Chinese aims and goals on trade and economy

Chinese aims and goals on trade and economy

By Virginia F. Bodmer-Altura

For most of our readers China and its future are of importance, either as supplier of goods and services or for resourcing purposes, especially in textile relevant areas. The party congress has recently decided on who is going to govern China in the next few years, but there will not be dramatic changes since also the new government is obliged to follow the 12th Five Year Plan (2011 – 2015) for the development of domestic trade approved by the State Council, and therefore TextileFuture wishes to focus on 18 key projects, because we think that this framework is not yet common knowledge

The basics

In 2015 it is projected that Chinese retail sales of consumer goods will amount to CNY 32 trillion, and based upon an average annual growth rate of 15 %.

Total sales of production materials should reach at the same time CNY 76 trillion which means an annual growth rate of 16 %.

The value added by wholesale, retail, lodging and catering sectors will exceed CNY 7 trillion, thus an annual real growth of 11 %.

The number of people being employed in domestic trade will reach 130 million of which over 100 million will be employed in urban areas, growing at an average rate of over 5 million persons per year.

The 18 key projects

 The 18 key projects entail border trade markets, a ten thousand villages’ project, then a community business project, an agricultural production network, a domestic service system, a breakfast project, further a daily life service and producer service industry project and a small and medium-sized service system. Other projects are on E-commerce, urban logistics and distribution, renewable resources recoveries, vehicle recycling, energy saving and environmental protection, market macro control system, a meat, vegetable and liquor circulation traceability system, a “peace of mind meat” service system as well as a domestic trade supervision and public service system.

First of all, all of these sectors are also new business areas presenting new business opportunities for non-Chinese sources, because knowhow and experience is demanded to fill these projects with life.

Border markets

When referring to Chinese retail developments, TextileFuture has explained already the role of different types of markets and their significance. The border trade markets should make use of key port cities and transportation hub cities along borders and minority provinces (regions) and serve as nodes. It entails as well the renovation and construction of a number of niche border trade markets engaged both in domestic and foreign trade. They will consist additionally of commodity trading markets, logistics and export processing, as well as cross border logistic channels. Also a number of regional commercial centres will be built.

Ten thousand villages

This project will cater to develop rural chain operation networks by expanding rural supermarket chains and by setting up an agricultural commodity distribution system to attain a distribution rate of agricultural supermarket products of 60 % in rural areas and under the motto “one network, multiple uses” and over 50 % of rural supermarkets will be provided with electronic systems. The key support will be given to the establishment of 100 distribution centres serving rural areas.

The Community business project

The efforts concentrate on 1000 communities in order to enhance commercial networks, services and to support a number of chain-operated enterprises to enter communities. It entails also an expansion and upgrading of community commerce (convenience stores and supermarkets). This project should also create new job opportunities.

The agricultural network

For this project, the effort is laying on the development of 100 large chain-operated supermarkets (and 500 wholesale markets in provincial cities and agricultural areas will be renovated, respectively newly constructed), and to relay them directly with agricultural production bases and by applying standard sale and purchase contracts. Also 6000 agricultural trade markets in counties and villages are to be renovated or built. There will be also electronic processing installed and a focus is set on fresh agricultural products and their distribution. Environmental aspects must also be enhanced.

The domestic service system

Here, China wants to establish and to enhance a domestic service network firstly with centres in core cities and then gradually expand all over China.

The breakfast project

This project will support leading catering enterprises in cities above prefectural level to enhance staple food processing and distribution centres, to improve the systems of food safety inspection, information management, and to develop a cold chain and distribution system.  A number of branded breakfast and fast food enterprises will receive support.

Daily life service industry

Efforts will be made to establish a number of street areas within daily life service industry clusters in large and medium sized cities, by building  food, shopping, leisure and entertainment streets and time honoured shop streets and to form a number of innovative service enterprises, online custom-made services and to promote the development of own brands in the service industry.

Producer service industry

Provinces and cities will build a number of modern service and public service platforms such as industry cluster zones, commercial logistics parks, key enterprises and e-commerce platforms.

