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Economic New Normal and

Policy Interpretation
Liu Lingling
Tsinghua University School of
Economics and Management
I. Judgement on China's present macro
economy
How to judge China’s macro economy situation?

—Type U?Type V?

—Type L?

Type L. It's a tendecy that will last for a period.


1. Speed and quality evaluation of economy growth
rate
 Five development concepts of innovation, coordination,
green development, opening up, and sharing.
 The economy growth rate is 6.53%.
 China's per capita GDP reached 8,000 US dollars at the end of 2015.
 On condition that the economy growth rate remains above 6.5%, per
capita GDP will achieve 12,500 US dollars by 2020.
 Proportion of advanced manufacturing, modern services, and strategic
emerging industries will rise significantly by 2020.
 Overall Labor Productivity rose from 87,000 yuan to over 120,000 yuan.
 China's GDP will exceed 90 trillion by 2020.
 International Experience
 Argentina
 In 1913, per capita GDP was 3,797 dollars(7.885 million persons).
 In 2015, per capita GDP was 13.428 thousand dollars(42 million persons).
 US
 In 1941, per capita GDP was 1,031 dollars(133 million persons).
 In 1980, per capita GDP was 12.6 thousand dollars(227 million persons).
 In 2015, per capita GDP was 55.904 thousand dollars(320 million
persons).
 China
 In 2003, per capita GDP was 1,090 dollars(1.29 billion persons).
 In 2015, per capita GDP was 7,800dollars(1.37 billion persons).
 In 2020, per capita GDP was projected to be 12,500 dollars (1.42 billion
persons).
 International Experience
 Hongkong
 In 2015, per capita GDP was 42,000 dollars(7.32 million
persons).
 Taiwan
 In 2015, per capita GDP was 22,000 dollars(23 million persons).
 Korea
 In 2015, per capita GDP was 27,000 dollars(50 million persons).
 Japan
 In 2015, per capita GDP was 42,000 dollars(128 million people
in 2005).
 In 2015, per capita GDP was 32,000 dollars(126million persons).
Yuan/ person
Figure 4 Overall labor productivity Overall labor
between 2011 and 2015
productivity was 76,978
yuan per person in
2015, up 6.6% from the
previous year. The
figure is equal to
GDP(based on GDP in
2010) divided by the
number of employees.

Figure 3 Newly registered urban employees


Ten thousand between 2011 and 2015 Figure 2 Proportion of added value of tertiary industry
people in GDP between 2011 and 2015

Primary industry; Secondary industry; Tertiary industry


Ideal Mix of Macro Economy (bottom line)
The proportion of tertiary industry in GDP is 60%;
(56.9% in the first quarter).
The proportion of consumption in GDP is 60%; (49.2%
in the first quarter).
Dependence on foreign trade is no more than 40%.
(32.9% in the first quarter)
The Keqiang Index in the first quarter:
Employment rate (3.18 million people)
Income of urban and rural residents (increase by 6.5%)
Energy consumption of GDP fell (actually decreased by
5.3%, it will decline by3.4% overall in 2016 )
PMI of manufacturing industry (adjusted
for seasonable variations) Non-manufacturing PMI (adjusted for
seasonable variations)
No change compared to last month
No change compared to last month

2015 JUL AUG SEP OCT NOV DEC 2016 FEB MAR APR MAY JUN
JUN JAN 2015 JUL AUG SEP OCT NOV DEC 2016 FEB MAR APR MAY JUN
National CPI rangeability JUN JAN

year on year month on month PPI rangeability


year on year
month on month

2015 JUN JUL AUG SEP OCT NOV DEC 2016 FEB MAR APR MAY 2015 JUN JUL AUG SEP OCT NOV DEC 2016 FEB MAR APR MAY
MAY JAN MAY JAN
Private Fixed Asset Investment increased Year-on-year growth rate of value-added of
by 3.9%from January to May in 2016 industrial enterprises above designated size

Growth rate of private investment in fixed


assets and national fixed asset investment

Value of industrial enterprises


private investment in fixed assets national fixed asset investment above designated size
increased by 6.0%in May of
Year-on-year growth rate of retail sales of social consumer goods 2016(adjusted for inflation).
National online retail sales
reached 1.8089 trilion yuan
between January and May in
2016, increasing by 27.7% year
on year.
It's anticipated that China's
value of trade in services in
2016 will exceed 750 trillion
dollars.
China's investment efficiency at macro-economic level between 1980
and 2013 is measured by incremental capital-output ratio (ICOR).

China’s investment efficiency at


macro-economic level
Investment efficiency at macro-economic level (contribution of incremental
fixed capital to GDP growth) can be measured by ICOR. The definition
presents that the higher ICOR, the more fixed capital needed for per
incremental GDP unit, or the lower investment efficiency. The influence of
industrial structure should be considered when ICOR is used to measure
macro-economic investment efficiency.
Economic Fluctuation and Cycle

actual growth rate


potential growth rate

In the late 1990s, China was hit by Asian financial crisis, leaving a large
number of people unemployed. The world financial crisis in 2008 and 2009
was influenced by short-term demand factor. Though China‘s potential
growth rate is high, its actual growth rate declines, leading to
insufficient utilization of production capacity. Capital under-utilization means
excess capital and underutilization of labor force suggests that many
people lost their jobs.
Economic growth slows down
Period year
GDP potential growth rate

The blue line represents potential growth rate. It is the highest growth rate
when all resources in a country (or a region ) are allocated optimally
and sufficiently. It’s reckoned that working-age population definitely
declined after 2010 and China’s economic potential growth rate during the
12th Five Year Plan was merely 6% or 7%. The potential growth rate
during 13th Five Year Plan will dramatically increase to 6.2%.
2、China has demographic dividend?
China’s total fertility rate is 1.4 (lower than the standard rate of 2.1 )
nationwide city countryside
total fertility rate

China’s total fertility rate is 1.4 (lower than the standard rate of 2.1 ). If
such rate remains, China’s population will face absolute decline one day.
This is quoted from Can China Create Economic Miracle Again ? by Cai
Fang.
http://news.ifeng.com/exclusive/lecture/special/caifang/
Prediction on China’s aging population size
(unit: million persons) In 2015, working age population
aged between 16 and 60 (under 60
years old) was 91,096, accounting
for 66.3% of total population;
Number of people aged above 60
(including 60 years old) was 22,200,
accounting for 16.1% of the total;
Number of people aged above 65
(including 65 years old) was 14,386,
accounting for 10.5% of the total.

Population aging comparison


between China and US
Above 60 years old; Above 80 years old
China
US

On average, one third Chinese


are old people after half a century.

