10.05.2015 Views

F REIGN TRADE - 中国国际贸易促进委员会

F REIGN TRADE - 中国国际贸易促进委员会

F REIGN TRADE - 中国国际贸易促进委员会

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

CHINA’S<br />

F <strong>REIGN</strong> <strong>TRADE</strong><br />

The Export-Import Bank of China:<br />

Want to Be the Best in A Better World ?<br />

Special report<br />

Setting Tone for China<br />

Economy in 2011<br />

SURVEY<br />

China: A Booming<br />

Market for Foreign<br />

Cosmetics Brands<br />

国 内 邮 发 代 号 :80-799<br />

国 际 邮 发 代 号 :SM1581<br />

国 内 刊 号 :CN11-1020/F<br />

国 际 刊 号 :ISSN0009-4498


What’s on?<br />

China’s foreign trade structure diversified<br />

China’s trade volume surged in 2010. The development wasn’t only in<br />

quantity, but also in quality — namely structure diversification.<br />

The European Union, the United States and Japan remained<br />

China’s top 3 largest trading partners in 2010.<br />

But trade volumes between China and other emerging economies increased<br />

also. Bilateral trade volumes with BRIC nations — Brazil, Russia and<br />

India — all jumped more than 40 percent. That made India China’s tenth largest<br />

trading partner.<br />

Huang Guohua, Statistics Department Director of General Administration<br />

of Customs said “Trade volume between China and emerging economies<br />

increased faster than that with the traditional market. It indicates that China’s<br />

foreign trade is diversifying, and showing less dependence on the traditional<br />

partners. It’s a good way to reduce risks.”<br />

Data also shows that foreign trade volumes developed dramatically in<br />

China’s middle and western areas last year. Although the southern province of<br />

Guangdong still topped others in the total volume of import and export.<br />

Huang Guohua said “The export volume of middle and western areas<br />

surged over 40 percent year on year in 2010. The speed was 10 percentage<br />

points higher than the country’s total. It indicates that industrial structure has<br />

improved in these areas.”<br />

The import and export volume of private enterprises surged faster than the<br />

country’s average in 2010, with 47 percent year on year growth. Experts say<br />

China’s foreign trade development reduced dependence on foreign-funded enterprises.<br />

(CNTV)<br />

China to continue proactive fiscal policy<br />

China will continue its proactive fiscal policy in 2011 to improve infrastructure<br />

and people’s living standards, said Jia Kang, head of the Research Institute<br />

for Fiscal Science of the Ministry of Finance.<br />

Speaking at the China Textile Round-Table Forum Annual Conference<br />

2011, Jia attributed the policy decision partly to the need to roll out more followup<br />

investment programs for the four-trillion-yuan (607 billion yuan) economic<br />

stimulus program launched by the central government to combat the global<br />

downturn in November 2008.<br />

Further, Jia refuted criticism over China’s continuous building of infra-<br />

structure, saying many regions and cities were still<br />

suffering from inadequate roads or subway systems,<br />

citing Beijing’s severe traffic jams as an example.<br />

“China also needs to make investments in a<br />

nationwide medical insurance system and affordable<br />

housing, to expand domestic consumption and<br />

improve the living standards of the people,” said Jia.<br />

During the annual Central Economic Work<br />

Conference held in December 2010, the central<br />

authorities agreed that the country would continue<br />

its proactive fiscal policy next year, while switching<br />

its monetary policy stance from relatively loose to<br />

prudent.<br />

Jia said China’s fiscal policy, after years of being<br />

“proactive,” would return to “prudent” at some<br />

point of time, when appropriate. “However, it would<br />

be a gradual exit which is not likely to happen in<br />

2011.” (Xinhua)<br />

Chinese home appliance industry<br />

on the “Go global”<br />

To further promote the development of China’s<br />

self-owned brands in the home appliance field, the<br />

Ministry of Industry and Information Technology<br />

Figures<br />

10.3%<br />

China’s economy expanded 10.3<br />

percent in 2010 from a year earlier,<br />

and 9.8 percent year on year in the<br />

fourth quarter of last year, the National<br />

Bureau of Statistics (NBS) said<br />

on Jan. 20. (Xinhua)<br />

34.7%, 6.4%<br />

China’s foreign trade in 2010<br />

jumped 34.7 percent from a year earlier<br />

to $2.97 trillion, with its trade surplus<br />

falling 6.4 percent to $183.1 billion, the<br />

General Administration of Customs<br />

(GAC) said on Jan. 10. (Xinhua)<br />

23.8%<br />

China’s fixed-asset investment rose<br />

23.8 percent year on year in 2010, the<br />

National Bureau of Statistics said at a<br />

press conference on Jan. 20. (Xinhua)<br />

4.6%<br />

China’s consumer price index (CPI),<br />

a main gauge of inf lation, rose 4.6<br />

percent in December year on year, the<br />

National Bureau of Statistics (NBS) announced<br />

on Jan. 20. (Xinhua)<br />

$105b<br />

Foreign direct investment (FDI) into<br />

China hit a record 105.74 billion U.S.<br />

dollars last year, up 17.4 percent year on<br />

2


(MIIT) announced Tuesday to carry out<br />

a guiding plan that eyes to export more<br />

than 30 percent of China’s home appliance<br />

products by 2015.<br />

According to the guide, over 80<br />

percent of companies in the field in<br />

China are suggested to work out a clear<br />

development strategy by 2015, making<br />

achievements in core technologies.<br />

The MIIT intends for companies to<br />

inject 3 percent of their investments on<br />

research and development that can lift<br />

three to five brands to compete in the<br />

international market in the coming set<br />

years.<br />

China may also put forward a series<br />

of measures to support the development<br />

of the home appliance industry, and<br />

encouraging mergers and acquisitions<br />

with overseas companies, said the China<br />

News Agency.<br />

MIIT will back companies that<br />

apply for overseas trademark registration<br />

and patent, and inspiring Chinese<br />

companies taking the “Going globally”<br />

strategy.<br />

Haier Group, one of the largest<br />

white-goods company in the world, has<br />

already announced its five-year (2011-<br />

2015) development plan, which aims<br />

to promote itself to leading position in<br />

the country through integrations and<br />

mergers with Chinese white-goods companies,<br />

plus acquiring some overseas<br />

companies.<br />

In 2010, Chinese home appliance<br />

industry is estimated to have generated<br />

$165 billion. (Global Times)<br />

“Yuan internationalization a big step for world<br />

monetary reform”<br />

Quotes<br />

China should steadily promote the internationalization of its currency, the yuan,<br />

the head of China’s social security fund said on Jan. 15.<br />

The internationalization of the yuan is a significant step for advancing the reform<br />

of the international monetary system, Dai Xianglong, chairman of China’s National<br />

Council for Social Security Funds, said when speaking at annual economic forum in<br />

Beijing.<br />

The current international monetary system has not adapted to the new patterns of<br />

global economic development, he said, adding that currency diversification is a realistic<br />

solution. (Xinhua)<br />

“China pledges more action to fight IPR infringements”<br />

China is committed to improving the investment environment by adhering to<br />

its long-term fight against the infringement of intellectual property rights (IPR), said<br />

Chen Deming, minister of commerce, on Jan. 14.<br />

“China will go on strengthening communication and coordination with foreign<br />

enterprises, addressing their concerns about IPR protection. We expect the multinationals<br />

to have strong confidence in China’s commitment and efforts on the issue,”<br />

said Chen at an IPR forum held in Beijing.<br />

But “It takes time, and you need the patience to wait and see the changes,” said<br />

Chen. (China Daily)<br />

“China should be cautious of inflation, excess liquidity”<br />

China should be cautious of inflation and prevent the effects of excess liquidity,<br />

Fan Gang, a former advisor to the country’s central bank, said on Jan. 15.<br />

The loose credit policy of the United States is pumping money into the market<br />

and increasing expectations for the depreciation of the US dollar and the appreciation<br />

of other currencies, including the Chinese yuan, Fan told the annual meeting of<br />

China’s economy (2010-2011) in Beijing.<br />

The policy is reasonable for its own economy but will cause serious problems for<br />

the world, he said.<br />

It pushes up commodity prices and spurs hot money flows that cause inflation in<br />

emerging economies, he said. (Xinhua)<br />

year, the Ministry of Commerce (MOC)<br />

announced on Jan. 18. (Xinhua)<br />

30%<br />

Outbound merger and acquisition<br />

(M&A) deals by Chinese buyers increased<br />

by more than 30 percent to a<br />

new peak of 188 transactions in 2010,<br />

with a value of about $38 billion, a<br />

report from PwC said on Jan. 17. (Xinhua)<br />

15.7%<br />

China’s industrial output growth accelerated<br />

in 2010 from a year earlier, the<br />

National Bureau of Statistics (NBS) said<br />

at a press conference on Jan. 20. (Xinhua)<br />

5.5%<br />

China’s producer price index (PPI),<br />

a major measure of inf lation at the<br />

wholesale level, rose 5.5 percent last<br />

year, the National Bureau of Statistics<br />

(NBS) announced on Jan. 20. (Xinhua)<br />

$5.668b<br />

In 2010, 804 cases of venture<br />

capital (VC) investments conducted<br />

in China, a total capital injection of<br />

$5.668 billion, which is currently the<br />

highest investment amount in the<br />

country, according to ChinaVenture on<br />

Jan. 14. (Global Times)<br />

3


What’s on?<br />

China sets 2011 pollution control goal, warns of<br />

challenges<br />

The Chinese government has set its 2011 target to reduce the emission of four major<br />

pollutants, cutting them by 1.5 percent year-on-year.<br />

These main pollutants are Chemical Oxygen Demand (COD), sulfur dioxide, ammonia<br />

nitrogen, and nitrogen oxide. Ammonia nitrogen and nitrogen oxide were newly<br />

added to the country’s major pollutants monitoring list in accordance with its environmental<br />

protection plan from 2011 to 2015.<br />

Zhou Shengxian, minister of environmental protection, said on Jan. 13 at a national<br />

meeting on 2010 environmental protection that while experiencing quick economic development,<br />

the country is also facing increasing energy consumption and rising heavy<br />

metal, soil, dangerous waste and chemical pollution.<br />

According to Zhou, China will impose higher pollutant emission standards for<br />

paper-making, textiles, leather, chemical plants and other heavy-polluting industries.<br />

More efforts will also be made to control emissions of motor vehicles, build sewage<br />

processing plants at the county level and continue research on developing technology to<br />

remove sulfur, saltpeter, nitrogen and other polluting materials during industrial manufacturing.<br />

In addition, the country will also issue more policies, such as providing financial<br />

support for processing pollutants and collecting charges over emissions from motor vehicles<br />

on a trial basis, Zhou said. (Xinhua)<br />

Money inflow complicate China’s efforts to tighten policy<br />

China’s foreign exchange reserves hit a record $2.8 trillion in the fourth quarter of<br />

2010. That certainly consolidates what was already the world’s biggest stockpile, but it<br />

also shows that money streaming in from abroad will complicate efforts to tighten policy<br />

at home.<br />

China’s forex reserves climbed nearly 19 percent year on year in 2010. Experts say<br />

the forex increase reflects two things: a recovery in exports, but also the inflow of hot<br />

money. Some say the hot money inflows have impacted the appreciation of the yuan, and<br />

increases in domestic asset prices. These same factors could continue to push up forex<br />

reserves this year.<br />

Zong Liang, General Manager of Strategy & Development Department, BOC said “I<br />

believe China’s forex reserves will hit $3 trillion very soon. The United States is adopting a<br />

quantitative easing policy, some European countries are suffering debt crises and they could<br />

also adopt a similar QE policy. So China’s forex reserves are facing the risk of depreciation.”<br />

Wang Songqi, Deputy Director of<br />

Institute of Finance & Banking, CASS<br />

said “The central bank has to use hedging<br />

tools. It must adjust policies according<br />

to the situation, especially to avoid hot<br />

money inflows.”<br />

Experts suggest the central bank<br />

should further improve the exchange rate<br />

system, by allowing the rate reflect market<br />

supply and demand in a more timely<br />

fashion. They also suggest easing control<br />

on overseas investments, and encouraging<br />

Chinese investors to buy up on foreign<br />

currency. (CNTV)<br />

China gets first overseas<br />

order for LNG ships<br />

China State Shipbuilding Corporation<br />

(CSSC) signed a contract with Exxon<br />

Mobil and Mitsui & Co., Ltd. on Jan. 15<br />

to build four LNG ships (liquefied natural<br />

gas), the nation’s first overseas order for<br />

such an advanced carrier.<br />

Hudong-Zhonghua Shipbuilding<br />

(Group) Co., Ltd., a subsidiary of CSSC,<br />

will build the ships for Mitsui, a Japanese<br />

shipping giant.<br />

The ships are scheduled for delivery<br />

between 2015 and 2016. The fleet will<br />

be used for shipping China’s imports of<br />

liquefied natural gas from Australia and<br />

Papua New Guinea.<br />

In 2009, Exxon Mobil contracted<br />

with China’s major oil and gas producer<br />

PetroChina and refiner Sinopec to transport<br />

exports about 425 tonnes of liquefied<br />

natural gas per year.<br />

7.95t<br />

Figures<br />

New yuan-denominated lending in<br />

China reached 7.95 trillion yuan (about<br />

$1.2 trillion) last year, the People’s Bank<br />

of China (PBOC), the central bank, said<br />

on Jan. 11. (Xinhua)<br />

14.56%<br />

China’s electricity consumption<br />

rose 14.56 percent year on year to well<br />

over 4.19 trillion kWh in 2010, the China<br />

Electricity Council (CEC) said on Jan. 17.<br />

(Xinhua)<br />

1t<br />

China’s tax revenues rose 22.6 percent<br />

to 7.74 trillion yuan (1.17 trillion U.S.<br />

dollars) in 2010 compared to one year<br />

earlier, the State Administration of Taxation<br />

announced on Jan. 9. (Xinhua)<br />

2t<br />

China’s output value of forestry<br />

rose 27 percent last year to more than<br />

2 trillion yuan ($302 billion), a senior<br />

forestry official said on Jan. 5. (Xinhua)<br />

32%<br />

China’s auto sales hit 18.06 mil-<br />

4


A liquefied natural gas carrier is a<br />

tanker ship designed for transporting liquefied<br />

gas at a temperature of minus 163<br />

degrees Celsius, and marks an important<br />

part in the LNG supply chain.<br />

Only a handful of nations, such as<br />

the United States, Japan and the Republic<br />

of Korea, have the ability to build such<br />

ships.<br />

Hudong-Zhonghua Shipbuilding<br />

(Group) Co., Ltd. is China’s only LNG<br />

ship builder. Its first ship was delivered<br />

in April 2008. It has completed 5 vessels,<br />

with one still under-construction.<br />

The company did not disclose the<br />

price of the vessels.<br />

Tan Yajun, general manager of<br />

CSSC, said the company would strive<br />

to deliver the ship with high quality<br />

craftsmanship and on schedule. (Xinhua)<br />

China starts pilot scheme<br />

for settlement of overseas<br />

direct investments in yuan<br />

China announced on Jan. 13 that the<br />

nation’s qualified enterprises and banks<br />

could settle their overseas direct investment<br />

in yuan, a move that could expand<br />

the currency’s global reach.<br />

The People’s Bank of China, or the<br />

central bank, said on its website that,<br />

banks and enterprises which are allowed<br />

to settle the cross-border trade in yuan<br />

are permitted to conduct direct investments<br />

overseas using yuan, or Renminbi.<br />

(Xinhua)<br />

Quotes<br />

“Agricultural efficiency crucial<br />

for food security”<br />

China will maintain more than 90 percent of<br />

its self-sufficiency in grains during the coming<br />

decade by developing agricultural technologies and<br />

improving land use for food production, an agricultural<br />

expert said on Jan. 15.<br />

In 2010, the country saw the seventh consecutive record grain harvest with production<br />

of 546 million tons. The government said current grain stocks exceed 200 million<br />

tons, with grain self-sufficiency standing at 95 percent for the last decade. (China Daily)<br />

“Renminbi not undervalued as real exchange rate increases”<br />

The Chinese currency is not undervalued, if measured with Real Effective Exchange<br />

Rate (REER) based on Unit Labor Cost (ULC), a better way to grasp changes<br />

in competitiveness than looking at nominal exchange rate and REER based on Consumer<br />

Price Index (CPI), the United Nations Conference on Trade and Development<br />

(UNCTAD) said on Jan. 18.<br />

In a press conference presenting UNCTAD’s recent surveys and findings, Heiner<br />

Flassbeck, Director of UNCTAD’s Division on Globalization and Development Strategies,<br />

said according to his calculation based on the ULC oriented approach, the Chinese<br />

currency “is not undervalued”, but rather, “it has appreciated quite significantly in<br />

the last ten years.” (Xinhua)<br />

“China to attract overseas talent to aid economic<br />

restructuring”<br />

China will attract overseas experts in equipment manufacturing and emerging industries<br />

this year to help its economic restructuring process, officials said on Jan. 11.<br />

The country would also recruit overseas talent who could help in the technological<br />

upgrading of enterprises, the development of modern service industries, the research<br />

and development of core technologies and energy saving and emission reduction sectors,<br />

according to officials attending a national conference on the introduction of overseas<br />

expertise.<br />

Ji Yunshi, director of the State Administration of Foreign Experts Affairs, said that<br />

the administration would work with international headhunting companies and employment<br />

agencies to recruit foreign talent for China. (Xinhua)<br />

lion last year, up 32.37 percent from the<br />

previous year, the China Association of<br />

Automobile Manufacturers (CAAM) announced<br />

on Jan. 10. (Xinhua)<br />

82,000<br />

Applications for computer software<br />

copyright protection in China<br />

have almost quadrupled, from nearly<br />

21,500 in 2006 to nearly 82,000 in<br />

2010, the Copyright Protection Center<br />

of China said in a statement on<br />

Jan. 12. (Xinhua)<br />

$152b<br />

China has spent more than 1 trillion<br />

yuan ($151.5 billion) on building<br />

up its civil aviation infrastructure and<br />

in purchasing aircraft over the past<br />

five years, official data showed on<br />

Jan. 11. (Xinhua)<br />

25%<br />

Online games market rose 24.7 percent<br />

in the fourth quarter last year to hit<br />

9 billion yuan ($1.36 billion) with Tencent<br />

Holdings and NetEase.com extending<br />

their market share, iResearch showed<br />

on Jan. 13. (Xinhua)<br />

5


2011<br />

No.495<br />

44<br />

68<br />

84<br />

As the wind-vane to judge the current economic situation<br />

and to draw up the development of macro-economic policies<br />

next year, the central economic work conference is vital for<br />

how to give the direction for the realization of the Twelfth<br />

Five-Year Planning.<br />

International brands are exploring the Chinese market<br />

through acquisitions, as China is becoming a promising<br />

platform for the development of these brands.<br />

Having for long heard the movie Romance on Mt. Lu, which<br />

is claimed to be and famous for the PRC’s first movie with<br />

kiss scene.<br />

REGIONAL <strong>TRADE</strong> AND INVESTMENT<br />

08 ASIA-PACIFIC<br />

12 EUROPE<br />

18 NORTH AMERICA<br />

22 LATIN AMERICA<br />

28 AFRICA<br />

CONGRATULATORY MESSAGES<br />

33 Congratulatory Messages for the Spring Festival<br />

Special report<br />

44 Setting Tone for China Economy in 2011<br />

46 Shift to Prudent Monetary Policy<br />

48 Encourage to Boost Imports<br />

50 Equal Emphasis on the System of Affordable Housing<br />

and Commercial Housing<br />

52 A New Round of Reform on Income Distribution<br />

—Touch the Tender Spot<br />

voices and views<br />

54 Experts’ Views on China Economy of 2011<br />

INDUSTRY<br />

58 China Searching for Something<br />

60 M&A Deals in China Reach Record Levels in 2010<br />

62 China’s Outdoor Industry, Filled with Great Promise<br />

65 China’s Economic Data in 2010 Released<br />

SURVEY<br />

68 China: A Booming Market for Foreign Cosmetics Brands<br />

Technology<br />

74 Alibaba to Expand Supply Network in China<br />

Business TIPS<br />

76 Q&A for Foreign Business Practice in China<br />

Lifestyle<br />

80 The National Little Birch Tree Dance Troupe of Russia<br />

China Tour<br />

THIS IS China<br />

84 Touring Mt. Lu: Feeling Elegance and Poetic Beauty


EYE ON CHINA<br />

90 Spring Festival I Can’t Understand<br />

91 Unforgettable Spring Festival Fireworks<br />

Culture<br />

92 Why Chinese Lunar New Year?<br />

Index of Advertisements<br />

封 二 Ningbo Ruyi Joint Stock Co., Ltd.<br />

宁 波 如 意 股 份 有 限 公 司<br />

01 China National Electric Apparatus Research Institute<br />

中 国 电 器 科 学 院<br />

16 Dalian Kehui Bearing Instrument Co., Ltd.<br />

大 连 科 汇 轴 承<br />

17 Wenzhou Xiaoer Valve Co., Ltd.<br />

温 州 市 孝 尔 阀 门 有 限 公 司<br />

26 Tongxiang Baoyang Lighting Technology Co., Ltd.<br />

桐 乡 市 宝 阳 照 明<br />

27 Zhejiang Zhuyou Bamboo Machine Factory<br />

竹 友 机 械 厂<br />

42 Zhangjiagang Create Mechanical Mannfactuing<br />

Co., Ltd.<br />

张 家 港 市 开 创 机 械 制 造 有 限 公 司<br />

43 Tongxiang Zhongcheng Chemical Industry Co., Ltd.<br />

桐 乡 市 中 诚 化 工 有 限 公 司<br />

56 Baoding Laite Rectifier Co., Ltd.<br />

保 定 莱 特 整 流 器 股 份 有 限 公 司<br />

57 Yangchun Jozi Imp.& Exp. Trade Co., Ltd.<br />

阳 春 市 卓 志 进 出 口 贸 易 有 限 公 司<br />

66 Zhenjiang Hengwei Machine Manufacturing Co., Ltd.<br />

镇 江 恒 威 机 器 制 造 有 限 公 司<br />

67 Hebei MSJC Textile Co., Ltd.<br />

河 北 名 世 锦 簇 纺 织 有 限 公 司<br />

72 Jiangsu Jintan Xinland Diesel Engine Co., Ltd.<br />

金 坛 鑫 田 柴 油 机 有 限 公 司<br />

73 Jiangsu Tiancheng Biochemical Products Co., Ltd.<br />

江 苏 天 成 生 化 制 品 有 限 公 司<br />

78 Hebei Runlai Textile Co., Ltd.<br />

河 北 润 莱 纺 织 有 限 公 司<br />

79 Ningbo Teng Yuan Machinery Co., Ltd.<br />

宁 波 腾 远 机 械 有 限 公 司<br />

88 Nice Group Co., Ltd<br />

纳 爱 斯 集 团 有 限 公 司<br />

89 Heilongjiang Austrian Yu Graphite Group<br />

黑 龙 江 澳 宇 石 墨 集 团<br />

96 Zhanjiang Global Steel Wheel Manufacturing Co., Ltd.<br />

湛 江 环 球 钢 轮<br />

封 底 Anhui Jianghuai Automobile Co., Ltd.<br />

江 淮 汽 车<br />

Cooperation Media<br />

Sponsored by ( 主 管 )<br />

CCPIT( 中 国 国 际 贸 易 促 进 委 员 会 )<br />

Published by ( 主 办 )<br />

Trade Development and Cooperation Center of CCPIT<br />

中 国 国 际 贸 易 促 进 委 员 会 贸 易 推 广 交 流 中 心<br />

社 长 President 杨 晓 东 Yang Xiaodong<br />

总 编 辑 Editor-in-Chief 王 晓 同 Wang Xiaotong<br />

副 社 长 Vice President 石 净 Shi Jing<br />

副 总 编 辑 Vice Editor-in-Chief 孟 燕 星 Meng Yanxing<br />

编 辑 部 副 主 任<br />

Editorial Deputy Director<br />

编 辑 部 Editorial Department<br />

Tel:86-10-68053271<br />

英 文 校 审 English Polisher<br />

杨 蔚<br />

Yang Wei<br />

郭 艳 Guo Yan<br />

李 振 Li Zhen<br />

阎 漫 漫 Yan Manman<br />

竹 子 俊 Zhu Zijun<br />

泰 瑞 · 克 兰 丹 农 ( 美 ) TY Clendenen<br />

经 营 部 总 经 理 石 净 ( 兼 )<br />

Marketing Department Director Shi Jing<br />

副 总 经 理 Deputy Director 白 义 峰 Bai Yifeng<br />

石 林 峰 Shi Linfeng<br />

项 目 经 理 Manager 游 万 龙 You Wanlong<br />

Tel:86-10-88075934 李 小 冬 Li Xiaodong<br />

88075494 丁 秋 珍 Ding Qiuzhen<br />

高 嵩 Gao Song<br />

推 广 部 总 经 理<br />

Distribution Department Director<br />

项 目 经 理 Manager<br />

Tel:86-10-88075342<br />

理 事 会 副 秘 书 长 兼 秘 书 处 主 任<br />

Council Secretariat Director<br />

联 络 专 员 Assistant<br />

Tel:86-10-88075380<br />

李 英 宏<br />

Li Yinghong<br />

王 石 Wang Shi<br />

王 岱 凌 Wang Dailing<br />

杨 复 强<br />

Yang Fuqiang<br />

刘 晓 东 Liu Xiaodong<br />

宋 华 峰 Song Huafeng<br />

戚 英 杰 Qi Yingjie<br />

石 林 Shi Lin<br />

王 飞 Wang Fei<br />

General Distributor For Overseas Subscribers<br />

国 外 发 行 总 代 理<br />

China National Publications Import & Export(Group) Corporation<br />

中 国 图 书 进 出 口 ( 集 团 ) 总 公 司<br />

Add: 16, Gongti East Road Beijing, China<br />

Post Code:100020<br />

地 址 : 北 京 市 朝 阳 区 工 体 东 路 16 号<br />

Tel: 86-10-65066688-8822 65063082<br />

China International Book Trading Corporation<br />

中 国 国 际 图 书 贸 易 总 公 司 (GUOJISHUDIAN)<br />

Add: Box 399, Beijing 100044, China<br />

地 址 : 中 国 北 京 399 号 信 箱 (100044)<br />

国 内 邮 发 代 号 80-799<br />

国 际 邮 发 代 号 SM1581<br />

国 内 统 一 连 续 出 版 物 号 CN11-1020/F<br />

及 国 际 标 准 刊 号 ISSN0009-4498<br />

AD LICENCE No. JXGS/G-0249<br />

广 告 经 营 许 可 证 号<br />

Domestic Price 国 内 订 价<br />

Overseas Price 国 外 订 价<br />

设 计 制 作<br />

印 刷<br />

京 西 工 商 广 字 第 0465 号<br />

16 元 (RMB)<br />

US$5<br />

北 京 锋 尚 制 版 有 限 公 司<br />

北 京 瑞 禾 彩 色 印 刷 有 限 公 司<br />

常 年 法 律 顾 问 北 京 市 天 银 律 师 事 务 所<br />

License Mark of General Administration of<br />

Press and Publication, the People’s Republic of China


ASIA-pACIFIC<br />

<strong>TRADE</strong><br />

China, Israel ink contracts worth about<br />

$100 mln<br />

Enterprises from Israel and Harbin, capital of China’s<br />

northeastern Heilongjiang Province, signed on January 20,<br />

2011 to a package of economic and trade cooperation contracts<br />

valued at 648 million yuan (US$98 million).<br />

This is part of the ongoing 2nd China Harbin-Israel<br />

Cooperation Convention, an economic platform that was designed<br />

to deepen economic and trade cooperation for Chinese<br />

and Israeli enterprises.<br />

Also, 39 Israeli enterprises and 170 local enterprises in<br />

Harbin held talks on Tuesday for potential economic cooperation.<br />

(Global Times)<br />

China overtakes S Korea as world's<br />

largest shipbuilder<br />

The two countries’ total trade volume hit US$1.12 billion<br />

in 2010, up 41.5 percent from about US$791 million in 2009,<br />

according to the statistics from the department of statistics and<br />

planning of the Ministry of Commerce on January 18.<br />

Of the figure, Cambodia’s exports to China worth 56.8<br />

million, increased nearly four folds from US$15 million in<br />

2009 and Cambodia’s imports from China reached US$1.07<br />

billion, up 37.8 percent from US$776 million in 2009.<br />

The increase in trade volume is due to the economic recovery.<br />

Cambodia’s main imports from China are garment raw<br />

materials, machinery, foodstuffs, electronics, furniture, light<br />

products, medicines and cosmetics while Cambodia’s main<br />

exports to China are agricultural products, rubbers, fishery,<br />

timbers, and some garments and textiles. (Xinhua)<br />

China's imports from ASEAN up 44.8 pct<br />

in 2010<br />

China surpassed South Korea to become the world’s<br />

largest shipbuilder in 2010 in terms of shipbuilding capacity<br />

and new orders, according to recently released statistics from<br />

China’s Ministry of Industry and Information in January.<br />

The statistics show that from January to December<br />

2010, China’s shipyards finished building 65.6 million deadweight<br />

tons, an increase of 54.6 percent year on year. They<br />

received new orders exceeding 75 million deadweight tons,<br />

nearly triple the amount of a year earlier.<br />

The great development of the shipbuilding industry in<br />

recent years can be mostly attributed to the increasing capacity<br />

requirements due to economic growth, said an expert from the<br />

economic research center of China’s shipbuilding industry.<br />

China’s shipbuilding enterprises are mainly distributed<br />

among Jiangsu, Shanghai, Zhejing, Shandong and Guangdong,<br />

with Jiangsu ranking first. (People’s Daily Online)<br />

Cambodia’s trade with China up 41.5<br />

pct in 2010<br />

Bilateral trades between Cambodia and China increased<br />

41.5 percent in 2010 compared with that of 2009, official statistics<br />

showed.<br />

China’s imports from the Association of Southeast Asian<br />

Nations (ASEAN) rose 44.8 percent to US$154.56 billion in<br />

2010, said the General Administration of Customs on January<br />

20, 2011.<br />

Since the establishment of the China-ASEAN Free<br />

Trade Area at the beginning of 2010, bilateral trade had<br />

risen 37.5 percent year on year to US$292.78 billion, the<br />

customs said.<br />

ASEAN is China’s fourth largest trading partner, after<br />

the European Union, the United States and Japan.<br />

Mechanical and electrical products accounted for 53.7<br />

percent of all imports.<br />

In 2010,<br />

China’s exports to<br />

ASEAN were up<br />

30.1 percent from<br />

a year earlier to<br />

US$138.22 billion.<br />

China’s trade deficit<br />

with ASEAN saw<br />

a 30.7-fold increase<br />

to US$16.34 billion.<br />

(Xinhua)<br />

8


INVESTMENT<br />

Robust trade between Chinese<br />

mainland and Taiwan<br />

Trade volume between the Chinese mainland and Taiwan<br />

reached US$145.37 billion last year, up an annual 36.9<br />

percent, according to a report by China’s Ministry of Commerce<br />

on January 21, 2011.<br />

The mainland exported US$29.68 billion worth of<br />

products to Taiwan, up 44.8 percent year on year, and imported<br />

US$115.69 billion worth of products from the island,<br />

up 35 percent, figures showed.<br />

The December trade volume between the mainland and<br />

Taiwan increased 4.1 percent from November to US$13.61<br />

billion.<br />

The mainland is Taiwan’s largest export market.<br />

(Shanghai Daily)<br />

Japan’s TEL kicks off new plant in East<br />

China<br />

Japan-based Tokyo Electron Limited (TEL) began<br />

construction of its Chinese joint venture in eastern Jiangsu<br />

Province on January 18, 2011.<br />

The joint venture, Tokyo Electron Kunshan Limited,<br />

has a designed annual capacity of 500 sets of production<br />

equipments for flat panel display (FPD), solar and semiconductor<br />

products, with sales revenue up to 10 billion yuan<br />

(US$1.5 billion).<br />

According to the investment agreement jointly signed<br />

by TEL and Kunshan Economic & Technical Development<br />

Zone, where the joint venture is located, the project has a<br />

total investment of US$400 million with a registered capital<br />

of US$50 million.<br />

First-phase investment will reach US$150 million,<br />

with initial construction covering an area of 100,000 square<br />

meters, according to the agreement.<br />

Kunshan, a city adjacent to Shanghai, has been designated<br />

by the Chinese government as a key FPD industry<br />

promotion base.<br />

Set up in 1963, TEL is a leading supplier of semiconductor<br />

production equipment with a global network of<br />

about 90 locations in 15 countries in the United States, Europe<br />

and Asia. (Global Times)<br />

Record 284 companies invest in Hong<br />

Kong in 2010<br />

Invest Hong Kong of the Hong Kong government<br />

helped a record of 284 companies from Chinese mainland<br />

and overseas set up or expand<br />

in Hong Kong in 2010, with<br />

Chinese mainland continuing<br />

to be the largest single source<br />

of investment by taking 18<br />

percent of the total projects,<br />

the bureau said on Jan. 19.<br />

“Last year’s result was<br />

very encouraging. It demonstrated<br />

a strong vote of<br />

confidence in Hong Kong as<br />

a business location,” Director-<br />

General of Investment Promotion<br />

Simon Galpin said.<br />

Of the 284 completed<br />

projects, Chinese mainland accounted for 52 projects, followed<br />

by the United States with 51, the United Kingdom<br />

with 36, Japan with 19, and Australia with 16. The top three<br />

industry sectors were transport and industrial, tourism and<br />

hospitality, and innovation and technology, the statement<br />

showed.<br />

Last year also marked greater emphasis on green foreign<br />

direct investment, in particular on companies that provide<br />

renewable energy and environmental protection solutions.<br />

Invest Hong Kong will strengthen its promotion efforts in<br />

the mature markets of the United States and the United Kingdom<br />

in 2011, as well as the emerging markets of Chinese mainland<br />

and Russia, said Galpin. (Xinhua)<br />

Chinese hydro power enters Nepal<br />

hydro sector<br />

Nepal’s state–owned, Nepal Electricity Authority<br />

(NEA), has signed a power purchase agreement (PPA) for<br />

commissioning the 50 MW Upper Marshyangdi Hydro Electricity<br />

Project ‘A’ (UMHEP) with Sino Hydro Sagarmatha<br />

Power Company, a Nepal-China joint venture company. This<br />

is the first Chinese investment in hydro project in Nepal.<br />

UMHEP ‘A’ located at Bhulbhule VDC of Lamjung<br />

district will start construction work this winter. It is expected<br />

to be completed in five years at an estimated cost of US$138<br />

million.<br />

“UMHEP is an attractive project compared to other donor-funded<br />

hydro projects as it will generate 50 percent of the<br />

total capacity even during the dry season,” said Diwakar Poudel,<br />

an NEA official. The government issued generation license<br />

for the project after the parties concerned signed the PPA.<br />

The PPA has set the rate of 5.995 cents (approximately<br />

Rs 4.50) per unit taking 2010-11 as the base year. The PPA<br />

rate per unit from the commercial operation date (COD) will<br />

be 6.95 cents. The estimated COD for UMHEP is 2016-17.<br />

(China.org)<br />

9


ASIA-pACIFIC<br />

Promising Bilateral Trade Expansion<br />

Between Malaysia and China<br />

By Alice Yang<br />

H.E. Mr. Iskandar Sarudin<br />

Ambassador of Malaysia to China<br />

According to China Customs,<br />

the total trade value of import<br />

and export between<br />

China and Malaysia reached<br />

US$74.22 billion in the year of 2010,<br />

an impressive increase of 42.8% year<br />

on year. Among them, China’s export<br />

to Malaysia accounted for US$23.81<br />

billion, 21.3% growth upon the last<br />

year, and the import value amounted<br />

to US$50.41 billion, 55.9% increase<br />

compared with 2009. Based on the<br />

cheerful trade exchange between two<br />

countries, China’s Foreign Trade conducted<br />

a special interview with H.E.<br />

Mr. Iskandar Sarudin, Ambassador of<br />

Malaysia to China.<br />

Q<br />

: How did you introduce Malaysia<br />

to Chinese? During your<br />

time in China, what impressed you<br />

most?<br />

A<br />

: There are a lot of elements that<br />

I can put forward in promoting<br />

Malaysia to the world in general and<br />

to China in particular. Malaysia has a<br />

vast area of green forest, beautiful sandy<br />

beaches and islands for eco–tourism.<br />

Apart from that, we can also provide<br />

historical places for the cultural loving<br />

visitors, and shopping haven to satisfy shopaholics. I also believe that our unique cultural<br />

diversity with strong spirit of hospitality will impress the visitors from China<br />

and make their stay in Malaysia an experience that can be cherished forever. In addition,<br />

we offer anything and everything that you wish to see in Asia, as the slogan<br />

of our tourism goes, ‘Malaysia is Truly Asia.’<br />

As for my impression on China, China is an ancient country with thousands<br />

of history. The pace of moderation and development is breathtaking. On top of that,<br />

