How to Export to
The People’s Republic of China
2006-3 Version
Prepared for
Ministry of Foreign Relations of Brazil
Trade Promotion Department
Trade Information Division
By
Beijing CDS Information Consulting Co., Ltd.
Suite 705, North Office Tower, Beijing New World Center, No.3B Chongwenmenwai St. Beijing, 100062 China Tel: 86-10-67082542 Fax: 86-10-67082534 E-mail: [email protected] Website: http://www.bjcds.com How to Export to the People’s Republic of China
Table of Contents INTRODUCTION...... 5 Map of P.R. China...... 9 BASIC DATA...... 10 BIBLIOGRAPHY ...... 11 I GENERAL ASPECTS...... 12 1 Geography...... 12 2 Population, urban centers and standard of living ...... 15 Population ...... 15 Urban centers ...... 17 Main socio-economic indicators ...... 18 3 Transportation and communications ...... 19 Telecommunications ...... 22 4 Political and administrative structure...... 22 Political Structure...... 22 Administrative Structure ...... 25 5 International Organizations and Agreements ...... 27 China and the UN...... 27 China and the WTO...... 27 China and the IMF ...... 27 China and the APEC...... 28 II ECONOMY, CURRENCY AND FINANCE ...... 29 1 Economic outlook ...... 29 2 Main industries...... 31 Farming, Forestry, Animal Husbandry and Fishery ...... 31 Mining...... 32 Industry ...... 33 Power and Petroleum Industries...... 34 Machine-building and Auto Industries...... 34 Information Industry ...... 35 New and High Technology Industry ...... 36 Tourism ...... 37 Construction Industry...... 37 3 Currency and finance ...... 38 Currency...... 38 4.Balance of Payments and International Reserves...... 38 Public Finance...... 40 Banking System ...... 40 III FOREIGN TRADE ...... 42 1 Recent evolution: ...... 42 2 Direction...... 43
2 How to Export to the People’s Republic of China
3 Composition...... 43 IV ECONOMIC RELATIONS BETWEEN BRAZIL AND CHINA ...... 45 1 Bilateral trade: Evolution of Sino-Brazil Trade ...... 45 2 Composition of bilateral trade...... 46 Brazil: main products exported to China 2003 – 2005...... 46 Brazil: main products imported from China 2003 - 2005 ...... 47 3.Investimentos bilaterais...... 48 Investments by China in Brazil ...... 48 Brazilian Investments in China ...... 49 4. Main economic agreements involving Brazil...... 50 V MARKET ACCESS ...... 52 1 Tariff system...... 52 2 Import regulation...... 56 General regulation...... 56 Foreign exchange regime ...... 59 3 Documents and formal procedures...... 61 Shipment (from Brazil) ...... 61 Customs clearance (in China) ...... 63 4 Special regimes ...... 68 VI TRADE STRUCTURE...... 72 1 General Considerations ...... 72 2 Distribution channels ...... 72 Domestic wholesalers...... 72 Foreign agent and distributors...... 73 Wholesale markets ...... 73 Retail channels ...... 74 Trading via Hong Kong...... 77 Government procurement...... 77 3 Sale promotion ...... 78 General considerations...... 78 Fairs and exhibits ...... 78 Advertising media ...... 79 Consulting services in marketing ...... 80 4 Trade practices ...... 81 Appointing an agent ...... 81 Establishing a retail business in China...... 82 Opening a commercial representation office...... 82 Disputes and commercial arbitration...... 84 VII RECOMMENDATIONS TO BRAZILIAN COMPANIES ...... 87 1 Advice on China Import Procedures ...... 87 2 Advice on Business Trips...... 87 Establishing personal relationships ...... 94 Comprehending the necessity of working lunches and dinners ...... 95 Figuring out the management structure of the Chinese organization...... 95
3 How to Export to the People’s Republic of China
Bring small gifts...... 95 Bring name cards...... 95 Learn some greetings in Mandarin...... 96 Paying attention to the small details when you see your Chinese counterparts for the first time ...... 96 Understanding the Chinese way of thinking ...... 96 The concept of face ...... 97 ANNEXES ...... 98 I ADDRESSES...... 98 1. Official agencies...... 98 2. Brazilian companies...... 103 3. Chambers of commerce...... 116 4. Main local class entities ...... 116 5. Main banks...... 118 6 Main fairs and exhibits...... 120 7. Communications ...... 125 8. Consulting services in marketing ...... 130 9. Obtaining required documents ...... 131 10. Transportation companies to/from Brazil...... 132 11. Shipment inspection ...... 134 II. TRANSPORTATION AND COMMUNICATIONS WITH BRAZIL...... 134 1. Information on transportation...... 134 2. Communications: rates (China)...... 134 III. PRACTICAL INFORMATION ...... 135 1. Currency...... 135 2. Main weights and measures...... 135 3. Main national holidays...... 135 4. Time zones ...... 136 5. Business hours...... 136 6. Electric current:...... 136 7. Desirable periods for trips...... 136 8. Entry visa ...... 137 9. Vaccines...... 137 10. Hotels ...... 137
4 How to Export to the People’s Republic of China
INTRODUCTION The People’s Republic of China is the third largest country in the world in terms of land area, occupying a territory of approximately 3.7 million square miles. China is also the world’s largest nation by population, with approximately 1,307.56 million people at the end of 2005.
The People’s Republic of China was founded on October 1, 1949. Since its founding, China has transformed itself from a largely agrarian, semi-feudal and semi-colonial society that existed prior to 1949, to a centralized economic and social system and, since 1978, to a more open and market-oriented socialist economy.
The People’s Republic of China, the biggest developing country with the largest population and the third largest territory, has enjoyed a rapid and sustained growth in its economy for the past 20 years. China's GDP rose from RMB 7.4 trillion yuan (0.89 trillion US dollars) in 1997 to 18.23 trillion yuan (2.23 trillion US dollars) in 2005, with an average annual rate of 9%
In December 2005, China raised the GDP in 2004 to RMB 15.99 trillion yuan (1.93 trillion US dollars) from 13.65 trillion (1.64 trillion US dollars) based on the results of the country's first nationwide economic census in 2005. The revision lifts China above Italy as the sixth-biggest economy in the world in 2004, just behind the United States, Japan, Germany, France and the United Kingdom.
National tax revenue grew by a large margin every year. Total fiscal revenue rose from RMB 0.8651 trillion yuan (0.10 trillion US dollars) in 1997 to 3.1628 trillion yuan (0.3860 trillion US dollars) in 2005. China's foreign exchange reserves climbed from 139.9 billion US dollars in 1997 to 818.87 billion US dollars in 2005.
China's foreign trade has taken several big steps forward, and grew by an annual rate of 15 percent since 1978. In 2005, the combined volume of imports and exports increased to 1421.90 billion US dollars, and China become the third largest trader with foreign trade. China’s export volume hit 761.95 billion US dollars. In the same year, China’s import volume reached 659.95 billion US dollars.
The amount of foreign direct investment actually used in China in 2005 came to 60.33 billion US dollars.
China has succeeded in improving the people's standard of living and in establishing on the whole a relatively affluent society. The per capita annually disposable income of urban dwellers went up from RMB 5,160 yuan (622.44 US dollars) in 1997 to 10493 yuan (1280.9 US dollars) in 2005, an average annual increase of 8.1 percent in real terms. The balance of savings deposits of urban and rural residents rose from
5 How to Export to the People’s Republic of China
RMB 4.6 trillion yuan (0.55 trillion US dollars) in 1997 to 14.11 trillion yuan (1.72 trillion US dollars) in 2005.
China became a full member of the World Trade Organization (WTO) in December 2001. It is in conducive to both China and the world. China’s entry into WTO, not only can enable China to integrate into the process of globalization of world economy, but also facilitate the products, services, capital and technology to enter into the Chinese market. In the foreseeable future, China’s economy will be more dynamic and it’s market will be more open to the world.
Brazil and China are the largest developing countries in Latin America and Asia, respectively. As far apart as two countries can possibly be on this planet, in terms of either geography or history, there are several significant social and cultural differences between Brazil and China. And yet they hold some important similarities. The first, visible similarity is the sheer size of the national territories, both absolutely and relatively to other countries in Asia and Latin America. Secondly, Brazil and China share some problems which are commonly faced by large, developing countries, specially where predominantly rural economies gave place to more sophisticated, complex ones in a time frame not larger than a single generation. In both countries, this process happened through swift changes in their respective industrial sectors. Furthermore, development has not been uniform in these huge territories, generating economic integration difficulties as well as wealth distribution problems. Large tracts of land remain to be explored in both Brazil’s northern regions and China’s west, thus constituting new frontiers where significant opportunities are to be sought. Brazil and China have an excellent relationship. Bilateral dialogue is good, common positions are usually shared in international organizations, and there is an important constituency for further bilateral interaction, materialized in a lengthy, complex agenda of common interests. In this sense, Brazil and China are not only friends, but also strategic partners. The potential for further development of this relationship is huge, and cooperation has not yet reached the level of intensity aimed by both societies, either in economic, political or cultural issues.
Started in 2002, the process of reducing taxes on export operations continued and was implemented parallel to Brazilian government’s strategy of prioritizing trade with non-traditional markets, for example China.
China, since its admission to the World Trade Organization (WTO) has consolidated its position as Brazil’s major trading partner in Asia, surpassing such more trading markets as Japan. According to the data from SECEX/DECEX MDIC, the total trade flow between the two countries grew from 3.2 billion dollars in 2001 to the record of 12 billion dollars in 2005, a growth of 275 % in five years.
According to MDIC, total trade volume between Brazil and China in 2005 reached US$ 12.11 billion, up 33.19 percent. And Brazil has a favorable balance of US$1.48
6 How to Export to the People’s Republic of China billion, up 14.45 percent.
Brazilian exports to China in 2005 reached US$6.833 billion, up 25.63 percent, and China was the 3rd largest export destination of Brazil.
Brazilian imports from China in 2005 reached US$5.353 billion, up 44.28 percent, and China was the 4th largest import origin of Brazil.
China mainly exports to Brazil such goods as electromechanical equipment, hi-tech products, clothes, coke, textiles, automatic data-processing equipment and accessories. China mainly imports from Brazil such goods as bean products, iron ore, electromechanical equipment, paper pulp, car spare parts, leather, hi-tech products, planes, steel products, plastics and timber.
By the end of 2004, China has founded 70 firms in Brazil, and Brazil has invested in more than 300 projects in China. The Chinese companies and enterprises are mainly engaged in electrical household appliances, microscope assembling, lumber processing, transport, health and catering. The Brazilian projects include water conservancy engineering, railway project and catering. A number of Brazilian companies have opened their offices in China.
2004 was the 30 anniversary of establishing diplomatic ties between Brazil and China. In May 2004 the Brazilian President Luiz Inácio Lula da Silva paid a state visit to China, and more than 400 Brazilian entrepreneurs accompaning his visit. During the visit, some 15 cooperative contracts were signed, which involve cooperation in fields like steel, coal and motor.
In May 2004, Brazil's petroleum giant Petrobras set up a representative office in Beijing. Petrobras, as Brazil's biggest state-owned enterprise, plays an important role in Brazil-China economic and trade ties, and there is huge potential in energy co-operation between the two countries.
In 2004, Brazil Star Alliance member Varig and Air China signed an agreement. They jointly opened a route of Rio de Janeiro/Sâo Paulo/Munich/Beijing, the only direct route connecting between the two countries.
In 2006 Varig Brazilian Airlines, Brazil's largest carrier, launched code-share flights with Air China between the two countries. Air China will fly from Beijing and Shanghai to Frankfurt, while Varig will take passengers on from Frankfurt to Rio de Janeiro and Sao Paulo.
The total journey time will be shortened to 27 hours, including transfers. Passengers do not need a transit visa. Previously, passengers traveling from China to Brazil had to travel for at least 30 hours.
7 How to Export to the People’s Republic of China
In November 2004, Chinese President Hu Jintao visited Brazil. China and Brazil signed a memo in Brasilia, in which Brazil said it recognized China's full market economy status. The memo was a major result of Chinese President Hu Jintao's visit to Brazil.
The recognition of China's full market economy status enriched the contents of China-Brazil strategic partnership relations, and will strongly expand the opportunities of trade and investment.
