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Special reportChina Accelerates Agricultural Modernization

SUrVeYChinese Brands Value Saw an Overall Growth

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Mar. 2013 No. 532 Sponsored by ccpit Since 1956

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Policies

Measures proposed to boost circular economy

The Chinese government has proposed a series of fiscal and financial measures to ensure the country’s circular economy targets are achieved during the 12th Five-Year Plan period (2011-15), in a bid to build a recycling society and promote “green” consumption, China Daily reported.

The government set a target to raise the country’s resource-utilization effi-ciency by 15 percent by the end of 2015, compared with 2010, and for the circular economy industry to achieve a total output value of 1.8 trillion yuan ($286.05 mil-lion) in the same period, the State Council said earlier in February.

The National Development and Reform Commission, the country’s top eco-nomic planning agency, issued the development plan, saying the government put forward 80 specific standards for the circular economy industry on areas such as recycling, energy efficiency, as well as the use of water, land and raw materials.

The commission said that related policies on investment, taxes and the financial sector, among other areas, will also be launched, and that the government will final-ize laws to develop the country’s circular economy industry.

Those laws will include restricting excessive packaging of products, establishing

standards and testing systems for the healthy development of the circular economy and set-ting up a fund for the industry.

The government will also boost supervi-sion of the industry and explore market-orient-ed management methods. Meanwhile, it will accelerate the adoption of advanced technolo-gies and carry out evaluation systems to boost resource efficiency.

China to offer fiscal support for service biz

The Chinese government will provide sub-sidies and rewards for several types of busi-ness projects in the service sector, according to finance and commerce authorities, Xinhua News Agency reported.

Funds will be allocated from the central coffers to benefit housekeeping, e-commerce, resource recycling, second-hand car trade and other businesses that can either make people’s life more convenient, facilitate distribution of goods or promote a green economy, said a document jointly released by the Ministry of Finance and the Ministry of Commerce.

Subsidies and rewards to each of those business projects should not exceed 30 percent of its total investment, the document said.

Those projects can also receive subsidies on their bank loan interest payments at a rate no higher than the benchmark one-year lend-ing rate for no longer than three years, it said.

China aims to boost the development of the service sector in a bid to make its economy

26.7%China’s foreign trade surged 26.7

percent year on year to 2.17 tril-lion yuan ($345.59 billion) in January, according to data from the General Administration of Customs (GAC).

20,000Local authorities in central

China’s Henan Province have raided a publishing house suspected of printing pirated books and found some 20,000 ille-

gal copies, China’s publication watch-dog announced.

10.4%Total credit-

card receivables in Hong Kong rose

10.4 percent to 111.3 billion HK dollars ($14.34 billion) in the fourth quarter last year, after increasing 2.1 percent in the previous quarter, the Monetary Authority announced.

120bThe Chinese government plans to

allocate 120 billion yuan ($19.11 billion) to fund local transport infrastructure construction in 2013, the Ministry of

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Quotes

driven more by domestic consumption than by industrial investment and ex-ports.

The proportion of the value-added output of the service sector in the coun-try’s gross domestic output will be in-creased by 4 percentage points by 2015 from 2010, according to government plans.

VAT reform to be further expanded

Another 10 provinces and regions are likely to benefit from a tax reform program to replace the business tax with the value-added tax, which aims to avoid duplicated levies, the Finance Ministry was quoted as saying by China Daily on February 18.

This will be the latest expansion of the program, which kicked off in Janu-ary in Shanghai, and was later extended to other provinces and cities.

Hebei, Henan, Shandong, Jiangxi, Hunan, Sichuan, Shaanxi, Qinghai and Xinjiang, together with the city of Qingdao, have submitted their applica-tions to join the program this year, ac-cording to the Finance Ministry.

The program is expected to be ex-panded nationwide during the 12th Five-Year Plan (2011-15) period, and will help reduce several hundreds of billion yuan in taxes.

“China’s GDP growth this year targets at 7.5%”

China maintains its 2013 gross domestic prod-uct (GDP) growth target unchanged at around 7.5 percent this year to leave some leeway for eco-nomic restructuring, ac-cording to a government work report delivered by Premier Wen Jiabao at the annual legislative ses-sion on March 5th.

More targets were set up for 2013 in the report. Consumer Price Index (CPI) increase will be kept around 3.5 percent. A deficit of RMB 1.2 trillion (US$190.48 billion) is projected, 400 billion more than the budgeted figure last year and accounting for 2 percent of GDP. Add more than 9 million urban jobs. Keep the registered urban unemployment rate at or below 4.6 percent. And the government will work to ensure that real per capita income for urban and rural residents increases in step with economic growth.

“Worries on China’s economy unfounded”

Growth of the booming Chinese economy will remain strong this year and play a major role in reshaping the global economic activities, a senior economist at HSBC bank said.

Speaking to the daily le Figaro, Stephen King said he expected Chinese growth to quicken in 2013, dismissing fears over a possible slowdown of the world’s second largest economy.

“Remarks about an eventual slowdown in China were unfounded... Its contribution to the global growth is more important than ever, four times more than 15 years ago,” the HSBC chief economist stressed.

“Even if the Chinese economy slows down, its weight and its influence on the global economy are paradoxically higher,” he added.

Finance announced.

40.6mChina’s individually-

owned businesses and private enterprises topped 40.6 million around Janu-ary end, according to the State Administration for Industry and Commerce (SAIC).

2%The consumer price index (CPI), a

main gauge of inflation, grew 2 percent year on year in January, according to the National Bureau of Statistics (NBS).

1.6%China’s producer price

index (PPI), which measures inflation at the wholesale level,

fell 1.6 percent year on year in Janu-ary, the NBS said.

7.3%Macao’s gaming revenues in Jan-

uary this year increased by 7.3 percent year-on-year to 26.86 billion patacas (about $3.76 billion), the Gaming Inspection and Coordination Bureau of the Macao Special Administrative Region (SAR) announced.

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Policies

China eyes energy-saving products for clean economy

The Chinese government is targeting energy-efficient products as part of efforts to build a cleaner and more sustainable economy, according to Xinhua.

The Ministry of Finance announced that over 9 billion yuan ($1.43 billion) has been earmarked from the country’s central budget in 2012 to promote energy-saving products ranging from home appliances to hybrid vehicles.

In a breakdown, the special fund has boosted sales of 33 million units of ener-gy-saving home appliances, 1.24 million fuel-efficient cars and 160 million illumi-nating devices, as well as high efficiency electric motors with a combined power capacity of 9.5 million kilowatts (kW).

The fund has also boosted consumption by 250 billion yuan, while 24 billion kWh of electric power and 850,000 tons of oil were saved, the data showed.

The central government started to pay subsidies for energy-saving home appli-ances in June 2012. Buyers of such appliances can receive 70 to 600 yuan for each purchase.

By the end of 2015, China will lower its energy consumption per unit of GDP by 16 percent from 2010 and lower its carbon dioxide emission per unit of GDP by 17 percent, according to the country’s 12th Five-Year Plan (2011-2015).

Barriers lowered in public funds sector

China’s top securities regu-lator said it will allow qualified private equity and venture capital firms to enter the public funds business, in a bid to encourage the development of a comprehen-sive wealth management sector, according to China Daily.

Barriers to enter the public funds sector will also be lowered for securities companies and in-

surance asset managers, the China Securities Regulatory Commission said on Feb-ruary 18.

The move means that not only fund companies but all types of financial institutions

providing asset management services can now apply for the public funds business if they meet the requirements.

Analysts said this is the beginning of a new era for the country’s wealth management industry, which may bring increased innova-tion to the sector.

Securities companies with at least 20 bil-lion yuan ($3.18billion) of total assets under management, or more than 2 billion yuan of aggregate assets under management, will be able to apply for the business.

Insurance companies should have more than 20 billion yuan of assets under manage-ment and no less than 500 million yuan of net assets.

For private equity firms, the minimum value of assets under management should be 2 billion yuan in the past three years, the CSRC said. “Financial intermediaries will be able to start applying from June 1. At that time, the modified Securities Investment Fund Law will take effect,” said an official at the CSRC.

China to develop sustainable marine fishery

The Chinese government has made new plans to tap the nation’s marine resources in a more sustainable manner to stimulate econo-mies in coastal areas and better protect mari-time interests, Xinhua reported.

The State Council, or China’s cabinet, is-sued a set of guidelines to boost the country’s marine fishing industry following an executive meeting presided over by Chinese Premier

50.4%The purchasing managers’ index

(PMI) for China’s manufacturing sector fell to 50.4 percent in January from 50.6 percent in December, the NBS and the China Federation of Logistics and Pur-chasing (CFLP) said.

$4.8bThe People’s Bank of China (PBOC)

started a 28-day repurchase operation worth 30 billion yuan ($4.8 billion) for the first time since June, according to a state-ment on its website.

3.3%J a p a n E x t e r n a l

Trade Organ izat ion released a report saying that Japan’s total trade with China dropped 3.3

percent to $333.664 billion in 2012.

$19bThe Chinese gov-

ernment plans to allocate 120 billion yuan ($19.11 billion) to fund local transport infrastructure construction in 2013, the Ministry of Finance has announced.

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“China will keep implementing positive fiscal policy”

China will keep imple-menting posit ive f iscal policy and prudent mon-etary policy this year, Fi-nance Minister Xie Xuren said during the meeting of finance ministers and cen-tral bank governors of the Group of 20 (G20).

The Chinese govern-ment will strive to improve the quality and efficiency of its economic growth, expand domestic demand and strengthen efforts to reshape economic structure, said the official.

Meanwhile, the government will safeguard and improve people’s well-being, boost domestic sources of growth so as to achieve sound and sustain-able development, said the senior official.

Enhancing recovery, growth and employment should remain priorities for G20 policy makers, Xie said, urging all members to take feasible macro-economic polices and speed up structural reforms.

“China still lags US in trade”

The Ministry of Commerce has quashed recent media reports speculat-ing that China had surpassed the United States to become the world’s biggest trading nation by volume.

The ministry said, however, that China’s combined export and import volume from last year is below that of the US when the same method of mea-surement is used.

The official said the WTO’s annual trade report, which will be released within a month, will show a continued 1-2 ranking of the US and China.

Quotes

Wen Jiabao.Under the guidelines, China pledges

to take an array of environmentally friendly measures, such as intensify-ing monitoring of fishery areas, strictly implementing off-season policies and controlling offshore fishing.

It will also target long-range fish-ing, intensive sea-farming and aquatic products processing to fine-tune the in-dustrial structure.

In addition, the guidelines highlight the significance of improved manage-ment of the sector inline with current international rules.

Aspects including accelerating fishing boat upgrades, nurturing lead-ing companies, improving fishermen’s livelihood and stepping up infrastructure construction were also noted.

9,400China’s top auditing body has said

it spotted about 9,400 clues on alleged serious malpractices and transferred them to judicial departments in the past five years.

87A total of 87 Chinese

mergers and acquisitions were concluded in January with the total value of 80 dis-closed deals reaching $2.89 billion, Ze-ro2IPO Research Center said in a recent

report.

1mT he 26.1 pe r-

cent increase over 2011 sent the na-t ion’s total patent

inventory past the one-million mile-stone for the first time.

3%Hong Kong’s overall consumer

prices rose by 3 percent in January 2013 over the same month a year ear-lier, smaller than the corresponding increase of 3.7 percent in December 2012, the city’s Census and Statistics Department announced.

Special report

08 China Accelerates Agricultural Modernization10 Rural Development Remains a Top Priority11 Rural Land Reforms to Empower Farmers12 China to Innovate Agricultural Operation System14 China’s Big Step in Rural Reform 15 Investment in Modern Agriculture17 A Decade of No. 1 Central Documents in Review

ecoNoMY

22 HeadingintoaMoreInflationary2013-1426 The Real Exchange Rate and Export Growth: Are Services Different?28 Will Municipal Bonds Save China’s Urbanization Plan?30 DataWatchonChina’sForeignTradeandInvestmentinJanuaryof2013

iNduStrial Watch

42 China Mobile to Launch 4G Network43 IntelligentTraffictoLeadtheFuture44 Worldwide PC Shipments Decline in 2012 46 Lost in Thailand, not Lost but Won48 Opportunities and Challenges of the Health Industry in Aging China51 China Import Food Market Expands Rapidly

SurveY

52 Chinese Brands Value Saw an Overall Growth

caSe StudY

54 New Measurement Cuts China Trade Surplus by 25 Percent

reGioNal trade aNd iNveStMeNt

58 Pakistan-ChinaBilateralTradeExceededUS$12Billion58 Rason Economic and Trade Zone Full of Opportunities60 Chinese Investors Optimistic about European Market62 Weixin to Enter the U.S. Market 64 Latin America Fears Currency Wars66 China to Enlarge Fields of Investment in Africa 68 Gansu Taps into Cultural Resources

http://cft.ccpit.orgwww.ccpit-cft.net.cn 2013/03 No.532

54 China’s trade surplus with the United States shrinks by a quarter when calculated on a value-added basis.

84 Yueyang at the northeastern corner of Hunan province has been famous in China for the picturesque Dongting Lake and gorgeous Yueyang Tower since ancient times.

08 The first policy document, issued by the CPC Central Committee and the State Council on January 31, sets the tone for this year’s agricultural development.

70 Western China’s Shaanxi Province is focusing more on water management, by speeding up construction of water projects, solving drinking water problems and protecting water resources.

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70 Shaanxi Enhances Water Management

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公告 Notice

8

By Zhu Zijun

China Accelerates

Agricultural Modernization

The first policy document, known as the No.1 central document, was issued by the CPC Central Committee and the State Coun-

cil, the Cabinet, on January 31 of this year. It sets the tone for this year’s agricultural development.

Eentitled “Opinions of the CPC Cen-tral Committee and the State Council on Accelerating the Development of Modern Agriculture and Further Enhancing the Vi-tality of Rural Development”, the document focuses on accelerating agricultural modern-ization and enhancing the vitality of rural development.

Though great changes have taken place during the past years, China’s agriculture still faces many challenges, such as ensur-ing effective supply of agricultural products, making innovations in rural social manage-ment, and narrowing the gap between urban

and rural development. To address the is-sue, the document says the government will make persistent efforts to strengthen agricul-ture, benefit farmers, and enrich rural areas.

The document indicates that ensuring grain security and supplies of major farm produce will always be the country’s top pri-ority in development of modern agriculture. It also stresses that efforts will be made in the modernization of agricultural production and management organizations, and China will continue with rural land registrations.

This is the 10th No. 1 central document to guide governmental work in rural areas since the 16th CPC National Congress. The document consists of seven sections and sets forth 26 policies and measures.

What are the highlights of the No. 1 document? How will the document work? The Special Report of this issue will explore further into the topics.

10

Rural Development Remains a Top PriorityBy China Daily

Efforts will be intensified to accelerate the country’s agricultural modern-ization and enhance developmental vitality in the sector, a central policy

document said.China will set up a system to ensure the

effective supply of important agricultural prod-ucts, increase farmers’ income and improve their livelihoods, as well as push forward reforms in rural areas, according to this year’s No. 1 docu-ment.

Central authorities regularly release major policy documents at the beginning of each year to address government priorities.

This is the 10th consecutive year that the theme of the first document has been rural is-sues.

China is facing several challenges in ag-ricultural development, including rising pro-duction costs and structural barriers between supply and demand of agricultural products, due to the country’s fast industrialization and urbanization, the document said.

The preferential policy will support more

professional investors, family farms and rural cooperatives to be engaged in farm production, it said.

China recorded grain output of more than 589 million metric tons in 2012. It was the ninth consecutive year of increased grain harvests, according to the National Bureau of Statistics.

Meanwhile, the country imported 2.32 million tons of rice last year, a 310 percent year-on-year increase and the peak volume since 2000, according to the Ministry of Agriculture.

Imports of soybeans last year reached 58.4 million tons, according to the ministry.

With many farmers moving to cities and industrial sectors, an inadequate labor force is gradually becoming a major factor hindering the country’s grain output, analysts said.

The document will help determine who will farm and grow grains for the country in the future, said Lu Bu, a researcher in agricultural resources and regional planning at the Chinese Academy of Agricultural Sciences.

The country’s agricultural output will be increased when more professional investors, family farms and rural cooperatives are involved in farm production, he said.

“Farmers will be interested in using more advanced technologies in agricultural produc-tion when they are farming on a larger scale,” he said.

In 2012, the country had 680,000 rural cooperatives, a 30 percent year-on-year increase, according to the Ministry of Agriculture.

The document also said it will establish a strict access and a supervision system for in-dustrial and commercial enterprises which rent farmers’ land for agricultural production.

Government authorities should make clear whether such enterprises are using land in rural areas for agricultural development so that farmland won’t be seized for other uses, Chen Xiwen, director of the Office of the CPC Central Committee’s Leading Group on Rural Work, said at a forum in January.

China will set up a system to ensure the effective supply of important agricultural products, increase farmers’ income and improve their livelihoods.

11

Rural Land Reforms to Empower Farmers

By Xinhua News Agency

Chinese farmers are expected to have more say in determining the destiny of their contracted land as the gov-ernment vows to intensify reforms to

back their rights.The government aims to complete rural

land use-rights registration in five years and step up property rights protection for farmers’ land use-rights, according to China’s first policy document for 2013.

It will also speed up work on reforms in the rural land expropriation system, implementing stricter acquisition procedures, rationalizing com-pensation and increasing farmers’ shares in the output of expropriated land, the document said.

“Illegal changes in the use of farmland are not rare in rural areas. The rights registration and certification will help better protect farmers’ property rights,” said Qin Qingwu, a Chinese Association of Agricultural Economics member.

Chinese farmers own farmland through their collective, often a village committee, which distributes land-use rights to farmer families through long-term deals under a household con-tract responsibility system introduced in the late 1970s.

The system was at first designed to ensure distribution fairness, but a lack of legal proof on rural land ownership has led to unlawful land grabs as the country rapidly urbanizes and in-dustrializes.

“With the registration, farmers will have a true feeling that they have rights over the land, and that they are capable of protecting it. Land expropriation will be negotiated and will not be allowed if they say no,” Qin said.

Meanwhile, the legal backing will facilitate land transfers from farmers who are attracted by better-paid urban jobs to those who see promises in scale farm production. This will free up more rural labor without hurting farming efficiency.

Li Guoxiang, a researcher with the Chi-nese Academy of Social Sciences, said because each farmer household is entitled to one or sev-eral small land plots, the fragmented production

has caused bottlenecks to rural productivity.Li said that he expected the completion

of land rights registration to lay foundations for farmers’ land transfers and help foster new types of farming production.

Official data showed that the country’s migrant worker population amounted to 253 million by the end of 2011, among whom 159 million were working away from homes, leaving their farmland uncared for.

China has been struggling to boost its grain output to meet growing demand. Al-though it saw a higher yield for the ninth con-secutive year in 2012, rises in grain imports last year underlined difficulties in maintaining the record.

“If rural land can f low to those capable producers, land use efficiency and yields will be higher. This is beneficial to both farmers who lease out land use-rights and those engaged in intensive production,” Qin said.

According to the document, the govern-ment will work to boost land transfers to large landholders and farmers’ cooperatives in a bid to develop various forms of scale production.

12

By Richard Zhu

China to Innovate Agricultural Operation System

The first policy document of this year lays stress on innovation of the agricul-tural support and protection system in China, which will help promote mod-

ern agricultural construction.This year’s work will focus on establishing a

new type of system for intensive agricultural op-erations that are specialized, well organized and commercialized, said the document.

This is in line with the new changes in ag-riculture and rural development in the current stage. Along with the promotion of industrial-ization and urbanization, China’s agricultural development has entered a new era.

In the last two years, with accelerated re-form and development of water conservancy and agricultural technology, as well as the emergence of new agricultural production entities, great breakthroughs have been made in the develop-ment of modern agriculture and poverty reduc-tion.

Official data shows that at present, there are nearly 600,000 registered specialized farmer cooperatives across the country, covering 18 percent of rural households, and leading indus-trialized agricultural enterprises have exceeded 110,000, expanding their outreach to more than 6,000 farming households. Poverty alleviation and development program has been intensified.

However, China’s agricultural development still shows tendencies of rising agricultural pro-duction cost, acute structural imbalance between agricultural supply and demand, accelerated re-structuring of rural society, and integrated urban and rural development.

There are other challenges. The contradic-tion between a large human population, limited arable land, and a shortage of water resource has intensified; the demand for agricultural products has greatly increased; consumption structure has

upgraded; the nation’s dependence on imported agricultural products has continued to increase, and securing food security and effective supply of important agricultural products have become pressing tasks. Large-scale rural labor migration has resulted in increasing numbers of farming households involved in non-agricultural sectors, empty villages, and aging of the rural popula-tion.

To protect farmers’ rights and interests, it is imperative to enhance and innovate social man-agement in the countryside, and it is urgent to establish an equal exchange mechanism between urban and rural factors while narrowing the gap between urban and rural development and in-come distribution gap, said the document.

The document showed that efforts in this year will focus on improving the agricultural support and protection system and strengthening the policies for boosting agriculture, benefiting farmers, and enriching rural areas. It requires that a long-term mechanism should be established to ensure continuous increase of investment in rural work. And the policy of agricultural

There are nearly 600,000 registered specialized farmer cooperatives across the country.

By Richard Zhu

13

subsidy should be improved, with new increases in subsidies targeted at major grain-producing areas and areas with favorable conditions for agricultural production and in favor of leading grain farmers, family farms, and farmers’ co-operatives. Financial services in the rural areas should be improved, and lending for agricultural development should be enhanced. All sectors should support agriculture and rural develop-ment, and the investment of social capital in the construction of new countryside is encouraged.

Furthermore, the document underlined the innovation of agricultural production and opera-tion system and the rise of farmers’ organization level. It emphasizes the respect and guarantee of the main body position of farmers in agricultural production and operation and fostering new types of agricultural business entities. According to the document, efforts should be made to work out methods to ensure the existing land contract-ing relationship remain stable and unchanged in a long time and establish a strict access and monitoring system for industrial and commer-cial enterprises to rent farmers’ contracted land

(including forest land and grassland). Awards and subsidies can be adopted to

support joint partnerships, specialized farming households, family farms, and the development of new rural cooperative organizations of various types, and encourage farmers to establish spe-cialized cooperatives and shareholding coopera-tives. Some government-funded projects would target eligible cooperatives, and a series of mea-sures including tax preferences, project support, financial support, and talent training will be ad-opted. Meanwhile, the document also sets new requirements for fostering leading industrialized agricultural enterprises.

In addition, the document also aims to es-tablish new mechanisms for agricultural social service and develope diverse service entities. It provides guidance on consolidating the public service system, fostering market-oriented service organizations, and encouraging innovations in methods of service. Information technology should be adopted to spur modern agricultural construction, and it is vital to encourage market-oriented service organizations to participate in public services through government order, targeted commission, awards and subsidies, and public bidding.

For farmers’ management rights of con-tracted land China will continue to carry out registrations regarding the ownership and man-agement rights of rural land to offer legal protec-tion to farmers, the document said. China aims to complete the work in five years. The registra-tion is intended to offer legal proof to farmers in cases of land transfers.

Modern agriculture, characterized by in-tensive and organized operations, is the common trend of the world agricultural development. Small scale and concurrent business is the main operation mode in China’s rural areas. The low level of organization and socialized service sys-tem leads to high cost in agricultural production and low production efficiency.

Industry insiders said that to develop mod-ern agriculture, the dispersive farmers should improve the intensification of agricultural pro-duction based on voluntary organization.

Even China finishes its industrialization and urbanization in the future, and the agricul-tural population reduces to its limit, the small-scale family management in the rural area will not change fundamentally, said Cheng Guoq-iang, researcher with the Development Research Center of the State Council, adding that “In-novating the agricultural operational system will help stimulate a new cycle of development.”

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By Reuters

China’s Big Step in Rural Reform

The bare lightbulbs, unheated rooms and elderly residents of the whitewashed vil-lage of Yangwang in eastern China make it seem an unlikely place for an experiment

in cutting-edge satellite technology.This tiny village in Anhui Province was home

to a pilot project that for the first time mapped farmers’ land holdings, putting it on the front line of China’s efforts to build a modern agricultural sec-tor that can underpin the country’s food security- a policy priority for the Communist Party.

The mapping is a tedious but crucial task to make farmers feel more secure about their rights so that they become more willing to merge fields into larger scale farms. It could also help protect them from land grabs by local officials, a leading cause of rural unrest.

“If we don’t do this now, and the older genera-tion passes away, the next generation won’t know which plot is whose,” said Pan Shengyu, who over-saw one of Anhui’s land titling pilots, “Soon no-one will be able to figure it out.”

China’s annual rural policy document calls for title to farmland to be defined nationwide over the next five years. It is a technical challenge that could cost $16 billion.

In another move aimed at the countryside, Bei-jing unveiled sweeping tax reforms to narrow a wide income gap between the urban elite and rural poor.

Reforms in the 1980s assigned farmland to households but reserved formal ownership to the village collective. But land certificates are imprecise

at best and over half of rural households lack some documentation — leaving possession dependent upon villagers’ knowledge and officialdom’s whims.

Lessons learned using satellite positioning to map tiny plots of land in Yangwang have been scaled up in other pilot projects in Anhui and elsewhere, with an eye to rolling out the program nationwide.

Most Chinese farmers till about 8 mu (15 mu = 1 hectare) per household, an area roughly the size of an American football field. Each household’s land tends to be sub-divided into five or more separate plots.

Anhui Province alone has 100 million plots of less than 1 mu each. Nationwide, well over 1 billion plots have never been mapped properly.

The mapping will replace current deeds that often rely on descriptions like “Yang’s field borders Wang’s to the east” — an imprecise formulation that makes villagers reluctant to remove the dirt berms that separate each plot for fear they will no longer be able to identify what is theirs.

The information will go to searchable central-ized registries, allowing farmers to confirm what they own and giving officials better land-use infor-mation.

Although China legalized transfers in 2008 to formally allow villagers to aggregate land, most Chinese agriculture is still too small-scale to permit investment to boost productivity enough to feed a growing urban population.

Those who rent large tracts of land are more likely to invest for the long-term if the transfer is documented and legal, a World Bank study found last year.

Farming families who feel secure in their land rights send more members out to find paid work, the study found. Monthly incomes for migrant laborers in cities exceed the amount earned in a year from a 1-mu plot.

More precise title “makes people feel more secure,” said Jian Zongzhu, a stooped 72-year old in Yangwang with bleary eyes and thick laborer’s hands.

“Everyone’s gone out to work but with a cer-tificate you know the land is yours, no one can take it away and you can claim it back if you want. That’s important to common people because our life comes from the land.”

Assigning title is painstaking work that in-volves correlating satellite pictures with villagers’

The mapping is a tedious but crucial task to make farmers feel more secure about their rights.

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records, issuing certificates and creating databases to register and search land transfers.

A flat field in the North China Plain may be sub-divided many times. Hilly south China terrain increases the satellites’ error margin. Trees hide field boundaries.

International Land Systems, a company acquired by Thomson Reuters in July 2011, was involved in the initial pilot project in Yangwang, which sought to find the most cost-efficient mapping method.

China’s top rural policymaker Chen Xiwen esti-mates costs could be kept to 8-10 yuan per mu, or about 18 billion yuan nationwide. Other officials told Reuters costs could reach 100 billion yuan while respected fi-nancial magazine Caixin said it would cost 150 billion yuan.

Even the minimum would be too much for budget-strapped rural governments. A pilot in Anhui’s Matou Township, where flat wheat fields are cheap to measure, would have equaled one-sixth of its annual budget.

“Land certification needs to be shouldered by the nation, there is no way local governments could pay for it,” Matou Township vice chief Wang Hong told Reu-ters.

The project carries a hidden price tag for Beijing, which subsidizes grains production, fertilizer use and irrigation at an average rate of 150 yuan per mu. The subsidies are based on acreage estimates that date from when farmers regularly under-reported to avoid grains taxes.

Precise mapping could force China to reassess es-timates it has 1.8 billion mu of farmland — or roughly the amount that Chinese experts believe is necessary for food security.

Matou Township alone gained 45 percent more registered acreage with the more accurate mapping, to the delight of township officials and residents hopeful that greater subsidies will follow.

Some efforts to drive down costs as the project goes nationwide could themselves prove costly. Cheap-er satellite positioning systems might be less accurate and software that fails to integrate future land transfers would make the mapping exercise a waste.

Replacing the pilots’ lengthy village-to-village ex-planations with a state media campaign might be quick-er, but could alarm villagers suspicious after decades of land grabs.

Yangwang villager Yang Changpei worried he’d lose his land when he first heard about the program. Careful explanations soothed his fears, although he didn’t see the point of clearer certificates when villagers all know each other.

His neighbor Jian, by contrast, was enthusiastic.The berms that villagers use to identify their plots

could disappear when fields are merged, leaving villagers in need of some other way to prove what is theirs, Jian said.

“If you explain it, people across China would un-derstand how important this is,” he added.

Investment in Modern Agriculture

By Wang Xi, Yu Xuejiao

Modern agriculture is attracting more and more investment as it is bringing ample opportunities.

Firstly, investment in seed. Seed is the foundation of plants and high quality seed can double the output. At present, China has become the secondary seed-trading country, but Table 1 shows that China imports more than export. China mainly imports from America, Canada, Japan, Korea, Israel and Thailand, but can’t get the core technology to promote domestic seed market since it is scatted. Some corporations are too small to do the research, while there are some oligopolies in domestic market. By the end of 2010, China had issued 8,093 seed licenses and there were nearly 180,000 retailers, but only 91 large-scaled corporation can foster seed and then breed it. A great amount of money and the in-put of high-technology talent are required to narrow the great gap. In China, now it’s a fait accompli that more and more industrial or commercial corpora-tions have entered the field of agriculture, causing further tension of available cultivated land. Hence, improving the quality of seed can help relieve the contradiction. In 2012, Chinese government pro-mulgated a decree for seed industry to prevent per-sistent trade deficit and gave some special support to some high-tech companies. The government will al-locate 0.34 billion funds for the development of seed industry. From the perspective of technical gap or government’s policy support, seed industry still need a large amount of investment.

Secondly, agriculture has entered the era of mechanization from the global perspective. In China, the rate of agricultural mechanization is 50% while it is 99% in Japan and Korea. Besides, China’s One-child Policy and excessive urbanization result in the shortage of rural labor. Such a grim reality can generate another chance for investment. China not

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only depends on import, but has to produce a lot of new machines to develop agriculture. Agricultural mechanical R&D is a good investment area.

