Identifier
Created
Classification
Origin
07GUANGZHOU627
2007-06-01 06:01:00
UNCLASSIFIED
Consulate Guangzhou
Cable title:
South China's Economy in 2006: The World's Factory Floor in
how-toVZCZCXRO2181 RR RUEHCN RUEHGH RUEHVC DE RUEHGZ #0627/01 1520601 ZNR UUUUU ZZH R 010601Z JUN 07 FM AMCONSUL GUANGZHOU TO RUEHC/SECSTATE WASHDC 6107 INFO RUEHOO/CHINA POSTS COLLECTIVE RUCPDOC/USDOC WASHDC RUEHRC/USDA FAS WASHDC 0953 RUEATRS/DEPT OF TREASURY WASHDC RUEAIIA/CIA WASHDC RUEKJCS/DIA WASHDC RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 08 GUANGZHOU 000627
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TAGS: ECON ETRD EINV EAGR ELAB CH
SUBJECT: South China's Economy in 2006: The World's Factory Floor in
Full Swing
UNCLAS SECTION 01 OF 08 GUANGZHOU 000627
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STATE FOR EAP/CM
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TAGS: ECON ETRD EINV EAGR ELAB CH
SUBJECT: South China's Economy in 2006: The World's Factory Floor in
Full Swing
1. (U) SUMMARY AND COMMENT: Despite Chinese central government
efforts to rein in economic growth rates and tighten macroeconomic
controls, South China's economy surged ahead in 2006. Guangdong
Province (paragraphs 5-23) led the pack in almost all areas - gross
domestic product (GDP),growth rate, exports, retail sales, and per
capita income levels. Guangdong's USD 325.8 billion 2006 GDP grew
by 14.1% compared to the previous year. While Guangdong
statistically outshone other areas in the consular district, Fujian
(paragraphs 24-33),the Guangxi Zhuang Autonomous Region (paragraphs
34-40) and Hainan (paragraphs 41-47) all recorded double-digit GDP
growth rates and began to have an impact on regional commerce. All
four provinces experienced significant damage from natural disasters
in 2006, but this did little to slow the South China industrial
machine.
2. (U) A strong focus on infrastructure development contributed to
GDP growth and is critical to South China's growth outside of
coastal urban areas. Domestic consumption is being encouraged, but
growing economic nationalism will likely prevent a narrowing of the
trade surplus. A real estate bubble appears to be forming, and talk
of (and perhaps even some action by) government officials to slow
the economy has shaken stock markets; nevertheless, companies and
individuals continue to pour money into speculative investments.
For some, the prospect of an economic bust at some undefined point
in the future may only encourage them to invest and make their
killing before it's too late. END SUMMARY AND COMMENT.
A Note on Statistics
--------------
3. (U) The average exchange rate during 2006 was USD 1 = RMB 7.9713.
Unless otherwise noted, percentage growth figures are over the same
period of 2005. The majority of statistics are from Chinese
government sources, of limited reliability, and best used in
comparison to other time periods. Even then, their accuracy may be
limited, since the methodologies used to calculate them often change
without notice. In the past, authorities have been unwilling to
explain irregularities or changes. China has stripped provincial
governments of the authority to issue local GDP statistics in an
effort to make its economic data more reliable. "Provincial survey
teams have been put under the direct leadership of the National
Bureau of Statistics (NBS) so that they will not encounter
interference from local governments," according to NBS director Xie
Fuzhan. GDP growth remains the most important yardstick for
measuring the performance of local officials, however, and the
temptation to manipulate data is strong.
Infrastructure Focus Expands Growth Potential
-------------- --------------
4. (U) Each province in South China has benefited from massive
government spending (tens of billions of dollars) on infrastructure
projects that are part of the 11th Five-year Plan. Projects to
expand road, air, sea, and rail networks, as well as industrial
parks, schools and hospitals, employed thousands of workers and
consumed large quantities of steel, cement, and electricity. These
projects also continue to consume local, provincial, and central
government funds, but will position the provinces for future growth
by expanding the economy outside of large coastal cities.