8 How to Export to the People’s Republic of China
Map of P.R. China
9 How to Export to the People’s Republic of China
BASIC DATA
Area: 9,600,000 km2 Population in 2005: 1307.56 million Population density: 136 /km2 Economically Active population in 2005: 758.25 million Capital: Beijing Currency: Renminbi (RMB) yuan Average exchange rate in 2005: US$1.00 = RMB8.1917 GDP (current prices) in 2005: 18.23 trillion yuan (US$2.23 trillion) Share of GDP in 2005: Primary Industry: 12.5% Secondary Industry: 47.3% Tertiary Industry: 40.2%
GDP – real growth rate: 2005= 9.9 % 2004 = 10.1 % 2003 = 10.0 %
Per capita GDP in 2005: US$ 1,707 (RMB13,985 yuan)
Output of main products in 2005: Grain: 484.02 million tons Cotton: 5.71 million tons Oil Bearing Crops: 30.77 million tons Meat: 77.43 million tons Coal: 2.19 billion tons Crude Petroleum Oil: 180.84 million tons Electricity: 2474.7 billion kwh Crude Steel: 352.39 million tons Motor Vehicles: 5.705 million units
Foreign trade in 2005: Imports: US$659.95 billion (CIF) Exports: US$761.95 billion (FOB)
Brazil’s trade with China in 2005 (data from MDIC/SECEX):
Exports to China: US$2.52 billion (CIF) Imports from China : US$1.55 billion (FOB)
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BIBLIOGRAPHY
Atlas of the People’s Republic of China China Cartographic Publishing House China Statistical Yearbook 2005China Statistics Press Encyclopedia of New China Foreign Language Press China Business China Intercontinental Communication Center China Statistical Abstract 2006 China Statistics Press China Customs Statistical Year Book Customs General Administration of China Fairs and Exhibitions China China Council for the Promotion of International Trade China Government Organization Chart China Daily China Business Guide China Council for the Promotion of International Trade Investment in China Ministry of Commerce International Financial Statistics IMF Report on China’s National Economic and Social Development China Planning Press
Note:
The national data in the report do not include that of Hong Kong Special Administration Region, Macao Special Administration Region, and Taiwan Province except for divisions of administrative areas, and territory.
11 How to Export to the People’s Republic of China
I GENERAL ASPECTS 1 Geography
China is located in the northern part of the East Hemisphere of the earth, the southeastern part of Eurasia, and the eastern and central part of Asia. It is at the west coast of the Pacific Ocean. Chinas land border line totals more than 20,000 kilometers, which are shared with 15 countries. North: Russia and Mongolia Northeast: the Democratic People’s Republic of Korea Southwest: Kazakhstan, Tadzhikistan, Kirghizia, Afghanistan, Pakistan, India, Nepal, Sikkim, Bhutan and Myanmar South: Viet Nam and Laos Japan, the Republic of Korea, the Philippines, Brunei, Malaysia and Indonesia in the east face China across sea.
Distances From Capital Beijing to Other Main Chinese Cities (km)
Name of City Railway Highway Airway Changchun 1,100 1,030 828 Changsha 1,650 1,640 1,364 Chengdu 2,400 2,097 1,542 Chongqing 2,400 2,087 1,492 Dalian 903 900 443 Fuzhou 2,344 2,183 1,586 Guangzhou 2,400 2,480 1,908 Guiyang 2,600 2,458 1,784 Haikou 2,310 Hangzhou 1,520 1,490 1,135 Harbin 1,392 1,256 1,034 Hefei 1,106 1,100 959 Hohhot 594 540 432 Jinan 457 420 412 Kunming 3,510 3,108 2,118 Lanzhou 2,000 1,780 1,203 Lhasa 3,890 2,557 Nanchang 1,609 1,574 1,270 Nanjing 1,141 1,099 926 Nanning 2,650 2,660 2,074 Ningbo 1,710 1,423 Qingdao 832 666 511
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Shanghai 1,490 1,394 1,079 Shenyang 780 698 610 Shenzhen 2,600 2,567 1,967 Shijiazhuang 295 270 346 Taiyuan 622 500 431 Tianjin 137 120 180 Urumqi 3,768 3,820 2,465 Wuhan 1,300 1,230 1,087 Xiamen 3,100 3,200 1,744 Xi'an 1,200 1,117 942 Xining 2,260 2,010 1,344 Yinchuan 1,300 1,277 919 Zhengzhou 722 720 646 Source: Atlas of the People’s Republic of China
Flight time from Provincial Capitals to Beijing
China Provincial Capital Flight Time to Beijing, the Capital (Hour) Changsha (Hunan) 02:25 Chengdu (Sichuan) 02:20 Chongqing (Municipality) 02:05 Dalian (Liaoning) 01:20 Fuzhou (Fujian) 02:20 Guangzhou (Guangdong) 02:50 Haikou (Hainan) 03:25 Hangzhou (Zhejiang) 01:50 Harbin (Heilongjiang) 01:45 Hefei (Anhui) 01:45 Hohhot (Inner Mongolia) 01:10 Jinan (Shandong) 00:55 Kunming (Yunnan) 03:00 Lhasa (Tibet) No direct flight Nanjing (Jiangsu) 01:40 Shanghai (Municipality) 02:00 Tianjin (Municipality) Less than 01:00 Urumqi (Xinjiang) 03:30 Wuhan (Hubei) 01:45 Xi’an (Shaanxi) 01:40 Source: website of the Air China
13 How to Export to the People’s Republic of China
Climate Most part of China lies in the north temperature zone, characterized by a warm climate and distinctive seasons, a climate well suited for habitation. Most of China has a continental monsoon climate. From September to April the following year, the dry and cold winter monsoon blow from Siberia and the Mongolian Plateau, resulting in cold and dry winters and great differences in the temperatures of north and south China. From April to September, warm and humid summer monsoons blow from the seas in the east and south, resulting in overall high temperatures and plentiful rainfall, and little differences in the temperatures of north and south China. January is the coldest month in most parts of the country, the average temperature is below 0 degree; while July is the hottest, the average temperature is between 20-28 degrees.
In terms of temperature, the nation can be sectored from south to north into equatorial, tropical, subtropical, warm-temperate, temperate, and cold-temperate zones.
Average Temperature of Main Cities in 2004
Unit: ℃ Name of City Jan. July. Annual Average Beijing -2.3 26.0 13.5 Changchun -13.2 22.5 7.1 Changsha 5.1 29.4 18.3 Chengdu 6.0 25.0 16.2 Chongqing 8.5 28.5 18.4 Dalian -3.1 24.1 12.2 Fuzhou 11.0 29.5 20.8 Guangzhou 13.4 28.7 22.8 Guilin 7.9 26.7 19.6 Guiyang 3.1 22.2 14.6 Haikou 18.4 29.1 24.7 Hangzhou 4.7 30.2 17.8 Harbin -16 22.8 5.8 Hefei 2.9 28.9 16.6 Hohhot -10.2 22.8 8.0 Jinan -0.1 26.4 14.8 Kunming 9.2 20.4 15.6 Lanzhou -3.6 23.0 10.9 Lhasa -0.9 14.4 8.6 Nanchang 5.7 29.7 18.8 Nanjing 3.3 29.3 16.9 Nanning 13.3 27.1 21.5 Qingdao 0.2 24.8 13.6
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Shanghai 4.1 29.8 17.5 Shenyang -9.4 24.3 9.6 Shijiazhuang -0.5 26.3 14.3 Taiyuan -4.7 23.5 10.9 Tianjin -3.1 26.0 13.2 Urumqi -12.6 24.6 8.0 Wuhan 4.5 29.9 18.3 Xi'an 1.6 27.8 15.4 Xining -8.4 16.5 5.8 Yinchuan -7.0 24.0 10.3 Zhengzhou 1.5 27.0 15.5 Source: China Statistical Yearbook 2005
Precipitation gradually declines from the southeastern to the northwestern inland area, and the average annual precipitation varies greatly from place to place. In southeastern coastal areas, it reaches over 1,500 mm, while in northwestern areas, it drops to below 200 mm.
2 Population, urban centers and standard of living Population
China is the most populous country in the world, with 1307.56 million people at the end of 2005, one fifth of the world’s total. Moreover, the population density is high, with 135 people per km2. This population, however, is unevenly distributed. Along the densely populated east coast there are more than 400 people per km2; in the central areas, over 200; and in the sparsely populated plateaus in the west there are less than 10 people per km2. Shanghai is the most densely populated city in China, with more that 2800 people per km2 , and Tibet is the most sparsely populated area, with only 2 people per km2 .
In China’s Tenth Five-Year Plan period (2001-2005) the average annual natural increase rate of population will not exceed nine per thousand, and the population of 2005 will be controlled to less than 1.33 billion. By 2010 the population of China will not have exceeded 1.4 billion.
Population Density of Provinces, Autonomous Regions, and Municipalities (at the end of 2005)
Province Population (1000 persons) Area (1000 km2) Density (persons/ km2) Anhui 61,200 139.00 440 Beijing 15,380 16.80 915 Chongqing 27,980 82.00 341 Fujian 35,350 121.40 291 Gansu 25,940 450.00 58 Guangdong 91,940 178.00 516 Guangxi 46,600 236.00 197
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Guizhou 37,300 176.00 212 Hainan 8,280 35.40 234 Hebei 68,510 188.00 364 Heilongjiang 38,200 454.00 84 Henan 93,800 167.00 562 Hubei 57,100 185.90 307 Hunan 63,260 210.00 301 Inner Mongolia 23,860 1,180.00 20 Jiangsu 74,750 102.60 729 Jiangxi 43,110 166.90 258 Jilin 27,160 187.40 145 Liaoning 42,210 145.90 289 Ningxia 5,960 66.40 90 Qinghai 5,430 720.00 8 Shaanxi 37,200 205.00 181 Shandong 92,480 157.00 589 Shanghai 17,780 6.34 2804 Shanxi 33,550 156.00 215 Sichuan 82,120 485.00 169 Tianjin 10,430 11.30 923 Tibet 2,770 1,220.00 2 Xinjiang 20,100 1,600.00 13 Yunnan 44,500 394.00 113 Zhejiang 48,980 101.80 481 Note: The military personnel were included in the national total population, but excluded in the regional total. Source: China Statistical Abstract 2006
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Population by Gender (at the end of 2005)
Population (1000 persons) Proportion % Total 1,307,560 100.00 Male 673,750 51.50 Female 633,810 48.50 Source: China Statistical Abstract 2006
At the end of 2005, one in five people in China was under 14 year – old , and 7.7 percent of people was aged 60 or over. The working population took 72 percent of total.
Population by Main Age Group (at the end of 2005)
Population(1000 persons) Proportion % Total 1,307,560 100.00 0-14 265,435 20.3 15-64 941,443 72.0 65 and over 100,682 7.7 Source: China Statistical Abstract 2006
Urban centers
By the end of 2005, China mainland had 31 provincial capital cities, 283 cities at prefecture level, and 374 cities at county level. China’s urban population took 43 percent of total, and rural population took 57 percent of total.
Number of Inhabitants of China’s Provincial Capitals and Centrally Administered Municipalities in 2004
Name of City Population1000 persons Beijing 11,630 Changchun 7,240 Changsha 6,100 Chengdu 10,600 Chongqing 31,440 Fuzhou 6,090 Guangzhou 7,380 Guiyang 3,480 Haikou 1,430 Hangzhou 6,520 Harbin 9,700
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Hefei 4,450 Hohhot 2,150 Jinan 5,900 Kunming 5,030 Lanzhou 3,080 Lhasa n.a. Nanchang 4,610 Nanjing 5,840 Nanning 6,490 Shanghai 13,520 Shenyang 6,940 Shijiazhuang 9,180 Taiyuan 3,320 Tianjin 9,330 Urumqi 1,860 Wuhan 7,860 Xi'an 7,250 Xining 2,070 Yinchuan 1,380 Zhengzhou 6,710 Source: China Statistical Yearbook 2005
Main socio-economic indicators
Urban Rural Indicators Households Households Amount of Hi-Fi stereo, per 100 Households 28.8 Amount of TV sets, per 100 Households 134.8 105.7 Amount of cameras, per 100 Households 46.9 Amount of air conditioners, per 100 Households 80.7 6.4 Amount of refrigerators, per 100 Households 90.7 20.1 Amount of mobile telephones, per 100 Households 137.0 50.2 Amount of motorcycles, per 100 Households 25.0 41.0 Amount of computers, per 100 Households 41.5 2.1 Amount of automobiles, per 100 Households 3.4 Source: China Statistical Abstract 2006
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Literacy Rate (at the end of 2005)
Education level % of total population Illiterate Primary School 31.2 Junior Middle School 35.8 Senior Middle School 11.5 College and above 5.2 Source: China Statistical Abstract 2006
3 Transportation and communications
Road Transport
Highway transport plays a significant role in China’s transport sector, especially in passenger transport. Now 98 percent of towns and 90 percent of villages all over China have access to roads.
