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More than 2,000 Chinese companies have invested in Africa. Most of the investment has gone into energy, mining, construction and manufacturing.  China’s state-owned oil companies are active throughout the continent. The map below represents current investments in the Continent.

In order to help compare and contrast the economic, geographical & population differences between China and the US, the following graphics dircetly compare the contries. 

Data CIA Factfile 2010.

To maintain its economic growth and provide for its massive population, China must reconcile two powerful, converging trends: energy demand and resource scarcity. Below is a graphic of Global proposed new power plants as of 2013

The travel market in China currently represents $232 billion, with a domestic dominance. Research by Boston Consulting Group suggests that China will surpass Japan as the second‑largest travel and tourism market in the world by 2013.

In 2011, 2.6 billion total trips were taken by Chinese, of which 70 million were to international locations. Rising disposable income and abolition of travel restrictions inside the country has led to a take off in domestic tourism. Relaxation of visa restrictions fuels growth for travel abroad. Visa processing for the USA grew by 46% from Oct 2011 to Mar 2012 compared to same period in 2010-2011.

Digital Luxury Group and Luxury Society are proud to announce the launch of the World Luxury Index™ China Hotels, in a first-time partnership with Luxury Concierge China. Unveiling for the first time, a ranking and analysis of the most searched-for luxury hotel brands specifically in China, based on the unbiased search inputs coming from Google and Baidu.

Our research examines over 65 brands, through 170 million+ searches, from 75 domestic and international locations.

A Preference for Sheraton

The most searched for hotel by Chinese travellers is Sheraton, capturing 13.58% of total luxury hotel searches. This is perhaps unsurprising as Sheraton was the first western hotel brand to operate in China when it launched in 1985.

The brand currently has plans to open 12 new hotels across China in 2012, with plans to raise its Chinese portfolio to 80 properties by 2015.

A look at the searches for Sheraton from the beginning of 2012 show a significant increase starting mid-January and continuing until mid-February. This is most likely an effect of the Chinese New Year, a popular time for travel. Top destinations during this period were Shanghai, Beijing, Dameisha & Chongqing.

Sheraton’s Dameisha Resort, Shenzhen

Domestically, Shanghai

After the nation’s biggest economic hubs, Shanghai (#1) and Beijing (#2), cities Chongqing and Tianjin are most
searched. These locales act as primary gateways to western and northern China, respectively.

Hangzhou, known as “the Switzerland of China” beckons with lakes, mountains, and beautiful countryside (with tea plantations instead of vineyards). Leisure holidays to Sanya, Dameisha and Dalian are very popular due to their weather, nature and cuisine.

Most searched for hotel brands by International location

Internationally, Hong Kong

Proximity, no language barrier and regular and direct flights make business and shopping hubs Hong Kong and Singapore top locations for Chinese travellers.

Interest in travel to New York surges as China is set to become the largest inbound tourist market to the U.S. Dubai has become the most popular destination in the Middle East, as a stable and shopping–oriented city, benefiting from the “approved destination” status given by Chinese authorities in 2009.

The full report is available online at: dlgr.com/chinahotels. More detailed data and analysis on a particular segment or brand is available upon request.

SOURCE: LuxurySociety

There has been much speculation in the Western media of late as to Chinas intent in Africa, there has been much talk of Soft Power, Imperial ambitions and outright exploitation. On the completion the fifth Forum on China-Africa Cooperation (FOCAC) in Beijing (19-20 July 2012) here is a round-up of current projects undertaken by China or Chinese Companies:

Mali.

China plans to build a centre for agricultural research and technological demonstration near Bamako, Mali, to carry out experiments and technical training, and to contribute to the development of sustainable agriculture in the country, according to an agreement between the governments announced last month (11 July) The centre - to be built this year on a 20 hectare site in Baguinéda in the region of Koulikoro, 40 kilometres from the country's capital, Bamako - will focus on developing rice, maize and horticultural production.

It will be built at an estimated cost of  55 million Chinese yuan (around US$8.6 million), with a loan from China. Anastase Hessou Azontondé, chief of the soil science, water and environment laboratory at the National Institute of Agricultural Research of Benin (INRAB), said the centre would use Chinese funds to "bring to Mali technologies developed by Chinese talent and experience".

It is part of China's soft power diplomacy and research strategy, according to Azontondé, who said: "The results will be most useful to Africa".

Zambia.

Huawei Technologies is the biggest supplier for most of the telecom equipment for MTN Zambia, Airtel Zambia and Zamtel. Huawei Technologies has announced it will help upgrade facilities at the University Teaching Hospital (UTH) in Zambia in order to help the medical staff provide better medical care to patients.

The Chinese telecom equipment manufacturer said in addition to providing telecom equipment, it will as well provide the much needed beds, mattresses and blanks to the UTH’s clinic.

Huawei representative Zou Liqiang said the company is on a mission to enrich lives in the country through communication and supporting communities in which it operates.