Thirdly, with the continuous development of the Internet, a wave of worldwide e-commerce is booming. In domestic market of primary products over the past years, the price often changes. Asym-metry between farmers and market, and the low ef-ficiency of the circulation of agricultural products are the major incentives. In America, nearly 80% prod-ucts are sold by signing contracts with supermarket or through the Internet. This order mode even ac-counts for 60% in Malaysia. Through e-commerce, farmers can plant according to the number of orders to prevent stock. Compared with mature industry circulation, the cost of transportation varies from low to high and involves many aspects, but agriculture is the primary industry to connect three major indus-tries as it is the sunrise industry. Because agricultural e-commerce is more complicated, it needs long-term investment.

Food safety problem has got more attention than before. Microorganisms-exceeded and some rudimental pesticide problem make people feel pan-ic. Some people go back to countryside to live a self-sufficient life, while others plant organic agricultural products to sell for profit. With the enhancement of people’s healthy awareness, people would like to plant for themselves or buy organic products from some professional firms and individuals. So organic food is a new area to invest in. The rich have higher

healthy awareness and are willing to pay for food safety at high price. Recently news shows that some giant IT enterprises get involved in modern agricul-ture, such as Taobao, NetEase and Lenovo. It seems that modern agriculture has better investment pros-pect.

It’s expected that in the future, Chinese agricul-ture will be more market-oriented and technology-driven, by learning from the experience of developed countries like America, Japan and Netherland.

Agriculture is the primary industry and the fundamental of a country, so it is necessary to sup-port it but not to control it. Thanks to the policy and funds from Chinese government and banks, some firms and individuals will have motivation to invest agriculture. On the one hand, adjusting the invest-ment structure via market can promote the develop-ment of agriculture, forestry, animal husbandry and fisheries. It can erase unqualified firms or business out of market and create a competitive atmosphere. On the other hand, a mature agricultural circulation requires the joint participation of the entire market. Government can guide to arouse all industry. Take logistics industry for example, if there are only one transportation company over an area, it’s a monopoly so the cost may be very high to send products to all over the country. Market can lead each resource rea-sonable.

Mechanization is a standard to judge whether a country’s agriculture is modernized or not. Chi-nese labor force is decreasing so it is necessary to use machine to substitute the shortage of labor force. Besides, machine can promote the development of secondary industry. China often imports agricultural machine from North America and Europe to meet domestic need, so more and more people have real-ized that Mechanization is efficient to create more revenue. And it is another trend of modern agricul-ture.

Cultivated land in China is reducing, from 130,039.2 kilo hectares in 1996 to 121,735.2 kilo hectares in 2007, so how to get the largest output with limited land is an urgent problem to be solved. Technology-driven is the essential way to realize modern agriculture.

(Authors: Wang Xi, Associate Professor at Central University of Finance and Economics; Yu Xuejiao, undergraduate at Wuhan University of Technology)

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Seed Import Proportion 91.71% 88.19% 90.29% 91.04% 86.88% 44.10% 43.75% 86.62% 84.07% 83.06% 85.93%

Table 1: China imported seeds from 2000 to 2010

Data Source: China Customs

Chinese agriculture will be more market-oriented and technology-driven.

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By Zhao Wei

A Decade of No.1 Central Documents in Review

The Central Committee of the Communist Party of China and the State Council have jointly issued the first docu-

ment of the year on January 31st. This is the 10th consecutive year in which the document focused on rural issues.

Decades ago, agricultural devel-opment was made a top priority for China. From 1982 to 1986, the Com-munist Party of China (CPC) issued five No.1 central documents in a row, all regarding agriculture, rural areas and farmers as top concerns. Over the next 17 years, the CPC turned its focus towards other sectors. But since 2004, the CPC has once again concentrated on the agricultural sector.

During the past ten years, efforts have been made on accelerating agri-cultural production and sales, reform-ing land usages, promoting farming technologies and innovation, etc. Fol-lowing is a review of key messages and effects of No.1 central documents since 2004.

Opinions on accelerating agricultural modernization, and further invigorating the development of rural areas

Key Messages● Emphasizing the importance of promoting the coordination between urbaniza-

tion and agricultural modernization;● Encouraging more specialized, large-scale farming, as well as family farms;● Highlighting the need to accelerate the reform of land acquisition regulations;● Accelerating China’s agricultural modernization;● Underlining the need to help rural migrant workers become urban residents.

Opinions on accelerating the innovation of agricultural science and technology, and continuing to increase the products supply ability

Key Messages● Strengthening the intensity of input in agricultural sector;● Highlighting the status of agricultural science and technology;● Developing socialized service for agriculture;● Fostering new-type talents in agriculture and rural areas;● Improving the construction of infrastructure in rural areas;● Increasing the market circulation efficiency and guaranteeing the steady and

balanced supply of agricultural products.

Effects● Ninth consecutive growth of grain output;● 95% of farmers have been covered by medical insurance;● Farmers’ incomes have doubled compared to ten years ago, and the increas-

ing rate remained over 7.5%;● Mechanization proportion in ploughing, farming and reaping reached 57%.

Decisions on accelerating water conservancy reform and development

Key Messages● Putting great efforts to irrigation and water conservancy;● Developing the water resource rationally;● Stressing the importance of water and soil conservation, as well as water

ecology protection;● Enlarging the input of public finance into water conservancy;

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2012

2011

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● Encouraging social funds to invest in wa-ter conservancy construction.

Effects● Eighth consecutive growth of grain output

was achieved, and food per capita hit a record high to 852 jin (426 kilograms);

● Two-digit growth of farmers’ income;● Mechanization proportion in ploughing,

farming and reaping reached 54.5%, 2.2 percentage points higher than the previ-ous year;

● The amount of agricultural products exports exceeded $50 billion for the first time.

Opinions on strengthening the efforts of coordinative urban-rural development and further consolidating the basis of agricultural and rural development

Key Messages● Improving the system of agricultural subsi-

dy and mechanism of market adjustment;● Actively leading social resources to agri-

culture and rural areas;● Launching standardized production of

vegetable basket products;● Strengthening construction of water sup-

plies, power supplies, roads, gas supplies and housing;

● Lifting the level of opening up of agricul-tural sectors.

Effects● Seventh consecutive growth of grain

output to 1.0928 trillion jin (0.5464 trillion kilograms);

● 10% increase of average income of farm-ers, which reached 5800 yuan;

● Steady development for products in veg-etable basket;

● Establishing 400 new industrial standards, and guaranteeing the providing of safe products for major events like Shanghai Expo and Guangzhou Asian Games;

● The output value of agriculture products processing surmounted 10 trillion yuan for the first time;

● The total power of agricultural machinery amounted to 0.92 billion KWH, up by 5.1%.

Opinions on promoting the steady development of agriculture and continuing increase of farmers’ income

Key Messages● Increasing the agricultural subsidy with a large jump;● Maintaining the price of agricultural products at a reasonable level;● Strengthening the financial service level in rural areas;● Supporting the advantageous areas and focusing on the development

of industrial crop;● Reinforcing the marketing system construction of agricultural products;● Strengthening the regulation of the import and export of agricultural

products.

Effects● Sixth consecutive growth of grain output;● Mechanization proportion in ploughing, farming and reaping reached

48.8%, 3 percentage points higher than the previous year;● The transformation and upgrading of township enterprises speeded up

and brought an added value of 9.25 trillion yuan, up by 10%;● 8.5% increase of average income of farmers, which reached 5153

yuan;● The number of migrant workers working nearby the hometown or re-

turning home to start a business increased.

Opinions on reinforcing the agricultural infrastructure construction and further helping increase farmers’ income

Key Messages● Consolidating, improving and strengthening the related supporting and

preferential policies;● Supervising the production of vegetable basket products;● Reinforcing the supporting function of agriculture science and technol-

ogy and service system;● Gradually improve the level of fundamental rural public service;● Establishing sound rural security system.

Effects● The first fifth-consecutive growth of grain output over the past 40

years;● The oil plants realized a self-sufficiency rate of 2.2 percentage points

higher year on year, putting an end to the continuous decline since 2000;

● The total power of agricultural machinery amounted to 0.8 billion KWH, up by 4%;

● Guaranteeing the providing of safe agricultural products for Beijing Olympic Games;

● 8% increase of average income of farmers, which was about 4700 yuan.

● The added value created by township enterprises in the whole year was 7.97 trillion yuan, up 11.6%, and the profits surged 11.7% to 2.012 trillion yuan.

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2009

2008

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Opinions on developing modern agriculture and promoting new countryside construction

Key Messages● Improving the agricultural supporting

subsidy system;● Encouraging farmers and social forces

to invest in modern agriculture;● Accelerating the development of clean

energy in rural areas;● Promoting agriculture science and

technology among farmers;● Promoting the mechanization of agri-

culture;● Accelerating the construction of infor-

mationization;● Developing healthy breeding industries;● Developing characteristic agricultures.

Effects● The grain output exceeded 1000 billion

jin (500 kilograms);● 7% increase of average income of

farmers, which reached over 4000 yuan;

● 600 industrial standards were released in the whole year;

● 676 agricultural products wholesale markets in large and medium cities were covered in the monitoring scope;

● 1000 model villages were built under cleaning project, in which the process-ing ratio of household garbage and sewage was as high as 90%;

● Realizing the skill training of 3.5 million farmers.

Opinions on promoting the construction of a new socialist countryside

Key Messages● Promoting the construction of modern

agriculture;● Strengthening the construction of mod-

ern circulation system in rural areas;● Stabilizing, improving and reinforcing

direct subsidy policies;● Strengthening the rural infrastructure

construction.

Effects● The grain output reached 994.9 billion jin (497.45 kilograms);● 7.4% increase of average income of farmers, which reached 3587 yuan;● Comprehensive agriculture tax reliefs;● Minimum subsistence allowances system was set up in more than 2,400 coun-

ties of 24 provinces;● The trial of rural cooperative medical service was expanded to 1,415 counties,

covering 50.7% of the national total.

Opinions on policies about reinforcing rural works and increasing agricultural comprehensive production ability

Key Messages● Continuing the policies of “two remissions and three subsidies”;● Reinforcing the support on major grain producing areas;● Building channels of steadily-increasing financial support on agriculture;● Firmly implementing the strictest arable land protection system;● Strengthening the construction of irrigation and drainage, and ecological envi-

ronment;● Accelerating the agricultural technology innovation.

Effects● 25 billion yuan more input on the implement of “two remissions and three sub-

sidies” policies year on year;● The grain output reached 968 billion jin (484 kilograms);● 13 major grain producing provinces occupied 65% of the national total arable

land, and produced 70% of the total output;● 6.2% increase of average income of farmers, which reached 3255 yuan;● 177 million rural people, 19.9% of the total number in rural areas, were covered

by cooperative medical service;● More than 25% rural people had no access to safe drinking water.

Opinions on policies about helping increase farmers’ income

Key Messages● Supporting the development of major grain producing areas to promote the in-

come increase;● Developing the second and third industries in rural areas to broaden the chan-

nels of income increase;● Improving the employment environment of farmers in the city;● Accelerating the circulation of agricultural products under the influence of the

market;● Strengthening the construction of infrastructural facilities in rural areas.

Effects● More than 0.2 trillion yuan financial support on agriculture;● Record high grain increment of 77.5 billion jin (38.75 billion kilograms) over the

past years;● 6.8% increase of average income of farmers, which reached 2936 yuan.

(Source: National Bureau of Statistics; Ministry of Agriculture)

2007

2006

2004

2005

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Heading into a More Inflationary2013-14

Our new CPI leading indicator predicts CPI out to six months Pork, residential and service-sector prices will be key drivers of the 2013-14 inflation cycle We forecast average CPI inflation of 4% in 2013 and 5% in 2014, higher than market consensus of 3.1%

and 3.5% We expect PBoC to hike interest rates once in Q4-2013, by 25bps, followed by four more hikes in 2014

ber 2012. Our indicator significantly outperforms off icial M2 in leading inflation (the correlation between M2 growth and CPI inf lation was only 25% from 2000-12). The CPILI sug-gests that CPI inf lation has already bottomed and will break above 5% by Q4-2013. We believe this will trigger an explicit shift in monetary policy.

The key components of the CPI basket include pork, residential and service-sector prices. In weighted

By Wei Li, Stephen Green

growth terms, these three components account for about 50% of overall CPI inflation. They have already begun to rise, and this should only intensify as the economy continues to recover.

What the CPILI says about the 2013-14 inflation outlook

The CPILI comprises two sub-indices: one leading indicator for food inf lation (the FLI) and another for non-food inf lation (the NFLI). The

Inf lation was not a problem in 2012. We out l ined this v iew in late 2011, when growth was slowing and China’s three-year

inflation cycle meant that CPI infla-tion, after averaging 5.4% in 2011, was due for a quiet patch. CPI inf lation was at 2.5% y/y in December 2012 and averaged 2.6% for the year, proving our inflation call for 2012 largely cor-rect.

We believe the inf lation story for 2013-14 will be very different. We estimate that CPI inflation will aver-age 4% in 2013 and 5% in 2014, above the Bloomberg consensus estimates of 3.1% and 3.5%. Inflation, we believe, is likely to become a serious problem from Q4-2013 through H1-2014. As a result, we expect the People’s Bank of China (PBoC) to hike the bench-mark interest rate once in Q4-2013, by 25bps, followed by four more hikes in 2014. This would take the 1Y bench-mark lending rate to 7.25% by the year-end from 6% today. This is our base case; if further interest rate re-form happens (for instance, if the ceil-ing on the deposit rate is raised), this will have an impact on our forecasts.

Our CPILI has a good six-month lead on official inflation and had a cor-relation of 83% with headline CPI in-flation from January 2000 to Decem- Sources: CEIC, Standard Chartered Research

Figure 1: The inflation tide has turnedOur CPI leading indicator (CPILI), 3mma, 6m lead; official CPI inflation, 3mma

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two sub-indices have some differences in construction, designed to allow them to better track the development of these two forms of inflation.

Figure 2 shows our FLI and headline CPI food inf lation. The dashed lines represent our forecasts for the variables and trajectories in 2013-14. Our FLI leads headline CPI food inf lation by six months, so we know that the headline number will pick up strongly throughout H1-2013. The correlation between our FLI and of-ficial food inflation was 88% between 2002 and 2012, significantly outper-forming official M2 growth, which had only a 19% correlation with of-ficial CPI food inflation over the same period.

For 2013-14, we expect official CPI food inf lation to rebound from 4.2% y/y in December 2012 to a peak of about 12% y/y in H1-2014, before coming off to 4% y/y by end-2014 as a result of policy tightening start-ing from Q4-2013. We estimate that CPI food inflation will average about 7.5% in 2013 and 9.1% in 2014. On a weighted basis, this means that food will be responsible for about 2.4ppt of the 4% CPI inflation we forecast for 2013, and 2.9ppt of the 5% we forecast for 2014.

For non-food inf lation, as indi-cated by our NFLI (see Figure 3), we expect average rates of 2.3% in 2013

and 3.1% in 2014, up from 1.6% in 2012. On a weighted basis, this means that non-food items will contribute about 1.6ppt of the 4% CPI inflation we expect in 2013, and 2.1ppt of the 5% expected in 2014.

Our CPILI is calculated as the weighted average of the FLI and NFLI, which have respective weight-ings of 70% and 30%, in line with their relative contributions to overall CPI inf lation in weighted growth terms. (As Figure 4 shows, food con-tributes about 70% of total CPI infla-tion, and non-food items account for 30%, of which the residential sub-component accounts for about half.) The correlation between our composite CPILI and headline CPI inflation was 83% from 2000 to 2012, as shown in Figure 1. Over the same period, the correlation between M2 and CPI in-flation was only 25%.

As Figure 1 shows, we expect CPI inf lation to be on an upward trend in 2013 and H1-2014, with the headline figure breaking above 5% in Q4-2013. Inf lation pressures should gradually ease in H2-2014 as a result of policy tightening starting from late 2013. We estimate 4% average CPI inflation in 2013 and 5% in 2014. As a result, the authorities are likely to shift from a prudent monetary policy stance to outright tightening from Q4-2013. We forecast one interest rate hike of

25bps by the PBoC in Q4-2013, fol-lowed by another four in 2014.

The pig problem will returnPork inflation looks set to become

a problem again in 2013-14. The two key indicators here are the pork-to-corn price ratio and the total pig stock. The former measures the profitability of pig farming, while the latter is a good tracker of supply over the fol-lowing year. If the pork-to-corn ratio is low, hogs are sold or slaughtered as farmers exit the business; this leads to a big upswing in pork prices after about a year due to a supply shortage.

Figure 5 shows the y/y change in the pork-to-corn ratio and pork infla-tion. We calculated the pork-to-corn ratio using the current pork price and the 6mma of the corn price. The cur-rent rate of growth in the pork-to-corn ratio, at about -3% y/y, is too low from a historical standpoint. As the ratio normalises in 2013-14, pork inflation should rise.

Slowing pork supply growth will also add to price pressures. As we show in Figure 6, pork supply growth is set to slow in 2013, as indicated by the pig stock in 2012 (official pork sup-ply data for 2012 has yet be released, so the end date for pork supply in the chart is 2011, not 2012). The negative relationship between growth in pork supply and in pork prices seen since

Figure 2: Food CPI inflation forecasts for 2013-14FLI, 6-month lead; food CPI inflation % y/y, 3mma

Sources: CEIC, Standard Chartered Research Sources: CEIC, Standard Chartered Research

Figure 3: Non-food CPI inflation forecast for 2013-14NFLI, 6-month lead; non-food inflation, % y/y, 3mma

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Other likely candidates for price in-creases include:

Beef, whose price has been picking up strongly, as Figure 7 shows.

Edible oils and fish as urban middle-class consumption growth picks up again

Rice, whose price will continue to rise as part of official government policy

Overall, on a weighted basis, we expect food inflation (excluding pork) to be about 2% for 2013-14.

Residential and service prices underpin our inflation call

Residential and service prices

are already picking up. Residential prices within the CPI include build-ing and decoration materials, public and private housing rents, water, electricity and fuel. (We believe that rental prices here have two significant problems ─ they are under-weighted in the residential basket, and they are based on mortgage costs rather than actual rents. We therefore suspect that the official figures underestimate rent and residential price inf lation.) As Figure 10 shows, residential prices are already bottoming out, and they should soon rise.

Slower growth in labour sup-ply, combined with continued strong

Sources: CEIC, Standard Chartered Research

Sources: CEIC, Standard Chartered Research Sources: CEIC, Standard Chartered Research


Figure 4: Food 70%, non-food 30%Share of overall CPI inflation: food, residential, other non-food

Figure 5: A reflationary pork cycle in 2013-14Pork-to-corn ratio, pork CPI inflation, % y/y, 3mma

Figure 6: Pork supply growth to slow in 2013Pork supply, pig stock (1Y lead) and pork prices (RHS), % y/y

Figure 7: People consume more beef as incomes riseCPI beef inflation, % y/y, 3mma

2002 suggests strong reasons to expect a reflationary pork cycle in 2013-14.

As a result, we estimate that pork prices will rise 16% in 2013 and 30% in 2014, after falling by 3.5% in 2012. Given that pork has a 2.9% weighting in the CPI basket, it is likely to add 0.45ppt to headline inflation in 2013 and 0.87ppt in 2014, after subtracting 0.1ppt in 2012.

Pay no less attention to other foods

Pork will not be the only source of food-price pressure in 2013-14. It has accounted for less than 30% of food inf lation over the past decade.

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growth in demand for services (as reflected in the consistently above-55 reading in the non-manufacturing PM I) and moderate produc t iv-ity growth, wil l continue to push up prices. Figure 11 shows a few examples of rising service prices, in-cluding nursery fees, education, car maintenance costs and personal ser-vice charges. We expect overall non-food CPI inf lation to average 2.3% in 2013 and 3.1% in 2014, up from 1.6% in 2012.

ConclusionInf lation is returning to China

in 2013-14. Although most of the

pressure will come from food, service prices will also lend a hand. By mid-2013, this issue will be moving up policy maker’s list of things to worry about. We forecast that CPI inflation will average 4% in 2013 and 5% in 2014, with the headline figure break-ing above 5% in Q4-2013; it may stay there for most of H1-2014. Given the likelihood that this bout of inf lation will not be as serious as the 2007-08 and 2011 cycles, we believe the authorities should be able to move gradually to raise overall borrowing costs. We also hope that the central bank will be given more leeway to set interest rates, and that the government

reform agenda will not be sidetracked by inflation-fighting.

We think the PBoC will hike benchmark interest rates once in Q4-2013, by 25bps, followed by four more hikes in 2014. This should take the 1Y benchmark lending rate from 6% at end-2012 to 7.25% by end-2014. A further loosening of interest rate controls may mean that rates can go higher without benchmark hikes. But at the end of the day, corporates will still need to prepare for higher lending costs.

(Authors: Economists from Standard Chartered China)





Figure 8: Edible oil and fat prices to follow meat inflationInflation in edible oils and fats, meat, % y/y, 3mma

Figure 9: Aquatic product and rice inflation to reboundInflation in aquatic products and rice, adjusted loan growth, y/y

Figure 10: Residential prices to accelerate furtherCPILI (6M lag), residential CPI inflation, % y/y, 3mma

Figure 11: Paying more for less labourService-sector CPI, % y/y, 3mma

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The role of exports in economic growth and, in turn, of the real exchange rate in export promotion features promi-

nently in literature on development and globalization. Much of this literature dates, however, from an era when “ex-ports” meant “exports of merchandise”. Today, “exports” increasingly means “exports of services”. This raises the question of whether the emphasis in the earlier literature on the importance of a competitively valued exchange rate for promoting exports carries over to this new environment.

In recent research, we f ind it does. When we distinguish traditional services (trade and transport, tourism, financial services and insurance) from modern services (communications, computer, information and other related services), the effect of the real exchange rate is especially large for exports of modern services. We find that the effect of real exchange rate changes on exports of modern services is 30 to 50% larger than that on merchandise and tradi-tional services.

The real exchange rate and service exports

We analyze the determinants of the growth of exports of merchandise and services using data for 66 coun-tries for which significant runs of data on exports of services are available in 1980-2009. Of these 66 countries, nine

are low-income countries, 15 are low middle-income, 20 are high middle-income and 22 are high-income. The in-dependent variables include the log per capita income (over the previous five-year period), country and time-fixed effects and the real exchange rate, where we consider four different measures of the real exchange.

Our empirical results confirm the importance of the real exchange rate for export growth. In addition, we find that the effect of the real exchange rate

is even stronger for exports of services than exports of merchandise. Indeed, it is largest for modern services.

Why does the real exchange rate impact exports of services so powerfully? It could be that services, and especially modern services, use fewer imports. It could be that these sectors have lower fixed costs of entry, making for a more elastic supply response. It could be that demand for these exports is more price elastic. Or it could be a combination of all of the above.

Figure 1. RER and export surges in traditional and modern services

The Real Exchange Rate and Export Growth:

Are Services Different?By Barry Eichengreen, Poonam Gupta

RER IndexModern, Developed

RER IndexTraditional, Developed

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100

-5 -5surge

Median Mean

-4 -4-3 -3-2 -2-1 -10 01 12 23 34 45 5

120

120

140

140

160

160

RER IndexTraditional, Developed

RER IndexModern, Developed

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We obtain similar results with al-ternative measures of the real exchange rate. The effect of the real exchange rate on the growth of exports is broadly similar for developing and for developed countries.

Export surgesWe also focus on periods when the

growth of exports accelerated signifi-cantly (“export surges”). As Freund and Pierola have shown, surges provide ad-ditional identification. They are instanc-es when export performance and their determinants are changing radically. They are when countries are overcom-ing obstacles that previously hindered export growth.

We identify surges using the Bai-Perron structural break technique. We define a surge when a pair of breaks points first to a significant acceleration and then to a significant deceleration of exports. In addition, we require the ex-port growth rate to be at least 2% a year for three consecutive years. So defined, the surge lasts until the growth rate falls below 2% or until another structural break is identified.

We identified 81 episodes of surges in the exports of merchandise, 100 epi-sodes of surges of traditional services and 80 episodes of surges in exports of modern services. Typically, surges last four to five years.

We see in Figure 1 that surges in exports of services, both modern and traditional, tend to be preceded by real exchange rate depreciations, especially in developing countries.

Using an approach similar to Hausmann, Pritchett, and Rodrik we estimate regressions of the determinants of the timing of a surge in the exports of merchandise, traditional and modern services, focusing again on the real ex-change rate. Consistent with our earlier analysis, we find real exchange rate de-preciation has a positive and significant effect on the probability of a surge of both merchandise and services. Includ-ing other controls does not make much of a difference to the results.

Results also show that the volatility of the real exchange rate has a negative effect on the probability of an export surge. We also estimate Tobit regres-sions which make fuller use of the data,

in the sense of distinguishing larger and smaller surges. We find a larger impact of the real exchange rate on exports of modern services than on traditional services and on tradi-tional services than on merchandise (the coefficient of real exchange rate is about 50% larger for modern services).

Lessons for developing countriesOur results suggest that as developing countries shift

from exporting primarily commodities and merchandise to exporting traditional and modern services, appropriate policies toward the real exchange rate become even more important.

This said, relying on an undervalued exchange rate to encourage the growth of exports of services, as of merchan-dise, has its limitations.

Eichengreen and Haddad and Pancaro caution that depreciation/undervaluation can be deployed as a policy tool to spur growth only in the short term, because a coun-try cannot maintain a depreciated real exchange rate indefi-nitely.

Potential costs include tensions with other countries, accumulation of foreign-exchange reserves on which capital losses may occur, and the fact that adjustment, when it oc-curs, may come in the form of inflation.

For a competitive real exchange rate to succeed in boosting exports it will have to be accompanied by strong institutions, sound macroeconomic policies, a disciplined labor force, high savings rates or other policies conducive to attracting foreign capital. Finally, for benefits to exceed costs, countries using real exchange rate depreciation to jumpstart exports and growth should have an exit strategy in mind and, ideally, in place. (VoxEU)

(Authors: Barry Eichengreen, Professor of Eco-nomics and Political Science at the University of California, Berkeley; Poonam Gupta, Reserve Bank of India Chair Professor, National Institute of Public Fi-nance and Policy)

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Increasingly China’s new leader-ship has revitalized the topic of urbanization. Last November, the vice-premier, Li Keqiang, wrote

an article calling urbanization a “huge engine” for future economic growth. More recently, the newly released in-come inequality plan has even described urbanization as a tool to reduce income inequality.

This renewed emphasis on urban-ization appears to have re-opened the topic of financing local infrastructure projects. In the fourth quarter 2012 monetary policy report released earlier in February 2013, the People’s Bank of China (PBC) wrote an exhibit entitled “the international experience of financ-ing construction for urbanization.” In this exhibit, the People’s Bank observed a strong correlation between urban-ization and municipal bonds across countries from the 1950s to today. They

found that the use of municipal bonds backed by tax revenues was the most ef-fective tool for supporting urbanization “no matter whether you have a federal or centralized system of government.”

The PBC’s research is well timed to encourage a transition away from local government financing vehicles (LGFVs) to promote the direct issuance of local government debt. The traditional model of indirect financing of projects via credit lines and corporate debt issuance from LGFVs injected with public assets ─ generally land ─ is coming under strain. Although highly successful at raising funds since their creation in the late 1990s, the model is opaque and has cre-ated confusion in accounting for the costs and risks of infrastructure development in China ─ particularly in their linking many local projects to land sale revenue. Due to these concerns, regulators led by the State Council have increasingly

Will Municipal Bonds Save China’s Urbanization Plan?By Ryan Rutkowski

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cracked down on the LGFV channel in 2010, and again last year.

If policymakers were to agree with the PBC and promote a policy transi-tion toward direct debt issuance, they would essentially have two options:

One option is to expand the exist-ing channel for Ministry of Finance (MOF)-backed local government debt. Since 2009, provincial governments have been able to raise some money on the interbank bond market as part of collective provincial government bonds issued by the Ministry of Finance. These bonds operate more like fiscal transfers ─ they are sovereign bonds with the interest and principal paid by the Ministry of Finance.

The Ministry of Finance also opened another pilot channel in No-vember 2011 to allow creditworthy provinces ─ Shanghai, Guangdong, Zhejiang, and Shenzhen ─ to issue their own bonds of 3 and 5-year maturi-ties. The Ministry of Finance is still responsible for acting as a guarantor and an agent for issuing and collecting the interest on these bonds, yet repayment is ultimately the responsibility of the lo-cal government. The arrangement has allowed some variability from treasury yields but ultimately offers little expo-sure to local risk.

Both types of local government debt issuance are capped by a State Council quota; together amounting to only Rmb 250 million in 2012, up slightly from Rmb 198 million in 2011. In contrast, Barclays estimates that local government financing vehicles issued Rmb 965 million in corporate debt in 2012.

The State Council could increase the annual MOF-backed local govern-ment debt quota significantly at the same time it cut down corporate debt issuance by LGFVs. However, such an approach would have some major draw-backs. First, it would inherently limit the financing capacity of local govern-ments to the approval of the Ministry of Finance. Second, MOF-backed pro-vincial bonds would not be as attractive to investors offering yields on par with treasuries.

Another ─ perhaps more ideal ─ solution would be to amend the budget law to remove the ban on local govern-

ment debt issuance, allowing them to issue bonds backed by tax revenue. In contrast to the United States where states, counties, special districts, cities, towns, and even school dis-tricts can issue debt secured by tax revenue, Chinese local governments are banned from direct bond issuance. There was discussion to amend the budget law to allow local gov-ernment issuance in 2011. However, this amendment was eventually dropped from the draft revision approved by the NPC standing committee in June 2012 due to concerns sur-rounding excessively high-levels of local government debt.

The reason for dropping the amendment is likely to be more complex, and potentially political. Direct issuance of local government debt ─ more clearly than financing ve-hicles ─ represents the credibility of a Chinese city or prov-ince. This in turn would open up questions as to whether the central government would be implicitly backing such bonds in the event of a default. The Ministry of Finance generally resists taking on such guarantees for fear that it would impact China’s sovereign credit rating. At the same time, not taking on such guarantees runs the risk of restrict-ing direct access to debt financing only to provinces with very high credit ratings ─ Shanghai, Shenzhen, Zhejiang, Guangdong ─ something which could exacerbate income inequality between regions.

