ZHEJIANG PROVINCE

General Background

Zhejiang - abbreviated as Zhe - is located in the Yangtze River Delta, adjacent to Shanghai. The provincial capital is Hangzhou.

Most coastal cities and towns are opened to foreign investors.  These open areas include Hangzhou, Ningbo, Wenzhou, Jinhua, Yiwu, Shaoxing, Jiaxing, Lishui, Quzhou, Huzhou, Zhoushan, Yuyao, Xiaoshan, Haining, Jiaojiang, Linhai, Cangnan, Ninghai, Cixi, Fenghua, Pingyang, Xiangshan, Leqing, Rui'an, Yongjia, Yuhang, Fuyang, Lin'an, Tonglu, Deqing, Changxing, Shangyu, Pinghu, Haiyan, Jiashan, Tongxiang and Huangyan.

Lying on the Yangtze River delta, the province has a lot of flat and fertile land, and is known as the "land of fish and rice".  The most densely populated and intensively farmed area lies in the northern part of the Taihu Plain.  Rice is the province's major crop; tea, silkworm cocoon, jute, bamboo, citrus fruits, sugarcane and oil-bearing crops are the other important farm products.

The province's coastline is indented with over 3,000 offshore islands, of which the Zhoushan Islands is the largest in size.  Zhejiang is a leading supplier of both ocean and freshwater fish and shellfish.

Zhejiang has very rich non-metal mineral deposit. Its reserve of alum and agalmatolite are the highest in the nation. Zhejiang¡¦s seaboard also has rich reserve of petroleum and natural gas.

Infrastructure

Water Transport ¡Ð A total of more than 50 ports are built along the coastline, of which the ports of Ningbo, Wenzhou, Shenjiamen and Haimen are all open to foreign vessels.  Ningbo port was the second largest port in China in terms of cargo handling capacity, reaching 96 million tons in 1999 (+10.9%).  It takes 3-4 days to sail from Ningbo and Wenzhou to Hong Kong.

Zhejiang's inland water transport is also well developed. Its dense network of rivers and canals makes water transport a part of people's daily life. The Zhejiang government is investing Rmb2.3 billion to improve this network in the Tenth Five-Year Plan.

The port of Beilun in Ningbo, one of China's four major deep water ports, has opened shipping lines to 225 ports in 57 countries and regions worldwide.  The second-phase of expansion of the Beilun Port is under construction, which will help it become a major outer port for Shanghai in its bid to become an international transportation center.

Railways ¡Ð Zhejiang's railways are well-developed, served by two national trunk lines - Hangzhou-Shanghai Lines and Zhejiang-Jiangxi Lines, as well as regional railways, including Hangzhou-Ningbo, Xiaoshan-Ningbo, Xuancheng-Hangzhou, Hangchang Lines and the Jinhua-Wenzhou railway.

The new railway network will be built from Harbin in Heilongjiang to Changxing in Zhejiang. The railway network will link the Harbin-Dalian railway and a 170-kilometre-long ferry passage from Dalian to Yantai.  It will further extend from Shandong to Zhejiang and running through Shanghai and Jiangsu in order to improve China's existing railway network in Heilongjiang, Jilin, Liaoning, Shandong, Jiangsu and Zhejiang upon completion.

Highways ¡Ð Hangzhou is the province's transportation hub.  Major expressways include the Hang-Yong Expressway which links Hangzhou and Ningbo, and the Hu-Hang Expressway which links Shanghai and Hangzhou.  Meanwhile, the Yong-Tai-Wen Expressway (Ningbo-Taizhou-Wenzhou), which is an important section of the coastal expressway from Heilongjiang to Hainan is also under construction.

Recently, the Wenzhou Shuangyu Highway Transport Station began its construction. Its completion is expected to be on 2005. This is going to be the biggest highway transport station in Zhejiang and it¡¦s aiming to be a new transportation hub in the province.

In the Tenth Five Year Plan, Zhejiang is going to build several new expressways and upgrade all the existing highways in the province with a total investment of Rmb 13 billion. By 2005, traveling from Hangzhou to anywhere in the province will take less than 1 1/2 hour.

Air Transport ¡Ð The province has 7 civil airports, of which Hangzhou, Ningbo and Wenzhou are international airports.  Other domestic airports include Huangyan, Quzhou, Yiwu and Zhoushan.

Telecommunications ¡Ð Zhejiang has a well-developed and advanced post & telecommunication network, which ranks one of the country's strongest.  By July-2001, the province has more than 6 million subscribers for mobile phone services and ranks the second in China. There are over 1 million internet users as well.

