EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

16 October -  22 October 2000

No 19


China's GDP grows 8.2% in first three quarters
The GDP of China grew 8.2% year-on-year to RMB 6'212 billion in the first nine months this year. Of the total, agricultural, industrial and service sectors grew 2.2%, 9.8% and 8.1%, respectively. (Xinhua, 16 October)

China's industrial growth speeds up in first three quarters
The added value of China's large and medium-sized enterprises hit RMB 1'706.1 billion in the first nine months this year, up 11.6% over the same period last year. The first three quarters also witnessed a quick growth of fixed asset investment, which went up 12.9% to RMB 1'347 billion. (Xinhua, 16 October)

Chinese residents' income grows in first three quarters
In the first nine months of the year, urban residents' cash income in China grew 8.4% over the same period last year to RMB 4'719. Farmers' disposable income reached RMB 1'500 during the period, up 2.5%. The first three quarters also witnessed a booming consuming market, with retail sales growing 9.9% to RMB 2'434 billion. Retail sales in urban areas rose 10.7%, higher than the 8.5% rise in rural areas. During the period, the consumer price index rose 0.2%, compared to the minus 1.6% growth in the same period of last year. Prices of industrial products continue to grow partly due to oil price surge in the world market. In the third quarter, prices of industrial products grew 4.0%, a rise of 1.3 percentage points and three percentage points over those in the second and first quarter, respectively. (Xinhua, 16 October)

China claims USD 1.3 billion budget surplus in first 9 months
China produced a budget surplus of RMB 10.8 billion in the first nine months of this year because of a large increase in tax revenue. Revenue rose 21% compared with the same period last year to RMB 956.1 billion while spending rose 22% to RMB 945.3 billion. The revenue from major taxes such as value-added tax, stamp duty and income tax increased sharply in the first nine months of this year, he said. (China Daily, 17 October)

Konka linking with Intel to enhance technological base
Konka Group, the second-largest television manufacturer in China, has linked with US-based semiconductor giant Intel to develop chips for next-generation mobile-phones. Konka is among nine Chinese consumer-electronic goods firms approved by Beijing to make mobile phones, in a drive to recover market share from the foreign manufacturers that have dominated in the past decade. (SCMP, 17 October)

New York Life puts USD 60 million into western development
US-based insurer New York Life International has committed to invest more than USD 60 million in China, mostly in infrastructure projects in the country's western provinces. They included sewage projects, water treatment plants, power plants, roads, and other public facilities. (SCMP, 17 October) Note: New York Life does not (yet) hold a licence to do insurance business in China.

Growth in rural income slowing down
A new survey reveals that growth in Chinese rural residents' incomes has been slowing since 1997 and is likely to continue to decline in the absence of further government measures to promote the non-farming industry. (South China Morning Post, 17 October)

Need for clean energy
China will require that at least 5.5% of each province's and autonomous region's electricity come from renewable energy sources before 2003. Average renewable energy consumption in China (wind power, solar energy, hydropower and geothermal energy) represented 5.8% of the total energy consumption in 1998. However, the renewable energy industry has developed unevenly, with the East lagging behind badly. (China Daily, 17 October)

IFC: Emergence of the domestic private sector most important result of reform process
A study of more than 600 private companies by the International Finance Corp (IFC), the World Bank's private investment arm, claims that the emergence of the domestic private sector is the most important result of the reform process in China. The study recommends that China must open up financing and remove a wide range of hurdles to the private sector in order to create new jobs as it overhauls its ailing state industry. Since economic reforms began in 1979, the private sector has grown steadily and accounts for about one-third of GDP. But the private sector still receives only a fraction of the credit from the state banking system. (SCMP, 19 October)

China to spend USD 12.08 billion on advertising next year
Experts predict that China's advertising revenue would double next year to more than RMB 100 billion. China would then become the fourth largest global advertising market after the United States, Japan and Germany. (ChinaOnline, 19 October)

Beijing McDonald's opens 63rd restaurant
The first McDonald's restaurant in China was set up in 1990 in Shenzen. Over the past 10 years, nearly 280 McDonald's restaurants have opened in 50 Chinese cities. Suppliers of McDonald's fast-food system have invested more than RMB 1.37 billion in China. The company's raw material procurement in China has reached RMB 4 billion annually. McDonald's currently employs more than 20,000 people in China. (ChinaOnline, 19 October)

Bank of China to lay off 15,000 employees
The Bank of China recently announced that it would lay off 15,000 employees worldwide. Insiders say that the layoffs are necessary for Bank of China's plans for major reforms and reorganization and for a future public listing. (ChinaOnline, 20 October)

Homeownership on the rise in Chinese cities
Now over half of urban Chinese own the houses in which they live, according to a new study on the reform of China's housing system. The data reveals that there was no significant increase in the amount of living area in China's urban households from 1999 to 2000. However, the percentage of homeowners jumped nearly 10%, to 59%. The study also predicts that the trend toward purchasing houses will continue. (ChinaOnline, 20 October)

Property investments up 25%
A total of RMB 286.1 billion was invested in China's real estate sector in the first nine months, up 25% year-on-year. Development investment in commercial residences increased 29% in the first eight months. Sales of residential apartments rose by 43.4% and sales revenue climbed 48.8%. Individuals are playing a major role in the property market. They bought 89.4% of commercial apartments in the first eight months. (SCMP, 20 October)

China becomes world's largest fruit and vegetable producer
China has become the world's largest producer of fruit and vegetables. In 1999, China accounted for 32.8% of all land used in the world for planting vegetables, and China's orchards comprise 21. 3%. China's vegetable and fruit output contributes 64.4% and 14% of the world's total, respectively. (Xinhua, 20 October)

30% pay rise expected for civil service
Beijing is planning another major civil service pay rise for next year to spur consumption and discourage corruption among cadres. The State Council is also preparing a comprehensive medical, old-age and unemployment benefit package for state workers to be put into place in 2002. (SCMP, 21 October) 

2000 Western Forum of China
An estimated 1'700 business and government representatives from around China and abroad participated in the first so-called Western Forum of China. An intense meeting schedule gave ample opportunity to exchange past experience in and future strategies for the development of the West. While the central government announced a series of new preferential policies for investors, some speakers drew the participants' attention to the more basic problems encountered when investing in the West (lack of infrastructure, lack of skills, lack of capital, abundance of red-tape etc.). The Chengdu organizers turned the event into a breathtaking showcase of the city's as well as Sechuan's hitherto development and future potential. Meanwhile, foreign observers noted the scarce presence of high-ranking representatives from the central government as well as from the other Western provinces. In the future, the Western Forum is supposed to be held annually, each time in another city of the West. (Embassy of Switzerland, 22 October)


China Business Briefing is a random selection of business related news gathered from various media and news services covering China, edited by the Embassy of Switzerland in Beijing and distributed among Swiss Government Offices and other interested parties. The Embassy does not accept responsibility for accuracy of quotes or truthfulness of content. Upon request and depending on the resources available, the Embassy will provide further information on the subjects mentioned in the China Business Briefing.
vertretung@bei.rep.admin.ch 

17.11.2000

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