Small and medium-sized circulation service system

Selected provinces and cities will set up small and medium sized circulation enterprise service centres, on a pilot basis and by building up public service platforms and implement an improvement of public services (also for start up companies, personnel training, information, market development, guaranteed financing, legal consultancy and legal assistance for small and medium sized companies).

E-Commerce

Support will be provided to enhance technological and model innovation, including supporting service systems, such as transaction settlement, security safeguard and warehousing logistics and extending to raise the level of e-commerce application, all to form an e-commerce public service system. Traditional enterprises will be supported to further develop information technology and by establishing a number of online shopping platforms, serving both consumers and e-commerce platforms and by serving enterprises.

Urban logistics and distribution

China wishes to expedite the construction of commercial logistics clusters and logistic distribution nodes in large and medium-sized cities and to optimise the geographical layout of urban logistics and distribution. Also a pallet sharing system is to be built, as well as joint distribution service platforms. Key support goes into construction and renovation of 200 logistics and distribution centres and a number of commercial logistics parks as well as zones in modern logistics cities. The goal is to raise the distribution rate of chain operated retail enterprises in large and medium cities to 75 %.

Renewable resources recovery system

A system of renewable resources, recovery system (embracing urban and rural recovery networks, sorting centres and distribution markets) in provincial capital cities, certain prefectural level cities and county level cities will be built and become the home of 100 waste products recovery and sorting clusters. Support is also attributed to 100 leading enterprises in the recovery sector.

Vehicle recycling promotional effort

As we are all aware, automotive sales have been accelerating at large scale in recent years. This project should encourage car suppliers and dealers to develop the second hand car market by setting up second hand car marts and boutique stores. Also car recycling should be encouraged. Actually the first cars equipped with catalytic converter will have to be recycled and such items contain also metals and other substances of value.

Energy saving and environment

Retail stores in municipalities will undertake energy saving measures by renovation and installation of energy efficient systems and to reduce emissions.

 

Market macro control system

Statistical and monitoring system should be established in urban and rural areas to improve the forecast and alarming system for major commodities, but also by building up a government reserves system and to foster a core entrepreneurial team, as well as to improve auxiliary policy support and the building up of an emergency commodity database and an emergency supply and distribution network.

Traceability and meat service system

These points are self explaining and are catering to food safety measures such as traceability of each item and slaughtering supervision technology and also entail ethic rules.

Trade supervision and public service system

Also these aspects are clear and will be enhanced all over the country to meet standards applied worldwide.

 

The foreign trade promotion packages

On September 16, 2012 the State Council has established additional 16 measures aimed at promoting a steady growth of foreign trade, and at a time when the growth of China’s economy was slowing down.

China has already a tremendous number of subsidies in place that are the cause of a WTO complaint by Mexico (all details in TextileFuture’s Newsletter of October 30, 2012) and is promoting now other measures that will provoke some further complaints.

The list of these new measures: extending VAT rebates on exports and financial services, to facilitate trade through a speeding-up process of customs procedures. And by taking appropriate measures against trade frictions, such as the deepening of bilateral and multilateral relations, as well as by active participation in multilateral, regional and sub-regional cooperation mechanisms, such as G20 and the Shanghai Cooperation Organisation. Further by optimising trade structure, such as the promotion of trade balance, the optimisation of the distribution of international markets for foreign trade as well as domestic regional development. The build-up of foreign trade bases, trading platforms and international marketing networks has to be expedited and the goods export and trade structures (also by creation of “processing trade zones”), including governmental departments at all levels have to be optimised in order to support China’s aims and goals in trade.

Concluding remarks

The Chinese governmental incentive packages are important and seem to ever expand, also beyond the measures allowed to a member of WTO World Trade Organisation, and therefore criticism will persist against China, but lately China reacted harshly on criticism, making clear that self rightness and power have increased to the benefit of China’s economy and the Chinese political system and has voiced clearly its expanding autonomy also within established global bodies of trade and finance.

Other measures were initiated to calm down the growing discontent of citizens in regard to price levels of food and uneven distribution of supply of goods and job availability, as well as the level of wealth being more and more concentrated in urban cities, whereas the rural population remains poor.

Most measures are taken to protect the growth of the Chinese economy, might they be directed to the domestic or international market.


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