Subject: CHINA IMP/EXP NEWS (CN940214)

From: [email-masked] (wangc)
Date: Tue, 15 Feb 94 15:00:38 CST

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 #           A WEEKLY NEWSLETTER FROM THE CHINA-LINK CLUB             #
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                    Febuary 14, 1994 (CN940214)

CONTENTS                                                           LINES
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A) BUSINESS SECTION INDEX ........................................... 43
B) CHINA MARKET WATCH:
   1)  TELECOM FAIR TO USHER IN NEW TECH..............................26
   2)  BRISK STEEL IMPORTS TO CONTINUE................................64
   3)  LOCAL AREAS GIVEN MORE TAXING POWER............................57
   4)  TRANSPORT FACILITIES TO GAIN FACELIFT..........................71
   5)  SHAANXI GEARS UP HIGH-TECH PRODUCTION......................... 47
   6)  GM DEAL SWELLS AUTO INDUSTRY...................................73
   7)  GRAIN-TRADE GIANT REPORTS $9.1B .............................. 55
     
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EIDITOR'S NOTE: Start from this week, we changed the newsletter into 
                TWO parts,  the NEWS section and BUSINESS section.

BUSINESS SECTION: You could request our weekly BUSINESS SECTION via
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A) BUSINESS SECTION INDEX ...................................... 43 lines
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BUSINESS SECTION can be automatically retrieved from [email-masked]  
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GOODS WANTED ..................................................... 
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1)        841430  TECHNOLOGY AND EQUIPMENT FOR
                  MANUFACTURING SCROLL COMPRESSORS FOR
                  COMMERCIAL AIR-CONDITIONERS
                         (#B94021401)

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2)        2801  PERMA ZYME (#B94021402)

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3)        852610  RADAR APPARATUS (#B94021403)

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4)        902511  THERMOMETERS (#B94021404)

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5)        830300  BANK VAULT
          830300  SAFE DEPOSIT BOXES
                  (#B94021405)

        ***   ***   ***   ***   ***   ***

6)        870324  AMBULANCE (#B94021406)

        ***   ***   ***   ***   ***   ***

7)        030360  FROZEN COD FISH WITHOUT HEAD AND INTERNAL ORGANS
                         (#B94021407)

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B) CHINA MARKET WATCH (7 items).....................................410 lines
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1)    TELECOM FAIR TO USHER IN NEW TECH..............................26 lines

[09-FEB-1994 by Wang Rong]

A TELECOM show to be held this summer will introduce new technology onto the
Chinese market, according to its co-hosts.

The Multinational Telecommunication Equipment and Instrument Exhibition and
Conference (TEEX '94) will be held in July by Tianjin municipal government and
Chinese Electronics Society.

Electronics dealers at home and abroad have been invited to exhibit their
products and introduce their advanced technologies into China.

The show will include television, computer, optical fiber and other electronics
technologies, according to Tianjin Electronics and Instruments Bureau.

Tianjin has already joined hands with big-name foreign electronics companies
like AST Research Incorporate, Motorola of the United States and NEC (Nippon
Electronics Corporation) of Japan.

The city is expecting to attract more overseas investors to develop its
electronics industry this year.

Tianjin, the largest industrial city in north China, saw electronics output rise
to 6.7 billion yuan ($770 million) last year. 

2)  BRISK STEEL IMPORTS TO CONTINUE...................................64 lines

[09-FEB-1994 by Wang Yong]

CHINA will continue to attract steel imports from around the world despite a
drop in its overall demand, according to metal trader Li Yihao.

The credit squeeze, which was imposed by the State last July, hasn't reined in
the high capital investment in building projects.

"China is still a magnet for worldwide steel manufacturers who are facing a slow
international market this year," said Li, chief representative of China National
Metals & Minerals Import & Export Corporation (Minmetals) in Japan.

The construction industry will remain buoyant with the national economy facing
growth of 9 per cent, and steel imports will reflect this, according to
Minmetals.

But China's steel imports this year will be less than the 1993 total of over 30
million tons, which exceeded domestic market demand.

Stocks of more than 20 million tons will dampen demand in the first quarter of
this year.

"But steel imports will see tangible growth from June onward -- provided that
the renminbi yuan's exchange rate against the US dollar remains stable," Li
predicted.

