The Shanghai Lawyer
Vol. 2 , No. 9 - December 3, 2003
Shanghai is one of the most dynamic and fastest growing mega-cities in the world. It is quickly establishing itself as the leading financial and economic center of the Far East, on par with the likes of Paris and New York. The Shanghai Lawyer is a bi-weekly publication providing up-to-date newsworthy articles and legal information to professional and business persons around the world. We hope you enjoy the newsletter and welcome your comments and feedback.
Letters from Shanghai
And it keeps going and going and growing and growing. With a US election year on the horizon and China attracting investment from all reaches of the globe, as of late much criticism has been levied at Beijing, blaming it for contributing to spiraling foreign trade deficits and in general for exporting deflation to the rest of the world. In fact however, the opposite may be true. Massive economic development activity in China is creating a huge demand for global suppliers causing a rise in prices and stimulating economic growth.
Thanks to heavy Chinese demand, prices of many natural resources and metals are going through the roof. In the past 18 months the cost of alumina, used to make aluminum has doubled; the price of nickel, used to make stainless steel has doubled; copper prices are up 40 % in the first 8 months of this year; and the demand for crude oil imports grew almost 60 % from last year. This year, due to the surging boom in the construction and automotive sectors, China will import 150 million tons of iron ore, surpassing Japan as the world's largest consumer. Additionally, imports of precious metals, gold, platinum, diamonds; polyethylene used in the plastics industries; and agricultural products including beef, cotton, soybeans and potatoes are exploding.
Since China joined WTO in 2001, import tariffs have been reduced, or are in the process of being reduced, creating more incentive for Chinese companies to purchase foreign goods and commodities. In 2003, China's imports have outpaced its exports. Did you get that? Due to the economic boom in China, the import growth is greater than export growth. Therefore, far from exporting deflation to the rest of the world and contributing to a global economic slowdown, in reality China is causing a rise in global prices and becoming an engine for global economic growth.
By - Blaine Turnacliff You may contact Blaine directly at bturnacliff@lehmanlaw.com | |
Shanghai Essentials
The Shanghai government has thrown the doors open to foreign software development companies. The Shanghai government offers zero percent business taxes for the first two years and then 7.5 percent business taxes from years three to five after the company first begins to make a profit. In addition, the developers can receive special designation of "innovative software developers" from the Shanghai government, which then gives the development companies preferential treatment on the tax front as well as logistical and access to resources. |
China Joins the Space Club
The re-entry capsule of Shenzhou-5 landed safely here in north China's Inner Mongolia, on October 18, 2003 and Lt. Col. Yang Liwei, China's first astronaut in space, stepped out of the re-entry capsule in good situation. This signals that China has become the world's third space faring country, following Russia and the United States.
The recovery personnel at the landing site said that conditions of the 38-year-old Yang were good after he spent 21 hours in space, orbiting the Earth 14 times. Chinese Premier Wen Jiabao announced China's first manned space flight a "complete success" after talks with astronaut Yang Liwei upon the landing of the re-entry capsule of Shenzhou-5. Shenzhou-5 traveled 600,000 km during the flight, realizing a centuries-old dream cherished by the Chinese nation.
In the Ming Dynasty (1368-1644), a man named Wan Hu tried to send himself into the sky by lighting gunpowder-packed bamboo tubes tied to his seat. The gunpowder exploded, killing the man who has been remembered as the first Chinese attempting to fly.
The man's dream was, in fact, the dream of all the Chinese. The country abounds in fairy tales about humans vs. space. One is about a woman of surpassing beauty flying to the moon after taking some magic medicine, where she stays as the Goddess of Moon. The story of the woman named Chang'e has always been a most favorite theme in traditional Chinese painting, poetry and drama.
In 1992, the country started a manned space flight program, in the wake of success in sending man-made earth satellites into space. Spacecraft of the Shenzhou series ventured, successfully, into the outer space four times from 1999 to 2002 under the program.
Yang's return to land from outer space signifies completion of the first step taken by China to implement its plans for space exploration. More steps are to follow -- attempts for space walk, rendezvous and docking of spaceships and setting up of a space lab. Sometime from now, up in the space, high up over the Earth, there will be a space station which, like Shenzhen-5 that has just made history, will be designed, built and manned by the Chinese.
(Source: Xinhua News)
Shanghai's Property Market Continues to Surge
Surging house prices in China's economic hub Shanghai are unlikely to cool anytime soon and may post a 30-percent growth rate this year, state press reported yesterday.
