CONSULTANCY STUDY O SOCIO-ECONOMIC-POLITICAL T IN PAN ... A07.pdf · Socio-Economic-Political Trends in Pan-Pearl River Delta Region Fujian, Jiangxi, Hunan, Hainan (7th Monthly Report)

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

SEVENTH MONTHLY REPORT PART I

COVERING FUJIAN, JIANGXI, HUNAN, AND HAINAN

MAY 2005

CENTRAL POLICY UNIT

HONG KONG SPECIAL ADMINISTRATIVE REGION

Socio-Economic-Political Trends in Pan-Pearl River Delta Region Fujian, Jiangxi, Hunan, Hainan (7th Monthly Report)

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Table of Contents

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

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

“Development of Pan-PRD Telecommunications Industries:

Opportunities and Challenges for Hong Kong”

Part One: South-eastern Region

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Pan-PRD Region to Strengthen Cooperation in Informatisation --------- 10

Promoting the Construction of Digital Fujian ------------------------------- 16

Jiangxi Market Sees Potential for Developing Value-Added Telecommunications Services ------------------------------------------------- 21

Hunan Needs to Speed Up Development of Its Rural Telecommunications Services ------------------------------------------------- 25

Information Technology Finds Wide Applications in Hainan ------------ 30

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

Economic Development Trends of Fujian in the First Quarter of 2005 -- 36

Fujian Price Bureau Adopts Nine Measures to Stabilise Property Prices ------------------------------------------------------------------------------ 38

Economic Development Trends of Jiangxi in the First Quarter of 2005 - 40

Jiangxi to Become a Major Red Tourism Province ------------------------- 42

Economic Development Trends of Hunan in the First Quarter of 2005 - 44

National-level Export Processing Zone to be Established in Hunan’s Chenzhou City ------------------------------------------------------------------ 46

Hainan Insurance Regulatory Bureau to Enhance Market Environment - 48

Haikou Introduces Measures to Improve Customs Environment ------- 50

Memorabilia of Pan-PRD Regional Cooperation --------------------------- 52


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Table of Contents (continued)

IV. Data and Trends ---------------------------------------------------------------------- 55

Fujian ------------------------------------------------------------------------------ 56

Jiangxi ----------------------------------------------------------------------------- 57

Hunan ----------------------------------------------------------------------------- 58

Hainan ----------------------------------------------------------------------------- 59

Major Economic Indicators of Nine Pan-PRD Provinces/Region (Jan-Mar 2005)------------------------------------------------------------------- 60

Nine Pan-PRD Provinces/Region: 10-Year Economic Trend (1995-2004) ---------------------------------------------------------------------- 61

Nine Pan-PRD Provinces/Region: Statistics at a Glance (2004) ---------- 62

V. English-Chinese Glossary of Terms ----------------------------------------------- 65


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3. Within the Pan-PRD region, telecommunications in Hong Kong and Guangdong are more advanced. They have a more developed communications infrastructure and enjoy higher level of telecommunications. They have also gained more extensive experience in developing information resources, applying information technologies, and in promoting the integration of information industries with other sectors. Hong Kong and Guangdong can foster cooperation and share resources with the eight Pan-PRD provinces/region, which have vast market potentials but underdeveloped telecommunications. Currently, the Pan-PRD constituents are joining efforts to promote informatisation. A platform for information dissemination and exchange has been established. On this basis, e-commerce applications in the areas of electronic banking, tourism, logistics, etc. will be gradually developed, to facilitate coordination in the operation of e-commerce services in the Pan-PRD region. Moreover, the Pan-PRD constituents will step up cooperation in facilitating industry transfer, development of information technology for public use, information security, policy and regulatory development, radio communication management, etc. Priority will be given to the construction and connection of the information networks of the two governments of Guangdong and Hong Kong, mutual verification of e-certificates between the two places, standardisation of the platforms for logistics information exchange, and joint promotion on the standardisation and application of electronic labels, to achieve information integration in the region.

4. In recent years, Fujian has stepped up the promotion and application of information

technology, and aggressively encouraged the development of the telecommunications industry. Fujian is striving to maximise the utility of its information technology and resources to construct a “Digital Fujian”. The “Digital Fujian” project involves digitising information resources, networking, and facilitating information sharing. The project aims to achieve informatisation of the economy and society and spur the development of its information industry. Hong Kong’s success as an international financial and trade centre would have been impossible without advanced development in Internet technologies and the telecommunications industry. Fujian can cooperate and interact with Hong Kong’s communications technology industry, introduce internationally advanced technologies and facilitate their application. This way, effective technological support and services will be provided for the construction of “Digital Fujian”.

5. As the society develops and channels of communications are continuously expanded, the

requirements on telecommunications services have also become higher and higher. Increases in individualistic consumption of communications services have led to incessant growth in household consumption of communications products and services. With the proliferation of Internet technology, structural changes have emerged in the traditional telecommunications services and their modes of operation. The transformation of telecommunications network has not only constructed a platform for wide-scale information exchange, but also made the provision of dynamic and individualistic services possible. It laid the foundation for basic telecommunications services operators to


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explore new markets, and provided opportunities for developing a wide range of value-added services. Among the eight provinces/region of the Pan-PRD region, Jiangxi ranks the highest in the business volume of value-added telecommunications services. However, it still lags behind the national average. This indicates that there is still room for Jiangxi’s value-added telecommunications services to develop. Promoting value-added telecommunications services via opening up the operating, maintenance and sales businesses to non-state companies would help increase the utilisation of Jiangxi’s communications networks, encourage further exploration of the market potential and meet the society’s demand for diverse information services.

6. In Hunan, access to information remains difficult in some remote rural areas, hampering

the development of the rural economy. To enhance the development of the rural economy, Hunan is aggressively promoting the “Telecom for Villages” project, to achieve universal telecommunications services. Improving the communications infrastructure facilities in the rural areas will facilitate more efficient information dissemination among rural residents, helping to enhance the competitiveness and to raise their incomes. Their consumption of telecommunications services will also grow naturally, contributing to rising demand for value-added telecommunications services. Business opportunities arising herewith are valuable to Hong Kong businesses.

7. Hainan is the first Mainland province to pilot test e-commerce applications in its pillar

industries of agriculture and tourism. In July 2004, Hainan’s e-HiFarms established distribution centres in Tianjin and Xiamen. Thereafter, its clients in these two cities and their peripheral areas are able to place their orders for natural rubber via the Internet and collect their ordered goods in the respective distribution centres on the same day. Currently, e-HiFarms is focusing on developing trading centres in areas like Dalian, Wuhan, etc. It plans to complete setting up distribution centres in all major rubber markets throughout China within the next 1 to 2 years. In tourism, Hainan’s e-Commerce Application System for Tourism Services is in place to provide a unified and open e-commerce platform for the tourism industry. Its objective is to pool together different services and statistical information from the province’s numerous small- and medium-sized tourism enterprises and construct an online tourism information centre. The centre would provide tourists with information on Hainan’s dining, accommodation, transportation, sightseeing, shopping and entertainment. It could also provide the whole series of services including reservations, travel arrangements, return trip arrangements, payment settlements and complaints. At present, the system has incorporated 100% of Hainan’s backbone tourism enterprises and 60% of other tourism enterprises.


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II. TOPICAL ANALYSIS

“Development of Pan-PRD Telecommunications Industries: Opportunities and Challenges for Hong Kong”

Part One: South-eastern Region

Pan-PRD Region to Strengthen Cooperation in Informatisation --------- 10

Promoting the Construction of Digital Fujian ------------------------------- 16

Jiangxi Market Sees Potential for Developing Value-Added Telecommunications Services ------------------------------------------------- 21

Hunan Needs to Speed Up Development of Its Rural Telecommunications Services ------------------------------------------------- 25

Information Technology Finds Wide Applications in Hainan ------------ 30


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Pan-PRD Region to Strengthen Cooperation in Informatisation1 Since the reform and opening up of the Mainland, the telecommunications industry has

undergone rapid development and has transformed into a major telecommunications player of the world. By the end of 2004, the capacity of international telephone exchanges reached 9.806 million circuits; the capacity of office telephone switches in the Mainland has surpassed 420 million devices, an increase of more than 100-times than in the pre-reform period. In the process of development, mobile telecommunications, which started from scratch, have reached a capacity of nearly 400 million mobile telephone switches. The Mainland telecommunications network is now the world’s largest. The number of telephone users in the nation has exceeded 600 million, with the number of mobile telephone users having reached 335 million surpassing the 312 million fixed line telephone users. In both cases, the country ranks top of the world. Currently, the Mainland’s major communication networks use optical fibre transmission, while broadband and mobile communications technologies are rapidly developing. Various advanced technologies now available in the world are basically being applied in the Mainland’s networks. Concurrently, both basic and value-added telecommunications businesses such as fixed line telephones, mobile telephones, data lines and Internet are being operated in the Mainland. In 2004, the revenues generated by the nation’s telecommunications industry reached Rmb518.8 billion, up 12.6% from the previous year, and accounted for 3.8% of China’s GDP. The development of the telecommunications industry has substantially promoted the nation’s economic growth and played an important role in supporting the process of informatisation.

Revenues of China’s Telecommunications Industry as a Percentage of GDP

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1997 1998 1999 2000 2001 2002 2003 2004

%

Source: Yearbook of China Communication; China Statistical Yearbook

1 Along the telecommunications industry chain, telecommunications operators form the upstream, equipment manufacturers

form the mid-stream and content/application service providers form the downstream. Informatisation involves transmitting the resources accumulated by content/application services to enterprises or individual users’ terminals via the platform and channels provided by midstream and upstream telecommunication enterprises.


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Telecommunications development varies distinctly across regions With the rapid development of the telecommunications industry, the imbalance in

regional development has become more pronounced. In the case of the Pan-PRD region, as at the end of 2003, the telephone popularisation rates of the south-eastern provinces of Fujian, Hainan, Jiangxi and Hunan averaged at 19.2 fixed line units per 100 persons and 16.3 mobile units per 100 persons. However, in the south-western provinces/region of Guangxi, Sichuan, Yunnan and Guizhou, the average popularisation rate for fixed line telephones was only 12.2 units per 100 persons and that for mobile telephones was only 13 units per 100 persons. In Guizhou, in particular, the average popularisation rate for fixed line telephones was only equivalent to about 30% of Fujian’s.

2003 Pan-PRD Telephone Popularisation Rates

0

10

20

30

40

50

60

Gua

ngdo

ng

Fujia

n

Hain

an

Jiang

xi

Hun

an

Gua

ngxi

Sich

uan

Yun

nan

Gui

zhou

Nati

onal

Fixed line telephone

Mobile telephone

Units/100 persons

Source: Statistical Report of China Telecom Industry

Comparing the villages to the urban areas in the 8 Pan-PRD provinces/region, the

number of fixed line telephone user in villages is only about half of that in urban area. The gap between the east and west of the Pan-PRD region is also very wide. The number of fixed line telephone users in villages account for only 29.2% of the total in the four south-western provinces/region, lower than 39.2% average in the four south-eastern provinces. As the economy continues to grow and develop, the living standards of urban residents in the Mainland is also improving rapidly, breeding growing demand for universal services1. However, telephone penetration rate remains low in quite a number of remote villages in some of the Mainland provinces/region. At the end of 2003, out of 174,643 administrative villages in the eight Pan-PRD provinces/region, telephone services were available in 148,3402 or 85.9% of them -- lower that the 91.4% national average. The discrepancy between the eastern and western areas was also significant. At the end of 2003, 1 Universal telecommunications service aims to provide each and every individual with access to basic communications

service at a reasonable price. 2 Including administrative villages with access to either fixed line or mobile telecommunication networks.


