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Key Indicators on ASEAN-China Trade & Investment 2013

Key Indicators on ASEAN-China Trade & Investment 2013

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration. At present, China is the largest trading partner of ASEAN while ASEAN is China's third largest trading partner. From 2002 to 2012, China-ASEAN bilateral trade climbed 23.6 percent annually to its current 400 billion U.S. dollars. Mutual investment added up to over 100 billion dollars by the end 2012. Currently member countries and China are working to upgrade and deepend the China-ASEAN Free Trade Area (CAFTA) that was established in 2010.

 

 

Key Indicators on ASEAN-China Relations (2013): Trade

 

Category

Contents

Ranking

Remarks

ASEAN-China Trade

443.6 billion USD

(ASEAN Importing 244.1 billion USD /Exporting 199.5 billion USD)

China is ASEAN's largest trade partner, and ASEAN is China's 3rd largest trade partner.

Increased by 10.9% from 2012

 China's Trade with Malaysia

 106.07 billion USD

(Malaysia Importing 45.93 billion USD /Exporting 60.14 billion USD)

 1st among ASEAN Member States

Increased by 11.9% from 2012
 China's Trade with Singapore

75.91 billion USD

(Singapore Importing 45.86 billion USD /Exporting 30.05 billion USD) 

2nd

 Increased by 9.6% from 2012
China's Trade with Thailand

71.26 billion USD

 (Thailand Importing 32.74 billion USD /Exporting 38.52 billion USD)

3rd

Increased by 2.2% from 2012

 China's Trade with Indonesia

 68.35 billion USD

(Indonesia Importing 36.93 billion USD /Exporting 31.42 billion USD)

 4th

Increased by 3.2% from 2012 
 China's Trade with Vietnam

 65.48 billion USD

(Vietnam Importing 48.59 billion USD /Exporting 16.89 billion USD)

 5th

Increased by 29.8% from 2012
China's Trade with the Philippines

38.07 billion USD

(the Philippines Importing 19.84 billion USD /Exporting 18.23 billion USD)

6th

Increased by 4.6% from 2012

Source: General Administration of Customs of China

 

Key Indicators on ASEAN-China Relations (2013): Investment

 

 ASEAN-China Investment Total: 14.09 billion USD

 

 ASEAN's Investment to China Total: 8.35 billion USD China's Investment to ASEAN Total: 5.74 billion USD 
Rank   Country  Investment    Rank  Country Investment
 1st among ASEAN Member States  Singapore  7.327 billion USD  1st among ASEAN Member States Singapore 2.4 billion USD
 2nd Thailand  480 million USD 2nd  Laos 800 million USD
 3rd  Malaysia  280 million USD  3rd  Indonesia  760 million USD

Source: Ministry of Commerce of China

 

China`s foreign aid budgets 2001-2013...

China`s foreign aid budgets 2001-2013.
This paper aims to estimate China’s net foreign aid from 2001 to 2013 as compared to net ODA figures which OECD DAC usually uses. First, a practical definition to capture China’s foreign aid activities as a proxy for China’s ODA was proposed. It consists of grants and interest-free loans (treated as grants), concessional loans as bilateral aid, and contributions to international development agencies as multilateral aid. Second, both net and gross disbursements of China’s foreign aid were estimated. The results showed that China’s net foreign aid has grown rapidly since 2004 and reached US$ 7.1 billion in 2013. The share of bilateral aid is much larger than that of multilateral aid. The difference between net and gross foreign aid is still small due to the fact that the repayment of concessional loans is still relatively limited.
 
 
Relevant points from the paper are:
 
  • Most Chinese aid is provided bilaterally. Only 15% is given as multilateral aid.
  • Concessional loans, provided by China Eximbank, now make up nearly half of the total aid.
  • There are more than 40 departments involved in some way.

The full paper is available here.

Constitution of the Peoples Republic...

Constitution of the Peoples Republic of China, Part 1.

PREAMBLE

 

 

China is one of the countries with the longest histories in the world. The people of all nationalities in China have jointly created a splendid culture and have a glorious revolutionary tradition. Feudal China was gradually reduced after 1840 to a semi-colonial and semi-feudal country. The Chinese people waged wave upon wave of heroic struggles for national independence and liberation and for democracy and freedom. Great and earth-shaking historical changes have taken place in China in the 20th century. The Revolution of 1911, led by Dr Sun Yat-sen, abolished the feudal monarchy and gave birth to the Republic of China. But the Chinese people had yet to fulfil their historical task of overthrowing imperialism and feudalism. After waging hard, protracted and tortuous struggles, armed and otherwise, the Chinese people of all nationalities led by the Communist Party of China with Chairman Mao Zedong as its leader ultimately, in 1949, overthrew the rule of imperialism, feudalism and bureaucrat capitalism, won the great victory of the new-democratic revolution and founded the People's Republic of China. Thereupon the Chinese people took state power into their own hands and became masters of the country.

 

After the founding of the People's Republic, the transition of Chinese society from a new- democratic to a socialist society was effected step by step. The socialist transformation of the private ownership of the means of production was completed, the system of exploitation of man by man eliminated and the socialist system established. The people's democratic dictatorship led by the working class and based on the alliance of workers and peasants, which is in essence the dictatorship of the proletariat, has been consolidated and developed. The Chinese people and the Chinese People's Liberation Army have thwarted aggression, sabotage and armed provocations by imperialists and hegemonists,safeguarded China's national independence and security and strengthened its national defence. Major successes have been achieved in economic development. An independent and fairly comprehensive socialist system of industry has in the main been established. There has been a marked increase in agricultural production. Significant progress has been made in educational, scientific, cultural and other undertakings, and socialist ideological education has yielded noteworthy results. The living standards of the people have improved considerably. Both the victory of China's new-democratic revolution and the successes of its socialist cause have been achieved by the Chinese people of all nationalities under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, and by upholding truth, correcting errors and overcoming numerous difficulties and hardships.

 

The basic task of the nation in the years to come is to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism- Leninism and Mao ZedongThought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship and follow the socialist road, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defence and science and technology step by step to turn China into a socialist country with a high level of culture and democracy. The exploiting classes as such have been eliminated in our country. However, class struggle will continue to exist within certain limits for a long time to come. The Chinese people must fight against those forces and elements, both at home and abroad, that are hostile to China's socialist system and try to undermine it. Taiwan is part of the sacred territory of the People's Republic of China. It is the lofty duty of the entire Chinese people, including our compatriots in Taiwan, to accomplish the great task of reunifying the motherland. In building socialism it is imperative to rely on the workers, peasants and intellectuals and unite with all the forces that can be united. In the long years of revolution and construction, there has been formed under the leadership of the Communist Party of China a broad patriotic united front that is composed of democratic parties and people's organizations and embraces all socialist working people, all patriots who support socialism and all patriots who stand for reunification of the motherland. This united front will continue to be consolidated and developed. The Chinese People's Political Consultative Conference is a broadly representative organization of the united front, which has played a significant historical role and will continue to do so in the political and social life of the country, in promoting friendship with the people of other countries and in the struggle for socialist modernization and for the reunification and unity of the country. The People's Republic of China is a unitary multi-national state built up jointly by the people of all its nationalities. Socialist relations of equality, unity and mutual assistance have been established among them and will continue to be strengthened. In the struggle to safeguard the unity of the nationalities, it is necessary to combat big-nation chauvinism, mainly Han chauvinism, and also necessary to combat local-national chauvinism. The state does its utmost to promote the common prosperity of all nationalities in the country. China's achievements in revolution and construction are inseparable from support by the people of the world. The future of China is closely linked with that of the whole world. China adheres to an independent foreign policy as well as to the five principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality and mutual benefit, and peaceful coexistence in developing diplomatic relations and economic and cultural exchanges with other countries; China consistently opposes imperialism, hegemonism and colonialism, works to strengthen unity with the people of other countries, supports the oppressed nations and the developing countries in their just struggle to win and preserve national independence and develop their national economies, and strives to safeguard world peace and promote the cause of human progress. This Constitution affirms the achievements of the struggles of the Chinese people of all nationalities and defines the basic system and basic tasks of the state in legal form; it is the fundamental law of the state and has supreme legal authority. The people of all nationalities, all state organs, the armed forces, all political parties and public organizations and all enterprises and undertakings in the country must take the Constitution as the basic norm of conduct, and they have the duty to uphold the dignity of the Constitution and ensure its implementation.


CHAPTER I. GENERAL PRINCIPLES

 

Article 1. The People's Republic of China is a socialist state under the people's democratic dictatorship led by the working class and based on the alliance of workers and peasants. The socialist system is the basic system of the People's Republic of China. Sabotage of the socialist system by any organization or individual is prohibited.

 

Article 2. All power in the People's Republic of China belongs to the people. The organs through which the people exercise state power are the National People's Congress and the local people's congresses at different levels. The people administer state affairs and manage economic, cultural and social affairs through various channels and in various ways in accordance with the law.

 

Article 3. The state organs of the People's Republic of China apply the principle of democratic centralism. The National People's Congress and the local people's congresses at different levels are instituted through democratic election. They are responsible to the people and subject to their supervision. All administrative, judicial and procuratorial organs of the state are created by the people's congresses to which they are responsible and under whose supervision they operate. The division of functions and powers between the central and local state organs is guided by the principle of giving full play to the initiative and enthusiasm of the local authorities under the unified leadership of the central authorities.

 

Article 4. All nationalities in the People's Republic of China are equal. The state protects the lawful rights and interests of the minority nationalities and upholds and develops the relationship of equality, unity and mutual assistance among all of China's nationalities. Discrimination against and oppression of any nationality are prohibited; any acts that undermine the unity of the nationalities or instigate their secession are prohibited. The state helps the areas inhabited by minority nationalities speed up their economic and cultural development in accordance with the peculiarities and needs of the different minority nationalities. Regional autonomy is practised in areas where people of minority nationalities live in compact communities; in these areas organs of self- government are established for the exercise of the right of autonomy. All the national autonomous areas are inalienable parts of the People's Republic of China. The people of all nationalities have the freedom to use and develop their own spoken and written languages, and to preserve or reform their own ways and customs.

 

Article 5. The state upholds the uniformity and dignity of the socialist legal system. No law or administrative or local rules and regulations shall contravene the constitution. All state organs, the armed forces, all political parties and public organizations and all enterprises and undertakings must abide by the Constitution and the law. All acts in violation of the Constitution and the law must be investigated. No organization or individual may enjoy the privilege of being above the Constitution and the law.

 

Article 6. The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of 'from each according to his ability, to each according to his work.

 

Article 7. The state economy is the sector of socialist economy under ownership by the whole people; it is the leading force in the national economy. The state ensures the consolidation and growth of the state economy.

 

Article 8. Rural people's communes, agricultural producers' co-operatives, and other forms of co- operative economy such as producers' supply and marketing, credit and consumers co-operatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm private plots of cropland and hilly land, engage in household sideline production and raise privately owned livestock. The various forms of co-operative economy in the cities and towns, such as those in the handicraft, industrial, building, transport, commerical and service trades, all belong to the sector of socialist economy under collective ownership by the working people. The state protects the lawful rights and interests of the urban and rural economic collectives and encourages, guides and helps the growth of the collective economy.

 

Article 9. Mineral resources, waters, forests, mountains, grassland, unreclaimed land, beaches and other natural resources are owned by the state, that is, by the whole people, with the exception of the forests, mountains, grassland, unreclaimed land and beaches that are owned by collectives in accordance with the law. The state ensures the rational use of natural resources and protects rare animals and plants. The appropriation or damage of natural resources by any organization or individual by whatever means is prohibited.

 

Article 10. Land in the cities is owned by the state. Land in the rural and suburban areas is owned by collectives except for those portions which belong to the state in accordance with the law; house sites and private plots of cropland and hilly land are also owned by collectives. The state may in the public interest take over land for its use in accordance with the law. No organization or individual may appropriate, buy, sell or lease land, or unlawfully transfer land in other ways. All organizations and individuals who use land must make rational use of the land.

 

Article 11. The individual economy of urban and rural working people, operated within the limits prescribed by law, is a complement to the socialist public economy. The state protects the lawful rights and interests of the individual economy. The state guides, helps and supervises the individual economy by exercising administrative control.

 

Article 12. Socialist public property is sacred and inviolable. The state protects socialist public property. Appropriation or damage of state or collective property by any organization or individual by whatever means is prohibited.

 

Article 13. The state protects the right of citizens to own lawfully earned income, savings, houses and other lawful property. The state protects by law the right of citizens to inherit private property.

 

Article 14. The state continuously raises labour productivity, improves economic results and develops the productive forces by enhancing the enthusiasm of the working people, raising the level of their technical skill, disseminating advanced science and technology, improving the systems of economic administration and enterprise operation and management, instituting the socialist system of responsibility in various forms and improving organization of work. The state practises strict economy and combats waste. The state properly apportions accumulation and consumption, pays attention to the interests of the collective and the individual as well as of the state and, on the basis of expanded production, gradually improves the material and cultural life of the people.

 

Article 15. The state practises economic planning on the basis of socialist public ownership. It ensures the proportionate and co-ordinated growth of the national economy through overall balancing by economic planning and the supplementary role of regulation by the market. Disturbance of the orderly functioning of the social economy or disruption of the state economic plan by any organization or individual is prohibited.

 

Article 16. State enterprises have decision-making power in operation and management within the limits prescribed by law, on condition that they submit to unified leadership by the state and fulfil all their obligations under the state plan. State enterprises practise democratic management through congresses of workers and staff and in other ways in accordance with the law.

 

Article 17. Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they accept the guidance of the state plan and abide by the relevant laws. Collective economic organizations practise democratic management in accordance with the law, with the entire body of their workers electing or removing their managerial personnel and deciding on major issues concerning operation and management.

