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This time last year China's paramount leader, Deng Xiaoping, launched the country on another bout of fast-paced economic growth and restructuring. After three years of riding out political and economic [...]

The Communist Party strategy for the country's transition to a market economy by the end of the century marks 1994 as a crucial year. The blueprint calls for broad tax and foreign-exchange reforms to keep up with the international economy. The blueprint will gradually convert state enterprises into limited-liability companies free from government intervention. The state will assume the role of a market-oriented investor. The blueprint also clears ownership rights issues and bankruptcy procedures.

China's import market will decline in 1994 as government tries to reign in the runaway economy. Steel, car and oil imports have fallen as a consequence of this government effort. The China trade deficit amounting to $1.28 billion in the 1st qtr. 1994 is also a source of tension for the already strained China-US relations. Minister of Foreign Trade and Economic Relations Wu Yi said that the government is seeking a trade balance through greater exports rather than less imports.

Huaneng International Power Development Corp. is gearing to become the first Chinese company to be listed in the New York Stock Exchange. Huaneng is confident that Chinese power will remain a lucrative business as there is very little chance of a oversupply. Among other firms which have signified interest to be listed in the exchange are Shandong Huaneng Corp., Datang Power Plant and Shandong Power Corp.

China has announced the enactment of a so-called 'Corporate Law' that lays the groundwork for transforming all state-owned enterprises into either shareholding or limited liability companies. Observers believe that the proposed measure provides a legal framework for the entry of the private sector into the public sector. The enactment of the law follows the announcement by the Communist Party in Nov 1993 that they support a transition to a market economy in the country.

The Chinese government criticized the US decision to decrease their textile and garments quota and threatened to take retaliatory measures. Chinese trade officials viewed the development with concern, saying that it could have a severe effect on trade relations between the two countries. The US decided to slash the quota after China refused to accede to their demands. Textile is one of China's main exports.

Chinese women are finding it difficult to reach the top of the corporate ladder due to China's strong traditional influences implying that women should instead be given household tasks and other menial forms of labor. Despite statistical reports revealing that over 40% of workers in China's industrial and commercial sector are women, employers remain hesitant to promote women employees to top-level positions.

China is adopting a single exchange rate starting 1994. The country has been employing two exchange rates, a fixed rate for international deals and a floating rate for domestic transactions. The rate unification, which is expected to benefit both traders and investors, also calls for an end to the issuance of Foreign Exchange Certificates by the Chinese government. The currency reform is also aimed at boosting the country's foreign trade.

The success of German Chancellor Helmut Kohl, leading a trade mission to Beijing, in clinching deals with China is viewed by US business leaders based in the Asian country as a signal for Washington to reassess its stringent China policy. American Chamber of Commerce in China Pres John Hart said Kohl's visit was China's way of telling the US that it must rethink its trade policy. The German trade mission brought home over $2 billion in letters of intent and contracts.

China is mired in tremendous economic throes primarily due to the half-hearted efforts of its leaders to institute major reforms in the country. Nationwide inflation for the first half of 1993 was 6.1% higher than the annual inflation rate for 1992. Vice Premier Zhu Rongji claimed that the government is carrying out economic reforms with caution but major changes have been applied least in the energy, raw materials and transport sectors. If the Chinese economy does not improve sooner than expected, political turmoil may again erupt in the country.

The Chinese government has called on foreign investors to help in its plan to reform China's transport sector. Poor transportation has been considered one of the major impediments in the country's effort to meet the 8% economic growth target for 1993. Although the government has assured that a large part of the budget will be allocated to infrastructure projects including transport, traffic jam remains a major problem in the country. The central government has coordinated with the World Bank in its effort to ameliorate the dismal transportation situation.

The Chinese government is increasingly saying that its environmental protection policies have Chinese characteristics, which is a label used to mute aspects of socialism that hinder reform, and these policies give priority to areas where the interests of economic growth coincide with those of the environment. There is concern about long-term values being attached to natural resources and the ability of the nation's under-funded environmental agencies to meet a market economy's demands.

Major world construction equipment manufacturers such as US's Caterpillar Inc and Japan's Komatsu Ltd see a big market for their products in China because of the country's encouraging economic growth. There has been a 12% economic growth in China during the first six months of 1992 and the country's importation of construction equipment within the same time frame amounted to somewhere between $300 million and $400 million. China's policies and conditions on the importation of the said products, however, are giving the the manufacturers some difficulties.

