China News - Summer 2011

From the British Press

China aims to slow GDP growth to improve the environment

Wen Jiabao, China's Premier, has said that China's 2011-15 economic plan would lower the target for annual GDP growth in order to raise the quality and efficiency of economic growth. He said: 'We absolutely cannot again sacrifice the environment as the cost for high-speed growth, to have blind development and in that way create over-capacity and put greater pressure on the environment and resources. That economic development is unsustainable.' Any change is likely to be gradual, though immensely significant because China has become the most powerful engine for global economic growth. The next five-year economic plan will use more macro-economic and market tools to curb energy demands leading to emissions, rather than rely solely on top-down engineering fixes.

China's energy demand has surged by 220% compared to a world average of 20%. Since 2006, the country has accounted for 75% of the global increase in coal consumption and 60% of the increase on oil consumption. He Jiankun, director of the low carbon energy laboratory at Tsinghua University said, 'In the 12th five-year plan we need to consider quality and efficiency of economic growth. We need to change from a big economy to a strong economy.' Instead of the reliance on infrastructure investment and manufacturing for export, domestic consumption and the service sector should be expanded. (From The Guardian 1/3/11)

China to invest in Wirral

The Peel Group (which built The Trafford Centre) struck an initial £25 million deal which will involve a Chinese investment company funding half of the first phase of Peel's 'global trading centre' in the Wirral docklands. The overall plan will ultimately include the construction of a 'Canary Wharf of the North'. Initially the development would establish a £200 million version of the International Small Commodities Market in Yiwu (situated west of Hangzhou in China). This is a permanent trade fair for Chinese factories making everything from Christmas decorations, light industrial rivet guns to socks, buttons and beads. This however would only be the beginning for Mr John Whittaker's Peel Group which has plans to create 20,000 jobs in a £50 billion 'Ocean Gateway' project which will develop large areas of land adjacent to the River Mersey and the Manchester Ship Canal.

The initial £20 million of Chinese funding will buy Chinese investors a 50% stake in one of Peel's four trade hubs, each planned to occupy 500,000 sq ft. The first is expected to house 1,000 Chinese companies, but subsequent phases may draw in South Korean and Indian manufacturers. (From The Times 16/5/11)

Chinese to invest in north-western property.

A British property company has signed a deal with a Chinese internet operation to sell flats, which could kick-start the housing market in the North of England. FreshStart Living (Salford based) said it had sold £2.5 million worth of flats to Chinese investors in the two weeks before the partnership was formed. The internet operation, SunFun is China's biggest internet property company with more than 20 million registered users and more than 6,000 staff.

The $2 billion business is listed in New York and claims to control almost 60% of the Chinese online property market. FreshStart expects about 20 Chinese investors to land in the UK every month to view developments - 50 Chinese investors had reserved units already. They buy with confidence because they know the cities of Liverpool and Manchester through the football teams, the universities and also the Chinese communities here. (From The Times 16/5/11)

China's growing luxury market

The growing middle class in China and its desire to own sought-after Western brands has pushed up prices significantly. Of total worldwide wine sales last year at Sotheby's, 60% went to Hong Kong. The auction house sold wine worth $88.3 million (£51 million) in 2010, of which $52.6 million was in Hong Kong, $21 million in London and $14.7 million in New York. The Liv-ex Fine Wine 100 index, which tracks the price of the 100 most sought-after wines, returned 40% last year, compared to 9% for the FTSE 100.

The price of collectible stamps has also soared on the back of Chinese demand. There are more than 30 million philatelists in China, more than anywhere else in the world and stamp prices at recent auctions have broken records. Stanley Gibbons, the stamp dealer could soon open an office in Hong Kong. A block of four stamps from the Cultural Revolution recently fetched a record HK$8.97 million (£700,000). Stanley Gibbons said that the Chinese market is also boosting the price of British stamps such as the Penny Black.