China’s state-owned Sinohydro Corp. is restoring the 1,344- kilometer Benguela railway linking the cobalt reserves in the South of the Democratic Republic of Congo and copper mines in Zambia to Angola’s Lobito port, 243 miles south of Luanda, the capital. Zambias current major export partners are South Africa (21.5% of total exports), the Democratic Republic of Congo (DRC) (19.8%), the UK (14.5%) and China (10.3%). The share of exports to the EU has declined to around 8-9%.

Kenya.

Mr. Junqing Lu (The Chairman of the World Eminence Chinese Business Association) commented on the project dubbed “China-Africa Project Hope”, which is driven by Chinese entrepreneurs. It has set aside approximately Ksh. 1.2Billion (15 million US dollars) towards this continental project.

China will put up 10 ICT-driven model primary schools in Kenya as part of a project that aims at constructing 1000 such schools across the African continent.

The first phase of the programme, he added, targets three nations including Kenya, which will receive an initial funding of approximately Khs. 12 Million in addition to having the schools equipped with computers.

Mr. Lu who was accompanied by the Secretary General of the project Ms Jennifer Lu and the Chinese ambassador to Kenya Mr. Liu Guang Yuan announced that a delegation of Chinese investors would be visiting Kenya in March as a follow up to explore investment opportunities.

The establishment of the model schools in Kenya would go along way in supplementing the government's efforts in providing quality free primary education to her citizens.

Uganda.

Lecturers and Students from Ugandass Makerere University received ICT certification upon successful completion of ICT training in Huawei’s East Africa Training Centre in Nairobi. Upon Signing a Memorandum of understanding with Makerere University early this year, Huawei  Uganda sponsored an ICT training session for 10 students and lecturers from Makerere.

As part of its Corporate social responsibility efforts, Huawei will also sponsor ICT scholarship for students from this month. Uganda needs to invest heavily in this sector as the strategic drive for addressing increasing challenges facing the education in the ICT sector.

Zimbabwe

Mr Lin Lin, Chinese ambassador to Zimbabwe, has pledged to assist the country renew its infrastructure during his time as Ambassador. Zimbabwe and China have recently signed a number of agreements in various sectors of the economy.

Anjin Investment, a joint venture company between the two countries is currently involved in the mining of diamonds in Marange as well as providing loans for the construction of the National Defence College. It has already provided funds for renovations of infrastructure in Victoria Falls ahead of the United Countries World Tourism Organisation general assembly to be co-hosted with Zambia next year.

The Chinese government has provided a US$150 million loan facility to Harare City Council to revamp its water and sewer reticulation systems.

China and Kazakhstan share a vast border of 1,700 km in the North Western province of Xinjiang. As with each of the post-Soviet republics on its western border, they have had border disputes dating to the collapse of the Soviet Union in 1990. A 1998 treaty signed between the two countries ended border demarcation issues by resolving disputed areas near the Baimurz pass and the Sary-Charndy River. To help conclude negotiations, China offered to invest in one of Kazakhstan’s biggest oil fields, construct a 3,000 km pipeline connecting the two republics, and establish a 15-year program for joint economic cooperation.

Since then, Kazakhstan has become a strategic ally in securing China’s long-term interests in the post-Soviet region. Kazakhstan’s oil, natural gas and minerals reduce China’s excessive reliance on imported oil from the Middle East. Furthermore, diplomatic relations with Kazakhstan play a key role in combating Uighur nationalism in Xinjiang province – cultural ties between the Kazakh people and the Uighurs (a Turkic ethnic group) have raised concerns in China of a potential separatist movement. While cooperation with Kazakhstan affords China a buffer zone between it and Russia, an alliance with China also helps Kazakhstan balance the heavy geopolitical influence of its Northern neighbor.

The following is a time line of mutual development projects and agreements:

• The People’s Republic of China and Kazakhstan first formed diplomatic relations on January 3, 1992. Since then, both countries have kept close ties and solved border disputes.

• In 2001, China and Kazakhstan were co-founders of the Shanghai Cooperation Organisation (previously Shanghai Five, 1996), along with Kyrgyzstan, Russia, Tajikistan and Uzbekistan.

• In 2005, China and Kazakhstan established a strategic partnership. Bilateral cooperation has expanded to trade, energy, science and technology, culture and even education.

• In 2007, Kazakh president Nursultan Nazarbayev announced that further strengthening ties with China is one of Kazakhstan’s most important foreign policy initiatives in upcoming years.

• In 2008, both Nursultan Nazarbayev and Wen Jiabao paid visits to China and Kazakhstan respectively. Agreements were made to expand cooperation beyond extractive industries.

• KazStroService completed the second leg of the Kazakhstan-China oil pipeline, between Kenkiyak and Kumkol, on July 1, 2009. The pipeline is China’s first direct method of oil importation from Central Asia and has a capacity of 10 million tons per year. Construction of Line C of the pipeline is scheduled to begin this year, and will begin to supply China with natural gas by January 2014.