Japan, which was the biggest steel exporter last year with 6.8 million tons,
will face increasing competition in the Chinese market, particularly from South
Korean manufacturer Posco.

"Japan will continue to garner a considerable share of the Chinese steel markets
this year," he said.

This follows a spectacular year for Japanese steel exporters, with China
importing over three times as much from them as they had the year before.

Japan sold 23.5 million tons overseas in 1993, up almost 24 per cent on the
previous year.

"Japan's steel export growth was largely due to China's economic boom," Li
pointed out.

And as one of China's largest foreign trade companies, Minmetals is able to take
on the financial risks of its foreign partners, like Japan's six largest steel
manufacturers.

But Japanese hegemony in the Chinese market is facing threat from more foreign
rivals.

South Korean Posco is a relative latecomer to the Chinese market, but it's
exports to China surged to more than one million tons last year.

"We hope to co-operate with all foreign partners, no matter where they come
from," Li said.

Minmetals has more than 1,000 guaranteed domestic customers and can easily
collect big-ticket orders for imports.

But steel market growth will be subject to foreign exchange stability.

"If there should be any downspiral fluctuation from the current rate of $1 to
8.7 yuan, import costs will shoot up and hamper the import momentum," according
to Minmetals. 

3)  LOCAL AREAS GIVEN MORE TAXING POWER................................57 lines

[09-FEB-1994 by Wang Yong]

CHINA abolished five old tax items yesterday to smooth the way for its new and
simplified tax system.

The State Council, China's cabinet, also decided to delegate more power to local
governments for taxing animal slaughter and banquets.

The five obsolete items had covered trade fairs, livestock trading, salary
adjustments, bonuses and oil burning.

China introduced the bonus tax in the early 1980s to prevent inflation.

The country's economy at that time was just lifting from a decade-long low, and
enterprises were paying more to their employees because of improved
efficiencies.

In particular, managers of State-run enterprises, who were able to control their
ventures for a designated period of time on a contractual basis, tried to win
the support of employees by lining their wallets.

The provision stipulated that a State-run industrial or commercial enterprise
was subject to taxation if its annual bonuses to employees exceeded an amount
equal to their standard salaries for two and a half months.

The bonus tax rate could be as high as 300 per cent.

The tax successfully curbed the practice of raising bonus levels, thereby easing
the country's inflationary pressures.But that was only one side of the coin. The
bonus tax also hampered a quick increase of individual incomes in China.

The new individual income tax law took effect at the beginning of this year,
replacing the old bonus (and salary adjustment) tax.

Under the new system, enterprises find it easier to raise the employees' income
levels. However, now the individuals, not the units, must pay the tax for their
extra income, including bonuses.

The emphasis on individual rights and obligations comes closer to international

practice and effectively relieves the enterprises' burden, while steering away
from possible inflationary hikes.

Chinese individuals are now liable for taxation if their monthly income
(including bonuses) surpasses 800 yuan ($92).

The ceiling will be higher for taxable foreigners, but the amount is still to be
decided by the State Council.

Economists said the structural reform of China's tax system will not cause a
heavier burden on tax payers.

China will tax only 18 items, compared with more than 30 in the past decades.

Yesterday's announcement reflects the State's consideration to strike a virtual
balance between the revenues of central and local governments. 

4)  TRANSPORT FACILITIES TO GAIN FACELIFT..............................71 lines

[08-FEB-1994 by Xie Yicheng]

TRANSPORTATION facilities will get a major boost in 1994 to match the nation's
expected economic growth rate of 9 per cent.

To support this goal, greater efforts will be made to recruit foreign investment
and technology, said officials from the Ministry of Communications.

China is poised this year to add 18,000 kilometres of new highways to the 1,075
million kilometres in service now.

The figure includes 960 kilometres of expressways and other high-grade roads,
which will be funded by the ministry and local governments.

These new road projects include the major cross-country trunklines bisecting the
mainland from north to south and from east to west.

One of the two cross-country lines runs from Tongjiang in northern-most
Heilongjiang Province to Sanya in southern-most Hainan Province. The other
extends from Beijing to Zhuhai in Guangdong Province, running parallel to the
Beijing-Guangzhou Railway.

The first of the two east-west lines runs from Lianyungang in coastal Jiangsu
Province to Korgas in the Xinjiang Uygur Autonomous Region, alongside the new
Euro-Asian Continental Railway. And the second line links Shanghai in East China
with Chengdu in S ichuan Province, largely following the route of the Yangtze
River.

