CONSULTANCY STUDY O SOCIO-ECONOMIC-POLITICAL T IN PAN … · 2018. 4. 12. · Socio-Economic-Political Trends in Pan-Pearl River Delta Region Fujian, Jiangxi, Hunan, Hainan (9th Monthly

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

NINTH MONTHLY REPORT PART I

COVERING FUJIAN, JIANGXI, HUNAN, AND HAINAN

JULY 2005

CENTRAL POLICY UNIT

HONG KONG SPECIAL ADMINISTRATIVE REGION

Socio-Economic-Political Trends in Pan-Pearl River Delta Region Fujian, Jiangxi, Hunan, Hainan (9th Monthly Report)

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Table of Contents

I. Executive Summary ----------------------------------------------------------------- 5

II. Topical Analysis ---------------------------------------------------------------------

“Investment Cooperation in the Pan-PRD:

Opportunities and Challenges for Hong Kong”

Part One: South-eastern Region

9

Strengthening Investment Cooperation in the Pan-PRD Region ---------- 10

Fujian Guiding Foreign Investors Towards Its Key Industries ---------- 16

Jiangxi Receiving Industries Relocating Out of the Coastal Areas ------- 20

Economic Development in Hunan Spurred by Domestically-lined up Investments ---------------------------------------------------------------------- 25

Hainan Promoting Interaction with Metropolises -------------------------- 30

III. Trends and Updates on the Four South-eastern Provinces ------------------- 35

Fujian Accelerates the Development of Leading Industry Clusters ------ 36

Fujian’s Development Plan for Software Industries ------------------------ 39

Jiangxi Activates Project for the Conservation and Construction of an Ecological Environment in the Source Region of Dongjiang River ------ 41

Jiangxi Adopts Measures to Rein in the Surge in Housing Prices ------- 44

Hunan Standardises Measures on Handling Non-performing Assets of State-Owned Enterprises --------------------------------------------------- 46

Promoting the Development of Chemical Industries into Pillars of Hunan ----------------------------------------------------------------------------- 48

Hainan Introduces New Preferential Policies for Investors --------------- 51

Pilot Testing Air Freedoms Promoted Hainan’s Economic Development -------------------------------------------------------------------- 53

Memorabilia of Pan-PRD Regional Cooperation --------------------------- 56


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Table of Contents (continued)

IV. Data and Trends ---------------------------------------------------------------------- 61

Fujian ------------------------------------------------------------------------------ 62

Jiangxi ----------------------------------------------------------------------------- 63

Hunan ----------------------------------------------------------------------------- 64

Hainan ----------------------------------------------------------------------------- 65

Major Economic Indicators of Nine Pan-PRD Provinces/Region (Jan-Mar 2005)------------------------------------------------------------------- 66

Nine Pan-PRD Provinces/Region: 10-Year Economic Trend (1995-2004) ---------------------------------------------------------------------- 67

Nine Pan-PRD Provinces/Region: Statistics at a Glance (2004) ---------- 68

V. English-Chinese Glossary of Terms ----------------------------------------------- 71


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EXECUTIVE SUMMARY

1. In recent years, China’s investment environment is being continuously improved; the

legal system and regulations are continuously being perfected. Moreover, in accordance with China’s WTO commitments, restrictions to market entry in the sectors of retail, finance and insurance, professional services, telecommunications, transportation, etc. have been lifted one after another. All these factors have contributed to the strengthening of foreign investors’ confidence in the Mainland. As the Mainland speeds up the pace of opening up, governments at all levels have incessantly expanded their efforts in attracting investment, organising different overseas delegations consisting of government officials and entrepreneurs to host various investment promotion conferences. In 2004 alone, various Mainland provinces/municipalities/regions have hosted over 250 such conferences in Hong Kong, bringing with them tens of thousands of people. As the number of investment promotion activities increased, foreign investment in the Mainland has also made new records.

2. Compared with the national average, the eight Pan-PRD provinces/region lagged in

attracting foreign investment. In 2004, utilised foreign direct investment (FDI) in the eight Pan-PRD provinces/region totalled US$10.75 billion, accounting for less than 19% of the national total, and significantly lower than its 28.7% share of the population. Statistics show that in 2004, the per-capita average utilised FDI in the four south-western provinces/region of Guangxi, Yunnan, Guizhou and Sichuan was only US$6. In the two central provinces of Jiangxi and Hunan, the average per capita utilised FDI was US$31.6, which was still lower than the national average of US$46.6. In 2004, the dependence of the eight Pan-PRD provinces/region on foreign investment was 2.93%, which was also lower than the national average of 3.67%. These figures show that the Pan-PRD still has much room for development in terms of utilising foreign capital.

3. To foster stronger cooperation in attracting investment among the Pan-PRD

provinces/region, on March 18, 2004, investment promotion organisations from more than 30 Pan-PRD cities jointly published the “Manifesto of Cooperation Among Investment Promotion Organisations of the Pan-PRD Cities” (泛珠三角城市投資促

進機構合作宣言 ) . The participants committed to construct a fair and mutually beneficial mechanism for promoting cooperation among investment promotion organisations of the Pan-PRD cities. They would open up their cities, break down the regional barriers between them, and remove the protective policies to achieve win-win results. Each of the Pan-PRD constituent city has its own unique features and there are a lot of complementarities among the cities. By actively promoting investment cooperation among the cities, it would help highlight the competitive advantages of the Pan-PRD region, consolidate the investment resources of these cities and promote investment development in the region.


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4. With Nanning designated as the permanent host of the annual China-ASEAN Business

and Investment Summit, and as a result of the implementation of the strategy of Developing China’s Western Region, it is expected that an increasing number of domestic and foreign enterprises will tap the south-western Pan-PRD region for new development and business opportunities. Moreover, the construction of the Economic Zone on the West of the Taiwan Strait, and the relocation of industries from the coastal region towards the inland provinces would also significantly promote investment in the south-eastern Pan-PRD and their neighbouring regions. The nine Pan-PRD provinces/region are geographically close to Hong Kong. With the full implementation of the Pan-PRD regional cooperation, Hong Kong businesses can fully leverage on their comparative advantages in capital, technology and human resources to expand investment in the nine provinces/region.

5. In recent years, Fujian has integrated its efforts in attracting foreign investment with

adjustments to its industrial structure, and it also enhanced utilisation of foreign investment in its key sectors. The provincial government has identified ten industries for foreign investment, and required governments at all levels to come up with the necessary means of support. There is a lot room for complementarities between the industries of Fujian and Hong Kong, particularly in those identified for foreign investment in the near- to medium-term such as infrastructure facilities, tourism, and modern logistics. As a major financial centre, internationally renowned tourist destination, and Asia’s most important business, trade and transportation hub, Hong Kong can complement Fujian actively in sourcing development funds, building tourism projects and developing modern logistics businesses. Opportunities available herewith are worth the attention of Hong Kong businesses.

6. As a part of the central Mainland region, although Jiangxi is not a sea-bordering province,

it is strategically located at the intersection of the PRD, Yangtse River Delta, and southern Fujian. It is well positioned to benefit from its strategic geographical location, low cost, rich resources and good ecology, and has become a prime receiver of industries relocating out of the developed coastal regions. In recent years, a number of foreign-invested enterprises in the coastal region have chosen Jiangxi as their new production base. Currently, Longnan District in Ganzhou (贛州龍南縣 ) , which is situated at the southern-most tip of Jiangxi and forms a core part of the “three-hour economic radius” (三小時經濟圈 ) of the Pan-PRD, has become a hot spot of investment for Hong Kong’s garment manufacturers. With the conceptualisation of the Pan-PRD, Hong Kong investors that used to focus on the PRD region would gradually move northwards. In this process, Jiangxi is bound to become a favourable investment destination for Hong Kong businesses.

7. Last year, Hunan prioritised investment promotion and cooperation with its neighbouring


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II. TOPICAL ANALYSIS

“Investment Cooperation in the Pan-PRD: Opportunities and Challenges for Hong Kong”

Part One: South-eastern Region

Strengthening Investment Cooperation in the Pan-PRD Region ---------- 10

Fujian Guiding Foreign Investors Towards Its Key Industries ---------- 16

Jiangxi Receiving Industries Transferred from Coastal Areas ------------ 20

Economic Development in Hunan Spurred by Domestically-lined up Investments ---------------------------------------------------------------------- 25

Hainan Promoting Interaction with Metropolises ------------------------ 30


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Strengthening Investment Cooperation in the Pan-PRD Region In recent years, sustained economic growth in the Mainland together with the speeding

up of structural adjustments in global industries, international funds have increasingly moved into developing Asian countries. Meanwhile, China’s investment environment is being continuously improved; the legal system and regulations are continuously being perfected. During the Tenth Five Year Plan period1, in accordance with China’s WTO commitments, restrictions to market entry in the sectors of retail, finance and insurance, professional services, telecommunications, transportation, etc. have been lifted one after another. All these factors have contributed to the strengthening of foreign investors’ confidence in the Mainland. As the Mainland speeds up the pace of opening up, governments at all levels have incessantly expanded their efforts in attracting investment, organising different overseas delegations consisting of government officials and entrepreneurs to host various investment promotion conferences. In 2004 alone, various Mainland provinces/municipalities/regions have hosted over 250 such conferences in Hong Kong, bringing with them tens of thousands of people. As the number of investment promotion activities increased, foreign investment in the Mainland has also made new records. According to latest statistics from the Ministry of Commerce, the Mainland has approved the establishment of 43,644 new foreign-invested enterprises (FIEs) in 2004. It attracted signed foreign investment contracts worth US$153.5 billion, actually utilised foreign direct investment (FDI) worth US$60.63 billion, up by 6.29%, 33.38% and 13.32% respectively.

Utilised Foreign Direct Investment in the Mainland

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

US$100mn

contractedactually utilised

Source: China Statistical Yearbook; Statistical Report on the Economic and Social

Development of China in 2004

1 The Tenth Five-Year Plan period refers to the five-year period between 2001-2005.


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More room for the eight Pan-PRD provinces/region to utilise foreign capital

Based on last year’s FDI statistics, the overall attractiveness of the eight Pan-PRD provinces/region to foreign investors is obviously weaker than the national average. In 2004, utilised FDI of these eight provinces/region totalled only US$10.67 billon, which is equivalent to less than 18% of the national total of US$60.63 billion and falls short of matching their 28.7% share in the country’s population. According to statistics, the average FDI per capita of Guangxi, Yunnan, Guizhou and Sichuan was only US$5.70; while that of the two central provinces, namely Jiangxi and Hunan, was US$31.60 -- much lower than the national average level of US$46.60. In addition, utilised FDI as a percentage of nominal GDP, which reflects the degree of their dependence on foreign capital, was only 2.93% -- also below the national average level of 3.67%. These figures reflect the enormous potential for these provinces/region in expanding their utilisation of foreign capital.

2004 Dependence of Nine Pan-PRD Provinces/Region on Foreign Capital

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Fujian

Hainan

Guangdo

ngJia

ngxi

Hunan

Sichuan

Guangxi

Yunnan

Guizhou

National

%

Source: Statistical Report on the Economic and Social Development of the

respective provinces in 2004

In order to develop stronger cooperation in investment promotion among Pan-PRD constituents, on March 18, 2004, the investment promotion agencies of the 30-plus Pan-PRD cities jointly endorsed the Declaration of Cooperation Among Investment Promotion Agencies of the Pan-PRD Cities. The cities committed to establishing a mechanism that would be equally and mutually beneficial to the investment promotion efforts of all constituents, would integrate their resources, foster regional cooperation and promote their common development. These efforts would help to strengthen regional development and cooperation, break regional barriers and local protectionism, and achieve win-win results. Each of the Pan-PRD cities has its own unique features and comparative advantages. Closer investment cooperation between these cities will facilitate full use of these comparative strengths, help integrate resources and promote investment in the Pan-PRD.


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Economic construction in the Pan-PRD would promote investment cooperation

With China stepping up the construction of its strategic economic regions and with the commencement of Pan-PRD regional cooperation a year ago, the Pan-PRD constituent provinces/region have actively cooperated in investment promotion by leveraging on their respective geographical strengths and abundant resources. Such investment cooperation greatly promotes capital flow within the region, and the achievements are significant. 1. Construction of the China-ASEAN Free Trade Area1

On November 3-6, 2004, the first China-ASEAN Expo was held in Nanning, the capital

city of Guangxi. The first China-ASEAN Business and Investment Summit was held during the Expo period. This Summit provided a very important platform for the businessmen of China and ASEAN countries to negotiate investments, and discuss cooperation in economic and technological undertaking. The Summit highlighted the geographical advantages of Guangxi in bridging investment relations between China and the ASEAN. There are currently 343 ASEAN-invested enterprises in Guangxi, with a total investment of US$1.148 billion. As the Summit would take place in Guangxi every year, more and more enterprises from home and abroad will be attracted to the autonomous region to seek business and investment opportunities. According to relevant statistics, leveraging on Guangxi’s hosting of the Summit in 2004, 29 investment promotion sessions were held and 102 projects involving a total investment sum of US$4.968 billion were signed.

2003 Foreign Investment in China: Share of Individual ASEAN Countries

Singapore70%

Malaysia9%

Philippines8%

Thailand6%

Indonesia5%

Brunei Darussalem,

Cambodia, Laos, Myanmmar,

Vietam2%

Source: CEIC and China Statistical Yearbook

1 The ten ASEAN countries include: Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Philippines, Singapore,

Thailand, and Vietnam.


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2. Development of China’s Western Region1 On May 25, 2005, the 6th Western China International Economy and Trade Fair

concluded in Chengdu, the provincial capital of Sichuan. As an important window and platform for exchange between China’s western provinces/region and Sichuan to further open up to the outside world and expand the space for development, the theme of the Expo this year was “Attracting International and Domestic Capital to China’s Western Region, and Strengthening Cooperation to Promote Common Development”. Thousands of businessmen across China and from all parts of the world participated in the Expo to seek business and investment opportunities. Under the supportive guidance of the State and market mechanism, China’s western region has become an investment hot spot. According to statistics, the western region has attracted FDI of US$10 billion from the end of 1999, when the Central Government launched the strategy of Developing China’s Western Region, up to the end of 2004. With foreign investors’ growing interest in the western region, domestic capital and businesses are also being attracted westward. So far, more than 10,000 enterprises from eastern China have invested and expanded their businesses in the western region. The cooperation between western provinces and the Pan-PRD region is becoming closer and this trend is evident particularly in Chengdu. Since last year, the Pan-PRD constituents have invested in more than 500 projects in Chengdu, involving a sum of Rmb10 billion, contributing to a total investment of Rmb4.416 billion, up 17.3% from 2003.

