China

Background Information of the People’s Republic of China : Background Information of the People’s Republic of China Economic & Commercial Office The Consulate General of The People’s Republic of China in Houston


Map : Map


Geography : Geography China is the third largest country in the world, after Russia and Canada. Land Area: 9.6 million square kilometers. Sea Area: more than 4.7 million square kilometers that lies off the coasts of east and south China, Coastline: more than 18,000 kilometers stretching from the mouth of the Yalu River in the north to the mouth of the Beilun River in the south. Taiwan is the biggest island covering 36,000 square kilometer.


Population : Population 1.29533 billion by the end of 2000. Of the total, 1.266 billion living in mainland China. Annual Natural Growth Rate: 1.07% (2.61% in 1969). Population by Age: 0-14: 22.89% (4.8 percentage points lower than in 1990). 65 and above: 6.96% (1.39 percentage points higher than in 1990). Dwindling Family Size: 3.44 person per household. Population living in Cities: 456 million, 36.09% of the total (9.86 percentage points higher than in 1990).


Population : Population Han people account for 91.6%, other nationalities account for 8.4% (8.04% in 1990).  First Five Largest Provinces with Population Size: Henan (92.56 million) Shandong (90.79 million) Guangdong (86.42 million) Sichuan (83.29 million) Jiangsu (74.38 million) MacaoSAR (440,000) Hong Kong SAR (6.78 million) Taiwan Province (22.28 million)


Nationalities : Nationalities Of the 56 nationalities: Largest one: Han nationality Largest ethnic minority group: Zhuang nationality Smallest ethnic minority groups: Oroqen, Hezhe, Gaoshan Each nationality in China is a member of the great family. All nationalities are equal with legitimate rights, interests, with the freedom to use and develop own language and customs  Autonomous Regions: 5 Guangxi Zhuang Autonomous Region Inner Mongolia Autonomous Region Xinjiang Uygur Autonomous Region Ningxia Hui Autonomous Region Tibet Autonomous Region


China’s Administrative Levels : China’s Administrative Levels Province, autonomous region and centrally-administered municipality Prefecture, league, autonomous, prefecture and prefectural-level municipality County, autonomous county, banner, autonomous, banner, county-level municipality Township, minority nationality township, town


China’s Administrative Levels : China’s Administrative Levels Altogether there are 34 administrative entities at provincial level: 23 provinces, 5 autonomous regions, 4 centrally-administered municipalities 2 special administrative regions.   Largest Cities in China Chongqing (30.90 million) Shanghai (16.74 million) Beijing (13.82 million) Tianjin (10.01 million)


Education : Education Regular institutions of higher education (including adult higher education): Middle school (secondary school): Senior (including vocational or technical schools): 25 millions students Junior: 62.6 millions students Primary school: 130 millions students Illiteracy rate of youth & mid-aged: lower than 5%


History of Ancient Civilization and Cultural Relics : History of Ancient Civilization and Cultural Relics China has a long history of ancient civilization and cultural relics of over 5000 years. Four great inventions: compass, gunpower, papermaking and printing. World heritage sites in China: Great Wall, Forbidden City, Temple of Heaven, Ming Tombs, Zhou Kou Dian Home of Pekingman, Potala Palace, Classical Gardens in Suzhou, the Mausoleum of the First Qin Emperor and Terra-Cotta Warriors and Horses (221-206 B.C.), Mogao Caves, qin bingmayong.


A. Current Economic Situation : A. Current Economic Situation GDP for 2001: More than US$1 trillion, rank 6th Annual average growth of GDP (1996-2000): 8.3% GDP growth in 2001: 7.3% Total foreign currency reserve (end of 2001): US$212 billion


A. Current Economic Situation : A. Current Economic Situation


A. Current Economic Situation : A. Current Economic Situation


A. Current Economic Situation : A. Current Economic Situation Tenth Five-Year-Plan (2001-2005) Annual GDP rate: 7%, RMB12.5 trillion Yuan Foreign Trade Value: US$650 billion China will import US$140 billion worth of equipment, technology and products. Average annual utilization of FDI: US$40 billion China will provide vast business opportunities to foreign businesses and make great contributions to the world economic development.


A. Current Economic Situation : A. Current Economic Situation Total foreign trade value in 2001: US$510billion, 7.5% increase compared to 2000 Now China ranks No.7 in world total trade, against No.32 in 1978. (1978, only US$20.6 billion.) Export accounts for about 25% of the national GDP


A. Current Economic Situation : A. Current Economic Situation Total trade value by 2005 will reach US$680 billion. Top 10 trading partners: Japan, USA, HK, ASEAN, ROK, Taiwan, Germany, Russia, Australia and Canada.