Above 60 years old; Above 80 years old


3、Dividend of Urbanization
New Urbanization Plan for 2014-2020
It’s predicted that urbanization rate in 2020 will reach 60%, which
will bring about approximately investment demand of 42 trillion
yuan.
——Urbanization of registered population
Urbanization rate of registered population in 2020 will reach 45%.
The figure was 39.5% in 2013——1.3 percentage points every
year, or 16 million people get registered as permanent resident in
urban areas.
There are 750 million permanent residents, accounting for 55%,
250 million of whom are not registered.
5. Reform of household registration system: convert rural
migrant workers into urban residents.
Chongqing experience
Farmers have three unchanged things:
First is contracted farmland.
During municipality; At the beginning of reform; One year after reform
Second is forest land.
• Requirements for household registration (vary from main urban
Third is homestead(no less than 96,000 districts, suburban districts or counties and villages and towns)
per 1/15 hectare).
Rural migrant workers ; urban residents main urban districts: suburban districts villages and towns:
endowment insurance: 12% ; 20% more than 5 or counties: more completely open
medical insurance: raise about 1000 yuan every year. working years than 3 working
Housing: /; They can apply for public rental housing. years
Education: /; Their children can be transferred to and receive
education in the city where they work.
Employment: /; They can get policy support for startups and
employment (small-sum guaranteed loan, etc) and obtain • Welfare for converting household registration
training and recommendation for employment. Compensation for homestead is paid to rural residents—
—no less than 96,000 yuan per 1/15 hectare.
Contracted land and forests can be reserved and
handled by farmers on their own. The land can be used
for commercial transfer.

Rural residents who go to cities can


put on
five pieces of clothes (five privileges).
Cut property inventory  China has built 7.72 million
housing units as part of
 The concept that houses are built for people
affordable housing project in
to live in cannot be deviated. Destocking
2015. New starts reached 78.3
should be realized by the urbanization of
million, 6.01 million of which
people instead of “add leverage”. We should
were transformed from rundown
gradually improve differentiated regulation policy
area
of central government controlling macro
 Year of 2020: 20 million housing
regulation and basing on local areas.
units
Figure 13 Investment in fixed assets (excluding rural
households) and its proportion
 The total sales in 2015 was 8.73
Investment in trillion with an average of 6800
Other investments manufacturing yuan per square meter. Inventory
is estimated to be 8.6 billion
square meters worth 58.6 trillion
yuan. With an eye to the rising
house price in some cities
Investment in recently, the 60 trillion estimate
Investment in
property development infrastructure is fair. Then who will receive
this?
Real estate inventory continuously declines

The inventory shows a nationwide decreasing trend…… ……House prices in more and more cities tend t
o become stable and rise quarter-on-quarter
Price of newly built commodity housing in 70 large
Destocking cycle (by city hierarchy ) and medium-sized cities in China
Month Month on month, %
40 50
first-tier cities second-tier cities
35 40 first-tier second-tier third-tier 36.1%
third-tier cities nationwide cities cities cities
30 30

25 20
20 10 6.0%

15 0 0.7%

10 -10

5 -20

0 -30

Data source:CEIC, Research department at CICC Data source:CEIC, Research department at CICC

16
China’s housing demand is mainly from people’s need to
improve their housing and housing need of rural residents into cities.

Poor quality of plenty of houses cannot Urban home ownership rate fell between 2000 and 2010
meet people’s basic quality requirement.

Town City Township


45% 42%
40%
35% 33% home
31% ownership nationwideCity Town Village
30% 25% rate
24%
25%
19% 19% 5th census 2000 88% 72% 78% 96%
20% 15%
15% 11%
9% 8% 10%
10% 6th census2010 85% 70% 83% 96%
5%
0%
Proportion Proportion of Proportion of Proportion of
of bungalow brick-timber houses houses
building and that have no built before
other structure both 1979(including
kitchen and 1979)
washroom

Data source:CEIC, Research department at CICC Data source:CEIC, Research department at CICC

14
What contributes to high property price?

Urban residential construction land is in short supply. Governmental taxation and land-transferring fees
account for 60%-70% of the total urban house prices.

100,000 100 million yuan


China2013US2007Japan2009 90,000
Hongkong2014
80,000 Rest
Proportion of urban 70,000 30-40%
construction land corporate income tax 8%
60,000
Proportion of
0.89%2.7%5.0%24.1% land value increment tax 11
50,000
residential land
0.30%1.4%3.0%6.9% business tax5.5%
40,000
Proportion of Taken by government
33%54%61%29% 30,000
residential land in 60-70%
urban land Land-transferring fees
20,000
37%
10,000
Decomposition of commercial residential building of 8.7 trillion in 2015
0

Data source:CEIC, Research department at CICC


Data source:CEIC, Research department at CICC

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Cut property inventory and increase housing demand
 Three tasks concerning 100 million people in the future: granting urban
residency to around 100 million rural people who have moved to cities ;
rebuilding rundown city areas and villages inside cities where around 100
million people live; guiding the urbanization of around 100 million rural
residents of the central and western regions in cities there .
 Develop rental housing businesses. Chinese government supports
developing rental business by utilizing existing housing and newly built
housing. Individuals are encouraged to lease their own residential houses
according to the law. Commercial buildings are permitted to be transformed
into rental residential housing in accordance with regulations.
 Boost monetization of public rental houses. Chinese government offers
allowances to tenants through rental housing market.
 Improve preferential tax policies, encourage financial institutions to
increase support and increase rental housing land supply.
 Strengthen regulation by practicing uniform model housing leasing
contract, supervising intermediary services and stabilizing leasehold
relations to safeguard legitimate rights and interests of tenants.
Smart city—“sponge city”,underground pipeline
Make plans before construction and build underground
infrastructure before constructing buildings on the ground.
——Underground pipeline :Paris:1833;London:1861.
——Enhance construction and transformation of municipal underground
pipe network, construction of sewage and garbage disposal and recycling
facilities, transformation of gas, heating and old pipe network,
construction of subway, light rail and other high-capacity public
transportation system and urban power distribution network construction.
Promote construction of intelligent power grid and ecological
environment and improve the functions of flood storage and drainage and
groundwater replenishment of urban green land.
——“Decrease real estate inventory by accelerating citizenization
of rural migrant workers and promoting reform of housing system that
focuses on the need of new urban residents to increase effective demand
and stabilize property market”.
Stimulate the development of city circle
centering on Lhasa and Kashgar.

