Policy Express)：

Xinhua News Agency
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Belt and Road Weekly
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Content
Cover Story......................................................................................................................................... 4
Financial co-op to bear multi-beneficial fruits for B&R and world, Fund chairperson.............4
Special Report: South China Sea........................................................................................................ 5
Arbitration case cannot deplete China's historical rights........................................................... 5
China, U.S. need to manage differences over South China Sea: experts................................... 7
Australian expert: U.S. has complicated South China Sea issue................................................9
German expert doubts arbitral court's jurisdiction over South China Sea dispute...................10
Why more and more countries support China on South China Sea issue?.............................. 10
Policy Review................................................................................................................................... 12
Asia needs comprehensive cooperation mechanism to secure energy market security........... 12
Chinese leaders emphasize efforts to deepen SOE reform.......................................................13
China to unveil 13th Five-Year Plan for bio-pharmaceutical industry in H2, report...............14
China regulates local governments' holding in state industry-guiding fund............................ 14
Data This Week................................................................................................................................. 15
China's manufacturing PMI down slightly in June...................................................................15
China's service trade deficit narrows in May............................................................................16
China's industrial profit growth slows further in May..............................................................17
Silkroad Insights................................................................................................................................17
China continues commitment to stronger China-UK ties after Brexit..................................... 17
Chinese new energy firms advised to better cooperation in Africa..........................................18
Belt & Road brings new opportunities for China-EU co-op.................................................... 20
Company News................................................................................................................................. 21
Gree moves ahead amid Brazil's economic uncertainty........................................................... 21
COSCO takes decisive move to acquire Greece's Piraeus port................................................23
China's Yutong helps improve Cuba's transportation system................................................... 24
Silkroad Province.............................................................................................................................. 25
Xinjiang: a textile, garment trade hub with Central Asia......................................................... 25
Investment environment and policies of Jiangxi province....................................................... 26
NE China province launches overseas tourists tax refund....................................................... 28
Project Info........................................................................................................................................29
Nanjing starts cargo train service to Europe.............................................................................29
Investment-inviting Projects..................................................................................................... 29
Backgrounder.................................................................................................................................... 30
China-Arab Investment Funds.................................................................................................. 30
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Cover Story
Financial co-op to bear multi-beneficial fruits for B&R and
world, Fund chairperson
BEIJING -- China-initiated Silk Road Fund is vigorously lending support to the Belt and Road
construction via diversified investment, Jin Qi, chairperson of the Silk Road Fund told Xinhua in a
recent interview.
After having been proposed for over three years, the Belt and Road Initiative is widely
applauded by bringing new opportunities for countries alongside the route.
According to Jin, financial integration is the core of implementing the Belt and Road Initiative
and realizing interlinking of related countries and against such backdrop, Silk Road Fund was
born.
In her eyes, Silk Road Fund stands for a concrete embodiment of China's financial support to
the Belt and Road construction, and a practical action of China to participate in global initiatives
to enlarge infrastructure investment and financing and facilitate sustainable world economic
growth.
Since its birth in Beijing at the end of 2014, Silk Road Fund has been positioned as a mid- to
long-term development and investment fund, adhering to such concept as "openness, inclusiveness,
mutual benefits and win-win", to provide investment and financing support for economic and
trade cooperation and bilateral and multilateral interconnectivity within the framework of the Belt
and Road.
Since its establishment, Silk Road Fund made active attempts to explore its positioning,
investment conception, management mechanism and business mode in accordance with its
market-based, internationalized and professional operating principles.
According to Jin, Silk Road Fund placed at the very beginning its focus on financing real
economy development and large projects that could bring notably up economic development. In
2015, the Fund revealed three project investments, supporting namely the
Karot hydropower station in Pakistan, Sinochem to acquire Pirelli, an Italian tire manufacturer
and purchasing equity stake in Yamal LNG project from Russia's Novatek.
The three projects present thoroughly the business mode and investment concept of Silk Road
Fund, which invests in equity, debt and others and via these, the Fund makes useful attempts in
supporting
Chinese
technology
and
equipment
to
"go
out",
introducing
advanced international technologies and management experience into China, boosting economic
structural reform and upgrading, and conducting international energy cooperation.
Compared with other investment institutions, Silk Road Fund is different in several aspects,
including being a medium- to long-term development and investment fund which provides
diversified investment and financing services, and supporting real economy development via
pressing ahead with international production capacity cooperation.
It abides by market-oriented operating principles in a bid to realize financial sustainability in
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the mid- and long term, innovating development so as to craft investment and financing modes
featuring openness, inclusiveness, and multi-party cooperation.
Silk Road Fund is dedicated to supporting infrastructure, resources and energy development,
industrial capacity cooperation and financial cooperation in countries involved in the Belt and
Road Initiative.
To push forward the Belt and Road construction, the key is to give full display to the
comparative advantages of Belt and Road-related countries to unlock the potential and space of
cooperation.
Investment of Silk Road Fund usually takes into consideration matching its investment with
the various development strategies and industrial plans of countries alongside the Belt and Road,
supporting the real economy development, industrialization, and urbanization process and
economic structural adjustment in investment destinations, facilitating reasonable industrial
structure layout, industrial chain extension, and improving economic sustainability.
The Fund values developing green finance and the social responsibility of investment, abides
by international rules and practices, as well as the laws, policies and social and cultural customs of
investment destinations, supports relevant parties to jointly construct the green silk road, and
facilitates countries and regions alongside the Belt and Road to achieve green and sustainable
development.
In next decade, China's international production capacity cooperation and outbound
investment will enter a higher level as the Belt and Road construction forges ahead thus China's
international financial services and cooperation will hail new historical opportunities and broader
growth space, Jin predicts.
(By Duan Jing, Liu Lina, [email protected])
Special Report: South China Sea
Arbitration case cannot deplete China's historical rights
BEIJING -- Looking into the Philippines' submission at the Arbitral Tribunal on the South
China Sea, many confusing concepts aimed at denying China's historical rights have been found.
But they only serve to expose the Philippines' ignorance and prejudice.
-- Example one: interpreting out of context
In its arbitration statement, the Philippines claimed that the United Nations Convention on the
Law of the Sea (UNCLOS) has never mentioned historical rights.
The Philippines undoubtedly misinterpreted the content of the convention. In fact, many
articles of the UNCLOS recognize the concepts of "historic bays" and "historic waters."
For example, Article 15 of the convention states: "The above provision does not apply,
however, where it is necessary by reason of historic title or other special circumstances to delimit
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the territorial seas of the two States in a way which is at variance therewith."
Some scholars believe that China's historical rights can be established from "historic bays" and
"historic waters" in relevant articles of the UNCLOS.
Therefore, the UNCLOS offers strong support for China's stance, but not on the contrary.
-- Example two: ignoring judicial precedents
The Philippines claimed that the historical rights mentioned by China had been clearly denied
and abolished by the UNCLOS makers, attempting to imply that none of historical rights should
be included in the international law.
In fact, however, no rights could come into being instantly and those rights established in
history undoubtedly should be respected by the international law.
Several precedents in judicial practices also reinforced the claim for historical rights. The most
typical one was the fishery case between Britain and Norway in 1949, which was related to
historical rights.
The Norwegian royal family issued a decree in 1935, delimiting Norway's exclusive fishery
area in accordance with Norwegian historical tradition, while Britain believed Norway's
delimitation violated the international law and filed a law suit with an international court in 1949.
The court accepted the case as both Britain and Norway had agreed to accept the count's
jurisdiction. In 1951, the court dismissed Britain's appeal and ruled that the Norwegian royal
family's decree remained effective due to historical rights.
In addition, the continental shelf case between Tunisia and Libya, and the Gulf of Fonseca
case between Salvador and Honduras, among others, dealt with historical rights.
Abundant judicial precedents have proven that "historical rights" have been a big factor in
international judicial practices.
-- Example three: attempting to mislead those confused
In its submission, the Philippines said that China's Nine-Dash line in the South China Sea
lacks a link to the history, claiming that China's historical rights were a new proposal it put
forward in 2009.
In fact, China was the first country to discover, denominate, develop and control the South
China Sea islands. The Chinese people's navigation and trade on the South China Sea and
jurisdiction over the area has a history of more than 2,000 years, which provides firm evidence for
China's historical rights on the South China Sea.