The US is pressing China to boost its imports and open its market to more foreign goods. Unless the country does so, it will impose trade sanctions on Chinese exports to the US amounting to $3.9 billion. The Americans contend that if China wants to benefit from exports, it must allow in imports. China is apparently complying, not only because of US pressure but also because it wants to regain entry to GATT.

Only one in 10 Chinese teenagers graduates from high school. For those who stay in school, life is no party - unless it's the Communist Party BEIJING, China - dancing […]

China intends to form joint ventures with foreign partners for the country's Family Car Project after the ban on new car assembly projects is lifted in 1994. Twenty major carmakers are expected to attend a seminar in Beijing where they will present new design concepts for an affordable passenger car. Among the carmakers who have expressed their interest in the project are Honda Motor Company Ltd., Porsche AG, Renault S.A. and Ford Motor Co.

American business groups in China support the decision of US Trade Rep. Mickey Kantor to invoke the Special Section 301 of the US trade law to start a piracy investigation in the country. Under this section, China will face crippling tariff increases if it does not adopt more stringent measures to protect intellectual property rights within six months. US businesses are confident that the Chinese government will act to resolve the problem before the sanctions are imposed.

China's foreign advertising community is finally reaping the rewards of the economic reforms implemented by the Chinese government over the past several years. The country's advertising sector reported a revenue increase of 65% in 1993 after posting a 93% jump in 1992. The State Administration for Industry and Commerce expects these figures to reach at least 28 billion yuan annually by the year 2000. This trend is attributed by industry analysts to China's favorable economic climate and the business community's growing awareness of the benefits of high-quality advertising.

The Chinese government is planning raids against software pirates to gather evidence for civil cases filed by the US computer industry. The US Business Software Alliance charged five Chinese retailers with software piracy and is preparing to file charges against illegal printers of software manuals. The Chinese government recently hardened its stance against trademark infringement in response to threats of US investigations which could lead to economic sanctions.

Philips Gloeilampenfabrieken N.V. plans to expand its television-tube joint venture in Nanjing, China, and will soon open a television factory in Suzhou. The move follows enthusiastic consumer response to the television manufacturer's wide-screened television sets. The expansion plan involves the installation of two production lines for 29-inch and 32-inch television-tubes and two for color computer monitors at its Hua Fei Color Display Systems Co. joint venture. The plan will increase capacity to 3.75 million by 1997.

China is looking to Japan as a model for its economic system. Economic policy-maker Zhu Rongji recently visited Japan to examine the country's economic development and transplant several of its elements to China's economic system. Zhu expressed interest in the experience of Japan's Ministry of International Trade and Industry, as well as in its budget system and system for carrying government-mandated lending. These efforts have made Japan China's leading trade partner.

The Chinese government espoused a strategy of maintaining a balance among social stability, market reforms and fast economic growth. However, this strategy is starting to crack as inflation spurred by two years of 13% annual growth hits the nation. It appears that the government's priority has shifted to preventing civil unrest by sustaining economic growth, a strategy far removed from a blueprint for reform charting transition to a market economy by the year 2000. In the end, government may choose to maintain stability over economic reform.

China's escalating demand for crude oil to power its growing economy is attracting foreign investors. With the country planning to increase crude production to 170 million tons by the year 2000, oil reserves will be opened to greater foreign investment. China is expected to be a net importer in 1994, following a 1993 output increase of only 2.5% to 143.7 million tons. Declining reserves and logistical problems contributed to this dismal performance.

Secretary of State Warren Christopher ended his Mar 1994 visit to China by saying that the US and China had made progress regarding some areas of China's human rights policies. Improvement of China's human rights record was made a precondition by Pres Bill Clinton for the renewal of China's most-favored-nation status with the US. US businessmen remain skeptical because statements of high Chinese officials reveal that China is not sincere with political reforms. This could damage US-China trade, which amounts to $40 billion annually.

Hong Kong businessman Victor Hwang is joining forces with Chinese state oil companies, China National Chemical Import and Export Corp and China Petrochemical Corp, to purchase Texas oil fields. Hwang has also disclosed plans for a North American stock listing to finance the acquisitions. In addition to overseas oil exploration, the group also intends to build a large refinery and open several gasoline stations.