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93.1% of the administrative villages in the four south-eastern provinces had telephone access, but popularisation rate of telephones in the administrative villages of the four south-western provinces/region was only 78.5%.

Meanwhile, because the south-western provinces/region lag behind in

telecommunications facilities, the development of their telecommunications industry is more reliant on investment than the south-eastern provinces. In 2003, fixed asset investment in the telecommunications industry of the four south-western Pan-PRD provinces/region amounted to Rmb24.3 billion, accounting for 58.14% of the total revenues generated by the industry in these four provinces/region, much higher than the 48.18% recorded in the four south-eastern provinces. This indicates that investment remains the major driver of the development of the poorly equipped telecommunications industry in the south-western provinces/region. In these provinces/region, infrastructure work of the telecommunications sector remains focused on basic facilities such as construction of large-scale communications network. Among the eight Pan-PRD provinces/region, Fujian’s reliance on fixed asset investment in the telecommunications sector is the lowest. As the capacity of its telecommunications network has stabilised, fixed asset investment is now mainly focused on establishing connections and supporting facilities.

2003 Pan-PRD Telecommunications Industry: Fixed Asset Investment and Revenues

Telecom fixed asset investment (Rmb10 mn)

Telecom industry revenues (Rmb10 mn)

Investment as Percentage of Revenues (%)

Fujian 809 1,736 46.59 Jiangxi 471 824 57.16 Hunan 561 1,345 41.70 Hainan 170 268 63.43

4 south-eastern provinces

2,011 4,173 48.18

Guangxi 604 984 61.38 Yunnan 534 887 60.22 Guizhou 418 511 81.85 Sichuan 874 1,798 48.60

4 south-western provinces/region

2,430 4,179 58.14

8 provinces/region 4,440 8,352 53.16 Guangdong 3,238 7,730 41.89 National 22,176 45,976 48.23


Aggressively promoting informatisation

At the third Joint Meeting of Pan-PRD Directors of Information Industry Department

(Bureau) convened in Hainan on December 14, 2004, representatives from the nine Pan-PRD provinces/region and their counterparts from the Commerce, Industry and Technology Bureau of the Hong Kong SAR Government, reached the following consensus on the promotion of


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informatisation in the region:

1. Each party agrees to cooperate in drafting the Eleventh Five-Year Plan for the regional informatisation of the Pan-PRD. Concerted efforts in planning will be carried out in accordance with the principles of strengthening government guidance, reasonably allocating market resources, maximising the benefits of complementarities, and strengthening the links of the telecommunications industry chain. The plan would cover the areas of promoting coordination of information industry development, joint promotion and application of information technology, exchange of industry personnel and cooperation between research institutes, establishing a uniform and standard platform for common use, etc. Each party also agrees to lobby for the inclusion of their cooperative plan into the Eleventh Five-Year Plan of the National Information Technology Industry.

2. A Pan-PRD regional network to facilitate the interaction of Pan-PRD informatisation has

officially been launched. It serves as an important platform for the different regions to exchange information. The parties present at the meeting have agreed to follow the “Interim Management Procedures for the Pan-PRD Regional Informatisation Exchange Network” and adopt concrete measures to provide and manage the exchange of information. This will hopefully help to encourage information exchange in the region and facilitate more efficient information sharing in Pan-PRD.

Pan-PRD Regional Informatisation Exchange Network The Exchange Network is a website open to the general public. The users are classified into three categories: premium users, registered users, and general users. Industrial organizations can apply to the provincial or regional information industry department or bureau to become premium users. A premium user can publish information and organise information exchange activities. Enterprises or individuals can apply or register online to become registered users. A registered user can publish information and organise information exchange activities in selected platforms. General users need not apply; however, they will be entitled only browsing the website and exchanging information within only a few selected areas. The respective authors would be held responsible for the accuracy, timeliness of the information published on the website.

3. Each party agrees to take part in regulating the regional wireless frequency; to come up

with an action plan to strengthen supervision across provinces/region, and to adopt relevant measures to alert and deal with emergency cases. Each party should bear in mind the objectives set out in the “Framework for Pan-PRD Cooperation in Regional Wireless Management”, foster closer communication and coordination so that an effective cooperation framework on wireless management and frequency allocation can be set up in


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the Pan-PRD.

Contents of the “Framework for Pan-PRD Cooperation in Regional Wireless Management”

(1) Management authorities of wireless telegraphy in each of the Pan-PRD

constituents should notify each other of their contact points. They should appoint liaison staff to facilitate exchange and sharing of information and take the initiative to alert each other of relevant issues. The authorities can set up systems for direct communication to promote closer and more frequent exchange of information.

(2) Data on border area stations and electro-magnetic environment should be commonly shared to avoid interference of wireless frequency. When granting approvals to additional frequencies and stations, the Pan-PRD constituent concerned should notify their relevant counterparts if cross-border transmission or possibilities of interference are expected.

(3) Exchange experiences on wireless management and discuss issues relevant to the management of regional wireless telegraphy.

(4) Set up links among the wireless monitoring websites and supervise the cross-provincial/regional wireless wave at technical level.

(5) Draft a joint action plan for cross-provincial/regional wireless supervision; come up with an emergency alert plan to safeguard the safety of aviation and marine navigation and participate in joint emergency drills.

(6) Strengthen the coordination and management of the wireless transmission facilities market. On matters of supervision that affect more than one province/region, a Pan-PRD constituent should take up the issue with other Pan-PRD members and seek to launch joint actions.

4. Each party should comply with the requirements under the “Framework of Action Plan

and Ideas for Pan-PRD Cooperation in E-Commerce Development”. The requirements include promoting exchanges between regional governments and foster cooperation in planning e-commerce and optimising regional resource allocation; jointly drafting and implementing regional e-commerce systems by unifying e-commerce standards as well as establishing a common platform shared by the Pan-PRD provinces/region; guiding cooperation among core enterprises and setting up a general system for dissemination of logistics information system with a focus on e-commerce; promoting the professional e-commerce platforms for major industries such as finance, securities, foreign trade, machinery, chemicals, metallurgy, pharmaceuticals, coal, agriculture, and tourism.

5. Each party should regard Certification Authority (CA) integration and interchange as a

breakthrough facilitating further cooperation in the areas of networking and enhancing


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information security. Authorisation and certification units and departments in the Pan-PRD region have committed to transform and restructure their respective information systems to facilitate the integration and inter-change of electronic signatures and enable cross-authorisation in the region. This will help create a complete chain of services for electronic signature authorisation in the Pan-PRD. Each Pan-PRD constituent should also partake in the development of a certification application interface, which would be compatible with each other’s systems in order to ensure that the system can be shared and used by all relevant Pan-PRD units; commitment has also been made by each party to jointly resolve the technical issues in the process of developing new products.

CA Integration and Interchange

CA is an abbreviation for Certification Authority. It is responsible for issuing, updating, handling enquiries, cancelling and documenting electronic certificates. Electronic certificates are the sole effective forms of identification used online in exchanging information and conducting business and trade. CA Integration and Interchange refers to linking up the different certification authorities (spanning different industries, regions, nature, and using different IT systems) already set up in the Mainland.

6. A Pan-PRD Regional Expo for Software Industry Coordination and Trade (tentative name)

will be held every year in Zhuhai, Guangdong. The organisation of the expo will be based on the Pearl River Delta Software Industry Forum jointly sponsored by Guangdong and Hong Kong, with an aim to enhance the cooperation and exchange of the regional software industry on product, technology, talent, and market, and to promote the extension of cooperation to other areas of the information industry to achieve win-win situation.

7. The aggregate size of the Pan-PRD information industry accounts for one third of the

country total. It is commonly recognised that the region should continue to make good use of this advantage. Focusing on key issues of linking up the industry chains in the region, optimising allocation of resources, enhancing technological cooperation and expanding market sales, Pan-PRD constituents should promote the exchange and cooperation between enterprises, higher education institutions, research institutes, and various agencies in order to maximise the benefits drawn from their complementarities and optimise the use of resources available in the region.


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Promoting the Construction of Digital Fujian

As a foundation and pioneering service industry of the economy, the telecommunications industry plays a key role in Fujian’s economic development. In recent years, Fujian has increased the promotion and application of information technology. It has issued a Special Tenth Five-Year National Economic and Social Informatisation Development Plan to encourage the development of the telecommunications sector. The province also actively develops and utilises information technology and resources to construct the “Digital Fujian” project, which includes digitising information resources, networking, and facilitating information sharing. The project aims to achieve informatisation of the economy and society and spur the development of its information industry. According to the Plan, by the end of 2005, the total annual output of Fujian’s electronic information industry will be above 20%; the total volume of the telecommunications service will grow by more than 17% annually; the added value of the telecommunications industry will account for above 5% of Fujian’s total value-added GDP; the number of fixed telephone line users in Fujian’s urban areas will reach 10 million; the number of mobile phone users will reach 10 million; and the number of digital and multimedia services users will reach 4 million. Prioritising the “Backbone Project 131”

During the Tenth Five-Year Plan period, Fujian has promoted the Backbone Project 131

of constructing a “Digital Fujian”. “131” stands for one plan (for the construction of “Digital Fujian”), three projects (public information platform, e-government information network, and a centre for spatial information research), and one policy (on information sharing). Revolving around the implementation of Project 131, the major tasks for Fujian’s informatisation of the economy and society during the “Tenth Five-Year Plan” include: 1. Optimising the basic infrastructure for information network

The province should enhance the construction of various basic networks need to facilitate information transmission. Tracking the rising demand for data transmission arising from the construction of “Digital Fujian”, the province should mainly strengthen its optic-fibre network and complement it with supplementary transmission networks via digital microwave and satellite means. The backbone network to facilitate public transmission should possess a large handling capacity, high transmission speed and efficiency, and strong reliability and safety standards. The province will also set up a public information platform that is unified in standard throughout the Fujian province. This information platform will be Internet-based to facilitate the inter-connection between the backbone networks of various organisations. Meanwhile, Fujian will develop a broadband multimedia telecommunications network based on the Internet protocol (IP) technology, and step up the construction of optical cable networks that are capable of providing a comprehensive range of services. The province will also make full use of the fixed line telephone network and public


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telecommunications network to develop value-added service and facilitate data connection to allow provision of universal telecommunications services; develop various channels of connection, upgrade broadband connections, and promote communication and broadcasting services. Fujian will also construct a universal network for broadcasting of information, digital videos, audio-visuals, and for facilitating two-way data transmission.

2. Promote exploration of information resources

Existing information resources in Fujian will be treated with high technology

applications. They will be standardised, digitised, uploaded onto networks, consolidated, updated and renewed. Information resources that are scattered and disorganised will be reconstructed and turned into distinct, high quality, systematic and standardised bits of information to meet the demand for information in a growing economy and society. Collection and updating of information resources will be regulated to upgrade their quality and promote information sharing. The market mechanism will be introduced to develop the information services industry and lift the level of commercialisation of information resources. The province will follow government guidelines and market forces and focus on developing databases with provincial-level statistics and other general information. It will encourage the uploading of information for public use onto the Internet to facilitate wider sharing of information resources.

3. Speeding up the application of information technology in various industries

Fujian will encourage wider application of information technology in all aspects of the

economy and society. Emphasis will be given to informatisation in the areas of government, finance, foreign trade, education, postal service, health care, social security, and community service. A network system will be set up to connect the departments of trade, finance, transportation, taxation, customs, and industry and commerce. Usage of electronic certification, modern payment systems, logistics distribution and credit systems will be promoted to actively support e-commerce development. Electronic information technology will help to transform modes of operation in the traditional industries. The province will encourage the development of information service industry, particularly, the Internet to improve the level of informatisation of agriculture, manufacturing, and service industry. Residents of Fujian are being encouraged to purchase computers and use the Internet more frequently so that Fujian would turn into a model society of informatisation.