I admire the hard work and determination of the people of China, by giving their<br />

support to the Government, especially in ensuring the successful organizing of<br />

world events. The year 2010 has seen China has managed to organize successfully<br />

two events in Shanghai and Guangzhou, which is not an easy task to achieve without<br />

the commitment of everybody involved.<br />

Q<br />

: China-ASEAN FTA opened at the beginning of 2010. What influence<br />

has it generated in the cooperation between China and Malaysia?<br />

And what is to be expected in the future?<br />

A<br />

: The full implementation of the FTA between ASEAN and China is a big<br />

leap towards closer regional integration between ASEAN and China. Malaysia<br />

and China have always shared very close bilateral relations particularly in the areas<br />

of trade, investment, tourism, education, cultural and economic cooperation. The<br />

priority would be to further enhance this relation to a higher level of collaboration.<br />

Q<br />

: What are your comments on the mutual trade relationship between<br />

China and Malaysia? What is your hope for the future development?<br />

A<br />

: Malaysia and China continues to foster strong bilateral trade relation and in<br />

2009, total trade between Malaysia and China was valued at US$ 51.838 billion.<br />

It accounted for 2.3% of China’s total trade with the world.<br />

In 2009, Malaysia has emerged as China’s:<br />

• Largest trading partner;<br />

• Second largest export destination;<br />

• Largest source of import.<br />

In terms of ranking, Malaysia was China’s:<br />

• 8th largest trading partner;<br />

• 14th largest export destination;<br />

• 7th largest source of import.<br />

China by the sheer size of its market has vast potential that can benefit Malaysia<br />

and I strongly believe the future for bilateral trade expansion is very promising.<br />

I also encourage businessmen from China to source their products from Malaysia,<br />

which has a thriving manufacturing sector.<br />

Q<br />

: How is the investment situation from China to Malaysia? Which<br />

fields are most welcome for foreign investment there? For those Chinese<br />

enterprises who wish to invest in Malaysia, what recommendation<br />

will you give?<br />

A<br />

: In the first three quarters of 2010, investment inflows from China to Malaysia<br />

reached US$283 million (RM 914 million). In the area manufacturing, investments<br />

worth US$156.3 million were approved in the first 9 months of 2010.<br />

Malaysia continues to offer investment opportunities in a wide range of areas.<br />

10


Potential areas of investment which<br />

offers opportunities for Chinese investment<br />

include manufacturing of basic<br />

metal products; automotive parts and<br />

components; machinery and equipment;<br />

engineering support; medical devices;<br />

healthcare products; pharmaceutical<br />

products; chemical products; halal food<br />

products; solar related component/equipment;<br />

and alternative energy source.<br />

In the area of services, Chinese<br />

firms can consider favourably to set-up<br />

their regional offices in Malaysia. Malaysia<br />

also offers investment opportunities<br />

in the areas of construction, healthcare,<br />

educational services and tourism.<br />

With effect from June 23, 2010,<br />

the China Banking Regulating Commission<br />

(CBRC) had recognised Malaysia<br />

as its 11th approved Qualified<br />

Domestic Institutional Investor (QDII)<br />

investment destination. Fund managers,<br />

securities firms and financial institutions<br />

from China can now avail the Scheme<br />

to explore investment opportunities in<br />

the Malaysian capital market.<br />

Q<br />

: Malaysia is famous for its halal<br />

manufacturing industry. Are<br />

there any cooperation between<br />

China and Malaysia in this field?<br />

What is your view on its future cooperation<br />

and development?<br />

A<br />

: Increasingly, Malaysian businesses<br />

have expressed keen interest to explore<br />

the halal market segment in China.<br />

Currently, Malaysian entrepreneurs<br />

have set-up halal product business operations<br />

either wholly or jointly in Xi’an<br />

and Yinchuan. Malaysia is also providing<br />

training to Chinese entrepreneurs in<br />

the area of halal production awareness.<br />

Apart from collaboration in the<br />

manufacturing of processed halal food<br />

products, there is vast potential to explore<br />

halal meat products from China.<br />

Producers of processed food, and fresh<br />

or frozen meat from China can explore<br />

the potential of obtaining Malaysia’s halal<br />

mark certification for wider market<br />

access and acceptance worldwide.<br />

Q<br />

: As a member country in<br />

ASEAN, what strategic role<br />

does Malaysia play in promoting<br />

closer relationship between China<br />

and ASEAN? Are there any future<br />

plans or on-going programs?<br />

A<br />

: As the first country amongst the<br />

original ASEAN membership to<br />

have established diplomatic relations<br />

with China, Malaysia is especially gratified<br />

at the constructive approach taken<br />

by China in her interaction with ASE-<br />

AN. The relationship is one of a partnership<br />

of equals and has brought mutual<br />

benefits, and we certainly look forward<br />

to the convening of an ASEAN-China<br />

commemorative summit in 2011.<br />

Malaysia has and will continue<br />

to play an active role in strengthening<br />

norms, rules and institutions in<br />

the region. We believe that enhancing<br />

relations require the enhancement of<br />

connectivity between ASEAN and<br />

China. Within ASEAN, Malaysia<br />

will continue to strengthen economic<br />

and people-to-people ties between<br />

ASEAN and China. For example<br />

in 2009, China recorded 4.1 million<br />

tourist arrivals from ASEAN. In turn,<br />

ASEAN received about 4 million Chinese<br />

tourists, and Malaysia continued<br />

to be a regional magnet for Chinese<br />

tourists. We hope to build on this.<br />

On economic relations, it is important<br />

for us to maximise the ASE-<br />

AN-China FTA Framework (ACF-<br />

TA). It would, among others, support<br />

production processes in ASEAN. In<br />

this connection, it is also important<br />

to work together to address concerns<br />

of ASEAN SMEs, particularly as<br />

they relate to China’s manufacturing<br />

prowess. China’s assistance towards<br />

Malaysia Pavilion at Shanghai Expo<br />

strengthening of SMEs in ASEAN<br />

will help to alleviate uneasiness among<br />

our business community over the<br />

ACFTA.<br />

In this connection, I believe that<br />

Malaysia can play a vital role in utilizing<br />

the US$10 billion ASEAN-China<br />

Investment Cooperation Fund to accelerate<br />

the necessary infrastructure<br />

related projects and linkages between<br />

ASEAN and China. Malaysia looks<br />

forward to a mechanism that would<br />

enable Malaysian companies to utilise<br />

the Fund for projects that would enhance<br />

connectivity between ASEAN<br />

and China.<br />

I wish to take this opportunity to<br />

express Malaysia’s appreciation on the<br />

assurance given by Premier Wen Jiabao<br />

at the 13th ASEAN-China Summit<br />

held in Ha Noi, Viet Nam on 29 October<br />

2010, that China would ‘forever<br />

be a good neighbour’. I have noted that<br />

during the past few months, some analysts<br />

have spoken of the threats posed<br />

by China’s growth and assertiveness in<br />

the South East Asian region. We definitely<br />

do not share the same view. Malaysia’s<br />

position is that in an important<br />

and strategic region such as South East<br />

Asia, it is important for all countries,<br />

large and small, to abide by rules and<br />

institutions which we have commonly<br />

established. The strategic role that we<br />

play in promoting closer relationship<br />

between China and ASEAN f lows<br />

from this position.<br />

11


Europe<br />

12<br />

<strong>TRADE</strong><br />

Volkswagen 2010 sales in China up 37%<br />

Europe’s largest carmaker, Volkswagen AG, said January<br />

7 that it had sold 37 percent more vehicles on the Chinese<br />

mainland and Hong Kong in 2010, compared to sales in<br />

2009.<br />

With 1.92 million vehicles<br />

delivered to its customers last year,<br />

Volkswagen had performed beyond<br />

expectation in the past year,<br />

said the European automaker in a<br />

statement.<br />

The company also planned<br />

to invest 10.6 billion euros (about<br />

13.8 billion U.S. dollars) in China<br />

through 2015 to expand its production<br />

capacity and develop new<br />

products, said Karl-Thomas Neumann,<br />

president and chief executive<br />

of Volkswagen Group China,<br />

which operates car ventures with<br />

Chinese state auto groups SAIC Motor and FAW Group.<br />

Neumann also said he expected significant sales in the<br />

country in the coming years and noted that the first Volkswagen<br />

electric cars would hit the roads in China in 2011. (Xinhua)<br />

German pork, egg imports halted<br />

Germany’s dioxin contamination problems deepened<br />

in mid January as China banned pork and egg imports and it<br />

emerged that tainted meat may be in circulation.<br />

A day after authorities ordered the slaughter of 140 pigs<br />

at a German farm after discovering dangerous dioxin levels<br />

in pork for the first time since a scare began early January,<br />

China said its ban was effective immediately.<br />

The country has banned imports of “German-produced<br />

edible pork and egg products,” the country’s product safety<br />

watchdog, General Administration of Quality Supervision,<br />

Inspection and Quarantine, announced in a statement on its<br />

website dated,<br />

saying the move<br />

was aimed at<br />

safeguarding<br />

the health of<br />

consumers.<br />

Authorities<br />

also said<br />

t h e y w o u l d<br />

inspect goods<br />

shipped from<br />

Germany prior<br />

to January 11 and would release them only if found to be safe.<br />

“This is a scandal that is growing bigger and worse every<br />

day,” Johannes Remmel, agriculture minister in the western<br />

state of North Rhine-Westphalia in Germany, told the<br />

Frankfurter Allgemeine Zeitung (FAZ) daily.<br />

Germany exported 7,000 tons of pork to China in 2009,<br />

the German government said, worth some six million euros<br />

($7.78 million).<br />

Previously only South Korea had banned German pork<br />

imports, while Slovakia had halted sales of German eggs and<br />

poultry meat, despite Berlin’s repeated assurances there was<br />

no immediate risk to human health. (Global Times)<br />

China-Russia natural gas pricing agreement close<br />

China may reach an initial agreement with Russia on<br />

natural gas pricing - a subject of great contention for years -<br />

by the middle of 2011, industry experts close to the matter<br />

said.<br />

“We’ve seen that the price gap has narrowed during the<br />

past several months. And we’re cautiously optimistic that the<br />

initial price disagreement will be solved in the first half of<br />

2011,” said Wan Chengcai, director for the Russian Foreign<br />

Relations Development Research Center under the State<br />

Council.<br />

The two countries signed a natural gas contact as early<br />

as 2006, when they agreed to construct two pipelines to<br />

transport a total of 70 billion cubic meters (cu m) of the fuel<br />

annually from Russia to China.<br />

The first pipeline is expected to become operational<br />

this year. But disagreement on the pricing of natural gas has<br />

stalled negotiations for several years.<br />

China has strengthened its cooperation with Russia, the<br />

world's largest energy producer since 2009, in terms of exploration<br />

and supplies of crude oil and natural gas.<br />

The first pipeline linking Siberia in Russia and China’s<br />

Daqing oil field, in the northeast of the country, started operating<br />

on Jan 1. The 16 billion yuan ($2.42 billion) pipeline is<br />

expected to carry 15 million tons of crude oil annually from<br />

Russia to China for 20 years.<br />

“The operation of the oil pipeline is just the beginning<br />

of the countries’ cooperation in the energy sector,<br />

and a deeper and broader partnership can be developed<br />

afterwards,” said Huang Xiaoyong, vice-president of the<br />

Graduate School of the Chinese Academy of Social Sciences.<br />

Russia’s biggest natural gas export destination is Europe.<br />

However a trend through 2008 and 2009 saw demand for the<br />

fuel declining.<br />

In the negotiations with China, Russia hoped to secure<br />

a price similar to that paid by its European customers, but<br />

China insisted on paying a lower price as it did with several<br />

Asian countries such as Turkmenistan.<br />

“China is exploring closer cooperation with Russia in<br />

the field of natural gas. However, as the country’s consumption<br />

power per capita lags far behind its counterparts in the<br />

West, the natural gas price is much lower and cannot compete<br />

with the West,” Huang said.<br />

China is expected to more than double the proportion of<br />

natural gas it consumes on an annual primary basis from the<br />

current level of 4 percent by 2020.<br />

The country may consume 300 billion cu m by then,<br />

leaving a huge market for other overseas providers of the fuel<br />

to tap into.<br />

“We hope the two nations can reach an agreement in<br />

the summer, and see more cooperation in the sectors of hydropower,<br />

nuclear power and coal,” Wan said. (China Daily)


INVESTMENT<br />

BlueStar buys Norwegian Elkem for nearly US$2b<br />

Norwegian conglomerate Orkla ASA announced<br />

January 11 it will sell almost all its Elkem unit to chemical<br />

group China National BlueStar Corp for nearly US$2 billion.<br />

The deal, which also covers a major power contract that<br />

Orkla bought last year, includes Elkem Silicon Materials, Elkem<br />

Foundry Products, Elkem Carbon and Elkem Solar. However,<br />

Orkla said it will continue to own Elkem Energi AS.<br />

A silicon and carbon parts maker, Elkem specializes<br />

in components for solar panels. It also is involved in energy<br />

production in Norway and has 2,500 employees. It reported<br />

revenues of US$1.2 billion in 2009.<br />

Orkla CEO Bjoern M. Wiggen said BlueStar will<br />

provide Elkem an owner “that has the best attributes to take<br />

advantage of the potential of Elkem’s technological strength<br />

and competence,” with solid finances and already well positioned<br />

in the metals and renewables sector.<br />

BlueStar Chairman Ren Jianxin said the deal will benefit<br />

both groups, with Elkem getting access to Asia and the<br />

Chinese market and BlueStar profiting from the Norwegian<br />

company’s management experience and technology.<br />

“We strongly believe in the huge potential for Elkem’s<br />

new solar-grade technology with its leading energy efficiency<br />

and environmental safety characteristics,” he said.<br />

Orkla said the sale will not greatly change Elkem’s main<br />

structure or the way it operates its existing plants.<br />

The deal is subject to regulatory approvals and is expected<br />

to be completed in the first half of this year. (Shanghai Daily)<br />

PetroChina eyes 2 European refineries<br />

PetroChina said January 10 it has agreed to invest in<br />

two refineries in Europe owned by private British firm INEOS<br />

Group Holdings Plc as a major step of its global strategy.<br />

PetroChina said it plans to set up a joint venture<br />

through its wholly-owned subsidiary PetroChina International<br />

Co to run INEOS’s Grangemouth refinery in Scotland<br />

and Lavera refinery in southern France, according to a filing<br />

to the Shanghai Stock Exchange.<br />

PetroChina International Co signed the agreement with<br />

INEOS European Holdings Ltd and INEOS Investments<br />

International Ltd, both wholly-owned unit of INEOS.<br />

PetroChina didn’t disclose the value of the deal or the<br />

stake it will take in the joint venture.<br />

Industry sources said last year the offer for Grangemouth<br />

was about US$6 billion-US$7 billion, Reuters reported<br />

yesterday.<br />

It will be PetroChina’s third overseas refinery deal after<br />

investing US$2 billion in Singapore and Japan.<br />

The proposed joint venture is set to be set up in the first<br />

half this year and will also engage in oil trading.<br />

“PetroChina will inject capital in INEOS and setting<br />

up the joint venture will be very meaningful for the company<br />

to establish a broader business platform in Europe,”<br />

it said in the statement.<br />

Both the two refineries have a processing capacity of<br />

about 200,000 barrels a day. (Shanghai Daily)<br />

Italian retail giant to open five-luxury outlet centers<br />

Italian fashion retail giant RDM announced January<br />

19 that it will invest $910 million to set up five Italianstyle<br />

luxury outlet centers in China under the brand name of<br />

“Florentia Village.”<br />

Jacopo Mazzei, chairman and CEO of RDM Group,<br />

made the remarks when attending a ceremony to mark the<br />

completion of RDM’s first “Florentia Village” in Tianjin.<br />

The fashion outlet slated to open May 19 represents the<br />

launch of RDM’s investment and development strategy in<br />

China, he said.<br />

The outlet covering 60,000 square meters will offer an<br />

average 50-70 percent off domestic retail prices for luxury<br />

brands such as Giorgio Armani and Burberry.<br />

The shopping village, which resembles a 16th century<br />

Italian town, will feature nearly 200 world-renowned brand<br />

name stores with authentic merchandise.<br />

Ivano Poma, chairman and CEO of Florentia Village and<br />

managing director of RDM Asia, said the company chose to<br />

launch the first China outlet in Tianjin because of its potential<br />

to attract a new generation of stylish consumers with growing<br />

disposable incomes in the luxury sector. (Xinhua)<br />

German auto logistics company to enter China<br />

MOSOLF Group, a leading provider of logistical services<br />

in Germany, signed a memorandum of understanding<br />

(MOU) with one subsidiary of Beijing Automobile Works Co.,<br />

Ltd. (BAW) January 18, according to the China Business News.<br />

The two sides plan to build a joint venture (JV) in China<br />

for further develop<br />

the automobile logistics<br />

market in the<br />

country.<br />

China’s fast<br />

growing auto industry<br />

provides plenty of<br />

opportunities for auto<br />

logistics companies,<br />

said Jorg Mosolf,<br />

CEO of MOSOLF.<br />

Business in the<br />

JV will include finished<br />

vehicle logistics, auto<br />

production logistics and<br />

after-sales services, according<br />

to the report.<br />

Logistics companies<br />

are not merely<br />

a channel of distribution. Auto companies need them to provide<br />

differentiated logistical services that can help them deal<br />

with future changes in the auto market, said an insider.<br />

Founded in 1955, MOSOLF has developed from a<br />

forwarding agency into a provider of technical and logistical<br />

services for the international automobile industry. It is also a<br />

logistics provider for manufacturers of agricultural and construction<br />

machines together with car rental, leasing companies<br />

and fleet customers. (Xinhua)<br />

13


Europe<br />

A New Phase for Sino-EU<br />

Economic Relationship<br />

By Cai Hongbo, Han Lili<br />

In 2010, the European economy<br />

began to slowly revive, but the increasingly<br />

sovereign debt crisis made the<br />

process of recovery extremely fragile and<br />

full of uncertainty. Despite the challenges<br />

and adverse factors, the economic<br />

and trade relations between China and<br />

the EU still maintained a good momentum,<br />

bilateral trade volume was substantially<br />

increased and even exceeded precrisis<br />

levels. With both China and the<br />

EU’ entering into the new phase for economic<br />

adjustment, the future is expected<br />

to continue to deepen bilateral economic<br />

and trade cooperation.<br />

Recovering bilateral trade<br />

According to the latest data from<br />

China Customs, in 2010, bilateral trade<br />

volume reached 479.7 billion dollars, an<br />

increase of 31.8% year on year. Among<br />

them, China exported 311.2 billion dollars<br />

to the EU, an increase of 31.8%; China<br />

imported 168.5 billion dollars from<br />

the EU, an increase of 31.9%. China’s<br />

trade surplus was 142.7 billion dollars, up<br />

35.7%, a significant increase. China continues<br />

to maintain the EU’s largest source<br />

of imports and second largest export market.<br />

(See the Table and the Chart.)<br />

Bilateral trade between China and the EU<br />

from Jan. to Dec. 2010<br />

Unit: US$ billion<br />

Import and Export Export Import<br />

Month Absolute Increase±%<br />

Value (y-o-y)<br />

Absolute Increase±%<br />

Value (y-o-y) Absolute Increase±%<br />

Value (y-o-y)<br />

Jan 2010 351.82 -6.99 233.47 -4.6 118.35 -11.4<br />

Feb 2010 302.82 -13.93 205.81 -11.8 97.00 -18.0<br />

Mar 2010 359.44 18.70 214.50 4.2 144.94 49.4<br />

Apr 2010 363.12 1.02 222.97 3.9 140.15 -3.3<br />

May 2010 397.21 9.39 258.61 16.0 138.60 -1.1<br />

Jun 2010 419.42 5.59 272.05 5.2 147.38 6.3<br />

Jul 2010 437.89 4.40 286.73 5.4 151.15 2.6<br />

Aug 2010 426.75 -2.54 279.29 -2.6 147.46 -2.4<br />

Sep 2010 437.01 2.40 288.02 3.1 148.99 1.0<br />

Oct 2010 389.65 -10.84 267.25 -7.2 122.39 -17.9<br />

Nov 2010 454.68 16.69 295.34 10.5 159.34 30.2<br />

Dec 2010 458.46 0.83 289.38 -2.0 169.08 6.1<br />

Source: General Administration of<br />

Customs of the P.R.C.<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Bilateral trade between China and the EU from Jan. to Dec. 2010<br />

Unit: US$ billion<br />

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec<br />

In the first two months of 2010,<br />

the trade volume declined and became<br />

a negative growth year-on-year due to<br />

the financial crisis. In the second quarter,<br />

with the slow recovery of the global<br />

economy, bilateral trade was largely<br />

and quickly increased, a fast, high rate<br />

of growth quarter-on-quarter. In the<br />

third quarter, the growth slowed down<br />

and decreased to a negative growth in<br />

August. In the fourth quarter, trade<br />

volume fluctuated greatly and created<br />

annual record high of negative growth<br />

in October. While in November the<br />

trade rebounded sharply, it came down<br />

slightly in December.<br />

Increasing investment flow<br />

In addition to the rapid recovery<br />

in foreign trade, direct investment between<br />

China and the EU has been<br />

expanding, and investment further<br />

widened. In the first ten months of<br />

2010, the EU invested in China for<br />

5.1 billion dollars, European companies’<br />

investment in China extended from<br />

traditional manufacturing to service<br />

industries, business areas such as mergers<br />

and acquisitions and venture capital.<br />

At the same time, Chinese companies<br />

have also begun to actively invest to Europe.<br />

In the first three quarters of 2010,<br />

Chinese direct investment in the EU in-<br />

Data source: General Administration of Customs of the P.R.C.<br />

creased by more than 5 times. Currently,<br />

many Chinese enterprises go to Europe<br />

to invest in large-scale projects, for example,<br />

China Ocean Shipping (Group)<br />

Company invested in Piraeus Greece,<br />

China Geely Holding Group Co.,<br />

Ltd. acquired Volvo Car Corporation.<br />

Challenges ahead<br />

Ex%Im<br />

Export<br />

Import<br />

However, with the further development<br />

of the bilateral trade and<br />

investment, China-EU economic and<br />

trade relations will inevitably face many<br />

challenges.<br />

First, the Trade Friction. In 2010,<br />

the EU had launched anti-dumping investigation<br />

or imposed high anti-dumping<br />

duties on a variety of Chinese goods.<br />

According to Chinese Ministry of Commerce<br />

statistics, in the first ten months of<br />

2010, the EU launched 10 cases of trade<br />

remedy investigations to China, which<br />

is more than the whole year’s cases of<br />

2009. In addition, the EU also continued<br />

to break its previous range of trade remedy<br />

investigations and the bottom line,<br />

launched the first anti-subsidy investigation<br />

on Chinese goods (coated), involving<br />

goods from light industry, textiles to<br />

electrical, electronics and other high-tech.<br />

In 2010, the EU has become the largest<br />

member in WTO that set trade remedy<br />

investigations to China.<br />

14


Second, Exchange Rate Fluctuation.<br />

In 2010, the wide Euro exchange rate<br />

fluctuation led to a greater exchange loss to<br />

trade enterprises, many enterprises in trade<br />

with Europe therefore did not dare to take<br />

large, long list. Currently, when the Euro<br />

is still unstable because of the impact of the<br />

Euro zone sovereign debt crisis, how to effectively<br />

trade in the EU to avoid exchange<br />

rate risk is the problem before us.<br />

Third, the Technical Barrier. The<br />

EU has continued to emphasize the<br />

environmental and safety standards of<br />

goods, Chinese toys, clothing and motor<br />

vehicles became the main victims.<br />

According to the China Trade Remedy<br />

Information Network statistics, from<br />

January to August 2010, the EU recalled<br />

338 textile and garment goods,<br />

an increase of 117%. Among them, the<br />

recall of Chinese goods was 175, an increase<br />

of 127%.<br />

Fourth, Market Access. In<br />

2010, the EU strengthened the border<br />

enforcement on intellectual property<br />

rights, restricted the companies of nonopening<br />

market countries to participate<br />

in its government procurement. On the<br />

issue of market access, EU put further<br />

pressure on china, which created new<br />

troubles to China-EU trade.<br />

But overall, the positive factors in<br />

China-EU trade are far more than the<br />

disadvantages. In particular, the frequent<br />

high-level visits between China-EU<br />

in 2010 set a more solid foundation for<br />

bilateral cooperation and made the mutually<br />

most important trading partners<br />

relationship strengthened. EU is fully<br />

aware of the importance of China’s market<br />

in pulling its economy out of crisis<br />

and achieving sustainable growth. China<br />

supports the EU’s measures to deal with<br />

the debt crisis and Euro’s stability and<br />

continues to send trade and investment<br />

delegations to visit Europe, to expand<br />

and deepen cooperation. We have good<br />

reason to believe that, with the gradual<br />

improvement of the EU’s economy,<br />

China-EU trade and investment will<br />

also enter into a brighter tomorrow.<br />

(Authors: from School of Economics<br />

and Business Administration,<br />

Beijing Normal University Beijing,<br />

P.R.C.)<br />

Europe<br />

Link 1: FDI in China from EU<br />

Link 2: Chinese Investment in EU<br />

According to Ministry of Commerce,<br />

P.R.C., in January-December 2010, the<br />

top ten countries/regions (calculated by<br />

the actual utilized value of foreign capital)<br />

investing in China were: Hong Kong<br />

(US$67.47 billion), Taiwan (US$6.70 billion),<br />

Singapore (US$5.66 billion), Japan<br />

(US$4.24 billion), USA (US$4.05 billion),<br />

ROK (US$2.69 billion), UK (US$1.64<br />

billion), France (US$1.24 billion), Netherlands<br />

(US$952 million) and Germany<br />

(US$933 million), all of which accounted<br />

for 90.1% of China’s total actual use of<br />

foreign capital.<br />

The actual input of foreign capital<br />

from EU to China accounted for US$6.59<br />

billion, up by 10.71% year-on-year.<br />

According to Ministry of Commerce, P.R.C., Chinese investors<br />

in the year of 2010 made direct investment in EU for US$2.13 billion,<br />

297% increase year on year in a whole excluding investment in Luxembourg<br />

(a tax haven).<br />

By the end<br />

of 2010, the accomplished<br />

turnover<br />

of China’s<br />

foreign contracting<br />

projects in<br />

EU amounted to<br />

US$4.99 billion,<br />

accounting for<br />

5.4% of the total,<br />

5 7. 1% g r o w t h<br />

compared w ith<br />

the previous year.<br />

15


NORTH AMERICA<br />

<strong>TRADE</strong><br />

Data Watch on Sino-US Trade<br />

Throughout 2010<br />

By Yan Manman<br />

Total Export Export to the US Total Import Import from the US<br />

Value(US$ ±% y-o-y Value(US$ ±% y-o-y Value(US$ ±% y-o-y Value(US$ ±% y-o-y<br />

100<br />

100<br />

100<br />

100<br />

million)<br />

million)<br />

million)<br />

million)<br />

Jan. 1,094.8 21.0 187.3 8.4 953.1 85.5 77.6 56.6<br />

Feb. 945.2 45.7 164.0 39.2 869.1 44.7 64.4 18.8<br />

Mar. 1,121.1 24.3 193.3 17.6 1,193.5 66.0 94.6 52.5<br />

Apr. 1,199.2 30.5 204.7 19.4 1,182.4 49.7 86.1 31.7<br />

May 1,317.6 48.5 241.1 44.3 1,122.3 48.3 74.0 28.7<br />

Jun. 1,374.0 43.9 255.1 43.9 1,173.7 34.1 78.1 27.1<br />

Jul. 1,455.2 38.1 273.5 35.0 1,167.9 22.7 79.2 25.2<br />

Aug. 1,393.0 34.4 267.3 42.1 1,192.7 35.2 86.4 37.0<br />

Sep. 1,449.9 25.1 269.8 27.5 1,281.1 24.1 89.9 29.8<br />

Oct. 1,359.8 22.9 251.1 18.0 1,088.3 25.3 70.8 14.9<br />

Nov. 1,533.3 34.9 264.6 32.2 1,304.4 37.7 97.3 35.1<br />

Dec. 1,541.5 17.9 262.1 18.0 1,410.7 25.6 122.2 28.2<br />

(Source: China Customs)<br />

Chia's Export to the U.S. throughtout 2010<br />

Chia's Import from the U.S. throughtout 2010<br />

Value (US$100 million)<br />

300<br />

250<br />

200<br />

150<br />

100<br />

50<br />

0<br />

Value (US$100 million)<br />

140<br />

120<br />

100<br />

80<br />

60<br />

40<br />

20<br />

0<br />

Jan.<br />

Feb.<br />

Mar.<br />

Apr.<br />

May<br />

Jun.<br />

Jul.<br />

Aug.<br />

Sep.<br />

Oct.<br />

Nov.<br />

Dec.<br />

Month<br />

Month<br />

(Source: China Customs)<br />

Chia's Total Export to All the Countries Each<br />

Month throughtout 2010<br />

Value (US$100 million)<br />

2,000.00<br />

1,500.00<br />

1,000.00<br />

500.00<br />

0.00<br />

Jan.<br />

Feb.<br />

Mar.<br />

Apr.<br />

May<br />

Jun.<br />

Jul.<br />

Aug.<br />

Sep.<br />

Oct.<br />

Nov.<br />

Dec.<br />

Jan.<br />

Feb.<br />

Mar.<br />

Apr.<br />

May<br />

Jun.<br />

Jul.<br />

Aug.<br />

Sep.<br />

Oct.<br />

Nov.<br />

Dec.<br />

(Source: China Customs)<br />

Chia's Total Import from All the Countries<br />

Each Month throughtout 2010<br />

Value (US$100 million)<br />

1500<br />

1000<br />

500<br />

0<br />

Jan.<br />

Feb.<br />

Mar.<br />

Apr.<br />

May<br />

Jun.<br />

Jul.<br />

Aug.<br />

Sep.<br />

Oct.<br />

Nov.<br />

Dec.<br />

Month<br />

Month<br />

(Source: China Customs)<br />

(Source: China Customs)<br />

18


INVESTMENT<br />

China invests in Canada oil project<br />

China is helping to finance the development of a proposed<br />

$5.51 billion dollar oil pipeline to Canada’s West Coast<br />

that would open the Asian market to Canadian crude, which is<br />

now chiefly consumed by the U.S.<br />

State-owned China Petroleum & Chemical Corp., or<br />

Sinopec, is among a consortium of Canadian oil producers and<br />

Asian refiners investing $100 million in Enbridge Inc.’s proposed<br />

Northern Gateway pipeline, Enbridge Chief Executive Pat Daniel<br />

said during a Web cast investor conference on January 20.<br />

The Northern Gateway pipeline would pipe an average<br />

of 525,000 barrels of crude oil a day from Canada’s oil-sands<br />

region to a port in British Columbia, from which it would be<br />

shipped to Asian markets. Regulators aren’t expected to rule<br />

on whether the project can go forward until next year. If approved,<br />

construction is scheduled to be completed in 2016.<br />

Canada’s oil sands hold an estimated 170 billion barrels of<br />

oil, making it the second-largest oil reserve in the world, after<br />

Saudi Arabia’s. The U.S. is the only export market for Canadian<br />

crude oil, and Canada is the U.S.’s largest single supplier.<br />

“We think it is hugely in Canada’s national best interest<br />

to have a second outlet for our crude oil,” Mr. Daniel said, ”...so<br />

that we can become a price-maker with regard to crude-oil<br />

pricing, instead of a price-taker.”<br />

Sinopec and other investors have put up $100 million to<br />

help Northern Gateway get through the regulatory process,<br />

which includes producing environmental-impact studies and<br />

consulting with native and environmental groups — some of<br />

which oppose the project.<br />

Mr. Daniel said Enbridge itself has already spent $100<br />

million on the regulatory process. The Calgary-based pipeline<br />

company applied for approval to build Northern Gateway in<br />

May, and expects Canada’s federal energy regulator to approve<br />

it by the middle of 2012.<br />

The proposal has met fierce criticism from native groups<br />

and environmental nongovernmental organizations. Some<br />

warn of the risk of spills from the pipeline or from oil tankers,<br />

while others are chiefly opposed to further growth of the oilsands<br />

industry, which has come under fire for its substantial<br />

greenhouse-gas emissions and fears of water contamination.<br />

Mr. Daniel said he is confident Enbridge could win over<br />

opposition. The company in November proposed giving a 10%<br />

equity stake to native groups in an attempt to win them over,<br />

Daniel said. (Wall Street Journal)<br />

ICBC acquires 80% of Bank of East Asia USA<br />

The Industrial and Commercial Bank of China (ICBC)<br />

and Hong Kong-based Bank of East Asia had reached and signed<br />

an agreement in which ICBC would pay 140.23 million U.S.<br />

dollars to buy 80 percent interest of Bank of East Asia USA, the<br />

Hong Kong bank said late on January 23 in a statement.<br />

Bank of East Asia will retain the remaining 20 percent<br />

stake in Bank of East Asia USA, and the two banks signed the<br />

agreement in Chicago on Jan. 21, according to the statement.<br />

Upon completion of the transaction, Bank of East Asia<br />

will have the put option to sell its remaining shares to ICBC in<br />

accordance with the terms and timeline specified in the agreement,<br />

it said.<br />

Both ICBC and Bank of East Asia are seeking the necessary<br />

regulatory approval in the U.S. and China. Once the deal<br />

was completed, ICBC would be responsible for the operation<br />

and management of Bank of East Asia USA.<br />

The transaction will create a win-win situation for both<br />

parties, said ICBC Chairman Jiang Jianqing.The acquisition<br />

would enable ICBC to establish a solid presence in the U.S.<br />

With a commercial bank license in the U.S., ICBC can further<br />

expand its retail banking business and operating network<br />

across the nation, and ultimately enhance its market position,<br />

he said.<br />

Bank of East Asia Chairman and Chief Executive David<br />

Li said the transaction will further optimize the allocation of<br />

the bank’s resources and strengthen financial services in the<br />

major markets where Bank of East Asia operates.<br />

Successful completion of the transaction is subject to<br />

approval from China Banking Regulatory Commission, the<br />

Hong Kong Monetary Authority, and U.S. Federal Reserve<br />

Board, according to the statement. (Xinhua)<br />

CSR, GE to form joint venture<br />

Chinese railway equipment maker CSR Corporation<br />

Ltd. and US General Electric Co. will form a joint venture<br />

in the U.S. with a high-speed railway technology transfer, according<br />

to a memorandum signed between China’s Ministry of<br />

Railway and GE.<br />

As early as December, CSR announced it would set up a<br />

$100 million 50-50 joint venture with GE to bid for US highspeed<br />

railway and urban rail projects.<br />

The venture hopes to win two high-speed railway projects<br />

in Florida and California, and with its strong position in highspeed<br />

technology, CSR will expand the venture’s reach to other<br />

U.S. projects and markets outside the U.S., analysts said.<br />

But it is unknown what technologies will be transferred<br />

and how much GE will pay for them. If the deal is done, it will<br />

be the first time China exports its high-speed rail technologies.<br />

(China.org.cn)<br />

China, US reach $45 billion export deals<br />

China and the United States on January 19 agreed<br />

on $45 billion in US export deals and to give US companies<br />

greater access to China’s $88 billion-plus government contracts<br />

market at the start of President Hu Jintao’s four-day state visit.<br />

White House officials said the agreements included a $19<br />

billion contract to buy 200 Boeing aircraft for delivery between<br />

2011 and 2013.<br />

“From machinery to software, from aviation to agriculture,<br />

these deals will support some 235,000 American jobs —<br />

and that includes many manufacturing jobs,” US President<br />

Barrack Obama said at a joint press conference with Hu.<br />

Another deal involving GE builds on an existing partnership<br />

with the Chinese Ministry of Railways to bring Chinese<br />

high-speed rail technology to the United States, and for GE to<br />

manufacture locomotives for China.<br />

The White House also announced deals in various stages<br />

of development involving Honeywell, Caterpillar, Westinghouse<br />

Electric, a unit of Japan’s Toshiba Corp, and other companies.<br />

(China Daily)<br />

19


NORTH AMERICA<br />

“The Root Actually Lies in the<br />

Relations between Capital and Labor”<br />

—An Exclusive Interview with Dr. Tu Xinquan, Professor and Vice Dean of WTO<br />