French scholar Francois Gipouloux said in his book "The Asian Mediterranean" that before
Southeast Asia was invaded by Western colonists, trade on the South China Sea was conducted by
Chinese oceangoing ships, officials and the ships' crew were Chinese, and China's trade system
was guiding the then trade rules on South China Sea.
Since the Tang Dynasty (618-907 AD), China has formed explicit jurisdiction over the South
China Sea.
According to Southern Song Dynasty (1127-1279 AD) work Zhu Fan Zhi, the South China Sea
was governed by Zhenzhou (of today's Hainan Province) in the Tang Dynasty and by Qiongguan
in the Southern Song Dynasty. In the Ming (1368-1644 AD) and Qing (1644-1911 AD) dynasties,
South China Sea islands belonged to the Prefecture of Qiongzhou, Guangdong Province.
Through China's governmental and non-governmental promotion, cultivation, defense and
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maintenance in several dynasties, the South China Sea has become a tunnel, a platform and a
network to lead neighboring countries to realize common prosperity in trade and economy.
History cannot be denied and is not allowed to be denied. By whatever legal means or with
whatever arguments, China's historical rights are right there. Whether an arbitral award is to be
issued or not, history and the rights it offers are indisputable facts.
As an old Chinese saying goes, an unclear mind can never make it clear to others. The
Philippines' submission has ignored not only history but also existing judicial cases, which, along
with the current arbitration case itself, will become a laughingstock in history.
(By Xiong Ping, Chen Shilei)
China, U.S. need to manage differences over South China Sea:
experts
(Photo 1: Former U.S. Deputy Secretary of State John Negroponte speaks during a dialogue o n
South China Sea issue in Washington D.C., the United States, July 5, 2016.)
WASHINGTON -- China and the United States need to manage their differences over the
South China Sea issue, as they are bracing for an arbitral court's ruling, experts said July 5.
One week ahead of the July 12 ruling over the South China Sea case initialed by the
Philippines, a group of former Chinese and American officials and experts on international law
and foreign relations held a dialogue in Washington to discuss the ruling's legality, possible
reactions and its implications on the China-U.S. relations.
In a keynote speech at the dialogue held at the Carnegie Endowment for International Peace,
Dai Bingguo, former Chinese state councilor in charge of foreign affairs, reiterated that China will
not accept the ruling because the tribunal under the Permanent Court of Arbitration has no
jurisdiction over the case.
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Noting the rising tensions in the South China Sea as the United States steps up its pressure on
China to abide by the ruling, Dai issued a call for cooling down the issue, warning otherwise it
could lead to unexpected accidents and even chaos in the region and Asia.
At the same time, Dai bluntly warned any party against trying to enforce the court ruling or
force China into its implementation. Particularly, the Philippines should be dissuaded from making
further provocations.
-- Cooling down temperature of South China Sea
Most experts attending the dialogue praised Dai's speech for clarifying China's position ahead
of the court ruling, while echoing Dai's call for cooling down the temperature of the South China
Sea for the sake of peace and stability in the Asia-Pacific.
The speech "certainly reinforces a very clear position that China has taken on the issue for a
while, (and) there is a continued offer for cooperation," said Rodger Baker, vice president of
strategic analysis at the Stratfor, a geopolitical intelligence firm.
Douglas Paal, vice president for studies at the Carnegie Endowment for International Peace, a
U.S. think tank, said it "is the time for diplomats and politicians to exercise cool judgment and try
to find ways to keep the issue from exploding into something more dangerous."
Stapleton Roy, former U.S. Ambassador to China and a senior fellow at the Wilson Center,
agreed with Dai's call for cooling down the situation, noting it's important to resolve territorial
issues peacefully through negotiations instead of threats or use of force.
Brendan Mulvaney, associate chair of the Languages and Cultures Department of the U.S.
Naval Academy, told Xinhua that he did not expect the U.S. reaction to the court ruling to be very
aggressive because it is not a claimant to the territorial dispute.
-- U.S. has to take lead in reducing tensions
On how to cool down the situation, Huang Renwei, vice president of the Shanghai Academy of
Social Sciences, said the United States should take the lead because it is the most powerful nation
in the region.
Then the Philippines should refrain from taking any actions after the court ruling, otherwise it
will surely trigger off counter moves, Huang told Xinhua.
At the same time, other outside parties such as Japan and Australia should avoid stepping into
the troubled waters in the South China Sea, he proposed.
Zhu Feng, director of the China Center for Collaborative Studies of the South China Sea at
Nanjing University, said it is impossible to enforce the upcoming arbitration ruling on the South
China Sea case either by the United States or the Philippines.
Baker believed that the immediate reaction to the court ruling from the United States could be
talking immediately with the Philippines on the next step for Manila to take.
He proposed the related parties first change the tone of the discussion right now in order to
lower the tensions.
-- Sit down to manage differences
The experts said the South China Sea issue is only part of the broader relationship, so the two
sides should manage their differences through talks to prevent it from leading to strategic rivalry
or confrontation.
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"I think one of the most important things would be sit down and have discussions about how
we're going to manage conflicts, specifically, on intended or unplanned conflicts," Mulvaney said.
Zhu said the two countries should find a way of compromise and cooperation on the South
China Sea issue from a long-term perspective, because neither side wants to turn the region into a
battlefield. "A military confrontation will benefit neither side, as it will be a disaster to the
regional and global economy," he said.
Huang said despite all the differences, Beijing and Washington do have a consensus, that is,
neither wants an all-out confrontation in the West Pacific. This is evident in the progress being
made in improving the military-to-military cooperation and crisis management mechanisms.
"The South China Sea issue is only part of the overall China-U.S. relationship, which should
never be kidnapped by the dispute," he added.
(By Zhi Linfei)
Australian expert: U.S. has complicated South China Sea issue
BEIJING -- The United States has complicated the situation in the South China Sea instead of
playing a constructive role, an Australian expert on maritime security has said.
Sam Bateman, a former commodore who is now a professorial research fellow at the
University of Wollongong's Australian National Center for Ocean Resources and Security, told
Xinhua recently that the controversial arbitration process initiated by the Philippines in The Hague
is highly likely to produce "a lose-lose outcome."
Bateman said that the South China Sea disputes will have to be resolved through negotiations
among the countries directly involved.
Tensions in the South China Sea have been on the rise since the Philippines initiated an
arbitration process in 2013, backed by the United States, who said it was not taking sides but has
since sent warships near Chinese claimed islands to conduct its self-styled freedom of navigation
patrols.
China has made it clear it rejects the arbitration process, which has been unilaterally initiated
by the Philippines and runs counter to the spirit of international law, including the United Nations
Convention on the Law of the Sea (UNCLOS). It also says the arbitration process is essentially
related to sovereignty, which is not regulated by the UNCLOS.
Bateman wrote in a recent article that the brinkmanship in the South China Sea is dangerous.
The only way out of the issue is joint management and joint development of the sea.
There is not the trust needed for the tribunal to play a constructive role. Actually, it is not only
an obligation clearly set out in UNCLOS but also a necessity for countries to cooperate with each
other in joint management of the sea, Bateman said.
(By Chen Jipeng)
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German expert doubts arbitral court's jurisdiction over
South China Sea dispute
BERLIN -- The real nature of a dispute between China and the Philippines over the South
China Sea is about territorial sovereignty, which is beyond the jurisdiction of an arbitral tribunal, a
German expert has said.
Stefan Talmon, director of the Institute of Public International Law at the University of Bonn,
said in a paper published recently that despite the Philippines' claims about issues such as
"traditional fishing rights," the "actual controversy" in the case is about territorial sovereignty.
The Hague-based Arbitral Tribunal on the South China Sea established at the unilateral request
of the Philippines has no jurisdiction over the case, as disputes over territorial sovereignty are not
governed by the United Nations Convention on the Law of the Sea (UNCLOS), Talmon said.
The arbitral tribunal will issue a final award on July 12. China has repeatedly said that it will
neither accept nor participate in the arbitration.
Talmon also criticized the tribunal for failing to scrutinize the documents referred to by the
Philippines in its submission and ignoring China's position before rendering an award on Oct. 29,
2015 when it ruled that it has jurisdiction over the case.
"The tribunal's finding on the true nature of the dispute is based on a misunderstanding of the
disputes in the South China Sea," he said, calling the tribunal's award on Oct. 29, 2015 an example
of "discounted justice."
In a recent interview with Xinhua, Talmon said the coming award would not help solve the
disputes over the South China Sea, but rather have a "counterproductive impact" on the issue.