The Ministry of Foreign Affairs of Nepal states that Qinghai-Tibet railway


is supposed to stretch 540km to Gillon on the border between China and
Nepal in 2020.
The distribution of 1 billion urban
Chinese residents in the future
Five national urban agglomeration: the Yangtze River Delta urban agglomeration, the Pearl
River Delta urban agglomeration, Beijing-Tianjin-Hebei urban agglomeration, middle reaches of
Yangtze River urban agglomeration and Chengdu-Chongqing urban agglomeration.
Nine regional urban agglomeration: Harbin-Changchun urban agglomeration, Shandong
Peninsula urban agglomerations, central and southern Liaoning Province urban agglomeration, west
coast of the Taiwan Straits urban agglomeration, central Shaanxi Plain Central Plains urban
agglomeration, Yangtze River and Huai River urban agglomeration, Beibu Gulf urban
agglomeration and north slope of Tianshan Mountain urban agglomeration.
Six new egional urban agglomeration: Hohhot-Baotou-Erdos-Yulin urban agglomeration,
Jinzhong city urban agglomeration, cities along the Yellow River in Ningxia agglomeration and
west Lanzhou urban agglomeration, Central Yunnan urban agglomeration and Central Guizhou
urban agglomeration.
"Fund Town "
in Zhejiang
Province

"Fund
Town" in
Southern
Yuhuang
Mountain

School for children of foreign staff in Wahaha


Waiting area
for VIP patients
"Fund Town"
in Nanhu
4、Build—beautiful villages
• Industrialization of agriculture and "First industrial workshop" ——
agricultural network, Internet of things and e-commerce platforms.
• Reform of household registration——reform of land-use system——
structural reform of the supply side
• ——Quality and efficiency of agricultural supply system: there are
sufficient agricultural products whose breed and quality completely
satisfy the needs of consumers. We can ensure agricultural products can
be supplied effectively with appropriate mix.
• We will coordinate the production of food, cash, and feed crops and the
development of the farming, forestry, livestock, and fishing industries,
and promote integrated planting, breeding, and processing operations to
promote the integrated development of the primary, secondary, and
tertiary industries in rural areas.
• Cut inventories, reduce the cost and shore up weak spots. Moderately
carry out scale operation, decrease improper application and chemical
fertilizer and pesticide, provide social service and increase the production
of urgently needed agricultural products.
"Targeted poverty alleviation" :
Current poverty alleviation standard of China: per capita net
income of farmers is 2,300 yuan( based on fixed income in 2010).
The figure is 2,800 yuan in 2014.
There were still 70.17 million rural residents living under the
poverty line across China at the end of 2014.
The standard is updated every year based on latest price. Suppose
annual growth rate is 6%, the standard per capital net income is
expected to be 4,000 yuan in 2020
Industrial support, transfer of employment, relocation, education
support, medical assistance and other measures are supposed to help
50 million people get rid of poverty in 2020.
Rural subsistence allowance system covers over 20 million people
who have completely or partially lost their capacity to work. Basic
poverty alleviation is realized through social security policies.
The plan of building 1,000 county-level "operational centers"
and 100,000 village-level "service outlets" by Jack Ma
Jack Ma has spent 10 billion yuan in building 1,000 "operational centers" in
counties and up to 100,000 "service outlets" in villages over three years. That is to
say, among 41,636 villages and towns in China, there are 2.4 Taobao service outlets
in every village or town.
Rural Taobao service outlets turned into "rural branches" of Jack Ma’s MYbank on
November 9, 2015 . Farmers can get credit loan from the bank without mortgage
and guarantee. The approval takes 3 minutes at the fastest speed and then farmers
can get the loan real time.
Rural Taobao service outlets turned into "rural hospitals" on January 20, 2016.
Jack Ma signed agreement with Central Hospital in Wuhan city and created hospital
on the Internet. Consequently, through video calling in local Taobao service outlets,
rural residents can receive treatment online from 13 departments, involving digestive
internal medicine, endocrinology apartment, traditional Chinese medicine
department and dermatological department. Electronic prescribing can be given after
diagnosis and medicine can be delivered to you home. Besides, Tmall medical shop
has beome the largest third-party platform, with sales value of 6 trillion.
Wanda Group implemented targeted
poverty alleviation in Danzhai county
of Guizhou province
——It Invested 1.4 billion yuan in
many measures at the same time

Wanda Group totally invested 1.4 billion yuan in the poverty alleviation.
Among them, 300 million yuan is used for building Danzhai Vocational
Technical Institute, 600 million yuan for building a tourism town and 500 yuan
for setting up a special fund for the poverty alleviation in Danzhai.
Wanda promoted targeted poverty alleviation in Danzhai in fields of industry,
education and fund simultaneously and combined short, medium and long-term
considerations. By doing this, it created a new mode of targeted poverty
alleviation in China.
It's expected all impoverished people in Danzhai county will get rid of
poverty within two years. The operation of all projects in 2017 will bring great
change to the overall economy in Danzhai county and achieve sustainable
development there. It's believed that Wanda can help lift people in Danzhai out
of poverty for good.
Danzhai boasts convenient
transportation. The establishment of
Xiamen-Chengdu freeway shortened
distance between Danzhai county and
important economic cities, including
Guiyang, Guilin and Guangzhou. This lays
a solid foundation for Danzhai to integrate
into Pan-Pearl River Delta economic circle.

After Guiyang-Guangzhou high-speed


rail was open to traffic in December, 2014,
the distance between Danzhai and
In Danzhai county lies flat land of over 50 square kilometers, Guangzhou has been reduced to 4 hours.
which is rarely seen in Guizhou. The land is an excellent area to
simultaneously promote industrialization, urbanization and Wanda employs about 10,000 rural
agricultural modernization. Wanda spent 1 billion on pig feeding migrant workers from Danzhai every year
and tea trees planting. From pig breeding, butchering and and deploys them to work in construction
processing plants totally raise 300,000 pigs. Every household enterprises of its strategic partner in hope
there is a stakeholder of the plants and get earnings from them. of lifting them from poverty.
On December 2, 2014, Wang
Jianlin, chairman of Wanda(2nd
right) was surveying
Dendrobium officinale Kimura
et Migo planting mode base in
Tsinghua Science Park of
Danzhai county.

Relying on the sales platform and


various resources of Wanda Square,
Wanda works hard to establish high-
end agricultural special products
distribution platform based on local
mountain specialties.

