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Fujian

Cross-Strait Trade Hub

Directly facing Taiwan, Fujian’s coastline gives easy access to cross-strait trade and business. The province used to be the sole hub for all air and sea transportation to Taiwan, but several  years ago the government began permitting direct links with other parts of the country and Guangdong and Jiangsu surpassed Fujian in terms of attracting investment from Taiwan. Nonetheless, Fujian province stands to gain the most from a continuing improvement of cross-strait relations, both economically and in terms of attention received from the state government. The main economic engines in Fujian are Xiamen, Fuzhou, Quanzhou, Zhangzhou and Putian. There are also a number of less-well-known economic gems in the province. For example, Fujian’s Jinjiang ranks 5th in the National Bureau of Statistics rankings of the strongest county-cities nationally (2012).

Economy

The economies of Fujian and Taiwan are closely related and complimentary-with the current pillar industries of both regions made up of electronics, petrochemicals and mechanics. If this favorable economic factor can be properly utilized, gains from the increasing trade between the two regions can benefit both sides amid the ongoing global economic downturn. In May of last year, the capital city of the province, Fuzhou, set up an administration office to handle the  certification of origin for goods made in Taiwan, expecting to boost trade between the two regions by facilitating the exchange of goods and commodities.

In June 2012, China’s State Administration of Industry and Commerce issued 16 new policies to promote the development of the region and strengthen its bond with Taiwan. The new policies entitle the local office to handle the application of registration and other business-related licenses directly for enterprises funded with overseas capital without going through the Beijing office, thereby making it more convenient for Taiwan enterprises to gain market access. Besides, the new policies allow Taiwan-funded enterprises to use traditional Chinese characters on outdoor advertisements and register a company name with Taiwanese idioms. All these measures aim to reduce the commercial cost of Taiwan-funded enterprises and help to attract more large-scale companies and projects to Pingtan.

 

Fujian’s Major Industrial Products (National Rank (total 30 provinces/municipalities )

Product

National Rank

Chemical Fiber

3

Yarn

 

5

Micro computer equipment

Televisions

Hydropower

6

Paper

Beer

7

Cloth

8

Mobile telephones

 

Glass

 

Source: China Statistical Yearbook, 2011

Historically, Fujian’s key industries have been agriculture, footwear and clothing, but in recent years there has been increasing development in high-technology and electronic goods. In recent years, Fujian’s industrial clusters have become more concentrated on electronic information, equipment manufacturing and petrochemicals, with these industries accounting for more than 60 percent of total industrial output value.

A prime example of an equipment manufacturer headquartered in Fujian is Longking Holdings, one of the largest construction machinery manufacturers in China (making and distributing loaders, road rollers, excavators and forklifts). One of the company’s most recent investments is an excavators manufacturing line in Longyan Economic Development Zone, with an investment of RMB 3.5 billion in late 2011. The project is estimated to produce 15,000 excavators annually. To fuel such industry, Fujian province is taking initiative in power production. For example, a household waste-fuelled power plant in Fuqing city was completed and entered operation in 2011.

The provincial government focuses on attracting foreign investment in 13 industries, namely electronics and  information technology, machine equipment, petrochemicals, steel and non-ferrous metals, shipbuilding, new energy, bio-pharmacy (traditional Chinese medicine), logistics, new materials, construction materials and textile. Other industries in the province include aquaculture and fisheries.

Spotlight on Xiamen

While Fuzhou is the capital of Fujian province, the more southern Xiamen is one of China’s four original special economic zones (along with Guangzhou province’s Shenzhen, Zhuhai and Shantou) and a key trade hub-its port and airport are both the third busiest in the region, behind Guangzhou and Shenzhen.

The import and export volume connected to trade conducted by foreign-invested enterprises takes up more than half of the total volume in Xiamen, which in turn occupies more than half of the total import and export volume of the entire province. These provide opportunities for service outsourcing enterprises in Xiamen to open up their overseas markets. There are around 500 service outsourcing enterprises in Xiamen that are concentrated in the Xiamen Software Park and Xiamen Bonded Logistics Park. The Xiamen Software Park is described by Taiwanese merchants to be “the most beautiful in China, and the closest to Taiwan.” Meanwhile, many modern logistics enterprises are concentrated in the Xiamen Bonded Logistics Park.

Xiamen’s more prominent service outsourcing businesses include information technology service outsourcing targeted towards the Japanese market, logistics and supply chain outsourcing, as well as integrated circuit design, animated games and call center service outsourcing businesses targeted towards Taiwan.

Fujian provincial government has a standing policy to promote the development of emerging industries, including new generation information technology, biotechnology and new medicine, new materials, new energy, energy-saving, high-end equipment manufacturing, and the marine high-tech industry.  By 2015, the provincial government aims to increase the value of emerging industries to RMB 300 billion, accounting for 12 percent of Fujian’s GDP.

