Investments Group Xie Bingzhen Chairman of Strategic Decision Committee of China Huang Biyun Chairman of Huada Industry and Trade Development Co., Ltd. Machi Group Huang Jianlong Vice President of SANY Group Co., Ltd. Xie Futian Chairman of Green World Holdings Ltd. Hung Chi Ching Chairman of HCC Assets Management Ltd. Xie Liqun Chairman of Yunnan Anhong Real Estate Development Li Guoqiang Chairman of Nuovo Collection Co., Ltd. Li Liming Chairman of DingXiang County LiMing flanges Co., Xie Mingcheng Chairman of China Win-Win Group Limited Ltd. Xu Zili Chairman of the Board of Directors of Supermercado Sun Lin Jiashui Executive Chairman of Unimech Group Miu Ltd. Liu Junying Chairman of China Xinghai Group Energy & Mining In- Xu Wenbo Executive Director of Macau Huan Yu Group Holdings vestment Co., Ltd. Co., Ltd. Ma Zhongli General Manager of Taching Petroleum Co., Ltd. Xu Li Chairman of the board of Nankai Transport International Ma Jianbo Chairman of Zhenghua International Trade Co., Ltd., (HK) Co. Ltd. Thailand Xu Zhiming Chairman of Yuemei Group Guo Kongfeng Chairman of Hilmar Trading PVT Ltd. Xue Baojin President of Beijing Smart Garments Co., Ltd. Gong Xuebin Chairman of Longda Foodstuff Group Co., Ltd. Yao Junwen Chairman of Russia Yujia Group Jiang Xing Director of Lippo China Resources Ltd. Yang Jinhua Chairman of King Far B.V., Holand Peters Lim Managing Director of JP International Travel Pte Ltd., Yang Luming Managing Director of Danchen Group of Companies Singapore Yin Xiaomin Chairman of Yinshi Group, Brazil Qian Yuezhen General Manager of Nordic China Center (Finland) You Kaicheng Chairman & General Manager of Binhtien Imex Co., Sun Jianxi General Manager of Xi’an Dagang Road Machinery Co., Ltd. PTE. Ltd. Shao Chuanwei Chief Director of Information and Technology Division, Yu Mingquan Chairman of Juhai Group, Russia Phillips Electronics (Hong Kong) Co., Ltd. Yang Luming Managing Director of Australian Chen Enxi Group Co., Tang Lei Head of Public Affair & Government Relationship, Ltd. Shanghai eBay China Yang Zongde(Lin) Managing Director of GLENCAIRN International Group Teng Yunpeng Beijing Walson International Property Rights Agent Co., Ltd. Zhao Hui Manager of Wuhu Cigarette Factory, Anhui Province Wang Anlun CEO of Ascott Group Zhao Anji Vice Chairman of Fumao Group Wang Junqin Chairman of J.K. Wong Inc. Zhang Weizhi Chairman of Hacau-Taiwan Portugal Chauber Of Com- Wang Shuyin Managing Director of Shaanxi Xianyang Grain Machin- merce ery Factory Zhang Liqun Great Will Inv. Co., Ltd. Xuan Guangri General Manager of Yiwu Yana Imports and Exports Co., Ltd. Zhang Xiaoqun Chairman of Dubai China Trade City, Saudi Arabia Xie Gang General Manager of Beijing Helen Travel & Culture De- Zhang Xiqing Chairman of Union of Overseas Chinese Greece velopment Co., Ltd. Zhang Jianwei President of Sino-trans Limited Yang Chuanli Chairman of Jingu Jewellery Ltd. Zhang Qingxin President of Chongqing Wijaya Reality Ltd. Zhang Yin Chairman of Nine Dragons Paper (Holdings) Limited Zheng Weicai Executive Director of Malaiya Flour Mills Berhad Zhao Zhiming Chairman of Chow Kim Lin Group SDN. BHD. Zhou Jinhui Chairman of Legendale Constructive Co., Ltd, Macau Zhu Chunzi General Manager of Seaport Industrial Park Development Zhu Shanyi Chariman of Jiangsu Mingda Mining Investment Co. Ltd. Company, Zhanjiang Port Group