Research Institute, University of International Business and Economics<br />

By Yan Manman<br />

Dr. Tu Xinquan<br />

Professor and Vice Dean of WTO Research Institute, University<br />

of International Business and Economics<br />

On January 21, President Hu Jintao concluded his<br />

state visit to the US. And the international communities<br />

had closely watched this visit, commenting<br />

that it was a successful visit, which bore substantial<br />

fruit and is of great significance for the future trend<br />

of Sino-US relations. In terms of the economic and trade ties,<br />

China and the United States agreed on $45 billion in US export<br />

deals to China and to give US companies’ greater access<br />

to China’s $88 billion-plus government contracts market.<br />

Does this mean the conflict and dispute afflicted trade<br />

relations between China and US will be changed in the following<br />

years? What difficulties still lie ahead on the way of<br />

Sino-US cooperation? And can China’s huge trade surplus<br />

with US be gradually settled with the US’s growing export to<br />

China and Chinese companies’ increasing investment in the<br />

US? Concerning these issues the journalist of China’s Foreign<br />

Trade made an exclusive interview with Dr. Tu Xinquan, professor<br />

and Vice Dean of WTO Research Institute, University<br />

of International Business and Economics, who was an expert<br />

in studying Sino-US economic and trade relationship.<br />

CFT: On January 21, President Hu Jintao concluded<br />

his state visit to the US. And the international communities<br />

commented that it was a successful visit, which bore substantial<br />

fruit and is of great significance for the future trend of<br />

Sino-US relations. In terms of the economic and trade field,<br />

how do you comment on President Hu’s visit? What do you<br />

think is the most significant meaning of this visit?<br />

Dr. Tu: This visit in general was positive and the basic<br />

tone was cooperation. The most important meaning of this<br />

visit was to mitigate the tension in the past two years and lay<br />

foundation for the cooperation between China and the US in<br />

the coming years.<br />

Obama visited China at the end of 2009, which actually<br />

did not have produced positive influence. And later<br />

the Cheonan Incident further worsened the relationship.<br />

Last year, the Sino-US relations were mostly confrontation,<br />

whether in the eyes of political circle, business communities<br />

or academia. However, this time governments of the two<br />

countries reached a tacit understanding. Chinese government<br />

lowered its posture to assure the US; and signed with the US<br />

substantial benefit, I mean, the big deals of US$45 billion;<br />

while the US valued President Hu very much with the highest<br />

standard state diplomatic etiquettes. Besides, Chinese<br />

Government also pledged to coordinate with the US on the<br />

North Korea issue. The two sides reached an agreement over<br />

cooperation, and reversed the trend of worsening relationship<br />

in the past year. And in the second half of 2011, the US Vice<br />

President Biden and China Vice President Xi Jinping would<br />

exchange visit, which actually aimed at fixing the orientation<br />

of Sino-US relationship in future.<br />

Right now, neither China nor the US admitted the socalled<br />

G2, but as a matter of fact, this kind of situation was<br />

forming, well, in my personal opinion. In his State of Union<br />

address on January 25, Obama mentioned China for four<br />

times within one hour. What’s more, he admitted the competition<br />

between China and the US, but he also stressed that<br />

the US should work hard to strengthen itself instead of containing<br />

China. So seen from the State of Union address, the<br />

signal that the US Government conveyed was also very positive<br />

and cooperative, which further echoed President Hu’s<br />

Visit.<br />

Cooperation will be the keynote of Sino-US relations<br />

in the coming several years from now on. Certainly China<br />

and the US will further the economic and trade cooperation<br />

in future. However, it doesn’t mean the trade disputes will be<br />

reduced or eased in the years to come.<br />

CFT: In order to add job opportunities, Obama Ad-<br />

20


ministration proposed National<br />

Export Initiative (NEI), placing<br />

expanding export as one priority of<br />

its work. On the contrary, China,<br />

in order to deal with the huge trade<br />

surplus, began to list increasing<br />

import in its 12th five year plan. In<br />

this view, Sino-US economic and<br />

trade cooperation had a foundation<br />

of mutual demand. Theoretically, it<br />

is true. But what would be the concrete<br />

integration point in reality?<br />

What are the major barriers?<br />

Dr. Tu: Yes, it is true theoretically.<br />

But there are indeed some paradoxes. First, the US government<br />

proposed the NEI and set the goal of its export, but<br />

it didn’t issue the concrete implementing steps or measures.<br />

This made me doubt the effect of NEI. I met an American<br />

expert in this field a few days ago, and when we talked about<br />

this issue, he expressed the same questioning.<br />

You know, there are two aspects to do in order to increase<br />

the export. One is to strengthen one’s own industrial<br />

competitiveness and the other is to open export market,<br />

which demands trade liberalization. The US government<br />

mentioned improving its strength and capturing the height of<br />

emerging industries. In opening the export market, the US<br />

needs trade liberalization, not only bilaterally but more multilaterally.<br />

However, the US government has been keeping a<br />

negative attitude over the Doha negotiation. And the TPP<br />

still did not have clear goals and progress. So I really question<br />

its NEI.<br />

The second problem is that what the US will sell to China.<br />

You know, by now, Miscellaneous products( category 99),<br />

according to the export and import goods classification, are<br />

still the category with the largest amount that the US sold<br />

to China. All kinds of scraps accounted for a large portion of<br />

FOR THE US SIDE, THEY<br />

ALSO SHOULD SEE THE<br />

SOURCE OF CHINA’S <strong>TRADE</strong><br />

SURPLUS. IT IS NOT THE<br />

PROBLEM BETWEEN CHINA<br />

AND THE US. THE ROOT<br />

ACTUALLY LIES IN THE<br />

RELATIONS BETWEEN THE<br />

CAPITAL AND THE LABOR.<br />

this category. Besides the Miscellaneous<br />

products, mechanical equipment, particularly<br />

the electric equipment, and the<br />

agricultural products are what the US<br />

mainly sold to China. So the question is<br />

what else the US could export to China?<br />

For its export control, many products the<br />

US bears the comparative advantage over<br />

China could not be exported to China.<br />

Then what else? For the traditional manufactured<br />

products, the US does not have<br />

the comparative advantage obviously. So<br />

the US companies moved to China and<br />

manufactured goods, which then was<br />

exported back to the US. Even the high-tech ipods are also<br />

not produced in the US, but in China. So how does the US<br />

increase its export to China?<br />

CFT: So just as you mentioned, the ipods are produced<br />

in China and then back to the US. Actually a large portion<br />

of China’s trade surplus were produced in this way, and the<br />

surplus creators are those large MNCs, including quite a few<br />

US MNCs. However, the US government always pressed<br />

China in trade issues taking China’s huge trade surplus with<br />

the US as the so-called “evidence”. So how do you comment<br />

on China’s trade surplus with the US?<br />

Dr. Tu: You are right. China just bore a bad name of<br />

having huge trade surplus, but actually share a very small<br />

portion of benefit. Take the ipod as an example. Chinese<br />

companies only earn 5% of the added-value. There are<br />

complaints over this in China. I think there is nothing to<br />

complain. You still don’t have the capacity to take the 95%<br />

added-value, that’s your problem. And those MNCs chose<br />

to locate their production here for they thought the investment<br />

environment was good for them to invest. However,<br />

for the US side, they also should see the source of China’s<br />

trade surplus. It is not the problem between China<br />

and the US. The root actually lies in the relations<br />

between the capital and the labor. Capital’s nature<br />

of going after profit means that it would move to<br />

the place it can maximize the profitability. For the<br />

low labor cost and other factors, the US MNCs<br />

moved its production from its home to China.<br />

This kind of industrial transfer caused the unemployment<br />

in its home country, or the labor had<br />

to shift to the third industries. You know, in the<br />

US, the income of the employees in the average<br />

third industries is comparatively lower than in the<br />

second industries. So in either situation, the sense<br />

of happiness would be reduced in general. They<br />

thought it was Chinese who scrambled their jobs.<br />

So China’s huge surplus became one target for<br />

them to lodge their complaint. Actually, to solve<br />

this problem, China has nothing to help. Even<br />

though China’s huge surplus is reduced a lot, it<br />

does not necessarily mitigate the US’s unemployment.<br />

Their problems can only be addressed by<br />

themselves.<br />

21


<strong>TRADE</strong><br />

China, Chile celebrate 40th anniversary of<br />

diplomatic ties<br />

China and Chile on December 8, 2010 celebrated the<br />

40th anniversary of diplomatic ties at a reception in Beijing.<br />

The Chinese People’s Association for Friendship<br />

with Foreign Countries (CPAFFC) and the China-Latin<br />

America and Caribbean Friendship Association jointly<br />

held the reception.<br />

Almost 60 guests attended the event, including<br />

Abdul’ahat Abdulrixit, vice chairman of the National<br />

Committee of the Chinese People’s Political Consultative<br />

Conference, other Chinese officials, as well as<br />

Chilean experts and overseas students in China.<br />

Addressing the reception, Li Xiaolin, vice president<br />

of the CPAFFC, said Chile was the first country<br />

in South America to forge diplomatic relations with new<br />

China and the first in that region to recognize China’s<br />

market economy status and sign a bilateral free trade<br />

agreement with China. China and Chile established diplomatic<br />

ties in 1970.<br />

In the years since 1970, China-Chile relations have<br />

developed smoothly, with frequent high-level visits as well<br />

as exchanges and cooperation in various areas, especially in<br />

the cultural, education, economic and trade sectors, Li said.<br />

Chile is China’s second biggest trade partner in Latin<br />

America and China is Chile’s largest trade partner. Bilateral<br />

trade volume rose 2.1 percent to US17.72 billion in<br />

2010.<br />

China and Chile forged a comprehensive cooperative<br />

partnership in 2004. China-Chile non-governmental exchanges<br />

have growth in strength over the years, Li added.<br />

Chile’s ambassador to China Luis Schmidt Montes, spoke<br />

highly of the development of Chile-China relations. He<br />

said Chile would like to further expand its cooperation<br />

with China as the two countries have much to share with<br />

each other. (Xinhua)<br />

Brazil ups rates and signals more<br />

tightening<br />

Brazil’s central bank raised interest rates by 50 basis<br />

points and signalled further tightening in the weeks to<br />

come as Latin America’s biggest economy seeks to rein in<br />

a worrying surge in inflation.<br />

In a hawkish statement, the central<br />

bank increased the benchmark Selic rate to<br />

11.25 per cent in a move that could lead<br />

to further pressure on Brazil’s currency,<br />

the real, to appreciate against the dollar.<br />

The rate increase was the beginning<br />

of “a process of adjustment<br />

in the benchmark interest rates<br />

whose effects, coupled with macroprudential<br />

measures, will contribute<br />

to a convergence of inflation to<br />

the target trajectory”, the central bank<br />

said.<br />

The move will ratchet up pressure on the new government<br />

of President Dilma Rousseff to make politically difficult<br />

cuts in government spending, which is partly blamed<br />

for recent rises in inflation.<br />

Consumer prices in Brazil rose more than economists<br />

expected in December, contributing to year-end inflation<br />

of 5.91 per cent, the fastest increase for a calendar year in<br />

six years.<br />

The central bank’s target for inflation is 4.5 per cent,<br />

plus or minus 2 per cent, leading to expectations among<br />

traders in the futures market that rates could reach as<br />

much as 13.25 per cent this year, according to Bloomberg<br />

data. Brazil already has the highest real interest rates,<br />

policy rates adjusted for inflation, of any large economy.<br />

Ms Rousseff has made lowering rates one of her priorities<br />

but must first reverse an increase in the government<br />

budget during the past two years, when Brazil spent more<br />

to counter the effects of the global financial crisis and then<br />

entered an election year.<br />

High interest rates and rapid economic growth also<br />

have attracted hot-money flows from foreign investors,<br />

driving an appreciation of the real against the dollar of almost<br />

40 per cent in two years.<br />

“By most metrics, Brazil’s economy closed 2010 overheating,”<br />

wrote Tony Volpon, emerging markets economist<br />

with Nomura Securities. Ms Rousseff’s first act on coming<br />

to office has been to try to combat the appreciation of the<br />

real with measures designed to damp speculation on the<br />

currency.<br />

Brazil’s strong exchange rate contributed to a 40 per<br />

cent increase in imports last year, which domestic manufacturers<br />

say is threatening to drive them out of business.<br />

Ms Rousseff has also promised stringent budget cuts to be<br />

implemented next month but analysts believe she needs to<br />

act more quickly to convince markets.<br />

Nomura’s Mr Volpon said he expected interest rates<br />

to increase 150bp during this tightening cycle.<br />

“The government’s incorrect emphasis of the ‘currency<br />

war’ over the need to detail its fiscal constraints has once<br />

again put the central bank in a tough spot,” Mr. Volpon<br />

said. (Financial Times)<br />

22


INVESTMENT<br />

Latin America Lessons for Euro zone<br />

to Avoid Lost Decade<br />

By Komal Sri-Kumar<br />

Despite a €110bn bail-out programme that the European<br />

Union and the International Monetary Fund<br />

arranged in early May, Greek debt yields remain<br />

elevated. Ten-year Greek debt yielded around 11.5<br />

per cent on December 13, 2010, 8.5 percentage points over<br />

comparable German obligations.<br />

The Greek bail-out has been followed by a surge in<br />

yields on Irish, Portuguese and Spanish debt as investors<br />

shunned those obligations as well. In understanding this “debt<br />

contagion,” it is useful to examine the characteristics of the<br />

region’s debt crisis, as well as compare it with the experience<br />

of Latin American economies through most of the 1980s.<br />

Today, many of the once debt-ridden countries such as Brazil<br />

are growing rapidly, have ample foreign exchange reserves,<br />

and have become significant creditors to other countries.<br />

How did this transformation occur?<br />

The euphoria following the formation of the euro zone<br />

led some lenders to believe that there was no greater sovereign<br />

risk in Greece than in Germany, significantly increasing<br />

exposure to the weaker economies. Similarly, in the 1970s,<br />

foreign banks believed global capital market integration had<br />

eliminated Latin American country risk. Symptomatic of the<br />

era was the oft-quoted statement by the then chairman of<br />

Citicorp, Walter Wriston: “Countries don’t go bust.”<br />

I followed the situation closely as a country risk analyst<br />

as loans made at f loating interest<br />

rates became unserviceable after<br />

global interest rates doubled after<br />

1979. In August 1982, Mexico was<br />

the first to declare that it could not<br />

make principal and interest payments<br />

as scheduled. Brazil, Argentina and<br />

most of the region followed. The<br />

IMF and the US Treasury attempted<br />

to defuse the debt contagion by imposing<br />

austerity and adding to the<br />

countries’ debt. However, the situation<br />

worsened with sharp devaluations<br />

and a deep recession. The ratio<br />

of Mexico’s net public debt to GDP<br />

surged from 34 per cent in 1981 to<br />

81 per cent by 1986.<br />

The situation started to improve<br />

only when Nicholas Brady, US<br />

Treasury Secretary, offered a plan in<br />

March 1989 for creditors to accept<br />

“haircuts”, either through a principal<br />

reduction but maintaining market<br />

interest rates, or by keeping the face value of the loans but<br />

substantially lowering interest rates. Mexico repaid the “Brady<br />

Bonds” in full in 2003, some 15 years ahead of schedule.<br />

The Latin American crisis was a solvency issue rather<br />

than a liquidity issue. A significant portion of the loans the<br />

nations received in the 1970s was used to finance wasteful<br />

consumption, or eventually landed in Miami and New York<br />

based banks due to capital flight. They were no longer available<br />

to service debt. We also learned that these countries<br />

could not generate sustainable economic growth, or create<br />

jobs, until the debt levels were reduced.<br />

Both these conclusions are relevant to resolving problems<br />

that southern Europe and Ireland face today, and call<br />

for a similar programme to reduce the level of debt. Irish real<br />

estate developers borrowed at low interest rates because of the<br />

perception that euro zone membership eliminated risk of default.<br />

The developers, and the Irish banks which lent to them,<br />

can no longer service debt since building values have crashed.<br />

With Ireland due to pay a relatively high average interest rate<br />

of 5.8 per cent on the new funds, its debt is projected to rise<br />

from 99 per cent of GDP this year, to 108 per cent in 2013.<br />

The budget measures will likely lead to negative growth in<br />

2011 following three successive years of GDP declines.<br />

In the case of Greece, the €110bn programme announced<br />

in May requires it to lower the public sector budget<br />

deficit from over 15 per cent of GDP in 2009 to less than 9<br />

per cent this year. The unemployment rate will rise to almost<br />

15 per cent by 2012 according to the IMF, and could eventually<br />

jump to 20 per cent.<br />

The Latin American experience also suggests that<br />

there will be adverse implications for<br />

European debt and equity markets.<br />

The deterioration in debt ratios will<br />

discourage voluntary lending to the affected<br />

euro zone countries and, in the<br />

absence of functioning capital markets,<br />

those governments will become<br />

permanent supplicants for official aid.<br />

Poor economic growth prospects will<br />

dampen equity market performance as<br />

well since an increasing percentage of<br />

savings will be destined toward debt<br />

service rather than domestic investments.<br />

The vicious cycle of austerity,<br />

declining GDP and worsening debt<br />

ratios means that there will be no selfcorrecting<br />

cure for the malaise in debt<br />

and equity markets.<br />

In the absence of debt reduction,<br />

the 2010s could become a “lost<br />

decade” for some euro zone countries,<br />

much as the 1980s turned out to be for<br />

Latin America. (Financial Times)<br />

23


Trade Data Watch<br />

in Latin America<br />

By Li Zhen<br />

Nowadays, Latin American countries are increasingly<br />

of great importance to China in terms of<br />

economic and trade relations. Take Brazil for<br />

example, it has become China’s most important<br />

partner, both as a market for Chinese goods and as a source<br />

of raw materials. Brazil supplies some 45% of all China’s<br />

soybean imports and is also the source for other agricultural<br />

products, as well as iron ore and petroleum. It has becomes<br />

clear that China’s trade with Latin America has fuelled a<br />

boom in the region’s export sectors in countries such as Argentina,<br />

Brazil, Chile, Peru and Venezuela.<br />

From the beginning of 2011, China’s Foreign Trade<br />

magazine will keep a close look on what happened in Latin<br />

American countries’ trade agenda. In this issue, we pick<br />

three countries, namely Mexico, Peru and Venezuela, for<br />

your reference.<br />

Mexico<br />

Mexico reported a trade deficit equivalent to US$102<br />

million in November of 2010. Mexico is the biggest exporter<br />

and importer in Latin America. Mexican trade is<br />

fully integrated with that of its North American partners:<br />

close to 86% of Mexican exports and 50% of its imports are<br />

traded with The United States and Canada. Mexico’s major<br />

exports are: manufactured goods, oil and oil products, silver,<br />

fruits, vegetables, coffee and cotton. Mexico imports mainly<br />

include metal working machines, steel mill products, agricultural<br />

machinery and electrical equipment.<br />

Mexico exports were worth US$2.815 billion in November<br />

of 2010. Mexico is the biggest exporter in Latin<br />

America. Mexico’s major exports are: manufactured goods,<br />

oil and oil products, silver, fruits, vegetables, coffee and cotton.<br />

Mexican trade is fully integrated with that of its North<br />

American partners: 82% of Mexican exports are with the<br />

United States.<br />

Mexico imports were worth US$2.825 billion in November<br />

of 2010. Mexico is the biggest importer in Latin<br />

America. Mexico imports are mainly metal working machines,<br />

steel mill products, agricultural machinery, electrical<br />

equipment, car parts for assembly, repair parts for motor<br />

vehicles and aircrafts. Its main import partner is United<br />

States. Mexico also imports from European Union, China<br />

and Japan.<br />

Figure 1 Mexico Balance of Trade in 2010 (Jan.-Nov.)<br />

(Million USD)<br />

600<br />

400<br />

200<br />

0<br />

-200<br />

-400<br />

-600<br />

-800<br />

-1000<br />

-1200<br />

Jan<br />

Feb Mar Apr May Jun Jul Aug Sep Oct Nov<br />

Data Source: TradingEconomics.com<br />

Figure 2 Mexico’s Imports and Exports (IM/EX) in<br />

2010 (Jan.-Nov.) (Billion USD)<br />

3<br />

2.5<br />

2<br />

1.5<br />

1<br />

0.5<br />

0<br />

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov<br />

Data Source: TradingEconomics.com<br />

Figure 3 Peru Balance of Trade in 2010 (Jan.-Oct.)<br />

(Million PEN)<br />

900<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Jan Feb Mar Apr May Jun Jul Aug Sep Oct<br />

