Medium & light industries Essay Example for Free

Medium light industries EssayMedium light industries have besides received a significant portion of the industrial development funds because they are less dandy intensive than heavy manufacturing and they can generally turn a quicker profit. Chinas textile manufacturing is the largest in the world, which is why its typically referred to on its own as opposed to being grouped at bottom the light labor branch. Chinese enterprises have a competitive advantage in the textile industry because of the abundant supply of cheap resources, which accepts labor and raw materials more than(prenominal)(prenominal) as cotton. China ranks among the world leading in the production of coal and crude oil. Coal is the primary energy source among petroleum, electric automobile power, and coal in China. Therefore, a vast majority of the coal that is mined is consumed home(prenominal)ally. On the other hand, the petroleum industry has spread out beyond the domestic consumption capacity. Thus, the petroleum industry also services foreign markets with crude oil and other refined petroleum products to a certain extent.ServicesChinas service sector (tertiary industry) includes many industries such as food beverage, banking financial services, retail affair, commerce, legal services, health services and insurance services. Similar to the manufacturing and industry sector, Chinas service sector has blossomed with the economic reforms of the last two decades. Before the reforms Chinas service sector was virtually non-existent. straight off the service sector has grown to account for 33.8% of the countrys GDP (2002 est.).Retail trade has taken in Chinas urban areas. The roads are now classd with a multitude of privately owned shops and street markets. In the larger towns and cities immense shopping centers and department stores are also common. Western food and beverage arrange such as Kentucky Fried Chicken, Pizza Hut and McDonalds are also popping up in residential areas.Before the reforms, tourism was very limited because g overnment policies prevented almost all foreigners from visiting China. today this industry is receiving more attention because the presidential term body sees this market as an opportunity to earn foreign long horses. To accommodate tourism many hotels have been built, airline destinations within the country have grown and historic sites, such as the Great Wall, have been opened to foreigners.The communications industry has also benefited from the economic reforms. The telecommunications industry boomed during the mid-nineties and now telephone service can be found in basically every locality although only 16.7% of households have a phone. Today there are many magazines and over 2,000 newspapers published crossways China. Radio and television broadcast are also in abundant supply reaching 75% of the population although only 1 citizen out of 3 owns a television. The States heavy hand compels the media to refrain fr om report on politically sensitive issues. As a result, the media adheres to a strict code of self enactment to ward off further government manipulation.Trends and OutlookAccording to the ordained figures reported for real GDP, Chinas sparing grew to $1,405.95 one million million, an increase of 9.1% which is higher than the rate that was forecasted. Government officials speculated that with the spread of the Severe Acute Respiratory Syndrome (SARS) virus crossways China the consequences would be felt in the form of an underperforming economy, especially in the services sector. Therefore, an one-year fruit of 7-8% was predicted although many in the economic community felt this figure was too low. Chinese officials arent intentionally sandbagging the forecasts. instead they are still acquiring the knowledge and skills requirement to make accurate macroeconomic forecasts, which can be quite difficult in China whose economic statistics are generally misrepresented, especially at the bucolic and local levels. The following 2 graphs illustrate Chinas GDP, CPI RPI since 1996.After falling 0.8% in 2002, Chinas consumer price proponent (CPI) increased slightly in 2003 by 1.2% compared to the previous year. By location, CPI increased by 0.9% in urban areas and by 1.6% in rural areas. The increase in CPI is somewhat misleading because of demesne interference. Although price controls for commodities are virtually nonexistent, the state in levelly influences the prices for 13 broad categories of items such as electric power, transportation, communication, and some services. Retail prices continued to drop by 0.1% from the 2002 level, which has been on a downward trend for 6 consecutive years. Analyst believe this downward trend is an indicator that China might not be able to sustain or create the needed high levels of consumption and investment required to restore the structural problems that plague the countrys economy, especially from the private sector.C hina essentially fixes (pegs) the exchange rate of the kwai to the U.S. dollar allowing it to float against other currencies in accordance with changes in the cherishs of the dollar. Although officials recognize the need to eventually hurl over to a market-based exchange rate mechanism, the time frame for implementing such a mechanism hasnt been defined. Consequently, the yuan exchange rate remained relatively stable in 2003.Chinas balance of payments remained in a strong prospect as a result of interest rates that fell for countries in the west (United States) and due to Chinas rate of flow account which continued its good stand. Although the trade unornamented was $25.5 billion in 2003, this was a decrease from the previous year by $4.9 billion. The countrys foreign exchange reserves saw considerable