• As of 2011, both countries have cooperated within the UN and SCO, and cemented bilateral agreements through documents such as the Good-Neighborly Treaty of Friendship and Cooperation, the China-Kazakhstan Cooperation Strategy for the 21^st Century and the Blueprint for China-Kazakhstan Economic Cooperation and Development.

• China and Kazakhstan will jointly build a 1,050 km long, high-speed railway connecting Astana and Almaty by 2015.  The railway will run at a maximum speed of 350 km/hour and will service up to 5 million passengers annually.

• China and Kazakhstan built the first trans-border, international free trade center in Eurasia in 2011. The center, which lies on the border of China and Kazakhstan in Horgos (Xinjiang province), was inagurated along with a railway connecting Horgos – Ah Teng Corey.

• Kazakhstan extradited Arshidin Israil, a Chinese citizen of Uighur ethnicity, to China on May 30, 2011. The abolition of Israil’s refugee mandate upheld the Kazakh-Chinese extradition agreement of 1996 and helped solidify bilateral relations between the countries. Israil was wanted by Interpol on terror charges; China has promised that he will not face capital punishment.

• Kazakhstan has begun supplying China with electric batteries worth around $30 million USD annually. In April of 2012, Kainar AKB supplied a first shipment of around 1 million batteries to FengFan Co. Ltd. Kainar AKB is the largest battery manufactuer in Central Asia – its products are regularly used in automobiles, as well as agricultural and military equipment.

• The Development Bank of Kazakhstan (DBK) and China Eximbank agreed to invest $500 million together on energy cooperation, beginning in June 2011. The announcement followed an individual loan agreement of $1.5 billion in October of 2009.

• From a $5 billion credit line for energy cooperation, China's Export-Import Bank agreed on a $1 billion construction plan for the Atyrau oil refinery, a major hub for the massive offshore Kashagan deposit now under development. This falls into the profile of Kazakhstan's program to modernize the country's three oil refineries at a cost of up to $4 billion. Chinese companies already produce 20% of all the oil produced in Kazakhstan.

• 2011, Kazakhmys PLC signed a memorandum of understanding with the China Development Bank Corp. to secure a US$1.5 billion loan facility to develop a copper project at Aktogay in Kazakhstan. Further negotiations will be undertaken to move the MOU to a full loan agreement by the end of 2011, the company said in a press release. The loan will be in addition to the existing China Development Bank's US$2.7 billion loan facility, which is being used for the development of a major copper project at Bozshakol and a series of mid-sized projects.

Bi-lateral relations and trade between these two countries will only increase over the next few years, dominated by the energy sector which already has seen 7 billion in loans from China for various projects. Whilst there is little cultural connection with China (Kazakhstan's people have long felt a deep connection to Russia, in language, culture and lifestyle) the investments speak for themselves and provide Kazakhstan with access to deeper political ties to a world power. However in the minds of ordinary Kazaks there is a fear of loosing their identity and culture to their neighbor.

We believe this relationship truly represents the much used ‘win win’ nature of Chinese investments in emerging countries. All that remains if for the two countries to agree on the nationality of their Weightlifters.

The China Greentech Initiative releases The China Greentech Report 2012, the third in the series of annual China Greentech Reports. Each edition is the culmination of the annual collaborative research and development effort undertaken by CGTI's Partner Program community of 100+ commercial and policy organizations.

The China Greentech Report 2012 in particular enables readers to understand:

Four factors that characterize challenges and opportunities in China's greentech markets

• China and global economic forces have impacted greentech growth
• Aggressive government policies will continue to support greentech growth
• Public awareness of urgent environmental problems is growing
• China is going global to satisfy energy security needs and to meet emission reduction goals

 Market updates and opportunities for six greentech sectors:

• Cleaner Conventional Energy - natural gas infrastructure; distributed gas power, coal bed methane; advanced nuclear power
• Renewable Energy - relocating solar operations overseas; retrofitting wind turbines for higher output; biogas production
• Electric Power Infrastructure - distributed energy management; energy storage; charging infrastructure and grid communication networks
• Green Building - green building design; building energy retrofits; green building material supply; energy management
• Cleaner Transportation - cleaner internal combustion engines; China's fleet vehicle electrification market; electric vehicles (EVs) and charging infrastructure.
• Clean Water - wastewater and sludge equipment; water-use efficiency equipment; water quality monitoring technologies

 Some of the highlights from The China Greentech Report 2012 include:

• Vast unconventional domestic gas reserves, including shale gas and coal-bed methane, could ease China's gas shortfall, which is expected to grow nine-fold by 2015
• Private equity and venture capital investments in China's private water sector increased from $US 50 million in 2010 to US$ 400 million in just the first four months of 2011
• Wind and solar farms costs have fallen dramatically: onshore wind farms in China can now be completed for around RMB 7000/kW and photovoltaic (PV) system costs have decreased from RMB 74,000/kW in 2007 to less than RMB 13,000/kW in late 2011 with costs continuing to drop

The China Greentech Report 2012 is available for free download at www.china-greentech.com/report.

