N E W S L E T T E R January 2007

Transcription

1 N E W S L E T T E R January 2007 Story of the Month China and U.S. Global Joint Venture There are encouraging signs that the U.S. and China can work together as mutual stakeholders in the world economy. China launched a high-level energy group with the U.S., India, Japan, and South Korea while a strategic economic discourse has begun with the U.S. and China. Chinese leaders recognize that China s development depends on the international marketplace. The U.S., on the other hand needs to show the American public that opportunities can grow from China s economic growth and that China will share international responsibilities. China is bases their values on the creation of a harmonious society. Fair competition is important for its growth, and this strategy should encourage China to support the international system. China s leaders are striving for a more balanced development between the cities and the countryside, the rich and the poor, the coast and the interior, and the environment and growth, while seeking to boost consumption. The U.S. can assist and/or benefit from these transformations in many ways: 1) Helping to develop China s interior and link the provinces to global sourcing networks. Also, U.S retailers can help Chinese consumers get better goods and services at lower prices, and American farm products to lower the cost of food as rural Chinese move to higher value-added products. 2) Due to Chinese high savings rates and given the one-child policy and rising longevity, China will grow old before it grows wealthy. Therefore, China would benefit from U.S. private sector involvement in creating new reforming pensions and healthcare system. 3) Investment returns have been declining in China and now, they are starting to complement its reform of commercial banks with steps to develop a bond market, strengthen insurance and equity markets, and foster asset management and disposition services. This offers business opportunities for U.S. companies and creates the prerequisites for opening China s capital markets and freeing its currency. 4) Both China and the U.S. need to expand energy supplies beyond oil and gas. Therefore, both would benefit from other energy sources. 5) China wants a knowledge economy which means that there is a need for educational services, including innovative information technology, which China could get from international technology standards rather than using their local ones. 6) Both countries will have an interest in open, fair and transparent investment policies as Chinese businesses go global. 7) Since the new head of the World Health Organization is Chinese, China can now set a standard in practices to counter infectious diseases, chronic ailments and pandemics. They can also be a responsible stakeholder in international economic, environmental, health, and energy regimes. (Source: FTChinese) NAROS Update Hong Kong and Shenzhen: Your Winning Formula for China, Washington D.C., January 17, 2007 Shenzhen Bureau of Trade and Industry (SZBTI) and Invest Hong Kong jointly set up a promotion event at Ronald Reagan Building in Washington D.C. on January

2 17, 2007 Hong Kong and Shenzhen: Your Winning Formula of China. North America. NAROS and Hong Kong TDC have worked together numerous times in the past, and look forward to continued cooperation. Shenzhen and NAROS Participated CES in Las Vegas During January 8-10, 2007, NAROS and Shenzhen government's delegation which was lead by Mr. Yingchun Chen, the Vice Mayor of the City of Shenzhen, participated in the 40th International Consumer Electronics Show (CES) held in Las Vegas. Photo: Clay Hickson, of the Maryland China Business Council moderates a panel discussion at the Washington DC Conference. Keynote speakers included Wang Xiaochun, Deputy Director-General of the Shenzhen Bureau of Trade and Industry and Mike Rowse, Director-General of Invest Hong Kong. The two spoke on the topics of major industries, major advantages to U.S. investors, and regional integration between Hong Kong and mainland China. A second panel was held featuring expert presentations from representatives of FedEx, Deloitte and Touche LLP, HSBC, and the Hong Kong Trade Development Council. Economic officials from the Shenzhen and Hong Kong governments held private meetings and one-on-one consulting sessions with over 75 companies and organizations from the Mid-Atlantic region after the luncheon. Shenzhen delegation consisted of 62 Shenzhen enterprises with 68 booths, boasting the city's the biggest delegation in the Show among China's participating provinces and cities. Shenzhen delegation brought a few dozen products to CES including portable display, hard disc player (MP4) and home theater system, etc. The various innovative, handy and high-quality products attracted many international buyers. In addition, many Shenzhen's large electronics enterprises like Konka Group, Skyworth Group and Matsunichi Electronics participated in CES independently. The organizer of CES, Consumer Electronics Association (CEA), held a meeting with Shenzhen delegation during the show to give the delegation a brief introduction about the CES and discuss the future cooperation opportunities. NAROS Chief Representative Andrew Pan and Trade Promotion Specialist Calvin Cheng were in the delegation and supported the whole proceedings. Shenzhen Bureau of Trade and Industry and NAROS Delegation Visits Hong Kong Trade Development Council Office in Los Angeles On Friday, January 19, 2007, a small delegation from the Shenzhen Bureau of Trade and Industry and NAROS visited the office of the Hong Kong Trade Development Council in Los Angeles. The delegation included Mr. Wang Xiaochun, Deputy Director-General of the Shenzhen Bureau of Trade and Industry (BTI), as well as BTI Director Li Xin, as well as other staff members Li Xiaoyan, and He Zhimei. The group met with Tony Wong, Director of TDC s Los Angeles Office along with staff members Anne Yuan and Kelly Ma. A number of issues were discussed, including economic integration between Shenzhen and Hong Kong and cooperation between the two cities in Photo: Vice Mayor Chen Yingchun at Shenzhen booth on CES US/China/Shenzhen Shenzhen Business News Shenzhen Will Host 2011 World Universiade Many excited Shenzhen residents celebrated early on January 17, 2007 when Shenzhen was chosen by the