2000-2004 Foreign Direct Investment in the Western Mainland Regions

0

10

20

30

40

50

60

70

80

90

100

2000 2001 2002 2003 2004

US$100mn (Cumulative from 2000)

Source: CEIC and China Statistical Yearbook

1 The designation of western provinces include: Xinjiang, Ningxia, Shaanxi, Gansu, Qinghai, Tibet, Guangxi, Inner

Mongolia, Yunnan, Guizhou, Sichuan, and Chongqing.


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3. Construction of an Economic Zone on the West Coast of the Taiwan Strait1

On May 26-27, 2005, the 2nd Pan-PRD Provincial Capital City Mayors' Forum was held in Fuzhou of Fujian. The theme of the Forum this year was “Strengthening Economic and Trade Coordination between the Pan-PRD Provincial Capitals and Promoting the Construction of the Economic Zone on the West of the Taiwan Strait, as well as Economic and Trade Cooperation with Taiwan”. The Forum’s objective was to actively initiate changes in cross-strait relations and maximise the advantages of having an Economic Zone on the West of the Taiwan Strait to facilitate exchanges and cooperation in trade and economic relations between the Pan-PRD provinces and Taiwan. Fujian is at the centre of the Economic Zone on the West of the Taiwan Strait but the Economic Zone is not limited to Fujian. Apart from serving as a recipient of industries transferred out of Taiwan, Fujian is also an ideal low-cost platform for neighbouring Pan-PRD constituents involved in supporting industries to set up their manufacturing bases. With a platform for investment promotion readily in place, more investment from Taiwan will be attracted into the Pan-PRD. Taiwan is currently the second largest source of investment for Fujian. By the end of 2004, the number of Taiwan-funded projects totalled 8,082; contracted investment reached US$13.8 billion, and utilised Taiwan investment exceeded US$9.9 billion (excluding indirect investment coursed through a third country).

1997-2004 Taiwan Investment in the Mainland

0

5

10

15

20

25

30

35

40

45

1997 1998 1999 2000 2001 2002 2003 2004

US$100mn

Source: China Statistical Yearbook

4. Industries transferring out of coastal regions into western China

Benefiting from abundant resources and low-cost, the Pan-PRD region is a good 1 The economic zone on the west coast of the Taiwan Strait refers to the water and land territory with Fuzhou and Xiamen as

the centre and south-eastern part of Fujian as the main constituent, starting in the north from Zhejiang and Wenzhou to Shantou, Guangdong in the south, and to the Taiwan Strait in the west.


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destination for industries relocating out of the costal region. Hunan is a central province closest to receive the industries transferred out of the PRD. Last year, Hunan fully leveraged on the cooperative platform of the Pan-PRD to attract industries relocating out of the coastal region. Focusing on investment promotion, Hunan aggressively expanded its cooperation with the coastal areas in capital, management, technology, information and restructuring of enterprises, and achieved substantial progress inviting investors from other provinces. In 2004, Hunan and investors from other provinces closed 4,014 joint projects in Hunan. They were worth a total of Rmb51.05 billion. Jiangxi is where PRD, Yangtse River Delta (YRD) and the south-eastern Fujian intersect. It is another ideal venue for receiving industries transferring out of the coastal region. In recent years, a number of famous Guangdong-based IT manufacturers such as Greencool (格林科爾 ), Shenzhen Advanced Science & Technology Enterprise Group (先科), TCL and NESO (新索麗), etc. have launched their businesses in Jiangxi. Fujian is also planning to turn some industrial parks in the southern and south-western part of the province into bases for receiving industries transferred out of PRD areas with the emphasis on the cities of Zhangzhou (漳州) and Longyan (龍岩) in order to realise the advantages of complementarities and promote mutual development. As manufacturing industries in the PRD are moving inland, cooperation between the Pan-PRD and inland provinces/region would strengthen continuously under the setting of “store in front and workshop in the backyard”. Wider development opportunities for Hong Kong businesses

To accelerate the development of the national economy, the central and western

provinces are stepping up the efforts to promote investment, attract foreign capital, human talents and technology. Hong Kong boasts of plentiful capital, advanced management expertise, professional services, talents familiar with the Mainland market, and is an established multi-functional international centre. Under the CEPA framework, Hong Kong can make full use of these advantages to actively encourage enterprises to participate in the economic construction of the Mainland. The Pan-PRD provinces/region are geographically close to Hong Kong. With the commencement of Pan-PRD regional cooperation, Hong Kong businesses can further accelerate their investment in the area. Investments from Hong Kong would not only contribute to the necessary funding for the local economic construction, but also enhance the level of internationalisation and modernisation of local enterprises, helping them to upgrade and meet international standards. For Hong Kong, extending its economic hinterland to the Pan-PRD, where the economy accounts for one-third of the national total, will provide wider room and greater opportunities for businesses to develop. This would lead to win-win results.


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Fujian Guiding Foreign Investors Towards Its Key Industries

In 2004, Fujian concentrated on the construction of the Economic Zone on the West Coast of the Taiwan Strait, further improved its investment environment and stepped up its investment promotion efforts. These helped Fujian realise steady growth in FDI. The province signed a total of 2,277 FDI contracts in 2004, worth a total value of US$7.543 billion; it utilised FDI worth US$5.318 billion. Fujian’s utilisation of FDI in the primary industries accelerated and investment in agriculture, forestry, livestock husbandry and fisheries grow by 39%, higher than the overall provincial average. The secondary industries maintained the lead in attracting foreign investment with a value of US$3.637 billion, accounting for 68.4% of the total received in Fujian. Of this sum, US$3.457 billion went into the manufacturing industry. Investment in the tertiary industries was also strong, registering a growth rate of 15.1%. Driven by transportation and communication, storage industry, wholesale and retail industry and other sectors, growth in foreign investment in the services sector outpaced the other industries. Moreover, foreign investment in information transmission, computer services and software industry, water resources, environment and public services management, as well as other emerging industries also achieved impressive growth. Ten key industries for foreign investment identified

Fujian’s previous investment promotion efforts prioritised optimisation of industry structure and lacked concrete strategies in directing industrial investments. In recent years, Fujian started to pay more attention to integrating upgrading and modernisation of industries into its investment promotion efforts and strived to expand utilisation of foreign capital in key sectors. In directing foreign investment into the province’s key industries, Fujian’s Provincial Government unveiled a series of “Suggestions to Guide Foreign Investors towards the Key Industries”. The Suggestions define ten key industries for foreign investment in the short- and medium-term. These ten key industries cover primary industries such as crop cultivation and livestock breeding; secondary industries like electronics, petrochemicals, machinery, light textile and pharmaceutical, etc, as well as tertiary industries such as public services, transportation and communication, tourism, logistics and other service sectors.

1. Agriculture: The emphasis of foreign investment utilisation is to develop the planning

and processing of famous, quality and characteristic fruits, vegetables, tea, domestic fungus and Chinese traditional medicinal crops; industrialise the dairy products, egg and meat production; develop a base for fast-growing woods, refined processing of woods and bamboo, scale cultivation of feature aquatic products and processing industry.

2. Electronic information: leverage on foreign investment to develop a group of sizeable

companies in the areas of computer and network companies, software, new-generation digital audio and video unit, new components and supporting products.


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3. Petrochemicals: by taking the opportunity to construct integrated refining and

petrochemicals project1, foreign capital will be attracted into industries including petrochemicals, composite material, organic chemicals and refined chemicals, etc.

4. Machinery: Fujian will leverage on the inflow of foreign capital to lead the

development of its key industries including automobile, engineering machinery, electric appliances, shipbuilding and repairing, the integration of mechanical and electronic industry, precision machinery, agricultural machinery, environmental protection equipments, etc.

5. Textiles: foreign investment will be used for accelerating the restructuring and

upgrading of the light industry of textile, clothing, pulping and paper-making, etc. 6. Pharmaceutical: foreign investment will be utilised to develop new products including:

anti-cancer drugs and new drugs for treating cerebrovascular disorders; new bioengineering production technology, vaccines made with genetic engineering processes, biological and pharmaceutical materials and finished products.

7. Infrastructure and urban public services: foreign investment will be attracted and

encouraged to construct and operate expressway, ports, railway, energy, city road, bridges, water plant, waste water treatment, garbage, waste treatment and other pollution control projects.

8. Tourism: foreign investment will be utilised to accelerate the development and

construction of key tourism projects and key tourism areas throughout Fujian. They will also be directed to fund the construction of infrastructure and necessary facilities, development of tourism brands and commodities. Setting up of travel agencies jointly funded by Chinese and foreign partners are encouraged. Emphasis will be placed on the Wuyi Mountain (重點開發武夷山), tourism and holiday resorts in Meizhou Island (湄

洲島), as well as its 11 National Scenic Spots and other featured tourism items. 9. Modern logistics: foreign investment will be utilised to accelerate the development of

modern logistics and third-party logistics2 service, and logistics storage, distribution, chain operation and combined transport and services.

10. Other services: include consultancy services in international economics, technology,

environmental protection, accounting, auditing, legal, homes for the aged and disabled, medical institutions, physical education, higher learning institutions, scientific research

1 The project is located at Quangang Petrochemical Base (泉港石化基地) at the south of Meizhou Bay (湄洲灣). The project

was invested and operated by Sinopec, US Exxon Mobil and Saudi America Overseas Corporation. It spans 437 hectares and involve Rmb26.7 billion in investment. The Chinese partner holds 50% of the venture while the two foreign partners hold 25% respectively. Completion is expected at end-2006 and operation to commence in 2007.

2 Third-party logistics refers to the situation when a manufacturing enterprise wishing to concentrate on its core business commissions a professional logistics company to carry out the logistics activities which it used to perform by itself.


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and comprehensive technology service, etc. The Suggestions require that the foreign investment be directed towards the key industries of nine prefecture cities in accordance with their resource advantages. This should be done on three levels: 1. The first level includes Fuzhou, Xiamen and Quanzhou. Priority should be given to

upgrade and optimise the structure of industries, develop high and new technology industry, attract multinational investment, expand international market presence and accelerate the construction of infrastructure and public services, etc.

2. The second level includes the cities of Putian (莆田) and Ningde (寧德). Priority should

be given to utilisation of foreign capital to develop their sea-bordering industries, promote agricultural industrialisation, cultivation and processing of aquatic products, light industries, food manufacturing, characteristic tourism projects and other projects complementing those in the first level.

3. The third level includes the cities of Nanping (南平), Sanming (三明) and Longyan (龍岩).

Priority should be given to utilisation of foreign investment to spur construction of infrastructure projects, coastal traffic communication network, electronic information industry, agriculture, forestry and other characteristic industries. These would transform the cities’ resources into economic advantages and help them strengthen to become the more competitive hinterlands of Fujian.

Necessary supportive measures introduced

To direct foreign investment towards the province’s key industries, the Fujian government has demanded departments at all levels to further deepen, specify, study and work out concrete solutions to attract foreign investment into their respective areas and to introduce necessary supportive policy measures. The major ones are: 1. Simplify investment approval procedures

Unless otherwise stipulated by the State and as long as not destabilising the overall balance in national production and construction, foreign investment projects of capital construction or technical innovation that involve less than US$30 million and are on the list of projects where foreign investment are allowed, will not be required to submit project proposals or feasibility studies for examination and approval. They can directly apply for registration with the provincial Development and Reform Commission or Economic and Trade Commission in their respective cities. Registration certificates of foreign investment projects issued by the above Commissions will be regarded as equivalent to approvals on project proposals or feasibility studies and upon presentation of this certificate, the applicant will be able to proceed with the next steps of the application process with relevant government departments. Tax exemption for imported equipments for capital construction


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projects under areas where foreign investment are encouraged will be processed and confirmed by Fujian’s Development and Reform Commission. The Commission will examine the total amount of foreign exchange required for importing equipments but will not go into the details or affix seals on the list of each item imported.

2. Encourage pooling of industries in development zones

Strong support shall be given to development zones with high degrees of reliance on

industries, can exert strong influence, has reasonable layout, and positive development prospects. They will be given support in use of land, funding, infrastructure construction, etc. In terms of use of land, preference will be given in granting rights to use land, and preferential prices will be offered. In conducting environmental assessment, foreign investors will have the liberty of choosing their appraising agency, while the environmental protection agency simplifies the procedures and shorten the time of examination and approval. Where conditions allow, development zones will be able to practice “Closed Management and Open Operation”. Uniform and standardised enforcement of laws and regulations will be aggressively pursued. In standardising non-tax fees, qualified development zones may pilot-test implementation of “zero fee zones”.

3. Provide financial support and services

For large infrastructure projects involving sizeable investment and a long period of construction as well as projects that involve pillar industries such as petrochemicals, electronics and machinery, the term of loans extended to the project shall be reasonably determined in accordance with the construction period and the ability to repay. Fujian will also actively explore new modes of providing financial guarantees, such as using famous brand names and patents as collaterals. FIEs shall be encouraged to seek listing in the capital market, issue bonds, etc. Enterprises with good development prospects will receive assistance when they seek to raise capital through listing. Foreign investors are encouraged and directed to set up funds for investment and business expansion and priority will be given to high and new technology industries and projects of key industries that belong to the list of encouraged sectors for priority development.

Half of the foreign capital utilised in Fujian comes from Hong Kong. As of the end of

2003, Hong Kong businesses have accumulated more than US$22 billion in investment in Fujian. The sum is equivalent to 10% of Hong Kong’s total investment in the Mainland. There is a lot room for complementarities between the industries of Fujian and Hong Kong, particularly in those services sectors identified for foreign investment in the near- to medium-term such as infrastructure facilities, tourism, and modern logistics. As a major financial centre, internationally renowned tourist destination, and Asia’s most important business, trade and transportation hub, Hong Kong can actively complement Fujian in sourcing development funds, building tourism projects and developing modern logistics businesses. Opportunities available herewith should be noted by Hong Kong businesses.


