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The Australia-China Chamber of Commerce and Industry of New South Wales |
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TRADE AND INVESTMENT STRATEGIES WITH CHINA The Network of Co-operative Agreements With Cities and Provinces in China 1995 CONTENTS Areas of concentration for trade
and investment Cities and provinces in China
with ACCCI Co-operative Agreements Note that the data contained in this document pertain to
1994. Consult the Key Cities Index for
more recent data. |
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Chamber members have indicated
that they are associated with ACCCI of New South Wales largely because they
realise that China is too important to Australia to be neglected. They also recognise the sound and sensible
nature of the Chamber’s objectives, which are: v
promoting Australian business, in general, within
the context of two-way trade and investment with China, v
promoting the Chamber and the businesses of its
member companies with businesses and organisations in China, and v
promoting various Chamber projects (such as Rugby
Union Football and Dragon Boat Racing in China), which have the principal
purpose of bringing the business communities together. Members of the State Council of
the Chamber remain fully committed to these objectives, and are currently
developing strategies to achieve them. The purpose of this booklet is
to describe the strategies already developed that are now being put into
effect. How will Chamber members benefit? Chamber members will benefit
only to the extent to which they avail themselves to the opportunities that
are being created. An informal survey
of a portion of the Chamber’s membership indicated that they generally lack
the following: v
in-depth analyses of particular commercial sectors
and industries in China, with a view to determining what China needs and what
can be supplied from Australia, v
specific information about business prospects in
China, including exports, imports and joint-venture investment opportunities,
especially on a regional basis, v
reliable contacts in China from whom information
can be obtained and, if desirable, introductions can be made, and v
knowledge as to where to begin to seek
joint-venture partners and how to insure that the “appropriate” partner is
found, The basic strategies of the
Chamber are intended to establish a way of obtaining these analyses,
information, contacts and knowledge.
Initially, they will be acquired mainly on a case-by-case basis, in
response to specific requests from members, or in connection with particular
opportunities that are seen to arise from our Chinese counterparts. Eventually we hope to anticipate members’ needs and to collect
the analyses, information, contacts and knowledge in the belief that some
Chamber members will be able to use them and to benefit from them. The mechanism with which that
collection is expected to be made is both innovative potentially
durable. It is essentially a channel
for the two-way flow of information, a basis for mutual understanding among
the business communities and a platform for the exchange of business people
between Australia and China. As a
mechanism or structure, it functions only if it is used. Its success, and its permanence, will
depend upon that usage. What are the key elements in the strategy? The vastness of China, and the
size of its population, prompted the State Council to be selective in the
number of counterpart organisations in cities and provinces in China with
whom we establish “ld friend” status.
Having acquired such status is extremely valuable, but it also entails
obligations. The Chamber’s
organisation is relatively small, compared to that of its counterparts in
China. We cannot hope to fulfil
obligations entered into with all major cities in China, or with all
organisations in China that send trade missions to Australia. Being selective is not necessarily a sign
of snobbishness on our part, it is essential for our own ability to function. The most important element in
the Chamber’s strategy is to establish “old friend” status with cities and
provinces which have the following characteristics: v
they allow scope for the friendship to be mutually
satisfactory, v
they are expected to grow substantially over the
medium-to-long term so that early participation in their business and commercial
activities will be rewarded as a sustainable activity, and v
they are not yet so large and so open-to-the-world
as to be over-committed with too many “old friends”. With the signing, or the
intention of signing, co-operative agreements with 24 cities and provinces,
the Chamber now has 24 potential “old friends”. The agreements only provide the basis to form that
friendship. The status must be
acquired through a period of mutual exchange, assistance and
obligations. As noted above, it is
the accumulation of obligations, both paid and received, which is of
value. What are the co-operative agreements? Each agreement is an undertaking
by the Chamber to co-operate in the business areas of export/import,
investment joint ventures, business information including academic research
and development, commercial culture such as the performing arts, and public
administration including social services.
Each party agrees to co-operate
as follows: v
in export-import matters, by exchanging information on rural
activities, mining ventures, manufactured products and a variety of services, v
in investment and joint ventures, by facilitating capital
flow and technology transfer, v
in business information including academic research and development,
by establishing long-term institutional economic relations, v
in commercial culture such as the performing arts, by
encouraging viable cultural interchange, and v
in public administration including social services, by
transfer of all forms of management expertise. Each party agrees to sponsor and
promote visits by business delegations for the expansion of bilateral trade
and investment. All projects are
subject to agreement by both parties and the co-operative agreement will
remain in effect until such time that the two parties mutually decide to
terminate it. In most cases the agreements
will be reviewed within 3 years after signing, in order to determine how much
benefit has been achieved and to seek ways of improving that benefit. Considerable effort has been made to
ensure that the agreements are not filed away and forgotten. What have we gained from the agreements? The principal attribute of the
agreements is to formally record an expression of interest in working toward
a mutually beneficial set of co-operative activities. That expression alone establishes the
first layer of good will. They enable
the Chamber to ask for assistance when member companies visit the city or province. They also enable Chinese companies and
organisations to ask for our assistance.
They provide the Chamber with a
reliable source of reference about particular business ventures in China and
about individual business people.
They also give the Chinese a similar source of information about
Chamber members and friendly-to-the-Chamber organisations. They enable both parties, and
their respective constituents, to have a starting point in a wide range of
business activities. In short, they
provide a basic institutional framework for obtaining the analyses, contacts,
information and knowledge mentioned above. Why choose four areas of concentration As most members are aware, the
number of trade delegations which the Chamber has hosted over the past 20
years is exceptionally large.