For the first nine months of the year prices surged a total of 23 percent, which compares with annual 15.5 percent growth last year, the Shanghai Daily said. Based on data, the index office raised its forecast for the annual growth rate to 30 percent from 25 percent in August, indicating average prices would rise to about 5,900 yuan a square meter (US$719) by year-end. By the end of last year, the average new housing price was 4,553 yuan (US$549) a square meter, according to the National Bureau of Statistics.
Vacant housing decreased 30.9 percent to 926,800m2 in the same period to last month. A total of 16.09 million square meters were sold during the period, while 16.08 million square meters of projects were completed.
(Source: Taipei Times)
Did you know?
Shanghai is sinking at a rate of one inch per year. The problem is blamed on runaway construction growth of skyscrapers in the downtown core. |
GDP grows robust 8.5% in first 9 months
China's economy roared ahead in the year to the third quarter, recording scorching growth that will fuel concerns that the world's sixth-biggest economy is overheating. Gross domestic product, a broad gauge of economic activity, rose 9.1 percent between the third quarters of 2002 and 2003, the State Statistical Bureau said.
GDP in the first nine months of the year was up 8.5 percent on a year earlier. But the economy remained plagued by problems and that unspecified measures were needed following rapid lending and credit growth.
The difficulty in raising rural incomes that has bedeviled the economy for a long time, the relatively large unemployment pressure and other contradictions are still prominent. Unbalanced development between investment and consumption, China's cities and villages and industrial output and energy had become more pronounced.
The third quarter figure came in at the high end of analysts' expectations and pointed to a potentially faster growth rate in the fourth quarter, economists said. The consumer price index, which covers a basket of goods from grain to rents, was 0.7 percent higher in the first nine months than a year earlier, showing inflation was still in manageable territory. Retail sales continued their rebound from the SARS outbreak earlier this year, showing an 8.6 percent rise in the first nine months from a year earlier.
Seeking to head off resurgent inflation and prevent damaging bubbles in some sectors, authorities have moved to curb lending, have slapped curbs on the buying and building of luxury property and have said they will ease back spending on infrastructure. But figures released earlier this week gave little sign that recent measures to cool off growth were succeeding.
China's September factory output surged 16.3 percent from a year earlier, driven by industries such as automobiles, metals, computers and machinery. Some analysts have said the measures to put the economy on a more sustainable footing may fall short and that more specific policies targeting surging sectors such as steel and cement are needed.
Foreign investment in China slowed sharply in the wake of the SARS outbreak, but has picked up as foreign firms seek to tap a huge pool of cheap labour and a vast potential market. Some economists said they expected no let-up in the country's startling growth rates in the near term. There is speculation growth will even be higher in the fourth quarter, perhaps eclipsing 9.5%.
(Source: China Daily)
Shanghai legal problem? Tell us about it. . . Mergers & Acquisitions * Incorporations * Commercial Contracts Contact Blaine Turnacliff at bturnacliff@lehmanlaw.com |
Office rents will remain high in Shanghai
Rents of Shanghai's Grade-A office buildings will increase steadily in the coming two years due to a limited new supply, an industrial market review report said. The local office market will see 73,000 square meters of additional floor space next year and 70,000 square meters in 2005, according to a report by Jones Lang LaSalle yesterday. This year's supply is estimated at 70,000 square meters.
The daily rents of Grade-A office buildings hover around US$0.55 per square meter in the city. Since 2000, the short supply has ensured rent increases. Consistent with the rise in demand, vacancy rates fell to about 9.7 percent by the end of the third quarter, an indication that quality office space is being swallowed up by the market.
To date, Shanghai has Grade-A office space totaling 3.3 million square meters, compared with 6.7 million square meters in Hong Kong and 42 million square meters in Tokyo. Pudong's lujiazui area will outperform the rest of Shanghai in terms of prosperity, especially since it targets financial institutions, Chan said.
(Source: Shanghai Daily)
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Shanghai' GDP Almost 12 Percent this Year
Shanghai's gross domestic product grew at 11.8 percent in the first nine months of the year, its fastest growth since 1997. Officials attributed the growth to increased industrial production and greater investment. GDP totaled 441 billion yuan (US$53 billion) through the first three quarters, the Shanghai Statistics Bureau reported yesterday. No specific figures were given for the third quarter.
The real estate industry, whose added value rose 10.2 percent during the period, provided greater potential for related products such as home appliances and decoration materials, the statistics bureau's Chen noted. Sales of home appliances alone rose 24 percent in the first nine months.
Despite previous prediction of an export slowdown for the second half because of the impact of SARS, Shanghai exported products valued at US$35.3 billion through September 30, exceeding the total volume achieved last year.
During the period, the city realized retail sales of 164 billion yuan, up 9.3 percent year-on-year. In addition, contracted overseas investment rose 30.4 percent to US$8.9 billion.
(Source: Xinhua News)
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