If opposition to an amendment were to be overcome, municipal bonds would seem ideal for China’s situation. First, it will increase the transparency of financing local government infrastructure projects. Second, it would free local govern-ments from constraints based on land as a source of cash flow. Infrastructure is a public good, which should be subsidized by taxpayers as well as user fees from project cash flows. Third, issuing bonds will help avoid maturity mismatches in infra-structure financing ─ a common problem in the bank loans given to LGFVs in 2009. Fourth, it will likely reduce financ-ing costs for local infrastructure by basing interest rate calcula-tions on the credit rating of an entire province or municipality rather than the assets of an individual platform company. This fact was borne out by the direct issuance pilot program during which in November 2011 Shenzhen sold a three-year bond price to yield at 3.03 percent compared with a 3.11 percent yield on central government treasuries on the same date.

Direct debt issuance ─ whatever its form ─ will not di-rectly solve all the problems of local governments. There is still a large local debt overhang of Rmb 10.7 trillion in 2010. Local governments also need to improve the efficiency of tax collec-tion and build new more sustainable sources of tax revenue.

Nevertheless, the transition away from over-reliance on financing vehicles would be a good step toward improving lo-cal government finances and putting Chinese cities on a more sustainable growth path, suggesting re-assessing the ban on local government debt issuance at least warrants further dis-cussion among China’s top leadership. In the meantime, a sig-nificant expansion to the existing State Council quota on local government bonds issued by the Ministry of Finance would be a step in the right direction.

(Author: from Peterson Institute for International Economics)

THERE IS STILL A LARGE LOCAL DEBT OVERHANG OF RMB 10.7 TRILLION IN 2010.

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China’s foreign trade in January of 2013

According to statistics of the Cus-toms, China’s exports and imports in the first month of 2013 reached ¥2.17 trillion ($345.59 billion), up 26.7% over the same period of last year, excluding the exchange rate factor. Specifically, exports stood at ¥1.18 trillion ($187.37 billion), up 25% year on year; imports ¥0.99 trillion ($158.22 billion), up 28.8%. The whole month saw a trade surplus of ¥183.21 billion ($29.15 bil-lion), increasing by 7.7%. Deducting the seasonal inf luence of the Spring Festival, China’s exports and imports in January increased 8.1%, in which the former was 12.4% and the latter was 3.4%. Several obvious features are as follows:

Steady increase in trade with Europe, the United States, Japan and Korea; significant increase with the ASEAN, Hong Kong SAR, Chinese Taiwan and South Afirca.

In January of 2013, China’s bilat-eral trade growth rates with Europe, the United States, Japan and Korea re-ported 10.5%, 23.4%, 10.3% and 23.1% respectively, 42.9% increase with the ASEAN, 83.0% increase with Hong Kong SAR, 70.0% increase with Chi-nese Taiwan and 98.9% increase with South Africa.

Rapid growth in exports of Cen-tral and Western China; significant increase in exports of Guangdong and Fujian Provinces of Eastern China; other areas saw steady increase rates.

In the first month of this year, the exports in Sichuan, and Henan, Jiangxi provinces increased by 65.6%, 47.2%, 122.7% and 84.6% respectively. The in-creasing rate of exports in Guangdong Province reached 42.1%, continuing to stay at the top for the biggest export

by 51.6%, 22.8 percentage points higher than the national total over the same period. The total exports value of seven kinds of labor-intensive products in-cluding textile, apparel, shoes, luggage, plastics, furniture and toys increased by 25.1%, and the total amount reached

$41.03 billion. The imports of crude oil increased 7.4% and 3.8% for soybeans, while that of iron ore and copper prod-ucts dropped 11.0% and 29.8% respectively.

Continuing increase of price for several traditional expor t commodities, and consecutive drop of price for some imported raw materials.

In January, the increasing rate of average price of exports

was 0.7%, in which it was 28.3% for plastics products and 20.7% for shoes. The price of imported goods continued to decrease, with a decreasing rate of 5.0% for average price. To be specific, the import prices of iron ore and pure rubber saw the 14th consecutive de-crease, and that of scrap copper wit-nessed the 12th consecutive decrease. What’s more, the price of steel also had dropped for eleven consecutive months, and that of log had decreased for nine months.

Utilization of foreign investment

In the first month of 2013, China approved the establishment of 1,883 new foreign-invested enterprises, an increase of 34.3% on the previous year. China utilized $9.27 billion worth of foreign capital, a decline of 7.3% from the same period of last year (excluding the data of banks, securities and the insurance industry). The features are as follows:

The decreasing rate of foreign

Data Watch on China’s Foreign Trade and Investment in January of 2013

volume, and Fujian Province saw an increasing rate of 30.9%.

Significant increase of the ex-pansion rates of exports and imports under both the general trade and pro-cessing trade.

In January of this year, China’s

general trade value was $180.73 bil-lion, up by 19.2% year on year, in which exports value increased by 21.7% to $93.38 billion, while imports value increased by 16.6% to $87.35 billion. The total value of processing trade was $114.10 billion, up by 23.1%, in which the exports value rose by 14.6% to $71.79 billion, while the imports value increased 40.6% to $42.31 billion.

Significant increase in imports and exports of mechanical and elec-trical products; steady increase for traditional labor-intensive products.

In January of 2013, China export-ed $105.81 billion worth of mechanical and electrical products, 25.1% higher than that of last year, and imported $67.45 billion worth of products, up 39.9%, 11.1 percentage points higher than the growth rate of the nation’s total imports over the same period. The exports value of high-tech products in-creased 42.0% to an amount of $55.09 billion, 17.0 percentage points higher than the national total. While the im-ports value was $45.53 billion, jumping

31

capital utilization in service indus-tries exceeded that of manufacturing industry.

In January, the sectors of agricul-ture, forestry, animal husbandry, and fisheries made an actual use of $0.13 billion in foreign investment, a decrease of 31.5% year on year and accounted for 1.5% of the country’s total utilization of foreign capital. The manufacturing industry made an actual use of $4.43 billion in foreign investment, a decrease of 5.8% year on year, and accounted for 47.7% of the country’s total utilization of foreign capital. The service industry made an actual use of $4.03 billion in foreign investment, a decline of 9.8% over the same period of last year and accounted for 43.5% of the national total. Foreign investment in real estate was down by 14%.

Significant increase in the for-eign investment from the EU.

In the first month of 2013, China approved the establishment of 140 new enterprises from 27 EU countries, up 30.8%. The total amount of paid-in capital from the EU increased 81.8% to $0.82 billion, in which that of France, Germany, Sweden and Denmark increased 309.6%, 70.3%, 4060.4% and 325.2% respectively. The amount of paid-in capital in China from ten Asia nations and regions (Hong Kong, Macau, Taiwan, Japan, the Philippines, Thailand, Malaysia, Singapore, Indo-nesia, and South Korea) reached $7.82

billion, down by 9.0%. The newly-approved enterprises from the above ten nations and regions were 1,475, up 33.5%. Specifically, the paid-in capital from Hong Kong decreased 10.2% to $5.71 billion, 20.0% decrease for Japan to an amount of $0.64 billion, and 2.5% decrease for Singapore to $0.63 billion. The investment from Taiwan increased 28.8% to $0.63 billion, and that of the US dropped 20.0% to $0.27 billion, while the number of newly-established American enterprises was 94, up 9.3%.

Slight decrease in paid-in foreign capital to both Central and Western China.

In January, the eastern regions made an actual use of $7.87 billion in foreign investment, a decrease of 8.1% year on year and accounted for 84.9% of the national total. The central regions made an actual use of $0.83 billion, a decrease of 0.8%, accounting for 8.9% of the national total. The western re-gions made an actual use of $0.58 bil-lion in foreign investment, a decline of 4.2% year on year and accounted for 6.2% of the national total.

Overseas investment and economic cooperation

China’s outbound FDI.In the first month of 2013, China’s

domestic investors invested directly in 777 overseas corporations in 123 na-tions and regions, with a total of non-financial outbound FDI of $4.914 bil-

lion, an increase of 12.3% year on year. In January, the investment from

mainland China to seven major econo-mies including Hong Kong SAR, ASEAN, EU, Austra l ia, the US, Russia and Japan amounted to $3.63 billion, accounting for 73.9% of the total FDI over the same period. To be specific, the investment in ASEAN, Australia, EU and the US was quadru-pled, while that in Hong Kong SAR and Russia decreased 33.2% and 49.9% respectively. With regard to the inves-tors, the local FDI decreased 11.3% to $2.306 billion, accounting for 46.9% of the total amount over the same period. Investments from Guangdong, Shan-dong, Jiangsu provinces and Beijing were much more than those from other provinces.

Overseas-contracted projects.In the first month of 2013, China’s

overseas-contracted projects reported a turnover of $6.76 billion, an increase of 15.1% year on year. $13.33 billion worth of new contracts was signed in January, up by 42.9% year on year. There were 57 projects (32 for the previ-ous year) with a newly-signed contract worth over $50 million, and the total amount reached $10.63 billion, 79.7% of the total newly-signed amount, among which there were 30 projects with a contract value over $100 million, 7 more than the same period of last year.

By the end of January in 2013, China had signed a total of $1.0115 trillion worth of agreements on con-tracting overseas projects, and realized $662.4 billion in turnover.

Foreign labor service coopera-tion.

In January, the number of all kinds of labor sent abroad was 29,000, almost the same as the same period of last year. 14,000 of them were working on over-seas contracted projects, and 15,000 of them were for labor cooperation. At the end of January in 2013, there were a to-tal of 819,000 Chinese working abroad, 8,000 more than the same period of last year.

(Source: Press conference of the Ministry of Commerce of China on February 20, 2013)

Guangzhou Dayun Motorcycle Co., Ltd (hereaf-ter referred to as Guangzhou Dayun) is a new-type modern motorcycle company which combines R&D, manufacture, sales, services and imports & exports. It served as the supplier of motorcycle for the 2008 Bei-jing Olympic and the exclusive supplier of motorcycle for the 2008 Beijing Paralympic, which makes the company an excellent representative of the Chinese motorcycle industry. At present, the Company manu-factures one million motorcycle and over 1.2 million engines of motorcycles per annum, and has more than 200 types of motorcycles (including Street Bike, Cub, Scooter, Tricycle, Off Road, ATV, etc.). The prod-uct has been sold to more than 80 countries and re-gions in Asia, Africa, Europe and America, which has been admired by the experts and users from home and abroad.

Guangzhou Dayun takes up about 400,000 square kilometers, and has 6 full automatic suspen-sion-type synchronous motorcycle production lines which lead in the country, 4 packaging lines, 4 mono-axial synchronous production lines for power driving engines, and 6 brand new coating lines. Meanwhile,

the FPY of our products exceeds 99%. The Company has been granted the ISO9001:2008 APIQR certificate, ISO14001:2000 environmen-tal management system certificate and the “3C” certificate. In January 2010, the General Admin-istration for Industry and Commerce of China has confirmed Dayun as a “Famous Trademark in China”. The Company has also been granted “the 100 Top Industrial Companies in Guangdong”, “Contract and Integrity Centered Company”, “Ex-cellent Private Enterprise”, etc, and has also been rewarded “Level-AAA Integrity Company”, “Top Prize for Scientific Progress” and “100 Companies with the Best Integrity in the Chinese Economy”.

ADD: NO.12 Yongfa Road, Huadu Guangzhou, Guangdong, ChinaWebsite: www.gzdayang.com E-mail: [email protected]: 86-20-86965400FAX: 86-20-86884661

Guangzhou Dayun Motorcycle Co., Ltd

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IndustrIal Watch

Metal

The US Department of Commerce on February 20 an-nounced its affirmative final determination in duty inves-

tigations against drawn stainless steel sinks from China.The move increases the possibility of imposing punitive

duties on the products, according to the analysis of Xinhua agency.

Commerce claimed that Chinese producers and export-ers sold drawn stainless steel sinks in the US market at dump-ing margins ranging from 27.14 percent to 76.53 percent.

It also alleged that Chinese producers and exporters re-ceived subsidies of 4.8 percent to 12.26 percent.

Imports of drawn stainless sinks from China were val-ued at an estimated US$118 million in 2011, according to the US government.

The US International Trade Commission is scheduled to make its final determination on or before April 5, according to the same report by Xinhua.

China’s aluminum inventories reached a record high, caused by rapidly growing supply and weak demand in

the country, resulting in sharp price drops, China Daily said.The country’s overall aluminum stockpiles climbed to

1.25 million metric tons on February 18, almost double the level during the same period late year, according to Myyouse.com, a Shanghai-based commodities information consultancy.

On January 10 last year, the nation’s aluminum stock-piles stood at about 700,000 tons, said Li Xun, an analyst at the consultancy.

He also said that the excessive supply in China’s aluminum industry will continue at least for the first half of the year.

“The aluminum price will fall by 200 yuan ($32) to 300 yuan a ton in the week from February 18 to 24,” he said. “That is considered a dramatic price drop in the market.”

Li said there are many reasons for the increasing stock-piles, but the major one is the new production capacity in western areas of China.

Facing a gloomy economy, many international alumi-num companies decided to reduce capacities in recent years to survive amid shrinking demand and falling prices.

However, many Chinese companies continued to in-crease their capacities and output, leading to even fiercer com-petition in the market.

About 90 percent of the new electrolytic aluminum pro-duction capacity has come from western China since 2009. In 2011, China’s 3.4 million tons of new production capacity for electrolytic aluminum was mainly centered on the Xinjiang Uygur autonomous region and Qinghai province in North-west China, according to the China Nonferrous Metals In-dustry Association.

The US move came at a time when protectionism is making a comeback

in America amid a sluggish economic recovery. It is widely believed that such actions would hurt US-China trade relations that are increasingly critical to the glob-al recovery.

Comment

Effective measures are needed to elimi-nate small-scale aluminum producers

that lack advanced technology. Meanwhile, it might be a good time for the processing companies to pur-chase aluminum as their raw material.

Comment

China’s steel sink exports may face US tariffs

China’s aluminum stockpiles reach new high

If the result affirms that the products cause material injury or threat to the US industry, Commerce will issue an-tidumping duty and countervailing duty orders. If the ITC makes a negative determination, the investigations will be ter-minated.

Commerce initiated the AD and CVD investigations in March 2012 in response to a petition filed by Illinois-based Elkay Manufacturing Company.

Li said the new projects approved in Xinjiang began pro-duction, which could not be absorbed by the market, leading to the current situation.

Also, before Spring Festival, transport links from west to east were affected by bad weather, adding more difficulties to easing aluminum stockpiles.

“If aluminum producers in eastern China don’t reduce their output, the oversupply will continue even if consumption rises,” said Li. “The supply increase is far greater than con-sumption growth in China.”

He predicted the aluminum price would stay at about 14,500 yuan to 15,000 yuan a ton during the first half of the year.

China’s output of aluminum by month190

180

170

160

150

Source: Wind Information

Unit: 10,000 tons

Jul Aug Sep Oct Nov Dec2012

167.1175

167.23171.9

166.39171.64

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AUTO

Chinese passenger auto-mobile sales reached a

new high in January, when a total of 1.72 million units were sold, auto.sina.com.cn reported on February 17. The figure is 17.95 percent higher than the amount sold in De-cember 2012, and represents a year on year growth of 48.68 percent. German manufacturers performed especially well that month, Gasgoo reported.

Sales of crossovers in January were 9.07 percent and 1.59 percent lower than they were in December 2012 and January 2011, respectively. Sales of all other vehicle types increased. Respective year-on-year growth rates for Chinese sedan, min-ivan and SUV sales in January were 48.9 percent, 170 percent and 90.54 percent. Sales growth rates for the three segments from December to January were 19.02 percent, 140 percent and 16.21 percent, respectively.

Domestic Chinese brands accounted for 747,300 of the passenger automobiles sold in January, growing a full 53 percent from last January. Chinese brands made up 43.31 percent of all passenger automobiles sold over the course of the month, up 3.76 percent from December. Among foreign brands, German passenger automobiles performed especially

The Chinese govern-ment has released new

recommendations on reduc-ing emissions from gasoline powered vehicles this Febru-ary, the National Business Daily reported.

The recommendations, which come straight from the State Council, were an-nounced as smog levels in Beijing and surrounding areas reach critically high levels. According to the rec-

ommendations, the government is aiming to reduce carbon dioxide emissions in 2015 to ten percent less than they were in 2010. The previously released Twelfth Five-Year Plan also stipulated that China will decrease its carbon dioxide emis-sions by 62 million tons by the end of that same year. It also mentions the country’s aim to reduce the amount of com-mercial fuel used by 15 million tons via the use of alterna-tive products. A recent study showed that over 60 percent of China’s oil is used to power gasoline engines.

strongly. Their combined monthly sales totaled 328,000 units, 56.06 percent higher than the previous month’s figure and 69.6 percent higher than last January’s. Their combined mar-ket share was 19.01 percent, up 4.64 percent from December. Sales of Japanese, American, Korean and French passenger automobiles totaled 224,000 units, 204,300 units, 163,000 units and 54,400 units, respectively. As expected, sales growth of Japanese vehicles was fairly slow still this year.

Shanghai General Motors was January’s most success-ful sedan manufacturer, selling a total of 142,000 sedans. It was followed by Shanghai VW (134,300 sedan sales), FAW VW (132,200), Beijing Hyundai (83,700), Dongfeng Nissan (66,200), Geely (55,100), Dongfeng Peugeot (49,200), Chery (46,100), BYD (45,400) and Changan Ford (43,700). The above ten enterprises were responsible for 67.19 percent of all sedan sales in January.

The State Council’s recommendations also aim to in-crease the amount of so-called “fuel efficient” vehicles to constitute 60 percent of all motor vehicles on Chinese roads by 2015. According to estimations, this will allow fuel use to be six percent to ten percent less than it was in 2010, reducing commercial oil use by 20 million tons. Fuel efficient vehicles currently only account for 30 percent to 40 percent of all mo-tor vehicles in China, CIConsulting Environmental Protec-tion Industry Analyst Hou Yuxuan pointed out.

The State Council also has plans to support automobile and auto part enterprises to develop and manufacture fuel efficient and environmentally friendly engine technology to help further reduce emissions. The government will encourage development of turbocharged and naturally aspirated engines that are 1.6 L or smaller in particular.

January is traditionally a strong shop-ping season, as Chinese new year,

Spring Festival usually arrives in this month or the fol-lowing month (this year it was February 10th). To pre-pare for the new year celebration, consumer demand increases sharply, including for automobiles. You can see traffic jam even in China rural areas nowadays.

Comment

Strict emission limits were made to six heavy polluting industries: thermal pow-

er, iron and steel, petrochemical, cement, non-ferrous metal and chemical. Now vehicle too, whose emission is said to contribute 20% of the pollution by experts, for the sake of energy saving, and also cleaner air.

Comment

Chinese passenger automobile sales in January exceed 1.7m units

Chinese government announces measures to reduce vehicle emissions

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IndustrIal WatchChina’s energy consumption rises 3.9% in 2012

Retail fuel prices jump for the first time this year

ENERGY

China’s energy consumption totaled 3.62 billion tonnes of standard coal equivalent in 2012, up 3.9 percent year on

year, the National Bureau of Statistics (NBS) said February 22.

Consumption of coal, crude oil, natural gas and electric-ity rose 2.5 percent, 6.0 percent, 10.2 percent and 5.5 percent from a year earlier, respectively.

Energy consumption for every 10,000 yuan ($1,601.98) of China’s GDP fell 3.6 percent year on year, according to a report released by the NBS.

Monitoring of 571 sections of major rivers show that

The target for energy consumption for every 10,000 yuan of China’s GDP set

by the 12th Five Year Plan was 16 percent reduc-tion annually. To achieve this target, China needs to work harder.

Comment

Experts predict that the international crude oil prices are not likely to retreat

back from current level. The price hike of gasoline may add salt to the wound of inflation.

Comment

water quality of 63.9 percent of the sections met or exceeded standards. However, 12.4 percent of the sections were found to have dirty or polluted water.

China Dai ly repor ted that retail gasoline and

diesel prices were raised on February 25 for the first time this year on the back of the country’s economic rebound, which will lead to an increase of February’s consumer price index, experts said.

Retail gasoline prices jumped by 300 yuan ($50) a metric ton, or 0.22 yuan a li-ter and diesel prices increased by 290 yuan a ton, or 0.25 yuan a liter from February 25, the National Development and Reform Commission, the nation’s top economic planner, has announced.

The price adjustment, which is within the expectations of the market, will raise the gasoline retail price to more than 8 yuan a liter again in Beijing.

“As the major material for transportation, the price rise will result in higher costs for operations in key industries in-cluding agriculture, forestry and fisheries and eventually lead to the CPI climb this month,” said Han Jingyuan, an analyst at the oil department of JYD Online, a bulk commodity con-sultancy in Beijing.

International crude oil prices have been rising since the beginning of the year. By February 18, the Brent oil price, one of the prices that China refers to for fuel price adjustments, had increased by 5.45 percent compared with the beginning of January.

During China’s lunar New Year, earlier this month, the Brent crude prices reached $118 a barrel, a record high in nine months, which led to the growth of average movement of the three reference markets, namely Brent, Dubai and Cinta’s oil prices.

China’s current mechanism allows the government to adjust fuel prices if the average movement changes by 4

percent. The last fuel price rise was on November 16, 2012.

“At present, the major countries adopt easy monetary policies to stimu-late the economy, which has boosted the oil price rise,” said Li Hong, an analyst at SunSirs. “The high oil price will hurt investor expectations of the economic rebound. It is difficult to predict wheth-er retail fuel prices will continue to rise in March or not.”

Prompted by weak domest ic demand in recent months, the fuel in-

ventories in refineries are high, and are sufficient for market supply. Although the busy season for diesel consumption is approaching, the shortage is not likely to happen, according to SunSirs.

Li said the price rise will be beneficial for the country’s two top refiners, Sinopec Group and PetroChina. It will also provide profit opportunities for local refineries.

As China is strengthening its reform of the energy in-dustry, many industrial insiders and experts believe the new fuel pricing mechanism plan may be launched this year.

“All the price adjustments last year were largely based on the international oil price change. It is certain that the fuel price adjustments will eventually become the norm,” said Li.

Zhou Dadi, former director of the NDRC’s energy re-search institute, commented that the current pricing mecha-nism remains complex and not nimble enough to ref lect global crude oil prices.

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The new taxation policies will be ben-eficial for the environment, natural re-

sources and the country as well.

Comment

Geothermal energy, as renewable and clean energy, can help reduce energy

pressure and promote ecological progresses.

Comment

ENVIRONMENT

China to introduce carbon tax

China to further tap geothermal energy

million tons of TCE annually and a national information system on the energy shall be in service, said the guideline, jointly issued by the National Energy Administration, the Ministry of Finance, the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Develop-ment.

Under the same time frame, geothermal energy shall provide heating for 500 million square meters of housing, and installed capacity fueled by geothermal energy should top 100,000 kilowatts, the guideline said.

The State Council in late January approved an energy consumption control target, part of the country’s efforts to correct overuse and foster greener growth.

It set a target to keep total energy consumption below 4 billion tons of TCE by 2015, with electricity consumption below 6.15 trillion kilowatt hours.

China will proactively introduce a set of new taxation policies designed to preserve the environment, including

a tax on carbon dioxide emissions, said a senior official with the Ministry of Finance, Xinhua News Agency reported.

The government will collect the environmental protec-tion tax instead of pollutant discharge fees, as well as levy a tax on carbon dioxide emissions, Jia Chen, head of the min-istry’s tax policy division, wrote in an article published on the MOF’s website.

It will be the local taxation authority, rather than the environmental protection department, that will collect the taxes.

The government is also looking into the possibility of taxing energy-intensive products such as batteries, as well as luxury goods such as aircraft that are not used for public transportation, according to Jia.

To conserve natural resources, the government will push forward resource tax reforms by taxing coal based on prices instead of sales volume, as well as raising coal taxes. A resource tax will also be levied on water.

The article did not specify when the new measures will be implemented.

In 2010, MOF experts suggested levying a carbon tax in 2012 at 10 yuan per ton of carbon dioxide, as well as rec-

China is aiming to provide geothermal energy of 50 mil-lion tons of coal equivalent (TCE) annually by 2020,

said a guideline issued, Xinhua reported.By 2015, geothermal energy shall supply power of 20

ommended increasing the tax to 50 yuan per ton by 2020.China is among the world’s largest emitters of green-

house gas and has set goals for cutting emissions. The gov-ernment has vowed to reduce carbon intensity, or the amount of carbon dioxide emitted per unit of economic output, by 40 to 45 percent by 2020 in comparison to 2005 levels.

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TEXTILE

Vancl expects 50% increase of annual results in 2013

Quotas of textile processing trade planned to be raised

Chen Nian, CEO of Vancl (Beijing) Technology Co. — Chinese famous online clothing retailer — has made up

his mind to firmly stick to the concept of brand building in the beginning of the Year of Snake.

Incorporated in 2007, Vancl was positioned as an online clothing brand, starting from selling shirts for men, with an aim to realize the revenue of 200 million yuan three years later. However, 2008 saw the brilliant performance of Vancl as a successful electric dealer.

In 2010, the revenue amounted to 2 billion yuan, which gave Vancl enough confidence, as well as potential risks. The business scope included not only clothing, but commodities like electric cookers as well, which formed the huge product categories of more than 240,000. In 2011, the sales target of 10 billion yuan was just completed 3.8 billion. The overex-pansion led to the high inventory of 1.445 billion yuan, caus-ing a loss of 600 million yuan at the end of that year.

The failure of Vancl’s IPO at the beginning of 2012 made people worry about its fate. Nonetheless, the quarterly profits in Q4 of 2012 prevented Vancl from dying, realizing the revenue of 6.54 billion yuan, which could still not turn the negative number of net profits for the whole year into a positive one.

During the previous year, Chen Nian did a lot to change. Reducing warehouses, curtailing the categories from

Vancl expanded too fast during the past several years. From enlarging

product categories to developing overseas mar-ket, it gradually lost itself in the fierce competi-tion. Now, Vancl re-positioned itself as a tradition-al brand with features of electric business com-pany, rather than an electric business company with features of a traditional brand.

Comment

Influenced by the European debt cri-sis, the international market for Chi-

nese textiles seems still sluggish in 2013. How-ever, it cannot be worse, which means the related companies should speed up the process of trans-formation and upgrade.

Comment

240,000 to 60,000, refining procedures and assessment stan-dards, optimizing the efficiency of supply chain and destock-ing by various promotions, all of which made Chen Nian realize the importance of branding all of a sudden.

On January 21 of 2013, a new channel about fashion-able clothing for women was launched, which resembled the model of fast fashion brands like ZARA and H&M whose products are abundant in styles and flexible in quantities.

Also in January, Chen Nian predicted that the sales vol-ume this year will increase 50% and he will spare no efforts to make Vancl profitable.

Now he would rather focus on the building of brand than merely make Vancl an electric dealer with a large scale. The transformation is arduous, but worthy trying.

According to a report by China National Textile and Apparel Council, the quota of textile processing trade is planned to

be increased this year by the Ministry of Commerce, in order to reverse the downturn in textile and apparel exports.

The company which obtains the quota can import re-lated cotton without tariffs, said an analyst. Generally speak-ing, the company can only apply for the quota of importing cotton when getting overseas processing orders. Therefore, the quantity of overseas orders acts as the key to make full use of the quota.

Recent statistics from the Customs suggested that the exports of textiles and apparels in January increased 14.7% to an amount of $24.69 billion. To be specific, the exports of textiles jumped 19.7% to $9.18 billion, and that of apparels rose 12.1% to $15.51 billion.

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The Spring Festival is always a golden week for businessmen. Those who

meet consumers’ needs and follow the consump-tion trend will not miss the opportunities.

Comment

Bank card transactions is becoming more and more popular with Chinese

consumers, indicating vast opportunities for busi-nesses.

Comment

CONSUMER

Retail sales surge during China’s Lunar New Year holiday

Spring Festival holiday fuels bank card transactions

Holiday shopping spree significantly boosted China’s retail sales during the week-long Lunar New Year festival, data

released by the Ministry of Commerce (MOC) showed, Xin-hua News Agency reported.

Shops and restaurants across the country earned 539 billion yuan (85.5 billion U.S. dollars) in the past week, an in-crease of 14.7 percent in comparison with that in the previous year. The sales volume of food was up 9.8 percent, jewelry up 38.1 percent and garment up 6.3 percent. The sales of digital products also jumped.

The Spring Festival, which fell on Feb. 9 this year, is tra-ditionally a time for family reunions in the nation. Businesses usually experience a boom during the period as people swarm to shops and restaurants.

Amid the hot sales in general, luxurious restaurants saw business dwindle remarkably, partly due to a nation-wide cam-paign against extravagance and call for frugal lifestyle.

Data showed the high-end restaurants in the better-off Zhejiang Province in east China saw business revenue decline at least 20 percent.

In order to conserve food, many restaurants in major cities provided dishes based on customers’ specific needs and

China saw rapid growth in cross-bank card transactions during the Spring Festival holiday, statistics from national

bank card network operator China UnionPay showed, said Xinhua.

The total value of domestic cross-bank card transactions rose 43 percent year on year during the holiday, which lasted from February 9 to 15, while overseas card transactions gained 33 percent during the period, China UnionPay said in on on-line statement.

Card payments in shopping malls and supermarkets con-

offered free packaging of the leftovers.According to the MOC, food supply and prices remained

steady during the holiday. The price of mutton rose 1.9 percent, and that of beef up 1.3 percent, pork up 0.9 percent.

tinued to show robust growth, up 44 percent and 34 percent, respectively, but transactions in restaurants grew only 17 per-cent from a year earlier.

Card transactions in jewelry shops experienced a boom during the period, surging 119 percent year on year due to Val-entine’s Day, the statement said.

Marked transaction growth was also recorded in tourism-related businesses, including ticket purchases at tourist attrac-tions and spending in hotels.

In major overseas tourist destinations such as Cambodia, Thailand, the Republic of Korea, Taiwan, Malaysia, Singa-pore, Italy and the United Arab Emirates, UnionPay card transactions grew by over 40 percent during the holiday.

China UnionPay is solely responsible for bank card trans-actions on the Chinese mainland and has extended its network to 141 countries and regions.

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TRANSPORTATION

According to China CNR Corporation Ltd. (CNR), four diesel locomotives it manufactured berthed at

Heshangdao Wharf, Dalian Bay, heading for Buenos Aires Bay, Argentina on February 25. The journey will last for two months via a Liberian freighter. This is the first time for the railway passenger locomotives CNR manufactured to enter the South American market on a large scale, which is the largest overseas order in China’s railway transportation equipment sector.

