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The reform of Chinese high-technology companies has shown up corporate problems. Chinese companies have risen from nothing, but there is no modern corporate system. In September 1999 the Legend Holding Group (Beijing, China) sacked its chief engineer, Ni Guangnan, and Hong Kong Founder demanded the resignation of its chairman, Wang Xuan. These two cases exemplify the conflicts within the industry.

There were 110 million telephone subscribers in China in 1998, of which 24.98 million were mobile phones. In Jul 1999, the overall teledensity reached 12.06%, while teledensity in cities was 28.2%. Some 67% of China's administrative villages now have access to telephone services. Significant changes are set to take place in China's telecommunications sector in the first decade of the 21st century. By 2010, the overall communications capacity will be double that of 2000, with the central office telephone switching capacity totalling 370 million lines.

Consumer credit is becoming increasingly popular in China. The Bank of China has decided to allocate 10% of all new loans in 1999 for consumer credit, with this rate to be raised by 1% a year in the future. Consumer credit is also being made available by other financial institutions, including the Construction Bank of China and the Beijing Commercial Bank. However, many consumers still feel reluctant to buy on credit, being influenced by the traditional Chinese view that it is dishonourable to spend borrowed money.

Considerable efforts have been made in the city of Jiangzhou, China, to ensure that the threat of flooding posed by the Yangtze River is minimized. Following severe flooding in 1998, dangerous dike sections have been reinforced and damaged flood control facilities have been repaired. Measures to prevent seepage have been implemented across the whole of the Jingjiang Dike, which protects an area of 18,000 sq km on the Jianghan Plain. It is now anticipated that Jiangzhou will be better protected if flooding as serious as that seen in 1998 occurs again.

There has been extremely heavy rainfall in some areas of southern China since early Jun 1999, and there has been significant flooding in parts of Jiangxi, Anhui, Hubei, Zhejiang and Fujian provinces, as well as in areas crossed by some tributaries of the Yangtze River. There is also concern about the flood potential of the Yellow River, China's second-longest. Long-term silting has substantially reduced this river's flood discharge ability and raised the river bed. President Jiang Zemin has emphasized that considerable efforts are being made to control Yellow River flooding.

There has been a significant rise in the number of small towns in Xiangfan, Hubei Province, China. By 1998, Xiangfan had 310 small towns covering 210 sq km and housing 1.97 million people, or 35% of Xiangfan's total population. Of these small towns, 250 focus on the processing and trade of agricultural and related products and natural resources. Farmers account for more than 80% of the small towns' population and manage 44,000 enterprises. Residents of the small towns enjoy an attractive environment and a wide range of facilities.

The draft of Amendments to the Constitution of the People's Republic of China was approved at the Second Session of the Ninth National People's Congress. Important amendments include a change in the status of urban and rural labourers' individual economy, making it 'an important component' of the socialist market economy. The basic strategy of ruling China in alignment with the law and creating a socialist country of law has also been written into the Constitution for the first time.

There has been a sharp rise in awareness about environmental issues in China, which has eight of the 10 most polluted cities in the world. There are still high levels of soot-dominated air pollution, while 70% of river sections near urban areas are contaminated and around two-thirds of urban residents must endure noise levels above the permitted standards. The Chinese government is strongly committed to improving the environment, and has launched initiatives including a nationwide afforestation campaign.

The Chinese government believes that 1999 will be a critical year for its three-year reform programme for large and medium-sized state-owned enterprises (SOEs). Some progress has already been made with SOE reform, but there are still many challenges to address. These include the need to eliminate surplus production, thus allowing SOEs to adapt to strong market competition. Goals for 1999 will include creating re-employment centres, training heads of large and medium-sized SOEs in industrial and commercial management and ensuring that more SOEs operate profitably.

There were eight large-scale reforms in the financial sector in 1998, according to People's Bank of China Governor Dai Xianglong, speaking at a press conference. It has been possible to complete the reform of the management system of the People's Bank of China, as well as creating separate management, operational and supervisory systems in the banking, securities and insurance sectors. In the medium-term, China will introduce a strict monetary policy because the overall efficiency of the national economy is quite low and there is a continued risk of inflation.

Taihu, China's third-largest freshwater lake, has become increasingly polluted over recent decades. There have been particular problems with blue green algae and with lake flashing. This issue is now being addressed through the Ninth Five-Year Plan on Controlling Taihu Lake Water Pollution and the Program Through to the Year 2010. It is planned that the quality of water at concentrated drinking water sources and major lake and river outlets should reach the third-class standard for ground water by the end of 2000. However, there has been slow progress with the construction of sewage works in cities and towns along the lake.

The Chinese government has embarked on a comprehensive water conservancy construction program to control floods. The move comes in the wake of the flooding of the Yangtze and Nenjiang river valleys in the summer of 1998. Some of the water conservancy and flood control measures to be undertaken by the government are the restoration of projects damaged by floods, control projects on both tributary and trunk rivers, construction of flood storage and detention centers, water and soil conservation and construction of flood relief security projects.

