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China now able to invest overseas
2002/09/08

As China's economy continues its rapid and healthy growth, China has possessed the capabilities of launching overseas investment, said Shi Guangsheng, Minister of Foreign Trade and Economic Cooperation, here Sunday.

Shit told the 2002 China Investment Forum in this city of Fujian Province that after China's entry into the World Trade Organization, as the Chinese market has gradually been opened, other members of the WTO will in turn provide China with more access to their markets and facilitate China's trade and investment overseas.

All this will result in favorable conditions for Chinese enterprises to "go out" for transnational operations, he said.

Presently, China's economy and foreign trade rank the sixth in the world. In 2001, total imports and exports of China's foreign trade were valued at 510 billion US dollars; as of the end of this July, China's foreign exchange reserves have reached 246.5 billion US dollars.

China has already had a significant number of enterprises possessing strong technological and economic resources, familiar with internationalized operations and management, and adapted to the heated competition in the international market, Shi said.

The minister stressed that the promotion of the "going-out" of these enterprises will not only expand the space for the development of China's economy, but also facilitate and enrich economic cooperation between China and other nations and regions, and inject new vitality into the multilateral and bilateral economic and trade relations.

As of the end of June 2002, China has set up 6,758 non- financial businesses abroad, the contractual investment has totaled 13.2 billion US dollars, and the Chinese side has contributed a total investment of 10 billion US dollars; the cumulative values of oversea construction contracts have reached 105.3 billion US dollars, business volumes completed have totaled 75.2 billion US dollars; the cumulative values of overseas labor supply contracts have reached 28.1 billion US dollars, business volumes completed have totaled 22 billion US dollars, and the number of labor supplied to overseas has topped 2.6 million person- times.

Projects of joint development of overseas resources have achieved significant results; cooperation projects in developing overseas resources such as oil, gas, minerals, forestry and fishery are currently running smoothly and their economic benefits have become apparent.

Chinese enterprises have also had certain stride in establishing overseas research and development centers and launching agricultural cooperation, the official said.

MS JV aims for 50% growth in China
2002/08/24

Beijing issues Action Plan for 2008 Olympics
2002/07/12

Beijing organizers officially released a guiding document for the 2008 Olympics on Friday, one day before the first anniversary of the city's successful bid for the 2008 Olympics.

The document, titled "Beijing Olympics Action Plan", will become the guideline for the city's preparations for the Olympics.

It covers five major areas including the overall strategic concept, development of Olympic venues and related facilities, national environment and infrastructure development, social environment development, and strategic support.

The draft document, worked out by experts from different fields, was issued in March to solicit opinions from the public.

It drew great attention from all walks of life across the country, as the organizers received up to 2,000 calls and more than 300 letters from not only the host city, but also other parts of the country, including HK, Macao, and Chinese Taipei.

Opinions on the document also came from the Beijing-based commercial institutions of such countries as the United States, Japan, Spain, Italy and Canada.

The statement said that the public have shown common concern about those hard-to-handle issues closely related with people's livelihood.

"Such as the prevention and control of air pollution and water pollution, augmentation of greenery coverage in the city, lessening of traffic jams, planning and construction of Olympic venues, and improvement of urbanites' quality," said the statement.

To the delight of the organizers, some people proved to be quite professional and their advice had great feasibility.

"Their advice is also enclosed with detailed scenarios. Some even offered their works of research or invention, which they said would be free to the organizers if the organizing committee like," said the statement.

In addition, the responding public expressed great desire to get involved in the preparations for the Olympics, inquiring about the bidding process in course of the construction of Olympics venues, how to offer donations or sponsorships, and how to use the Olympic emblems.

Meanwhile, the public is also concerned about how the 2008 Games could leave a unique legacy for both China and sports and how such legacy could fully show China's national features.

With more than 50 amendments or supplementations made on the basis of the public's opinions, the final version of the action plan is more in accordance with Beijing's economic and social circumstances, becoming more practicable and more of a guideline document.

"The action plan is a vivid example of how the broad masses are concerned about the Olympics, and how they wish to get involved in and contribute to the Olympics," said the statement.

When Everything Is Made in China
2002/06/09

During the past few months, Intel Corp. announced a $100 million investment in Shanghai to assemble Pentium 4 microprocessors. Dell Computer Corp. moved its giant PC-making facility from Kuala Lumpur to Xiamen. The provincial government of Shenzhen said it would provide $5 billion to boost its integrated-circuit industry. It's not hard to connect the dots. "China is becoming a manufacturing superpower," Kenneth Courtis, Goldman, Sachs & Co.'s vice-chairman for Asia, says, "and the momentum seems unstoppable."

The big question is whether the world economy is becoming so dependent on China as an industrial lifeline that it will soon be dangerously vulnerable to a major supply disruption caused by war, terrorism, social unrest, or a natural disaster. In other words, will China's importance to global manufacturing soon resemble Saudi Arabia's position in world oil markets?