The locomotive-loaded diesel engines this time confirm to the latest European emission standards and the control in-terface for the driver and crew is in Spanish, official language for Argentina, which is convenient for operation. Unlike the locomotives exported before, the locomotives exported this

In spite of the fact that the Opinions on the Policies and Measures for Promoting the Sound Develop-

ment of the Logistics Industry (Nine Policies for the Logistics Industry by the State Council) unveiled earli-er does boost the development of the logistics industry, there is still some room for the domestic policies to be improved so as to gain better development of the logis-tics industry, said He Dengcai, Vice Chairman of the China Federation of Logistics and Purchasing (CFLP) on February 9.

However, the Report on Alleviating Burden of the Logistics Enterprises issued by CFLP shows that dur-ing the first half of 2012, 90.6% of the pilot enterprises paid more value-added tax, which was primarily con-tributed by high tax rate and insufficient tax deduction. As a result, He Deng suggests implementing a universal 6% tax rate for “cargo transportation service” and “lo-gistics supporting service”; creating an environment in favor of convenient and smooth traffic for the logistics transportation vehicles; supporting construction of the logistics delivery system in the urban areas; exploring various financing channels; and reforming the manage-ment mechanism for the logistics industry.

According to the Foreign Eco-nomic Cooperation Division

of the Leshan Commerce Bureau of Sichuan Province on February 17, Heima Mining Co., Ltd. in Mabian County of Leshan City spent EUR 15 million (about USD 20 million) to successfully purchase 70% shares and the core assets of LISAAirplanes, a French aircraft builder. Leshan Heima’s acqui-sition this time is realized by its subsidy — Lisa Airline Investment Stock Company in France and it is the first order among Sichuan’s overseas purchases in 2013.

The acquisition program will focus on aircraft manu-facturing, sales, flight and maintenance training, network-ing of taking off and landing points as well as tourism and will build into an industrial base integrating several flight bases, temporary taking off and landing points, maintenance service, flight training and air traffic operation. In this way, a complete and universal aviation industrial chain will be constructed with a large industrial scale, which will boost the coordinated development of the upstream and downstream industries.

Getting the order is just a first step, and it’s how to localize products to ca-

ter to the local market that can walk farther in the future.

Comment

Financing difficulties and high taxation are the major problems confronting

the domestic logistics enterprises at the current stage. Consequently, only earnestly implementing polices introduced and abating enterprises’ bur-den can the domestic logistics industry gain fast development.

CommentAs China’s low altitude opens and the domestic air traffic industry develops,

the M&A program by Leshan Heima lays a founda-tion for setting up plants in China and then driv-ing the emergence and development of the entire supporting industries and related techniques.

Comment

China’s railway passenger locomotives to enter the South American market

China needs to improve policies for developing the logistics industry

A private company in Sichuan successfully acquires LISAAirplanes

time are for the Argentine railways with the world’s largest track gauge, 1,676 mm to be exact. To this end, by virtue of state-of-the-art techniques and optimal structural design of the locomotive bogie, Dalian Locomotive and Rolling Stock Co., Ltd. under CNR Group took the initiative to design the “fully suspended” locomotive bogie, suitable for the 1,676 mm track gauge.

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FINANCE

Watchdog approves new foreign investors

Social security fund opens stock market accounts

China's new loans soar in January

China’s top securities watch-dog, the China Securities

Regulatory Commission, has ap-proved six new Qualified Foreign Institutional Investors, bringing the total number to 213. China has quickened the approval process for QFIIs to attract more foreign investors. It approved 72 QFIIs in 2012, up from 29 in 2011, Securi-ties Daily reported on February 21. The CSRC has also lowered the entry threshold, including lower-ing the QFII asset requirements to $500 million from $5 billion.

Opening the m a r k e t w i l l

help foreign investors hedge risks in complicated portfolios, and in the long run add liquidity to China's index futures market.

CommentThe size of the social security fund, comprising insurance for pensions, healthcare, unemployment, work injury and ma-

ternity for urban workers is growing every year and reached 2.85 trillion yuan in 2012. The Chinese Government is facing increasing pressure to preserve and increase the value of the fund. It's good news for stock market to have the social security fund on board.

Comment

At the Central Economic Work Conference last De-cember, the tone set for the monetary policy in 2013

was that China would maintain a proactive fiscal policy and a prudent monetary policy. However, China will “properly expand the amount of social financing to maintain a moderate increase in loan issuances”, and its influence was already felt in the first month of the year.

Comment

China’s national socia l security fund opened 30

new trade accounts in January to expand investment in the domestic stock market, the Shanghai Securities Journal reported on February 21. The new accounts set a monthly high not seen since Novem-ber 2008, which shows the strong willingness of national institutions to enter the stock market, the paper said. The benchmark Shanghai Composite Index rose 186.38 points, or 8.77 percent, in January, which strongly boosted the confidence of large and small investors. Some analysts said they believe the rise could be a signal of a bull market returning.

China’s new yuan-denominated lending soared to 1.07 trillion

yuan (170.4 billion U.S. dollars) in January, up 334 billion yuan year on year, the People’s Bank of China (PBOC) announced February 8, Xinhua reported.

New loans denominated in for-eign currencies stood at 179.3 billion yuan, representing a year-on-year increase of 194.1 billion yuan, the central bank said in an online state-ment.

It said that the country’s social financing, a measure of funds raised by entities in the real economy, amounted to 2.54 trillion yuan in January, up 1.56 trillion yuan from the same period last year.

The net amount of cash in January put into circulation stood at 779 billion yuan.

Item Balance (trillion yuan)

Increase (% y-o-y)

Money supply of broad sense (M2) 99.21 15.9Money supply of narrow sense (M1) 31.13 15.3

Cash in circulation (M0) 6.25 4.4Loans in foreign currencies 68.55 16.4

Loans in Renminbi 64.08 15.4Savings deposit in foreign currencies 95.51 16.5

Savings deposit in Renminbi 92.93 16.0

More financial statistics in January 2013

Source: National Bureau of Statistics of China

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ICT

By Cui Xiaoling

China Mobile would be roll-ing out its homegrown 4G TD-LTE network to over half a billion people in 100

cities this year, announced Xi Guohua, Chairman of the company, at the World Mobile Congress (WMC) held in Barcelona from February 25 to 28.

China’s dominant wireless carrier also unveiled four smartphone models built to run on its 4G network, coming from foreign brands HTC and LG, and Chinese handset makers Huawei and ZTE. The phones are likely to hit the shelves later this year, said Wang Hengjiang, deputy general manager of the terminal subsidiary of China Mo-bile.

This bumps up market confidence in the commercial success of TD-LTE, as the lack of capable mobile devices has long been a concern ham-pering the technology’s popularity.

The debut came after China Mo-bile’s recent moves to tout a faster 4G network at a time when the idea of 3G still remains something of a novelty for many Chinese users.

Faster speed TD-LTE (Time-Division Long-

Term Evolution) is a 4G technology that can offer peak speeds of up to 100Mbps. Currently, most carriers across the world are using another LTE variant, known as FDD-LTE (Frequency-Division Duplex), to build their 4G networks.

China Mobile’s TD-LTE has been chosen as a second global 4G standard. As of January, 29 telecom operators across the world have signed 45 TD-LTE commercial contracts and launched 64 TD-LTE trial net-works, according to Qiu Hong, an of-ficial with China Mobile’s department

of market operation. A total of 14 TD-LTE networks have been rolled out commercially around the globe.

The four phones unveiled on the WMC can not only use TD-LTE networks, but also FDD-LTE, besides China Mobile’s 3G and GSM networks.

Undergoing trials China’s 4G networks are stil l

undergoing trials across the coun-try, since official service can not be launched until the telecoms regulator, the Ministry of Industry and Informa-tion Technology (MIIT), issues 4G licenses.

Some analysts said the Chinese government is not likely to hand out 4G licenses before 2014, as it may be keen to avoid overlapping invest-ment since the issuance of 3G licenses happened not long ago, while others expect the licenses to be granted at the end of this year.

Not long after launching a dual-mode LTE network in Hong Kong in December 2012, which couples the homegrown TD-LTE with the exist-ing FDD-LTE technology, China Mobile announced commercial trials of TD-LTE networks in Hangzhou, Wenzhou, Guangdong and Shenzhen in February, four of the most affluent cities in China.

Opportunities for China Mobile For China Mobile, the arrival of

4G marks an important opportunity to regain the ground lost to its rivals in the nation.

The company’s hegemony from the 2G era has gradually diminished as China Unicom and China Telecom, its two smaller rivals, have gained mo-mentum in the 3G race. By the end of 2012, the number of users subscribing

to China Mobile’s 3G TD-SCDMA network totaled 87.93 million, while those subscribing to China Unicom and China Telecom’s 3G networks stood at 76.46 million and 69.05 mil-lion respectively.

China Mobile had a hard time introducing smartphones for its 3G networks, because it used a home-grown technology called TD-SCD-MA (Time Division Synchronous CDMA), which is not widely adopted outside the country. Although the country’s government backed the TD-SCDMA technology, China Mobile was slow to get handset makers to build smartphones for the standard.

While, its rivals – China Unicom and China Telecom used the more universally accepted WCDMA tech-nology. The much sought-after iphone, which is compatible with WCDMA but not China’s Mobile’s TD-SCD-MA technology, is one of the reasons that China Unicom and China Tele-com have higher 3G share.

This time China Mobile are mak-ing sure that the entire supply chain, from chip vendors to handset makers, are all on board. So that the lack of handset terminals won’t hold back the progress.

“The TD-LTE standard is far more globally acknowledged than its predecessor TD-SCDMA , and is expected to have a brighter outlook, which will undoubtedly give China Mobile a boost against competitors in the next-generation era,” Joy Yang, Shanghai-based chief analyst of the carrier network infrastructure group at Gartner Inc, told the Global Times.

In stark contrast with China Mobile’s 4G hype, China Unicom and China Telecom’s 4G schemes remain low-profile.

China Mobile to Launch4G Network

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Intelligent Traffic to Lead the Future

By Richard Zhu

Intelligent traffic is supposed to solve the problem of increasing passenger transportation, with the growing population in the

world’s largest conurbations and the increasing amount of traffic, accord-ing to a recent study by Roland Berger Strategy Consultants.

The study, entitled Connected Mobility 2025, predicts that intelli-gently linking mobility would save over USD 266 billion globally every year for the world’s 30 biggest megacities with paralyzed traffic flows.

According to the study, by intelli-gently linking transportation data and modes of transportation, people can quickly and easily use different mo-bility models as needed to get where they’re going. Integrated offers and a comprehensive management function (“mobility manager”) will play a central role by bundling various options and offering services from one platform.

“Although we live in an increas-ingly networked world, individual mobility remains mostly fragmented. At the critical moment, we lack the information on how to best get from A to B,” said Carsten Rossbach, Partner at Roland Berger Strategy Consultants, adding that “Integrated offers for the networked consumer will have a major effect on our mobility habits.”

The individual elements of in-tegrated mobility have been available in the society for a long time: private vehicles, public transit (local and long-distance), car sharing and, more and more frequently, electric cars. However, these elements are most often present on the market as closed transportation systems.

“It is only very rarely that these systems are so closely intertwined that the user can quickly and easily move from one mode of transportation to the next, as needed. There’s no comprehen-sive mobility perspective,” said Marc Winterhoff, Roland Berger Partner and co-author of the study. “Here is where modern information and com-munication technology can help drive networked mobility.”

This development i s sore ly needed, particularly in the world ’s largest conurbations. In these areas, approximately 180,000 people move to

the cities each day — a major challenge for the transportation systems of these metropolitan regions. Integrating vari-ous transportation options better would have positive effects, not only for the environment, but also for the quality of life in these large cities.

For the intelligent transporta-tion, smart mobility is already in place. The first is the widespread presence of smartphones. Today there are already more than a billion smartphones on the market around the world. Users can therefore access important real-time in-formation from anywhere. Experts es-timate that the number of smartphones will even double in the next two years.

Another point worth noting is the spread of key technologies that make it possible to quickly share data.

“The option of storing data in the cloud plus implementing Long Term Evolution (LTE) technology for rapidly transmitting information via mobile networks are already a reality today. They form the technological backbone of future mobility,” said Roland Berger strategist Carsten Rossbach.

New mobility offers considerable potential for adding value. The report predicts that companies that can offer customers the full range of mobility services — from travel planning and booking to billing — under one roof will benefit the most from the potential of smart mobility. However, it remains to be seen which sector will assume this key integrative function.

The findings show that one option might be car manufacturers, which are already at the heart of individual mobil-ity and have strong brands. But trans-portation associations, with their strong regional links, or railways and airlines with their international networks, could also assume this integrative function. And finally, telecommunication and Internet providers are also in a good position to bundle services from various mobility providers in single portals.

“One thing is clear,” said Ross-bach, adding that “First movers that can secure a strong starting position as mobility managers will control a large amount of value creation going for-ward.”

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By Lynn Yu

Worldwide PC Shipments Decline in 2012

According to the International Data Cor-poration (IDC) Worldwide Quarterly PC Tracker, 89.8 million PCs were shipped to the market worldwide during the fourth

quarter of 2012 (4Q12), down 6.4% compared to the same quarter in 2011. The results are below the fore-cast of a 4.4% year-on-year contraction. Despite the release of Windows 8 in the fourth quarter which marked a new beginning for the PC market, the demand for PC will remain weak in the foreseeable future. Continued pressure from other products as well as the dim economic outlook contributed to the depressed PC market. As a result, the fourth quarter of 2012 saw the year-on-year contraction of the PC market during the holiday season for the first time in recent five years.

Given the numerous challenges confronted by the PC market over the course of 2012, a sluggish market was largely expected, rather than a sur-prise, during the fourth quarter of the year. Earlier on IDC forecasted that the PC market would face depression in the second half of 2012. The grow-ing demand for tablets and smartphones diverted customers, vendors and distribution channels away from PCs. Furthermore, uncertainty about using a touch screen PC equipped with the Windows sys-tem or a tablet leads to the loss of buyers.

“Although the third quarter was focused on the clearing of Windows 7 inventory, preliminary research indicates the clearance did not significant-ly boost the uptake of Windows 8 systems in the fourth quarter,” said Jay Chou, senior research ana-lyst with IDC’s Worldwide Quarterly PC Tracker. “Lost in the shuffle to promote a touch-centric PC, vendors have not forcefully stressed other features that promote a more secure, reliable and efficient user experience. As Windows 8 matures, and other corresponding variables such as Ultrabook pricing continue to drop, hopefully the PC market can see a reset in both messaging and demand in 2013.”

“As anticipated, the U.S. market had a rough ending, dropping 4.5% in the fourth quarter and contributing to a decline of 7% for the full year 2012,” said David Daoud, research director, IDC U.S. Quarterly PC Tracker. “Consumers expected all sorts of cool PCs with tablet and touch capabili-ties. Instead, they mostly saw traditional PCs that feature a new OS (Windows 8) optimized for touch and tablet with applications and hardware that are not yet able to fully utilize these capabilities. De-spite a generally weak performance, some leading brands managed do to well relative to the market. HP, Lenovo, Asus, and Samsung were among the top performers, taking advantage of some consumer interest in Windows 8, and a push to build up their presence ahead of 2013.”

Regional outlookThe United States — The U.S. market con-

tracted less sharply than expected in the fourth quarter of 2012 thanks to the channel replenish-ment. But the prospect for the market is still dim. Promotion activities centering around Windows 8 have been taken. Nevertheless, the limited product choices, in particular for touch screen tablet PCs, made consumers once again delayed their purchases. Vendors who are intent on the consumer market like HP and Asian majors like Lenovo, Asus, and Samsung fared well. It is partly due to the response to the relatively strong consumer demand and partly due to channel activity promoting Windows 8 in December 2012 which originally was set to take place in the first half of 2013. Consumers now have clear attitudes towards Windows 8 while the other users of the industry take a wait-and-see attitude.

Europe, Middle East and Africa (EMEA) — The EMEA PC market performed as anticipated in the fourth quarter of 2012 with PC shipments declining 5% over the same period of 2011. Pushed by the new Ultra Slim products, sales of Windows 8

ELECTRONICS

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was accelerated in the early December 2012. But consumers continued to be prone to purchasing attractively priced tablets and smartphones rather than PCs, particularly during the Christmas. Commercial purchases remained slump and became worse due to the uncer-tainty in the economic situation across the region.

Japan — The Japan market saw a modest positive growth but still several percentage points below the expecta-tion. Consumer demand was expected to be weak because the first batch of Windows 8 PCs were priced much higher than the previous generation models. However, the Windows XP support service was about to be ended, boosting the commercial purchases. In the past several quarters, companies gradually upgraded to Windows 7.

The Asia-Pacific Region (exclud-

ing Japan) — The Asia-Pacific region performed not as well as expected since channels in most countries focused on clearing out Windows 7 inventory before bringing in Windows 8 stock. Although the economic growth slowed down and commercial project demand shrank, the Chinese PC market was not that far from the expectation.

“Preliminary statistics from China Quarterly PC Tracker indicate that the Chinese PC market remained weak,” said Wang Jiping, assistant director in charge of individual IT market research at IDC China. “The PC shipment in the fourth quarter of 2012 totaled 18.25 million units, down 1.2% over the same period of 2011 and the third consecutive quarter for negative growth. The PC shipment grew only by 1.1% for the full year 2012, the lowest for the past two decades. It was resulted mainly from the hit from other

devices like tablets and smartphones. In addition, many commercial and common family customers delayed their purchases to 2013.”

Vendor outlookHP continued to defend its top

spot in IDC’s worldwide vendor rank-ing and managed to revive slightly the depressed key markets recently. By vigorously promoting Windows 8, HP made headway in the Asia-Pacific mar-ket and the U.S. market. HP performed not very well in the EMEA market, but it registered the first year-on-year growth in the Asia-Pacific market in four quarters. The total volume re-mained almost unchanged from 2011 but better than the overall market.

Lenovo performed better than the overall market, registering a growth of 8%. The shipment volume reached a new record-high of more than 14 mil-lion units. Channels continued to win in the U.S. market and EMEA market. Albeit a positive market performance, Lenovo made much less profits than the previous several quarters when the company was besting market growth by nearly 30%.

Dell continued to lose market share while it is strongly challenged by other market leaders and has been trying to increase its prof its. Com-pared with the same period in 2011, its worldwide shipments dropped by more than 20%, which is faster than declines over the past several years. The volume of decline equals the U.S. market ship-ments. The company managed sequen-tial growth in other markets.

Acer Group remains dependent on consumer spending. Therefore, with consumers turning to other products, Acer Group has continued to struggle. Meanwhile, it has been cautious in upgrading its products to Windows 8, leading to continued decline of note-book shipments.

ASUS held onto its top 5 spot in the world with growth of 5.6% year on year, distancing vendors who have been focusing on consumers. The company demonstrated strong growth across all regions. With often innovative and com-petitively priced products, the company still managed a firm foothold on the increasingly tough market landscape.

Vendors 2012 Shipments

2012 Market Share

2011 Shipments

2011 Market Share

2012/2011 Growth

1. HP 17,856 26.8% 18,587 26.0% -3.9%

2. Dell 14,062 21.1% 15,898 22.2% -11.5%

3. Apple 7,585 11.4% 7,656 10.7% -0.9%

4. Lenovo 5,278 7.9% 4,706 6.6% 12.2%

5. Toshiba 4,593 6.9% 6,670 9.3% -31.1%

Others 17,150 25.8% 18,033 25.2% -4.9%

All Vendors 66,524 100.0% 71,550 100.0% -7.0%

Vendors 2012 Shipments

2012 Market Share

2011 Shipments

2011 Market Share

2012/2011 Growth

1. HP 58,129 16.5% 62,321 17.1% -6.7%

2. Lenovo 52,448 14.9% 44,016 12.1% 19.2%

3. Dell 38,718 11.0% 44,278 12.2% -12.6%

4. Acer Goup 33,494 9.5% 37,073 10.2% -9.7%

5. ASUS 24,134 6.8% 20,619 5.7% 17.0%

Others 145,498 41.3% 155,580 42.8% -6.5%

All Vendors 352,421 100.0% 368,887 100.0% -3.2%

Top 5 Vendors, Worldwide PC Shipments, 2012 (Preliminary data) (Units Shipments are in thousands)

Source: IDC Worldwide Quarterly PC Tracker, January 10, 2013

Top 5 Vendors, United States PC Shipments, 2012 (Preliminary Data) (Units Shipments are in thousands)

Source: IDC Worldwide Quarterly PC Tracker, January 10, 2013

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CREATIVITY

Lost in Thailand, not Lost but WonBy Guo Yan

If asked which f ilm was the most popular in China in 2012, undoubtedly the answer would be ‘Lost in Thailand’. Since it was shown in December of 2012, the ticket office

continued to break records. And ultimately, the box office closed at a record of RMB 1.26 billion and accumulated audience of over 380 million, which made it the first film in China whose box office exceeded RMB 1 billion. What is even more exceptional is that the investment only cost around RMB 30 million.

Since then, Lost in Thailand has become a cultural phenomenon in China. According to Mr. Wang Changtian, Chairman of Enlight Media, which anticipated the investment opportunity, this film brought the box office revenue sharing of over RMB 500 million. Why was the film so popular? The participated parties of this movie and experts thought that the most important is that this is a good story with clear objective and successful mar-ket promotion.

Be sure of the type of a comedy and follow its internal rule

For the marketing positioning of Lost in Thai-land, Xu Zheng, director of this movie, was clear of it. He produced it according to a specific type. Mr. Shu Huan, screenwriter of this movie once said that the character of this movie is road come-dy. Before it was written, the producers researched similar movie from home and abroad. Therefore, in the process of creating the movie, they are strict to follow the rules of this type of movies.

Shu thought that writing the script was just like drawing a road map of a story complete with high tide and valleys, for the movie the character relationship and comedy plot were drawn out with more details and quantifications. Shu was aware that timing is the key component of comedy and made sure that punchlines not only corresponded with specific plot points but also made sure that the audiences had the time to laugh, to relax and to rest and the comedy wasn’t overbearing or without dramatic pause. This could guarantee the quality of the work stability and be suitable for audience. Shu’s method was both effective and formulaic;

therefore, this is more like a mass of cultural prod-ucts, not “personal inspiration” but an assembly line production.

At the same time, the film not just has the commercial factor, but has touched and connected with people as well. Mr. Wang said that it is neces-sary to cut some part of comedy so as to balance the commercial and emotional aspects.

A good story is the key to a successful movie

Chinese writer Mo Yan, winner of the 2012 Nobel Prize in Literature, described himself as a storyteller in a lecture at the Swedish Academy, he also mentioned that it was the telling of stories that earned him the prize. Xu Zheng also thought that narrative is the core of a movie, and he could convince Mr. Wang Changtian that he has a good story that investors would like.

Mr. Wang said every year he would see doz-ens of scripts or story outlines, especially when the investments are concentrated. The movie could be successful as it tells a good narrative and plot that could impress the audience.

In this movie, the actors Xu Zheng and Wang Baoqiang represent two kinds of common people in China: the middle class with a comfortable life but massive pressure, and the other from the grass-roots with dream and a strong heart.

Professor Zhang Yiwu in Peking University analyzed that Lost in Thailand showed the anxiety of reality and the desire for happiness in daily life were issues that really resounded with the audience. In fact the roles that Xu Lang and Wang Bao are two sides of one person. Xu Lang displays the vul-nerable side of the middle class, while Wang Bao shows the strong side of the grassroot class. They all have the complicated anxiety and it is difficult to balance mental and material demands. At the end of the story, they compromise. The film com-bines the humor and sentimentality that expresses the contemporary Chinese sense of reality in exotic tone.

Most of the films adopt the notion that the elite are used to looking down. But this film didn’t. Mr. Wang Haizhou, China’s famous film critic,

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thought that “civilian narration” is more direct and close to the ordinary people. The characters are in a completely unfamiliar environment, and they are in equal status, so their personal be-havior is more close to the ordinary people. The audiences are touched by what they showed.

Every audience is the promoterWang Changtian once said that the promo-

tion of this film is the most widely by Enlight Media. And it is rare that the promotion capital is equal with the production cost.

The advantage of Enlight Media is its wide broadcast network. Many programs they produced are shown at a variety of player terminals such as local television station, bus, subway, train, air-plane, hospital and university campus. So in this respect many resources could be used, while they also give Enlight Media support.

Enlight Media put ads at 360 computer terminals and Alipay, and promotes in news at local television stations in order to attract more audiences. Even in the stores of Suning and Gome, the videos of Lost in Thailand are shown on the sample televisions. According to Enlight Media, there are more than thirty posters for promotion that greatly enlarge the range of the audiences.

In addition, Enlight Media also has the ad-vantage of distribution channels, for example the company arranges the distributers in every cine-ma in the 70 major cities that have the higher box office than other cities. So they could know the demands of the audience and the arrangement of the cinemas that could let the movie producers think about what the audiences like. The system is set up so that it could improve the box office by 30%. When the movie is on the screen, the local distributers coordinate with the local cinema and media, so the efficiency is higher.

To provide the opportunity to new director

Lost in Thailand is directed by Xu Zheng, who is one of Chinese famous actors. This is his first time to direct a film. Mr. Wang Changtian thought these directors know Chinese culture, understand the audience’s interest, and are full of innovative ability. To cultivate new directors and new actors are the future direction of Chinese film. If new mainland directors do not constantly emerge, there is no future to Chinese films.

In 2012, there were over 600 films that were produced in China; eventually only 150-200 made it into the cinemas, according to Wang, only 20% of them that are shown could make money. The biggest problem during movie production is that the project continuity is not strong. Today the movie is successful, but tomor-row it is hard to succeed. Therefore, although Lost in Thailand succeeded, Wang said frankly that there are risks in the process of movie investment and distribution. He wished that no matter you were an investor or creator the most important thing is to maintain peace of mind.

It is necessary to cut some part of comedy so as to balance the commercial and emotional aspects.

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HEALTH

By Cai Hongbo, Zhou Minghui

Opportunities and Challenges of the Health Industry in Aging China

As the population aging is accelerating, unproductive consumption expenditures in national income, such as

the medical and caring for the elderly increased significantly. At the same time, working population has been decreasing. In developed countries, the health industry has become a strong driving force for the growth of the national economy, where the output of health industry accounts for more than 15% of the GDP. It is only about 4%-5% in China, which is much lower than many other developing countries. To some extent, the development of relat-ing industries which is pushed forward by population aging brings about great market potential. Chinese health in-dustry is about to step into the rapid industrial growth of the Golden Age.

The aging of the populationThe mortality has been greatly re-

duced due to the improvement of sani-tary conditions, the progress of medical technology, the improvement of living standards and the reinforcement of health awareness. The average life ex-pectancy was increased from 46.6 years in 1950-1955 to 67.6 years in 2005-2010. According to the data released by China National Bureau of Statistics, the elderly population over the age of 65 reached 7% of the Chinese population in 2000, and it came to 9.4% in 2012.

In the long run, the number of the elderly will be in rapid growth in the next 40 years. Studies show that the proportion of the elderly population

in China is expected to reach its peak in 2055. Even if the subsequent speed of population aging slows down, the proportion of the elderly population in China may still stay at the level of 34% in 2100. In a long period, the global trend of population aging will be irre-versible.

China’s average life expectancy increased year by year. In fact, the living condition of the elderly is not good. Nearly half of the elderly have

not enjoyed the pension insurance yet. Furthermore, since the one-child policy was adopted in China over 30 years ago, the pressure of the young to sup-port the elderly is more than ever be-fore. As a result, it does have influences on the mentality of the elderly, such as strong sense of loneliness and lower self-care ability. These can increase the seniors’ demand for health services.

The health industry is an emerging industry with huge market potential. It

Figure 1 China's population age structure (1982-2011)

Data source: China Statistical Yearbook (2012)

100%90%80%70%60%50%40%30%20%10%

0%

■ more than 65 years old■ 15-64 years old■ 0-14 years old

1982

1990

1996

1998

2000

2002

2004

2006

2008

2000

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bilitation therapy, reproductive nursing and beauty makeup; traditional health products industry which mainly includes the procedure of producing and selling health food, functional beverages and health supplies; health management industry which mainly includes the personalized health detection and evalu-ation, consultants, sports and leisure, in-termediary services; new health industry which mainly includes transit circulation and professional logistics distribution.

involves the production and consump-tion of pharmaceutical products, health supplies, nutritional food, medical equipment, fitness, health management, health consulting. Health industry is deemed as a “sunrise industry”. Specifi-cally, China’s health industry is consti-tuted by six industry groups: medical industry which mainly includes medical services, medicines, equipment; non-(cross-) medical industry which mainly includes health physical therapy, reha-

OpportunitiesThe health industry in China is at

an early stage and is in a serious short-age of investment, which also brings huge space for future development. Currently the most important opportu-nities will be in five areas: drug R&D, medical devices, high-quality hospi-tal, information industry directly for healthcare, and health insurance.

Oppor tunit ies of China’s health industry by the capital inflows

In 2011, 28 enterprises in China’s health industry IPO successfully, getting a finance of $5.333 billion. Compared with the peak in 2010, the amount of financing and the number of listed com-panies declined, but the trend was main-ly due to the downturn of the overall IPO market. According to Zero2IPO database, the number of Chinese listed companies in 2011 decreased by 120 over the previous year, 41.6% decrease in the financing amount. Healthcare industry has a strong attraction for the capital due to demand rigidity as well as the improvement of the medical security system. So its decline is lower than the overall. In other words, net inflow of the capital in health industry is positive.

Compared with the traditional industries, high-tech and long-term investment is extremely prominent to the health industry. The biopharmaceu-tical industry involves many high-new technologies and the cycle is generally 8 to 10 years or even longer. In the past venture investment helped to solve the shortage of the capital. Venture capital is mainly aimed at unlisted SMEs. The investment targets high-risk, high-growth and high-yield program. These SMEs can get stable funding easily from the venture investment. Therefore, these companies may attract a certain amount of venture capital to China’s biopharmaceutical field. The opportu-nities are unprecedented for the sus-tainable enterprises.