"There is a danger that the decision will be misused for political purposes and ultimately
contribute to the hardening of positions of both sides," he said.
(By Tang Zhiqiang)
Why more and more countries support China on South
China Sea issue?
BEIJING -- With a so-called "international arbitration" to be decided by the Arbitral Tribunal
on the South China Sea, more and more countries around the world have expressed support for
China in the arbitration unilaterally initiated by the Philippines and for China's stance on the South
China Sea disputes.
-- Arbitral tribunal’s jurisdiction
The real nature of the dispute between China and the Philippines over the South China Sea is
about territorial sovereignty, which is beyond the jurisdiction of an arbitral tribunal.
Stefan Talmon, director of the Institute of Public International Law at the University of Bonn,
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said in a paper published recently that despite the Philippines' claims about issues such as
"traditional fishing rights," the "actual controversy" in the case is about territorial sovereignty.
The Hague-based Arbitral Tribunal on the South China Sea, established at the unilateral
request of the Philippines, has no jurisdiction over the case, as disputes over territorial sovereignty
are not governed by the United Nations Convention on the Law of the Sea (UNCLOS), Talmon
said.
-- "Mouthpiece" for certain groups
China believes the arbitral tribunal is "only a mouthpiece for certain groups," as "it is strange
that he (Paul Reichler) seems to know what the ruling will be even before there is one."
Reichler, the Philippines' chief lawyer on the international arbitration of the South China Sea
disputes, said in an interview with Reuters recently that China risks being seen as an "outlaw
state" unless it respects the outcome, and expected the tribunal will award in favor of the
Philippines.
Shannon Ebrahim, a well-known South African commentator, said on July 1 that U.S.
intervention in the South China Sea issue has aimed to serve its purpose to impede China's rise.
This strategic waterway has turned into a game of chess between China and some of its
neighbors along the South China Sea, which have made a series of territorial claims and are
backed by the United States, Ebrahim said.
Sam Bateman, an Australian expert on maritime security, said, "I believe the United States has
complicated the situation in the South China Sea," referring to the U.S. move of sending warships
to the South China Sea to conduct its self-styled freedom of navigation patrols.
-- Direct negotiation only way
"Pacta sunt servanda" -- or maintaining agreements -- is a basic principle in international law.
However, the Philippines' unilaterally initiation of the arbitration violates its agreement with China
to resolve any dispute through bilateral negotiations.
On the basis of bilateral agreements and the Declaration on the Conduct of Parties in the South
China Sea (DOC), China and the Philippines have chosen negotiation as the means to resolve their
disputes rather than arbitration.
The Philippines' initiation of the arbitration without obtaining China's consent contravenes its
international obligations to China.
Cambodian Prime Minister Samdech Techo Hun Sen said on July 4 that the ruling Cambodian
People's Party considered the arbitral tribunal's upcoming decision as "the worst political collusion
in the framework of international politics," the result of which would lead to division among
members of the Association of Southeast Asian Nations (ASEAN) themselves and between
ASEAN and China.
(By Zhu Junqing)
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Policy Review
Asia needs comprehensive cooperation mechanism to secure
energy market security
(Photo 2: Asia Energy Cooperation Forum 2016 was held in southwest China's Chongqing
Municipality. to discuss establishing an Asia energy cooperation mechanism.)
BEIJING -- As the largest energy supplier and consumer in the global market, Asia has yet
lacked an integral platform for dialogue and cooperation to safeguard regional interests.
To ensure the stability and security of Asia energy market, experts, officials and business
leaders from across Asia called for a comprehensive energy cooperation mechanism for greater
influence in the global market, according to a forum held recently in southwest China's Chongqing
Municipality.
However, many challenges need to be overcome to achieve the goal. Zhao Mingwen,
spokesman of the forum noted in a briefing that different countries in Asia are striving for
different interests. Moreover, geopolitics further hinders regional energy cooperation. Hence,
establishing an energy cooperation mechanism involves balancing interests of both suppliers and
consumers, which is not an easy task.
"Asian countries should strive for more reasonable and efficient energy pricing system and
trading rules. China and its neighboring countries can enhance communications and work to set up
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a mechanism in this regard," said Chen Wenling, chief economist of China Center for International
Economic Exchanges.
Experts have reached consensus that as Asia countries have little say in global energy market,
oil suppliers, consumers and transit countries should join hands to cope with "Asian Premium."
In the meantime, various countries should strengthen cooperation in the whole industry chain
in a bid to achieve mutual complementarities in advantage.
Jiang Xuefeng, vice president of CNPC Economics & Technology Research Institute, said in
the "Belt and Road Initiative & Asia Energy Cooperation" forum that it is urgent to deepen
cooperation in the whole industry chain, drive all the countries along the Belt and Road route to
establish modern oil industry system and realize mutual recognition of technical standards.
Kaho Yu, research fellow of Asian Energy Studies Center at Hong Kong Baptist University,
proposed that Asian countries can jointly undertake cross-border energy projects and accelerate
energy infrastructure construction.
Experts in the forum widely suggested that cross-border energy think tank cooperation among
Asian countries should be established so as to provide consultancy for governments and
enterprises. Meanwhile, a regular information exchange mechanism is also encouraged to be built
to alleviate information asymmetry.
(By Zhang Yuan, [email protected])
Chinese leaders emphasize efforts to deepen SOE reform
BEIJING -- Chinese leaders have urged continued efforts to propel reforms of state-owned
enterprises (SOE) to enhance their competitiveness.
President Xi Jinping said SOEs are an important foundation for national development and
guarding people's interests, demanding efforts to enhance SOEs' vitality, competitiveness and risk
resistance capacity, according to a statement released July 4 after a symposium on SOE reform.
Xi urged authorities to continue to deepen SOE reform, focusing on the establishment of a
modern corporate governance system.
More should be done to advance industrial structure adjustment and innovation-driven
development, letting SOEs play a leading role in the country's supply-side structural reform, Xi
told the meeting.
All departments should intensify supervision to prevent the loss of state assets and strengthen
the leadership of the Communist Party of China (CPC) over SOEs, Xi said.
Premier Li Keqiang also demanded priority in advancing SOE reforms.
These state firms should enhance their competitiveness and efficiency through market-oriented
reforms and reduce excess and backward production capacity to advance supply-side structural
reform, Li said.
Li added that innovation and entrepreneurship should play a role in the SOE reform.
To improve competitiveness, SOEs should come up with innovative technology, products and
services while upgrading their traditional industries, Li said.
(By Wang Yaguang)
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China to unveil 13th Five-Year Plan for bio-pharmaceutical
industry in H2, report
BEIJING -- China has basically completed formulation of the 13th Five-Year Plan (2016-2020)
for bio-pharmaceutical industry and will officially unveil it in the second half of 2016, the
Xinhua-run newspaper Economic Information Daily reported on July 4.
According to the plan quoted by the newspaper, the country's bio-pharmaceutical industry will
give priority to developing medicines for major diseases, biotech medicines, new vaccines and cell
therapy preparations, as well as major medical technology like 3D printing.
Except for making detailed deploy on the research and development (R&D) of medicine, the
plan has also called for an international development of the whole industry.
By 2020, China will try to make the medicine quality of a large number of bio-pharmaceutical
enterprises get in line with international standard and at least 100 pharmaceutical preparation
enterprises obtain the authentication of American, European, Japanese countries and World Health
Organization (WHO).
Meanwhile, based on international medicine standard, China will promote 10-20 chemical
medicines and high-end preparations, 3-5 traditional Chinese medicines, 3-5 bio-tech medicines to
complete registration in American and European countries, and accelerate the pace to get access to
the international market.
China boasts a huge bio-pharmaceutical market. At present, it is the second largest medical
consumption market, with net sales volume of medicines in 2014 exceeding 1.5 trillion yuan.
However, the industry is relatively weak in independent R&D. Hence, it is crucial to improve the
competitiveness of the industry, disclosed an insider.
(By Zhang Yuan, [email protected])
China regulates local governments' holding in state
industry-guiding fund
BEIJING -- China's top economic planner, the National Development and Reform
Commission (NDRC), required in a circular publicized on July 5 the funds recommended by local
governments to own equities in the state fund for guiding investment in emerging industries and
business start-ups to be no less than 200 million yuan.
And for such local government-led share-holding fund, 60 percent of its total equity should be
held by private investors, the NDRC circular said.