The blueprint also calls for 59 new seaport berths with an increased
cargo-handling capacity of nearly 31 million tons per year. Last year, 19
deep-water coastal berths were built, four more than originally planned.

In addition, 370 kilometres of inland waterway lanes will get facelifts and 19
new river berths will be built, with an increased handling capacity of 3.2
million tons.

The ministry seeks substantial foreign investment this year in developing
transportation facilities -- above and beyond existing loans.

Some State-owned firms, handling the building and operation of highways, bridges
or berths, may issue stocks and bonds abroad to recruit foreign investment, a
ministry official said.

Foreign investment for transportation facilities was at a record high last year,
the official said, although actual figures were not cited.

Last October, the Hong Kong-based Hutchison Whampoa-led consortium signed a
major joint venture contract with China to develop the Yantian Port of Shenzhen
into a world-class harbour.

The project's first phase, including two 50,000-ton container berths and four
general cargo berths, has already been placed in service.

The project's second phase will consist of three 50,000-ton container berths,
scheduled to open in 1995.

Meanwhile, businesses from the United States, the Republic of Korea, Malaysia
and other countries are negotiating with Chinese authorities to build and manage
such road projects as the Jilin-Changchun and Fuzhou-Guangzhou expressways.

By the end of 1993, China's road and port construction has used up to $1.7
billion in loans from the World Bank, Asia Development Bank and the Japanese
Government.

This year the ministry will continue to open the land and water transportation
market to the outside world in "a moderate way," said the official.

By the end of last year, the ministry had endorsed 381 Sino-joint ventures for
the development of highway transportation, 85 for waterway shipping, and 66 for
vehicle repair work.

  5)  SHAANXI GEARS UP HIGH-TECH PRODUCTION......................... 47 lines

[08-FEB-1994 by Ma Lie]

XI'AN -- Shaanxi, one of China's technological powerhouses, is gearing up its
high-tech development to bolster economic growth in this relatively
under-developed inland province in Northwest China.

The main breakthroughs will be achieved by developing non-State-run high-tech
enterprises, establishing a technology market and focusing on key research
projects, according to Sun Haiying, director of the Shaanxi Provincial Science
and Technology Committ ee.

"The total income of non-State high-tech enterprises this year will hit 1.5
billion yuan ($170 million), 28 per cent more than last year, while the business
volume in technological transactions will be 500 million yuan ($57 million),"
Sun said.

Six out of 10 key research products developed this year will reach the
production stage, he added.The rate of transferring technology development to
production should be even faster, he noted.

This year, the province plans to build a technical market--the Northwest
Technological Trade Centre, the largest of its kind in Northwest China. More
than 1,000 technical market brokers will be trained in technology, business and
management.Local governm ents will focus more on developing private high-tech
enterprises that have flexible operation and management systems. Their
development will be supported with loans through such channels as new technical
credit co-operatives, Sun said.

"We hope the non-State high-tech enterprises will increase to more than 6,000
from the 4,000 in 1993," Sun said.

The province has identified 10 agricultural and manufacturing projects as vital
to Shaanxi's economy.

These key projects will actively use foreign advanced technology and funds.

The province also plans to further widen its international co-operation and
exchanges. This includes plans to attract foreign research institutes and
enterprises to establish high-tech joint ventures in Shaanxi.

More local research organizations and manufacturers of high-tech products will
also be encouraged to compete in the international market, Sun added.
Shaanxi's technological strength now ranks third in the country, behind only
Beijing and Shanghai. Some 50 universities and colleges and more than 500
research institutes are located in the province. END

6)  GM DEAL SWELLS AUTO INDUSTRY..................................73 lines

[07-FEB-1994 by Chang Weimin]

AMERICAN car giant General Motors (GM) signed a contract for a $120-million
joint venture with two Chinese firms over the weekend.

Based in Beijing, the joint venture will develop and manufacture engine
management systems that will help reduce auto emissions, while increasing fuel
efficiency and engine power.

Analysts predict this GM venture will bring major competition to China's
auto-parts market.

GM's contract signing on Saturday comes just four days after 14 major Chinese
car makers agreed to launch an electronic fuel injection project in Shanghai.
The Chinese car makers expect to hook up with foreign auto makers to transform
it into a joint ven ture.