By the end of 2005, the mileage of China’s highway open to traffic reached 1.93 million kilometers, with expressways 41000 kilometers.
In 2005, the highway handling capacity of passengers reached 16.97 billion people, and the passenger-kilometers reached 929.2 billion, accounting for 53.2 percent of the total passenger-kilometers transported that year. The cargo handling capacity amounted to 13.42 billion tons, and the freight ton-kilometers reached 869.3 billion, accounting for 10.8 percent of the total freight ton-kilometers that year.
Length of Highway and Vehicle Fleet (at the end of 2005)
Item Number Length of Highways (1000 kms) 1,930.5 Length of Expressway (1000 kms) 41.0 Total Number of Civil Motor Vehicles (1000 units) 31,596.6 Number of Passenger Vehicles (1000 units) 21,324.6 Number of Trucks (1000 units) 9,555.5 Total Number of Private-owned Vehicles (1000 units) 18,518.7 Number of Private-owned Passenger Vehicles (1000 units) 13,839.3 Number of Private-owned Trucks (1000 units) 4,521.1 Source: China Statistical Abstract 2006
Railway Transport Railways have always played a leading role in China’s comprehensive transportation system. By the end of 2005, China had 75,400-kilometer-long railway lines. By the end of 2005, more than
19 How to Export to the People’s Republic of China
18,600 kilometers of electric railway had been constructed in China, ranking the third in the world behind Russia and Germany, in terms of the total mileage of electric railway.
In 2005, 1.16 billion passengers traveled by train, and the passenger-kilometers reached 606.2 billion, accounting for 34.7 percent of that year’s total passenger-km. The cargo transport volume reached 2.69 billion tons, and the freight ton-kilometers reached 2072.6 billion ton-km, accounting for 25.8 percent of that year’s total freight ton-km transported.
At present, China is speeding up construction and upgrading of trunk lines, with emphasis placed on the central and western region. Special efforts will be made to solve the problem of insufficient transport capacity in northeastern China, and further improve the modernization level of equipment on trunk lines.
Railway Extension and Rolling Stock in 2005
Item Number Length of Railways in Operation (km) 75,400 Length of Electrified Railways (km) 18,600 Length of Double-tracking Lines (km) 23,841 Number of Railway Locomotives 16,547 Number of Passenger Coaches 39,766 Number of Freight Cars 520,101 Source: China Statistical Abstract 2006
Inland Waterway Transport Inland water transport holds an extremely important position in China’s cargo transports. Waterway transport is concentrated in coastal areas in eastern China and in south China.
In China, the length of navigable inland waterway reached 123,300 kilometers by the end of 2005. The inland waterway cargo transport volume reached 2.19 billion tons, and freight ton-kilometers reached 4967.2 billion tons, accounting for 61.8 percent of that year’s total freight ton-km transported
Shipping (Ocean Transport)
China is situated in the west coast of the Pacific Ocean, facing a vast ocean in the East and South. China is situated in the middle of north latitude with a warm climate, and most of its ports are ice-free all the year round. Therefore, China has very favorable natural conditions to develop ocean transport.
China has more than 60 ports along the coasts. The number of the berths for working at the end of 2004 reached2,849, and 687 deep water berths among them are able to accommodate 10,000 ton boats. The chief ports with an annual handling capacity of over 50 million tons are Shanghai, Ningbo, Guangzhou, Qinhuangdao, Tianjin, Dalian, Qingdao, Rizhao and Yingkou.
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China’s chief ports along the coasts are usually linked with the hinterland through high grade roads or trunk railways, forming basically an international container system consisting of ocean transport, port loading and unloading, and inland transport (water, road and railway).
So far, China has opened navigation with 1,100 ports in 150 countries in the world. Beginning from 1989, China has been successively elected Class A Council Country in the International Maritime Organization.
In May 1979, Marine Transport Agreement between Brazil and China (Convênio de Transporte Marítimo ) was signed.
Volume of Freight Handled in top Chinese Ports (at the end of 2005)
Rank Name of Port Volume of Freight Handled (million tons) 1 Shanghai 44,317 2 Ningbo 26,881 3 Guangzhou 25,036 4 Tianjin 24,069 5 Qingdao 18,678 6 Dalian 17,085 7 Qinhuangdao 16,900 Source: China Statistical Abstract 2006
Air Transportation
China’s civil aviation has developed rapidly. At the end of 2005, China had 135 airports with scheduled flights, 1,257 regular air routes (including 233 international air routes), with a total length of 1.99 million kilometers, and 132 cities with access to air service. China’s international air routes reached more than 60 cities in 34 countries. In 2005, Chinese airports handled 138.27 million passengers, and the passenger-km reached 204.5 billion, taking 11.71 percent of total. The cargo transport volume reached 3.07 million tons, and the freight ton-kilometers reached 7.89 billion.
Among Chinese airports, the Capital Airport in Beijing, the Baiyun Airport in Guangzhou, and the Hongqiao Airport in Shanghai accounted for 34.87 percent of the total passenger handling capacity, and 47.05 percent of total cargo handling capacity.
In 2006, Varig Brazilian Airlines, Brazil's largest carrier, launched code-share flights with Air China between the two countries. Air China will fly from Beijing and Shanghai to Frankfurt, while Varig will take passengers on from Frankfurt to Rio de Janeiro and Sao Paulo.
Capacity of China’s Major Airports (at the end of 2004)
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Passenger Handled Name of Airport (person/time) Cargo Handled (ton) Beijing Capital International Airport 34,883,190 668,690.3 Guangzhou Baiyun International Airport 20,326,138 506,988.3 Shanghai Hongqiao International Airport 14,889,198 294,020.1 Source: website of the CARNOC
Telecommunications
China has established a telecommunications network linking various parts of the country and connected with foreign countries, including Brazil. Moreover, a facsimile telecommunication network has also been established across the country and connected with most countries all over the world. From 2000, all Chinese towns and cities were connected with DDD and IDD. I.e. people can access IDD direct communication to Brazil at all Chinese towns and cities.
In 2005, the capacity of long-distance telephone exchanges reached 13.38 million circuits, and the capacity of local office telephone exchanges reached 469.54 million lines. In 2005, China’s mobile telephone subscribers reached 393.43 million, taking the first place in the world. There were 57.3 telephones (include mobile phone) and 30.3 mobile phones per 100 population in China.
In 2005, China’s internet users reached 111 million, taking the second place in the world, just behind the United States.
In 2005, China has 65917 post offices with 6.97 million kilometers of mail-delivering routes. International postal services in China has also achieved rapid development, China has run direct postal services to 185 countries, including Brazil.
4 Political and administrative structure Political Structure
State institutions
The People’s Republic of China is a socialist country under the leadership of the Communist Party of China. According to the Constitution of China, the socialist system is the basic system of China. China’s state institutions are composed of the following sections:
1. The National People’s Congress. It is Chinas supreme organ of state power. It regularly holds an annual plenary session, and is elected for a term of five years. Delegates are elected according to their present administrative regions through the universal suffrage. The national congress has regular and temporary special committees, which are led by the permanent committee, the Standing Committee of the People’s National Congress, when the congress is not in session.
2. President of the People’s Republic of China. The present president of the People’s Republic of
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China is Hu Jintao, and the vice president is Zeng Qinghong.
3. State Council i.e. the Central People’s Government. It is the executive organ of the supreme organ of state power and the states supreme administrative organ. The State Council consists of the premier, vice-premiers, state councilors, ministers of different ministries and commissions, the auditor-general and the secretary-general. The premier is responsible for the State Council. At present, the premier of the State Council is Wen Jiabao.
4. The Chinese People’s Political Consultative Conference (CPPCC). It consists of different political parties and groups, people’s organizations and patriotic democratic personages. Its major function is to follow the principle of cooperation between the Communist Party of China and different democratic parties and personages in discussing key state political principles, and participating in government affairs. The chairman is Wu Bangguo.
Laws and Jurisdiction
Chinas law standard includes the states fundamental law, basic law, laws, administrative laws and regulations and local laws and regulations.
Being the legislative body, the National People’s Congress (NPC) formulates the states fundamental law, basic law and laws. All the administrative laws, regulations, resolutions and orders, issued by the State Council, and local laws and regulations, issued by People’s congresses of different provinces, municipalities and autonomous regions, have the legal effect.
Court and procuratorate, which are the main judicial organs in China, consist of the Supreme People’s Court, the Supreme People Procuratorate and local People’s courts and procuratorates, each independently exercising judicial authority and procuratorial power. Local court consists of the higher People’s court (at provincial level), intermediate People’s court (at prefecture level) and county (district) court; and the local procuratorate can be divided into procuratorate and sub-procuratorate at provincial, prefecture and county levels. A People’s court carries out the public judicial system and two systems of final adjudication to enable defendants to have the right to defend themselves.
Main Central Government Agencies
The statute for administrative reform (approved on March 10, 2003) and its subsequent alterations, made the State Council composed of 28 ministries and commissions, besides its General Affairs Office. Followings are brief introduction to the ministries and commission that deal with foreign trade.
Ministry of Foreign Affairs - acts in the field of international policies, diplomatic relations, programs of international cooperation, also in charge of participating in bilateral commercial, financial and technical negotiations with foreign countries and entities.
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The National Development and Reform Commission (NDRC) - in charge of macroeconomic planning, draft and implement a strategy for the national economy and social development, long-term and annual planning, industrial policy and pricing policy. It is required to give priority to reforming its own structures, push forward the reform of the financing system and decrease the amount of administrative approval procedures so that market mechanisms will play a greater role in the economy.
The State Asset Management Commission (SASAC)- works on behalf of the nation and be responsible for supervising and managing State-owned assets. The commission's functions and powers would extend to all enterprises affiliated to the central government. The commission has the power to guide and push forward the reform and restructuring of the enterprises, appoint and remove their chief officials, evaluate the enterprises' achievements, draft laws and regulations in accordance with the management of State-owned assets and give instructions to local departments in that sector.
Ministry of Finance (MOF) - is in charge of financial expenditures and revenues, financial and taxation policies, administration of public internal and external debts
The People's Bank of China (PBOC) - responsible for drafting and implementing monetary policy
China Banking Regulatory Commission (CBRC)- responsible for supervising commercial banks
State Administration of Foreign Exchange (SAFE) – responsible for foreign exchanges
Ministry of Agriculture (MOA) - deals with matters related to: agricultural policy, such as production, commerce, supply, storage; technological research; agrarian reform; rural development
Ministry of Commerce (MOFCOM) - is in charge of domestic and international trade and international economic cooperation. The ministry has such major responsibilities as to study and formulate policies and regulations for standardizing market operation and circulation order; promote the establishment and improvement of the market system; deepen the reform of the circulation system; monitor and analyze market operation and the situation of commodity supply and demand; coordinate anti-damping, anti-subsidy matters and investigate the harm such acts have brought to industries.
General Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) - the ministerial-level department is the result of the merger of the previous State Administration for Quality and Technology Supervision and the State Administration for Exit-Entry Inspection and Quarantine (AQSIQ). It is responsible for quality supervision and exit-entry quarantine.
Certification and Accreditation Administration of People’s Republic of China (CNCA) - the
24 How to Export to the People’s Republic of China only watchdog authorized by the central government to supervise certification in the market.
Customs General Administration - in charge of all customs offices in the country from the central to the local levels; study and draw up the regulations and implementation rules for the collection of tariffs, organize the collection of import-export tariff and the management of other taxes, implement in accordance with law anti-damping and anti-subsidy measures; implement customs search and assume unified responsibility of combating smuggling.
The Food and Drug Administration - responsible for supervision over the safety of food, health products and cosmetics.
State Administration for Industry and Commerce - in charge of the registration of industrial and commercial enterprises and units and individuals engaged in business operations; approve their names; examine, approve and issue business licenses and supervise their operation; supervise and check market competition; deal with monopoly and other unjust competition cases; protect the lawful rights and interests of consumers; oversee business operators and agents, economic contracts and the registration of pledges of movable property; supervise auctions and take care. of the registration of trade marks.
