U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 162
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Editor:Matthew Gettman
Contributors: CS Shanghai, Qiu Jing, Shen Yan, Peng Aiqun, Cao Yue, Wang Ling
News Briefs
In addition to the article summaries provided by CS Beijing, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit summaries of commercial articles from their local press to the CCB on a rotating schedule. This week we are pleased to feature a contribution from our Shanghai post.
1. Environmental Protection Gets Boost.
2. China's Internet Advertising Revenue reaches USD 130 million (RMB 1 billion).
3. China Implements a Standard Hourly-based Salary.
4. China Will Gradually Eliminate Foreign Bank Restrictions.
5. 110 Chinese Cities Reached Severe Water Shortage.
6. China’s Natural Gas Industry Encouraging Foreign Participation.
1. Environmental Protection Gets Boost
The Chinese Government plans to foster the environmental protection market, which is now wide open to international bidders, authorities said yesterday at the IFAT 2004 International Trade Fair for Environmental Protection in Shanghai. Policies to reflect these plans would be forthcoming, they added.
China earmarked USD 85 billion (RMB 703 billion) for the environmental protection sector between 2001 and 2005. That figure will increase over the next five years, said Zhou Changyi, Deputy Director of Resource Conservation & Comprehensive Utilization Department of the National Development and Reform Commission. “Policies encouraging the development of the
industry will be highlighted in the 11th Five Year Plan (2006-2010),”he said. “For example, tariffs on imported environmental protection products will drop from 13.4% to 6.9% by 2008.”
The Chinese national authorities have implemented preferential policies such as tax exemptions for pollution disposal. In addition, a large portion of capital raised through Chinese Government bonds will be spent on environmental protection projects, added Zhou. International cooperation in the environmental protection sector is increasing ahead of the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai.
(Source: Shanghai Daily, 06/30/2004, -Translated by FCS Shanghai)
2. China's Internet Advertising Revenue reaches USD 130 million (RMB 1 billion)
The revenue of China's Internet advertising rose to USD 130 million (RMB 1.08 billion) in 2003, more than twice as much as the amount in 2002, according to China’s State Administration for Industry and Commerce.
The market for Internet advertising has great prospects since China boasts over 78 million internet users, said Wang Jinjie, deputy director with the office of advertising management of the administration.
A total of 870,000 people are engaged in China's advertising business with a revenue reaching USD 13 billion (RMB 107.9 billion), which is around 0.92 percent of the nation's GDP, Wang said.
Wang said that last year, conventional advertising achieved steady growth of over 10 percent.
Most of the ad business still goes to TV and newspapers, which account for 23.64 percent and 22.53 percent respectively. In 2003, TV earned USD 3 billion (RMB 25.5 billion) and newspapers got USD 2.9 billion (RMB 24.3 billion) from advertising. Radio broadcasts and magazines won USD 308 million (RMB 2.56 billion) and USD 294 million (RMB 2.44 billion).
(Source: CEI News, 07/05/2004 - Translated by Qiu Jing)
3. China Implements a Standard Hourly-based Salary
China’s Ministry of Labor and Social Security announced on April 1 that the Regulations of Enterprise Minimum Standard published in 1993 are now replaced by the recently published Minimum Salary Regulations.
So far, the minimum salary security system has been established in 31 provinces, autonomous regions, and municipalities directly under China’s Central Government. The monthly minimum salary standard in Beijing, Tianjin, Shanghai and Guangdong is USD 60 ( RMB 495 ), USD 50
( RMB 412), USD 69 ( RMB 570 ) and USD 69 ( RMB 574 ) respectively.
The new regulation stipulates that the minimum salary standard shall be adjusted at least once in every two years. When determining the salary standard, the following factors shall be taken into consideration: local minimum living expense, local population, consumer price index, housing fund, employees current average salary, level of economic development and unemployment.
(Source: China Info News, 04/02/2004 - Translated by Shen Yan)
4. China Will Gradually Eliminate Foreign Bank Restrictions
Mr. Li Wei, the Vice Chairman of China Banking Regulatory Commission (CBRC), stated on June 30, 2004 that China would continue to open up China’s banking market, further decrease the restrictions to the foreign banks in areas of customers, business and geography, so that to provide bigger development space for the foreign banks. The number of cities opened for foreign banks to conduct RMB businesses has increased to thirteen, eleven more than were open prior to China’s WTO entry, and eligible foreign banks are now allowed to offer RMB services to Chinese enterprises.
According to Mr. Li Wei, as of the end of May 2004, the aggregate assets of the banking institutions in China reached USD 3.53 trillion (RMB29.2 trillion), making up over 90 per cent of the total assets of the financial institutions in China. At present, there are 199 foreign bank branches or subsidiaries and 219 foreign bank representative offices in China. Until now, only six joint-stock commercial banks and city commercial banks have been permitted to receive investments from qualified overseas investors.