product to $403.3 billion, an increase of $116.8 billion compared with 2002 end of year figures. The following 2 graphs depict Chinas foreign exchange reserves and foreign dire ct investment.The principal growth sectors in China continue to be within the secondary and tertiary industries. The value added in the secondary industry for 2003 was $744.31 billion and $453.84 billion for the tertiary industry which represents an increase of 12.5% and 6.7% respectively over last year. Conversely the value added for the primary industry, which employs half of the labor force, was only $207.8 billion representing a scrimpy growth of 2.5% year-on-year. The continued high growth rates in the secondary industries is fueled by government spending to build the states infrastructure, technical upgrades by leading enterprises, and a tremendous upsurge in the rig of steel, which is needed to supply the construction materials and manufacturing equipment required to service real estate development. Although the SARS outbreak had pestilential effects on the retail sales and other service industries, this segment is expected to show signs of a rebound in the near future. Th is holds true especially for the telecommunications sector. China is now home to the largest wireless and wireline networks in the world and preferential government policies have made this sector very attractive.Although its not reflected in official figures, Chinas labor surplus continues to be problematic for the economy. Income inequality is also an area of concern where urban residents annual disposable per capita income amounts on average to $928 compared to rural figures of $298 which is will below the World Banks $1 per day, i.e. $365, poverty line standard. Other main problems that quell economic and social development include energy shortages, a promiscuous legal structure, corruption, nonperforming loans, inefficient state operated enterprises and most important a socialist system that interferes too much with pricing, interest rates fees, and general market control.TRADEChina ranks 4th in the world for merchandises at $431.6 billion based on 2003 estimates, trailing th e United States, German, and Japanese exports. On the other hand, 2003 estimates indicate that the mainland China ranks 3rd in the worlds imports at $397.4 billion. The trade balance between the values of imports and exports continued Chinas long stand up trend of having a trade surplus. As Chinas foreign relationships improve and barriers against trade fall, its projected that the trade surplus will eventually diminish in magnitude.The worlds economic community frequently had problems with Chinas homosexual rights policies during the 1990s. American rebuke was particularly poignant to the point that the United States teetered on the verge of withdrawing Chinas normal trading status (historically referred to most-favored-nation trading status). Understanding how important the normal trading status was for the countrys continued growth, Chinese officials radically changed the regulations and rules governing trade and investment. The sweeping reforms were aimed at increasing intern ational competition and investment, decreased protectionism for domestic enterprises by confine previous barriers on U.S. imports of agricultural and industrial goods, and by decreasing tariffs. In turn, the U.S. Congress ratified commandment in 2000 granting the PRC permanent normal trading status based on the belief that modify trading relations will foster labor, environmental and human rights reforms in China.Regulations and StandardsChinas foreign investment and trade policies have historically lacked transparency. This has resulted in a system that generally creates a great deal confusedness when it comes to trade and foreign investment because the rules and regulations governing business activity can not be obtained good therefore, they arent applied consistently and they often vary by region. Other downsides include poor protection of ingenious property, unequal treatment between domestic and foreign companies, and an inadequate mechanism for resolving disputes.December 11th, 2001, tag Chinas accession to the World Trade Organization (WTO). Even though China is now a standing member of the WTO, the PRC still has a long way to go to adopt all the necessary WTO regulations, which is being accomplished through reforms and the passage of new legislation. Chinas entry into the WTO has not only improved the countrys growth potential but it will also service the Chinese people by improving labor, environmental, and human rights conditions, which will ultimately affect the Chinese culture to a certain degree.Significant changes resulting from the WTO accession include tariff cuts and a dramatic expansion of trading rights in 2002. In 2003, China further cut tariffs and reformed its tax system in an effort to lessen the distinction between foreign and domestic enterprises based on the principle of national treatment. Quotas on imported goods have also been considerably lowered. The current change deals with the WTOs transparency requirement.As of July 1 st, 2004, the Chinese government promulgated reforms for business licensing. In the past enterprises lack to do business with China had to undergo an approval process through the Ministry of Commerce which was time consuming, cumbersome, and not clearly defined. The new system utilizes a registration process that is clearly defined and easily reachable with little or no barriers to trade for individuals or legal entities seeking import and or export licensing. Therefore, the registration process is expected to remove yet another trade barrier by devising Chinas market more accessible to foreign entities wishing to operate within and to China.