 

Article 18. The People's Republic of China permits foreign enterprises, other foreign economic organizations and individual foreigners to invest in China and to enter into various forms of economic co-operation with Chinese enterprises and other economic organizations in accordance with the law of the People's Republic of China. All foreign enterprises and other foreign economic organizations in China, as well as joint ventures with Chinese and foreign investment located in China, shall abide by the law of the People's Republic of China. Their lawful rights and interests are protected by the law of the People's Republic of China.

 

Article 19. The state develops socialist educational undertakings and works to raise the scientific and cultural level of the whole nation. The state runs schools of various types, makes primary education compulsory and universal, develops secondary, vocational and higher education and promotes pre-school education. The state develops educational facilities of various types in order to wipe out illiteracy and provide political, cultural, scientific, technical and professional education for workers, peasants, state functionaries and other working people. It encourages people to become educated through self- study. The state encourages the collective economic organizations, state enterprises and undertakings and other social forces to set up educational institutions of various types in accordance with the law. The state promotes the nationwide use of Putonghua (common speech based on Beijing pronunciation).

 

Article 20. The state promotes the development of the natural and social sciences, disseminates scientific and technical knowledge, and commends and rewards achievements in scientific research as well as technological discoveries and inventions.

 

Article 21. The state develops medical and health services, promotes modern medicine and traditional Chinese medicine, encourages and supports the setting up of various medical and health facilities by the rural economic collectives, state enterprises and undertakings and neighbourhood organizations, and promotes sanitation activities of a mass character, all to protect the people's health. The state develops physical culture and promotes mass sports activities to build up the people's physique.

 

Article 22. The state promotes the development of literature and art, the press, broadcasting and television undertakings, publishing and distribution services, libraries, museums, cultural centres and other cultural undertakings, that serve the people and socialism, and sponsors mass cultural activities. The state protects places of scenic and historical interest,valuable cultural monuments and relics and other important items of China's historical and cultural heritage.

 

Article 23. The state trains specialized personnel in all fields who serve socialism, increases the number of intellectuals and creates conditions to give full scope to their role in socialist modernization.

 

Article 24. The state strengthens the building of socialist spiritual civilization through spreading education in high ideals and morality, general education and education in discipline and the legal system, and through promoting the formulation and observance of rules of conduct and common pledges by different sections of the people in urban and rural areas. The state advocates the civic virtues of love for the motherland, for the people, for labour, for science and for socialism; it educates the people in patriotism, collectivism, internationalism and communism and in dialectical and historical materialism; it combats the decadent ideas of capitalism and feudalism and other decadent ideas.

 

Article 25. The state promotes family planning so that population growth may fit the plans for economic and social development.

 

Article 26. The state protects and improves the living environment and the ecological environment, and prevents and controls pollution and other public hazards. The state organizes and encourages afforestation and the protection of forests.

 

Article 27. All state organs carry out the principle of simple and efficient administration, the system of responsibility for work and the system of training functionaries and appraising their work in order constantly to improve quality of work and efficiency and combat bureaucratism. All state organs and functionaries must rely on the support of the people, keep in close touch with them, heed their opinions and suggestions, accept their supervision and work hard to serve them.

 

Article 28. The state maintains public order and suppresses treasonable and other counter- revolutionary activities; it penalizes actions that endanger public security and disrupt the socialist economy and other criminal activities, and punishes and reforms criminals.

 

Article 29. The armed forces of the People's Republic of China belong to the people. Their tasks are to strengthen national defence, resist aggression, defend the motherland, safeguard the people's peaceful labour, participate in national reconstruction, and work hard to serve the people. The state strengthens the revolutionization, modernization and regularization of the armed forces in order to increase the national defence capability.

 

Article 30. The administrative division of the People's Republic of China is as follows: (1) The country is divided into provinces, autonomous regions and municipalities directly under the Central Government; (2) Provinces and autonomous regions are divided into autonomous prefectures, counties, autonomous counties and cities; (3) Counties and autonomous counties are divided into townships, nationality townships and towns. Municipalities directly under the Central Government and other large cities are divided into districts and counties. Autonomous prefectures are divided into counties, autonomous counties, and cities. All autonomous regions, autonomous prefectures and autonomous counties are national autonomous areas.

 

Article 31. The state may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by law enacted by the National People's Congress in the light of the specific conditions.

 

Article 32. The People's Republic of China protects the lawful rights and interests of foreigners within Chinese territory, and while on Chinese territory foreigners must abide by the law of the People's Republic of China. The People's Republic of China may grant asylum to foreigners who request it for political reasons.

 


CHAPTER II. THE FUNDAMENTAL RIGHTS AND DUTIES OF CITIZENS

 

Article 33. All persons holding the nationality of the People's Republic of China are citizens of the People's Republic of China. All citizens of the People's Republic of China are equal before the law. Every citizen enjoys the rights and at the same time must perform the duties prescribed by the Constitution and the law.

 

Article 34. All citizens of the People's Republic of China who have reached the age of 18 have the right to vote and stand for election, regardless of nationality, race, sex, occupation, family background, religious belief, education, property status, or length of residence, except persons deprived of political rights according to law.

 

Article 35. Citizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration.

 

Article 36. Citizens of the People's Republic of China enjoy freedom of religious belief. No state organ, public organization or individual may compel citizens to believe in, or not to believe in, any religion; nor may they discriminate against citizens who believe in, or do not believe in, any religion. The state protects normal religious activities. No one may make use of religion to engage in activities that disrupt public order, impair the health of citizens or interfere with the educational system of the state. Religious bodies and religious affairs are not subject to any foreign domination.

 

Article 37. The freedom of person of citizens of the People's Republic of China is inviolable. No citizen may be arrested except with the approval or by decision of a people's procuratorate or by decision of a people's court, and arrests must be made by a public security organ. Unlawful deprivation or restriction of citizens' freedom of person by detention or other means is prohibited; and unlawful search of the person of citizens is prohibited. Article 38. The personal dignity of citizens of the People's Republic of China is inviolable. Insult, libel, false charge or frame-up directed against citizens by any means is prohibited.

 

Article 39. The home of citizens of the People's Republic of China is inviolable. Unlawful search of, or intrusion into, a citizen's home is prohibited.

 

Article 40. The freedom and privacy of correspondence of citizens of the People's Republic of China are protected by law. No organization or individual may, on any ground, infringe upon the freedom and privacy of citizens' correspondence except in cases where, to meet the needs of state security or of investigation into criminal offences, public security or procuratorial organs are permitted to censor correspondence in accordance with procedures prescribed by law.

 

Article 41. Citizens of the People's Republic of China have the right to criticize and make suggestions to any state organ or functionary. Citizens have the right to make to relevant state organs complaints and charges against, or exposures of, violation of the law or dereliction of duty by any state organ or functionary; but fabrication or distortion of facts with the intention of libel or frame-up is prohibited. In case of complaints, charges or exposures made by citizens, the state organ concerned must deal with them in a responsible manner after ascertaining the facts. No one may suppress such complaints, charges and exposures, or retaliate against the citizens making them. Citizens who have suffered losses through infringement of their civil rights by any state organ or functionary have the right to compensation in accordance with the law.

 

Article 42. Citizens of the People's Republic of China have the right as well as the duty to work. Using various channels, the state creates conditions for employment, strengthens labour protection, improves working conditions and, on the basis of expanded production, increases remuneration for work and social benefits. Work is the glorious duty of every able-bodied citizen. All working people in state enterprises and in urban and rural economic collectives should perform their tasks with an attitude consonant with their status as masters of the country. The state promotes socialist labour emulation, and commends and rewards model and advanced workers. The state encourages citizens to take part in voluntary labour. The state provides necessary vocational training to citizens before they are employed.

 

Article 43. Working people in the People's Republic of China have the right to rest. The state expands facilities for rest and recuperation of working people, and prescribes working hours and vacations for workers and staff.

 

Article 44. The state prescribes by law the system of retirement for workers and staff in enterprises and undertakings and for functionaries of organs of state. The livelihood of retired personnel is ensured by the state and society.

 

Article 45. Citizens of the People's Republic of China have the right to material assistance from the state and society when they are old, ill or disabled. The state develops the social insurance, social relief and medical and health services that are required to enable citizens to enjoy this right. The state and society ensure the livelihood of disabled members of the armed forces, provide pensions to the families of martyrs and give preferential treatment to the families of military personnel. The state and society help make arrangements for the work, livelihood and education of the blind, deaf-mute and other handicapped citizens.

 

Article 46. Citizens of the People's Republic of China have the duty as well as the right to receive education. The state promotes the all-round moral, intellectual and physical development of children and young people.

 

Article 47. Citizens of the People's Republic of China have the freedom to engage in scientific research, literary and artistic creation and other cultural pursuits. The state encourages and assists creative endeavours conducive to the interests of the people made by citizens engaged in education, science, technology, literature, art and other cultural work.

 

Article 48. Women in the People's Republic of China enjoy equal rights with men in all spheres of life, political, economic, cultural and social, and family life. The state protects the rights and interests of women, applies the principle of equal pay for equal work for men and women alike and trains and selects cadres from among women.

 

Article 49. Marriage, the family, and mother and child are protected by the state. Both husband and wife have the duty to practise family planning. Parents have the duty to rear and educate their minor children, and children who have come of age have the duty to support and assist their parents. Violation of the freedom of marriage is prohibited. Maltreatment of old people, women and children is prohibited.

 

Article 50. The People's Republic of China protects the legitimate rights and interests of Chinese nationals residing abroad and protects the lawful rights and interests of returned overseas Chinese and of the family members of Chinese nationals residing abroad.

 

Article 51. The exercise by citizens of the People's Republic of China of their freedoms and rights may not infringe upon the interests of the state, of society and of the collective, or upon the lawful freedoms and rights of other citizens.

 

Article 52. It is the duty of citizens of the People's Republic of China to safeguard the unity of the country and the unity of all its nationalities.

 

Article 53. Citizens of the People's Republic of China must abide by the constitution and the law, keep state secrets, protect public property and observe labour discipline and public order and respect social ethics.

 

Article 54. It is the duty of citizens of the People's Republic of China to safeguard the security, honour and interests of the motherland; they must not commit acts detrimental to the security, honour and interests of the motherland.

 

Article 55. It is the sacred obligation of every citizen of the People's Republic of China to defend the motherland and resist aggression. It is the honourable duty of citizens of the People's Republic of China to perform military service and join the militia in accordance with the law.

 

Article 56. It is the duty of citizens of the People's Republic of China to pay taxes in accordance with the law.


CHAPTER III. THE STRUCTURE OF THE STATE

 

SECTION 1. THE NATIONAL PEOPLE'S CONGRESS

 

Article 57. The National People's Congress of the People's Republic of China is the highest organ of state power. Its permanent body is the Standing Committee of the National People's Congress.

 

Article 58. The National People's Congress and its Standing Committee exercise the legislative power of the state.

 

Article 59. The National People's Congress is composed of deputies elected by the provinces, autonomous regions and municipalities directly under the Central Government, and by the armed forces. All the minority nationalities are entitled to appropriate representation. Election of deputies to the National People's Congress is conducted by the Standing Committee of the National People's Congress. The number of deputies to the National People's Congress and the manner of their election are prescribed by law.

 

Article 60. The National People's Congress is elected for a term of five years. Two months before the expiration of the term of office of a National People's Congress, its Standing Committee must ensure that the election of deputies to the succeeding National People's Congress is completed. Should exceptional circumstances prevent such an election, it may be postponed by decision of a majority vote of more than two- thirds of all those on the Standing Committee of the incumbent National People's Congress, and the term of office of the incumbent National People's Congress may be extended. The election of deputies to the succeeding National People's Congress must be completed within one year after the termination of such exceptional circumstances.

 

Article 61. The National People's Congress meets in session once a year and is convened by its Standing Committee. A session of the National People's Congress may be convened at any time the Standing Committee deems this necessary, or when more than one-fifth of the deputies to the National People's Congress so propose. When the National People's Congress meets, it elects a presidium to conduct its session.

 

Article 62. The National People's Congress exercises the following functions and powers:

(1) To amend the Constitution;

(2) To supervise the enforcement of the Constitution;

(3) To enact and amend basic statutes concerning criminal offences, civil affairs, the state organs and other matters;

(4) To elect the President and the Vice-President of the People's Republic of China; (previously translated as Chairman and Vice-Chairman of the People's Republic of China--translator's note.)

(5) To decide on the choice of the Premier of the State Council upon nomination by the President of the People's Republic of China, and to decide on the choice of the Vice-Premiers, State Councillors, Ministers in charge of Ministries or Commissions and the Auditor-General and the Secretary-General of the State Council upon nomination by the Premier;

(6) To elect the Chairman of the Central Military Commission and, upon his nomination, to decide on the choice of the other members of the Central Military Commission;

(7) To elect the President of the Supreme People's Court;

(8) To elect the Procurator-General of the Supreme People's Procuratorate;

(9) To examine and approve the plan for national economic and social development and the reports on its implementation;

(10) To examine and approve the state budget and the report on its implementation;

(11) To alter or annul inappropriate decisions of the Standing Committee of the National People's Congress;

(12) To approve the establishment of provinces, autonomous regions, and municipalities directly under the Central Government;

(13) To decide on the establishment of special administrative regions and the systems to be instituted there;

(14) To decide on questions of war and peace; and

(15) To exercise such other functions and powers as the highest organ of state power should exercise.

 

Article 63. The National People's Congress has the power to recall or remove from office the following persons:

(1) The President and the Vice-President of the People's Republic of China;

(2) The Premier, Vice-Premiers, State Councillors, Ministers in charge of Ministries or Commissions and the Auditor-General and the Secretary-General of the State Council;

(3) The Chairman of the Central Military Commission and others on the commission;

(4) The President of the Supreme People's Court; and

(5) The Procurator-General of the Supreme People's Procuratorate.

 

Article 64. Amendments to the Constitution are to be proposed by the Standing Committee of the National People's Congress or by more than one-fifth of the deputies to the National People's Congress and adopted by a majority vote of more than two-thirds of all the deputies to the Congress. Statutes and resolutions are adopted by a majority vote of more than one half of all the deputies to the National People's Congress.