Moreover, the number of visits per year has been increasing. In order to concentrate these incoming and
outgoing trade delegations into single-interest groups, and thus to avoid the
‘shotgun’ approach to trade exchanges, four areas of concentration have been
identified and are described in the next section. They are broadly defined at the
present time in order not to preclude particular interests of Chamber
members. It is hoped that further
concentration within these four areas will be possible. Organising two-way trade
delegations on a regular basis is regarded as an important aspect of the
co-operative agreements. Personal
experience and personal contact is by far the most effective way of gaining
the information and knowledge required for successful business ventures in
China, or joint ventures in Australia with partners in China. The selection of four areas of
concentration will also assist in achieving a systematic collection and
presentation of information on the key cities and provinces in China. This information will require time to collect,
verify and process. The Chamber has
made arrangements with an Australia-China consulting firm to assist in
obtaining some of the information to be used as briefing material for outward
trade delegations. We will also seek full information about incoming trade
delegations. Considerable time has
been lost in the past in the process of ‘exchanging credentials’ during
visits. Exchanging that information
before the visits enables the respective delegations to focus on the main
purposes of the visits and to optimise the use of the limited amount of time
generally available for the trade missions. |
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Urban Services Rural Industries Infrastructure Commercial Culture The purpose of this section of
the strategies booklet is to define the four areas and to explain the reasons
for the selection of each as an area of concentration. Broadly speaking, urban services
include all activities of the services sector (or tertiary sector), which are
provided specifically to users in urban areas. They do not include public utilities and construction, since
the Chamber grouped these services with infrastructure. The services sector is conventionally
divided into four major categories: Commerce Transport, storage and
communications Finance, insurance and business
services Government services Each of these has a number of
sub-categories. For example, commerce
would include wholesale trades, retail trades, hotels, restaurants, theatres
and other entertainment services.
Since each category is exceptionally broad, the Chamber has restricted
its interest in urban services to include the following: Finance, banking and insurance
services International trade services Business services for
manufacturing Real estate and property Selected government services
such as public administration and health administration The first two categories are
highlighted as important areas of development in China. This conclusion is based upon the
development of those same sectors in Taiwan during the past two decades. Between 1952 and 1994, a total
of US$1.4 billion in overseas direct investment flowed into Taiwan for both
categories, and jointly comprise about 15% of total overseas direct
investment during the period. Over the same period of time,
US$2.3 billion in outward investment approvals occurred for Taiwan in
finance, banking and insurance. A
large share of this outward investment went into mainland provinces. International trade services include a range of business and professional
services oriented toward the facilitation of international trade. This would include legal services,
accounting, transport agencies and other services that are needed for an
efficient and sustained flow of merchandise trade. It is one of the most rapidly growing division of China’s
services sector. Business services for manufacturing could include legal and accounting services, but
also includes technical assistance from Australian manufacturers. Joint ventures with Chinese manufacturing
enterprises will be explored, partly as a means for Australian manufacturers
to export to China and partly for the purpose of securing supplies of Chinese
products in Australia. This would
involve financial, legal and technical services. In the recent past, real estate and property
services to China have been
provided principally by Overseas Chinese.
Considerable scope exists, however, for Australian enterprises to
become part of the huge potential in urban expansion and renewal. The process of rapid industrialisation in
China will significantly alter the current percentage of people living in
rural areas. Government administration in China
is becoming more ‘westernised’, but will probably always retain features of
Chinese traditions dating from the time of Confucius. Modernising the system of administration
without losing the more important elements of those traditions is a
challenging task. Improvements in
health administration are among the more urgently needed aspects of public
administration. Rural industries include primary
production as well as rural secondary industries and rural services. It includes the following: Agriculture Livestock Forestry Fisheries Mining Township and village enterprises Of particular interest is
township and village enterprises (TVEs).
This includes a variety of activities ranging from food processing to
small and medium sized manufacturing plants relying upon rural labour and
primary products for inputs. These
enterprises employed more than 12 million people in 1993. The gross output of TVEs increased from
US$207 billion to US$363 billion in 1993. Most of that employment and
output has occurred in China’s coastal provinces such as Jiangsu, Shandong,
Zhejiang, Guandong and Henan. The
non-coastal provinces such as Sichuan, Anhui and Hebei have nevertheless
experienced rapid growth in TVEs. Most of the northwest and
southwest provinces are lagging behind the other provinces in these
developments, and therefore offer an opportunity for longer-term Australian
participation in both trade and investment. Infrastructure is generally
classified into the following categories: Land transport, including road
and rail Air transport, including
airports Sea transport, including
seaports Telecommunications, including
public switched telephone networks, microwave transmitters, optical fibre
cable and satellite earth stations Electricity supply Gas supply Urban and rural water supply Wastewater treatment Solid waste disposal In most parts of China
infrastructure development has kept up with the need for improvement. This has resulted from the rapid rate of
economic growth, and from the inability to assess infrastructure requirements
associated with the faster pace of economic activity. The need is particularly noticeable in the
northwestern provinces where infrastructure has not been improved substantially
since the 1950s. Rail transport in China
increased at an average rate of 8.8 per cent per year in constant GDP terms
since 1987 but even with that increase, there are significant shortages of
capacity. Road construction has also
lagged behind demand, except for the more prosperous coastal provinces. Although the efficiency in civil
aviation has improved in recent years, the growth in passenger travel from
11.6 billion passenger-km in 1985 to 47.8 billion passenger km in 1993
created enormous pressures. The air
transport system requires substantially more improvement in order to operate
effectively. China has relatively few
seaports that can handle modern containerships, and continues to rely on
relatively small general cargo vessels.
Despite this, the amount of cargo handled more than doubled from 1985
to 1993. The major ports are becoming
increasingly more constrained. The number of main telephone
lines in China in 1991 was only 0.73 per 100 people compared to Australia’s
46 per 100 people in the same year.