Danzhai utilizes local ecological


resources to create a ecological tea
garden. Wanda is building zinc
selenium tea processing factory with a
scale of ten thousand tons in Danzhai. It
will book and purchase zinc selenium
tea prodeced by local famers to raise
their income.
Potatoes are grown across China with a planting area of about 80 million mu. But its average
output is as low as 1,200 kg per mu. There are 4 potato cultivation areas and 6 favorable
potato planting areas. Potatoes need to be stored, transported, sold and eaten when they are
fresh. Traditional dietary pattern indicates that over 95% potatoes are consumed as vegetable
instead of being eaten directly as staple food. In recent years, processed potato products are
popular in China.
Potatoes turning into staple food

potato
powder

potato bread

technology of processing
potato noodles
steamed potato bun
Agriculture "going out"
Brazil's agricultural land is up to about 264.5 million hectares, 61 million of
which is arable land. Brazilian land price is cheaper than that of China (750
yuan per mu in China while dozens of yuan in Brazil). China imports 60 to 70
million tons of soybean every year. Soybeans of the US, Brazil and Argentina
are mainly exported to China. Brazil's 74.3 million hectares of dry land can
produce 150 million tons of soybeans.
Russia possesses 220 million hectares of agricultural land and 134 million
hectares of arable land, accounting for 8% of total arable land in the world.
Russian per capita farm land is 0.84 hectare, 10.9 times as large as that of
China. Russia’s increasing population leads to labor shortage. Russian land in
Far East is vacant and free from contamination.
We can cooperate with Cambodia, Laos, Vietnam and other countries.
Cambodian land along both sides of Mekong is very fertile. Planting
sugarcane there doesn't need chemical fertilizer and the output is higher than
China's. Rare natural disasters there represents favorable plant conditions.

Ethiopia, Nigeria and other African countries boast cheap land and good
conditions for planting grain.
Raising fish in paddy field, a kind of traditional Chinese agricultural technology is
introduced into Nigeria and spread to Sierra Leone and Mali. The application of
this technology reduces the utilization of pesticides and significantly increases grain
output, contributing to agricultural and environmental sustainable development.
Being a peasant in America: the first
Chinese farm

Farm's alfalfa is transported to processing plant.


A farm operated by Chinese in Johnson city
of Utah in the United States.
Alfalfa, also known as clover, is recognized as the best roughage for
dairy cow in the world.

Harvesting oat
5.Service industry develops rapidly
—— By 2020:
 Set up a catalogue of national basic public services.
 Average number of years of schooling received by the
working-age population increases from 10. 23 to 10. 8
years.
 Create 50 million plus new urban jobs.
 Rebuild 20 million housing units in rundown urban
areas.
 Average Life Expectancy rises by 1 year in China.
Jpanese experience: supply creates demand
• Revolution in Kitchen
• ——Rice cooker, tableware, preservative film(PVDC) , etc.
• Revolution in washroom
• ——Toilet cover, small appliance, daily chemical products, etc.
• Hair washing and care: “no silicon”; Hair dye: “no
ammonia”; Detergent (powder) : “without phosphorus and
fluorescent whitening agent”; Cosmetics: “lead-free”, etc.
• Revolution of bedding articles
• ——textile Upgrading
• Revolution of home decoration
• ——Advocate natural materials——formaldehyde-resistant and
so on.
 Aging industry and medical services
 Sports industry will produce 3 trillion yuan by 2020 and 5
trillion yuan market value by 2025.
 China is building 20,000 special schools featuring football
training in 5 years.
 Multi-tiered cultural products and elements market will be
established.
 ——To encourage the combination of financial capital
social capital and cultural resources.
 Expand the scope of tourism, including developing
"beautiful village tour" and exploration tour.
 Remote online education——MOOC market
 Information service
Financial reform and deleveraging
Wu Xiaoling: China issued 30 Billion dollars
Figure 8 China's foreign exchange reserves
trillion credit loan from 1949 to 2008. between 2011 and 2015
The figure rose by 63 trillion between
2009 and 2015. That is to say, double
the loan size extended during the
pervious 30 years was extended within
the subsequent 7 years.
She concludes that excess money
supply results in either rising price or
bump in asset price.

By the end of March in 2016, Renminbi loan increased by 4.61 trillion yuan in the
first quarter (2.51 trillion in January).
M2 balance is 144.62 trillion yuan, up 13.4% year on year.
M1 balance is 41.16 trillion yuan, up 22.1% year on year.
M0 balance is 6.47 trillion yuan, up 4.4% year on year.
Balance of China's foreign exchange reserves is 3.21 trillion US dollars at the end
of March. Exchange rate is RMB 6.2 /USD 1.
Deleveraging
 Based on restoring market financing function and protecting
rights and interests of investors, stock market should give full
play to the adjustment function of market mechanism,
strengthen the establishment of basic systems of issuing and
delisting and trade, enhance market supervision, improve the
quality of information disclosure and crack down on insider
trading, price manipulation and other improper behaviours.
 Focusing on improving the autonomy of monetary policy and
implementing balance of payments automatic adjustment
mechanism, foreign currency market should gradually form a
two-way floating exchange rate mechanism on the basis of
market supply and demand with flexibility while keeping the
exchange rate basically stable.
Ⅱ.“Three cuts, one reduction and one shore up"

Supply-side reform: three policies


——Industry policy
——Policy concerning energy and environment
——Regional policy: One Belt and One Road
lnitiative
Three "engines":
Systematic reform, structural optimization and
elements upgrading.
1.Cut excessive industrial capacity
• Steel industry: 90 million tons steel capacity was cut down in
2015. It's expected to cut 200 million tons of steel production
capacity in the following 5 years. 2020: production capacity of 1.13
billion tons
• ——Shut down in accordance with laws and regulations: whose
enterprises that cannot meet legal and industry policy standards in
terms of environmental protection, energy consumption, quality,
safety and technology, etc.
• ——Enterpries take the initiative to reduce production capacity by
merging and reorganization, switch to other products and relocation
or international capacity cooperation.
• ——Promote intellectual manufacturing, improve quality and
brand reputation, develop high-end varieties, boost green
development and stimulate market consumption.
• ——The number of laid-off employees from steel enterprises will
reach 500,000.
Cut excessive industrial capacity
• Coal industry: eliminate capacity 500 million tons of capacity and
restructure 500 million tons of coal production capacity betweem
2016 and 2020. In principle, no new coal mine projects will be
reviewed and approved within 3 years.
• Coal mines with a production of under 90,000 tons per year
(account for 50% of total number )should be shut down whose
production capacity is more than 200 million tons. Coal mines with
a production capacity of 300,000 tons and below totally have 480
million tons of coal production capacity. To shut down or suspend
small coal mines is the key. In 2015, mines that stop production
have production capacity of about 300 million tons.
• ——Accelerate the elimination of excess industrial capacity in the
light of environmental protection, energy efficiency, safety, quality
and technology.
• ——When we cut excess production capacity in coal industry, how
to relocate 1.3 million coal workers?
Central enterprises cutting excess capacity
• About 10% coal and steel production capacity of central enterprises
will be reduced this year and next year.
• Encourage central enterprises to highlight and improve their main
businesses in an attempt to raise their core competitiveness.
• We will proactively and prudently introduce all kinds of social
capital to participate in and support the restructuring and
reorganization of central enterprises.
• Encourage central enterprises to establish national demonstration
base for "mass entrepreneurship and innovation" and professional
maker space to solve common key technological problems.
• Reduce management level. We should strive to reduce management
levels within three years from current level 5 -- 9 to level 3-4 in
most central enterprises and reduce about 20% legal entities.
State-owned enterprise Reform
"Triple-decker" system design

(1)referee:State-owned Assets Supervision and


Administration Commission(SASAC)

(2)coach:state-owned investment corporation

(3)athlete:state-owned enterprise

2020: State-owned enterprises need to hand over 30% of their


after-tax profits to public finance.