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Jiangxi Receiving Industries Relocating Out of the Coastal Areas Jiangxi has not traditionally practiced a high degree of opening up. To a large extent,

this has hampered its pace of development. In 2001, the Party Committee and Government of Jiangxi proposed to open up wider to the outside world. In accordance with its actual conditions, they proposed constructing “three bases and one backyard”1, and strived to attract investments from “three external sources” – outside the country, outside the borders and outside the province. These external sources have become the major force driving the province’s economic development and leveraging on the capital provided by these external sources, Jiangxi has found a new economic growth point. In 2002, Jiangxi actually utilised external capital (from overseas as well as from other provinces/region) worth more than Rmb50 billion, equivalent to a substantial portion of fixed asset investment in the province. In 2003, they further proposed that the rise of Jiangxi’s economy should be spearheaded by a fully-opened economy. Investment promotion and attracting industries relocating out of the coastal regions are consistent with fully opening up Jiangxi’s economy. In 2004, Jiangxi utilised FDI worth US$2.05 billion, ranking the 8th highest in China, up eight notches from its ranking in the previous year, and occupying the top position among China’s central provinces. To date, a large number of large enterprises both home and abroad have launched their businesses in Jiangxi; they include Ford Corporation of the US, Suzuki, Isuzu, Toshiba and Fuji Heavy Industries from Japan, Rhone-Poulence Groupe from France, Uni-President Group (統一集團) from Taiwan, and Golden Eagle Group from Singapore. The investment of these enterprises spans industries including motor vehicles, electronics, food, textile, machinery and pharmaceuticals.

2004 Actually Utilised Foreign Direct Investment in the Central Region

0

5

10

15

20

25

Hubei Jiangxi Hunan Henan Anhui Shanxi

US$100 mn

Source: Statistical Report on the Economic and Social Development of the

respective provinces in 2004

1 The “three bases” refer to a base for receiving industries relocated from the eastern provinces, a base of quality agricultural

products and by-products, a base for exporting workforce; “one backyard” refers to turning Jiangxi into a tourism and leisure destination for residents of Shanghai, Zhejiang, Jiangsu and Fujian, Guangdong and other coastal areas.


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Advantages for receiving industries relocating out of the coastal areas

Relocation of industries started in the more developed coastal regions. They have earlier received the labour intensive industries transferred in by developed countries and this has helped speed up economic development in the coastal regions. Eventually, the Mainland developed two major economic regions -- PRD and YRD. With the upgrading and updating of the structures of industries in the coastal areas, and their rising costs of land, labour and other factors of production, labour-intensive industries are once again seeking to move to areas where costs remain low. This provides the central Mainland region with the opportunity to speed up its economic development.

As a part of the central Mainland region, although Jiangxi is not a sea-bordering

province, it is strategically located at the intersection of the PRD, YRD, and southern Fujian. In September 2004, an expressway network that resembles the character “天”1 and links Jiangxi and surrounding provinces has commenced operation. This has substantially cut the travel distance between Jiangxi and the coastal areas like Shanghai, Zhejiang and Fujian, etc. The resulting geographical advantage and convenient transportation improves the position of Jiangxi in receiving the industries relocating out of the coastal region. Besides, Jiangxi is also better positioned to provide the necessary supporting services to the economically developed regions of PRD, YRD and Fujian. In terms of factor costs, Jiangxi possesses abundant and relatively lower cost labour force. Statistics show that in 2004, the average annual wage level of Jiangxi was Rmb11,860, only half that of Guangdong. The costs of electricity, water, transportation and other infrastructure are likewise much lower than in coastal areas. In Jiangxi, it takes only Rmb22 million to build one kilometre of expressway; in Shanghai, it takes Rmb80 million, in Guangdong Rmb60 million, and in Zhejiang Rmb40 million. In 2003, the average price of commercial housing unit in Jiangxi was only Rmb1,210 per square metre -- only one third of that in Guangdong Province.

1 This transportation is the main connection between Jiangxi and the surrounding provinces. The Jiujiang-Jingdezhen

Expressway (九江-景德鎮高速公路) started operating at end-2000. It represented the first horizontal stroke of the character “天”; The Liyuan-Wenzhou Expressway (梨溫高速公路), the Jiangxi Section of National Highway linking Shanghai and Ruili (瑞麗) represents the second horizontal stroke of ”天”, and to Zhejiang and Shanghai; Jiangxi-Guangdong Expressway completed in January, 2004 represents the third stroke and connects the Jiangxi from north to south. The Wenzhou-Shatian Expressway (溫沙高速公路) is the Jiangxi Section of National Highway linking Beijiang and Fuzhou. Completed in September 2004, it represents the final stroke of the character “天”.


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Factor Costs in Jiangxi vs. YRD, PRD and Fujian Average annual wage

(Rmb, 2004) Average price of

commercial housing (Rmb/sqm, 2003)

Jiangxi Fujian Jiangsu Zhejiang Guangdong Shanghai

11,860 15,603 18,202 23,506 22,116 30,085

1,210 2,297 2,197 2,737 3,195 5,118

Source: CEIC In resources, Jiangxi is gifted with rich mineral deposits. 35 of its mineral products

have verified deposits that rank amongst the top five highest in China, 12 of which top the nation. Copper, tungsten, uranium, tantalum, gold, silver and rare earth are crowned as “Seven Golden Flowers” of Jiangxi. The province also boasts of the largest land area in eastern China, with 83% of its land suitable for cultivation – 14 percentage points higher than the national average. Jiangxi boasts of fertile land, comfortable weather and diverse of biological resources. Jiangxi’s level of water resources per kilometre ranks 5th highest in China, per capita water resources reached 4,120 cubic meters, higher than the average levels enjoyed by the country and the YRD drainage area. General speaking, areas which possess rich resources are better positioned to attract capital, technology and industries. With abundant resources, Jiangxi is well positioned to receive industries transferring out of the coastal regions.

In terms of ecological environment, Jiangxi features green hills, clear water, fresh air

and fertile land. Its level of industrial waste discharges (waste water, waste gas and waste solids) is among the lowest in China. The province is most suited for developing green and organic agriculture and food products. Coverage of forests in Jiangxi is as high as 59.7%; the variety of wildlife in Jiangxi accounts for 17% of the national total. These are suitable conditions for developing green vegetable, bamboo products and building materials. More than 5 million mu (Chinese unit of area equivalent to 1/15 of a hectare). The water in Jiangxi is less polluted. The Poyang Lake (鄱陽湖), which is China’s largest freshwater lake, has particularly managed pollution well and is ideal for raising the high-quality aquatic products. Irreplaceable and immovable, the ecological environment has become the most valuable resources for supporting the development of Jiangxi’s economy. It has also become the most appealing attraction to external capital, technology, talent and other mobile resources. Through economic cooperation and exchange with the YRD and PRD, Jiangxi will become China’s largest base for developing green industries; its export of green products to the international market will experience continued expansion. Foreign investors choose Jiangxi as new manufacturing base

Benefiting from its strengths in capital, cost, resources and ecology, Jiangxi is a suitable


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base for receiving industries relocating out of the coastal areas. In recent years, quite a number of FIEs in the coastal areas have picked Jiangxi as their new production base. Uniden (Japan), the world’s largest seller of wireless telephones, which first invested in Shenzhen, invested in Jiangxi’s Ji’an City (吉安市) in 2002 at a much lower cost. As Uniden and Shanghai’s Renzhong Electric Co., Ltd (人眾電器) continued to expand their investment in Ji’an he city has become an important base for manufacturing electronic products. It now possesses production capacities of 3 million colour televisions and ten million telephone sets, fast becoming Jiangxi’s major distribution centre of these appliances. In September, 2002, Tai Nike International Corporation (泰耐克國際公司 ), a French multi-national corporation manufacturing the household appliances and office appliances chose Nanchang as its key investment destination and started construction of Tai Nike (Nanchang) Industrial Park for its production of air-conditioners, washing machines, ATM equipment, etc. In April 2005, China Head Office of Trilec France S.A. started its Nanchang operations. It became the first multinational corporation to set up a China head office in Nanchang. At present, the total investment made by Trilec has reached more than Rmb1.5 billion. The company has indicated intention of moving its Paris headquarters to Nanchang as well.

In December, 2002, the businessmen of Singapore jointly established Pengda Investment and Development Company (鵬達投資與發展公司). Through negotiating with the Ganzhou Government, the company decided to invest into the development of Xingan Industrial Park (新贛工業園區). In its first phase, the industrial park successfully attracted four companies manufacturing garments, stainless steel, plastic products and building materials. Combined, these four companies invested a total of US$12 million into the Xingan Industrial Park. Pengda Investment and Development Corporation is a joint venture investment formed by four Singaporean companies: EM Ptd Ltd. (怡安產業), Poh Lian Holdings (寶聯控股), King Wan Corporation (慶源企業) and Rainbow Building & Construction (彩虹建築). It committed to join efforts with Ganzhou’s long-established Pengda Corporation in developing the Xingan Industrial Park. The four companies signed agreements committing to set up the Asian Garment Factory (亞洲製衣廠 ), Anyi Private Ltd. (安益私人有限公司 ), Quande Plastics Company (泉德塑膠公司) and Pengyun Investment Company (鵬運投資公司). FIEs in Jiangxi are expanding their export production capacities, actively supporting the province’s export growth. About 40% of the province’s total trade are currently accounted for by FIEs.

Hong Kong businesses in Jiangxi mainly invest in the manufacturing sector. In 2003, Hong Kong investors signed 247 investment projects with a total contract value of US$607 million, actual inflow of capital into Jiangxi reached US$386 million. Currently, Longnan District in Ganzhou (贛州龍南縣), which is situated at the south-most tip of Jiangxi and forms a core part of the “three-hour economic radius” (三小時經濟圈) of the Pan-PRD, has become a hot spot of investment for Hong Kong’s garment manufacturers. The number of foreign-invested factories in the region has exceeded 1,000, of which 70% are Hong Kong-funded and accounting for close to 60% of the total investment made by foreigners.


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Most of these are exporters. They accept orders from clients abroad and conduct export processing activities in the province. During the 2004 Ganzhou (Hong Kong) Economic and Social Development Presentation, Easyknit International Ltd. of Hong Kong announced it would invest US$25.80 million to set up a garment and dyeing factory in Longnan. The project will proceed in three phases and Easyknit will be moving its sizeable textiles manufacturing base from Shenzhen to Jiangxi. With the conceptualisation of the Pan-PRD, Hong Kong investors that used to focus on the PRD region would gradually move northwards. In this process, Jiangxi is bound to become a favourable investment destination for Hong Kong businesses.


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Economic Development in Hunan Spurred by Domestically-lined up Investments

Hunan is an inland province situated adjacent to coastal regions. At the frontier of

inland regions, it is linked with Shanghai, Zhejiang and Jiangsu eastward and adjacent to the Pan-PRD southward. As globalisation and integration drive China’s economy to become more market oriented, and industries in the coastal regions seek to relocate, Hunan is located at a conveniently central position to receive industries transferred from YRD and PRD. Last year, with Hunan focused on promoting investment and expanding cooperation with surrounding provinces in a wide array of aspects including capital, management, technology, information and market systems, domestically-lined up investment experienced substantial development. During the year, Hunan signed 4,014 projects with other provinces. These involved total investment of Rmb154.3 billion; while utilised investment reached Rmb51.05 billion, representing a 52.2% rise over previous year. In 2004, Hunan attracted capital from other Mainland provinces that was equivalent to 26.2% of its total fixed asset investment, 4.4 percentage points higher over the previous year. This inflow made up for the shortfall in Hunan’s construction funding and drove the economic growth up by about 2 percentage points. Domestically-lined up investments created 150,000 job opportunities, accounting for more than one-fourth of the new jobs created in Hunan, effectively alleviating the employment pressure. At present, domestically-lined up investment has become an important force driving the province’s economic growth and plays very important role in optimising industry structure, advancing the processes of agricultural industrialisation, industrialisation and urbanisation to promote Hunan’s economic development.

Domestically-lined up Investment in Hunan

0

100

200

300

400

500

600

2001 2002 2003 2004

Rmb100mn

Utilized capital

Source: Hunan Bureau of Statistics


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Actively attracting investment from YRD and PRD Last year, Hunan fully leveraged on the Pan-PRD platform to expand economic

cooperation and exchange with the YRD. The province implemented 3,277 joint projects with other Mainland provinces, signed contracts worth Rmb115.5 billion in investment and actually utilised Rmb39.73 billion investment, representing a rise of 58.6% over the previous year and accounting for 77.8% of the total domestic investment. Among these, projects signed with Guangdong numbered 1,583 and involved contracts worth Rmb62.93 billion; utilised Guangdong investment totalled Rmb19.32 billion, up 53.7% over the previous year. The number of projects signed with Zhejiang reached 527 and involved contract value worth Rmb23.75 billion; Hunan utilised Rmb8.1 billion investment from Zhejiang, up 95.6% over the previous year. As the province nearest Guangdong, Hunan is taking the initiative to invite industries seeking to relocate out of the province. In 2003, Guangdong-based Meidi Enterprise Group (美的企業集團) acquired 100% of Sanxiang Passenger Car Factory (三湘客車廠), aiming to construct the Meidi Auto Industry Town for manufacturing the commercial vehicles, passenger cars and auto parts and accessories. The investment contributed significantly to the development of Hunan’s automobile industry and created more than 10,000 job opportunities.