Improving existing social pen-sion system

China’s current social pension sys-tem is being improved year by year, but there are still many problems. For exam-ple, it is still difficult to meet the needs of the elderly for the number of beds in

ItemNumber of Enterprises Number of Staff and Workers

(10 000 persons)

2010 2011 2010 2011

Urban Institutions for Aged Persons 5413 5616 7.3 8.1

Rural Institutions for Aged Persons 31472 32140 14.2 15.2

Community Centers(Stations) for Aged Persons

56957 70547 27.9 33.7

Table 1 Statistics on Social Service Institutions

Data source: China Statistical Yearbook (2012)

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pension institutions. By the end of 2008 in China, there are a total of 42,040 pension institutions, 2.355 million beds, accounting for only 1.47% of the elderly population. This percentage was much lower than that of 5% to 7% in devel-oped countries, and did not reach the level of 2%-3% in most developing coun-tries (such as Brazil, Romania). Among these existing pension institutions, rural nursing home accounts for 77.84%. But most of them fell into disrepair which failed to effectively alleviate the prob-lems arising form taking care of the elderly in rural areas. The elderly popula-tion is increasing year by year and the demand for health services is increasing. The companies can engage the appropriate medical facilities, medicines R&D and pension institutions to provide better products and services for elderly con-sumers. The huge demand brings great opportunities for the medical industry and non-(cross-) medical indus-try. Enterprises could seize the opportunity to fill the vacancy of the current elderly services. It is not only good for the development of the enterprise itself, but also for bringing the substantial preparation facing aging society.

Innovation of health services for the elderly

In China, especia l ly in rura l China, most of the elderly live together with their children. They can be taken good care of, but there are still a lot of the elderly who feel lonely and are lack of spiritual solace. Elderly apart-ment was either too expensive or in lack of ancillary services, so it failed to be widely used. Solving these problems, Japan and Germany have a lot of valu-able experiences for China to learn from. The enterprise could improve the innovation capability of service and technology and exploit the market of the aging population to meet their needs.

ChallengesThough China’s health industry

has made significant achievements in

the medical treatment, public health, health care, life sciences, there are still some flaws, such as a regulatory fatigue, adverse development and disorderly market. It is a huge challenge for the government and the industry to make good use of the policy to guide and regulate the development of healthy industry.

Regulating the order in health market

Although China’s health indus-try is developing rapidly, there are no

relevant legal, institutional norms or standard as reference, especially health care products industry. Some health care products companies which are aiming at the elderly enlarge product efficiency just for their own economic benefits. Now industry regulation is far from perfect, and it cannot rely on the consumers themselves to become health care experts. If the health in-dustry wants fast and sustainable de-velopment, it must make great efforts in building a social credit system and creating good social environment and market environment. China’s elderly population is growing, consumers are more vulnerable to the impact of media publicity. Therefore, it is a great chal-lenge for government departments to enhance the regulation and rectify the order in health industry. The regulatory authorities should act as a connect-ing bridge between the suppliers and elderly consumers, as a neutral third party to promote the self-discipline of the enterprise and avoid consumers misunderstanding.

The diversification of health products and services

There are only 27 claims of health care products that fit the national stan-dard, which is more likely to decrease to 18 claims. Almost all of the products in the market are of the same quality. It is difficult to distinguish the difference among them for the consumers. In ad-dition, most of the companies provide similar service, so it is difficult to form their own core competitiveness. For example, health care training center is

the professional institution which can provide health care services for the elderly who are suffering from vari-ous chronic diseases. Japan started it in 1997. Bathing and blood pressure measure-ments and other day-to-day care are difficult due to the lack of necessary equipment in the home of elderly pa-tients. So this institution has bathing services, health ser-vices and so on. China could learn from this way. It can not only reduce the burden on the families, but also meet the daily needs of the elderly.

It is a challenge in the process of devel-opment to diverse health services and improve the quality of health products.

Expanding the information consulting business

The contradictory between con-sumers’ health needs and the lag of national health care system performs in the following aspect: the demand for health products and services grows with economic growth, but there are still not suitable health counseling agencies to help health consumers. The actual situ-ation is that existing National Health Service System is to provide medical services for sick patients of all ages. But nationwide consulting agencies that are specifically for the elderly have not appeared. At present in the society, there are a few informal health advisory institutions, but there are no real health advisory institutions set up in the com-munities and cells.

(Authors: from School of Eco-nomics and Business Administra-tion, Beijing Normal University)

HEALTH

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EXPO

By Audrey Guo

According to COMEXPOSIUM, SIAL China 2012 surpassed FOODEX JAPAN for the first time to become the most re-

markable international food trade show in the Asia-Pacific region.

Statistics show that SIAL China 2012 saw an increase of 25% in the booth area for the second consecutive year to 73,200 sqm. The number of domestic exhibitors and that of overseas exhibitors shared an almost equal ratio among the total of 1,907—46% for the latter and the rest 54% for the former. The number of professional visitors stood at 40,722, a 22.4% hike over the previous year. Besides, the number of visitors outside Shanghai exceeded that of the Shanghai lo-cal visitors for the first time.

SIAL China 2013 is to be held in the Shanghai New International Expo Center on May 7, 2013. The expo will maintain an growth of around 15% in exhibition area, exhibitor number and visitor number re-spectively to 85,000 sqm, 2,200 and 46,000 respectively.

By the end of 2012, 80% of the over-seas sales target was achieved. Although domestic sales did not start until last No-vember, nearly 70% of the sales target was achieved merely during two months. The expo boasts of many regular exhibitors and more importantly it has attracted many new countries for registration, such as Czech Republic, Romania, Columbia, Belgium, Switzerland, Vietnam and Turkey.

The domestic provinces and cities are actively preparing for participating in the exhibition. For instance, Shangdong, Zhejiang, Shanghai, Ningbo, Urumqi and Changchun are engaging in launching the local quality food for exports. Besides, the Foreign Economic Cooperation Center un-der the Ministry of Agriculture will bring the seven famous apple producing areas –

Shaanxi, Shangdong, Henan, Shanxi, He-bei, Liaoning and Gansu to exhibit their quality apples in the Fruit and Vegetable Section as well as quality fresh vegetables and de-hydro freezing vegetables.

According to statistics at the end of 2012, the sale amount of domestic regular import food had surpassed RMB 63 bil-lion in 2012, while, in 2011, the number was RMB 54. It means that in the past two years, China’s import food market has ex-panded at a speed of over 20%.

Some experts predict that 2/3 of the Chinese population, or over 800 million peo-ple will become a major consumption group for import food in the next 10 years. The American Food Industry Association made a forecast that by 2018 China will become the world’s largest import food consumer and the Chinese mainland food market scale will total RMB 480 billion.

In short, China’s import food market will usher in fast expansion in the upcoming 10 years.

China’s import food market will usher in fast expansion in the upcoming 10 years.

China Import Food Market Expands Rapidly

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By Lynn Yu

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Chinese Brands Value Saw an Overall Growth

According to the 2012 Best Chinese Brands ranking released recently, China Mobile tops the list, fol-lowed by China Construction

Bank and Industrial and Commercial Bank of China, all of which have leaped forward by one rank over the previous year. Other brands making their debut on the list include China Life, Bank of China, Agricultural Bank of China, Yanghe Blue Classic Liquor, Xtep, Fenjiu and Semir.

Against an overall slowing down econ-omy, the total value of the brands on the list

rose 13% year-on-year. Except the newly enlisted brands, the total value of the brands that were also on the list in 2011 increased by 7%. The growth of the listed brands is mainly contributed by the new brands, par-ticularly by the 7th-ranking Agricultural Bank of China and Yanghe Blue Classic Li-quor, which ranked 24th.

Listed in Shanghai and Hong Kong in July, 2010, the Agricultural Bank of China made its debut on the list in 2012, as enough public data can be obtained to assess the bank’s brand value. Yanghe Blue Classic

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Without the support from the “home ap-pliances going to the countryside” policy, the household appliance sector is now trapped in the supply-over-demand dilemma. The 33rd-ranking Gree and the 35th-ranking Midea dropped 4% and 6% respectively in brand value. And only Haier, ranking at 30, enjoyed a rise of 25% in brand value. The key for Haier to maintain growth in a gloomy market is to implement or-ganization operation by corporate culture and to drive product and service innovation for consum-ers based on its brand value.

A dramatic change occurred in the listed brands of the sporting goods. Owing to a market downturn, high inventory and more intense intra-sector competition, three out of four sporting brands included in last year’s list — Anta, Li-Ning and PEAK saw negative growth in brand value. Li-Ning slipped down to ranking 39 from last year’s 29. It is notable that the 45th-ranking Xtep, which entered the top 50 list for the first time, is the sole brand among the five listed domestic sporting brands to post positive growth. Differen-tial positioning and a sound channel strategy have assisted Xtep to survive the market trough.

The frequently-happened quality issues in the food and beverage sector this year dragged its overall brand value by 69% compared with last year. Yurun and Shuanghui were even excluded from this year’s list. The only enlisted brand from the food and beverage sector is Mengniu, ranking at 41 with a fall of 18% in brand value. The top priority for the Chinese food and beverage brands to rebuild up consumers’ confidence and brand loy-alty is to attach more importance to food security and to effectively respond to consumers’ desire for health.

The total value of the 2012 Best China Brands demonstrates a steady growth, and those upward brands against a flagging sector framework manifested to the world the progress and hope for the Chinese brands. “The Chinese companies have quickly stepped onto the track of building brands. Before becoming a perfect brand-driven company in China, brand strategy replacing marketing to guide the overall business strategy is supposed to be the only way out for the domestic companies to build influential international brands at the current stage,” Mr. Chen Pu, Managing Director of Inter-brand Shanghai, pointed out.

Liquor has maintained rapid growth in these years with a Compound Annual Growth Rate (CAGR: annual sales revenue and net profit) of 64% and 82% respectively during 2008 and 2011.

Compared with 2011, the threshold to enter onto the list has enhanced further last year. The value of the 50th-ranking brand reached RMB 1.78 billion, an increase of RMB 420 million over 2011. Among the sectors, the banking sector and white spirit sector are the top two players with staggering growth, which is mainly driven by financial per-formance, and their brand influence and strength basically remains the same with 2011. In other sectors, it is worthwhile to observe performance by such brands as Tencent, Baidu, Haier and Lenovo.

The financial service sector still plays well on the list. 18 of the 50 top brands are from this sec-tor, including 12 banks, 4 insurance companies and 2 securities companies. The brand value of all the banks on the list has gone up compared with last year. The 17th-ranking Minsheng Bank and the 43rd-ranking Huaxia Bank grow fastest at a rate of 29% and 28% respectively, which signals their power to focus on small and micro businesses to drive product and service innovation. Impacted by the bear stock market, the securities and insur-ance sector saw an industry-wide decline in brand value. Only Ping An, ranking in the 6th place, unexpectedly experienced a growth of 16% in its brand value, which was contributed by its brand-based business strategy.

The Internet sector shows a steady growth momentum. The best performance comes from the 13th -ranking Baidu and 8th-ranking Tencent with a rise in brand value of 24% and 21% respec-tively. The former keeps leading the search engine market and the latter, with its WeChart business, registers a strong growth in the mobile Internet domain. Among the listed six companies from the Internet sector, only Ctrip, ranking in the 29th place, saw a sharp decline of 27% in terms of brand value due to more fierce competition in the online tourist market.

The auto market has stepped into a single-digit growth era. The homegrown brands are the first to bear the brunt. The 49th-ranking Great Wall Motor, however, has registered a 5% increase in brand value last year. Its focus and professional-ism on SUV has helped it to become the biggest winner in the hot SUV market.

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China’s trade surplus with the United States shrinks by a quarter when calculated by a new method, which analyzes the value-added by a country in the production of any

good or service that is then exported. It reflected the high level of foreign-sourced content in Chinese ex-ports.

Based on this new calculation, the U.S. 2009 trade deficit with China contracted to $131 billion from the $176 billion shown in the gross data, accord-ing to a Reuters report.

The new estimate is one of the key findings of an ambitious project by the Organization for Economic Cooperation and Development (OECD) and the World Trade Organization (WTO). The project is

designed to present a truer picture of underlying trade flows in an age of global supply chains when interme-diate inputs can cross borders several times during the manufacturing process.

In the joint study, the OECD and the WTO break with conventional measurements of trade, which record gross flows of goods and services each time they cross borders.

Traditional measures of trade flows fail to reflect the complexities of global commerce, and the result is a distorted picture, one that leads to ill-informed policy decisions if viewed in isolation.

The Apple exampleTake the most illustrated iPhone case. The

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traditional measures classify the iPhone as a wholly “Chinese” export to the United States, even though it is entirely designed and owned by a U.S. company and nearly all the component parts have been produced in several Asian and European countries. China’s contri-bution is the final step ─ assembling and shipping the handsets.

The factory-gate price of the phone ─ $187.51 in 2010 ─ will have shown up in full in China’s gross export figures.

In fact, according to estimates provided by re-search firms iSuppli and Chipworks, Taiwan was the origin of $20.75 of the value; Germany, $16.08; South Korea, $80.05; the United States, $22.88; and others, including Japan, $47.75.

And that does not tell the whole story. To trace the origin of the value-added, information is needed on the whole chain of suppliers and their suppliers.

Putting the figures together in what the OECD and WTO said was a first analytical stab, America’s 2009 trade deficit with China shrinks 25 percent to $131 billion from the $176 billion shown in the gross data.

The flip side is that the U.S. deficit with South Korea, Japan and other Asian countries supplying in-termediate inputs to China is bigger.

For the same reason, Japan’s trade surpluses with South Korea and China almost disappear when looking at value-added flows because Japanese exports of chips and components do not end up in those coun-tries’ final consumption.

The new calculation method The new database derived from global input-out-

put tables, developed by the OECD, which describe interactions between industries and consumers for 58 economies, reflecting 95 percent of global output, ac-cording to the OECD.

The political purpose of the new calculation method is to reduce protectionist pressure by demon-strating that governments are shooting themselves in the foot if they raise barriers to imports because, in doing so, they are also hurting their own exporters and competitiveness.

“We no longer live in a world where goods are made entirely in one country, that sees imports as ‘bad’,” said OECD Secretary General Angel Gurria, during the launch of the new database with WTO Director-General Pascal Lamy, EU Trade Commissioner Karel de Gucht and New Zealand Trade Minister Tim Groser.

He said the new data indicated that countries’ ca-pacity to sell to the world depends on their ability and readiness to buy from the rest of the world.

With intermediate inputs accounting for a whop-ping 60 percent of global trade in goods, the OECD and WTO hope the new database will breathe life into efforts to cut red tape for exporters and importers.

Simplifying customs and border procedures can reduce trade costs by 10 percent, the OECD has esti-mated.

Gross trade figures had suggested that services account for only 20 percent of global trade. But the value-added breakdown shows that the average for OECD countries is around 50 percent, with multiple services such as software and design increasingly em-bedded in manufactured goods.

OECD officials said they were startled by this finding.

Gross trade flows show how much a country is spending relative to its savings and so remain critical. But officials say measuring trade by value, by provid-ing a better picture of the supply side of trade, should help policymakers to better identify which sectors of the economy are generating jobs and income.

Political consequences The novel trade-flow calculation method is mostly

a technical issue, but has real-world consequences as trade figures always guide policy formulation, accord-ing to Xinhua.

Under the flawed measures, the United States has a big trade deficit with China. This assumption has been the basis for some U.S. politicians’ anti-China sentiment and responses to China’s currency policies and its allegedly unfair trade practices.

Under the new count, however, the U.S. trade deficit with China would shrink by 25 percent in 2009. On the other hand, the U.S. deficit with Japan, the Republic of Korea and other nations supplying inter-mediate goods to China is bigger.

The revision is certainly a significant fact that U.S. policymakers should have beaten into their heads before they are allowed to discuss China-U.S. trade imbalances.

Although this would not be enough to eliminate trade disputes between the two countries, it offers a complementary view and may shed a different light on trade measures imposed against China.

“It’s less important and less relevant,” Gurria said of the dollar/yuan exchange rate.

The notion that an exporting country can calcu-late how much competitiveness it would lose by letting its currency rise was simply not true in a world of com-plex trade chains, Lamy said.

Other findingsThe United States supplants Germany as France’s

largest value-added trading partner, both for exports and imports.

Germany’s trade deficit with the United States is transformed into a surplus in value-added terms. A third of the total value of German vehicle exports comes from abroad.

Forty percent of the value of China’s electron-ics exports comes from abroad.

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According to the latest data released by China Customs, the overall bilateral trade between Pakistan and China in 2012 exceeded the fig-ure of US$12 billion for the first time.

“This puts us firmly on track to achieve the target of US$15 billion in the next two to three years,” said Paki-stan Ambassador to China Mr. Masood Khalid. “The leadership of the two countries has paid special attention to augmenting and cementing trade relations between our two countries and bringing them at par with our strategic partnership and political relations.”

The data shows that Pakistan-China trade increased by 17.6% to a total of US$12.4 billion in 2012. In a wel-come development, Pakistan’s exports to China increased by 48.2% to US$3.14 billion. Pakistan Imports from China increased by 9.9% to US$9.2 billion. In 2011, the bilateral trade was US$10.6 billion. China became Paki-stan’s largest trading partner in 2011. Now, Pakistan is China’s second largest trade partner in South Asia. Both China and Pakistan have set a goal for US$15 billion in bilateral trade by 2015.

The biggest increase in Pakistan exports to China in 2012 has been in textiles and textile articles, vegetable products, ores and mineral products, leather goods and base metals. Similarly, major imports from China include machinery and mechanical appliances, textiles and textile products, metals, chemical products, mineral ores, plastic scrap and transport equipment.

Last year, Pakistan actively participated in a number of fairs and expos such as the Eurasia Expo, Canton Fair and Kunming Fair. This provided exhibitors from Pakistan an opportunity to display products and helped boost the ex-ports. Pakistan traders have been especially focused on tex-tiles, leather, sports goods, precious stones and handicrafts.

Ambassador Masood Khalid hopes in the future both sides could build on this momentum and further in-crease bilateral trade. More trade delegations from Paki-stan would be encouraged to visit China and participate in the fairs and expos.

In the end, Ambassador Masood Khalid said, “We have an excellent and broad economic architecture in place between our two countries.” In order to exploit it to the full, it is vital to diversify export basket, introduce value addition and provide better quality of goods and services, he added.

On January 30, 2013 accord-ing to Mr. Wang Zhihou, Director of Economic and Tec hnolog y Coopera-

tion Agency of Jilin Province, Rason Economic and Trade Zone, developed and managed by both China and the Democratic People’s Republic of Ko-rea (DPRK), has made substantial progress. A batch of key cooperation projects have been started and obtained important results.

In October of 2012, Rason Eco-nomic and Trade Zone Management Committee was officially set up. The main development strategy for Rason Economic and Trade Zone is to develop transportation, trade and investment, finance and tourism.

Rason merged by Rajin and Son-bong earlier is in the northeast DPRK, adjacent to Yanbian prefecture in Jilin, with a total area of 890 square kilo-meters, in which, Rason Economic and Trade Zone covers an area of 470 square kilometers.

In 1991, the UNDP raised a pro-posal to set up an economic develop-ment zone in the Tumen River delta, which forms a 516-km-long border between China, Russia and the DPRK. The program was later upgraded to become the Greater Tumen Initiative, aiming to promote regional develop-ment, prosperity and security of the Asia-Pacific region. In 1991, DPRK designated Rajin and Sonbong as the economic and trade zone. In the past 20 years, the economic and trade zone hasn’t developed as expected.

In 2009, Rason Economic and Trade Zone started a new round of investment. During this period, top leaders from China and the DPRK visited each other frequently. In 2009, Premier Wen Jiabao visited the DPRK. In 2010, the top leader of the DPRK visited China. Meanwhile, in terms of economic and trade, both sides have strengthened the cooperation.

In December of 2009, Kim Jong-il inspected Rason, after which Rason was enhanced to a municipality. It is an important point for the development of the Zone. On January 27, 2010, the DPRK revised the “Law on the Rason Economic and Trade Zone”, and re-started to open Rason up to outside.

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By Guo Yan

Rason Economic and Trade ZoneFull of Opportunities

With China and the DPRK im-proving the facilities of the Zone, more and more infrastructure projects have settled there, and the number of joint ventures and foreign private businesses in such areas as light industry and ag-riculture is steadily increasing as well. Many Chinese enterprises also see the potential. At the end of September of 2012, DPRK officials in charge of for-eign investment invited Chinese enter-prises to invest there.

In the DPRK, mineral resources underground is estimated at about $6 trillion including iron, aluminum, zinc, copper, gold, silver and other non-ferrous metals. After China Min-metals Corporation, some large-scale Chinese enterprises such as Shougang Tonggang Group, Yanbian Tianchi Metal Group stepped into the DPRK mining industry. According to a report released by the institute of economic research from South Korea Industrial Bank, 70% of the investment from China to DPRK is in mining resourc-es, of which the majority is iron and copper. And most of the Chinese en-terprises are from Heilongjiang, Jilin and Liaoning provinces.

Mr. Li Tie, party secretary of the Economic Cooperation Bureau in Jilin Province, said that now the invest-ment was focusing on infrastructure construction, channel instruction, port instruction, agriculture, light industry and other industries suitable for coop-eration with the DPRK.

Till now, Rason Economic and Trade Zone has attracted 8 to 10 Chi-nese enterprises including national and private ones to involve the construction such as agriculture, port and infrastruc-ture, including China Communication Construction Company Ltd., China Railway Construction Group, China

Commercial Group, Yatai Group. And some other large enterprises are also planning to invest in the Zone, accord-ing to the Jilin provincial government. Yatai is the first Chinese company that registered under the steering commit-tee. The rice project with around 587 hectares co-organized by Jilin Province and Rason gained harvest.

In addition, in the DPRK houses are not private property. All the proper-ty belongs to country. But the leader in Rason has approved that foreign com-panies could build commercial houses there and could sell to foreigners.

Rason is full of opportunities, yet there are risks. Prof. Jin Qiangyi, dean of Northeast Institute of Yanbian Universi-ty, thought that the very important issue of the development of Rason Economic and Trade Zone is whether the invest-ment environment and policy could attract foreign companies. And now, there is a lack of infrastructure even the electricity and the transportation need to be solved by the investors themselves.

A research report from a Yunchun official concerning investment in the DPRK showed that the priority issue is that Chinese enterprises are in lack of legal insurance. When they encounter commercial dispute with the DPRK side, they have to ask for help through personal relationship. Now the estab-lishment of Rason Economic and Trade Zone may change this situation and make the dispute resolution process a le-gal one. According to the Law on Rason Economic and Trade Zone, the steering committee and the related department of DPRK could accept the appeal and mediate the disputes.

And Mr. Li Zichen, deputy di-rector of the Zone said that in order to speed up the construction of the zone, both China and the DPRK would need to formulate the related laws. But due to the fact that the Zone committee is managed by China and the DPRK, there is no past example to emulate. So, its effect still needs to be tested and im-proved in the future.

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EUROPE

By Richard Zhu

Chinese Investors Optimistic about European Market

Chinese companies are increasing investment in the European market and are optimistic with its future, since Europe is viewed as a safe and stable destination for investment.

That’s according to the findings of the recent survey by the European Union Chamber of Commerce in China (EUCCC) in cooperation with KPMG and Roland Berger Strategy Consultants. The survey, named The Chinese Out-bound Investment in the European Union (EU), is based on a unique questionnaire that was completed by 74 enterprises originating from mainland China who had previously com-pleted at least one investment within the EU.

The findings showed that the future outlook for Chinese investment in the EU is overwhelmingly positive. 97 percent of the surveyed enterprises indicated that they will make future additional investments in the EU, with 82 percent of these planning to invest at higher amounts. Companies are looking to expand investments, localize to a greater degree and invest in technology and human resource development.

Chinese ODI has been increasing since the mid-2000s to reach nearly $65 billion in investment flow over the year of 2011, and the trend of Chinese companies investing in Europe has become more prominent in the public sphere. Increasing ODI is a key goal of the Chinese government and is seen as a key tool in advancing its economic development, with Europe becoming a more frequent destination.

The survey indicated that Chinese companies are mostly looking to access the European market to sell their goods and services, while a smaller, but increasing number are looking to acquire technologies, expertise and brands through mergers & acquisitions (M&A) with European companies to improve their capacity to compete both at home and abroad. Data shows that to date, the majority of Chinese investments into the EU have been relatively small in size but larger M&A deals are becoming more common and this is likely to continue to increase in the future.

“The study results are in line with KPMG’s observa-tions that Chinese companies invest in Europe primarily to sell their goods and services in the EU market. They are

identified include difficulties in obtaining visas and work permits for Chinese employees, and problems dealing with European labor laws, human resources (HR) costs, and cul-tural differences in management style. Understanding the EU market is also a key concern, due to the lack of uniform legislation over the region of 27 member states and 23 official languages.

Recommendations by Chinese enterprises to EU policy makers captured in this survey focus on these operational is-sues. Notably few respondents made recommendations relat-ing to the lifting of market access barriers in the EU market, which can be contrasted with the priorities of European busi-nesses in China. Recommendations by Chinese investors to

confident about their future in Europe and intend to in-crease their presence,” said Thomas Rodemer, partner of KPMG.

The survey found that the EU is perceived by Chi-nese enterprises as a stable investment environment with advanced technologies, skilled labor and a transparent le-gal environment. In addition, it is regarded as a relatively open market, with few market access barriers and little history of opposition to Chinese investments on national security grounds.

However, operating in the EU is not considered easy and there are numerous obstacles often relating to bureaucratic procedures and high costs. The key obstacles

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the Chinese Government focus on the desire for improved advisory and support services both in China and in Eu-rope, and the greater streamlining of outbound investment approval processes from the relevant regulatory bodies in China.

“Greater Chinese investment in the EU is a positive trend and this survey clearly shows that Chinese compa-nies face few regulatory market access barriers in Europe. We look forward to further opening up in China,” said Davide Cucino, president of the European Chamber.

“Europe is now a full part of the investment strategy of Chinese companies. Our work with them demonstrates that this is a top priority for them as well as a true opera-tional challenge,” said Charles Edouard-Bouée, member of Global Executive Committee and president of Asia, Roland Berger Strategy Consultants.

Based on the findings of the research, the survey sug-gested that European policy makers with responsibility for inbound investment should examine the comments and recommendations by Chinese enterprises and examine what can be done to better encourage future investment, including: look to address the operational issues relating to bureaucracy and cost which are frequently raised here; look to offer practical solutions to minimize the complexities of a market of 27 separate legal and tax regimes as well as 23 languages, such as establishing a source of consolidated le-gal information for all EU member states in one language; investigate the reported obstacles in the FDI approval pro-cesses and see if these can be streamlined; better commu-nicate the openness of the EU market due to the reported lack of awareness amongst potential Chinese investors.

The survey also suggested that Chinese Government bodies charged with encouraging ODI should likewise examine the opinions put forward by their domestic en-terprises, this should include: review existing advisory and support mechanisms for Chinese enterprises looking at making outbound investments from within China; review on-the-ground support in Europe and establish a chamber of commerce for Chinese enterprises with coverage for the whole EU; review outbound approval processes and fur-ther streamline where possible.

Furthermore, the report advised that from a macro perspective, the EU should maintain its openness for foreign investment and continue to encourage ODI from China. China should look to develop various aspects of its international relations for the benefit of Chinese enter-prises going overseas through means such as opening up the domestic market to foreign firms.

There will be increased future investments from Chi-na into the EU and if the policy makers of both regions can positively address key issues, this investment relation-ship can develop further, the survey predicted.

identified include difficulties in obtaining visas and work permits for Chinese employees, and problems dealing with European labor laws, human resources (HR) costs, and cul-tural differences in management style. Understanding the EU market is also a key concern, due to the lack of uniform legislation over the region of 27 member states and 23 official languages.

Recommendations by Chinese enterprises to EU policy makers captured in this survey focus on these operational is-sues. Notably few respondents made recommendations relat-ing to the lifting of market access barriers in the EU market, which can be contrasted with the priorities of European busi-nesses in China. Recommendations by Chinese investors to

confident about their future in Europe and intend to in-crease their presence,” said Thomas Rodemer, partner of KPMG.

The survey found that the EU is perceived by Chi-nese enterprises as a stable investment environment with advanced technologies, skilled labor and a transparent le-gal environment. In addition, it is regarded as a relatively open market, with few market access barriers and little history of opposition to Chinese investments on national security grounds.

However, operating in the EU is not considered easy and there are numerous obstacles often relating to bureaucratic procedures and high costs. The key obstacles

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NORTH AMERICA

By Lesley Cui

Weixin to Enter the U.S. Market

Weixin, the most popular Chinese messaging app with more than 300 mil-lion users, mostly from

China though, was said to make its foray into the U.S. for the first time, said an internal email addressed to all Tencent employees sent on February 25, according to a TechNode report.

The email disclosed that Tencent’s Guangzhou Research Institute, the in-cubator of Weixin, would be opening a branch office in the States. The new overseas office would be responsible for Weixin’s developments like user acquisi-tion and research, business opportunities assessment and cooperation and so forth.

As one of the first Chinese apps to grow outside its home turf, Weixin has already made some pretty nice moves in Asian countries, now its unquenchable thirst for overseas expansion seemed to go across the Pacific.

The messaging app made by Ten-cent rules in China, just like how Line or Kakao Talk rules in their respective terri-tories. And Weixin isn’t the only one who has a taste for the U.S. market, Line, the Japanese messaging app was also stepping up its efforts in teasing the American con-tinent. Let’s just wait and see how Weixin and Line pan out in an exotic land.

A phenomenal hit in China Launched in January of 2011, Weix-

in also known by its English name as WeChat, has taken off with tremendous

speed in China’s digital platform. With 300 million registered users, Weixin has captured the attention of Internet and smart phone app users. In the third quarter of 2012 alone, over 60 million smartphones were purchased nationwide. Similar to the mobile app of WhatsApp, users are able to utilize a variety of fea-tures such as voice chats, group chats and unique meet-and-greet features like “Look Around” and “Shake”.

“Mobile is still in the premature stages,” says Stephen Khan, Strategy and Insights Director at MPG China. “While ad-spending and marketing in the mo-bile domain is still relatively small, it will grow as smart phone sales go up and apps play an increasingly important role in the lives of the consumer”, as reported by U.S.-China Today.

Weixin has attracted a largely young user demographic through its highly in-tegrated methods of communication and SNS network connections. 76 percent of Weixin app users are between the ages of 22 and 30, the same age group most active on the Internet and social media groups.

The main functions of Weixin in-clude:

·Text messaging·Voice recording and messages·File sharing (photographs, video

clips, photo edit functions also available)·Video calls·Find users in your vicinity and

become their friends

The email disclosed that Tencent’s Guangzhou Research Institute, the incubator of Weixin, would be opening a branch office in the States.

