Untitled


	China – Land of a Thousand Cranes and a Thousand Opportunities! Capitalism has taken root in the Peoples Republic of China and it is coming up cranes…massive construction cranes that is! Beneath the cranes lie tremendous opportunities for Virginia businesses. Enormous change and development is underway in China, in proportions we can not even fathom. No matter where you go in China, hundreds of cranes dot the horizon, as the skyline of yesterday makes way for the skyline of tomorrow. China’s economy has surges forward with double-digit annual growth rates for over a decade. Just three short years after accession to the WTO, China has leapfrogged into the global arena and become the manufacturing center of the world. This giant manufacturing machine and its rising middle class present huge opportunities for Virginia companies. In fact, China is so important to Virginia, Governor Warner is leading a trade mission to China later this week. China has many Herculean projects underway to support the 2008 Olympics, to support the unprecedented rural migration to urban centers, and to develop the massive manufacturing machine and rising middle class. Made in China China has a voracious appetite for oil, industrial metals, commodities and semi-finished goods. It inhales these commodities to fuel the manufacturing engine, which in turn is driving the country’s robust growth. According to the WTO, from 2002 to 2003 China’s imports rose 40% to reach $413 billion. In fact, in January 2004, China imported more than it exported for the first time and has generated a trade deficit every month to date this year. Beijing 2008 Summer Olympics Major construction projects are underway to support the 2008 Olympics in Beijing. China views this as an opportunity to showcase not just Beijing, but the entire country. A massive modernizing facelift is taking place all across China. Rural Migration to Urban Centers China is experiencing a fundamental shift from an agricultural based to a manufacturing based economy. China’s agricultural population–eager to access the manufacturing riches, are fleeing rural areas and flooding cities at a pace of 20 million annually. To put that in context, China must build a city the size of Houston every month through the end of this decade. They must build the socio-economic infrastructure necessary to accommodate this influx, with rapid construction of housing, schooling, waste-water treatment facilities, transportation, telecommunication and other projects. China’s Emerging Middle-Class Some low-estimates figure that the Chinese middle-class now accounts for just 4.5 % of the population. However, with a population of 1.28 billion people, this still translates into 58.5 million people. Others at the high-end predict that by 2007, China’s middle class could exceed 300 million people—larger than the entire U.S. population. Either way, China’s growing middle-class and their rising per capita income and consumption will surely influence future world supply and demand. In fact, while China ploughs forward, the world is already feeling some of the growing pains. China’s world imports grew 40% from 2002 to 2003.This unprecedented demand has caused commodity price spikes, supply shortages and port bottlenecks around the world. The world as we know it is tilting toward China and we must all take notice. China –U.S. Trade China, our second largest supplier, sells $152 billion worth of goods and services to America annually. Much is heard about China’s exports, but China is also one of the top buyers of U.S. goods and services. And, China’s demand for U.S. goods has been steadily rising. U.S. exports to China rose 28% exceeding $28 billion in 2003 and making China our sixth largest buyer. Virginia’s exports to China also grew 41% in 2003 to exceed $521 million and make China Virginia’s fifth largest buyer. Also worth noting is China’s investment in U.S. government securities. According to the Federal Reserve, as of November 2003 China had over $420 billion in foreign exchange reserves, including $100 billion worth of U.S. securities which had been purchased in the previous year and a half. These purchases help offset our huge trade deficits. Ready or not, China is here and here to stay. The world by necessity is adjusting and changing to accommodate China’s needs. Over the next decade Virginia companies will be increasingly involved with China. The top Virginia exports to China include industrial machinery, paper, man-made fibers, wadding, felt and spun yarn, electrical machinery, iron and steel, wood, manmade filaments, and plastics. The top export prospects for U.S. and Virginia firms include: •Paper and Paperboard •Mining Machinery •Computer Services and Software •Telecommunication Equipment •Environmental Technologies •Compressors •Plastic Materials and Resins •Aircraft, Parts and Airport Development •Scientific Instruments •Biotechnology Help For Virginia Exporters Interested in China Now more than ever, China is an important trade partner and the VEDP is ready to assist Virginia firms develop sales there. The VEDP Division of International Trade has an office in Hong Kong, staffed by Hailey Fong. Hailey is available to assist Virginia companies with preparation and execution of business all across China and Southeast Asia. Virginia companies are also encouraged to meet with Hailey Fong as he tours the state during the annual fall Virginia Walkabout. Hailey M. Fong - Trade Representative State of Virginia 6/F Chung Nam Building No. 1 Lockhart Road Hong Kong, PRC Phone: 011-852-2520-2338 Fax: 011-852-2520-1833 Email: HMFong@fiacragp.com.hk Hailey and the VEDP Division of International Trade conduct Virginia trade missions to China every year. During these missions, Virginia companies visit various cities in China and meet one-on-one with pre-screened agents, distributors and buyers matching their unique market objectives. More than fifty (50) business delegates representing a broad array of Virginia entities will accompany Governor Warner on his mission to China, June 5-19, 2004. Ten of these companies worked with the VEDP, to arrange pre-screened appointments with potential customers and representatives in China. If you are interested in pursuing or expanding your business in China we highly recommend participation in a future mission. An inward mission from China is planned for November 8-12, 2004, and a trade mission to China is slated for May, 2005. These trade missions are a great way to open the door and generate sales. To participate in upcoming China missions, contact Tom Garnett, International Trade Manager, TGarnett@YesVirginia.org. And remember, beneath the cranes lie tremendous opportunities for Virginia businesses! Sources: Leach, Peter T. “Boom! China’s economic miracle may last for years”The Journal of Commerce. 23-29 Feb.2004:14-16. United States Dept. of Commerce. Country Commercial Guide: China. Executive Summary 2004. http://www.export.gov World Trade Atlas. US State Export Edition. Annual 2003. Global Trade Information Systems. http://www.gtis.com/state DISCLAIMER – The contents of this article are intended to provide pertinent inform-ation for Beyond Virginia subscribers interested or already involved in international trade. While every effort is made to convey accurate and timely information, the contents of this article are not intended as specific advice to its readers. Our intent is solely to convey information.