CONSULTANCY STUDY ON SOCIO-ECONOMIC-POLITICAL TRENDS IN PAN-PEARL RIVER DELTA REGION

ELEVENTH MONTHLY REPORT PART II

COVERING GUANGXI, YUNNAN, GUIZHOU, AND

SICHUAN

SEPTEMBER 2005

CENTRAL POLICY UNIT HONG KONG SPECIAL ADMINISTRATIVE REGION Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

2 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Table of Contents

I. Executive Summary ------5 II. Topical Analysis ------9 “Pan-PRD Cultural and Technological Cooperation and Exchange: Opportunities for Hong Kong” Part Two: South-western Region

Cinema Circuits Boost Guangxi’s Movies Industry ------10

Yunnan’s Cultural Endowment Embodies Significant Economic Value -- 14

Guizhou Striving to Modernise Its Chinese Medicine Industry ------18

Chengdu Develops A Digital Entertainment Industry Base ------23

Industry Views on Mainland-Hong Kong Cultural and Technological Exchange and Cooperation ------27

III. Trends & Updates on the Four South-Western Provinces/Region ------31

Nanning Adopts Strategy to Become an Industry-Strong City ------32

Guangxi Adopts Measures to Optimise Its Investment Environment ------34

Yunnan Improves Investment and Financing Environments and Encourages Enterprises to Go Global ------36

Yunnan Plans to Develop 60 Tourism Towns ------38

Economic Development Trends of Guizhou in the First Half of 2005 ---- 40

Guizhou Strives to Form a New Industrial Pattern in 2010 ------42

Sichuan to Become the Largest Logistics Centre in South-western China 44

Sichuan, Guizhou and Chongqing Invest Rmb1 Billion to Build the Golden Triangle for Tourism ------46

Memorabilia of Pan-PRD Regional Cooperation ------48

3 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Table of Contents (continued)

IV. Data and Trends ------53

Guangxi ------54

Yunnan ------55

Guizhou ------56

Sichuan ------57

Major Economic Indicators of Nine Pan-PRD Provinces/Region (Jan-Jun 2005) ------58

Nine Pan-PRD Provinces/Region: 10-Year Economic Trend (1995-2004) - 59

Nine Pan-PRD Provinces/Region: Statistics at a Glance (2004) ------60

V. English-Chinese Glossary of Terms ------63

4 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

I. EXECUTIVE SUMMARY

1. There are over 80 county level cinemas in Guangxi. Because of strict requirements on market entry, most of these cinemas operate outside the region’s three largest cinema circuits and make up a secondary film market. These cinemas find it difficult to source films and their showing schedules often lag behind the major cinemas. Most of them are thus unprofitable. To promote the development of its film market, Guangxi needs to develop this sizeable secondary film market. This would mean ensuring a steady supply of films to these cinemas. According to Mainland reports, income generated by Hong Kong movies in the Mainland has declined in the past two to three years. Hong Kong movie producers could consider taking this opportunity arising from Guangxi’s efforts to supply movies to the secondary film market, and introduce their movies to these county level cinemas through qualified Mainland distributors, to effectively expand the market of Hong Kong movies in the Mainland.

2. Yunnan is among the world’s few places with rich ethnic and cultural treasures. It enjoys abundant unique, beautiful and colourful natural and cultural resources. These conditions provide a solid foundation for the development of Yunnan’s cultural industries. To turn Yunnan’s rich cultural resources into competitive advantages for its cultural industries to gain a wider share of the market in the Mainland and even overseas, the Provincial Party Committee and Provincial Government of Yunnan offer an accommodating environment and relevant policy to protect these industries. It is Yunnan’s objective to develop a multi-faceted cultural industry cluster that enjoys high turnover by 2010. At present, the arts, film and television industries of Hong Kong and Yunnan have their own strengths and development needs. The two sides could consider active participation in cultural festivals and arts performances hosted by each other to foster stronger cooperation in techniques, talents and resources.

3. Guizhou is one of the nation’s four largest production bases of Chinese herbal medicines. Leveraging on its unique Chinese medicinal resources, Guizhou has stepped up the development of modern Chinese medicinal technology industry in recent years. A complete system of Chinese herbal medicine production, Chinese medicine research and development, as well as Chinese medicine manufacturing has begun to take shape. As at the end of 2004, all backbone enterprises in Guizhou’s Chinese medicine manufacturing industry have received the State’s certification of Good Manufacturing Practice (GMP) in medicine. In its next move, Guizhou will aggressively attract both domestic and foreign pharmaceutical manufacturing enterprises to participate in the modernisation of its Chinese medicine industry. It will also explore more financing channels to provide sufficient funding support for the development of enterprises in the industry. In as early as 2000, Hong Kong already had intention to develop the Chinese medicine industry. Hong Kong enterprises may ride on Guizhou’s initiatives and take part in the construction of Guizhou’s modern Chinese medicine industry. They may find business opportunities herewith.

5 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

4. Chengdu is among the earliest in the country to develop digital entertainment industry. In order to achieve its target of raising the share of digital entertainment industry to GDP to above 15% by 2014, Chengdu will adopt a strategy that will shift the focus of the digital entertainment industry from Internet games to cyber society in stages over the next nine years. To achieve such a transformation, Chengdu must expand investment into the digital entertainment industry, reasonably reduce the tax burdens of enterprises and further liberalise its market to attract investment and to encourage the local enterprises to go global. Hong Kong has a good knowledge of the market for various types of electronic games, and has a lot of talents in games development. Moreover, it has a good grasp of international consumption trends. Leveraging on these strengths, Hong Kong can cooperate with Chengdu enterprises and explore business opportunities herewith.

5. According to the Secretary General of a Hong Kong major sports association, since Hong Kong’s handover in 1997, there has been more attention in strengthening Mainland-Hong Kong cooperation in sports. However, while a lot has been said, neither comprehensive plan nor actual measures of implementation has been adopted. Taking the training of athletes as an example, it was considered that for the long term, Hong Kong could consider making more use of the training programmes of the Mainland to increase the exposure of Hong Kong athletes to the Mainland’s sports culture and training environment. This would be conducive in improving the standards of Hong Kong athletes, and in building a training mechanism viable in the longer term.

6. According to the Executive Director of a Hong Kong orchestra, it is currently difficult for individual art performers of the Mainland to apply for performing in Hong Kong. This is mainly because these individuals do not belong to a Mainland’s arts organisation. Their applications therefore involve more complicated procedures and entail a longer period of processing.

7. According to the Director of Administration at the School of Chinese Medicine of a local tertiary education institution, the major problems faced by the development of Chinese medicine industry in Hong Kong are related to clinical training and career prospects of the graduates. This is because Hong Kong has not yet established any hospital for pure Chinese medical practice or for integrated Chinese and western medical practice. Students mainly rely on the Chinese medical hospitals in the Mainland to gain clinical experience, which means they need to take their internship and residence training in the Mainland. Moreover, students are also faced with insufficient opportunities for development in Hong Kong after they graduate. These situations need to be dealt with seriously so as not to stall the long-term development of Chinese medicine industry in Hong Kong.

8. According to an industrialist, in terms of new product development, although scientific research development in the Mainland is more focused, the research results need to be

6 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

complemented by commercial elements in order to become viable merchandises. Compared with the Mainland, Hong Kong’s comparative advantage lies in its long-term relationship with overseas buyers and deeper understanding of international market trends. Hong Kong businesses can leverage on these strengths and attract successful scientific projects of the Mainland into Hong Kong to further the research and development efforts in the enterprises and universities here. By doing this, these projects can leverage on Hong Kong’s network and experience in dealing with the international market to conduct product and market tests. This will be help finding commercially viable applications for the research results and exploring their international market prospects.

7 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

8 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

II. TOPICAL ANALYSIS

“Pan-PRD Cultural and Technological Cooperation and Exchange: Opportunities for Hong Kong”

Part Two: South-western Region

Cinema Circuits Boost Guangxi’s Movies Industry ------10

Yunnan’s Cultural Endowment Embodies Significant Economic Value -- 14

Guizhou Striving t0 Modernise Its Chinese Medicine Industry ------18

Chengdu Develops A Digital Entertainment Industry Base ------23

Industry Views on Mainland-Hong Kong Cultural and Technological Exchange and Cooperation ------27

9 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Cinema Circuits Boost Guangxi's Movies Industry

In the Chinese movie industry, it is said that Shanghai is the origin of native films, Changchun is the cradle of new movies, Beijing is the centre of modern movies culture, while Guangxi is the fertile land for Chinese movie-making. Guangxi's debut in the movie industry dates back as far as the world-famous Third Sister Liu (劉三姐). This was soon followed by morale-boosting productions in the critical years including movies such as Miao's Legend (苗家兒女), Red Earth, The Battle of Tai'erzhuang (血戰台兒莊), Zhou Enlai (周 恩來) and Long March (長征), which all helped to build Guangxi’s reputation in the movie-making industry. Guangxi's diverse ethnic culture also inspired the rise of the fifth generation of Chinese directors led by pioneer figures Mr. Chen Kaige (陳凱歌) and Mr. Zhang Yimou (張藝謀). Guangxi is often associated with the Golden Rooster and Hundreds of Flowers Movie Festival (中國金雞百花電影節), a major ceremony of the Chinese movie industry, which was first held in Guilin and hosted by the China Film Association and the Guangxi Film Association. The ninth annual festival was again staged in Guangxi’s capital, Nanning. So far, only Guangxi, together with Guangdong and Zhejiang, have hosted the Festival twice, marking the importance of the region in the Mainland movie industry.

Golden Rooster and Hundreds of Flowers Movie Festival

The Festival is modern China’s longest-standing, largest-scale and most authoritative movie award. It also spans wide international influence. The award was a combination of the previous Hundred Flowers Awards, which started in 1962, and Golden Rooster Awards, which started in 1981. In order to accelerate the development of the Mainland movie industry to keep up with the country’s pace of reform and opening-up, the Communist Party Publicity Department endorsed the integration of the Hundred Flowers Awards and Golden Rooster Awards by the China Film Association into the Golden Rooster & Hundreds of Flowers Movie Festival in 1992. As a major annual celebration in the Chinese movie industry, the festival provides venue for nationwide exchange. The event includes awards and recognitions, academic discussions, and is also a venue for introducing new movies and performances. The annual festival has been hosted 14 times and selected venues included Guilin, Guangzhou, Changsha, Beijing, Kunming, Foshan, Chongqing, Shenyang (瀋陽), Nanning, Ningbo, Wuxi (無錫), Jiaxing (嘉興), Yinchuan (銀川) and Sanya.

Cinema circuits boost Guangxi’s movie industry

With a population of over 48 million, Guangxi recorded only a box office of Rmb20 million last year, indicating that the market is far from saturation. The key to expanding the Guangxi market lies not only in improving the quality of movie production or coming up with more entertaining or artistic productions, but also in the establishment of more film distribution companies and stronger cinema circuits by fostering competition. On November 15, 2004, Guangxi’s Culture Department held a region-wide movie industry

10 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

conference in Nanning, aiming to speed up the development of local movie industries. During the conference, Guangxi identified the stepping up of reform in its cinema circuits as one of the main tasks of the industry, so that the development of its movie industry can be stimulated.

In response to the demand of the State Administration of Radio, Film and Television, Guangxi Film Studio (廣西電影公司) set already set up a cinema circuit company with numerous film companies all over the country. The newly established Guangxi Xinlian Cinema Circuit (廣西新聯院線) adopted the modern mode of managing cinema circuits. In Guangxi, its network includes 15 cinemas, five of which are in Nanning and are major cinemas dominating the movie market in the provincial capital. Xinlian Circuit’s monopoly in Nanning was dashed in January 2004, when Hongxing Cinema City (紅星影城) held by Guangzhou Pearl River Cinema Circuit (廣州珠江院線) made its entrance in the city. In May 2004, Warner Brother’s Studio, a multinational movie giant and entertainment company opened its branch in Nanning Wanda Commercial Plaza (南寧萬達商業廣場), bringing with it advanced cinema equipments and first-class cinema concept. In addition, it established the Warner Wanda Cinemas (華納萬達) in March 2005 together with other six cinemas, thus forming a tripartite confrontation in Nanning with Guangxi Xinlian and Guangzhou Zhujiang.