Confidently strengthen and expand state-owned enterprises!


Make new achievements in important ares and key links of
state-owned enterprises reform as soon as possible.
Market-oriented and problem-targeted for overall development.
Focus on enhancing the vitality of state-owned enterprises,
optimizing the layout of state-owned economy, improving the
efficiency of state-owned capital and preventing loss of state-
owned assets.
Strengthen the party's leadership in state-owned enterprises,
further emancipate people's mind, make bold changes and
innovations and have the initiative to do things.
Implement different policies according to the conditions of
enterprises and keeping overcoming difficulties to further deepen
the reform of state-owned enterprises and assets, making new
greater contributions to the economic and social development.
 2.Reduce cost
 1)Reduce the institutional trading costs and decrease the efficiency loss
brought by administrative system to enterprises.
 2)Reduce enterprises' tax payment burden, regulate taxation and clarify
fee charging and study the way of reducing value-added tax rates of
manufacturing industry to create a fair tax bearing environment.
 3)Reduce social insurance premiums, study the way of simplifying and
combining "five social insurance and one housing fund" and release the
vitality of labour market and enterprise development .
 4)Reduce financial costs of enterprises , set policies normalizing
interest rate and benefit the real economy.
 5)To reduce the electricity price and improve the coal and electricity
price linkage mechanism.
 6)Reduce logistics cost, promote the reform of circulation system and
improve the efficiency of goods flow to boost commodity production and
consumption.
3. Shore up weak spots——industrial innovation policy

• Promote innovation-driven and endogenous


economy growth.
• 1) Rejuvenate China through scientific research
and achieve significant breakthrough in core
technology.
• 2)Implement system and mechanism reform
and arouse the enthusiasm of the whole society.
• 3)Improve the way of social governance and
motivate social organization.
Breakthrough in four strategic industries is
achieved——created by China
1. High-speed rail
——high speed and large carrying capacity
2. Nuclear power
——“Hualong 1”( pressurized water reactor nuclear power
technology of million kilowatt grade) and its industrial chains.
3. Aerospace
——Spaceflight----One atomic bomb and several satellites
——Aviation----C919---C929---
4. Modern shipbuilding
——Aircraft carrier, all kinds of warships and civil ships
National Science and Technology Major Project
Implemented in August: high-end general chip, integrated circuit
equipment, broadband mobile communications, high-grade CNC
machine tools, nuclear power plant, new drugs development, etc.
To be finished in 2030:
 Aircraft engine, quantum communications, intelligent
manufacturing and robotics, deep sea exploration, important new
materials, brain science, health care, etc
——Systematic layout of successive projects with echelons
——The advantage of new-type nationwide system in market
economy
——Focus our strength on attacking strategic passes in a
coordinated manner and climbing the strategic commanding heights.
Made in China in 2025—”three-step development”

• The first echelon: the United States

• The second echelon: Germany, Japan

• The third echelon: China, Republic of Korea and England

• Step one: China will become an innovative country by 2020.

• Step two: China will become the forefront of innovation-oriented


country by 2030.

• Step three: China will build the world’s scientific and


technological innovation powerhouse by 2049.
Made in China in 2025—10 major areas—10
great opportunities
 1、New generation information technology
 2、High-end CNC machine tools and robots
 3、Aerospace equipment
 4、Marine engineering equipment and high technology ship
 5、Advanced railway transportation equipment
 6、Energy-efficient and new energy vehicle
 7、Electronic equipment
 8、New materials
 9、 Biological medicine and high-performance
medical apparatus and instruments
 10、Agricultural machinery equipment
 High performance integrated circuit engineering and its
industrialization
 To further improve the industrialization level of key integrated circuit
products and empower integrated circuit design technology in key areas
such as mobile intelligent terminal, network communications, cloud
computing, Internet of things and big data to lead in the world,
significantly raising industrial concentration of design industry.
 Gallium nitride (GaN), a kind of semiconductor material, not as common
as silicon , is used to produce new generation microchip that has
extensive application and powerful performance.
 Smart phone, tablet, e-reader, vehicle-mounted information equipment,
computer and telecommunications infrastructure all have promoted the
growth of the semiconductor industry.
 The United States, Japan, Germany, South Korea, Taiwan and Mainland
China are major producers of semiconductor products. The United States
has always been maintaining a leading position in semiconductor
technology industry, while Taiwan mainly concentrates on the
production of the IC foundry enterprises from across the world.
Industrial Network
 Industrial Internet is the integration and linking of global industrial
system with advanced calculation, analysis, induction technology and
Internet. Through the connection between intelligent machines, it finally
realizes man-machine connection. It reconstructs global industry by
combining software and data analysis, bringing about faster, safer, cleaner
and more cost effective productivity.
Industrial Network: Industrial revolution + Internet revolution
Intelligent machines, advanced analysis and large talent pool (New type
interdisciplinary talents, such as digital mechanical engineers who excel
in mechanical and industrial engineering, data experts who create analysis
platform and algorithm and experts who specialize in both software and
Internet security.)
2030 industrial Internet revolution will contribute $15 trillion to global
GDP in 2030. Equivalently, the United States’ GDP is doubled when we
calculate global economic aggregate.
Increase investment in science and
technology to build innovative country
China signed Agreement On Intellectual Property Rights in 2008
Intellectual property court is set up in 2014.
Opinions on Deepening the Reform of Talent Development
Systems and Mechanisms issued by CPC central committee
——The overall plan to promote the construction of worldly
first class universities and disciplines issued by the State Council
———To establish high-level national centers for science and
technology and innovation centers and develop internationally
competitive leading innovative enterprises.
Increase investment in science and
technology to build innovative country
R&D spending accounts for 2.5% of GDP and the contribution of science
and technology to economic growth is 60% in 2020. China is expected to
become innovative country and talent powerhouse.
Shengu industrial blowers (axial-flow and Shenyang Air Blower Group Co.,
centrifugal compressor) was rated as "famous LtD., is a leading strategic pillar
Chinese brand product". company in China‘s major
technical equipment industry. It
bears the responsibility of
providing domestic equipment
for major engineering projects
that concerns national economy
and the people’s livelihood
including large ethylene project,
large oil refining project, large-
scale coal chemical project, large
power project and large
metallurgical project. Its survival
and development are related to
national economic security.
Steel Industry Energy Saving Technology Innovation
Alliance is set up in Beijing-Tianjin-Hebei region
Departments supervising science and technology in Beijing-Tianjin-Hebei
region along with more than 70 iron and steel enterprises, energy
conservation and emissions reduction institutions, academics and financial
institutions set up “ Steel Industry Energy Saving Technology Innovation
Alliance ”.
Based on cloud computing and the Internet, the
alliance achieves collaborative and optimized development of energy flow
and material flow of steel enterprises in Beijing-Tianjin-Hebei region.
Taking enterprises as the main body and relying on key research and
development institutions and universities in this region, the alliance
establishes a big data-based technology innovation centers, which constitute
the first regional network innovation platform in steel industry. Enterprises
can balance capacity according to the network platform and optimally
allocate capacity according to certain characteristics. The steel enterprises
don’t need to move forward lonely any longer.
Financial service institutions are projected to raise over 30 billion yuan.
4、Green development policy——powerful
constraint
By 2020, water consumption, energy consumption and carbon dioxide
emissions for per unit GDP will fall by 23%, 15% and 18% respectively. Forest
coverage rate will reach 23.04%. The ratio of days with good air quality in
prefecture-level city is expected to be more than 80%.
Goals of China’s controlling greenhouse gas emissions in 2030:
carbon dioxide emissions for per unit GDP reduce by 60% to 65% from that in
2005,
The proportion of non-fossil energy in primary energy consumption will reach
20%,
Forest stock volume will increase by 4.5 billion cubic metres from that in 2005.
In China-US joint statement on climate change issued on November 12, 2014 :
the United States for the first time pledges to reduce its overall greenhouse gas
emissions by 26% - 28% in 2025 from that in 2005,a higher goal than its previous
commitment that carbon emissions will reduce by 17% in 2020 from that in 2005.
China’s oil import degree of
dependence between 1993 and 2015
Net import; degree of dependence