 

Article 65. The Standing Committee of the National People's Congress is composed of the following: The Chairman; The Vice-Chairmen; The Secretary-General; and Members. Minority nationalities are entitled to appropriate representation on the Standing Committee of the National People's Congress. The National People's Congress elects, and has the power to recall, all those on its Standing Committee. No one on the Standing Committee of the National People's Congress shall hold any post in any of the administrative, judicial or procuratorial organs of the state.

 

Article 66. The Standing Committee of the National People's Congress is elected for the same term as the National People's Congress; it exercises its functions and powers until a new Standing Committee is elected by the succeeding National People's Congress. The Chairman and Vice-Chairmen of the Standing Committee shall serve no more than two consecutive terms.

 

Article 67. The Standing Committee of the National People's Congress exercises the following functions and powers:

(1) To interpret the Constitution and supervise its enforcement;

(2) To enact and amend statutes with the exception of those which should be enacted by the National People's Congress;

(3) To enact,when the National People's Congress is not in session, partial supplements and amendments to statutes enacted by the National People's Congress provided that they do not contravene the basic principles of these statutes;

(4) To interpret statutes;

(5) To examine and approve, when the National People's Congress is not in session, partial adjustments to the plan for national economic and social development and to the state budget that prove necessary in the course of their implementation;

(6) To supervise the work of the State Council,the Central Military Commission, the Supreme People's Court and the Supreme People's Procuratorate;

(7) To annual those administrative rules and regulations, decisions or orders of the State Council that contravene the Constitution or the statutes;

(8) To annul those local regulations or decisions of the organs of state power of provinces, autonomous regions and municipalities directly under the Central Government that contravene the Constitution, the statutes or the administrative rules and regulations;

(9) To decide, when the National People's Congress is not in session, on the choice of Ministers in charge of Ministries or Commissions or the Auditor-General and the Secretary-General of the State Council upon nomination by the Premier of the State Council;

(10) To decide, upon nomination by the Chairman of the Central Military Commission, on the choice of others on the commission, when the National People's Congress is not in session;

(11) To appoint and remove the Vice-Presidents and judges of the Supreme People's Court, members of its Judicial Committee and the President of the Military Court at the suggestion of the President of the Supreme People's Court;

(12) To appoint and remove the Deputy Procurators-General and procurators of the Supreme People's Procuratorate, members of its Procuratorial Committee and the Chief Procurator of the Military Procuratorate at the request of the Procurator-General of the Supreme People's Procuratorate, and to approve the appointment and removal of the chief procurators of the people's procuratorates of provinces, autonomous regions and municipalities directly under the Central Government;

(13) To decide on the appointment and recall of plenipotentiary representatives abroad;

(14) To decide on the ratification and abrogation of treaties and important agreements concluded with foreign states;

(15) To institute systems of titles and ranks for military and diplomatic personnel and of other specific titles and ranks;

(16) To institute state medals and titles of honour and decide on their conferment;

(17) To decide on the granting of special pardons;

(18) To decide, when the National People's Congress is not in session, on the proclamation of a state of war in the event of an armed attack on the country or in fulfillment of international treaty obligations concerning common defence against aggression;

(19) To decide on general mobilization or partial mobilization;

(20) To decide on the enforcement of martial law throughout the country or in particular provinces, autonomous regions or municipalities directly under the Central Government; and

(21) To exercise such other functions and powers as the National People's Congress may assign to it.

 

Article 68. The Chairman of the Standing Committee of the National People's Congress presides over the work of the Standing Committee and convenes its meetings. The Vice-Chairmen and the Secretary-General assist the Chairman in his work. Chairmanship meetings with the participation of the chairman, vice- chairmen and secretary-general handle the important day-to-day work of the Standing Committee of the National People's Congress.

 

Article 69. The Standing Committee of the National People's Congress is responsible to the National People's Congress and reports on its work to the Congress.

 

Article 70. The National People's Congress establishes a Nationalities Committee, a Law Committee, a Finance and Economic Committee, an Education, Science, Culture and Public Health Committee, a Foreign Affairs Committee, an Overseas Chinese Committee and such other special committees as are necessary. These special committees work under the direction of the Standing Committee of the National People's Congress when the Congress is not in session. The special committees examine, discuss and draw up relevant bills and draft resolutions under the direction of the National People's Congress and its Standing Committee.

 

Article 71. The National People's Congress and its Standing Committee may, when they deem it necessary, appoint committees of inquiry into specific questions and adopt relevant resolutions in the light of their reports. All organs of state, public organizations and citizens concerned are obliged to supply the necessary information to those committees of inquiry when they conduct investigations.

 

Article 72. Deputies to the National People's Congress and all those on its Standing Committee have the right, in accordance with procedures prescribed by law, to submit bills and proposals within the scope of the respective functions and powers of the National People's Congress and its Standing Committee.

 

Article 73. Deputies to the National People's Congress during its sessions, and all those on its Standing Committee during its meetings, have the right to address questions, in accordance with procedures prescribed by law, to the State Council or the ministries and commissions under the State Council, which must answer the questions in a responsible manner.

 

Article 74. No deputy to the National People's Congress may be arrested or placed on criminal trial without the consent of the Presidium of the current session of the National People's Congress or, when the National People's Congress is not in session, without the consent of its StandingCommittee.

 

Article 75. Deputies to the National People's Congress may not be called to legal account for their speeches or votes at its meetings.

 

Article 76. Deputies to the National People's Congress must play an exemplary role in abiding by the Constitution and the law and keeping state secrets and, in production and other work and their public activities, assist in the enforcement of the Constitution and the law. Deputies to the National People's Congress should maintain close contact with the units and people which elected them, listen to and convey their opinions and demands and work hard to serve them.

 

Article 77. Deputies to the National People's Congress are subject to the supervision of the units which elected them. The electoral units have the power, through procedures prescribed by law, to recall the deputies whom they elected.

 

Article 78. The organization and working procedures of the National People's Congress and its Standing Committee are prescribed by law.

 

SECTION 2. THE PRESIDENT OF THE PEOPLE'S REPUBLIC OF CHINA

 

Article 79: The President and Vice-President of the People's Republic of China are elected by the National People's Congress. Citizens of the People's Republic of China who have the right to vote and to stand for election and who have reached the age of 45 are eligible for election as President or Vice-President of the People's Republic of China. The term of office of the President and Vice-President of the People's Republic of China is the same as that of the National People's Congress, and they shall serve no more than two consecutive terms.

 

Article 80. The President of the People's Republic of China, in pursuance of decisions of the National People's Congress and its Standing Committee, promulgates statutes; appoints and removes the Premier, Vice-Premiers, State Councillors, Ministers in charge of Ministries or Commissions, and the Auditor- General and the Secretary-General of the State Council; confers state medals and titles of honour; issues orders of special pardons; proclaims martial law; proclaims a state of war; and issues mobilization orders.

 

Article 81. The President of the People's Republic of China receives foreign diplomatic representatives on behalf of the People's Republic of China and, in pursuance of decisions of the Standing Committee of the National People's Congress, appoints and recalls plenipotentiary representatives abroad, and ratifies and abrogates treaties and important agreements concluded with foreign states.

 

Article 82. The Vice-President of the People's Republic of China assists the President in his work. The Vice-President of the People's Republic of China may exercise such parts of the functions and powers of the President as the President may entrust to him.

 

Article 83. The President and Vice-President of the People's Republic of China exercise their functions and powers until the new President and Vice- President elected by the succeeding National People's Congress assume office.

 

Article 84. In case the office of the President of the People's Republic of China falls vacant, the Vice-President succeeds to the office of President. In case the office of the Vice-President of the People's Republic of China falls vacant, the National People's Congress shall elect a new Vice-President to fill the vacancy. In the event that the offices of both the President and the Vice-President of the People's Republic of China fall vacant, the National People's Congress shall elect a new President and a new Vice-President. Prior to such election, the Chairman of the Standing Committee of the National People's Congress shall temporarily act as the President of the People's Republic of China.

 

SECTION 3. THE STATE COUNCIL

 

Article 85. The State Council, that is, the Central People's Government of the People's Republic of China, is the executive body of the highest organ of state power; it is the highest organ of state administration.

 

Article 86. The State Council is composed of the following: The Premier; The Vice-Premiers; The State Councillors; The Ministers in charge of Ministries; The Ministers in charge of Commissions; The Auditor- General; and The Secretary-General. The Premier has overall responsibility for the State Council. The Ministers have overall responsibility for the respective ministries or commissions under their charge. The organization of the State Council is prescribed by law.

 

Article 87. The term of office of the State Council is the same as that of the National People's Congress. The Premier, Vice-Premiers and State Councillors shall serve no more than two consecutive terms.

 

Article 88. The Premier directs the work of the State Council. The Vice- Premiers and State Councillors assist the Premier in his work. Executive meetings of the State Council are composed of the Premier, the Vice-Premiers, the State Councillors and the Secretary-General of the State Council. The Premier convenes and presides over the executive meetings and plenary meetings of the State Council.

 

Article 89. The State Council exercises the following functions and powers: (1) To adopt administrative measures,enact administrative rules and regulations and issue decisions and orders in accordance with the Constitution and the statutes; (2) To submit proposals to the National People's Congress or its Standing Committee; (3) To lay down the tasks and responsibilities of the ministries and commissions of the State Council, to exercise unified leadership over the work of the ministries and commissions and to direct all other administrative work of a national character that does not fall within the jurisdiction of the ministries and commissions; (4) To exercise unified leadership over the work of local organs of state administration at different levels throughout the country, and to lay down the detailed division of functions and powers between the Central Government and the organs of state administration of provinces, autonomous regions and municipalities directly under the Central Government; (5) To draw up and implement the plan for national economic and social development and the state budget; (6) To direct and administer economic work and urban and rural development; (7) To direct and administer the work concerning education, science, culture, public health, physical culture and family planning; (8) To direct and administer the work concerning civil affairs, public security, judicial administration, supervision and other related matters; (9) To conduct foreign affairs and conclude treaties and agreements with foreign states; (10) To direct and administer the building of national defence; (11) To direct and administer affairs concerning the nationalities and to safeguard the equal rights of minority nationalities and the right of autonomy of the national autonomous areas; (12) To protect the legitimate rights and interests of Chinese nationals residing abroad and protect the lawful rights and interests of returned overseas Chinese and of the family members of Chinese nationals residing abroad; (13) To alter or annul inappropriate orders, directives and regulations issued by the ministries or commissions; (14) To alter or annul inappropriate decisions and orders issued by local organs of state administration at different levels; (15) To approve the geographic division of provinces, autonomous regions and municipalities directly under the Central Government, and to approve the establishment and geographic division of autonomous prefectures, counties, autonomous counties and cities; (16) To decide on the enforcement of martial law in parts of provinces, autonomous regions and municipalities directly under the Central Government; (17) To examine and decide on the size of administrative organs and, in accordance with the law, to appoint, remove and train administrative officers, appraise their work and reward or punish them; and (18) To exercise such other functions and powers as the National People's Congress or its Standing Committee may assign it.

 

Article 90. The ministers in charge of ministries or commissions of the State Council are responsible for the work of their respective departments and convene and preside over their ministerial meetings or commission meetings that discuss and decide on major issues in the work of their respective departments. The ministries and commissions issue orders, directives and regulations within the jurisdiction of their respective departments and in accordance with the statutes and the administrative rules and regulations, decisions and orders issued by the State Council.

 

Article 91. The State Council establishes an auditing body to supervise through auditing the revenue and expenditure of all departments under the State Council and of the local governments at different levels, and those of the state financial and monetary organizations and of enterprises and undertakings. Under the direction of the Premier of the State Council,the auditing body independently exercises its power to supervise through auditing in accordance with the law, subject to no interference by any other administrative organ or any public organization or individual.

 

Article 92. The State Council is responsible, and reports on its work, to the National People's Congress or, when the National People's Congress is not in session, to its Standing Committee.

 

SECTION 4. THE CENTRAL MILITARY COMMISSION

 

Article 93. The Central Military Commission of the People's Republic of China directs the armed forces of the country. The Central Military Commission is composed of the following: The Chairman; The Vice-Chairmen; and Members. The Chairman of the Central Military Commission has overall responsibility for the commission. The term of office of the Central Military Commission is the same as that of the National People's Congress.

 

Article 94. The Chairman of the Central Military Commission is responsible to the National People's Congress and its Standing Committee.

 

SECTION 5. THE LOCAL PEOPLE'S CONGRESS AND THE LOCAL PEOPLE'S GOVERNMENTS AT DIFFERENT LEVELS

 

Article 95. People's congresses and people's governments are established in provinces, municipalities directly under the Central Government, counties, cities, municipal districts, townships, nationality townships and towns. The organization of local people's congresses and local people's governments at different levels is prescribed by law. Organs of self-government are established in autonomous regions, autonomous prefectures and autonomous counties. The organization and working procedures of organs of self-government are prescribed by law in accordance with the basic principles laid down in Sections V and VI of Chapter Three of the Constitution.

 

Article 96. Local people's congresses at different levels are local organs of state power. Local people's congresses at and above the county level establish standing committees.

 

Article 97. Deputies to the people's congresses of provinces, municipalities directly under the Central Government, and cities divided into districts are elected by the people's congresses at the next lower level; deputies to the people'scongresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns are elected directly by their constituencies. The number of deputies to local people's congresses at different levels and the manner of their election are prescribed by law.

 

Article 98. The term of office of the people's congresses of provinces, municipalities directly under the Central Government and cities divided into districts is five years. The term of office of the people's congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns is three years.

 

Article 99. Local people's congresses at different levels ensure the observance and implementation of the Constitution, the statutes and the administrative rules and regulations in their respective administrative areas. Within the limits of their authority as prescribed by law, they adopt and issue resolutions and examine and decide on plans for local economic and cultural development and for development of public services. Local people's congresses at and above the county level examine and approve the plans for economic and social development and the budgets of their respective administrative areas, and examine and approve reports on their implementation. They have the power to alter or annul inappropriate decisions of their own standing committees. The people's congresses of nationality townships may, within the limits of their authority as prescribed by law, take specific measures suited to the peculiarities of the nationalities concerned.