3 International University Sports Federation (FISU) as the host of the Summer Universiade in Because of the city s great economic growth in the past two decades, the city has the financial means to stage a successful event that will attract many university students and spectators from around the world. Shenzhen, with only 26 years of history, has become to be known worldwide as an overnight boomtown. It has all the means necessary to host and international sports event. It is vibrant, progressive, original, and open-minded. This event will boost the city s efforts in becoming an international metropolis. The 2011 Universiade will serve as a training ground in addition to the business opportunities, tourism revenue and growing international profile that will be expected from the event. When Beijing won the right to host the 2008 Olympics in 2001, a Hong Kong newspaper said it expected Beijing to become a great international city seven years later. Now, surely Shenzhen can become a more international city in 2011 than it is now. overseas companies have seen a surge in foreign orders in the city. In 2006, for the first 11 months, the city exported goods worth US$121.5 billion to overseas markets. This showed an increase of 38.5 percent from the year of Also, total import and export volume reached US$212.6 billion, which showed an increase of 33.5 percent from the same period in Liberalization of Air Services between the U.S. and China As economic relations between the two countries continue to expand at a rapid pace, the linearization of air services between the United States, and China become one of the U.S. administration s top priorities. The U.S. delegation is visiting Beijing on January to restart talks on an open skies agreement with China. This agreement would give the airlines in both countries the right to operate air services from any point in one country to any point in the other, as well as being able to connect those flights to points in third countries. This eliminates restrictions on air services with the type of aircraft, frequency of flights, and other aspects. Andrew Steinberg, assistant secretary of transportation for international affairs said that a bilateral open skies agreement would bring huge economic gains to both countries. US officials say China's rapidly growing aviation market would benefit from increased liberalization through more jobs, greater consumer choice, increased investment, improved levels of service and technological advancements. We want to be a true partner with the Chinese, Steinberg said. As world leaders in civil aviation technologies and services, we have a lot of expertise to share. (Source: Aero-News) Photo: Shenzhen celebrates being chosen to host the summer Universiade in 2011 Shenzhen: China s Top Exporter for 14 th Year The Shenzhen Special Zone Daily reported on January 3, 2007 that Shenzhen is China s top exporter in 2006 for the 14 th straight year. With its exports jumping more than 30 percent and reaching US$126.5 billion, it has far outdone other cities. More than 70 percent of the city s exports were from 120 big names such as Huawei Technologies, BYD, ZTE, and Foxconn. The report recognized a favorable investment environment and efficient customs clearance for the continued rapid growth in exports in Shenzhen. The city has attracted a large number of foreign logistics companies and manufacturers. Therefore, local and Clean-Energy Technologies Trade Mission to India and China lead by the Department of Commerce In April of 2007, the U.S. Department of Commerce s International Trade Administration will lead a Clean-Energy Technologies Trade Mission to India and China. Where American clean technology goods and services can help improve the environments of these countries, U.S. companies will have the opportunity to enter into their fast-growing markets. Renewable energy, energy efficiency, clean coal, and distributed generation are some of the clean energy technologies that the mission will target. All are industries related to the Asia Pacific Partnership on Clean Development and Climate (APP), which is a public-private partnership including six partner