China‘s oil consumption was 543 million tons in 2015 , with the
dependence on foreign trade exceeding 60% for the first time.
Currently China’s oil consumption outpaces its GDP growth rate. Total oil
consumption is projected to reach 600 million tons by 2020.
By 2030, 80% of China's oil consumption need to be imported.
China’s apparent natural gas consumption is expected to grow by 7.3% to
205 billion cubic meters in 2016. Natural gas imports is estimated to grow by
10.6% to 69 billion cubic meters.
 Energy Development Strategic Action Plan (Year 2014-
2020)
 Strategy of prioritizing energy saving -- Control the overall consumption of
primary energy within around 4.8 billion tons of standard coal and that of coal
within 4.2 billion tons.
 Strategy of relying on domestic resources -- Ensure that, by 2020,
domestic overall production volume of primary energy reaches 4.2 tons of
standard coal, the energy self-sufficiency rate maintains at 85% or so, the
reserve and production ratio of petroleum increases to 14-15 and an
emergency system of energy reserves basically takes its shape.
 Strategy of advancing green and low carbon -- In 2020, non-fossil energy
accounts for 15% of primary energy and natural gas 10%; coal contributes less
than 62% to the energy consumption mix.
 Strategy of emphasizing innovation-driven growth -- A modern energy
market system featuring integration, openness, competitiveness and orderliness
is basically formed by 2020.
China's Energy Utilization Status
Shanghai “Wai3 Miracle” justifies China's thermal power

Shanghai Waigaoqiao No.3 Electric Power Generation Co., Ltd. (“Wai3”)


boasts two supercritical thermal power generation units. Being the world's
large-sized energy-efficient and environmental-friendly generators of its kind,
the two units make Wai3 the cleanest thermal power producer in the world. If
we were to adopt this technology, it would be possible to recoup the
investment in technological upgrading within 8 or 9 years. If promoted across
the board, the technology would help to basically eliminate thermal power's
contribution to PM2.5 by the end of the 14th Five-Year Plan.
Promote the development of low-carbon and circular economy, establish a
modern energy system that is clean, safe and efficient, and launch
demonstration projects for areas with nearly zero emission. Establish and
perfect the initial quota allocation of energy and water consumption, waste
discharge and carbon emission and encourage thrift in society.
Blue Sky & White Clouds
Implement the most stringent
environmental protection system, carry out
the prevention and treatment plan of air,
water and land pollution, and conduct the
vertical management system of the
supervision, examination and law
enforcement of environmental protection
organs of the provincial level or lower.
Chinese Enterprises Build Power Plants in Vietnam
In July 2015, China Southern Power Grid and
The first phase of Yongxin China Power International Holding Ltd. jointly built
Project involves establishing two a power plant in Vietnam .They invested in 1.75
billion US dollars, 95% of the total investment; and
generating units, each with a
the other 5% made by Vinacomin, an electricity
capacity of 600 megawatt. This power company owned by Vietnam coal production
is the first project applying group. The two Chinese enterprises are operators
ultra stream generator of the plants for 25 years.
technique in Vietnam.

Vietnam
Administrative
Planning Graph

Yongxin Thermal Power Project Phase Ⅰ


in Vietnam
Energy Saving and Environmental Protection
Industries Development Plan during the 12th
Five-Year Plan
Ensure that the total output value of energy saving and
environmental protection industries reaches 4.5 trillion yuan, and
the value added accounts for around 2% of GDP by 2015.

The total output value of energy saving services industries


exceeds 300 billion yuan; infrastructural investment for urban
sewage and garbage treatment and desulfurization and denitration
works exceeds 800 billion yuan; and the total output value of
environment services amounts to 500 billion yuan.

Impose a punitive electricity tariff on enterprises with a high


energy consumption exceeding the limit; support energy saving and
environmental protection enterprises to go public and raise funds;
and set up industrial investment funds.
• 5. Construction of main functional regions and
strategic layout of the “Belt and Road” initiative

• Integrate the development and utilization of national land space and


enhance regional development coordination
 Improve development coordination while expanding development space
and strengthen development sustainability.
 Promote regional coordinated development, and create a new pattern
featuring the free flow of production factors, effective control of main
functional regions, equal access to basic public services and sustainable
resources and environment.
Hu's Line -- Two Distinctive Density Areas of China's
Population Distribution (1935)
China's population density:
1:50,000,000

36% national land -


- 96% population --
430 million (1935)
43.18% national
land -- 93.77%
population -- 1.22
billion (2000);
95.70% GDP.