According to the NDRC circular, the funds qualified for investment in the state fund shall be
managed by professional management teams and invest via equity investment no less than 60
percent of their total sizes mainly in innovative businesses that are at start-up stage, early and
middle stage and feature original innovation, integrated innovation or re-creation in strategically
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emerging areas and high-tech industries.
Meanwhile, recommendations for plans on the funds qualified to invest in the state fund shall
be submitted by local development and reform commissions and public finance bureaus of
Chinese provinces, autonomous regions, municipalities and cities specifically designated in state
economic plan to the NDRC and Ministry of Finance (MOF) and recommended, after their
preliminary review, to the institutions managing the state fund for sequent work implementation.
"Funds qualified for investment in the state fund shall be no less 200 million yuan in size,
gauged by total capital subscription and committed capital of all parties involved, including capital
from local governments. Of them, a fund financed by Chinese local governments shall consist of
no lower than 60 percent of private capital," said the circular.
NDRC made the decision shortly ahead of the pending establishment of the operating body of
the state fund for guiding investment in emerging industries and business starting, in an effort to
expedite its operation.
Earlier in January 14, 2015, China decided to set up the state fund to help startups, innovation
and industrial upgrading, with the initial size at 40 billion yuan.
(By Duan Jing, [email protected])
Data This Week
China's manufacturing PMI down slightly in June
BEIJING -- China's manufacturing sector in June posted a slight drop in June, official data
showed on July 1.
The purchasing managers' index (PMI) for June came in at 50, slightly lower than May’s 50.1.
It was the lowest reading since March’s 50.2, according to the National Bureau of Statistics (NBS)
and the China Federation of Logistics and Purchasing.
A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
The sub-index measuring production stood at 52.5, marking the second consecutive
expansion.
The sub-index for new orders settled at 50.5, 0.2 percentage points lower than the previous
month but remaining in expansion territory for a fourth month, indicating steady market demand.
NBS statistician Zhao Qinghe said, in general, the manufacturing sector is steady and its
structures are improved. High-tech manufacturing picked up remarkably while industries with
excess capacity contracted.
The sub-index for high-tech manufacturing was 51.3, 0.5 percentage points higher than that
recorded in May. The sub-index for sectors with high energy consumption fell 0.9 percentage
points to 48.2, the second consecutive monthly decline.
The sub-index for new orders for export shed for the third month in a row to 49.6; the index
for new orders for import lost 0.5 percentage points to 49.1, staying in contraction territory for a
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third straight month.
Zhao attributed the sagging trade index to the weak global economy, expectations of a U.S.
interest rate hike and protectionist policies in Western countries.
Also on July 1, June's Caixin General China Manufacturing PMI, an indicator of factory
activity based on a private survey, dropped to 48.6 from 49.2 in May.
The June figure was the lowest since January, when the PMI dipped to 48.4, and marked the
16th consecutive month of contraction, according to the Caixin report.
Caixin attributed the decline to sluggish demand at home and abroad.
"Against the backdrop of a turbulent external environment, and in order to avert a sharp
economic decline, the government must strengthen its proactive fiscal policy while continuing to
follow prudent monetary policy," said Zhong Zhengsheng, director of Macroeconomic Analysis at
CEBM Group, a subsidiary of Caixin Insight Group.
China's GDP expanded 6.7 percent in the first quarter, the slowest reading since the global
financial crisis in early 2009.
Authorities have predicted that China's economy will follow an L-shaped path as downward
pressures weigh and new growth momentum has yet to pick up.
While the manufacturing sector slowed, the service sector expanded faster in June, presenting
a new growth engine for the economy.
NBS data showed that the index for services grew 0.6 percentage points to 53.7.
Table: China’s PMI for the manufacturing sector and the non-manufacturing sector in Jan.-June
Jan.
Feb.
Mar.
April
May
June
Manufacturing PMI
49.4
49
50.2
50.1
50.1
50
Caixin manufacturing PMI
48.4
48
49.7
49.4
49.2
48.6
Source: www.stats.gov.cn, China Federation of Logistics and Purchasing
(By Niu Huizhe, Liu Jie, [email protected])
China's service trade deficit narrows in May
BEIJING -- China continued to see a deficit in foreign service trade in May, but the figure
narrowed for a second month, official data showed on June 27.
Income from trade in services stood at 22.6 billion U.S. dollars last month, while expenditure
was 41.7 billion U.S. dollars, resulting in a deficit of 19.1 billion U.S. dollars, according to the
State Administration of Foreign Exchange.
The deficit came down from 21 billion U.S. dollars seen in March and 20.3 billion U.S. dollars
in April. The total deficit in the first five months of 2016 stood at 97.1 billion U.S. dollars, the data
showed.
Distinct from merchandise trade, trade in services refers to the sale and delivery of intangible
products such as transportation, tourism, telecommunications, construction, advertising,
computing and accounting.
China's service trade volume grew from 362.4 billion U.S. dollars in 2010 to 713 billion U.S.
dollars in 2015, doubling the average international growth speed. The country is aiming to lift its
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service trade volume to over 1 trillion U.S. dollars by 2020.
The State Council has pledged measures to improve the development of trade in services,
including gradually opening up the finance, education, culture and medical treatment sectors.
In May, China saw a surplus of 48.1 billion U.S. dollars in foreign merchandise trade.
(By Liu Xinyong)
China's industrial profit growth slows further in May
BEIJING -- Profits of China's major industrial firms rose 3.7 percent year on year in May, 0.5
percentage points lower than that recorded in April, official data showed on June 27.
Profits of industrial companies with annual revenues of more than 20 million yuan (about 3.1
million U.S. dollars) totaled 537 billion yuan last month, the National Bureau of Statistics said.
(By Liu Jie)
Silkroad Insights
China continues commitment to stronger China-UK ties
after Brexit
China values its relations with the UK and remains committed to stronger China-UK ties and
closer China-UK cooperation, according to Chinese Ambassador to the UK Liu Xiaoming at the
Young Icebreaker's Dinner.
It was the first speech made by Liu on the China-UK relations after the UK held a referendum
on whether to remain in the European Union (EU).
"Whether the UK is in the EU or not, we will take a strategic and long-term perspective when
it comes to China-UK ties, as we always have done. We hope that, regardless of any British
domestic political changes, a positive relationship with China will continue to be the consensus for
both the UK government and opposition political parties," said Liu.
Speaking of impacts of the Brexit on the China-UK economic and trade exchanges, Liu
pointed out that given the immediate market fluctuations and uncertainties, the Chinese businesses
will inevitably need to be more prudent and stay cool-headed. But in the long run, there is no way
that our bilateral cooperation should be allowed to go down.
It is not possible to make any clear comments on the impact of this issue (Brexit) on the broad
Sino-British relations, said Chairman of 48 Group Club Stephen Perry.
The global basis of the UK-China relationship starts from the fact that both nations are
members of the Security Council of the United Nations and have global responsibility to manage
global and regional flash points, Perry noted.
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Perry said that the UK and China cooperated in helping to achieve a major global
breakthrough in Iran, where a peaceful solution was promoted by China and the UK from the time
of David Miliband's tenure as Foreign Secretary and Dai Binggou as State Councilor for Foreign
Affairs. There is reason to believe that the UK and China can build broad agreements with other
nations to use pressure and negotiation to create solutions.
It is worth noting that Liu also shared the same view and said that China and the UK are
countries of global influence. A healthy, stable and win-win China-UK partnership serves not only
the fundamental interests of the people of our two countries but also the peace and prosperity of
the world.
According to Liu, On June 25, just one day after the referendum result was announced, Tianjin
Airlines, a subsidiary of China's Hainan Airlines Group, opened a direct flight route connecting
Tianjin, Chongqing and London. This new route followed the launch of direct flight
from Beijing to Manchester by Hainan Airlines on June 10. These business moves sent a clear
message that Chinese businesses have confidence in the British market. They testify to the fact
that, on China-UK relations, China is taking a long term perspective.
The UK provides an open economy for China to invest its funds into as it builds a global
presence. While the UK may lose the access to the European market, which was an attraction that
may be reflected not in a lack of interest from China but in the value and therefore the
price said Perry.
Behind all this is the haunting question --- if the UK is not the financial center for Europe or
the UK does not provide access to Europe, how interesting is it for the Chinese compared to say
Frankfurt or central Europe, which is better placed to link up with the New Silk Roads
(China-initiated Belt and Road).
Regarding the question, Perry said that it is in that area where the UK needs to step up its
offering and work to be the partner of choice for Chinese and Central Asian and West Asian
nations in landing key infrastructure contracts. It is where the low hanging fruit is if we organize
ourselves efficiently.