Improving the national grain circulation system is one the five primary reform responsibilities of the new Chinese cabinet for 1998. Under the present system, the government protects the farmers purchasing grains from them at government-set prices in cases of oversupply. However, China has experience three bumper harvests in a row since 1995 and the government no longer has the financial capacity to purchase excess grains from farmers.

China's color television production capacity is the largest in the world. However, the rapid sales growth of US and Japanese digitalized color televisions threatens China's dominantly analog television industry. China's has already started R&D on digital televisions. However, not a single enterprise has the capacity to achieve the analog to digital revolution independently, thereby necessitating an industry-wide cooperation. In addition, the problem of implementing a coexistence of digital and analog technologies has to be resolved immediately.

International commercial retailers are venturing into Chinese markets creating a stiff competition for the Chinese retail industry. Department stores are to be opened by Japanese, American, French, Singaporean and Malaysian retailers who will compete with local retailers in importing and exporting products. Local retailers have conducted innovations in their operational mechanism to effectively vie with foreign companies.

Revitalization efforts of transportation via air, land and water in China are underway. Train speeds are being increased as well as services gradually improved to entice more people to commute by train. The aviation sector is also doing its part to improve quality of service. The open booking system is presently being used with the aid of computers. Water transportation is also undergoing a makeover as more sophisticated vessels are being used such as imported hydrofoil vessels, high-speed catamaran, Flying Fish, hovercraft aside from high-speed passenger ships.

Central and western China has exhibited constant economic growth while growth in the east has declined. Growth rates in eastern areas dropped to 13.1% in 1995 from 18.5% in 1993. On the other hand, the growth rates in central and western China fell to 12% from 13.4% and to 10.3% from 10.8%, respectively. These figures show that the central and western regions are less affected by economic policies and cycles compared to the eastern regions.

China established 13 free trade zones in the 90s which has helped stimulate economic development, modernisation and foreign investment. The first free trade zone was set up in Shaghai called the Waigaoqiao Free Trade Zone in 1990. It is the largest zone at 10 square kilometres. It came into operation in Apr 1993 and by the end of Jun 1993, 600 investment businesses have been established worth $1.9 billion. The problems encountered include: a lack of administrative coherency; too many government departments involved and the lack of unified laws.

China's Shougang Corp., once a major polluter in the city of Beijing, is endeavoring to reduce the environmental damage caused by its operations. The company has given top priority to environmental protection, on which it spends over one million yuan each year. To improve the environment, Shougang has implemented a strategy of sustainable development and is also involved in energy-saving and afforestation projects.

China will seek to both expand exports and increase imports appropriately in 1999, according to Minister of Foreign Trade and Economic Cooperation Shi Guangsheng. Multi- and bilateral trade relations will be fostered to establish a positive international climate for foreign trade development, and more emphasis will be placed on external contracted projects and labour cooperation. At present, China shares only 3% of the world trade market, so export growth is still feasible.

China is the third-biggest user of paper in the world with an annual consumption of 34 million tons. It is projected that consumption of paper in the country would rise to 75 million tons by 2010. Its paper industry enjoys a huge potential as 500 billion yuan worth of paper is expected to be sold within the next 15 years. This represents as much as 40% of global consumption of paper by that time. However, its paper industry lags behind those of developed countries. China has 6,000 paper mills but a mere 100 mills produce more than 10,000 tons annually. There are only 30 mills that produce 30,000 tons yearly and the biggest mill makes 145,000 tons a year.

Effective government policies and priorities in agriculture have resulted in China reporting bumper grain harvests in spite of destructive droughts in the northern regions. Since 1993, the central government has implemented various laws to correct deficiencies and impediments to agricultural development. The government has also focused on technological innovations resulting into improved seeds, enhanced water-conservation methods and more potent chemical fertilizers.

China has implemented several measures to control vehicular pollution in the country. One such measure promotes the use of unleaded gasoline by completely eliminating the use of the leaded variety by year 2000, while another revitalizes the country's tram networks to encourage high occupancy vehicle transport. An environment-friendly twin-fuel engine has also been produced by the Shenzhen Lubao Automobile Research Center. The device can run with either gasoline or natural gas fuel.

Chinese Premier Zhu Rongji announced the planned commercialization of housing in 1998. Under the new system, houses will no longer be allocated to employees after several years of service. Instead, housing allowances will be given to employees which they can use to acquire or rent housing in the open market. The government has also enacted measures in support of plan including the offering of housing loans and insurance guarantee for house mortgages.

China has made significant progress in making telecommunications services available to business and private users. Indeed, the country's public telephone switchboard capacity exceeded 100 million lines in Aug 1997. It is now planned to reach total switchboard capacity of 174 million lines on the public telephone network by the end of the 1990s. The country's communications network is on schedule to reach the highest international standards by 2010.