This Item was produced for China Brain by CIO

China Intelligence Online gathers business intelligence and provides analysis as well as general business services  for  international  organisations  working  or  interested  in  the  Greater  China  and  East  Asia markets. Business services include company establishment, customised research, sales and marketing, and client representation. www.chinaintelligenceonline.com

For many years the importance of China’s economic growth far outweighed the environmental consequences of that growth. Urbanisation and industrialisation have resulted in environmental degradation country so serious that 16 of the world’s 20 most polluted cities are in China.

In response to this growing threat, the Chinese government’s objectives, as detailed in China’s 11^th Five-year Plan for Environmental Protection) are threefold.

To  place  equal  emphasis  not  only  on  economic  growth,  but  also  on  environmental protection.

 The second objective is to shift strategies for economic growth towards development that promotes environmental protection, not degradation.

The third objective is administrative and attempts to apply more  comprehensive  legal, technological and necessary administrative frameworks to better facilitate and enforce environmental protection policies.

Introduction.

China’s determination to generate growth to improve the material lot of its population for many years was pursued at any cost; not least that of the environment. Over the past few decades, first at the hands of its lumbering,  State-owned  industries,  and  later  as  at  unseen  consequence  of  its  market-socialist  reform, China’s environment has become the victim of a wide number of environmental issues.

 In spite of bold goals outlined in the 11th Five-Year Plan, it remains to be seen how effectively China can implement them and incorporate them into their economic development plans for the future.

China’s acute environmental problems stem from a deteriorating natural resource base, dense population, heavy reliance on soft coal, outmoded technology, under-priced water and energy, and breakneck industrial growth. The World Bank estimates that health costs of air and water pollution in China amount to about 4.3 percent of its GDP. By adding the non-health impacts of pollution, which are estimated at approximately 1.5 percent of GDP, the total cost of air and water pollution in China is about 5.8 percent of GDP.

Dominated by hostile geographic terrain, half of China’s population lives on only 13.5 percent of its land. Since only 10 percent of China’s land is arable, a mere 7 percent of the world’s cultivated land feeds 22 percent of the world’s population.

China’s  environmental  problems  have  become  a  global  issue  with  nations  embarking  upon multilateral efforts  to  reduce  greenhouse  gas  emissions.  No  country  exists  in  isolation;  China’s  airborne  particle pollutants settle in Japan and are even partially to blame for Los Angeles’ smog cloud. Pollutants originated in China have even been located as far away as Lake Tahoe in the western United States.

The 10th Five-year Plan failed to meet its objectives to reduce total pollution discharge by 10 percent from 2000 levels and instead saw only a 2.1 percent reduction in CO2 emissions and an actual 27.8 percent increase in SO2 emissions that it set for its 2005 target [unsure how to unpack this sentence-MS]. Through edicts in the 11th Five-year Plan, the government has unleashed new rounds of environmental legislation and called for the shut down of thousands of factories with the aim of once again reaching a 10 percent reduction of the 2005 levels of emissions for CO2 and SO2. Still, local enforcement of environmental laws is spotty, and investment in pollution control infrastructure is inadequate.

Competition from domestic  firms in the  environmental  protection field is  increasingly strong.  Products enjoying  the  best  sales  prospects  include  low-cost  flue  gas  desulphurisation  systems,  air  and  water monitoring  instruments,  drinking  water  purification  products,  vehicle  emission  controls  and  inspection devices,   industrial   wastewater   treatment   equipment,   and   energy   efficient   and   resource   recovery technologies.

What environmental solutions does China need most?

Environmental needs vary from region to region in China, but water and wastewater treatment, flue gas desulphurisation (used by coal-fired power plants to reduce sulphur dioxide emissions), energy efficiency improving technologies, and river basin management and flood control rank at the top of the list. Water reuse projects and sludge treatment and disposal are also high priorities for local planners.

Because environmental projects often lack funding, demand for market-based environmental solutions that allow investors to reap financial benefits is growing. Opportunities exist in the areas of environmental treatment, clean production, energy efficiency, and recycling and reuse technologies. Though local planners have  shown  an  interest  in  industrial  waste  recycling  and  municipal  waste  composting,  the  market  for recycled products remains small, and quality standards for these products are lacking. Demand for remediation of industrial sites is also growing since factories must relocate to make way for residential areas, but local governments have limited resources available for cleanup.

Which regions in China need which environmental projects most?