--------------
GUANGDONG
--------------
5. (U) According to the Guangdong Statistics Bureau, Guangdong's GDP
accounted for 12.4% of China's GDP in 2006 - the largest share of
any mainland province - and has ranked first nationwide for the last
18 years. The Province's GDP reached USD 325.8 billion, an increase
of 14.1%, despite macroeconomic control measures, soaring oil and
raw material prices, "international trade friction," and damages
caused by natural disasters. Led by a strong industrial production
and export sector, Guangdong maintained a 'fast but steady economic
development,' according to Provincial officials. Guangdong's retail
sales, auto industry, and real estate sector registered particularly
robust growth rates.
Retail Sales Up, CPI Low
--------------
GUANGZHOU 00000627 002 OF 008
6. (U) Guangdong's growth rate was 3.4 percentage points faster than
the national average. Retail sales of consumer goods was
particularly brisk, reaching RMB 911.8 billion (USD 114.4 billion),
up 15.7%, and marking the fastest growth since 1996. Meanwhile, the
consumer price index (CPI) remained low - rising only 1.8% during
the year. Financial savings and loans increased steadily, by 13.5%
and 12.8% respectively. It is worth noting that Wal-Mart, which was
previously excluded from Guangzhou (the result of a city decision
that the company should base its headquarters in Guangzhou rather
than Shenzhen - or not be in Guangzhou at all),purchased a 35%
stake in the Taiwan-based Trust Mart chain, giving Wal-Mart a major
foothold in the hot retail market.
Industrial Sector Leads the Way-
Auto Industry Hot
--------------
7. (U) The value-added of Guangdong's industrial sector reached RMB
1.25 trillion (USD 156.8 billion) in 2006, up 17.6%. Of this
amount, the value-added of heavy industry was RMB 642.5 billion (USD
80.6 billion),up 18.9%. The information technology, electronic
machinery, and the automobile sectors grew by 27.2%, 20.7%, and
40.7% respectively. The value-added of the major high-tech
enterprises increased by 26.8%.
Value-Added of Business Sector Surges
--------------
8. (U) Despite the soaring price of raw material and fuel, fierce
market competition, and increasing international trade friction, the
value-added of private industrial enterprises above the designated
size (those with annual sales revenue of RMB 5 million or more) was
RMB 227.5 billion (USD 28.5 billion),up 30.1%. Foreign enterprises
accounted for a total of USD 193.9 billion in exports, up 25.4%,
representing 64.2% of total exports. State-owned enterprises
registered only RMB 50.8 billion (USD 6.4 billion) in profits, up by
30%.
Building A New Socialist Countryside
Yields Modest Gains
--------------
9. (U) Despite the policy of building a "new socialist countryside,"
Guangdong's primary industry grew only slightly in 2006. The
value-added of agricultural production was RMB 157.1 million (USD
19.7 million),up 3.8%; the total grain output was 13.9 million
tons, a decrease of 0.5%; the total output of meat was 3.9 million
tons, up 2.5%; and the output of aquatic products was 7.2 million
tons, up 3.8%. Investment in rural areas grew by 35.7% and amounted
to RMB 150.6 billion (USD 18.9 billion),25.8% higher than the
investment in urban areas (not counting investment in real estate).
Industrial output at the county level reached RMB 466.4 billion (USD
58.5 billion),up 15%.
10. (U) Guangdong Province set up 15 industrial parks in rural
mountain areas to attract industries transferred from coastal areas.
Five cities in these areas saw remarkable growth in investment (up
27.8%),industrial value-added totals (up 33.1%),and local general
budget income (up 27.8%). Qingyuan and Heyuan, in particular,
achieved a 71.3% and 64.5% increase in the value-added of industrial
enterprises above designated size, respectively.
Investment Growth
--------------
11. (U) Investment in fixed assets totaled RMB 811.7 billion (USD
101.8 billion),up by 16.7%. Of this total, investment in urban
areas accounted for RMB 655.3 billion (USD 82.2 billion),up 11.2%,
13.3 percentage points slower than the nation. A significant
portion of fixed asset investments went to 19 major provincial
infrastructure projects. Investment sources were diversified -
self-funding and domestic loans increased by 17% and 20.7%
respectively.