China is a growing market for classic cars with Fiva (Federation Internationale des Vehicules Anciens) organising events and rallies in China to target affluent buyers. IGA Automobile is inviting investors with a minimum of $500,000 to invest in a classic cars fund. The biggest interest so far has come from Asia - China in particular - and the Middle East, with Europe showing the least interest. IGA is to hold a portfolio of between 30 and 50 cars within the $17.15 billion classic car market. Classic cars have an 'underlying intrinsic value' because of their rarity. (From The Sunday Times 8/5/11)

Chinese self-made billionaire woman in England

Xiuli Hawken, a Chinese woman with a British husband is listed in this year's Sunday Times Rich List. She was born in Harbin in northern China and spent five years as a journalist before coming to Britain in 1991 to learn English. She married Anthony Hawken, a teacher, and began working in finance before returning to China, where she and relatives became involved in a property company called Renhe. They built air-raid shelters and then progressed to underground shopping malls. Xiuli travels back and forth to China and is said not to like England much, whilst Anthony is a house-husband. Renhe is listed in Hong Kong and Xiuli Hawken's share is estimated to be £1.06 billion. (From The Sunday Times 8/5/11)

China's richest man to open chain store

Zong Qinghou, who made a fortune making soft drinks has stunned China's retail industry with plans to open 100 departmental stores. This is in line with concerns that margins are worsening in China's manufacturing industry. Economists believe that rising wage bills and soaring material costs may be pushing prices higher and making the situation more difficult for low-end manufacturers. Many could be forced out of business. Other Chinese entrepreneurs may follow him out of manufacturing and into the retail or service sector. This is something which may be welcomed in official circles and there is already speculation that Beijing may be preparing to set the country a consumption target in its attempts to rebalance the economy.

Mr Zong's Wahaha Group is to make a strategic leap into the mining and high-tech industries as part of a broad package of investment plans. It intends to buy companies that make products that China lacks or China is not good at making. Products such as Louis Vuitton luggage and Rolex watches may be at the top of the list, which also includes baby milk. China's domestic producers remain under a cloud since the events of three years ago, when babies were poisoned. Wahaha is understood to be looking at European producers with impeccable reputations for hygiene. Mr Zong sees the establishment of his own retail network as the most effective way to put his products under the noses of customers and the departmental store chain would ensure the products are sold nationwide. (From The Times 3/3/11)

Even more Chinese tourists in UK?

Chinese tourists spent £200 million on luxury goods in London last year - an increase of 155% on the previous year. The number of Chinese visitors soared last year by 45% from the year before and they spent a total of £300 million in British shops. The 146,000 tourists spent an average of £600 on each purchase. Brands such as Burberry, Mulberry are popular for these visitors from the Far East and in fact it is 30% cheaper to buy them here than in China, because of tax and it is more authentic coming to London.

Numbers of tourists are expected to peak in 2012 because of the Olympics and the Queen's Diamond Jubilee. At present Chinese coming to Europe can enter 24 countries with a single Schengen visa - but not the UK. To do this they have to complete a separate lengthy form. The UK Border Agency recently opened a new visa application centre in Beijing to make it easier for Chinese to apply for UK visa by issuing Chinese-language guidance notes explaining how to complete the form. (From The Times 27/5/11)

NB. The new chief executive of the world's largest hotel chain, Intercontinental Hotels Group (IHG), believes that within 10 years, one in every four international travellers will be Chinese and he intends to create an upmarket Chinese hotel brand. Crowne Plaza and Intercontinental have been very successful in China. He says that in some cities IHG will become saturated and so it makes sense having another brand. (From The Sunday Times 29/5/11)

Will India's population overtake China's?

According to Indian government figures the country will overtake China and become the most populous country in the next 16 years, but officials say this will threaten rapid economic development. The population is expected to rise to 1.6 billion by 2050. The subject of population growth has been almost taboo since Indira Gandhi's population policies which included forced sterilisations in the mid-1970s. Dr Amarjeet Singh of the Indian National Population Stabilisation Fund says, India will need to reconsider its position to stop population growth increasing poverty.