State Intellectual Property Office - in charge of supervision and coordinating matters related to patents and international-related intellectual properties. It also drafts laws and formulates regulations on intellectual property and supervises their enforcement.
National Tourism Administration - study and draw up development strategy of the international tourism market, undertake external publicity of China's overall tourism image and major sales promotion activities, organize and provide guidance to the development of important tourism products, offer guidance to market development of offices stationed outside China; cultivate and improve the domestic tourism market, study and formulate strategies and methods for developing domestic tourism and guide their implementation.
Administrative Structure
China is divided into provinces, autonomous regions, municipalities directly under the Central Government, and special administrative regions. Provinces and autonomous regions are further divided into prefectures and autonomous prefectures, counties and autonomous counties, and cities. Counties and autonomous counties are further divided into townships and minority nationality townships. Municipalities and large cities are divided into districts and counties.
At present, China has 23 provinces (including Taiwan), five autonomous regions, four municipalities directly under the Central Government, and two Special Administrative Regions. (see the following table).
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China's Provinces, Autonomous Regions, Centrally Administered Municipalities and Special Administrative Regions
Name Seat of Government Anhui Province Hefei Beijing Municipality Beijing Chongqing Municipality Chongqing Fujian Province Fuzhou Gansu Province Lanzhou Guangdong Province Guangzhou Guangxi Zhuang Autonomous Region Nanning Guizhou Province Guiyang Hainan Province Haikou Hebei Province Shijiazhuang Heilongjiang Province Harbin Henan Province Zhengzhou Hong Kong Special Administrative Region Hong Kong Hubei Province Wuhan Hunan Province Changsha Inner Mongolia Autonomous Region Hohhot Jiangsu Province Nanjing Jiangxi Province Nanchang Jilin Province Changchun Liaoning Province Shenyang Macao Special Administrative Region Macao Ningxia Hui Autonomous Region Yinchuan Qinghai Province Xining Shaanxi Province Xi'an Shandong Province Jinan Shanghai Municipality Shanghai Shanxi Province Taiyuan Sichuan Province Chengdu Taiwan Province Tianjin Municipality Tianjin Tibet Autonomous Region Lhasa Xinjiang Uygur Autonomous Region Urumqi Yunnan Province Kunming Zhejiang Province Hangzhou
Local People’s congress and People’s government is a component of Chinas state organs. According to the constitution, People’s congress and People’s government at the levels of province,
26 How to Export to the People’s Republic of China prefecture (or city), county and township is a local organ of state power and an executive organ of power.
5 International Organizations and Agreements China and the UN
China is a founding member of the UN and one of the five permanent members of the UN Security Council. China has made unremitting efforts for strengthening UN’s role, safeguarding international peace and promoting the development of the world. China maintains that countries should strengthen economic and technological exchanges and cooperation so as to change gradually the unfair and unreasonable international economic order and achieve the goal of coexistence and mutual benefits for the economic globalization; and that all civilizations and social systems in the world should coexist on a long-term basis, hold dialogues, learn from each other and develop together.
China and the WTO
After 15 years of arduous efforts, the protocol on China’s WTO entry was approved and adopted at the Fourth WTO Ministerial Meeting held in Doha, capital of Qatar, by representatives from142 members on November 10, 2001. On December 11, 2001 China formally became the 143rd member of the WTO. Entering the WTO is a strategic decision made by the Chinese government under the condition of economic globalization, marking the new stage of China’s opening-up.
To suit the needs of joining the WTO, China began to revise and improve laws and administrative regulations involving foreign trade and economic cooperation in 1999. Laws and regulations not in conformity with WTO regulations were revised or nullified. By the end of 2001 relevant departments of the State Council had revised 2,300 related laws and regulations and a list of 221 administrative regulations annulled by the State Council had been published. In 2001, the NPC revised the Copyright Law, Trademark Law, and Law on Joint Ventures with Chinese and Foreign Investment. Together with the Law on Chinese-Foreign Cooperative Ventures, Law on Foreign-funded Enterprises and Patent Law revised in 2000, China had revised six laws directly related to China’s WTO entry. China’s permanent mission to the WTO was opened in Geneva on January 28, 2002.
China and the IMF
China joined the IMF on December 27, 1945, as one of its 35 original members. People's Republic of China assumed responsibility for China's relations with the IMF in April 1980.
In February 2001, the Board of Governors of the IMF approved an increase in China's quota from SDR 4,687.2 million to SDR 6,369.2 million. As a result of the increase, China's voting power in the IMF has increased from 2.19 to 2.95 percent of total.
China accepted the obligations of Article VIII the IMF Articles of Agreement on current account convertibility on December 1, 1996.
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The IMF holds annual Article IV consultations on economic developments and policy issues with China. In recent years, these discussions have focused on macroeconomic policies to cushion the impact of the Asian financial crisis and foster sustainable growth over the medium term.
Since 1981, China has twice used IMF credits -- in 1981 and in 1986. The credits under these arrangements have been fully repaid.
Technical assistance cooperation between China and the IMF has increased rapidly in recent years. Since 1990, technical assistance to China has taken the form of missions, seminars, and visits by experts, and has focused primarily on macroeconomic areas such as fiscal policy and tax administration, commercial and central banking legislation, development of monetary instruments and an inter-bank market, external current account convertibility and a unified foreign exchange market, and economic and financial statistics.
The IMF-sponsored training programs for Chinese officials included financial analysis and programming, balance of payments, public finance, government finance, and money and banking, external capital account convertibility, as well as methodologies in financial statistics compilation. In addition, many Chinese officials have attended courses and seminars at the Joint Institute in Vienna, Austria. Finally, the People's Bank of China and the IMF recently established a Joint China-IMF Training Program.
China and the APEC
In accordance with the Memorandum of Understanding signed by the People's Republic of China and APEC in 1991, the People's Republic of China became full member of APEC.
After the entry into APEC, China has been actively taking part in all kinds of activities of the organization and brought about positive effect on the recent corporation among APEC members by always holding a spirit of "seeking the same ideas and reserve the different ones."
Chinese president has attended the informal APEC Leaders' Meeting and gave important speech for eight times since the meeting was started in 1993. China's Minister of Foreign Affairs and Foreign Trade and Economic Co-operation have attended APEC's Joint Minister Meeting for 12 times. They have also made great affect in APEC's principles, activity spheres and organization. China's ministers of some special departments also contributed their own idea bout some policy and cooperation guideline to support the proposals of APEC leaders.
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II ECONOMY, CURRENCY AND FINANCE 1 Economic outlook After more than 50 years’ economic construction, China today is one of the major economic powers with the greatest potential of development in the world, and its people live a comparatively well-off life as a whole.
In the first 30 years (1949 to 1979) after the founding of the PRC, the Chinese government carried out a system of planned economy, and targets and quotas for various spheres of economic development were all set by the special “planning committees” of the state. Factories produced goods according to state plans, and farmers planted crops also according to state plans. Commercial departments replenished and sold their stocks according to state plans, and the qualities, quantities and prices of the goods were all fixed by planning departments. At the end of the 1970s, mindful of the gap in economic growth between China and other countries China’s leaders made a great decision to reform China’s decades-old economic system.
The reform began first in the rural areas in 1978, when the household contract responsibility system was introduced there. In 1984, the economic restructuring shifted from the rural areas to the cities. In 1992 the Chinese government formulated a policy to establish a market economy.
In 1997, the Chinese government stressed that the non-public sectors of the economy are an important component part of the socialist economy of China, in which profitability is encouraged for elements of production, such as capital and technology, making the economic restructuring march forward in bigger strides.
In 2001, reform in various fields was carried out smoothly, and saw great achievements. At present, a socialist market economy system is well on the way to being established in China, and the basic role played by the market has been improved in the sphere of resources allocation. At the same time, the macro-control system has basically taken shape. Moreover, the extensive mode of economic growth is being replaced by an intensive mode. China’s socialist market economy will be further improved by 2010, and by 2020 a comparatively mature socialist market economy structure will have been established in China.
According to the Tenth Five-Year Plan (2001-2005), the average annual economic growth rate will be about seven percent. By 2005, the GDP will reach about RMB 12,500 billion yuan (1,510.2 billion US dollars), calculated at the prices of 2000, and the GDP per capita will be RMB 9,400 yuan (1,135.7 US dollars). The average annual growth rate of the disposable income per urban resident and that of the net income per rural resident will both be about five percent.
From 2006 China will start its 11th Five-Year Plan for National Economy and Social Development (2006-2010). China aims to maintain average annual economic growth rate of 7.5 percent from 2006 to 2010, in line with the country's long-term goals. The targeted growth rate would deliver an objective in the 11th five-year plan for 2010 per-capita GDP to be double from US$854 in 2000.
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China will achieve the target by optimizing structure, improving efficiency and decreasing energy consumption. And the energy use per unit of GDP also known as ratio of total energy use to GDP will be reduced by 20 per cent from 2005.
A group of enterprises with strong international competitiveness will be established in the next five years.
Urban employment opportunities will be increased, the social security system improved and the number of poverty-stricken people reduced in the next five years.
The income and living standards of Chinese people will be raised, while the quality of housing, communication, education, culture, public health and the environment will be improved remarkably.
Increase of China’s GDP
Year in RMB yuan (billions) in US dollar (billions) increase % 2001 10,965.52 1,175.73 8.3 2002 12,033.27 1,237.14 9.1 2003 13,582.28 1,640.97 10.0 2004 15,987.83 1,931.64 10.1 2005 18,232.06 2,225.67 9.9 Source: China Statistical Abstract 2006
Note: In December 2005, China raised the GDP in 2004 to RMB 15.99 trillion yuan (US$1.93 trillion) from 13.65 trillion (US$1.64 trillion) based on the results of the country's first nationwide economic census in 2005.
Employment
Registered Unemployed Persons in Registered Urban Areas (million Unemployed Rate in Year Employed Persons (million persons) persons) Urban Areas 2001 730.25 6.81 3.6% 2002 737.40 7.70 4.0% 2003 744.32 8.00 4.3% 2004 752.00 8.27 4.2% 2005 758.25 8.39 4.2% Source: China Statistical Abstract 2006
Annual Change of Price Indices (Inflation Rate)
Preceding year = 100
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Year Retail Price Index Consumer Price Index 2001 99.2 100.7 2002 98.7 99.2 2003 99.9 101.2 2004 102.8 103.9 2005 100.8 101.8 Source: China Statistical Abstract 2006
2 Main industries
Farming, Forestry, Animal Husbandry and Fishery
Cultivated land, forests, grasslands, deserts and tidelands are distributed widely across China. Cultivated land is mainly located in east China, grasslands are mainly located in north and west China, and forests mainly in the remote northeastern and southwestern areas.
The cultivated land currently available in China is about 130 million hectares, of which only 50 per cent is irrigatable. China’s forestry resource is very limited, the percentage of forest coverage was only 18.21 percent in 2005. China has four large seas, and the sea fishing area covers 2.8 million km2 . China’s total inland fresh water area is 17.47 million hectares, of which, 6.75 million hectares are cultivatable area. In 2005, China’s utilizable grassland area was 400 million hectares, stretching more than 3,000 km from the northeast to the southwest. They are the centers of animal husbandry.
China’s cultivated lands, forests and grasslands are among the world’s largest in terms of sheer area. But due to China’s large population, the areas of cultivated land, forest and grassland per capita are small, especially in the case of cultivated land, only one third of the world’s average.
For a long period of time, the Chinese Government has regarded farming, forestry, animal husbandry and fishery as the foundation of the national economy, and issued policies in favor of them while allocating large amounts of funds and materials to support them. In 2005, China produced 484.02 million tons of grain, 5.71 million tons of cotton, 30.77 million tons of oil-bearing crops, 161.20 million tons of fruits, 61.58 million tons of pork, mutton and beef, 28.65 million tons of milk, and 51.06 million tons of aquatic products. The rapid increase of the output of these products has further consolidated the position of farming, forestry, animal husbandry and fishery serving as the foundation of the national economy, and continuously strengthened their positions among the same trades in the world. From 1990s, the output of cereals, meat, cotton, peanuts, fruits and tobacco ranked the first in the world, and output of tea, sheep wool ranked the second place in the world. Nevertheless, considering its large population, China’s agricultural output per capita is still low in comparison with that of other countries in the world.