To catch up with the rest of the world, China’s expenditure for
telecommunications is expected to increase from the present level of about
US$5 billion to more than US$12 billion in the year 2000. Although China’s power sector
has managed to grow at a rapid pace of more than 8 per cent per annum from
1980 to 1993, to become the fourth largest generating system in the world,
persistent power shortages continue to occur. Of particular importance is the need for electrical network
strengthening in the poorer provinces. Gas supplies, mainly town gas,
have been increasing in response to the desire to avoid excessive pollution
from coal-fired heating and cooking in the provinces north of the Yangtze
River. Considerable work remains,
however. Water supplies are rapidly improving
in the coastal region, but residential access to tap water per capita in
urban areas remains at just over 90 per cent, on the average. In rural areas the availability of safe
water is of course lower, and the need for improved sanitation is greater. The Chamber has long recognised
the importance of mixing cultural exchanges with trade missions. They provide a focus of attention that is
separate from, but conducive to, the business and commercial interests that
are the principal driving force of the co-operative agreements. The special category of ‘commercial
culture’ includes a variety of cultural activities that have a potential to
be commercially viable. This includes
a range of entertainment and leisure activities that contain a significant
amount of cultural content. The selection of particular
activities to be exchanged depends largely upon the special characteristics
of the individual cities and provinces.
The intention is to view these activities broadly to include potentially
all forms of visual art, music and the performing arts. For many years the Chamber has
been active in its sponsorship of cultural activities. The W. J. Liu Exhibition of scrolls has
been one of the most popular and widely appreciated of these activities. We expect to enlarge the list of
these activities substantially in the next few years, thus providing scope
for Chamber members to meet with a wide variety of both Chinese and
Australian officials. |
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Beijing Beijing is one of the three
municipalities in China whose government is considered to be at the same
level as a provincial government. The
other two municipalities are Tianjin and Shanghai. The mayors of those cities therefore occupy the same ranking
within the Chinese hierarchy as provincial governors. In the case of Beijing, the city
limits extend for some 80 km from the centre. Within these limits exist an urban area, a number of suburban
areas and nine rural counties to form a total area of 16,800 sq km. The overall population is more than 10
million, compared to 63 million in Hebei Province, which completely surrounds
Beijing. Although the city’s origins have
a much longer history, most of the urban pattern, layout and structures, such
as the Forbidden City, were designed in the early part of the 1400s when the
Ming Dynasty moved back to Beijing from Nanjing. At that time, the Inner City occupied the area around the
Imperial City, and a suburban zone was added to the south. As a result of large amounts of
money poured into it since 1949, Beijing has most of the trappings that are
befitting to China’s national capital.
Streets were widened, parks, museums and open spaces were created and
the old wall was removed. The city
continues to change rapidly, as does most of China, but with those changes
Beijing remains a different part of China. Under Mao Zedong, Beijing began
to industrialise and become a “People’s City”. Clothing and textile manufacturing developed quickly, together
with iron and steel industries, petrochemicals and machinery. Despite the continuing dominance of
central government administration, the city now produces a wide range of
manufactured goods. Transport and telecommunications
continue to be the best in China.
These and other infrastructural advantages have appealed to many
foreign enterprises, resulting in a large number of joint ventures. ACCCI’s co-operative-agreement
partner in the city is the Beijing Branch of the Chinese Council for the
Promotion of International Trade (CCPIT).
Since the organisation represents a large number of manufactures, like
other branches, they are keen to seek new outlets for their products and to
obtain more joint venture partners. With a location in the same
city, the Beijing Branch of the CCPIT has close connections with the national
office of the CCPIT. That provides an
additional advantage in forming an association with the branch. Not surprisingly, per capita
income in Beijing is substantially higher than in most of China’s cities, at
RMB 6,805 yuan per annum (in 1993).
Only Shanghai is higher at RMB 8,652 yuan per annum. For most of this century, China’s
northeastern region was a three-dimensional checkerboard for various warring
factions. First it was Imperial China
v. Imperial Japan, with Manchu bandit leaders initiating rear-guard action to
appropriate whatever was not firmly secured.
Then it was Imperial Japan v.
Imperial Russia, with the latter eventually leaving with as much as they
could carry, including office furniture and railway tracks. Eventually, militarist China struggled
with militarist Japan for control over the region’s supplies of raw
materials. Finally, Chiang Kaishek’s
Kuomingtang troops engaged in three critical battles in the northeast with
Mao Zedong’s locally recruited sympathisers.
The local revolutionaries used captured weaponry including Japanese tanks
and US jeeps. By this time, they were
fed up with the numerous checkerboard games, and especially with players who
took away their ‘marbles’. In recent times, the northeast
has become an industrial powerhouse.
Some observers suggest that the Japanese influence during World War II
contributed to the region’s ability to achieve an apparently painless
industrial revolution. The desire to become
self-sufficient must nevertheless be strong in a region for which
exploitation was both ruthless and persistent. This cannot be attributed to any one of the former combatants,
but to the entire chain of events. Although Liaoning Province is
regarded as the northeast’s main engine for industrialisation, Changchun
received a boost in 1950 with China’s first motor car manufacturing
plant. Manufacturing during that
period received assistance from the Soviet Union. Trucks, tractors, Red Flag limousines, locomotives soon appeared,
together with carpets, articles of fur and wood carvings. Jilin Province now has about 26
million people, making it smaller than Liaoning to the south (40 million) and
Heilongjiang to the north (36 million).
Per capita GDP is also lower – Rmb 2,071 yuan compared to Rmb 3,254
yuan in Liaoning and Rmb 2,433 yuan in Heilongjiang. This results partly from a greater
reliance on agriculture in Jilin – more than 25 per cent of GDP compared to
15 per cent in Liaoning and 20 per cent in Heilongjiang. Changchun is also interesting as
the site of the Puppet Emperor’s Palace and Exhibition Hall, commemorating
the late Henry Puyi, China’s last emperor.
The city has a film studio which got its start making documentaries
during China’s civil war period. Thus, the combination of
agriculture, manufacturing, culture and the arts make Changchun a microcosm
of China itself. The Chamber looks
upon the city as a potential centre for future developments in the northeast. Tumen/Hunchun (Jilin Province) Tumen and Hunchun are likely to
become twin cities if current plans for a free trade zone encompassing China,
North Korea and Russia eventuate.