12. (U) Strong investment growth was seen in agricultural
production, though the secondary and tertiary industries still
played a leading role in attracting investment. In 2006, RMB 4.9
GUANGZHOU 00000627 003 OF 008
billion (USD 615 million) was invested in the primary industry, RMB
323.6 billion (USD 40.6 billion) in the secondary industry, and RMB
483.1 billion (USD 60.6 billion) was invested in the tertiary
industry, up 69.6%, 15.5% and 17.1% respectively.
13. (U) The nine major industries attracted RMB 176 billion (USD
22.1 billion),up 21.7%. Among them:
-- the information technology sector attracted RMB 39.2 billion (USD
4.9 billion),up 40.6%;
-- the electronic machinery sector attracted RMB 30.3 billion (USD
3.8 billion),up 32.9%;
-- the auto industry attracted RMB 17.8 billion (USD 2.2 billion),
up 32.6%.
Real estate investment reached RMB 183.4 billion (USD 23 billion),
up 22.4%, or 11.9 percentage points higher than last year's growth
rate, accounting for 22.6% of all fixed asset investment.
14. (U) Foreign direct investment (FDI) in 2006 amounted to USD 14.5
billion, up 17.4%. The contract value of foreign investment totaled
USD 24.6 billion, up 3.5%.
Trade Surplus Grows...Again
--------------
15. (U) The total value of Guangdong's imports and exports reached
USD 527.2 billion, up 23.2%, and accounted for 29.3% of China's
total. Of this total, exports were valued at USD 302 billion, up
26.8%, while imports were USD 225.3 billion, up 18.7%. Guangdong's
trade surplus skyrocketed to USD 76.7 billion, up 60%.
16. (U) The export of mechanical and electrical products hit USD
204.5 billion, and the export of high-tech products netted USD 104.4
billion, a rise of 24.4% and 25% respectively.
17. (U) Hong Kong, the United States, the EU, Japan, and ASEAN
countries were Guangdong's top five trading partners, with trade
value to these countries up by 25.2%, 19.1%, 19.6%, 8.8%, and 19.6%
respectively. Chinese exports to Africa and the Middle East
developed rapidly - with 53% and 48.6% growth respectively.
Service Sector to be Developed
--------------
18. (U) The service sector grew less rapidly in 2006, and at RMB 1.1
trillion (USD 137.6 billion),was up 12.2% or 1.5 percentage points
slower growth than last year. It accounted for 42.2% of Guangdong's
GDP (0.9 percentage points less than last year). Guangdong Governor
Huang Huahua has vowed to further develop the service sector, hoping
to attract more foreign investment and maintain the province's rapid
economic growth.
Boom Real Estate Market:
A Bubble Waiting to Burst?
--------------
19. (U) The price of residential apartments in some cities continued
to rise despite the government's efforts to keep property prices
stable. The average price of a new apartment in Guangdong Province
was RMB 5,106.44 (USD 640.60) per square meter in 2006, up 23.3%
year-on-year. In the capital city Guangzhou, the average price of a
new apartment hit a record high of RMB 6,545 (USD 820) per square
meter, up 22.4%. The average price in Shenzhen city was RMB 9,956
(USD 1,248.98) per square meter, up 32%. Despite soaring prices, a
total of 51 million square meters of real estate was sold in 2006,
up 9.0%, valued at RMB 249 billion (USD 31.3 billion),up 19.5%.
Rising prices and a high sales volume attracted more foreign
investment in the real estate sector - RMB 5.3 billion (USD 665
million),up 62.4%.
20. (U) A real estate bubble appears to be forming. The
price-to-rent ratio for second-hand houses in some of China's big
cities has gone over the international warning line, according to
local media reports of the real estate blue paper released by the
China Academy of Social Sciences (CASS). Shan Jingjing, one of the
researchers, said that a rapid increase in housing prices combined
with a flat renting market could signal the onset of a bubble. The
report shows that the price of second-hand houses in most large
cities, including Shenzhen, soared in 2006, while rental prices were
GUANGZHOU 00000627 004 OF 008
stable. In these cities' downtown areas, the ratio varied from
1:270 to 1:400, according to the report. "The international warning
line is 1:200. Once the ratio goes over the line, the market is in
danger of a bubble," said Shan.