Output of Main Farming, Forestry, Animal Husbandry and Fishery Products
Unit: Million tons
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Products 2001 2002 2003 2004 2005 Rice 177.58 174.54 160.66 179.09 180.59 Wheat 93.87 90.29 86.49 91.95 97.45 Corn 114.09 121.31 115.83 130.29 139.37 Cotton 5.32 4.92 4.86 6.32 5.71 Peanuts 14.42 14.82 13.42 14.34 14.34 Rapeseeds 11.33 10.55 11.42 13.18 13.05 Fruits 66.58 69.52 145.17 153.41 161.20 Tobacco 2.35 2.45 2.26 2.41 2.68 Meat 63.34 65.87 69.33 72.45 77.43 Milk, 11.23 14.00 18.49 23.68 28.65 Sheep Wool 0.30 0.31 0.34 0.37 0.39 Aquatic Products 43.81 45.65 47.05 49.02 51.06 Rubber 0.48 0.53 0.57 0.58 0.51 Tea 0.70 0.75 0.77 0.84 0.94 Source: China Statistical Abstract 2006
Main Producing Areas of Selected Agriculture Products
Products Main producing areas Share Rice Hunan, Jiangsu, Jiangxi, Sichuan 39% Wheat Henan, Shandong, Hebei 54% Corn Shandong, Jilin, Henan 35% Cotton Xinjiang, Henan, Shandong 57% Peanuts Shandong, Henan, Hebei 56% Rapeseeds Hubei, Anhui, Jiangsu, Sichuan 57% Fruits Shandong, Guangdong, Hebei 35% Tobacco Yunnan, Guizhou, Henan 52% Meat Shandong, Sichuan, Hebei 25% Milk, Heilongjiang, Hebei, Inner Mongolia 37% Sheep Wool Xinjiang, Inner Mongolia 44% Aquatic Products Shandong, Guangdong, Zhejiang 40% Rubber Hainan, Yunnan 95% Tea Zhejiang, Fujian, Hubei, Hunan 53% Source: Beijing CDS Information Consulting Co.
Mining
China is rich in mineral resources, and all the world’s known minerals can be found here. To date, geologists have confirmed reserves of 153 different minerals, putting China third in the world in total reserves. China leads the world in the reserves of 11 minerals including titanium, tungsten,
32 How to Export to the People’s Republic of China antimony, rare earth, tantalum and heavy spar. The country ranks second in the reserve of 12 other minerals such as aluminum, coal, tin, niobium, silver and lithium. Those minerals can not only meet domestic demand, but also are important export products. Other products, like chromium and bismuth, the reserves of which are proven small, need to be imported for a certain quantity to support the domestic consumption.
Coal is a major source of energy in China, accounting for 75 percent of the nation's energy consumption. China’s coal reserves total 1,007.1 billion tons, mainly distributed in north China, with Shanxi Province and the Inner Mongolia Autonomous Region taking the lead.
China’s iron reserves rank fifth in the world after Russia, Brazil, Canada, and Australia. Proved iron reserve is about 50 billion tons, and about 25.7 billion tons can be used. Iron reserves are widely dispersed in 28 provinces and autonomous regions. Reserves in Liaoning, Hubei, and Sichuan provinces account for 51 percent of the total.
The country also abounds in petroleum, natural gas, oil shale, phosphorus and sulphur. Petroleum reserves are mainly found in the northwest, northeast and north China, as well as in the continental shelves of east China. The national reserves of rare earth metals far exceed the combined total for the rest of the world
In China, proved copper sites of deposits are more than 800, and mainly distributed in the middle and lower reaches of the Yangtze River.
Proved wolfram reserves in China is over three times the proved reserves in all other countries in the world. They are mainly distributed in Guangdong, Hunan.
China's gold reserves are mainly distributed in the Kunlun-Qinling-Dabie Mountain Ranges. Continuous prospecting has proved that the gold reserves in Zhaoyuan County of Shandong Province, which boasts one of the country's biggest and earliest gold mines, are more than 10 times what they were previously estimated to be. The Xiao Qinling area is another base of gold reserves in Central China.
Rare metals and rare-earth metals have been found in more than 20 provinces and autonomous regions in China. Large-scale deposits are mainly distributed in Inner Mongolia and Xinjiang Autonomous Regions, Sichuan, Fujian, and Jiangxi provinces. The nation's proved reserves of such rare metals as beryllium, lithium, niobium, and tantalum are among the richest in the world.
Industry
Since 1979, Chinas industrial production has increased at a high speed with the average annual growth rate came to 11.6 percent, and the nation's industrial added value came to 6642.52 billion yuan (810.88 billion US dollar) in 2005, an increase of 16.4 percent over that of the previous year. Since 1996, China has been in the lead in the production of steel, coal, cement, farm-use chemical fertilizers and television sets.
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At present, China has formed a modern industrial set-up with independent and necessary trades. In view of the worlds conventional classification of industrial trades, China has set up more than 500 industrial trades. China has formed such manufacturing industries as modern metallurgical equipment, mining equipment, large power facilities, planes, automobile, large and precise machine tools, high-grade alloy and key nonferrous metal smelting, space industry, large integrated circuit, electronic computer, telecommunications and transmission equipment as well as precise instruments and meters. At present, China is able to rely on its own technical forces to develop heavy industries including mining, power plant, metallurgy, oil, chemicals, automobile and ship-building.
Power and Petroleum Industries
Of all Chinese industries, the thermal, hydro and nuclear power industries have developed the most rapidly. In 2005, the total generated electricity came to 2,474.70 billion kwh. The average annual growth rate of generated electricity reached 9.4 percent. Now China ranked second in the world in terms of both power generating capacity and electricity output.
China’s power resources are not distributed evenly. The vast central and western region is rich in hydropower resources and has large coal reserves, whereas economically developed eastern coastal region is relatively deficient in energy resources. China will accelerate energy development and construction of energy production centers in the central and western region, propel abundant power supply from the central and western region to the eastern region, and connect all of its power grids as soon as possible.
In 2005, China produced 180.84 million tons of crude oil and 50.0 billion m3 of natural gas, increasing 0.9 percent and 11.5 percent respectively over the previous year. China’s on-shore oil fields are primarily concentrated in the eastern part. In recent years, with constant development, off-shore oil fields have reported rapid growth of crude oil production. Since China’s economy has been growing rapidly, its domestically –produced crude oil can not fully meet its needs. So, since the beginning of the mid-1990s,China has had to import some crude oil each year.
Machine-building and Auto Industries
China’s machine-building industry can provide advanced complete sets of equipment, including power generating equipment such as large gas turbines, large pump storage groups and nuclear power sets, ultra-high voltage direct-current transmission and transformation equipment, large complete metallurgical, fertilizer and petrochemical plants, city track transport equipment, new paper-making and textile machinery, etc. Electro-mechanical products have become pillar exports for China.
In the 1990s, as one of the country’s pillar industries, the auto industry developed steadily, and the output of automobiles increased from 1.45 million in 1995 to 5.70 million in 2005. The number of privately-owned automobiles increased from 2.5 million in 1995 to 18.51 million in 2005, with an
34 How to Export to the People’s Republic of China average annual growth rate over 20 percent.
Information Industry
In China, the Internet has become an indispensable part of Chinese people’s life. By the end of 2005, the number of Internet users has reached 111 million. Chinese computer groups, with Legend (Lenove) and Founder as the representatives, besides occupying leading positions in the domestic market, have entered the world market with their products. To date, information industry has become the first pillar of China’s industry. Statistics show that the output value, sales volume and profit of the electronic and telecommunications equipment industries have all surpassed those of the traditional industries, making the greatest contribution to the growth of the national economy.
As for the construction of the telecommunications network, a basic transmission network featuring a large capacity and a high speed is now in place. It covers the whole country, with optical cables as the mainstay, and satellite and digital microwave systems as the supplement. In 1998, China completed its “eight from east to west and eight from north to south” lattice-type optical cable network, linking all the provincial capital cities and over 90 percent of counties and cities. Except for Lhasa, the capital city of Tibet, each provincial or autonomous regional capital is connected by at least two optical cables. In the coastal and economically advanced hinterland areas, optical cable has reached townships, towns, urban residential quarters and multi-storeyed buildings, thus becoming the main technological means for transmitting information. Meanwhile, all the provinces have set up satellite communication earth stations, with more than 20,000 satellite circuits, and digital microwave routes stretching more than 60,000 km. Meanwhile, China has participated in the construction of a number of international land and sea-bed optical cables, such as the China-Japan, China-ROK and Asia-Europe sea cables, and Asia-Europe and China-Russia land optical cables. China initiated the construction of the 27,000-km Asia-Europe Land Optical Cable, which starts from Shanghai in the east and reaches Frankfurt in Germany in the west, passing through 20 countries. It is the longest land optical cable system in the world today.
In 1987, China started the mobile telecommunication business, which has developed rapidly since the beginning of the 1990s, with an average annual growth rate of more than 100 percent. At present, the mobile phone network covers all the large and medium-sized cities, and more than 2,000 small cities and county towns. China has established automatic roaming with 60 companies in 38 countries and regions.
In 1992, China started the large-scale construction of the public data telecommunications network, which has now taken initial shape, with group exchange data network, digital data network, computer Internet, multi-media telecommunications network and frame relay network as the mainstay, covering over 90 percent of counties and cities in China. The telecommunication ability reaches 610,000 ports, making it one of the largest public data telecommunications networks in the world. China has also put great efforts into the international telecommunications business, which has basically met the needs of the opening-up.
During the 10th Five-Year Plan period (2001-2005), the public telephone network developed very
35 How to Export to the People’s Republic of China fast, at the end of 2005 China had a total of 26.61 million public telephone users. China’s public telephone network offers ordinary services as well as Internet on-line services to rural, border and remote areas, the latter being the major sector of growth. Mobile communications continued to grow at a high speed, and the number of users reached350.43 million in 2005. The Internet and relevant services developed rapidly too, and the number of users increased to more than 111 million. A new broadband high-speed public information network on the basis of IP technology also developed at a high speed. E-commerce, distance education and various other network-based forms of digital economy and social activities were promoted. Radio and TV networks continued to develop at a high speed, the number of radio and TV users scheduled to exceed 200 million by 2005, when almost all villages in China will then have access to radio and TV programs.
Chinese government requests the American search sites as google to facilitate the government censorship. Google, the world's most popular Internet search engine, launched a Chinese-language service in January 2006, that would be stripped of content deemed offensive or subversive. The self-censorship was the first for Google in China. The company does not restrict access to Websites on its English-language search engine, though government censors do block links to forbidden material.
Other Internet giants including Yahoo and Microsoft's MSN have also censored material "in exchange" for being allowed to tap a market comprising 110 million Internet users, the world's second-largest market.
The government bars access to 20 broad content categories, including pornography and other banned material. Cyber surfers who enter forbidden keywords in the search engine at the new www.google.cn will receive this message: "In line with local laws and policies, parts of the result are not listed."
New and High Technology Industry
According to statistics, China has made 493,000 important scientific and technological achievements since 1981, of which nearly 20 percent have reached the advanced international levels. To speed up the transfer of scientific and technological achievements, and promote the development of high-tech industry, the Chinese government has implemented a series of policies. At present, over 80 percent of the nation’s sci-tech force have been engaged in economic development work and the overwhelming majority of the scientific research institutes specializing in developing technology have gradually taken the road of independent development geared to market operations. In recent years, the business volume of the nation’s technology market has increased at an annual rate of over 50 percent.
New and high technology development zones have developed fast. State-level development zones of this kind now number 53, and are home to more than 20,000 enterprises, with a total of well over 100 million employees. The output value per capita of most enterprises exceed RMB 100,000 yuan (12,082 US dollars). Among them, 1,252 enterprises have registered an annual production
36 How to Export to the People’s Republic of China value of over RMB 100 million yuan (12.08 million US dollars), 143 over RMB one billion yuan (0.12 billion US dollars), and six over RMB 10 billion yuan (1.2 billion US dollars).
Establishing export bases for new and high-technology products in selected state new and high technology industrial development zones is an important part of the plan for developing trade by means of science and technology worked out and implemented by the Chinese government. The Beijing Zhongguancun Science and Technology Park and 16 state new and high technology industrial development zones in Tianjin, Shanghai, Heilongjiang, Jiangsu, Anhui, Shandong, Hubei, Guangdong, Shaanxi, Dalian, Xiamen, Qingdao and Shenzhen have been designated as the first group of export bases, thanks to their rapid overall development, favorable hard and soft environments, and rapid increase of the export volume of new and high-technology products.