"I am sure that our new government will show a commitment to working with China and the
manipulations and confusions of the election and referendum will soon be in the past," said Perry.
(By Hu Pingchao, Li Xiaoming, [email protected])
Chinese new energy firms advised to better cooperation in
Africa
Chinese enterprises' participation in development of renewable energy sources in Africa is in
the infancy and they mainly build the renewable energy sources projects and export equipment. In
the next step, they shall make overall plans, strengthen collaboration, avoid vicious internal
competition, optimize the commercial model and strengthen the sustainable development capacity,
industry insiders said at a recent symposium.
At present, about 600 million people in Africa fail to have access to the power, accounting for
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15 percent of the global population. The entire 147GW electric power installed capacity in Africa
represents only 2.5 percent of the global installed capacity, showing huge potential, according to
Wen Jiayun, a visiting researcher of Chongyang Institute for Financial Studies at Renmin
University of China (RDCY).
The insufficient electric power has greatly limited Africa's economic development. According
to statistics, of the 48 countries in sub-Saharan Africa, 30 often encounter power failure. The
economic loss caused by power failure accounts for about 5 percent of GDP of Malawi, Uganda
and South Africa, respectively.
Chairman of African Development Bank Akinwumi A. Adesina also pointed out that
economic loss caused by power failure accounts for around 4 percent of Africa's GDP.
In fact, Africa enjoys rich new energy resources, like solar power, wind power, geo-thermal
and hydropower. In recent years, African countries have quickly increased investments in the new
energy field. Moreover, additional 250GW installed capacity will be put into place in Africa
before 2030. To be specific, South Africa and Kenya each have already seen their investments on
renewable energy projects exceed 1 billion U.S. dollars annually, said Wen.
Under the circumstances of the huge demand for electric power in Africa, in recent years, a
batch of Chinese enterprises have set foot in Africa and carried out cooperation on new energy
sources with the projects involving hydropower, solar power, wind power, biomass energy and
geothermal energy fields.
China has matured renewable energy technologies and can produce the renewable energy
devices and offer abundant funds support. Therefore, many African countries actively seek to
cooperation with China in the field, said Wen.
It is reported that the Chinese enterprises have made progress in development of the renewable
energy sources in Africa. For example, the Kariba Hydropower Station built by the SinoHydro
in Zambia has seen the dam height of up to 128 meters and reservoir capacity stand at 184 billion
cubic meters, making it one of the largest reservoirs by water storage.
Despite the progress in project construction, the Chinese enterprises are in a disadvantage
position in influence and sustainability. By contrast, the European and American enterprises enjoy
stronger soft power and are able to participate in higher-level policy design and planning in
development of the renewable energy sources, many industry insiders note.
Wen said that the Chinese enterprises should use the "government-think tank-enterprise
integration" model adopted by the European and American enterprises for reference to promote
foreign aid and cooperation. The western governments often pay attention to influencing new
energy policy orientation of African countries by international cooperation and initiatives and also
subsidize local think tanks and research institutes to delivery development concept and
understanding and help relevant countries to formulate development plans. They do not simply
rely on a single company to compete for a project.
Meanwhile, the Chinese enterprises should avoid vicious competition and explore
corresponding cooperation mechanism in the "Going Global" projects. They shall also optimize
the commercial model and avoid "one-off deal" so as to seize market share and enhance customer
stickiness, Wen suggested.
(By Hu Pingchao, Liu Yulong, [email protected])
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Belt & Road brings new opportunities for China-EU co-op
BERLIN -- China's new Silk Road initiative brings new opportunities for cooperation between
China and the European Union (EU).
As China's leading trading partner, the EU should respond actively to the initiative in order to
formulate its own interests in economic growth and political influence, experts told Xinhua in
recent interviews.
China in 2013 proposed to build the Silk Road Economic Belt, which links China with Europe
through Central and Western Asia by inland routes, and the 21st-Century Maritime Silk Road
connecting China with Southeast Asia, Africa and Europe by sea.
The Belt and Road Initiative aims at promoting policy coordination, infrastructure connectivity,
trade and financial integration as well as cultural exchange.
"In my view, this initiative is the most important strategic proposal on the planet," said Helga
Zepp-LaRouche, founder and president of the Schiller Institute, an international think tank.
She said that the Belt and Road Initiative is based on win-win cooperation and overcomes
geopolitical confrontations which threaten to "bring the world close to war. It has a potential to
help the world to get rid of its current crises."
Currently, over 70 countries and international organizations have taken part in the Belt and
Road Initiative and some 30 countries have signed deals with China to jointly push forward the
initiative.
"If it succeeds, the initiative will create new wealth growth opportunities in the vast Eurasian
continent and seas," said Gu Xuewu, director of Center for Global Studies at the University of
Bonn, "Its importance cannot be underestimated."
For China-EU cooperation, it also means great opportunities, he added.
Since 2004, the EU has been China's leading trading partner.
"The Belt and Road Initiative can help to strengthen Chinese-European trade relations by
establishing new transport routes and by improving the investment environment in countries along
the new Silk Road," said Benno Bunse, CEO of Germany's economic development agency
Germany Trade & Invest.
"German trading companies for example can profit by new and more efficient logistics routes
between China and Europe along the New Eurasian Land Bridge," he said, "Investment in
countries along the new Silk Road such as Kazakhstan, Iran, India or Sri Lanka, can help to open
up new markets."
Bunse expected Chinese and German companies to cooperate on projects as suppliers of
special-purpose machinery, building materials or professional and management services.
"German companies hope to gain benefits from projects under the Belt and Road framework.
That is also one reason why the German government decided to join the Asian Infrastructure
Investment Bank (AIIB)," he said.
Among the 20 non-regional founding members of AIIB, an international bank initiated by
China to finance projects in the Asia-Pacific region, 17 come from Europe.
According to Gu, Europe's favorable attitude toward the Belt and Road Initiative is due to its
own strategic interests.
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"It will be beneficial for Germany and Europe if the initiative leads to infrastructural
modernization of the region along the Silk Road and makes it a new strategic hinterland for
Europe's economic growth," Gu said.
"This is a vital interest for Europe," emphasized Zepp-LaRouche, "Right now, if you don't
develop the Middle East, Southwest Asia, Africa, the refugee stream will become bigger and
bigger."
Cooperation has already started. In June last year, China and the EU declared they would build
synergies between the Belt and Road Initiative and European Commission President Jean-Claude
Juncker's 315 billion euros (350 billion U.S. dollars) investment plan.
However, experts said the EU could do more to engage with China under the Belt and Road
framework.
"The next step for the EU is to reach out to China and communicate a desire to work together
on infrastructure cooperation, not just in Europe (as is currently the norm), but also in Europe's
greater neighborhood," said Netherlands Institute of International Relations researchers Jikkie
Verlare and Frans-Paul van der Putten in a policy brief.
(By Tang Zhiqiang)
Company News
Gree moves ahead amid Brazil's economic uncertainty
(Photo 3: Dong Mingzhu, president and CEO of China's Gree Electric Appliances, speaks during
a China-Brazil Business Summit in Brasilia, capital of Brazil, May 19, 2015.)
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Xinhua News Agency
BEIJING, June 29 (Xinhua) -- Gree Brazil is an air conditioner production base invested by
Gree Electric Appliances Inc. with 20 million U.S. dollars. Covering 30 square kilometers, it was
put into production in June 2001, with an annual production capacity of 300,000 sets.
As the first base Chinese air conditioner producer set up abroad, it has become a leading air
conditioner company after more than a decade of development.
-- Growing strength amid unsettled economy
The macro-economic environment in Brazil has been showing great uncertainties, from the
Import Substituting Industrialization program in the 70s and 80s in the last century, the serious
inflation in the 90s and governance of the Workers' Party in the last 15 years. The impact on a
company's operation in Brazil brought by the changeable environment can't be neglected.
In terms of the foreign exchange, Gree Electric witnessed the Brazilian real depreciating 10
percent in a day during the president election in 2002, about one year after the factory was
completed, which even made it almost leave the country.
It's concerned that the history may repeat itself these years. The Brazilian real continued to
refresh new lows and fell more than 32 percent against the U.S. dollar in 2015. The depreciation
has made many Chinese companies consider leaving the market while Gree, which already gained
pricing power in Brazil, stayed through the storm.
