State of the Market

Sino-Russian Trade

Last year, Sino-Russian trade and economic cooperation maintained its momentum and nearly touched an unprecedented $20 billion, which helped realize the development targets put forth by leaders of the two countries in May 2003, according to the Ministry of Commerce (MOFCOM).

From January to November, bilateral trade reached $19.34 billion, up 35.2 percent over the same period in 2003. At present, Russia is China’s eighth largest trading partner, while China is Russia’s fourth largest trading partner (see graph 1).

Non-state enterprises were active in trade and economic cooperation with Russia. According to statistics released by Chinese customs, last year imports and exports of non-state enterprises accounted for 66.8 percent of total bilateral trade between China and Russia. This was higher than that of state-owned enterprises, which was 33.2 percent.

According to MOFCOM Vice Minister Zhang Zhigang, a number of well-known Chinese companies have successfully entered the Russian market. China’s biggest television manufacturer TCL sells more than 400,000 sets in Russia every year, while the Guangdong-based digital video disk (DVD) and phone maker Bubugao has recorded annual sales of $100 million in recent years.

By the end of 2004, MOFCOM had approved more than $680 million in investments to Russia, while Russia’s investment in China stood at $450 million.

“Based on mutual trust in politics, the two nations are starting high-speed economic and trade development,” said Zhang, who added that consolidating and promoting the strategic partnership between China and Russia was of great importance.

Bilateral trade is expected to grow to $60 billion to $80 billion by 2010, the official said.

Sino-African Trade

Buoyed by the Second Ministerial Meeting of the China-Africa Cooperation Forum 2004, Sino-African trade and economic relations made new progress. In the first 10 months of 2004, China’s imports from and exports to Africa reached $23.1 billion, up 54.4 percent compared with the previous year (see graph 2). In 1979, bilateral trade between China and Africa amounted to $817 million, rising to $19 billion in 2003 and further increasing last year.

In recent years, China’s trade with Africa has grown dramatically. The abundant natural resources of Africa have helped meet the needs of a rapidly growing Chinese economy. On the other hand, China has also exported high quality goods at low prices, which meet the consumption levels in Africa. The growth rate of China’s exports to Africa was higher than the total growth rate of exports.

The export structure has also changed. At present, more Chinese enterprises have set up factories in Africa, and this has increased China’s imports of production materials from Africa. Chinese investments have moved into more diversified fields and by September last year, China’s investments in Africa had touched $976 million.

China’s projects in Africa have also become more technology intensive. By October last year, Chinese enterprises had signed engineering and labor contracts worth about $30.6 billion, with a turnover of $21.54 billion, covering various sectors of the national economy.

With African countries focusing on poverty alleviation at this stage of their economic development, Chinese enterprises are in a particularly advantageous position to help them in such efforts. Chinese exports meet the requirements of the African market, especially, in machinery and electronic products and daily necessities.

The China-Africa Cooperation Forum is set to further bilateral cooperation and the coming years will see these ties develop to their fullest extent.

Commodity Trade

According to statistics released by MOFCOM, China contributed 12 percent to the growth of global commodity trade last year, which is 0.3 percentage points higher than in 2003, becoming the main driving force of global trade growth.

In the first 11 months of 2004, China’s foreign trade broke through the $1 trillion level with a year-on-year increase of 36.5 percent. It was predicted that total foreign trade last year would touch $1.1 trillion, making China the world’s third biggest trading nation. Last year, imports and exports of China from and to the United States were expected to exceed $167 billion, from and to Europe $190 billion, and trade with Asian countries more than $600 billion.

Banks

Bank of Beijing. As of January 1 this year, the Beijing City Commercial Bank, one of China’s more than 100 city commercial banks, has been renamed Bank of Beijing, with the intention to develop it further. Facing fiercer competition, the bank has changed its name to promote the brand value and nurture new customers.

Regrouping dozens of urban credit cooperatives in Beijing, Bank of Beijing was established in early 1996 and saw its name changed from Beijing Urban Cooperative Bank to Beijing City Commercial bank, and now to Bank of Beijing. By the end of last year, the bank’s total assets had hit 209 billion yuan and its balances of deposits and loans reached 188.8 billion yuan and 109.6 billion yuan, which are 8.6 times, 9.3 times and 21.3 times the figures when it was first established.

The bank was ranked 61st among the top 200 banks in Asia in terms of total assets by The Banker in 2003 and ranked 515th among the top 1,000 banks in the world by the same magazine in July 2004. The bank is also ranked 13th among the top 50 banks in China by the Financial Times.

Three years after China entered the World Trade Organization (WTO), foreign banks have started to enter the financial market of Beijing. At the same time, state-owned commercial banks and joint-stock commercial banks are all in the process of deepening their reforms.

ICBC. China’s largest state-owned commercial bank, the Industrial and Commercial Bank of China (ICBC), has inked a contract with Diebold, Inc. for Opteva advanced-function automated teller machines (ATMs). The $25 million deal includes more than 1,100 Opteva(R) self-service terminals driven by Agilis Power(R), a tailored solution used to develop ATM software applications. The balance of the order includes more than 100 bulk cash recycling machines (BCRMs).

With its countrywide network of 27,000 branches, ICBC provides routine banking transactions, in addition to other customer-friendly services such as pension plans and bill payments, to millions of customers in urban and rural areas of China. As a result, ICBC has developed a solid reputation among customers as a “neighborhood bank.” Opteva ATMs will help ICBC strategically accelerate the reconstruction of its retail delivery channel.

In an effort to pursue additional profits in the high-end market, ICBC is improving efficiency and reducing the cost of its services to the majority of Chinese customers, a strategic move designed to free up resources to devote to high-end customers.

To achieve its business goals, ICBC has taken aggressive steps to reform its service delivery channels. Over the past several years, ICBC has actively sought to expand its ATM network to transfer more traditional banking services to the self-service environment.

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