Tourism China is rich in tourist resources with its long history, many scenic spots and historic sites, famous mountains and great rivers, distinctive operas, music, dances and folklore, and world-renowned Chinese cuisine.
In recent years, China has met the demands of tourists at various levels by building, expanding and renovating a lot of hotels and restaurants. At present, there are more than 9,000 star-level hotels around the country. All large and medium-sized cities and tourist sites have hotels with complete facilities and excellent services for domestic and international tourists.
In 2005, 120.29 million tourists entered China, or an increase of 10 percent over the previous year, and the foreign exchange earning from tourism reached 29.3 billion US dollar, or an increase of 14 percent over that of the previous year. The income from domestic tourism has grown by a large margin, coming to RMB 528.59 billion yuan (64.53 billion US dollars), or an increase of 12 percent over that of the previous year. The growth speed of income from tourism remained higher than the overall growth speed of the national economy. Tourism has become a rising industry with the greatest vitality in China’s economic development, as well as one of the new economic growth points.
Construction Industry
Construction industry has developed rapidly in China. In 2005, its value added reached RMB 670.9 billion yuan (81.9 billion US dollars), or an increase of 19.5 percent over that of the previous year. At present, governments at all levels in China have special institutions in charge of the bidding work on the construction market. Meanwhile, intermediate organizations such as project consulting companies and project supervision and management companies have made rapid progress. The practice of Chinas construction industry is closer to the international convention.
With the enhancement of enterprise quality as a whole, the competitive power of Chinas construction industry on the international construction market has increased steadily.
37 How to Export to the People’s Republic of China
3 Currency and finance Currency The currency of China is Renminbi, its unit is yuan (¥). As China’s legal currency, Renminbi is issued and controlled solely by the People’s Bank of China (PBoC). The exchange rates of the Renminbi are decided by PBoC and published by the State Administration of Exchange Control (SAEC). China adopts a regulated, floating-exchange-rate system based on market supply and demand. Along with its financial reform, China will further explore and improve the exchange-rate regime based on its economic development and performance as well as international balance of payment. On December 1, 1996, China formally accepted the Article Eight of the Agreement on International Monetary Fund, and realized the Renminbi’s convertibility under the current account ahead of schedule.
On July 21, 2005, China cut the yuan's decade-long peg to the dollar, allowing its currency to move in a restricted float. China's central bank announced that the renminbi would no longer be pegged to a single currency following the rate reform. Instead, as the value of the yuan will be adjusted with reference to a basket of currencies, the mutual changes of major currencies in the world market would reduce the yuan's fluctuation.
Dominant currencies used to determine the value of the yuan are the US dollar, the euro, the yen and South Korea's won. The Singapore dollar, pound sterling, the Malaysian ringgit, the Russian rouble, the Australian dollar, the Thai baht and the Canadian dollar are also considered in the calculation.
Annual Average Exchange Rate of RMB yuan Against US dollar (Middle Rate)
Year Exchange Rate 2001 8.2770 2002 8.2770 2003 8.2770 2004 8.2768 2005 8.1917 Source: China Statistical Abstract 2006
4.Balance of Payments and International Reserves
Balance of Payments
Balance of Payments (Local official data)
Unit: million US dollars
Item 2004 2005
Balance Credit Debit Balance Credit Debit
I. Current Account 68659.16 700697.01 632037.85 160818.31 903581.79 742763.48
38 How to Export to the People’s Republic of China
A. Goods and Services 49283.64 655826.58 606542.93 124797.7 836887.83 712090.13
a. Goods 58982.28 593392.51 534410.24 134189.1 762483.73 628294.64
b. Services -9698.63 62434.07 72132.7 -9391.39 74404.1 83795.49
1.Transportation -12476.27 12067.49 24543.76 -13021.02 15426.52 28447.55
2.Tourism 6589.7 25739 19149.3 7536.93 29296 21759.07
3.Telecommunication -31.74 440.46 472.2 -118.17 485.23 603.4
4.Construction 128.66 1467.49 1338.83 973.57 2592.95 1619.38
5.Insurance -5742.79 380.78 6123.57 -6650.14 549.42 7199.56
6.Finance services -44.15 93.95 138.1 -14.24 145.23 159.48
7.IT services 384.4 1637.15 1252.75 217.68 1840.18 1622.51
8.Utilization of IPR -4260.25 236.36 4496.61 -5163.85 157.4 5321.25
9.Consulting services -1581.79 3152.52 4734.31 -861.41 5322.13 6183.54
10.Adivertasment services 150.29 848.63 698.34 360.52 1075.73 715.21
11.Film and Audio and Video -134.84 40.99 175.83 -20.1 133.86 153.95
12.Other business services 7472.62 15950.75 8478.14 7497.03 16884.78 9387.75
13.Other government services -152.49 378.5 530.99 -128.18 494.66 622.84
B Income -3522.67 20544.1 24066.76 10635.14 38959.1 2823.96
1.Staff and worker's remuneration 632.19 2014.36 1382.17 1519.65 3337.06 1817.41
2.Investment income -4154.86 18529.74 22684.6 9115.49 35622.04 26506.55
C. Current Transfer 22898.19 24326.34 1428.15 25385.47 27734.86 2349.39
1.Governments -89.06 97.54 186.59 -176.23 48.85 225.08
2.Other Departments 22987.25 24228.8 1241.55 25561.7 27686.01 2124.31
II. Capital and Finance Account 110659.76 343350.15 232690.4 62963.92 418956.2 355992.28
A. Capital Account -69.35 69.35 4101.79 4155.15 53.36
B. Financial Account 110729.1 343350.15 232621.05 58862.12 414801.05 355938.93
1.Direct Investments 53131.43 60905.78 7774.35 67821.04 86071.26 18250.22
2.Securities 19689.87 20262.12 572.24 -4932.84 21997.44 26930.27
3.Other investment 37907.8 262182.26 224274.46 -4026.08 306732.35 310758.43
III. Reserve Assets -206364 478 206842 -207016 1929 208945
1.Gold Reserves
2.SDR -161 161 -5 5
3.China's Reserve in IMF 478 478 1929 1929
4.Foreign Exchange -206681 206681 -208940 208940
5.Other Creditor's rights
IV. Net Error and Omission 27045.08 27045.08 -16766.23 16766.23 Source: China Statistical Abstract 2006
International Reserves
China's growing trade surplus had boosted reserves, in 2005, China's foreign exchange reserves, the world's largest, rose by more than US$200 billion to $818.87 billion.
International Reserves
39 How to Export to the People’s Republic of China
Unit: million US dollars Descriptor 2001 2002 2003 2004 2005 Gold in million ounces 16.10 19.29 19.29 19.29 19.29 Gold AC.to National Valuation 3,093.00 4,074.00 4,074.00 4,074.00 4,074.00 Holding of SDRS 850.58 998.15 1,101.59 1,247.08 1,251.15 Reserve position in IMF 2,589.55 3,722.67 3,798.07 3,320.46 1,390.71 Foreign exchange 212,165.00 286,407.00 403,251.00 609,932.00 818,872.00 Total reserves minus gold 215,605.00 291,128.00 408,151.00 614,500.00 821,514.00 Source: IMF, International Financial Statistics
Public Finance
From a base of just over 318.92 billion US dollars for 2004, national revenue rose to 386.10 billion US dollars, 67.18 billion US dollars or 21.4 percent more than the previous year National expenditures totaled 411.49 billion US dollars, an increase of 67.31 billion US dollars or 19.5 percent year-on-year Expenditures exceeded revenue by 25.09 billion US dollars in 2005.
Total Budgetary Revenue and Expenditure
Unit: billion US dollars 2001 2002 2003 2004 2005 Total Revenue 197.97 228.51 262.36 318.92 386.10 Total Expenditure 228.38 265.94 297.81 344.18 411.49 Balance -30.4 -37.43 -35.46 -25.26 -25.39 Source: China Statistical Abstract 2006
Banking System
China’s bank structure mainly includes the central bank, policy banks, wholly State-owned commercial banks, incorporated commercial banks, and foreign banks in China.
The Central Bank
The People’s Bank of China (PBoC) is the central bank independently in charge of the monetary policy under the leadership of the State Council. Its main duty is to stabilize currency and supervise the banking. At present, the Peoples Bank of China is engaged in the management of credit funds and proportion of assets and liabilities among commercial banking organizations.
Policy-lending Banks
The main aim of the policy banks is to realize the policy of the government. The source of capital of those banks is through the allocation of State budget, the operation capital is for
40 How to Export to the People’s Republic of China long-time credit, and the interest rate of loans is usually lower than that of the commercial banks during the same period.
The policy banks of China include the State Development Bank of China, the Export-Import Bank of China, and the Agricultural Development Bank of China.
Wholly State-owned Commercial Banks
These nationwide commercial banks include Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and Construction Bank of China.
Incorporated Commercial Banks
The incorporated commercial banks include Bank of Communications, CITIC Industrial Bank, Ever Bright Bank, Huaxia Bank, Investment Bank of China, Merchants Bank, Guangdong Development Bank, Shenzhen Development Bank, Pudong Development Bank, Fujian Xingye Bank, and etc. Besides, there are a few dozen city cooperation banks or city commercial banks.
Foreign Banks in China
Since 1979, when the first foreign-funded financial institution opened a representative office in China, foreign-funded financial institutions have become an important part of Chinas financial system, and a key channel to help China to import overseas funds. By the end of 2000, the number of foreign banking institutions operating in China reached 191, with a total capital of 34.43 billion US dollars, and 33 foreign banks obtained the permission to exercise Renminbi business.
41 How to Export to the People’s Republic of China
III FOREIGN TRADE 1 Recent evolution:
General considerations Prior to 1978, foreign trade was not a significant part of China’s economy. However, as a key component of the 1978 economic reform program, the government sought to attract foreign investments to China and develop foreign trade. Since then, foreign trade has become an increasingly important part of PRC economy. Imports provide China with advanced technologies and equipment, which china needs to modernize its economy, and exports provide China with foreign exchange needed for the purchase of such technologies and equipment, as well as increased employment opportunities. Although overall foreign trade policy is formulated by the central government, the local government and enterprises have enjoyed autonomy in conducting foreign trade activities. China’s trading partners include over 200 countries and regions throughout the world.
China’s foreign trade has grown significantly since 1978 in both value and in the range of products traded. Overall foreign trade policy is formulated by the central government. However, local governments and enterprises enjoy increasing autonomy in conducting foreign trade activities. Individuals and privately owned enterprises can now import and export goods. The government believes that China’s accession to the WTO has further enhanced its trade relationships with other countries and regions.
China’s entry into the World Trade Organization (WTO) on December 11th 2001 further promoted the trade. China’s total foreign trade volume increased from US$1,154.6 billion in 2004 to US$1,421.9 billion in 2005. China’s exports in 2005 increased by 28.4% to US$762 billion and its imports increased by 17.6% to US$660 billion, each as compared with 2004.
As a result of rapid industrial growth and the inflow of foreign capital, manufactured goods have become China’s major exports in recent years.
The composition of imports has also changed in recent years as imports of manufactured goods have steadily outpaced imports of primary goods.