4. Strengthening the introduction and development of information technology

With the Fujian Centre for Spatial Information Research as base, the province will actively invite professionals with good qualifications to contribute to technological innovations. The national software industrial parks in Fuzhou and Xiamen will be constructed to cultivate competitive software enterprise groups. The industry will be


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encouraged to develop popular software that enjoy high market share rates in the country as well as key basic products required by the country. Fujian will seek to develop information system software and application software products for the construction of “Digital Fujian”, and boost the contribution of software output to the information industry. Application software products will be developed in large scale for use in areas such as production, fiscal budgeting and tax accounting, foreign trade, finance, office automation, information management, social and public management, scientific research, education, health care, and culture. Fujian will set the standards for its software technology to ensure its compatibility with other industrial sectors. Enterprises should regard the construction of “Digital Fujian” as an opportunity to develop the products with their own intellectual property rights. These products may include online digital audio and video broadcast receiving facilities, network monitoring alarm system, etc. These products would help promote the development of Fujian’s information products manufacturing industry.

Fujian Spatial Information Research Centre

With the support of the Fuzhou University, the Fujian Spatial Information Research Centre is part of the “Backbone Project 131” to construct “Digital Fujian”. Since its establishment on March 28, 2004, the research centre has played a vital role in preparing the plan for constructing “Digital Fujian”, developing key technology, software, and technical support service, training professionals for informatisation, promoting public education on informatisation, especially in developing software for sharing government information, and setting the standards for the guidelines and regulations of informatisation.

Significant progress made in e-government applications

Since the “Digital Fujian” campaign was launched at the end of 2001, it has achieved significant success in promoting the application of information technology in Fujian. In terms of electronic government, 180 units directly under the provincial government are connected through the horizontal broadband networks linking provincial departments and bureaus. Nine sub-districted cities (設區市) and 84 county-level cities (縣市區) are connected through the vertical network connecting the provincial- and county-level departments and bureaux. The province’s e-government network can now support applications of online information publishing, database inquiry, office automation, document transfers, resource- sharing across departments, encrypted communication, email, video conference, and virtual private network (VPN). The launching of the e-government has changed the way that government departments previously worked. It has promoted the transformation of government functions, improved the government’s decision-making process, management, and service quality. It has also helped reduced cost and administrative expenses. Concrete e-government applications in Fujian include the following:


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1. The Xiamen Municipal Government is actively promoting e-government services. Six government agencies in city have launched six websites for receiving complaints and public reports. Since the launching of the government email address, the government has received 5,150 emails. The administrative office appoints special staff to attend to the received emails and forward them for the attention of the mayor’s office. Most of the emails are replied and problems raised in these emails have been basically resolved.

2. The public information network of Quanzhou Municipal Government has launched

e-services for enquiries on water and electricity bills, online job market, online property market, online weather forecast, and online tourism services. All these have brought great convenience to the general public. The launching of these services has also increased the transparency of the municipal, county, and town governments and enabled the public to have access to government services more conveniently. The website has been awarded “Excellent Social Public Service Government Website” in China.

3. Wuyishan City (武夷山市) features its scenic spots and introduces its background

information through the government website using descriptive text, pictures, video, and adopting three-dimensional graphic designs. It has also launched online tourism activities, providing tourists with more convenient services and helping to promote Wuyishan as an attractive tourist destination.

4. The No.5 Lianhua Village (蓮花五村) in Xiamen City has launched a community service

website. Using digital and network technology, residents in the community can log on the virtual community to obtain information of the community government, let houses, hire hourly-paid workers, and acquire information related to online goods ordering, education, entertainment, and health care services provided by the community. The residents can also publish their opinions online and initiate discussion forums about community activities, environmental construction or other social issues.

Digital technology are widely applied in various industries

As the infrastructure network has basically been completed, the digital technology is already being applied to various industries. The society’s level of informatisation has improved. Informatisation has enabled many traditional enterprises in Fujian’s construction materials, pharmaceuticals, metallurgy, forestry and light industries to automate their production processes. The quality of their products has improved significantly. More than 30% of the province’s large and medium-sized enterprises reportedly experienced higher cash turnover rates after employing management information systems. The manufacturing enterprises reduced energy costs by more than 20% by adopting information technology applications and transform their machine tools and industrial furnaces. The number of online exhibitions has also been increasing. Examples of these are the Fujian Online Export Commodity Trade Fair and Fujian Online Investment and Trade Fair. Everyone can do


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business by simply turning on the computer and clicking on the website. In addition, agricultural information websites are now extending to urban as well as rural areas, such as “Ba Min Agriculture Net” (八閩農網), “Fujian Agriculture Information Net” (福建農業信息網), “Fujian Agriculture Trade Net” (福建農貿網), and “Tea Leave World” (茶葉縱橫). They serve as express networks closely connecting the farmers with market.

In the more than 20 years of China’s reform, Hong Kong has always served as a

window and bridge facilitating Fujian’s opening-up. As informatisation is increasingly influencing the world economy, if Hong Kong can cooperate with Fujian’s telecommunications enterprises to meet challenges and seize opportunity, prospects for future developments would be promising. Hong Kong’s success as an international financial and trade centre would have been impossible without advanced development in Internet technologies and the telecommunications industry. Fujian can cooperate and interact with Hong Kong’s communications technology industry, introduce internationally advanced technologies and facilitate their application. This way, effective technological support and services will be provided for the construction of “Digital Fujian”.


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Jiangxi Market Sees Potential for Developing Value-Added Telecommunications Services

With the continuous reform of its administrative system, Jiangxi’s telecommunications

industry has achieved significant improvement in terms of the scale of its network, technology and quality of service. The province has established a modern communication network that is extensive, multi-functional and spans various dimensions. This network supports program-controlled telephones1, data communication, mobile communication, fibre optic cable communication, and microwave and satellite communication. The telecommunications industry has transformed from the analogue mode to digital mode, and from providing uniform service to tailor-made services. The transformation has enabled the industry to develop towards providing services that are digitised, comprehensive, transmitted on broadband and are highly customised to cater for differences in user requirements. At present, the telecommunications industry of Jiangxi has formed a multi-layer and diversified pattern of market competition dominated by Jiangxi Telecom (江西電信), Jiangxi Unicom (江西聯通), Jiangxi Mobile Communication (江西移動), Jiangxi Netcom (江西網通), Jiangxi Railwaycom (江西鐵通) and Jiangxi Satellite Communication (江西衛通). According to the figures provided by the provincial Bureau of Statistic, at the end of 2004, the number of fixed telephones in Jiangxi was 95.7 per 100 households, while the respective number of mobile phones was 95.2, and the number of computers was 20.

Classification of Telecommunications Value-Added Services

According to the Directory of Classification of Telecommunications Value-Added Services that took effect on April 1, 2003, there are two categories of value-added services: 1. Under Category I are important services requiring high handling capacity, which

include online data and transactions processing, local multi-party conferencing, local VPN and Internet data service centres.

2. Under Category II are services with relative low technological requirement, simple

product mix and have little impact on market. They include services such as storage and transmission (e.g. systems of voice mail, e-mail and value-added fax), call centres, Internet access and information services, etc.

In addition, to facilitate more effective management, trunk communication and wireless paging services, domestic VSAT (Very Small Aperture Terminal), Category II data communication (including the domestic data transmission and wireless data transmission services), LAN (Local Area Network) and web hosting services are all regarded as basic telecommunications services rather than value-added services.

1 Apart from the features of an ordinary telephone, a programme-controlled telephone has added features of automatic

charging, direct dialling of long-distance calls hotline numbers. The central control system of a programme-controlled telephone is computerised, their functions enhanced and their level of automation quite high. Besides, they are more compact in size compared to the central control system.


22

Continuous growth in demand for value-added services

As the society develops and channels of communications are continuously expanded, the requirements on telecommunications services have also become higher and higher. Increases in individualistic consumption of communications services have led to incessant growth in household consumption of communications products and services. In 2004, urban households in Jiangxi spent an average of Rmb356.5 in communications-related products and services per capita, accounting for 6.7% of their total consumption expenditure, and represented a 5% increment from 2003. Of this sum, per capita spending on service fees was Rmb284.5, up 6.7% from the previous year. With the proliferation of Internet technology, structural changes have emerged in the traditional telecommunications services and their modes of operation. The transformation of telecommunications network has not only constructed a platform for wide-scale information exchange, but also made the provision of dynamic and individualistic services possible. It laid the foundation for basic telecommunications services operators to explore new markets, and provided opportunities for developing a wide range of value-added services. At present, the Mainland is experiencing robust growth in demand for various telecommunications value-added services such as Internet access, Internet information, video conferencing, e-mail, voice mail, electronic data exchange, online data and transactions processing, value-added fax, etc.

2003 Business Volume of Pan-PRD Mobile SMS

0

100

200

300

400

500

600

700

Gua

ngdo

ng

Jiang

xi

Fujia

n

Gui

zhou

Hain

an

Sich

uan

Yun

nan

Hun

an

Gua

ngxi

Nati

onal

Number of short messages per user


Among the eight provinces/region of the Pan-PRD region, Jiangxi ranks the highest in

the business volume of value-added telecommunications services. Taking the SMS (Short Message System) as example, in 2003, the average number of short messages1 sent per mobile phone subscriber was 474 – the highest among the eight Pan-PRD provinces/region,

1 According to the new edition of the Directory of Classification of Telecommunications Value-Added Services that took

effect on April 1, 2003, SMS is classified among value-added services.


23

but lower than the national average of 514. In the same year, income generated from data communication1 accounted for 4.42% of total income of Jiangxi’s telecommunications services – the 3rd highest among the eight Pan-PRD provinces, but lower than the national average figure of 5.36%. These figures indicate that there is still room for Jiangxi’s value-added telecommunications services to develop. According to statistics, there are more than 70 enterprises providing value-added telecommunications services in Jiangxi, nearly two thirds of them focus on the wireless paging and messaging2 and most of them are small in scale, short in capital, are under inefficient management and generate poor business results. To further develop value-added telecommunications services, Jiangxi will strengthen its policy guidelines and perfect the regulations on market competition to create a suitable environment that would be attractive for enterprises to operate value-added telecommunications services.

Promoting value-added telecommunications services via opening up the operating,

maintenance and sales businesses to non-state companies would help increase the utilisation of Jiangxi’s communications networks, encourage further exploration of the market potential and meet the society’s demand for diverse information services. Accelerating the development of value-added telecommunications services will help to transform the traditional industries into the information-oriented ones. Given the substantial disparity between Jiangxi’s urban and rural areas, the development of value-added telecommunications services remains insufficient on average, as the province is still dominated by agriculture and has yet to industrialise. By applying information and networking technologies, the value-added telecommunications services will be able to provide a wider range of services to different industries and various sectors of the society. Such expansion, in turn, will attract investment of idle capital into further development of value-added telecommunications services, helping to maximise the utility of the province’s network resources, promoting the social progress, economic development and increasing the job opportunities. Attractive opportunities for foreign investors

In the Mainland, barriers to entering the value-added telecommunications market are quite low. Business licenses are granted administratively, without having to go through the competition-assessment-selection process. So long as the enterprise meets the minimum requirements, a business license will be granted. Owing to the low threshold of market access, a large number of small and medium-sized enterprises are providing value-added telecommunications services. At present, more than 4,000 small and medium-sized enterprises in the Mainland are engaged in the value-added telecommunications services, forming a group of virtual service providers. The development of value-added services has given rise to service providers such as ISPs (Internet service providers), ICP (Internet content

1According to the Directory of Telecommunications services Classification, Category II data communication services are

managed as part of the basic telecommunication services as against value-added services. 2According to the Directory of Telecommunications services Classification, wireless calling services are managed as part of

the basic telecommunications services as against value-added telecommunications services.