EX<br />

IM<br />

Data Source: TradingEconomics.com<br />

24


Peru<br />

Peru reported a trade surplus equivalent to 424 million<br />

PEN in October of 2010. Peru’s major exports are fish products,<br />

gold, silver, copper, zinc, lead, coffee, asparagus, and<br />

textiles. Peru’s imports mainly petroleum and petroleum<br />

products, plastics, machinery, vehicles, iron and steel, wheat<br />

and paper. Its main trading partners are: the United States,<br />

European Union, China and Brazil.<br />

Peru exports were worth US$3.083 billion in October<br />

of 2010. Peru’s major exports are fish products, minerals<br />

(gold, silver, copper, zinc, lead), agricultural products (coffee,<br />

asparagus), petroleum products, and textiles. Peru’s main<br />

exports partners are the United States, European Union and<br />

China.<br />

Peru imports were worth US$2.659 billion in October<br />

of 2010. Peru’s major imports are petroleum and petroleum<br />

products, plastics, machinery, vehicles, iron and steel, wheat<br />

and paper. Its main import partners are United States, China,<br />

European Union, Brazil and Ecuador.<br />

Venezuela<br />

Venezuela reported a trade surplus equivalent to<br />

US$74.46 billion in the third quarter of 2010. The petroleum<br />

sector accounts for around 80% of Venezuela’s export<br />

earnings. Thanks to petroleum exports, the country usually<br />

posts a trade surplus. Venezuela imports mostly raw materials,<br />

machinery and equipment, transport equipment and<br />

construction materials. Its main trading partners are: the<br />

United States (49% exports, 24% imports), European Union<br />

and Brazil.<br />

Venezuela exports were worth US$15.49 billion in the<br />

third quarter of 2010. The economy of Venezuela is based in<br />

large part on oil. The petroleum sector accounts for around<br />

80% of export earnings. Venezuela also exports steel, aluminum,<br />

transport equipment, textiles, apparel, beverages,<br />

and foodstuffs. The United States is Venezuela’s leading<br />

trade partner.<br />

Venezuela imports were worth US$9397 billions in the<br />

third of 2010. Venezuela imports mostly raw materials, machinery<br />

and equipment, transport equipment and construction<br />

materials. Its main import partners are United States,<br />

European Union, Brazil, Colombia and China.<br />

Figure 4 Peru’s Imports and Exports (IM/EX) in 2010<br />

(Jan.-Oct.) (Billion USD)<br />

3.5<br />

3<br />

2.5<br />

2<br />

1.5<br />

1<br />

0.5<br />

0<br />

Data Source: TradingEconomics.com<br />

Figure 5 Venezuela Balance of Trade in 2010 (Q1-Q3)<br />

(Billion USD)<br />

100<br />

90<br />

80<br />

70<br />

60<br />

50<br />

40<br />

30<br />

20<br />

10<br />

0<br />

Q1 Q2 Q3<br />

Data Source: TradingEconomics.com<br />

Figure 6 Venezuela’s Imports and Exports (IM/EX) in<br />

2010 (Q1-Q3) (Billion USD)<br />

18<br />

16<br />

14<br />

12<br />

10<br />

8<br />

6<br />

4<br />

2<br />

0<br />

Jan Feb Mar Apr May Jun Jul Aug Sep Oct<br />

EX<br />

Q1 Q2 Q3<br />

EX<br />

IM<br />

IM<br />

Data Source: TradingEconomics.com<br />

25


<strong>TRADE</strong><br />

Africa<br />

China pledges to help Angola in<br />

diversifying exports in bilateral trade<br />

China, Mauritius sign about 9 million U.S.<br />

dollars economic cooperation accord<br />

Visiting Chinese Vice Minister of Commerce Zhong<br />

Shan said here on Jan. 13 that China would help Angola<br />

in diversifying its exports to China as part of the efforts to<br />

boost trade relations between the two countries.<br />

Zhong made the pledge during his meeting with Angolan<br />

Minister of Trade Maria Idalina Valente to explore<br />

ways of further expanding trade and economic ties between<br />

the two countries.<br />

Zhong said China has attached importance to developing<br />

ties with Angola, the largest trading partner of China in<br />

Africa, and the 2010 visit to Angola by Chinese Vice President<br />

Xi Jinping brought Sino-Angolan ties to new highs.<br />

The Chinese official said crude oil was almost the sole<br />

product of Angola which ended up in Chinese markets despite<br />

the fact that trade volume between the two countries<br />

amounted to some 25 billion U.S. dollars in 2010, and the<br />

Chinese government has decided to reduce or waive tariffs<br />

on Angolan exports to China from January 1, 2011 to<br />

encourage Angolan businessmen to export more products<br />

to China, including agricultural produces, fish and other<br />

marine products<br />

and diamonds.<br />

Z h o n g<br />

said China<br />

a nd A ngola<br />

have made<br />

substantial<br />

progress in<br />

bilateral cooperation<br />

in<br />

the f ields of<br />

energy, basic<br />

infrastructures<br />

and agriculture, and the Chinese government has encouraged<br />

Chinese enterprises to invest in Angola and make<br />

technological transfers to the African country as well.<br />

For her part, Maria Idalina Valente said Angola welcomed<br />

China’s proposal to expand bilateral trade and economic<br />

cooperation on the basis of the strategic partnerships<br />

hammered out during Xi Jinping’s visit to Angola.<br />

The Angolan minister said the biggest challenge faced<br />

by her government is to diversify its oil-dependent economy<br />

and to build up industrial and manufacturing capabilities in<br />

the national economy.<br />

She said Angola is trying to improve its investment<br />

conditions and hopes to reach an agreement with China on<br />

the protection of investments by the year 2012.<br />

The minister said her country is also keen on learning<br />

from China’s development experiences in setting up special<br />

economic zones and zones of processing products for exports.<br />

Zhong arrived in Luanda earlier in the day for a twoday<br />

work visit to the African country. (Xinhua)<br />

China has signed an economic and trade cooperation<br />

accord with Mauritius worth about 9 million U.S. dollars,<br />

including 6 million dollars grant and 3 million dollars<br />

interest-free loan.<br />

The accord was signed on Friday and the signing ceremony<br />

was attended by visiting Chinese Vice Premier Hui<br />

Liangyu and Mauritius Vice Prime Minister and Minister<br />

of Finance and Economic Development Pravind Kumar<br />

Jugnauth.<br />

According to the accord, the grant and loan will fund<br />

projects agreed on by the two governments in the future.<br />

Hui and Jugnauth also agreed on boosting cooperation<br />

in science and culture and implementing the programs of<br />

the accord signed by the two sides.<br />

Hui also met Mauritius Prime Minister Navinchandra<br />

Ramgoolam in the capital of Port Louis on Friday when he<br />

started a three-day official visit to Mauritius.<br />

During the meeting, Hui commended the bilateral cooperation<br />

since the two countries established diplomatic ties<br />

in 1972 and the promising trend to further strengthen the<br />

ties in cultural exchange, education and tourism.<br />

He thanked the Mauritius government for its support<br />

on issues concerning the core interests of China.<br />

Hui noted that the two countries should keep pushing<br />

for extensive cooperation and high level exchange of visits,<br />

continue to building political trust between the two governments<br />

and implement the measures in the framework of<br />

China-Africa Cooperation Forum.<br />

Ramgoolam also spoke highly of the fruitful cooperation<br />

between the two countries and thanked China for the<br />

assistance in improving the country’s infrastructure including<br />

a new international airport which is under construction.<br />

Hui held talks with Mauritius opposition leader Paul<br />

Berenger on Saturday afternoon before he wraps up his visit<br />

to Mauritius, the first leg of his five-African country tour<br />

which will also take him to Zambia, the Democratic Republic<br />

of Congo, Cameroon and Senegal. (Xinhua)<br />

28


INVESTMENT<br />

China to forgive half of Africa rail debt<br />

Chinese Vice - Minister of Commerce Zhong Shan<br />

signed an agreement with counterparts from Zambia and<br />

Tanzania in Lusaka, Zambia’s capital, on Jan 19, to forgive<br />

50% of the debt from China to build and operate the Tanzania-Zambia<br />

railway.<br />

The Chinese government took the action because of the<br />

traditional friendship between China and Africa, and Chinese<br />

people want to do their best to support African people’s<br />

development, said<br />

Zhong at the signing<br />

ceremony. He<br />

also said the Chinese<br />

government<br />

hopes the railway<br />

will operate with<br />

less debt and boost<br />

the regional economy<br />

and benefit the<br />

two countries.<br />

Chinahelped<br />

construct the<br />

Tanzania-Zambia<br />

railway at the request<br />

of the leadership<br />

of Tanzania<br />

and Zambia in<br />

1970, and handed<br />

it over after its<br />

completion in<br />

1976. The Chinese<br />

government provided an interest-free loan of 988 million<br />

yuan to complete the project, and continued to provide<br />

such loans and technicians to ensure its operation. (Chinadaily.com.cn)<br />

Uganda: China Pledges More Support for<br />

Nation’s Oil and Infrastructure<br />

at the current pace,” he said.<br />

The highway funded by preferential loan from China is<br />

to provide an alternative route linking the country’s capital<br />

and its international airport at Entebbe, 40 kilometres south<br />

of Kampala.<br />

Chinais also committed to working with Uganda in its<br />

nascent oil industry as China National Offshore Oil Corp<br />

(CNOOC) is seeking to partner with Total and Tullow to<br />

build an oil refinery in the western part of the country.<br />

President Museveni, is known to be in favour of building<br />

the country’s own oil industry with a complete chain of<br />

finished oil products. “China aims to assist Uganda build its<br />

own oil industry through participation in the production of<br />

oil products and assisting the country to attain its Millennium<br />

Development Goals before 2015 the Unites Nations’<br />

target years,” said Mr Heping.<br />

Ugandahit oil in the western part of the country in the<br />

Albertine Graben region in 2006. So far, Tullow, has discovered<br />

about one billion barrels of crude oil in the area. Tullow<br />

estimates that Uganda has a further potential of 1.2 billion<br />

barrels more in the Albertine basin which also borders the<br />

Democratic Republic of Congo. (allAfrica.com)<br />

China to fund US$900m projects in Nigeria<br />

Nigeria says it has secured a US$900 million loan<br />

from China to boost infrastructure in Africa’s most populous<br />

country, the Associated Press reported at the end of 2010.<br />

Minister of Finance Olusegun Aganga told the reporters<br />

that the Nigerian government had signed a US$900 million<br />

loan agreement with the Export-Import Bank of China<br />

for the construction of a US$500-million railway in the capital<br />

and a US$400-million public security communications<br />

project.<br />

While Nigerian commercial banks avoid risk, China has<br />

become a major financier of projects across the continent, the<br />

report said.<br />

A Chinese report released Thursday said that China’s<br />

direct investment in Africa had reached US$9.33 billion in<br />

2009, a jump from US$490 million in 2003. (China Daily)<br />

Kampala - China will continue to assist Uganda in the<br />

development of its infrastructure and oil industry, Mr Sun<br />

Heping, the Chinese ambassador to Uganda has said.<br />

“The Chinese government has attached great importance<br />

to the development of infrastructure in Africa,<br />

Uganda in particular, and made it one of the key areas of<br />

cooperation in the framework of the China-Africa Cooperation<br />

Forum,” Mr. Sun told a Chinese news agency<br />

recently.<br />

He said the cooperation has provided a platform for<br />

China and African countries to have dialogues and implement<br />

several projects covering infrastructure, education<br />

and health funded by grants and preferential loans.<br />

He said the Chinese and Ugandan governments have<br />

been in close touch on the proposed Kampala-Entebbe highway<br />

project, the first in the country, which is expected to cost<br />

about US$350 million. “The project is currently in preparations<br />

stage and will get underway in 2011 if everything keeps<br />

29


Africa<br />

New Developments Pull<br />

China and Africa Closer<br />

By Alice Yang<br />

Africa in Chinese eyes<br />

Africa, a land full of wonders, gives<br />

a lot of possibility beyond your imagination.<br />

“Africa isn’t as scary as people<br />

think. Since Africa is so vast that the<br />

living environment varies from region to<br />

region. Some areas are very comfortable<br />

to stay in, neither too cold nor too hot.<br />

You may think Africa is very hot as it<br />

is in the tropical zone, but the heaviest<br />

snow I’ve ever seen in my life is in the<br />

mountain areas of Tunisia of North Africa,”<br />

said Dawn Zhang, a senior officer<br />

from China Road & Bridge Corporation<br />

(CRBC), who has visited and stayed<br />

in nearly 10 countries in Africa.<br />

CRBC, as the first Chinese companies<br />

in Africa since 1979, now conducts<br />

business in over 20 countries there,<br />

such as Angola, Equatorial Guinea, Kenya,<br />

and Rwanda. “We have about 70 to<br />

80 on-going projects in Africa, accounting<br />

for two-thirds of the total business<br />

volume of the whole company. Doing<br />

business with Africa has to take bigger<br />

risk and tougher condition compared<br />

with other regions; as a result, investment<br />

there will receive higher return,”<br />

said Zhang.<br />

In Zhang’s memory, in the 1980s,<br />

Africa enjoyed higher development levels<br />

than China. “My first time to shop in<br />

a supermarket was in Burundi in 1982;<br />

my first time to pass by an expressway<br />

was in Côte d’Ivoire (Ivory Coast called<br />

at that time). In these so-called poor<br />

countries, you can see more cars on<br />

streets than in Beijing at that time.”<br />

Africa’s development mode is<br />

highly influenced by western countries.<br />

The land is the whites’ paradise in<br />

Zhang’s eyes. In the city life of Africa,<br />

there is hardly any language barrier;<br />

also living habits, consumption patterns<br />

and social institutions all follow<br />

the western style. “When you turn<br />

on the TV, you’ll watch the latest TV<br />

programs from France, America and<br />

Britain. When you relax in the bars or<br />

dancing hall, you’ll hear the most popular<br />

hits of western music. It’s very easy<br />

for the whites to have a comfortable life<br />

in Africa: they are always on the top of<br />

the rich class here, easy to have villas<br />

to live in with servants and gardeners.”<br />

Zhang said.<br />

30


“I stayed in Ethiopia and Kenya for<br />

2 years, and I’m now still visiting other<br />

African countries for business travel. Just<br />

in 2 or 3 years, you can really feel the significant<br />

changes everyday taking place<br />

in Africa,” said Wang Peng, a project<br />

manager of China National Machinery<br />

& Equipment Import & Export Corporation<br />

(CMEC), China’s 3rd largest<br />

enterprises in terms of business turnover<br />

of foreign contracted projects.<br />

“It seems to me that most developing<br />

African countries hold a welcome<br />

attitude to the Chinese, only very few<br />

of the poorest nations and some southern<br />

areas controlled by the Whites are<br />

the exception,” said Wang.<br />

Stray Xie, a young girl working<br />

for China Development Bank (China’s<br />

largest financial partner of Africa) in<br />

Beijing has been to Zambia, Kenya and<br />

Egypt due to the company’s business<br />

connection with Africa. “From my experience,<br />

the local government and enterprises<br />

welcome Chinese companies<br />

warmly. I can feel their anticipation<br />

in the friendship and cooperation of<br />

China from the heart,” she said.<br />

Yes, it is a land full of change and<br />

surprise. But it may also be necessary<br />

for Chinese companies to shed some<br />

sweat or tears there.<br />

“Africa has many disadvantages<br />

as well: unstable politics and society,<br />

relatively poor investment environment,<br />

low working efficiency, heavy corruption,<br />

low experience of personnel...<br />

When conducting business in Africa,<br />

Chinese enterprises need to highlight<br />

the security concerns. As a foreign girl<br />

in Africa, I never dare to take a bus<br />

alone there,” Xie said. “Irregular and<br />

unreliable transportation in Africa is<br />

also a problem. Roads are in poor condition,<br />

and it is very difficult to find<br />

a taxi. Also, in the middle and west<br />

Africa, you may also meet problems of<br />

poor-timing and low-trust.”<br />

Liu Zhirong, director of Woreta-<br />

Woldiya Project launched by World<br />

Bank, stayed in Africa for years. In<br />

his view, African people have a completely<br />

different work attitude from<br />

Chinese. “They don’t want to work<br />

extra hours even though overtime<br />

pay is much higher than their regular<br />

salaries. They’d rather enjoy the free<br />

time as granted by law. What is worse,<br />

Chinese companies generally lack local<br />

legal understanding, which brings a<br />

lot of trouble for themselves.” Liu gave<br />

an example, “A Chinese construction<br />

company in Africa once was served 150<br />

subpoenas in one day because it fired<br />

employees without following legal procedures<br />

and the employees all sued.”<br />

Liu’s view on legal awareness was<br />

echoed by Wang Peng. “For any Chinese<br />

companies or individuals who go to Africa<br />

to conduct projects or business, you<br />

must pay high attention to the small print<br />

in the contract agreements, such as the<br />

legal provisions mentioned in the contract<br />

(tax, insurance, labor rights, etc.). A lot of<br />

study and research in advance is very necessary,”<br />

Wang reminded kindly.<br />

China in African eyes<br />

“You Chinese work very hard,”<br />

said Mr. Balay, a government official<br />

in an Ethiopian city. “That’s the main<br />

reason your country develops so fast.<br />

People in Ethiopia lack that spirit.”<br />

“African’s general impression of<br />

the Chinese people is hard-working. Be<br />

it engineering or doing business, Chinese<br />

people barely rest on weekends or<br />

holidays. We work from 7 am to 6:30<br />

pm, plus frequent overtime at night.”<br />

said Liu Zhirong according to his experience<br />

in Ethiopia. Hard-working is<br />

just a part of Chinese nature.<br />

In most African’s eyes, Chinese<br />

products means cheap. Cheap Chinamade<br />

products do provide improvement<br />

to every-day life of the middle and<br />

lower class of the society. “With the<br />

label of ‘Made-in-China’, many common<br />

African families have improved<br />

their lifestyle: wear decent clothes and<br />

shining shoes, visit friends on their own<br />

vehicles (bicycles, motorbikes, or cars),<br />

enjoy many electrical appliances in daily<br />

life, and decorate the house by attractive<br />

building materials...” said Zhang.<br />

Xie thought the same. “They (Africans)<br />

think Chinese products combine<br />

cheap price and good quality at<br />

the same time. Also the infrastructure<br />

projects in Africa invested by Chinese<br />

enterprises benefit the livelihood of<br />

the local people. They are happy about<br />

that.”<br />

“CMEC currently has too many<br />

projects in Africa that it is hard to give<br />

an exact number. Our over one hundred<br />

of our projects have covered 80% of African<br />

countries.” Wang said. “Generally<br />

speaking, the contract-based projects<br />

from China have a good reputation in<br />

31


Africa<br />

the local community. But projects in<br />

trade only are more demanding, mainly<br />

because the after-sales service can not<br />

catch up with the growing expansions.”<br />

According to Ministry of Commerce,<br />

P.R.C., by the end of 2010,<br />

the accomplished turnover of China’s<br />

foreign contracting projects in Africa<br />

amounted to US$35.83 billion, accounting<br />

for 38.9% of the total, 27.5%<br />

growth compared with the previous<br />

year, involving in fields of mining, financial,<br />

manufacturing, construction,<br />

agriculture, business and trade, wholesales<br />

and retails, etc.<br />

However, the attitude of local<br />

government towards cooperation with<br />

Chinese enterprises often falls in a dilemma.<br />

“They hope Chinese enterprises<br />

can boost the local economy, as well as<br />

create more job opportunities for the<br />

local community. However, they also<br />

worry if too many Chinese enterprises<br />

march into the market at one time,<br />

it would be a threat to the local companies,<br />

and risk the market balance.”<br />

Zhang said.<br />

“Politically, China is easy to make<br />

friends with Africa, particularly when<br />

the land was bullied by the Western<br />

countries. But, in other cases? Hard to<br />

say. Africa has been influenced so much<br />

from the West: language, religion, culture,<br />

social system, technical principles,<br />

even life style. Significant numbers of<br />

Africans respect or even encourage the<br />

Western society style and the westerners.<br />

This probably dates back to African<br />

history itself which China missed the<br />

chance to be involved in early developments.<br />

It will take a long time for China<br />

to win their real respect and trust.”<br />

Zhang said.<br />

“Chinese business in Africa still<br />

remains in a low level in internationalization.<br />

There are many stories of<br />

unethical practices and lack of social<br />

responsibility among Chinese companies.”<br />

Xie said.<br />

Wang added, “It’s important for every<br />

Chinese company to build confidence,<br />

trust and establish a fair and honorable<br />

reputation. Yes, indeed, a few Chinese<br />

companies who attempt short cuts have<br />

disturbed the normal market stability by<br />

not following the rules. For each instance<br />

where one company breaks one rule,<br />

many companies will have to do a lot of<br />

things to pay back the loss and build back<br />

up the reputation again.” he said.<br />

In fact, those Chinese who have<br />

travelled outside China are more likely<br />

to have a more open and international<br />

mind. However, their ways of thinking,<br />

communication, and behavior style...all<br />

these need to adjust to fit for the game<br />

rules of the global market. It is still a<br />

long way ahead. “In my eyes, it is still<br />

difficult for Chinese to blend into the<br />

global village; maybe Chinese culture<br />

is too unique in itself. We still<br />

need time to adjust, to get familiar<br />

with acceptable global business<br />

practice.” remarked Zhang.<br />

More opportunities in<br />

future<br />

The China-Africa Cooperation<br />

Forum was established in October<br />

10, 2000. In the past decade,<br />

trade and investment between the two<br />

sides grew rapidly, which proved that<br />

they need each other, and indicated more<br />

potential to explore further in future.<br />

According to China’s Ministry of<br />

Commerce data, from 2000 to 2009,<br />

the trade value between China and<br />

Africa has increased from US$10.6<br />

billion to US$91.0 billion. China now<br />

is the largest trade partner of Africa.<br />

From July 1, 2010, China has reduced<br />

60% tariff for 26 countries in Africa,<br />

involving over 4700 items. This will, no<br />

doubt, promote, encourage and grow<br />

the bilateral trade.<br />

In 2009, China announced to offer<br />

a US$10 billion preferential loan<br />

to African countries in 3 years. “The<br />

financial aid from China will mainly<br />

focus on the areas of agriculture,<br />

health, education, clean energy and talents<br />

training. This is the main focus of<br />

people’s livelihood in Africa, also what<br />

they need most.” said Gao Yuanyuan,<br />

vice director of Department of Aid to<br />

Foreign Countries of MoC. “Financial<br />

cooperation will be the main highlight<br />

in our future work.”<br />

From 2000 to 2009, China’s direct<br />

investment in Africa increased from<br />

US$210 million annually to US$1.44<br />

billion. Meanwhile, the FDI from Africa<br />

to China increased from US$280<br />

million annually to US$1.31 billion.<br />

Wei Jianguo, former vice-minister of<br />

commerce commented, “Now is the<br />

best time for Chinese firms to invest<br />

in the continent as Africa needs to upgrade<br />

its economic structure.”<br />

It is a land full of opportunities.<br />

When Dawn Zhang saw the vast idle<br />

land in Africa, he often wondered if the<br />

land could be tapped by Chinese, how<br />

much wealth would be created from it.<br />

Zhang’s dream is now encouraged by<br />

Chinese government. “Chinese companies<br />

can explore more chances in sectors<br />

like agriculture and manufacturing,<br />

as well as the current focus on infrastructure<br />

and energy resources,” Lu<br />

Shaye, director-general of the African<br />

affairs department with the Ministry of<br />

Foreign Affairs, said at a China-Africa<br />

forum in Beijing last May.<br />

According to Zhong Manying,<br />

director of the Department of Western<br />

Asian and African Affairs of MoC,<br />

currently, there are only 30 direct<br />

flights between China and Africa every<br />

week. “That is quite a small number<br />

(considering that the direct flights between<br />

China and United Arab Emirates<br />

per week exceed 30). Moreover,<br />

those flights are mainly run by African<br />

airlines. China can explore its chance in<br />

this and related areas.” Zhong said.<br />

“Very few large and medium-sized<br />

supermarkets in Africa are operated<br />

by Chinese. Though Chinese products<br />

are very popular in Africa’s market, the<br />

distribution and logistics ability is very<br />

limited,” Zhong added, “To enhance an<br />

all-around service is our target there.”<br />

32


2011<br />

Congratulatory Messages<br />

For The Spring Festival<br />

SCO<br />

尊 敬 的 中 国 外 贸 的 读 者 朋 友 们 :<br />

值 此 中 国 传 统 节 日 - 春 节 即 将 来 临 之 际 , 谨 向 大 家 致 以 节 日 的 祝 贺 !<br />

在 过 去 的 2010 年 里 , 上 海 合 作 组 织 全 力 落 实 2009 年 6 月 16 日 叶 卡 捷 琳<br />

堡 峰 会 、2 010 年 6 月 11 日 塔 什 干 峰 会 、2 0 0 9 年 10 月 14 日 北 京 政 府 首 脑 理 事 会<br />

会 议 确 定 的 目 标 和 任 务 , 包 括 2009 年 10 月 通 过 的 《 上 海 合 作 组 织 成 员 国 关<br />

于 加 强 经 济 合 作 、 应 对 全 球 金 融 经 济 危 机 、 保 障 经 济 持 续 发 展 的 共 同 倡<br />

议 》。 上 海 合 作 组 织 致 力 于 贸 易 和 投 资 便 利 化 、 落 实 本 地 区 和 地 区 间 交 通 、<br />

运 输 基 础 设 计 的 共 同 项 目 , 扩 大 和 深 化 人 文 合 作 , 为 推 动 上 海 合 作 组 织 地<br />

区 各 国 的 经 济 社 会 发 展 、 维 护 本 地 区 的 和 平 与 稳 定 做 出 了 重 要 贡 献 。<br />

2011 年 是 上 海 合 作 组 织 成 立 十 周 年 。 我 们 愿 以 此 为 契 机 , 将 上 海 合 作 组<br />

织 框 架 内 的 各 领 域 合 作 提 高 到 崭 新 的 水 平 , 造 福 于 本 地 区 各 国 人 民 。<br />

祝 大 家 身 体 健 康 , 万 事 如 意 !<br />

穆 · 伊 马 纳 利 耶 夫<br />

上 海 合 作 组 织 秘 书 长<br />

H.E. Mr. Bolat Nurgaliyev<br />

Secretariat of SCO<br />

UNICEF<br />

On the occasion of the 2011 Spring Festival, I would like to extend my<br />

best wishes to all and express my sincere hope that all children, everywhere,<br />

will have a better future.<br />

Dr. Yin Yin Nwe<br />

UNICEF Representative People’s Republic of China<br />

33


2011<br />

Congratulatory Messages For The Spring Festival<br />

Asia<br />

Pakistan<br />

THE PRESIDENT Islamic Republic of Pakistan to<br />

H.E. Mr. Hu Jintao, President of the People’s Republic of China, Beijing.<br />

February 2011<br />

Excellency,<br />

On behalf of the people of Pakistan and on my own behalf, it gives me great pleasure to extend<br />

warmest felicitations to Your Excellency and the government and people of China on the advent of Chinese<br />

Lunar Year and Spring Festival.<br />

China’s civilizational renaissance is a defining theme of the 21st century. Chinese phenomenal ascent<br />

over the last six decades bears testimony to the wisdom of its leaders and genius of its people. For us in<br />

Pakistan, China’s success story has come to serve as a source of inspiration and confidence.<br />

We believe that China is a factor of hope for the people of the world. It’s unparalleled development<br />

has brought, in its wake, peace, prosperity and harmony in its immediate neighbourhood and beyond.<br />

China is Pakistan’s closest friend and time tested partner. Rooted in the vision of Shaheed Zulfikar<br />

Ali Bhutto, the brotherly ties between our two countries have, over the years, flowered into a comprehensive<br />

strategic partnership based on mutually beneficial cooperation. Our close and friendly relations with<br />

China have been and will remain the corner stone of our foreign policy. The recent visit of Premier H.E.<br />

Mr. Wen Jiabao to Pakistan was the testimony of our unique relationship.<br />

We have declared 2011 as Year of Pak – China Friendship, which also coincides with the 60th anniversary<br />

of establishment of diplomatic relations between the two countries. Our two countries have<br />

already agreed on a comprehensive action plan to celebrate the Friendship Year which, inter alia, includes<br />

visit of Your Excellency to Pakistan.<br />

Through our deep and abiding friendship, Pakistan and China can together make a significant contribution<br />

towards fashioning a better future for the region and work towards creating a peaceful and harmonious world.<br />

I avail myself of this opportunity to convey best wishes for Your Excellency’s good health and happiness<br />

and continued progress and prosperity for the friendly people of China.<br />

Please accept, Excellency, the assurances of my highest esteem and consideration.<br />

(ASIF ALI ZARDARI)<br />

PRIME MINISTER Islamic Republic of Pakistan to<br />

H.E. Mr. Wen Jiabao, President of the State Council of the People’s Republic of China, Beijing.<br />

February 2011<br />

Excellency,<br />

On the advent of Chinese Lunar Year and Spring Festival, I have great pleasure in extending, on my<br />

behalf and on behalf of the government and people of Pakistan, our cordial greetings and sincere felicitations<br />

to Your Excellency, the government and the people of China.<br />

Chinese phenomenal ascent over the last six decades bears testimony to the wisdom of its leaders<br />

and genius of its people. For us in Pakistan, we believe that China is a factor of stability and of hope for<br />

the people of the world. This belief is reinforced by the fact that China’s growth has, in its wake, brought<br />

peace, prosperity and harmony in its immediate neighbourhood and beyond. As a close friend and good<br />

neighbour of China, Pakistan deeply appreciates China’s initiatives for building mutually beneficial economic<br />

complementarities for progress and social harmony in Asia and beyond.<br />

For us in Pakistan, the model set by China, our special friend and a time-tested partner, is a source of<br />

pride, inspiration and admiration. Our close and friendly relations with China have been and will remain<br />

the cornerstone of our foreign policy. The recent visit of Your Excellency to Pakistan was the testimony<br />

of our unique relationship.<br />

Pakistan and China have declared 2011 as Year of Friendship, which also coincides with the 60th<br />

anniversary of establishment of diplomatic relations between the two countries. Our two countries have<br />

already agreed on a comprehensive action plan to celebrate the Friendship Year.<br />

I avail myself of this opportunity to convey best wishes for Your Excellency’s good health and happiness<br />

and continued progress and prosperity for the friendly people of China.<br />

Please accept, Excellency, the assurance of my highest consideration.<br />

(SYED YUSUF RAZA GILANI)<br />

34


Asia<br />

Bahrain<br />

2011<br />

On the auspious occasion of the Chinese New Year, allow me to extend<br />

to the readers of China’s Foreign Trade Magazine my cordial wishes.<br />

Wishing every happiness and every increasing progress and success to<br />

China and Chinese People, I am optimistic that the existing friendly relations<br />

between us will be further enhanced in 2011 and beyond.<br />

With my higher consideration and esteem.<br />

Cambodia<br />

H.E. Bibi Al-Alawi<br />

Ambassador of Bahrain to China<br />

It gives me a great pleasure to extend, on behalf of the people and the<br />

Royal Government of Cambodia, my sincere congratulations and best<br />

wishes to the people and the Government of the People’s Republic of China<br />

on the occasion of the Chinese traditional New Year--Spring Festival.<br />

I feel very proud that the Chinese people will enjoy the upcoming Spring<br />

Festival just a few months after the great success of the Shanghai World Expo.<br />

China’s national development over the past 61 years in transforming<br />

the rural backward society into a Superpower is quite obvious to the Chinese<br />

peopleand the people in the rest of the world.<br />

I am confident that the Chinese people will continue to prosper in the<br />

years to come and materialize further modernization.<br />

Once again, I am delighted to extend our cordial greetings and best<br />

wishes to the people and the Government of the People’s Republic of<br />

China for the continued success in the building of a harmonious and prosperous<br />

society in all aspects.<br />

H.E. Khek Caimealy Sysoda<br />

Ambassador of Cambodia to China<br />

Congratulatory Messages For The Spring Festival<br />

35


2011<br />

Congratulatory Messages For The Spring Festival<br />

Asia<br />

Jordan<br />

Since the establishment of diplomatic ties between Jordan and China<br />

in 1977, leaders of the two countries have attached great importance to<br />

the bilateral relationship and have made many direct efforts to bring it<br />

forward. Thanks to their support, bilateral cooperation in the political,<br />

economic, cultural, and education areas has made sound progress, and<br />

friendly exchanges have been scales up.<br />

With both sides making vigorous efforts on the basis of equality,<br />

reciprocity and common development, Jordan and China have witnessed<br />

rapid progress in bilateral trade and economic cooperation, which has<br />

yielded satisfactory results in recent years. Bilateral trade broke the 2<br />

billion USD barrier in 2009 for the first time and has been maintaining a<br />

momentum of fast development.<br />

Both the Jordanian and Chinese economics are strongly complementary<br />

to each other, and there is huge room for trade and economic<br />

cooperation between the two countries. China can increase its imports<br />

of phosphate and potassium and participates in Jordan’s mega projects.<br />

Jordan is working on a number of Mega Projects that are regional in their<br />

impact and scope, cutting across several sectors and based on partnerships<br />

with the private sector. These mega projects in the key sectors of<br />

energy, transport, water and environment position Jordan as a regional<br />

hub for energy and transport networks, but are also essential in creating<br />

a transformative economic dynamic by allowing it to overcome chronic<br />

natural resource and development constraints in terms of water and<br />

energy, as well as significant environmental challengers. These efforts<br />

equally contribute to ensuring sustainable economic growth and quality<br />

standards of living, as well as addressing critical challenges of poverty<br />

alleviation, sustained growth and investment flows.<br />

The mega projects currently in preparation include the Jordan National<br />

Railway Project, the Nuclear Power Plant Project and the Jordan<br />

Red Sea Projects (Red-Dead Desalination projects), in addition to projects<br />

in alternative energy (such as oil shale, solar power projects). Cooperation<br />

with China can help in knowledge and experience transfer in the<br />

implementation and management of such projects, in addition to financing<br />

options which will help in bridging the financing gaps.<br />

Finally, on behalf the Government of Hashemite Kingdom of Jordan, I<br />

would like to extend my cordial greetings and best wished to the one million<br />

readers of China’s Foreign Trade. May the year 2011 be a better and a<br />

happier year and wish the China’s Foreign Trade magazine a great success!<br />

H.E. Anmar A.H.N.Al-Hmoud<br />

Ambassador of the Hashemite Kingdom of Jordan to China<br />

36


Europe<br />

Albania<br />

2011<br />

On the eve of the Spring Festival, I take the opportunity to wish the<br />

prestigious China’s Foreign Trade Magazine and its devoted and talented<br />

stuff a lot of prosperity and success in the coming year.<br />

The China’s Foreign Trade magazine is becoming very valuable to its<br />

users in China and abroad, due to the information it is publishing. Keep<br />

going on to this path and your success will be achieved.<br />

I wish you, I wish the Chinese people a prosperous year 2011.<br />

H.E. Maxhun Peka<br />

Ambassador of the Republic of Albania to the P.R.C.<br />

Bosnia and Herzegovina<br />

Dear Chinese Friends,<br />

I want to wish you a very happy and lucky Spring Festival as we enter the<br />

year of the Rabbit, a year traditionally associated with liveliness and speed.<br />

In this auspicious year of the Rabbit, I wish that China keeps progressing<br />

with more vitality and in higher speed, and accomplish greater<br />

successes in all fields, in order to make its society even much stronger for<br />

betterment of the whole world.<br />

I look forward to continuing to strengthen the friendly relationship<br />

between Bosnia and Herzegovina and China, keep promoting our mutual<br />

beneficial economic and trade cooperation, and reinforce the efforts for<br />

our respective development and prosperity.<br />

So as we join in the celebration of the Spring Festival with Chinese<br />

communities all around the world, please do pass on my warm best wishes<br />

to your family and friends:<br />

新 春 快 乐 兔 年 大 吉<br />

H.E. Mr. Amel Kovacevic<br />

Ambassador of Bosnia and Herzegovina to China<br />

Congratulatory Messages For The Spring Festival<br />

37


2011<br />

Congratulatory Messages For The Spring Festival<br />

Europe<br />

Greek<br />

Cordial wishes for a harmonious, creative, dynamic and prosperous<br />

Year of the Rabbit 2011.<br />

Hungary<br />

H.E. Theodore Georgakelos<br />

Ambassador of Greek Embassy in China<br />

I wish family happiness and business success to all readers, editors<br />

and employees of China’s Foreign Trade magazine in the upcoming Chinese<br />

Year of the Rabbit!<br />

I congratulate China’s Foreign Trade for its great success in the 54<br />

years of its existence and especially for its transformation into a monthly<br />

published magazine with rich content.<br />

I hope that in its new form China’s Foreign Trade will continue its<br />

highly valuable service to all readers and will successfully promote the<br />

trade cooperation between Chinese and foreign companies, including the<br />

Hungarian companies and entrepreneurs eager to develop trade and economic<br />

cooperation between Hungary and China.<br />

H.E. Mr. Sándor Kusai<br />

Ambassador of the Republic of Hungary to China<br />

38


Europe<br />

Russia<br />

2011<br />

Poland<br />

Dear readers of China’s Foreign Trade,<br />

On the occasion of the Spring Festival approaching, I wish you all the<br />

best in the coming Year of Rabbit!<br />

The strategic partnership and cooperation between Russia and China<br />

has been steadily improving in recent years, as the two countries continue<br />

to achieve breakthroughs in political, economic and cultural cooperation.<br />

Unprecedented frequency of political contacts and level of mutual<br />

understanding, as well as fruitful cooperation in international problems<br />

and wide variety of bilateral projects gives us confidence in the bright<br />

prospects of our friendship.<br />

I hope you have a most happy and prosperous New Year!<br />

Sincerely yours,<br />

H.E. Mr. Razov Sergey<br />

Ambassador of Russia to China<br />

I wish the readers of China’s Foreign Trade all the best for the Chun Jie and I wish economics of<br />

our countries that can develop faster in the New Year then the Rabbit can run!<br />

H.E. Mr. Tadeusz Chomicki<br />

Ambassador of Poland to China<br />

Congratulatory Messages For The Spring Festival<br />

39


2011<br />

Congratulatory Messages For The Spring Festival<br />

Africa<br />

Cape Verde<br />

On the occasion of the Chinese New Year, may my wife and I extend to all the Chinese people our<br />

warmest greetings, as well as wishes of family happiness and wealth, career greater success and the<br />