 

Article 100. The people's congresses of provinces and municipalities directly under the Central Government, and their standing committees, may adopt local regulations, which must not contravene the Constitution, the statutes and the administrative rules and regulations, and they shall report such local regulations to the Standing Committee of the National People's Congress for the record.

 

Article 101. At their respective levels, local people's congresses elect, and have the power to recall, governors and deputy governors, or mayors and deputy mayors, or heads and deputy heads of counties, districts, townships and towns. Local people's congresses at and above the county level elect, and have the power to recall, presidents of people's courts and chief procurators of people's procuratorates at the corresponding level. The election or recall of chief procurators of people's procuratorates shall be reported to the chief procurators of the people's procuratorates at the next higher level for submission to the standing committees of the people's congresses at the corresponding level for approval.

 

Article 102. Deputies to the people's congresses of provinces, municipalities, directly under the Central Government and cities divided into districts are subject to supervision by the units which elected them; deputies to the people's congresses of counties, cities not divided into districts, municipal districts, townships, nationality townships and towns are subject to supervision by their constituencies. The electoral units and constituencies which elect deputies to local people's congresses at different levels have the power, according to procedures prescribed by law, to recall deputies whom they elected.

 

Article 103. The standing committee of a local people's congress at and above the county level is composed of a chairman, vice-chairmen and members, and is responsible, and reports on its work, to the people's congress at the corresponding level. The local people's congress at and above the county level elects, and has the power to recall, anyone on the standing committee of the people's congress at the corresponding level. No one on the standing committee of a local people's congress at and above the county level shall hold any post in state administrative, judicial and procuratorial organs.

 

Article 104. The standing committee of a local people's congress at and above the county level discusses and decides on major issues in all fields of work in its administrative area; supervises the work of the people's government, people's court and people's procuratorate at the corresponding level; annuls inappropriate decisions and orders of the people's government at the corresponding level; annuls inappropriate resolutions of the people's congress at the next lower level; decides on the appointment and removal of functionaries of state organs within its jurisdiction as prescribed by law; and, when the people's congress at the corresponding level is not in session, recalls individual deputies to the people's congress at the next higher level and elects individual deputies to fill vacancies in that people's congress.

 

Article 105. Local people's governments at di

Constitution of the Peoples Republic...

Constitution of the Peoples Republic of China, Part 2.

 

Article 105. Local people's governments at different levels are the executive bodies of local organs of state power as well as the local organs of state administration at the corresponding level. Local people's governments at different levels practise the system of overall responsibility by governors, mayors, county heads, district heads, township heads and town heads.

 

Article 106. The term of office of local people's governments at different levels is the same as that of the people's congresses at the corresponding level.

 

Article 107. Local people's governments at and above the county level, within the limits of their authority as prescribed by law, conduct the administrative work concerning the economy, education, science, culture, public health, physical culture, urban and rural development, finance, civil affairs, public security, nationalities affairs, judicial administration, supervision and family planning in their respective administrative areas; issue decisions and orders; appoint, remove and train administrative functionaries, appraise their work and reward or punish them. People's governments of townships, nationality townships and towns carry out the resolutions of the people's congress at the corresponding level as well as the decisions and orders of the state administrative organs at the next higher level and conduct administrative work in their respective administrative areas. People's governments of provinces and municipalities directly under the Central Government decide on the establishment and geographic division of townships, nationality townships and towns.

 

Article 108. Local people's governments at and above the county level direct the work of their subordinate departments and of people's governments at lower levels, and have the power to alter or annul inappropriate decisions of their subordinate departments and people's governments at lower levels.

 

Article 109. Auditing bodies are established by local people's governments at and above the county level. Local auditing bodies at different levels independently exercise their power to supervise through auditing in accordance with the law and are responsible to the people's government at the corresponding level and to the auditing body at the next higher level.

 

Article 110. Local people's governments at different levels are responsible, and report on their work, to people's congresses at the corresponding level. Local people's governments at and above the county level are responsible, and report on their work, to the standing committee of the people's congress at the corresponding level when the congress is not in session. Local people's governments at different levels are responsible, and report on their work, to the state administrative organs at the next higher level. Local people's governments at different levels throughout the country are state administrative organs under the unified leadership of the State Council and are subordinate to it.

 

Article 111. The residents' committees and villagers' committees established among urban and rural residents on the basis of their place of residence are mass organizations of self-management at the grass-roots level. The chairman, vice-chairmen and members of each residents' or villagers' committee are elected by the residents. The relationship between the residents' and villagers' committees and the grass-roots organs of state power is prescribed by law. The residents' and villagers' committees establish committees for people's mediation, public security, public health and other matters in order to manage public affairs and social services in their areas, mediate civil disputes, help maintain public order and convey residents' opinions and demands and make suggestions to the people's government.

 

SECTION 6. THE ORGANS OF SELF-GOVERNMENT OF NATIONAL AUTONOMOUS AREAS

 

Article 112. The organs of self-government of national autonomous areas are the people's congresses and people's governments of autonomous regions, autonomous prefectures and autonomous counties.

 

Article 113. In the people's congress of an autonomous region, prefecture or county, in addition to the deputies of the nationality or nationalities exercising regional autonomy in the administrative area, the other nationalities inhabiting the area are also entitled to appropriate representation. The chairmanship and vice- chairmenships of the standing committee of the people's congress of an autonomous region, prefecture or county shall include a citizen or citizens of the nationality or nationalities exercising regional autonomy in the area concerned.

 

Article 114. The administrative head of an autonomous region, prefecture or county shall be a citizen of the nationality, or of one of the nationalities, exercising regional autonomy in the area concerned.

 

Article 115. The organs of self-government of autonomous regions, prefectures and counties exercise the functions and powers of local organs of state as specified in Section V of Chapter Three of the Constitution. At the same time, they exercise the right of autonomy within the limits of their authority as prescribed by the Constitution, the law of regional national autonomy and other laws, and implement the laws and policies of the state in the light of the existing local situation.

 

Article 116. People's congresses of national autonomous areas have the power to enact autonomy regulations and specific regulations in the light of the political, economic and cultural characteristics of the nationality or nationalities in the areas concerned. The autonomy regulations and specific regulations of autonomous regions shall be submitted to the Standing Committee of the National People's Congress for approval before they go into effect. Those of autonomous prefectures and counties shall be submitted to the standing committees of the people's congresses of provinces or autonomous regions for approval before they go into effect, and they shall be reported to the Standing Committee of the National People's Congress for the record.

 

Article 117. The organs of self-government of the national autonomous areas have the power of autonomy in administering the finances of their areas. All revenues accruing to the national autonomous areas under the financial system of the state shall be managed and used independently by the organs of self- government of those areas.

 

Article 118. The organs of self-government of the national autonomous areas independently arrange for and administer local economic development under the guidance of state plans. In developing natural resources and building enterprises in the national autonomous areas, the state shall give due consideration to the interests of those areas.

 

Article 119. The organs of self-government of the national autonomous areas independently administer educational, scientific, cultural, public health and physical culture affairs in their respective areas, sort out and protect the cultural legacy of the nationalities and work for the development and prosperity of their cultures.

 

Article 120. The organs of self-government of the national autonomous areas may, in accordance with the military system of the state and concrete local needs and with the approval of the State Council, organize local public security forces for the maintenance of public order.

 

Article 121. In performing their functions, the organs of self-government of the national autonomous areas, in accordance with the autonomy regulations of the respective areas, employ the spoken and written language or languages in common use in the locality.

 

Article 122. The state gives financial, material and technical assistance to the minority nationalities to accelerate their economic and cultural development. The state helps the national autonomous areas train large numbers of cadres at different levels and specialized personnel and skilled workers of different professions and trades from among the nationality or nationalities in those areas.

 

SECTION 7. THE PEOPLE'S COURT AND THE PEOPLE'S PROCURATORATES

 

Article 123. The people's courts in the People's Republic of China are the judicial organs of the state.

 

Article 124. The People's Republic of China establishes the Supreme People's Court and the local people's courts at different levels, military courts and other special people's courts. The term of office of the President of the Supreme People's Court is the same as that of the National People's Congress; he shall serve no more than two consecutive terms. The organization of people's courts is prescribed by law.

 

Article 125. All cases handled by the people's courts, except for those involving special circumstances as specified by law, shall be heard in public. The accused has the right of defence.

 

Article 126. The people's courts shall, in accordance with the law, exercise judicial power independently and are not subject to interference by administrative organs, public organizations or individuals.

 

Article 127. The Supreme People's Court is the highest judicial organ. The Supreme People's Court supervises the administration of justice by the local people's courts at different levels and by the special people's courts; people's courts at higher levels supervise the administration of justice by those at lower levels.

 

Article 128. The Supreme People's Court is responsible to the National People's Congress and its Standing Committee. Local people's courts at different levels are responsible to the organs of state power which created them.

 

Article 129. The people's procuratorates of the People's Republic of China are state organs for legal supervision.

 

Article 130. The People's Republic of China establishes the Supreme People's Procuratorate and the local people's procuratorates at different levels, military procuratorates and other special people's procuratorates. The term of office of the Procurator-General of the Supreme People's Procuratorate is the same as that of the National People's Congress; he shall serve no more than two consecutive terms. The organization of people's procuratorates is prescribed by law.

 

Article 131. People's procuratorates shall, in accordance with the law, exercise procuratorial power independently and are not subject to interference by administrative organs, public organizations or individuals.

 

Article 132. The Supreme People's Procuratorate is the highest procuratorial organ. The Supreme People's Procuratorate directs the work of the local people's procuratorates at different levels and of the special people's procuratorates; people's procuratorates at higher levels direct the work of those at lower levels.

 

Article 133. The Supreme People's Procuratorate is responsible to the National People's Congress and its Standing Committee. Local people's procuratorates at different levels are responsible to the organs of state power at the corresponding levels which created them and to the people's procuratorates at the higher level. Article 134. Citizens of all nationalities have the right to use the spoken and written languages of their own nationalities in court proceedings. The people's courts and people's procuratorates should provide translation for any party to the court proceedings who is not familiar with the spoken or written languages in common use in the locality. In an area where people of a minority nationality live in a compact community or where a number of nationalities live together, hearings should be conducted in the language or languages in common use in the locality; indictments, judgments, notices and other documents should be written, according to actual needs, in the language or languages in common use in the locality.

 

Article 135. The people's courts, people's procuratorates and public security organs shall, in handling criminal cases, divide their functions, each taking responsibility for its own work, and they shall co- ordinate their efforts and check each other to ensure correct and effective enforcement of law.

 

CHAPTER IV. THE NATIONAL FLAG, THE NATIONAL EMBLEM AND THE CAPITAL

 

Article 136. The national flag of the People's Republic of China is a red flag with five stars.

 

Article 137. The national emblem of the People's Republic of China is Tian'anmen in the centre illuminated by five stars and encircled by ears of grain and a cogwheel.

 

Article 138. The capital of the People's Republic of China is Beijing.

 

    AMENDENTS TO THE CONSTITUTION

 

AMENDMENT ONE
(Approved on April 12, 1988, by the 7th NPC at its 1st Session)

1. Article 11 of the Constitution shall include a new paragraph which reads: "The State permits the private sector of the economy to exist and develop within the limits prescribed by law. The private sector of the economy is a complement to the socialist public economy. The State protects the lawful rights and interests of the private sector of the economy, and exercises guidance, supervision and control over the private sector of the economy."

2. The fourth paragraph of Article 10 of the Constitution, which provides that "no organization or individual may appropriate, buy, sell or lease land or otherwise engage in the transfer of land by unlawful means," shall be amended as: "no organization or individual may appropriate, buy, sell or otherwise engage in the transfer of land by unlawful means. The right to the use of land may be transferred according to law."

 

AMENDMENT TWO
(Approved on March 29, 1993, by the 8th NPC at its 1st Session)

3. The last two sentences of the seventh paragraph of the Preamble which reads "The basic task of the nation in the years to come is to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship and follow the socialist road, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a socialist country with a high level of culture and democracy," shall be amended as: "China is at the primary stage of socialism. The basic task of the nation is, according to the theory of building socialism with Chinese characteristics, to concentrate its effort on socialist modernization. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship and follow the socialist road, persevere in reform and opening to the outside, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a socialist country with prosperity and power, democracy and culture."

4. At the end of the tenth paragraph of the Preamble, add "The system of multi-party cooperation and political consultation led by the Communist Party of China will exist and develop in China for a long time to come."

5. article 7 which reads "The State economy is the sector of socialist economy under ownership by the whole people; it is the leading force in the national economy. The State ensures the consolidation and growth of the State economy," shall be changed to: "The State-owned economy, that is, the socialist economy under ownership by the whole people, is the leading force in the national economy. The State ensures the consolidation and growth of the State-owned economy."

6. The first item of Article 8 which reads "Rural people's communes, agricultural producers' cooperatives, and other forms of cooperative economy such as producers', supply and marketing, credit and consumers' cooperatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately-owned livestock," shall be amended as: "Rural household-based contract responsibility system with remuneration linked to output, and other forms of cooperative economy such as producers', supply and marketing, credit and consumers' cooperatives, belong to the sector of socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately-owned livestock."

7. Article 15 which reads "The State practices economic planning on the basis of socialist public ownership. It ensures the proportionate and coordinated growth of the national economy through overall balancing by economic planning and the supplementary role of regulation by the market.

Disturbance of the orderly functioning of the social economy or disruption of the State economic plan by any organization or individual is prohibited," shall be changed to: "The state has put into practice a socialist market economy. The State strengthens formulating economic laws, improves macro adjustment and control and forbids according to law any units or individuals from interfering with the social economic order."