24

providers), ESP (electronic service providers) and ASP (application service providers). In their modes of operation, these services providers have upgraded from providing their subscribers only with Internet access services to higher-level applications and customised services. The network equipment manufacturers, telecom operators, virtual service providers, system integration service providers, sales agents and content providers all form part of the telecommunications industry chain, providing a complete range of telecommunications services and applications.

ISP, ICP, ESP, ASP ISPs provide access to the Internet through leasing the relay lines from telecommunications operators. They also provide email and news services. ICPs gather, collect, organise and consolidate news and information and feed them to subscribers. They generate revenues from charging subscription fees or from advertisers on their websites. ESPs operate online shops and provide enterprises with applications to enable online commercial trades. The services they provide allow integration between the Internet and the traditional industrial/commercial sectors. ACPs provide configuration, leasing and application solution to enterprise management. They do not possess any network resources and generate their revenues solely from providing clients with integrated forms of services.

The development of telecommunications industry entails huge sums of capital

investments and requires further opening up in the Mainland. Foreign value-added telecommunications service providers have extensive management experiences, sufficient funding and advanced technological resources. By cooperating with these foreign enterprises, Jiangxi’s value-added telecommunications service providers will have added access to financial support, advanced management and operating know-how. It will also help promote the development of value-added telecommunications services. Under the CEPA arrangement, the value-added telecommunications market will be open to Hong Kong investors two months ahead of the WTO schedule of opening up to all foreign operators. From October 1, 2003, the Hong Kong companies can establish joint ventures of not more than 50% stake with Mainland enterprises to provide five types of value-added telecommunications services anywhere in the country. These value-added industries include Internet data centres, storage and transmission service, calling centres, Internet access services and information services. The Hong Kong service providers can cater to specialised enterprises and user groups and provide them with professional service contents and integrated service packages to meet the increasingly individualistic demand of Jiangxi.


25

Hunan Needs to Speed Up Development of Its Rural Telecommunications Services

According to the Government Work Report delivered by Hunan Governor Zhou Bohua

(周伯華) during the Third Session of the Tenth Hunan Provincial Party Congress held on January 27, 2005, of the province’s 10 competitive industries, the electronic information industry was said to be the most competitive. He stressed the need to use informatisation to lead the province’s industrialisation, maximising the catalysing and multiplying effect of informatisation on industrialisation. Hunan will strive to apply information technology in its industries, help enterprises be better equipped for the adoption of information technology, and enhance their core competitiveness. As a major agricultural province, in promoting informatisation-led industrialisation, Hunan should first allow informatisation to penetrate into its agricultural sector. This is equally important to introducing informatisation to industries. In this respect, the telecommunications industry plays a vital role. In recent years, telecommunications enterprises focused only on the expanding services in the urban and town areas to maximise business revenues but ignored the development of communication services in the rural areas, giving rise to a growing gap in the conditions of telecommunications development between the urban and rural areas. The discrepancy is particularly wide when compared with the remote rural areas and villages, which hampers the process of agricultural industrialisation. Imbalance in the development of telecommunication services across regions

At present, the optical cables are in use in all areas that are above-county levels; covering 100% of the towns and villages in lake areas and plains, 80% of towns and villages in rural areas, 70% of towns and 50% of villages in mountain areas. Long-distance microwave access has extended to all cities above the prefecture level and Sihui river drainage area (四水流域), Dongting Lake area (洞庭湖區) and all other counties. The integrated access network now makes use of optical cables on roads, in buildings and in residential communities. The network for video and multimedia communication services has also been set up. On the whole, the telecommunications industry of Hunan has reached an advanced level. However, in some remote rural areas, inaccessibility to telecommunication services hampers the development of the rural economy. Results of a special investigation conducted by Rural Investigation Group of Hunan on more than 20 villages and 300 farmers and rural cadres in the counties of Hanshou (漢壽), Heshan (赫山), Wangcheng (望城), Shimen (石門) and Longshan (龍山) in early 2004, the low level of informatisation is one of the seven major obstacles to the growth of farmers’ income:

1. According to the investigation into Longshan County, the biggest hindrance to farmers’

income growth is that they “do not know what to do”. Nearly 10% of farmers indicated they do not have access to information telling them what sorts of crops are in demand in the market so that they could sell more. The reason for this is a lack of convenient


26

means of communication that would provide them with timely information and knowledge. Without access to such valuable information, farmers find it difficult to raise their incomes.

2. Moreover, according to the investigation into Shimen County, due to the lack of market information, the adjustment to the agricultural structure in some rural areas has become uniform and without planned objective. Farmers tend to copy what others plant, flooding the market with the same type of products. As a result, their produce failed to generate higher incomes for them. For instance, the medicinal materials like gastrodia tuber and ginger were priced high a few years ago, contributing to higher incomes of farmers producing these crops. Soon, majority of the farmers blindly followed the trend. In 2003, the land that grew gastrodia tuber reached 850,000 square metres and lots that grew Shimen ginger exceeded 15,000 mu (Chinese unit of area equivalent to 1/15 of a hectare). As a result, the price of gastrodia tuber fell drastically by 65% and the price of ginger dropped by more than 50%. Incomes of over 7,000 farmers reduced by more than Rmb70 million.

“Telecom for Villages” project promotes universal services

To enhance the development of the rural economy, Hunan is striving to promote universal telecommunications services and is expanding the coverage of its communications network in the rural areas to facilitate more efficient dissemination of information. According to internationally accepted definition, universal telecommunications services refer to telecommunications services affordable to common residents, providing all people with equal access to informational resources. The rural and the less-developed areas in the Mainland are still burdened with very high costs of telecommunications services, their communications facilities have limited coverage and farmers’ incomes are low, with many of the households living below the poverty line. These residents are the ones in dire need of universal telecommunications services. The implementation of universal telecommunications services would satisfy the rural residents’ basic demand for communications, narrow the discrepancy between the urban and rural areas, and help resolve the “three dimensional rural problem” 1. Given the imbalance in the development between urban and rural areas, the existing universal telecommunications services only provide rural residents in the less developed areas with the most basic telephone service.

The “Telecom for Villages” project is one of the more important measures to help

bring universal telecommunications service to the rural villages. The project plays an important role in promoting the development of the rural economy. According to the national strategic objective of realising universal telecommunications services defined in the Long- and Medium-Term Development Plan 2002”, the “Telecom for Villages” project will

1The “three dimensional rural problem” refers to agriculture, rural villages and rural residents. It concerns agricultural

industrialisation, the system of household registration, the education level of farmers, debts alleviation, etc.


27

be implemented in two phases. The first phase aims to make telephone service available to all administrative villages by 2010. The second phase aims to allow each household to telephone access and each village to access the Internet. By the end of 2005, Hunan will be among the leading provinces with 95% of its administrative villages1 enjoying telephone services. After 2005, universal telecommunications services will gradually expand to areas where conditions are ripe. In addition to the basic telephone services, the value-added services and Internet access will be provided. In 2008, 98% of administrative villages across the country will be enjoying telephone services. The “Telecom for Villages” project will enhance existing channels of information communication in the rural areas and strengthen their contact with the outside world. Under the strong support of the four major telecommunications operators2 of the Mainland, the Telecom for Villages” project has been piloted in the provinces of Shanxi, Inner Mongolia, Sichuan, Guangxi and He’nan and has since achieved very good results. In October 2004, the Ministry of Information Industry ordered the extension of the project to the provinces of Gansu, Guizhou, Qinghai, Xinjiang, Ningxia, Jiangxi, Hebei and Hunan. As one of the second batch of the provinces piloting the project, Hunan has successfully provided telephone service to 37,694 of its administrative villages3, representing 92% of the 40,994 administrative villages in the province. However, this is still below the 94.2% average figure achieved by all provinces of Central China4 and still falls short of the 97% target required in the “Telecom for Village” Project in the region.

Percentage of Pan-PRD Administrative Villages with Telephones

50

55

60

65

70

75

80

85

90

95

100

Gua

ngdo

ng

Fujia

n

Hai

nan

Hun

an

Jiang

xi

Yun

nan

Gua

ngxi

Sich

uan

Gui

zhou

Nat

iona

l

%

Source: Ministry of Information Industry

1 In the eastern areas, over 99.9% of administrative villages shall have the telephone service; in the central areas, 97%, and

in the western areas, 87%. 2 Four major telecom operators are China Telecom, China Netcom, China Mobile and China Unicom 3 Including the administrative village that can access to fixed telephone switch network and mobile communication network 4 The central region refers to the provinces of Hebei, Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan.


28

Developing Rural Telecom is Profitable At the present stage, the capital needed to fund the “Telecom for Villages” project is

assumed by the provincial branches of the basic telecommunications operators, while the capital allocation of the provincial branches are being coordinated by their respective head offices. Thanks to the rapid business expansion of the telecommunications operators and the smooth progress in the implementation of the project, those administrative villages with good traffic conditions and relatively high population density were not confronted with serious difficulty in accessing the telephone switching networks. Administrative villages that are still deprived of telephone connections are those located in the mountains and plateau areas, where extensive laying of telephone lines is required and telecom facilities are difficult to construct. Moreover, facilities set up in these areas are highly prone to damages caused by natural disasters such as floods and mudslides; they would involve costly construction and maintenance. Given the high level of investment required and low yield involved, telecommunications operators unwilling to bear losses refrained from developing their services in these geographically disadvantaged villages. This is the biggest factor deterring them from investing in the construction of telecommunications facilities in the rural areas.

However, some industry experts pointed out that the “Telecom for Villages” project can

be profitable to the telecommunications operators in the long run even if they have to bear the initial construction costs. To facilitate universal telecommunications services, the state grants preferential treatment to enterprises participating in the “Telecom for Villages” project. For instance, priority is given to these enterprises when allocating frequencies for wireless access; they are also allowed greater flexibility in setting fees and charges on rural telephone service; these benefits are invaluable. Meanwhile, in implementing the second phase of the “Telecom for Villages” project, China Telecom is responsible for Gansu and Jiangxi, China Netcom is responsible for Hebei, China Mobile is responsible for Hunan, Guizhou and Qinghai, while China Unicom is responsible for Xinjiang and Ningxia. Most of them are western provinces, complementing the strategy of developing China’s western regions. If the telecommunications operators take up this opportunity, they will be able to enjoy a good start when expanding their businesses in these provinces in the future.

The development of rural communication services is a long-term plan. The ultimate

goal of the “Telecom for Villages” project is to give each household access to telephones and enable each village to have access to the Internet. By improving the communications infrastructure in the rural areas, the disadvantaged position of farmers in accessing information will gradually be resolved. By facilitating the flow of information, the production elements of agriculture will be allocated more rationally and efficiently and advanced agricultural technologies will be popularised more extensively. This way, farmers will be in better position to compete in the market, helping them to increase their incomes and self-sufficiency. It will also improve the cultural quality of the farmers. Their consumption of telecommunications services will also grow naturally, contributing to rising


29

demand for value-added telecommunications services. Business opportunities arising herewith are valuable to Hong Kong businesses. According to the schedule defined in China’s WTO commitments to open up the telecommunications market, basic telecommunications market will be opened up to foreign investors from December 11, 2007. Hong Kong companies wishing to develop the rural telecommunications services market can start their planning and preparation.