B. Foreign Trade Policy : B. Foreign Trade Policy


B. Foreign Trade Policy : B. Foreign Trade Policy Before 1978 As a supplementation to national economy Highly centralized management system Trades conducted strictly in line with the rigid state plan Less regard of price movement on international market Highly protected domestic market High tariff rates and various import quotas and licenses Only a dozen national import/export corporations and their branches at provincial level have foreign trade rights


B. Foreign Trade Policy : B. Foreign Trade Policy Before 1978 Major Trading Partners Former Soviet Union and East European countries accounted for over 70% of the total trade in the 1950s Major export commodities Raw materials and natural resource products Major import commodities Agricultural products ( grains, edible oil, sugar, etc. ) Manufactured products ( machinery, transportation vehicles, etc. ) Average trade volume in the 1950s: US$2-4 billion


B. Foreign Trade Policy : B. Foreign Trade Policy Since 1979, especially since 1992 As important part of the national economy and the window to the outside world Decentralizing trade rights to large state-owned and private manufacturers Cutting tariff rates, reducing quotas and import licenses, cutting export subsidies, setting JV trading companies Optimizing export commodity structure Reform and opening up is the long term and basic policy


B. Foreign Trade Policy : B. Foreign Trade Policy


B. Foreign Trade Policy : B. Foreign Trade Policy


C. Foreign Direct Investment (FDI) : C. Foreign Direct Investment (FDI) By the end of 2001: 47 billion, 14.9% increase in Actually Utilized Volume #1 among developing countries of FDI inflow in consecutive 9 years More than 400 of 500-largest-company-in-the- world have invested in China Major source of FDI: HK, USA, Taiwan, Japan, Singapore, Virgin Island, ROK, UK and Germany


C. Foreign Direct Investment (FDI)  : C. Foreign Direct Investment (FDI) Traditional form of FDI Utilization: Equity joint venture wholly foreign owned venture contractual joint venture


C. Foreign Direct Investment (FDI) : C. Foreign Direct Investment (FDI) Major changes in China’s policy towards foreign investment: Will allow foreign enterprises to acquire Chinese medium-sized and small enterprises by way of participating in shares, holding shares and buying outright.


C. Foreign Direct Investment (FDI) : C. Foreign Direct Investment (FDI) Future Prospects: On the whole, China now is one of the very few places in the world which enjoys fast economic development speed, high economic growth rate propelled by the reform schemes and opening up policy, entry of the WTO, being host of 2008 Olympic Games, large domestic market and preferential treatments to foreign investors. All these favorable factors will help more and more overseas capital settle down in China.


D. China’s West Exploration Program : D. China’s West Exploration Program This land----vast and spacious, mysterious, beautiful and rich in natural resources, include: 10 provinces, municipality and autonomous regions occupying 5.4 million square kilometers of China’s land territory


D. China’s West Exploration Program : D. China’s West Exploration Program Major Projects Started or Initiated: West-East Gas Pipeline Project West-East Power Transmission Project Qinghai-Tibet Railway Project inter provincial highway projects basic infrastructure facilities in key western cities


D. China’s West Exploration Program : D. China’s West Exploration Program Key sectors for potential investment: Water conservancy Transport Energy Telecom public facilities ecology and environmental protection Agriculture manufacturing industry Services Science technology and education social development


D. China’s West Exploration Program : D. China’s West Exploration Program Newly issued preferential policies towards development of west part of China: Expansion of the area open to overseas investment. Taxation preferential treatment. More service sectors will be open to overseas investors. Wide channel for the inflow of overseas investment. Relaxed restrictions on investment in infrastructure projects. Reinvestment projects in which overseas funds account for more than 25% of the total will be treated as foreign funded enterprises.


D. China’s West Exploration Program : D. China’s West Exploration Program Newly issued preferential policies towards development of west part of China: Favorable treatments to foreign businesses engaged in mineral exploration (except for oil and natural gas). Foreign Funded Enterprises’ senior staffs may enjoy special convenience when entering or exiting the country. Examination and approval procedures of setting up enterprises will be simplified. It is believed that favorable policies will spur a new round of FDI boom in west part of China.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) Chronicle Of Major Events Concerning China’s Entry To The WTO 2001.09.13: China and Mexico signed bilateral agreement. 2001.09.17: All documents concerning with China’s accession to the WTO passed at WTO’s 18th China Working Group in Geneva. 2001.11.10: WTO Ministerial Conference in Doha unanimously passed the decision on accepting China as a WTO member. 2001.12.10: China will officially become WTO member economy.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) Chronicle Of Major Events Concerning China’s Entry To The WTO. 1982. 09: China Applying to the GATT for observer membership. 1986.09.29: Applying for resuming founding membership status of the GATT. 1995.01.01: WTO replacing GATT. China became observer in the WTO. 1999.11.15: China the U.S. signed bilateral agreement on China’s accession to the WTO. 2000.05.19: China and the E.U. signed bilateral agreement.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) Efforts made by China towards its accession of the WTO. Cutting off tariff rates. Average industrial products tariff: from 43% in 1993 to current 15%, 10% by 2005. Revising and amending laws, rules and regulations not in line with international practice. Over 2000 copies have been revised or amended, more works will be done. Deregulating government control over business activities. Gradually open domestic markets to overseas investors, encourage fair competition among business entities. Granting national treatment to foreign enterprises, setting up preferential FDI policies.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO)