8. Article 16 which reads "State enterprises have decision-making power in operation and management within the limits prescribed by law, on condition that they submit to unified leadership by the State and fulfil and their obligations under the State plan.

State enterprises practice democratic management through congresses of workers and staff and in other ways in accordance with the law," shall be revised as: "Stated-owned enterprises have decision-making power in operation and management within the limits prescribed by law. State-owned enterprises practice democratic management through congresses of workers and staff and in other ways in accordance with the law."

9. Article 17 which reads "Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they accept the guidance of the State plan and abide by the relevant laws.

Collective economic organizations practice democratic management in accordance with the law, with the entire body of their workers electing or removing their managerial personnel and deciding on major issues concerning operation and management", shall be amended as: "Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they abide by the relevant laws. Collective economic organizations practice democratic management, elect or remove their managerial personnel and decide on major issue concerning operation and management according to law."

10. The their item of Article 42 which reads "Work is the glorious duty of every able-bodied citizen. All working people in State enterprises and in urban and rural economic collectives should perform their tasks with an attitude consonant with their status as masters of the country. The State promotes socialist labor emulation, and commends and rewards model and advanced workers. The state encourages citizens to take part in voluntary labor," shall be amended as: "Work is the glorious duty of every able-bodied citizen. All working people in State-owned enterprises and in urban and rural economic collectives should perform their tasks with an attitude consonant with their status as masters of the country. The State promotes socialist labor emulation, and commends and rewards model and advanced workers. The State encourages citizens to take part in voluntary labor."

11. Article 98 which reads "The term of office of the people's congresses of provinces, municipalities directly under the Central Government and cities divided into districts is five years. The term of office of the people's congresses of countries, cities not divided into districts, municipal districts, townships, nationality townships and towns is three years," shall be revised as: "The term of office of the people's congresses of provinces, municipalities directly under the Central Government, counties, cities and municipal districts is five years. The term of office of the people's congresses of townships, nationality townships and towns is three years."

 

AMENDMENT THREE
(Approved on March 15, 1999, by the 9th NPC at its 2nd Session)

The original text of paragraph seven in the Preamble of the Constitution is: "Both the victory of China's new-democratic revolution and the successes of its socialist cause have been achieved by the Chinese people of all nationalities under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, and by upholding truth, correcting errors and overcoming numerous difficulties and hardships. China is currently in the primary stage of socialism. The basic task of the nation is to concentrate its effort on socialist modernization in accordance with the theory of building socialism with Chinese characteristics. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship, follow the socialist road, persist in reform and opening-up, steadily improve socialist institutions, develop socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a powerful and prosperous socialist country with a high level of culture and democracy."

It is revised into: "Both the victory of China's new-democratic revolution and the successes of its socialist cause have been achieved by the Chinese people of all nationalities under the leadership of the Communist Party of China and the guidance of Marxism-Leninism and Mao Zedong Thought, and by upholding truth, correcting errors and overcoming numerous difficulties and hardships. China will stay in the primary stage of socialism for a long period of time. The basic task of the nation is to concentrate its efforts on socialist modernization by following the road of building socialism with Chinese characteristics. Under the leadership of the Communist Party of China and the guidance of Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory, the Chinese people of all nationalities will continue to adhere to the people's democratic dictatorship, follow the socialist road, persist in reform and opening-up, steadily improve socialist institutions, develop a socialist market economy, advance socialist democracy, improve the socialist legal system and work hard and self-reliantly to modernize industry, agriculture, national defense and science and technology step by step to turn China into a powerful and prosperous socialist country with a high level of culture and democracy."

One section is added to Article Five of the Constitution as the first section: "The People's Republic of China practices ruling the country in accordance with the law and building a socialist country of law."

The original text of Article Six of the Constitution is: "The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people." "The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of 'from each according to his ability, to each according to his work'."

It is revised into:"The basis of the socialist economic system of the People's Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people. The system of socialist public ownership supersedes the system of exploitation of man by man; it applies the principle of 'from each according to his ability, to each according to his work'." "During the primary stage of socialism, the State adheres to the basic economic system with the public ownership remaining dominant and diverse sectors of the economy developing side by side, and to the distribution system with the distribution according to work remaining dominant and the coexistence of a variety of modes of distribution."

The original text of the first section in Article Eight of the Constitution is:"The rural household-based output-related contracted responsibility system and other forms of the cooperative economy such as producers', supply and marketing, credit and consumers' cooperatives belong to the sector of the socialist economy under collective ownership by the working people. Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately owned livestock."

It is revised into:"Rural collective economic organizations practice the double-tier management system that combines unified and separate operations on the basis of the household-based output-related contracted responsibility system. Various forms of the cooperative economy in rural areas such as producers', supply and marketing, credit and consumers' cooperatives belong to the sector of the socialist economy under collective ownership by the working people.

Working people who are members of rural economic collectives have the right, within the limits prescribed by law, to farm plots of cropland and hilly land allotted for private use, engage in household sideline production and raise privately owned livestock."

The original text of Article 11 of the Constitution is: "The individual economy of urban and rural working people, operating within the limits prescribed by law, is a complement to the socialist public economy. The State protects the lawful rights and interests of the individual economy." "The State guides, helps and supervises the individual economy by exercising administrative control." "The State permits the private economy to exist and develop within the limits prescribed by law. The private economy is a complement to the socialist public economy. The State protects the lawful rights and interests of the private economy, and guides, supervises and administers the private economy."

It is revised into: "Individual, private and other non-public economies that exist within the limits prescribed by law are major components of the socialist market economy." "The State protects the lawful rights and interests of individual and private economies, and guides, supervises and administers individual and private economies."

The original text of Article 28 of the Constitution is: "The State maintains public order and suppresses treasonable and other counter-revolutionary activities; it penalizes actions that endanger public security and disrupt the socialist economy and other criminal activities, and punishes and reforms criminals."

It is revised into: "The State maintains public order and suppresses treasonable and other criminal activities that endanger State security; it penalizes actions that endanger public security and disrupt the socialist economy and other criminal activities, and punishes and reforms criminals.

 

AMENDMENT FOURTH
(Approved on March 14, 2004, by the 10th NPC at its 2nd Session)

1 "... along the road of building socialism with Chinese characteristics..." and "...under the guidance of Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory..."

Revised to: "... along the road of Chinese-style socialism..." and "...under the guidance of Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and the important thought of 'Three Represents'..."

2 Seventh paragraph of the Preamble: After "... to modernize the industry, agriculture, national defence and science and technology step by step..."

Is added: "... promote the co-ordinated development of the material, political and spiritual civilizations..."

3 The second sentence of the 10th paragraph of the Preamble: "In the long years of revolution and construction, there has been formed under the leadership of the Communist Party of China a broad patriotic united front that is composed of the democratic parties and people's organizations and embraces all socialist working people, all patriots who support socialism, and all patriots who stand for the reunification of the motherland. This united front will continue to be consolidated and developed."

After "... a broad patriotic united front that is composed of the democratic parties and people's organizations and embraces all socialist working people..." is added "... all builders of socialism, ..."

4 Third paragraph of Article 10: "The State may, in the public interest, requisition land for its use in accordance with the law."

Revised to: "The State may, in the public interest and in accordance with the provisions of law, expropriate or requisition land for its use and shall make compensation for the land expropriated or requisitioned."

5 Second paragraph of Article 11:"The State protects the lawful rights and interests of the individual and private sectors of the economy, and exercises guidance, supervision and control over individual and the private sectors of the economy."

Revised to: "The State protects the lawful rights and interests of the non-public sectors of the economy such as the individual and private sectors of the economy. The State encourages, supports and guides the development of the non-public sectors of the economy and, in accordance with law, exercises supervision and control over the non-public sectors of the economy."

6 Article 13: "The State protects the right of citizens to own lawfully earned income, savings, houses and other lawful property." and "The State protects according to law the right of citizens to inherit private property."

Revised to: "Citizens' lawful private property is inviolable" and "The State, in accordance with law, protects the rights of citizens to private property and to its inheritance" and "The State may, in the public interest and in accordance with law, expropriate or requisition private property for its use and shall make compensation for the private property expropriated or requisitioned."

7 Article 14 has a fourth paragraph added: "The State establishes a sound social security system compatible with the level of economic development."

8 Article 33 has a third paragraph added: "The State respects and preserves human rights."

9 The first paragraph of Article 59 is revised to: "The National People's Congress is composed of deputies elected from the provinces, autonomous regions and municipalities directly under the Central Government and of deputies elected from the armed forces. All the minority nationalities are entitled to appropriate representation."

Revised to: "The National People's Congress is composed of deputies elected from the provinces, autonomous regions, municipalities directly under the Central Government, and the special administrative regions, and of deputies elected from the armed forces. All the minority nationalities are entitled to appropriate representation."

10 On "State of Emergency"

Subparagraph 20 of Article 67: "... to decide on the imposition of martial law throughout the country or in particular provinces, autonomous regions, or municipalities directly under the Central Government."

Revised to: "... to decide on entering the state of emergency throughout the country or in particular provinces, autonomous regions, or municipalities directly under the Central Government."

Article 80: "The President of the People's Republic of China ... proclaims martial law, ..."

Revised to: "... proclaims entering of the state of emergency, ..."

Subparagraph 16 of Article 89: "... to decide on the imposition of martial law in parts of provinces, autonomous regions and municipalities directly under the Central Government..."

Revised to: "... in accordance with the provisions of law, to decide on entering the state of emergency in parts of provinces, autonomous regions, and municipalities directly under the Central Government..."

11 Article 81: "The President of the People's Republic of China receives foreign diplomatic representatives on behalf of the People's Republic of China."

Revised to: "The President of the People's Republic of China, on behalf of the People's Republic of China, engages in activities involving State affairs and receives foreign diplomatic representatives."

12 Article 98: "The term of office of people's congresses of provinces, municipalities directly under the Central Government, counties, cities and municipal districts is five years. The term of office of the people's congresses of townships, nationality townships and towns is three years."

Revised to: "The term of office of the local people's congresses at various levels is five years."

13 Provision on the National Anthem:

Title of Chapter IV: "The National Flag, the National Emblem and the Capital"

Revised to: "The National Flag, the National Anthem, the National Emblem and the Capital"

Article 136 has a second paragraph added: "The National Anthem of the People's Republic of China is the March of the Volunteers." (Updated on March 22, 2004)

Decoding China’s Emerging “Great...

Decoding China’s Emerging “Great Power” Strategy in Asia.

The Asia-Pacific region is the center of dynamism in the international system, and events there are defining the security and prosperity of the world. Increased economic interde- pendence and a budding institutional architecture create a solid foundation for a vibrant and stable future, but the region also faces an array of challenges that could destabilize the security environment. For over six decades the U.S.-Japan alliance has been the corner- stone of security and stability in the Asia Pacific, and it should continue to play an important role in shaping the regional order.

 

 

The course charted by China’s reemergence as a great power over the next few decades represents the primary strategic challenge for the U.S.-Japan security alliance and for the East Asian security landscape writ large. If China’s economic, military, and geopolitical influence continues to rise at even a modest pace during this period, we will witness the largest shift in the global distribution of power since the rise of the United States in the late 19th and early 20th centuries. If China in the next 10 to 15 years surpasses the United States as the world’s largest economy, it will mark the first time in centuries that the world’s economic leader will be non–English speaking, non-Western, and non-democratic.

 

For the full PDF Report of the CSIS Freeman Chair in China Studies please click here.

 

 

 

Chinese domestic aviation: problems...

Chinese domestic aviation: problems, advantages and outlook.

At first sight the Chinese domestic airline industry does not seem too different from those of America or Europe: a few players dominating the market, regional airlines and burgeoning low-cost carriers. However, further examination reveals a typical trait of the Chinese economy prevalent in the aviation industry as well - it is mostly state controlled. The main Chinese airlines, Air China, China Eastern and China Southern, not only control 80% of the market, but are also owned by different branches of the central and local governments despite being listed on various stock exchanges. All of the companies are forced to compete, but the “Big 3” can be suspected to prefer to do so with each other, rather than “outsiders”.

 

Air China, China Southern and China Eastern have all posted comparable results for 2013 and the first quarter of 2014, citing similar reasons for their declining profits: lower yields, harsher competition from regional and low-cost carriers, declining numbers of premium travelers and depreciating Renminbi. All carriers face, essentially, the same problems as their operations are based on a similar model - an international hub with few secondary hubs and an extensive network within Mainland China (which they are subsidized to fly).

 

According to the Civil Aviation Administration of China (CAAC), in 2013, the three airlines altogether officially received subsidies of 433 million Chinese Renminbi ($69.25 million) from the central government in Beijing, theoretically modest compared with other Chinese industries. However, because local governments of smaller cities want to maintain direct flights to the main economic centers of China, they therefore provide airlines with generous support, which accounts for the lion’s share of the industry’s subsidies.

 

China's skies are becoming ever more crowded, making for constant delays. Anyone who has recently taken a domestic flight in China has experienced the frustration of sitting on an aircraft waiting to depart. Poor air traffic control and lack of capacity at the airports are cited for this phenomenon, but the main reason remains the military’s reluctance to allow commercial airlines to use its restricted airspace for weather diversions. Changes are being implemented and airlines will be allowed to change their flight path from this summer in Northern China, if there are dangerous weather conditions. However, further improvement will take time, since PLAAF will be slow to yield its authority to the commercial aviation.  

 

Although the delays cannot usually be blamed on carriers, the service passengers receive still leaves a lot to be desired. Often, passengers are forced to wait for hours in an aircraft without any explanation or information as to the delay. In numerous cases this has lead to passenger protests and sit-ins. The authorities, not oblivious to these protests, have directed the airlines to provide greater levels of customer service to passengers in case of delays. However, other aspects of the flight experience have improved significantly in the last few years, enhanced by new aircraft orders coming into service.

 

Another trait shared by all three airlines is debt structure. Almost all debts held by the “big three” are denominated in US dollars; hence any Renminbi movement against the USD can significantly affect companies’ financial results.