Cinema Circuit

In February 2002, the State Administration of Radio, Film and Television issued a notice to step up systematic reforms in cinema circuits, requiring them to adopt the modern management mode of cinema circuits. The move is aimed at simplifying the layers of movie distribution and to enhance the profitability of movie producers and cinemas. Under the operating mode of cinema circuits, one distributor (movie companies or production companies) is linked with several cinemas under unified brand name, transaction arrangement and management. A cinema circuit can be formed by merging cinemas or tying up movie distributors and cinemas. It can be a closely-knitted circuit involving joint investment; or a loose circuit whose cooperation is based mainly on signed contracts for providing movies to cinemas. Such a system enables cinemas within a circuit to have access to all domestic and foreign movies provided by the circuit. Cinemas that are not part of any cinema circuit will still be able to air locally produced movies, but will not be entitled to air imported box office hits. Prior to the cinema circuit system, different provincial/municipal/county-level movie companies supply movies to individual cinemas.

With cinema circuits now operating in Guangxi, the participation of Guangzhou Zhujiang and Warner Wanda has ushered in more competition, helping to stimulate the movies market of Guangxi. Faced with ever-intense competition, every cinema circuit is now striving to strengthen its promotion, pushing the market towards standardisation. Cinemas within circuits imported top-grade film projectors, acoustic equipments and seats designed for airline use to improve their environment. These enhancements have successfully drawn the attention of more movie-goers and widened the scope of its audience.

11 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

As a result of these, the number of movie-goers increased and despite the greater number of cinemas, Guangxi still generated higher box office. It is known that even after the entry of Warner Wanda, Guangxi Xinlian still reported higher audience rates. In 2004, Xinlian recorded box office that was millions of Renminbi higher than that recorded in 2003. Favourable competition has enlarged the pie of the movies market, and at the same time promoted the prosperity of the Guangxi movies industry.

Admittedly, there is currently little difference in the movies and airing schedules among cinema circuits in Nanning. When choosing where to watch movies, movie-goers seldom make their decisions based on their preference of particular cinema circuits. However, as the industry continues to reform, the different cinema circuits will start to differentiate in terms of their selection of movies, which is expected to have crucial impact on audience’s choice of cinemas. Guangxi will probably see an increasing number of cinema circuits in the near future, as restructuring, integration, and mergers and acquisitions are being undertaken. More intense competition is on the way and a broader selection of movies will further stimulate Guangxi’s movies market.

Secondary markets to be developed in the small- and medium-sized cities

The advent of cinema circuit has been considered to be of crucial importance to Mainland’s movies industry reform. However, while promoting the development of the movies industry, the reform has also pushed the industry into two extremes. Due to stringent requirements, not all cinemas qualify for assimilation into cinema circuits. As such, cinemas in less developed cities, in countryside, in villages and towns, and less profitable or irregular cinemas on campus, in institutions and enterprises are dissociated from cinema circuits. Together, they form a secondary market in Guangxi. This market have little resources in terms of selection of movies, are weak in timeliness and have little access to box office hits while these are still being staged in top cinema circuits. Moreover, these cinemas find new movies too costly and are thus unable to include them in their selection of movies. Instead, they resort to re-runs of old movies, which make them unappealing to audience. All these factors have contributed to the slack in the development of the secondary market for movies.

The two extremes in the movies industry is relatively more pronounced in Guangxi. According to statistics, there are over 80 county level cinemas in Guangxi, accounting for about two-thirds of the total number of cinemas in its city areas. In better years, these county-level cinemas generated one-third of the box office made in the autonomous region. However, since cinema circuits evolved, the situation has changed. Because of strict requirements on market entry, most of these cinemas operate outside of the region’s cinema circuits. Most of them remained unprofitable in the recent years.

As such, in developing Guangxi’s movies market, attention should not be limited to the

12 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report) three cinema circuits or the handful of modern cinemas. The development of a large-scale secondary movies market should be given importance, and this can be achieved by addressing the problems faced by these cinemas in sourcing films. First, distributors need to be motivated, and film companies be encouraged to penetrate deeper into communities, factories, campuses, barracks, farms, and pasturing areas. Secondly, distributors and cinemas of diverse ownership systems need to be cultivated. Broader channels of investment and financing will encourage all qualified culture-related companies, state-run or privately-owned alike, to participate in the industry. Thirdly, all appropriate channels of introducing movies to communities, campuses, villages and factories should be encouraged.

According to Mainland reports, the income generated by Hong Kong movies in the Mainland has declined in the past two to three years. Hong Kong movie producers could consider taking this opportunity arising from Guangxi’s efforts to supply movies to the secondary film market, and introduce their movies to these state- and non-state-owned county-level cinemas of Guangxi through qualified Mainland distributors, to effectively expand the market of Hong Kong movies in the Mainland. The implementation of CEPA allows approved Hong Kong service providers to set up wholly-owned pilot companies for distributing Mainland movies. They may also form partnerships or joint ventures with Mainland parties to renovate and operate cinemas. Opportunities herewith are worth the attention of Hong Kong investors.

13 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Yunnan’s Cultural Endowment Embodies Significant Economic Value

Yunnan is among the world’s few places with rich ethnic and cultural treasures. It enjoys abundant, unique, beautiful and colourful natural and cultural resources. These conditions provide a solid foundation for the development of Yunnan’s cultural industries. The Provincial Party Committee and Provincial Government of Yunnan proposed to nurture the province’s cultural industries into new pillars and engines for economic growth. Apart from focusing on cultural ideologies, Yunnan will also pay attention to the industry’s economic, commercial and material contents. From making extravagant cultural productions and displays, Yunnan will move towards manufacturing of cultural merchandises and specialties. By 2010, Yunnan’s cultural industries would form a group of new pillars for the economy. A group of leading and competitive enterprises will be formed; a group of renowned brands will be created. It is Yunnan’s objective to develop a multi-faceted cultural industry cluster that enjoys high turnover, with urban and rural residents allotting a higher proportion of their expenditures on cultural products and services. Yunnan will be constructed into a dominant cultural province, with the value-added generated by its cultural industries accounting for 6-10% of its GDP.

A solid foundation for developing cultural industries

According to Mr. Dan Zeng (丹增), Deputy Director of Yunnan’s Party Committee, the cultural resources in Yunnan are among the most important for the province’s social and economic development. Rich and unique, these resources are of great economic value. Given the increasing integration of economics and culture, Yunnan shall develop these resources in the perspective of supporting economic and industrial development and highlight the unique advantages provided by Yunnan’s historical and natural resources. The following are of particular importance:

1. Historical and cultural endowment

Yunnan is one of the cradles of mankind. It has a history dating back 1.7 million years ago or the ages of the Yuanmou Man (元謀人)1. The long course of historical development left Yunnan with a rich pool of cultural and historical endowment that lay a sturdy foundation for the development of its cultural industries. For example, Bronze Civilization from the Warring States Period (春秋戰國) to the period of Han Dynasty plays a very important role in the history of bronze culture in China, and even the rest of the world, with its profound cultural influence in areas ranging from metal technology, sculptures and carvings to cultural customs. As another example, the Nanzhao-Dali Culture (大理崇聖寺三塔) is

1 In 1965, staff from the Geology Department found two tooth fossils of the ape-man in Yuanmou county of Yunnan. These were later confirmed to be part of the remains of one of the earliest man found in China, dating back about 1.7 million years. This man is now known as the Yuanmou Man. The discovery of Yuanmou Man proved that the Yunnan Plateau was one of the regions earliest inhabited by mankind.

14 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

represented by the Dali Chongsheng Temple (大理崇聖寺三塔), Caves-Baoshan (劍川石寶山石 窟), Ancient Kunming City (昆明古幢), East and West Temple Pagodas (東西寺塔), etc. Moreover, many important events that happened in the contemporary and modern history of Yunnan such as the National Protection Movement (護國運動), Red Army Long March (紅軍長 征), and Western Yunnan’s Anti-Japanese Struggle (滇西抗戰), etc.

The rich and unique cultural endowment of history, if appropriately explored, can strongly boost the development of Yunnan’s cultural industries. First, Yunnan can improve the quality and attractiveness of its tourism industry by developing special culture-oriented tours. Secondly, it may develop ancient buildings, relics and tombs into theme parks, integrating the tasks of protecting the relics and developing a market-oriented industry. Thirdly, it may select fine arts and crafts like ancient bronze ware, sculptures and carvings or religious relics, etc., and re-create these by using modern techniques, or mass-produce items that carry these images and sell them in the market. Fourthly, there are a lot of cultural and artistic resources that can be found in the province. Yunnan can leverage on these resources to create fine arts, audio and video productions that are suitable to be launched in the commercial market.

2. Ethnic cultural endowment

The province of Yunnan boasts of the biggest number of ethnic minorities. Of the 25 ethnic minority groups, 15 are unique to Yunnan. Rarely is such convergence of different ethnic cultures seen anywhere in the world. During the long course of historic development, all ethnic minority groups have formed their own cultures, songs and dances, folk customs, arts and crafts, clothes, architecture, food and festivals, etc., creating a set of unique cultural attractions featuring “diverse cultures within 10 miles and variety of languages within 100 miles”. All these contribute to the solid foundation that Yunnan enjoys in developing its cultural industries, and enhance the potential for Yunnan to develop a new image.

Currently, Yunnan has collected more than 20,000 folk songs and music pieces, 6,718 dances, over 2,000 operas, over 200 pieces of instrument music1 and more than 50 lyric compositions. Their creations are all based on real life experiences and stories, and hence possess not only artistic value, but also meaningful content to viewers and audiences. As long as these creations are properly arranged and packaged to highlight their artistic value, they will receive good market response, attract viewers and become commercially viable products. Recently, Yunnan has stepped up its efforts in marketing its folk and ethnic songs and dances, gaining extensive experience in this area. For example, the original song and

1 Ethnic instrument music refers to traditional folk music performed in solo or ensembles with traditional musical instruments. The combination of different musical instruments forms various instrument music types. For solo performances, examples are Qin-music, lute, zither, flute, Chinese fiddle, etc. For ensembles, examples are the combination of gong and drum, Chinese traditional string music played on all sorts of stringed instruments, combining wind and stringed instruments such as string and bamboo flute music, Chinese traditional wind and percussion ensembles, which feature a combination of wind and percussion instruments, etc.

15 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report) dance production, "Medley-Dynamic Yunnan” (雲南映象) aptly highlights the integration of exhibiting, protecting and developing Yunnan’s ethnic creations of song and dance numbers.

"Medley-Dynamic Yunnan"

"Medley-Dynamic Yunnan" is a grand-scale original song and dance performance produced by Ms. Yang Liping (楊麗萍), a famous Chinese dancer, who also plays a leading role in the programme. The production is wholly-funded by Yunnan investors and 75% of the dancers in the programme are local peasants and clansmen. It highlights the brilliance of original song and dance creations of the ethnic minority groups such as Yi (彝), Miao (苗), Tibetan (藏), Dai (傣), Bai (白), Va (佤), Hani (哈尼), etc. "Medley-Dynamic Yunnan" has won the Golden Play Award, together with awards for best director, best actress in a leading role, best costume design and excellent performer in the 4th China Dance Lotus Award in 2004. Since its debut in Kunming in August 2003, "Medley-Dynamic Yunnan" has been performed over 100 times in various parts of China. At end-2004, the show was staged in Brazil and Argentina, successfully entering the international market. Performances are still regularly being staged at the Kunming Hall (昆明會堂).

In industrialising the tangible aspects of ethnic culture, developing folk arts and crafts would be the easiest to start with. Members of all ethnic minorities in Yunnan have somehow found their own ways to develop their unique arts and crafts, laying a handy foundation for industries such as metal folk arts and crafts produced by Bai Zu (白族) craftsmen of Xinhua Village in Heqing County (鶴慶縣新華村), wood sculptures of Jianchuan County (劍川縣), tie-dying of Weishan Yi Zu (巍山彝) , variegated copper technique of Huize County (會澤縣), Nixi Pottery (尼西製陶) of Shangri-La (香格里拉), Purple Clay Tea sets of Jianshui County (建水縣), Black Pottery and marble of Zhenyuan County (鎮沅縣). Unique works of art can be found in almost every county of the province. So long as Yunnan people of all nationalities find their own resource advantages, continuously absorb and refer to advanced design ideas and technologies, they will be able to make every piece of work a masterpiece and attract interest from buyers and art collectors looking for the unique spirituality imbibed in each of the art pieces. With these efforts, ethnic and folk arts and crafts of Yunnan will be able to gain popularity in the market.

