CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 2, No. 7 - June 11, 2001
TOPICS THIS ISSUE:
- China IT Market Update
- Enormous Economic Data System Finally Completed
- China Internet Association Founded
- Unclear Tax Regulations Seen as Unfair By Some Software Companies
- CeBIT Asia Exhibition in China
- Beijing's Olympic Bid Creates Momentum in IT Sector
- Proposed Information Technology Projects
China IT Market Update
IT purchases in China are currently increasing three to four times faster than the rest of the world, making it the world's third largest market for IT. IT output value in 2000 was estimated at $119.7 billion, a stark contrast to the $1.2 billion figure of 1980.
China is becoming more and more determined to catch up to Japan and Western Developed Countries in the realm of high technology. The PRC is holding very little back in its efforts to promote and expand a field that has seen a 100-fold increase in its output revenue in the last ten years. Among the techniques being implemented by the PRC are the cultivation of high technology start-ups within the national high-tech industrial zones, incubators, venture capital and intermediate agencies.
China's 53 national New and High Technology Industries Development Zones (NHTIDZ) have netted RMB 794.2 billion (US$95.7 billion) worth of gross industrial output value, contributed RMB 46 billion (US$5.6 billion) to state revenue, and exported RMB 154 billion (US$18.6) worth of goods.
Statistics show that among the 20,796 enterprises in the national zones, 1,252 each had an annual output value of more than RMB 100 million (US$12 million); 143, over RMB 1 billion (US$120 million); and 6 over RMB 10 billion (US$1.2 billion).
Emulating developed countries, China established more than 100 incubators for high technology enterprises. Also, the Ministry of Science and Technology and the Ministry of Education jointly masterminded high technology zones in universities. A total of RMB 659 million (US$79 million) worth of state innovation funds were allocated to 872 projects in 2000, which are expected to create RMB 11.11 billion worth of industrial added value and create 45,300 new jobs.
(Source: Asia Pulse/Xinhua)
Enormous Economic Data System Finally Completed
The State Economic Information System (SEIS), the largest national information system in China, has been officially launched.
SEIS is a large-scale information system built specifically for the purpose of gathering economic data. The system is comprised of seven subsystems and one public network platform.
Among the seven subsystems are a macroeconomic forecast system, an enterprise and product information system, a market and price information system, a global economic information system, an economic laws and regulations system, a foreign-loan project information system and a government investment project information system.
The construction of SEIS was funded by a Sino-Japanese loan agreement and was completed in five years. The system passed inspection by a committee consisting of the SDPC, the Ministry of Finance and experts from the domestic information technology sector.
(Source: ChinaOnline)
China Internet Association Founded
The China Internet Association was recently established. The Association is a national, non-profit organization founded by China's enterprises, institutions, and individuals engaged in the Internet industry and other groups and individuals interested in promoting the development of the Internet in China.
Among the goals of the Association are to foster communication between Internet-related businesses and the government and to play a role in the implementation of state policy in regard to the Internet. Moreover, the association hopes to spread knowledge about the Internet to China's citizenry and support the industry's already rapid growth.
A ceremony was recently held to mark the event. Zhou Guangzhao, vice-chairman of the National People's Congress Standing Committee and chairman of the China Association for Science and Technology was the guest of honor. Along with 300 members of China's IT industry, the heads of relevant government agencies were also in attendance -- the State Council Information Office, the Ministry of Information Technology and Telecom Industries, and the Ministry of Civil Affairs, and others were represented.
(Source: BBC Worldwide Monitoring)
Unclear Tax Regulations Seen as Unfair by Some Software Companies
On October 16 of last year, China's Ministry of Information Industry promulgated regulations that would allow a tax break to China's Software developers. However, some firms have found out that due to technicalities, they are being exempt from the exemption.
Due to the ambiguous nature of the Trial Regulations on the Certification Standards and Management Measures for Software Developers, industry leaders and tax authorities have differing opinions regarding the interpretation of the laws. The tax authorities maintain that only software companies that engage in scaled production can qualify for the tax break, which exempts companies from having to pay a value-added tax of three percent.
Firms not involved in scaled production but instead in customized software development, do not receive the tax exemption and thus feel that they are being treated unfairly.
The logic behind the tax authorities exemption of these customized developers is due to the fact that their average profit is much higher than software companies on the whole.