Population
Heihe-Hengchong
Density
geographical population line
(person/km2)
Northern Sand Belt

Northeast Forest Belt

Qinghai-Tibet Plateau
Ecological Barrier

Loess Plateau-Sichuan and


Yunnan Ecological Barrier Southern Hillside

Ecological Safety Strategic Layout of “Two Barriers and Three Belts”


Fen-Wei Plains Production
Zone -- wheat, corn

Gansu-Xinjiang Production Northeastern Plain Production Area -


Area -- cotton, wheat - corn, rice, bean, livestock products

Hetao Irrigation Production


Area -- wheat
Yellow river-Huaihe river-Haihe river Plain Production
Area -- wheat, corn, cotton, bean, livestock products

Yangtze River Basin Production


Area -- rice, wheat, cotton, rape,
Main production areas livestock, and aquatic products
of agricultural products

Southeastern Production Area -- rice,


sugarcane and aquatic products
Agricultural Strategic Layout of “Seven Areas and Thirteen Belts”
中国未来十亿城市人口分布形式
The distribution of 1 billion urban
Chinese residents in the future

“Two Horizontal and Three Vertical” Urbanization Strategic Plan


The Belt and
Road
 “Five -tions:
Road
connection
Trade
facilitation
Currency
circulation
Policy
communicatio
n
Heart
The “Silk Road Economic Belt” and the “21st Century connection
Maritime Silk Road”, linking China with other Asian and African Three
counties and ending in Europe, will help to create the principles: co-
community of interests, responsibilities and destinies. consultancy,
In June 2016, China and Russia vigorously promoted the co-
coordination between the Belt and Road initiative and the construction
Eurasian Economic Union, to deliver the development benefits and co-sharing
to the two peoples and also the whole region.
6. Urban-Rural Large Logistics System:
-- Railway transportation
-- Waterway -- ocean transportation, coastal transportation,
inland river shipping.
-- Civil aviation transportation
-- Highway transportation
-- The fifth largest transportation industry -- China oil and gas
pipelines
-- National transmission and distribution grid, smart grid and
ultra-high voltage grid
-- Mobile communication networks etc. (integration of the
three networks)
-- Public service networks including that of education,
medical care, sports and culture, etc.
China determines to build a national backbone circulation
great channel system featuring “3 vertical and 5 horizontal”

 2020: High-speed railway operation mileage reaches 30,000 km,


covering over 80% big cities. The traffic mileage of newly constructed
or reconstructed highway reaches around 30,000 km. And all urban
and rural areas have access to broadband network.
China makes a plan of Six
Corridors along the Belt and the
Road
China-Mongolia-Russia
New Eurasian Land Bridge
China-Central Asia-West Asia
China-Indo-China Peninsula
China Pakistan Economic Corridor
Bangladesh-China-India-Myanmar
Yunnan Province is a strategic pivot along the Belt and the Road, and also
transportation corridor connecting South Asian and Southeast Asian countries.
Railway
transportation
from Linyi,
Shandong
Province to
Alma-Ata/the
transit trade of
Kazakhstan

Kazakhstan is projected to become the largest trading


partner of Xinjiang
Several Sino-EU international special train: “Yiwu-Xinjiang-
Europe”, Yiwu-Xinjiang-Europe, Wuhan-Xinjiang-Europe,
Chengdu-Europe, Zhengzhou-Europe, Suzhou-Manzhouli-
Europe and Hefei-Xinjiang-Europe cargo trains leading directly
to the European continent.
Up to date, the mileage of
railway under the construction of
African Railway project
invested and constructed by or constructed by China in Africa
China has reached 5,756 km. Besides,
China has aided Africa in building
4,335 km of highways, 9 ports
and 12 airports.

• Projects invested
by China
• Korean investment Railways
(suspended)
• Indian investement
(suspended)
China Railway Construction Corporation, by adopting the EPC (Engineer, Procure, Construct) method,
finished the construction of the fastest railway in Angola. The length of the railway reaches 1,344 km.
Mombasa-Nairobi Railway
constitutes the starting section of the
East African railway network.
Constructed according to China's
national railway Class One Standard,
the railway measures 480 km in length
and has a carrying capacity of 25
million tonnes. It links Nairobi, capital
of Kenya, with Mombasa port, the
largest port in the area, and is
expected to lead to the six East African
countries of Kenya, Tanzania, Uganda,
Rwanda, Burundi and South Sudan in
the long run.
Road in Rowanda
built with the help of
China