3. Natural resources

Yunnan is a melting pot of all climate types. A saying describing Yunnan is that “its mountain has four seasons and different weathers can be experienced within 10 miles”. The province is also a library of various landforms ranging from snow-covered plateaus that are over 6,400 metres above the sea-level, glaciers, dry and hot valleys that are over 70 metres above the sea-level, to various Karst landforms, with rivers and mountains interlacing; Yunnan possesses almost all types of landforms that exist in the world. Yunnan is also a Grand Garden filled with various creatures, with over 30,000 plants and thousands of animals.

16 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Together, these unique natural resources create the amazing Shangri-La, Three Parallel Rivers (三江並流), Stone Forest (石林), Dali (大理), Xishuangbanna (西雙版納), Tengchong Volcano (騰 沖火山), etc. All these make Yunnan a rare and fascinating wonderland most suitable for shooting movies and films.

Recently, increasing attention has been paid to the unique charm of Yunnan for film shooting. More and more movies and television programmes are being shot in Yunnan. Local film producers and directors are deeply attracted by the favourable natural conditions of this “grand natural studio”. Leveraging on this advantage, a cluster of scenic areas suitable for shooting television programmes and movies have been established and peripheral facilities have been constructed to provide comprehensive service to the industry. They include the Cuishan film and TV Cultural Centre of Quqing (曲靖翠山影視文化城), Dragon Chronicles Film and TV Centre of Dali (大理天龍八部影視城), South East Asia Film and TV Centre of Yulong Bay (玉灣東南亞影視城) and Tea-Horse Road Film and TV Centre of Lijiang and Shuhe (麗江束河茶馬古道影視城). With all the efforts, Yunnan will be developed into a first-class TV and film shooting base of the world – a Hollywood in the orient.

Introducing policies to create a favourable environment for development

In order to turn the advantages of Yunnan’s cultural resources into commercially viable industries so that the cultural sector can account for a bigger portion of the market, the province’s Party Committee and government have issued three separate documents: “Opinions on Further Strengthening Cultural Restructuring and Speeding up the Development of Culture Industry”, “Yunnan’s Policies on Speeding up the Development of Cultural Industries” and “Opinions on Strengthening the Compilation of Statistics for the Cultural Industry of Yunnan”. By introducing favourable policies on financing, taxation, industry and commerce, investment, land-use, public security, talent and social security development, the authorities have created a more favourable environment for the development of cultural industries. Meanwhile, it will also set up the Cultural Industry Development Fund and Artistic and Literary Creation Fund to provide necessary financial guarantees to support the industry’s development.

At present, the arts, film and television industries of Hong Kong and Yunnan have their own strengths and development needs. The two sides could consider active participation in cultural festivals and arts performances hosted by each other to foster stronger cooperation in techniques, talents and resources. The implementation of the Closer Economic Partnership Arrangement (CEPA)1 has created further opportunities for Hong Kong and Yunnan to leverage on each other’s competitive advantages and promote mutual benefits at all levels of the cultural industries. Enterprises in Hong Kong’s cultural industries should take advantage of this to find further business opportunities.

1 For more details on CEPA’s stipulations that are related to the Hong Kong-Mainland cultural cooperation, please refer to “Industry Views on Mainland-Hong Kong Cultural and Technological Exchange and Cooperation” in this report.

17 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Guizhou Striving to Modernise Its Chinese Medicine Industry

The rapid development of high and new technology industries has become a new growth engine spurring Guizhou’s economic growth. In 2004, the total output value of the province’s new and high technology industries increased 19% from the previous year and exceeded Rmb15 billion. The number of self-developed products and techniques introduced during the year reached more than 1,000, and the value of their output rose 169.4% to Rmb8.68 billion. A group of such new technology industries started to take shape. They include electronics and information technology industry, which focus on the development of micro-hard disks, new electronic components; new materials industry, which focuses on the development of non-ferrous metals, composite materials, electronic materials; new energy manufacturing industry, which focuses on the development of lithium cell, electro-mobile battery; and modern Chinese medicine industry which focuses on the development of ethnic medicine. Among the above, Guizhou’s modern Chinese medicinal herbs industry has developed into the backbone of the province’s high and new technology industries. The annual turnover of Chinese medicine industry reached Rmb4 billion, accounting for 30% of all high and new technology industries in the province. Chinese medicine is thus well positioned to become a new pillar industry of Guizhou.

New and High Technology Industries

New and high technology industries refer to those industries that are newly developed by employing scientific and technological means of new discoveries, inventions and innovations. They involve two industrial types: high technology industry and newly developed technology industry. Due to frequent overlapping of high technology and newly developed technology, the three terms “high technology, newly developed technology, and high and new technology industry” are largely used interchangeably. According to the Catalogue of High-technology Industry Classifications, high and new technology industry involves the following 11 fields: electronics and information technology, advanced manufacturing, aerospace, modern transportation, biology, medicine, new material, energy and energy conservation, environmental protection, earth and space sciences, marine science, nuclear application and modern agriculture. There are about 2,056 products in this industry.

Strengths in developing Chinese medicine industry

As the old saying goes, “No grass in Guizhou is useless, medicinal herbs are everywhere.” Guizhou’s diverse land types, together with the vast disparity in altitude, climate, and the unique and complex ecological environment, have all contributed to the nurturing of the province’s abundant biological resources. These have turned Guizhou into one of the four major production bases of Chinese medicinal herbs. Guizhou boasts of as much as 4,290 varieties of Chinese medicines, including 3,924 medicinal herbs, 289 biological medicines and 77 minerals. The total Chinese medicinal resources in Guizhou

18 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

are estimated at 6,550 tons. With such abundant resources, Guizhou is a perfect place to develop the Chinese medicine industry. According to a national survey, of the 363 varieties of major Chinese medicines, 326 or 90% can be found in Guizhou. The province also boasts of 1,200 varieties of common Chinese medicinal herbs. The medicinal herbs of Guizhou are known to be of highly effective content and good quality. Apart from rare medicines such as Rhizoma Panacis Majoris (珠子參), Borneolum Syntheticum (天然冰片) and Bezoar (牛黃), there are also ample scores of pure medicine materials of high quality which play an important role in the national Chinese medicine industry and have good potential for commercial development. Examples of these are Rhizoma Gastrodiae (天麻), Eucommia ulmoides (杜仲), Rhizoma Pinelliae (半夏), Medicinal Evodia Fruit (吳茱萸), Dendrobium (石斛), Magnolia officinalis (厚朴) and Amur Corktree Bark (黃柏).

Among Guizhou’s Chinese medicine industries, Miao medicines stand out. Its industrial output value account for 50% of the total Chinese medicine manufacturing industries of Guizhou. The population of Miao group in Guizhou is only second to that of Han (漢) group. Over thousands of years, Miao people have accumulated rich and unique medicinal experience during their long practical battles with diseases. Based on Guizhou’s resource advantages, medicine manufacturing plants have developed a group of Miao medicine products with unique functions and good market potentials, such as the Magic cough syrup (咳速停糖漿), Xin Liver Drug (鑫肝樂), Yanlishuang Cough Drops (咽立爽口含滴丸), which sell well throughout the country and are also being exported to Southeast Asia and Japan. The Miao medicine has thus established its own brand name and 154 Miao medicines have achieved national standard.

A system for developing a modernised Chinese medicine industry1 has taken initial shape

Fully leveraging on its rich natural resources, Guizhou strives to modernise its Chinese medicines industries. At the beginning of 2002, Guizhou was next to Jilin and Sichuan in receiving approval to become the third national base for developing a modern Chinese medicine industry with high technology content. In September of the same year, its Party Committee and Provincial Government published the decision of “Opinions on Advancing the Development of Modern Chinese Medicine Industry” and introduced a series of policies to speed up the industry’s development in Guizhou. So far, a well-developed system of production, research & development (R&D) for Chinese medicines has been primarily established.

1 In a narrow sense, Chinese medicine industry includes Chinese herbal medicines, Chinese traditional patented medicines, and manufacturing of drink tablets. Of these, Chinese herbal medicines are also used as raw materials of the other two. In a general sense, the Chinese medicine industry also includes folk medicine (generally called herbal medicine) and its pharmaceutical industry, as well as ethnic medicines (such as Tibetan medicine, Meng medicine, Miao medicine) and their pharmaceutical industry.

19 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

1. The planting of Chinese medicinal herbs

In the process of modernising its Chinese medicines industry, Guizhou prioritises the development of technologies related to the planting of Chinese medicinal herbs, adjustment of the agricultural industry structure, and the conversion of "woodland-converted farm-plots" for afforesting. Guizhou stepped up planting of Chinese medicinal herbs in large fields, focusing on the launching of Good Agricultural Practice (GAP) Experiment and Demonstration of Chinese medicinal herbs. This has led to the faster development of standardised planting of Chinese medicinal herbs. At present, the plantation base for Chinese medicinal herbs spans an area of 1,070,000 mu (Chinese area of measurement equivalent to 1/15 of a hectare), and more than 70 herbal medicine plantations have been set up, 19 of which boast of a size of more than 10,000 mu. By the end of 2004, the GAP planting technology research of Chinese medicinal herbs has covered from about 10 varieties, including Rhizoma Gastrodiae, Euonymus Japonicus, Gastrodia Elata, Eucommia Ulmoides, Amur Corktree Bark to more than 33 varieties, including the root of Polygonum multiflorum Thunb (何首烏), Pseudostellaria Heterophylla (太子參), and Smilax China Root (茯苓). Based on the GAP planting technology of Chinese medicinal herbs, 3 experiment and demonstration bases have been established, with an area of 13,000 mu and spanning an influence over 93,000 mu of area, capable of exerting substantial impact on the surrounding plantations.

GAP of Chinese medicinal herbs

GAP is short for good agricultural practice. GAP for Chinese medicinal herbs is implemented to standardise the planting of these herbs to ensure their quality, and promote upgrading of their standards, and modernisation of the industry. Guizhou published the “Preliminary GAP guidelines for Chinese Medicinal Materials” on March 18, 2002. This was approved by the State Drug Administration and was implemented from June 1, 2002. By adopting GAP for Chinese medicinal herbs, the products’ authenticity, safety, effect and quality can be ensured, as the entire process of production will be monitored. In terms of plants, the production process refers to the period of time from sowing of seeds, growing to harvesting and up until the final output is produced.

2. R&D in the Chinese medicine industry

The development and application of advanced techniques and scientific findings are essential to the modernisation of the Chinese medicines industry. Since 2003, Guizhou’s launching of specialised Chinese medicine projects and key technological projects have ushered in faster investment in R&D, encouraged enterprises to lead in innovativeness and to integrate industry with research and education. Priority has been given to the development of new medicines and consolidation of resources for use in Chinese medicinal technologies. Modern R&D of the Chinese herbal medicines

20 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

industry has taken initial shape, with over Rmb40 million in investment attracted and Rmb175 million in social funds established. Apart from stronger financial support to R&D of new medicines and technologies, the funds also help to lay down a more solid foundation for the cultivation of scientific innovations. In 2004, of 57 new medicines and technologies founded in Guizhou, 12 have received national approval to proceed with further clinical studies.

3. Chinese medicine production

Guizhou is capable of producing many varieties of medicines, with 1,802 having acquired the national registration approval number1 (國藥準字). Products range from traditional pills, powders, ointments and pellets, to drop pills, tablets, injections, capsules, and medicinal granules, medicinal drinks, frothing agents, etc., totalling 27 types. Time-release, freeze-dried, transdermal drugs have also been developed, forming a relatively comprehensive system of production. Guizhou enterprises manufacturing Chinese herbal medicine drinks started from scratch and there are now eight such manufacturers in the province, including Tongjitang (同濟堂), Jirentang (濟仁堂), Tongren Pharmaceutical Factory (銅仁飲片廠) and Qinnan Pharmaceutical Company (黔南自治州 飲片公司) have developed into relatively large scales, with hundreds of varieties of products. As of the end of 2004, 318 production lines belonging to 96 of the province’s 182 pharmaceutical enterprises have passed the national pharmaceutical certification for GMP (good manufacturing practice), with all pillar Chinese medicine enterprises qualified for the certification.