 

Despite these problems, the main question remains, how will “the big three” continue to expand after the recent slowing in the Chinese economy and will they be able to turn a profit without Government subsidies.

 

China National Aviation Corporation (Air China Group).

 

Although Air China itself is a smaller airline compared with its main rivals, China Eastern and China Southern, Air China Group is as big as the other three carriers combined. It has a 100% stake in Air China, majority ownership of Shenzhen Airlines, Shandong Airlines, Air Macau, Dalian Airlines, as well as a 30% share in Cathay Pacific (Hong Kong airline holds a 20% investment in Air China). The Group has 497 aircraft, with the majority flying under the Air China, Shenzhen Airlines and Shandong Airlines brands. Air China’s main hub is Beijing Capital Airport, while its secondary hubs are Chengdu and Shanghai Pudong airports.

 

 

 

2013

2012

Change %

Revenue

¥98.18 billion ($15.79 billion). 

¥99.47billion ($15.94 billion)

-1.3%

Net profit

¥3.6 billion ($576 million)

¥5.3 billion ($849 million)

-32%

Carried passengers

77.68 million

72.41 million

+7.3%.

Load factor

80.8%.

80.41%

 

Cargo

1.45 million metric tons

1.46 million metric tons

0.69%

 

Revenue has decreased in the core market of Greater China as well as Korea and Japan. Net profit might have turned into loss if not for a Renminbi appreciation against the US dollar.

 

According to CAAC, Air China (the airline) has received a relatively small, 10 million CNY ($1.6 million) subsidy from regional CAACs for flying regional routes and improving accessibility of less economically developed cities. However in reality, according to some reports, the airline received 1.28 billion CNY ($204 million) from local governments. Moreover, this number could actually be higher, since the real data about state subsidies is not made public.

 

Air China expects a 65% decrease in profits for the 1st quarter of 2014, mainly due to the weakening Renminbi. Moreover, a few days ago, the airline’s Chinese pilots published a public letter demanding equal pay with foreign pilots, reduced hours and better working conditions. On a positive note, Germany's Lufthansa has expressed an interest in a possible joint venture with Air China, but stressed tough negotiations lie ahead before any concrete results can be achieved. Air China has recently started testing free Wi-Fi on its Beijing-Chengdu route and expects to gradually expand this to other flights.

 

China Eastern Airlines.

 

This company is the largest airline in Asia, by number of destinations. Both Shanghai airports serve as the airline’s principal hubs, while it has secondary hubs in Xi’an and Kunming.  China Eastern subsidiaries are Shanghai Airlines, and a recently announced joint venture with Qantas - Jet Star Hong Kong. The total size of China Eastern Airlines and its subsidiaries fleet are 478 aircraft. In an example of the industry’s close ties, CNAC (Air China) owns 11% of China Eastern holdings. Also it successfully derailed Singapore Airlines’ bid for 24% in CEA in 2008, in order to prevent it from entering the Chinese domestic market.

 

 

 

2014

2013

Change%

Revenue

¥88.25 billion ($14.07 billion)

¥85.25 billion ($13.65 billion)

3.5%

Net profit

¥2.38 billion ($380 million)

¥3.07billion ($491 million)

-22.5%

Carried passengers

79.1 million

73.1 million

8.2%

Load factor

79.21%

79.81

 

Cargo

1.41 million metric tons

1.416 million metric tons

-0.44%

           

The company blamed the decline in business/first class passengers and lower yields for its recent poor performance.

 

China Eastern’s debt structure must be examined, since it is representative of all the “Big Three's” balance sheets. More than 95% of CEA’s 58.35 billion Renminbi debt is denominated in US dollars ($9.35 billion). Therefore, larger currency swings on the Forex Market result in a substantial impact on companies’ financial results. The Yuan’s appreciation against the dollar in 2013 helped China Eastern to remain profitable, but has been in reverse as of this year.

 

Amongst the Chinese domestic airlines, CEA receives the biggest subsidy from the state. Although the official amount paid by local CAAC offices is only 110 million CNY ($17.6 million), the real subsidy is a lot higher, and should stand at about 1.7 billion Yuan ($2.7 billion).

 

Recently, China Eastern placed an order for 70 Airbus A320NEO, fuel-efficient, short-haul aircraft, in order to increase the airline’s total capacity by 13 aircraft. The deal is estimated to be worth $6.4 billion. However, the company in its annual report states that the biggest challenge for the future is the rise of domestic low-cost carriers (Juneyao and Spring airlines both have their main hubs in Shanghai), encouraged by the 12th five-year plan.

 

China Southern Airlines.

 

China Southern is the biggest carrier in Asia, by passenger numbers (91.79 million in 2013) and size of its fleet (561 aircraft). It operates from its main hub Guangzhou Baiyun international airport, with secondary hubs in Beijing, Chongqing and Urumqi. China Southern is also the world’s largest airline to receive a four star rating from IATA. Guangzhou airport is logistically convenient, since it lies in the center of popular routes, such as Australia-Europe, US-South East Asia, and East Asia-South East Asia.

 

         

 

2013

2012

Change%

Revenue

¥98.55 billion ($16.2 billion)

¥99.51 billion ($15.93 billion)

-1%

Net profit

¥2.7 billion ($451 million)

¥3.8 billion ($608 million)

-27.3%,

Carried passengers

82.17 million

77.3 million

5.85%

Load factor

80.22%

81.8%

 

Cargo

923 thousand metric tons

890 thousand metric tons

3.75%

 

China Southern recently stated that it had reduced seat prices to increase its market share, due to increasing competition from the HSR network and regional and low-cost airlines. As in cases of Air China’s and China Eastern, its profits have received a boost from the strong Renminbi.

 

China Southern is currently the only airline in the world to operate both Airbus A380 and the Boeing 787; and has a promising strategy, based on a large transit hub (with more intercontinental routes expected to be opened up, especially to the US and Europe). Although the airline’s officially-received-subsidy of ¥98.52 million ($15.8 million) does not reveal the full picture, it received much lower governmental support than its rivals.

 

Outlook.

 

All in all, the “Big 3” face similar problems in both the short and long run: a slowing economy, fewer premium class travellers, China’s expanding HSR network and Renminbi currency fluctuations. As SOEs, they are continually fighting to increase efficiency and reduce waste whilst compelled to fly unprofitable routes for the “greater cause” of regional development.

 

Regional carriers, most if which are subsidiaries of the “Big 3’s”, are used as a means to improve already fierce competition in the domestic market and develop the domestic industry. Shandong Airlines, subsidiary of Air China, recently reported a $4.6 billion order for 50 Boeing 737.

 

However, the main challenge to the “Big 3” arises from the Chinese government’s intention to boost competition, especially through the low-cost carriers. These currently account for only 5% of the market, but airlines can expect this to only grow as infrastructure is put into place such as Beijing’s new low-cost terminal (due to open in 2018), the removal of caps on new aircraft purchases and minimum ticket prices, the building of new airports in 2nd, 3rd and 4th tier cities and the encouragement of financial institutions to deepen cooperation with them. The results should appear in the near future.

 

Juneyao Airlines and Spring Airlines are planning to IPO in Shanghai, in order to fund their expansions, though the latter was suspended, after some uncertainty regarding its financial results. Jiuyuan, subsidiary of Juneyao, should commence operations from Guangzhou-Baiyun airport in August this year. Spring Airlines, which has been growing 20% annually for the last 10 years, continues to expand internationally not only by gaining slots on the routes like Shanghai - Taipei, but also by setting up a subsidiary in Japan. Jetstar Hong Kong, a subsidiary of China Eastern and Australian Qantas, should begin operation this or next year with 48 destinations in Mainland China. Hainan Airlines, the largest private airline in the country, has renamed its Chongqing-based subsidiary West Air, and turned it into a low-cost carrier.

 

China’s domestic aviation market is only expected to grow in spite of the current economic slowdown. Whilst all three carriers are looking into possible joint ventures with Western carriers, a move that should improve Chinese companies’ management and operational efficiency, the domestic air travel market will grow with greater development and infrastructure coming into operation over the next few years. Market share will shift away form the larger SEOs towards the new players, whilst remaining under the aegis of the big three. China Brain will continue to report on this topic.

 

The Chinese Luxury Traveler 2014 (Hurun...

The Chinese Luxury Traveler 2014 (Hurun Report)

This report analyzes the travel habits and consumption patterns of China’s HNWIs in the past year, and includes a new case study on medical tourism through collaboration with DIADEMA.

 

 

According to statistics provided by the China Tourism Academy, consumer demand was strong as China’ s tourism economy grew steadily in 2013, with the number of Chinese outbound tourists coming to a staggering 98 million, up 17.8% year on year. However, the international tourism trade deficit continued to widen due to the rapid growth of outbound tourism. The China Tourism Academy continues to hold relatively optimistic expectations for the tourism economy in 2014 and believes it will continue to maintain steady and rapid growth.
 
 
Please click here to open the report PDF

China’s Outbound Tourism, 2014

China’s Outbound Tourism, 2014
China became the largest spender on international tourism globally in 2012, surpassing Germany and the United States, propelled by strong spending growth in 2011. China’s outbound tourism has been growing vigorously at an annual rate of ~15% over the past decade, which is much higher than that of the global market and the other BRIC countries. Whilst growing urbanization of various Chinese cities and their improved connectivity with the outer world have broadened the geographical market focus for the destination countries. Lastly Chinese tourists are proving to be a boom for the retail industry of the destination countries, as they account for the largest share of the global expenditure on tax-free shopping.
 
 
 

The report found here as a PDF highlights the opportunities and trends associated with growth in the Chinese outbound travelers markets.

China National Salt Industry Corporation...

China National Salt Industry Corporation.

China Salt is a state owned company that has a monopoly over the management and production of edible salt in China. It is one example of an SOE that the public is beginning to question the need for- is salt a matter of national security in 2014?

 

 

Employees: 60,000

Subsidiaries: 46 over 22 provinces

Total assets: 34.5 billion in value

Output: 12 million tons salt annually,

7.7 million tons salt chemical products annually

 

 

China has a long history of many dynasties using salt as a major source of government revenue, with it still representing over 5% of the total national tax by the founding of the PRC. Nowadays, salt brings in only a very small percentage of national tax, but the monopoly still costs consumers an average of an extra 10 yuan per year in excessive profits.

 

 

One reason for the state affiliation decades ago was for health reasons as iodine deficiency is a common problem among under-nourished populations. As salt can be iodized or non-iodized, the government wanted to ensure that all citizens were consuming salt with iodine to resolve this problem. However, this is no longer the case for the Chinese population and in fact China is joining the developed world now in having the opposite problem, with people consuming too much iodine, also leading to health complications. Now, Chinese consumers have no option to purchase salt with iodine as there is no private market.

 

 

CNSIC has a monopoly in China on table salt, with sub-enterprises encompassing production, packaging, and distribution. The company was founded in 1950 and falls under the administration of the State Council. Regulations in China prohibit salt from being sold across regional lines or from private citizens selling their own manufactured salt. This particular law led to the removal of all salt listings from Taobao’s marketplace in March 2013.

 

 

One negative outcome of the monopoly is in the food industry, in which there have been reports of food product manufacturers, such as soy sauce and other seasonings, illegally using industrial salt rather than table salt in their products to cut down on costs.

 

 

US Exports to China 2013

US Exports to China 2013

In 2013, US exports to China reached $120 billion, making it the third-largest export market for US goods behind Canada and Mexico, our neighbors and NAFTA partners.

 

US exports to China have grown faster than exports to any other major US trading partner. From 2004 to 2013, US exports to China increased 255 percent. That rate is greater than growth to any of the other top ten US export markets, including its two largest trading partners, Canada (59 percent growth) and Mexico (108 percent growth). With its large population, rapidly growing middle class, and long list of infrastructure goals, China will continue to be a major export market for US goods and services.

 

Please click here to download the full PDF report.

Wuhan

Wuhan

For years, investment opportunities in China seemed restricted to bustling coastal cities like Shanghai, Shenzhen, and Guangzhou. The Chinese hinterland—where the bulk of the world’s largest population resides—received comparatively little attention.

 

Over a decade into the 21st century, the situation in China has changed. Previously emerging markets on the east coast have become  increasingly  saturated,  leading  savvy  investors  to  look  elsewhere.  Meanwhile,  infrastructure  investment  and favourable economic incentives have transformed China’s vast hinterland, opening up opportunities in cities most investors previously never knew existed.

 

   

Wuhan City                                                                                    Wujiashan Taiwan Development zone

 

Most  investors know that inland China has tremendous economic potential. What  most people don’t understand are the practical mechanics of accessing these increasingly vibrant engines of growth.

 

Wuhan —central China’s largest metropolis and a city at the nexus of China’s transport network. Once billed as the “Detroit” of China due to its massive auto manufacturing industry, Wuhan has reinvented itself for the 21st century as an environmentally-friendly venue for high-tech investment.

 

A Snapshot

 

Compared with similar size cities around the globe, Wuhan could seem awkward. Larger than London or New York, having over 1 million university and college students alone, yet with only three metro lines. Wuhan, as a city, started to exist only in 1926, when three ancient towns, Wuchang, Hangkou and Hanyang, were conjoined. Wuchang, by using its favorable position on the Yangtze River has always been a busy port. Nowadays, Wuhan’s position as a transportation hub is even stronger, as it lies on the two most important railway corridors in China, Shanghai-Chengdu and Beijing-Guangzhou and is the biggest inland port in the country. This has allowed the city to become a hub for major delivery and shipping companies.

 

 

Today the city offers a lot more, besides good transportation links. Wuhan is the largest city in central China, with the population of 10.5 million, 5th largest in the country. The city has seen its GDP grow by 10-12% each year reaching 900 billion CNY ($144.3 billion) in 2013, the 9th highest in the country. According to reports, it is one of the fastest growing cities globally in terms of GDP. Wuhan is also a burgeoning high-tech city, with 3 Special Development Zones and a Pudong-style skyline in the planning stage. According to British government estimates, ¥3.9 trillion ($625 billion) will be invested in Wuhan’s infrastructure by 2030.