The major areas for attracting domestically-lined up investment in Hunan are along the

“one point, one line” region, in which Changsha is located at the core. In the “one point, one line” set up, Changsha, Zhuzhou (株州) and Xiangtan (湘潭) are set as the central points. They are linked to linking Yueyang (岳陽), Hengyang (衡陽) and Chenzhou (郴州) along No.107 National Highway, Beijing-Zhuhai Expressway and Beijing-Guangzhou Railway, thus forming the pattern of six cities on a line. This serves as the backbone layout of Hunan’s development. Since 2002, the six cities along the “one point, one line” have attracted capital worth Rmb73.183 billion, accounting for 72.8% of total utilised domestic investment in the entire province. Statistics show that in 2004, among the 14 prefecture level cities, the three cities that attracted the most domestically-lined up investment are are Changsha (Rmb14.58 billion), Hengyang (Rmb5.89billion) and Yueyang (Rmb5.89 billion), all part of the “one point, one line” setting. Most of the domestically-lined up investment projects implemented in the “one point, one line” region are of large and super-large scales. For instance, among the 325 domestically-lined up projects in Changsha, 115 involved contract sizes of over Rmb100 million, and 26 have actually utilised investment of more than Rmb100 million, accounting for 34.5% and 44.8% respectively of the province’s total.

Leveraging on their respective geographical and resource advantages, the 14

prefecture-level cities in the province are stepping up the efforts to introduce investment from PRD and YRD. Chenzhou, Hengyang and Yongzhou (永州 ) are close to the PRD. Domestically-lined up investment and cooperation in these cities focus on sectors such as energy, non-ferrous metals, non-metallic minerals, agricultural products processing, biological and cultural tourism and education. This way, the cities can become a backyard


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for Guangdong, Hong Kong and Macao and a main source of supply of agricultural products, energy and mineral products. Meanwhile, Yueyang, Yiyang (益陽) and Changde (常德) are near the YRD. They focus instead on the refine processing of agricultural products, manufacturing of transport equipment and petrochemicals. Relying on the plan of “Economic Integration of Changsha, Zhouzhou and Xiangtan, these three cities are striving to develop industries such as petrochemicals, electro-mechanics, building equipment and new high technology industries such as new pharmaceuticals and new materials, as well as service industries such as storage and logistics. Shaoyang (邵陽 ), Huaihua (懷化 ), Xiangxi Autonomous Region (湘西自治州) and Zhangjiajie (張家界) can develop processing of the region’s characteristic products, ecological and ethnic/cultural tourism. Huaihua is suitable for construction into a central city serving the bordering areas of Guizhou, Chongqing and Hubei; Loudi (婁底) boasts of rich natural resources and have good prospects in developing into a major supply base of raw materials such as nonferrous metals, building materials and energy.

“Economic integration of Changsha-Zhuzhou-Xiangtan” Changsha, Zhuzhou and Xiangtan are located in the central and eastern part of Hunan and lower reaches of Xiangjiang River (湘江). They lie along the path of Beijing-Guangzhou Railway and Beijing-Zhuhai Expressway. The layouts of these three cities resemble the Chinese character “品” and are linked by a river. They are adjacent each other with the distance between each pair of them is about 45 kilometres. The “Economic Integration of Changsha, Zhouzhou and Xiangtan” is a project of the century to enable rapid development of the Hunan economy. With the “guidance of an overall plan and priority given to infrastructure construction”, after 5-10 years, these three cities will develop convenient transport links and be able to share power grids and information; they will enjoy the same support in terms of funding and environmental protection, achieving unified infrastructure, market, industry, as well as urban and rural areas. These would make the cities Hunan’s core economic growth pole and will transform them into a modern networked city cluster with high and new technology industries. During the Tenth Five-year Plan period, the economic growth of these three cities will be 3 percentage points higher than the average level of whole province, striving to reach 11%. In 2005, the GDP of these three cities will exceed Rmb210 billion, contributing to 45% of the province’s GDP.

Promoting technological upgrade

A look at the breakdown in the areas of investment shows that manufacturing, energy

and transportation are the hottest areas for domestically-lined-up investments. From 2002, Hunan has accumulated Rmb31.701 billion investment in the manufacturing sector, equivalent to 31.5% of the total domestically-lined up investment in Hunan, representing 1.4 times growth on average each year. Those that went into the energy and transportation sectors reached Rmb13.315 billion, accounting for 13.2% of the total in the province and representing an average annual growth of 1.5 times. In recent years, Yongzhou and


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Chenzhou have been taking advantage of their extensive water resources to develop the hydroelectric power industry. These two cities implemented 213 hydroelectric power projects worth a total investment of more than Rmb4 billion. At Hunan Investment and Trade Fair held in October 2004, 5 contracts involving expressways were signed; one of which involved a sum of Rmb12.188 billion. Regulated by the state macro-economic policy, the growth of real estate slowed down. In 2004, the growth of investment from other provinces into the real estate sector slowed 49.7 percentage points from 2003; its share in the total investment in real estate also fell from 26.9% at the start of the year to 17.1%.

Domestically-lined up investments not only ushered in funds, but also advanced

technologies and better-qualified human resources, upgrading the technologies of Hunan industries and promoting industrialisation. They also supported the growth of Hunan’s manufacturing sectors such as bio-medicines, electronics and building materials. In July, 2004, China Huayuan Group Co., Ltd. (中國華源集團有限公司), a key state-owned enterprise under the direct jurisdiction of Central Government, announced that it would take up stakes in Hunan Jiuhui Modern TCM Co., Ltd. (湖南九滙現代中藥有限公司), an established company inside Changsha’s Liuyang Biological and Pharmaceutical Park (瀏陽生物醫藥園). An investment of Rmb150 million will be made to build a 150-mu new pharmaceutical factory. This is another successful example of the Park in incubating high-tech projects and attracting large-scale enterprises by offering attractive projects.

Liuyang Biological and Pharmaceutical Park

The Liuyang Biological and Pharmaceutical Park is located in the eastern suburb of Changsha City, 35 kilometres away from the city centre. Since its establishment in October 1998, by making maximising the advantages arising from the formation of industry clusters, the Park has successfully attracted talents and technology, as well as nurtured the development of a number of pharmaceutical enterprises. Through active and effective efforts, some pharmaceutical enterprises, such as Siqi Pharmaceutical (斯奇製藥), Taier Pharmaceutical (泰爾製藥), Hunan Palladium Pharmaceutical Co.,Ltd (守護神製藥), have already gained national recognition. The park has grown to become one of China’s largest production base of external medicines, traditional Chinese medicines for abstinence from drugs, and central China’s largest manufacturing base of antibiotics. Possessing exclusive technologies to freeze-dry anti-cancer drugs, it is also the most economically efficient production base for biological vaccines in the central region. The park has already gained high reputation in and outside China. By the end of 2004, the park produced gross industrial output of Rmb2.5 billion, representing one third of the total output value of pharmaceutical industry of Hunan and the fourth highest among the Mainland’s various pharmaceutical parks. In recent years, the park has been actively cooperating with universities both at home and abroad to bring in high technology projects. With the help of ample support and various preferential measures, these projects have developed well and they received favourable responses when introduced to large-scale enterprises in other provinces and even overseas.


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As Hunan province steps up industrialisation, technology is increasingly used to improve industries and promote upgrading. This has become the main agenda in Hunan’s investment promotion efforts. Hunan will fully leverage on its geographic location, abundant resources and low-cost labour, as well as the unprecedented opportunity arising from the PRD’s process of industrial upgrading and structural adjustments to attract investments from other Mainland provinces. At the same time, Hunan will leverage on the PRD’s strength in overseas connections to usher in more foreign capital, technology and human resources, so that the adjustment of Hunan’s industrial structure would also be sped up. Hong Kong serves as a bridge linking Hunan to the overseas market. It will play an increasingly important role in promoting Hunan’s economic cooperation and its development of new and high-tech industries. Wider opportunities will arise for Hong Kong businesses. By the end of 2004, Hunan had 4,511 Hong Kong-invested enterprises, involving a total contract value of US$7.535 billion; it utilised Hong Kong investment worth a total of US$5.115 billion, accounting for 52.5% and 51.2% respectively of the province’s total foreign investment.


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Hainan Promoting Interaction with Metropolises As China’s largest Special Economic Zone, Hainan unveiled a series of supportive

measures and preferential policies to promote investment in the Island since it was accorded the provincial status 17 years ago. In order to attract investment, Hainan stepped up efforts to strengthen its infrastructure construction and system innovation, as well as to improve its investment environment. Through years of hard work, Hainan has successfully attracted investment from more than 70 countries and regions all over the world. Particularly in recent years, Hainan has made significant progress in further opening up to the outside world. A number of large enterprises have set up operations in Hainan and the strategy of bringing in investment by introducing large projects has achieved impressive results. Hainan Auto Group (海汽集團) has attracted large investment and advanced technology, self initiated productions of motor vehicle brands Family (福美來) and Premacy (普力馬) are well received in the Mainland market and are often met with supply shortage. Yangpu Jinhai Pulp Project (洋浦金海漿紙), which is currently the world’s largest single pulp-making production line and invested by Indonesian Sinar Mas Group, also started operation; while US ACT Corporation, the global leading enterprise of peptide pharmaceuticals, has reached an agreement to cooperate with Hainan Zhonghe Pharmaceutical (海南中和藥業 ) to set up a peptide pharmaceuticals manufacturing base in Haikou. It will be the largest of its kind in Europe and Asia.

Yangpu Jinhai Pulp Project Yangpu Jinhai Pulp Project is owned by the Asian Pulp Paper Industry Co., Ltd, the subsidiary of Indonesian Sinar Mas Group. The project was approved by the State Planning Commission in 1997, started trial operation in November 2004 and commercial operation on March 28, 2005. It currently remains to be the province’s largest industrial investment project, involving an investment of Rmb10.2 billion and possessing the world largest single-production line for pulp production. The commencement of commercial operation signifies that Hainan has made big progress in implementing the strategy of bring in large investment by big enterprises through introducing sizeable projects to investors. It also signifies that the construction of new industrial Hainan is underway. According to the agreement, Asia Pulp Paper Industry will make an additional investment of Rmb16 billion for setting up a paper-making factory with an annual production capacity of 1.6 million-tons. Upon completion, Hainan will become the largest pulp paper-processing base in Asia.

According to statistics, Hainan utilised foreign capital worth US$580 million in 2003, up

30% from the previous year and setting a record high. Its foreign investment concentrates in


31

the manufacturing and real estate industries, accounting for over 50% of the province’s total utilised foreign investment. In 2004, Hainan Province achieved breakthrough in investment promotion. Utilised foreign investment hit US$670 million in 2004, up 8.4% over the previous year, of which the FDI amounted to US$643 million, up 10.8% over a year ago. 171 foreign investment contracts were signed during the year, matching the level received in 2003. Newly signed foreign investment contracts reached US$743 million, representing a 115% rise over previous year. Interacting with the metropolises necessary for the lone island to win

By further opening up to the outside world, Hainan has made substantial achievements

in investment promotion. However, as other provinces are unveiling their respective supportive measures and preferential policies for foreign investment, the policy advantage enjoyed by Hainan as a Special Economic Zone (SEZ) begins to weaken. Given the situation that Shanghai is going all out in constructing its international metropolis, the western provinces are making rapid progress in the development of China’s western region, and the north-eastern China is rising as a strong industrial base, all peripheral areas are striving to accelerate development. Hainan is thus caught amongst tough challenges, especially in trying to win over investment; if progress is not made, the province will soon lose out. In order to cope with these challenges and ride on the ongoing development of the economy, the Party Committee and Government of Hainan launched a campaign encouraging Hainan to interact with other metropolises. This new strategy entails further opening up of Hainan, and would ride on China’s accelerated efforts in fostering regional cooperation to initiate mutual interaction and cooperation with metropolises in the periphery, so that Hainan can amalgamate into the broader economic regions.

Although the advantages resting in the preferential policies offered by Hainan has weakened, many competitive strengths still remain. Hainan is a unique and attractive destination for investors. It is located at the tropical zone and is the province with the biggest marine industry in China. It boasts of good ecological environment and unique resources, which include the rich mineral resources, fauna and flora resources and island tourism resources. At the same time, the island also occupies a strategic geographical position, as it is the potential hub of air and marine transportation. In recent years, the Central Government allowed Hainan to grant air freedoms; tourists from 21 countries and regions can enter the Island without having to obtain visas. Hainan is also granted permission to construct restriction-free animal epidemic disease demonstration plot, etc. It strengths in terms of abundance in resources, location and preferential policies it offers pose as very attractive conditions to the surrounding metropolises. They lay a solid ground for Hainan to further expand their investment promotion and strengthen their interactive cooperation with the peripheral metropolises and other provinces.

Mr. Wang Xiaofeng (汪嘯風), Hainan’s Party Secretary, noted that as an island economy,


32

Hainan should take the initiative to seek cooperation with other metropolises in areas that generate mutual benefits and maximise complementarities. It should leverage on external resources and participate in the economic cycles both within Hainan and in the outer regional economies. Only by doing so would Hainan find more room for development and avoid being marginalised in new rounds of market competition. At present, the metropolises are facing the growing pressures in issues related to land and water usage, as well as environmental pollution. They are also in urgent need to seek external investment opportunities and room for development. Given the situation that the SEZ is looking forward to further opening up and the metropolises are aggressively seeking room for further economic expansion, the campaign promoting interaction with the metropolises would be appropriate for achieving mutual and complementary cooperation, as well as promoting the common development. As such, Hainan is initiating efforts to seek opportunities for interactive cooperation with the metropolises, absorb and adopt their advanced ideas and successful experiences in economic development. These interactions would help promote the development of Hainan.

Initiating investment promotion activities Since Hainan was declared a province and was designated as an SEZ, the interaction between Hainan and the metropolises has been fostered. The inflow of investments from the metropolises has been one of the important factors the drove Hainan’s development. Major cities such as Hong Kong, Guangzhou, Shanghai and Beijing have started to take note of Hainan since it gained the provincial status. So far, these metropolises have accumulated a total of Rmb100 billion in the province. However, Hainan has taken a more passive role in the past in dealing with the metropolises. In order to step up interaction and cooperation with these metropolises, the Party Committee and Government of Hainan Province launched a program encouraging interaction with the metropolises so that Hainan would take up a more active role in investment promotion. Under the campaign, investment promotion efforts have become less random, more target oriented, and more coordinated project presentations have been undertaken. At the same time, Hainan has also grown more active in introducing talents and brains; external cooperation has also extended beyond enterprise cooperation to overall economic, social and cultural cooperation, taking interaction to a higher level and broader scope.