The analysis shows that India's 1.1 billion will have increased by 371 million in 2026 and exceed China's current 1.35 billion. Dr Singh said that if growth continued at the current rate, India's population will double in 50 years and make sustainable development unobtainable. Rival experts disagreed, saying high economic growth will be attained providing India invests in human resources and health. In addition, increasing education opportunities and the rise in access to television was already slowing the population growth rate. More than 500 million rural Indians are watching television and as more and more try to replicate the lifestyle they see, they will realise that each child reduces their chances of being part of the upwardly mobile curve. (From The Telegraph 13/7/10)

China to have rail link with the Indian Ocean

Burma and China have agreed to build a rail link connecting southwest China with the Indian Ocean. The 755 mile (1,215 km) railway will run from Kyaukphyu on the western Burmese coast to Yunnan province. It will take three years to build and will be done in five stages. There will be a road parallel with two pipelines that will carry crude oil and gas into China. The railway is part of a wide-ranging network to connect southwest China with its Asian neighbours through a system of railways, roads, power grids, telecommunication networks, oil and gas pipelines and ports. Burma and China have strong political, economic and trade links. (From The Times 29/4/11)

China to renew research into nuclear fusion

A Chinese scientist will deliver a paper on a new energy form at a UN conference next month. Deuterium, an isotope of hydrogen can be extracted from sea water and used as the starting point for 'cold fusion'. The deuterium from one litre of seawater could produce the energy equivalent of 300 litres of petrol. Much research on this subject was dropped in the West in the 1990s but recently, in China, senior leaders, including Hu Jintao are believed to have taken a keen interest. The research on this subject is receiving support at the highest levels in China. A leading scientist in an interview with Xinhua was quoted as saying that within a decade, an alternative source of energy could make existing nuclear reactors obsolete. Some of the richest and powerful institutions in China are reported to have committed funds to the research.

Christiana Figueres, the top UN diplomat for climate change said earlier this year that China's commitment to win the green economy race will leave 'all of us in the dust'. (From The Sunday Times 29/5/11)


From the Chinese press

Main targets for China's 12th Five-Year Plan

These were summarised by Premier Wen Jiabao at the Fourth Session of the 11th National People's Congress on 5th March 2011. The target of 7% annual average growth of GDP over the next five years was set with significant improvements in the quality and performance of economic growth. Based on 2010 prices, GDP in 2015 should exceed 55 trillion yuan ($8.37 trillion). Short-term control policies will be integrated with long-term development policies. Domestic demand will be expanded and economic growth will be more quickly driven by a balanced mix of consumer spending, investment and exports. Manufacturing industry will be upgraded and strategic emerging industries will be fostered and developed. The development of the service sector will be accelerated and its value-added contribution to GDP will be raised by 4% points. Urbanisation will be carefully increased from 47.5% to 51.5% and its quality will be constantly improved. Infrastructure will continue to be improved and the foundation for economic and social development will be further strengthened.

Education will continue to be given top priority and the education level of the people will be steadily raised. Efforts will be made to innovate and 'leapfrog advances' will be made in key areas. The country will strive to make major scientific and technological breakthroughs. The spending on research and development will be increased to 2.2% of GDP. Personnel training will be strengthened with the goal of developing a large number of high-calibre personnel. Culture will be strengthened and sports will continue to be developed. Efforts will be made to reform the pharmaceuticals, healthcare and medical sectors and strive to more quickly reach the goal of basic medical and healthcare services available to all citizens.

The government will actively respond to climate change. Resource conservation and management and ecological development to mitigate natural disasters will be strengthened to comprehensively build the capacity for sustainable development. The use of non-fossil fuels should reach 11.4%. Energy consumption and carbon dioxide emissions per unit of GDP should be reduced by 16% and 17% respectively. Major pollutant release should decrease by 8-10%. Forest coverage should be increased to 21.66%. Water conservation facilities will be substantially improved. There will be progress in water management and agricultural irrigation.