Leaders of US corporations operating in China are elated over the new textiles agreement signed by China and the US, a move which prevented a possible trade war between the two nations. The deal, which is aimed at eliminating illegal Chinese textile shipments, will keep the increase in Chinese sales at the 1993 level for 1994 and allows substantially lower growth than previous bilateral trade agreements.

The Chinese government imposed new trade regulations in its effort to reverse its current trade deficit and be allowed to join GATT. However, these regulations caused confusion among investors and government sectors. For instance, the government's decision to abolish its two-tier exchange rate and allow the yuan to float prompted joint ventures to take damage-control measures and raise prices. Although the government expects to gain much on its newly-imposed value-added tax, the tax reforms it implementented remained hazy for investors.

Chinese officials are reassuring foreign enterprises that their present level of tax burden will be maintained despite the sweeping tax reforms implemented by the government. Foreign companies will also retain the favorable income tax status they enjoy in special economic zones. Tax officials are also promising rebates to foreign investors whose tax burdens change as a result of the reforms.

The Chinese government awarded DHL Worldwide Express Ltd a license to operate a domestic courier service in China. Under the licensing agreement, DHL, in a joint venture with Sinotrans Corp, will be allowed to open seven new offices in the country, making it the first foreign company to be granted a permit to provide courier service in China. The 50-50 joint venture was followed by applications from several of DHL's international competitors asking for permits to operate the same kind of express mail service.

The Chinese Communist Party officially announced its approval of new plan for the nation's transition to a market economy. However, analysts believe that the move was only a political announcement prompted by widespread concerns that China's economic growth was proceeding at a dangerously rapid pace. The plan contains provisions for a market distribution network and a new system of taxation. Despite the approval, many experts believe that it would come under fierce opposition when it is implemented regionally.

The Chinese government has been seeking foreign investors to finance the development of its transport network. Investments in the transport sector are bound to have good returns mainly because of China's 14% annual growth rate. The transport sector was opened to foreign investments in 1991, encouraging some of Hong Kong's biggest investors to build transport links with China. The Chinese government allows foreign investors to engage in the construction and finance of high-grade facilities.

China's 16-point plan to keep economic growth at a relatively slow pace could be a major threat to the import industry in the country. The economic policy is likely to create friction between China and its trading partners, according to the Central Intelligence Agency. Moreover, China will have difficulty rejoining the GATT if the current economic slowdown continues. However, China maintained that slower growth is crucial to the implementation of reforms required by GATT.

The International Intellectual Property Alliance plans to bring a series of test cases against the most blatant offenders of intellectual property rights agreements in China. The cases involve infringement of copyright laws for films, books, music and computer programs. Recommendations will be made to the US trade representative as the time nears to review compliance with a memorandum of agreement signed in Jan 1993 under the threat of a $1.5 billion US sanction. The Business Software Alliance also plans to bring up two cases of its own against China.

United Insurance Co. has been established by venture capital company, China International Trust & Investment Corp., and Chinese government-owned China Ocean Shipping Corp., China National Chemicals Import & Export Corp. and China National Cereals, Oils & Foodstuffs Import & Export Corp. The new company is awaiting approval to operate. It will offer life and non-life insurance and compete with state-owned People's Insurance Company of China which currently only faces competition in Chinese coastal cities. Foreign insurance companies and brokers moving into the Chinese market are discussed.

China's electricity shortage has created a promising market for foreign-invested and joint-venture power stations. Several American companies have begun negotiations with Huaneng International to meet China power minister Shi Dazhen's goal of building 15,000 megawatts of new generators per year for the next five years. The boom in China's economy has been hindered by an estimated $42.1 billion a year because of brownouts, according to the State Planning Commission.

The showpiece of China's state sector, Capital Iron and Steel Corp or Shougang, has invested heavily overseas in compliance with Deng Xiaoping's call for the enterprise to experiment with unprecedented investment autonomy. In less than two weeks in late 1992, Shougang has acquired a 51% stake in Hong Kong trading firm Tung Wing Steel (Group) Ltd, bought an entire steel mill from California Steel Inc for shipmentto China and paid US$312 million for Hierroperu SA, a Peruvian iron mine.