Among developing nations, China has been the largest recipient of foreign investment, averaging about $40 billion per year during the late 1990s. Membership in the World Trade Organization will result in even higher levels. U.S. companies are shifting manufacturing from Malaysia, Thailand, Indonesia, and even Mexico to China. Toshiba Corp. is making its TVs on the mainland, and Sony Corp. is manufacturing its PlayStations there. Taiwan's companies produce half of all their information-technology products in the country.

China's advantages are numerous. Its wage rates are a third of Mexico's and Hungary's, and 5% of those in the U.S. or Japan. China's investments in education and training are attracting research facilities from companies such as IBM, Motorola, and Microsoft. The critical mass of factories, subcontractors, and specialized vendors has created a manufacturing environment with which few can compete. China is not just an export platform, either; its large and expanding domestic market is another attraction.

The mushrooming investment also reflects the obsession among global CEOs to lower production costs by outsourcing whatever they can to large-scale specialists. According to Bear, Sterns & Co., 50% of all manufacturing could be outsourced by 2010. Flextronics International Ltd. , the world's largest manufacturing subcontractor, is illustrative. It operates in 28 countries on behalf of companies selling everything from cell phones to washing machines. Its revenues have grown from $100 million in 1993 to an estimated $14 billion today. Its business in China is projected to double this year over 2001 and could reach 40% of its worldwide production in two years, up from 24% in 1998.

How worried should the U.S. be? To be sure, in the 1980s, one heard false alarms about Japanese dominance of high-tech industries. But China is far more open to foreign investment, along with greater cost advantages and more rigorous higher education.

No one would say China dominates manufacturing--yet. But in April, Congress' General Accounting Office criticized the Clinton and Bush Administrations for failing to analyze China's growing sophistication in semiconductor technology. In the June issue of Harper's, investigative journalist Barry Lynn underscores the vulnerability of the U.S. economy to global supply lines that originate in China and Taiwan and are designed for just-in-time delivery to our critical industries. Michael Marks, chairman and CEO of Flextronics, has concerns, too. "I worry that CEOs are overreacting to short-term cost considerations," he told me. "Too much concentration in China could lead to serious supply disruptions. It would be better if their manufacturing facilities were more geographically dispersed."

Unfortunately, it is no one's job to analyze the aggregate risks. Chief executives are rightfully seeking profits in a hypercompetitive world. China is admirably opening its economy to foreign investment. The national-security community is understandably focused on terrorism and weapons of mass destruction. Threats to highly complex global supply chains seem not to be the subject of any national or international group.

There isn't an easy answer for every problem, of course. But it is not too much to ask the Bush Administration to create a joint government-business task force to examine key questions. Is the approximately 90% of all foreign investment that is geographically located in China's coastal provinces a dangerous concentration? Should Washington take another look at tax and tariff incentives to make the entire Caribbean Basin--Mexico, Central America, and the islands--more attractive to foreign manufacturers? Should multinational companies be encouraged to hold larger inventories closer to home? Does China need to beef up its security around its vast industrial parks?

For a quarter of a century, Washington and Wall Street have wanted China to become an integral part of the world economy. Their wish has been granted, and now it's time to come to grips with the implications.

China to loosen control on Forex
2002/05/24

Beijing - China will gradually loosen its control on foreign exchange, People's Bank of China governor Dai Xianglong said on Thursday, without giving a detailed timetable. Institutions under the PBOC are vigorously preparing for a future with a convertible Chinese currency.

According to Dai the country will promote full convertibility of the Renminbi as its foreign exchanges reserves grow, Xinhua reports.

Forex reserves rose to US$233.8 billion at the end of April, up US$21.6 billion from the start of this year, Dai said at the 9th General Assembly of the World Savings Banks Institute (WSBI).

He said China will loosen guidelines regarding the floating interest rates and keep the Renminbi stable against other currencies.

Measures to tighten or loosen the foreign exchange control have fluctuated depending on the size of the capital flight from China.

At the end of the 1990s US$ 50 to 100 billion has left China illegally, depending on the source of information. Tough measures by the State Administration of Foreign Exchange (SAFE) brought back the outflow to around US$ 10 billion annually.

In the long run forex controls are expected to disappear as governor Dai indicated yet again. The China Foreign Exchange Trade System (CFETS) in Shanghai, a department of the PBOC responsible for the exchange of the Renminbi into foreign currencies, is expected to hold a press conference on June 3.

Currently, the CFETS is the only location where banks can trade in Renminbi and change it into US dollars, HK dollars, Yen or Euros. Under a convertible Renminbi the center would lose its function. However, in June it will announce new services in exchanging foreign currencies.

"They are hedging their own future," says a foreign banker in Shanghai. Now banks can trade in foreign currencies without any interference from the financial authorities. The new service is expected to remain a voluntarily one.