utmost achievements in building a harmonious and prosper society in 2011.<br />

Djibouti<br />

H.E. Julio Marais<br />

Ambassador of Cape Verde to China<br />

40


Africa<br />

Niger<br />

2011<br />

North America<br />

On the occassion of the upcoming Spring Festival, I would like to express<br />

in the name of the Embassy of the Republic of Niger in China, and<br />

in my own name, our sincere greetings and wishes to all the members of<br />

China’s Foreign Trade.<br />

Receive our sincere thanks for keeping us informed about China’s<br />

trade issue which help us a lot in our work in China.<br />

Wishing you the best for the New Year’s activities.<br />

Jamaica<br />

H.E. Boubakar Adamou<br />

Ambassador of Niger to China<br />

As we once again celebrate the Spring Festival in China, I take this<br />

opportunity to extend greetings and best wishes to all the members and<br />

readers of China’s Foreign Trade magazine.<br />

Indeed, we are afforded new information and perspectives each month<br />

on China’s finance, economy, investment and trade, which undoubtedly<br />

contribute towards a better understanding of the Chinese economic and<br />

business environment. I look forward to more of these in 2011 and hope<br />

that our partnership as well, will be strengthened in the coming year.<br />

Jamaica is home to a very large Chinese community, which will be<br />

celebrating the coming festival as well. I also wish them a very joyous<br />

season of activities, which, over the years, have become interwoven into<br />

the cultural fabric of Jamaica.<br />

H.E. E. Courtenay Rattray<br />

Ambassador of Jamaica to China<br />

Congratulatory Messages For The Spring Festival<br />

41


Setting Tone for<br />

China Economy in 2011<br />

by guo yan<br />

Since the second quarter of 2010,<br />

China economy has overtaken<br />

the rank of Japan’s economy,<br />

becoming the second largest<br />

economy. And recently, the World<br />

Bank predicted that the rate of China’s<br />

contribution to the world economic<br />

growth will reach 25% this year, then<br />

China will be the first engine to the<br />

global economic growth for two consecutive<br />

years.<br />

2011 is beginning of China<br />

“Twelfth Five-Year Planning”. As the<br />

wind-vane to judge the current economic<br />

situation and to draw up the development<br />

of macro-economic policies next<br />

year, the central economic work conference<br />

is vital for how to give the direction<br />

for the realization of the “Twelfth Five-<br />

Year Planning”. This time, the conference<br />

stipulates six tasks including the<br />

goal of macro-economic control, fiscal<br />

and monetary policies, livelihood, price<br />

reform, foreign economic and other issues<br />

of concern.<br />

In which, some policies highlighted<br />

several “first times”. In 2010,<br />

the price hikes reflected the living of<br />

citizens. More efforts will be made to<br />

ensure market supplies, stabilize prices<br />

and regulate market order in 2011. At<br />

first, China shift its monetary policy<br />

stance from loose to prudent in 2011.<br />

The second major task for economic<br />

work next year is to ensure the effec-<br />

tive supply of agricultural products. Anti-inflationary<br />

macro-control work will become the focus<br />

of next year. Since 2005 the policy of exchange<br />

reform has carried out. It is the first time that “to<br />

further improve the RMB exchange rate formation<br />

mechanism” was emerged in the document<br />

of central economic work conference publicly. In<br />

addition, it also was the first time that this session<br />

proposed to raise f the policy of expanding the<br />

scale of import to the level of balancing the macroeconomic<br />

and adjustment of economic structure<br />

height.<br />

This issue of livehood concerns a wide range.<br />

The central economic work conference discussed<br />

the issues including the education, employment,<br />

health insurance, and housing. At the conference,<br />

the emphasis was put on accelerating the developments<br />

of the housing guarantee system, and it was<br />

mentioned for the first time that a housing system<br />

including both affordable housing and commercial<br />

housing will be established in accordance with the<br />

national conditions. As the increasingly expanding<br />

income gap is setting barriers for Chinese social<br />

development, the central government requires<br />

strengthening the reforms on national income distribution<br />

system. This is also the first time to appear<br />

independently, not as one of the measures of<br />

improving the livehood.<br />

Therefore, how the central economic conference<br />

shift monetary policy, improve the exchange<br />

rate mechanism, expand the scale of imports, increase<br />

housing “dual” supply and adjust the reform<br />

of income distribution and other hot spots? This<br />

issue of China’s foreign trade will give you more<br />

detail.<br />

45


Shift to<br />

Prudent<br />

Monetary Policy<br />

by Chinanews. com<br />

“the money supply would grow by<br />

15-16% in 2011.”<br />

—Xia Bin<br />

The Central Economic Working Conference<br />

of 2010 was accompanied by<br />

a high CPI—5.1%. The National Bureau<br />

of Statistics released the macroeconomic<br />

data in advance on December 11th in<br />

2010 for which the Bureau claimed they wanted<br />

to release the data soon afterwards the data was<br />

obtained. However, more people believed it was<br />

the ongoing Central Economic Working Conference<br />

that advanced the data release.<br />

Back to August 10th 2009, the cover story<br />

on Time magazine was “Can China Save the<br />

World ” with an illustration, where a chubby<br />

panda was pumping up the deflated earth with<br />

sagging world economy. In that month, China’s<br />

CPI saw a year-on-year drop of 1.2%, a negative<br />

growth in 7 consecutive<br />

months, with decline<br />

in prices of five<br />

commodities among<br />

the eight commodities<br />

for calculating CPI.<br />

Under the deflationary<br />

pressure, a shift in the macro policy, particularly<br />

the monetary policy seemed to be a fable.<br />

But one year later, the fable comes true.<br />

As the weathervane of the Central Economic<br />

Working Conference, the Conference of the<br />

Political Bureau of CPC Central Committee<br />

held on December 3rd in 2010 by convention<br />

set the tone for this year’s Central Economic<br />

Working Conference—to implement proactive<br />

fiscal policy and prudent monetary policy and to<br />

enhance the relevance, flexibility and effectiveness<br />

of macro regulation (“proactive and prudent,<br />

cautious and flexible” to be short). After<br />

having tried the moderately loose, to be exact,<br />

extremely loose monetary policy for three years,<br />

China’s policy makers are considering again the<br />

prudent policy.<br />

There were signs for inflation, which were<br />

perceived by Premier Wen Jiabao. “Last year was<br />

most difficult for economic development, while<br />

this year will be most complicated,” said Premier<br />

Wen when communicated with netizens prior<br />

to this year’s NPC and CPPCC. Afterwards,<br />

the housing price saw the sharpest rise and that<br />

outside the Beijing 5th ring road reached RMB<br />

20,000, a shocking beginning for this year’s<br />

high commodity prices.<br />

In fact, as early as the fourth quarter of<br />

last year, many insiders expressed their concern<br />

about inflation. But the government have merely<br />

adopted anticipation management with no substantive<br />

changes in the monetary policy. The<br />

overall policy would not be changed, and small<br />

adjustments would be made in the growth rate<br />

of monetary supply and new credit scale in 2010,<br />

said Li Yang, Deputy President of the Chinese<br />

Academy of Social Sciences.<br />

For the figure itself, CPI is not that heartrending.<br />

During February to April of 2008,<br />

China’s CPI jumped more than 8% year on year<br />

for a third straight month, much higher than<br />

this year’s 5%. The stable pork price began to<br />

soar in April 2007, which concerned the whole<br />

country and imposed much more impact on<br />

people’s daily life than this year’s high-price garlic,<br />

bean and ginger.<br />

Some people have noted the nuance of the<br />

46


inflation in 2008 and 2010. Economist<br />

Chang Xiuze warned that before the inflation<br />

in 2007, China had implemented<br />

prudent monetary policy for ten years<br />

only with several adjustments; whereas<br />

in the wake of the 2008 global financial<br />

crisis, the Central Bank initiated the<br />

two-year “moderately loose” period and<br />

in 2009 increased the newly increased<br />

loans to RMB 9.5 trillion. In spite of<br />

adjustments in 2010, the aggregate<br />

credit scale was still nearing RMB 7.5<br />

trillion during the first 11 months.<br />

The Central Bank has did pointed<br />

out the difference between the prudent<br />

policy of 2010 and ten years ago. “This<br />

year’s prudent policy is different from<br />

that of 2008. In 2008, the prudent policy<br />

is subject to changes, while the prudent<br />

policy here is an intermediate state,<br />

neither loose nor an abrupt stop,” Sheng<br />

Song, the new head of the Financial<br />

Survey and Statistics Department of the<br />

Central Bank explicitly showed in Time<br />

for Prudent Monetary Policy carried in<br />

the Financial Times of mid November.<br />

Sheng’s opinion now seems in<br />

line with the message delivered by<br />

this year’s Central Economic Working<br />

Conference—to prevent inflation<br />

yet sustain economic growth, which<br />

is the long-term goal and also a severe<br />

challenge for China. On the night<br />

when the Central Economic Working<br />

Conference opened, the Central Bank<br />

announced a 0.5 percentage points<br />

hike in the deposit-reserve ratio from<br />

December 20th, the third time for the<br />

Central Bank to lift the deposit reserve<br />

ratio in one month. The abandonment<br />

of raising interest rates—most direct<br />

to adjust money supply—indicates that<br />

the Central Bank is considering the<br />

prudent policy.<br />

All parties are weighing the degree<br />

of the prudent policy. “The prudent<br />

policy this time is to deal with the<br />

stable triangle of economic development,<br />

structural adjustment and inflation<br />

curbing. Therefore, the prudent<br />

policy is to stay between tight and<br />

loose extreme. In theory, the chance<br />

for tight and loose policy is equal, but I<br />

prefer neutral monetary policy, because<br />

the economy is now in development<br />

after having recovered,” Chang Xiuze<br />

analyzed. “Next year, the monetary<br />

policy tends to be slightly tight,” said<br />

Xia Bin, Member of the Monetary<br />

Policy Committee of the Central Bank<br />

and Director of the Research Institute<br />

of Finance of the State Council<br />

Development Research Center in an<br />

interview with the media. Xia also<br />

forecasted the money supply would<br />

grow by 15-16% in 2011. Anyway, one<br />

thing is for sure: the policy makers will<br />

be more prudent and even cautious for<br />

capital use, as the Central Economic<br />

Working Conference has made it clear<br />

that more credit funds will be input to<br />

the real economy, particularly SMEs<br />

along with projects concerning agriculture,<br />

rural areas and farmers.<br />

Prior to the Central Economic<br />

Working Conference, it was reported<br />

that the Conference would stick to a<br />

minimum 8% economic growth for<br />

2011, while control CPI within 4%,<br />

breaking the former bottom line of<br />

3%. Although this news remains to be<br />

proved in next year’s NPC and CPP-<br />

CC, it can infer that the prudent policy,<br />

in the real sense for the policy makers,<br />

aims at economic growth rather that an<br />

abrupt slow down at the cost of small<br />

yet controllable inflation.<br />

47


Encourage<br />

to Boost Imports<br />

By China Times<br />

It’s learned that “adjusting structure and<br />

promoting balance” would be the tone<br />

for China’s foreign trade work in 2010.<br />

However, there’re some changes in specific<br />

policies which will shift attention to boosting<br />

import, unlike previous measures that blindly<br />

focus on encouraging imports; one of the major<br />

measures would be to facilitate the clearance of<br />

customs of commodities by abolishing non-tariff<br />

barriers.<br />

Some insider with the Ministry of Commerce<br />

(MOC) told reporters on December<br />

15th that policy guidance of next year will be<br />

imports-facilitating, which will further reduce<br />

the examination and approval procedures of imports,<br />

and narrow the registration scope subject<br />

to automatic import licensing; the MOC will<br />

continue to promote the reduction of tariffs and<br />

non-tariff barriers and open up manufacturing<br />

and services sectors to push the opening<br />

up of domestic markets. Besides the Ministry<br />

of Commerce will promote key industries and<br />

encourage the introduction of industry supporting<br />

policies, concerning, say, energy-conserving<br />

& environment-friendly industries, high-tech<br />

industries, to promote the restructuring of Chinese<br />

enterprises and the development of service<br />

industry.<br />

Secretary-General of the China Center<br />

for International Economic Exchanges, former<br />

Vice Minister of the Ministry of Commerce,<br />

Wei Jianguo said that China’s previous study on<br />

import was not enough; rather than take “import”<br />

into serious consideration, major national trade<br />

policies just kept focus on encouraging exports,<br />

which now require timely adjustments.<br />

During the just-ended 2010 Central Economic<br />

Work Conference, there are some changes<br />

in the account concerning foreign trade. The<br />

conference proposed to “attach equal importance<br />

to exports and imports, or more exactly, attracting<br />

foreign investment and investing in foreign<br />

countries, broaden the channels of international<br />

economic cooperation, and enhance opening up<br />

constantly.”<br />

Exports beat market’s expectations<br />

According to some statistics, China’s foreign<br />

trade jumped 36.3 percent from a year earlier<br />

to 2.67728 trillion U.S. dollars from January<br />

to November of 2010. Among that China’s export<br />

recorded at USD 1423.84 billion, up 33.0%<br />

year on year and import rose 40.3% year on year<br />

to USD 1,253.4 billion, resulting in a trade surplus<br />

of 170.42 billion U.S. dollars.<br />

In fact, the Ministry of Commerce estimated<br />

at the end of 2009 that imports and exports<br />

would grow by eight to ten percent in the<br />

whole year of 2010; however, judged by the data<br />

of China’s foreign trade in the first 11 months<br />

of 2010, the recovery of exports has been much<br />

better than expected.<br />

“It’s estimated that export growth rate this<br />

year will be 28 to 30 percent” analyzed by some<br />

from the foreign trade system. The Ministry<br />

of Commerce has raised the estimated export<br />

growth rate to around 25 percent in the symposium<br />

in the 2010 Canton Fair.<br />

This impressive growth rate, however, may<br />

be unsustainable.<br />

Earlier a number of key provinces and cities<br />

engaged in foreign trade have estimated that<br />

overseas demand in the first half of 2011 will be<br />

slowing down greatly, making it difficult to reproduce<br />

the fast growth in 2010.<br />

Feedback from the Canton Fair Autumn<br />

2010 showed that export orders at the fair were<br />

not in large numbers; what’s worse, most of<br />

those are short-term contracts. Some pessimists<br />

are even talking about a negative growth of export<br />

in 2011. “Even if it’s not a negative growth,<br />

the growth rate will be very limited.” Mr. Wei<br />

told reporters, “generally China’s exports next<br />

48


year does not seem to be optimistic; a<br />

decline of 10 to 15 percentage points is<br />

expected.”<br />

According to the insider from<br />

the MOC China’s foreign trade policies<br />

will start to put more emphasis<br />

on the adjustment of trade structure<br />

from 2012; the country’s foreign trade<br />

growth target will thus expectedly be<br />

lowered.<br />

Huo Jianguo, the president of<br />

the Chinese Academy of International<br />

Trade and Economic Cooperation, an<br />

institute under the Ministry of Commerce,<br />

gave the same judgment. He<br />

estimated that exports growth in 2011<br />

will be around 15 to 16 percent; and<br />

imports will rise slightly faster, at a rate<br />

of 17 to 18 percent.<br />

Emphasis will be put on<br />

boosting imports<br />

It’s the first time for China to position<br />

import so high in the country’s<br />

overall strategy.<br />

In fact, foreign trade policies<br />

have been showing signs of a shift ever<br />

since the start of the latter half of 2010.<br />

Reporters have noted that, officials<br />

with the Ministry of Commerce have<br />

been talking about taking a series of<br />

measures to further boost imports and<br />

maintaining a balanced development of<br />

foreign trade.<br />

In order to further expand imports<br />

volume, the Chinese government has already<br />

taken several measures, including<br />

lowering the import tariffs. The general<br />

tariff level in this country has been lowered<br />

at 9.8 percent in 2010, and China<br />

has further cut import tariffs of some<br />

raw materials and consumer goods and<br />

formulated policies for domestic sales of<br />

processing trade companies.<br />

However, the Ministry of Commerce<br />

will focus more on expanding<br />

imports in 2011.<br />

The insider with the Ministry<br />

of Commerce told the reporter, the<br />

Ministry of Commerce will focus on<br />

encouraging imports from the countries<br />

with trade deficit with China, the Ministry<br />

of Commerce is even considering<br />

opening up unilaterally, relaxing import<br />

regulation, lowering import costs, simplifying<br />

import financing for domestic<br />

enterprises etc. In addition, the Ministry<br />

of Commerce will also support and<br />

organize various forms of investment<br />

and trade promotion missions to “go<br />

out” to invest and procure in 2011.<br />

Talking about the expansion of<br />

imports, Bai Ming, Deputy Director<br />

of the Research Department of International<br />

Market under the Chinese<br />

Academy of International Trade and<br />

Economic Cooperation (CAITEC), an<br />

affiliate of the Ministry of Commerce,<br />

said, “Apart from technology, China<br />

mainly needs to import resources,<br />

which for the most part refer to commodities,<br />

such as iron ore, crude oil.”<br />

To further enhance trade facilitation,<br />

China will continue to clean up nontariff<br />

barriers, improve trade policies,<br />

measures and customs inspection<br />

procedures, continue to simplify and<br />

relax certain import regulations, reduce<br />

import procedures, as well as reduce<br />

import costs.<br />

Long Guoqiang, Director of<br />

the Research Department of Foreign<br />

Economic Relations, Development Research<br />

Center of the State Council, told<br />

reporters that Europe and the United<br />

States need to relax the controls of<br />

technology export to China; for China’s<br />

part, the country should further open<br />

up the markets unilaterally, and give<br />

preferential trade treatment to the least<br />

developed economies to promote the<br />

liberalization of regional trade and<br />

multilateral so as to increase imports.<br />

Domestic and foreign trade<br />

will be integrated<br />

The country should look forward<br />

to plan for the future as well as pay<br />

attention to the current situation to<br />

deliver a good result in foreign trade in<br />

2011, as it’ note worthy that 2011 is the<br />

first year of the 12th Five-Year Plan.<br />

It is known that in the 12th Five-<br />

Year period great emphasis will put on<br />

the transformation of the structure,<br />

quality, technology and standard of<br />

China’s foreign trade, with focus on<br />

urging the change of processing trade.<br />

What’s more, the Ministry of Commerce<br />

will also help foreign trade companies<br />

to enter the domestic market<br />

gradually in 2011.<br />

Chen Deming, the Minister of<br />

the Ministry of Commerce, noted in<br />

his investigation and research of foreign<br />

trade in Guangzhou, that “I believe<br />

China’s foreign trade structure will<br />

be greatly changed and improved and<br />

domestic market will integrate with<br />

overseas market after a few years’ time,<br />

especially in the 12th Five-year period.<br />

In my opinion the future Chinese domestic<br />

market will surpass Japan’s market<br />

significantly to become the world’s<br />

second largest domestic market.”<br />

Some people engaged in foreign<br />

trade indicated that, in addition to an<br />

expanding foreign trade size, China’s<br />

foreign trade team will be changed<br />

fundamentally with the transformation<br />

of international market pattern and the<br />

country’s economic development mode.<br />

Mr. Bai commented that China’s<br />

foreign trade will shift from a “masstrader<br />

pattern” to a “go-getter pattern”<br />

in the next five years; companies with<br />

few variations of products and weak<br />

bargaining power will be eliminated<br />

gradually.<br />

Along with the unification of domestic<br />

and overseas market, the product<br />

chain and industry chain of Chinese<br />

foreign trade enterprises will be further<br />

“extended” in the future, similar<br />

to the production and operation mode<br />

of current multinational enterprises in<br />

developed countries; and it will become<br />

a trend for manufacturing companies<br />

to move from “Made-in-China” to<br />

“Created-by-China” in accordance with<br />

their own needs for development.<br />

49


Equal Emphasis<br />

on the system<br />

of Affordable<br />

Housing and Commercial Housing By Li Qianqian<br />

According to the statements on the<br />

real estate sector developments at<br />

the Central Economic Work Conference,<br />

the emphasis was put on<br />

“accelerating the developments of the housing<br />

guarantee system”, and it was mentioned for the<br />

first time that “a housing system including both<br />

affordable housing and commercial housing will<br />

be established in accordance with the national<br />

conditions.” This statement implies that the dual<br />

track housing supply system, which combines<br />

affordable housing and commercial housing as<br />

many experts had long advocated, has gained<br />

approvals from the central government and recognitions<br />

of markets. In the future, this housing<br />

system will gradually take shape.<br />

Many factors raise the difficulty in<br />

controlling the property market<br />

According to the data provided by the<br />

National Bureau of Statistics, in November in<br />

2010 the average selling price of houses in 70<br />

Chinese big and medium-sized cities rose by 7.7%<br />

on year-on-year basis, the amount of increase<br />

contracting by 0.9 percentage point compared<br />

with October; however, this price kept a month<br />

to month growth of 0.3% in November, rising<br />

by 0.1 percentage point compared with October<br />

and the third consecutive monthly increase since<br />

September in 2010. As for the trading volume, in<br />

November commercial houses with a total space<br />

of 101.13 million square meters were sold, rising<br />

by 14.5% on a year-on-year basis. The absolute<br />

amount surged by 8.34 million square meters,<br />

a 9.0% increase from October; the commercial<br />

housing sales across China valued 528.6 billion<br />

yuan, rising by 18.6% on a year-on-year basis.<br />

The absolute amount rose by 21 billion yuan, an<br />

increase of 4.1%. A double surge in amount and<br />

price happened in many cities, including Beijing,<br />

Tianjin, Wuhan and Changsha.<br />

Currently, the inflationary expectations<br />

began to rise after one or two months’ policy<br />

implementation and observation. The inflationary<br />

pressure also intensified and could not be<br />

eased in the short run. The role of property as<br />

investment tools was strengthened, which bolstered<br />

up the housing prices. Additionally, the<br />

favorable exchange and interest rate gains led a<br />

huge amount of foreign capital into the property<br />

market. Therefore, under these multiple factors,<br />

the control and management of property market<br />

has arrived at a critical period of game playing.<br />

Due to the inflationary expectations, the<br />

curbing effect of management and control policies<br />

on demands has moderated. The surging<br />

price aroused property buyers’ worries about<br />

devaluation of purchasing powers and lack of<br />

investment channels, and strengthened their<br />

beliefs that “having one house in hands is better<br />

than none”. Also, the inflationary expectations<br />

rose with the growing pressure, and the spike<br />

of price made capital flow back to the property<br />

market after a short period of observation,<br />

which increased the difficulty in controlling the<br />

property market.<br />

“Buckets Effect” of affordable housing<br />

becomes prominent; construction of public-rent<br />

houses will speed up.<br />

For quite a long time, the imbalanced<br />

development of Chinese commercial housing<br />

market and the affordable housing market was<br />

also an important factor that contributed to the<br />

spike of housing prices. On the one hand, the<br />

long accumulated “historical debts” of affordable<br />

housing prompt demands to unleash in huge<br />

50


amount in the commercial housing<br />

market, which boosted the high housing<br />

price; on the other hand, the inadequacy<br />

of affordable housing accentuates<br />

the housing difficulties against the<br />

backdrop of high housing prices, which<br />

forms a vicious circle.<br />

Compared with the commercial<br />

housing market, which grows rapidly<br />

with the urbanization, the development<br />

of affordable housing clearly lags behind,<br />

as the amount of houses is insufficient.<br />

In the middle of June of 2010,<br />

Mr. Liu Jiayi, Auditor-General of the<br />

National Audit Office of China, stated<br />

in his 2009 work report delivered to the<br />

Standing Committee of the National<br />

People’s Congress that as of the end of<br />

2009, the 448 new low-rent housing<br />

projects and 10 squatter resettlement<br />

projects under the spot test had only<br />

completed 41% and 42% of the planned<br />

investment respectively. The “debts” of<br />

affordable housing channel huge housing<br />

demands into the commercial housing<br />

system, stress the relations between<br />

supply and demand, which become an<br />

important factor that contributes to the<br />

high housing price.<br />

The Central Economic Work<br />

Conference this year pointed out that<br />

the role of governments should be<br />

consolidated, all social forces should<br />

be mobilized, the constructions of affordable<br />

housing should be furthered<br />

and the public-rent houses should be<br />

developed. A system of affordable housing<br />

and commercial housing should be<br />

formed in accordance with the national<br />

conditions. Also, an additional emphasis<br />

on affordable housing will not only<br />

efficiently satisfies part of demands in<br />

the commercial housing market, but<br />

also provides a good solution to the<br />

housing problems of those deserving<br />

people.<br />

However, according to the housing<br />

programs in the “Twelfth Fiveyear<br />

Plan” in all regions, the affordable<br />

housing projects will take much more<br />

shares of the property market. The public-rent<br />

houses, which are used to solve<br />

housing problems for the “sandwich<br />

class”, will also become important in<br />

the construction program. During the<br />

“Twelfth Five-Year Plan”, the Beijing<br />

government plans to build and purchase<br />

1 million affordable housing and grant<br />

rental compensations to 100 thousand<br />

households. The affordable housing will<br />

take up 60% of the whole housing supplies.<br />

In 2011, the percentage of publicrent<br />

houses will increase to more than<br />

60% of the whole affordable housing<br />

program in Beijing. As for Shanghai,<br />

its initial plan during the “Twelfth<br />

Five-Year Plan” period is to build new<br />

houses with space of 130 million square<br />

meters. Among these houses, the affordable<br />

housing space will take up 50%<br />

and the number of houses will take<br />

about 60% of the total.<br />

The Ministry of Housing and<br />

Urban-rural Development has recently<br />

pointed out that in 2011 the affordable<br />

housing program will cover 10 million<br />

houses, compared with the 5.8 million<br />

in the year 2011, the new incremental<br />

4.2 million houses mainly belong to the<br />

public-rent houses.<br />

Developers will take greater<br />

initiative in the affordable<br />

housing program<br />

In those earlier days, Jia Kang,<br />

director of the Research Institute for<br />

Fiscal Science, Ministry of Finance,<br />

P.R.China and other experts claimed to<br />

establish “double track” housing supply<br />

system. The key lies in the division of<br />

responsibilities between government and<br />

market: the government should carry out<br />

well the territorial development and “top<br />

planning” for the property constructions,<br />

and provide low-rent houses for the lowincome<br />

class and the rental houses for<br />

“sandwich class”. The market should<br />

play its role in allocating common commercial<br />

housing and other properties.<br />

This means that more affordable housing<br />

houses should be built.<br />

Actually, in recent years, as the<br />

double-track housing system of commercial<br />

housing and affordable housing<br />

becomes clearer, and the development<br />

of affordable housing was furthered<br />

and accelerated all across China, some<br />

real estate developers have followed<br />

the policy trend and take part into<br />

the affordable housing program on a<br />

voluntary basis. Many large real estate<br />

corporations, including Vanke, Poly,<br />

CSCEC, Chixia Development, green<br />

land, Merchants Property etc, have<br />

quickened their pace towards the affordable<br />

housing market and intended<br />

to grab more shares of the market.<br />

We think that during the “Twelfth<br />

Five-Year Plan” period, it will be a big<br />

market trend that more and more real<br />

estate corporations will participate into<br />

the affordable housing developments<br />

and raise their corresponding investments.<br />

Reasons are as follows:<br />

The first reason is that since last<br />

year, the control over property market<br />

has strengthened, which raised the<br />

policy risk for developing commercial<br />

housing programs. The contraction in<br />

real estate credit will surely happen next<br />

year. However, the affordable housing<br />

program has won a lot of policy support<br />

in capital, land and taxation. Compared<br />

with the commercial housing market,<br />

developers will suffer less risk in developing<br />

affordable housing and gain<br />

stable profits, protections on the capital<br />

return and credit support. It is said that<br />

currently, among all the housing space<br />

invested by Vanke, 5% of them belongs<br />

to affordable housing and the net profit<br />

rate amounts to 6%. The average net<br />

rate of all Vanke projects is about 10%.<br />

Second, there is not much space<br />

left for developers in the commercial<br />

housing markets at the first-line and<br />

second-line cities. As the affordable<br />

housing program becomes more urgent<br />

and important, its huge market will<br />

become a new place for business competition<br />

and source of profits. Also, the<br />

affordable housing program will be carried<br />

out as business rather than public<br />

welfare projects. The affordable housing<br />

planned to be constructed this year<br />

will cover 1 million square meters. In<br />

Beijing, 1/3 of the houses developed by<br />

Vanke Beijing will become affordable<br />

housing in 2010.<br />

From “letting real estate sector play<br />

a prominent role” emphasized in 2008<br />

Central Economic Work Conference, to<br />

“provide more commercial housing supply”<br />

in 2009, to “accelerating affordable<br />

housing system development” this year,<br />

the policy trend has become quite clear.<br />

Under such background, real estate<br />

developers should adapt to the market<br />

change and make long-term plan about<br />

its position, to grab a share from the<br />

increasingly fierce competition in the affordable<br />

housing market.<br />

(Author: from Xinhua News Agency)<br />

51


A New Round of<br />

Reform on Income Distribution<br />

—Touch the Tender Spot<br />

By Outlook Weekly<br />

The unreason of income distribution<br />

system mainly includes the influence<br />

of non-market factors on market factors<br />

in the initial distribution, and<br />

weak compensatory intervention of the government<br />

in redistribution of initial distribution.<br />

As the increasingly expanding income<br />

gap is setting barriers for Chinese social development,<br />

the central government requires<br />

“strengthening the reforms on national income<br />

distribution system”. The new round of reform<br />

on income distribution system should cut to the<br />

quick, and really works.<br />

According to the data from National Bureau<br />

of Statistics, the Gini coefficient of China<br />

has kept on rising since 2000 when it topped 0.4,<br />

the warning limit. And now it comes to 0.47,<br />

according to the World Bank. Companied with<br />

the expanding income gap is the rapid concentration<br />

of social wealth, which is contrary to the<br />

target of building a moderately prosperous society<br />

in all aspects, demonstrating the urgency of<br />

adjusting income distribution system.<br />

The unreason in income distribution system<br />

since marketization reform mainly shows in<br />

influences of non-market factors on market factors<br />

in the initial distribution, and insufficient<br />

compensatory intervention of the central government<br />

in redistribution of initial distribution<br />

results. First is the gray income out of combination<br />

of market mechanism and non-market factors.<br />

“Gray income” means interference of nonmarket<br />

forces on market mechanism, which can<br />

lead to concentration of incomes that should<br />

be equally distributed by market mechanism to<br />

hands controlling non-market forces. In addition,<br />

gray income is not included in social and<br />

economic statistics. Overall, gray income in<br />

China includes incomes from double-track price<br />

system, monopoly, loss of state-owned assets,<br />

tax erosion and illegal operation, etc.<br />

Second, the weak position of laborers<br />

causes that the labors now are having a declining<br />

income proportion. In this long-term oversupply<br />

labor market in China, “monopsony”<br />

objectively exists, and this situation is even<br />

worse in traditional labor-intensive industries.<br />

Enterprises often force employees to accept a<br />

wage offer that can hardly meet the basic demands,<br />

to make the largest profits. This results<br />

in a situation that labors can not equally share<br />

achievements in economic growth.<br />

Third, state-owned monopoly industries<br />

can offer much higher wages. In the process of<br />

state-owned enterprise reform, this problem is<br />

not solved.<br />

52


Fourth, the social security system<br />

hasn’t sufficient relieving capabilities in<br />

redistribution. As a relieving system for<br />

the government to intervene in income<br />

distribution by market mechanism,<br />

social security system should not only<br />

have functions to correct the unbalances<br />

in initial distribution by market<br />

mechanism, but also capabilities to<br />

relieve the social contradictions due to<br />

income gap. In the process of marketization<br />

reform, meaning through the<br />

transformation from “enterprise-funded<br />

security” to social security, the unbalanced<br />

social security coverage due to<br />

different income levels between urban<br />

and rural area and different enterprises<br />

still exists. According to the statistics of<br />

2009, only 4.8% of rural population in<br />

China takes pensions, and the ratio of<br />

urban population is 78%. After several<br />

times of adjustments, now urban enterprise<br />

retiree has a basic annuity of 1200<br />

RMB/month, but still less than 50% of<br />

that of a civil servant. This is contrary<br />

to the aim of social security system to<br />

remedy the groups with weak market<br />

competitiveness and “losers”, and may<br />

even worsen the unbalanced income<br />

distribution by expanding the actual<br />

income gap.<br />

The above four “spots” are the<br />

targets for current reform on income<br />

distribution system.<br />

First, make comprehensive efforts<br />

on gray income, meaning overcoming<br />

the income gap due to grey or even<br />

“black ” income, which needs great<br />

determination from decision-makers.<br />

Cleaning gray income needs comprehensive<br />

measures, and the priority is<br />

to reference on experiences from other<br />

countries of market economy, especially<br />

those with mature market economy, to<br />

patch the loopholes in financial, administrative,<br />

state-owned resources management<br />

systems that may lead to losses<br />

of public capital, corruption and so<br />

on, while establish a standardized and<br />

transparent systems, cut unnecessary<br />

administrative examination and approval<br />

procedure, reduce administrative<br />

monopoly, standardize governmental<br />

authority, perfect strict social monitoring<br />

mechanism.<br />

Second, actively and steadily boost<br />

collective labor contract negotiation<br />

mechanism, and raise labor income.<br />

The main reason for laborers having a<br />

declining income proportion is that a<br />

single laborer is weak facing an enterprise<br />

in labor market, while collective<br />

agreement negotiation can arm labors<br />

and effectively protect their economic<br />

interests. The existing legal framework<br />

in China has provided a legal basis for<br />

boosting the collective negotiation.<br />

From the perspective of economics,<br />

collective negotiation<br />

can<br />

ease the buyer<br />

monopolization<br />

in labor<br />

market, and<br />

maximize social<br />

welfare by<br />

market competition.<br />

It is<br />

demonstrated<br />

that collective negotiation can be a legal<br />

way to secure labors’ economic interests<br />

and avoid social contradictions, as a<br />

smoother to social contradictions.<br />

Third, average the higher incomes<br />

in monopolized industries, to overcome<br />

the income gap between industries,<br />

especially with monopolized industries.<br />

This is a key part for reform on income<br />

distribution system in China. The following<br />

measures can be taken. For<br />

example, carry out state-owned capital<br />

management budget, turn in the equity<br />

earnings and profits of monopolized<br />

enterprises to state treasury to supplement<br />

social security, impose special<br />

taxes to monopoly profits, hold public<br />

hearings before any price changes of<br />

products and services from monopoly<br />

industries, make transparent of income<br />

distribution in administrative monopoly<br />

industries, etc. Taking chance of this<br />

wave of reform on income distribution<br />

system, treat anti-monopoly as a necessity<br />

for socialist market economy construction,<br />

and only in this way can we<br />

secure a balanced<br />

income distribution.<br />

M e a n -<br />

while, the social<br />

security system<br />

should focus on<br />

those disadvantaged,<br />

to prevent<br />

intergenerational<br />

transmission of<br />

poverty. As China has a large population<br />

and unbalanced economic development<br />

between urban and rural areas<br />

and different regions, it is hard to realize<br />

equal social security coverage in a<br />

short term. So, we should vigorously<br />

promote the construction of rural social<br />

security system and the establishment<br />

of urban social security system for migrant<br />

workers, while consider setting<br />

up educational funds in social security<br />

system for low-income, especially rural<br />

poor population, to improve labor quality<br />

and competitiveness, therefore preventing<br />

intergenerational transmission<br />

of poverty.<br />

As China has a large population<br />

and unbalanced economic<br />

development between urban and<br />

rural areas and in different regions,<br />

it is hard to realize equal social<br />

security coverage in a short term.<br />

53


voices and views<br />

Experts’ Views on<br />

China Economy of 2011<br />

Zhang Yansheng<br />

director of Foreign Economic Research Institute of National<br />

Development and Reform Commission<br />

Zhang Yansheng points out<br />

that, the statement of Central<br />

Economic Work Conference<br />

on RMB exchange rate means<br />

that next year China will insist<br />

on perfecting RMB exchange rate<br />

regime in accord with actual national<br />

conditions, and continue the reform<br />

direction towards enhancing regime<br />

f lexibility and forming mechanism<br />

marketization. He believed that appreciation<br />

of RMB would not help to solve<br />

the “problem” of trade surplus of China,<br />

as China’s trade surplus is mainly from<br />

processing trade, internal trade of multinational<br />

companies, and is resulted<br />

from globalization. It can not be overcome<br />

by exchange rate regime.<br />

Wang Xiaoguang<br />

researcher at Decision-making Consultation Department of<br />

Chinese Academy of Governance<br />

Wang Xiaoguang said, in consideration<br />

of that the export<br />

and actual consumption may<br />

slowdown next year, but investment<br />

would continue to<br />

rise, China is possible to have 9% to 9.5%<br />

of GDP growth in 2011. According to the<br />

data issued by General Administration<br />

of Customs recently, in November 2010,<br />

China had an import and export value totaled<br />

283.76 billion US dollars, up 36.2%<br />

from a year ago, refreshing the record of<br />

US$273.09 billion September 2010, and<br />

topping US$280 billion for the first time.<br />

Wang Xiaoguang pointed out that, as export<br />

grew too fast in 2010, even to a new<br />

height in November, it may slow down in<br />

2011 due to this large basic value; on the<br />

other hand, global economy recovered as a<br />

whole in 2010, and may face adjustments<br />

in the following year. “In American and<br />

European markets we may face higher<br />

pressure, so it is estimated that 2011 will<br />

see an export growth of 10% plus or so,<br />

which could be a major restrictive factor<br />

for China economic growth.”<br />

Liu Fuyuan<br />

president of China Human Resources Development Research<br />

Association, researcher of Academy of Macroeconomic Research<br />

of National Development and Reform Commission<br />

Liu Fuyuan said, the key of economic<br />

structure adjustment is the<br />

transformation of peasant workers<br />

and making free of farmers. He<br />

pointed out that, if 1% of rural<br />

population can be turned into urban, China’s<br />

economy development will improve<br />

by one percentage, and GDP growth rate<br />

will not be less than 10%. Now the principal<br />

contradiction in China is the contradiction<br />

between urban and rural mode of<br />

production. Liu Fuyuan said, changing<br />

the social identity of peasant workers<br />

and accelerating urbanization of rural<br />

population, can solve many problems. He<br />

consistently claims that transformation of<br />

social identity of peasant workers should<br />

be an important topic during 12th Fiveyear<br />

Period. “Peasant workers should stay<br />

in cities. The major barrier for the transformation<br />

lies in lack of a social security<br />

system with comprehensive coverage.<br />

Moving rural population to towns instead<br />

of urbanization is not a good choice, and<br />

the best way is to perfect the social security<br />

system,” he said.<br />

54


Xiao Geng<br />

from School of Public Policy and Management, Tsinghua University<br />

P<br />

rofessor Xiao Geng believed<br />

personal income tax<br />

threshold does not matter<br />

much, but it is important<br />

to lower the rates. Doing<br />

this can attract many industries<br />

to relocate in China Mainland from<br />

overseas, such as finance and other<br />

high-end service industries. In this<br />

way, the revenue would increase<br />

rather than decline. As to those new<br />

taxes like resources tax, environment<br />

tax and house tax, he said the government<br />

should be prudent. For example,<br />

the property and value of real<br />

estate in China is very complicated<br />

to figure out, so it must be cautious<br />

to set building tax rate. “These new<br />

taxes should have a low rate, if they<br />

are imposed,” he said.<br />

Zhang Xiaojing<br />

director of Department of Macroeconomics, Institute of<br />

Economics, Chinese Academy of Social Sciences<br />

Z<br />

hang Xiaojing said, the number<br />

of favorable factors to stimulate<br />

consumption increases<br />

in recent years. For example,<br />

farmers’ income, standards<br />

for minimum urban living allowance,<br />

minimum wage and personal income<br />

tax threshold are on the rise, the govern-<br />

ments’ input in people’s livelihood is<br />

increase, and the process of urbanization<br />

is speeding up. Since most people source<br />

their incomes from work, next phase of<br />

reform on income distribution system<br />

will take wage reform as the core and lift<br />

the proportion of labor income in initial<br />

distribution of income.<br />

Yi Xianrong<br />

Researcher Yi Xianrong from Institute of Finance and Banking<br />

Y<br />

i Xianrong said, the key of reasonable<br />

property market regulation<br />

is to clean speculation.<br />

There are numerous policies,<br />

but they are not put into practice as expected.<br />

About 70% to 80% of property<br />

market regulation policies are not carried<br />

out as expected. “House tax which is hot<br />

recently can do little help, and the key<br />

to regulate property market is to control<br />

speculative purchases. 10 million sets<br />

of welfare housing to be constructed in<br />

2011 will ease the pressure on people<br />

with housing difficulties, having no<br />

major impacts on commodity property<br />

market.<br />

Zhuang Jian<br />

Asenior economist from Asian Development<br />

Bank China Office<br />

Zhuang Jian pointed out that,<br />

most of the governmental investments<br />

were used in infrastructure<br />

construction. In the<br />

12th five-year period, central<br />

government will put more attention to<br />

people’s livelihood, to boost domestic<br />

demand and improve people’ lives; investments<br />

in emerging strategic industries<br />

will increase; meanwhile, the government<br />

also should spare investment<br />

to small and medium-sized and private<br />

enterprises, to develop various driving<br />

forces to boost economic development.<br />

55


China Searching for Something<br />

By Lan Shen<br />

• Online search data sug<br />

gests rising interest in<br />

buying a home<br />

• Searches for buying a car<br />

resumed their uptrend in<br />

late 2010<br />

• Inflation became a big<br />

concern nationwide in<br />

late 2010<br />

• Wealth management<br />

products are growing rap<br />

idly in popularity<br />

What people search for online can be a good signal of present and<br />

future consumer demand. In March 2009, we believe we became<br />

the first bank research team to use Google Tools to track what<br />

people in China were searching for online. We are now excited<br />

to find that Baidu, which has an 80% share of the search market among China’s<br />

online population of 300mn, has developed a similar tool, the Baidu Index (BI).<br />

Again, we believe we are the first to use this tool to highlight what the Chinese<br />

consumer is thinking about. Our main findings are as follows:<br />

• Interest in buying a home has risen in the last few months, after plateauing<br />

at a high level in 2010. This is a bullish signal for near-term housing<br />

demand.<br />

• Interest in buying a car is rising again, too.<br />

• Online interest in inflation is through the roof.<br />

• Wealth management products appear to be the dominant inflation<br />

management tool for retail investors.<br />

First, a quick note on how the BI works. We did all of our searches in<br />

simplified Chinese and limited them to searches in mainland China. The results<br />

are an index representing the number of daily searches for that term over<br />

time via Baidu’s search engine (we asked Baidu’s investor relations department<br />

how they calculate this index, but the exact details have not been made public).<br />

Despite this lack of transparency, it is clear that the BI is different from<br />

Google’s equivalent tool. Google compares the number of searches for one<br />

58


search term to all other searches carried<br />

out at that time, and thus provides<br />

a sense of how popular a search term<br />

is relative to others. The Baidu Index,<br />

in contrast, will show more searches<br />

simply as a result of an increase in the<br />

online population, and in the number<br />

of people using Baidu. As a result, we<br />

should focus on periods of stability<br />

and spurts in growth in the BI. Most<br />

of the BI data starts in June 2006 and<br />

runs to December 2010. Unfortunately,<br />

Baidu does not allow the data to be<br />

downloaded, so we have eyeballed the<br />

charts and recreated them as best we<br />

can. Baidu also provides statistics on<br />

the gender, age, occupation, education<br />

and location of searchers. To smooth<br />

out the volatility, we have averaged<br />

the monthly data over three months in<br />

our charts. Housing interest continues<br />

to rise Nationwide searches for ‘buy a<br />

home’ (‘ 买 房 ’) are rising again, as Chart<br />

1 shows. The only time searches for this<br />

term declined between June 2006 and<br />

December 2010 was during a brief period<br />

in Q1 and Q2-2008. When searches<br />

recovered in Q3-2008, transactions followed,<br />

and so did the monthly average<br />

selling price (ASP). Strong interest was<br />

maintained throughout 2009-10. Inter-<br />

Chart 1: Searches for ‘buy a home’<br />

Nationwide searches for ‘buy a home’ vs. monthly ASP<br />

1,000<br />

900<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Jun-06<br />

Oct-06<br />

Feb-06<br />

Jun-07<br />

'Buy a house'<br />

Oct-07<br />

Feb-08<br />

Jun-08<br />

Oct-08<br />

Feb-09<br />

Jun-09<br />

Oct-09<br />

Feb-10<br />

Jun-10<br />

Oct-10<br />

ASP, CNY/m2(RHS)<br />

12,000<br />

10,000<br />

8,000<br />

6,000<br />

4,000<br />

2,000<br />

0<br />

Sources: Baidu, CREIS, Standard Chartered Research<br />

Chart 2: Searches for ‘buy a home’<br />

Top 3 cities (Beijing, Shanghai, Shenzhen)<br />

– searches for ‘buy a home’<br />

1,000<br />

900<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Jan-09<br />

Mar-09<br />

May-09<br />

Jul-09<br />

Sep-09<br />

Nov-09<br />

'Buy a house' (nationwide)<br />

Jan-10<br />

Mar-10<br />

May-10<br />

Jul-10<br />

Sep-10<br />

Nov-10<br />

'Buy a house' (three cities)<br />

Sources: Baidu, Standard Chartered Research<br />

1,000<br />

900<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Chart 3: Searches for ‘buy a car’<br />

Nationwide searches for ‘buy a car’<br />

Jun-06<br />

Oct-06<br />

Feb-06<br />

Jun-07<br />

Oct-07<br />

Feb-08<br />

Jun-08<br />

Oct-08<br />

Feb-09<br />

Jun-09<br />

Oct-09<br />

Feb-10<br />

Jun-10<br />

Oct-10<br />

'Buy a car'(nationwide)<br />

Sources: Baidu, Standard Chartered<br />

Research<br />

Chart 5: Searches for ‘travel abroad’<br />

Searches for ‘travel abroad’ vs. passengers on<br />

international routes, mn.<br />

160 2.00<br />

120 1.60<br />

1.20<br />

80<br />

0.80<br />

40<br />

0.40<br />

0 0.00<br />

Dec-07<br />

Jun-08<br />

Dec-08<br />

'Travel abroad'<br />

Jun-09<br />

Dec-09<br />

Jun-10<br />

Dec-10<br />

International passengers, mn<br />

Sources: Baidu, CEIC, Standard Chartered<br />

Research<br />

Chart 4: Searches for consumables<br />

Searches for ‘buy a TV’, ‘buy a computer’ and ‘buy<br />

a mobile phone’<br />

1,000<br />

900<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Aug-09<br />

Sources: Baidu, Standard Chartered Research<br />

estingly, there was no dip in searches following the property-market cooling<br />

measures announced in April 2010. Even more interestingly, search interest<br />

has risen again since Q3-2010. This suggests that strong transaction volumes<br />

can be expected in the near term. Looking at city-specific data (available since<br />

October 2008), searches from the top three cities (Beijing, Shanghai and<br />

Shenzhen) followed almost the same pattern as nationwide searches until recently,<br />

but the two have diverged since H2-2010 (see Chart 2). This suggests<br />

that housing demand in Tier 1 cities has weakened, while buying interest in<br />

other cities has risen gradually. This reflects transaction activity (for more details<br />

on China’s housing market, see Special Report, 18 November 2010, ‘China<br />

– Our big real-estate survey, Phase 2’).<br />

Planes, trains and automobiles As Chart 3 shows, searches for ‘buy a car’<br />

(‘ 买 车 ’) are also rising again, suggesting that even after a strong year and the end<br />

of most car-buying subsidies, sales may still have some momentum. We expect<br />

passenger car sales growth of 10-15% in 2011. That said, given that the main<br />

subsidy for car buyers ended on 30 December 2010, the rise in searches may represent<br />

a surge in interest before the subsidies disappeared. The January 2011 data<br />

for ‘buy a car’ searches should be more telling. Chart 4 shows searches for ‘buy a<br />

TV’ (‘ 买 电 视 ’), ‘buy a computer’ (‘ 买 电 脑 ’) and ‘buy a mobile phone’ (‘ 买 手 机 ’).<br />

While searches for durable goods like TVs and computers have been quite steady,<br />

searches for ‘buy a mobile phone’ rose sharply in Q2-2010 and plateaued in Q3-<br />

2010. In March 2010, searches for ‘travel abroad’ (‘ 国 外 旅 游 ’) rose significantly<br />

and have remained at this higher level. This is consistent with passenger trends on<br />

international air routes, as Chart 5 shows. With recovering confidence and strong<br />

income growth, Chinese consumers are holidaying again.<br />

Inflation is the hot issue Official CPI inflation breached 5% y/y in November<br />

2010. Searches for ‘inflation’ (‘ 通 货 膨 胀 ’) and ‘CPI’ are shown in<br />

Chart 6. Searches move in line with official CPI, though there is more online<br />

interest in inflation now than in February 2008, when official CPI inflation<br />

hit 8.7% y/y. In Chart 7, we compare searches for ‘grain price’ (‘ 粮 食 价 格 ’), ‘pork<br />

price’ (‘ 猪 肉 价 格 ’) and ‘vegetable price’ (‘ 蔬 菜 价 格 ’). All rose sharply in December.<br />

Searches for ‘grain price’ have remained lower than before; searches<br />

for ‘pork price’ are up a bit, but are still far below their mid-2007 peak. In late<br />

Oct-09<br />

Dec-09<br />

Feb-10<br />

Apr-10<br />

Jun-10<br />

Aug-10<br />

Oct-10<br />

Dec-10<br />

'Buy a TV 'Buy a computer' 'Buy a mobile phone'<br />

Chart 6: Searches for inflation<br />

Searches for ‘inflation’ and ‘CPI’ vs. official CPI<br />

inflation<br />

3,000<br />

10<br />

8<br />

2,000<br />

6<br />

4<br />

2<br />

1,000<br />

0<br />

-2<br />

0 -4<br />

Jun-06<br />

Dec-06<br />

Jun-07<br />

Dec-07<br />

Jun-08<br />

Dec-08<br />

Jun-09<br />

Dec-09<br />

Jun-10<br />

'Inflation' 'CPI' official CPI y/y%(RHS)<br />

Dec-10<br />

Sources: Baidu, NBS, Standard Chartered<br />

Research<br />

59


Chart 7: Searches for food prices<br />

Searches for ‘grain price’, ‘pork price’ and<br />

‘vegetable price’<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Jun-06<br />