GMP for Medicines

GMP refers to Good Manufacturing Practice. It employs scientific and standardised methods, and adopts a unified management specification used for ensuring the quality of medicines throughout the course of manufacturing. According to the requirements of newly revised Medicine Management Law, the State Drug Administration (SDA) issued the “Notice on Speeding up the Supervision and Implementation of GMP on Pharmaceutical Industries”, requiring all pharmaceutical manufacturers in the Mainland to meet the GMP requirements and obtain certification by June 30, 2004. Those that fail to comply had to terminate production.

According to Mr. Gao Guilong (高貴龍), Deputy Chief of the provincial science and technology department, certification of the pharmaceutical products’ quality conducted on the basis of GMP has already been established. In its next move, Guizhou will speed up the restructuring of assets and shareholdings to establish a modern enterprise system for its Chinese medicine industry. This would help to optimise the allocation of resources and

1 Medicines that have received the license number are approved for national production.

21 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report) upgrade the standard of the industry’s overall development. At the same time, Guizhou will aggressively attract both domestic and foreign pharmaceutical manufacturing enterprises to participate in the modernisation of its Chinese medicine industry, explore wider channels of financing and provide sound capital support. In as early as 2000, Hong Kong already had intentions to develop the Chinese medicine industry. Hong Kong enterprises may ride on Guizhou’s initiatives and take part in the construction of Guizhou’s modern Chinese medicine industry. They may find worthwhile business opportunities herewith.

22 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Chengdu Develops A Digital Entertainment Industry1 Base

Stepping into the 21st century, new forms of entertainment ushered in by digitalisation are fundamentally changing the traditional ways of entertainment and re-shaping the lives of today’s consumers. Chengdu started early in its development of the digital entertainment industry. Ahead of the rest of the country, the Chengdu Municipal Government announced its strategies in constructing a digital-entertainment industry base in as early as late 2002. In only a few years’ time, Chengdu’s market share of internet games expanded rapidly and became the third highest in China, up substantially from the 10th ranking that it held back in 2001. Statistics show that Chengdu has more than 20 enterprises and about 2,000 talents engaging in research and development (R&D) of games products. The city also boasts of over 2,500 internet bars and 304 entertainment venues such as electronic game rooms. In 2003, China recorded Rmb2.55billion in sales of internet game point cards 2 . The south-western market accounted for 16.8% of the sales and 60% of this was made in Chengdu. In the same year, Chengdu’s Internet games generated operating incomes totalling Rmb70 million, brought Rmb150 million in revenues to the telecommunications sector, and contributed more than Rmb1 billion to the information technology industry as well as Rmb500 million to the media and publishing sectors.

Internet games

Internet game, also called online game, is a type of electronic games. It is a computer game played on the internet, involving intercommunication between players and integrating recreation with personal interaction. Before the internet technology was available, electronic games were all single station games, that is, “player to machine” games played on game station (popularly known as street machine“街機”); they could accommodate only up to two players at one time at the most. With internet, hundreds, thousands and even tens of thousands of players can simultaneously take part in the game world by simply connecting to a game server, facilitating greater interaction and allowing games to be more “real”. This makes electronic games more enjoyable.

Five advantages in developing digital entertainment industry

As one of the three largest digital entertainment centres, Chengdu possesses the following unparalleled advantages in the development of digital entertainment industry.

1 Digital entertainment industry consists of seven general areas: Internet games, mobile phone games, TV games, electronic books, cartoon and animation, digital music and digital photography. 2 Most internet game providers charge fees via selling of point cards that are used by internet game players to access online games on the Internet. Points accumulated on the cards are time are time-equivalent units, and time spent playing online games are automatically deducted from the card. Point cards can be easily purchased in convenient stores and Internet bars or online stores. 3 Zhuhai, Beijing and Chengdu are the three largest digital entertainment centres in China.

23 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

1 . Rich culture

Sichuan is most advanced in the western Mainland region in terms of its economy, technology, education and culture. It has long enjoyed the reputation as the “land of abundance”. Sichuan possesses long established historic Bashu (巴蜀) culture and Dao (道家) culture as well as dietary and tea cultures that are well known both at home and abroad. These, together with its ecological environment, endow Chengdu with a civilization that has a combination of ancient and modern features. Chengdu’s social and cultural foundation is conducive to the development of the digital entertainment industry.

2 . Great market potential

Chengdu has a population of 11.10 million people. It is a large metropolis and a major economic and trade centre in south-western Mainland. It has over 2.5 million internet users, ranking the highest in the country. On average, 100,000 people connect to the Internet each day. These factors plus the trendy consuming behaviour of Chengdu people, as well as their leisurely and fashionable life style, make the city a vast market for the digital entertainment business. At present, the size of Chengdu’s digital entertainment market, inclusive of internet connecting service, game distribution, and online sales of point cards, has reached tens of millions Reminbi each month.

3. High priority given by the government

Ahead of the other major Mainland cities, Chengdu formed the “Leading Team for Propelling Digital Entertainment Industry” on May 22, 2003. This provided the industry with strong organisational support. The numerous preferential policies issued and the innovative systems of administration introduced made business environment conducive to the development of local enterprises in the digital entertainment industry. Improvement in the legal environment also paved the way for the sustained development of the industry in Chengdu.

4 . High degree of clustering

Since the completion of the country’s first digital entertainment software park in Chengdu on April 4, 2004, a large number of enterprises engaged in this line of business have begun moving into the park. Together, they led Chengdu to develop a digital entertainment industry of sizeable scale. Apart from sharing of the park’s infrastructure, the clustering of these enterprises has also facilitated efficient sharing of information, intercommunication and cooperation. The interaction among enterprises in the park has nurtured a unique park culture that is conducive for the development of business ventures, innovation, and continuous industrial improvement. All these are beneficial to the development of Chengdu’s digital entertainment industry.

24 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Chengdu Digital Entertainment Software Park (成都數碼娛樂軟件園)

The Chengdu Digital Entertainment Software Park is located inside the Chengdu High-technology Industrial Development Zone. The construction of the park entailed a total investment of Rmb100 million and spans an area of 14,000 square metres. The park is composed of game developers, telecommunication and network carriers, Internet content providers (ICPs) and mobile phone terminal manufacturers. 23 of the enterprises in the park were relocated from other parts of the country. Not only does the software park boast of a high concentration of well-known Mainland game enterprises, but also of a college that serves as a training ground for the digital entertainment software college talents of Chengdu. In May 2005, the park was officially designated as China’s first National Industrial Development Base of Internet Games and Animation. The base is a solid and wide-spanning platform for the rapid development of Chengdu’s game industry.

5. Abundant human talents

Chengdu’s abundance in human talents is a key to its successful development of the digital entertainment industry. Good quality cultural and IT talents of western Mainland are highly concentrated in Chengdu. Many of them have accumulated years of experience in R&D and are familiar with the ins and outs of running internet games. Sichuan University in Chengdu is the nation’s first higher-education institution that offers courses majoring in R&D of games. This helps to arm Chengdu’s digital entertainment industry with a strong intellectual base and also facilitates the industry’s development.

Gradually transforming the digital entertainment industry

Incorporated in the Development Plan of Chengdu’s Digital Entertainment Industry issued in May 2005 is its target of raising the share of digital entertainment industry to GDP to above 15% by 2014. To achieve this target, Chengdu would transform the digital entertainment industry’s focus from internet games towards cyber societies in stages over the years 2005 to 2014.

1. During the initial stage, Chengdu would speed up the development of mobile phone games. As an important base for scientific research, Chengdu’s strength in science and technology is well known in the western Mainland region, and is only behind Beijing and Shanghai. Along with the steady and rapid development of Internet games and the gradual maturing of 3G broadband technology, Chengdu has already gained competitiveness in the mobile phone game business. The city shall leverage on its large population of mobile phone users to speed up the development of mobile phone game business.

2. During the second stage, it would extend the scope of the games industry to cover areas such as TV games and electronic sports, gradually boosting the development of its

25 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

peripheral industries (such as R&D, product distribution, telecommunications, information technology, media and publishing) and facilitating healthy interaction and sustainable development of the digital entertainment industry and its peripherals. Ultimately, Chengdu will form an ecological industry chain for the digital entertainment business. As the industry develops, consolidation, clustering and formation of an extended industry chain will be promoted. These would help the industry expand and extend its economic influence.

3. The third stage is to facilitate the formation of a system of cyber societies. The concept of creating a cyber society is aimed at changing people’s styles of living and entertainment since their standards of living and ideologies have been enhanced. In a cyber society, games give greater priority to social experiences. These games will feature contents such as occupational diversities, value derivation and team collaboration. Online games would then provide an alternative channel for gaining experiences and socialising, and would no longer be a simple form of entertainment.

In order to realise the above transformation, Chengdu must expand investment into the digital entertainment industry, reasonably reduce the tax burdens of enterprises, encourage industry professionals to adopt more initiatives, strengthen regulations to foster market order, and further liberalise its market to attract investment and to encourage local enterprises to go global. Hong Kong has a good knowledge of the markets for various types of electronic games, and has a lot of talents in games development. Moreover, it has a good grasp of the international consumption trends. Leveraging on these strengths, Hong Kong can cooperate with Chengdu enterprises and explore business opportunities herewith.

26 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Industry Views on Mainland-Hong Kong Cultural and Technological Exchange and Cooperation

Entertainment, culture and sports services are among the eight value-added services sectors opened up by the Mainland under CEPA II1. Looking ahead, Hong Kong service providers can set up joint ventures, partnerships, wholly-owned performance centres, art galleries and shops, arts exhibiting organisations in the Mainland. CEPA II substantially extended the opening up of the audio-visual services sector to Hong Kong enterprises. Apart from allowing Mainland-Hong Kong joint productions to be regarded as local movies when they are distributed in the Mainland market, the Mainland also allow Mainland-Hong Kong joint television productions to be eligible for distribution in the local market upon receiving proper approvals. In terms of cultural cooperation and exchange, Hong Kong’s advantage lies in its position as an international city. In the areas of sports, performing arts, exhibits, audio-visual entertainment and broadcasting, Hong Kong can closely match its western counterparts, and can help the Mainland link up with the international market. This gives much room for cooperation between the Mainland and Hong Kong. On how the two sides could strengthen cooperation and exchange along this line, the opinions of representatives from the relevant industries in the following sections are useful references.

Hong Kong and Mainland should construct an environment that is conducive to the development of the sports industry

According to the Secretary General of a Hong Kong sports association, since Hong Kong’s handover in 1997, there has been more attention in strengthening Mainland-Hong Kong cooperation in sports. However, while a lot has been said, neither comprehensive plan nor actual measures of implementation has been adopted. It was considered that for the long term, Hong Kong could consider making more use of the training programmes of the Mainland to increase the exposure of Hong Kong athletes to the Mainland’s sports culture and training environment. This would be conducive in building a training mechanism that would be viable in the longer-term.

The process of inviting Mainland artists to perform in Hong Kong is complicated

In terms of cultural cooperation and exchange, the Executive Director of a Hong Kong orchestra indicated that Hong Kong, as an international metropolis, has always participated in cultural performances of the world. It was felt that since 1997, Hong Kong and Mainland have strengthened contacts and exchanges in culture and arts. Joint performances with orchestra from the Mainland have not only brought new experiences to the Hong Kong audience, but also provided orchestra members of Hong Kong and the Mainland with opportunities to further cultural and technical exchanges.

1 CEPA II was signed on October 27, 2004 and took effect from January 1, 2005.

27 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

To facilitate cultural exchange and cooperation, the orchestra would, apart from performing in the Mainland, also invite Mainland artists to come to Hong Kong to perform, as well as host seminars and talks to make the most of the opportunities available for exchange and improving performance skills. It was pointed out that it is currently difficult for individual art performers of the Mainland to apply for performing in Hong Kong. This is mainly because these individuals do not belong to any Mainland’s arts organisation. Their applications therefore involve more complicated procedures and entail a longer period of processing.

The development of Chinese medicine industry in Hong Kong has received much help from the Mainland

The Director of Administration at the School of Chinese Medicine of a local tertiary education institution thought that Hong Kong has comparative advantage over China for being an international metropolis. When Hong Kong develops its academic Chinese medicine programmes, it incorporates international elements including basic knowledge of western medical practice, anatomy, etc. into the programmes. As such, the Chinese traditional medicine programmes offered in Hong Kong are different from the purely traditional Chinese medicine programmes in the Mainland and would help to cultivate a new generation of Chinese medical practitioners. By modernising its course content, the development of Chinese medicine in Hong Kong would complement its internationalisation, and highlight its unique ability of integrating Chinese and western culture.