People's well-being will be comprehensively improved. The most important objective of social and economic development will be increasing employment and providing equitable job opportunities for the entire workforce and also creating 45 million more urban jobs over the next five years. The per-capita disposable income of urban dwellers and the per-capita net income of rural dwellers will increase by an annual average of 7%. The poverty line will be raised and the number of people living in poverty will be reduced. The social security system will be quickly improved and social security benefits will continue to be raised. The basic pension insurance and basic medical insurance systems will cover all urban and rural residents. Low-income housing will be made available to about 20% of the country's urban households. Balanced population growth in the long term will be promoted and it is expected that life expectancy will be increased by one year.

The government will vigorously press ahead with economic restructuring and prudently advance political restructuring. The socialist market economy will be constantly improved, socialist democracy will be expanded and the socialist legal system will be extended. The rule of law must be upheld as a basic strategy and laws and regulations to safeguard the people's interest strengthened. Institutional changes must be made to end the excessive concentration of power and lack of checks on power. Corruption must be resolutely prevented and punished. The government must safeguard people's democratic and legitimate rights and interests and also protect social fairness and justice. (From Beijing Review 17/3/11)

China helps evacuate 1,100 foreigners

China conducted a large overseas evacuation from Libya over the last two weeks. The evacuees were transported on chartered Greek vessels. They were from Greece, Italy, Poland, Bangladesh, the Philippines and Vietnam. In addition a total of 35,860 Chinese were also evacuated from Libya and of these 20,745 had already returned to China. As soon as the Libyan crisis became apparent, the Chinese Foreign Ministry asked the Chinese Ambassador in Greece to request help from Athens. Within three hours, the Greeks responded and the next day, two Greek ships were leased to evacuate people to Crete. There, although hotels were closed until the start of the tourist season, 14 hotels with 7,500 beds were quickly found and many more soon followed.

The Chinese Ambassador said, 'The quick response was crucial and we appreciate their kindness in offering help. A friend in need is a friend indeed. Sino-Greek friendship withstood the test in hard times' Source; China Daily via the internet 3/4/11)

Results of 2010 population census

China's total population reached 1,370,536,875 people. This included 7,097,600 in Hong Kong, 552,300 in Macao and 23,162,123 in Taiwan. The total population of the mainland increased by 73,899,804 persons or by 5.84% over the past 10 years: the average annual growth rate was 0.57%.

The number of households was 401,517,330 and the average size was 3.10 persons - 0 .344 persons less than in the 2000 census. The sex ration (women=100) declined to 105.20 from 106.74 a decade ago - approximately 687 million men and 653 women.

Persons in the age group of 0 to 14 accounted for 16.60% of the total population; in the age group 15 to 59 accounted for 70.14% with 13.26% aged 60 and above. Rural residents made up 50.32% of the population with 49.68 in the urban areas. There were 261 million migrant workers who lived in places other than their household registration where they had lived for more than six months. (From Beijing Review 26/5/11)

Chinese learning English

In just a few years, it is theoretically possible that the number of English-speaking Chinese will out-number the populations of all English-speaking countries in the world combined. More than 300 million Chinese are studying English, accounting for a quarter of China's population according to English First (EF) one of the world's biggest language training institutes.

In the next five years, all State employees younger than 40 will be required to master at least 1,000 English phrases, and all schools will begin teaching English in kindergartens. The government is also funding extensive teacher training programmes to find new models for language learning and to develop new textbooks. Parents who can afford it are sending their children - some as young as two years old to private language schools, which are popping up all over the country, and they hope that by the time the children are 10, they will be fluent.

One of the reasons why speaking English is so important is that many parents want to send their children abroad, to the US (more than 51%), UK, Canada and Australia for a better education and they see English as a key factor. Only 7% wanted to send their children to Japan, Italy, France or other countries. There are 63 countries of the world where English is the official language and according to a website (Tencent) survey amongst 3,000 young Chinese people, 30% of men believed that they could boost their income by 30% by learning English. The Chinese women in the survey thought that speaking English made them appear more fashionable. In 2010, the National Educational Statistical Bulletin reported that the English-training market reached 30 billion yuan (3.3 billion euros). Furthermore, analysts are predicting an annual growth rate in private English schools of between 12 to 15% as urban incomes rise.