Though it would be convenient to attribute environmental problems to specific regions in China, the nature of air, land, and water pollution are such that environmental problems tend not to stay in one place for very long. Generally speaking, northern China suffers from soil erosion, air-pollution, desertification, and drought; southern China suffers from silting and acid rain; industrial cities choke from air pollution; urban areas lack proper sewage and water treatment; and many of China’s rivers and lakes are seriously polluted.

Fortunately, environmental projects are sprouting up throughout China, from dust control in Inner Mongolia to wastewater treatment in Chongqing, to hospital waste disposal in Shanghai. Beijing ‘s hosting of the 2008 Olympics  has  cast  a  spotlight  on  the  city  ‘s  environmental  protection  effort,  leading  to  a  host  of infrastructure, transportation, and conservation projects. Shanghai ‘s 2010 World Expo plans have spawned similar ‘green’ projects such as clean mass transit, energy-efficient buildings, and auto emissions control. To prepare for the Expo in 2010, Shanghai launched a three-year (2003-05) environmental protection plan that focuses on water, air, solid waste, forestation, industrial pollution, and agricultural contamination problems. Nearly 300 projects are planned, including several large sewage treatment plants along the Yangtze River and medium-scale plants on Hangzhou Bay.

 Following the leads of Beijing and Shanghai, many cities and provinces have launched environmental protection campaigns to obtain funding from the central government or attract the attention of foreign investors. But many of these projects offer companies low returns on investment. Like much of China’s development, many  of the  reliable  and well-funded projects are located in the coastal regions, where competition is intense.

How should my company approach World Bank- and Asian Development Bank-financed projects?

It is important to identify projects that are likely to receive World Bank (WB) or Asian Development Bank (ADB)  funding  early  in  the  process  by  networking with  local  design institutes,  government  authorities, foreign engineering firms, and bank project officers. Equipment requirements and specifications for these projects are usually identified before the loan is finalised, well before the tender opportunity is made public. Having a local presence in the market, either through a sales office or a sales agent, helps companies learn about projects early, introduces their technologies, and follow up as the project unfolds. Embassies and Consulate Generals may be able to help foreign firms through liaison officers at the WB and ADB.

Is there much demand for environmental consulting services?

Although consultants have traditionally had difficulty selling their services in China, the opening of China’s services market to foreign competition, improved environmental standards and compliance requirements, and the demand for sophisticated technologies have led to more consulting opportunities. Many European firms have been successful in bundling consulting services with turnkey design-and-build projects. Some equipment providers offer free consulting services up front to develop sales later in the project. WB and ADB projects usually include substantial consulting and technical assistance components that are open to bids from international firms.

Though it may be difficult to sell consulting services to China’s state-owned enterprises, the steady stream of foreign investment into China has created a niche for consulting services that offer their expertise to foreign manufacturers throughout the country. Foreign consulting firms that sell environmental due diligence, environmental health and safety, or environmental impact study services to major corporations outside China should consider offering these services to their clients‘ China operations, if they haven’t already. Many environmental consulting firms target multinational corporations in China’s burgeoning manufacturing, information technology, semiconductor, pharmaceutical, and petrochemical industries.

Is it true that the PRC government plans to invest billions of dollars in wastewater treatment?

PRC government plans call for massive investment in this sector, but most projects are either financed in Chinese yuan or lack financing altogether. Foreign companies that want to access a larger portion of this market must be willing to accept local currency, make equity investments in projects, or offer competitive

financing terms on equipment and technology sales. Although multilateral bank loans represent a drop in the bucket compared to China’s investment needs, there are several USD multimillion WB and ADB projects currently in the planning pipeline, including urban environmental planning, acid rain control, river basin management, and wastewater treatment in Anhui, Beijing,  Jiangsu,  Shanghai,  Sichuan,  and Zhejiang, to  name a  few  projects. These  projects  usually offer international competitive bidding opportunities and payment in hard currency.

Do build-operate-transfer (BOT) projects make sense for wastewater treatment projects?

BOTs are possible but there are few, if any, profitable BOT projects in China’s wastewater sector. Because environmental projects perennially lack funding, local officials hope to attract foreign investment into this sector by offering 20-30 year operating concessions to foreign companies in return for building the facilities. Since the government commonly subsidises domestic treatment plant operation, domestic project planners and their foreign counterparts often disagree on the technology and investment required to turn a profit. Low tariff rates, fragmented fee-collection systems, irregular accounting practices, and lack of payment guarantees are key barriers to developing viable BOT projects. These projects make more sense in the water- supply sector where increasing demand combined with gradually rising water tariffs in residential, commercial, and industrial sectors make investment more attractive.

Are there any good environmental trade shows in China?

There are a number of trade shows in China, but most of them are small and regional, and many are not well organised. The biannual China International Environmental Protection Industry Conference is the country ‘s largest. (see  www.chinaenvironment.org/index_en.aspx ). The conference will cover a wide range of sectors including air pollution, water, wastewater, solid waste, recycling, green transportation, and energy conservation. The Guangzhou International Environmental Protection Exhibition, is also broad in scope. The China Environmental Protection Industry Association plans to organise a large show in Shanghai. Foreign firms should consider participating in technical seminars and conferencesto network and learn the latest trends. Local government bureaus are often eager to co-organise workshops and  technical  seminars  to  introduce  foreign  technologies.