(Source: International Finance News, 07 /01/2004 - Translated by Peng Aiqun)
5. 110 Chinese Cities Reached Severe Water Shortage
China is severely short of water. China’s freshwater resources total 2,800 billion cubic meters, representing 6% of global availability, and ranking fourth, after Brazil, Russia and Canada. Therefore, why the shortages? Population pressures are one major cause. At present, in China, the per-capita water resources have shrunk to about 2,300 cubic meters, equaling one-fourth of the world’s average per capita level, and only one-fifth the level used in the U.S., ranking China 121st worldwide. China has grown into one of the thirteen countries facing a severe water shortage of growing magnitude.
Apart from the barely utilized flood runoff and groundwater resources scattered in outlying areas, the freshwater resources, which can be used in China, are only 1,100 billion cubic meters, equal to 900 cubic meters per capita and are distributed throughout China unevenly. By the end of the 20th Century, over 400 out of 600 cities in China were short of water supply. Among those, 110 severely lacked water. The water shortage in urban areas totaled 6 billion cubic meters.
The Ministry of Water Resources of the P.R.C. forecasts that China’s population will soar to 1.6 billion in 2030, while water per capita will decline to only 1,750 cubic meters. Even with efficient water saving measures, the water demand is estimated to be 700 to 800 billion cubic meters in total, requiring an increase of 130 to 230 billion cubic meters in water supply availability.
China’s intractable water shortage has drawn the attention of the local Chinese Governments. China has embarked on several courses of action to improve the water situation. China also provides opportunities to foreign water companies to assist with these endeavors.
(Source: China Business News, 03/22/2004 - Translated by Yue Cao)
6. China’s Natural Gas Industry Encouraging Foreign Participation
Based on China’s natural gas development strategy, the Energy Bureau of China’s National Development & Reform Commission, is encouraging foreign participation in all aspects of the natural gas industry including gas exploration and development, as well as the construction of infrastructure, natural gas power station, and other projects for medium and large municipalities.
Currently, China’s most significant natural gas reserves are located in West China and the China Sea. Today, there is tremendous potential, however, there are low levels of proven reserves and exploration in these regions is challenging, requiring more advanced technologies. To expedite development, China will need a significant infusion of capital along with expedited adoption of advanced foreign technologies and foreign management skills.
Industry insiders forecast that between 2002 and 2020 the construction of China’s natural gas infrastructure will require the investment of approximately $2.7 billion. The majority of these funds will be dedicated to the construction of a 50,000 km long natural gas pipeline, LNG terminals with capacity over 10 million tons, and LNG transmission capability of 1 million tons or more.
Downstream pipeline construction will account for a significant upsurge of investment as well.
With regard to natural gas power generation, the sector will be open to greater foreign equipment suppliers. Presently, gas power generation accounts for 14% of total natural gas consumption in China. This percentage is expected to increase to 30% or greater. In the future, there is further potential for opportunities when China tackles upgrading and expanding its dated power stations and gas turbines.
As for the development of coal-bed methane, foreign investment and advanced technology will also play a very important role.
Overall, China’s natural gas industry warmly welcomes foreign participation, cooperation and investment.
(Source: China Chemical News, Vol.25, 06/2004 - Translated by Wang Ling)
Consulate News: Shanghai
In keeping with our goal of making the CCB a more integrated publication, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit consulate news to the CCB on a rotating schedule. This week, we are pleased to feature a contribution from CS Shanghai.
A Soft Landing for Shanghai?
The Chinese authorities have recently taken a number of steps designed to cool China’s galloping economy, which China Government states is about 10% year-over-year in the first quarter of this year. These steps include raising interest rates slightly and guidance to banks to minimize loans to certain sectors. One outstanding question has been whether the slow down would result in a "soft landing" - a gradual slow down in economic activity to a more sustainable level - or a "hard landing" - a sudden drop in economic activity or a drop significantly below desired levels of activity.
One of the most overheated sectors was real estate, in particular Shanghai’s real estate sector, which had seen year-over-year price increases of 25% in the residential space. However, according to an unpublished study by a major international real estate consulting company, institutional investors are now putting off their investments into Shanghai real estate - the asked-for prices have gotten so high that rents cannot provide an adequate return on investment. According to the study, developers of condominiums who were able to quickly sell off the units have made excellent money, but developers of commercial spaces are now in a quandary. Unable to raise rents at the same pace as overall increases in real estate costs, they are also unable to sell away their properties given both the government’s recent policies and their own desires to make a profit. If the policies hold, it looks like the developers will have to wait a bit longer to make money.
All that said, Shanghai continues to see excellent interest among industrial and corporate interests. CS Shanghai recently hosted a delegation of members of the President Bush’s Export Council, and we see no let up in the number of business people coming to Shanghai to kick its tires with an eye towards setting up representative offices or starting small offices or assembly operations. Established companies continue to invest in their operations as well.
Perhaps this combination of a slowdown in real estate prices but continued interest in setting up business activities could be the soft landing the Chinese Government had hoped.
For more information on CS Shanghai and the Shanghai consular region, visit our website at http://www.buyusa.gov/china/en/Shanghai.html
DISCLAIMER: CS China does not guarantee the veracity of the original sources of our news summaries. While we do our best to report accurate and timely articles and news sources, you should always check the source for further information.
The China Commercial Brief is a free newsletter published by the U.S. Embassy- Beijing.
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INTERNATIONAL COPYRIGHT, U.S. COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.