The Brazilian government has strict taxation regulation on companies. Fortunately, Brazil has
a relatively sound legal system. If companies are treated unfairly, they can take legal weapon to
protect themselves, but usually the process will take a long time and a lot of work. Brazil's tax
system allows no room for careless self-management of companies, especially for accounting
management.
For the companies that just arrive in Brazil, they may be able to quickly occupy the market
with the advantages in scale, low cost and capital. It is not wrong to pursue expansion, but there
should be no "more or less" before conducting investment, and precise understanding to local
policies and regulations and accurate operating orientation are very important.
The economic and legal environment is the same for all companies operating in Brazil, and the
only way to avoid risks and achieve long-term growth is to grow the company's own strength.
-- Principles of international operation
Gree Brazil has accumulated precious experience for the group's international development,
which includes four principles:
First of all, Gree has adhered to the principle that giving priority to its independent brand
development. As the only world brand of China's air conditioner industry, Gree develops products
of its own brand at the cost of sacrificing some profits of the overseas sales. It used to give up
large original equipment manufacturer (OEM) orders during the global financial crisis to put more
resources in developing product of its own brand.
Secondly, Gree has taken technology innovation as the core strategy. At Gree, there is no
ceiling for research and development (R&D) expense. Gree now spends several billions of yuan in
R&D a year. It has more than 8,000 R&D staff, two national level R&D centers, one provincial
level laboratory, and five research institutes.
Due to the ample input in technology innovation, the quality of Gree's air conditioners has
been recognized by Brazilian customers and changed the "cheap and poor quality" image of
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Xinhua News Agency
Chinese products. The improvement of quality has significantly boosted Gree's sales growth in
Brazilian market.
Meanwhile, Gree has stuck to the principle of prudent expansion. Although it has the ability,
Gree is in no hurry to expand, and it still insists on professional operation and quality perfection. It
follows the route of achieving steady growth in emerging markets first and then entering
developed markets, developing household air conditioner first and then central air conditioning
business.
Taking the Brazilian market as an example, Gree started to set up factory in Brazil after its
sales of its own brand topped 30 million U.S. dollars and achieved stable development. And now,
its competitors have to pay ten times of Gree's initial investment to acquire local factories and
undertake bigger risk.
Last but not least, Gree has adhered to localization strategy during its process of
internationalization. Localized operation means using local employees, adopting management and
operation that are suitable to the local market.
At Gree Brazil, the proportion of Chinese staff is strictly controlled within 5 percent, and using
local staff has shown positive effect. Gree Brazil also donates and organizes charity activities for
the poor, school for the disabled and welfare homes, which has received wide social recognition in
Brazil.
(Source: Caijing.com.cn; Chinese by Gree Electric Brazil General Manager: Xie Dongbo;
English by Yang Qi, [email protected])
COSCO takes decisive move to acquire Greece's Piraeus
port
BEIJING -- China COSCO Shipping and Hellenic Republic Asset Development Fund
(HRADF) signed a confirmation letter on July 4 in Beijing, which is a decisive move taken by
COSCO to acquire 67 percent stake in the Piraeus Port Authority (PPA or OLP in Greek) has been
cleared.
COSCO and HRADF sealed the agreement of the deal on April 8, and COSCO agreed to pay
the Greek privatization fund 280.5 million euros (311.52 million U.S dollars) for the 51 percent of
shares in PPA and the management of the port.
Following investments of another 300 million euros total worth in infrastructure works within
the next five years, under the deal, the Chinese investors will pay HRADF an extra 88 million
euros to acquire an additional 16 percent of shares in PPA.
Earlier this June, the contract was approved by the general assembly of PPA's shareholders and
the Greek Competition Commission. Greek parliament ratified the acquisition on June 30 with two
thirds of MPs voting to approve the deal.
Wan Min, board director and general manger of COSCO Shipping, said that COSCO would
take the opportunities brought by China's Belt and Road Initiative and cooperation between the
two countries to build the Piraeus port as the largest container transit hub in Mediterranean area
and an international logistics center.
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Xinhua News Agency
Since the second half of 2009, COSCO's subsidiary Piraeus Container Terminal (PCT) has
been operating Piers II and III at Piraeus port under a 35-year concession agreement. In 2015, the
port's annual throughput grew to 3.36 million TEU from 880,000 TEU in 2008, bringing it up
from the world's 83rd to 39th. It has also created 1,200 new jobs and boosted local economy
significantly.
PPA's privatization will add a total of 1.5 billion euros to the Greek economy until 2052, when
the concession deal expires, and help create 125,000 jobs, according to a survey of the Foundation
for Economic and Industrial Research (IOBE), one of Greece's leading think tanks.
(By Yang Qi, Jia Yuankun, [email protected])
China's Yutong helps improve Cuba's transportation system
HAVANA -- A young Cuban professor who commutes over 20 km every day from her home in
western Havana to the city's downtown has witnessed a dramatic change in the public transport
system that has troubled the Carribean country's people for decades.
Maylin Orta, 32, has to catch two buses or "guaguas," as the locals call them, to get to work in
a commute that used to take her up to four hours.
"In those years I used to study at the University of Havana and would have to catch the bus at
4 a.m. to be in time for the start of classes at 8 a.m. Those were very hard times for our country's
public transport system," the academic told Xinhua.
However, this has all changed thanks to China's Yutong buses, which are becoming an
increasing presence in Cuba. It all started with the arrival of 12 Chinese-made Yutong buses in
2005.
Months later, 1,000 additional Yutong buses reached the Carribean island and made a
difference for Orta and millions of other Cubans all over the country.
The main cities in Cuba are all connected by outdated roads, and the transport system is solely
based on bus routes. The country does not have subway systems or high-speed trains.
In Havana, long city routes are covered by articulated Yutong buses, which are designated by
the letter "P." The buses have eased the demand of the population for an effective public transport
system.
Yutong has also had a positive impact on Cuban society due to the quality, comfort and
competitive prices of its buses and their adaptation to this Caribbean nation's standard.
"Currently there are 5,890 Yutong buses in Cuba with many uses. Last year 1,500 units,
between assembled buses and chassis, were sold surpassing 10 million U.S. dollars in contracts
signed with different Cuban state companies," said Wang Tong, sales manager of the Chinese firm
in Havana.
Over 20 bus models have been introduced to the island since 2005 and currently 9 prototypes
of Yutong buses are sold to Cuba, which is considered by the Chinese company as one of its main
markets in Latin America along with Venezuela and Chile.
The tourism industry, which is the main source of revenue for Cuba, has also benefited from
the cooperation with the Chinese brand with comfortable coach buses for intercity transfers.
Wang also said that in 2014, Yutong started to sell small bus chassis to a Cuban company in
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order to contribute to the local industry.
A joint venture between Yutong and the state-owned CAISA bus-maker is a possibility in the
future to supply Cuba's provinces and small towns with comfortable units.
"This is a way to help Cuba develop its transport system and at the same time provide
technology transfer. For us this is a great challenge and acknowledgement of the high value the
government has for our work here since 2005," Wang said.
In 2014, over 930 chassis were sold to CAISA to assemble with Yutong parts and pieces. The
product is a small bus, known as "Diana," which seeks to meet the demand for public
transportation all over the island.
"This year we'll assemble in Cuba 650 buses after a quarter century without producing a single
unit in the nation," said Enrique Martinez, CAISA's general manager.
The local company located in the town of Guanajay, just 50 km southwest of Havana, has one
production line of small buses with a seating capacity of up to 35 passengers. At the same time,
Yutong advisers work along with their Cuban counterparts to uphold the Chinese company's
standards.
"We're currently negotiating a more ambitious joint plan that has to do with upgrading the
buses' quality, design and comfort and for that, we must learn from the experience Yutong has,"
said Martinez.
Yutong has sold over 18 million dollars in parts and pieces to CAISA this year.
Yutong is the leading bus-maker in China and the world and it exports products to over 190
countries. In 2015, it sold 67,000 buses with over 500 million dollars in revenue.
(By Raimundo Urrechaga)
Silkroad Province
Xinjiang: a textile, garment trade hub with Central Asia
URUMQI -- Textile and garment exports to Central Asia and Russia via ports
in Xinjiang Uygur Autonomous Region have increased by 61.3 percent in January-May of 2016
from the same period last year.
During the period, China has exported 16.57 billion yuan (about 2.5 billion U.S. dollars) worth
of textiles and garments through ports in Xinjiang, according to the latest statistics released by
Urumqi Customs.