Conclusions

There has been a general increase in water projects creating a large, diverse and growing market for water treatment technologies, including municipal water treatment facilities for drinking water, as well as drinking water treatment equipment for the bottled water and home treatment sectors.

The government ‘s inability to invest and to fill the huge capital demand creates opportunities to involve non-state-owned or foreign investment. The Chinese government is encouraging non-state-owned and foreign  investment  participation.  These  policies  include  preferential  tax  policies  for  the  industries  and projects  listed  in  the  Foreign  Investment  Industry  Guideline.  Guided  by  the  state  ‘s  policies,  local governments established relevant policies applicable to local areas. Companies can obtain details on these policies from the local governments and taxation bureaus.

Forming a private and public partnership (PPP) is a common method for non-state-owned and foreign participants in the water supply and wastewater treatment sector. For specific projects, build operate- transfer (BOT), and design-build-operate (DBO) schemes are often used. Because the concept of PPP is a new one in China, the Chinese government has not set specific regulations or guidelines regarding schemes. Foreign companies and investors are likely to encounter a dilemma in assessing the opportunities and challenges for participation and the accompanying financial risks.

Clean fuels, desulphurisation, coal washing, air quality monitoring, and other related technologies for prevention and control of air pollution are also required.

As for the solid waste treatment sector, advanced equipment and technology are always welcome, especially for the treatment of hazardous solid waste and medical solid waste.

Whilst research centres have been created advanced environmental technology for hazardous solid waste treatment is still essentially in the research stage and is only recently being put into practice. This means there is a large-scale environmental market in China offering a wide range of market opportunities for foreign companies.

A Snapshot.

Big, bustling, and growing, Chengdu has emerged as one of the most dynamic cities in the Chinese hinterland and is an increasingly essential gear in the nation’s economic engine. As the capital of Sichuan Province—among the most populous in China—Chengdu has become a centre for both business and logistics in western China. The city, once a backwater lagging far behind its coastal counterparts, has now firmly arrived on the business scene.

The rise of Chengdu is due to the convergence of two distinct, but related, factors. One is the Western Development  Strategy,  in  which  Chengdu  figures  prominently  as  a  key  city.  In  an  effort  to  spread economic growth more equitably within the country, Beijing allowed cities like Chengdu to offer foreign firms extensive  investment  incentives,  spurring the interest of multinationals and small  to medium enterprises (SME) looking to lower costs.

The second factor attracting outside investment to Chengdu is its vast supply of cheap and talented labour.  As  the  city  turned  its  focus  toward  high-tech  industries,  local  universities  developed  well- regarded programmes in IT, churning out a pool of qualified workers. The low cost of living in Chengdu allowed producers to benefit from lower labour costs, with average salaries for skilled labour lower than cities like Beijing, Shanghai or Shenzhen. The ensuing cost-benefits have drawn major investors like Intel, Toyota,   and   Motorola,   reinvigorating   the   once  neglected backwater.

One factor that historically limited development of the city was the high transport cost for primary and secondary sectors. This has however in many ways become a blessing in disguise. Lacking adequate containerised rail infrastructure or the proximity to ports that cities like Shanghai enjoy, Chengdu was forced to focus on development of service industries and high- value manufacturing such as semi-conductors and pharmaceuticals. Industries which are less dependant upon cheap transport costs may insulate the city from the global downturn  –  in  stark  contrast  to  regions  heavily  dependant upon low cost manufacturing such as Guangdong.

With both the Central and Provincial governments working hard to improve the overall investment environment  of  the  city,  and  the  province  at  large,  huge  sums  are  being  invested  in  financing construction  of  several  major  intercity  highway  and  rail  networks.  Within  the  city  limits  itself, construction is underway on its metro system.

                                          Expanding rail capacity

Not even the worst economic crisis in 80 years could halt the growth of China’s logistics industry. The world’s rising economic superpower still put up growth numbers that aroused the envy of the rest of the world. Beijing continued to invest enormous sums of money into massive infrastructure projects, building new airports, railway lines, expressways, and intermodal centres. China’s full-speed march into modernity appeared far less affected by the dire news emanating from other corners of the world than many of the more developed regions.

Logistics, the industry that greases the wheels of the great Chinese economy, continued to grow at a rapid pace. Yet to argue that the 2008-9 was a uniformly positive year for the industry would ignore several troubling signs. Port throughput growth fell nearly everywhere in China over the period; and no place suffered a steeper growth decline than the Pearl River Delta, China’s most developed economic region.