Hunchun is now classified as a backwater area located a few kilometres
west of the Russian border and approximately the same distance from the North
Korean border. The Chamber does not have a
reliable crystal ball to suggest when, if ever, that particular area will
become a growth triangle. It is
nevertheless clear, on the basis of past experience, that the Chinese will
not allow its border regions to remain insecure. The pace of development for Tumen and Hunchun may be slow for
some time to come, as other regions receive a higher priority, but it will
develop. Hailar (Inner Mongolia Autonomous Region) Inner Mongolia is the longest of
China’s provinces, spanning more than 2,600 km mostly in an east-west direction. The region conjures visions of a vast
movie set beyond the Great Wall with sweeping grasslands emerging where the
Gobi Desert ends. It is nevertheless the home of
more than 22 million people. The
Mongol ethnic group comprises about 10 per cent of the population, with
Mongol-Han dominating, particularly in the border regions. Pockets of Manchus occur in the east, and
some Hui are located near the provincial capital of Hohhot and along the
northern bank of the Yellow River.
Daurs and Ewenkis are found in the northeastern tip. Inner Mongolia is also the site
of one ‘foot’ of the most ambitious reafforestation programmes in the
world. On either side of the Great
Wall, and extending for 6,000 km, a belt of trees is designed to protect farmland
from desert sands carried by northern winds.
It will also help to restore the
timber stands which became depleted during the period of enormous population
pressures toward the end of the Qing Dynasty. Already the tree-planting programme has raised the afforestation
level from 9 per cent to 13 per cent.
Intentions are to bring the level to 20 per cent by year 2000. This will involve a total of 70 million
hectares. There are two centres of
development in Inner Mongolia. One is
in the northeast with railway links to Jilin Province, as well as to Mongolia
and Russia. The other is in the west
with a rail line following the Yellow River and connecting Hohhot to Ningxia
Autonomous Region to the west, and continuing eastward to the
Beijing-Mongolia line. In between is Xanadu Palace,
near Duolun. These connections follow
the road system installed by Kublai Khan, who became the first emperor of the
Yuan Dynasty. Trade links with Russia
and with the rest of the world were thus formed in the second half of the
13th century. Since the province is a natural
grazing land, its chief economic activity is livestock breeding, including
horses, sheep, cattle and camels. It
is thus a major source of leather and dairy products. Hailar is a growing city in the
northeast, not far from the border with Outer Mongolia. It has been opened relatively recently and
appears destined for major grasslands development in the region of Dalai
Lake. It has and airport and is a
principal supply point for Manzhouli which is on the border with Outer
Mongolia and Russia. As with Tumen/Hunchun, China
will secure its border areas, particularly in view of the growing spirit of
independence exhibited by the 2 million or so inhabitants of Outer Mongolia,
which occurred with the recent departure of Soviet troops and personnel. Tangshan is only a few
kilometres outside the municipal limits of Tianjin, and is therefore more
closely associated with activities in that city than with those in Hebei
Province. Tianjin has a population of
more than 9 million, including rural areas.
Tianjin became a treaty port in
1858, largely as a result of the British and French assessment of its
location on both the Grand Canal and the Bohai Sea. The Grand Canal is the ancient inland waterway connecting the
Yangtze and the Yellow Rivers, running between Hangzhou and Beijing. The Bohai Sea is the ocean inlet north of
Shandong Province and bounded on the east by Dalian. After 1949, Tianjin became a
major industrial city and produces a wide variety of consumer goods, heavy
machinery and precision equipment.
The consumer products, in particular, are well regarded in terms of
their quality. They represent most of
the relatively few examples in China of brand-name production for national
distribution. Tangshan is on the mainline
railway connecting Tianjin with Harbin to the north. Together with Shenyang in Liaoning
Province, it is noted particularly for its production of locomotives and
other railway equipment. It is an
important link between the older industrialised region of China and newly
industrialising regions in the northeast. Shandong Province is slightly
larger in size than Zhejiang, but has an even greater population of about 86
million. Traditionally it has been a
poor province. The Yellow River
changed its path through the province some 26 times within recorded history. The river is also notorious for
flooding and for periods of sustained drought. To make it even more difficult for the province to be
self-sufficient in food, about two-thirds of the province is hilly, with high
mountain peaks in the southwest and a coastal chain of mountains within the
Shandong Peninsula, which extends into the sea. The province has nevertheless
made a quantum leap into industrialisation, assisted by early German
influences in Qingdao. It is likely
to continue this progress in manufacturing, but improvements in agriculture
and rural industries will remain an important need for some time to
come. Yantai is very much a
sea-oriented city. The name means
‘smoke-terrace’, and Yantai acquired that name during the Opium Wars when
fires were lit on the headland to warn ships of approaching pirates. The city continues to reflect its origin
as a fishing village and a naval defence outpost. As with many other coastal
cities, the attraction of manufacturing as an a major boost to economic
development has been irresistible.
Yantai is noted for its production of wine, spirits and fruit, but is
rapidly diversifying its output. The Shandong Peninsula is the
recipient of direct investment from the Republic of Korea, which lies only
400 km to the east. Rapid development
of the coastal cities is expected to follow from this inflow. Linyi is a relatively small
community in the southeastern part of the province. It therefore has linkages with northern Jiangsu Province and
with Anhui Province. An important
element in that area is conversion of locally available grain supplies into
livestock feed, as well as significant improvements in breeding stock and in
meat and poultry processing. Although there are numerous
centres for concentration in rural industries, Linyi represents a good choice
on the basis of location. Changshu is in the central part
of the huge industrial complex that extends from Nanjing to Shanghai on the
southern bank of the Yangtze River.
The historical importance of Changshu has been dwarfed by that of the two
larger centres, as well as by neighbouring Suzhou. This arises partly from the
Chinese tradition of locating cities in concentrated areas with rivers
flowing through or around them. In
the case of Suzhou, a moat was constructed to enclose the old city. Changshu, on the other hand, is located on
the main roadway between Nanjing and Shanghai and in earlier periods was a
quite town specialising in lace-making. Industrialisation has altered
land use in China and places a premium on broader, less concentrated areas
that are close to river transport.