30

Information Technology Finds Wide Applications in Hainan

As early as in 1997, Hainan’s Party Committee and Provincial Government had adopted the strategy of building Hainan into an “Intelligent Island” in the 21st century. The province will strive to establish a comprehensive and advanced network system to facilitate transmission of information and link up with networks outside of the province; to apply information technology in wide areas of the economy and society; to develop an advanced information industry that will help improve the economic and social conditions in Hainan. After years of efforts, Hainan already has in place a comprehensive network system that covers the entire province, with optical submarine cables that connect to the Mainland in 3 directions. The fibre optic cables have extended to commercial and residential buildings in the urban areas, and have reached administrative villages in rural areas. Numerous players have entered the market, participating in fixed line telephone services, mobile phone services as well as data communication services. The launching of e-government and Internet websites by industrial and commercial enterprises has laid down the foundations for a networked economy in Hainan. E-government proves to be highly effective

Since the foundation of Hainan’s electronics industry is rather weak, with little

supporting facilities, the strategy of informatisation focused mainly on developing useful applications. At present, information technology applications span wide sectors such as e-government and e-commerce. To modernise government operations, the Hainan Party Committee and the Provincial Government have stepped up informatisation of government operations. The e-government initiation proved to be highly effective. According to the “Report on the Evaluation of Municipal Government Portals in China 2003-2004”1 issued by “E-Government” magazine, the E-Government Realisation Rate (EGR) of the portals of the municipal governments in Hainan was 47.2%, ranking 6th in the country; while the E-Government Unevenness Rate (EGU) was 3%, which is the lowest in China. The launching of e-government services aims to enhance the efficiency of government departments, effectively employ government resources and allow the public more convenient access to government services. Currently on Hainan’s top agenda is the perfection of e-government services, including the completion of intranet services of the provincial party committee and the Internet services of the provincial government.

At the centre of the “Party Committee Intranet” is the general office of the provincial party committee and the provincial people’s government. It connects with the general office of the Party Central Committee and the State Council, while covering the provincial party committee, provincial people’s government, provincial people’s congress, provincial political consultative conference and other direct subsidiaries, cities and counties. It enables party

1 In consideration of the uniqueness of the sampled data, the Report only covers data in 336 cities of 27 provinces/ regions.

The four municipalities directly under the jurisdiction of the Central Government were not covered in the Report.


32

handling of administrative licenses and related affairs are logically classified based on the user’s requirements; service guides, procedure manuals, electronic documents for downloading, on-line approvals and results notification will be made available in a central platform. Meanwhile, online tax declaration, annual assessments of industrial and commercial registrations and the handling of all permits and licenses will also be centralised to make it more convenient for Hainan residents.

The first Mainland province to pilot test e-commerce

E-commerce started early in Hainan. In May 1998, the provincial informatisation office launched the “E-commerce Pilot Project” in conjunction with the information technology enterprises of the province, which received great support from the Ministry of Science and Technology (MOST). In April 2000, MOST approved the “E-commerce Pilot Project” and included it among the key technology projects of the “Ninth Five-Year Plan”. Hainan thus became one of the eight pilot areas (and the first province selected) for launching e-commerce during the “Ninth Five-Year Plan”. E-commerce in Hainan is primarily applied in two pillar industries, i.e., agriculture and tourism.

As an agricultural province, the modern logistics distribution of agricultural products in

Hainan calls for the application of E-commerce. Accounting for 38% of GDP, the dominance of agriculture in Hainan is the highest among all Mainland provinces. Agricultural products are affected by climatic conditions and if not promptly delivered to end-users, they will be wasted. The purpose of the modern logistics is to promptly transport agricultural products to their end-users in other parts of the country. As such, the Hainan Information Industry Bureau and the Agricultural Department jointly designed the “Agricultural Products E-commerce and Modern Logistics Distribution System in Hainan”, which is made up of e-commerce application systems, logistics information systems, product source and sales-point logistics centres. The objectives are to remove the obstacles when marketing these products by communicating the information via e-commerce platforms and facilitating remote transaction processing; to facilitate operation of an “order-based agriculture” and lower the transaction costs of marketing agricultural products; improve the value-added of agricultural products via logistics processing, creating “branded” agricultural products and strengthening “branded” agriculture in Hainan. According to its plan, the annual agriculture sales of agricultural products via e-commerce will reach more than Rmb2 billion in 2005.

The application of e-commerce in Hainan agriculture is an important showcase of “Hainan’s Systems of Agricultural E-Commerce and Modern Logistics”. Rubber is an important Hainan product and accounts for more than 50% of the total rubber output in China. In the past, the farms sell their rubber directly and incur a lot of costs during the marketing process. Since the establishment of Hainan’s e-HiFarms, an agriculture e-commerce trading platform, in May 2001, the provincial agricultural bureau required all farms to transact on this


33

electronic platform. This way, both buyers and sellers could reduce their transactions cost. In July 2004, Hainan’s e-HiFarms established distribution centres in Tianjin and Xiamen. Thereafter, its clients in these two cities and their peripheral areas are able to place their orders for natural rubber via the Internet and collect their ordered goods in the respective distribution centres on the same day. Currently, e-HiFarms is focusing on developing trading centres in areas like Dalian, Wuhan, etc. It plans to complete setting up distribution centres in all major rubber markets throughout China within the next 1 to 2 years.

Apart from agriculture, e-commerce is also widely applied in Hainan’s tourism.

Hainan’s e-Commerce Application System for Tourism Services is in place to provide a unified and open e-commerce platform for the tourism industry. Its objective is to pool together different services and statistical information from the province’s numerous small- and medium-sized tourism enterprises and construct an online tourism information centre. The centre would provide tourists with information on Hainan’s dining, accommodation, transportation, sightseeing, shopping and entertainment. It could also provide the whole series of services including reservations, travel arrangements, return trip arrangements, payment settlements and complaints. At present, the system has incorporated 100% of Hainan’s backbone tourism enterprises and 60% of other tourism enterprises. Each month, the website gets over 1.8 million visits and the visitors count is growing at 15% per month.

The telecommunications industry in Hong Kong was opened up to market competition

during its early stages of its development. The industry is now characterised by intense competition and high service quality. Hong Kong’s Cyberport and e-commerce applications development are growing at a faster pace than Hainan. The city also boasts of more extensive experiences in servicing different customer groups, developing diversified products, managing brands, developing marketing channels, fostering business cooperation, and integrating the information industry with other industries. Hainan offers wide opportunities for developing e-commerce. Numerous small and medium-sized enterprises are just moving towards e-commerce, offering attractive opportunities for Hong Kong telecommunication service providers.


34


35

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

Economic Development Trends of Fujian in the First Quarter of 2005 -- 36

Fujian Price Bureau Adopts Nine Measures to Stabilise Property Prices ------------------------------------------------------------------------------ 38

Economic Development Trends of Jiangxi in the First Quarter of 2005 - 40

Jiangxi to Become a Major Red Tourism Province ------------------------- 42

Economic Development Trends of Hunan in the First Quarter of 2005 - 44

National-level Export Processing Zone to be Established in Hunan’s Chenzhou City ------------------------------------------------------------------ 46

Hainan Insurance Regulatory Bureau to Enhance Market Environment - 48

Haikou Introduces Measures to Improve Customs Environment ------- 50

Memorabilia of Pan-PRD Regional Cooperation --------------------------- 52


36

Economic Development Trends of Fujian in the First Quarter of 2005

In the first quarter of 2005, Fujian basically maintained a steady pace of economic growth, with industrial production, fixed asset investment, retail consumption and attraction of foreign investment continuing to increase at double-digit pace. According to initial estimates by the provincial government, Fujian’s gross domestic product (GDP) reached Rmb125.3 billion in the first quarter, up 10.5% year-on-year in real terms. Industries witnessed steady growth

Generally speaking, Fujian’s economy performed well in the first quarter of this year. The primary, secondary and tertiary industries grew by 3.8%, 12.3% and 10.1% year-on-year in real terms respectively. The healthy development in agricultural and industrial production, together with the expansion in investment, effectively upgraded and improved the province’s industrial structure. Despite the cold weather, the gross output value of farming, forestry, animal husbandry and fishery rose to Rmb23.018 billion in the first quarter.

Industrial output increased steadily. In the first quarter, industries that showed the

most rapid rise in output were coal mining and washing (40.2%) and metallurgy (35.8%). Employment also showed significant improvement. Compared with the same period last year, the number of employed persons in the urban areas increased 9.6% and the average wage rose by 7.2%. Urban and rural households’ income rose by 10.8% and 8.9% respectively in the first quarter, supporting double-digit growth in the province’s retail sales during the period.

Fixed asset investment continued to rise by double figures

Fujian’s fixed asset investment grew 16% year-on-year in real terms during the first quarter. This was 17.5 percentage points lower than that in the same period last year. Investment in the primary, secondary and tertiary industries totalled Rmb1.156 billion, Rmb14.054 billion and Rmb21.628 billion respectively, increasing by 12.7%, 25.9% and 10.6% in real terms respectively. The sustained growth of investment benefited not only from the province’s infrastructure construction as part of the government’s efforts to beef up the construction of the Economic Zone on the West Coast of the Taiwan Strait. Moreover, Fujian’s continuous efforts to open up its economy also encouraged increasing investment of from the non-state-owned economy and foreign-invested enterprises. In the first quarter, non-state sector investment accounted for 52.7% of the province’s total fixed asset investment, 3.4 percentage points higher than that in the previous year. Meanwhile, investment by foreign-, Hong Kong-, Macao- and Taiwan-invested companies accounted for 20.4% of the province’s total fixed asset investment, 1.5 percentage points above that of last year.


37

Fujian Fixed Asset Investment

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2000 2001 2002 2003 2004 2005 Q10

5

10

15

20

25

30%

Total fixed asset investment (Rmb100mn)

Year-on-year growth (%)

RMB100mn

Source: Fujian Provincial Bureau of Statistics

Utilized foreign investment increased substantially

Foreign investment in Fujian continued to rise. In January-March, Fujian received a US$1.539 billion worth of signed foreign direct investment (FDI) contracts, 12.2% higher than in the same period last year. Utilised FDI increased sharply by 55.7% to US$780 million. As Fujian further opened up its services sectors, investment into the province’s services industries recorded continuous growth. FDI into the tertiary industries was way ahead of the other sectors, with contracted FDI totalling US$292 million, up 26.7% and utilised FDI reaching US$132 million, a surge of 1.3 times. FDI from Taiwan picked up again this year, mainly investing into the industries of electronics, construction materials and chemicals. In the first quarter, contracted FDI from Taiwan increased 90% year-on-year to US$183 million, up 90% and accounted for 11.9% of the total contracted FDI, compared with only 7% in the first quarter of 2004.

In addition, Fujian’s exports also continued posting double-digit growth rates.

Classified according to product source, Fujian’s exports reached US$7.67 billion in the first three months, up 17.3% year-on-year. Of this sum, export of machinery expanded by 14.82%. According to the estimates of Fuzhou Customs, Fujian’s external trade has already recorded exceptionally strong growth in the past three consecutive years since China’s entry into WTO. Moderation is, therefore, expected in 2005 mainly due to the large comparative base. In 2002-2004, Fujian’s exports rose 24.4%, 27.6% and 30.2% respectively.