China’s Foreign Trade 2003 – 2005
Unit: in US$ billions, imports CIF export FOB Year Imports Change (%) Exports Change (%) Balance Changes (%) 2003 412.8 39.9 438.4 34.6 25.53 -15.9 2004 561.4 36.0 593.4 35.4 32.0 25.5 2005 660.1 17.6 762.0 28.4 101.9 218.4 Source: China’s Customs Statistics and Ministry of Commerce, People’s Republic of China
42 How to Export to the People’s Republic of China
2 Direction
China’s imports from main areas and countries 2003 - 2005
Unit: in US$ billions (CIF) Areas and countries 2003 Share (%) 2004 Share (%) 2005 Share (%) Japan 74.1 17.9 94.4 16.8 100.5 15.2 South Korea 43.1 10.4 62.2 11.1 76.8 11.6 ASEAN 47.3 11.4 63.0 11.2 75.0 11.4 Taiwan 49.3 11.9 64.8 11.5 74.7 11.3 EU 53.0 12.8 70.1 12.5 73.6 11.1 USA 33.8 8.2 44.7 8.0 48.7 7.4 Australia 7.3 1.8 11.5 2.0 16.2 2.5 Russia 9.7 2.3 12.1 2.1 15.9 2.4 Hong Kong 11.1 2.7 11.8 2.1 12.2 1.8 Brazil 5.8 1.4 8.7 1.5 10.0 1.5 India 4.3 1 7.2 1.3 9.8 1.5 Canada 4.4 1.1 7.3 1.3 7.5 1.1 South Africa 1.8 0.4 3.0 0.5 3.4 0.5 Source: China’s Customs Statistics and Ministry of Commerce, People’s Republic of China
China’s exports to main areas and countries 2003 - 2005
Unit: US$ billions (FOB) Areas and countries 2003 Share (%) 2004 Share (%) 2005 Share (%) USA 92.5 21.1 124.9 21.0 162.9 21.4 EU 72.1 16.4 107.2 18.1 143.7 18.9 Hong Kong 76.3 17.4 100.9 17.0 124.5 16.3 Japan 59.4 13.5 73.5 12.4 84.0 11.0 ASEAN 30.9 7.0 42.9 7.2 55.4 7.3 South Korea 20.1 4.6 27.8 38.4 35.1 4.6 Taiwan 9.0 2.0 13.5 2.3 16.5 2.2 Russia 6.0 1.4 9.1 1.5 13.2 1.7 Canada 5.6 1.3 8.2 1.4 11.7 1.5 Australia 6.2 1.4 8.8 1.5 11.1 1.5 India 3.3 0.8 5.9 1.0 8.9 1.2 Brazil 2.1 0.5 3.7 0.6 4.8 0.6 South Africa 2.0 0.4 2.9 0.5 3.8 0.5 Source: China’s Customs Statistics and Ministry of Commerce, People’s Republic of China
3 Composition
China’s major imported goods 2003 - 2005
43 How to Export to the People’s Republic of China
Unit: US$ billions (CIF) Share Share Share Products 2003 % 2004 % 2005 % Electrical machinery and household appliances 79.8 19.3 110.5 19.7 137.7 20.9 Petroleum and petroleum products 26.7 6.5 44.5 7.9 59.5 9.0 Scientific instruments and apparatus 20.3 4.9 33.3 5.9 41.3 6.3 Metalliferous ores and metal scrap 11.8 2.9 25.2 4.5 36.2 5.5 Office machines and automatic data processing machines 24.2 5.9 29.6 5.3 35.8 5.4 Telecommunications and parts 19.5 4.7 24.6 4.4 29.4 4.5 Organic chemicals 15.8 3.8 23.7 4.2 27.9 4.2 Plastics in primary forms 15.7 3.8 22.0 3.9 26.3 4.0 Iron and steel 22.0 5.3 23.4 4.2 26.2 4.0 General industrial machinery and parts 16.6 4 22.7 4.0 24.3 3.7 Source: China’s Customs Statistics and Ministry of Commerce, People’s Republic of China
China’s major exported goods 2003 - 2005
Unit: US$ billions (FOB) Share Share Share Products 2003 % 2004 % 2005 % Office machines and automatic data processing machines 62.5 14.3 87.1 14.7 110.7 14.5 Telecommunications and parts 45.0 10.3 68.5 11.5 94.9 12.5 Electrical machinery and household appliances 42.3 9.6 59.5 10.0 75.5 10.0 Apparel and clothing accessories 52.1 11.9 61.9 10.4 74.2 9.7 Textile yarn, fabrics and made-up articles 26.9 6.1 33.4 5.6 41.0 5.4 Metal products 15.0 3.4 20.9 3.5 27.4 3.6 General industrial machinery and parts 13.6 3.1 19.9 3.4 25.8 3.4 Road vehicles 11.4 2.6 16.3 2.7 21.7 2.7 Iron and steel 4.8 1.1 13.9 2.3 19.3 2.5 Footwear 12.9 2.9 15.2 2.6 19.1 2.5 Source: China’s Customs Statistics and Ministry of Commerce, People’s Republic of China
44 How to Export to the People’s Republic of China
IV ECONOMIC RELATIONS BETWEEN BRAZIL AND
CHINA 1 Bilateral trade: Evolution of Sino-Brazil Trade
In 1949 when People’s Republic of China was established, Brazil and China had made some trade contacts. Due to geographical inconvience, however, trade volume was very small.
Since 1974, when diplomatic relations were formally established, bilateral trade has increased, albeit not proportionally to the potential of both markets. Although the average pattern has been one of long-term trade growth, commercial contacts between Brazil and China have not increased steadily during most of these roughly 30 years.
The bilateral trade reached the first record high in 1985 when it hit US$1.41 billion, accounting for 55% of the total Sino-Latin American trade.
During 1990-1991, trade between China and Brazil suffered a sharp decline.
Starting in 1993, bilateral trade saw a significant turn with a 80.6 % rise over 1992 to reach US$1.06 billion. The growth of bilateral trade lasted till 1997, when it reached a new record high with US$ 2.5 billion.
However, starting in 1998, bilateral trade saw a down-turn to decline, though Brazil still positions as China’s number one trade partner in Latin America.
Since the end of 1999, however, trade has consistently increased at unprecedented levels.
According to China Customs, the bilateral trade between Brazil and China in 2005 reached US$14.82 billion, up by 20%, among which China’s import from Brazil was US$9.99 billion, up by 15.2%. China’s major imports from Brazil included iron ores and concentrates, soybeans, steel billet and primarily forged steel pieces, rolled steel, steel plates, paper pulp, soybean oil, manganese ores and concentrates, crude oil, etc.
According to the data from SECEX/DECEX MDIC, the total trade flow between the two countries grew from 3.2 billion dollars in 2001 to the record of 12 billion dollars in 2005, a growth of 275 % in five years.
According to MDIC, total trade volume between Brazil and China in 2005 reached US$ 12.11 billion, up 33.19 percent. And Brazil has a favorable balance of US$1.48 billion, up 14.45 percent.
Brazilian exports to China in 2005 reached US$6.833 billion, up 25.63 percent, and China was the 3rd largest export destination of Brazil.
45 How to Export to the People’s Republic of China
Brazilian imports from China in 2005 reached US$5.353 billion, up 44.28 percent, and China was the 4th largest import origin of Brazil.
Table 1 Brazil: trade exchange with China 2003 – 2005 (DECEX)
Unit: US$ billion (FOB) 2001 2002 2003 2004 2005 Export 1.902 2.520 4.530 5.440 6.833 % growth 75.3 32.5 79.83 20 25.63 % share 3.27 4.18 6.20 5.64 5.78 Import 1.328 1.555 2.148 3.710 5.353 % growth 8.7 16.99 38.2 72.7 44.28 % share 2.39 3.29 4.45 5.91 7.28 Total 3.230 4.075 6.680 9.150 12.110 Trade Balance 0.574 0.965 2.380 1.730 1.480 Source: DECEX
2 Composition of bilateral trade
Brazil: main products exported to China 2003 – 2005
Unit: US$ million (FOB) H.S. Code 2003 Share % 2004 Share % 2005 Share % 12010090 1,313.07 28.97 1,621.74 29.81 1,716.92 25.12 26011100 520.77 11.49 781.36 14.36 1,242.54 18.18 26011200 244.09 5.39 333.59 6.13 542.09 7.93 27090010 22.27 0.49 210.13 3.86 541.63 7.93 24012030 54.55 1.2 101.74 1.87 246.67 3.61 47032900 259.39 5.72 252.16 4.64 230.10 3.37 72091700 151.59 3.34 49.96 0.92 165.02 2.41 15071000 256.40 5.66 422.87 7.77 144.04 2.11 44079990 61.96 1.37 81.94 1.51 100.58 1.47 02071400 6.68 0.15 33.69 0.62 78.31 1.15 72029300 24.83 0.55 23.34 0.43 76.29 1.12 52010020 11.24 0.25 15.15 0.28 62.54 0.92 41044130 45.34 1.0 48.30 0.89 60.53 0.89 84621011 ------48.41 0.71 25161200 19.34 0.43 23.65 0.43 46.19 0.68 Source: DECEX
Note: Description for H.S. Code in above table
46 How to Export to the People’s Republic of China
12010090 OUTROS GRAOS DE SOJA, MESMO TRITURADOS 26011100 MINERIOS DE FERRO NAO AGLOMERADOS E SEUS CONCENTRADOS 26011200 MINERIOS DE FERRO AGLOMERADOS E SEUS CONCENTRADOS 27090010 OLEOS BRUTOS DE PETROLEO 24012030 FUMO N/MANUF. TOTAL/PARC. DESTEL. FLS. SECAS, ETC. VIRGINIA 47032900 PASTA QUIM. MADEIRA DE N/CONIF. A SODA/SULFATO, SEMI/BRANQ 72091700 LAMIN. FERRO/ACO, A FRIO, L>=6DM, EM ROLOS, 0.5 MM<=E<=1MM 15071000 OLEO DE SOJA EM BRUTO, MESMO DE GOMADO 44079990 OUTRAS MADEIRAS SERRADAS/CORTADAS EM FOLHAS, ETC. ESP>6MM 02071400 PEDACOS E MIUDEZAS, COMEST. DE GALOS/GALINHAS, CONGELADOS 72029300 FERRONIOBIO 52010020 ALGODAO SIMPLESMENTE DEBULHADO, NAO CARDADO NEM PENTEADO 41044130 OUTS. COUROS/PELES BOVINOS, SECOS, PENA FLOR 84621011 MAQUINAS FERRAM. P/ESTAMPAR METAIS, C/COMANDO NUMERICO 25161200 GRANITO CORTADO EM BLOCOS OU PLACAS
Brazil: main products imported from China 2003 - 2005
Unit: US$ million (FOB) H.S. Code 2003 Share % 2004 Share % 2005 Share % 85299019 91.80 4.27 162.16 4.37 396.49 7.41 90138010 82.05 3.82 159.18 4.29 255.94 4.78 27040010 213.53 9.94 338.91 9.13 163.57 3.06 85219090 5.59 0.26 51.71 1.39 121.19 2.26 85252022 3.54 0.16 25.66 0.69 101.97 1.9 85299020 59.52 2.77 99.2 2.67 90.83 1.7 54075210 35.05 1.63 68.74 1.85 74.35 1.39 85340000 20.86 0.97 40.68 1.1 69.58 1.3 85078000 22.28 1.04 51.69 1.39 58.88 1.1 85229050 28.01 1.30 38.65 1.04 58.60 1.09 85422929 5.43 0.25 31.28 0.84 47.84 0.89 84733041 10.8 0.50 26.28 0.71 44.98 0.84 85254090 6.31 0.29 20.94 0.56 43.71 0.82 85271390 20.13 0.94 49.07 1.32 37.87 0.71 85422128 8.82 0.41 20.97 0.57 36.53 0.68 Source: DECEX
Note: Description for H.S. Code in above table 85299019 OUTRAS PARTES P/APARELHOS TRANSMISSORES/RECEPTORES 90138010 DISPOSITIVOS DE CRISTAIS LIQUIDOS (LCD) 27040010 COQUES DE HULHA, DE LINHIA OU DE TURFA 85219090 OUTROS APARELHOS VIEDEOFONICOS DE GRAVACAO/PEPRODUCAO 85252022 TERMINAIS PORTATEIS DE TELEFONIA CELULAR
47 How to Export to the People’s Republic of China
85299020 OUTS. PARTES P/APARELHO RECEPT. RADIODIF. TELEVISAO, ETC. 54075210 TECIDO DE FILAM, POLIESTER TEXTUR>=85%, TINTOS, S/BORRACHA 85340000 CIRCUITO IMPRESSO 85078000 OUTROS ACUMULADORES ELETRICOS 85229050 MECANISMOS TOCA-DISCOS, MESMO C/CAMBIADOR, P/APARS. REPROD 85422929 OUTS. CIRCUITOS INTEGRADOS MONOLIT. MONTADOS 84733041 PLACAS-MAE MONTAD. P/MAQS. PROC. DADOS (CIRCUITO IMPRESSO) 85254090 OUTRAS CAMERAS DE VIDEO 85271390 OUTS. APARS. RECEPT. RADIODIF. COMB. APARS. SOM, PILHA/ELETR 85422128 OUTS. MEMORIAS MONTADAS P/MONTAG. SUPERF
3.Investimentos bilaterais
Investments by China in Brazil
According to the Ministry of Commerce (MOFCOM), by the end of 2005 China established 89 joint ventures in Brazil, and Chinese side invested 151 million US dollars (actual invested amount).