This avoids the congestion associated with rail or road movement of
goods and allows ample space for expansion. Changshu has these
characteristics with some distance between the old site of the town and the
river. The farmland, which collected
nutrient-rich soil from upstream erosion, has been converted into industrial
estates that are linked by wide roadways and are easily provided with the
necessary utilities. Changshu is nevertheless
associated with the commercial culture of Nanjing, Suzhou and Shanghai, and
is rapidly becoming the satellite industrial centre for these more
traditional cities. Its growth seems
guaranteed within that strategic part of the Yangtze delta. The population of Jiangsu
Province is about 70 million. Zhejiang Province is one of the
smallest in area but has traditionally been one of the most prosperous. This results partly from the fertile land
in the northern portion of the province, which is part of the Yangtze River
delta, and partly to its close proximity to Shanghai. Historical events also contributed to the
forward-looking nature of the province.
Hangzhou became the site of the imperial court for the Southern Song
Dynasty in 1126, in order to avoid northern invaders. The city grew in size and became the
centre of Chinese culture during the period.
Ningbo lies to the southeast of
Hangzhou and is separated from Shanghai by a portion of the sea that extends
west to Hangzhou. Within that general
area, the local dialect is Shanghainese. Ningbo rose to prominence in the
7th and 8th centuries as a trading port from which Zhejiang’s exports,
especially silk, were carried to Japan, to the Ryukyu Islands and to other
parts of China’s coastal region. The
Portuguese established trading quarters in Ningbo in the 16th Century, mainly
for the purpose of trade with Japan.
Thus, Ningbo is an open city not only by central government decree,
but also by tradition. The manufacturing sector in
Ningbo is its principal engine for development. The city produces a wide range of industrial products, mainly
classified as miscellaneous items such as pumps, small motors and various
articles of metal. Most of the heavier
industries in the province are located closer to Shanghai. The city is also becoming a
services centre for the region extending eastward from Hangzhou and to the
south. Its relatively small size, its
location close to Shanghai and its forward-looking attitude make it a good
choice as a key location in Eastern China. The population of Zhejiang is 43
million people and the population of Ningbo is about 500,000. Although Fujian Province cannot
claim to have exported Mao Zedong (see description of Zhuzhou on page 26), it
has made that claim for an extremely large number of Chinese who migrated to
Taiwan, Singapore, Malaysia, Indonesia and the Philippines. The local dialect is referred to as the
south-of-the-Min-River language and is very similar to Taiwanese. Both provinces of course speak Mandarin as
the official language. Fujian officials are attempting
to re-build a sense of identity with the province among Overseas Chinese, and
are encouraging investment in the ‘homeland’. As a result, Fuzhou, the provincial capital, has become a moderately
wealthy city. It is a well-established port
city, with a history of transport and commerce that goes back to the early
days of the Silk Road and the adventures of Marco Polo. During most of that history, only the
coastal cities displayed any degree of prosperity. The higher elevations in the western part of the province
continue to exhibit poorer living conditions. The economy of Fuzhou remains
heavily dependent upon agriculture and fishing, but its industries are
developing rapidly. Xiamen, which
lies about 200 km to the south, became more industrialised as a result of its
early status as a special economic zone.
However, the zone, and the city
within it, is on an island and is thus restricted in terms of future
development. Additionally, in
encouraging investment from Overseas Chinese, the authorities invited
investors to purchase dwellings and to live in Xiamen on a permanent
basis. This stimulated land
development, financed partly by the Overseas Chinese, resulting in a number
of luxury flats and villas. Although these housing
developments are generally located away from the more favourable
manufacturing sites, they nevertheless give rise to an additional restriction
on future land use for industrial estates on the island. The population of Fujian
Province is about 32 million, and nearly 6 million people live in Fuzhou. The name ‘Shenzhen’ refers to
three places: Shenzhen City is opposite the border-crossing from Hong Kong
at Lo Wu; Shenzhen Special Economic
Zone (SEZ) is a separately administered region that extends to the
north, east and west of Shenzhen City; and Shenzhen County is north of the SEZ. The co-operative agreement entered into by the Chamber is with
the municipal authorities who have administrative influence over all three. The Shenzhen region is rapidly
becoming similar to Hong Kong. Its
population has grown at about 20 per cent per annum, giving rise to the
comment that ‘all peacocks in China fly south (to Guangdong Province)’. The economy of Guangdong
Province continues to grow at a faster rate than the national economy (about
14 per cent per annum compared to 10 per cent nation-wide in 1994). In the recent past, Shenzhen’s economy
grew at an incredible rate of 45 per cent per annum. With industrial output per
capita of Rmb 68,931 yuan in 1993, it can claim to be the undisputed leader
of China’s industrialisation programme.
Shanghai is a poor runner-up with Rmb 25,637 yuan per person and the
leading industrial city in northern China, Tianjin, manages only Rmb 18,304
yuan per person. The SEZ came into existence in
1980. Three other SEZs were formed at
that time: Zhuhai, near Macau,
Shantou in the eastern part of Guangdong Province and Xiamen in Fujian Province. After a brief, uncertain period of
widespread smuggling activity, the Shenzhen SEZ became firmly established
with the help of Hong Kong entrepreneurs who moved their clothing and toy
factories across the narrow waterway that separates the Colony from Shenzhen. Not surprisingly, Shenzhen is
the site of the first McDonald’s Restaurant in China and signed the first of
the ACCCI network-oriented co-operative agreements. Being first is an important part of Shenzhen culture. The region produces a wide range
of manufactured goods, the success of which can be attributed to the close
connections with Hong Kong industrialists.
Already, however, the cost of land and labour has risen to the extent
that factory relocations to other parts of Southern China are taking
place. It is likely that Shenzhen
will become a services centre, and a friendly rival to a post-1997 Hong Kong,
having similar activities. A number of Australian companies
have chosen Shenzhen as their corporate headquarters for business ventures in
China. Considering the fact that Hong
Kong has not been a popular business address for many Australians, it is
possible that Shenzhen may one day have a ‘kangaroo valley’. For that purpose, and to act as an
important introduction for Shenzhen exporters into Australia, the Chamber
considers Shenzhen too important to ignore. The population of Guangdong
Province is 66 million people and the population of Shenzhen is about 880,000
people. Hainan is a large tropical
island off the southern coast of China.