Furthermore,  upon closer inspection China’s logistics industry still has significant structural problems that may undermine future development. Logistics still comprise over 18 percent of GDP, a figure more than double that in developed economies. The industry suffers from under-agglomeration, and many registered logistics companies operating in China lack professional standards and operational efficiency.

Despite tremendous government effort to spread China’s newfound prosperity to less-developed regions, the gap between China’s coastal area and its interior remains large - and growing. The country’s varied economic regions remain less integrated with each other than with various parts of the outside world. Bureaucratic hassles—such as fines levied upon inter-provincial trade—have prevented the massive Chinese economy from operating as a cohesive unit hindering the emergence of national brands able to compete on a global stage.

Aware that suboptimal logistics performance threatens to obstruct overall economic development, Beijing has expended enormous effort in rectifying these problems. Investment in transport infrastructure received a jolt by a CNY 586bn stimulus package, and the Chinese government confidently claims that a nationwide high-speed rail network will be in place by 2020. New airports, expressways, and container terminals will also affect the logistics landscape in coming years.

In addition, reforms such as the Fuel Tax Law have indicated a growing willingness for Beijing to consider green solutions in its logistics industry policy. The coming years are likely to witness an increased emphasis on environmentally-sound practices, a move that could lead to greater industry consolidation as smaller firms struggle to compete in a rapidly changing landscape.

Few observers expect the global economic slowdown to have reversed itself fully by the end of 2010, and correcting structural flaws in the logistics industry will require time, even by the standards of the Chinese government. The industry showed impressive resiliency in the wake of natural disaster in 2008, overcoming both the unseasonably cold weather in the winter and the tragic Sichuan earthquake in May.

Betting against its ability to overcome an economic slowdown would similarly be unwise – even though the World Bank now forecasts that a recovery independent of stimulus spending is likely to require a broad structural change in the composition of GDP growth drivers.

China’s Economic Geography

The Chinese economy is better understood not as a single unit but rather a decentralised collection of several regional economies that interact with one another less than one might expect. This arrangement— which differs from other large countries such as the United States—results from China’s transition from a command to a market economy.

Such fragmentation has resulted in the apparent lack of major, globally recognized companies emerging from  China,  particularly  given  the  size  of  its  economy.  Larger  Chinese  firms  have  enormous  difficulty managing their parent-subsidiary networks; companies under the same corporate umbrella often fail to cooperate and even work at cross-purposes.

Growth of Inter-Asian Trade

Within Asia, the PRC is the largest driver of regional exports, but its final demand accounts for only 6.4 percent of total Asian trade, which was only half the contribution from Japan and slightly below a quarter of the US. The results show that the G3 economies are still the main ultimate export destinations for finished goods leaving Asia, when taking into account the share of intermediate goods trade that is for assembly and production within the region, but that is eventually shipped out of the region.

Based on these data, CIO estimates that of the total volume of finished goods leaving Asian countries as exports, around 20 percent is destined for Asian markets with around 60 percent absorbed by G3 countries and the remainder headed for the rest of the world (ROW).

Air Freight

While most carriers, as well as shippers, appear confident that 2010 will represent a general stabilisation of overall demand—a return to 2008 volumes—most believe that this demand is likely to take the shape of mini-troughs and mini-peaks, due to the continued unpredictability of demand. This said however, given last year’s last minute scramble for capacity, it is unlikely that shippers will be prepared to run inventories as low as last year. In general, while most predict that 2010 will prove to be a much more positive year for the air freight market in China, it seems unlikely that carriers will be keen to reintroduce capacity back into the market straight away. Instead preferring a much more gradual approach as demand develops helping to hold up freight rates and limit liability in what remain uncertain times.

Future growth will however be dependent on several factors:

????nbsp;   Macro-economy stabilized.

????nbsp;   Foreign trade began to resume growth.

????nbsp;   International transshipment centers of air express giants will play a great role.

????nbsp;   Uncertainties caused by the economic crisis and legacy policies do remain.

China’s investment in airport infrastructure development will be enormous. According to a plan formulated in 2008, the country intends to spend more on airport infrastructure development over the next five years than the entirety of its airport investment program since the start of the reform era, a figure likely to approach USD 20bn by 2013.

Road Haulage

Some estimates indicating that up to 30-40 percent of China’s road haulage firms experiencing sever losses with many forced to withdraw from the market altogether. Given the high levels of fragmentation and lack of standardization and national registration in the sector it is extremely difficult to accurately gauge the real level of loss or indeed the number of companies forced to withdraw from the sector over the period. It is however possible to say that the vast bulk were only marginally profitable and were – especially given Beijing’s commitment to consolidate the sector – living on borrowed time. Perhaps the most significant trend—besides the global economic meltdown—facing road transport in China is the passage of a new fuel tax law, implemented on 1 January 2009.