Dec-06<br />

Jun-07<br />

Dec-07<br />

Jun-08<br />

Dec-08<br />

Jun-09<br />

Dec-09<br />

Jun-10<br />

'Grain price' 'Pork price' 'Vegetable price'<br />

Dec-10<br />

Sources: Baidu, NBS, Standard Chartered<br />

Research<br />

Chart 9: Searches for ‘equities’<br />

Search for ‘equities’ vs. SSE<br />

40,000<br />

30,000<br />

20,000<br />

10,000<br />

0<br />

Jun-06<br />

Dec-06<br />

Jun-07<br />

Dec-07<br />

'Equities'<br />

Jun-08<br />

Dec-08<br />

Jun-09<br />

Dec-09<br />

'SSE(RHS)'<br />

Jun-10<br />

Dec-10<br />

7,000<br />

6,000<br />

5,000<br />

4,000<br />

3,000<br />

2,000<br />

1,000<br />

0<br />

Sources: Baidu, Bloomberg, Standard<br />

Chartered Research<br />

Chart 8: Searches for investments<br />

Searches for ‘gold investment’, ‘FX investment’ ,<br />

‘structured products’ and ‘equities’<br />

800 40,000<br />

700<br />

600<br />

30,000<br />

500<br />

400<br />

20,000<br />

300<br />

200<br />

10,000<br />

100<br />

0<br />

0<br />

2010, searches for ‘vegetable price’ surged – unsurprisingly, given the vegetable<br />

price increases. What to invest in Amid broad concerns about inflation,<br />

we looked at how online China is responding in terms of investment<br />

options. Chart 8 shows searches for four investment options: gold, FX,<br />

structured products and equities. (‘ 黄 金 投 资 ’, ‘ 外 汇 投 资 ’, ‘ 理 财 产 品 ’, and<br />

‘ 股 票 ’).<br />

Jun-06<br />

Dec-06<br />

Jun-07<br />

Dec-07<br />

Jun-08<br />

'Gold investment'<br />

'Structured products'<br />

Dec-08<br />

Jun-09<br />

Dec-09<br />

Jun-10<br />

Dec-10<br />

'FX investment'<br />

'Equities'(RHS)<br />

Sources: Baidu, Standard Chartered<br />

Research<br />

Chart 10: Searches for ‘gold investment’<br />

Search for ‘gold investment’ vs. gold price<br />

400<br />

300<br />

200<br />

100<br />

0<br />

Jun-06<br />

Dec-06<br />

Jun-07<br />

Dec-07<br />

'Gold investment'<br />

Jun-08<br />

Dec-08<br />

Jun-09<br />

Dec-09<br />

Jun-10<br />

Dec-10<br />

Gold price, USD/oz(RHS)<br />

1,600<br />

1,200<br />

800<br />

400<br />

Sources: Baidu, Standard Chartered<br />

Research<br />

0<br />

• Searches for ‘FX’ are highly volatile,<br />

as are searches for ‘equities’. Search interest<br />

in equities peaked just before the end of the<br />

bull market in H2-2007 and fell dramatically<br />

afterwards (see Chart 9). Search interest<br />

is still range-bound, providing little basis to<br />

judge where the Shanghai Stock Exchange<br />

Composite Index will go next.<br />

• Gold has seen a steady rise in interest<br />

in recent months. Searches are relatively consistent<br />

with gold price trends (see Chart 10).<br />

• Structured wealth management products<br />

are the clear winner. In recent years,<br />

banks have aggressively marketed these<br />

products, which are popular because of their<br />

ability to offer returns above deposit rates (see<br />

On the Ground, 14 September 2010, ‘China<br />

– How to prevent a housing bubble’).<br />

In short, then, online China is concerned<br />

about inflation, and is anxious to<br />

protect its wealth with structured products<br />

offered by banks, as well as home purchases<br />

and, to a lesser extent, gold investment. Interest<br />

in home-buying has recovered in Tier<br />

2 and 3 cities, but not in Tier 1 cities.<br />

(Author: from Standard Charted<br />

Bank (China) Limited)<br />

M&A Deals in China<br />

Reach Record Levels in 2010<br />

By Zhao Ailing<br />

T he c onsistent pac e of<br />

strong economic growth in<br />

China and the valuable inorganic<br />

growth opportunities<br />

created from consolidating<br />

industries are some of the<br />

important drivers behind<br />

this burgeoning M&A trend.<br />

The overall level of merger and acquisition (M&A) deals in China<br />

has reached an all time high, both in the number and value<br />

of domestic, inbound and outbound deals, according to PwC<br />

analysis released. A record 4,251 announced transactions valued<br />

more than US$200 billion were recorded in the 2010 calendar year, representing<br />

a 16% increase in the number of deals and a 27% increase in the<br />

value of deals over 2009. The consistent pace of strong economic growth<br />

in China and the valuable inorganic growth opportunities created from<br />

consolidating industries are some of the important drivers behind this<br />

burgeoning M&A trend.<br />

60


The trend is loud and clear<br />

for outbound M& A by China<br />

buyers, with M&A deal activity<br />

overseas growing by more than<br />

30%, to a record 188 transactions<br />

with a combined value of<br />

about US$38 billion in 2010, up<br />

from 144 deals in 2009 valued at<br />

US$30 billion. PwC Transaction<br />

Services Partner Nelson Lou said<br />

there was no denying the strong<br />

trend of China’s growing interest<br />

in quality assets overseas, and despite<br />

a relatively slower final quarter<br />

of outbound activity in 2010<br />

in terms of volume, there were no<br />

signs of the strong outbound trend<br />

waning during 2011 and beyond.<br />

“China’s appetite for overseas<br />

assets is insatiable, with natural<br />

resources remaining a key industry<br />

target, as the country aims to secure<br />

the resources it needs to fuel its engine<br />

of economic growth,” Nelson<br />

Lou said. As predicted by PwC earlier<br />

in the year, apart from continued<br />

strong interest in natural resources,<br />

there has been an increasing number<br />

of acquisitions of high technology<br />

companies, as Chinese buyers look<br />

to bring know-how back to China to<br />

foster a developing economy. There is<br />

also strong interest in machinery and<br />

equipment manufacturers, and the<br />

automotive sector.<br />

China’s interest in M&A targets<br />

overseas remain widespread<br />

globally, however the US is identified<br />

as a growing strategic target with 32<br />

Outbound deal-Top 10 sectors by number of<br />

deals, FY09 vs. FY10<br />

Raw materials<br />

Industrials<br />

High Technology<br />

Energy and Power<br />

Consumer Staples<br />

Conglomerate<br />

Healthcare<br />

Consumer Products<br />

and Services<br />

Media and<br />

Entertainment<br />

Retail<br />

11<br />

13<br />

5<br />

12<br />

11<br />

7<br />

1<br />

5<br />

9<br />

5<br />

4<br />

4<br />

2<br />

18<br />

19<br />

25<br />

22<br />

24<br />

FY10<br />

FY09<br />

Note: Raw Materials include mining, metals and chemicals.<br />

Source: ThomsonReuters and PwC analysis<br />

49<br />

Strategic buyer Deals-Top 10 sectors by deal<br />

value (US$ billion), FY09 vs. FY10<br />

Raw materials<br />

Financial Services<br />

Real Estate<br />

Conglomerate<br />

Industrials<br />

Energy and Power<br />

Consumer Staples<br />

High Technology<br />

Consumer Products<br />

and Services<br />

Media and<br />

Entertainment<br />

5.7<br />

5.1<br />

4.9<br />

4.9<br />

3.0<br />

4.6<br />

2.3<br />

28.2<br />

Source: ThomsonReufers, ChinaVenture and<br />

PwC analysis<br />

67<br />

9.7<br />

11.8<br />

12.8<br />

12.9<br />

10.5<br />

9.7<br />

11.0<br />

20.8<br />

20.5<br />

18.8<br />

20.5<br />

18.1<br />

FY10<br />

FY09<br />

Strategic buyer Deals-Top 10 sectors by<br />

number of deals, FY09 vs. FY10<br />

Raw materials<br />

Industrials<br />

Conglomerate<br />

Real Estate<br />

High Techndogy<br />

Energy and Power<br />

Consumer Staples<br />

Consumer Products<br />

and Services<br />

Healthcare<br />

Financial Services<br />

320<br />

308<br />

248<br />

253<br />

223<br />

202<br />

223<br />

179<br />

179<br />

120<br />

137<br />

106<br />

614<br />

539<br />

475<br />

428<br />

403<br />

351<br />

369<br />

404<br />

Note: Raw Materials include mining, metals and<br />

chemicals.<br />

deals in 2010 compared to 21 in 2009. The European Union, Australia<br />

and Africa remain important locations of interest, as well as countries<br />

in Asia. Outbound M&A deal activity is expected to continue to grow<br />

strongly in 2011 driven by the continued demand for natural resources<br />

as well as the search for technologies and know-how to bring back to the<br />

China market.<br />

The rise of Private Equity<br />

Private Equity (PE) is emerging as an important source of capital<br />

for private enterprises in China, with nearly 580 transactions involving<br />

PE activity with China targets announced in 2010, an increase of 66%<br />

over 2009. More than two thirds of these were initiated by domestic PEs,<br />

demonstrating the trend of localisation of the PE industry within China.<br />

“There are rapid developments in the private equity industry in China.<br />

All indications are that private equity will prove to be an important<br />

provider of growth capital for Chinese private enterprises in the future,<br />

and this is underpinned by the support of the Chinese government,” said<br />

Andrew Li, PwC Transaction Services Partner.<br />

“Nearly all of the major PE houses are gearing up to meet the growing<br />

competition from a burgeoning domestic PE industry, and while some<br />

of the new funds will fail, others will emerge as important players. The<br />

growth and localization of the PE industry in China is unstoppable.”<br />

Strategic deals make a comeback<br />

Foreign strategic buyers (corporates) are marching to the beat of a<br />

new drum, now showing signs of returning to China with inbound M&A<br />

activity growing by 32% to approach levels reached before the global financial<br />

crisis.<br />

However, Andrew Li said M&A activity in China is still dominated<br />

by domestic transactions, which grew at a steady pace of 6% to 2,947 announced<br />

deals in 2010, and an announced value of US$131 billion, up<br />

41% over 2009.<br />

“The policies and direction set by China’s new five year plan are likely<br />

to support continued M&A activity, as the government aims to continue<br />

domestic consolidation and restructuring of industries, while ensuring foreign<br />

investment is optimised and ‘going abroad’ is accelerated,” Mr Li said.<br />

“We expect overall strategic buyer activity both domestic and foreign<br />

to continue to grow steadily in 2011 and to exceed the peak levels seen in<br />

2010.”<br />

FY10<br />

FY09<br />

61


China’s Outdoor Industry, Filled with Great Promise<br />

—An Exclusive Interview with Mr. Frank Hugelmeyer, President &CEO<br />

of American Outdoor Industry Association<br />

By Yan Manman<br />

On February 23, the 7th ISPO China is to open at China National<br />

Convention Center. With the development in the past 6<br />

conventions, the scale of ISPO China is increasingly larger and<br />

larger, which has fully witnessed the rapid development of China’s<br />

outdoors industry in the last decade, sprouting, growing and rising. But<br />

what’s the trend of China’s outdoor industry? How do the foreign outdoors<br />

industry brands run in China? What can we learn from the western counties<br />

in this field? … Concerning some issues in the development of China’s<br />

outdoors industry, China’s Foreign Trade made an exclusive interview with<br />

Mr. Frank Hugelmeyer(Hereinafter short for F.H.), President &CEO of<br />

American Outdoor Industry Association, who shared his view point on<br />

China’s outdoor industry with us.<br />

Mr. Frank Hugelmeyer,<br />

President &CEO of American Outdoor<br />

Industry Association<br />

CFT: How do you comment on the development of the outdoors industry<br />

in China in the last decade?<br />

F.H.: Over the past ten years, the outdoor industry in China has been in its<br />

early formative stage and has been building to a future that is filled with<br />

62


great promise. The past decade has<br />

seen more National Parks created, ski<br />

areas constructed, and the introduction<br />

of mountain biking trails and<br />

urban hiking paths. As more Chinese<br />

enter the middle class, the need and<br />

desire for outdoor infrastructure and<br />

leisure activities will only grow.<br />

Strong and expanding<br />

outdoor cultures have followed<br />

the last two global industrial<br />

revolutions. Europe witnessed<br />

a broad expansion of its mountain<br />

ski resorts in the 1920’s to<br />

1940’s and America began to<br />

significantly embrace its outdoor<br />

industry in the 1950’s to<br />

1970’s. As China shifts from a<br />

production economy to a consumer<br />

economy, I expect that<br />

we will see many more Chinese<br />

pursue outdoor sports.<br />

However, compared to<br />

Europe and America, there are<br />

very few specialized retail outlets<br />

in China that provide the<br />

technical service, training and sales<br />

for the products that require the more<br />

advanced outdoor skills, like climbing,<br />

paddling, skiing. This apparent lack of<br />

specialty retail is a challenge and an<br />

opportunity.<br />

CFT: Compared with the outdoor industry<br />

in the US, what do you think<br />

the difference between China’s outdoor<br />

industry and the US’ outdoor<br />

industry?<br />

F.H.: America has a<br />

more mature<br />

Compared to Europe and<br />

America, there are very few<br />

specialized retail outlets<br />

in China that provide the<br />

technical service, training<br />

and sales for the products<br />

that require the more<br />

advanced outdoor skills,<br />

like climbing, paddling,<br />

skiing. This apparent<br />

lack of specialty retail<br />

is a challenge and an<br />

opportunity.<br />

outdoor industry at this point in time. In the U.S. annual outdoor product<br />

sales for all channels of retail and outdoor sports activities is US $48B. The<br />

U.S. has over nine different channels of retail distribution that serves the<br />

outdoor market. More than 50% of all Americans pursue between one to<br />

six outdoor activities a year with the most popular activities being fishing,<br />

cycling, hiking, camping and paddling.<br />

Across the nation, many U.S. cities and states focus key parts of their<br />

economic development strategies on outdoor recreation because it drives tourism,<br />

promotes quality of life and health and wellness.<br />

Most significantly, the U.S. federal government’s environmental<br />

policy protects large tracts of wilderness<br />

and open space, manages millions of acres of forests<br />

and ensures very clean air, land and water so that<br />

Americans have a strong desire to play outside.<br />

CFT:According to what you learned, how did the<br />

American outdoors brands run in China? What do<br />

you think the most challenging factor for them to<br />

expand in China?<br />

F.H.: Most brands gravitate towards two strategies<br />

when entering the Chinese market. The largest<br />

companies form subsidiaries within China and<br />

establish their own retail stores. Nike, Adidas, The<br />

North Face, Columbia Sportswear come to mind as<br />

some brands who are pursuing a direct strategy.<br />

Smaller brands are partner with distributors<br />

who are already based in the country. The challenge<br />

is that many Chinese distributors are also retailers. If a small brand chooses<br />

the wrong partner, their product can end up in only a handful of retail locations.<br />

I also know of several brands that are currently considering entering<br />

the market through online retail partners only.<br />

Besides choosing the right strategy and distribution partners, the biggest<br />

challenges in entering the market are the packaging and labeling requirements<br />

that are required by China or the consumer.<br />

CFT: The income of most people in China are still low relative to the high<br />

price of outdoor gear and apparel, and besides, most of the outdoor lovers<br />

mainly gather in big cities such as Beijing, Shanghai, Shenzhen or<br />

other large provincial capital cities. In most of the second-layer and third<br />

layer cities, outdoor sports is still a little strange to people. How do you<br />

comment on this? How do you comment on China’s outdoor market?<br />

F.H.: It is true that the initial market growth will originate from the wealthier<br />

citizens living in cities. At first, they will be the consumers that have<br />

more time and money.<br />

However, many second and third layer cities<br />

have a unique opportunity to develop the great<br />

recreation and natural areas that are located<br />

nearby and become a gateway recreation<br />

community. The urban outdoor recreationists<br />

will always visit the top quality<br />

natural areas and second and third tier<br />

cities that take advantage of this trend<br />

will realize real economic growth. There are<br />

many, many rural communities across America<br />

and Europe that have benefited from positioning<br />

themselves as a gateway city to recreation. As the local<br />

wealth increases due to the tourism, the gateway<br />

citizens will find that they are able to enjoy a close by<br />

63


natural resource more often and more affordably.<br />

LINKS<br />

Outdoor Industry Association<br />

Founded in 1989, Outdoor<br />

Industry Association (OIA) is the<br />

premier trade association for companies<br />

in the active outdoor recreation<br />

business in the USA. OIA provides<br />

trade services for over 4000 manufacturers,<br />

distributors, suppliers,<br />

sales representatives and retailers in<br />

the outdoor industry. Outdoor Industry<br />

Association seeks to ensure a<br />

healthy and diverse specialty retail<br />

and supply chain based on quality,<br />

innovation and service. To this end,<br />

OIA works diligently to raise the<br />

standards of the industry; increase<br />

participation in outdoor recreation to<br />

strengthen business markets; provide<br />

support services to improve member<br />

profitability; represent member interests<br />

in the legislative/regulatory<br />

process; promote professional training<br />

and education; support innovation;<br />

and offer cost-saving member<br />

benefits.<br />

CFT: To what extent do you learn about the China’s domestic<br />

brands in outdoor gear and apparel? What do<br />

you think their advantages and disadvantages?<br />

F.H.: One of the great advantages China has is that it is<br />

the center of outdoor products manufacturing worldwide.<br />

This will enable the necessary products to be rapidly and<br />

widely available to the consumer at an affordable price.<br />

Already we have seen several good technical domestic<br />

brands emerge in China that also manufacture products<br />

for European and American brands. These manufacturer-created<br />

brands have the ability to create a very efficient<br />

and profitable vertical structure. If these domestic Chinese<br />

companies invest in product and brand development<br />

like all great brands, I see few disadvantages. The biggest<br />

obstacle domestic Chinese brands will need to overcome<br />

is the real or imagined belief that American brands are of<br />

a higher value and quality.<br />

CFT: What do you think are the factors most influencing the development<br />

of China’s outdoor industry? What would be the barriers? What’s your<br />

advice for the development of China’s outdoor industry?<br />

F.H.: China and its local communities need to recognize that outdoor recreation<br />

will be a major economic engine if it is treated as a priority. The cities<br />

that fully embrace and promote the active outdoor lifestyle will have a great<br />

advantage and head start over the communities that do not. In Europe and<br />

America, the early cultural hubs for the lifestyle and industry now attract<br />

most of the top companies, talented employees and tourists.<br />

At the moment, the biggest barrier in China to realizing a strong recreation<br />

economy is the air and water quality in the cities. On my last trip to<br />

Beijing, I was in a hotel across from the Bird’s Nest Olympic Center and I<br />

could not see the stadium. Outdoor athletes and adventurers aspire to see<br />

great landscapes. Landscapes are an integral part of the overall outdoor<br />

experience and essential to growing a strong outdoor recreation economy.<br />

Poor air quality simply does not inspire people to go outside and play.<br />

China possesses some of the most amazing land and waterscapes in the<br />

world and they should not be hidden behind a cloud. Obviously, the manufacturing<br />

economy is very important to China but it cannot exist at the<br />

expense of losing the outdoor recreation and adventure tourism economies<br />

and their tremendous benefits. By choosing to lead on environmental issues<br />

in the future, China can realize the benefits of a very strong manufacturing<br />

base and a great outdoor recreation industry.<br />

CFT: You must have attended the ISPO for several times. How do you<br />

comment on the ISPO? What’s your expectation for the 7th ISPO?<br />

F.H.: ISPO China reminds me of the very exciting early days of Outdoor<br />

Retailer, which is the leading show in the U.S. There is a great energy and<br />

passion at the ISPO China show. You can just feel the entrepreneurial spirit<br />

and potential in the exhibit halls.<br />

At ISPO China, Outdoor Industry Association will launch a breakthrough<br />

global environmental assessment for developing outdoor products.<br />

The tools will help outdoor companies reduce cost, waste, energy and water<br />

when they produce products. The leading experts in sustainable development<br />

for U.S. outdoor companies like REI, Timberland and Patagonia will<br />

be presenting the new tool for the Asian market. GreenBiz.com named the<br />

OIA Eco Index as one of the top ten most hopeful green developments of<br />

2010 and we are very proud to be sharing it with our Chinese partners.<br />

64


China’s Economic Data<br />

in 2010 Released<br />

By Li Zhen<br />

On January 20 of 2011, National<br />

Bureau of Statistics<br />

(NBS) released China’s<br />

main economic data in<br />

2010. Data released by NBS showed<br />

that GDP for the year of 2010 was<br />

RMB 39798.3 billion, up 10.3% for the<br />

full year, or 1.1 percentage points higher<br />

than that in the previous year.<br />

The pace of growth in the last three<br />

months of 2010, which was 9.8 percent,<br />

accelerated from the 9.6 percent recorded<br />

for the third quarter. Both the quarterly<br />

and annual figures were significantly above<br />

what analysts had expected. Taken together,<br />

the data and a number of other statistics<br />

supported the view of many economists<br />

who believe that the government will have<br />

to further tighten monetary policy, which<br />

could eventually lead the Chinese currency<br />

to appreciate against the dollar.<br />

Inflation, which has become a major<br />

concern for the authorities in recent<br />

months, came in at 3.3 percent for the full<br />

year, above the official target of 3 percent,<br />

while the data for December showed<br />

consumer prices were up 4.8 percent from<br />

a year earlier. The price rose by 3.2% in<br />

cities and 3.6% in rural areas. Grouped by<br />

categories, the prices for food increased<br />

by 7.2%; prices for tobacco, liquor and<br />

articles went up by 1.6%; health care and<br />

personal articles, up by 3.2%; recreation, education, culture<br />

articles and services, up by 0.6%; housing, up by 4.5%; clothing,<br />

down by 1.0%; transportation and communication, down<br />

by 0.4% while household facilities, articles and maintenance<br />

services maintained the level of growth.<br />

In December, the consumer prices grew by 4.6% yearon-year<br />

and 0.5% month-on-month. In 2010, the producer<br />

prices for manufactured goods went up by 5.5% year-on-year.<br />

The year-on-year change in December was up by 5.9% and<br />

the month-on-month change was up by 0.7%. The purchasers’<br />

prices for raw material, fuel and power was up by 9.6%<br />

for the whole year, and in December it grew by 9.5% year-onyear,<br />

or 1.1% month-on-month.<br />

Moreover, many economists expect the pace of inflation<br />

to pick up again in coming months because of adverse<br />

weather conditions and other seasonal factors like the Lunar<br />

New Year holiday in February, which triggers higher household spending. Rising<br />

wages also have fanned inflation pressures in recent months.<br />

Total value of imports and exports increased rapidly and the trade surplus<br />

declined to some extent. The total value of imports and exports for the whole<br />

year reached US$2972.8 billion, an increase of 34.7% over that in the previous<br />

year. The total value of exports was US$1577.9 billion, up by 31.3%; that of<br />

imports was US$1394.8 billion, up by 38.7%. The trade surplus was US$183.1<br />

billion, a decline of 6.4 percent over that in the previous year.<br />

Agricultural production grew steadily with increase in grain output for<br />

consecutive seven years. In 2010, the total output of grain reached 546.41 million<br />

tons, and increase for the seventh year. Of this total, the output of summer<br />

grain was 123.1 million tons, a year-on-year decline of 0.3%; the output of early<br />

rice was 31.32 million tons, a drop of 6.1% over that in the previous year; the<br />

output of autumn grain was 391.99 million tons, a year-on-year increase of 4.8%.<br />

The output of oil-bearing seeds grew by 2.7% and that of sugar dropped by 1.9%.<br />

The output of meat maintained steady growth as the output of port, beef, mutton<br />

and poultry reached 77.8 million tons in 2010, up by 3.6%. Of this total, the<br />

output of pork was 50.7 million tons, up by 3.7%.<br />

Investment kept fast growth with further improved investment structure.<br />

In 2010, the total investment in fixed assets of the country reached RMB 27814<br />

billion, a year-on-year growth of 23.8%, or a drop of 6.2 percentage points as<br />

compared with the growth in the previous year. The real growth was 19.5% after<br />

reducing price factors. Of this total, the fixed assets investment in urban areas was<br />

RMB 24141.5 billion, up by 24.5%, or 5.9 percentage points lower than that in<br />

the previous year, and that in rural areas was RMB 3672.5 billion, up by 19.7%.<br />

At present, the national economy is in a crucial period of turning from recovery<br />

to steady growth. According to the general arrangements of the Central Economic<br />

Work Conference, China will insist on taking scientific development as the theme<br />

and transformation of economic development mode as the mainline, carry out the<br />

pro-active fiscal policy and prudent monetary policy and improve the relevance,<br />

flexibility and effectiveness of macro-control. It can be sure that China’s economy<br />

will continue to prosper in a sustainable way in the next five year plan period.<br />