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·Post photos to a timeline that friends can see

·“Shake” the phone to chat with a stranger

·“Throw a Bottle” via a text or voice message to the Weixin commu-nity and potentially get a response.

Intrigued by the ability to meet strangers and also send easy voice mes-sages to friends, people download the app in staggering numbers. Weixin transformed the way in which the Chinese communicate. It keeps people informed and provides ready opportu-nities to meet new people.

Social media marketing Weixin has also caught the at-

tention of many corporations seeing potential for digital social media mar-keting.

During a conference in Shang-hai, Starbucks chief of marketing Marie Han Silloway announced that the brand instigated their “Naturally Awake” campaign via Weixin to inter-act with consumers and promote bever-ages. The campaign received over 3000 comments and Starbucks was praised for exploring Weixin as a marketing platform. Nike has also launched their “Nike sports daily” campaign through Weixin to promote a Nike sports festi-val in Shanghai.

Khan believes that, “ features like location based services and in-stant messaging appeal to the Chinese consumers who are constantly on the move. This is a digital area of great po-tential for not only individual connec-tions but also as a touch point for many brands to the Chinese market”.

Uncovered marketing potential is prevalent in Weixin and the mobile mar-ket in general as WARC has mentioned that mobile advertising in China only accounts for 1.5% of total ad spending. While it may be easy to capture the at-tention of mobile app users, importance lies in retaining their interest and build-ing relationships with a target audience segment for a specific market.

Global expansionOwned by the digital mogul cor-

poration Tencent Holdings, Weixin has successfully integrated itself in the Chinese mobile sphere with full inten-

tions to expand further into other countries.When Tencent launched its multi-language version of QQ , it

said the product was to help foreigners who live in China to plug into Chinese communities. While this time, it aims to attract foreign users living overseas in competition with Kik, Talkbox and other English mobile messaging service.

It will undoubtedly face a range of challenges as it attempts to make a mark on the mature US market.

The United States is a very difficult and important market for in-ternet businesses; it’s a place where a number of excellent products and enterprises were born and many enterprises are eager to launch their ideas, and this including Weixin, analysts said.

Weixin had to overcome technology and quality thresholds, while breaking Western users’ loyalty for their own products. This had proved to be a major hindrance for Weixin’s designs for expansion into Europe and the US.

Tencent has waged a big Ads campaign to promote Weixin over-sea. Currently, Weixin’s international version, WeChat, is available for several platforms, including the iPhone, Android, Windows phones, Symbian and Blackberry and has been launched in various languages, including traditional Chinese for Taiwan and Hong Kong, English, Thai, Indonesian, Vietnamese and Portuguese. It also supports mobile phone microletter accounts and the opening of Facebook’s main pages in more than 100 countries and regions abroad.

Until now, Weixin’s expansion has primarily been in Hong Kong, Taiwan and Southeast Asian countries. It had not gained pop-ularity in Europe and US. Figures show that as of September 2012, the number of registered users in the US touched 100,000, though these are largely Chinese international students.

Other Chinese internet powers such as Baidu, the nation’s lead-ing search provider, are also facing challenges in their global forays. For instance, Baidu lost $108 million in its bid to venture into Japan’s search engine market in 2011.

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LATIN AMERICA

Latin America is going Brazilian. Previously, it was only Brazil, the region’s biggest economy, that com-plained about the competitive devaluations generated by money-printing in the west, the so-called cur-

rency wars.Now, however, as Japan joins the rush to print money

and devalue, the more orthodox and free-trading Latin econo-mies — investor darlings such as Mexico, Chile, Colombia and Peru — also fear catching a bullet, according to a Finan-cial Times report.

“Not all Latin American policy makers have used the term currency war,” says Luis Oganes, head of Latin America research at JPMorgan. But they “are expressing increasing concern and reacting to it”.

Felipe Larraín, Chile’s finance minister, lamented in Fe-buary that competitive devaluations of global currencies from quantitative easing, or QE, could lead “to new forms of trade protectionism”.

Agustín Carstens, the head of Mexico’s central bank, warned the following day that massive cross-border capital

f lows could lead to a “perfect storm” of economic problems. He added that “concerns of asset-price bubbles fed by credit booms are starting to reappear”.

Symptomatic of this was a tweet by Bill Gross, the co-chief invest-ment officer of Pimco, the bond fund, which praised the Mexican peso as a “great currency” and that led an almost 1 percentage point jump in the cur-rency. Such concerns are the opposite of those in more mismanaged Latin economies, such as Venezuela, which devalued its currency greatly, or Ar-gentina, both of which are suffering capital outflows.

What makes this round of curren-cy war complaints different from when Brazil coined the phrase in 2010, is that after years of orthodox policy making the Mexican, Colombian, Peruvian and Chilean economies, which have a com-bined economic output of $2.1tn, enjoy lower inflation and interest rates, and smaller budget deficits. And yet they are still suffering.

“The term ‘currency wars’ is often used as a scapegoat by policy makers,” says Michael Henderson, Latin Amer-ica economist at Capital Economics, a

Latin America Fears Currency Wars

By Bernice Cui

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requirements; and interest rate cuts that reduce the “carry”, or interest rate differential, for yield-hungry foreign investors.

Yet such approaches have limits, and bring their own problems. Lower-ing interest rates, for one, can foster credit booms — and private credit is already growing at an average of 13 per cent among the four economies, ac-cording to Capital Economics.

Faster credit growth can in turn lead to overheating — but raising inter-est rates to cool the economy only at-tracts more capital inflows.

It is an unfortunate dilemma, with no magic formula to solve it.

“We do not l ike capita l con-trols, we believe they are not effective enough,” says Mr Cárdenas, contem-plating Colombia’s trade-weighted peso which is 17 per cent above its 10-year average. “But we have not scrapped the idea altogether — it is always a handy option. I even have one plan in my desk drawer.”

consultancy. “The fact that people such as Mexico’s Carstens are picking up on the idea lends it more credence.”

Certainly, the evidence seems clear. The Mexican, Chilean, Colom-bian and Peruvian currencies all ap-preciated by about 10 per cent against the dollar in 2012. The average of their inflation-adjusted, trade weighted cur-rencies is now also 8 per cent above the 10-year average.

This has prompted howls of pro-test from local exporters, and increased pressure on politicians to “do some-thing” to help.

“We firmly criticise the monetary policies of developed economies which are generating excessive international li-quidity and overvaluing currencies such as ours,” Mauricio Cárdenas, Colom-bia’s finance minister, told the Financial Times.

To be sure, part of the reason for the exchange rate appreciation is that Chile, Peru and Colombia are enjoying a terms of trade boost from high com-

modity prices. Chile is the world’s larg-est copper producer, Peru the second-biggest, and Colombia the world ’s fourth-biggest coal exporter.

But Mexico, where by contrast manufacturing accounts for 75 per cent of exports, also bemoans getting caught in a quantitative easing-led currency war — even as QE helps boost devel-oped world economies and thus its own.

“The fact that emerging world exports are slowing generally has only intensified policy makers’ willingness to ‘fight’ the currency war,” says David Lubin, head of emerging markets eco-nomics at Citi.

So far, none of these countries have contemplated Brazilian-style capi-tal controls. “I’ve never thought about capital controls. I don’t see them as necessary,” Julio Velarde, Peru’s central bank chief, said last month.

Instead, they have turned to direct currency intervention; paying down foreign debt; macro-prudential mea-sures – such as increases in bank reserve

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AFRICA

By Audrey Guo

China to Enlarge Fields of Investment in Africa

From February 14 to February 17, 2012, Chairperson of the Af-rican Union Commission (AUC) Nkosazana Dlamini Zuma paid a visit to China and attended the Fifth China-AU Strate-gic Dialogue in Beijing.

The AU was established as the second important regional national alliance after the European Union. The China-AU Strategic Dialogue was started in November of 2008. In recent years, with increasing direct investment in Africa, China has become Africa’s largest trade partner, surpassing the U.S. and EU countries.

During her visit, Zuma made positive comments on the develop-ment of China-AU relations and thanked China for its enduring support on the cause of peace and development in Africa, noting that Africa re-gards China as a good friend and trustworthy partner. Africa would like to further strengthen cooperation with China on the affairs of peace and development in Africa. Africa is also ready to draw on China’s experienc-es in working out long-term development plans, readjusting its economic structure and promoting its sustainable development, she said.

Chinese Foreign Minister Yang Jiechi said in recent years, the relations between China and the African Union have made significant progress with frequent contacts at various levels and fruitful mutually beneficial cooperation in various fields. “As the AU joined in the Fo-rum on China-Africa Cooperation, whose fifth ministerial conference launched a train of measures concerning cooperation with the AU,

relations between the two sides now have a solid foundation,” Yang said. China is willing to keep closer high-level exchanges and expand coopera-tion with the AU in a variety of fields, including infrastructure, agriculture, human resources and media.

Accord ing to the data f rom China Customs, investment from China to Africa exceeded US$1 bil-lion in 2009, up from US$50 mil-lion in 2001. In 2012, bilateral trade increased by 24% to reach US$200 billion. From January to November of 2012, the investment from China to Africa reached US$2.3 billion. It is predicted that in the next three to five years Africa will become China’s largest trade partner.

At the end of 2012, Standard Bank of South Africa, the largest bank in the continent, released a report that showed that although the cost com-petitive power in China is decreasing. So the expectation that China will reduce exports to Africa, is likely to be proved wrong. The report believes China will continue to enlarge the share of investment in Africa. Stan-dard Bank of South Africa estimates that in 2012, 18% of Africa’s imports came from China, 10% in 2008 and 4.5% ten years ago. While, African exports to China increased from 3.3% in 2011 to 5% in 2012.

According to the forecast by International Monetary Fund, from 2011 to 2015, among the top ten fast-est growing economies in the world, 7 will come from Africa. Mr. Wang Qinmei, special researcher from the Academy of Social Science believed that the economy of Africa is grow-ing, and is entering into a new stage; simple trade couldn’t meet the need of development.

Attending the China Afr ica Industrial Forum earlier, Mr. Yang Fuchang, the former vice minister of the ministry of foreign affairs pointed out that accordign to the statistics, the products that China exported to Af-rica have changed gradually from daily nondurable consumer goods to hi-tech products such as electrical and me-chanical equipment. With the devel-opment of the manufacturing industry there, the need for oil refining equip-Nkosazana Dlamini Zuma (left) and Yang Jiechi (right)

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ment and port equipment will increase steadily, presenting new business op-portunities for Chinese enterprises.

In December of 2012, CSR Zhu-zhou Electric Locomotive Co., Ltd won a bid with the value of approxi-mate US$400 million of locomotives, which marked the first time that South Africa Railway Company had procured electric locomotives from China.

South Africa has one of the most developed railway systems in Africa. Its running mileage exceeds 34,000 km, with about 18,000 electrif ied railway, more than 2,000 electric loco-motives and 1,400 diesel locomotives. However, the average service life of 55% of electric locomotives exceeds 35 years. There is a huge market for up-grade of products.

It is said that CSR ZELC pre-pared for almost a year and finally beat eight competitors by higher localiza-tion rate, date of delivery and cost performance, etc. and finally won this contract. According to the contract ar-rangements, CSR ZELC will transfer manufacturing technology to South Africa. The earliest 10 electric locomo-

tives will be assembled in China, and the others will be finished in South Africa. Malusi Gigaba, Minister of South Africa Ministry of State-Owned Enterprises expressed that it could be achieved by investing and building factories, technology transfer and export promotion. South Africa hoped that it could become a global design and manufacturing center, not just limited to locomotive supply.

Other countries of Africa have also attached great importance to railway transport in recent years. This provides opportunities for China’s en-terprises related to railway transporta-tion construction to step into Africa. On October 4, 2012, China Commu-nications Construction Group (Ltd.) signed an online engineering business contract on Mombasa-Nairobi stan-dard rail project with Kenya Railway Administ rat ion, w ith a contract amount of 1.147 billion dollars. And China Civil Engineering Construc-tion Corporation won a railway mod-ernization project of Nigeria with a contract amount of 8.3 billion dollars and a total length of about 1,315km.

Over 2000 Chinese enterprises invest in Africa, in areas ranging from agriculture, telecommunications, en-ergy, to manufacturing, food and bev-erage services.

With the wide cooperation be-tween China and Africa, travel, edu-cation, health care, infrastructure, etc have developed rapidly. For instance, many Chinese middle and small en-terprises are keen to cooperate in tour-ism or invest in the facilities of those popular destinations. In 2012, the number of China tourists that visited Africa reached 870,000.

In terms of communications and infrastructure construction, ZTE and Huawei have developed successfully in Africa. In addition, these companies pay attention on training to help local employees such as engineers and also allow them to be trained in China. Mr. Yang Fuchang wished every Chinese enterprise that invest and develop there not only pay attention on economic profits, but also focus on protection of the environment and the culture, take on corporate social responsibility and benefit the local market.

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68

By Zhu Zijun

Gansu Taps into Cultural Resources

Northwest China’s Gansu Province is to make full use of its cultural resources for its economic and social development.

On January 21, 2013, the State Council of-ficially approved Gansu Province to build the Inheritance and Innovation Zone of Chinese Civilization, which is another state level strategic platform after the Lanzhou New Area.

“It is bound to play a significant role and generate a profound influence in carrying forward and innovating Chi-nese culture and building a moderately prosperous society in Gansu,” said Wang Sanyun, Gansu’s Party Chief.

“The construction of the zone will explore a new path for scientific development of culture in economically under-developed regions,” said Minister of Culture Cai Wu.

“In this way, Gansu is striving to turn superior cultural resources into real cultural productivity, strengthening the development of public cultural service system, and realizing the overall prosperity of cultural programs. It will set an ex-ample for regions with similar conditions,” he added.

Gansu has advantages and conditions for the construc-tion of the zone. It is an important birthplace of Chinese civilization and Chinese nation, a passage for the exchanges between Chinese and western civilization, as well as a cul-tural treasure house of Chinese cultural resources.

Gansu boasts of numerous historical and cultural sites, such as the Mogao Grottoes in Dunhuang, the Maiji Grottoes in Tianshui, the Impregnable Pass under Heaven-Jiayuguan Pass and the famous Taoist Mountain-Kongtong Mountain. There are also colorful folk cultures, such as the Qingyang sachets, Hezhou (present day Linxia Hui Auton-omous Prefecture) folk song Hua’er (flowers), as well as the Tibetan culture in Gannan Tibetan Autonomous Prefecture. It also has shiny modern culture: the Duzhe (Reader) Maga-zine is known as China’s Chicken Soup for the Soul; the dance drama Tales on the Silk Road and Grand Dunhuang Mogao Grottoes in Dunhuang, Gansu

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Dreams are both milestones of Chinese dance drama.

However, as a less developed prov-ince in the land-locked western region, Gansu has a low degree of opening up to the outside world and many restraints in development. It faces challenges in building a moderately prosperous soci-ety in an all-round way at the same pace with the whole country.

“It is a strategic task to support the development of the western re-gions,” said Cai Wu, adding that “The construction of the zone will greatly improve the level of resource integration and opening up in Gansu.”

The country has been support-ing Gansu with favorable policies. The central government attaches great

importance to Gansu’s cultural develop-ment. China designates the strategic positioning of Gansu as an important national treasure house of Chinese cultural resources, and proposes strate-gic target for developing Gansu into a province relying on its strong industries, abundant cultural resources and sound ecological environment.

“Our overall plan is to combine the cultural programs with cultural industries, combine the inheritance and preservation with innovation and development of national culture, and in-tegrate economic and social transforma-tion and leap-frog development with the cultural needs of the people,” said Wang Sanyun.

According to Wang, the construction

process will include two phases. From now on to 2015 is the first phase, during which Gansu will prepare and issue the overall planning and launch a number of key projects so that the construction of the zone achieve the initial results. By 2015, major historical and cultural heritages will be under protection, basic public cul-tural service system will be established, and cultural industry will account for over 3% of GDP. From 2016 to 2020 is the second phase, during which the majority of the cultural relics will be well pro-tected, a complete public cultural service system will be basically formed, special cultural industry bases and a highland for innovation and development of modern culture in west China will be created, and cultural industry will become a pillar in-dustry for the regional economy. By 2020, the cultural industry will take up over 5% of GDP.

In the overall arrangement of de-velopment, Gansu will focus on “one belt”, develop “three areas” and create “thirteen sections”. The “one belt” refers to the Silk Road Cultural Development Belt stretching 1,600 km from west to east within the province. The “three ar-eas” refer to the historical and cultural area in southeast Gansu with ancestral culture at the core, the cultural and ecological area in Hexi Corridor with Dunhuang at the core and the cultural industry area in Lanzhou with the Yellow River Culture at the core. The “thirteen sections” refer to the preserva-tion of cultural heritage sites, inheri-tance of national culture, the collation and publishing of ancient books, the promotion of Red Culture, as well as the holding of sports events and exhibi-tions, etc.

To promote the construction, Gansu will strengthen protection of cultural resources and enhance cultural services. Further, it will develop cul-tural industries, improve supporting polices in finance, taxation and land, develop cultural parks and trading plat-forms, carry out a series of key indus-trial projects, support key enterprises to become bigger and stronger and encourage private capital to invest in cultural sector.

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Shaanxi Enhances Water ManagementBy Zhu Zijun

Western China’s Shaanxi Prov ince is focusing more on water manage-ment, by speeding up

construction of water projects, solving drinking water problems and protecting water resources.

Water resources of Shaanxi are generally scarce and unevenly distrib-uted in time and space. Data shows that its per capita share of water is mainly around the flood season, and 70 percent of its precipitation is mainly around the flood season, and 70 percent of the wa-ter concentrates in southern Shaanxi.

“It has long been the bottleneck to sustainable development of the province,” said Shaanxi Governor Lou

Qinjian, adding that “Realizing this, the government has all long paid close atten-tion to water conservancy construction.”

Wang Feng, the head of Shaanxi Provincial Department of Water Re-sources, said RMB 56.6 billion ($9 bil-lion) had been invested in the construc-tion of water conservancy projects over the past five years, an annual increase of 47 percent.

Shaanxi has started construction of a number of water conservancy projects for its long-term development. Hanji-ang River, a major tributary of Yangtze and Weihe River, the largest branch of Yellow River, are the main rivers in the province. Key projects such as water di-version from Hanjiang River to Weihe

River and from Yellow River to North-ern Shaanxi, construction of Wangedu Reservior and comprehensive treatment of Weihe River have been initiated. Big breakthroughs have been made in terms of key water source protection, urban and rural water supply, flood control and irrigation area improvement.

Therefore, Shaanxi can now sup-ply 1.3 billion cubic meters more water every year, irrigate 1.79 million mu (15 mu = 1 hectare) more farmland with 4.88 million mu being water-saving irriga-tion farmland. It has built and reinforced 1,230 km of dyke, controlled 33,000 sq km of water and soil erosion land.

Water Diversion from Hanjiang River to Weihe River is the largest ir-rigation project in Shaanxi’s history with a static total investment of RMB 16.2 billion. It plans to divert 1.5 billion cubic meters of water from the upper reaches of Hanjiang River to central Shaanxi plain crossing the Qinling Mountain. The project stretches some 100 kilome-ters from south to north and will supply water to five large and medium-sized cities. So far about RMB 2.88 billion has been invested into this project.

“After its completion, Shaanxi water resources allocation will be greatly opti-mized. The project will satisfy the water demands of 10 million people by 2017, and be completed by 2030,” Lou said.

Shaanxi is also enhancing the comprehensive treatment of Weihe River. The province plans to invest RMB 60.7 billion ($9.73 billion) over five years’ period to transform it into a

Weihe River flowing through Xianyang, Shaanxi after treatment

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local landscape, a flood control and bio-logical adjustment project. RMB 10.5 billion ($1.68 billion) has been put into the project and 490 km of dam has been reinforced so far. In 2011, it successfully withstood the worst flood of 30 years with zero levee failure and zero casualty. In addition, the construction of 3 billion cubic meters Dongzhuang Reservior has been initiated.

Moreover, Shaanxi has effectively solved drinking water problem for over ten million people. Access to drinking water has long been a problem for peo-ple living in Baiyu mountainous areas of northern Shaanxi, dry and belt along north bank of Weihe River and Qinba mountainous areas of southern Shaanxi. Many local people have to carry water from faraway places either by shoulder or by cart. The water they used to drink were either unclean raindrops collected in cellars or water contained intensive fluorine.

Off icial data shows that since 2006, Shaanxi has attached great im-portance to the drinking water problem. RMB 8.95 billion ($1.43 billion) of total investment has been made in rural drinking water projects and 250,000 projects have been built. The rural tap water access rate has increased from 34.4

percent at the end of the 10th Five-Year Plan period to 77 percent by the end of 2012, effectively solving the drinking water problem for 18.47 million people.

Further, Shaanxi has been striv-ing to protect key water resources. The focus of the water resources protection is mainly on Weihe River, Hanjiang River and Danjiang River, water-heads for the middle line of South-to-North-Water Diversion project. Over the past five years, 17 billion ($2.73 billion) has been invested to curb the Weihe River pol-lution, 56 sewage disposal plants have been built and more than 300 polluting factories, such as paper mills, have been shut down successively.

The official material shows that by 2010, cross-section outf low water quality of Weihe River had been greatly improved. In 2011, a three-year action plan for Weihe River pollution preven-tion and treatment was put in place to cope with the reoccurrence of pollution. Tough measures ranging from cross-section detection, water-head control to ecological restoration have been adopted to contain pollution. As such, chemi-cal oxygen demand and permanganate indexes of main pollutants dropped an-other 15 percent in addition to 60 per-cent decline during the 11th Five-Year

Plan period. In order to protect water sources

of Hanjiang River and Danjiang River, 241 polluting enterprises have been shut down, while 24 construction projects which failed requirements suspended for rectification. Saponin plants have shrunk from 109 to a dozen. 348 small watersheds have been managed, so that environment pollution and soil erosion have been put under effective control. Last year, comprehensive management project of Hanjiang River was activated with another RMB 18.8 billion ($3 billion) investment to maintain water quality of Hanjiang River and Danjiang River and ensure the clean water supply to Beijing.

Shaanxi is seeing a rapid growth in economy. The annual GDP growth rate of the past five years reached 14.3 per-cent on average, 4.3 percentage points higher than the national figure. The total economic volume increased over RMB 150 billion ($24 billion) year on year.

Since 2011, the government of Shaanxi has been designating both newly increased financial revenue and fiscal expenditure to improving people’s livelihood, such as social security, gov-ernment-subsidized housing, education, and public health.

Danjiang River flowing through Ankang, Shaanxi after treatment

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Investment Projects

in Zhengzhou City,

Henan Province, China

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1. Project organizer: Henan Hezhi Real Estate Co., Ltd.2. Contact: Qu Min3. Tele: +86-371-663196114. Email: [email protected]

Name of project: Foxconn Supporting Industry ZoneProject overview: This project is located in the Linkong Industrial Zone of Hang Kong Gang District of Zhengzhou. It borders the core area of airport and Foxconn Technology Park in the north, which provides convenient transportation. After completion of this project, it can accommodate the transferred enterprises which are supporters of Foxconn.Total investment: RMB 434 million Approach to cooperation: Sole Proprietorship, Joint Venture1. Project organizer: Merchants Bureau of Airport District2. Contact: Miss Chen3. Tele: +86-371-861998884. Email: [email protected]

Name of project: Outlet Industrial ParkProject overview: This project is proposed to be construct-ed on major municipal roads: Northwest Around-the-city Expressway, Jiangshan Road and Tianhe Road; relying on the convenient transportation and the beautiful environment, it plans to construct a comprehensive high-end compound commercial park integrating large “outlet discount center”, five-star conference vocational hotel, high-end supporting residential community and high-grade catering, leisure and entertainment facilities. This project will satisfy the shopping, catering, leisure, and entertainment consumption require-ments of the large population in the high-end service new city of Huiji District, and it will become a new commanding height and commercial center for the commercial develop-ment in the north part of Zhengzhou urban area.Total investment: RMB 2 billion Approach to cooperation: Sole Proprietorship1. Project organizer: People’s Government of Huiji District, Zhengzhou2. Contact: Cheng Bo 3. Tele: +86-371-63639936 4. Email: [email protected]

Name of project: Riverside Integrated Commercial ComplexProject overview: Located on the east side of the intersec-tion of Tianhe Road and Binhe Road, the project covers an area of about 90mu; the transportation here is convenient, and within the one-hour’ radius, there is a population of 200,000; the area is the core section of Zhengzhou Huiji District Administrative Center with huge development po-tential. This project plans to build all kinds of commercial projects like shopping malls, stores, pedestrian mall, business center, business projects, etc. and there is land planned for residential use which may satisfy the requirements of residen-tial supporting construction.Total investment: RMB 2 billion

Name of project: Zhengshang Internationl SquareProject overview: This project is close to Hanghai Road and Weilai Avenue, connecting Zhengdong New District and National Economic and Technological Development Zone on the east and downtown area in the west. It is 1km from Zhengzhou Avenue and 1.5km from the Airport Ex-pressway. Covering an area of 48000sq m, the project has a construction area of 25000sq m and a total investment of 2 billion yuan. The construction project is a Xinhuadu Zhongqi Shopping Mall, in which 150 million yuan will be invested to build a 5-story building with a construction area of 40000 sq m. A supermarket, the Capital Fashion Hall, Lady’s Gar-ment Hall, Gentlemen’s Garment Hall and a cinema will be set up on Floors 1 to 4 respectively. The main building of the project and its internal and external decorations will be completed at the end of 2011. 50% of the investment inten-sions have signed agreements; a contract has been signed with Wanhao Hotel to set up a star-level hotel; two top-class buildings can provide services to 300 large- and medium-scale enterprises, forming a new industrial cluster and a new point for economic growth.Total investment: RMB 1.984 billion Approach to cooperation: Sole Proprietorship, Joint Venture1. Project organizer: Henan Hezhi Real Estate Co., Ltd.2. Contact: Qu Min3. Tele: +86-371-663196114. Email: [email protected]

Name of project: Reconstruction of Tianrong Fashion CityProject overview: The project is on a piece of land sur-rounded by Qiaojiamen Road, Caishi St and Nanqianyuan St. It will be a super-large complex integrating trade of gar-ments and ornaments (wholesale and retail), display and exhibition, collection and distribution of information and logistics, finance service, catering, leisure, sight-seeing, cul-tural activities and education, hotel service and office build-ings. The 5.6 billion-project will cover a land of 90 mu, with a total construction area of 400000-500000 sq m, including shops of 250000 sq m, offices of 110000 sq m and hotels of 40000sq m. Business partners are invited and specific devel-opment is negotiable.Total investment: RMB 5.425 billion

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area of Henan and Zhengzhou’s Modern Manufacturing Bases and Industries. Effort would be put in to introdue auto part related companies to ZEDA’s Auto Parts Industrial Park.Total investment: RMB 2 billionApproach to cooperation: Sole Proprietorship1. Project organizer: Zhengzhou Economic & Technologi-cal Development District2. Contact: Yuan Weidong3. Tele: +86-371-66782002

Name of project: Zhengzhou Taiwanese Merchant Indus-trial ParkProject overview: Zhengzhou Taiwanese Merchant Industrial Park enjoys ideal location and convenient trans-portation. It’s next to National Export Processiong Area and Bonded Center. 15 famous Taiwanese enterprises like Foxcon, Formosa Plastics, Jingcheng S&T, Yihui Food and Dennis Logistics are stationed in the park. Business scope includes e-info, food, packaging, construction material, com-merce and logistics. Welcome more Taiwanese companies invest here to achieve win-win outcome.Total investment: RMB 2 billionApproach to cooperation: Sole Proprietorship1. Project organizer: Zhengzhou Economic & Technologi-cal Development District2. Contact: Liu Zhenfeng3. Tele: +86-371-66781253

Name of project: National Import Goods Allocation & Distribution Center projectProject overview: This project is an investment promot-ing project of the logistics park, including regional gathering center of export cargo and national allocation and distribu-tion center of imported goods.Total investment: RMB 2 billion Approach to cooperation: Sole Proprietorship, Joint Venture1. Project organizer: Administrative Committee of Zheng-zhou International Logistics Zone2. Contact: Zhang Guangming3. Tele: +86-371-608069564. Email: [email protected]

Name of project: Longzi Lake Island Business Office Building projectProject overview: Along the main traffic artery on the Longzi Lake Island, it is a part of the main buildings on the island and acts as a useful carrier for the industrialization of the university-related service.Total investment: RMB 186 million Approach to cooperation: Sole Proprietorship1. Project organizer: Administrative Committee of Zheng-dong New District2. Contact: Shen Yong3. Tele: +86-371-67179821 4. Email: [email protected]

Approach to cooperation: Sole Proprietorship1. Project organizer: People’s Government of Huiji District, Zhengzhou2. Contact: Cheng Bo 3. Tele: +86-371-63639936 4. Email: [email protected]

Name of project: Accessory project for Dongfeng Nissan projectProject overview: This project aims to provide supporting services for Dongfeng Nissan automobiles.Total investment: RMB 3.72 billion Approach to cooperation: Sole Proprietorship1. Project organizer: Zhengzhou Economic & Technologi-cal Development District2. Contact: Wang Yumin3. Tele: +86-371-66033677

Name of project: Accessory project of China Railway’s Tunnel Shield Machine R&D projectProject overview: This project aims to provide support-ing services for Chinese Railway’s Tunnel Shield R & D and Manufacturing Base.Total investment: RMB 1.24 billion Approach to cooperation: Sole Proprietorship1. Project organizer: Zhengzhou Economic & Technologi-cal Development District2. Contact: Wang Yumin3. Tele: +86-371-66033677

Name of project: Accessory project of COFCO (Zheng-zhou) Industrial ParkProject overview: This project aims to provide supporting services for COFCO (Zhengzhou) Industrial Park.Total investment: RMB 1.24 billion Approach to cooperation: Sole Proprietorship1. Project organizer: Zhengzhou Economic & Technologi-cal Development District2. Contact: Liu Zhenfeng3. Tele: +86-371-66781253

Name of project: Accessory project of Panel Display projectProject overview: This project aims to provide supporting services for panel display industrial platform.Total investment: RMB 1.24 billion Approach to cooperation: Sole Proprietorship1. Project organizer: Zhengzhou Economic & Technologi-cal Development District2. Contact: Ou Mingjun3. Tele: +86-371-66782002

Name of project: Auto Parts Manufacturing Base projectProject overview: Devoted to the construction of cluster

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steel villa, etc.Web: http://villa-expo.com/Add: North 3d Ring No.16, China International Exhibition Center, Cha-oyang District, Beijing, 10028Tel: 86-20-58629127Email: [email protected]: Zhou Yi

2013 The 19th Northeast Shenyang In-ternational Building &Decoration FairDate: March 22, 2012-March 24, 2013Frequency: YearlyVenue: Liaoning Industrial Exhibition HallExhibits: Decorative materials, build-ing energy-saving wall materials, win-dows and doors, curtain wall, glass, heating and air conditioning technol-ogy and products, etc.Web: www.bfexpo.com.cnAdd: Jinyuan Building, 5F, No.93, Sanhao, Shenyang, 110004Tel: 86-24-23914926Fax: 86-24-23922432Email: [email protected]

2013 China (Shanghai) International Garden Design ExhibitionDate: March 27, 2012-March 29, 2013 Frequency: YearlyExhibits: Landscape planning and design, landscape engineering, wood preservation, wood, green roofs, etc.Tel: 86-21-61956088Fax: 86-21-61956099Email: Cindy. [email protected]: Zhang Liang

Electrical Apparatus, Heating, Air-conditioning 2013 China International Heating Ven-tilation and Air Conditioning, Sanitary Ware and Technological Urban Con-struction Equipment ExhibitionDate: April 2, 2012- April 4, 2013Venue: China International Exhibi-tion Center (New Hall)Exhibits: Bathroom furniture, bath-tubs, showers, hardware and acces-sories, sports bathroom, plumbing technology, etc.