4 countries representing half of the worlds population, energy consumption, and economy, which includes China. (Source: SD WTC) Google Invests in Shenzhen Website Google, owner of the world's most-used internet search engine, will invest in Shenzhen Xunlei Network Technology, a mainland website that helps users download videos form the internet. China was home to 123 million internet users at the end of June, second only to the U.S., which it is expected to surpass within the next two years. Google's investment in Xunlei may help it tap the growing popularity for online video in the world's second-biggest internet market. Existing investors in Xunlei include IDG Venture Capital and Morningside Asia Advisory. The mainland website also has partnership agreements with companies such as Motorola and Sina Corp. Doing Business in China Foreign Banks in China Have New Administrative Regulations The deputy director of the Legislative Affairs Office of China s State Council announced on November 16, 2006 that new administrative regulations foreign-invested banks will be approaching. These new regulations will provide a full range of banking services to Chinese individual customers and foreign investment enterprises (FIE s) by allowing foreign banks to own Chinese incorporated banking subsidiaries. Full scope banking services are only available to banks that are incorporated in China, under the new banking regulations. Therefore, in order to be able to offer full scope banking services to Chinese individual customers, foreign banks must convert their existing branches into a bank incorporated in China. The Chinese government believes that linking the range of services to the corporate status of a foreign bank would protect the interests and assets of its customers. Therefore, this new requirement would limit their risk. As of December 11, 2006, China will accept applications from foreign banks that wish to convert their branches into Chinese incorporations. China Unifies Corporate Tax Rates at 25% The Standing Committee of the National People s Congress ( NPC ) proposed the country s first ever tax law that will bring together differing corporate tax rates for domestic and foreign funded companies at 25%. If the bill is adopted in March 2007, it will take effect in Some of the more significant details of the proposed tax bill include: 1) The five-year tax holiday currently available to many foreign owned manufacturers will be rescinded. In addition, the 50% tax rate reduction subsequent to the five-year holiday available to export-oriented foreign businesses will no longer be offered. 2) A grace period will be provided to phase out the manufacturer tax holiday for no longer than five years. 3) A preferential income tax rate of 15% will b e granted to all qualified hi-tech companies and/or environmentally-friendly enterprises regardless of the origin of their investors or the location of their operations. 4) All qualified enterprises with investment in equipment for environmental protection, water conservation or operational safety, may be eligible for qualified expenditures. 5) Investments in China s Western region that qualify as an encouraged industry sector may continue to benefit from the reduced incentive rates provided under the current tax system. 6) Special economic zone tax incentives are expected to be phased out within the next five years. (Source: PriceWaterHouseCoopers) New Anti Money Laundering Law in China On January 1, 2007, China's top legislature approved landmark legislation on anti-money laundering. The People's Bank of China, the central bank, and its provincial branch offices are now authorized to investigate suspicious transactions. Along with this, the law now demands that financial and some non-financial institutions maintain customer and transaction records and that they must also report large and suspicious transactions. The law also pledges to coordinate their efforts with other countries to combat global money laundering along with the exchange of information with overseas anti-money laundering organizations as a requirement by the United Nations Convention Against Corruption. By the end of 2005, about 683 suspected money laundering cases had been reported to the police, according to the China Anti-Money Laundering Monitoring and Analysis Center. This in turn, involved billion Yuan ($17.2 billion USD). Also, the central

5 bank reported 2,790 suspected cases involving billion Yuan ($4.1 billion USD) to the police, along with 405 cases involving 1.24 billion USD reported by the State Administration of Foreign Exchange. "It is an important and essential step," said Zhang Xuechun, an economist with the Asian Development Bank's Resident Mission in China. "But how well it will be implemented depends on whether the government can put together an efficient inter-department co-ordination mechanism," he said. In addition, Zhang Hongwei, director of the anti-money laundering department of the Ministry of Public Security said that the law would facilitate closer co-operation between police departments and financial institutions. (Source: China Daily) New Tax Reporting Rules for Individuals Introduced in China On November 6 th, 2006, The State Administration of Taxation announced that Chinese individuals earning more than RMB 120, (approx. 15, USD) are required to file annual tax returns in 2007 by March 31 st for the fiscal year of Both Chinese and foreign source income will need to be declared. The filing requirement applies to Chinese nationals and foreign nationals who have resided in China for more than one year and are otherwise subject to PRC individual income tax. Foreign nationals are only subject to declare income that is taxable in China, and not subject to tax on worldwide income, only if they have resided in China for less than five years continuously. On the other hand, PRC nationals that are employed outside of China are subject to the annual reporting requirement and remain liable for tax on their worldwide income. The intention of these rules is to increase the collection of individual income tax by requiring persons to declare their incomes from all sources. The new rules, however, do not affect the obligation of employers to withhold individual income tax on a monthly basis. Failing to file a return can cause fines; therefore, it is important for Chinese individuals to carefully plan the holding of their worldwide assets. The reporting requirement applies to those individuals who are the legal owners of the assets/income, but not if the same is held by a trust or private foundation. (Source: China Daily) Shenzhen Facts Shenzhen Museum- Located at No. 6 of Tonggxin Road, Futian District. Exhibitions include Ancient Shenzhen, Recent Shenzhen, Shenzhen Today and Ocean Biology Specimen. Central Library- One of the 4 most important culture facilities in Shenzhen. Located at the centre of Futian District, it is a landmark building that takes the lead in China in terms of scale, level and modernized degree. Grand Theatre Located at No. 5018, Shennan Road that holds the annual Art Festival since He Xiangning Art Gallery- Opened to public on April 18 th, Located at the Overseas Chinese Town (OCT). Holds more than 1000 pieces or works of He Xiangning. North American Representative Office Of Shenzhen, P. R. China 中国深圳市驻北美经贸代表处 350 S. Figueroa Street, Suite 288 Los Angeles, CA Tel: (213) Fax: (213) info@shenzhenoffice.org Website: If you have any questions or would like to subscribe/unsubscribe to the newsletter, please contact Armine Asatryan at armineasatryan@shenzhenoffice.org or This newsletter is provided by the North American Representative Office of Shenzhen, P. R. China (NAROS) for general guidance and information only, and does not constitute the provision of legal advice, investment advice, or professional consulting of any kind. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information, without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.