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) Implications of China’s entering into WTO to its business sectors On the whole, China’s entry into the WTO will not only benefit China itself, but also to the outside world, The ever growing and huge domestic market will provide overseas industrial entities with potential business opportunities.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) Why China Is So Eager To Join In The WTO? To push forward socialist market system process. To expedite the readjustment of economic and industrial structure. To build up legal society. To conduct fair trade with other WTO member economies. To help merge China into world economic community at an early date.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) Challenges Faced By China. Pillar economic sectors will be under attack (agriculture, auto industry, banking, etc.). Fulfill commitments once made. Readjust economic and industrial structure timely and effectively. Convert government functions. Ideological prejudice (here comes the wolf).


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) China WTO Accession Benefits to the US Sino-American trade review Bilateral trade was increased by 30 times since 1979. Total trade value: US$81 billion China now enjoys favorable trade balance.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) China WTO Accession Benefits to the US Sino-American trade review Major goods shipped by China. Labor intensive products: textiles, garments, toy, footwear, household appliance, machine tools, hardware, furniture, office appliance, etc. Major goods imported by China. Technology & capital intensive products: aircrafts, electronics, computers, chemicals, power station, machinery and farm produce, etc.


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO)


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO)


E. China’s Accession of the World Trade Organization (WTO) : E. China’s Accession of the World Trade Organization (WTO) According to the US-China Agricultural Cooperation Agreement, Tariff Rate Quotas (TRQ) set for US wheat, corn, rice, cotton and soybean oil are much higher than current import amount. Granting national treatments and opening once closed industrial sectors to foreign entities Trading rights and distribution (wholesaling, retailing, rental, leasing, advertising, packaging, warehousing, etc.) Services (tourism, consulting, accounting, auditing, legal, medical and healthcare, audio-visual services, etc.)


F. Tips on doing business in China : F. Tips on doing business in China Realizing the cultural difference, be flexible, be polite. Finding the right partner---abilities, right connections, shared goals. Big name may only do small things, try to approach specialized manufacturers or end users. Payment always be made by bank issued letter of credit (L/C) Don’t trust empty promise or words of No Problem, there maybe some serious problems in future, always rely on contract in written form. Before signing on the contract or agreement, consult qualified local attorney and let him review the document.


F. Tips on doing business in China : F. Tips on doing business in China Patience and patience. Time is irrelevant, business maybe dealt in at the last minute. Test your power of endurance, never lost your temper, especially when you are the seller. If your products are not suitable for the market, change to another product. Always know your bottom line. Getting rid of the market in time is better than losing money. Beware of regional protectionism, find your buyers in the big cities even in western part of China. Relationship comes first, business follows. Nursing personal relationships, it is different from western customs that out of sight, out of mind. Personal relation will last long, but it surely takes time. Try not to let your counterpart lose face, otherwise it will lead to the end of the business.


F. Tips on doing business in China : F. Tips on doing business in China Bring name cards with you when first visiting a Chinese company, and print your name in Chinese on card. Try to get some knowledge on history, geography or specialty about the place where your buyer is located, or say a few words about your self (hobbies, family members, etc.), This may shorten the distance and make a good impression. Don’t mind if your counterparts ask some uncomfortable questions such as “How old are you? Have you got married or even How much do you earn?” These are the common topics among themselves.


Source of Information to Know More about China’s Trade Issues : Source of Information to Know More about China’s Trade Issues http://www.moftec.gov.cn (Ministry of Foreign Trade and Economic Cooperation) http://www.customs.gov.cn (State General Customs Administration) http://www.ciq.gov.cn (China Inspection Quarantine) http://www.madeinchina.com.cn http://www.cecf-info.com (Chinese Export Commodities Fair---Guangzhou) http://www.chinahouston.org (Consulate General of the PRC in Houston) http://www.chinafair.org.cn (China International Fair for Investment & Trade---Xiamen)