At present, Hainan is actively encouraging interaction with the metropolises and

accelerating its pace of promoting investments. Along this line, the Province hosted a series of investment projects presentations in Guangdong, Hong Kong and Shanghai. They include the following:

1. June 1-3, 2004, a Hainan delegation headed by Mr. Wei Liucheng (衛留成), Governor of Hainan Province, took part in Pan-PRD Regional Cooperation Summit and signed the Pan-PRD Regional Cooperation Framework Agreement. At the Forum, Mr. Wei elaborated


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the strategy of Hainan in developing characteristic industries and promoting such development through cooperation. He also declared the objective of fostering cooperation in the six fields of agriculture, livestock products and aquatic products processing bases; tourism; restructuring of state-owned assets; developing and utilising its petrol and natural gas resources; petrochemical and pharmaceuticals. 2. July 11, 2004, the biggest ever, highest-profile and most complete Party Committee and Government Delegation of Hainan headed by Mr. Wang Xiaofeng, Secretary of the Party of Hainan, conducted a study tour to Guangdong in a mission to implement and implement the campaign to strengthen interaction with the metropolises. Hainan actively participates in the cooperation and exchange with the Pan-PRD, strengthen economic and trade cooperation and cultural exchanges, studying the experience of Guangdong in opening to the outside world and seeking more opportunities to foster economic and trade cooperation. 3. July 14-17, 2004, the Hainan Government organised a large delegation to take part in the first Pan-PRD Economic and Trade Forum. At the Forum, 53 projects were signed with a total investment of Rmb28.4 billion. It was the largest ever and relatively more comprehensive activity for promoting economic and trade cooperation. 4. November 15-17, 2004, Hainan hosted the first Hainan Economic and Trade Fair in Hong Kong. During the Fair, 79 projects were signed with a contract investment sum of Rmb34.6 billion, 17 intended investment joint projects were signed with an intended investment value of Rmb12 billion. During the Fair, Citic Group of Hong Kong and the Hainan Provincial Government signed an agreement to develop and construct a special venue for hosting the annual Bo’ao Asia Forum. According to the Agreement, Rmb10 billion will be invested within ten years to complete the world-class conference centre and holiday resort, tourism and leisure centre. 5. January 8, 2005, the first “Annual Exhibition of Hainan’s Real Estates” was held in Shanghai. The exhibition is aimed at pooling together developers, property agents, media and relevant government departments to establish a positive brand image for Hainan’s real estates in the major target market of Shanghai. By year-round presentation of feature projects and continuous media advertising, Hainan hopes to effectively stimulate market demand for its property units.

Strengthening interaction with the metropolises is the important measure adopted by

Hainan. With regional economic cooperation expanding, the economic circles of PRD and YRD have emerged. The Mainland and Hong Kong are implementing the CEPA, the Pan-PRD regional cooperation is also ongoing. Moreover, the construction of the China-ASEAN Free Trade Area is accelerating. Given these positive developments and favourable situations, Hainan must seize the opportunities and actively participated in these processes. The campaign to strengthen interaction with the metropolises is heading the right


34

direction for Hainan to seek to play a bigger role in regional cooperation and to further economic integration with the Pan-PRD region. As an international metropolis, Hong Kong has naturally become a target of Hainan’s initiatives. Under the framework of Pan-PRD regional cooperation, Hainan can fully leverage on Hong Kong’s strengths in capital, human resources and technology, as well as market intelligence. Merging these with Hainan’s own abundant resources, both sides could emerge stronger than ever. Hong Kong businesses should take note of the underlying business opportunities.


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

Fujian Accelerates the Development of Leading Industry Clusters ------ 36

Fujian’s Development Plan for Software Industries ------------------------ 39

Jiangxi Activates Project for the Conservation and Construction of an Ecological Environment in the Source Region of Dongjiang River ------ 41

Jiangxi Adopts Measures to Rein in the Surge in Housing Prices -------- 44

Hunan Standardises Measures on Handling Non-performing Assets of State-Owned Enterprises --------------------------------------------------- 46

Promoting the Development of Chemical Industries into Pillars of Hunan ----------------------------------------------------------------------------- 48

Hainan Introduces New Preferential Policies for Investors --------------- 51

Pilot Testing Air Freedoms Promoted Hainan’s Economic Development ------------------------------------------------------------------ 53

Memorabilia of Pan-PRD Regional Cooperation --------------------------- 56


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Fujian Accelerates the Development of Leading Industry Clusters

In May 2005, The Economic and Trade Commission of Fujian issued the “Keys Notes on Speeding up Convergence of Industries and Fostering Industry Clusters”. Meanwhile, the section of the province’s Eleventh Five-Year Plan about supporting industry clusters is being formulated. Over the next five years, to gradually develop a modern industrial structure capable of supporting its leading industries, pillar industries and basic industries, Fujian will emphasise the development of strategic sectors such as electronic information, petrochemicals and automobiles, support competitive industries such as forestry and building materials, and develop high and new technology industries such as photo-electricity and software. Goals of industrial development

The goals of industrial development set in the Eleventh Five-Year Plan of Fujian require that the gross output value of enterprises above designated size quadruple the 2000 level in 2010. By then, six to eight industry clusters that are capable of handling jobs subcontracted by overseas and with output values exceeding Rmb50 billion will be formed. In addition, 30 industry clusters capable of participating and taking leading position in local subcontracting works and with an output value over Rmb10 billion will take shape.

Concretely speaking, this year, Fujian has officially launched the first batch of key

projects slated to speed up convergence of industries and formation of industry clusters. There are 225 key projects involved and entail a total investment of Rmb63.189 billion; Rmb15.213 billion of this sum is scheduled for implementation this year. The 225 key projects cover mainly the following: the three leading industry clusters of electronic information, mechanical equipment and petrochemicals; the traditional industry clusters of light industry and textiles, building materials, metallurgy; the emerging industry clusters of bio-medicine, new materials and photo-electricity; the industry clusters of agricultural by-products processing which would enable transformation of local resources.

To achieve the above-mentioned goals, Fujian will eventually adopt a series of

supporting measures to guide the convergence of leading enterprises, proactively nurture and develop famous national brands, encourage concentration of complementary or supporting enterprises in relevant industrial parks or zones, where the leading enterprises are located, establish a system to facilitate meetings of associated organisations so that boundaries between geographic regions, departments and industries can be overcome, and create a speedy and convenient traffic and transportation network within industrial parks or zones. In addition, in receiving industries transferred from Taiwan, Fujian will carry out the demonstrative “One City One Park”〔one industrial park for each city〕program to turn industrial parks or zones into effective platforms conducive to the development of industry clusters. There will also be projects reserved for the participation of the small- and medium


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sized enterprises (SMEs) of Fujian, Hong Kong and Macao. This would particularly encourage inflow of Hong Kong capital into the province to help rebuild and upgrade its SMEs. While much importance is attached to speed up the formation of industry clusters, the development for their more comprehensive supporting facilities will not be ignored: regional logistic parks or zones as well as logistics and distribution centres will be established, and a modern logistics platform will be formed.

Strategic clusters of sea-bordering industries to surround Fujian’s pillars

Since the identification electronics, machinery and petrochemicals as the three leading industries of the province in 2000, the pace of growth of these three industries has accelerated, thanks to supportive measures and priority development policies introduced by the government. Their contribution to Fujian’s economy has grown rapidly. Last year, the three industries achieved total industrial output value of Rmb300.1 billion, an increase of 27.5% year-on-year, contributing 49.3% to the province’s industrial growth.

Along Fuzhou-Xiamen coastal area (inclusive of five cities: Fuzhou, Xiamen,

Zhangzhou (漳州), Putian (莆田) and Quanzhou), a group of electronic information enterprises has converged and a group of industry leaders have emerged. This has led to gradual improvement in investment environment and construction of necessary supporting facilities. Five industry clusters, namely, monitors and displays, mobile communication, computer and peripherals, digital audio visual products, as well as software, have basically been developed. The clusters consist of 34 backbone enterprises, which accounts for 80% of the whole industry’s output value in Fujian. With monitors and displays, the gross output value realised by the industry cluster reached nearly Rmb50 billion last year. As for audiovisual products, the gross output value was about Rmb15.3 billion.

As of the end of 2004, the number of the machinery manufacturing enterprises above

designated size in Fujian reached 1,531, and their gross output value reached Rmb100.3 billion, a year-on-year increase of 20.1%. Up to now, the industry clusters of motor vehicles, engineering machinery as well as electric motor and appliance have basically been formed in Fuzhou, Xiamen and Fuan (福安) respectively, and the industry clusters of passenger- and tour-buses in Xiamen, which are composed of automobiles and supporting enterprises, has emerged. It is estimated that the four industries will achieve a gross industrial output value of Rmb24.6 billion in 2004.

Fujian’s petroleum and chemical industries are largely concentrated in Quanzhou and

Xiamen; they account for 68.01% of the province’s entire output. At present, the petrochemical base in Quangang is the large of its kind that is planned by the State. It has become an important base for developing Fujian’s petroleum and chemical industries. In 2004, the gross industrial output value of this industry cluster was around Rmb33.8 billion. Meanwhile, the project of integrating refining and producing petrochemicals is currently


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under construction. With an annual production of 450,000 tons polyvinyl chloride and 160,000 tons caustic alkali, the project will also lead the development of industry clusters.

The strategic sea-bordering industry, which revolves around the three leading industries,

is starting to develop into sizeable scale. Under the government’s policy of encouraging industry clusters, the prospects of these industries are worth the attention of Hong Kong businessmen.


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The Development Plan for Fujian’s Software Industries Seven departments of Fujian, including the Department of Information Industry,

Development and Reform Commission and Department of Science and Technology, have jointly completed “The Development Plan for Fujian’s Software Industries 2005-2007”. On the basis of “focusing on major enterprises, leaving small ones, and grow larger and stronger”, Fujian will give priority support to ten large software enterprises, 30 key enterprises and 20 products with proprietary intellectual property rights.

Plan aims to upgrade all industries through software development

In 2004, four enterprises in Fujian were ranked among China’s Top 100 Software Enterprises; 12 recorded annual sales exceeding Rmb100 million and 32 enterprises recorded annual sales exceeding Rmb30 million. During the year, the income from software and system integration reached Rmb8.62 billion, an increase of 53% year-on-year; software exports also grew 33% to US$16 million. The number of enterprises engaging in software development, promoting and servicing application users exceeded 500, and these enterprises employed over 20,000 people. According to the development plan, Fujian would spend three years to turn Fuzhou and Xiamen software parks into software production and export bases that have strong market influence nationwide. By 2007, the revenues of software and system integration enterprises shall reach Rmb18 billion, representing an annual average growth rate of 34%. Their export volumes will reach US$30 million, and employees will number over 40,000.

The development of Fujian’s software industry would have the following emphases: (1)

software applications for government usage in order to promote informatisation of government services; (2) software for industrial application to be used to strengthen the competitive advantages of industries such as telecommunication, finance, securities, public finance and taxation, traffic, electricity, tobacco, public security and social security; (3) software applications for e-commerce to propel informatisation and encourage breakthroughs in traditional industries; (4) embedded software for digital audio-video products, network communication and “smart software applications” for public use in order to exert the competitive advantages of the province’s electronic information industry; (5) network security software and intermediate software for the promoting personal and commercial Internet applications; (6) relevant systems maintenance and consultancy services for encouraging industries to adopt information system integration and outsourcing. Fuzhou and Xiamen software parks are both competitors and partners

After years of construction, Fujian’s software industry has basically achieved convergence. Competition between the two software parks has emerged. The software industries of Fuzhou and Xiamen combined account for 96% of the entire province.


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In 2000, the Fuzhou Software Park -- a National Torch Program Software Industrial

Base evaluated and acknowledged by the Ministry of Science and Technology -- entered into a comprehensive construction stage. At that time, it was listed as the key construction project and the key base for Fujian’s industrialisation. Software products find wide applications in industries such as finance, communication and electric power; they provide integrated solutions for electric power, telecommunication, securities and banking businesses; they provide tools for resource planning, fingerprint identification and colour image transmission, chips decoding, etc. Since its establishment, the Fuzhou Software Park has accumulated Rmb350 million in fixed assets and the park is currently in its fourth phase of construction. The park currently accommodates 250 enterprises, 135 of which entered after the establishment of the park. Among them, two are key software enterprises identified by the State, five generate an output of over Rmb100 million, and 20 with an output over Rmb10 million. In 2004, the gross industrial output value achieved by enterprises in the park was Rmb3.606 billion, up 83% year-on-year.

The Xiamen Software Park broke grounds back in January 2000. Likewise, it is a

National Torch Program Software Industrial Base evaluated and acknowledged by the Ministry of Science and Technology. Leveraging on its favoured position as part of an SEZ, the Xiamen Software Park has attracted a great number of software enterprises. At present, more than 150 enterprises specialising in software development, network services and system integration have been granted admittance into the park. In 2004, the park generated gross industrial output value worth Rmb1.8 billion. The park has moved toward having a diversified equity structure, its operation and management are of good corporate standards and industries are increasingly market-oriented. Some of the products have entered international markets in Europe, the US, Japan and Southeast Asia. Their businesses span the scopes of software development, system integration, information services, chip design, information security, etc. There are a total of 215 software products with proprietary intellectual property rights (acknowledged by the Bureau of Science and Technology), among which, more than 100 items are advanced by local standards. Enterprises in the park have undertaken 26 national-level scientific and technological projects and more than 40 provincial-level projects.

Going forward, the two parks will continue to perfect all kinds of necessary supporting

infrastructure facilities, absorb more foreign investment, and play an increasingly significant role propelling the development of software industry. Hong Kong businesses that intend to undertake investment in this sector should take note of the foreign investment policies promulgated by the two software parks.


