The Consulate General of Switzerland in Shanghai - Commercial Section
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ISSUE N° 2 December, 2000

1. New Development of the Private Economy

The private economy sector in China has been growing rapidly since several years. Following are some aspects of the new development.

1.1. 1.6 million private enterprises in China

At the end of June 2000, according to official statistics, there were 1.59 million private enterprises with 20.86 million employees in China (not including the so-called "Ge Ti Hu", namely, the self-employed business owners and the businesses employing less than eight workers).

The private sector has become China's most dynamic "new growth point" of the national economy. Two third of the newly created industrial production in 1999 was derived from the non-State sector.

1.2. Private economy in Shanghai

By the end of October 2000, 139,000 private enterprises were registered in Shanghai - an increase of 2.5 times compared to 1995. 
More than 1.5 million people are employed by the private enterprises and the total registered capital exceeded 104.2 billion RMB (exchange rate: 1 USD = ca. 8.3 RMB) - an increase of 163% compared to the figure two years ago. 
During the first six months of 2000, 21,067 new jobs were created in private enterprises in Shanghai which is 39.1% of all the new jobs in the city.

1.3. Private economy in Jiangsu and Zhejiang

Jiangsu and Zhejiang both belong to the most strong and dynamic provinces in China, and both are located close to Shanghai. However, the development of the private sector is different. The private sector in Zhejiang developed much earlier and much stronger than in Jiangsu. Zhejiang is quite an unique province in China.

According to the statistics of the provincial Administrative Bureaux of Industry and Commerce, at the end of August 2000 Jiangsu registered 1.42 million self-employed households with a capital of 18.84 billion RMB, and 159,000 private enterprises with a capital of 84.18 billion RMB. In Zhejiang - a province much smaller than Jiangsu in terms of area and population, there were about 1.57 million self-employed households and more than 151,400 private enterprises at the end of June 2000. 

In Zhejiang about 45% (in Jiangsu, only 20%) of the GDP, 65% of the total investment, almost half of the industrial production, 60% of the retail sales, and one fourth of the fiscal revenue of the local government are generated by the private sector.

Zhejiang's private enterprises are very active everywhere across the country. Wenzhou, a city famous because of its rapidly developed economy and the private sector, is a good example: more than 4,000 private enterprises from Wenzhou invested in Shanghai. Among them, 300 new investors this year. Out of the total 4,000 private enterprises, 20 put more than 10 billion RMB in the Shanghai market.

1.4. SOEs will withdraw from 146 industries

The Chinese government has set up the strategy for reforming State-Owned Enterprises (SOEs). The majority of small SOEs will be privatised, while large and medium-sized SOEs will mostly be restructured. Mergers and take-overs of SOEs either by management or by private enterprises have proved to be an efficient way for reforming the state sector. As a consequence, the state sector of the Chinese economy will shrink.

The new policy: according to a recent official report, the SOEs will be classified into three categories:

  1. the ordinary "competitive" industries, from which the SOEs should gradually withdraw. There are 146 industries of this kind, such as textile, food, household appliances etc.;

  2. the more important industries, in which the SOEs should exercise a certain controlling power, such as in the mineral industries, aerospace, new materials, IT, bio-pharmaceutics, electronics, petrol-chemicals, automobile industries, etc. There are 35 industries in this category.

  3. the most important industries, in which the SOEs should continue to play a monopoly role like in the military and the electrical industries. In this category there are 15 industries.

1.5. China held the first "Private Enterprises Fair"

China's first private enterprises fair, with the theme of "China's private sector toward the 21st century", was held on December 8-12, 2000 in Kunming, capital city of Yunnan Province in Southwest China. The fair has held a series of activities including product exhibitions, forums and business talks. More than 1,900 enterprises and institutions from home and abroad attended the fair. Mr. Li Ruihuan, President of the Chinese People's Political Consultative Conference sent a congratulation letter to the fair. Mr. Li Jiating, Governor of Yunnan Province and many prominent "Big Bosses" of private enterprises like Mr. Liu Yonghao and Nan Cunhui ( from Wenzhou) held speeches.

The fair has shown a growing interest for the private sector in China.

2. New Economic Development in East China and Yangtze Area

2.1. The East China Fair 2001

Besides the Guangzhou Export & Import Commodity Fair - an international fair, the East China Fair (ECF) is the biggest regional fair in China with the largest visitor numbers and the largest export volume (see bellow about the economic strength of the East China area).

The ECF is held in Shanghai in March every year since 1991 for 10 consecutive years. It is sponsored by the governments of Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Nanjing and Ningbo. 70,000 foreign businessmen from over 130 countries and regions attended the fair last year. The total export volume hit USD16.882 billion.

The ECF 2001 will set up specialized exhibition halls, such as the Light Industry & Art-Craft Hall and the Textile & Garment Hall, with a stressed priority on consumer goods. In addition, a hall will be set up specially for the overseas exhibitors.

Contact address:
International Trade Promotion Corp. (ITPC)
Add:757 Xikang Rd., Shanghai
Tel. 0086-21- 6256 0100
Fax. 0086-21- 6256 1068 

2.2. The Economic Strength of the East China Area

In the most prosperous economic region in China, the East China Area's ( here it refers to Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi and Shandong ) the GDP in 1999 hit RMB 3325.35 billion, accounting for 40% of the Nation's total.

The export and import trade volume of East China recorded US$ 128.047 billion in 1999. It accounted for 35.5% of the Nation's total (US$ 360.7 billion).

Foreign investment in East China reached US$18.131 billion in 1999, accounting for 45% of the Nation's total ( US$ 40.398 billion).

2.3. The Tenth Economic Conference of the "Big 26 Cities" along the Yangtse River

The Conference which closed on December 3, 2000, elaborated "the Industrial Development Plan of the Yangste (River) Region". According to the plan, the "26 Big Cities" (especially the two " Mega-Cities", Wuhan and Chongqing) will play a more active role in the campaign of the development of West China.

Although the Conference founded by the "Big Four" cities of Shanghai, Nanjing, Wuhan and Chengdu in 1985 functions as an organization for cooperation and coordination, the influence of the Conference is growing. It has become an organization with 26 important members. The GDP of the 26 city members reached RMB 1984. 4 billion in 1999, that was about 24% of the total of China.


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