The data show that 70 percent of exports went to Kyrgyzstan and Kazakhstan, with the former
ranking first.
Following the China-proposed Belt and Road initiative and regional economic
development, Xinjiang, which borders eight countries and boasts 29 national ports, has grown into
a trading hub for garments, shoes, and daily necessities.
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China has long been a top textile manufacturer for the world market. Xinjiang produces
China's best cotton, and more of it than any other region. Xinjiang's cotton harvest reached 3.5
million tons, about 60 percent of China's total output, in 2015.
Leading textile and apparel producers have been transferring their business to Xinjiang,
making the far northwest region a thriving textile and garment producer.
China's cabinet, the State Council, issued a guideline in June 2015 to bolster the textile and
garment industry in Xinjiang in the hopes of increasing local employment and exports.
The country plans to build Xinjiang into a major textile base by 2020 to facilitate exports to its
western neighbors, according to the State Council.
(By Li Xiaohui, Cai Guodong, [email protected])
Investment environment and policies of Jiangxi province
NANCHANG -- Jiangxi province, adjacent to the Yangtze River Delta and the Pearl River
Delta, is going to establish closer economic ties with the Belt and Road countries and
regions, accelerate its pace of attracting investment from Hong Kong, Macao and Southeast
Asian countries, and extend its tentacles globally by setting up economic liaisons and investment
promotion centers in the United States, Australia and South Korea.
Industry insiders say that Jiangxi is a good place to attract overseas investment.
-- Promoted efficiency and multiplied structure of overseas investment
In 2015, overseas investment actually used in Jiangxi province hiked 12.1 percent on year to
9.473 billion US dollars, including 2.111 billion US dollars of foreign exchange cash, which
made Jiangxi rank the 14th in the country in use of foreign exchange cash
and ranked 5th place among provinces in Central and West China, according to statistics from
the Ministry of Commerce.
In 2015, there were 640 foreign-invested enterprises newly approved in Jiangxi, down 22.14
percent on year, and contracted foreign investment declined 31.32 percent on year to 7.367 billion
US dollars. Yet the investment quality and returns have been promoted.
During the year, Jiangxi approved 168 foreign-invested projects each with investment of
more than 10 million US dollars, including 14 projects each with investmentof more than 100
million US dollars. Some 65 of World Top 500 have set foot in Jiangxi.
Newly approved foreign-invested enterprises in Nanchang, Jiujiang, Ganzhou, and Ji'an
amounted to 378, presenting 59.06 percent of provincial total, and their use of foreign investment
totaled 6.5 billion US dollars, presenting 68.62 percent of provincial total.
-- Optimized environment for foreign investment
The province has in recent years made great efforts in creating both sound soft and hard
environment for overseas investors.
The transportation system in Jiangxi develops fast. In 2015, the mileage of Jiangxi's
expressway topped 5,000 kilometers, ranking No.10 nationwide. Meanwhile, the province has
opened multi international air routes to Hong Kong, Southeast Asia, U.S., Korean and West
Europe.
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To facilitate import and export enterprises, Jiangxi has set up 12 customs offices and
9 inspection and quarantine offices in Nanchang, Jiujiang, Jingdezhen, Xinyu, Ganzhou,
Shangrao, Ji'an, Yingtan and Longnan.
So far, Jiangxi has set up 17 national development zones, 73 provincial development zones,
four special customs supervision areas, four national export processing zones, and two
comprehensive bonded zones.
Besides, Jiangxi has strengthened control over illegal economic behavior, promoted
government work efficiency, and optimized procedures of investment-related affairs.
-- Supportive policies for overseas investors in Jiangxi
1) Preferential Policy Regime
In the case when a foreign investment enterprise decides to invest for technical transformation,
if the newly invested capital is above 200 million yuan, the administration fees that the
governments, provincial or municipal or the county (city, district) have the authority to remit shall
be remitted completely; if the newly invested capital is in the range of 100 million to 200
million yuan, 60 percent of the fees can be remitted.
Equipment imported by foreign-invested enterprises, R&D centers, or foreign-invested
projects by means of technology transferring for their own use shall be exempted from customs
duties or import linkage tax, provided that the import amount is included in the total investment.
2) Industrial Encouraging Policies
The province has adopted preferential policies
for
supporting the
development
of strategic emerging industries, under which high- and new-tech enterprises can enjoy a
corporate income tax rate of 15 percent. In addition, 100 strategic emerging industrial key
projects will be picked out every year, which will be given priority in the arrangement of
provincial reserved new construction land. According to the policies, the provincial government
will allocate a special fund for developing strategic emerging industry, and will guide and
encourage financial institutions, guarantee companies, and venture capital funds to increase their
credit lines in a bid to promote the development of innovation-driven enterprises
3) Regional Encouraging Policies
The provincial capital, Nanchang, has adopted a series of preferential policies to attract
businesses and investment, including offering discount interest, subsidy and capital in cash to
eligible companies.
For instance, enterprises will be given as much as 3 million yuan in discount interest support
for fixed-asset investment loans to industrial projects encouraged by the State, the province or the
city, as long as the borrowers' labor productivity, ratio of profit to capital, marginal income ratio
per capital and resource utilization ratio are at the same industry's advanced level or higher
than the industry average level, and they have reached the scale of key enterprises of the city.
In addition, the municipal finance bureau will provide pre-project cost subsidy to the
so-called "3010" projects. For industrial projects with total investment of 3 billion yuan or more
(including initial working capital), the subsidy will be 1.5 million yuan, for those with total
investment of more than 1 billion yuan but less than 3 billion yuan, the subsidy will be 500,000
yuan. The province also has initiated a Schedule Fulfillment Reward for the "3010" projects, and
such projects will be given priority when applying for provincial-level key projects and in land
use.
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For foreign firms among the World's Top 500, if they settle their production bases and
China headquarters in Nanchang with total investment of more than 1 billion yuan, they will be
rewarded 3 million yuan. For China Top 200 enterprises, if they settle their production bases and
company headquarters in the city, with total investment of more than 500 million yuan, will be
rewarded 1 million yuan.
The local government has also introduced special incentives to encourage local enterprises to
carry out technology innovation, establish brand and earn foreign exchange through export.
-- Suggestions for overseas investors
In January of 2016, Jiangxi province categorized its industries into three types, namely the
advanced industries, growth industries, and rearing industries.
Specifically, the advanced industries include electronics and information, biomedicine,
non-ferrous metals, and aviation manufacturing. The growth industries include PV, auto and
parts, energy saving and environmental protection, and special ship building. The
rearing industries include new energy vehicles, smart equipment, and integrated circuits.
Through the industrial classification, Jiangxi province has set target breakthrough in major
areas, major enterprises and major technologies in the coming 5-10 years.The
Jiangxi Provincial Bureau of Commerce recommends foreign investment in the above
mentioned industries.
(By Li Xiaohui, Chen Yushan, Cheng Di, [email protected])
NE China province launches overseas tourists tax refund
HARBIN -- Heilongjiang has started issuing tax rebates for overseas visitors from July 1,
aiming boost inbound tourism to the northeastern province.
According to Heilongjiang Provincial Office of the State Administration of Taxation, overseas
tourists visiting the cities of Harbin, Heihe and Suifenhe will enjoy VAT refunds on purchases
from specific shops.
Foreign tourists and those from Hong Kong, Macao and Taiwan who stay on the Chinese
mainland for fewer than 183 days can claim up to 11 percent back on goods bought at designated
department stores.
The minimum purchase for the rebate is 500 yuan (75.60 U. S. dollars) at one store in one day.
The refund is valid when the purchase is made within 90 days before departure. The rebate covers
over 20 kinds of commodities such as garments, cosmetics and home appliances.
A pilot tax refund program began on the southern island province of Hainan on Jan. 1, 2011.
Beijing and Shanghai rolled out the policy in July 2015. It has since been expanded to more
destinations nationwide.
Heilongjiang is known for its winter scenery and cool summers. The province recorded 130
million tourists in 2015.
(By Li Xiaohui, Wangjian, Ma Xiaocheng, [email protected])
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Project Info
Nanjing starts cargo train service to Europe
NANJING -- A cargo train departed from Nanjing in east China's Jiangsu Province on June 29
and will arrive in Moscow in 15 days.
The new direct service provides a convenient means of getting goods from the water and land
transportation hub in the Yangtze River Delta to Europe.
About 60 percent of the freight carried by the train comes from Jiangsu. The neighboring
provinces of Zhejiang, Anhui and Jiangxi have also expressed their willingness to transport goods
via the route.