Machinery, Machine tools2013 The 3th Hainan International Re-frigeration, Air Conditioning, Heating Ventilation and Food Processing Exhibi-tionDate: March 25, 2012-March 27, 2013Frequency: YearlyVenue: Haikou International Exhibi-tion CenterExhibits: Refrigeration equipment, refrigeration system or unit, cooling system equipment and accessories, specia l-purpose air-conditioning equipment, air handing, building in-telligent control, etc.Tel: 86-898-66252360Fax: 86-898-36386318Email: [email protected]: Mr. Wang

2013 The 14th China (Shenzhen) Inter-national Tool Manufacturing Technol-ogy and Product ExhibitionDate: March 28, 2012-March 31, 2013Venue: Shenzhen Convention and Ex-hibition CenterFrequency: YearlyTel: 86-755-83458748Email: [email protected]

2013 The 5th China International Con-crete Technology and Equipment ExpoDate: March 28, 2012-March 30, 2013 Venue: Beijing Exhibition CenterExhibits: Concrete materials, concrete products, precast concrete products main and auxiliary equipment, goods

and production technologies and equipment, etc.Tel: 86-10-88365655Fax: 86-10-88365655

Email: [email protected]: Li Lingling

Food and Additives, Beverage, Drinks, Sea-sonings, Dairy Prod-

uctsThe 17th China International Food Ad-ditives and IngreMoldnts ExhibitionDate: March 28, 2012-March 30, 2013 Frequency: YearlyExhibits: Food additives and ingre-Moldnts, testing equipment, food processing, packaging machinery, etc.Tel: 86-10-68396330Fax: 86-10-68396422Email: [email protected]

Construction, City planning, Decorations2013 China Beijing Villa and Decorative Facilities Exhibition Date: March 3, 2012-March 5, 2013Host city: Beijing Venue: National Agricultural Exhibi-tion CenterFrequency: Yearly Exhibits: Villas, townhouses, larry villa, overlay-style villas, penthouse duplex buildings, high-residential, garden houses, wooden house, light

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new exotic products and other services, etc.Tel: 86-471-3380065Fax: 86-471-3380054

The 6th Industrial Biotechnology Con-ferenceDate: April, 2013Venue: Dalian World Expo CenterExhibits: Cutting-edge technologies, life sciences, bioenergy, bioagriculture, etc.Add: High-tech Zone, Dalian, Liaon-ing Province, 116025Email: [email protected]: Geng Yun

2013 Hebei Building Energy Efficiency and Renewable Energy Technology ExpoDate: April 2013Venue: Shijiazhuang International Exhibition CenterFrequency: YearlyExhibits: External wall insulation sys-tems, exterior insulation system from materials, etc.Add: No.368 North Road, Shijiaz-huang, 050091Tel: 86-311-83835001Fax: 86-311-83835767Contact: Du Shixia

2013 The 4th China (Chengdu) New En-ergy and Energy Technology ExhibitionDate: April 2, 2012-April 4, 2013Venue: Chengdu New International Convention and Exhibition CenterFrequency: YearlyExhibits: Industrial energy saving, life saving energy-efficient, transportation, building energy efficiency, solar, etc.Tel: 86-28-68276746Fax: 86-28-68168911Email: [email protected]

2013 Shanghai International Mining Equipment ExhibitionDate: April 7, 2012-April 9, 2013Frequency: YearlyExhibits: Mining equipment and instruments, minera l exploration equipment and surveying equipment, vehicles and equipment, tunnel boring and drilling equipment, mine safety and rescue equipment, etc.Tel: 86-21-33586934Fax: 86-21-61294171Email: [email protected]

Energy, Mining Industry

2013 The 6th Guangxi Biogas Technol-ogy ExhibitionDate: March 16, 2012-March 18, 2013Venue: Nanning International Con-vention and Exhibition CenterExhibits: Biogas production equip-ment, gas equipment, gas transmission and distribution pipelines systems, etc.Tel: 86-771-2368926Fax: 86-771-2368926Email: [email protected]: Wang Yanjun

The 13th China International Petroleum & Petrochemical Technology and Equip-ment ExhibitionDate: March 19, 2012-March 21, 2013Venue: China International Exhibi-tion Center (New Hall)Exhibits: Oil and gas exploration, de-velopment and production equipment, geophysical prospecting, well logging, drilling technology and equipment-onshore, etc.Web: www.cippe.com.cnTel: 86-10-58236588Fax: 86-10-58236567Email: [email protected]

2013 Northeast Ninth National Solar Show and New Energy ExhibitionDate: March 28, 2012-March 30, 2013Frequency: YearlyVenue: Science Palace Convention CenterExhibits: Solar hot water engineering,

Tel: 86-10-84600666Fax: 86-10-84600669Email: [email protected]: Gao Qian

Sound, Musical instruments, Lighting 2013 The 8th Chongqing International LED and Urban Landscape Lighting ExhibitionDate: March 16, 2012-March 18, 2013Venue: Chongqing International Con-vention and Exhibition CenterFrequency: YearlyExhibits: LED display technology and application equipment, etc.Tel: 86-23-62986278Fax: 86-23-62986138Email: [email protected]: Yan Gong

CCBN 2013Date: March 21, 2012-March 23, 2013Venue: China International Exhibi-tion CenterFrequency: YearlyExhibits: Video knitting equipment, production equipment, video lighting and sound, digital film production and projection equipment, etc.Web: www.ccbn.cnAdd: North Third Ring Road, Chaoy-ang District, Beijing, 100028Tel: 86-10-86092648Fax: 86-10-86094090Email: [email protected]

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Auto tools and Fittings2013 The 10th Hebei International Man-ufacturing Automation & Instrument ExhibitionDate: March, 2013Frequency: YearlyVenue: Shijiazhuang International Exhibition CenterExhibits: Industrial automation and control systems and equipment, etc.Add: North Street, No.3, Jinyuan, Shijiazhuang, 050000Tel: 86-311-87871868Fax: 86-311-87871868Email: [email protected]

The 17th Tianjin International Indus-trial Automation and Instrument Exhibi-tionDate: March 8, 2012-March 10, 2013Venue: Tianjin International Exhibi-tion Center MeijiangExhibits: Regulator, sensitive compo-nents and measuring devices, trans-mitters, sensors, testers, measurement instrument, indicator, weighing de-vices, etc.Add: No. 57 Xianyang Road, Nankai District, Tianjin, 300110Tel: 86-22-27366505Email: [email protected]: Zhang Qiurong

Transportation, Logistics, Stor-age2013 China Tianjin International Public Transportation and Bus ExhibitionDate: March 14, 2012-March 16, 2013City: TianjinVenue: Tianjin International Exhibi-tion Center Meijiang

Web: www.cuauto.com.cnExhibits: Passenger car and zero parts, etc.Tel: 86-10-68416664Fax: 86-10-68414610Email: [email protected]: Li Jin

Public Security and Fire Control 2013 Chongqing Public Security and Technological Equipment ExhibitionDate: March 23, 2012-March 25, 2013Frequency: YearlyVenue: Chongqing International Con-vention and Exhibition CenterExhibits: Surveillance monitoring to prevent the system, human safety equipment, campus monitoring sys-tem, etc.Tel: 86-23-86830069Fax: 86-23-86830137

Textile and Clothing 2013 Shanghai International Fashion FairDate: March 16, 2012-March 18, 2013Venue: Shanghai World Expo Theme PavilionFrequency: YearlyExhibits: Men, casual wear, women, fashion accessories, etc.Web: www.modeshanghai.netTel: 86-21-62775353-608Fax: 86-21-60950192Email: [email protected]: Miss Xue

The 27th China International Clothing & Accessories FairDate: March 26-March 29, 2013Venue: China International Exhibi-tion Center (New Hall)Exhibits: Men, sports equipment, outdoor clothing, women’s, infant and children’s clothing, infant and child products, leather, fur, bags and shoes, apparel resources, fashion designers, etc.Web: www.chiconline.com.cnAdd: Room 449, No.12 East Chang’an Street, Beijing, China, 100742Tel: 86-10-8522936Fax: 86-10-85229018Email: [email protected]

2013 Dongguan Sewing Equipment Ex-hibitionDate: March 28, 2012-March 31, 2013Venue: Dongguan Modern Interna-tional Exhibition CenterFrequency: YearlyExhibits: Accessories, aids, after sew-ing, sewing, logistics, laser equipment, etc.Email: [email protected]: 86-21-63045419

2013 China International Apparel Fab-rics and Accessories Trade FairDate: March 28, 2012-March 30, 2013Venue: China International Exhibi-tion CenterExhibits: Fabric, garment accessories, computer CAD, etc.Add: Room 550, No.12, East Chang’an Avenue, Beijing, China, 100742Tel: 86-10-85229463Fax: 86-10-85229296Contact: Shen Zhen

Wedding Dress, Photography2013 The 17th China International Wed-ding &Photo Equipment ExhibitionDate: March 18, 2012-March 21, 2013Venue: China World Trade CenterE x hibits: Wedding dress , photo frames, photo albums, background, post-production, printing photofinish-ing, theme photography, children pho-

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tography, makeup, jewelry, wedding supplies, studio training, wedding, children’s photography, etc.Add: Floor 2, No.1, Beijing China World Exhibition Hall, Jian Guo Menwai Street, Beijing, 100004Tel: 86-10-65052161Fax: 86-10-65053260Email: [email protected]

2013 China (Shanghai) LED Large Screen Display Technology and Equip-ment ExhibitionDate: March 27, 2012-March 29, 2013City: ShanghaiVenue: Shanghai Everbright Conven-tion and Exhibition CenterFrequency: YearlyExhibits: LED display, touch screen, LED solid light, LED chip, control system and IC, LED backlight, etc.Web: www.www1111.comTel: 86-21-54485616Fax: 86-21-34140987Contact: Li LiEmail: [email protected] Care, Health Care 2013 The 27th Shenyang International Medical Equipment ExhibitionDate: March 21, 2012-March 23, 2013Venue: Science Palace Convention CenterCity: ShenyangExhibits: Pathological diagnostic equipment, function test equipment, rehabilitation, etc.Add: Heping District, No.28 North Street, Shenyang, 110002Tel: 86-24-22853303Fax: 86-24-22853500Email: [email protected]

Packaging, Paper, Printing and publication2013 The 7th Ningxia Printing Adver-tisement ExhibitionDate: April 8, 2012-April 10, 2013City: YinchuanVenue: Yinchuang International Con-vention and Exhibition CenterExhibits: Advertising equipment, printing, photo printers, etc.Tel: 86-951-5017735Fax: 86-951-5017735Email: [email protected]

Jewelry, Watches and Clocks, Glasses2013 The 5th Shanxi Jewelry ExhibitionDate: April 2012Venue: Shanxi Exhibition Center (New Hall)Exhibits: Diamonds and precious stones, jewelry gold ornaments, peals and coral, etc.Tel: 86-351-4166813Fax: 86-351-4079700

2013 Beijing International Jewelry Exhi-bitionDate: April 6, 2012-April 9, 2013Venue: China International Exhibi-tion CenterExhibits: Diamonds and precious stones, jewelr y, pearls and cora l, equipment and apparatus, fashion ac-cessories, etc.Tel: 86-532-85010059Fax: 86-532-85012624Email: [email protected]

Toys, Gifts and Craftwork2013 The 26th China Beijing Interna-tional Gifts, Premium & House-ware FairDate: March 14, 2012-March 17, 2013Host City: Beijing Venue: China International Exhibi-tion CenterExhibits: Arts and crafts, ceramics, crystal class, glass, metal crafts, gifts, promotional items, promotional items, benefits, collectibles and commemora-tive coins, stamps, etc.Web: www.99inf.comAdd: No.58, Lane 1108, Lianhua South Road, Shanghai Tel: 86-21-54995547

Fax: 86-21-5499541Email: [email protected]

Furniture, Household Decora-tions, Woodwork, Floor Decora-tions 2013 China (Shanghai) Household Ap-pliances ExpoDate: March 20, 2012-March 23, 2013Venue: Shanghai New International Expo CenterFrequency: YearlyExhibits: Large household appliances, kitchen and small appliances, con-sumer electronics, home audio-visual products, home appliances spare parts and support services, etc.Tel: 86-21-61459694Fax: 86-21-61158437Email: [email protected]: Liu Jing

Entertainment, Leisure China Golf 2013Date: March 16, 2012-March 18, 2013Venue: Beijing National Convention CenterExhibits: Clubs, golf equipment and accessories, clubs, shaft, grip, ball, ball tee, golf bag, club sets, etc.Web: www.chinagolfshow.comEmail: [email protected]

2013 The 18th Beijing International Swimming Pool SPA Bath ShowDate: April 7, 2012-April 9, 2013Venue: China International Exhibi-tion Center (Old Hall)Exhibits: Class spa pool, SPA water therapy classes, sauna bath category, class hotels, thermal heat pump type, water type, health-care and other ser-vices, etc.Host: Beijing Bathing Industry As-sociation, China Professional Leisure and Health Care Association, Nation-al Standardized Technical Leisure and Health Committee, 100028Tel: 86-10-85864985Fax: 86-10-85862040Email: [email protected]: Heng Wenjuan

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2013 China Market

Suppliers List

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Moreover, we have established long-te r m a nd s t ab le coop e r a-tive relationships with more than 50 0 c u s tomer s a rou nd ove r 3 0 European and US regions and coun-tries as well as more than 80 suppli-ers. We have strengthened our force in developing new products. Our products renew continually and thus our annual average volume increases by 20%.

With solid f inancial support, sufficient supply of goods as well as complete service and creditable con-tracts, the company has been entitled AAA enterprise by Ningbo Credit Evaluation Committee in 8 succes-sive years.

Add: NO. 598 , South K ang Zhuang Road, Ningbo, Zhejiang Province, China

Fax: 86-574-26287999Website: http://www.cnacczj.com

Company name: Nice Group Co., Ltd.

Established in 1968 and head-quartered in Lishui City, Zhejiang Province, Nice Group specializes in manufacturing Cleaning Products and is entitled to import & export right. Despite the headquarters, Nice Group sets up production bases in Yi-yang of Hunan, Chengdu of Sichuan, Zhengding of Hebei, Siping of Jilin and Urumqi of Xinjiang respectively, and forms the largest production base of Soap and detergent powder Industry of China. Since 1994, the sales volume of laundry powder, soap and liquid detergent has been steadily in the first place in China. In 2005, NICE ranked top 8 of the world en-terprises in the industry.

Add: No.19, Kuo Cang South Road, Lishui City, Zhejiang Prov-ince, China

Fax: 86-578-2264973Website: http://www.cnnice.com

Add: No.87, The Bund, Guang-zhou, Guangdong Province, China

Fax: 86- 20-83337697Website: http://www.gzli.com

Company name: Shanghai Foodstuffs Imp.& Exp. Corp.

With our professiona l expe-r ience of impor t & expor t busi-ness over 50 years, we select high quality foods all over the world to meet different requirements from customers; to satisfy consumption market; to lead foods vogue in this new period. Based on the mutual benefit, we supply a business chan-nel with best service to cooperate with you. Through various kinds of t rading form, we bel ieve that our efforts will win trust and favor f rom our f r iends. Past , present , future — “SF”, health and f lavor forever between you and us.

Add: 525 Sichuan Beilu, Shang-hai, China

Fax: 86-21-63291730Website: http://www.shfiec.com

Company name: Ningbo CNACC Imp. & Exp. Co., Ltd.

Established in February 1996, Ningbo CNACC Imp. & Exp. Co., Ltd. is authorized by State Import-Export Business Bureau of China. O u r compa ny i s a profe s s iona l export-oriented enterprise with the tota l export va lue of $48 mil l ion in 2005, ranking top 3 among the same trade circle. Our main export products extend from arts and crafts to adornments and toys. Woodwork, glasswork and candleholder are in-cluded in arts and crafts. Our mar-keting network covers America and European countries.

Company name: Guangzhou Light Holdings Limited

Guangzhou Light Hold ings Limited, established on the north bank of the Pearl River in 1956 has been growing strongly ever since. As one of the forerunners of foreign trade in China, GZLI has expanded its business in a variety of fields and being listed in the “Top 500 Enter-prises” and “the Biggest 200 Export Companies” in China. GZLI has already gained ISO9001 accredita-tion, as well as a host of honors from national, provincial and municipal organizations.

GZLI has fourteen subsidiary companies, and its business scope covers import and export of various commodities and l ight industria l products, domestic trade, warehous-ing, transport and advertising. GZLI owns a ser ies of world-renowned brands and trademarks, including “Triangle” household appliances, “Diamond” fanner, locks and uten-sils, “Champion” sports goods, “Sky-lark” musical instruments, “Oner” stationery, “Snowf lake” footwear, “Aviation” handbags, “Kapok” elec-trical appliances, “Golston” battery, construction material, sanitary ware and hardware, “TITAN” bicycles and tyres, etc.

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SUPPLIERS

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With six subsidiary business com-panies and three management of-fices, the corporation has adequate qualif ied personnel who specialize in foreign trade and have rich expe-riences in business administration. The corporation is mainly engaged in import and export business.

Its products include hardware and household utensils, cased and t r uck s , toy s , te x t i le s , ga rment and var iet ies of more than 1000 subsidiary materials. The corpora-tion boasts quite a number of good brands, such as 555, Seagull, Daily etc . A nd among which the 555 enjoys a good trademark registra-t ion in 57 countr ies and regions around the world. And every year many new-type 555 stainless steel products are put out and are well-re-ceived by our traders and customers for their high-quality and new style. As a resu lt , for si x years on end the 555 products are chosen as the name-brand in Shanghai and also a famous product for export of our national department of commerce.

The corporation practices all-round ma nagement , a im ing at standardizat ion, per fect ion and systematization, attaching impor-tance to faith and business cultural construction, and thus it has won international quality authentication: ISO 9001:2000, ISO 14001, OH-SAS 18000:1999. With f irst-rated qualification and certificate of busi-ness management, commodity in-spection, industrial and commercial administration, it is also selected as an exemplary unit of good faith-construction, one of the 100 trust-worthy enterprise of the country and an advanced unit of Shanghai in 2005.

Add: 8/F, 29 Jian Guo Zhong Road, Shanghai, China

Fax: 86-021-65077820Website: http://shanghailight.

com

(Source: Canton Fair Online)

and export business, invests in in-dustrial manufacture project and realizes extension from agriculture to industry projects. Changing with each passing day, the company has formed three business scopes of fresh and live commodities, indus-trial manufacture, import and ex-port trade and has branded products and service combinations such as Baishi Longjun pig, Shichu fresh egg, Shiqi young pigeon, Zhongq-iao food, Xiangshan Huafeng veg-etables and fruits, Shichu xianfeng export fresh and live product chain, RIYING key ring gifts, OSDAN lamps and decorative lighting and Zhongying pet products.

Products of the company cover domestic market, Hong Kong, Ma-cao and more than thirty countries and areas such as Europe, America, Canada and Japan. After decades of exploitation and progress, the company will stick to its consistent business philosophy as always, spare no effort in improving product qual-ity, be devoted to shouldering social responsibility exceeding profit, pro-vide safe, healthy and green high-quality food for consumers accord-ing to standard of export food and forge a one-hundred-year company.

Add: No. 17, Zhonshan Road, Zhongshan, Guangdong Province, China

Fax: 86-760-88669128Website: http://w w w.zsfco.

com

Company name: Shanghai Light International Develop-ment Corp., Ltd.

Originally a state-run foreign trade company founded in 1954, Shanghai Light Industrial Interna-tional Development Corp., Ltd. is now a restructured new-type multi-investment foreign trade enterprise.

Company name: Zhongshan Foodstuff Import & Export Co., Ltd.

Zhongshan Foodstuff Import & Export Co., Ltd. was founded in 1955 and was successful ly re-structured in 2000. It has devel-oped into a large enterprise which integrates science, industr y and trade from Shiqi Branch, which supplies fresh and live commodi-ties to Hong Kong and Macao in the way of purchasing export, of China Foodstuff Export Co., Ltd. Under the business philosophy of “Quality Comes from Concentra-tion, Responsibil ity Creates Fu-ture”, the company is devoted to becoming a main supplier of “safe, hea lthy, green” food, prov id ing safe, healthy and green high-qual-ity food for consumers and serving health of consumers and social de-velopment.

Through unremitting endeavor of staff of the company for decades, the company strengthens invest-ment and construction of fresh and live commodity base, expands the scale of self-run and agent import

Lifestyle

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LifestyleFeature

Simple but Exquisite

TANYA Couture Wang Yannan Collection ~“the beauty of wine”With the theme of revealing female’s richness and gaudiness, naturally chubby beauty, the design employs special color-match-

ing style and continues the exquisite and elegant style in tailoring with vintage silhouette and gorgeous accessory, whose major tone is like mellow wine. This season’s design emphasizes the technology of grouping the bead and lace by complicated handwork and simple fabrics tailoring, which discloses strong sense of fashion. It is the couture for modern women with easy choices.

ALEX WANG fashion~“Romantic & Beautiful & Simple”From the perspective of the male, the designer uses a kind of pure power to decon-

struct the female’s graceful image from inside to outside. Both the welding of black and white and the dimensional tailoring of the highly saturated color aim to highlight the female’s delicate curve without losing male’s line power in appreciation of the beauty. The character of “graceful, elegant, independent and strong” is refined and sublimed, finally achieving harmony and unity in ALEX WANG’s design.

By Guo Yan

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Hao Jia Collection~ Shining Like A divaThe design describes such a dreaming scene: when the night falls, the darkness covers the

reality of the day. In the moonlight, there is a dancing swan, leaving a strange arc on the lake. And the moonlight immerses into the skin. The beautiful figure and mysterious and untouch-able beauty presents the attractive scene and creates that kind of dreaming figure. The effect of indistinct figure gives people an experience of a dreamlike trip of reality. Such a kind of dream

makes people feel the real peace. Characterized by the clear waistline and graceful figure, the design pursues delicacy, elegancy with handsome nature of women, and emphasizes the ratio division of space and the line expressiveness. The pattern of distance between pin remains the soft tailoring. Through a lot of gentle flexible dimensional lines and the skill of simple and structural line tailoring, the de-sign builds a simple but full of characteristic charming female image.

Feature

FAMORY Wedding Collection~ New dawn of lifeThe bride throws her troubles away to step into a new life welcoming the new dawn of

life. The gentle laces substitute the complex pattern and the simple tailoring takes the place of heavy piling. Shell fabrics consist of lace, taffeta silk and satin; the classical wedding dress color, beige, is the major color, and they match the Chinese red series with Chinese cultural background, providing Chinese brides with the most exquisite bridal clothes.

Lifestyle

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Lifestyle

Feature

JOOOYS Zhao Yakun Haute Couture Collection ~Wing of LightThe gorgeous RED CARPET series dress made from crystal, feather and some other high-

grade fabrics presents the legend of “Gold Band with Sun and Magic Birds”. All the collections released are featured with bold colors — golden sunshine reflects gentle and colorful hues, glar-ing red appears in sunset and twinkling stars in the firmament magically turn into the wing of “Gold Band with Sun and Magic Birds”, all of which bring infinite brightness!

The designer once again uses superb fabrics and exquisite craftsmanship to ensure that each and every series of dresses showcases unique pattern and each is embellished with beads and em-broideries in different wing styles. Such delicate accessories as ostrich feather, crystal and sequin in the details shine fascinating charm, endowing the dresses with magnificence and nobility.

TORY·Liu Wei Collection ~ WonderlandThe collection “Wonderland II” unfolded fantastic innovation travel with richful large

pieces of single color. The show opened with the tone of blue and white, green in the middle, and ended with reddish and yellowish orange. In line with the international fashion trend, the design incorporates geometric shapes and straight lines, just like that of shawl, wrap and mantle.

Only environmentally-friendly fabric made with high-technology was used in the collection. The collar, breast, cuff or waist is decorated with classic hand-made openwork carved patterns, illustrating exceptional visual ideas. The light playsuit fabric made of moisture-permeable waterproof nylon fiber, dispaly ingenious chaming.

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Feature

By Audrey Guo

From the Past to the Future

Neutralism & sexualism ~ SIMONGAO Gao Yang CollectionThe three dimensional tailoring, geometry curve in accordance

with Human body aesthetics, and texture pattern, decorative stripe, dark chan, naturally oldness by washing, leathers primary side and excessive color processing, just like the scene of science fiction movie where human live in the dark wet city of future, being like a struggling nomad. Of the design, various unimaginable tailoring and mix are put together unrea-sonably; the bright orange filled with hope and the pure dark existed in the same sky.

Small broken flower pattern in the 1970s ~ JUZUI Gong Xiu Haute Couture Collection

The imaginative infiltration and the mixture of the colors create sorts of irregular flower patterns, intense and low-key, providing much room for imagination. The 1970s’ small broken flower pattern, classical and romantic, has a high affinity binding with intense artistic sense. The match-ing of Art Deco, geometry splicing and the usage of beads and crystal ornament increase the visional highlight.

Navy element in the 1980s ~VISCAP• Yuan Bing Collection This collection was themed as “Romantic Coast Trend”. Yuan

chooses the style with beach characteristics, expressing the pure and sweet. Navy element which is popular in the 1980s is skillfully fused into a large number of refurbished printing and interesting patterns. In this season, the design utilized nude color with silent temptation, mild soft light tan, sweet pink, and rich blue add strong romantic marine breath, scattering the pleasant holiday by the sea and encountering the romantic.

The combination of modern art and decorative art of twentieth century ~ TOM DONG Dong Huaiguang Haute Couture Collection

For fleeting concept and spatial pattern, man-made connection achieves the reflection of value and the eternality of objects by the diverse real products: Visualizing the “light” to reflect the delusion of “shade”; from the stack of “shade” to link the “light’s feeling of fullness”. The exquisite craft in design can be seen in the special shell fabric’s texture, as if crossing the light and shade of toasting. The second processed material is blended with the combination of modern art and decorative art of the twentieth century. The design is fashionable, simple and with low-key passion, which shows us the special taste of elegance and delicacy of modern women.

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HINATHIS ISHINATHIS IS

Yueyang

Guangdong

Hunan

Henan

Hebei

Hubei

Beijing

By Cui Xiaoling

Travel by Beijing-Guangzhou High-speed Train III

Yueyang Yueyang (岳阳 Yuèyáng) is a prefecture-level city at the northeast-

ern corner of Hunan province, South Central China, at the confluence of Dongting Lake and the Yangtze River.

The city has been famous in China for the picturesque Dongting Lake and gorgeous Yueyang Tower (岳阳楼 Yuèyánglóu) since ancient times. Its lovely scenery and cluster of places of historical interest draw a large number of Chinese and overseas tourists every year.

Neighboring Jiangxi Province in the east and Hubei Province in the north, Yueyang was a hinterland of military importance during the past dynasties. Nowadays, renowned for so many historic interests, the city is ranked as one of the China’s Top Tourism Destinations.

Covering 14,896 km², the Yueyang municipality has 3 municipal districts, 4 counties and 2 county-level cities, with a population of 5,477,911 as of the 2010 census. The white and beautiful gardenia is its city flower and the flourishing Duying (long-flowered ehretia) tree is its city tree.

Zhang-gu-ying Village

HINATHIS IS

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HINATHIS IS

History The area has been inhabited for

over 3,000 years. It was originally established as a prefecture called Han-chang in 210 AD during the Three Kingdoms period.

Under the Song Dynasty (AD 960-AD 1279) it was heavily fortified, with walls 4 miles in circumference, and became the seat of the military pre-fecture of Yueyang, whence its present name. During the Taiping Rebellion, its capture by the rebels in AD 1852 was an important stage in their advance up the Yangtze River valley to Nanjing. At the time of the foundation of the Republic of China in AD 1911, it became a county, taking the name Yueyang.

Economy Yueyang is a burgeoning industrial

city, with the production of petrochem-icals as its leading industry. It is the biggest petroleum and chemical base in the mid-south area of China. There are five other pillar industries in the city — feed grains, pharmaceuticals, textiles, building materials and paper making. Yueyang’s major economic indices rank second in the province.

The city is prolific in natural re-sources due to its rich soil. This area is an agricultural products base produc-ing high-quality grain, cotton, pigs, fish, etc. The agricultural by-products

like organic tea, organically grown vegetables and high-quality fruit, Dongting Lake shrimp sell well on the market. Moreover, the freshwater re-source is plentiful and advantageous for the development of the plant industry, freshwater fisheries industry and the shipping industry.

The city is very open to foreign in-vestment. Shell from the Netherlands, Mitsubishi from Japan and quite a number of other world top 500 enter-prises have invested in the city.

Attractions Yueyang’s real charm rests with

human cultural relics as well as the natural landscape. The well-known Yu-eyang Tower is one of the three famous pavilions in South China. China’s sec-ond largest freshwater lake Dongting, which stretches vastly into the skyline, is like a fancy satin belt encircling the

ancient city of Yueyang. On the lake is located an island called Junshan Hill, which is another tourist resort.