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Jiangxi Activates Project for the Conservation and Construction of an Ecological Environment in the Source Region of Dongjiang River

Dongjiang River, whose source lies in Anyuan (安遠), Xunwu (尋烏) and Dingnan (定南)

counties in Jiangxi, and the main supplier of drinking water for Hong Kong and the PRD. The river water is directed into Shenzhen and Hong Kong via the Dongshen system of water supply (東深供水工程). The river supplies water to 30 million people inhabiting along the river basin area. Due to excessive deforestation, disorderly exploitation of minerals such as rare earth, and lack of control on contamination of pollution agents due to some industrial enterprises’ production, the conservation of water resources in Dongjiang River has been weakened, and the quality of its water has deteriorated in recent years. Although the water from Dongjiang River maintains above Class II standard before reaching Huizhou (惠州) through Heyuan (河源), its quality deteriorates to Class V standard when reaching the Shenzhen reservoir. The quality of drinking water in Shenzhen ranks the second poorest in Guangdong, only a little better than that in Guangzhou.

Dongshen System of Water Supply The Dongshen System of Water Supply is in place to solve the problem of water

shortage in Hong Kong and Shenzhen. The Dongjiang River water originates from Jiangxi, enters the Dongshen channel and then flows into the Shenzhen reservoir after going through Shima River (石馬河) via the Taiyuan Class I water pump station (太園一級抽水站) in Qiaotou town, Dongguan (東莞橋頭鎮) on the left side of the river bank. After that, the river water enters Hong Kong’s system of water supply via water pipes. At present, the Dongjiang system of water supply delivers about 800 million cubic meters water to Hong Kong every year, accounting for more than 70% of the annual fresh water consumption in Hong Kong. To meet the requirements of Hong Kong’s economic development, the Dongshen system of water supply has been thrice expanded over the past 30 years. Phases I-III of the expansion took 16 years to complete and cost Rmb2 billion. From its up-most origin to Guangdong, one-tenth of Dongjiang River lies within the territory of Jiangxi. Water quality in this stretch of the river system has always maintained Class I to Class II quality. Results of a hydrology survey conducted by the State Environmental Protection Administration of China shows that among all large rivers in China, Dongjiang River still possesses the best water quality.

Implement nine ecological projects to protect the “green mountains and blue water”

The problems related to the ecological environment in the source region of Dongjiang River drew the attention of the State Council. According to relevant directives from the


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State Council, leaders from the National Development and Reform Commission and the State Environmental Protection Administration advised the Development and Reform Commission of Jiangxi, Department of Environmental Protection Administration of Jiangxi and the Provincial government to jointly formulate the ”Eleventh Five-Year Plan” for the Conservation and Construction of the Ecological Environment of the Source Region of Dongjiang River in Jiangxi”. It was even designated among the key programs of the Eleventh Five-Year Plan for the national economic and social development of Jiangxi. The program is also an important action plan for the implementation of Jiangxi’s sustainable development strategy and the promotion of coordinated development of Jiangxi’s resources, environment and economic society. The program covers the period from year 2005 to year 2010, authorises immediate contingent measures in solving serious problems and includes projects for construction up to as far as year 2015.

The main purpose of the program is to ensure that the water supplied to Hong Kong and

PRD are safe to drink. The program covers issues on maintaining and improving the ecology in the source region of Dongjiang River and doubling of efforts to solve acute problems such as obstructive systems, inadequate investment and insufficient law enforcement that have existed in the area of ecological environment within the Eleventh Five-Year Plan period. This can be achieved with the strengthening of its monitoring system, perfecting policies by relying on the market mechanism and involvement of the public. Jiangxi will do its best to turn this program into a nationwide model for ecological protection. It will also accumulate experiences in ecological environment conservation and share them with the source regions of other rivers in the country. The program plans to invest Rmb1.42 billion during the Eleventh Five-Year Plan period, implement nine ecological projects revolving around the protection of “green mountains and blue water”. These following nine projects formally took off on June 11, 2005:

1. Ecological forestation: the project involves 1.2443 million mu of mountains and hills enclosed for natural afforestation and 240,000 mu of sparse forestry and deserted hills for afforestion;

2. Water and soil conservation: the project calls for improved management of river basins of 48 small rivers, fixing erosion of 17,000 hectares of land and afforestation of 5,000 hectares to conserve water;

3. Recovery of ecological mines: the project involves largely the construction of waste water treatment facilities, retaining walls, sediment storage dams, ponds, drains, and so on;

4. Ecological agriculture: the projects calls for construction of 30,000 new methane gas ponds, and the comprehensive recycling and utilisation of marsh liquid emitted from horticulture enterprises;

5. Flood control and supply of drinking water: the project calls for reinforcement and cleaning of contaminated or endangered reservoirs, the construction of a 120- kilometre


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river levees, the extension of water supply to 20,000 more households for human and livestock consumption;

6. Preventing and curing agriculture-contamination: the project involves construction of 5 artificial wetlands, treatment of 101-square-kilometre of contaminated forests, etc.

7. Eco-tour: the project involves construction of the State key scenic area of Sanbai Mountain (三百山), the maintaining of Hakka Enclosed Buildings (客家圍屋) and the construction and eco-tours, turning Jiangxi into a demonstration area of ecological protection in the region;

8. Eco-migration project: the project involves migration of 30,500 residents in three counties in the river source;

9. Monitoring and preventing deterioration of ecological environment together with the establishment of an appropriate management information system. Establish a city-level monitoring centre, three county level monitoring stations, ten automatic water quality testing station, 3 automatic air pollution monitoring station and comprehensive information networks to track and prevent deterioration of the ecological environment in the source region of the Dongjiang River,

According to the plan, by 2010, 85% of the source region of Dongjiang River will be

covered with forests and 97,000 hectares of land will be treated for comprehensive water and soil conservation. Moreover, a huge number of sub-standard mines will be closed, relocating 33,000 farmers out of the region.


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Jiangxi Adopts Measures to Rein in the Surge in Housing Prices The average price of commodity housing in Nanchang has surged from less than

Rmb1,500 per square metre in 1999 to Rmb2, 900 per square metre by the end of 2004. During this period, prices of housing units rose incessantly at a pace of over 10% average rise each year. As at the end of 2004, the average price in housing units in the city centre has jumped 123% compared with that in 1999. From January-May 2005, the presales price of commodity housing in Nanchang was Rmb2,996 per square meter, a bit higher than that of Rmb2, 871 per square meter in the first quarter, and experts were expecting a 5% to 6% space of increase in the second half of 2005. Although the per capita income in Nanchang of Rmb10,443 is lower than the Rmb11,933 in Changsha, the per-square-meter housing price in Nanchang is Rmb300-400 higher than that in Changsha. Hence, it appears necessary for the government to adopt measures to cool down housing prices.

Policies adopted by the government

Besides local residents, the housing market of Nanchang has also successfully attracted

interests of outsiders. As Nanchang increased its investment in environmental construction to turn itself into a modern industrial base, it received the attention of outsiders and interest in its housing market grew. In 2004, non-residents of Nanchang accounted for 26% of the total housing units sold during the year. Moreover, the growing urban population of Nanchang is also supporting the strong housing prices in the city. Data from Jiangxi’s Bureau of Statistics show that there were 200,000 additional urban residents in the city districts in 2004. In the cost of building housing units, developers are also faced with the higher costs of land. Data from the Price Control Administration of Jiangxi show that rising development cost is a major cause of the higher housing prices. The average cost of land for developing residential units sold in the market this year averaged over Rmb1,000 per square metre.

Jiangxi’s Department of Construction printed and distributed the “2005 Key Tasks of

Jiangxi in Residential Housing and Real Estate Sectors” in early March 2005. This document mainly stipulates that Jiangxi shall prevent a surge in housing prices by adjusting and optimising the structure of its real estate market. Specifically, Jiangxi clearly demands that affordable housing in every place shall account for 10% of the volume of commodity housing development so that the need for housing of medium-to-low income households can surely be satisfied.

In addition, governments at all levels in Jiangxi, have established land reserve systems

and improved the system for open assignment of the right to use land for business purposes. They were able to follow the procedures for examining and approving land use rights and to supply land according to plans. In 2004, the scale of land used for residential housing by the real estate business in the whole province was about 540 hectares, and nearly half of that was built on existing land stock. Owing to the strict control on the scale of land use for


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construction and proactive adjustment made to the structure of land supply, speculation was curbed and the massive stock of land for commodity housing was reduced. Governments at all levels in Jiangxi shall also earnestly restrict the scale of demolition and reconstruction of old towns to reduce the demand for residential housing brought about by massive demolition and reconstruction. The above measures should help to maintain the stability of prices of urban land and housing.

Real estate developers join efforts in stabilising housing prices

Apart from government policies, the principals of 13 real estate developers and intermediaries in Jiangxi also propagated their initiatives to 1,698 real estate developers and sales agents throughout the province and unanimously advocated against real estate speculation, committing to further regulate the conduct of commodity housing sales and prevent excessive rise in housing prices.

Their initiatives include the following: keeping away from the market those

commodity housing units that have not yet gone through or have failed to pass quality assurance assessments; proactively develop regular commodity residential housing, strengthen internal management and reduce construction cost; not to stock up land and housing and not to release false information on price and sales to arouse panic buying from consumers; to increase publicity of housing projects being sold, explicate to consumers the proportions of gross interior floor area1 and the common area, etc. so that transparency in housing prices is improved; providing “quality warranties” for residential housing units and “user manuals” to housing unit owners upon the transfer of ownership, committing to undertake the responsibilities in repairs and maintenance as provided for in the “quality warranties”; agents should only collect the commission due them and should not exploit profit margin191 T


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Hunan Standardises Measures for Handling Non-performing Assets of State-Owned Enterprises

Following the issuance of a set of “Opinions on Establishing and Improving Supervision

and Management of Sate-owned Assets” in 2004, the General Office of Hunan Provincial Government unveiled a set of “Supplementary Opinions on the Policies Concerning the Reform of State-owned Assets” in May 2005 to improve the relevant measures. The “Opinions” clearly directs that when the reform of enterprises involves transfer of property rights, enterprises shall formulate a plan for the transfer after conducting thorough feasibility studies. Examination of the state-owned assets should be conducted in accordance with the necessary internal policies and procedures, and a written agreement should be drafted to lay down the plans for transfer of relevant property rights for submission to the General Office of the provincial government for approval. Hong Kong and foreign businessmen who intend to participate in the reform of state-owned enterprises (SOEs) or invest in Hunan SOEs should refer to the details of the “Opinions” to avoid being cheated or violating laws. Strictly regulating the reform of enterprises

The “Opinions” address several issues that arise in the process of an enterprise’s reform

such as disposal of state-owned assets, allocation of right to use land, as well as the declaration to write-off non-performing assets. The “Opinions” primarily requires enterprises to verify assets and capital, conduct financial audit and formally assess and appraise the value of the relevant assets before proceeding with asset restructuring. In verifying assets and capital, an enterprise shall make a thorough check on all forms of its assets and liabilities, verify and clearly define the portion of state-owned capital and corresponding equity rights. The net assets originating from loans and borrowings of the SOE should be regarded as state-owned. Upon obtaining the results of assets and capital verification, the holder of state-owned assets of the reforming enterprise shall entrust a certified public accountant and an asset assessor under the list of approved assessors of Hunan’s State-owned Assets Supervision and Administration Commission (SASAC) to perform financial auditing and asset appraisal.

In assigning intangible assets such as the rights to land use (where the purpose of land

use remains unchanged), patents, non-patented technologies, trademarks, and goodwill, enterprises also need to have their values appraised first. The result of the appraisals should be presented to the provincial SASAC for verification and approval. Moreover, for enterprises that convert into non-state-owned enterprises, the State laws require that they conduct exit audits on their legal person representatives. All disposals and acquisitions of state-owned assets need to obtain prior approval

The steering committee handling matters related to SPE reform disclosed that more than


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90% of the provincial-level SOEs have kicked off their reform process. Evaluation of these SOEs’ assets and capital has entered a crucial phase. In handling their declaration and write-off of non-performing assets, the “Opinions” require that they shall be dealt with in strict compliance with provisions under Hunan’s “Interim Measures on Handling the Non-performing Assets of Provincial-level SOEs” promulgated by SASAC and the Department of Finance.

The “Opinions” further stipulate that acquisitions and disposals of state-owned property

rights should always obtain prior approval. For reforming enterprises with less than Rmb50 million in non-performing assets, approval of the provincial SASAC will be required; for those with non-performing assets valuing more than Rmb50 million, examination will be conducted by the provincial SASAC but final approval by the Hunan Government would be required. For those involving non-performing assets of more than Rmb100 million, approval should be sought from the provincial standing committee. Moreover, in examining and approving the write-offs of the state-owned equity right of reforming enterprises, the Hunan SASAC will file a record with the provincial Department of Finance. Should this have any impact on the profit and loss statements of the enterprise, the SASAC will first solicit the opinions of the provincial Department of Finance.

Strictly monitoring the procedures for disposal and transfer of rights to non-performing assets

The Hunan Property Right Exchange (HPRE) was officially founded in September 2005; it is the first provincial-level platform of its kind. Its objective is to standardise the property right transactions of the province’s SOEs, enhance the transparency of the processes and curb under-the-table transactions. As such, the “Opinions” state that the transactions of State-owned property rights of enterprises shall be conducted via the HPRE, unless otherwise stipulated. Transactions involving the assignment of rights to use land that were returned to the government, the transfer of land with changes to land use, the transfer of the right to use land of allotted land, and the transfer of the right to use land should all take place in Exchanges designated by the provincial Department of Land and Resources. The “Opinions” further stipulate that the disposals and transfers of assets shall be effected within 30 working days after receiving the approvals from relevant units.

Lastly, due to foreign businessmen’s increasing merger and acquisition activities in

China in recent years, the “Opinions” now explicitly requires foreign investors acquiring domestic enterprises through mergers and equity investments to show certifications issued by foreign exchange administrations to prove the source of their Renminbi funds.