 

 

State-level special industrial zones could be considered as Wuhan’s economic backbone. Both foreign and domestic companies have been taking advantage of them for the last two decades.

 

 

Wuhan East Lake Hi-Tech Development Zone (EDZ) includes many opto-electronics, telecommunications, biotechnology, laser and engineering companies from China and abroad. Enterprises receive tax breaks, subsidies for exports, and priority in government procurement. All Wuhan registered companies can receive subsidies for hired experts and office space. From these industries its optical telecommunications that are the pride of the EDZ, as the largest fiber-optic cable manufacturer and the largest research institute in China are located in the zone.

 

 

The original Dongfeng Motors’ production site and headquarters are located in Wuhan Economic & Technological Development Zone (WEDZ) making it one of the most automotive industry-concentrated areas in China. Honda and Peugeot-Citroen cars are manufactured here, as well as various domestic brands. Another pillar of industry in the WEDZ is electronics manufacturing, as it is one of the main production sites for LCD monitors and air conditioners in China. The zone also has a packaging, biopharmaceuticals, food and resources & materials industrial cluster, as well as industry parks designated for French and Japanese enterprises.

 

                                                The Citroen production line in Wuhan

 

The latest, Wuhan Wujianshan Economics and Technological Development Zone is mostly dedicated to Taiwanese-funded enterprises and is aimed to become the largest Taiwanese businesses’ cluster in Central China.

 

 

Wuhan loves all things French. According to Hubei government’s statistics, a third of the ¥144 billion ($23.2 billion) French FDI in China is invested in Wuhan. More than 80 French companies have a presence in the city; a rate higher than anywhere else in China. According to France’s Consul General in Wuhan, the partnerships started with the Peugeot-Dongfeng joint venture in the early 90s and intensified after Sarkozy’s visit to China in 2007. French companies are mostly focused on construction, waste processing, energy, transportation and retail industries. Prominent enterprises in Wuhan are Peugeot-Citroen, AXA, and TOTAL. GE as well as General Motors also have production facilities in the city.

 

 

However Wuhan`s greatest draw is Education, the city has over 1 million students, more than any other in China, enrolled in more than 80 higher education institutions. Furthermore, Wuhan University, Wuhan University of Technology and Huazhong University of Science and Technology (HUST) constantly appear in Chinese and Asian universities’ leagues tables’ top positions. Finally, there are plenty of national research centers and laboratories, most of which closely work with private enterprises in the city.

 

 

Wuhan is planning to seriously change its skyline and become the Shanghai of Central China. The development projects are just stunning. When it comes to super-tall skyscrapers (over 300 meters), there are 4 being built at the moment, and more than 10 proposed to be built, not to mention countless skyscrapers under 300 meters. The most noticeable one is Greenland Centre, a 636-meters tall multifunctional building, which eventually should become China’s third tallest building. It is estimated to cost around ¥30 billion ($4.8 billion) and to cover the area of 300 thousand square meters. Another project is Riverview Plaza (Wuhan Tiandi A1), a 460 meters skyscraper in Yongqing area. The whole Tiandi project is also estimated to cost about ¥30 billion, but cover a larger area of 1.5 million square meters. Shanghai’s Xintiandi reconstruction was done by the same developer – Shui On Land, with some of the same architects working on the project. Wuhan Center will be part of Wuhan’s CBD district, the 438-meter super-tall will be the first to be built among Wuhan’s skyscrapers and be the first building in the city to break 400 meter mark. To service these buildings the Metro will see a further extensions of the current lines, 4 new ones currently being under construction (to be completed in 2017 and another 6 in the planning phase.

 

  

                                    The proposed CDB area development

 

Wuhan’s expansion plans are very ambitious and the city wants to compete with the likes of Shenzhen or even Shanghai and Wuhan might just become one of those global cities due to its strategic geographic location: a 2-hour or shorter flight time from all other major Chinese cities to Tianhe International Airport and its shear audacity in its ambition.

 

 

Due to its large volume of University graduates both the municipality and provincial governments are determined to provide as many jobs as there are graduates to further fuel growth.. This can only contribute to the growing investment of foreign enterprises looking for a relatively cheap and skilled workforce.

 

 

However although the ambitions to build skyscrapers are high, the majority of them are still at the proposal stage, which makes any development plans susceptible to a slowdown in the economy. Moreover, there is no clear, public data on occupancy rates of recently built and under construction buildings.

 

 

As with many developing cities a major problem is pollution: a few weeks ago “water panic” erupted in the city, as the public water supply was cut due to an excess of chemicals in the supply as well as the ever prevalent API figure.

 

 

Government Policy and Investment Incentives

 

The Wuhan municipal government offers certain incentives to both wholly-owned foreign enterprises and Sino-foreign joint ventures invested in the city. These incentives, once limited to export-heavy industries,  have  expanded  to  include  a  wider  variety  of  industries  in  the  years  following  China’s accession to the World Trade Organisation.

 

Wuhan has tied incentives into industries that establish themselves inside one of the city’s economic development zones. These development zones, of which the two largest are the Wuhan East Lake High- Tech  Development  Zone  and  the  Wuhan  Economic  and  Technological  Development  Zone,  offer additional advantages to firms that include proximity to transport modes and access to a large pool of qualified university graduates.

 

In general, most investment-incentives accorded to firms operating in Wuhan come in the form of tax relief. According to the Wuhan municipal government, the following incentives are available to foreign invested enterprises:

 

1      Full exemption from 30 percent corporate income taxes, 20 percent withholding tax, and 3 percent local corporate income taxes

1.1      A permanent corporate income tax holiday is available to foreign financial institutions for interests on loans to the Chinese government and to China’s National Bank- these are available for profits derived from royalties on technologies deemed to be advanced

1.2      A five-year corporate income tax holiday is available for the first five profitable years of Sino-foreign joint ventures in energy, transport, and infrastructure with an operating term of at least 15 years. The holiday is also available for the first five profitable years of approved integrated circuit manufacturers with an operating term of at least 15 years.

1.3      A two-year corporate income tax holiday is available for the first two profitable years of investment for high-tech industries located in Wuhan’s development zone. It’s available for the first two profitable years of approved integrated circuit and software enterprises.

1.4      Exemptions  from  a 20  percent  standard  withholding  tax  are available  for:  foreign investors’  gains secured by the right to share profits by proportion of investment, stock rights, or other non-creditor rights business; for interest on loans by international financial institutions to the Chinese government and China’s National Bank; for interest at preferential rates on loans to China’s National Bank by foreign banks;  and  for  gains  from  chartered  rights  and  use  fees  acquired  by  providing  special  approved technology for scientific research, energy exploitation, and transportation development.

1.5      Exemptions from a 3 percent local corporate income tax are available for all investments which qualify for federal corporate income tax exemptions or reductions.

 

2      Concessionary Tax Rates

 

2.1      A six year 7.5 percent tax rate is available for profitable years six through eleven of high-tech industries located in Wuhan’s development zones.

2.2      A five-year 7.5 percent tax rate is available for profitable years six through ten of approved integrated circuit manufacturers with an operating term of at least 15 years and is available for years six through then of infrastructure construction projects.

2.3      A one-year renewable 10 percent tax rate is available in Wuhan’s  development zones for profitable years after the tax holiday and reduced rates have expired for companies exporting more than 40 percent of total production in any given year. The rate is also available in the development zones for profitable years after the tax holiday and reduced rate have expired, and for companies exporting more than 70 percent of total production in any given year.

2.4      A continuous 10 percent tax rate is available for profits derived from royalties on technical knowledge from scientific research, exploitation of energy resources, development of the communications industry, agricultural, forestry, and animal husbandry production. The rate is also available to software companies deemed to be key enterprises by the state, regardless of their location, when other preferential tax rates no longer apply.

2.5      A continuous 15 percent tax rate is available for investments in manufacturing located outside of the special zones for companies engaged in high-tech projects, energy, communications, and port construction, or having a value of more than USD 30m with a long investment payback period. The rate is also  available  for  high-tech investments in the  development zones after  the  initial tax  holiday  and reduction periods expire, and for approved integrated circuit manufacturers, regardless of location, that do not qualify for other preferential tax rates.

2.6      A continuous 24 percent tax rate is available for foreign investments in manufacturing not listed above that have an operating term of over 10 years.

 

3      Income Tax Deductions, Allowances, and Credits

 

3.1      Income tax losses can offset the following year’s gains. A ‘carry forward’ of any unused portion is permitted for up to five additional consecutive years.

3.2     Accelerated depreciation is available for software and for machinery and equipment of approved manufacturers of integrated circuits.

3.3      Software and approved integrated circuit enterprises may be eligible for a tax deduction of 50 percent of research and development expenses incurred during a single year, provided that those expenses exceed the previous year’s research and development (R&D) expenses by not less than 10 percent

3.4      Foreign investors reinvesting their share of profits in the same investments or in new businesses that employ advanced technologies, with an operating term of at least five years, may receive a refund of 100 percent of the income tax already levied on the reinvested amount

3.5      Foreign investors reinvesting their share of profits in the same investments or in new businesses not employing advanced technologies, with an operating term of at least five years, may receive a refund of 40 percent of the income tax already levied on the reinvested amount.

 

4      Non-income Taxes

 

4.1      Exemptions from the Value-Added Tax (VAT) are available for imported goods used in the processing of export products and to approved integrated circuit manufacturers and software enterprises for the import of raw materials for production and consumption goods for their own use, and for the import of technology and special equipment necessary to production.

4.2      Rebate of a portion of the 17 percent VAT paid by software manufacturers: the amount of VAT in excess of 6 percent charged to integrated circuit manufacturers for the sale of IC products may be rebated until the end of 2010, provided the differential is used for research and development or expanded production of software products. The rebated amount may be treated as tax-exempt income for income tax products

4.3      Rebate of a portion of the 17 percent VAT paid by software manufacturers: the amount of VAT in excess of 3 percent charged to software manufacturers for the sale of software products may be rebated until the end of 2010, provided the differential is used for R&D or expanded production of software products.The rebated amount may be treated as tax-exempt income for income tax purposes

 

5      Visas and Work Permits

 

5.1      Employees engaged in major high-tech projects, and employees and senior managers of large-scale investments may receive multiple-entrance visas.

5.2      Employees engaged in major high-tech projects, and employees and senior managers of large-scale investments may receive residency permits of a duration lasting from 3 to 5 years.

 

Wuhan Municipal Government website (Chinese): http://www.wuhan.gov.cn

And its English version: http://english.wh.gov.cn 

China’s rising global brands: how...

China’s rising global brands: how far can they go?

It’s no secret that a significant share of the goods we use in our lives are produced in China. On average 15 to 20 percent of imports come from the Middle Kingdom. Most people assume that, while these goods are manufactured or assembled in China, the designing and branding is actually done elsewhere. Now, however, a growing amount of “China’s” companies are offering their own products to foreign customers. Not many Chinese brands could be called truly global, but the trend is changing. Whether it is Haier’s mini-fridge aimed at American college students or a new Xiaomi smartphone, these Chinese branded consumer goods are appearing in our daily lives more and more often. What kind of Chinese companies operate outside their country? What are the differences among them? And most importantly, how will this trend continue to develop and what Chinese companies are successfully competing with their international peers in the global market?

 

Adopted in 1999, then revised in 2006 China’s Go Out Policy (走出去战略),, is boosting Chinese companies ambitions abroad. Despite being vaguely worded, the document still represents a State-level desire to use business ties to increase China’s global soft power. It mostly mentions investing, but another very important point of the document encourages businesses to familiarize European and American (sic) consumers with Chinese brands.

 

There have been 3 stages of Chinese companies’ expansion into foreign markets: in late 90’s and early 2000, after 2007 and since 2012. In the first case, companies such as Lenovo, Haier, ZTE and Huawei were looking for opportunities to expand their businesses abroad. In the second stage, money-loaded Chinese corporations rescued or swooped on tumbling foreign business during the Great Financial Crisis (GFC). Geely and Sany, for example, spent relatively little money on gaining valuable knowledge and IP.

 

Most recently businesses, such as Dalian Wanda group feel the danger of a slowdown in Chinese economy, especially in the property market, and are looking at ways to diversify or expand their portfolio of investments beyond China’s borders.

 

Here China Brain provides a selection of brief case studies of Chinese brands that are pursuing various paths to global success and offer a good starting point for those who are exploring this topic in detail.

 

White Goods

Haier

 

Haier is the largest white goods manufacturer in the world in terms of volume, and in 2008 it became world’s largest refrigerator manufacturer. Shandong-based SOE’s CEO Zhang RuiMin has been named as one of the most innovative entrepreneurs globally. The multinational’s success, and even its name, can be traced back to its joint venture with German refrigerator manufacturer Liebherr in 1980’s. The company has presence in all continents, and has acquired competitors in Italy, New Zealand and the US. Haier’s revenue in 2013 was over ¥62 billion ($9.98 billion), while its profits surpassed ¥2 billion ($321 million) mark. Its produces a wide range of goods including air conditioners, wine coolers, washing machines, computers and even mobile phones. Haier is and will remain a successful company due to  its strong presence in both developing and developed markets, multiple R&D centres in countries, such as in Germany, and ability to identify consumer needs, as it did in the US with compact refrigerators and electric wine coolers.

 

Midea Group

 

The Guangdong-based group is a private, white goods manufacturer, producing washing machines, air conditioners, kitchen appliances, and water heaters, as well as heat pump components. The group went public last year, though its subsidiary Midea Holdings, whose revenue in 2012 reached ¥68 billion ($10.95 billion), while its Net Profit was ¥4.3 billion ($692 million).  Although the group is the third largest home appliances manufacturer in the world, it still remains mostly focused on developing economies. It sends a quarter of its goods to the Philippines, India, and Brazil. Midea has international production bases in Vietnam and Belarus, and has made acquisitions in South America. It used to position itself as cheap goods producer, but recently has started heavily investing in R&D in preparation to expand into new markets.