Electricity ¡Ð The province's electricity generation capacity currently stands at 24 billion kWh a year.  In addition to thermal-power and hydroelectric power plants at Zhenhai and Taizhou, new plants are being built in Wenzhou, Changxing, Beilun and Jiaxing.  New nuclear power plants are also planned to be built at Sanmen Bay, Xiangshan Port and Yueqing Bay.

Industries

Zhejiang is the fourth strongest industrial production base in China after Guangdong, Jiangsu and Shandong.  In 2000, the province's industrial output reached Rmb658 billion, an increase of 26.5%.  The province is also one of the Chinese regions with the strongest non-state-owned economy.  

Industries in the northeastern region of Zhejiang are more developed than that in the southwestern region.  Major industrial production bases are located at Hangzhou, Ningbo, Wenzhou, Jiaxing, Huzhou, Shaoxing, Jinhua, Quzhou, Zhoushan, Taizhou and Lishui region.

The light industry, small firms and the processing industry have long dominated the province's industrial sector.  Also, Zhejiang enjoys a competitive edge in China in the manufacturing of garments, chemical fibers, leather, foodstuffs, plastics, metal products, and paper.

The province's output of many products, including canned food, beverage, chemical fibres, silk, clothes, papers, cements, and some machinery are ranked among the highest in the country.  Besides, the province produces about one-third of the country's total raw silk and brocade.

Future economic development in Zhejiang will be concentrated in three economic belts: (1) from Beilun to Ningbo and cities along the Shanghai-Hangzhou-Ningbo Expressway, including Shaoxing, Jiaxing and Huzhou; (2) coastal cities of Wenzhou; (3) along the Zhejiang-Jiangxi, Wenzhou-Taizhou railways.  Besides, the province will aim at further developing its hi-tech industries in electronic information, biology and medicine, electronics, and new materials as well as in related industries, expanding the scope of foreign investment and accelerating the development of its economic zones.

Tourism

The West Lake of Hangzhou is one of the most famous tourist destinations in China.  Other tourism assets in the province include the Putuo Mountain- one of China's four sacred places of Buddhism, Yandang Mountain, Nanxi River, Tiantai Mountain, Mogan Mountain, Xuedou Mountain, Orchid Pavilion, Shuanglong Cave, Qiantang River Tide and the Chengsi Isles, and some historic and cultural cities including Shaoxing and Huzhou.  In 2000, more than 1.1 million tourists (+18.8%) visited the province and generated revenue of US$514 million (+25.4%).

Consumer Market

In 2000, Zhejiang's retail sales of consumer goods rose by 10.7% to Rmb229.9 billion and ranked the fourth in the country.  Major consumer markets are located in Hangzhou, Ningbo, Wenzhou, Shaoxing, Jinhua and Jiaxing.

The province's wholesale markets are well-developed. The two largest light-industrial goods open markets, Yiwu and Shaoxing, which are well-known in China.  Major consumer centres in Zhejiang include the Hangzhou Jiefanglu Department Store, Hangzhou Department Store and Hangzhou Building Shopping Center.

Science and Technology

Zhejiang¡¦s research and development capability is among the most advanced in China. So far, it has 237 independent and 400 university sponsored research institutes. Research areas include silicon material, nuclear science, computer science, fiber optics, electronics, recycling and industrial chemicals. The U.N also cooperated with Zhejiang to build research centers on rice, hydropower, and light construction material.

Foreign Trade

Zhejiang's exports rose by 49.6% to US$20.5 billion in 2000, ranking the fourth in China.  Major export goods were foodstuffs, textiles, handicrafts, electronics, machinery, chemicals, and pharmaceuticals, silk, native products and mineral products.

Imports amounted to US$11.0 billion (+66.7%) in 2000.  Major import commodities included fertilizers, petrochemical, rubber, electronics, iron & steel, machinery and equipment. 

Hong Kong was Zhejiang¡¦s 3^rd biggest export market in 1999. Zhejiang exported US$918 million worth of goods to Hong Kong in that year, and imported US$119 million from Hong Kong in return. Other major trading partners were the US, Japan, Taiwan, Germany and Italy. 

Foreign Investment

In 2000, Zhejiang approved 1,642 foreign-invested projects with contracted foreign capital of US$2.5 billion, both increased by 47.5% and 37.6% respectively.  Actually utilised foreign investment increased by 30.8% to US$1.6 billion in the year. 

Hong Kong was the biggest investor in Zhejiang. Up to 1999, there are 4197 Hong Kong invested enterprises. In that year, Hong Kong investors signed investment contracts of US$786 million. They also actually utilized US$669 million. Other major investors were the U.S, the EU, Taiwan and Japan.