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Promoting the Development of Chemical Industries into Pillars of Hunan Hunan’s chemical industries enjoy a long history and a solid foundation, within which

the streams of petrochemicals, industrial chemicals, food chemicals, organic chemicals and salt chemistry have been formed. Hunan also enjoys a relatively sound research base and substantial capacity to manufacture related equipment. By consolidating these resource advantages and encouraging the expansion of its core enterprises, the industry is all set to become a pillar of Hunan and the formation of a chemical industries cluster would be underway. Promoting the development of chemical industries

In March 2005, Hunan completed the plans for developing the chemical industries

under the Eleventh Five-Year Plan period. According to the plan, the provincial government will support the chemical industries reform and restructuring, and encourage mergers of enterprises as well as formation of large enterprise groups in order to improve the industry’s management and operation Efficiency. Enterprise groups will be formed through mergers and acquisitions, formation of alliance, restructuring, etc. Consequently, Hunan expects to see the formation of several large corporations and enterprise groups with proprietary intellectual property rights, distinguished core businesses and strong core competence. This should in tern help raise the degree of industry concentration and enhance the industry’s ability in product development. Gradually, a new industrial cluster, which allows SMEs to grow alongside the leading petrochemicals enterprises, would take shape. The government will offer feasible preferential policies in the areas of investment, financing and project construction, in an attempt to construct an environment conducive to the development of the province’s chemical industries.

In terms of enhancing the overall competence of enterprises, the government will

support development of relevant human resources, proactive adoption of advanced foreign management standards, and comprehensively promote the implementation of quality assurance systems such as the ISO9000. This way, the international competitiveness of its enterprises will be enhanced. In strengthening technological innovation, efforts will be devoted to the development of new and high technology industries, and they shall drive the advancement of traditional industries. Hunan has designated the following as key development areas: new petroleum refining and catalytic technologies, polymer diversification, serialised and high-performance technologies, biological and bio-pesticide technologies, new energy-saving and environmental conservation technologies, etc.

The plan particularly cited the developments of petrochemical, agro-chemical and new

chemical materials. In terms of speeding-up the adjustment of chemical products structure and composition, the enterprises shall strive to improve their production quality, upgrade their products and accelerate the development of extended products and further industrialisation.


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In agro-chemicals, Hunan will refine regulations on the proportion of nitrogenous, phosphate and potassium fertilisers, reduce salvolatile production, promote high-concentration compound fertilisers and bio-organic compound fertilisers. The aggregate output of nitrogenous fertiliser shall not be further expanded. Hunan will instead prod the development of new products that are of low toxic content, more efficient and safe to use; bio-pesticides would be a key area for development. Products such as industrial organic materials, high-quality pigments, dope and dye will be promoted. Considering the market balance in petroleum and chemicals, Hunan will gradually adjust the structure and composition of the industry’s raw materials by leveraging on the ”west-to-east natural gas transmission” project.

Objectives under the Eleventh Five-Year Plan

For enterprises above designated size, Hunan is set to raise the value-added, profits and taxes of its petroleum and chemical industries by an annual average rate of 10% during the Eleventh Five-Year Plan period. By 2010, the nominal gross industrial output value of the industries shall rise to Rmb48 billion, and the total profits and tax shall reach Rmb3.5 billion. In addition to an expansion in scale, the plan also aims to upgrade the overall quality and standard of its products. Concretely, the following objectives have been laid down: the ratio of high quality products to the gross industrial output value shall reach 70%; 60% of the main chemical products shall meet advanced international standard; the ratio of new products to gross industrial output value shall reach 20%; the ratio of precision chemicals to gross industry output value of the industry shall be over 40%. If the above targets are reached, the chemical industries of Hunan will rank as the 13th highest in China, helping it to maintain its position as a pillar industry of Hunan.

Apart from that, the chemical industries of Hunan will complete the construction of ten

landmark projects such as promoting the substitution of oil with coal. In the fertiliser and pesticides field, the province develop the key project of Baling Branch (巴陵分公司) which has an annual urea production of 600,000 tons and a specialised fertiliser production of 300,000 tons; construct a sulphate compound fertiliser project with an annual production capacity of 500,000 ton, consequently developing projects in compound fertilisers for tobacco, specialised fertiliser for fruits and vegetables and potassium sulphate, and complete the synthesised ammonia project which would bear an annual production capacity of 300,000 tons. Meanwhile, Hunan will also speed up innovation of pesticide products and promote new their field-experiment so that commercialisation and industrialisation of these products can proceed at earliest possible time. For inorganic salts, the traditional manufacturing processes are gradually being replaced by high technology. The technological content in manganese salts, barium salts and strontium salts, and the property, rate and times of lithopone quality shall be lifted. Product development shall move toward those with high–density and compounding effect. More attention will be paid to developing raw and intermediate materials. In terms of organic raw material, new markets for Neopentyl glycol,


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grease processing, methyl alcohol extensions, etc. shall be developed. To achieve the above objectives, the key technological reconstruction projects initially

estimated under the Eleventh Five-Year Plan involve 49 projects worth a total investment of Rmb25.1 billion. Upon completion, the industry expects to realise revenues of Rmb37.8 billion, generating Rmb6.4 billion in profit and US$154 million in foreign exchange. These projects also welcome the participation of foreign capital. They will accelerate the technological progress of enterprises in Hunan, and help Hunan enterprises move into the chain of international subcontracting. This way, Hunan enterprises will gain better knowledge in trends of market demands and changes in product developments in the overseas market.


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Hainan Introduces New Preferential Policies for Investors

2005 is an important year for Hainan to attract more investments. The provincial government will strive to improve the investment environment and open up wider both to other provinces and overseas to facilitate smooth development of its economy and society. The 6th Plenary Session of the 4th Hainan Party Committee held in June arrived at the "Decision of the Hainan Party Committee on Several Issues on Enhancing Its Investment Environment". The document has received much attention, as this is the first time for Hainan to issue guidelines on investment environment construction under the name of the Hainan Party Committee since it gained the provincial and SEZ status 17 years ago.

The “Decision” stipulated requirements on safeguarding and maintaining investors’

lawful rights and interests, improving administrative efficiency and service standard, ensuring and innovating preferential policies for investors, hastening the construction and improvement of supporting infrastructures, establishing a mechanism for monitoring investment processes and protecting investors. The “Decision” identified the following three aspects for the implementation of new preferential policies: first, to fully carry out the preferential policies that SEZs are entitled to enjoy as long as they do not contradict with existing policies; second, to issue some competitive preferential policies with an eye on strengthening the advantages offered by the Hainan SEZ; and third, to refer to and implement policies that have already proven their efficiency in other provinces and cities. This way, Hainan will enhance its attractiveness to investors.

Creation of a compensation system

Mr. Wei Liucheng, Governor and Deputy Secretary of the Hainan Party Committee

indicated that, if losses incurred by investors are due to administrative mismanagement of Hainan’s local governments, then the local governments shall be held liable for indemnifying and compensating investors in accordance with the laws. This shows Hainan’s determination to resolve the inconsistencies in investment issues that have accumulated throughout the years. The Hainan government is determined to reconstructing its creditability and reputation. The provincial, municipal and prefecture governments of Hainan will also organise special task forces to investigate into long overdue investment cases that have been stalled because the government has defaulted on the commitments it made, or due to administrative adjustments and changes in government plans. The task forces will propose alternative solutions to these cases in hope of resolving them. Special attention will be paid to cases involving transfers of property rights entitlement.

Expanding scope of services and upgrading quality of service

Hainan will perfect it window services it provide, directly handle cases and will commit

seriously to social responsibilities. To facilitate implementation of a “single window for


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foreign investors and one-stop window services”, the cities of Haikou, Sanya, Danzhou (儋州) and Qionghai (瓊海), where external investments abound, functional departments under the direct jurisdiction of the provincial government will be set up. Meanwhile, development zones at or above provincial-level will all set up their respective investment services centres.

The departments concerned will strengthen their accountability to providing appropriate

investor services. For major projects with an investment value of above Rmb100 million, files shall be kept and maintained and they will be classified according to the level of governing territories to ensure that their projects are verified and confirmed by the relevant units. Officials and departments of all levels shall come up with their own initiatives to ensure that investment projects are given the support and assistance required. Task forces shall be set up to help investors coordinate and resolve issues arising during the process of project implementation and operation.

The conventional process of approving projects will also be improved. The

“Decision” calls for the lifting of examination and approval requirements for construction projects of enterprises that do not involve government funding. For those that require government assistance, loan transfers, loan subsidies, the government units involved will take charge of examining and approving applications for funding. Providing preferential tax treatment

With a view to helping enterprises reduce their costs of production or operation, the

“Decision” has included provisions for preferential tax treatment. For enterprises established in Hainan, income tax is levied at the rate of 15% over the income incurred from the business’ production and operation as well as other activities. For enterprises in the city of Wuzhishan (五指山 ) and other ethnic autonomous counties that are engaged in infrastructure construction and production of any other kinds, a ten-year period of exemption and a ten-year period of 50% income tax reduction shall be granted starting from the year that profit is made. Where taxes are levied in ranges, the lowest rate shall apply; where taxes are discretionary, no tax shall be levied.

Industrial, infrastructure or technologically innovative projects (including IT industry,

treatment of waste, water supply, etc.) with registered capital of over Rmb500 million, shall enjoy exemption from export customs duties, partial rebate of value added and income tax portion that is allocated for the local governments, reduction in water and electricity charges, etc. Moreover, they shall be given 40% discount (based on ongoing price of similar industrial land in the same area) on the cost of transfer of land entitlement.

The above preferential measures will undoubtedly help attract more diversified

investments into Hainan, thus facilitating the transformation of this major agricultural province. Enterprises intending to expand their operation in the Mainland may take note of the various preferential treatments offered in Hainan.


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Pilot Testing Air Freedoms1 Promoted Hainan’s Economic Development

In March 2003, Hainan was approved by the Civil Aviation Administration of China

(CAAC, 國家民航總局) to act as a pilot test ground for exercising air freedoms. Thereafter, Hainan has launched a number of preferential policies in the aviation industry. Hainan has already allowed foreign airlines, which fly Haikou and Sanya to gradually extend their routing to other cities that have already opened up to international flights (except Beijing, Shanghai and Guangzhou). In addition, international flights extended to these inland cities from Haikou and Sanya and vice versa would also be allowed to stopover2.

Fast growth of passenger and cargo traffic since the opening air freedoms for two years

In the two years since the pilot testing of the air freedoms, Hainan has made remarkable

achievements in many aspects. First, with the expansion of international routes and airliners, throughput of passengers and cargos in Hainan also increased. At the end of 2004, ten domestic and international airlines have opened 50 international routes (12 scheduled routes, and 38 non-scheduled routes). The opening of air freedoms also attracted 6 foreign airliners to open 12 international routes to Hainan (5 scheduled and 7 non-scheduled), operating a total of 306 international flights. The number of international and domestic flights to Hainan thus reached 2,977 in 2004, an increase of 36.4% year-on-year. Passenger throughput reached 285,200, up 49.1% year-on-year; while cargos and mail posted an even higher growth rate of 53.1% f to 3.556 tons. The average passenger occupancy rate was 65.3%.

Expanding airport infrastructure

Aside from rapid growth of passenger and cargo throughput, infrastructure at the two

Hainan airports also improved over the last 2 years. This was a consequence of rising demand for airport services and opening of air freedoms, which have helped attract more and more foreign airlines into the Haikou Meilan International Airport (海口美蘭機場) and Sanya Phoenix International Airport (三亞鳳凰機場), bringing in an increasing flow of transiting passengers into Hainan, and created demand for better quality of services at the airports. Moreover, foreign airlines also came to Hainan to establish liaison offices, and they have inevitably compared facilities at the Hainan airports to those of more advanced countries. To boost competitiveness and be prepared to handle an expected rise in the flow of

1 The so-called five air freedoms are as follows: first freedom grants rights to fly over a country; second freedom grants

rights to stop in a country for aircraft maintenance; third freedom grants rights to offload passengers or cargo at destination; fourth freedom grants right to carry passengers or cargo at destination; fifth freedom grants rights to take on as well as offload passengers or cargo in a third country.

2 Freedom of stopover can be explained as follows: if a flight from a foreign aviation company bound for a destination within the territory of China and makes a stopover at another city after entering the territory of China, passengers can stay at the city for one or two days and then take a flight from the same aviation company to continue their journey to the destination. However, passengers who start their journey from the city cannot take a foreign flight, therefore, the passenger occupation rate of foreign flights can be increased when they stopover in Hainan or other cities.


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passengers and cargos, Haikou Meilan International Airport embarked on its second phase of construction which would involve an investment of Rmb427.8 billion. Upon completion, the Meilan International Airport shall have an added terminal floor area of 39,000 square metres, an added parking apron area of 116,000 square metres, 20 added parking stands, and an annual passenger handling capacity of 9.3 million visits. The Phoenix Airport has also undergone its second phase of expansion with an investment of Rmb900 million. With the expansion of the airport’s west-wing apron, which was completed in 2004, the total area of parking apron reached 100,000 square metres and 12 remote parking stands were added. At present, the expansion of terminal building is under construction, and upon its completion, the Phoenix International Airport will be able to handle 4 million visits per year.

Preferential policies helped optimise investment environment

Apart from improved airport facilities, the upgrading of services is another benefit

brought about by the opening of air freedoms in Hainan. Since the opening of air freedoms, the Haikou Meilan International Airport has introduced preferential measures on landing and departure fees to foreign airlines’ newly introduced routes to Haikou. Preferential treatments were also extended to those airlines that establish bases and liaison offices in the province. The airport went further to announce two service commitments: “providing passenger and cargo flow data for all foreign airliners and offering assistance and preferential treatments to foreign airliners in their efforts to establish more air routes.” At the same time, the Haikou Meilan International Airport has established a mechanism allowing regular communication with foreign airliners so that immediate and rational adjustment and updating of preferential policies can be effected in accordance with the feedbacks received. The airport is thus positioned to create a sound internal and external environment for foreign airliners to service the Hainan routes. The Haikou Meilan International Airport has also constructed transit halls for international passengers and checking facilities to support the halls: the “one instrument, two screens” checking facilities, the international cargo monitoring and supervising field, and warehouse checking and testing facilities; as well as airport and e-port electronic information platform. All the measures adopted for updating and supporting port checking and verification facilities have reinforced port construction and management. The reinforcement of port construction and management, updating and new deployment of checking facilities are measures that would contribute to the further development of Hainan’s economy.