38

Fujian Price Bureau Adopts Nine Measures to Stabilise Property Prices

Statistics from Fujian Provincial Department of Construction shows that the first quarter of this year witnessed a continuously flourishing demand in real estate market, with the housing vacancy rate dropped by 14.4%. In the first quarter, the gross floor area of property sold in the province amounted to 2.35 million square meters, involving a total sum of Rmb6.19 billion, an increase of 27.9% and 29.6% respectively over the same period of last year. The gross floor area of commodity housing pre-sold reached 4.43 million square meters, an increase of 51.7% over the same period of last year. The gross floor area of housing that has been vacant for over one year accumulated to 1.78 million square meters, down by 300,000 square meters from the start of 2005. The average prices of commodity housing and commodity residential housing in Fujian increased 10.8% to Rmb3,266 and 11.3% to 2,908 per square meter respectively. Commodity housing units in Fuzhou were sold at an average price of Rmb3,445 per square meter, up 9.2%, while those in Xiamen reached an average price of Rmb4,894 per square meter, an increase of 10.6%. In order to prevent housing prices from rising incessantly, on April 27, Fujian’s Price Bureau issued a circular to strengthen the monitoring and control of the prices of common commodity housing and affordable housing and prevent unreasonable escalation of housing prices. Regulating prices

The circular listed out new measures to enhance monitoring of commodity housing prices, particularly those of average commodity houses. As part of the measures, it ordered regular checks and reporting of the average cost of development and construction of these projects in different locations and levels. The information gathered will be used as benchmarks to gauge whether housing prices are moving within a reasonable range. The Fujian Price Bureau also proposed close government monitoring of the prices of affordable housing. Since affordable housing units are cheaper, they have recently begun to attract speculation. To discourage this, the Fujian Price Bureau started managing their prices. Moreover, the government will continuously offer various preferential policies for affordable housing to maintain a reasonable price gap between affordable housing and common commodity housing. Meanwhile, as low-rent housing forms part of the social security system, the government will continue to make these affordable to households in the lowest income bracket. The Fujian Price Bureau will ensure that going rents are within the means of these households, and are close to the levels of public housing rents. Towards this end, the Fujian Price Bureau has implemented a governmental pricing strategy for low-rent housing, determining the rental level based on the cost of maintenance and managing these estates.

As for managing land prices, the circular required the standardisation of market practice in pricing land, banning transfers of land at exceptionally low prices, curb speculative trading of land, and to gradually perfect the system of land tendering and auction. Furthermore, the


39

transparency of land transactions will also be enhanced by regularly determining and disclosing the pricing system. A benchmark price will be used to regulate and guide the movement of housing prices. Right to use land that have already been granted to approved housing projects but have remained idle for a long period of time will be withdrawn or dealt with through other appropriate measures in strict accordance with the laws. Regulating cost factors

The Fujian Price Bureau stressed that prices of commodity housing should be determined in accordance with both local market supply and demand as well as relevant state policies. Prices shall be set based on the costs of development and construction plus allowance for legal taxes and appropriate profits. When setting prices for commodity housing, a real estate developer is forbidden from collecting repeated charges from the homebuyers. The calculation of the cost of commodity housing shall consist of expenses involved in obtaining the right to use land, fees and charges on design and prophase engineering, expenses on construction and installation engineering, installation of public service facilities, operating costs incurred in management and other overheads, financial expenses, and other various stipulated fees and taxes. Governmental price authorities at all levels shall enhance monitoring, control and guidance on the setting of commodity housing prices, especially those of common commodity housing. They shall conduct regular measurements and disclosures of average development and construction costs for common commodity housing at different locations and levels. For higher-end commodity housing, real estate developers will be left to determine their selling price based on both the cost of development and operations, as well as ongoing market supply and demand conditions.

The Fujian Price Bureau has ordered real estate developers to standardize their fees and charges, eliminate all illegal and unreasonable fee items related to the construction of housing units and to adjust downward the exceptionally expensive fees and charges. Meanwhile, Fujian Price Bureau will also require real estate agents to standardize their fee charges, setting these in accordance with regulated methods and procedures. The Fujian Price Bureau further stressed that real estate developers should not compel buyers to employ the service of a real estate agent or appoint any such agents on buyers’ behalf. Tightening inspection and monitoring of price trends

The price authorities in each city shall keep a close eye on the trends in real estate development and the prices of relevant commodities, and shall enhance regular measurements on trading price of land transfer, commodity housing and inventory housing in Quanzhou, Fuzhou and Xiamen. Any abnormal fluctuations in prices shall be reported to higher price bureau authorities immediately. Any region reporting excessive rise in commodity housing prices for 3 consecutive months will see suspension in all pending fee hikes of its public utilities.


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Economic Development Trends of Jiangxi in the First Quarter of 2005 In the first quarter of 2005, Jiangxi continued with its system and structural reforms and

further opened up the economy to other investors from other provinces and even overseas. During the April 20 Standing Committee meeting, a Jiangxi provincial government official indicated that growth in the province’s investment, consumption and exports all gained momentum in the first quarter this year.

Both agriculture and industrial sectors maintained moderate pace of growth

Strictly complying with the policies promoted by the “No.1 Document” of the Central

Committee, Jiangxi had a good start in raising agricultural production in the first quarter of this year. During the period, Jiangxi sowed a record 20.4 million acres of land with early-maturing grains. Meanwhile, the industrial economy also maintained healthy growth pace, driven mainly by its pillar industries. According to the latest available statistics, the value-added of industry by enterprises above designed size increased to Rmb16.314 billion, up by 19.9% in real terms; the revenues of industrial enterprises reached Rmb52.47 billion, up 27.22%. In addition, domestic trade surged, and the residents’ standard of living continued to rise. In the first quarter, the urban residents’ average per capita disposable income reached Rmb2,411, up 14.9% year-on-year, while rural residents’ cash income rose even higher by 19.3% to Rmb810.5. Retail sales of consumer goods in the province totalled Rmb28.7 billion, growing by 12% in real terms and closely matching the 12.6% recorded in 2004.

The No.1 Document of the Central Government

The “No.1 Document” of the Central Government issued by the State Council contains policies aimed at boosting rural residents’ incomes. Issued on February 9, 2004, it was the sixth “No.1 Document” issued since China’s reform and opening up (the fifth one was issued 18 years ago) that addressed the “three dimensional rural problem”; namely, agriculture, rural villages and rural residents. As the average income of all Chinese farmers has experienced slow growth since 1997 and the income gap between urban and rural households has widened from a proportion of 1.8:1 to 3.1:1, the Central Government once again highlighted the importance of expanding the employment opportunities and raising the incomes of rural residents. The “No.1 Document” also stressed the need to carry out the important but difficult tasks of raising the incomes of rural residents in major grain-producing areas and those in poverty-stricken areas. This way, improvement in their economic conditions can be realised in all three facets: within the agricultural setting, within the rural village setting and even beyond the rural village setting.


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The composition of investment also optimised with the continued inflow of funds into both industrial and social undertakings. Total fixed asset investments reached Rmb24.73 billion in the first quarter, up 24.7% year-on-year in real terms. Among them, county, city and above level investments rose to Rmb20.31 billion, up 27.5% year-on-year. Investments by non-state sectors rose by 38.8% or 4.7 percentage points higher than the same period of last year and accounted for 57.6% of the total investment made in county, city and above level.

Inflation subsided significantly

Inflation in Jiangxi eased from 4% in 2004 to 2.8% in the first quarter this year. The

increase in prices slowed down significantly, especially in March -- after the lunar new year holiday. Overall, consumer prices increased by 2.7% year-on-year in March and the increment was 1.3 percentage points below that in February. Overall, prices of consumer goods increased 2.6% year-on-year but the increment was 1.2% lower than February. Likewise, service fees were up 3.1% year-on-year but down by 1.8% month-on-month. Food prices rose by 7.2%; residence-related fees rose by 3.8% due to higher mortgage loan rates and rising fuel prices. Fees on entertainment, education, cultural articles and services increased by 0.3%, with education fees rising by 1.5% and tourism charges rising by 1%.

External economy performed favourably

Classified according to product source and destination, Jiangxi’s exported goods worth a

total of US$540 million in the first quarter, representing a surge of 35.2% over the same period of last year. Exports of processing trade rose by 80% to US$71.22 million while imports increased by 40% to US$31.63 million. Jiangxi managed to maintain strong trade relations with its major trading partners such as Hong Kong, the United States, the EU and Japan. Export of traditional products also showed solid growth, led by pillars such as machinery, copper ore, etc. As for attracting foreign investment, Jiangxi recorded utilized foreign direct investment of US$452 million in the first quarter, up 20.5% year-on-year.


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Jiangxi to Become a Major Red Tourism Province

Within the territory of Jiangxi Province, there are in total 1,258 revolutionary relics, buildings and battle sites. They include over 170 well-known revolutionary relics such as the Huangyangjie (黃洋界) in Jinggangshan (井岡山), August 1 Nanchang Uprising Memorial (八一南昌起義紀念館), Zongping Lane in Anyuan of Pingxiang (萍鄉安源總平巷) and Sanwan Reorganisation Relic in Yongxin (永新三灣改編舊址), and nine national-level demonstration bases for patriotism education. In 2004, Jiangxi’s red tourism attractions have received over 13.5 million tourists and generated total tourism revenue of Rmb7.7 billion, nearly one third of the total tourism revenue for the entire province or 2.2% of the province GDP in 2004. “Opinions on developing red tourism” issued

As early as in 2001, the Jiangxi Provincial Party Committee and Jiangxi Provincial Government have decided to focus on the development of its tourism industry – particularly its red tourism sector – turning it into a pillar industry of the province and a new engine of economic growth. By making use of the rich historic and cultural resources available in the province, Jiangxi is aiming to leverage on the development of red tourism to accelerate the economic development, and has incorporated the tourism industry targets into its master economic development plan. In mid-April 2005, press media in Jiangxi reported that the province will soon issue the Opinions on Developing Red Tourism (the Opinions). According to these Opinions, Jiangxi will construct a series of high-quality and influential red tourism resorts and attractions over the next three years. In another three years’ time, the province will develop into an internationally-influential tourism brand, upgrading its red tourism resorts into top tourist attractions by the year 2010. Speeding up the construction of infrastructure facilities

According to Jiangxi’s tourism layout, an important attraction will be created surrounding Jinggangshan with Nanchang, Ruijin (瑞金), Pingxiang (萍鄉) and Shangrao (上饒)

as the main areas of interest, Nanchang and Ganzhou (贛州) as the tourism industry’s marketing centres. Six more special tourism routes will be developed, forming the backbone for Jiangxi’s tourism industry.

From 2001 to 2004, the province has invested a cumulative sum of over Rmb300

million in red tourism projects, mainly used in improving roads and pedestrian paths in its tourism areas, the construction of public toilets and tourist service centres, as well as in the recovery and maintenance of revolutionary relics. To expand Jinggangshan’s capacity to receive tourists, a new town will take shape at the foot of Mount Jinggangshan, to enable Ciping (茨坪) of Jinggangshan to provide comprehensive and convenient tourism services to sightseers and visitors. In addition to the improvement of travelling environments, the provincial government has also been improving the external transportation facilities for red


43

tourism. For examples, it has formally developed more international flights for Nanchang Changbei International Airport, rebuilt Jinggangshan military airport to a tourism-oriented airport and extended flights to Beijing, Shanghai, Guangzhou and Shenzhen. The construction of highways has also undergone great improvements, with the mileage increasing by 1,000 kilometres within three years, and spanning a total of 1,507 kilometres throughout the province. At present, red tourism resorts in Jinggangshan, Nanchang, Ruijin and Shangrao are already linked up with highways. Introduce preferential policies to encourage investment into the red tourism industry

To encourage private businesses to participate in the development of red tourism, Jiangxi offers preferential water and electricity rates to cities promoting red tourism and to star-rated hotels inside tourist attractions. The government allows star-rated hotels to enjoy utility rates equivalent to those applicable to industrial enterprises. Preferential treatment is also granted to tourist coach operators with the value-added charge per seat reduced by Rmb90. With these preferential policies in place, more entities from various sectors of the society have been encouraged to set up red tourism related business. The Jiangxi Party Committee and Jiangxi Provincial Government aims to raise the province’s red tourism related visits and receipts to Rmb9 billion or account for one-third of the province’s total tourist arrivals and tourism revenues by the end of 2005, and further expanding to 40% by 2007.