It was administered by the provincial government of Guangdong until
1988, when it became Hainan Province.
It is sometimes referred to as the ‘Asian Hawaii’, to convey its
popularity as a winter tourist attraction.
However, Its facilities and
infrastructure have not yet reached the full status that may be claimed in
travel brochures aimed at the Hong Kong market. The Limulingshan Mountains are
located on central axis along the longest length of the island, reaching just
under 2,000 metres at the southern portion.
This hilly land gives rise to a number of small rivers that flow to
the west, east or north. It is also
the home of two original minority groups – the Li and the Miao. The provincial capital is
Haikou, which lies less than 30 km from the mainland, and has little to
recommend it apart from being a transit point and a commercial centre. The coastal plateau on either side of the
mountains is occupied by Han Chinese, with an number of Indonesian and
Malaysian Chinese as well as Chinese-Vietnamese refugees. The land is devoted principally to
tropical fruits and vegetables. Sanya is the second largest city
in Hainan and would be classed as a town on the mainland. Sanya is a busy deep-water port and is a
tourist resort as a result of the beaches along the southern tip. The town lies along a narrow peninsula
running parallel to the coast and is connected to the larger land area by two
bridges. Basuo (Dongfang) is at the
western extreme of the island and is in a generally underdeveloped
region. The lack of tourist resorts
has become an attraction, and the portion of the island between Basuo and
Sanya is regarded as a particular scenic area. Basuo is also near the largest iron ore mine in China. The western region has the Institute for
Tropical Plants, the Nature Reserve for the Projection of Hainan Deer and a
large salt works. ACCCI’s interest in Basuo stems
partly from the participation in the area of Australian military personnel
during World War II. The western and
southern parts of the island are almost certain to become major tourist
attractions as Asian incomes rise.
Although it is popular now only among Overseas Chinese, the number of
European tourists has been increasing.
Considerably more investment will be needed, however, to cater to
larger numbers of tourists. Since the island was a place of
exile during China’s long history, its overall infrastructure, including, and
perhaps especially, educational services has been neglected. Opportunities to supply services therefore
exist. The relatively small size of
the province, as well as its physical separation from the Chinese central
bureaucracy, may help in establishing workable relationships in joint ventures. The population of Hainan Island
is about 11 million people. The broad plains of Central
China are difficult to define precisely according to boundaries. The region generally includes the
provinces situated between the Yellow River and the Yangtze River, but Anhui
Province is more closely linked economically to the coastal provinces than to
Henen Province lying to its west. Similarly, Hubei Province is
more traditionally a part of the Hunan-Guangdong region than to Sichuan in
the southwest or to Henan in the north.
The importance of the Henan-Hubei-Hunan axis is the way the three
provinces are situated on a north-south line connecting Guangdong to Beijing.
Such north-south axes, in particular, are likely to become more relevant as
industrialisation proceeds from the coastal provinces to the western
provinces of China. Henan Province has a population
of nearly 90 million. The Yellow
River cuts through the northern part of the province and at that point the
river widens into a more formidable waterway. Upstream it carves out narrow valleys which limit the spread of
its water during the rainy season. The region to the west of Henan
Province is the location of the ancient Chinese settlements that moved
eastward and created an urban-centred civilisation along the Yellow River
about 3,500 years ago. Zhengzhou, the
present provincial capital became the centre of the Shang Dynasty in the 16th
century BC. Today, Henan Province is one of
the smallest provinces in area, but is also one of the most densely populated. Over the centuries, flooding of the Yellow
River left broad deposits of nutrient-rich soil and the province was able to
sustain a large number of inhabitants. Luoyang lies about 100 km to the
west of Zhengzhou and is one of the richest historical sites in China. The region between Luoyang and Zhengzhou
has a number of ancient temples and tombs.
Since Luoyang was once the centre of Buddhism in China, some of its
relics are unique. The city has not yet reached the
level of industrialisation that is visible in Zhengzhou, but it is developing
rapidly. On particular interest,
commercially, is Luoyang’s location along the main railway line connecting
Zhengzhou to Xi’an and the cities of the northwest, as well as its position
on the Luo River which joins with the Li River before reaching the Yellow
River. The population of Hubei Province
is 57 million, of which 7 million are situated in Wuhan, the provincial
capital. In addition to being on
major north-south rail and road links, Hubei is on an important east-west
connection between Shanghai and Sichuan Province. The province in general, and Wuhan in particular, is rapidly
becoming a transport hub. Hubei province has two distinct
parts. The eastern two-thirds is a
low-lying flood plain drained by the Yangtze River and by the Han River, the
long river’s main northern tributary.
Rice is grown intensively in this region, generally produced in
substantial surplus. The western portion consists of
rugged highlands separating Hubei from Sichuan Province. Mixed crops are grown in the valleys and
basins formed between the hills. Wuhan was the first of the
interior cities to undergo industrialisation and is now considered to be one
of China’s great manufacturing centres.
It is also one of China’s largest metropolitan areas, created by
joining three formerly independent cities. This type of large municipal arrangement appears to be an
advantage for China’s interior cities which would otherwise lack a strong
local government for the purpose of undertaking necessary infrastructural
improvements. As a result of the
integration of smaller municipalities, Wuhan is the only city along the
Yangtze which sits on both sides of the river. Wuhan is the mid-point in the
long navigable part of the Yangtze River from Shanghai to Chongqing. The recently established “open city”
arrangement for Wuhan is likely to add further to its growth potential. Although Wuhan is some distance from the
Three Gorges (Sanxia) Dam project, it will undoubtedly be a major staging
area for the estimated US$20 billion project. Hunan Province has some of the
richest land in China. During the
Ming and Qing dynasties it was a major granary, supplying large quantities of
rice to poorer regions. Its
population began to grow toward the end of the Qing dynasty, resulting in
about 63 million inhabitants at the present time. The province lies above Guangdong, but has not yet achieved the
economic growth rate of its neighbour.