However, the despite the push to extend English language learning, the quality and proficiency of English language teaching is believed to be a cause for concern. According to critics, backward teaching methods, lack of good English teachers and China's test-orientated education system are to blame. Also, many English language teachers are not trained properly and some lack passion and dedication. Some foreign teachers of English are in China for an adventure or are just travelling through on a holiday and don't take the job seriously. (From China Daily European Weekly, 25 Feb - 3 Mar 2011)

Brand Building

Despite being the second largest economy in the world, China does not have a single brand name in the Best Global Brands rankings for 2010. The US had 47 brands in the top 100, headed by Coca-Cola. Finland's Nokia was the only non-American brand in the top 10. In the top 100; Germany has 10, the best known being Mercedes Benz; France has eight, mostly luxury goods, such as Luis Vuitton and Cartier; the UK has five, headed by HSBC; even Switzerland with a population of 7.8 million (compared to China's 1.3 billion) has five, led by Nescafe and Nestle. The source of this information was Interbrand.

However, some experts believe that it is just a matter of time. Japan took 40 years for its brands to develop major recognition; it now has six in the top 100. South Korea's has come only in the last 10 to 15 years, with Hyundai and Samsung. Others say that many Chinese companies are run by engineers and people with technical or financial backgrounds and that the marketing director is often at more junior levels. But this brand survey (by Interbrand) may be playing down the progress some Chinese firms have achieved; China Mobile is the eight biggest brand in the world, when rated by market value ($52.62 billion) and ICBC (Industrial and Construction Bank of China) is number 11, valued at $43.9 billion. China has seven in the top 100 in this survey by Millward Brown Optimor. The most valuable global brand is Google, valued at $114.26. (From China Daily, European Weekly 11-17/3/11)

New Confucius Statue in the correct place?

On 11 January 2011, a bronze 7.9 metre statue of Confucius was unveiled in front of the renovated National Museum of China in Beijing. The erection of this statue in such a prominent position has triggered a discussion over whether it is appropriate in this location. In a survey conducted by People.com.cn, seeking people's views, 70% of the 220,000 participants said that it is wrong to put the statue there. Some of those against say that, it should have been put at the history museum, instead of the National Museum; the National Museum is not exclusively for the culture of Confucianism.

Those for the statue in its present place believe that it is appropriate because it marks the Chinese nation's rising awareness of its own culture and that the Chinese have always realised the importance of respecting and learning from the country's history, its great people and its traditional culture. (From Beijing Review 3/3/11)

Automotive Deal

China's largest manufacturer of sports utility vehicles, Great Wall Motor Co. Ltd., is engaged in discussions with Tata Motor's Jaguar and Land Rover to cooperate in future business ventures according to China Business News. Senior executives of Jaguar and Land Rover came and visited the Great Wall Motor plant on 14 February. However, any decision on a potential joint venture has not yet been reached. Jaguar and Land Rover are amongst a very few top-line global brands that do not as yet have manufacturing facilities in China. (From Beijing Review 3/3/11)

To abolish the One-Child Policy or not?

This policy was endorsed in 1982 because rising population made it more difficult to increase people's standard of living, improve health care and employment and reduce poverty for the foreseeable future. Amongst developing countries, China was the only one to retain a low birth rate during the last part of the 20th century.

However in recent years, debate has been growing over whether the one-child policy should be abolished because various social problems have emerged as a result. These include the increasing proportion of the aged population and in the education and up-bringing of the single child. Also, the cost of implementing the policy has been rising and many people think that it would be more helpful to Chinese society if this money was used for improving people's education as well as the natural and social environment.

