The real estate buble is over building. It's an office capacity glout in Beijing/Shanghai. That's why Beijing halted building permits in Febuary, 1997.
Many of the Economic Developement Zones lack needed infrastructure. China is a very inefficient economy. Yet it hit a 4 year peak in growth last month. China's big banks are bigger than Japan's. Japan's big banks are twice the size of US big banks. And you can't trade the Yaun..................................................
scmp.com
MondayÿÿDecember 22ÿÿ1997
Beijing opens talks on investment reform
MARK O'NEILL in Beijing
A three-day meeting begins in Beijing today that will liberalise the mainland's foreign investment code but is expected to exclude new openings of the financial sector because of Asia's currency crisis.
The meeting, organised by the Ministry of Foreign Trade and Economic Co-operation and involving officials from government departments nationwide, will consider investment strategy for the next five years.
It is expected to approve changes in the code that will liberalise foreign investment in the restricted areas of tourism, mining and foreign trade.
Beijing has approved only three foreign-invested trade firms, all in the Pudong area of Shanghai.
The government is under pressure from Western countries, especially the United States, to open its financial markets.
However, anxieties that the nation's currency, banks and capital markets are not ready have been reinforced by the Asian currency crisis.
The meeting will approve the reintroduction of tax-free imports of capital equipment for high-technology projects and a 50 per cent exemption on import duties for projects in priority sectors such as energy, agriculture, transport, production of raw materials and infrastructure.
Liberalisation is also expected in manufacturing, with more products being moved from the restricted to the permitted or encouraged categories.
Driving the liberalisation is a 27.4 per cent drop in contracted investment in the first 11 months of this year, to US$48.46 billion, and that more than 70 per cent of foreign investment comes from Asia, mainly Hong Kong, Taiwan and Japan, which are likely to invest less abroad next year.
A fierce debate continues with the mainland over the good and evil foreign investment has brought, with many arguing the government has already given away too much of the market at the expense of domestic companies and brands.
Figures published last week back the reformers, not the conservatives.
A ministry survey found that in 1995, foreign-invested firms in China produced 640.3 billion yuan (about HK$595 billion) worth of industrial goods, of which 251.8 billion yuan, or 39.3 per cent, were sold in the domestic market and the rest exported.
These sales accounted for 7.9 per cent of domestic sales of industrial goods. If calculated by the foreign share ownership of the companies, their market share is equal to only 3.4 per cent.
The highest market shares were in cosmetics with 36 per cent, detergents 35 per cent, beer 20 per cent and drinks 19 per cent.
In luxury items like colour televisions, refrigerators and air conditioners, Chinese manufacturers have the top five positions.
The idea of national industries belongs to the colonial or semi-colonial era and is already outdated, argued Li Su, of the ministry's development bureau.
With the increase in technology transfers and tie-ups between Chinese and foreign companies in recent years, it is difficult to say what is a national product any more, he said.
The flood of foreign investment in the past four years has coincided with China's strong export performance. Foreign-invested ventures account for more than 40 per cent of exports. |