65


A Booming Market for<br />

Foreign Cosmetics Brands<br />

By Zhu Zijun<br />

On December 6, 2010, Coty Inc., the world’s largest<br />

fragrance company and the fifth-biggest cosmetics<br />

manufacturer in France, agreed to acquire<br />

a majority stake in TJoy Holdings, Ltd., a Chinese<br />

skin care company. The investment was valued at about<br />

$400 million, making it the largest among a flurry of similar<br />

acquisitions in recent years, according to a report from China<br />

Daily.<br />

The acquisition boom<br />

This case is not unique. Over the past decade, foreign<br />

cosmetics and healthcare manufacturers have been active<br />

in local brand acquisition, L’OREAL of France, Beiersdorf<br />

in Germany and Johnson & Johnson from the U.S. have all<br />

bought controlling stakes in Chinese cosmetics firms.<br />

In 2008, healthcare and cosmetics giant Johnson &<br />

Johnson purchased Beijing Dabao Cosmetics Co., Ltd. for<br />

$337 million.<br />

In 2007, Beiersdorf paid 269.45 million euros ($354.5<br />

million) for an 85 percent stake in China-based C-Bons Hair<br />

Care as the cosmetics giant looked to penetrate deeper into<br />

the fast-growing Chinese market.<br />

In 2003, beauty brand L’OREAL, the world’s largest<br />

cosmetics company by volume, acquired local Chinese brand,<br />

Little Nurse, and then acquired another local cosmetic brand,<br />

YUE-SAI, in 2004.<br />

International brands are exploring the Chinese market<br />

through acquisitions, as China is becoming a promising platform<br />

for the development of these brands.<br />

China: a surging market<br />

The 2010 China Cosmetics Industry Development Trend<br />

Blue Paper issued earlier last year showed that, the sales of<br />

cosmetics in China surpassed RMB140 billion in 2009, up 7.7<br />

percent year-on-year, making China the third largest cosmetics<br />

sales market, next only to the U.S. and Japan. China is fast<br />

becoming an arena for transnational cosmetics giants to carry<br />

out their global strategic plans.<br />

For many years already, urbanization has been a significant<br />

trend affecting China’s economic development. With<br />

government policy aimed at stimulating domestic demand,<br />

transformation of domestic consumption is becoming the<br />

primary force for a new round of consumption boost. The<br />

income levels of both rural and urban residents have been<br />

increasing rapidly, and middle-income groups have been expanding<br />

further, speeding up the transformation of China’s<br />

68


consumption structure. These new consumption patterns and<br />

consumer concepts will also propel the development of the<br />

cosmetics industry.<br />

With China’s economy moving into the fast lane, the<br />

cosmetics industry, as a sunrise industry, is developing much<br />

faster than the average growth rate of GDP. The increase<br />

in consumption has boosted overall economic prosperity<br />

and made China the largest emerging market in the world.<br />

Predicatably, in the future China will become the largest<br />

consumer market globally, and the cosmetics industry as a<br />

whole has changed course to follow the development trend.<br />

One sign of improved consumption is the acceleration<br />

of luxury good consumption. According to China Marketing,<br />

by the end of last year, LV already had 29 locations in China’s<br />

first-tier and coastal cities, while most of the interior provinces’<br />

capitals have no LV outlets yet. Huangqiang, manager of<br />

Hangzhou Xinziyang Daily Chemicals Co., Ltd., predicted<br />

that with the continuously rising levels of consumption and the<br />

acceleration of urbanization, top international brands will soon<br />

move to second and third-tier cities. If there was one LV store<br />

in each city at the prefectural level, then there would be 400.<br />

Similarly, the high-end cosmetics market in China’s<br />

first-tier cities is booming. At present, the cosmetics market<br />

in major Chinese department stores is dominated by international<br />

brands. Looking at Lancome in China as a example,<br />

the Lancome counter at Hangzhou Tower had sales volume<br />

of RMB 55 million, the highest among all global sales counters,<br />

while the Xinjiekou counter at Jinying Shopping Center<br />

in Nanjing was No.3 with RMB 48 million in sales, and the<br />

Wulin counter at Intime Department Store in Hangzhou<br />

was No. 5 with RMB 43 million.<br />

Another example, the sales volume of Estee Lauder<br />

rose 43% year-on-year, making it one of the fastest-growing<br />

brands in China’s high-end cosmetics market. The brand’s<br />

Wangfujing counter in Chengdu, had the highest sales volume<br />

in China with RMB 40 million, while Intime saw 60%<br />

growth, putting it at the forefront across the country.<br />

Meantime, the rapid increase in consumption level has<br />

also contributed to the recent prosperity of the high-end cosmetics<br />

market. Currently, second and third-tier cities are seeing<br />

a rapid upgrade in their consumption level. Mainstream<br />

consumption has moved away from joint venture brands like<br />

OLAY, L’OREAL and Aupres with average prices around<br />

RMB 200 in the past, to brands like Shiseido, Elizabeth<br />

Arden, Beauté de Kosé, Laneige, and others with average<br />

prices from RMB 300-400, and gradually moving closer<br />

to RMB 500-600 for mainstream consumer goods in firsttier<br />

cities.<br />

Expanding channels for foreign brands<br />

As mentioned earlier, increased urbanization is the key<br />

engine behind the prosperity of the cosmetics industry. Take<br />

Hangzhou as an example, the city’s central business district<br />

(CBD) is expanding rapidly. In the past, there was only one<br />

business district, while in the future, there will be 5 or 6.<br />

In the meantime, large chain department stores, an<br />

important channel for cosmetics, are also expanding. Intime<br />

already has 5 stores in Hangzhou and will have another 5 in<br />

the near future compared with only one just a few years ago.<br />

Department stores in second and third-tier cities will<br />

also follow the trend and upgrade themselves, while wellknown<br />

chain department stores are marching into these cities<br />

as well. Meanwhile, in order to satisfy the higher demands of<br />

consumers, promote their own image and enhance competitiveness<br />

in the market, stores will be eager to introduce more<br />

high-end foreign brands. In the future, these cities will likely<br />

bring in more foreign brands to keep up with first-tier cities.<br />

Department stores in county-level cities will also be<br />

rising soon. Currently, across China there are about 2,000<br />

counties with a few large department stores. These counties<br />

are transitioning to medium-sized cities with populations of<br />

over 100 thousand or even hundreds of thousands.<br />

Cosmetics stores are another strategic channel for<br />

Chinese cosmetics and are taking new approaches such as<br />

expanding their networks, upgrading their store level, etc.<br />

Throughout China there are hundreds of thousands of cosmetics<br />

stores, which are undoubtedly an important channel<br />

for cosmetics sales, with networks covering all of the large<br />

and medium-sized cities and key towns. In Zhejiang Province<br />

alone there are more than 6,000 cosmetics stores.<br />

Presently, cosmetics stores are the main sales venue for<br />

foreign cosmetics brands and will likely be the most promising<br />

sales channel in the future. Some secondary stores, specializing<br />

in domestic brands, should introduce more foreign<br />

69


ands and lift the consumption level.<br />

However, the Blue Paper pointed out that although traditional<br />

channels are still the mainstream, new channels are<br />

emerging. Among the new channels, e-commerce deserves<br />

the most attention. Last year, high-end products like Lancome<br />

and Biotherm were testing online sales. Estee Lauder was<br />

also developing an e-commerce platform aimed at the consumers<br />

in second or third-tier cities, which it could not cover<br />

in an all-round way. The activities of these big brands show the<br />

great potential of online shopping in the future.<br />

Foreign brands in consumers’ eyes<br />

With their expanding share in the Chinese market, foreign<br />

cosmetic brands are attracting the attention of more and<br />

more consumers, some of whom have become fans of certain<br />

brands.<br />

As the Chinese Lunar New Year is fast approaching,<br />

many department stores in Beijing are launching promotions.<br />

Juntai Department Store and Zhongyou Department Store,<br />

the ground floors of which are dominated by foreign cosmetics<br />

brands, are seeing a growth in the number of consumers<br />

coming and going. As are the foreign brands, just a month<br />

ago Juntai introduced MISSHA, a korea-based brand from<br />

ABLE C&C.<br />

A college student, choosing her favorite cosmetics at<br />

Juntai, told the reporter that the cosmetics products she uses<br />

are mainly foreign brands, with brands like L’OREAL and<br />

CLINQUIE as her favorites. “In a traditional view, foreign<br />

brands are performing better, so I prefer them and I will continue<br />

to choose them,” she said.<br />

Another young lady said that due to advertisements and<br />

her friends’ introduction, she preferred foreign brands since<br />

she was at middle school. “Foreign brands usually do better<br />

in advertising, introduction of their products’ application,<br />

packaging and especially, R&D.”<br />

A middle-aged woman said that in her daily life she<br />

uses both domestic and foreign branded products. “Though<br />

domestic brands’ advertisements, packaging, popularity and<br />

research should catch up with those of foreign brands,” she<br />

shared her opinion with the young lady.<br />

Another girl said her cosmetics products are mainly of<br />

domestic brands. She said, “Domestic brands can meet my<br />

needs with their cost performance. But if I had more disposable<br />

income, I would like to try foreign brands.”<br />

“Foreign brands, with their good brand image, advertisements,<br />

R&D, and most importantly, product effects,<br />

are popular with Chinese consumers,” said He Lixia, the<br />

manager at the Planning Department of Xidan Department<br />

Store.<br />

According to a report from Baidu Data Research Center<br />

for mass-market cosmetics brands in Q3 2010, L’OREAL<br />

PARIS took the lead with the highest attention at 10.16%,<br />

while OLAY and ZA were rated as second and third,<br />

with 5.45% and 4.39%, respectively. In the top 10 brands,<br />

L’OREAL PARIS, MAYBELLINE NEW YORK and<br />

GARNIER all belong to L’Oréal, indicating its strong position<br />

in mass-market cosmetics brands. Among the top 10,<br />

only Chcédo was domestic.<br />

Attention Rankings of Mass-market Cosmetics Brands<br />

in Q3, 2010<br />

L’OREAL PARIS<br />

OLAY<br />

ZA<br />

MAYBELLINE NEW YORK<br />

Neutrogena<br />

LANEIGE<br />

MENTHOLATUM<br />

Chcédo<br />

PURE&MILD<br />

GARNIER<br />

4.39%<br />

3.85%<br />

3.70%<br />

3.55%<br />

3.22%<br />

3.08%<br />

2.59%<br />

2.24%<br />

5.45%<br />

10.16%<br />

(Source: Baidu Data Research Center, Nov. 2010)<br />

For high-end cosmetics brands in Q3 2010 the level<br />

of attention for the top 4 brands was very close, with only a<br />

disparity of 1%. Lancome ranked first with the attention of<br />

11.23%. Dior, Estee Lauder and CLINIQUE ranked second<br />

through fourth with attentions of 10.69%, 10.39% and<br />

10.22%, respectively.<br />

Here, ANNA SUI took the place of Shu Uemura as<br />

No. 10 on the list. Of the top 10 brands, the ever present<br />

three brands by Estee Lauder had been reduced to two. Fortunately<br />

Estee Lauder and CLINIQUE were still among the<br />

top brands, while Lancome from L’OREAL still topped the<br />

list due to its interactive online activities from last year. It can<br />

be seen that the top 10 were all foreign brands, which dominate<br />

the high-end market in China.<br />

Attention Rankings of High-end Cosmetics Brands in Q3, 2010<br />

Lancome<br />

Dior<br />

Estee Lauder<br />

CLINIQUE<br />

SHISEIDO<br />

CHANEL<br />

Elisabeth Arden<br />

BIOTHERM<br />

CLARINS<br />

ANNA SUI<br />

3.50%<br />

6.90%<br />

6.61%<br />

6.09%<br />

5.44%<br />

5.15%<br />

11.23%<br />

10.69%<br />

10.39%<br />

10.22%<br />

(Source: Baidu Data Research Center, Nov. 2010)<br />

For natural cosmetics brands, domestic brands have<br />

their own advantages due to a better understanding of the<br />

domestic market. The brand Sinoway Herb took the lead<br />

with the attention of 14.58%; another domestic brand HER-<br />

BORIST was the second with the attention of 13.48%; the<br />

third was Avène with the attention of 11.58%, and the remainder<br />

were all foreign brands.<br />

70


Attention Rankings of Natural Cosmetics Brands in Q3, 2010<br />

Sinoway Herb<br />

HERBORIST<br />

Avène<br />

THE FACE SHOP<br />

FANCL<br />

VICHY<br />

LA ROCHE-POSAY<br />

THE BODY SHOP<br />

KI EH L'S<br />

L'OCCITANE<br />

9.21%<br />

8.26%<br />

7.84%<br />

7.04%<br />

6.37%<br />

5.50%<br />

5.04%<br />

11.58%<br />

14.58%<br />

13.48%<br />

(Source: Baidu Data Research Center, Nov. 2010)<br />

Looking at skin care products, the report showed that in<br />

Q3 2010, L’OREAL PARIS ranked first with the attention of<br />

6.37%, while the following No. 2-10 were all within 4%-2%.<br />

The runner-up was Sinoway Herb with the attention of 6.37%,<br />

third was CLINIQUE with 4.05%. The others in the top 10 in<br />

order of attention were, HERBORIST, OLAY, Estee Lauder,<br />

Avène, Neutrogena, MENTHOLATUM and SHISEIDO.<br />

For color cosmetics, MAYBELLINE NEW YORK,<br />

ZA and Shu Uemura were the top 3 with the attentions of<br />

11.51%, 9.03% and 4.98% respectively. The others in the top<br />

10 were Dior, REVLON, SKIN79, Lancome, DHC and<br />

opera. All the brands were foreign.<br />

As for perfume, the report shows that CHANEL and<br />

Dior were the top 2 brands given the most attention, with<br />

13.56% and 13.50% respectively, well ahead of others in the<br />

top 10. The other brands in the top 10 were as follows: Elisabeth<br />

Arden, Calvin Klein, Lancome, BURBERRY, ANNA<br />

SUI, VERSACE, adidas and BVLGARI. CHANEL and<br />

Dior were the best known by domestic consumers for their<br />

classic fragrance, so its no wonder they took the top 2 spots.<br />

adidas was given more attention than before due to men’s increasing<br />

attention on fragrances.<br />

Nowadays, men are paying more attention to cosmetics.<br />

This was shown in the Q3 2010 report, where men’s favorite<br />

brands were L’OREAL, NIVEA and METHOLATUM.<br />

The others in the top 10 were GF, BIOTHERM, OLAY, Biore,<br />

GARNIER, CLINIQUE and UNO in terms of attention.<br />

Foreign brands’ strengths<br />

Foreign brands are trying to take a larger share of the<br />

Chinese market. It seems consumers’ favorite brands are<br />

mostly foreign brands, so how have these brands realized<br />

such success? After analysis here are the following reasons:<br />

First, foreign brands tend to adjust their market strategy according<br />

to the social formation of the target market. Now China<br />

is an M-shaped society which means the rich and the poor occupy<br />

the two ends of the spectrum with a not that large middle class.<br />

For instance, L’OREAL has carefully studied Chinese<br />

society. Its high-end, low-and-middle products focus on different<br />

consumers. It is said that two-thirds of its sales volume is<br />

derived from third-tier cities, and 61% of its skin care products’<br />

sales are from third or even fourth-tier cities. Another example<br />

is Maybelline, which reduced the price of its products<br />

to compete with domestic brands. This is the transformation<br />

strategy that foreign brands rely on to attract more consumers.<br />

Second, foreign brands invest much more into research<br />

and development of new products, which are continuously<br />

upgrading and improving. Take Crest as an example, when<br />

it entered China in 1996, it had a rough time as it did not<br />

fully understand the target market well. After a while, Crest<br />

learned to take consumer demands as the starting point for<br />

its R&D effort. Through adequate market research, Crest’s<br />

R&D team launched new products with natural ingredients,<br />

like herbal toothpaste, making its share in the Chinese market<br />

surge and allowing it to overcome Colgate, thereby taking<br />

the lead in the toothpaste industry.<br />

Third, foreign brands’ subdivision has a specific aim with<br />

consumers as the clear target. For instance, L’OREAL has<br />

over 10 brands and more than 400 different kinds of products<br />

that it needs to provide customer service for. However, domestic<br />

brands have only several dozen products at most.<br />

Last but not least, foreign brands have a big say in international<br />

and domestic fashion. Things like advertisements, brand<br />

image, and brand story all contribute to their success in the market,<br />

while domestic brands still have a long way to go in this field.<br />

With foreign brands grabbing a greater share of the Chinese<br />

market, domestic brands are worrying about their future.<br />

As the saying goes, “Necessity is the mother of invention”, domestic<br />

brands are trying vigorously to implement innovation.<br />

The first national brand established in 1862, Kong Feng<br />

Chun, is focusing more attention on R&D. The products it<br />

has developed in just a few years are equivalent to the advances<br />

it had made over the last century.<br />

“Though foreign brands have taken a large share of the<br />

Chinese market, the future of domestic brands should be<br />

much better due to their hard work and diligence. We all<br />

have confidence,” said Ma Ya, the President of the Chamber<br />

of Beauty Culture & Cosmetics at the All-China Federation<br />

of Industry & Commerce.<br />

71


Technology<br />

Alibaba to Expand Supply<br />

Network in China<br />

Chinese Internet giant Alibaba Group said it is investing<br />

as much as US$4.6 billion to build a network of warehouses<br />

across China, as<br />

it looks to feed<br />

the countr y’s<br />

boom in online<br />

shopping.<br />

The move<br />

will directly<br />

benefit Taobao,<br />

an Alibaba unit<br />

that is China’s<br />

biggest shopping<br />

website by<br />

transaction volume, and comes at a time when Alibaba says<br />

China’s logistics industry has insufficient capacity to meet the<br />

needs of the country’s expanding electronic-commerce sector.<br />

Alibaba will commit an initial RMB 10 billion (US$1.52<br />

billion) to the warehouse project and, joined by financing<br />

partners, more than RMB 30 billion over three to five years,<br />

said Zeng Ming, Alibaba’s chief strategy officer.<br />

The company is making the investment to help speed<br />

delivery of products to consumers. “In 10 years, we hope that<br />

anywhere in China you can buy a product online, and, at<br />

the slowest, it will get to your home in eight hours,” Alibaba<br />

Chairman Jack Ma said.<br />

Chinese couriers ship many of the goods bought online<br />

in China, and can often deliver items the day after an order for<br />

a fairly low price — the equivalent of a few dollars or less. But<br />

e-commerce executives complain that the existing infrastructure<br />

is often fragmented and inefficient.<br />

The regions Alibaba has chosen for initial warehouse<br />

construction include the areas around the northern cities of<br />

Beijing and Tianjin, the Yangtze River Delta in east China<br />

and the Pearl River Delta in southern China since each is a<br />

major population center, the company said.<br />

Alibaba, which is 40% owned by Yahoo Inc., currently<br />

plans warehouse facilities in those three regions with total<br />

floor space around three million square meters, or the size of<br />

560 football fields, Alibaba said. Logistics partners, Taobao<br />

sellers and other business-to-consumer websites will all be able<br />

to use Alibaba’s warehouses, it said.<br />

The company said Alibaba.com Ltd., its business-tobusiness<br />

commerce platform, will also offer warehousing services<br />

to small Chinese exporters.<br />

Online retail transactions in China reached RMB 134.17<br />

billion (US$20.4 billion) in the third quarter, double year-ago<br />

levels, and Taobao accounted for 75% of the market.<br />

Taobao operates a consumer auction website similar to<br />

eBay.com Inc., but its Taobao Mall retail portal, where merchants<br />

can set up online storefronts, is more similar to Amazon.com<br />

Inc.<br />

Transactions on Taobao reached almost RMB 400 billion<br />

in 2010, Mr. Zeng said, up from RMB 208.3 billion in<br />

2009. Alibaba Group said in 2008 that Taobao broke even,<br />

but the closely held company doesn’t disclose its financials.<br />

While several Chinese Internet firms, including smaller<br />

e-commerce rival E-Commerce China Dangdang Inc., made<br />

strong trading debuts in New York in 2010, Taobao Chief<br />

Financial Officer Daniel Zhang said Taobao has no current<br />

plans to seek an initial public offering. (Wall Street Journal)<br />

Lenovo to Focus on<br />

Tablets, Phones for Growth<br />

Lenovo Group Ltd. will form a new business unit focused<br />

on mobile Internet and “digital home” devices, it said<br />

on January 19, as it continues pushing to expand beyond its<br />

core personal-computer business.<br />

Lenovo’s Mobile Internet and Digital Home Business<br />

Group will make tablets, smart phones and devices for other<br />

categories like smart TV and cloud computing, China’s biggest<br />

PC maker by shipments said.<br />

The world’s fourth-biggest computer maker by shipments<br />

behind Hewlett-Packard Co., Acer Inc. and Dell<br />

Inc. has already joined other PC makers in launching mobile<br />

devices to diversify into new areas and boost margins.<br />

In May last year, the company launched LePhone, its first<br />

touch screen smart phone based on Google Inc.’s Android<br />

operating system with a detachable Qwerty keyboard. Lenovo<br />

earlier this month also unveiled a hybrid notebook and<br />

tablet that combines a high-definition Android-based tablet,<br />

called LePad, with a keyboard base that enables the product<br />

to operate Windows 7.<br />

Lenovo bought International Business Machines<br />

Corp.’s (IBM) PC business in 2005 to boost its business in<br />

developed markets, but in 2009 it announced restructuring<br />

measures to refocus on China and other emerging markets.<br />

The company’s focus on mobile Internet comes as it is still<br />

also investing heavily to build its market share in emerging<br />

markets like Latin America, India and Southeast Asia. That<br />

effort and a greater focus on lower-price consumer products<br />

have pressured Lenovo’s margins.<br />

Lenovo said in November its net profit for its fiscal<br />

second quarter ended Sept. 30 rose 44% to US$76.6 million<br />

from US$53.1 million a year earlier, helped by strong<br />

growth in PC shipments.<br />

Chief Operating Officer Rory Read said Monday Lenovo<br />

will continue to look at acquisitions that would give it<br />

a strategic advantage in mobile Internet.<br />

The mobile Internet segment will help enhance Lenovo’s<br />

margins over three to five years, though the effect may<br />

not be significant, Mr. Read said in a phone interview.<br />

“From a standpoint of business opportunity, the next<br />

12 or 18 months are interesting, but the real game at hand is<br />

in, you know, 24, 36, 48 months” for devices like those the<br />

new unit will make, Mr. Read said.<br />

Lenovo is likely to offer LePad outside China in late<br />

74


summer, after a new version of Android comes out and<br />

Lenovo has time to test it, Mr. Read said, adding the tablet<br />

may not be called LePad outside China.<br />

Read in April last year said Lenovo believed 10% to<br />

20% of its revenue would come from mobile Internet services<br />

within five years, up from low single digits at the time.<br />

(Wall Street Journal)<br />

Apple Ranked Last by China<br />

Environment Group for Transparency<br />

Apple Inc. ranked last out of 29 global technology companies<br />

in terms of responsiveness and transparency to health and<br />

environmental concerns in China, according to a Beijing-based<br />

nonprofit group.<br />

BT Group Plc and Hewlett-Packard Co. were among the<br />

highest ranked companies, Ma Jun, director of the Institute of<br />

Environmental and Public Affairs said in a phone interview.<br />

Apple refused to confirm suspected polluters were among its<br />

suppliers and avoided taking responsibility for environmental<br />

problems related to its products, he said.<br />

“Apple has had an extensive supplier auditing program<br />

since 2006 and we have lots of information available through our<br />

website,” said Jill Tan, a Hong Kong-based spokeswoman for<br />

Apple. Tan said she read the IPE report.<br />

Among the examples cited in the report is Wintek Corp.<br />

which in 2009 is alleged to have used poisonous chemicals in<br />

the production of screens for Apple that resulted in workers being<br />

hospitalized for nerve damage. In a regulatory filing in May,<br />

Wintek said it stopped using the chemical, N-Hexane, and all<br />

workers were getting adequate treatment. Apple has not acknowledged<br />

Wintek as a supplier, Ma said.<br />

All of the workers involved in that case have recovered<br />

fully, said Jay Huang, a spokesman for Taichung, Taiwan-based<br />

Wintek. He declined to say whether Apple is a current or past<br />

customer. Apple’s Tan declined to say if Wintek is a supplier, or<br />

comment on specific cases.<br />

BT and HP ranked highly in IPE’s list of technology companies<br />

because they have responded to environmental problems<br />

and worked with suppliers to ensure better compliance, Ma said.<br />

“We originally thought that Apple, as a corporate citizen,<br />

would take a leadership role, but now we feel they ended up as<br />

the most obstructive,” Ma said. IPE today released “The Other<br />

Side of Apple” a report that outlines findings from a group of 36<br />

non-governmental organizations into environmental and health<br />

practices among technology companies. (Bloomberg)<br />

Facebook Should Mimic<br />

Apple App Security Restrictions<br />

Experts at security company Sophos say a rise in unmonitored<br />

Facebook applications endangers the site’s 650<br />

million users.<br />

Instead, they suggest that it should mimic Apple’s App<br />

Store, which vets all programs available for download.<br />

But Facebook said its data shows the opposite of Sophos<br />

and that it already has extensive protection for users.<br />

“We have a dedicated team that does robust review of<br />

all third party applications, using a risk based approach,” the<br />

firm said.<br />

“That means that we first look at velocity, number of users,<br />

types of data shared, and prioritize. This ensures that the<br />

team is focused on addressing the biggest risks, rather than<br />

just doing a cursory review at the time that an app is first<br />

launched.”<br />

This is partially because of the site’s size and popularity,<br />

but also because Facebook allows anyone to build applications,<br />

games, surveys and other programs. The most popular<br />

ones have been downloaded tens of millions of times.<br />

While this open system might be good news for Facebook’s<br />

business, says the report, it leaves inexperienced users<br />

vulnerable to attacks from malicious hackers who are increasingly<br />

building fake applications that trick people into handing<br />

over their private information.<br />

“Facebook, by far the largest social networking system<br />

and the most targeted by cyber-criminals, has a major problem<br />

in the form of its app system,” it says.<br />

To combat this, the report suggests Facebook could<br />

learn a lesson from mobile phone makers such as Apple,<br />

which operates strict controls over what applications are<br />

available for users of its iPhone and iPad platforms to download.<br />

“A walled garden approach may be more suitable,” the<br />

report says. “This is the way the Apple App Store operates,<br />

with applications requiring official approval before they can<br />

be uploaded to the site and shared with other users.”<br />

Although such an approach would potentially screen<br />

users from fraudulent applications, it would not be without its<br />

problems, however. Apple’s own process has come in for criticism<br />

in the past for its seemingly arbitrary rules that resulted<br />

in the banning of some applications, such as dictionaries,<br />

while other similar ones were allowed through.<br />

Alternatively, Sophos says, the world’s biggest social<br />

network could offer more detailed controls over security, allowing<br />

them to decide more easily which applications can run<br />

on their profile.<br />

“We have built extensive controls into the product, so<br />

that now when you add an application it only gets access to<br />

very limited data and the user must approve each additional<br />

type of data,” the company<br />

said in a statement.<br />

“We make sure<br />

that we act swiftly to<br />

remove or sanction potentially<br />

bad applications<br />

before they gain access<br />

to data, and involve law<br />

enforcement and file<br />

civil actions if there is a<br />

problem.” (BBC)<br />

75


Business TIPS<br />

Q&A for Foreign Business Practice in China<br />

We are a company registered and established<br />

in Germany, but the nature of our<br />

Q:<br />

company is a subsidiary. Recently, we want to<br />

invest a new company in Beijing. Can we, a<br />

subsidiary of a foreign company, are allowed to<br />

invest in China? If can, what preparations shall<br />

we make for such investment?<br />

There are no explicit provisions on the nature of<br />

A: a company which plans to invest in China, but<br />

there are provisions on the industry to be invested. For<br />

details, please refer to the Catalogue for the Guidance of<br />

Foreign Investment Industries (amended in 2007). According<br />

to the type of the company that you want to<br />

establish, you shall observe the Detailed Rules for the<br />

Implementation of the Law of the People’s Republic of China<br />

on Foreign-invested Enterprises, the Detailed Rules for<br />

Implementation of the Law of the People’s Republic of China<br />

on Sino-foreign Equity Joint Venture and the Detailed<br />

Rules for Implementation of the Law of the People’s Republic<br />

of China on Sino-foreign Cooperative Joint Venture.<br />

Are foreign investment permitted in gold<br />

Q: smelting projects?<br />

In accordance with the industrial category (X) of<br />

A: Restriction for Foreign Investment in the Catalogue<br />

of Industries for Guiding Foreign Investment (Revised<br />

2007), non-ferrous metal metallurgy and rolling processing<br />

industry: 1. Rare metal smelting including tungsten,<br />

molybdenum, tin (excluding tin compounds) and stibium<br />

(including antimony oxide and antimony sulphide), and<br />

gold smelting belongs to the restricted category, the items<br />

of which differs from each other due to different content.<br />

You are advised to directly consult the local competent<br />

commercial authorities for specific procedures.<br />

Is the alcohol exclusive wholesale certificate<br />

Q: required for a brewery? If yes, how to get the<br />

certificate and what procedures are required?<br />

For the purpose of regulating the alcohol circulation<br />

order, promoting the orderly development<br />

A:<br />

of alcohol market and safeguarding state interests and<br />

the legitimate rights and interests of alcohol producers,<br />

operators and consumers, the MOFCOM has formulated<br />

the Measures for the Administration of Alcohol Circulation<br />

(No. 25 Decree of the MOFCOM, 2005) according<br />

to the relevant laws and regulations of China.<br />

Reference information:<br />

Article 6 of the Measures for the Administration of<br />

Alcohol Circulation (No. 25 Decree of the MOFCOM,<br />

2005): Any entity or individual engaged in wholesale<br />

and retail of alcohol (hereinafter referred to the alcohol<br />

operators) shall go through procedures for filing and<br />

registration with the competent commercial department<br />

at the same level of the administration for industry and<br />

commerce in the place where the operator is domiciled<br />

according to the jurisdiction administration principle<br />

within 60 days after receiving the business license.<br />

Clients from Nigeria come to China for<br />

Q: commercial negotiation, which needs the<br />

official invitation letters of Chinese party. Which<br />

department shall I make application in? What<br />

materials shall be prepared? Is it charged or<br />

not?<br />

A:<br />

I suggest that you contact the local competent<br />

commercial authority for handling related issues.<br />

Where one foreigner needs to handle valid commercial<br />

visa (F) once or twice due to economic and trade activities<br />

in China, the visa notice may be handled via local competent<br />

commercial authority; or invitation letter or invitations<br />

of fairs of all kinds issued by<br />

economic and trade committees<br />

or bureaus (general companies) in<br />

the districts and counties where<br />

invitation units of Chinese party<br />

are located may be posted or faxed<br />

to foreign party (except otherwise<br />

special provisions). Foreigners may<br />

hold visa notices or invitation letters<br />

or invitations to go through<br />

procedures of visa in the embassies<br />

and consulates of China abroad<br />

and then come to China.<br />

A is a foreign-invested<br />

Q: enterprise, which reinvests<br />

in China and sets up<br />

a 100% owned B Co., Ltd. Is<br />

B a foreign-invested enterprise?<br />

In case A establishes<br />

B jointly with a domestic<br />

company in which A holds 25% equities, is B<br />

still foreign-invested enterprise?<br />

A:<br />

According to the Provisional Rules on Investment<br />

in China by Foreign-invested enterprises ([2000]<br />

No.6 of the Ministry of Foreign Trade and Economic<br />

Cooperation and the State Administration for Industry<br />

and Commerce), in case the share of foreign investment<br />

in the reinvested registered capital of foreign-invested<br />

enterprise in the central and western regions of China<br />

is more than 25%, it may be treated as foreign-invested<br />

enterprises. With the Approval Certificate of Foreigninvested<br />

Enterprises and the Business License (Noted),<br />

enterprises with foreign reinvestment may enjoy the<br />

treatment specified by state laws and regulations.<br />

According to the Provisions on Establishment of<br />

Companies of Investment Nature by Foreign Investors, the<br />

establishment of an enterprise with investment from an<br />

investment company shall be separately submitted for<br />

approval in accordance with the approval authority and<br />

approval procedures for the examination and approval<br />

of foreign-invested enterprises.<br />

Q:<br />

How to accurately and easily confirm the<br />

legitimacy of an enterprise? Which certificates<br />

are required?<br />

76


According to the relevant provisions of the Company Law of<br />

A: the People’s Republic of China (amended in 2005), the public<br />

may apply for inquiry of the registration of any company with the<br />

company registration authority and the latter shall provide inquiry<br />

services. According to the provisions of the above-mentioned law,<br />

please make inquiry with the administration for industry and<br />

commercial in the place where the company is registered.<br />

Our company has obtained the approval documents<br />

of the MOFCOM and now the sharehold-<br />

Q:<br />

ers have decided to make liquidation ahead of<br />

schedule. Do we need to obtain the approval of the<br />

MOFCOM for such liquidation,<br />

or just go through procedures<br />

with local commercial department?<br />

According to the Implementation<br />

Rules for the Law<br />

A:<br />

of People’s Republic of China on<br />

Sino-Foreign Equity Joint Venture<br />

(amended in 2001) and the Measures<br />

for the Liquidation of Foreigninvested<br />

Enterprises, you have to<br />

apply for approval with the original<br />

approval authority.<br />

Whether the approval of<br />

Q: the MOFCOM is required<br />

for the entire change of a<br />

Sino-foreign joint venture of<br />

limited liabilities to a company<br />

limited by shares? If required,<br />

whether the application of<br />

such approval shall take the way of promotion?<br />

The applicant of the foreign-invested company limited<br />

by shares to be established shall submit such docu-<br />

A:<br />

ments as the application form, research report of feasibility<br />

and assets appraisal statement to the competent authority<br />

of the province, autonomous region, municipality directly<br />

under the Central Government or separately planning city<br />

where it is located. The aforesaid documents will be submitted<br />

to the foreign trade and economic relationship bureau<br />

of the province, autonomous region, municipality directly<br />

under the Central Government or separately planning city<br />

by the competent authority after examination and approval.<br />

The initiator may officially sign the agreements on establishment<br />

of the company and the articles of association after<br />

approval of aforesaid documents by the competent commercial<br />

department of the province, autonomous region, municipality<br />

directly under Central Government or separately<br />

planning city.<br />

After such examination and approval, the abovementioned<br />

documents shall also be submitted to the<br />

MOFCOM for approval. For details, please refer to the<br />

Interim Provisions on Some Issues concerning Establishment<br />

of Foreign-invested Company Limited by Shares (Decree of<br />

the Ministry of Foreign Trade and Economic Cooperation<br />

[1995] No. 1).<br />

How to handle the procedures for transfer of foreigninvested<br />

enterprises to domestic-invested enterprises?<br />

Q:<br />

1. For the alteration of equities of the investors of<br />

A: foreign-invested enterprises, the examination and approval<br />

authorities should, in accordance with Article 17 of<br />

the Provisions on the Alteration of Investors’ Equities in Foreignfunded<br />

Enterprises, decide to approve or not within 30 days<br />

upon the receipt of all the required documents.<br />

2. For alteration of the items of foreign-funded enterprises,<br />

besides submission of the application letter of alteration,<br />

copies of approval certificate and copies of the business<br />

license, the documents required for approval should be submitted<br />

according to the Implementing Regulations for the Law<br />

of the People’s Republic of China on Sino-foreign Equity Joint<br />

Ventures, the Detailed Rules for the Law of the People’s Republic<br />

of China on Chinese-Foreign Contractual Joint Ventures, the<br />

Detailed Rules for the Law of the People’s Republic of China on<br />

Foreign-Capital Enterprises and the relevant special laws and<br />

regulations, including board resolution, contractual revised<br />

agreement and the revised agreement of article of association.<br />

Shall the creditors be informed in the written form<br />

Q: after the preliminary reply of the merger of foreign<br />

companies from the Ministry of Commerce that<br />

has been published in the nationwide media? If so,<br />

how to determine the scope of creditors? Whether<br />

shall all those with debt relationship be informed?<br />

In accordance with Clauses 2 and 3 of Article 29 of<br />

A:<br />

the Provision on the Merger and Division of Enterprises<br />

with Foreign Investment (Revised 2007), the applicants of<br />

companies to be merged shall submit the examination and<br />

approval authorities the documents including certification<br />

of the company to its creditors and statements of handling<br />

the rights of creditors and debts related to the company.<br />

Information source:<br />

China’s General Principles of Civil Law provides that a<br />

debt represents a special relationship of rights and obligations<br />

established between the parties concerned, either according<br />

to the agreed terms of a contract or legal provisions. The party<br />

entitled to the right shall be the creditor, and the party assuming<br />

the obligations shall be the debtor. The right enjoyed<br />

by the creditor is called creditor’s right and the obligation the<br />

debtor is responsible for is called debt.<br />

What requirements are needed to establish vehicle<br />

export companies with foreign investment?<br />

Q:<br />

For foreign trade companies engaged purely in whole<br />

A:<br />

car export, the state has no specific regulations on the<br />

types of companies. You may refer to the Implementing Measures<br />

of the Law of the People’s Republic of China on Wholly Foreign-owned<br />

Enterprises, the Detailed Rules on the Implementation<br />

of the Law of the People’s Republic of China on Sino-Foreign<br />

Joint Cooperative Ventures, the Measures for the Administration<br />

on Foreign Investment in Commercial Fields and the Automobile<br />

Trade Policy. For the way of registration, please contact the<br />

local administration for commerce, industry and commerce,<br />

customs and other government departments.<br />

77


ON STAGE<br />

Lifestyle<br />

2/4/2011-2/8/2011<br />

The National Little Birch Tree Dance Troupe<br />

of Russia China Tour<br />

Venue: NCPA-Opera House<br />

Price: RMB 180/280/380/600/700/780/880<br />

Tickets are available at 400-610-3721; 6417 7845<br />

T h e L i t t l e<br />

Birch Tree Dance<br />

Troupe<br />

The Little<br />

Birch Tree Dance<br />

Troupe is very<br />

famous in Russia<br />

with a history of<br />

59 years. Being<br />

the representative<br />

of Russian folk<br />

songs and dances,<br />

the troupe has acclaimed as a national treasure. It has been<br />

invited to perform in more than 60 countries in the world.<br />

In 2007, the troupe was named as the Traditional Cultural<br />

Heritage of Russia. In 2009, it is the 60th anniversary of the<br />

troupe, the 100th anniversary of the troupe founder and also<br />

the 60th anniversary of the founding of People's Republic of<br />

China. The Little Birch Tree Dance Troupe will bring its perfect<br />

cast to China to present a colorful display of Russian folk<br />

songs and dances.<br />

2/13/2011-2/17/2011<br />

Verdi’s Opera: La Traviata (NCPA's Production)<br />

Venue: NCPA-Opera House<br />

Price: RMB 100/180/280/400/460/520/580<br />

Tickets are available at 400-610-3721; 6417 7845<br />

Production: National Centre for the Performing Arts<br />

Orchestra: China NCPA Orchestra<br />

Chorus: NCPA Chorus<br />

Conductor: Chen Zuohuangw<br />

Director / Lighting Designer: Henning Brockhaus<br />

Stage Design: Benito Leonori<br />

Costume / Makeup Design: Giancarlo Colis<br />

La Traviata is the last part of “Popular Trilogy” by Verdi,<br />

the Italian romanticist composing master. It's also one of the<br />

best-selling classical works in the world opera history. The<br />

original version of the story is from Dumas Fils’ famous novel<br />

Lady of the Camellias. The whole opera consists of three<br />

acts. It was initially performed in Teatro La Fenice on Mar.<br />

6, 1853. After further adaptation, it became one of the most<br />

popular works in different opera houses universally and was<br />

performed again and again. Many arias with elegant melody<br />

enjoy great popularity and are engraved on the mind of the<br />

audience. Among Verdi's pieces, it has the greatest number of<br />

famous selections, which can be compete with Bizet’s Carmen.<br />

Dumas Fils once hailed: “50 years later, people may not<br />

remember my novel, but Verdi makes it immortal.”<br />

2/12/2011<br />

Chinese Concertos III: For Yellow River -<br />

Sun Yingdi and Beijing Symphony Orchestra<br />

Concert<br />

Venue: NCPA-Concert Hall<br />

Price: RMB 80/120/200/300/350/400/500<br />

Tickets are available at 400-610-3721; 6417 7845<br />

Presenter: Beijing Symphony Orchestra<br />

Conductor: Tan Lihua<br />

2/14/2011<br />

Sweet Melody for Valentine's Day: The<br />

National Ballet of China Symphony Orchestra<br />

Concert<br />

Venue: NCPA-Concert Hall<br />

Price: RMB 80/120/200/300/350/400<br />

Tickets are available at 400-610-3721; 6417 7845<br />

2/16/2011<br />

2011 NCPA Lantern Festival Concert by Beijing<br />

Symphony Orchestra<br />

Venue: NCPA-Concert Hall<br />

Price: RMB 180/240/320/420/500/580<br />

Tickets are available at 400-610-3721; 6417 7845<br />

Presenter: Beijing Symphony Orchestra<br />

80


Lifestyle<br />

2/20/2011<br />

Primitive Song and Dance<br />

of Hakka People: Charm of<br />

the Round House<br />

Venue: NCPA-Opera House<br />

Price: RMB 80/100/120/230/<br />

280/330/380/480<br />

Tickets are available at 400-<br />

610-3721; 6417 7845<br />

2/24/2011-2/26/2011<br />

Ballet: The Nutcracker<br />

Venue: NCPA-Opera<br />

House<br />

Price: RMB 80/120/180/28<br />

0/330/380/430/500<br />

Tickets are available at<br />

400-610-3721; 6417 7845<br />

National Ballet of China<br />

2/26/2011<br />

Poetic Russian-China NCPA Concert Hall<br />

Orchestra Tchaikovsky Concert<br />

Venue: NCPA-Concert Hall<br />

Price: RMB 80/120/200/300/350/400<br />

Tickets are available at 400-610-3721; 6417 7845<br />

2/26/2011<br />

Love Ensemble-Classic Opera Duet Selections<br />

Concert<br />

Venue: Beijing Concert Hall<br />

Price: RMB 50/80/180/280/380<br />

Tickets are available at 400-610-3721; 6417 7845<br />

3/2/2011-3/3/2011<br />

Dance-Drama: Rosy Clouds<br />

Beyond the Horizon<br />

Venue: NCPA-Opera House<br />

Price: RMB 80/150/260/<br />

320/380<br />

Tickets are available at 400-<br />

610-3721; 6417 7845<br />

Presenter: Shanghai Song and<br />

Dance Ensemble<br />

3/4/2011<br />

American Pianist Peter<br />

Vinograde Piano Recital<br />

Venue: Beijing Concert<br />

Hall<br />

Price: RMB 50/80/180/<br />

280/380<br />

Tickets are available at<br />

400-610-3721; 6417 7845<br />

2/27/2011<br />

3/4/2011-3/5/2011<br />

NCPA International<br />

Piano Series 2011:<br />

Andras Schiff Piano<br />

Recital<br />

Venue: NCPA-Concert<br />

Hall<br />

Price:RMB 180/280/4<br />

00/520/600/680<br />

Tickets are available<br />

at 400-610-3721; 6417 7845<br />

China<br />

Philharmonic<br />

Orchestra 2010-<br />

2011 Music<br />

Festival Ballet<br />

Drama: Carmen,<br />

L’Arlesienne<br />

Venue: Poly Theatre<br />

Price: RMB 50/80/<br />

180/380/680<br />

Tickets are available<br />

at 400-610-3721;<br />

6417 7845<br />

81


ART & GALLARY<br />

Lifestyle<br />

Lost Horizon<br />

Inspired by Béla Tarr’s movie aesthetics and George Orwell’s<br />

novel ‘Animal Farm’, Xu Zhe fabricates a convincing geographical<br />

environment with documentary photography and ‘records’ the<br />

occurring situation by camera. In fact, the story itself has been<br />

dissolved in the scenes. What each audience receives is the most<br />

intense expression of absurdity. The world shall be clearer when<br />

seen in reverse. This is exactly what Xu Zhe wants to emphasize.<br />

Wandering Dream<br />

Without any help<br />

of inborn realities, Lian<br />

Dongya conjures many<br />

‘patients’, who try to act<br />

in different ways, struggling<br />

between reality<br />

and dream. ‘Wandering<br />

Dream’ is based on<br />

psychology, which is<br />

obviously audacious and<br />

fascinating as images,<br />

releasing us from inner<br />

fear, abnormity and rebellion.<br />

As leading role, the<br />

imaginary patients find a<br />

way out of dilemma and<br />

achieve new social order<br />

and relationships. Therefore,<br />

‘Wandering Dream’<br />

possibly attracts people to be involved themselves.<br />

One by one — ShanghART Group Show<br />

Group Exhibition ShanghART Gallery, Shanghai<br />

Duration: Dec. 20th, 2010 - Feb. 15th, 2011<br />

Exhibition space: Shanghart Main gallery, bldg.<br />

16, 50 Moganshan Rd. Shanghai<br />

“One by one”, 38 artists in total, 86 smaller size artworks in<br />

different media; each work is placed at the height of 1.1m from<br />

the floor.<br />

Every work only has a number beside, no artist’s name, no<br />

caption, not classified by any standards, aligned randomly.<br />

“One by one” will be one of the fanciest views in Shanghai<br />

during the upcoming New Year.<br />

Past 15 years, name one by one, exhibition one by one, space<br />

one by one.<br />

“One by one, 2010 – 2011” is an exhibition, is again the collective<br />

party, is another way to meet art, is a revel time about<br />

dream and memory!<br />

Then, what is Art? What is the Artist? What’s the judgment<br />

criterion of art?<br />

This exhibition<br />

could be<br />

no history, no<br />

names, but many<br />

kind of judgment<br />

standard. In the<br />

same time, art<br />

like aggregation<br />

of the sickness,<br />

dilution, issues<br />

and quests.<br />

In front of<br />

the view which<br />

made up of these 38 artists, the conjectures, the fallacies, even the<br />

fleeting history is surging forward.<br />

The meeting between the audience and the art will be more<br />

purely, interesting and even more exciting.<br />

But the most important is: Is Art fun for you?<br />

Are you happy with it?<br />

Do you art today?<br />

82


Lifestyle<br />

Things From the Gallery Warehouse 3<br />

—Huang Kui & Zhang Ding<br />

Shanghart H-Space, bldg. 18, 50<br />

Moganshan Rd. Shanghai<br />

Jan. 12th, 2011-Feb. 10th, 2011<br />

Following “Things from the gallery<br />

warehouse 1 and 2” which introduced<br />

this exhibtion series last winter<br />

ShanghART Gallery is pleased to<br />

present now “Things from the gallery<br />

warehouse 3.”<br />

This time three large scale installation<br />

works from two young artists,<br />

Zhang Ding and Huang Kui, will be<br />

exhibited. They are “Does God exist?”,<br />

“Heaven is only an excuse” from<br />

Huang Kui and “A game of unclear<br />

direction” from Zhang Ding.<br />

What we do is to present people<br />

more approaches of understanding the<br />

art pieces and their creators.<br />

“Game with direction unknow” by Zhang Ding, Game of Unclear Directions<br />

is a large stage raised at more than a meter above the floor, composed<br />

of four main settings: a stuffed peacock, a zen-style rock, a fountain<br />

made of a vase and foams; a carpet featuring a symbol; a boat with chairs<br />

sunken in the wooden floor; a snowy slope with half of a body at its bottom.<br />

