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NINGXIA HUI AUTONOMOUS REGION

General Background

Ningxia - abbreviated as Ning - is situated in northwestern China between Gansu and Inner Mongolia. The Yellow River runs across the region from the west to the northeast for 397 km and its basin covers nearly 75% of Ningxia's total land area.

The regional capital is Yinchuan. Ningxia is the largest residence in China for the Hui that accounts for one third of the region's total population. Other major ethnic groups include Han and Manchus.

The region has abundant mineral resources. The quality of coal produced in the province is high and the varieties are large including lignite, bituminous coal and cooking coal. Ningxia also has China¡¦s biggest reserve of plaster.

Ningxia's Yinchuan Plain, which accounts for a quarter of the region's area, produces wheat, rice, oil-bearing crops, sugar beet, melons, fruits, hemp, flax and fa-cai, an edible moss with long thin thread. It is one of the major grain production bases in China.

Animal husbandry is well developed in Ningxia. It is one of the largest pastoral bases and an important production base of sheepskin, wool and camel wool in China. The province also produces tan lambskin, which is among the best in the world.

Infrastructure

Water Transport ¡Ð The Yellow River is the only inland river for water transportation in Ningxia, mainly responsible for the region's short-distance cargo transportation.

The central government is aiming to improve the water supply system of the northwestern provinces, including Ningxia, by conducing water from the upper Yangtze River to upper Yellow River. The first stage of this project is expected to be completed by 2010.

Railways ¡Ð The Baolan Line¡]Baotou-Lanzhou¡^and Baozhong Line¡]Baoji-Zhongwei¡^run across the region's northwest area and has become an important part of the New Asia-Europe Land Bridge inking Asia with Europe. In northern Ningxia, the Pingluo-Rujigou feeder line of the Baolan Line plays an important role in transporting Ningxia's coals to other provinces.

Construction of a new railway, Zongtai line¡]Zongwei-Taiyuan¡^linking the eastern and western China is underway. The new railway will start from Zhongwei of Ningxia and cross Shaanxi and Shanxi.

Highways ¡Ð The region has a fairly developed highway network centering at Yinchuan. The network links all counties, cities, key mining and industrial production bases in the region. In 2001, the government decided to invest RMB3 billion to improve the highways

A new expressway in Xihaigu area of Ningxia will be built within 5 years. This road will form an integral part of the expressway between the city of Yinchuan and Wuhan of Hubei province. The Yinchuan-Wuhan Expressway will be 390 kilometers long. This highway will be one of the eight major highways in Northwestern China, planned in the Great Western Development Strategy. Another expressway from Yinchuan to Qingdao is also under construction. Upon completion of the expressway, driving from Yinchuan to Qingdao, the nearest seaport, will take only 14 hours.

Air Transport ¡Ð The Yinchuan Hedong Airport provides more than 8 air routes connecting Yinchuan with Beijing, Chengdu, Chongqing, Guangzhou, Kunming, Shanghai, Xi'an, Urumqi, Wuhan, Shenyang, Lanzhou, etc. Since the announcemnent of the Great Western Development Strategy, Ningxia¡¦s air transport is experiencing a major boom. More flights and air routes has been established to accommodate this change. A new civil airport in Guyuan is under construction.

Telecommunications ¡Ð Ningxia has invested substantially in upgrading its post and telecommunication network over the past years. A major optic fiber cable connecting Beijing, Yinchuan, Huhehaote and Lanzhou has been completed recently. Another cable connecting Shizuishan and Taiyuan is under construction. Mobile phone and pager subscribers were over 106,900 and 198,900 respectively at the end of 1999. In Yinchuan, there were nearly 50,000 mobile phone users and the popularization rate was 8.5 per 100 persons by end-Aug 1999.

Electricity ¡Ð More than 5 large- and medium-sized power plants (including three thermal power plants and the hydroelectric power station at Qingtong Gorge on the Yellow River) in the region. The Daba Power Plant with designed generation capacity of 2 million kWh is under construction. More power plants will be built in Shapotou and Daliushu. The Shabotou power plant is one of the ten key projects in the tenth Five-Year Plan. Another major project to improve electricity supply in the tenth Five-Year Plan is the expansion of the Shizuishan power plant.

Gas Supply ¡Ð To accelerate the country's energy development strategy in coming years, a major gas pipeline with total length of 4,200 kilometers will be built. The pipeline will start from the Tarim Basin in Xinjiang and ends at Shanghai, running through the provinces Gansu, Shaanxi, Shanxi, Henan, Anhui and Jiangsu and Ningxia Hui Autonomous Region. It aims to deliver gas from the country's western area which were major gas production bases to central parts as well as Yangtze River Delta areas and the eastern regions.

Industries

In 2000, Ningxia's industrial output totalled Rmb23.7 billion (+21.5%). The region's major industries include coal, electricity, chemicals, metallurgy, machinery, building materials, pharmaceuticals, foodstuffs and textiles.

Industrial production bases in the region are located in the Yellow River basin along the Helan Mountain, mainly in Yinchuan, Qingtongxia, Shizuishan and Wuzhong cities. The northern part of the Helan Mountain Industrial Zone is the region's major coal production base.

In coming years, Ningxia will focus on developing its seven pillar industries - electricity, chemicals, metallurgy, machinery, building materials, pharmaceuticals and agricultural processing industries. The region will further develop its agriculture, energy resources, communication facilities and urban construction.

Tourism

Yinchuan and Qingtongxia are the major tourist sites in Ningxia. Their famous historic sites have attracted thousands of domestic and overseas visitors each year. In 2000, about 7,800 tourists visited the region and generated revenue of US$3million.

