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Beijing Doing Business

Economy:

The vast Chinese economy has developed in fits and starts since the founding of the People’s Republic in 1949. Its basic structure is mostly that of a developing country, with the majority of the population employed on the land. However, there is a significant industrial base and expanding pockets of advanced manufacturing and technological enterprises, including a space programme.

The economy has undergone rapid and consistent growth of around eight to nine per cent annually since the introduction of economic reforms in the 1980s. However, the new wealth has not been evenly distributed and there are now disparities between what are sometimes known as the ‘blue China’ – the coastal cities and Special Economic/Administrative Zones (including Hong Kong and Macau) – and the inland ‘brown China’ of low-grade agriculture, antiquated industrial operations and widespread social and economic deprivation. Although modernisation of the agricultural sector is underway, there has been a major shift of population – perhaps as many as 150 million people – from the countryside to the cities during the last decade.

China is the world’s largest producer of rice, and a major producer of cereals and grain. Large mineral deposits, particularly coal and iron ore, provide the raw material for an extensive steel industry. Other important minerals include tungsten, molybdenum, tin, lead, bauxite (aluminium), phosphates and manganese. In the last ten years, central government policy has switched the emphasis in development from heavy to light industry, and promoted the evolution of a service sector. Chemicals and high technology industries have grown particularly quickly. China is self-sufficient in oil and is developing a petrochemicals industry.

The fundamental changes that have taken place in the Chinese economy were introduced under what Beijing describes as the ‘socialist market economy’ under which market mechanisms were introduced to attract foreign investment and improved trade terms. Foreign companies were encouraged both to sell products in China and to establish joint ventures with Chinese commercial organisations. Such problems as emerged were put into perspective by the 1997 Asian economic crisis. China, because of its vast domestic market and highly regulated banking system, did not suffer nearly as badly as many of the region’s smaller economies. Government targets for production and growth continued to be met: as of mid-2001, annual growth is still close to eight per cent (with industrial production up 11 per cent), the trade balance shows a healthy surplus, while price inflation is next to nothing. China’s major imports are energy-related products, telecommunications, electronics and transport. Minerals and manufactured goods are the principal exports. The major trading partners are the USA, Japan and Germany. Trade has been hampered somewhat in recent years by a shortage of foreign exchange, but China has benefitted from the availability of soft loans from Western banks and is likely to benefit substantially from its newly acquired membership of the World Trade Organisation.

Business:

Weights and measures are mainly metric, but several old Chinese weights and measures are still used. Liquids and eggs are often sold by weight. The Chinese foot is 1.0936 of an English Foot (0.33m). Suits should be worn for business visits. Appointments should be made in advance and punctuality is expected. Visiting cards should be printed with a Chinese translation on the reverse. Business visitors are usually entertained in restaurants where it is customary to arrive a little early and the host will toast the visitor. It is customary to invite the host or hoste