Per capita income is only one-third of that in Guangdong. The provincial capital is
Changsha, which is located on a historical site dating back more than 3,000
years. The Hunan Provincial Museum
has one of the finest collections of ancient Chinese artefacts, obtained principally
from nearby tombs. Mao Zedong is regarded as one of
Hunan’s major exports. He was born in
the village of Haoshan, not far from Changsha. The area was the start of the Taiping Rebellion in the middle
of the last century and Changsha claims the beginning of the Chinese
Communist Party. The first recorded
meeting of the CCP, however, was in Shanghai. Zhuzhou lies to the south of
Changsha and became an industrialised city in 1937, due to its location along
the Yangtze River, the Canton-Wuhan railway and the Shanghai-Kunming
Railway. Travel booklets suggest that
the only reason for foreigners to come to Zhuzhou is to change trains. It is nevertheless an important
distribution centre for coal and freight.
It also is a large manufacturing centre for railway equipment,
locomotives and rollingstock. The
city will have an important role in future economic developments in
Hunan. The smaller, industrialised
cities in Southern China, having both river and rail transport, are likely to
grow more rapidly. Shaanxi Province is the
beginning of China’s northwest, with a thick layer of fine, wind-blown loess
soil. The area in the northern part
of the province consists of a plateau caught in a pocket formed by the Yellow
River as it flows northward from Lanzhou into Inner Mongolia, returning
southward to form the eastern border of Shaanxi. The land is terraced with deep
ravines created by centuries of water and wind erosion. The southern part of the province is cut
by the Wei River as it flows eastward to join the Yellow River at the border
between Shaanxi and Henan. The earliest evidence of human
habitation dates back about 6,000 years to Neolithic times. The plain between Xi’an and the eastern
border of the province was then a lush, green forest. The early Chinese gained sufficient
control of the water supply to establish permanent villages. Prosperity gave rise to a civilisation and
to the establishment of traditions. The area is best know for the
Army of Terracotta Warriors near Xi‘an.
That alone has made the city the most popular tourist stop after
Shanghai and Beijing. The region is also highly
industrialised, with factories established shortly after 1949 for the purpose
of developing the border regions to the west. The range of manufactured products is almost as great as that
produced in Shenzhen, but the capital equipment is much order and less
efficient. Most of these industries, and
the related infrastructure, will be revitalised during the next decade, resulting
in a significant increase in productivity.
Trading and investment opportunities in the area are seen to be
substantial. The population of Shaanxi
Province is about 34 million people, of whom 6 million live in the provincial
capital, Xi’an. Gansu Province is immediately
west of Shaanxi and stretches as an irregular crescent toward Inner Mongolia
and Xinjiang Autonomous Region. The
provincial capital is Lanzhou, an industrialised city of more than 3 million
people built within a long, narrow valley formed by the Yellow River. The city is also a services
centre for the portion of the province to the south, which is predominantly
agricultural-based. Its importance on
the Silk Road has been re-established by the major rail line west to Ürümqi
and further to Central Asia. Not far
from Lanzhou another rail line connects the city with Qinghai and Tibet. At least in that part of China, ancient
transport centres have not been diminished in importance. The province is generally rugged
and barren, with partially developed natural resources including coal, oil
and non-ferrous metals. The Chamber’s
co-operative agreement is with the provincial government, largely because the
development of the southern and western parts of the province is high on the
list of priorities. Hence,
agriculture and mining will be highlighted.
The industrialisation of Lanzhou is expected to continue with larger
injections of joint-venture capital. The population of Gansu Province
is just over 23 million people. Xining is the provincial capital
of Qinghai Province (pronounced ‘ching-high’ rather than ‘queen-high’) and
lies in the eastern portion. Not far
to the west is the boundary of the original Chinese Empire. The vast area beyond is generally
associated with Tibet, in terms of both physical characteristics and the
ethnic composition of the inhabitants.
The province was a penal colony
during China’s political sorting-out periods, and most of the 1 million Han
Chinese now residing in Xining remained there afterward, or were attracted by
the frontier existence. The area in
the northeastern part of the province, between Xining and the border with
Gansu Province, is a grassy plateau with elevations of between 2,500 and
3,000 metres. The land is devoted to
dry-land farming. In the southeastern portion,
mountain ranges rise to more than 5,000 metres and form the origin of the
Yellow River. The region west of
Xining is sparsely populated (the entire province has less than 5 million
people), with scattered salt lakes.
The land is devoted principally to sheep farming and mixed crops. Southern Qinghai is a high
plateau with a steep mountain range separating it from Tibet. This range of mountains is the origin of
both the Yangtze River and the Mekong River. In addition to the need for
improvements in dry-land farming, Qinghai has a supply of mineral resources,
including crude oil, which have not been exploited. A petrochemical industry is therefore likely to develop with
the availability of raw materials, hydropower and rail transport from Xining
to points east. Ürümqi (Xinjiang Autonomous Region) The autonomous region is China’s
western most outpost and was an integral part of the Silk Road. The oasis towns to the north and south of
the Taklimakan Desert (generally referred to now as the Tarim Basin) provided
stopping points for the caravans.
These towns exist today, with a unique culture that flourished for
2,000 years. They are supported by irrigated
farming, mainly grain crops and fruit, with sheep and horses in the nearby
foothills. The dominant minority
group in the area consists of Turkish-speaking Uigur people, or Kazakhs. They are generally taller and heavier than
Han Chinese, and could easily be mistaken for southern Europeans. Ürümqi (spelled as Wulumuqi in
China) is the provincial capital and is the only city in the province. With a population of about 1.3 million,
the city represents a relatively small proportion of the 16 million living in
the province. Those numbers give an
indication of the village structure of the western region. The development potential of the
region around Ürümqi is underpinned by the recent installation of an optical
fibre telecommunications system linking China with the Central Asian
republics, and ultimately with Europe. A railway line from Ürümqi to
Lanzhou was constructed in 1963 and has recently been upgraded to a double
track line. Trade with the Central
Asian republics, security of the western region and exploitation of the minerals
and crude oil deposits in the Tarim Basis are the principal motivating
factors. The economic development of the
region must be seen as long-term, but the steady migration of Chinese from
eastern provinces to the region is evidence that growth is likely to be
sustained. China’s southwest has the
largest number of poverty-stricken areas.