The development of Chinese medicine industry in Hong Kong was said to have received much help from the Mainland. Mainland specialists are employed, and the school successfully gained the support of Mainland institutions in areas such as providing facilities for clinical practice in local Chinese medical hospitals. Hong Kong also benefited from the Mainland’s sharing of long and deep-rooted history and theories of Chinese medical education, as well as their extensive clinical experiences and knowledge in the practice of Chinese medicine. By inviting officials from the State Administration of Traditional Chinese Medicine (中醫藥管理局) and Bureau of Health (衛生局) to visit Hong Kong to discuss issues relevant to the cooperation and development of Chinese medicine between the two sides, participating in relevant seminars and forums hosted in the Mainland, and engaging in meetings to discuss the opportunities for Hong Kong to partake in the research and development of new medicines and how to strengthen Pan-PRD cooperation in this area, the technological development and human resources training in Chinese medicines between the two sides has significantly been promoted.

The major problems being faced by the development of Chinese medicine industry in Hong Kong are related to clinical training and career prospects of the graduates. This is because Hong Kong has not yet established any hospital for pure Chinese medical practice or for integrated Chinese and western medical practice. Students mainly rely on the Chinese

28 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

medical hospitals in the Mainland to gain clinical experience, which means they need to take their internship and residence training in the Mainland. Moreover, students are also faced with insufficient opportunities for development in Hong Kong after they graduate. These kinds of situation need to be dealt with seriously so as not to stall the long-term development of Chinese medicine industry in Hong Kong.

Introduce Mainland technological projects into Hong Kong for further research and development

In terms of technological cooperation between the Mainland and Hong Kong enterprises, an industrialist pointed out that the Mainland’s industrial design institutes have competitive edges over Hong Kong in mechanical designs; they produce sufficient talents to meet the need of simple products. The company needs not import foreign specialists to cater to this aspect of the production process. However, Hong Kong is still responsible for the quality control aspects to ensure that the quality of its products is able to meet the international standards of quality.

In terms of new product development, although scientific research development in the Mainland is more focused, the research results need to be complemented by commercial elements in order to become viable merchandises. The weakness of Mainland engineers lies mainly in their lack of contact with overseas buyers, leaving them with less exposure to international market trends and putting a cap on their innovativeness and ability to develop new products. Compared with the Mainland, Hong Kong’s comparative advantage lies in its long-term relationship with overseas buyers and deeper understanding of international market trends. Hong Kong businesses can leverage on these strengths and attract successful scientific projects of the Mainland into Hong Kong to further the research and development efforts in the enterprises and universities here. By doing this, these projects can leverage on Hong Kong’s network and experience in dealing with the international market to conduct product and market tests. This will help finding commercially viable applications for the research results and exploring their international market prospects.

29 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

30 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

III. TRENDS AND UPDATES ON THE FOUR SOUTH-WESTERN PROVINCES/REGION

Nanning Adopts Strategy to Become an Industry-Strong City ------32

Guangxi Adopts Measures to Optimise Its Investment Environment ------34

Yunnan Improves Investment and Financing Environments and Encourages Enterprises to Go Global ------36

Yunnan Plans to Develop 60 Tourism Towns ------38

Economic Development Trends of Guizhou in the First Half of 2005 ---- 40

Guizhou Strives to Form a New Industrial Pattern in 2010 ------42

Sichuan to Become the Largest Logistics Centre in South-western China 44

Sichuan, Guizhou and Chongqing Invest Rmb1 Billion to Build the Golden Triangle for Tourism ------46

Memorabilia of Pan-PRD Regional Cooperation ------48

31 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Nanning Adopts Strategy to Become an Industry-strong City

Continuing with its strategy of developing into an industry-strong city, Nanning supports and prioritises the development of its aluminium processing, paper and sugar manufacturing as well as chemical and machinery industries. The development of these industries will help the city to achieve its economic development goal of “two 100-billions” set by Nanning Party Committee and Government in the 2005 economic development plan.

Develop key industries and foster a batch of large and strong enterprise groups

To become an industry-strong city, Nanning’s strategy has “development” at its core, “reform” as its propeller, and “structural adjustment and optimisation” as its plot. The city’s government will plan scientifically, innovate systems and reinforce monitoring and supervision to enable the state-owned sector to better complement the efforts to turn Nanning into an industry-strong city by accelerating reform and structural adjustments. Revolving around the “crusade to establish a hundred industrial enterprises”, Nanning will pool together available resources, integrate state-sector capital, and gather the strength of all non-state-owned sectors of the economy to develop the following key industries and foster a batch of large-scale enterprise groups that are sufficiently competitive.

1. The aluminium processing industry. By enhancing its operating systems, Guangxi’s Alnan Aluminium Co., Ltd. (南南鋁業公司) will operate at its designed production capacity by the end of 2005. In 2007, its annual output capacity will reach 200,000 metric tons of aluminium plates and sheets. In addition, Nanning has determined to diversify the equity ownership of Nanning Guokai Aluminium Co., Ltd. (國凱鋁業公司). Through absorbing private and overseas strategic partners via equity restructuring or equity expansion, the enterprise shall achieve rapid growth.

2. The paper manufacturing Industry. Nanning Phoenix Paper Co., Ltd. (鳳凰紙業公司) and Nanning Sugar Shareholding Co., Ltd. (南寧糖業股份公司) are designated as the pioneers to propel the industry’s development. Asset restructuring, joint ventures and cooperative partnerships, as well as joint stockholdings will be facilitated to further expand the industry. The construction of projects such as facilities to annually produce 20,000 metric tons household paper, 15,000 metric tons fine art paper as well as 120,000 metric tons coated paper and copperplate paper will be adequately dealt with to ensure their success. Through the parallel development of Phoenix and Nanning Sugar, the city’s paper industry shall form a production capacity of 420,000 metric tons of paper pulp and 500,000 metric tons of paper to 2010, and its turnover shall exceed Rmb2.7 billion at that time.

3. The sugar manufacturing industry. Nanning has expedited adjusting the industrial structure of the sugar-manufacturing sector of Nanning Sugar Shareholding Co., Ltd. After expanding and innovating the four sugar mills of Mingyang (明陽), Xiangshan (香 山), Lingli (伶俐) and Dongjiang (東江), the daily processing capacity of sugarcanes and the annual output of sugar of the four sugar mills would reach 28,000 metric tons and

1 “Two 100-billions” refer to Nanning’s goal to have gross industrial output and GDP surpass the Rmb100 billion mark in 2010.

32 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

700,000 metric tons respectively (about Rmb2 billion in value).

4. The chemical industry. Nanning will strive to have in place a new ion-membrane caustic soda production facility with an annual capacity of 60,000 metric tons and the supporting facility capable of producing 60,000 metric tons PVC yearly in the Nanning Chemical Industry Co., Ltd. (南化股份) and put them into operation in the end of September 2005. Nanning will make sure that the enterprise can realise over Rmb1 billion in sales revenue and generate profits and taxes of more than Rmb200 million for the year of 2005. In 2006, the enterprise shall achieve an annual capacity of 220,000 tons caustic soda and 120,000 tons PVC.

5. The machinery industry. Nanning will speed up the process of asset restructuring in the industry. Facilitating the successful merger of Nanning Heavy Machinery Plant (南 寧重型機器廠) and Nanning Generating Equipment General Works (南寧發電設備總廠) is an important task. After the merger, the new enterprise will focus on developing hydropower-generating equipment, port machinery and a complete set of equipment. Nanning would ensure that the restructuring of Nanning Special Automobile Works (專 用汽車廠) and Yuchai Group (玉柴集團) would proceed smoothly. The purpose of the restructuring is to extend their current capacity of manufacturing products for the agricultural sector to include automobiles and automobile parts by attracting foreign capital and technologies as well as establishing domestic connections for fostering stronger cooperation. With respect to Guangxi Jinniu Shareholding Co., Ltd. (金牛股份 公司), the company will be relocated, expanded and innovated. Advanced technologies will be introduced to equip the company with new printing machines with high technological contents. These measures shall enable the enterprise to upgrade its product and technology.

The Crusade to Establish a Hundred Industrial Enterprises

During the working meeting held on July 26, 2005, Nanning’s Party Committee and Government came up with a resolution to carry out “the crusade to establish a hundred industrial enterprises” starting from August this year to the end of 2010. The purpose of the campaign is to channel more capital from the society towards industrial projects and to drive industrial development with large amount of investment. Every year, about 100 projects from the list of the Crusade will be implemented. According to the scheme of the Crusade, Nanning plans to implement 503 projects during 2005-2010. The planned total investment on industrial projects amounts to around Rmb121.5 billion. The investment covers 20 industrial sectors including electric power, non-ferrous metals pressing (aluminium processing), chemicals, transportation equipment, paper manufacturing and construction materials.

Nanning’s efforts to transform into an industry-strong city create many investment opportunities for Hong Kong and foreign enterprises. Those intending to invest in Nanning’s industrial sector can take the opportunity to extend their market to ASEAN countries as well.

33 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Guangxi Adopts Measures to Optimise Its Investment Environment

Since August 1, 2005, the Guangxi Administration for Industry and Commerce (GAIC) has started to implement the “Measures of the Administration for Industry and Commerce of Guangxi Zhuang Autonomous Region on Optimising Investment Environment and Facilitating Economic Development” (the Measures) throughout Guangxi.

Mainly by lowering the investment threshold

In order to further optimise the investment environment and achieve the strategic goals such as promoting the prosperity of Guangxi’s economy and building a society that is prosperous in all aspects, the Party Committee and the People’s Government of Guangxi, together with the GAIC have formulated a total of 56 measures to encourage and expand investments in the province. While largely aiming at deepening reform, lowering investment threshold and optimising existing policies, these measures also include commitments to further simplify investment application procedures as well as increase administrative efficiency and transparency. As investment environment improves with the implementation of these measures, Guangxi will increasingly be attractive to Hong Kong and foreign investors.

With respect to lowering the investment threshold, investors of limited liability companies are allowed to pay their registered capital in instalment over a period of three years, in case their current investment cannot meet the minimum amount of registered capital prescribed in the Company Law. The first instalment of registered capital payment can be lowered to 10% of the total, but no less than Rmb30,000. Even the enterprises’ intangible assets -- trademarks -- are accepted as means of equity investment as long as they do not exceed 25% of the company’s registered capital. If the trademarks invested in equity capital are part of the Guangxi Famous Trademarks, the value of the trademark can account for up to 30% of its registered capital. If they are among China’s Famous Trademarks, this could be further raised to 40%.

Measures relevant to Hong Kong and foreign invested enterprises

The Measures stipulated that associations and public organisations constituted as juridical persons, natural persons, sole proprietorship enterprises, partnership enterprises and individually-owned stores are allowed to establish Sino-foreign joint ventures and cooperative enterprises with foreign enterprises or foreign businessmen. With regard to individual cases involving a change in the status of Hong Kong, Macao, Taiwan or foreign invested enterprise into domestic enterprise, the enterprise will not be required to submit any capital verification report when registering the change, provided that the registered capital of the original enterprise has been paid in full. Moreover, the size of its registered capital can also be kept unchanged.

34 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

The registration requirements for permanent representative offices of foreign enterprises will be simplified as well, and the duration of validity of their registration certificates will be extended. When renewing a registration certificate, the representative office will no longer need to submit its foreign parent’s valid business license, bank reference and business activity report. If the chief representative of the organisation is a Chinese national, submission of Employment Contract will not be required.

The Measures also clearly state that Guangxi would encourage foreign enterprises to establish advertising companies in Guangxi. Guangxi will actively provide information service to foreign investors and help foreign invested advertising enterprises to establish connections with leading local media and advertising companies, as well as manufacturing enterprises to strengthen cooperation, so as to promote the advancement of the province’s advertising industry.

In addition, the government has also committed to improve the system whereby enterprises can maintain close contacts with the government when it needs assistance. To enhance the standard of the services provided to investors, Guangxi will earnestly follow up on all issues raised. If the department contacted is relevant and authorised to deal with the issue, then this should be settled without delay. If the department contacted is not directly involved with the issue raised then it should coordinate with relevant units and find ways to resolve the issue.