Li Jun recommends abolishing the policy now. (website www.bwchinese.com in Chinese). In general, fewer babies are born each year (15 million last year compared to 25 million in the year 1988) and he believes that it is likely that China's population will peak at 2015 and then decline in the near future. The one-child policy quickens population decline and many problems have resulted. It has contributed to the shortage of migrant workers in the big cities and China now faces an ever-increasing proportion of aged people and a shortage of young labour. The increasing proportion of the aged in the population will add pressure on pensions. Gender imbalance has also resulted. Many schools have been merged or closed and teachers are losing their jobs.

It is anticipated that after 2020, the Chinese population will decrease sharply, the single-child policy may have to be cancelled and there may even be a need to encourage child birth.

Zhao Xiao (www.ce.cn with section in English) writes; Six problems have arisen.

1) The lack of migrant workers in 2011. Shanghai is short of nearly 300,000, Guangzhou is short of more than 150,000 and Shenzhen is short of 800,000. From 2004 to 2011, the growth of the working age population declined at the rate of 13.6%.

2) Gender imbalance. The National Bureau of Statistics shows the sex ratio at birth is approaching 120 to 100 - meaning 40 million males will be unable to find spouses. This could trigger mercenary marriages and sex crimes.

3) Aging population. The UN predicts that by 2050, people over 60 will account for 31.1% of China's population - compared to the world average of 21.9%. 'China is getting old before getting rich'.

4) Decline in population quality. The single-child policy is more intensely controlled in the cities than rural areas. Living conditions and education prospects are better in the cities than the countryside, where more babies are born, thus an elite class is emerging in the cities.

5) Danger to economic growth. In the social 'pyramid', the young and the strong make up a large part of the 'pyramid'. These people make and save the large amount of money during a lifetime. A high savings ratio is an important factor in China's rapid economic growth. If China's birth control remains unchanged, an 'inverted pyramid' will result. Savings rates will drop, followed by declining investments and China's economic growth will surely fall sharply.

6) A single child 'spoiled' by parents and two sets of grandparents probably does not bode well for the continuation of the civilisation and culture of China. (From Beijing Review 28/4/11)

Chinese philanthropist

Cao Dewang , board chairman of the Fuzhou-based glass manufacturer Fuyao Group was ranked No. 1 in the Huran Philanthropy List dated 19 April. His family donated 4.58 billion yuan ($694 million) to charity in 2010. Since 1983, Cao has donated nearly 5 billion yuan ($758 million) since he made his first donation in 1983. Cao, 65, founded Fuyao in 1987 and turned the company into a listed group in 1993. He donated 100 million ($15.15 million) to the quake-hit Yushu County of Qinghai Province and 200 million yuan ($30.3 million) to drought-hit southwest China in 2010. (From Beijing Review 5/5/11)

Tsinghua University celebrates centennial on 24 April 2011

The university was built in 1911 and was funded by part of the Boxer Rebellion indemnity (after China's defeat by the Eight-Nation Alliance). Tsinghua had its origins as a small preparatory school of the Qing Dynasty for students preparing to study in the US. Since the 1978 opening-up policy Tsinghua has thrived and developed from a polytechnic engineering institute into a comprehensive university.

Its alumni include state leaders, President Hu Jintao, Wu Bangguo (Chairman of the Standing Committee of the National People's Congress), Vice President Xi Jinping, former Premier Zhu Rongji, Nobel Prize winning Chinese American physicist and mathematician Chen-ning Yang and many other notable scientists and government officials.

At present China's universities lag behind those of developed nations, but China has vowed to turn Tsinghua and other leading Chinese universities into world-class institutions. (From Beijing Review 5/5/11)

Charles opens first Confucius Classroom in Wales

Prince Charles and the Ambassador to the UK, Mr Liu Xiaoming, unveiled the nameplate for the Confucius Classroom at Llandovery College in Wales on 1 March 2011. The private senior college has 300 students and nearly a quarter of them are learning Chinese. The celebrations that followed included both Chinese and Welsh traditions. (From Xinhua, Internet, 20/3/11)


Sino File is compiled by Walter Fung.

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