The debate over whether China should adopt mass production of home-made sedans or limit production to avoid traffic jams and pollution has clearly tilted toward the first position. Official statistics show that, despite purchasing limitations and inconveniences, the annual growth rate of family car sales exceeds 50%. The government plans to promote the development of more economical sedans and components, the purchase of private cars, and the transformation of the automotive sector into a pillar industry to solve transportation problems.

China has taken stringent measures to curb crimes related to illegal drug trade. Chinese authorities investigated 87,000 drug crimes, arrested 139,000 offenders and seized 14 tons of heroin, 9.7 tons of opium and 3.1 tons of marijuana from 1991-1994. Chinese laws implemented to curb drug-related crimes include the Criminal Law and the Regulations on Prohibition Against Narcotics.

The Free Trade Zone of Tianjin Harbor in China was commenced in May 1991. It has handled 60,000 tons of imports and exports since Apr 1992 worth $500 million. The eventual size of the free port will be 7.1 square kiliometres which will be divided into 4 areas: warehouses, processing, finance and trade. It will cost over 2 billion yuan to construct. About 1,483 businesses have been accepted which include investors from 41 different countries. The total investment is $1.2 billion. The problems include the lack of experienced professionals, state approval and of unified taxes.

China's leaders regard the return of Macao as a further step towards the reunification of the motherland. They point to the successful operation of the 'one country, two systems' policy in Hong Kong as an indication that Macao can successfully return to Chinese sovereignty. Conditions in Macao differ from those in Hong Kong, but it will still be possible to undertake a smooth transition and transfer of power. It will be necessary to give Macao a great deal of support, especially as it is suffering economic and social problems.

The Beijing Economic and Technological Development Zone (BETDZ) has attracted substantial foreign and domestic investment. Some 166 companies had registered and invested there by the end of Jun 1997, and total investment had reached $1.06 billion. The BETDZ has seen strong interest from high-tech companies, including Schneider Co of France and Bayer Co of Germany. It had fixed assets totalling 4.66 billion yuan by the end of the Jun 1997, with the construction area totalling 1.04 million sq mt, more than 50% of which had been completed.

The Chinese government encourages large and medium-sized enterprises to venture into transnational operations and promote foreign trade and economic cooperation. The country's annual average foreign investment volume has been pegged at $2.4 billion, the second highest among developing countries. Total negotiated investment of about 4,900 Chinese overseas enterprises has reached $5.4 billion with an average investment level per project of $1 million.

The Suzhou Industrial Park has attracted numerous investments and has lured several transnational corporations because of its quality services and infrastructure facilities. The park, founded in May 1994, enjoys the joint support of the Chinese and Singaporean governments. The park's management committee offers numerous support services to investors ranging from project registration to project construction.

Coca-Cola China Ltd donated five million yuan to China's Project Hope on Mar 29, 1998. The money will be used to help 10,000 children from depressed areas to return to school. The company previously donated over 10 million yuan for the establishment of 50 primary schools and funded libraries in 100 rural primary schools. It also set up a project in Sep 1997 to fund the tuition and accommodation costs of 500 college students from poor families.

The development of the Chinese money market has been sluggish, in large part due to its lack of discipline and the absence of adequate control mechanisms. Many experts believe that the government needs to eliminate barriers between regions, standardized market trading activities, national flow of capital and the rational allocation of funds. Conditions that would help to promote a central bank open market business should be established.

The Fourth Border and Local Trade Talks were held in Harbin, Heilongjiang Province, and saw business participants from 43 countries and regions. 52 domestic businesses exhibited 25,000 commodities in 20 categories, including textiles, machinery and electronics. Import transactions were mostly for tractors, crs, chemical fertilizers and lumber.

The Beijing Jingwei Relations Company Ltd pridesitself with being the ideal bridge to connect local business with foreign corporations interested in forging lucrative joint ventures. Since its creationin Aug 1992, the professional public relations firm has put up 16 liaison agencies around the country. Aside from providing information on China's business environment, foreign firms are given the privilege of obtaining first-hand knowledge of Chinese products.

The European-style furniture being made by China's Helin Furniture Corp is in demand in the domestic market and the export market as well. Helin's furniture are designed for easy assembly and stripping. The company has exported $1.7 million of particle boards since 1989. Some 30,000 pieces of furniture were also sold since 1991. The company's products are exported to Germany, France, Singapore, Japan and Hong Kong.

The number of foreign investment projects in China is increasing. The increase came in the wake of announcements by Deng Xiaoping about the need to make the investment climate in China conducive for foreign firms. China approved 13,052 foreign investment projects worth $14.677 billion in the first half of 1992. Foreign investments in joint venture projects with Chinese firms amounted to $6.49 billion.