The province is now vigorously promoting marine economy as its new economic growth engine. Fujian will fully initiate its marine economy pilot projects in 2013, targeting the total output value of the industry at RMB 730 billion by 2015, taking up more than 28 percent of the total regional production value and eventually turning itself into a powerful province of marine economy by 2020. The province is also set to improve its ports planning and optimize its resource allocation, coastal resource in the province that can be utilized to build deep water berth at 10,000 tons to 30,000 tons ranks first in the country, the province will fully utilize its coastal resource, with the next ambitious move to turn the southeast shipping centre into a shipping centre with relative strong international competitiveness, and a special fund of RMB1 billion will be established by the government for the development of marine economy.

Fujian’s 12th Five Year Plan encourages foreign investment towards newly emerging strategic industries, modern service industries, energy saving and environmental protection industries, and other key industries. The Plan also aims to:

• Increase cooperation with international large corporations through technological cooperation and asset M&As;

• Optimize the structure of exported products by encouraging the export of high-tech and electrical and mechanical products with independent IPRs as well as high added-value labor-intensive products;

• Promote the acceleration of the transforming and upgrading of the processing trade and encourage domestic and foreign enterprises to cooperate in the expansion from simple assembly and processing to the inclusion of R&D, design, manufacture of core components, and logistics;

• Restrict the export of high-energy consumption, high pollution and resource products;

• Encourage the import of advanced equipment and technologies, important resources, key component parts and daily consumption goods necessary for economic development so as to optimize import structure;

• Strengthen the certification of enterprises and products entering the global market; and

• Expand cooperation with Hong Kong and encourage Hong Kong finance institutions to set up branches in Fujian.

Much focus in the Plan is also placed on cooperation with Taiwan, for example in the modern service industries including legal, intermediary, medical and health, cultural, service outsourcing, commercial exhibition, shipping and logistics and R&D industries. The Plan encourages the introduction of Taiwanese hospitals, rehabilitation centers and retirement homes. Taiwanese residents are encouraged to start businesses and participate in politics in Fujian. During the first half of 2012, Fujian’s used FDI reached $3.926 billion, flowing primarily into processing, trade, investment platforms and resources development. The total value of Fujian’s imports and exports of foreign-funded enterprises in 2011 was $6,868,116; $3,912,418 being from exports and $2,955,698 being from imports.

Development Zones

Fujian’s development zones received great attention under China’s 11th Five Year Plan, in which the State Council approved free trade port zones both in Xiamen and Fuzhou and upgraded three provincial development zones – China Merchants Zhangzhou Development Zone, Quanzhou Economic and Technological Development Zone, Quanzhou High-tech Industrial Development Zone – to state level status.

Fujian’s development zones are also representative of the province’s economy as a whole. For example, the province’s development zones include three state level investment zones specifically aimed at Taiwanese businesses, located in Fuzhou, Quanzhou and Zhangzhou. Autoparts are a major product in Fujian province and this is no more clearly seen than in Hua’an Economic Development Zone, which is home to the “aluminum wheel production project.” According to Fujian government plans, this zone will develop an auto spare parts industrial cluster that produces car wheels, car bearings, tires as well as auto glass products, among others. In addition, several new-energy vehicles and fork-lift trucks manufacturers will also be housed in the area.

The West Coast Economic Zone (also known as the Western Taiwan Straits Economic Zone) covers the entirety of Fujian province, as well as several cities in the Zhejiang, Guangdong, and Jiangxi provinces. The Zone, described in China’s 12th Five Year Plan, was proposed by the Fujian government and Chinese central government with the purpose of facilitating political and economic relationships across the Taiwan Straits and accelerating economic development along the coastal cities in Fujian province.

Infrastructure

Air

Fujian’s airports are small in terms of passenger and cargo/mail throughput when compared nationally, with Xiamen Gaoqi the biggest (ranked 11th nationally in terms of passenger throughput and 9th in terms of cargo/mail throughput), followed by Fuzhou Changle. The province also has the smaller airports of Quanzhou Jinjiang, Nanping Wuyi Shan and Liancheng Guanzhishan. Fujian’s Changle international airport’s ramp has been recently expanded and the provincial government has been pushing the expansion and reconstruction of Jinjiang airport in Quanzhou city, as well as airports in Wuyi Mountain, Xiamen, and Sanming County.

Road

The expanded Wulong River Bridge, connecting Fuzhou and Xiamen, was re-opened in January 2012 with twice the number of lanes.

Ports and Waterways

Fujian’s major port is Xiamen, which ranks 7th nationally for annual container throughput and 15th nationally for goods throughput. The ports at Fuzhou and Quanzhou are significantly less busy, with annual container throughputs about 1/5 that of Xiamen. Jiangyin Port in Fuzhou was officially approved by the State Council in January 2012 to be the first and only place in the West Coast Economic Region to import whole vehicles. This measure will open up a new and convenient channel for whole car import in the region and its neighboring areas, which will improve the import logistics structure of the port. It is also expected to deepen cooperation with the Taiwan automobile industry through the creation of an automobile logistics cooperation base across the Taiwan Strait. As a coastal province, Fujian has been continuously investing in its port infrastructure. In 2011, port throughput in the province increased by 30 million tons, with new berths completed for Kemen Port and Zhaoyin Port area in Xiamen entering into operation. Ten more projects, including a ferry terminal for Pingtan-Macau roll-on/roll-off passenger ferries and Taishan Petrochemical Wharf and Storage Area, also entered operation.