Leading the GM venture are the technically-strong Beijing Wan Yuan Industry
Corporation, a subsidiary of the China Aerospace Corporation, and the Beijing
Economic Technology Investment Development Corporation (BETIDC), under the
Beijing municipal government.

The new plant, Beijing Wan Yuan-GM Automotive Electronic Control Company, is to
annually produce 300,000 electronic engine control systems in its initial phase,
said Li Shangren, a senior official with Wan Yuan-GM.

And production is to gradually increase to 600,000 units.

"We will adopt technology and products to meet the particular needs of our
customers,"said Shirley Young, a GM vice president.

In Shanghai, 50 per cent of the project is owned by the Shanghai Automotive
Industry Corporation (SAIC), which has worked with Germany's Volkswagen in
assembling the popular Santana for nine years.

Reform-minded industry officials are hailing the coming competition, saying it
will help develop the country's auto industry.

The birth of the two projects points to the beginning of a long-awaited rapid
development and manufacturing of car parts, an analyst said.

China expects its automotive industry to be a pillar of the economy, but weak
auto-parts manufacturing hampers any increased development.

For some years, demand in China for electronic engine management systems is
expected to exceed production by a wide margin, a senior official from a large
Chinese engine plant pointed out.

China badly needs engine management control systems, which largely reduce
exhaust emissions while improving fuel economy, performance, power and safety in
a vehicle.

Of the 1.2 million cars assembled in 1993, including 240,000 sedans, very few
were equipped with electronic fuel injection systems.

The establishment of Beijing Wan Yuan-GM is "an important step to achieve a
green China," said Young, GM's vice-president.

Young described herself as one of 1,000 Chinese Americans who are "part of GM's
effort to assist in developing China's automotive industry."

GM will share its technology and experience in all phases of the business in
Beijing, she said.

GM already has business ties and technology transfer agreements with several
Chinese plants such as the Zhuzhou Spark Plug, the Hubei Auto Electric Motor
Plant and the Mudanjiang Air Conditioning Factory.

William Ebbert, president of GM Automotive Components Group for Asia/Pacific
Affairs, said GM plans to enter additional ventures and relationships with 
more Chinese partners very soon. 

  7)  GRAIN-TRADE GIANT REPORTS $9.1B .............................. 55 lines

[05-FEB-1994 by Wang Yong]

THE business turnover of China's largest grain-trading company rose to about
$9.1 billion in 1993, as it further shifted away from pure trade to include a
variety of industrial sectors, it was announced yesterday.

Wang Baocheng, Vice President of China National Cereals, Oils & Foodstuffs
Import & Export Corporation (Ceroilfood), said turnover for 1994 would be higher
as many ventures with the company's investment both at home and abroad start to
make profits.

But he declined to specify the 1994 figures for turnover or profits.

Ceroilfood's import and export volumes last year were $2.76 billion, less than
one-third of its total business turnover.

Broken down, the exports hit $1.49 billion, while the imports reached $1.27
billion.

Although the company has diversified its trading scope to including cement, arts
and crafts, garments and shoes, said Wang, grain and foodstuffs still made up
most of its 1993 foreign trade volume.

At present, Ceroilfood is the only designated proxy for China's grain imports.
It also orchestrates the country's grain exports together with some other
domestic partners.

Statistics show that the country's grain imports hit more than 6 million tons
last year, down from the 1992 level of around 10 million tons.

China's grain exports last year surpassed imports, but company managers did not
give detailed figures for the former.

Wang said his company cemented exports to such new markets as Latin America,
Africa, the Middle East and Southeast Asia last year.

"Our exports to the Middle East alone increased by 6.8 times over 1992's
levels," he said.

Aside from foreign trade, Ceroilfood has invested in 203 industrial projects at
home and overseas, focused on food processing, real estate and transportation.
Wang revealed that his company intends to purchase some domestic flour mills
this year to upgrade China's flour quality.

In doing that, he implied, his company may well introduce foreign advanced
technology into China. But he did not explain whether any joint venture to that
effect would be established.

He said China's food processing will be a sunrise industry, as the country has
more than one billion people to feed.

Wang said his company, once allowed to deal in foreign trade only, will
strengthen its presence at domestic trade from this year on. END

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