Driven by the campaign to develop red tourism, Jiangxi sees great potential for developing its tourism industry. Although Hong Kong may not have as in-depth knowledge on red tourism products as their Mainland counterparts, their extensive experience in marketing and providing supporting services such as hotel and catering, planning of tourism routes and serving overseas tourists would be helpful in contributing to the successful development of Jiangxi’s red tourism business. Promoting cooperation between Hong Kong and Jiangxi tourism businesses would not only trigger the development of new business opportunities, but would also help satisfy the rising demand for tourism investment in Jiangxi, and help to upgrade the industry’s standard of services.


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Economic Development Trends of Hunan in the First Quarter of 2005

In 2005, Hunan continued with its industrialization process and the province’s economy developed steadily. Investment, consumption and exports continued their positive trends and the province witnessed further optimisation in its economic structure and performance.

Strong growth in secondary industries

Hunan’s GDP reached Rmb134.9 billion in the first quarter, growing 11.9% in real terms, closely matching the 12% growth in 2004. The pace of economic expansion was 0.7 percentage point higher than that in the same period last year. Specifically, output of the primary industry reached Rmb17.139 billion, up 5.3% in real terms; output of the secondary industry reached Rmb53.023 billion, up 14.7%; while the tertiary industry’s output reached Rmb64.795 billion, up 11.4%. Hunan pursued the overall policy of eliminating agricultural taxes and according rural residents with various preferential treatments during the first quarter, encouraging the rural residents to take up more production initiatives. As a result, the areas sown for medicinal herbs, tobacco leaf, vegetables, melons and fruits expanded by 112.6%, 17%, 11.7% and 10.4% respectively during the period.

Meanwhile, the value-added of industry by enterprises above designated size reached

Rmb31.597 billion, up 21.2% year-on-year in real terms. Hunan’s top ten industries including electronics information, new materials, biomedicine, equipment building, iron, steel and nonferrous metals, tobacco processing, food processing, petrochemicals, construction materials and paper making achieved strong output growth. The value-added output of these top industries reached Rmb24.066 billion during the first quarter and accounted for 76.2% of the total value-added of industrial enterprises above designated size. This represented a 22.2% year-on-year real growth, which was 1 percentage point higher than the provincial average.

Both investment and consumption growth remained strong

Total fixed asset investment in Hunan reached Rmb34.03 billion, up 29.3% year-on-year in real terms. Of this sum, industrial investment reached Rmb9.43 billion, up 45.3% year-on-year in real terms, and was 11.4 percentage points higher than overall urban investment.

Urban residents’ average per capita disposable income reached Rmb2,862, up10.7%;

while rural residents’ per capita cash income reached Rmb981.76, up 18.6% and 4.3 percentage points higher than the same period last year. Total retail sales of consumer goods reached Rmb57.073 billion, an increase of 10.1% in real terms. Also worth noting is that after the elimination of agricultural taxes, the incomes of rural residents have risen considerably, helping to boost per capita cash expenditures to Rmb664.59, a substantial


45

increase of Rmb120.34. This represented 17% year-on-year real growth. Driven by ongoing macro-economic controls, Hunan’s inflation narrowed. In the first

quarter, the consumer prices in the province rose 4.4% -- 1.5 percentage points slower than the 5.9% peak inflation rate recorded in the third quarter of 2004. Prices of food and residence rose 9% and 8.3% respectively, and were the major drivers of inflation.

Hunan Consumer Price Index

-2

-1

0

1

2

3

4

5

6

7

Q1

2001

Q2 Q3 Q4 Q1

2002

Q2 Q3 Q4 Q1

2003

Q2 Q3 Q4 Q1

2004

Q2 Q3 Q4 Q1

2005

HunanNational

Year-on-year growth (%)

Source: Hunan Provincial Bureau of Statistics

Export of Hunan iron and steel likely to achieve record high

In the external sector, classified according to product source, Hunan’s exports amounted to US$780 million in the first quarter, 39.6% higher than that in the same period of last year. Driven by a surge in international iron and steel prices, exports of iron and steel products tripled year-on-year. In recent years, Hunan’s iron and steel enterprises gradually reduced the production of staple items such as wires and shifted their focus towards higher-quality products such as metal sheets, super-thin sheet, tubes and rods to meet the international market’s enormous demand.


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National-level Export Processing Zone to be Established in Hunan’s Chenzhou City

In accordance with State regulations, an export-processing zone (EPZ) is usually

established in a national-level economic and technological development park. However, considering the benefits of setting up an EPZ in an area best positioned to receive industries relocating out of the coastal regions, Hunan has identified Chenzhou (郴州), which is adjacent to Guangdong, as the venue of the province’s first EPZ. Location: the non-ferrous technological and industrial park

As introduced by Mr. Pan Biling (潘碧靈), Vice Mayor of Chenzhou City, the first EPZ of Hunan will be situated in the eastern part of the Shizhuyuan Industrial Park (柿竹園工業區), nine kilometres away from the city centre. Approved by Hunan Provincial Government in April 2003, this non-ferrous metal technological and industrial park occupies a total area of 22.5 square kilometres. The EPZ is known to have passed the approval of nine relevant ministries and commissions, and the Customs General Administration has represented the local government to submit a formal application to the State Council seeking permission to establish a state-level EPZ in Chenzhou. Approval will hopefully be received in the first half of this year. Administrative policies in the EPZ

According to State policies, EPZs are entitled to various kinds of preferential treatment. In taxation, for example, all manufacturing and processing enterprises within the zone will be exempted from value-added taxes and consumption taxes, and may enjoy income tax reduction or exemption. Besides, imports of raw materials, equipment for use by an EPZ enterprise, infrastructure resources needed for plant construction and supplies for own use will also be exempted from taxes and duties. As raw materials, production equipment, resources needed for plant construction and office supplies for use by an EPZ enterprise and sourced locally are treated as exports and entitled to export tax rebates; enterprises within the EPZ may negotiate with their suppliers for discounts. Besides, transfers of raw materials and semi-finished products among enterprises within the EPZ can also enjoy exemption from taxes.

In administering the EPZ, all goods that are not banned by the state are allowed to enter

and exit the EPZ freely upon obtaining customs clearance. No other approval procedures are needed. Processing trade enterprises inside the EPZ will not be required to comply with the deposit account system for processing trade nor would they be constrained by the stipulations under the “Processing Trade Registration Manual” implemented by the China Customs. Even domestic enterprises set up in the EPZ can apply for import-export trade licenses. Under the trade policies of the EPZ, goods entering/exiting the zone will only be


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Hainan Insurance Regulatory Bureau to Enhance Market Environment

Since 2000, Hainan Province has enjoyed an annual average growth of over 30% in premium income, i.e., a jump from Rmb600 million in 2000 to Rmb1.355 billion in 2003. Despite rapid growth in recent years, Hainan’s insurance industry remains unable to meet the rise in demand resulting from the province’s social and economic development. Existing insurance products and services are unable to satisfy the needs of the various income groups. Measures being adopted strengthen the fundamentals for the healthy development of the insurance sector

To complement the Provincial Government’s “Year of Investment Environment Construction” campaign and enhance the environment of the insurance market of Hainan, the Hainan Insurance Regulatory Bureau (HIRB) highlighted in early 2005 the key objectives to be achieved in the insurance industry. It also ordered the implementation of a series of measures to strengthen guidance and supervision on industry practices to promote its healthy development. In accordance with the Eleventh Five-Year Plan for developing the insurance industry, the HIRB will enhance its efforts in five fundamental areas: informatisation, collecting statistics, enhancing the profession’s credibility, strengthening research and investigation, as well as nurturing a team of qualified industry professionals. By pursuing these endeavours, Hainan hopes to strengthen the fundamentals for the development of its insurance industry. Expand the range of insurance products and deepen market penetration

Under the guidelines of the China Insurance Regulatory Commission (CIRC), Hainan's insurance industry is set to achieve an annual average revenue growth of 20% and strive to raise its premium income to Rmb5 billion by 2010. To achieve this, Hainan should first widen the coverage of its insurance industry. This year, Hainan will strive to promote the insurance business in the county level, make insurance products available in all of its counties. It will also develop and promote new insurance products including a full range of travel insurance products, building third party insurance and fire insurance; marine insurance, aquaculture insurance and long-range fishing insurance; pension, health and liability insurance, etc.; promotion of non-vehicle insurance, reform of vehicle insurance market; promoting premium differentiation in vehicle insurance, diversified and tailor-made vehicle insurance products; expansion of sales channels, etc. With these efforts, Hainan aims to optimise the existing structure of its insurance products. Tighten regulatory supervision to maintain market order and protect the insured parties

In upgrading the industry’s standards and protecting market order, the HIRB will give


49

priority to tightening supervision in three key aspects: senior management of insurance companies, insurance risk monitoring and enhancement of internal control. To better protect the legal interests of the insured, the HIRB reiterated that officials in the public security and judicial offices would seriously crack down criminal conducts in the insurance industry. Violations of insurance laws and regulations will be severely punished; thorough investigations will be conducted from time to time to detect falsification, fraudulence and deception. This way, a comprehensive system of monitoring market order will be enforced.

Meanwhile, the HIRB will also improve efforts to educate consumers and require compulsory distribution of insurance notes to consumers. Effective from May 1, 2005, the insured party (whether purchasing vehicle or life insurance) will be given an “insurance note” to remind him of the crucial and material points included in the insurance policies that would affect his interests. For example, the insurance note would highlight the clauses on “exemption from liability”, “cool-off period”, “cash value” and fee deduction upon “policy cancellation”. A system will also be set up to allow consumers to conveniently look up information on insurance related matters.

To provide better quality of service, the HIRB will set up an office dedicated to handling administrative approval processes. Officials will be assigned to a designated unit to take charge of handling the documents submitted, processing applications, entertaining queries and supervising due processes, ensuring that cases are properly discharged and recorded on files, conducting public consultations, etc. These officials will be subjected to the supervision and monitoring of both the insurance companies and the public. By implementing the above measures, the HIRB hopes to promote the orderly and sustainable development of the insurance industry, and better prepare the local insurers for the competition that would follow the upcoming liberalisation of the insurance industry to foreign companies. These efforts would also facilitate the development of the local insurance market, groom more mature consumers and help to attract the interest of foreign insurers to set up their operations in Hainan in the future.


50

Haikou Introduces Measures to Improve Customs Environment

As the largest special economic region in China, Hainan has always adhered to the opening up policy to spur economic development. The customs offices of the province has been serving as the main channels facilitating the flow of people, cargo and transport vehicles, and thus play a vital role in Hainan’s economic construction and liberalisation efforts. Since the opening up of aviation rights in 2003, Hainan has experienced a surge in the volume of cargo transiting its ports, ushering in a new growth engine for the province. Expanding “open skies” pilot test grounds

Hainan entered the third year of pilot testing the partial opening up of aviation rights in 2005. In accordance with the Provincial Government’s opening up policy, Hainan will continue to develop more routes of international flight and attract more international airlines to launch direct flights to Hainan. It will strive to increase the number of regional and international flights to more than 6,000. New routes planned for launching this year include four passenger routes from Haikou to Ho Chi Minh City, Singapore, Macao and Hong Kong. To help Hainan develop its cargo transportation market, two new international cargo round-trip flights are also in the pipeline -- Haikou-Seoul and Kunming-Haikou-Osaka. It also plans to start regular flights from Haikou to Seoul and irregular flights from Hainan to Tokyo, Aomori, Nagoya and other cities in Japan. Direct and transit flights will be operated by Asiana Airlines, Singapore Airlines, Malaysia Airlines and Bangkok Airlines.