Tourism will continue to benefit

In the third year of Hainan’s opening of air freedoms, the province will vigorously

expand its international aviation market. Hainan Airlines will open four overseas air routes: from Haikou to Ho Chi Min, Singapore, Macao and Hong Kong, and two international cargo air routes: Haikou - Seoul, Kunming - Haikou - Osaka. China Southern Air Hainan will start international scheduled flights between Haikou to Seoul, and non-scheduled


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international flights from Hainan to Tokyo, Aomori, and Nagoya. Moreover, Hainan is trying to attract Asiana Airline, Singapore Airline, Malaysian Airline and Bangkok Airline to fly to Hainan and other cities, and take advantage of international scheduled flights that foreign corporations have opened for Hainan stopovers. At the same time, Hainan will proactively invite low-cost foreign airliners to compete in its aviation market. The rapid development of the aviation industry will certainly generate great benefits for the tourism industry of Hainan.


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Memorabilia of Pan-PRD Regional Cooperation

Fujian Leaders’ Summit of Chambers of Commerce between the EU and the Economic Zone on the West Coast of the Taiwan Strait (EZWCTS) (May 18, 2005) The first Leaders’ Summit was organised successfully by the Fujian International Chamber of Commerce (FICC) and Euro-China International Association (ECIA) in Fuzhou. Leaders of ECIA and chambers of commerce from Italy, Germany, France, Switzerland, Sweden, Greece, Belgium and Spain attended the summit, during which the agenda of “European Enterprises’ Opportunities in the development of ECWCTS” was tackled. The summit was also graced by leaders of various chambers of commerce and entrepreneurs from Fujian, Shanghai, Hunan and Shantou. Fujian and German Automobile Parts Business Fair (May 19, 2005) 18 German enterprises from Rheinland-Pfalz and over 20 automobile parts manufacturers from Fujian and other provinces hosted the business fair in Fuzhou. It was the first time for Fujian to organise specialised business fair for German automobile parts manufacturers. Kinmen-Xiamen Mini Three Links Shipping (June 1, 2005) With immediate effect, the Fujian Provincial Public Security Department will issue visas through computer networks on direct shipping ports, and will widely issue multiple entries visas with one-year validity. For Taiwan businessmen and holders of the Taiwan Compatriot's Pass to the Mainland (TCPM) from Kinmen, Matzu and Penghu, if they hold five-year-valid TCPMs and had a record of over 5 entries into Mainland each year, they can automatically apply for multiple-entries visas. Within one year’s validity, they can freely enter into or exit from the Mainland via direct shipping ports. Moreover, TCPMs for those covered under the mini three-links will be issued in advance. This would help to ease the bottlenecks at the immigration and customs clearance points due to long queues for on-arrival-visas. From May 30, Fujian has suspended the service of issuing on-arrival-visas for less emergent affairs at the direct shipping ports to avoid overcrowding. Fujian and Taiwan agrees on tourism cooperation (June 6, 2005) The meeting for cooperation of cross-strait travel agencies was held in Xiamen. Representatives from 29 travel agencies in Taiwan and 21 travel agencies in Fujian joined the meeting and discussed the possibility of travelling to Taiwan via Xiamen, Kinmen, Mawei or Matzu. The participants also signed the letter of intent for Cooperation between Travel Agencies in Fujian and Taiwan.


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Fujian proposed establishment of an experimental area for cross-strait cooperation in forestry (June 7, 2005) Fujian’s Information Office hosted a press conference revealing plans to set up a high-tech forestry park in Sanming Jinsha New and High Technology Zone (三名金沙高新技開發園區 ) and Yong’an Nige New and High Technology Zone (永安尼葛林業高新技術開發園區 ) . The forestry park will serve as an experimental venue for cross-strait cooperation in forestry, provide a venue for constructing refined processing of forestry product and developing relevant new technologies. The two sides can cooperate in developing ecological forestry leisure and sightseeing parks as well. The objective is to bring in the experience, economic model and market sales network of Taiwan’s forestry industry to help boost Sanming’s brand of forestry products. Jiangxi Delegation from Jiangxi’s Tourism Bureau visited Macao (May 20, 2005) A delegation of representatives from Jiangxi’s Tourism Bureau and its director, Mr. Wang Zhongwu, visited Macao and met with Macao Tourism Bureau officials to seek tourism cooperation between Jiangxi and Macao to promote the mutual tourism development. China (Nanchang) Medical and Healthcare Products Expo, (2005) (May 25, 2005) The fair was jointly sponsored by the Provincial Commission of Chinese Peasants and Workers Democratic Party, Nanchang Municipal Government and China’s Association for Research and Advancement of Traditional Chinese Medicine, and co-sponsored by the Unified Front Department of the Nanchang Municipal Committee and the Municipal Commission of Peasants and Workers Democratic Party. The event had significant implications on the position of Jiangxi as a leading medical and pharmaceutical industry player and better positions Jiangxi to grasp advanced information on medical and pharmaceutical technologies. Jiangxi and Guangdong signed agreement on tourism exchange and cooperation (June 1, 2005) In accordance with the agreement signed by the two provinces in Nanchang, both parties will come up with a series of high-quality tourism resorts and attractions in Pan-PRD region under the “9+2” cooperative framework. Hunan European Industrial Park in Hunan to start construction within this year (Mid-May, 2005) According to Mr. Li Weiwei, head of China Council for the Promotion of International Trade (CCPIT) Hunan Branch, many enterprises from the EU which attended the EU-Hunan Asian Enterprise 2004 (EUHAE), had returned to the province. 42 Chinese enterprises and 20 foreign enterprises started finalising negotiations on 44 projects and most


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of them have concluded their intentions to cooperate in these joint projects. As more medium and small-sized enterprises from the EU have intended to settle in Hunan, the municipal government is currently engaged in the preparing for the construction of the EU Industrial Park which will start this year. In the future, trade promotion will be accelerated in Hunan and more European enterprises will be attracted to settle in the park. Hunan delegation visited Shenzhen to study the construction of credit systems (May 20, 2005) In November 2005, Hunan will set up a leading group for the establishment of credit system. This group will responsible for harmonised planning, organising, coordinating and promoting the establishment of the credit system throughout the province. The field study conducted in Shenzhen aims to make reference to the series of measures adopted in Shenzhen’s credit system.

Hunan and Zhejiang Economic and Technical Cooperation and Exchange Fair (May 25, 2005) Enterprises from Hunan and Zhejiang signed large contracts during the fair. 18 projects attracted total investments of more than Rmb3 billion. The projects mainly covered the following fields: traffic, energy and infrastructure construction, as well as tourism, real estate and logistics. Other projects covered areas of industries, agriculture and the Changsha-Zhuzhou-Xiangtan integration. Delegation of Taiwan NGO visited Hunan (May 25-June 3, 2005) A delegation representing Taiwan’s grassroots arrived in Hunan for a nine-day visit. The head of the delegation said that the visit was very successful and the economic and cultural exchange and development across the straits would be pushed forward after the delegation returned. Hunan (Hong Kong) Investment Fair (2005) (May 31-June 3, 2005) During the meeting, Hunan successfully signed a series of investment projects. Contracts and agreements were reached for 329 projects worth a total investment of US$7.653 billion. Of this sum, US$6.297 billion involved foreign investment. Hunan’s Shaodong County held business investment fair in Macao (June 1, 2005) At the investment and trade promotion fair held at Xinzhuyuan, Mr. Wang Changzhong, Member of the Standing Committee of Shaoyang Municipal Party Committee and the Secretary of Shaodong County Committee, introduced the general environment in Shaodong, including its investment projects and exports. Chinese medicinal herbs are the main industry featured. In Shaodong, the sown area of Chinese medicinal herbs has reached 140,000 acres. Lianqiao Chinese medicinal herbs market is one of 17 largest Chinese medicinal herbs markets in China, ranking the fourth place and generating an annual turnover more than Rmb1 billion.


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Hunan Environmental Protection Science and Industrial Park held business investment fair in Shenzhen (June 3, 2005) The Hunan Environmental Protection Science and Industrial Park was jointly established by three governments of Hunan, Changsha and Yuhua. It is situated in Changsha, a modern industrial city that integrates urbanisation, industrialisation, environmental protection, and science & technology. The fair was an important move by Changsha to integrate into the PRD region. Hainan Vietnamese enterprises participate in the Agricultural Cultivation Electronic Commercial Network (ACECN) (May 16, 2005) The National Rubber Corporation of Vietnam concluded intentions to cooperate with the Hainan Agricultural Cultivation Office. It agreed to join the electronic business exchange centre of ACECN and strengthen cooperation in the areas of technology and information exchange. Business delegation from Guangdong visited Hainan (June 4, 2005) A 242-strong delegation from Guangdong visited Haikou mainly to complement the visit of Guangdong Party Committee to Hainan, Guizhu and Yunnan. The delegation further fulfilled the spirit of Pan-PRD cooperation, promoted economic and trade cooperation between Guangdong and the three provinces. Hainan and Guangdong signed nine cooperation and development framework agreements (June 4, 2005) The corresponding departments of Hainan and Guangdong signed nine cooperation and development framework agreements including the “Framework Agreement on Accelerating the Project on Merging 500 Kilovolt AC Marine Cable Networks between Main Network of Southern Power Grid and Hainan Power Grid”. The agreements would provide the two provinces with a guiding framework for pursuing cooperation in areas such as coordination, labour services, economic and trade, science and technology, transportation, agriculture, culture and tourism. Nine Provinces (Regions) The 2nd Mayors’ Forum of the Pan-PRD Provincial Capitals (May 26-27, 2005) The forum was held in Fuzhou and the theme was to “Strengthen Economic and Trade Cooperation Between the Pan-PRD Provincial Capitals and Promote the Construction of Cross-Strait Economic Zone and the Economic and Trade Cooperation with Taiwan”. Mayors of the provincial capital from the nine provinces/region, as well as representatives from Hong Kong and Macao Special Administrative Regions, jointly probed into strengthening the economic and trade cooperation in the Regions and with Taiwan.


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Pan-PRD constituents agree to pursue agricultural cooperation agreement (May 26, 2005) According to the agreement, all parties will support each other’s enterprises in setting up production and storage facilities in other Pan-PRD provinces/region. In addition, a unified and open agricultural products market will be built and a “green channel” will be pioneered for agricultural products of all Pan-PRD constituents. Meanwhile, the establishment of the "9+2” agricultural information platform will be encouraged to promote bilateral relations between such platforms within the region. First Pan-PRD motor racing event (June 6-26, 2005) This race started from Guangzhou on June 6, passing through Macao, Hainan, Guangxi, Yunnan, Sichuan, Guizhou, Hunan, Jiangxi, Fujian and finally reached Hong Kong via Shenzhen on June 26. The race lasted a period of 22 days and ran a distance of 8,000 km. It was the first large-scale sports event for the Pan-PRD region. The 3rd Joint Meeting on Human Resources Cooperation between Nine Provinces (Region) of Pan-PRD Region (June 18, 2005) The meeting was jointly held by the personnel departments of the nine Pan-PRD provinces/region. Its objective is to establish an interactive platform for employing companies and all kinds of talents to facilitate realisation of complementarities of regional talents, and to speed up economic development in the regions.

Anti-Smuggling Agreement of the Pan-PRD Region (June 29, 2005) The Pan-PRD Region Anti-Smuggling Cooperative Agreement was signed in Guangzhou and covered the “9+2” constituents. It cooperation was a practical move under the Pan-PRD framework. All constituents committed to partake in in-depth discussions to address the following aspects: intelligence warning, joint campaigns, policies deliberation, propaganda and education, exchange and investigation, and integrated administration of anti-smuggling efforts.


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IV. DATA AND TRENDS

Fujian ------------------------------------------------------------------------------ 62

Jiangxi ----------------------------------------------------------------------------- 63

Hunan ----------------------------------------------------------------------------- 64

Hainan ----------------------------------------------------------------------------- 65

Major Economic Indicators of Nine Pan-PRD Provinces/Region (Jan-Mar 2005)------------------------------------------------------------------- 66

Nine Pan-PRD Provinces/Region: 10-Year Economic Trend (1995-2004) ---------------------------------------------------------------------- 67

Nine Pan-PRD Provinces/Region: Statistics at a Glance (2004) ---------- 68


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V. ENGLISH-CHINESE GLOSSARY OF TERMS

Air freedoms 航權

Association of Southeast Asian Nations (ASEAN)

東盟

China Hunan Investment and Cooperation Conference

湘洽會

China-ASEAN Business and Investment Summit

中國 –東盟商務與投資峰會

China-ASEAN Expo 中國 –東盟博覽會

China-ASEAN Free Trade Area 中國 –東盟自由貿易區

Commodity housing 商品房

Competitive industries 優勢產業

Contracted FDI 合同外商直接投資

Development of China’s Western Region 西部大開發

Domestically-lined up investment 內聯引資

Dongshen water supply system 「東深供水」工程

Economic Zone on the west coast of the Taiwan Strait

海峽西岸經濟區

Eleventh Five-Year Plan 「十一．五」規劃

Fast-growing and fertile forest 速生豐產林

Fixed asset investment 固定資產投資

Foreign direct investment (FDI) 外商直接投資

Foreign investment 外商投資

Freedom to stopover 中途分程權

Fuzhou Software Park 福州軟件園

Hainan Economic and Trade Fair 海洽會

Haikou Meilan International Airport 海口美蘭機場

High and new technology industries 高新技術產業

Industrialisation 工業化

Integrated refining and petrochemical project 煉化一體化項目


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Investment promotion 招商引資

Labour-intensive industries 勞動密集型產業

Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

內地與香港更緊密經貿關係的安

排 Metropolis 大都市

Pan-Pearl River Delta Economic and Trade Forum

珠洽會

Project promoting the substitution of oil with coal

「煤代油」工程

Sanya Phoenix International Airport 三亞鳳凰機場

Sea-bordering industries 臨海工業

Special Economic Zones (SEZ) 經濟特區

Third-party logistics 第三方物流

Transfer of industries 產業轉移

Utilised FDI 實際使用外商直接投資

Xiamen Software Park 廈門軟件園

Documents

CONSULTANCY STUDY O SOCIO-ECONOMIC-POLITICAL T IN PAN … · 2018. 4. 12. · Socio-Economic-Political Trends in Pan-Pearl River Delta Region Fujian, Jiangxi, Hunan, Hainan (9th Monthly