Chinese enterprises are advised to invest in household electronic appliances, telecommunication, wood processing, transportation and mineral projects.
Baosteel Shanghai Baosteel Group signed cooperation agreements with Companhia Vale do Rio Doce SA (CVRD) of Brazil on May 13, 2001 and on August 21, 2001. Baosteel invested 18.9 million USD in Baovale---a joint venture with CVRD. Baovale started operation on April 11, 2002. The annual production capacity of Baovale venture would reach 6 million tons of high quality iron ore.
Baosteel on January 30, 2004 signed a US$2.5 billion contract with CVRD in Shanghai to establish a steel plant in Brazil's St. Louis. The venture is expected to produce at least 3.7 million tons of steel plates annually. Output could eventually rise to 7.5 million tons.
Gree Gree do Brasil established an air-conditioning plant in Manaus with US$ 40 million investments, US$ 20 million among which invested by Gree based in Zhuhai, Guangdong Province China, and the rest joint funded by the loan granted by Brazilian Development Bank (BNDES) and Amazon Bank (BASA).
The plant will provide 600 jobs and is expected to produce 20,000 sets of air-conditioning. The production in 2001 is 40,000 and 80,000 in 2002. The 20 per cent of the production will be exported to Mercosul.
Huawei Huawei based in Shenzhen, Guangdong Province in China has decided to invest 650 million
48 How to Export to the People’s Republic of China
US$ in three years span in Brazil to produce telecommunication equipment (infrastructure for mobile phone).
Brazilian Investments in China
According to the Ministry of Commerce (MOFCOM), by the end of 2005 Brazil established 384 joint ventures in China, and Brazilian side invested 144.3 million US dollars (actual invested amount).
Embraco Snowflake Compressor Co. Ltd. Embraco and Snowflake Group joint venture
Embraco established a joint venture in 1995 with China's Snowflake Group, which operates in the household appliance sector. The Embraco Snowflake Compressor Company Ltd. is located in Beijing.
The total investment of the plant is 53.75 million US dollars, 26.73 million from Brazil.
Yongcheng Coal Plant CVRD and Baosteel joint venture
The venture established in November, 2004 was based on Baosteel's existing coal joint venture with Yongcheng Coal and Electricity Group Corp in Henan Province and a number of other Chinese steel firms including Wuhan Iron and Steel Corp, Ma'anshan Iron and Steel Corp and Shagang Group.
Investment in the new venture reached more than 1 billion yuan (US$120 million), of which CVRD will control a stake of over 25 per cent.
The joint venture will give priority to supply of coal to CVRD and Baosteel, according to Baosteel's statement.
Yankuang Coking Coal and Coal Plant CVRD and Yankuang joint venture
In July, 2004, CVRD signed a contract with Yankuang Group in Shandong Province to establish a joint venture producing coking coal and coal. CVRD investment in the venture was 26 million US dollars.
WEG Nantong Electric Motor Manufacturing WEG solely owned enterprise in China
In April, 2005 WEG and the Chinese Group Weifu signed a contract to transfer ownership of Nantong Electric Motor Manufacturing (with initial investment of 18 million US dollars). The
49 How to Export to the People’s Republic of China company, WEG Nantong Electric Motor Manufacturing, is the first WEG factory in the Asian continent, which produces LV and HV three phase electric motors dedicated largely to the steel, mining, chemical and petrochemical segments and also the pump and compressor manufacturers.
WEG Nantong Electric Motor Manufacturing is located in an Economical Development Zone of Jiangsu Province, 155 miles away from Shangai, one of the main cities of China. The company is located near the largest consumption market in China in an area with high availability of qualified labour already accustomed to the foreign capital presence.
Harbin Embraer Aircraft Industry Company Ltd. Embraer and AVIC II joint venture
Embraer signed on December 2, 2002 an agreement to building a production unit in China through a joint venture with Harbin Aircraft Industry (Group) Co. Ltd. and Hafei Aviation Industry Co. Ltd. –companies controlled by China Aviation Industry Corp. II (AVICII). Harbin Embraer Aircraft Industry Company Ltd, located in Harbin, the capital of Liaoning, the northeastern province, is responsible for the manufacturing, assembly, sales and after-sale support for the ERJ135/140/145 family aircraft. The equity investment in the joint venture will be of 25 million US dollars, 51% of which controlled by Embraer (around 12.75 million US dollars).
4. Main economic agreements involving Brazil
• Comunicado Conjunto sobre o Estabelecimento de Relações Diplomáticas. (Entrada em vigor 15/08/1974)
• Acordo de Comércio (Entrada em vigor 22/11/1978)
• Convênio sobre Transportes Marítimos (Entrada em vigor 30/10/1980)
• Protocolo Adicional ao Acordo de Comércio. (Entrada em vigor 29/05/1984)
• Memorando sobre Cooperação em Matéria Siderúrgica. (Entrada em vigor 13/11/1984)
• Protocolo de Cooperação em Matéria de Siderurgia. (Entrada em vigor 01/11/1985)
• Memorado de Entendimento sobre Minério de Ferro. (Entrada em vigor 18/05/1990)
• Protocolo de Intenções sobre o Incremento do Comércio Bilateral de Minério de Ferro e a Promoção da Exploração Conjunta de Reservas de Minério de Ferro. (Entrada em vigor 23/11/1993)
• Acordo sobre Serviços Aéreos. (Entrada em vigor 27/11/1997)
50 How to Export to the People’s Republic of China
• Acordo sobre Quarentena Vegetal. (Entrada em vigor 03/07/1997)
• Acordo sobre Cooperação em Matéria de Quarentena e Saúde Animal. (Entrada em vigor 03/03/1998)
• Memorando de Entendimeno sobre Cooperação Industrial entre o MDIC do Brasil e a SDPC da China. (Entrada em vigor 02/12/2002)
• Memorando de Entendimento na Área de Segurança Sanitária e Fitossanitária de Produtos Alimentares. (Entrada em vigor 24/05/2004)
• Acordo, p.t.n., para Flexibilização da Concessão de Vistos para Empresários. (Entrada em vigor 24/06/2004)
• Memorando de Entendimento sobre o Estabelecimento da Comissão Sino-Brasileira de Alto Nível de Concertação e Cooperação (Entrada em vigor 12/07/2004)
• Protocolo sobre Quarentena e Condições Sanitárias e Veterinárias de Carne de Aves a ser Exportada do Brasil para a República Popular da China (Entrada em vigor 12/11/2004)
• Protocolo sobre Quarentena e Condições Sanitárias e Veterinárias de Carne Bovina a ser Exportada do Brasil para a República Popular da China (Entrada em vigor 12/11/2004)
• Memorando de Entendimento sobre Cooperação em Matéria de Comércio e Investimento (Entrada em vigor 12/11/2004)
• Memorando de Entendimento em Cooperação Industrial (Entrada em vigor 30/9/2005) http://www2.mre.gov.br/dai/bichina.htm
51 How to Export to the People’s Republic of China
V MARKET ACCESS 1 Tariff system
Tariff imposed on goods brought into China include import duties, consumption tax, and VAT. China also imposes anti-dumping duties on foreign imports if authorities consider theses to be sold too cheaply.
Import rates are set by General Administration of Customs (GAC) and approved by the Customs Tariff Commission, directly under the State Council. The commission consists of members from the Ministry of Finance, the Ministry of Commerce. Both the GAC and the Customs Tariff Commission follow the Custom Law in formulating policy.
Tariff rates are published by the General Administration of Customs in the Customs Import tariff Schedule. The schedule conforms to the International Customs Co-operation Nomenclature (ICCN) system. The “Regulations on Import Tariff”, most recently amended in March 1992, govern tariff matters including general rules, tariff rate application guidelines, base prices for tariff calculations, tax payments and refunds, tariff reductions and exemptions, review and approval procedures, appeals procedures, and penalty rules.
In recent years, China has, in line with international practice, relied on tariffs for the administration of trade policy rather than on quotas and licenses. At the same time it has reduced tariffs significantly.
Subsequent to China’s entry into the World Trade Organization (WTO), the government has taken measures to readjust its import tariff to comply with its WTO commitments. Effective January 1, 2002, China reduced its import tariffs on approximately 5,300 items from an average level of 15.3% to 12%. In particular, the average tariff for industrial products dropped from 14.7% to 11.3%, and that for agricultural produce dropped from 18.8% to 15.8%. At the same time, China eliminated its import quotas for a number of items such as grain, wool, cotton, polyester fiber, acrylic fiber and fertilizer.
Effective January 1, 2003, China further reduced its import tariffs on approximately 3,000 items, and lowered the average tariff level from 12% to 11%.
Effective January 1, 2004, China reduced its import tariff on approximately 2,414 items and lowered the average tariff level from 11% to 10.4%.
Effective January 1, 2005, China reduced its import tariff on approximately 980 items and lowered the average tariff level from 10.4% to 9.9%.
Effective January 1, 2006, China reduced its import tariff for over 100 categories of products ranging from vegetable oil to vehicles. After the adjustments, the average tariff rate on imports in China was 9.9 per cent. Average import tariff for industrial products was 9 per cent,
52 How to Export to the People’s Republic of China while the average tariff for agricultural products was 15.2 per cent, down from 15.3 per cent in the previous year.
China will continue to adjust its import quotas and tariffs in compliance with its WTO commitments.
Besides WTO commitments, some of the tariff reductions are a result of bilateral or multilateral agreements concerning trade and tariffs.
Import tariffs on all products from the Association of South East Asian Nation, on the so-called "early harvest" list, will be completely eliminated in 2006. This scheme is a preferential tariff program to promote the region's Free Trade Agreement.
Tariffs on all products imported from Hong Kong and Macao will also be lifted next year, according to stipulations in the Closer Economic Partnership Arrangement (CEPA).
Preferential tariffs will be implemented on 2,244 items from Pakistan, in line with an agreement the two countries signed earlier this month. Agreed import tariffs will be implemented on 928 items form South Korea, India, Bangladesh, Laos and Sri Lanka, according to the Asia Pacific Free Trade Agreement.
Import duties
Import duties are calculated as a percentage of the CIF (cost insurance freight) price of the goods. However, in a few cases duties are calculated on other bases, such as volume.
China provides a preferential rate, which applies to WTO member countries such as Brazil and economies that have bilateral favorable tariff treatment agreements with China.
Consumption tax
Consumption tax, ranging from 3-45%, is essentially a tax on luxury goods; alcoholic beverages and cigarettes; cosmetics, skin-and hair-care products; fire-crackers and fireworks; jewellery; automobiles, motorcycles, and motor vehicle tyres; diesel fuel and petroleum.
The Chinese Finance Department and State Administration of Taxation issued a joint Circular on 21 March 2006 (Circular Caishui [2006] No 33), which makes significant amendments to the Consumption Tax (CT). The changes, which become effective April 1, 2006, relate in particular to taxable items, tax rates and policies. These changes are the most significant amendments made to the CT since the tax was introduced in 1994.
The amendments affect a number of items in two categories subject to CT: resources and luxury products, with the explicit aim of improving environmental protection and resource conservation.
53 How to Export to the People’s Republic of China
Five taxable items are added to the category of industrial oil: naphtha, menstruum oil, fuel oil, aviation kerosene and lubricating oil. Disposable wooden chopsticks and solid wood floor boards also are added as taxable items. To ensure reasonable consumption and to indirectly reallocate revenue, luxury products, such as golf balls, golf instruments, luxury watches and yachts are included as taxable items, while skin-care and hair-care products are removed from the list of taxable items. The amendments also increase CT rates for energy-consuming cars and vans with large cylinder capacities, while decreasing CT rates for cars with small cylinder capacities with a view to encouraging the manufacturing and use of energy-efficient cars.
Value added tax
VAT is currently levied on all imports, including imported inputs on goods destined for export. Most goods are subjected to a 17% VAT, though the following goods are only subject to 13% VAT:
• Food and edible vegetable oil; • Drinking water; • Heating, natural gas, coal gas, liquefied petroleum gas (LPG); • Books, newspapers and magazines (these have a sliding tariff on import duties); • Fodder, chemical fertilizer, pesticides, agricultural machinery, agricultural plastic sheeting.
Companies can apply for 9% rebates on exported products subject to 17% VAT, and 6% rebates on goods subject to the 13% VAT. Textiles attract a more generous rebates of 11%.
Obtain Tariffs Information
In January 2002, the government set up a WTO information service desk and a WTO information service website providing WTO-related information to the public.