 

Telecommunications

Huawei

 

Huawei became the largest telecommunications equipment maker in the world in 2012; it is also the third largest smartphone manufacturer globally. The company has R&D centres in more than 20 countries, and more than 40% of Huawei’s employees are engaged in R&D operations. In 2013, Huawei, despite slowing building telecommunication networks market growth, has managed to increase its revenue up to a record level of ¥239 billion ($38.47 billion), while the Net Profit was ¥21 billion ($3.31 billion).

 

Huawei has partnerships with most of the serious players in the telecommunication business. Just to name a few: BT, TeliaSonera, Vodafone, T-Mobile, Bell Canada and Motorola. In order to promote brand recognition, Huawei has been sponsoring cultural events (Jonas Brothers’ US tour), sports teams (Arsenal, Paris PSG, Dortmund Borrusia). The company has stated a revenue target of $70 billion for 2018. It is also expected to profit from growing 4G networks in China, and should see growing smartphone sales.

 

In the past Huawei has been accused of copyright infringement (though always denied it), but the most serious and ongoing issue for the company’s expansion in foreign markets is fear of its links with the CCP and PLA. U.S. Congress has even labelled Huawei as a “national security threat”, while Australia and Canada denied it the chance to build their communication networks due to espionage fears.

 

ZTE

 

ZTE is a Shenzhen-based telecommunications corporation and the 7th largest smartphone producer in the world. It is planning to ship 60 million smartphones in 2014, 40% of which will be supporting 4G technologies.

 

For 2013, ZTE posted profit of ¥1.36 billion ($219 million), but its revenues had fallen down to ¥75.2 billion ($12.11 billion). More than half of the sales came from outside China.

 

ZTE applies for lots of invention-related patents. In 2011 and 2012, it was the company, which applied for the biggest amount of patents in the world. The company is also expected to profit from growing 4G networks. In 2012, ZTE has posted heavy losses, and has therefore started focusing on projects with a higher profit margin.

 

ZTE’s expansion abroad was also met with some controversies, though the allegations were not as severe as in Huawei’s cases and were mostly related to bribery and corruption.

 

Construction/Urban Machinery.

Two Goliaths of this industry are Sany and Zoomlion, supplying everything from excavators and cranes to road sweepers and garbage trucks. The years of construction growth in China have been good to these companies in their domestic market.

 

                                     

 

In the case of Sany, only about 7% of its current sales are international, but this is expected to increase as the company targets international expansion. The company already has manufacturing plants in over 5 countries, including the US, Brazil and Germany, and has also set up a R&D centre in the US. It also recently acquired Putzmeister, a noted German pump manufacturer. It was the first time in history, when a Chinese corporation bought a German Mittelstand company.

 

Zoomlion has acquired Powermole, a construction equipment manufacturer in Britain; CIFA, an Italian concrete machinery manufacturer and M-Tec, a German dry mortar equipment producer. Zoomlion sells its production all over the world, but its crucial market remains China, which accounted for 87% of its total revenue (¥38.54 billion, $6.2 billion), while their recorded overseas sales only reached ¥2.79 billion ($449 million). However, both Sany’s and Zoomlion’s near future seems not as bright as before, since the latter’s financial results indicate a serious slowdown in the Chinese construction market. It is highly likely that both these companies will look for more growth in other emerging markets close to China.

 

Engineering

 

Some of the world’s largest engineering companies are Chinese and have already completed numerous overseas projects. One company aggressively expanding overseas is Beijing Capital Group, which focuses on water and wastewater projects. The company already has international projects in Malaysia, the Philippines, Iran, and also the UK.

CREC and COVEC

 

CREC was the largest construction company in the world in 2012and it has built numerous high-speed rail lines in China. Now it is looking to extend the network beyond China`s borders through its subsidiary, China Overseas Engineering Group (COVEC), notably to Thailand and Myanmar, such as the African Union building in Addis Ababa. COVEC has also built roads and had other projects in Africa and South East Asia. It tried to enter the European market but failed to finish a project in Poland.

 

Transportation

Geely

 

Geely has been aggressively expanding overseas in recent years. The company became a saviour of troubled Western automotive manufacturers by buying Volvo from Ford in 2010, and in 2012 acquiring The London Taxi Company, which was in administration. Both companies can expect a significant investment from Geely, especially Volvo, which will receive more than $11 billion. Although there were reported tensions between Swedish and Chinese executives, he Gothenburg-based company will introduce its first car model developed under the Chinese ownership this year , and in 2017 will start rolling out further models.

 

Geely’s plans with Black Cab are less ambitious, as it is a much more niche product. A factory in Britain is producing cars for the local market, while the plant near Shanghai is selling cars globally.

 

There are factories in CIS and ASEAN countries, assembling knockdown kits,but Geely does not own these factories and does not operate them.

 

Political turmoil in Egypt and Ukraine, both important export markets will cause serious losses for the Chinese group.

 

Besides these older establishments, Geely’s marque Emgrand has been officially launched in the UK, Italy and Brazil recently.

 

Chery

 

Chery’s cars are also assembled in more than 10 countries from knockdown kits, while selling its production in over 80 countries in the world. In Iran and Argentina, Chery owns production bases.

 

Chery has been living off the Chinese government’s subsidies in recent years. However, it has started a restructuring plan and will cancel unsuccessful marques.

 

It presented its first Qoros marque model, one of the few Chinese cars to receive a top, five-star safety rating in NCAP tests, which was born out of partnership with Israeli corporation. On top of that Chery has a joint venture with Jaguar-Land Rover. The company has recently announced its plant is undergoing test runs and production should be started at the end of the year.

 

Consumer Electronics

Lenovo

 

Even some insiders now hardly consider Lenovo as “Chinese” due to its multinational culture, embedded by the CEO’s global push. Lenovo is the second largest supplier of personal computers and the fifth largest producer of smartphones in the world. The corporation made the global headlines in 2005, after it acquired IBM’s personal computer branch. The company thinks its biggest, untapped potential lies in smartphones and tablets sales. Therefore it recently has announced a series of new tablets in order to challenge the industry’s hegemons – Samsung and Apple. The Chinese corporation has also strengthened itself, by buying Motorola Mobility from Google.

 

Property Management

Wanda Group

 

Wanda is the biggest property developer and operator in China. It owns shopping malls, cinemas, hotels and entertainment establishments. Recently, the company has started making large-scale acquisitions abroad. First, by buying American cinema theatres operator - AMC Theatres, the Dalian-based conglomerate became the largest cinema operator in the world. Later the Chinese company bought Sunseeker, a luxury yachts builder in Britain. The company reported ¥186.6 billion ($30.04 billion) revenue in 2013. It was the eighth year in a row with the corporation’s revenue growing by more than 30%. Wanda Group aims at growing the number of Chinese tourists abroad and is riding the trend of wealthy Chinese making investments into properties abroad. The company has already announced its plans to develop a five-star hotel and apartments in central London. A similar project in New York will be made public later this year, with 5-star hotels in in more than 10 cities around the globe. Hotels will be under Wanda’s own brand, a new field for the corporation, since it operates hotels under franchises.

Finance

UnionPay

 

UnionPay is the equivalent of Visa in China. Due to the fact, that it is almost the only bank card used in China, UnionPay recently overtook Visa as the world’s most used debit card by volume. Following an increasing amount of travelling Chinese shoppers, UnionPay is expanding its operations abroad. For example, in Taiwan it is treated as any other bankcard and can be used almost everywhere. In the UK or US, UnionPay can be used in a lot of ATMs and department stores. Since China has such a burgeoning middle class, who increasingly travel overseas and who spend big sums on consumer products while on the road, UnionPay can be expected to see its income from foreign countries grow.

 

Although Chinese banks and financial institutions are among the biggest in the world, their expansion abroad is quite slow and unambitious. Only recently ICBC received permission to acquire the US operations of Bank of East Asia Canada. However, there have been repeated announcements from Chinese bankers that they intend to expand abroad.

 

As it is clear, Chinese companies can and are successfully competing in foreign markets. Cheap acquisitions of troubled Western enterprises awarded Chinese companies with long-desired technical knowledge and access to markets. On top of that, highly skilled Chinese engineers, managers and designers are returning home from abroad, serving to increase Chinese companies’ understanding and competitiveness overseas. The government in Beijing will provide assistance. Chinese companies are moving up the value chain and developing more expensive consumer goods. With the help of all the above-mentioned reasons, SOEs and private companies will be able to increase their market share abroad.

 

Challenges, like increasing brand awareness abroad, improving quality of the production, finding ways to enter the market are serious. Not all are guaranteed success but every company needs to be aware and alert to the ambitions of Chinese companies in their sectors. China Brain will continue to explore this topic in detail. 

 

China National Nuclear Corporation ...

China National Nuclear Corporation (CNNC).

Looking to the Future.

 

 

China’s burgeoning nuclear industry’s relationship with the state places it in a unique position as it expands domestically and moves into the international market, and it will play a vital role in the country’s future development. The industry is led by two state-affiliated giants -China National Nuclear Corporation (CNNC) in the northeast and China General Nuclear (CGN, China Guangdong Nuclear until 2013) in the southeast. These two have been working together and independently to construct nuclear reactors across China, making it the country with the most reactors in development worldwide. In the past couple of years, they have begun moving abroad with major projects in development in the Middle East, Europe and beyond.

 

China is now taking significant steps to expand its nuclear industry domestically and internationally. While China still overwhelmingly runs on coal as its main source of energy, it is also the world’s leader in renewable energy production. Currently, nuclear energy only accounts for about 2% of total energy used in the country, with plans to double this figure by 2020. There are 21 nuclear reactors in China as of April 2014 and 28 under construction, the highest number around the world. This past fall, Beijing allowed CNNC to open on the Shanghai stock market in the hopes of raising further capital for expansion. CGN will list its IPO on the Hong Kong market, with a possibility of expanding to China’s mainland stock market in the future.

 

Both CNNC and CGN operate under the supervision of the State-owned Assets Supervision and Administration Commission of the State Council (SACAS). The government has in recent months obliged them to work together increasingly in order to streamline China’s nuclear exports including adopting common third-generation nuclear technology. Below is a brief review of their recent international bids and projects:

 

Currently, China is competing with a Japanese-French joint venture in a bid for the building of Turkey’s second nuclear plant. South Korea and Canada have both been dropped from the short list for the 5,000-megawatt nuclear power plant, which is planned for the Black Sea province of Sinop. The French company GDF Suez is officially placing a joint bid with Japanese companies in what is expected to be a $22-25 billion dollar investment.

 

In March 2014 it was reported that China’s main nuclear power companies were lining up to bid for a $93 billion dollar contract in South Africa to build six reactors by 2030. The Energy Minister said that this could promote nuclear power development across the region. In February the Nuclear Energy Corp of South Africa signed a skills development and training agreement with CGN and SNPTC, funded up to 95% by China.

 

China is currently in talks with Pakistan concerning a potential deal for Beijing to sell Pakistan three large nuclear plants for around $13 billion. These talks follow China-Pakistan nuclear cooperation on a $9 billion dollar project of two nuclear plants in Karachi.

 

In October, CNG and CNNC announced they will hold 30-40% of a new nuclear development project, Britain’s Hinkley Point nuclear project - the first nuclear project that China will be involved in with a developed country. The Chinese companies are teaming up with France's EDF in a 16-billion pound ($25.69 billion) deal to construct two third-generation European Pressurised Reactors (EPRs) in southwest England. Thus far, China is only slated to play a financial role in the project.

 

There are several problems facing Chinese nuclear companies at the moment, prohibiting them from expanding to their full potential. One detriment to Chinese nuclear companies in their bids for international projects is the limit placed on their technology. The companies cannot export the most modern reactors being built domestically because foreign companies such as Westinghouse and Areva own the copyrights for those designs. However, analysts say China’s own local designs are catching up with third generation models ready for export this year.

 

Another issue the government faces is lack of public trust, which has led to protests in areas of planned projects domestically, resulting in delays or relocation of future nuclear reactors. Negative news seen globally about Chinese industries and lack of adequate government oversight could discourage foreign nations from pursuing projects with China’s nuclear developers. Britain’s Hinkley point project will have China as a minor stakeholder only, stating the public’s need to adjust to the idea of Chinese involvement. In fact ,China has never had a nuclear event exceed Level 2 on the International Nuclear Event Scale (INES)—a globally accepted scale used by the International Atomic Energy Agency for prompt and effective public communications. The US, by comparison, had a Level 5 accident in 1979. However, negative impressions left by food and environment scandals will take some time to overcome.

 

Finally, the nuclear industry in China also faces problems with its structure and policy. China does not have an atomic energy law, despite it being in discussion since the 1980s. It also follows fewer international structures than most nuclear industries globally. For example, both the US and India have expressed concern about China’s planned projects in Pakistan because reactors are being built without the approval of the 48-nation Nuclear Suppliers Group, a multinational body concerned with reducing nuclear proliferation by controlling the export and re-transfer of materials. Some within the State Council Research Office have stated that nuclear safety governance in China is too fragmented and that its regulatory body, the National Nuclear Safety Administration, does not have a sufficient level of independence.

 

On the other hand, the affiliation of Chinese nuclear companies with the state allows them to work together and bid on projects with the vast financial backing of Beijing. By working together and reducing competition, CNNC and CGN are likely to win more international project bids. They seem to be on their way with their first foray in to the European market, with their future share in projects likely to grow. Their affiliation with the state has benefitted the Chinese nuclear duo in the recent bid in Turkey, mentioned earlier. Because of the enormous financing that can be guaranteed by Beijing, they were able to beat out South Korea by not requiring state guarantees for the project from Turkey. The recent bid in Pakistan has seen a similar situation in which CNNC was able to offer Pakistan a loan of at least $6.5 billion to finance the project if China wins the bid. This certainly gives Chinese companies a huge advantage over those entirely private companies trying to compete for international projects. 

 

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