Relaxing aviation rights would not only promote Hainan’s economic development, but also create a more efficient operating environment for both local and foreign companies in the province. To be able to complement the province’s pace of opening up, the Haikou Customs indicated that the existing system of customs management has yet to be improved. Riding on the efforts of the Hainan Party Committee and Hainan Provincial Government in promoting the “Year of Investment Environment Construction”, the Haikou Customs unveiled on April 14, 2005 that it would implement 32 concrete measures to improve its operating environment. These measures include improving the internal and external clearing processes and facilities, as well as enhancement of Customs climate. Improving internal and external clearing processes

The Haikou Customs will set up a working unit to improve the environment for customs clearing. The unit will be led by the Customs Commissioner and will be in charge of formulating an efficient process for internal customs clearing. This team will also be responsible for strengthening the consciousness of customs officers on the importance of providing quality service, improving their attitudes towards work and enhancing their sense of responsibility. By hosting regular work meetings, the team will probe into the common problems encountered in their daily operation; standardise and fine-tune internal work flows;


51

and consolidate resources for internal control and enforcement of regulations. The efficiency of customs clearing work will thus be improved.

In improving the external environment, the Haikou Customs will adopt a customer-oriented policy, increase the transparency of customs processes, and step up the promotion of customs policies and regulations. Along this direction, Haikou Customs will seriously complement the efforts of the Provincial Party Committee and Provincial Government to promote faster customs clearance processes by “setting up multiple points for customs declaration and facilitating efficient customs clearing at the port”. It will also regularly publicise the customs “red list” and “black list”, standardise enterprise management processes, ensure the orderly flow of import and export trade, and allow enterprises that have good track records to enjoy more convenient clearing procedures. Improving customs morals

To improve its moral standards, Haikou will make public via e-customs platforms and other venues all incidences of enterprises giving red packets to customs officers, as well as cases of customs officers’ refusal or reporting of red packets received. By doing so, the Haikou Customs hopes to promote an honest and clean government as well as an impartial spirit of law-enforcement among customs officers. Moreover, it will make clear to enterprises that relationships with customs officers should be handled carefully and appropriately. Meanwhile, by using public resources such as the e-customs, the Haikou Customs will be able to enhance supervision and evaluation of the progress of law-enforcement. The authorities will also be able to solicit the public’s views and suggestions online. To step up efforts in cracking down violations by customs officers, the Haikou Customs will establish a dedicated email box to handle complaints and reports of misconducts, voluntarily subjecting its staff to public supervision.

Strict implementation of the above measures will effectively improve Haikou Customs’ quality of service and promote the efficiency of customs service to complement Hainan’s efforts to further open up. This, in turn, will benefit foreign-funded enterprises operating in Hainan.


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Memorabilia of Pan-PRD Regional Cooperation

Fujian Fujian to hold Commerce and Trade Investment and Cooperation Fair (April 20, 2005) The fair will feature over 20 investment projects ranging from commercial services, material supply, department stores, supermarket chains, motor vehicles, hotels, logistics and distribution, and transfer of property rights. During the fair, these projects will be subdivided into groups to facilitate negotiation. The fair will be held from July 18-20 at the Fuzhou International Exhibition and Convention Centre. Jiangxi Jiangxi promotes hundreds of billions worth of investment projects in Beijing (April 15, 2005) As Beijing boasts of strong presence of representative offices of multinational companies, Jiangxi’s Department of Foreign Trade and Economic Cooperation organised a road show to promote investment opportunities to these companies in Beijing and establish contacts with their representatives. In April, a delegation of Jiangxi enterprises brought with them key projects worth a total of US$7 billion in hope of finding interested foreign investors in Beijing. Jiangxi delegation to boost investments from Hong Kong (April 12-15, 2005) The objective of Jiangxi Provincial Government’s hosting of business investment activities in Hong Kong is to heighten the publicity of investment opportunities available in the province. This time, led by Mr. Wu Xinxiong, Executive Vice Governor of Jiangxi, the delegation promoted not only infrastructure projects but also those related to science and technology, education, culture and health. During the business investment fair, contracts were signed for 62 projects, involving a total investment amount of US$1.15 billion. At the event, Vice Governor Wu also met with Mr. Ian Fok Chun-wan, Chairman of the Chinese General Chamber of Commerce. Hunan Pan-PRD Provincial Capitals’ Education Expo to be held in Changsha in June (April 10, 2005) Sources from Hunan disclosed that the “Pan-PRD Provincial Capitals Education Expo” will be held on June 17-18 this year. The fair aims to establish a new platform for regional economic and cultural cooperation through educational exchange. The 7th International Agricultural Fair invites investors (April 10, 2005) The 7th International Agricultural Fair scheduled to be held this November is now soliciting the participation of interested parties. This year, the fair will feature an international hall and an exhibition hall for “9+2” Pan-Pearl River Delta enterprises. The


53

fair has been listed as one of the key events supported by the Ministry of Commerce. Nine Provinces/Region Round Table Conference of Leaders from Chambers of Commerce in Guangdong, Hong Kong and Macao (March 14, 2005) Over 30 leaders from different chambers of commerce in Guangdong, Hong Kong and Macao have attended the “Round Table Conference of Leaders from Chambers of Commerce in Guangdong, Hong Kong and Macao” jointly sponsored by the Chinese General Chamber of Commerce and 7 other chambers of commerce in Guangdong, Hong Kong and Macao. The participants expressed their opinions on how the different chambers of commerce can exert their competitive strengths and how to further promote cooperation in the Pan-PRD Region. Agreement signed between the Women’s Federations in the nine provinces (region) and the Women’s Organisations in Hong Kong and Macao (March 29, 2005) The agreement was jointly signed by representatives from the Women’s Federations in the nine Pan-PRD provinces/region and those from the Women’s Organisations in Hong Kong and Macao. The representatives have agreed to cooperate in the following six sectors: promoting women’s economic cooperation, promoting the protection of women's legal rights, enhancing education and training for women, developing regional exchanges between female cadres, conducting field studies to look into issues related to women and children, and promoting informatisation of women’s work. Conference to solicit opinions on the Pan-PRD regional road and waterway transport plan (April 10, 2005) The conference was organised by the Ministry of Communication. Participants were divided into two groups, experts and industry representatives, to facilitate examination and discussion of the transport plan. The plan unveiled that by 2020, the regional highway network and pivotal road transport system will be in place, allowing Pan-PRD constituents to be within each other’s reach in 3 hours’ time. As for the development of coastal ports, an optimised layout will be in place by that time to facilitate the establishment of an efficient system of waterway transportation capable of accommodating containerised ships. Meanwhile, the modernisation of inland navigation systems within the Pan-PRD shall also be completed by then. Pan-PRD Traditional Chinese Medicine Forum to be held in June (April 10, 2005) The Macao media reported that the Pan-PRD Traditional Chinese Medicine Forum sponsored by the Science and Technology Council of the Macao SAR Government and co-sponsored by relevant authorities in the Mainland and Hong Kong will be held from June 21-23. The event will be participated by experts, scholars and representatives from enterprises and government units. They will partake in in-depth discussions on


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technological innovation and industrialisation of the traditional Chinese medicine sector in the Pan-PRD and seek opportunities for future cooperation. Regional cooperation to curb smuggling activities will be launched in June (April 1, 2005) Information from the Pan-PRD Anti-Smuggling Symposium held in Guangzhou indicated that a cooperative mechanism to curb smuggling activities would be launched this June. The participating units suggested that under the Pan-PRD Regional Cooperation Framework, six fundamental systems and mechanisms would be established. They include systems of joint liaison, staff contact, mechanisms for communicating information, reporting anti-smuggling situations, exchanging experiences, exchanging intelligences, as well as a cooperative mechanism for joint campaigns to curb smuggling. Inauguration ceremony of Nansha Zhongzong Building (南沙中總大廈) and regional economic cooperation symposium (April 14, 2005) More than 200 guests from the Mainland, Hong Kong and overseas attended the inauguration ceremony of Zhongzong Building, which is invested by the Chinese General Chamber of Commerce in Nansha of Guangzhou. Besides, they also presented the Economic Cooperation Symposium sponsored by the Chinese General Chamber of Commerce in Nansha, and jointly probed into the prospects and opportunities of cooperation in the Pan-PRD. Shenzhen-Hong Kong–Macao Logistics Integration Summit Held (April 17, 2005) The summit indicated that the Pan-PRD Logistics Alliance organised and sponsored by Hong Kong Productivity Council, Macao Logistics and Forwarding Association, Shenzhen Logistics Association and other 9 organizations will be established in this June. The Logistics Alliance will actively promote cooperation within the region, eliminate barriers, and resolve problems encountered as regional logistics develops. At present, more than 10 logistics-related organisations and institutions from provinces/region such as Sichuan, Yunnan, Guangxi, Fujian, Hunan have applied for membership in the Logistics Alliance. Joint Meeting of Directors of Development and Reform Commissions in the Pan-PRD (April 18-23, 2005) The joint meeting was held in Hong Kong. At the invitation of the Hong Kong SAR Government, deputies of the Pan-PRD Regional Cooperation General Office from the nine provinces/region and Macao visited various government policy bureaux and departments and a number of infrastructure projects and facilities during their visit in Hong Kong, to familiarise with Hong Kong’s latest development.


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IV. DATA AND TRENDS

Fujian --------------------------------------------------------------------------------- 56

Jiangxi -------------------------------------------------------------------------------- 57

Hunan -------------------------------------------------------------------------------- 58

Hainan ------------------------------------------------------------------------------- 59

Major Economic Indicators of Nine Pan-PRD Provinces/Region (Jan-Mar 2005) --------------------------------------------------------------------- 60

Nine Pan-PRD Provinces/Region: 10-Year Economic Trend (1995-2004) - 61

Nine Pan-PRD Provinces/Region: Statistics at a Glance (2004) -------------- 62


56


57


58


59


60


61


62


63


64


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V. ENGLISH-CHINESE GLOSSARY OF TERMS

Administrative village 行政村

Application service provider (ASP) 應用服務供應商

Band width, broad band 頻寬、寬頻

Basic services 基礎服務

Bureau of Commodity Prices 物價局

Capacity of mobile telephone switches 流動交換機容量

Capacity of office telephone switches 局用交換機容量

Certification authority (CA) 認證中心

China Mobile Communications Corporation 中國移動

China Network Communications Corporation 中國網通

China Telecom Corporation Limited 中國電信

China United Telecommunications Corporation 中國聯通

Commodity housing 商品房

Communication level of telecommunications 電訊通信水平

Communications services 通信服務

Content services 資訊服務業務

Data services 數據服務

E-Commerce service provider (ESP) 電子商務服務供應商

Electronic commerce 電子商務

Electronic government 電子政務

Eleventh Five-Year Plan 十一．五規劃

Information industry 資訊產業

Informatisation 資訊化


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Insurance Regulatory Bureau 保險監督管理局

Internet 互聯網

Internet access services 互聯網接入服務

Internet content provider (ICP) 互聯網內容供應商

Internet protocol (IP) 互聯網通信協定

Internet service provider (ISP) 互聯網服務供應商

Low-rent housing 廉租住房

Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

內地與香港更緊密經貿關係的安排

No. One Document of the Central Government 中央一號文件

Optical cable, microwave, satellite 光纜、微波、衛星

Popularisation rate of fixed line telephone 固網電話普及率

Popularisation rate of mobile telephone 流動電話普及率

Portals 門戶網站

Red tourism 紅色旅遊

Shizhuyuan Industrial Park 柿竹園工業區

Telecommunications services 電訊服務

Three dimensional rural problem 「三農」問題

Universal services 普遍服務

Value-added services 增值服務

Voice services 話音服務

Documents

CONSULTANCY STUDY O SOCIO-ECONOMIC-POLITICAL T IN PAN ... A07.pdf · Socio-Economic-Political Trends in Pan-Pearl River Delta Region Fujian, Jiangxi, Hunan, Hainan (7th Monthly Report)