The freight includes household appliances, lamps, electronic products, building materials and
automobile parts.
After the maiden journey, the Nanjing-Moscow cargo train is scheduled to operate every two
weeks, and weekly around the beginning of next year, according to the Shanghai Railway Bureau.
The new service will boost China-Russia trade, according to the bureau.
(By Qiang Lijing, Yang Shaogong)
Investment-inviting Projects
The following is information about projects inviting investment in Zhangjiajie city, Hunan
province:
Avatar Theme Park Project
Release Date
July 6, 2016
Project Type
Equity investment project
Investment Mode
Joint venture, Cooperation, Solely-invested
Industry
Education, entertainment
Period of Validity
One year
Location
Zhangjiajie City, Hunan Province
Project Description
The project is a Avatar-themed park covering an area of 953 mu
(63.53 hectare) and integrating tourism, entertainment, resort and
commercial housing
Total amount of Project
200 million U.S. dollars
Badagongshan International Ecological Tourism Holiday Resort
Release Date
July 6, 2016
Project Type
Equity investment project
Investment Mode
Joint venture, Solely-invested, and other
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Xinhua News Agency
Industry
Education, entertainment
Period of Validity
One year
Location
Zhangjiajie City, Hunan Province
Project Description
To build Badagongshan Service Center, Badagongshan
Self-driving Tourism Service Base, Badagongshan outdoor leisure
town, Simenyan mountain forest tourist area, and other.
Total amount of Project
300 million U.S. dollars
Wenfeng International Tourist Resort Project
Release Date
July 6, 2016
Project Type
Equity investment project
Investment Mode
Joint venture, Cooperation, Solely-invested
Industry
Education, entertainment
Period of Validity
One year
Location
Zhangjiajie City, Hunan Province
Project Description
It is a project integrating leisure resort, national cultural
entertainment, and ecological rehabilitation, and covering an area
of 38,000 mu (2,533.3 hectare). In addition, in the project area,
Baihutang and Yixiantian natural scenic spots remain unexplored.
Total amount of Project
10 billion U.S. dollars
(Source: Xinhua Silkroad Database, http://db.silkroad.news.cn/en/, more projects available in the
Database)
Backgrounder
China-Arab Investment Funds
Relying on the China-Arab States EXPO and with strong support of the Chinese
government, China-Arab Investment Funds (the Fund) was officially established on
September 9, 2013.
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Xinhua News Agency
China-Arab Investment Fund is committed to building a regional bridge and link
between China and Arab via financial, trade, cultural and other cooperation.
Since its foundation, China-Arab Investment Funds' management team has forged
close partnership with well-known financial institutions in Arab countries, especially in
Gulf states, facilitated infrastructure construction by Chinese enterprises in west Asia and
Africa, and introduced Arab capital to invest in China.
Fund Form
-- Limited partnership & private equity investment fund;
-- Investor as a limited partner does not participate in the investment decision-making
and management of funds and undertakes limited liability;
-- General Partner as a fund manager is responsible for the operation and management
of China-Arab (Ningxia) industrial investment funds and undertakes unlimited
liability.
Business areas
-- Finance and Industry
-- Real Estate
-- Infrastructure
Consulting Services
The Fund provides financial consulting services related to a wide range of areas such
as policies and regulations on sovereign funds, cross-border investment and guarantee,
investment of insurers, PE, Islamic finance and others.
Strategic Cooperation Partners
-- China Beijing Equity Exchange
China Beijing Equity Exchange (CBEX) is a comprehensive equity trading institution
approved by the People's Government of Beijing Municipality. CBEX covers four major
business fields, namely, equity, physical goods, financial products and bulk stock and
extends its service scope to disposal of state-owned assets, enterprise reform and
restructuring, and enterprise investment and financing services etc.
-- Beijing Petroleum Exchange
Beijing Petroleum Exchange (BPEX), established on December 28, 2007, is the only
approved comprehensive oil trading platform with the participation of Beijing municipal
state-owned capital and petrochemical central state-owned enterprises following its equity
restructuring on December 2, 2010. BPEX focuses on spot trading covering all sorts of
petrochemical products and provides member companies with across-the-board
comprehensive services of trading, financing, settlement and delivery.
-- Administrative Committee for Lanzhou New Area
Administrative Committee for Lanzhou New Area is an administrative organ of the
northwest-China-located Lanzhou New Area, the fifth state-level new area in China,
governed by Gansu Province.
Established in December 2010, it sits in the Qinwangchuan basin, which
joins Lanzhou and Baiyin, two cities of Gansu Province, spanning about 49 kilometers
from north to south and about 23 kilometers from east to west.
Project Application Form
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Xinhua News Agency
(The following application form is given only for interested investors to take reference
from and in case of any inconsistency with China-Arab Investment Funds' formal project
application form, the latter shall prevail.)
Project name:
Project investors:
Main business of the project:
Total investment:
Investment requested from the Fund:
First, the Chinese-funded enterprises (project investors) overview
(A) Basic introduction. Basic introduction shall contain such information as business
name, registration date, registered place of business, place of business
operating, corporate nature, corporate history and background, registered capital, main
shareholders' capital contributions and the proportions, basic information about the core
management team, and corporate investment and operating activities in Africa.
(B) Market and core competitiveness analysis. Market and core competitiveness
analysis is expected to include main business (product or service) summary, industry
ranking, market share, and distribution of main clients. Analysis of
core corporate competitiveness shall be done by analyzing corporate strengths
on technology, manufacturing capacity, control of scarce resources, brand, marketing,
human resources and etc.
(C) Operations and financial condition. Operations and financial conditions shall
present sales and growth rates, profit, profit margins, balance sheets in recent three years
as well as outstanding foreign investment, or liabilities.
(D) Chinese-funded enterprises contact. Included in the contact information are
contact name, address, telephone number, fax, e-mail and etc.
Second, introduction over investment projects
(A) Overview of investment projects.In the overview, such information as about
significance of main business and investment of the project (business), name of projects
or companies, corporate registration date, place of incorporation and business operating
place, corporate nature, the registered capital, the main shareholders' capital
contributions and the proportions and background, etc., project (business) construction
term and deadline, and development strategies shall be clearly given.
(B) Preliminary work. The followings shall be prepared: business proposals and
feasibility study documents related to the early stage of the projects and other
preparations, adaptability analysis of the project to local social, legal and natural
environment in countries as investment destinations and the current progress of the
project.
(C) Management team introduction. Introduction about the management team shall
contain core management team members' names, genders, dates of birth, nationalities,
education backgrounds, business experiences and so on.
(D) Market and core competitiveness analysis. Market and core competitiveness
analysis includes:The company's main business (products or services) analysis, market
positions, rankings, market shares, major client distribution, and market entry barriers in
domestic markets of countries as investment destinations and international market; New
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Xinhua News Agency
project analysis, expectations, plans and relevant circumstances; Analysis of core
competitiveness of enterprises, including technology, manufacturing capacity, control of
scarce resources, brand, marketing, human resources and so on.
(E) Business and financial condition. Companies willing to invest in existing
businesses shall provide information and data about their sales and growth rates, profits,
profit margins, assets and liabilities, and disclose their foreign investment,
or contingent liabilities. Companies interested in investing in new projects
shall forecast their future operations and financial conditions.
(F) The use of funding and fund using plan. Under this item, such information as the
total funds to be raised and sources, capital use purposes, expected investment term by
China-Arab Investment Funds, and capital input plans.
(G) Fund investment exiting and related legal issues. Included are fund investment
exiting and the factors influencing their exit, such as property rights, taxation, enterprise
systems and etc.
(H) Contacts for to be invested projects or companies. Contact name, address,
telephone, fax, e-mail and so on.
Third, recommender information
Name, address, person in charge, telephone, fax, e-mail and etc. of entities
recommending the enterprise.
Bill of materials and application procedures
First, the application materials
1. Project Application;
2. Applicants' license documents and financial reports;
3. Project feasibility study report or business plans;
4. Investment approval by authorities from which the project is located in and related
documents;
5. Important contracts and legal documents related to the project;
6. Other relevant materials required by the Fund.
Second, the application process.
1. Submit project proposals to the corresponding departments of China-Arab
Investment Funds in accordance with its division of four investment management
departments.
2. China-Arab Investment Funds' investment management departments will give
feedbacks to the applicants in written or electronic form ten working days after receiving
their applications.
-- END --
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