The average gain received by those that have actually been granted the tax reprieve is in the vicinity of several million RMB per year (US$300,000-400,000).
While local tax bureaus such as the one in Haidian District, home to the Zhong Guancun High-Technology Park, do not necessarily support the regulations, they claim that they cannot institute any changes until a higher authority such as the Ministry of Finance or a deputy to the National People's Congress intervenes.
(Source: ChinaOnline)
CeBIT Exhibit in China
CeBIT, the international IT trade fair held annually in Hannover, Germany, will make a stop-over in Shanghai from August 8-11 this summer.
The CeBIT Asia program will be especially tailored to the needs of the Chinese market. Products and solutions will be showcased in information technology, telecommunications, network computing, and office automation.
During the exhibition, an extensive program of conferences and company presentations on the subject of "modernizing government and business" is being planned. Some of the main topics will be general administration and management processes, commercial processes linked to the public sector, and economic development and assistance.
It is anticipated that some 500 companies, including large multinationals, from over 22 countries will exhibit their products at CeBIT.
Estimates proclaim China will become the world's second largest information technology market in five years, behind the United States. And by 2010, China will be the biggest telecommunications market in the world.
(Source: Xinhua)
Beijing's Olympic Bid Creates Momentum in IT Sector
As China's capital city of Beijing prepares to host the 2008 Olympics Games, the fourth annual China-Beijing International High Tech Industries (CBHT) Week brought in a record US $7.4 billion-plus of investment pledges to one of the fastest growing sectors in China: IT. The conference which focused on developing multi-lateral economic and technological cooperation had over 1,300 attendees from both China and overseas multinational companies such as Nokia, General Electric, and NEC.
The success and the growing momentum in Beijing's technology markets is likely to speed up access to new information technologies and position Beijing as a major regional business center. Further catapulting China into the latest in information technologies is Beijing's bid to host the Olympics and their impending entry into the World Trade Organization.
Key investments generated at CBHT included US$1.2 billion for the capital's first economic development zone, the Beijing Economic-Technological Development Area (BDA), and US$816 million in investment for China's Silicon Valley, Zhongguancun Science & Technology Park.
Anyone who has witnessed the magnitude of the technology changes in China over the past two years realizes the importance of technology to China's economic ascent. Figures from the General Administration of Customs indicate that China's total import and export of high and new tech products amounted to US $89.55 billion last year. These industries will be key for Beijing to reach its targeted, per annum economic growth rate of 9%.
(Source: Business Wire)
Proposed Information Technology Projects
The following IT projects have been planned if Beijing is successful in winning it's bid for the 2008 Olympics:
The use of intelligent transport systems to assist in the navigation around difficult traffic conditions.
Installation of Global Positioning Satellite (GPS) technology to cover all Olympic transport routes to be used both for the Olympics and public transport.
Using a mini-satellite for the surveillance of ground conditions that has the capability of translating pictures into virtual reality images.
Provide a secure broadband network to deliver the Games to the world by expanding Beijing's current one million kilometers of optical fiber network, which is one of the largest in the world, to cover all Olympic sites. Fixed line telephone and data transmission infrastructure will provide all of the necessary capacity for IN and IP based services.
Use of a mobile communication network capable of handling 500,000 calls in the Olympic site area using GSM, IS-95 CDMA, and 3G.
Establishment of a digital cable TV network capable of HDTV transmission for all Olympic events.
Development and use of a dedicated and independent digital Olympic trunk radio system with a capacity for 15,000 handsets in 1,000 talk groups.
The addition of a submarine optical cable, five satellites, and transportable transmitting satellite earth stations to enhance televised transmissions of the Games both internationally and domestically.
Edward Tian, CEO of China Netcom Communications (CNC) one of the largest telecoms in China believes that the massive technological build-up for the Games and the new worldwide economy is a challenge that can be overcome by the people who built the Great Wall. "Our company CNC built and went live with a 8,500 km fiber network in 10 months. It took Sprint two to three years to do this in the United States," explains Tian. "China's dedications to the Games and to becoming a technological powerhouse go hand-in-hand. We recognize that both will help open our country and our people to the world."
(Source: Business Wire)
Lehman Lee & Xu
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The China Information Technology Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