This has resulted from the nature of the land and resources in the
area. It is a region of steep
mountains and dense, semi-tropical vegetation. Streams fed by melting snows
have created fertile basins that were isolated for centuries. River transport is hazardous, due to
rapids, and roads are very difficult in most of the region. The construction of several rail links in
the region occurred after World War II and is considered to be a major
engineering achievement. The southwest was incorporated
into the Chinese Empire during the Qin Dynasty as a means for protecting the
southern border. Apart from Sichuan
Province, however, the region is underpopulated, compared to the rest of
China. During most of the period into
the modern era, it was not a major concern of the ruling establishment. This apparent lack of concern
changed after China’s opening to the world in 1979. The economic and social disparities between the coastal
provinces and the interior provinces, especially those in the southwest, have
become increasingly apparent. The
central government cannot afford to neglect these areas and it has recently
undertaken several ambitious poverty-alleviation programmes. More than any other province in
the region, Sichuan has received favourable attention from Beijing. It is the most heavily populated of any
province in China, with more than 111 million people. That would easily make it an major
‘nation’ on its own. The Chinese refer to the
province as the ‘Heavenly Kingdom’, largely because of its varied terrain
with broad plains in the east and steep mountains in the west. It also has a rich cultural heritage from
centuries of isolation and is rich in natural resources. Per capita income in the
province is lower than average, at Rmb 1,356 yuan per annum, and income
disparities with the province are substantial. The broad plains in the east support the vast majority of the rural-oriented
population. Sichuan Province received a
boost with the construction of several rail links, particularly the link
between Chongqing and Chengdu, the provincial capital. As a result, manufacturing contributes
more than 40 per cent of GDP. Economic reform began in Sichuan
Province a year or so before it was officially announced and before SEZs and
‘open cities’ were created. Visible
effects of the reform can be seen especially in Chengdu and in the other
major cities. Chongqing has a population of
about 15 million people and is larger than Chengdu. It was known earlier as Chungking and became a treaty port on
the Yangtze River in 1890. Its
development was boosted during World War II when it became the centre of
government. The city is situated between the
Yangtze River and the Jailing River which joins the Yangtze at the eastern
end of the city. Since the peninsula
is hilly, it is one of the few cities in China with a virtual absence of push
bikes. Motorised vehicles and a cable
car provide the necessary transport. Chongqing is considered to be
the major industrial city of the southwest, although gross output of
manufacturing in Chengdu is only slightly lower. Together, the two cities contribute a large share of province’s
industrial output. The rapid growth of the urban
economy in Chongqing has created infrastructure constraints, and the city
lacks many of the amenities found in Chengdu. The capacity of Chongqing to expand westward and to the
opposite sides of the two rivers is substantial, and it will almost certainly
grow into an even larger industrial centre. Nanchong is north of Chongqing
and east of Chengdu. The city is
located in the broad Sichuan plains that provide food for the urban
areas. Although food processing
activities have been established, considerable progress is possible in adding
greater value to the produce of the surrounding rural areas. Yunnan Province is one of the
most varied of all provinces in China.
It ranges from snow-capped mountain peaks to tropical rain
forests. Its neighbours are Tibet and
Sichuan Province to the north, Myanmar (Burma) to the west, Laos and Vietnam
to the south and Guizhou and Guanxi to the east. Not surprisingly, it has one-third
of China’s minority groups and about one-half of China’s exotic plant and
animal species. The province is
relatively poor, with only Rmb 1,334 yuan per person per annum. Only Guizhou has a lower per capita
income. Yunnan means “south of the
clouds”, which conveys the source of its warm, sunny surroundings. Strong local identities exist in various
sections of the province, making it a quite different place from China’s
coastal region. Kunming is situated to the north
of Lake Dian, a relatively large body of fresh water that established it as a
settlement more than 2,000 years ago.
Like other parts of the southwest, it received a push during World War
II when eastern Chinese migrated there to escape Japanese occupation. It was part of the famous Burma Road which
supplied southwest China, and was part of the mammoth airlifting of supplies
from India, during the war. Manufacturing in Kunming was
initiated with a view to achieving self-sufficiency. As a result, nearly everything needed in
the region is made there. Transport
links have been improved, but remain inferior to those in other parts of
China. An attraction for joint ventures
is the mild climate and its proximity to Southeast Asia. Air travel from Singapore and Kuala Lumpur
is frequent and is relatively quick.
The development of Kunming will continue as a manufacturing centre for
the 38 million inhabitants of the province, and it will undoubtedly
contribute to the industrialisation of the Indochina region. Kunming has a population of more than 4
million people and a rapidly expanding infrastructure. It also retains elements of a frontier
region. The municipal government has
jurisdiction of an area covering 6,200 sq km, with four urban districts and
four rural counties. Guangxi Province has a
population of 44 million people, with an ethnic mixture which characterises
much of the southwest region. It is
bounded by Guangdong Province to the east and is beginning to show the
effects of economic prosperity in eastern and southern provinces passed along
to other regions. Nanning, the provincial capital,
was a small trading village at the turn of the century. Its population is now just under 3
million. Industrialisation was aided
by the post-1949 railway expansion in the region. Nanning is linked by rail to
Vietnam, thus giving the reform-era Vietnamese an entry into China’s
markets. It also provides an
alternative outlet for Nanning exports through Hanoi and Haiphong. Economic development in Guangxi Province is viewed as medium to long term. As noted elsewhere in this discussion of the Chamber’s signature cities and provinces, China’s border regions will receive a greater amount of attention in the future than they did in the past. Becoming established early in the process, and being associated with those developments, is extremely important to long-term relations between Australia and China. |
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Statistical
Yearbook of China, 1994, Asia-Pacific
Telecommunications Indicators, 1993 Various World Bank reports. Statistical
Yearbook of China, 1994 and China – A Survival Kit, 4th
Edition, Lonely Planet Publications, 1994. |
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