Express Delivery and E-Commerce

Postal business achieved a total income of CNY 109.5bn in 2009, up 14 percent. In particular, the express delivery sector grew by 17.3 percent in terms of revenue and reached CNY 47.9bn; total volume increased by 22.8 percent to CNY 1.86bn pieces.

Beijing’s new Postal Law has made waves in the express delivery industry. More dire predictions estimate that up to 80 percent of private express delivery enterprises will be unable to compete and fold from the industry. In the long term though the express delivery market in China promises only to expand, buoyed by the phenomenal growth of the nascent e-commerce industry.

In 2009, as part of an industry wide trend the two largest state-owned express companies - China Post EMS and China Post Logistics Company - completed integration and hence formed a new company, China Postal & Express Logistics.

The number of Chinese netizens reached 383m in Q4 2009, including over 109m online buyers. The e-trading turnover of SMEs amounted to almost CNY 2 trillion, accounting for 1.5 percent of the nation’s GDP. China E- Commerce shopping market is estimated to grow by over 50 percent in 2010, which means a total delivery volume of about 1bn or so.

Looking ahead to the future, the MOT has highlighted tier-3 and tier-4 cities in the eastern region and tier-2 and tier-3 cities in the central and western regions as becoming new growth areas for the industry in coming years.

Port Sector

As 2009 drew to a close, China had 413 ports with a total of 31,050 productive berths—of which 1,416 berths were over 10,000 tons. Coastal ports registered 5,119 productive berths—1,157 over 10,000 tons— while inland ports had 25,931 productive berths, 259 over the 10,000-ton level.

Of berths over 10,000 tons, 665 were between 10,000 and 30,000 tons, 252 between 30,000 and 50,000 tons, 366 between 50,000 and 100,000 tons and 142 berths in excess of 100,000 tons.

The global slowdown had an immediate impact on China international container trade sector with ports in numerous regions reporting disappointing figures for the Chinese New Year period.

In general, the south of the country was hit hardest, with port further north faring much better. At least part of the reason for this is that ports further north depend less on the lower value exports that tend to be the mainstay of certainly Guangdongs economy. Tianjin, for example, was boosted by the fact that much of its exports originate in the Binhai Free-Trade Zone, which tend to produce higher-tech products and the fact that its portfolio of shipping routes is less dependant on China-Eurpoe or US routes.

Bulk

Despite the overall slowing of growth in 2009, three new ports joined the 100m ton club. The new ports to reach  the mark  were  Jiangyin in Jiangsu Province,  Xiamen  in Fujian Province,  Zhanjiang in Guangdong Province and Huzhou in Zhejiang Province. Jiangyin and Huzhou are both river ports.

Over the course of 2009, coal imports increased by almost 211 percent to 125.83m tons. Over the same period, China’s coal exports fell 50.7 percent year-on-year to 22.4m tons, with production up 12.7 percent to 2.96 bn tons; making China a net importer of coal on an annualised basis (China’s net coal import reached103.43 m tons in 2009).

Iron ore imports grew rapidly in 2009. Chinese imports of iron ore showed robust growth in 2009, increasing 42 percent to 628m tonnes. Crude steel production within the country also increased, from 500m tonnes in2008 to 568m in 2009.

However, uneven distribution iron ore terminals are unevenly distributed a cause of steel company distribution patterns in China and network inefficiency. According to adjustments in the steel plant distribution pattern, China will build 12 super-large iron ore vessels with a capacity of 400,000 tonnes, in turn triggering new changes in the ore terminal distribution pattern.

Growing importance of logistics industry

As part of the overall stimulus strategy announced in 2008 intending to help mediate the effects of the global slowdown, the State Council acknowledged the critical role logistics will play in the overarching strategy to maintain GDP growth levels at the 8 percent target deemed necessary to absorb an emergent labour force and facilitate the structural changes deemed necessary to fully reform the economy.

Indeed, whilst 8 percent has in fact been maintained for the bulk of this year thus far, it has been achieved through a substantial shift in the composition of GDP growth drivers as pertinently noted by the World Bank China Economy Update Q3 2009. The noted shift seems to indicate that expansionary policies enacted by Beijing have in fact taken up much of the slack drawn into the system by a reduction in export demand. The Bank further concedes that, as expansionary measures subside to make way for natural growth the resulting composition of  GDP  drivers  will  be  structurally  different  from the  pre-crash economy  in that  domestic demand will likely mitigate to some extent the longer term reductions in spending power by the three main global consumer blocks – namely Japan, the US and the EU25.

Within this overall framework of structural change the State Council acknowledged the importance of the logistics sector both as an engine of growth to facilitate an effective response to the financial crisis as well as the need to streamline performance to enhance competitiveness to help the industry adapt to these longer term structural shifts in global consumption; to help Chinese logistics providers compete in an increasingly fierce global market environment; and create new jobs supporting the growth of domestic consumption.

A very comprehensive break-down of the various points on the New Chinese labour Law of 2008. For the PDF please click here