Improving the market, its legal and administrative environment

Instilling order in the market economy is another effort of Guangxi to improve its investment environment. The province is to break regional barriers and industrial monopolies to facilitate free flow of commodities and production factors of all kinds. Markets will be opened and standardised. With respect to the legal environment, the Measures made clear that the GAIC should not interfere with the market trends that do not violate laws and regulations. Regarding the administrative environment, all government organs will transpire their administrative affairs. Different measures will be adopted to inform the public of the different functions and responsibilities of various administrative departments, details of procedures involved in any application or transaction, as well as the processing time required, items on which charges are levied and their fee schedules, notices of complaint, etc. These measures are all directed at increasing the transparency of the administration and to allow the performance of various administrative departments to be monitored by the public.

35 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Yunnan Improves Investment and Financing Environments and Encourages Enterprises to Go Global

In support of Yunnan industries’ efforts in exploring new markets, sourcing raw materials for production, upgrading technological standard and speeding up the pace of “going global”, relevant departments of the Yunnan Provincial Government have successively adopted a series of supportive measures this year.

Special fund to be established and preferential taxes to be offered to support enterprises going global

In June 2005, Yunnan’s Finance Department and Taxation Bureau jointly announced the establishment of a special provincial-level fund with a size of Rmb5 million within this year. The objective of the fund is to support enterprises to go global. Preferential tax rates will be offered to these enterprises. During the period of 2005-2010, dividend incomes received by enterprises from their overseas operations will be tax-exempt.

The special fund to be established mainly supports the following areas: 1) establishing of overseas manufacturing base or processing trade business capable of spurring Yunnan’s exports or trade enterprises; 2) exploring and cultivating of resources and minerals as well as engaging in cooperative forestry development overseas; 3) undertaking businesses involving foreign project contracting and export of domestic labour services overseas; 4) undertaking agriculture development in cooperation with foreign partners overseas; 5) preliminary expenses incurred in relation to activities such as developing international markets, conducting project feasibility studies and overseas market research, as well as conducting human resources training.

Starting this year, Yunnan has implemented preferential tax policies to support enterprises that are “going global”. Tax levies on the portion of profits generated by the overseas business of an enterprise will enjoy tax exemption for five years. Upon expiry of the preferential tax exemption in 2010, enterprises that have invested and operated overseas in accordance with the State’s strategy of Developing China’s Western Region will enjoy a preferential tax rate of 15%.

In order to encourage enterprises to invest overseas and conduct multinational businesses, the Department of Finance of Yunnan will offer them preferential treatment in the forms of export tax rebate and income tax reduction or exemption to those that meet the requirements set out by the department. Tax rebates will be applicable to cargos that are exported as a result of an enterprise’s overseas investment, cargos that are exported in fulfilment of overseas contracts, as well as equipment, raw materials and spare parts exported for the use by processing businesses established overseas.

36 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

In order to encourage domestic enterprises to develop substitutes for opium poppy cultivation, the agricultural products sown abroad to substitute poppy will be exempted from customs duties and value-added tax when imported under the conditions stipulated. The amount of tax payable that is related to an enterprise’s imports can be deducted along with other costs incurred by the enterprises where applicable.

Supportive foreign exchange policies

In August 2005, the Yunnan Foreign Exchange Administration formulated a series of policy adjustments to support the foreign exchange demand of enterprises that are “going global”. The following are specific measures of the adjustments.

1. The administration has called off risk assessment that was previously required for foreign exchange used in overseas investment. This further simplifies the procedures and shortens the time required for examining and approving overseas investment of enterprises.

2. The administration has abolished the system of collecting a security deposit for the repatriation of profits made from overseas investments to alleviate the burden of enterprises and lower the cost of “going global”. All deposits will be returned to relevant investors.

3. The repatriation of profits generated by an enterprise’s overseas investment is no longer a compulsory. These profits can be used in reinvesting overseas.

4. The administration has abolished differentiated treatments to enterprises based on the nature of their ownership so that more enterprises are able to invest overseas.

5. Expanding the source of financing for enterprises “going global”. The administration has also opened five channels for enterprises “going global” to obtain foreign exchange capitals. Enterprises are allowed to use foreign exchange generated by themselves, loans from domestic and overseas banks, utilise policy-oriented foreign exchange loans from the State or purchase foreign currencies with Renminbi to finance their overseas undertakings.

6. The administration will earnestly support a group of strategic projects and state-supported projects invested by the state-owned sector in overseas market. The foreign exchange needs of these projects will be given higher priority.

All these and other supportive policies implemented by departments at the provincial level will help Yunnan’s enterprises “go global”. As an intermediary assisting Mainland enterprises in “going global”, Hong Kong will be able to enjoy wider room for development.

37 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Yunnan Plans to Develop 60 Tourism Towns

With Yunnan’s efforts in effecting barrier-free tourism, the hurdles normally encountered when travelling between Yunnan and foreign countries as well as between Yunnan and other Mainland areas have been gradually removed and the pace of tourism liberalisation has accelerated. The flourishing of tourism has brought along economic advancement to Yunnan and raised the incomes of its residents. Yunnan’s Tourism Administration revealed plans to construct 60 tourism towns to spur tourism development at the township level so that rural residents can share the fruits of its flourishing tourism industry.

Three Categories of Yunnan tourism towns

The construction of tourism towns will propel the development of Yunnan’s tourism and urbanisation. At present, urbanisation in Yunnan still lags behind the national average. During the Second Plenary Meeting of the Leading Team on Urban and Rural Planning and Construction of Yunnan held in March 2005, the Provincial Government proposed the conservation of Yunnan’s well-known historic cultural towns/villages. Their integration with the development of small tourism towns/villages was also suggested. If appropriately planned, this would breed a batch of high-quality, unique, and famous tourism destinations. Moreover, the construction of these tourism towns will bolster the development of the local economy, and allow its residents to transcend poverty and move towards prosperity.

Yunnan possesses obvious advantages in terms of human, natural, historical and cultural resources, making it ideal for developing tourism towns. In planning these tourism towns, the authorities would give consideration to the resources available, their geographical locations and market potentials. The provincial Tourism Administration revealed that the development of these tourism towns would mainly take three routes.

1. First are those towns with the tourism industry already reached a certain scale or achieved an influential status. Planning of these towns will be focused on improving the infrastructures and services facilities, as well as upgrading their cultural content so that they may excel. There are 11 towns in this category. They include Dayan Town in Gucheng district of Lijiang (麗江古城區大研鎮), Dali Town in Dali City (大理市大理鎮), Linan Town in Jianshui County (建水縣臨安鎮) and Nanzhao Town in the archaic city of Weishan (巍山古城南詔鎮).

2. Second are those towns or villages that are ready to be developed. According to the plan, strong measures will be adopted to accelerate their development so that economies of scale can be achieved at the soonest possible time. These towns and villages will highlight Yunnan’s tourism and urbanisation development. Yunnan has 22 such towns. They include the ancient town of Guandu in Guandu District (官渡區官渡古鎮) of Kunming, the ancient town of Shuhe in Lijiang City (麗江束河古鎮), Ganlanba in

38 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Menghan Town of Jinghong City (景洪市猛罕鎮橄欖壩) and the ancient town of Heijing in Lufeng County (祿豐黑井古鎮).

3. Third are those towns and villages with rich tourism and cultural resources as well as obvious market potential, but are not yet ready to be developed. The province will strive to create favourable conditions to facilitate the development of these towns and villages as soon as possible. According to the plan, the construction blueprints of these towns and villages would soon be ready and the improvement of their infrastructures will be adequately dealt with to prepare them for official works of construction and development when the time comes. 27 small towns including Lushi Town in Fengqing County (鳳慶縣魯史鎮), Dousha Town in Mengjin (鹽津豆沙鎮), Wulong Township in Shizong County (師宗縣五龍壯族鄉), Babao Town in Guangnan county (廣南縣八寶鎮) and so on fall into this category.

Supportive policies for the development of small towns

Yunnan will create a group of leaders to coordinate the development of these 60 towns and offer them three supportive policies. Firstly, a proportion of the fund designated for urban planning, tourism market development and loan subsidies would be allocated to support the development of the small tourism towns, to subsidise their expenses in planning, marketing and interest payment. Secondly, the bottleneck due to insufficient land supply will be overcome, and the strategy of “balancing the occupation and reclamation of cultivated land”1 would be implemented in the prefecture, city, and even provincial levels. Land supply would be consolidated, idle land would be developed, and wasted land would be rehabilitated for the development of the small tourism towns. Thirdly, the province will lift restrictions on issuing township “hukou” (戶口) to rural residents. This would, in effect, gradually unify the differentiated systems of household registration and resident-status recognition in rural and urban areas, abolish the differentiation between agricultural households, non-agricultural households and other households in the small tourism towns and remove charges on alteration of household registration. These measures will allow farmers to obtain resident status in the small towns without difficulty.

The development program shall cultivate a group of new towns that feature distinct tourism themes, convenient transportation, beautiful environment and comprehensive services ideal for touring and leisure. As these towns are being constructed and promoted, Yunnan would groom some of them to become part of the “Famous Tourism Towns of Yunnan”, enabling the province to protect and make full use of its historical and cultural resources.

1 “Balancing the occupation and reclamation of cultivated land” means that the size and quality of farm land occupied should be equal to the area of the farm land reclaimed in order to maintain the balance in land supply. This practice is in coherence with the country’s land administration law.

39 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Economic Development Trends of Guizhou in the First Half of 2005

Guizhou’s economy continued its rapid growth momentum this year. In the first half of the year, the province achieved Rmb79.488 billion in GDP, up 11.4% year-on-year in real terms. This is the highest year-on-year growth rate accomplished in the past 14 years.

Industrial output recorded steady growth

The total output of Guizhou’s secondary industry increased 11.9% in real terms in the first half of the year. The value-added of industry accomplished by the secondary industry totalled Rmb24.914 billion, representing a year-on-year growth of 16.6%. The growth of the light industry surpassed the heavy industry. The former achieved Rmb8.25 billion in value-added of industry, up 29.6% year-on-year, and this growth rate was 18.8 percentage points higher than the heavy industry. Competitive industries continued to lead industrial growth. The five pillar industries of tobacco, electric power, medicine, beverages and coal ore contributed to 81.5% of value-added industrial growth.

The economic efficiency of industrial enterprises remained steady. Total sales realised by industrial enterprises above designated size amounted to Rmb66.316 billion, up 22.8%. Although the Rmb2.441 billion total profits achieved was 2.2% lower than the same period last year, the profitability of the industrial enterprises above designated size was still at the relative high level of the latest five years.

The rate of investment growth remained high

In the first half of the year, Guizhou’s urban investment in fixed assets was Rmb35.185 billion, an increase of 23.6% year-on-year in real terms. Of the total, investments in fixed assets of main advantageous industries and key investment fields continued to grow fairly fast. In the first half of the year, investment in electric power industry increased 23.8% year-on-year; investment in coal mining sector grew 97.2%; investment in chemical industry rose 89.3%. Guizhou’s infrastructure construction, which focused on improving transportation networks, continued to strengthen, and the growth of investment in road transportation was 19.3% higher than the same period last year. In addition, investment in public utilities expanded obviously. In the first half of the year, investments in sanitation, social security and social welfare increased 95.7% year-on-year, and investments in scientific research, technological services and geological exploration went up by 207.8%.

Residents’ consumption structure upgraded

Along with the sustained and healthy development of Guizhou’s national economy, the wages of urban residents posted considerable rise. In the first half of the year, the per capita disposable income of urban residents rose 9.9% year-on-year in real terms to Rmb4,177.

40 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Meanwhile, the per capita cash income of rural residents reached Rmb808, up 8.4% year-on-year in real terms; their average household cash income rose 17.3% and their wages increased 3.3%. The exemption of agricultural tax levy reduced the burden of farmers, which added about Rmb20 to the per capita cash income of rural households. Higher income led to the upgrading of Guizhou residents’ consumption structure. Their expenditure on housing, automobiles, telecommunication, travel, etc. continued to rise. In the first half of the year, Guihou’s total retail sales of consumer goods reached Rmb28.895 billion, which represented a nominal increase of 13.3% year-on-year, and the growth rate was 0.9 percentage points higher than the same period last year.

Inflow of foreign investments in the first half of the year already close to the total received in 2004

In recent years, Guizhou sped up improving its investment environment and its investment promotion efforts achieved considerable progress. The US$56.91 million actually utilised foreign direct investment (FDI) in the first half of 2005 represented a year-on-year increase of 38.6%, and is equivalent to 87% of the total recorded last year. In terms of industrial breakdown, FDI flowed mainly into the manufacturing and mining sectors. The US$35.85 million FDI actually utilised by the manufacturing sector represented a 42.6% increase over the same period last year and accounted for 63% of the province’s total. Total FDI actually utilised by the mining sector was US$14.04 million, up 680% year-on-year, accounting for 24.7% of the total, compared with only 4.3% in the same period last year.