The holiday resort of Shapotou has become one of the famous tourist sites in the region. Great efforts will be put into developing the Shahu, Qingtongxia, The Western Film Studio, Xuni Mountain, The Xixia Kings¡¦ Mausoleums, Jinshui and Liupanshan tourist zones in the coming years.

Consumer Market

In 2000, Ningxia's retail sales of consumer goods totalled Rmb9.0 billion (+8.4%) and Yinchuan is the largest consumer center in the region.

Major department stores and shopping centers in Ningxia include Xinghua Shopping Centre, Yinchuan Department Store, Ningxia Hualian Commercial Building, Yinchuan Xincheng Department Store, Yinchuan Commercial City, Xinhua Department Store and Yinchuan Lihua Chain Store Co.. Wuzhong Zhaoyang Business Center. Shizuishan People¡¦s Business Center.

Foreign Trade

The region's exports rose by 25% to US$350 million in 2000. Major export goods were machinery, chemicals, rubber tyres, cashmere, anthracite, and farm & sideline products.

Imports sharply increased by 50% to US$180 million in 2000. Major import items included rubber, chemical and light industrial products.

Hong Kong is Ningxia¡¦s largest trading partner. Total trade between the two economies was $11.75 million. Other major trading partners include U.S, Japan, UK and Taiwan.

Foreign Investment

In 2000, Ningxia approved 31 foreign-invested projects (+6.9%) with contracted overseas capital of US$74.3 million (+19.3%). Actual utilized foreign capital fell 67% to US$17 million in the year.

Hong Kong is the largest investor of the province. In 1999, Hong Kong signed 9 investment contracts with the amount of US$16.4 million. Other major investors include Taiwan, U.S and Japan.

Yinchuan is the major city in Ningxia to attract foreign investment. In 1999, Yinchuan approved 20 new FIEs, and signed contracts with a total value of US$44.3 million. It also utilized US$10.21 million. The world's leading producer of high precision machine tools, Mazak of Japan, also established its first overseas joint venture in Yinchuan.

Overseas investments are encouraged to invest in the fields of agricultural development, telecommunication, energy, transportation, machinery, metallurgy, pharmaceuticals, chemicals, textiles, construction material and other light industries.

To boost the development of the central and western regions in China, the State Council has granted further tax incentives to foreign-invested enterprises (FIEs) in China. In 2000, the Ningxia government revised some of the policies, so that the autonomous region will be more appealing to investors. Under the existing policy, FIEs are entitled to a five-year tax exemption and reduction. There¡¦re also specific policies for industries investing various areas.

Economic Indicators of Major Cities (1999)

	Population	GDP	Industrial Output	Retail Sales
Cities	('000)	(RMB bn)	(RMB bn)	(RMB bn)
Yinchuan	954 (+2.8%)	6.9 (+16.9%)	8.1 (-2.4%)	3.8 (+18.8%)
Shizuishan	687 (+1.8%)	2.9 (+7.4%)	6.0 (+15.4%)	1.4 (+16.7%)
Wuzhong	1,873	8.1	9.8	2.3

Note: Figures in ( ) represent year-on-year growth

Source: Ningxia Statistical Yearbook, 2000

In 2000, the city of Wuzhong officially incorporated the city of Qingtongxia, as well as the following counties: Litong, Zhongwei, Zhongning, Ningwu, Yanchi, and Tongxin. Therefore the figures are not consistent with those of the past years.

Major Economic and Technological Development Zones (ETDZs)

1. Yinchuan New- and Hi-tech Development Zone, is a key development zone in Ningxia. It enjoys similar preferential policies to those of the coastal ETDZs and open cities. Overseas investors are encouraged to invest in hi-tech projects in the fields of machinery, electronics, chemical products, textile, clothing and food processing industries, pharmaceuticals, and other industry sectors.

2. Shahu Lake Resort Development Zone, an important tourist resort development zone in northwest China.

Economic Indicators

	1999		2000
Economic Indicators	Value	Growth	Value	Growth
		(%, y-o-y)		(%, y-o-y)
Area (sq km)	66,400	--	66,400	--
Population (mn)	5.4	0.9	5.6 ^	3.5
Gross Domestic Product (RMB bn)	24.2	8.7 *	26.5	9.6 *
Per Capita GDP (RMB)	4,473	4.8	N/A	N/A
Disposable Income Per Capita
- urban (RMB)	4,472.9	8.8	4,912.4	9.8
- rural (RMB)	1,754.2	1.9	1,724.3	-1.7
Fixed-assets Investment (RMB bn)	10.1	13.9	12.4	22.8
Added Value Output
- primary industry (RMB bn)	4.8	-1.4	4.6	-3.6
- secondary industry (RMB bn)	10.3	9.2	12.0	16.9
- tertiary industry (RMB bn)	9.1	7.1	9.9	9.0
Retail Sales (RMB bn)	8.3	7.1	9.0	9.1
Inflation (Consumer Price Index, %)	-1.3		-0.4
Exports (US$ bn)	0.3	16.7	0.4	25.0
- by FIEs (US$ bn)	0.03	0	0.04	33.3
Imports (US$ bn)	0.1	100.0	0.2	50.0
- by FIEs (US$ bn)	0.02	100.0	0.02	0
Foreign Direct Investment
- number of projects	29	-19.4	31	6.9
- contracted amount US$ bn)	0.06	19.7	0.07	19.3
- utilized amount (US$ bn)	0.05	176.6	0.02	-66.1

Notes : * In Renminbi real terms

^{^}Latest full population census figure, 1999 figure was estimation based on previous census.

Sources : China Statistical Abstract, 2001, CEIC database