Chinese manufacturers in Rwanda -- one main attraction of African countries is that with
the preferential trade agreement they signed with European and American countries,
manufacturers of textile products are exempt from import taxes as high as 30%.
Broadband China Strategy
As the 4G network is being
constructed on a large scale, the three
Chinese mobile operators, CMCC, China
Unicom and China Telecom, are
confronted with the grave pressure of
building more transmission stations and
towers. The establishment of
independent base station/tower
enterprises would facilitate their sharing
of such resources as machinery rooms,
stations and pipes, effectively reduce
network construction costs and accelerate
of network construction process.
XI Guohua, chief executive of CMCC, stated that, “the tower enterprise jointly invested by the
three giant operators would be completed in the third quarter of 2015. When completed, the
enterprise would receive facility assets of 2G, 3G and 4G in the first place. Newly-added facilities
would be introduced as the priority, followed by other existing ones. The total value of these
facilities reaches around 200 billion yuan.
The ownership structure is as follows: CMCC, as the largest shareholder, owns 40% of the
equity; China Unicom 30% and China Telecom 30%. Private capital is expected to be introduced,
but its share shall not exceed that of CMCC.
Broadband World Stragety
The Laos satellite station project China
undertook was launched.
At 00:07 on November 21, 2015, the
Laosat communications satellite was
launched by Longue March 3B in Xichang.
Laosat is another communication satellite
project independently implemented by
Chinese enterprise following the Laos
broadcasting-communication satellite of the
China Asia-Pacific Mobile Communication
satellite Co., Ltd. The launch of Laosat is
groundbreaking in satellite export by
Chinese private enterprise. The project is
contracted by Laos LH International satellite
Communication Co., Ltd (a Sino-Laos joint
venture). Once put into operation, the
satellite will provide Laos with such service
as HD TV programs, telemedicine, remote
education and government emergency
communication. Meanwhile, the enterprise
will launch supporting projects, including
constructing satellite industry building,
satellite industrial parks and aerospace
science and technology university in
Vientiane.
Civil Aviation Transportation
 -- National Civil Airport Layout Planning, By 2020, the number of
China‘s civil airports will reach 244, 97 of which are newly built after
2006, thus forming airport clusters in the five regions of northern,
northeastern, central south, southwestern and northwestern China.
 -- By then, over 80% of national county-level administrative regions
and above will have access to aviation service even if the ground
transportation distance is only 100 km or takes only 1.5 hours. In
these regions, the population accounts for 82% and GDP 96% of the
national total. An airport network system consisting of hubs, arteries
and regional lines will take shape.
 -- By 2020, the annual growth rate of cargo and passenger throughput
of airports nationwide will be kept at 15% and 11.4% respectively. The
number of airports handling over 30 million passengers annually will
be 13 (only 2 at present); 6 airports (only 3 at present) handling 20-30
million passengers and 10 (only 5 at present) handling 10-20.
The development of the general aviation industry
facilitates improvement of the comprehensive
transportation system, helps foster new areas of
growth and propels job creation and service industry
upgrading.
First, speed up building general airports in remote
areas, areas with inconvenient transportation, areas
frequently afflicted by natural disasters and areas
densely populated or confronted with severe traffic
congestion. Develop general aviation in main
agricultural production regions and key national forests,
to meet the demand of disaster relief, emergency
rescue, medical aid and industrial, agricultural and
forestry development. Set proper the general airports
construction standards and encourage enterprises and
Build over 500 general airports by 2020 individuals to be participants of airport construction.
Send, accelerate the R&D and application of
general planes, navigation communication
facilities and other core equipment, and cultivate
general aviation enterprises with international
competitiveness. Apply general aviation in such
fields as resource prospection, environment
surveillance, and transportation service.
Third, steadily open the low-altitude
airspace. Streamline the review and filing
process of general aviation flight tasks,
intensify safety supervision for flight and air
defense safety.
Waterway -- ocean transportation, coastal transportation
and inland river shipping
The State Council approved the National Inland Waterway and
Port Layout Planning in 2007
 By 2020, an all-weather modern water transportation safety
supervision and rescue system featuring prompt response, covering
all areas and focusing on Chinese coastal cities and Yangtze River
basin basically takes shape.
-- High-end inland waterways and major ports will be established
in 20 provinces, prefectures and municipalities nationwide. 27
national class-one ports will be in place to connect 56 cities with a
population of over 500,000, thus linking main resource areas with
consumption areas.
-- Guide and advance the upsizing and standardization of shipping
vessels, in a way to promote the upgrading and modernization of
inland water transportation industry, save a large amount of land
resources and enhance comprehensive transportation capacity.
The Fifth Largest Transportation Industry -- China's Oil and
Gas Pipelines Network
In April 2009, China and Russia signed an agreement concerning the designing,
construction and operation of pipelines leading from Skovorodino, Russia to Chinese
borders. The length of the Sino-Russia crude oil pipeline measures around 70 km in Russia
and 960 km in China.
At present, China has built and operated long-distance oil and gas pipelines of over 60,000
km, the length equaling 1.5 rounds of the equator. Among the 60,000-km pipelines, 17,000
km are used for crude oil, 1.2 for refined oil, 3.3 for natural gas and 3,000 offshore.
As the major pipeline projects such as those transmitting gas from west to east and those
carrying crude oil products in western China, a oil and gas supply pattern featuring
transmitting oil and gas from west to east and from north to south is taking shape.
By the end of the 11th Five-Year Plan, the total length of oil and gas pipelines would
exceed 80,000 km, forming four largest oil and gas transmission channels in northeastern,
northwestern and southwestern China and offshore.
In 2009, apart from such major projects as central Asia pipeline and the WEPPII under
construction, the oil and gas transmission projects of building the third Shaanxi-Beijing
pipeline, the Qinhuangdao-Shenyang pipeline, Shandong natural gas network and Huining
double pipelines were also launched successively. Besides, the construction of China-
Myanmar pipeline, the second phase of national reserve storage and business reserve
storage are also under consideration.
Since 2010, China will also make plans for the building of the third west-east natural gas
pipelines, crude oil pipelines in Duwushan, Changlan, Yin and Dajin as well as the Dajin-
Zhengzhou refined oil pipelines.
Roadmap of bringing the gas from west to east
Project at the Colombo Port City, Sri Lanka
got the works resumption approval

Southport Pier of Colombo Port is a pacesetter program


launched in Sri Lanka with the assistance of China. It is the
deepest container terminal in South Asia On March 9, 2015, the Colombo Port City
A total of USD 1.4 billion is invested in this project project was forced to shut down.
for the construction of golf course, aquarium,
apartments, hotels and malls, etc.
Foreign citizens arrive at Djibouti Port with
China's warships
Association of Southeast Asian Nation (ASEAN)

 ASEAN was established on July 31, 1961 in


Bangkok As a general intergovernmental and
regional organization by the five founding
member countries, namely, Indonesia,
Malaysia, Philippines, Singapore, and Thailand.
 ASEAN has 10 member states,  From August 7 to 8, 1967, Foreign Ministers of
namely Brunei (1984), Cambodia Indonesia, Thailand, Singapore and Philippines
(1999), Indonesia and Laos (1997), as well as the Deputy Premier of Malaysia
Malaysia and Myanmar (1997), attended the conference in Bangkok and
the Philippines, Singapore, issued the Bangkok Declaration. ASEAN was
Thailand and Vietnam (1995), as officially established.
well as 2 observers, Papua New
 The ASEAN region has a population of about
Guinea and East Timor.
601 million and a total area of 4.46 million
square kilometers.
Regional Comprehensive Economic Partnership Agreement (RCEP)

 In November 2011, ASEAN brought forward the initiative of forging a regional


comprehensive economic partnership (RCEP), in a way to construct a regional free
trade zone with ASEAN at its core. RCEP negotiations with the leaders of China,
Japan, India, Australia and New Zealand were launched in November 2012.
 On the morning of November 22, 2015, Chinese Premier LI Keqiang attended the
RCEP joint statement releasing ceremony with leaders from the 10 ASEAN
countries as well as Korea, Japan, Australia, New Zealand and India.
 The statement points out that RCEP is significant for improving local residents'
livelihood, promoting equitable development of the economy and strengthening
economic relationship among nations. RCEP serves as an important way leading to
regional economic integration. The leaders urge negotiation teams to press ahead
hard so as to finish the work by 2016.

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