Guizhou Foreign Direct Investment

US$10mn 7 6 5 4

3 2 1 0 2000 2001 2002 2003 2004 2005 Jan-Jun

Source: Guizhou Bureau of Statistics

41 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Guizhou Strives to Form a New Industrial Pattern in 2010

During the Seventh secession of the Ninth Committee Meeting, Guizhou’s Party Committee proposed the goal of realising a resources-optimising society and recycling economy by 2010. By that time, the province should have formed a new industrial pattern where production processes optimise resources, are clean, eco- and environmentally friendly.

To actively improve environment

Since carrying out the Tenth Five-Year Plan, Guizhou has firmly committed to constructing a province with good ecological environment. While advancing in economic development, Guizhou has also made initial progress in the areas of population control, resource conservation and pollution control. However, problems such as low efficiency of resource utilisation, severity of resources wastage, discharge of pollutants in excess of the environment’s self-cleaning capacity1, loss of water and soil erosion.

In order to tackle the above problems, Guizhou has decided it would implement the strategy of integrating economic development and environmental protection, prevent practices of “pollute first and clean up later”. It will implement strict measures to protect the environment, impose standard controls on the discharge of major pollutants; establish market-oriented, pluralistic and socialised mechanisms for investing and financing projects in pollution control and treatment; strive to improve the health and sanitation conditions in rural areas.

With respect to the ecological environment, Guizhou will steadily promote its greening program and carry out various ecological projects for improving the province’s forestry conditions. The province adheres to the principle of giving priority to pollution prevention and environmental conservation and would enhance the protection of key ecological and nature conservation areas and speed up the treatment for lithification. Moreover, Guizhou will work out a plan for the conservation and construction of the province’s ecological environment and implement. Lastly, Guizhou shall incorporate resource depletion and environmental loss caused by development into the process of assessing the province’s economic development. This would help to ensure harmonious balance between men and nature.

With respect to the recycling economy, Guizhou will stick to its principles of overall plan for the development of the province’s recycling economy. The government will offer supportive policies, secure technologies and create an environment that is conducive for the development of its recycling economy. The province will continue its pilot trial of recycling economy in Guiyang and give Guiyang relevant support to ensure its success. The pilot trial

1 Self-cleaning capacity refers to the ability to transform pollutants into harmless substances naturally. This happens through diffusion and oxidization induced by changes in atmosphere and water flow as well as by the natural decomposition of microorganism.

42 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

shall help Guizhou gradually establish a system of macro-control and mechanisms for appropriate operation in Guizhou. These would be beneficial to the development of the province’s recycling economy. The main features of Guizhou’s recycling economy include resource optimisation, i.e., finding various ways of utilising resources, recycling resources and clean methods of production. Therefore, the system and mechanisms aimed at achieving such an economy shall help to optimise resource utilization and reduce discharge of wastes.

In order to ensure achievement of concrete results, Guizhou has quantified all goals. The followings are the specifics: (1) Striving to increase forest coverage to 40%; (2) 80% of the major sources of pollution should comply with environmental protection standards; (3) The rate of recycling water by industries shall surpass 60%; (4) The rate of comprehensive utilisation of industrial solid wastes shall reach 40%; (5) The rate of safe urban domestic garbage disposal shall be above 60%; (6) The safety and security systems for water conservation projects and water supply in urban and rural areas shall be generally established; and (7) The rate of mineral resources comprehensively recovered shall increase to 5%, and the ecological restoration and treatment of mines shall reach over 40%. Guizhou hopes that specifying the goals in detail will provide clearer guidance to leaders of all government levels and units in constructing a resource-optimising society so to reduce conflicts during the course of development. In this way, Guizhou will also be able to speed up the formation of a new industrial pattern in Guizhou.

The new pattern of industrialisation has greater implications for agriculture-based provinces

Protection of environment and preservation of ecology has far and wide implications on the sustained development of Guizhou, which is mainly an agricultural province. Not only can abiding by the policy of “preserving the ecology while expanding the economy” help safeguard the traditional agricultural industries of Guizhou, but also stimulate the development of higher value-added industries, such as ecological and green agriculture. With enhanced productivity, Guizhou’s farmers would also be able to enjoy higher incomes.

As Guizhou is located in the upper reaches of the Pearl River, strengthening ecological construction and preservation of environment benefit not only Guizhou’s own development, but also have important implications on the entire Yangtze River and Pearl River basins, and even Hong Kong. As such, Guizhou has adopted a new road to industrialisation, and it has been persistent in its strategy of developing the province while preserving the ecology, actively cooperating with adjacent provinces and regions, mutually plotting and implementing a group of environmentally friendly projects which include projects such as comprehensive treatment to desertification.

43 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Sichuan to Become the Largest Logistics Centre in South-western China

Mr. Wang Guangsi (王光四), deputy chief of Sichuan’s Development and Reform Commission, indicated that Sichuan has unique advantages for the development of its logistics industry. Railway lines of Chengdu-Chongqing (成都-重慶), Baoji-Chengdu (寶雞-成 都), Chengdu-Kunming (成都-昆明) and Dazhou-Chengdu (達州-成都) all intersect in Chengdu. In addition, it is the largest centre of finance, logistics, commerce and trade in western China. Sichuan has sufficient conditions to become the largest logistics centre in Southwest region of the Mainland.

Clusters of logistics industries take initial shape

There are more than 300 traditional warehousing enterprises, over 1,000 transportation enterprises and above 2,000 logistics agents in Chengdu, the provincial capital of Sichuan. A cluster of logistics enterprises is gradually taking shape. With a group of large-to-medium sized logistics enterprises such as Changhong Logistics Co., Ltd. (長虹物流), Wuliangyi Group Anji Logistics Co., Ltd. (五糧液安吉物流), Erzhongwanlu Transportation Co., Ltd. (二重萬路運 業) and Sichuan China Post Logistics Co., Ltd. (四川中郵物流) enjoying rapid expansion, domestic and overseas logistics enterprises are moving to Chengdu one after the other. Taking China National Cereals, Oils and Foodstuffs Co., Ltd. (中糧集團) as an example, the corporation is constructing a Rmb1.9 billion logistics base of grains. Local media have reported that international air cargo giants such as Cargolux and FedEx have also visited Chengdu for investment field studies. In a sense, the number of logistics enterprises in Sichuan increased with the flourishing of commercial and trading companies in the province. Before long, Colliers International, the biggest property consultant and service company in the world, has set up its fourth Mainland branch office in Chengdu. Foreign enterprises including Yokado and Carrefour, franchise stores of China United (華聯), Gome (國美), Suning (蘇寧), Hongqi (紅旗) and Huhui (互惠) all contribute a lot to Sichuan’s modern logistics industry.

A bottleneck to be resolved

Although a large number of logistics companies have established their presence in Sichuan, they vary in scale and level of operation. In market expansion, compared with eastern costal areas, there are fewer competitive products or large brand names in Sichuan that could be exported overseas or nationwide. As such, Sichuan’s logistics enterprises still need to deal with the imbalance in demand -- strong demand for inbound services but weak demand for outbound services. Moreover, logistics processes such as production, storage, delivery and electronic positioning remain in the traditional mode, with crude management styles. This has led to high costs and delays in delivery, restricting the development of Sichuan’s logistics industry.

44 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Owing to a lack of organised management and an overly large number of logistics companies, Chengdu established a task force and an office in March 2004 to promote the development of modern logistics. This task force specialises in organising and coordinating the development of the city’s modern logistics industry. In addition, related documents such as “Suggestions to Promote the Development of Modern Logistics” have been issued, signifying its determination to build the city into an important modern logistics centre in the western part of China. This is made possible by leveraging on China’s strategy of developing the western region, and based on Chengdu’s advantageous position of being the “three centres and two hinges”1 in south-western China.

To enhance its standard of management, in accordance with Classification and Evaluation Index of Logistics Enterprises (物流企業分類與評估指標) issued by Standardisation Administration of China (國家標準化管理委員會), the Sichuan Logistics Association (四川物流協 會) is in the process of evaluating logistics enterprises and classifying them according to a rating scheme of “A” to “5A”. Their rankings will have direct bearing on the level of charges that these enterprises are allowed to levy. Enterprises belonging to different ratings will be adopting different fee schedules. The higher their ranking, the higher charges would be applicable. For example, for delivering the same product, 5A-rated enterprises will charge higher fees than those rated 4A. Of course, 5A enterprises offer higher-quality and higher-level of services. The Sichuan Logistics Association is currently coordinating with local price bureaus and departments of industry and commerce to finalise the scheme. The evaluation of enterprises will be completed soon. The move will force small logistics enterprises to realign and integrate to improve competitiveness. Those large enterprises, meanwhile, will continue to develop their scales.

Furthermore, Sichuan will stimulate cooperation between logistics enterprises and accelerate the construction of a unified and open logistics information platform. In this way, production and warehousing information can be forwarded to an electronic tracking system and facilitate informatisation of logistics procedures. These measures will improve efficiency in logistics, and are in line with Sichuan Government’s objective to make Chengdu the largest logistics centre in western China.

Sichuan is an important bridge for enterprises from the Pan-PRD to expand business in the broader market of western China, and can effectively stimulate cooperation between the western regions and the Pan-PRD and its adjacent regions. Among the “9+2” provinces/region, Sichuan is the most populated and is a market that eastern coastal areas should not overlook. Hong Kong entrepreneurs can seek to expand their Mainland businesses through Sichuan.

1 In 1993, the State accorded Chengdu with the status as “three centres and two hinges” in southwestern China, i.e., centres of trade, finance and science & technology, hinges of traffic and communication.

45 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Sichuan, Guizhou and Chongqing Invest Rmb1 Billion to Build the Golden Triangle for Tourism

In July 2005, the tourism bureaus of Sichuan, Guizhou and Chongqing passed the General Plan on Tourism for the Development of the Golden Triangle of Sichuan, Guizhou and Chongqing. It was reported that the three regions would join hands to invest nearly Rmb1 billion to build the Golden Triangle for tourism, which will span up to 3,000 square metres in core area.

Golden triangle for tourism of Sichuan, Guizhou and Chongqing

The Golden Triangle is located at the boundary area which is to the southeast of Sichuan, northwest of Guizhou and southwest of Chongqing. Within the area of no more than 80 kilometres in diameter, there are six national scenic spots, namely, Fobao National Forestry Park (佛寶國家森林公園) at Hejiang in Sichuan, Simianshan National Scenic Spot (四面山國家 重點風景區) in Chongqing, Chishui National Scenic Area of Historical Relics (赤水國家風景名 勝區) in Guizhou, National Reserve in Spinulose Tree Fern (國家桫欏自然保護區), National Bamboo Forest Park (國家竹海森林公園), and National Ecological Environment Protection Pilot Zone (國家生態保護試驗區). Also located in the region are the largest ancient spinulose tree fern community (130,000 trees ) in the world, the largest and best protected subtropical evergreen broad-leaved forest belt (1,200 square metres) in the world, the largest and most representative Danxia Landform (丹霞地貌) in the world and super-sized waterfalls. Among these waterfalls, some are up to 150 metres in height, second only to Huangguoshu Waterfalls (黃果樹瀑布) in width, according to Mr. Zhao Xiaolu (趙小魯). As these resources have kept on bringing rich tourism resources to the three provinces and cities, the unified planning of their development will enhance the attractiveness of tourism within the region.

Unified Tourism Development

The three provinces and cities plan to build the Golden Triangle into a world-class ecological tourism area. In order to speed up its realisation, unified allocation of resources, planning and policy-making will be initiated.

It was reported that the Chinese Academy of Sciences (中科院) has won the contract for planning services on the Golden Triangle of Sichuan, Guizhou and Chongqing through public bidding. According to its plan, the construction of the Golden Triangle should be divided into three phases. During the first phase, three nodes will be built to have in place three reception bases. This will be completed within the first five years. During the second phase, the configuration of the scenic area will be perfected; this will take place in the ensuing five years. During the third five-year phase, the Golden Triangle will transform from a national brand to become an international brand.