Ningbo was the main target for foreign investment. Over half of the FIEs in Ningbo came from Asian countries and those projects were mainly engaged in autoparts, bio-engineering, infrastructure and education.   Some world-known enterprises such as Dow Chemical from US and BP from the UK have also invested in the city.  Besides, Hangzhou, Jiaxing and Shaoxing are also hot to attract foreign fund.

In the coming years, foreign investments are encouraged to invest in the fields of heavy chemical, synthetic materials, new building materials, metal processing, textiles and light industries, machinery, electronics, communication, biological engineering, instruments, agricultural-processing, new & hi-technologies, as well as some under-developed tertiary industries.

To reform the existing processing trade system and to go in line with international practice, the Chinese government has decided to set up export processing zones in 15 pilot cities.  Hangzhou is selected as one of the cities in this trial program.  Export processing zones are special restricted areas administered by the Customs.  Goods moving in and out of the zones are regarded as imports and exports.  Enterprises involving in export processing, storage and transportation are allowed to be set up in the zones. 

Major Economic & Technological Development Zones (ETDZs)

The province has six state-level ETDZs, one bonded zone and one state-level tourist & holiday resort.  These are:

Hangzhou ETDZ, approved by the State Council in 1993 and mainly engaged in autoparts, telecommunications, micro-electronics, etc.   

Hangzhou New & Hi-tech Industrial Development Zone, approved by the State Council in 1991, mainly engaged in electronic information, new material, medicine and biological technology, new energy, energy saving and environmental protection.

Wenzhou ETDZ, approved by the State Council in 1992 and mainly engaged in biological technology, medicine, electronic information, new material and new energy.

Xiaoshan ETDZ, approved by the State Council in 1993 and is intended to serve as a separate satellite zone.  World known enterprises such as Coca-Cola, United Biscuits, Yamaha have also invested in the zone.     

Ningbo ETDZ, approved by the State Council in 1984.  The zone's pillar industries include chemical, paper, textiles, oil, shipping and steel. 

The CITIC Daxie Island Development Zone, approved by the State Council in 1993 and mainly engaged in export-oriented processing and hi-tech industries. 

Ningbo Bonded Zone, approved by  the State Council in 1992, mainly handling international trade, export-oriented processing, and bonded storage services.  A 200,000-square-meter hi-tech industrial park is taking shape in the zone, which will focus on information technology, machinery and bioengineering.  In Jan-Mar 2000, the zone's contractual and actual utilised foreign capital reached US$54.5 million and US$19.3 million respectively. 

 Hangzhou Zhijiang Tourist & Holiday Resort Zone, approved by the State Council in 1992.  Foreign investment was encouraged to invest in construction of restaurant, commercial centre and international convention centre.

Economic Indicators

 

 

	1999		2000
Economic Indicators	Value	Growth	Value	Growth
		(%, y-o-y)		(%, y-o-y)
Area (sq km)	101,800	--	101,800	--
Population (mn)	44.8	0.4	46.8^	4.5
Gross Domestic Product (RMB bn)	536.5	7.4*	602.4	10.9*
Per Capita GDP (RMB)	11,981	7.0	N/A	N/A
Income Per Capita
- urban (RMB)	8,428.0	7.5	9,279.2	10.1
- rural (RMB)	3,948.4	3.5	4,253.7	7.7
Fixed-assets Investment (RMB bn)	120.3	12.7	144.5	20.1
Added Value Output
- primary industry (RMB bn)	63.6	2.6	65.0	2.2
- secondary industry (RMB bn)	290.6	6.8	319.4	9.9
- tertiary industry (RMB bn)	180.8	10.2	218.0	20.6
Retail Sales (RMB bn)	207.6	8.7	229.9	10.7
Inflation (Consumer Price Index, %)	-2.3		1.0
Exports (US$ bn)	13.7	17.7	20.5	49.6
- by FIEs (US$ bn)	3.3	24.3	5.4	63.4
Imports (US$ bn)	6.6	28.6	11.0	66.7
- by FIEs (US$ bn)	2.3	14.8	4.0	73.9
Foreign Direct Investment
- number of projects	1,113	15.3	1,642	47.5
- contracted amount (US$ bn)	1.9	6.2	2.5	31.6
- utilized amount (US$ bn)	1.2	-6.5	1.6	30.8

Notes: * In Renminbi real terms                

^Latest population census, 1999 figure was estimate based on previous survey.

Sources:     Zhejiang Statistical Yearbook and State Statistical Bureau

UK -China Business Links. All Rights Reserved.