Yueyang Tower is an ancient Chi-nese tower on the shore of Dongting Lake. Alongside the Pavilion of Prince Teng and Yellow Crane Tower, it is one of the Three Great Towers in South China.

In Yueyang Tower, Fan Zhongyan, an outstanding official in Northern Song Dynasty (960-1127), sighed emotionally and said, “Be the first to worry about the affairs of the nation and the last to enjoy oneself.” The tower stands on the ancient city, and looks down at Dongting Lake with a vast expanse of water covered by mist and fog. In the long process of history, Yueyang Tower has attracted numerous literati, where they composed poems and appreciated the fascinating scenery, making the tower a cultural landmark of Yueyang City.

Junshan Hill Dongting Lake

Yueyang Tower

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HINATHIS ISHINATHIS IS

Zhuzhou

Guangdong

Hunan

Henan

Hebei

Hubei

Beijing

Zhuzhou Zhuzhou is a city in Hunan Prov-

ince, to the southeast of Changsha and beside the Xiangjiang River. It is part of the “ChangZhuTan Golden Triangle” which comprises the cities of Chang-sha, Zhuzhou and Xiangtan.

The city has jurisdiction over five counties and four districts, covering an area of 11,420 km². It had 3,855,609 inhabitants as of the 2010 census, of whom 806,988 lived in the four urban districts.

It is located in a subtropical mon-soon climate zone and with its abun-dant mineral and organic resources has one of the highest agricultural yields in Hunan Province.

HistoryIn the early 1980s, ruins of four to

six thousand years ago were discovered in Zhuzhou. One of the primogenitors of Chinese nation and the initiator of Chinese agrarian culture, Yan Em-

peror, was at rest in Yanling County within the jurisdiction of Zhuzhou. Jianning is the old name of the city, and the name of Zhuzhou was first used in the Southern Song Dynasty (1127-1279). During the initial post-liberation period, Zhuzhou was just a small town under Xiangtan, but the city is now the second largest in the province.

Transportation hub The city is a very important trans-

portation junction in South China. The Beijing-Guangzhou Railway, the Zhejiang-Jiangxi Railway and the Hunan-Guizhou Railway meet here, which makes Zhuzhou Railway Sta-tion, conveniently located in downtown Zhuzhou, one of the five largest pas-senger and goods transportation stations in China. On average, a train passes through every three minutes. Zhuzhou North Station is the largest goods trans-portation station in South China, with 110 trains and more than 30,000 pas-sengers passing through every day.

Taoyuan Cave

Shennonggu National Forest Park

Youxian Lake

HINATHIS IS

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HINATHIS IS

As well through its comprehensive railway system, Zhuzhou is connected to the rest of the country by 106 Na-tional Highway, 320 National High-way, 211 Provincial Highway, the Bei-jing-Zhuhai expressway, the Shanghai-Ruili expressway, and three highways linking south Fujian, south Jiangxi and south Hunan Province.

Zhuzhou is 37 kilometres away from Changsha Huanghua Internation-al Airport. It takes about 30 minutes to drive to the airport by the Changsha-Zhuzhou Highway.

The Xiang jiang River f lows through Zhuzhou, which makes it one of

the eight river ports of Hunan Province.Industries Zhuzhou has four key industries —

metallurgy, machine manufacture, chemicals and building materials.

The city became one of the eight key national-wide industrial cities in the 1st Five-Year-Plan.

Its high-tech industrial develop-ment zone was approved by the State Council in December 1992 and was designated in a 35 km² area next to the Xiangjiang River.

The high-tech industrial develop-ment zone is located less than 10km from national highway G320, and en-

courages investment in biotechnology, pharmaceuticals, construction materials production, food and agricultural pro-cessing, heavy industry, and telecom-munications equipment production.

AttractionsShennonggu National Forest

Park is an ideal mountain resort in summer. The climate in the park is favorable and the air is fresh and of superior quality. April to November is the best time to visit this enlivening land of forest and water.

Other scenic spots include the Taoyuan Cave, Youxian Lake and Xi-angjiang River Scenic Area.

Xiangjiang River Scenic Area

89

I Have a China Dream

Speak to any foreigner in China or any ambitious manager of a medium to large company and they will tell you about the “China

Dream”. The term is of course a play on the “American Dream” — the idea that anyone can make it in America. In China’s case, the opportunity to access a market of 1.3billion people is mouthwa-tering — even a fraction of that amount is a sizable populat ion and one that probably dwarfs most countries. As the country’s economic fortunes continue to outpace Western markets like Northern America and the European Union, the China Dream looks ever more attractive. However, it is not a particularly new con-cept, nor one easily attainable.

China has always been a recipient of foreigners pursuing the China Dream. Hong Kong is the most obvious example and one look at the architecture on The Bund in Shanghai conf irms a histori-cal foreign presence in the country. Old British trading houses Swire and Jardines are now commercial giants with diverse business interests, ranging from property to aviation, that have extended onto the mainland and across the continent. And in recent years, the Dutch entrepreneur Marc van de Chijs has experienced con-siderable success in co-founding the pop-ular online video sharing website tudou.com.

Yet, for every notable foreign firm that has enjoyed success in China, there are plenty who have stories of difficulty and failure. The most prominent might be media-titan Rupert Murdoch whose first venture into China was botched after he offended many Chinese public servants claiming the country to be a “totalitarian regime”. Another is Mark Kitto, who is one of China’s most famous foreign en-trepreneurs and founded the very success-ful “that’s Shanghai” magazine business (which he was relieved of by the govern-

ment in 2004). Afterwards, along with his wife, he also started and ran a popu-lar guesthouse in Moganshan. Last year, Kitto said he would leave China, and cited frustration that he will never been seen as an equal in the middle-kingdom, despite his many years experience and ac-custom to Chinese culture and tradition, as a key reason so.

Still, despite the mistakes, difficul-ties and uneven playing f ield that for-eigners see before them in China — the Dream still exists and many still believe in it. I myself, was originally (and still am!) attracted to the country by the idea of abundant business opportunity. Yet after spending considerable time there, falling in love with its different cultures, lifestyles, oddities and the challenges that are associated with the country, I have found different reasons to live in China. I think the majority of those who have tri-umphed and failed in China, would agree that a genuine enjoyment and interest in the country (outside of business) will be important factors that determine success or not.

There are probably more foreigners coming to China now than ever before and they include high-f lying banking executives, competent middle managers and smart, young graduates. They not only must prove themselves in a country where doing business can be exceedingly tough, but also dispel the caricatures of the expat who failed in his own country and the English teacher who thrives on an easy job. However, if what Mark Kitto believes is true, are foreigners being given equal opportunity in pursuit of the China Dream? And if his experiences are to go by…can it be achieved?

As China’s economy continues to grow and its new leaders find their feet, there may be good reason after al l to believe in the China Dream. I certainly hope so.

By Lewis McCarthy

Despite the mistakes, difficulties and uneven playing field that foreigners see before them in China – the Dream still exists and many still believe in it.

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China’s top state leaders, including the next president, will be chosen dur-ing the first annual session of the 12th National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC), which convenes in Beijing on March 5 and 3, 2013 respectively. To com-

memorate the occasion, the People’s Daily website conducted a survey, polling its readers about the issues they were most concerned about and what they expected to be addressed during the Two Sessions. On February 27, the website published the results of their annual “10 Pressing Issues” survey. The survey proved quite popular with Chinese netizens — 771,997 netizens had taken the survey as of 17:00 on February 26, and users had already left 14,650 comments on the webpage. The re-sults of the survey show that 18% of respondents (142,501 votes) considered “Social Security” the most pressing issue, followed by “Anti-corruption”, “Income Distri-bution” and “Housing Security”, among other issues.

10 Pressing Issues

1 Social Security 6 Price Stability

2 Anti-corruption 7 Food and Drug Safety

3 Income Distribution 8 Rule of Law

4 Housing Security 9 Administrative Reforms

5 Healthcare Reform 10 National Defense

1) 97% unhappy with rising pensions for retired enterprise employees

There’s been a lot of criticism recently over China’s pension insurance system, which, according to a November 2012 report, pays out a monthly pension to ap-proximately 125 million elderly Chinese. Indeed, from 2010 to present, “Pension Insurance” (part of the “Social Security” item) has topped the 10 Pressing Issues list. According to this year’s survey, more than 97% of the respondents indicated that they were very unsatisfied with the pensions for retired [private] business em-ployees, while 98% of the netizens believed that it is time to get rid of the dual-track pension system for civil servants and employees of state-run institutions. Moreover, 83% of the netizens supported a flexible retirement age.

In the comments section, a majority of users complained that a dual-track pension system — one in which civil servants don’t need to make contributions but still get covered by the state budget after retirement — runs contrary to the principles of social justice. Even though the state has already raised the basic pen-sion level for retired business employees nine times, the gap between them and the pensions of retired civil servants and employees of state institutions has not been significantly reduced. In some areas, the basic pension level of a retired business employee was only about one-third of the pension for a retired local civil servant. Consequently, many netizens commented that it should be a top priority for all lev-els of government to implement new “people’s livelihood” policies that substantially increase the pension of business employees and safeguard the living standards for these retired employees, as well as immediately reduce and ultimately abolish this dual-track pension system.

2) 92% expect more reimbursements for medical treatments

Health care reform is an issue that affects the livelihood of every single person, so it should come as no surprise that the public pays very close attention to it. 31% of the respondents believe that after reforms are carried out, drug prices will actually increase. 80% of the respondents stated that drug prices are already too high, making it difficult for them to receive medical treatment. 92% of the respondents believe that it should be easier to be reimbursed for medical treatments. Surprisingly, 32% of the respondents believed that it was pre-cisely due to mismanagement by local governments and hospitals that doctor-patient relationships are so tense.

Same as with overall health care reform, food and drug safety issues were widely followed by the public in 2012. 80% of the respondents believed that they were directly affected by “tainted” drugs, while 74% of the respondents were “increasingly distrustful of food products.” 96% of the respondents stated that they had little confidence in the current food safety measures.

Survey: Top Ten Pressing Issues Expected to Be Addressed at Two Sessions 2013

91

convened to discuss the plans before construction began. 25% of the re-spondents believed that a socialrisk assessment should have been con-ducted and that the public should have been informed of the results.It seems that a social atmosphere

of studying, respecting and abiding by the law is gradually forming in China. Consequently, whether or not the lead-ing cadres can turn China into a coun-try ruled according to law is something that a lot of netizens are concerned about. 61% of the respondents believe that the greatest impediment to the rule of law is judicial corruption and all of the dealings between those with power and those with money. 35% of the respondents believe that officials try to place themselves above the law, which is entirely possible due to lack of effective supervisory mechanisms. A comment left by one user reads: To achieve social justice and maintain the country’s development, China needs “rule of law”.

4) 85% believe performance evaluations should focus on “people’s livelihood”

“Administrative Reform”, a new option on this year’s survey, was chosen by 38,255 respondents as one of China’s most pressing issues. This points to

Public concern should be the driv-ing force of the government. 73% of the respondents stated that the current food safety problems were largely caused by ineffective supervision and lax enforce-ment. 86% of the respondents believe that local governments can strike back against these violations and criminal behavior with food and drug safety, but that they lack the strength. The main problems with the pharmaceutical in-dustry are the inflated cost of drugs, the abundance of counterfeit drugs and the inconsistent efficiency of drug prescrip-tions and treatments.

3) 90% believe that the public's legal awareness is increasing

Over the past year, civil protests over the construction of potentially hazardous and environmentally detri-mental factories broke out in Shifang, Ningbo and Qidong. Some say that this is a result of the public’s increased awareness of its legal rights, while oth-

ers say that this is simply the “NIMBY” effect at work (not in my backyard). In the survey, 23% of the respondents agreed with the statement “If it had been me there, I’d have done the same”, while 49% of the respondents believe that a public hearing should have been

all sorts of things like promoting the separation of government administra-tion from enterprise management, transforming government functions, creating a “super-ministry system” and innovating administration styles. All of these administration reforms are viewed as inevitable requirements of fitting the superstructure to the economic base.

According to the survey, 64% of the respondents believe that an over-abundance of departments, exceeding the personnel quota and overstaffing are the greatest problems in the current administrative management system. These problems are most apparent in the current administrative examination and approval procedures. 23% of the re-spondents complained that while navi-gating through all of the bureaucratic red tape, procedures are too complicat-ed, information is not clearly disclosed and even handling simple matters often takes several visits. 29% of the respon-dents think that an excessive number of departments are involved in procedures, while each department’s responsibili-ties are unclear and no one really knows which government agency is supposed to handle what.

Respondents want these problems to be solved as soon as possible, and of-fered up a number of recommendations. 33% of the respondents believe govern-ment agencies should be consolidated to eliminate overlapping responsibili-ties. 22% of the respondents suggested simplifying the examination and ap-proval procedures, publishing relevant information and establishing a one-stop approval center.

Another important element of administrative reform is the promotion of government performance evaluation. However, 54% of the respondents com-plained that the performance evaluation for cadres lacks public and media par-ticipation and supervision, while 23% of the respondents believe that the gov-ernment lacks effective accountability mechanisms. Meanwhile, 85% of the respondents believe that “the improve-ment of the people’s livelihood” should become a top priority in Government Performance evaluation.

(Source: People’s Daily online, eChinacities.com)

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By Cui Xiaoling

More Job Opportunities, More Income

The effect of China’s campaign to transfer industries from the coastal

areas to the inland is being felt in my hometown, a village in Henan Province in central China.

What strikes me most during my stay at home for the Spring Festival is that my neighbors are getting richer, largely due to the rise in wages earned by the men of the families. They are the so-called migrant workers, who work in the cities during non-farming seasons and come back home for harvests and reunions on Spring Festivals and Mid-Autumn Moon Festivals. They get paid 300 to 500 yuan per day for work on the construction site, several times of what they earned a decade ago.

Those with excellent skills are bet-ter paid. One of my classmates, who I went to primary school with in the village, learned to repair cars in Dalian,

a city in northeast China, and is now working in Russia. After working for ten years, he just bought an apartment in the nearest city for 400,000 yuan, in hope for better education for his two daughters and a nicer living environ-ment.

The women of the families also have more job opportunities. Two gar-

Spring Festival:Change Has Come to China

By Echo Zhao

Promising Consumption Potentials in Small Cities

Dengfeng, famous for Shaol in Temple and Song Mountain,

is labeled as a 4th-tier city in Henan Province of central China. However, the consumption level is no lower than that of 1st-tier city like Beijing in some aspects during the traditional holiday of Chinese lunar new year. Meanwhile, it seems almost everyone is endeavoring to have a brighter future in the coming Year of Snake.

The first common phenomenon is that people there are likely to stay in hotels during the holiday. The comfort-able temperature in hotels is at the top of the priority list. And then comes the sound and convenient facilities for both living and recreation. Attaching great importance to the gathering of families, people need to find an appropriate place to enjoy this precious time with dozens of relatives. Hotels can provide such convenience where they can have din-

ner together, play cards, play mahjong, etc., without regard to the house keep-ing as at home.

The other change is that people in small cities gradually pay attention to improve the quality of life. More and more people from rural areas begin to spend their time in express hotels, KTV rooms, or bath centers at the begin-ning of the new year. As a tourism city, Dengfeng also attracts lots of people to hang out with families and friends instead of just staying at home.

The economy in 2012 was not as favorable as expected, nonetheless, people seemed to be confident about a better future, and were seeking to ex-plore any business chance even in such a one-week holiday.

As a sophomore in university, one of my cousins chose to sell firecrackers in the winter holiday;

Possessing an empty tract under the foot of the Song mountain, one of my friends was making efforts to turn it into a training camp in the coming year;

Another friend was collecting related information to start his own characteristic express hotel in the near future;

There was a lso someone who joined a training school as soon as graduating from the university.

So many people have been on the way to strive for a better life, which sug-gests the huge consumption potentials in similar small cities. To find an innovative way out would be their top priority.

ment factories and one toy factory were set up within half an hour reach by bike from the village. The women have a choice to work there for a salary of about 1,000 yuan per month.

Most of the families still work on the farm. However, earnings from the farm, which averages 800 yuan per per-son per year, account for only a small part of the family income. The good news is modern equipment have greatly reduced the time villagers have to spent tending their farms to less than 30 days a year.

Along with the rise in income, commodity prices have soared. For instance, clothes in my hometown are no less cheaper than those in Beijing. So I did not buy myself any new clothes during the holiday. I prefer to buy in Beijing where have more brands and varieties or online for better prices.

The new factories not only brought jobs but also pollution. There are obviously more cancer patients in the past few years, with no identified source of the pollution or commitment from the government to investigate. I pray for my fellows to have a safer as well as richer life.

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In the wake of the f ireworks and celebrations of the New Year, there

is a notable change in atmosphere. Gone are the street food vendors, lo-cal eateries and small shop owners that normally characterise the ground-level landscape of Chinese cities. There is a noticeable reduction in noise (except firework noise), commerce and “hustle and bustle.”

Spring Festival in China can be both the most manic period and also the quietest. The manic part centres on travel. China has the world’s largest “moving population”, that is those who migrate to the cities and urban areas to find work, moving away from agricul-tural jobs to pursue more lucrative work in factories, taxi-cab driving and white collar jobs.

At this time of year, train stations and ticket offices have lines (crowds!) that stretch whole blocks of streets, everyone vying to obtain a ticket home, away from the city, to spend time with their family. The reason for these exten-sive and unusual queues is that Spring

By Lewis McCarthy

SF Spell: Travel and Gifts

Festival is perhaps the only time dur-ing the entire year when many migrant workers are able to travel back to their families, sometimes their journey alone may last one or two days.

The first time I experienced Spring Festival in China I left it late to buy trav-el tickets, consequently I spent 16 hours pinned to a “hard seat” (wooden bench) overnight train from Harbin to Beijing vying with the locals to try and find a sliver comfort and get some sleep. While it was certainly an experience I won’t forget, it is not one I wish to repeat! Yet, I can consider myself lucky to have even managed to buy a seat-ticket – for some they must suffer this long journey whilst standing.

Gifts are another key theme of the period. It is typical to offer money sealed in red envelopes “hong bao” at

Chinese New Year, however alternative gifts such as large vouchers for super-markets and department stores, or food and home ware are also very popular. Just as snapping a wishbone in the UK or US might be considered good luck, in China eating fish is considered good fortune, as the pronunciation for fish is the same as “left over”. It is superstition that eating the fish will lead to more money being accumulated and “left over” each year.

By Alice Yang

A Good Reason to Spend Money

When Chinese enjoy more and more holidays for leisure, mean-

while much better salary than before, it’s more likely that every holiday is just one more good reason to spend money. This is what I felt most during the spring festival period in Kunming, capital city of Yunnan Province, south-west China.

As tradition, all the family will gather together to celebrate with a big feast at the night of last day of Chinese lunar year. Unlike long-time preparation and cooking for the big family in the past, many locals now choose to dinner outside at restaurant. Make sure to book a table at least one month earlier, or you will have to follow the real tradition: cook from home. Restaurants in Kun-ming are usually so busy at holidays, es-pecially for the New Year’s Eve dinner.

pigs enjoying the warm sunshine on Haobao Organic Farm, which advo-cates natural growth of every vegetable and livestock. Even though their pork is at the price of about 100 yuan per kilo, and 50 yuan for vegetables, Kunming people love the pure taste and never mind spending money for that. Don’t forget, Kunming is also famous for its wild mushrooms hotpot, tasty, nutri-tious and expensive.

Instead of visiting friends and relatives one by one at Spring Festivals, people in Kunming, where is gifted to have spring only for the whole year as a famous tourism city, enjoy travel than any other places in China. Most rooms there were empty during the holidays, no, not renters from somewhere else, Kunming isn’t an immigrant city, but yes, they were out for travel. Yunnan itself is a place full of big names for tourism, Xishuang Banna, Shangri-La, Dali, Lijiang, snow mountain and more; let alone more exotic tours to Myanmar, Laos, and Vietnam, which Yunan borders.

Healthy food is also local people’s big concern. Manager Wang of Haobao Organic Farm in Kunming, which I visited during this Spring Festival holi-day, told me that their business during the holidays went so well that few meat and vegetables were left when it came to New Year Eve. I can see green beans and garlic playing with bees in the field, chickens and sheep running around,

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Cu

ltu

re

The Thousand Character Classic (千字文 qiān zì wén) is an ancient Chinese poem used as a primer for teaching Chinese characters to school children. It contains exactly one thousand unique characters and is composed of 250 phrases of 4 characters each. It is said that Emperor Wu of the Liang Dynasty (502-557) commissioned 周兴嗣 (Zhōu Xīngsì) to compose this poem for his prince to practice calligraphy. The writing of characters in the original version was selected among the calligraphies of 王羲之 (Wáng Xīzhī), one of the finest calligraphers in China. It was sung in the same way in which children learning Latin alphabet writing do with the “alphabet song”. The characters of the poem were sometimes used to represent the numbers from 1 through 1000.

The poem can be divided into four parts according to its topic focus. The first part is to tell the history from the very beginning. The second part is setting principles on how to behave in daily life. Then it describes the life in the capital city and upper class in the third part; and rural citizens’ life in the fourth part. The Culture column in the last two issues has shared the Part 1 History, Part 2 Principles, and Part 3 Life in upper class. Here are the rest of the 1000 Characters.

qiān

千zì

字wén

文

※ 治本于农，务兹稼穑。zhì běn yú nóng, wù zī jià sèThe nation has farming at its root,

With sowing, reaping; see you do’t.

※ 俶载南亩，我艺黍稷。chù zǎi nán mǔ, wǒ yì shǔ jìIn the southern field my work I

start, To tend to the crops with all my heart.

※ 税熟贡新，劝赏黜陟。shuì shú gòng xīn, quàn shǎng

chù zhìWhen ripe some part must go as

tax, To get a prize, a rise, or the axe.

※ 孟轲敦素，史鱼秉直。Mèng kē dūn sù, shǐ yú bǐng zhíWhile Mencius valued simple ways,

Historian Shi kept truthful days.

※ 庶几中庸，劳谦谨敕。shù jǐ zhōng yōng, láo qiān jǐn chìWork hard for the golden mean as

law, With diligence, modesty, care, and awe.

※ 聆音察理，鉴貌辨色。líng yīn chá lǐ, jiàn mào biàn sèWhat comes to the ear deserves a

think; One learns what’s meant from a face or wink.

※ 贻厥嘉猷，勉其祗植。yí jué jiā yóu, miǎn qí zhī zhíBe good at taking advice with cheer,

To devote yourself to a noble career.

※ 省躬讥诫，宠增抗极。xǐng gōng jī jiè, chǒng zēng kàng jíExamine yourself when facing

scorn, Beware how honor by honor is torn.

※ 殆辱近耻，林皋幸即。dài rǔ jìn chǐ, lín gāo xìng jíIn case your pureness challenge

face, Retire to a wooded or waterside place.

※ 两疏见机，解组谁逼。liǎng shū jiàn jī, jiè zǔ shuí bīWhen Shu and his nephew both

saw fit, Who forced them but them-selves to quit?

※ 索居闲处，沉默寂寥。suǒ jū xián chù, chén mò jì liàoIn solitude they nothing did, In

silence lived, in quiet hid.

※ 求古寻论，散虑逍遥。qiú gǔ xún lùn, sǎn lǜ xiāo yáoExplor ing what the ancients

taught, Whichever way their sweet will caught.

Part 4 Civil life※ 宣威沙漠，驰誉丹青xuān wēi shā mò, chí yù dān qīngThey were felt on the borders with

awe and glory, And history fills with their fame and story.

※ 九州禹迹，百郡秦并jiǔ zhōu yǔ jì, bǎi jùn qín bìngKing Yu walked across the nine-

member land, And Qin took the prefec-tures all in its hand.

※ 岳宗泰岱，禅主云亭yuè zōng tài dài, chán zhǔ yún tíngOf the Five Holy Mountains Tai is

the pride, For heaven and earth are wor-shiped by its side.

※ 雁门紫塞，鸡田赤诚yàn mén zǐ sài, jī tián chì chéngAt Wild Geese Gate Pass purple is

the Wall, With western Chickfield and east Rosy-all.

※ 昆池碣石，钜野洞庭kūn chí jié shí, jù yě dòng tíngFrom Kunming Pool to Mount

Jaggirock, And Giantwild town to Dongting Loch.

※ 旷远绵邈，岩岫杳冥kuàng yuǎn mián miǎo, yán xiù

yǎo míngThe ways stretch far through

mountains steep, With rocky caves both dark and deep.

The Thousand Character Classic (III)

Part 3 Life in Upper Class

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※ 欣奏累遣，戚谢欢招。xīn zòu lěi qiǎn, qī xiè huān zhāoWhen joys came in, all worries

were out, With sadness gone were smiles about.

※ 渠荷的历，园莽抽条。qú hé de lì, yuán mǎng chōu tiáoHow lotus in the pond bloomed

new, And garden plants just sprung to view!

※ 枇杷晚翠，梧桐蚤凋。pí pá wǎn cuì, wú tong zǎo diāoThe loquats loathed to drop their

green, But tong leaves yearned to quit the scene.

※ 陈根委翳，落叶飘摇。chén gēn wěi yì, luò yè piāo yáoOld roots still twisting winding lay,

And foliage in falling ever would sway.

※ 游鹍独运，凌摩绛霄。yóu kūn dú yùn, ling mó jiàng xiāoThe giant rocs were free to rise,

Toward the highest Crimson Skies.

※ 耽读玩市，寓目囊箱。dān dú wán shì, yù mù náng xiāngBazaars have books to catch the

eye, In bags or boxes leisurely they lie.

※ 易輶攸畏，属耳垣墙。yì yóu yōu wèi, zhǔ ěr yuán qiángAbout the spoken words have fears.

Be on your guard, for walls have ears.

※ 具膳餐饭，适口充肠。jù shàn cān fàn, shì kǒu chōng

chángPrepare your meals in proper taste.

To keep off hunger, also waste.

※ 饱饫烹宰，饥厌糟糠。bǎo yù pēng zǎi, jī yàn zāo kāngSatiety makes f lashy meat; In

dearth even chaffs would seem a treat.

※ 亲戚故旧，老少异粮。qīn qì gù jiù, lǎo shào yì liángWith food for friends and near

relation, Give elders and toddlers due consideration.

※ 妾御绩纺，侍巾帷房。qiè yù jì fǎng, shì jīn wéi fángThe concubine should tend the

loom, And serve with coat and hat her groom.

※ 纨扇圆洁，银烛炜煌。wán shàn yuán jié, yín zhú wěi

huáng

The silken fans are round and clean. The candles shine with silvery sheen.

※ 昼眠夕寐，蓝笋象床。zhòu mián xī mèi, lán sǔn xiàng

chuángFor naps there’s the mat of blue

bamboo, For the night the ivory bed will do.

※ 弦歌酒宴，接杯举殇。

xián gē jiǔ yàn, jié bēi jǔ shāngAt feasts with songs and music up,

And cheers on cheers and cup on cup.

※ 矫手顿足，悦豫且康。jiǎo shǒu dùn zú, yuè yù qiě

kāngThe heads are tossed; while tread-

ing a measure, Each has a part in the merry-making pleasure.

※ 嫡后嗣续，祭祀烝尝。dí hòu sì xù, jì sì zhēng chángThe queen’s first son to the throne

succeeds; In seasonal rites‘tis he who leads.

※ 稽颡再拜，悚惧恐惶。jī sǎng zài bài, sǒng jù kǒng

huángKowtowing hard again and again,

Full of fear and awe as in pain.

※ 笺牒简要，顾答审详。jiān dié jiǎn yào, gù dá shěn

xiángWhen writing a letter be concise,

When answering a question be precise.

※ 骸垢想浴，执热愿凉。hài gòu xiǎng yù, zhí rè yuàn

liángWhen dirty you’d like a wash;

when too hot. Is something you hold, you'd like it not.

※ 驴骡犊特，骇跃超骧。lǘ luó dú tè, hài yuè chāo xiāngA donkey, mule or oxen indeed,

When frightened, may shy, grow wild, stampede.

※ 诛斩贼盗，捕获叛亡。zhū zhǎn zéi dào, pǔ huò pàn

wángAll robbers and thieves must die

for their crime, And traitors and fugi-tives caught, any time.

※ 布射僚丸，嵇琴阮箫。bù shè liáo wán, jī qín ruǎn xiāoBoth Lu and Yi enjoyed a shoot,

And Ji his zither and Ruan’s proud hoot.

※ 恬笔伦纸，钧巧任钓。tián bǐ lún zhǐ, jūn qiǎo rèn diàoCai Lun made paper, Meng Tian's

brush to match, And Ma Jun’s magic compass, and Ren Gong’s nice catch.

※ 释纷利俗，并皆佳妙。shì fēn lì sú, bìng jiē jiā miàoTo solve disputes and benefit the

many, Is both as fine and laudable as any.

※ 毛施淑姿，工颦妍笑。Máo shī shū zī, gōng pín yán

xiàoWith Mao and Shi the fairest of

the fair, Frowning or smiling, they kept their charm there.

※ 年矢每催，曦晖朗曜。nián shǐ měi cuī, xī huī lǎng yàoThe year like an arrow is urging

every hour, While the eye of heaven shines bright in its power.

※ 璇玑悬斡，晦魄环照。xuán jī xuán wò, huì pò huán

zhàoThe armillary sphere’s on its

round and round rides, And monthly the moon shows up or hides.

※ 指薪修祜，永绥吉劭。zhǐ xīn xiū hù, yǒng suí jí shàoLight virtue, let it shine on hence,

For endless bliss its recompense.

※ 矩步引领，俯仰廊庙。jù bù y ǐn l ǐng, f ǔ yǎng láng

miàoAnd watch your step; behave,

in short, As who attends the imperial court.

※ 束带矜庄，徘徊瞻眺。shù dài jīn zhuāng, pái huái zhān

tiàoBe dressed with dignity and grace,

Wherever you may ascend or pace.

※ 孤陋寡闻，愚蒙等诮。gū lòu guǎ wén, yú méng děng

qiàoThe ill-informed deserve a sneer,

No less than benighted ones a jeer.

※ 谓语助词，焉哉乎也。wèi yǚ zhù cí, yān zāi hū yěAbout auxiliary words make clear:

They are yan, zai, hu, and yeh.

（The End）

F REIGN TRADE - 中国国际贸易促进委员会

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