All these objects extracted from reality are combined together into a<br />

decor that possesses an unusual, awe-inspiring beauty.<br />

“Heaven is only an excuse” by Huang Kui is showed this time, consists<br />

of a video and a light box installation. Inspired by an extremely<br />

violent online video, Huang Kui described its content as a process during<br />

which “some lives are deprived of by some other lives”. Huang separated<br />

this video frame by frame to obtain individual pictures in large quantity:<br />

pictures of murdering. Then he applied these pictures on an image of the<br />

oil painting named Le Printemps by French artist<br />

William-Adolphe Bouguereau, creating a new<br />

work, namely, the installation on display. During the<br />

production process, the colors of each picture were<br />

changed according to Le Printemps. Then, the artist<br />

took these color-changed pictures to make a new<br />

video, achieving this work that presents a uniquely<br />

sparkling effect.<br />

Beyond-ism — Sun Xun Solo Exhibition<br />

83


THIS IS<br />

CHINA<br />

Touring Mt. Lu: Feeling<br />

Elegance and Poetic Beauty<br />

By Yan Manman<br />

Having for long heard the movie Romance on<br />

Mt. Lu, which is claimed to be and famous for<br />

the PRC’s first movie with kiss scene. Though<br />

the movie-making technology was very lagging<br />

behind and the scene was not as delicate as now, when I<br />

saw the movie which was published in 1980, 30 years ago, I<br />

was moved by the pure and deep love between the hero and<br />

heroine, that kind of reticent way of expressing love, which<br />

was the very characteristic of Chinese people in the eyes of<br />

western world; I was touched by the beauty of Mt. Lu, that<br />

poetic beauty no matter in spring or autumn, summer or<br />

winter; I was awaken of the beautiful image in my mind by<br />

those famous poems written in Mt. Lu; and I was reminded<br />

of the heavy history in modern China history…Located<br />

in the northern part of Jiangxi province, Mt. Lushan faces<br />

Yangtze River to the north and borders Poyang Lake (the<br />

largest fresh water lake in China) on the east. Overlooking<br />

southward on top of the mountain, the Poyang Lake is like<br />

a silver mirror. In the north, the Yangtze River looks like a<br />

jade ribbon flying to the Mt. Lu views of the plains and the<br />

Yangtze are breathtaking. I was just so fascinated by Mt. Lu<br />

then, and told myself, “I wanna visit Mt. Lu someday.”<br />

Mt. Lu is famous for a splendid and pretty summer<br />

resort, and summer is the best time for visiting Mt. Lu.<br />

But its snowy scenery is also a miracle. I wished to see Mt.<br />

Lu covered by the crystal ice and white snow. Then just a<br />

few days after I saw the movie, I came to Mt. Lu with an<br />

impulse at a weekend in the winter. Arriving at Jiujiang at<br />

6:30, I took a bus at the coach station, which directly carried<br />

me to the Guling, a town on the top of Mt. Lu. Since it was<br />

in the morning, on the bus which ran on the winding road<br />

among the hills, I saw the sun rise and shine the mountains,<br />

and overlooked the Poyang Lake. I was just so excited that<br />

we had arrived at the Guling Town before I had enough of<br />

viewing the scene on the bus.<br />

Oh, an elegant fairyland<br />

It was cold even it was in the south of Yangtze River.<br />

Owing to the chillness, only a few tourists came. Some snow<br />

was still there on the ground. It was silent and quiet. My<br />

friend and I just meandered ahead along the street, and not<br />

far we saw the scenic spot Flower Path. That was the place<br />

where Bai Juyi, a famous poet of Tang Dynasty in his poem<br />

referred as “the fragrance in the human world has withered<br />

in Aprils, while flowers in the mountain are in full bloom”.<br />

All kinds of rare flowers are said to be found here. But it was<br />

winter, no flower. But for me, I still could sense that kind of<br />

poetic beauty.<br />

Not far away we walked was a lake with pagoda in the<br />

center and mountains with snow afar. Just like its name, Violin-like<br />

Lake, it was graceful like beautiful light music beside<br />

your ears.<br />

In the Yellow Dragon Pool and Dark Dragon Pool,<br />

snow covering the rocks and ice hanging there, the small wa-<br />

84


terfalls, like bead curtains, flowing along the rocks besides.<br />

Snow, ice and water together, just so amazing. Actually it is<br />

not the best waterfall at Mt. Lu. The best is Sandie (meaning<br />

three segments) Spring, which lies below Five Old Peaks.<br />

It drops through three craggy tiers with a fall of 155 meters<br />

(about 509 feet). It is said that the upper part is like snow falling<br />

down to the pond; the middle reach wanders and twists<br />

with splashing sprays dancing in the air; while the lower level<br />

resembles a jade dragon running in the pond. There is saying<br />

goes, “Without visiting Sandie Spring, one can not say having<br />

been to Mt. Lu.” I had been so eager to see the Sandie<br />

Spring, but I could not then because this scenery spot was<br />

closed owing to the consideration for the safety of the tourists.<br />

A pity for me.<br />

Walking on the winding road through the erecting<br />

metasequoia woods with white snow covering the ground, it<br />

seemed no ends to the woods, no people and no sounds and<br />

only metasequoia trees accompanying you. That road was<br />

called Returning Dragon Road. It was really a long path.<br />

At the end of the path, climbing on a bridge which is called<br />

Lulin Bridge, we came across another beautiful lake, Lulin<br />

Lake, which was said to be built for Chairman Maozedong<br />

to swim in. Now it is used as drinking water source for the<br />

people on Mt. Lu.<br />

Just touring a small part of Mt. Lu actually, however, it<br />

was, in my eye, an elegant fairyland already.<br />

Too much historical traces<br />

Walking back to the Guling Town, we walked by many<br />

western style villas built by Britain, Russia, America, France<br />

and so on in the early 20th century. The villas area once was<br />

the concessions of the western countries then. During 1930,<br />

it became the summer capital of Nanjing Kuomintang Government.<br />

The former residence of Mrs. Jiangs, Meilu Villa is<br />

kept well on the mountain. In 1937, Chou Enlai on behalf<br />

of CPC negotiated with Jiang Kai-shek and later released<br />

the important speech of anti-Japanese. After the foundation<br />

of People’s Republic of China, Chairman Mao mounted up<br />

to Lushan Mountain and hosted three center-governmental<br />

meetings. Historically,<br />

they were called Lushan<br />

Meeting, famous general<br />

of Communist Party of<br />

China, Peng Dehuai was<br />

deadly condemned here,due<br />

to his maintenance of right<br />

viewpoint. Laterly, he was<br />

dismissed to be the defense<br />

minister. Many villas had<br />

been the residential place of<br />

the top leaders then. Now<br />

all those villas still erected<br />

there, but those historic<br />

people nearly all passed<br />

away. Heavy sense of history<br />

just made my mind calmer.<br />

All the worldly disputes,<br />

no matter how influential it<br />

was once, are finally brought away by the fleeting time, only<br />

leaving some trace and becoming the subject in the future for<br />

the later generations to ponder.<br />

Too much cultural taste<br />

“Sunlight streams on the river stones.<br />

From high above, the river steadily plunges<br />

Three thousand feet of sparkling water —<br />

the milky way pouring down from heaven.”<br />

It was a very famous poem written by Li Bai, the most<br />

famous Poet in Ancient China. The elegance and mystery of<br />

Mt. Lu are just so deeply loved by multiple literators, artists,<br />

monks, Taoists and celebrities in politics and culture. Their<br />

love and behaviors enriched Mt. Lu dramatically in cultural<br />

taste and historical status. Numerous poets and essays activate<br />

it. Mt. Lu is characterized by its poets, calligraphers,<br />

painters, writers, philosophers. Its cultural and historical relics<br />

enrich and raise its spiritual meaning in Chinese people’s<br />

mind and heart. Both as the world heritages, Mt. Tai is created<br />

by emperors, while Mt. Lu is created by scholars.<br />

Time limited, I just visited a small part of Mt. Lu,<br />

missing too much. I had planned to Lushan Cinema to see<br />

that movie and experience that romantic feeling again, but<br />

did not have time finally. It was the most special and particular<br />

cinema, because it plays the same movie Romance<br />

on Mt. Lu everyday without any change in the past. It is<br />

the only movie that plays most and has most audiences. It is<br />

also the only one for non-stop playing all around the world.<br />

In 2002, Guinness organization<br />

of British Headquarters officially<br />

awarded Chinese<br />

movie, Romance on Mt.<br />

Lu to be the film that<br />

has the longest time<br />

for non-stop playing<br />

in the same cinema<br />

in the world. And<br />

another pity was<br />

that snow fell just<br />

t h e<br />

next day after I left. I missed<br />

the most beautiful Mt. Lu<br />

snowing world, fresh, peaceful<br />

and crystal like world full<br />

of spirituality. Life keeps<br />

missing, but I knew I would<br />

come again, if possible, at<br />

least once in each season. If<br />

time and money permitting,<br />

I wished to stay Mt. Lu for at<br />

least a month or longer. Mt.<br />

Lu is just such a mountain<br />

worth deeply tasting and appreciating.<br />

85


THIS IS<br />

CHINA<br />

Brief introduction to the scenic spots of Mt. Lu<br />

Flower path<br />

The eternal poetic masterpiece of Tang Dynasty famous<br />

poet Bai Juyi” the fragrance in the human world has<br />

withered in Aprils, while flowers in the mountain are in full<br />

bloom “describes the scenery here. All<br />

kinds of rare flowers are diaplayed to<br />

tourists. By the Violin-like lake, the<br />

scenery here is breathtaking.<br />

The Brocade Valley<br />

In this deep and sudden valley,<br />

flowers are always in full bloom, which<br />

are so brilliant that people call them<br />

brocade. The monk “huiyuan” gathered<br />

medicinal herbs in this valley far the<br />

Jin Dynasty according to legend.<br />

Here, we have overline bridge,<br />

head-like stone, and beautiful<br />

peaks.<br />

Immortal’s Cavern<br />

The carven is like a forward stretching hand. The cavern<br />

has shrines for idols or ancestral tablets, clear spring, and<br />

there are old monarch’s halls cavern the hole, Toad stone,<br />

Imperial Tablet Pavilion, and clubmoss. This hole gains the<br />

name because Lu Tung-pin practiced austerities here and became<br />

immortal according to legend.<br />

The Grand heavenly pool<br />

Tianchi Temple stands here. It was originally known as”<br />

Huguo Temple”. The Temple was built by an emperor who<br />

started Mimg Dynasty. In Song Dynasty people renamed it<br />

as “Tianchi”. Here tourists can see “wenshu” platform, old<br />

nurse’s shrine, Tianchi Tower, Traces, “yuanfu” temple, etc.<br />

And it is the best place to view a sea of clouds and “Buddhism<br />

light”.<br />

Dragonhead Cliff<br />

Besides a craggy cliff, it<br />

springs up some thousand<br />

feet out of the ground,<br />

rearing in the sky like<br />

a dragon head. Standing<br />

at the top, one can<br />

86<br />

enjoy<br />

a bird’s eye view<br />

of the millions<br />

of steep wall-like<br />

stones and hear<br />

the surfing of wind<br />

in the pine forest<br />

mingled with roaring<br />

of the waterfalls in the<br />

Stone Gate Ravine.<br />

The Suspension Bridge of Stone-Gorge valley<br />

The Bridge betweenthe two ravines seems a line of artificial<br />

rainbow from two mountains, as it was crafed by the<br />

invisible hands of gods. Standing on the bridge, people can<br />

look far into the distance.<br />

The Museum<br />

The museum, also called Lulin Villa and Lulin One, is<br />

Mao Tse-tung former residence. The villa combines the Chinese<br />

and Western architectural style harmoniously. It was<br />

changed into a museum in 1984. It has collections of bronzes,<br />

pottery, Porcelain, calligraphy and painting, etc. Among<br />

them, a painting of Xu conglong (a Qing Danasty painter)<br />

called “Five Hundred Buddists” is the most valuable.<br />

Five Old Peaks<br />

Five olds peaks exist side by side, like five old men chatting<br />

each other. The famous Tang Dynasty poet Libai left us<br />

poem about the beautiful scenery here. There are five little<br />

peaks coming in every shape before the peak, and tourist can<br />

enjoy stone engraving of rock on the peak, and yingke pines<br />

here. Seeing from the top of it, there is splendid view of sunrise.<br />

If it is foggy, people even can hear “the sound of fog”.<br />

Academy of White Deer<br />

In the valley of Wulanfeng stands one of the oldest<br />

institutions for higher learning in China. It was establish on<br />

A.D. 940. The teachings were first centered on the teachings<br />

of Confucius. The founder raised a pet white deer, thus<br />

its name “Academy of White Deer Cave”. In the courtyard<br />

there is the Tablet Corridor, The Sacred Gate of Ceremony<br />

and White Deer Cave.


Yellow Dragon Pool<br />

“It is the dragon make the water clever instead of the<br />

deepness of it.” Going through roots and rocks, and rushing<br />

downward along dark green precipice, waters<br />

straightly fall into the pool. It is said<br />

there is a untamed dragon in the<br />

pool, which often cause calamity.<br />

Later it has been subduded<br />

and kept in the pool by a Buddhist<br />

monk<br />

Dark Dragon Pool<br />

Dark dragon’s pool is divided<br />

into f ive chinks by a huge stone.<br />

Hanging from the stone, the five parts<br />

of water rush down to the pool. As the<br />

story does, there is a dark dragon inhabiting<br />

in the pool, so people name<br />

it after the dark dragon. The water is<br />

clear in the pool, which make people<br />

can not help drinking and playing<br />

with it.<br />

Three Ancient Trees<br />

“three trees stand in front of the<br />

temple, a tree and a bodhi”. Of three big<br />

trees, two are cryptomerias, the other is a gingko. It is tall<br />

and big, stalwart. It is said the tree was planted by Buddhist<br />

monk in the Jin Dynasty, but in fact it was done<br />

by monk in the Ming Dynasty. So it has a history of<br />

more than 400 years so far.<br />

Lulin Lake<br />

The Lulin lake was built in 1955 by piling up<br />

the dyke and building the bridge. The area is 130,000<br />

square meters, and water demand is 1,200,000 square<br />

meters. Surrounded by the mountains, the lake and the<br />

mountains set each other off. The rainbow-like bridge<br />

and mirror-like water make here a dreamlike place.<br />

Meilu Villa<br />

It was established in 1903 by Britain’s Lord Lannoze.<br />

The whole building reflects British winding corridors architectural<br />

style, and stresses the abstract beautiful rule of the<br />

building. It was transferred to the Mrs. Bali in 1922, and she<br />

presented it as a gift to Song Meiling in 1934. From then on,<br />

here became the summer official residence of Chiang Kaishek<br />

(the chairman of KMT). During the meetings of the<br />

Central Committee of the Communist Party of China, Mao<br />

Tse-tung lived here.<br />

Villa 359<br />

It was built in 1902 by<br />

priest Williams from U.S.A.<br />

north Presbyterian Church. The villa<br />

fully utilizes the topographical characteristic<br />

and occupies a commanding position. There is a kind of<br />

imposing manner out of the ordinary. Xiong shihui, the<br />

chairman of provincial government of Jiangxi bought the<br />

villa in 1932. During the meetings of the Central Committee<br />

of the Communist Party of China, Zhu De stayed here.<br />

Villas 286<br />

It was established by Kurchinan<br />

of the American missionary<br />

in 1903. In 1936, the National<br />

Government Ministry of<br />

Education bought the villa<br />

as its office on Mt. Lu.<br />

During the meetings of<br />

the Central Committee<br />

of the Communist Party<br />

of China, Deng Xiaoping,<br />

and Dong Biwu stayed<br />

here respectively in 1961 and<br />

1970.<br />

Former British Medical<br />

Hall Villa 438<br />

originally for British medical assembly<br />

hall, it was changed into little Christianity church<br />

in 1946. Chiang Kai-shek, Situ Leideng has prayed here.<br />

The building is influenced by the trend of architectural<br />

thoughts of European Renaissance and roman classics. The<br />

whole style is stable. During the meetings of the Central<br />

Committee of the Communist Party of China in 1950s,<br />

here is the middle and southern group meeting room.<br />

87


Spr ng Fest val<br />

I Can't Understand<br />

90<br />

By Paul Ward<br />

For most people,<br />

Spring Festival is<br />

not an option.<br />

It must be done.<br />

So, cheerfully<br />

accept and smile.<br />

I<br />

tried hard to think of a positive side to<br />

Chinese Spring Festival. But the truth<br />

is, I can’t. Not because I don’t want to,<br />

but because there is a cultural block. I<br />

don’t feel any emotion connected with SF,<br />

because it isn’t part of me. I didn’t grow up<br />

with it; I don’t have any family close enough<br />

to really appreciate its significance.<br />

For the 3 years that I lived in Shanghai,<br />

I observed SF from the outside. I Googled; I<br />

read; I listened; I watched. I asked questions.<br />

Some very kind colleagues tried to explain.<br />

BUT, I never really understood.<br />

The pattern was always the same. 2 weeks<br />

before SF, the tension would increase. The<br />

chatter at lunchtime focused on one topic; The<br />

travel home. Everyone needs to be with their<br />

family, everyone needs a ticket. Everyone has a<br />

plan, and a back-up plan, and a second back-up<br />

if the first back-up fails. Every route is explored;<br />

Plane (usually too expensive), train (preferred),<br />

bus (ok for a few hours travel), car (if you know<br />

someone else travelling to or past your hometown).<br />

Feel the anxiety. Guanxi is called in,<br />

spent, begged, given, traded. The boss must<br />

share the pain. Look the other way as your<br />

team disappear for 3 hour ‘lunch-breaks’ to go<br />

to the ticket office. Share the joy when a ticket<br />

is delivered. Like a prize in a lottery. Check<br />

the details (twice); Kiss the paper. Relief. Big<br />

smile. Phew, mum will be happy now. Think<br />

about the gifts. What to take? Food is traditional.<br />

Healthy fruit? Spicy meat? Yes. Snacks<br />

for the journey. And of course the hongbao.<br />

Can you get me three red envelopes please.<br />

Oops no, four, I forgot my new little brother<br />

(cousin). How much to put in? Can I afford one<br />

hundred. Yes, if I don’t go out next week. But<br />

the dinners with colleagues. Oh, I will manage<br />

somehow. Family will understand how difficult<br />

it is; how much effort I made to be there. I have<br />

my ticket. That is the most important thing.<br />

Everyone wants you to enjoy SF. But<br />

how? The usual questions; What are you doing<br />

for SF Mr Laowai? Will you travel? Are<br />

you kidding? Join 1.3 billion Chinese, all<br />

wanting to be somewhere else? My nightmare<br />

– I’m staying at home.<br />

The first year, naively, I went to the railway<br />

station to try and buy a ticket. Horrific<br />

scenes. People shouting, crying, pushing, everyone<br />

with huge bags. What makes these gentle<br />

people turn into monsters? SF of course.<br />

So eventually everyone gets to where<br />

they want to be. What now? Lots of dinners?<br />

Lots of chats. TV Gala’s. Visit the ancestors<br />

graves. Shopping. Telling happy ending<br />

stories. Playing cards or majong. More shopping.<br />

Special snacks between meals! Disorganised<br />

chaos. Happy family harmony.<br />

But what goes on in the background?<br />

My young team always dreaded the inevitable<br />

questions from their parents: You look<br />

thin. Are you eating properly? Do you have<br />

a girlfriend (boyfriend)? Whatever their answers,<br />

more questions would follow. Who is<br />

he (she)? Where is he from? Is she beautiful?<br />

How old is she? When will we meet him?<br />

Does he have a good job? A good family? A<br />

good education? Is he kind? Is he tall? Does<br />

he have a car? Does he have an apartment?<br />

The pressure to conform, follow the tradition,<br />

create and grow the next generation.<br />

And finally the fireworks. Wow, the incredible<br />

noise. Late at night; very, very late at<br />

night. Sleeping is not an option. The smoke; the<br />

pollution; the cost! Lots of theories about why<br />

they are so popular. Connections with the gods?<br />

Nah, Chinese men just like to make lots of noise.<br />

Stay a few days with the family, visiting<br />

relatives and old friends. Then the whole travel<br />

process begins again in reverse. Sometimes my<br />

team would be a few days late back to the office.<br />

Gifts from home. Mum’s cooking. Some new<br />

clothes. Tired, weary, exhausted. Was it worth<br />

it? Stupid question really. For most people, SF<br />

is not an option. It must be done. So, cheerfully<br />

accept and smile. One day, you can punish your<br />

kids by dragging them back from far away.<br />

Is it like Christmas? No.<br />

Is it like any Western festival? No.<br />

Will I ever understand it? No.


Unforgettable<br />

Spr ng Fest val<br />

Fireworks<br />

It’s that time of the year again, the Spring<br />

Festival, a time for celebrations and family.<br />

While I have been living in China for<br />

quite some time and the Spring Festival<br />

has become more and more familiar to me<br />

each year, I think the most exciting year for me<br />

would have to have been the first time I experienced<br />

Spring Festival. I wasn’t sure exactly<br />

what would happen, but it’s a night that turned<br />

out to be an unforgettable experience.<br />

As an American looking back, I think<br />

probably the most exciting and fun thing about<br />

the Spring Festival for me would be playing<br />

with the fireworks. I can still remember when<br />

I was young and we would celebrate Independence<br />

Day in the U.S., we would always<br />

play with fireworks as the sky became dark.<br />

Unfortunately, after a few years playing with<br />

fireworks was banned in my city, and in many<br />

other places across the U.S. since the risk of fire<br />

is too great. While this was for the good of the<br />

community and increased safety, it also took<br />

away one of the most exciting and representative<br />

parts of our National Day. Luckily, however,<br />

China’s tradition of fireworks lives on.<br />

While the symbolism of the Chinese<br />

use of fireworks during the Spring Festival is<br />

different (being used as a means to ward off<br />

evil spirits), it doesn’t mean playing with them<br />

are any less fun. On the contrary, I think the<br />

fireworks available in China are much bigger<br />

and more impressive than anything found in<br />

the U.S., which makes sense given that China<br />

is the birthplace of fireworks. During that first<br />

Spring Festival in China I remember noticing<br />

the fireworks shops popping up around the<br />

city, but I didn’t pay much attention to them.<br />

Then, on New Year’s Eve we stopped at one<br />

on the way to my wife’s family celebration (she<br />

is Chinese), I was both surprised and awed by<br />

the vast selection they had, and maybe I went<br />

a little crazy, spending a few hundred RMB<br />

on that night’s entertainment.<br />

After loading up the trunk of our car, we<br />

continued on to my wife’s parents house where<br />

we would celebrate. As many have said before,<br />

the focus of Spring Festival is spending time<br />

with family, and in that respect it is very similar<br />

with Christmas in the U.S. It was very relaxed<br />

and comfortable, enjoying a nice meal together<br />

and chatting. The food of course was great, and<br />

it was very interesting to experience all of the<br />

unique Chinese traditions related to Spring<br />

Festival for the first time. However, maybe it’s<br />

just me, or maybe there are others that share<br />

my feeling, but I kept looking back at my pile<br />

of fireworks near the door, then checking my<br />

watch to see how much longer until midnight.<br />

These fireworks needed to be set off!<br />

Finally it was approaching midnight<br />

and we went outside to prepare. I could hear<br />

other fireworks exploding in the distance,<br />

and that’s when I realized there are others<br />

out there just as excited as me. As midnight<br />

got closer the sights and sounds of the fireworks<br />

became more and more intense. We all<br />

took turns lighting up the different fireworks<br />

we had, saving the biggest and best for last.<br />

The whole sky was filled with explosions, so<br />

many that one might think they are in the<br />

middle of a war. But in reality it is a war, a<br />

war with all those evil spirits which need to<br />

be driven away. This was a war we continued<br />

to fight until there were no more fireworks<br />

left. While that was a sad realization, I immediately<br />

became happy again since my wife<br />

told me we could keep playing with fireworks<br />

for the next two weeks.<br />

Of course, after the fireworks there was<br />

still a lot of celebrating to do, not only that<br />

night, but over the next few days, spending<br />

more time with different family members.<br />

It was nice to see that people everywhere<br />

are largely the same, taking joy in the same<br />

things and sharing similar traditions, Christmas<br />

and Spring Festival are very similar in<br />

these respects. But I think maybe the biggest<br />

difference when compared with Christmas,<br />

at least in my experience, is that Christmas<br />

usually lasts only a day or two, but Spring<br />

Festival lasts two weeks, plenty of vacation<br />

time to spend with your loved ones.<br />

By Ty Clendenen<br />

The fireworks<br />

available in<br />

China are big and<br />

impressive, which<br />

makes sense<br />

given that China<br />

is the birthplace of<br />

fireworks.<br />

91


Culture<br />

Why Chinese Lunar<br />

Chinese spring festival is the lunar<br />

New Year, the first day of the first lunar<br />

month, the most important Chinese holi-<br />

New Year?<br />

day. It is a festival season for family gathering<br />

2011 falls on February 3rd, the Year of the<br />

and lasts for 15 days, ended as Lan-<br />

Rabbit.<br />

tern Festival, the 15th day of the first lunar There are many customs for Chinese<br />

month. In China, the fluctuating New Year New Year, in which people hope the new<br />

is the real start of the next year rather than start of a year will bring them good luck<br />

the fixed January 1. Chinese new year in and prosperity for the whole year.<br />

Why firework, lanterns and couplets?<br />

Most people stay up late on the eve<br />

of the Chinese New Year, watching TV,<br />

enjoying snacks and chatting with their<br />

family. Even if they don't, they are woken<br />

up by the loud bangs of firework at midnight<br />

-- if the sporadic firework sessions<br />

before 12 a.m. are not loud enough to stir<br />

the sound sleepers.<br />

Why Jiaozi and Niangao?<br />

In northern China, Chinese dumpling<br />

( 饺 子 jiǎo zi) is an indispensable dish on the<br />

New Year dinner table. It is an important<br />

tradition on New Year’s Eve for families to<br />

gather together and spend the evening preparing<br />

the dish. Experts say the snack was<br />

already popular in the Three Kingdoms<br />

period (220 - 280). Many Chinese believe<br />

that to eat dumplings at the turn of the year<br />

will bring good luck, because the food<br />

Why clean house?<br />

Before the New Year arrives, the<br />

Chinese consider it very important to give<br />

the house a thorough cleaning, sweeping<br />

Why red envelops?<br />

Children enjoy the holiday more than<br />

anyone else, largely because they get red<br />

envelops ( 红 包 hóng bāo) of “lucky” pocket<br />

money from their parents, grandparents and<br />

Why no haircut?<br />

Many Chinese has the superstitious<br />

belief that if a person has a haircut during<br />

the first month of the lunar year, his maternal<br />

uncle will die. As a result, barbershops<br />

open almost 18 hours a day in the preholiday<br />

rush for haircuts that lasts for at<br />

least two weeks until the New Year’s Eve.<br />

While women like to spruce up for<br />

Question:<br />

As a legend goes, Chinese ancestors<br />

were haunted by a monster named “ 年<br />

nián” (meaning year) that left its mountain<br />

dwelling for human communities amid<br />

food shortages in winter to prey on men<br />

and cattle. In the long run, people found<br />

out the monster was afraid of flames,<br />

bangs and red color. So they worked out<br />

resembles “ 元 宝 yuán bǎo”, a boat-shaped<br />

gold ingot that served for many years in history<br />

as China’s currency.<br />

Vegetables, meat, fish and shrimps<br />

can all make dumpling fillings. And it is<br />

common to put something special- from<br />

nuts and dates to coins- in just one of the<br />

dumplings. He who happens to eat this<br />

special dumpling is considered the luckiest<br />

person in the new year.<br />

away any bad luck that may have accumulated<br />

over the past year. However,<br />

don’t clean for the first few days of the<br />

other relatives. Experts say the custom, at least<br />

1,800 years old, conveys New Year greetings<br />

and aims to protect youngsters from ill luck.<br />

In Chinese cities, the sum in each<br />

the holiday, even men with short hair like<br />

to take an extra haircut before the new<br />

year lest their hair will grow too long before<br />

their next haircut, scheduled on the<br />

second day of the second lunar month.<br />

A Chinese legend goes that a poor<br />

barber loved his uncle dearly but could<br />

not afford a decent new year gift for<br />

How does your country celebrate the New Year?<br />

firecrackers and lanterns to scare it away.<br />

No one in China nowadays still believes<br />

such a monster actually existed, but<br />

the legend and customs have survived.<br />

Today, Chinese families still hang up<br />

red lanterns and put up red couplets with<br />

rhymed phrases at their door, light fireworks<br />

and stay up late to watch the old year out.<br />

In southern China, where people<br />

prefer rice to wheat, families eat glutinous<br />

rice cakes instead of dumplings for the<br />

new year. These sticky rice cakes, whose<br />

Chinese name “ 粘 糕 nián gāo” (same<br />

pronunciation as “ 年 高 ”, higher year), are<br />

also symbols of a prosperous new year. As<br />

such, eating nian gao has the symbolism<br />

of raising oneself higher in each coming<br />

year ( 年 年 高 升 nián nián gāo shēng).<br />

New Year. If you do any sweeping during<br />

this time, you risk sweeping away your<br />

good luck this year.<br />

envelop can range from RMB 100 up to<br />

several thousand, but has to be an even<br />

number. It is usually given in exchange of a<br />

child's New Year greetings to adults.<br />

him. So he gave his uncle a nice haircut<br />

that made the old man look many years<br />

younger. His uncle said it was the best<br />

gift he had ever had and wished to get a<br />

haircut every year. After his uncle died,<br />

the barber missed him very much and<br />

cried every new year. Over the years, his<br />

“thinking of his uncle” ( 思 舅 sī jiù) was<br />

interpreted as “death of uncle” ( 死 舅 sǐ<br />

jiù) because in Chinese, their pronunciations<br />

are almost the same.<br />

92


xīn nián jí xiáng huà<br />

新 年 吉 祥 话<br />

Chinese New Year<br />

Greetings<br />

2<br />

恭 喜 发 财 gōng xǐ fā cái<br />

May you come into a good fortune!<br />

This is another common greeting during the New<br />

Year. You may hear it quite frequently in shopping malls or<br />

supermarket. Children often greet their relatives with “ 恭<br />

喜 发 财 , 红 包 拿 来 ” gōng xǐ fā cái, hóng bāo ná lái. That is<br />

to say “Happy New Year and get rich, now give me a red<br />

envelope with some lucky money.”<br />

拜 年 啦 bài nián la<br />

CFT wishes every reader a very Happy New Year!<br />

tù nián xíng dà yùn<br />

兔<br />

年<br />

行<br />

大<br />

运<br />

May the Year of the Rabbit bring you good luck.<br />

jiā hé wàn shì xīng<br />

家<br />

和<br />

万<br />

事<br />

兴<br />

If the family lives in harmony, all affairs will prosper.<br />

3<br />

大 吉 大 利 dà jí dà lì<br />

Good luck and every success!<br />

Luck is important at the beginning of the year. There<br />

are many unwelcome words and expressions during Chinese<br />

New Year. Sometimes children may be unaware of<br />

this, and say something inappropriate. The adults will say<br />

“ 童 言 无 忌 , 大 吉 大 利 ” tóng yán wú jì, dà jí dà lì, to mean,<br />

“No matter what the child said, we’ll have a lucky and<br />

smooth year anyway.”<br />

4<br />

万 事 如 意 wàn shì rú yì<br />

May all your wishes come true!<br />

万 事 , literally means “10 thousand things”, referring<br />

to everything. 如 意 means “satisfy your wanting”. It is also<br />

a traditional handicraft in China, usually made of jade; 玉<br />

如 意 yù rú yì, as a sign of good luck, is a valuable gift to<br />

friends, also an exquisite decoration in any room.<br />

5<br />

岁 岁 平 安 suì suì píng ān<br />

Safe and sound every year.<br />

“Break” in Chinese is 碎 suì, the same pronunciation<br />

as 岁 (year). To ward off bad luck, Chinese say 岁 岁 平 安<br />

when something breaks during the New Year, e.g. drinking<br />

glasses.<br />

1<br />

新 年 快 乐 xīn nián kuài lè<br />

Happy New Year!<br />

There are many sayings and greetings associated<br />

with the Chinese New Year. Family members, friends, and<br />

neighbors greet each other with congratulations and wishes<br />

for prosperity of the coming year. “ 新 年 快 乐 ” is one of the<br />

most common greetings when Chinese meet each other at<br />

the first day of the New Year.<br />

6<br />

年 年 有 余 nián nián yǒu yú<br />

Wish you prosperity every year.<br />

A traditional New Year’s food is fish 鱼 yú, which has<br />

the same pronunciation as 余 (surplus), to indicate a rich<br />

coming year. Also when Chinese eat fish during the New<br />

Year, they prefer not to eat it all, but leave a small part to<br />

wish for a surplus year.<br />

93


Statement<br />

From January 2011, Issue<br />

No.1/494 of China's Foreign<br />

Trade magazine is to b e<br />

altered into monthly-published<br />

magazine with richer content<br />

(96 pages for each issue) for the<br />

same price (RMB 16/US$5 per<br />

issue). Subscription is welcome.<br />

We sincerely appreciate your<br />

continuous support to CFT.<br />

China's Foreign Trade<br />

Editorial Department


诚 征 来 稿 , 优 稿 优 酬<br />

诚 征 来 稿 , 优 稿 优 酬<br />

诚 征 来 稿 , 优 稿 优 酬<br />

Contributions to China’s Foreign Trade Wanted!<br />

《 中 国 对 外 贸 易 》( 英 文 ) 杂 志 是 一 本 创 刊 于 1956 年 的 国 际 经 贸 类 品 牌 期 刊 , 集 专 业 性 、 商 业 性 、 高<br />

效 性 于 一 体 , 主 要 面 向 外 经 贸 领 域 的 政 府 官 员 、 专 家 、 学 者 、 各 国 驻 华 使 ( 领 ) 馆 和 相 关 机 构 人 士 、 国 内<br />

外 企 业 管 理 层 、 经 营 界 人 士 等 , 读 者 遍 及 全 球 。<br />

为 密 切 与 各 界 人 士 的 交 流 , 本 刊 现 真 诚 欢 迎 国 内 外 业 界 专 家 、 学 者 为 本 刊 撰 稿 。 来 稿 必 复 , 优 稿 优<br />

酬 。 优 秀 者 将 有 机 会 受 聘 为 本 刊 特 约 撰 稿 人 ( 可 单 独 开 辟 专 栏 )。 凡 投 稿 者 都 将 获 赠 最 新 杂 志 两 本 。<br />

稿 件 要 求 :<br />

☆ 稿 件 内 容 请 参 看 本 刊 栏 目 设 置 及 内 容 , 主 要 涉 及 国 内 外 经 济 、 贸 易 、 投 资 、 金 融 等 相 关 领 域 ;<br />

☆ 文 章 长 度 以 2000 字 英 文 左 右 为 宜 , 可 配 图 片 或 图 表 ( 分 辨 率 应 不 低 于 300dpi);<br />

☆ 请 在 文 中 注 明 作 者 姓 名 、 联 系 电 话 、E-mail、 详 细 地 址 及 邮 编 。<br />

☆ 投 稿 信 箱 :ccpitcft308@163.com( 请 在 邮 件 “ 主 题 ” 一 栏 中 写 明 文 章 标 题 )<br />

☆ 投 稿 地 址 : 中 国 北 京 市 复 兴 门 外 大 街 1 号 贸 促 会 西 楼 308 室 (100860)<br />

本 刊 编 辑 部<br />

Contributions to China’s Foreign Trade Wanted!<br />

Contributions to China’s Foreign Trade Wanted!<br />

China’s Foreign Trade is a monthly magazine in English on economics and foreign trade. It combines<br />

recent business news with the opinions of various industry experts. Since its debut in 1956, China’s Foreign<br />

Trade has been an important bridge for the promotion of international cooperation, economic exchange and<br />

foreign trade between China and the world.<br />

Building the Magazine has always been a cooperative effort and we need your input. If you have a great<br />

idea or other information related to economics or international trade that you are free to share and feel would<br />

be of interest to others, please forward it with your detailed contact information to our mailbox (E-mail:<br />

ccpitcft308@163.com / Mail: Rm. 308 West Building of CCPIT, 1 Fuxingmenwai St, Beijing 100860, China).<br />

Your contribution can be as simple as a tip for solving a difficult implementation issue or as complex as<br />

an essay clarifying the aspects of a new policy, but please write around 2,000 English words for one article.<br />

See the list of our columns and recently published articles for ideas about what we are looking for. On the<br />

other hand, if there is something that you would like to see in our magazine, please let us know.<br />

Every contributor will receive two of our latest issues. The better the contribution, the higher the rewards.<br />

An excellent contributor will have the chance to start their own column and become a regular feature<br />

in our magazine.<br />

Let’s share and build a better magazine together! Your contributions to China’s Foreign Trade are<br />

more than welcome!<br />

ccpitcft308@163.com

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!