46 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Development phases of the Golden Triangle

The first phase of the Golden Triangle development will be implemented from 2005 to 2010. During this period, the Simianshan Tourism Centre (四面山旅遊中心) to serve as a central contact point in the northern area, as well as the major scenic spots of Golden Triangle will be completed. The Fubao Ancient Town (福寶古鎮) will be developed as an important entrance and traffic nexus to the hinterland of the Golden Triangle. Meanwhile, Chishui City (赤水市) will be developed into a main contact point in the southern region, as well as a scenic spot.

The second phase of the development will be implemented from 2011 to 2015. During this period, tourism resources in the region will be integrated to develop main scenic areas and tourism products with unique features. The development would include a traffic network that extends to every direction and turn the Golden Triangle into a national ecological tourism brand. By that time, the region will receive up to 5 million tourists annually, generating total tourism income of Rmb1.5 billion.

During the third phase of development from 2016 to 2020, the Golden Triangle should transcend from being a national brand into an international brand. In order to meet the above targets, Sichuan, Guizhou and Chongqing will join hands to remove the bottlenecks in traffic and overcome obstacles related to tourism policies. By that time, all vehicles with receipt appointment can move around freely within the Golden Triangle (including rest stations, docks, airports, hotels and scenic spots). Tourist groups from a province or city can directly enter another province or city without restriction. The system requiring employment of local guides of any form will be cancelled, and national guides can act as local guides. Moreover, the Golden Triangle for Tourism will be packaged and promoted as a whole, with unified marketing strategy, product image and slogans.

The tourism development at the Golden Triangle will help Sichuan to solidify its own tourism development. The total tourism income of Sichuan ranked 9th highest last year, up from 12th in 2002, with an average annual increment of more than 28%. Driven by the joint efforts of the three provinces and cities, Sichuan will try its best to double its total tourism income in 2005, to Rmb 140 billion by 2010.

47 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Memorabilia of Pan-PRD Regional Cooperation

Guangxi

Zhejiang Discipline Inspection Delegation visited Guangdong and Guangxi to study (July 10-17, 2005) The main purpose of the delegation’s visit was to learn from the two provinces’ experiences on reform and opening-up as well as the construction of the Party conduct and clean government. In Guangdong, the delegates paid visit to Shenzhen and experienced the e-supervision of civil affairs and e-public procurement practiced there. In Guangxi, they visited the Nanning International Convention and Exhibition Centre, Liuzhou Civil Affairs Transaction Hall, and so on. During their visit, the delegation had informal discussions with the two provinces’ Party commission on discipline inspection and supervision respectively.

2005 Green Camp of Guangxi University Students (July 17, 2005) The opening ceremony of the Camp was officially held in Guangxi Medical University. 23 university students from nine universities in Guangxi formed a study team heading for Guangxi’s Qinzhou, Fangcheng and Beihai. This activity is the prelude of an environmental study campaign themed with “Harmonious coexistence of men and nature — the approach to sustainable development”

The framework agreement on energy resources cooperation between Guangdong and Guangxi (August 1, 2005) During the signing ceremony of the Second Pan-PRD “9+2” Economic and Trade Fair held in Chengdu, Guangdong Electric Power Development Co., Ltd. and Guangxi Investment Group Co., Ltd. signed a framework agreement on cooperation of energy resources and a big contract amounted to Rmb8.7 billion, which was a shinning point of the Fair.

Update Meeting on the Preparatory Work of the 2nd China-ASEAN Business and Investment Summit (August 4, 2005） The preparatory work update meeting was held in Nanning, Guangxi. In addition to speeches to be delivered by leaders from different countries, this 2nd summit has arranged a dialogue session to facilitate interactive communications with business circles and the leaders. At present, the preparation of the 2nd China-ASEAN Expo is in its final stage. The summit will be held during 19-22 in October this year in Nanning, Guangxi.

Yunnan

Hong Kong conducted investment promotion in Yunnan for the first time (July 19, 2005) In Kunming, Invest Hong Kong of the Hong Kong SAR Government and

48 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

International Association of Modern Chinese Medicine introduced Hong Kong’s competitive advantages to Yunnan’s medicine and biotech enterprises and solicit interested enterprises to invest Hong Kong or to develop markets together with Hong Kong companies. This was the first time that Invest Hong Kong tapped south-western in its promotion, and Yunnan was the first stop.

The Shanghai International Arts Festival invited the world to a Yunnan experience (July 22, 2005) The Organising Committee of the Shanghai International Arts Festival and Yunnan jointly signed a “Memorandum on Cooperation”. It is agreed that the weekly cultural event of Mainland provinces and cities — “Experience Yunnan” will be held during the festival (to be held on October 20-28 this year). The event will cover a series of activities such as art performance and exhibition to share Yunnan’s rich and colourful culture with the world.

Shanghai and Yunnan establish technology exchange base jointly (July 27, 2005) Shanghai-Yunnan Technology Transfer Base will periodically collect information on demand and supply of technologies from organisations in Shanghai and Yunnan such as those specialised in transforming scientific and technological achievements into practical application, companies investing in science and technology, innovation centres, appraisal firms and technology brokers and send them information of the same like. This kind of information exchange will help enterprises from both places to transact scientific and technological achievements as soon as a match comes up.

Guizhou

Electricity transmission from Guizhou to Hunan reached 5.76 billion Kw/h (July 2005) Guizhou and Hunan jointly signed the Framework Agreement on Transmitting Electricity from Guizhou to Hunan. According to the framework agreement, Guizhou will transmit 5.76 billion kw/h to Hunan’s power grid every year, which accounts for nearly 10% of Hunan’s total electricity consumption last year.

Guizhou introduced 400 projects at Pan-PRD Economic and Trade Fair (July 26, 2005) Guizhou organised an economic and trade delegation composed of more than 500 delegates from over one hundred enterprises in nine cities/autonomous prefectures attending the fair. Enterprises attended and projects and products brought to the fair covers infrastructure construction, energy, transportation, industrial investment, business and trade, agriculture, food stuffs, tourism, scientific and technological achievements, informatisation, environmental conservation, and so on.

Hong Kong and Macao study delegation visited Guizhou (August 5-9, 2005) Hong Kong and Macao study delegation composed of over 40 delegates visited Guiyang, Zunyi, Qindongnan and Anshun in Guizhou province. Chief delegate Mr.

49 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

Leo T.H Lee, Chairman of Tung Tai Group in Hong Kong hoped to know more and deeper about Guizhou through this study visit so as to facilitate exchanges and cooperation between Guizhou and Hong Kong as well as Guizhou and Macao.

Sichuan

Shanghai delegation arrived in Sichuan to learn experiences and study (July 26, 2005) Shanghai municipal delegation to Sichuan led by Mr. Chen, Liangyu, Politburo member of the CPC Central Committee, Secretary of Shanghai municipal Party Committee and Mr. Han, Zheng, deputy secretary of Shanghai municipal Party Committee, mayor of Shanghai arrived at Chengdu to learn and study. Members of the delegation expressed that it is important to establish close and mutual-supportive relations between identical government organs of Shanghai and Sichuan so as to facilitate broad exchanges and cooperation in economic, social and cultural areas.

The Framework Agreement Between Guangdong and Sichuan on Economic and Trade Cooperation (July 26, 2005) Guangdong and Sichuan signed the Framework Agreement of Guangdong and Sichuan on Economic and Trade Cooperation during the Second Pan-PRD Forum and Economic and Trade Fair. The two provinces will regard the Pan-PRD Regional Cooperation as a platform to strengthen their cooperation under the forces of government interference and market mechanism. Guangdong hopes that the framework agreement will bring up long term economic and trade cooperation mechanism with Sichuan.

Guangdong enterprise invests Rmb2.5 billion in Sichuan’s electric power sector (July 27, 2005) On the 2nd (9+2) Pan-PRD Regional Economic and Trade Fair, Zhongguang Nuclear Energy Co., Ltd., a subsidiary of China Guangdong Nuclear Power Shareholding Co., Ltd. signed an agreement with relevant departments of Dazhou, Sichuan. The agreement gives Zhongguang Nuclear Energy Co., Ltd. the opportunity to invest in Dazhou’s natural gas development project.

Sichuan and Macao consumer councils signed cooperative agreement (July 27, 2005) Through the agreement, consumer councils of Sichuan and Macao will strengthen cooperation and information exchange so as to provide assistance to consumers of both places and jointly protect consumer’s rights and interests. The agreement stipulates that consumers of both Sichuan and Macao can seek assistance from and file complaints with the consumer council at either the place of consumption or where the consumer involved resides. The consumer council of both Sichuan and Macao will provide most appropriate assistance to the consumers.

Hunan founded chamber of commerce in Sichuan (August 4, 2005) The Chamber of Commerce of Hunan was established in Chengdu. With

50 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

the help of 150,000 Hunan business people in Sichuan, the chamber will be more powerful in facilitating the fulfilment of inter-provincial investment projects between the two provinces. In addition, the chamber has an important role to play in areas such as integrating resources, promoting investment, counselling, protecting legitimate rights of enterprises, facilitating coordination and communication as well as information exchange between the two provinces. These activities contribute to building strong economic and trade relations of Sichuan and Hunan.

The 20th World Hakka Fellowship Gathering (August 11, 2005) The gathering was held in Chengdu in October this year. This was the first time for the gathering to be held in western China. It was also the largest assembly involving overseas Chinese to be held in Chengdu after the founding of the PRC. 3,500 distinguished guests from 18 provinces/municipality/autonomous region, Hong Kong, Macao, Taiwan and tens of other countries over the world graced the event.

Macao Youth Entrepreneur Association visit its counterpart in Chengdu (August 13, 2005) The 6-member delegation of the Macao Youth Entrepreneur Association accompanied the delegation of Macao entrepreneurs during a visit to Chengdu, Sichuan to attend the 2nd Pan-PRD Regional Economic and Trade Fair. During the fair, the delegation attended the “Chengdu-Macao youth entrepreneur meet-greet and exchange gathering” hosted by Chengdu Youth Entrepreneur Association. Circumstances regarding Chengdu’s development and investment promotion policies were introduced during the gathering.

51 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

52 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

IV. DATA AND TRENDS

Guangxi ------54

Yunnan ------55

Guizhou ------56

Sichuan ------57

Major Economic Indicators of Nine Pan-PRD Provinces/Region (Jan-Jun 2005) ------58

Nine Pan-PRD Provinces/Region: 10-Year Economic Trend (1995-2004) - 59

Nine Pan-PRD Provinces/Region: Statistics at a Glance (2004) ------60

53 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

54 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

55 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

56 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

57 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

58 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

59 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

60 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

61 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

62 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

V. ENGLISH-CHINESE GLOSSARY OF TERMS

Animation 動漫畫 Chinese herbal medicines 中藥材 Chinese medicine industry 中藥產業 Chinese traditional patent medicine 中成藥 Cinema 電影院 Cinema circuit 電影院線 Collaboration of enterprise, institution of 產學研一體化 higher education and research institute

Cultural endowment 文化資源 Digital entertainment 數碼娛樂 Electronics information industry 電子資訊產業 Ethnic instrument music 民族器樂 Ethnic medicine 民族藥 Ethnic minority groups 少數民族 Film distribution company 電影發行商 Film production company 電影製作公司 Folk arts and crafts 民間工藝品 Going global 走出去 Golden Rooster & Hundreds of Flowers 金雞百花電影節 Movie Festival

Golden triangle for tourism 旅遊金三角 Good Agricultural Practice (GAP) of 中藥材生產質量管理規範 Chinese medicinal materials

Good Manufacturing Practice (GMP) of 藥品生產品質管制規範 medicine

High and new technology industry 高新技術產業 Integration of economics and culture 經濟文化一體化 International Organisation for 國際標準化組織 Standardization (ISO)

Internet games 網絡遊戲 Karst landform 喀斯特地貌

63 Socio-Economic-Political Trends in Pan-Pearl River Delta Region Guangxi, Yunnan, Guizhou, Sichuan (11th Monthly Report)

New materials industry 新材料產業 Pillar industries 支柱產業

Relics protection 文物保護 Secondary film market 二級電影市場 Sichuan, Guizhou and Chongqing 川黔渝 Special tours 旅遊精品 Tenth Five-Year Plan 「十．五」計劃 The crusade to establish a hundred 百項工業項目大會戰 industrial enterprises

Theme park 主題公園 Cyber society 虛擬社會 Warner Bros’ Studio 華納兄弟

64