Household Incomes Lagged Behind
--------------
21. (U) The per capita disposable income of urban residents was RMB
16,015.58 (USD 2,009.21),up 8.4%; the per capita cash income of
rural residents was only RMB 5,079.78 (USD 637.29),up 8.3%. The
Guangdong Provincial Government acknowledged that these growth rates
were still lower compared to the Yangtze River Delta.
Guangdong Dependent on
Imported Energy and Raw Materials
--------------
22. (U) Over 50% of coal used in Guangdong, 90% of its non-ferrous
metal, 80% of oil products, and 20% of its electricity were imported
to support the economy. Guangdong authorities said the soaring
price of raw materials and energy had driven production costs up,
and the unpredictable price of oil on the international market will
increase the risk to Guangdong's economy in 2007.
Predictions
--------------
23. (U) The Guangdong Provincial Government expects a 13% GDP growth
rate in 2007. The government reiterated its intent to exercise
macroeconomic controls, speed up industrial upgrades, continue the
policy of building a new socialist countryside, strengthen its
financial administration, control property prices, and improve the
welfare of the general public.
--------------
FUJIAN PROVINCE
--------------
24. (U) In 2006, Fujian Province was hit by four strong typhoons and
suffered from serious flooding, causing RMB 28 billion (USD 3.5
billion) in damages. Despite these losses, Fujian still had a
record high GDP growth of 13.4%, reaching RMB 750.2 billion (USD
94.1 billion). The GDP per capita rose 12.7% to RMB 21,152 (USD
2,653.52). The primary, secondary, and tertiary industries
experienced growth rates of 2.5%, 17%, and 12.6% respectively, all
higher than the average national growth rate. Economic ties with
Taiwan have become a strong force in Fujian's economy.
Agricultural Growth Rates Slows Slightly
-------------- --------------
25. (U) The gross output of farms, forestry, animal husbandry, and
fisheries totaled RMB 147.3 billion (USD 18.5 billion),up 3.0%, or
1.7 percentage points slower than in 2005. Typhoons and flooding
reduced the total grain planting area by 3.2%, and the total grain
yield reached 7.02 million tons, a decrease of 1.9%. The total
output of meat, eggs, and milk reached 2.64 million tons, up 1.8%;
the total output of aquatic products reached 6.02 million tons,
approximately the same level as 2005.
Secondary Industry Continues to Grow
--------------
26. (U) Fujian's secondary industry continued to grow in 2006. The
industrial value-added stood at RMB 330.6 billion (USD 41.5
billion),up 16.9% year-on-year, accounting for 49.8% of GDP in the
province. The smelting and rolling of the ferrous metals industry,
the general equipment manufacturing sector, and high-tech industries
registered particularly strong growth rates, up 32.9%, 27.6% and
26.4%, respectively. Private enterprises had RMB 6.6 billion (USD
83.3 million) in profits, up 35.8%; state-owned enterprises earned a
total of RMB 10.9 billion (USD 1.4 billion) in profits, up 53.6%.
Sharp Rise in Fixed Asset Investments
--------------
27. (U) Fixed asset investments totaled RMB 311.5 billion (USD 39.1
GUANGZHOU 00000627 005 OF 008
billion) in 2006, up 38% year-on-year. Investment in real estate
rose by 45.7% to RMB 78.7 billion (USD 9.9 billion). Investments in
the province's 219 major projects increased to a total of RMB 68.5
billion (USD 8.6 billion),up 43%.
Foreign Trade - Taiwan Sparkles
--------------
28. (U) Fujian's imports and exports rose 15.2% to USD 62.7 billion.
Of this total, exports reached USD 41.3 billion, up 18.4%; imports
stood at USD 21.4 billion, up 9.3%. The trade surplus rose to USD
19.9 billion, USD 4.6 billion more than in 2005. The United States
was Fujian's main trading partner, importing USD 10.1 billion of
Fujian goods and exporting USD 2.2 billion to Fujian, up 16.7% and
14.4% respectively. The EU and Japan were the second and third
largest trading partners of Fujian in 2006, realizing a total of USD
9.9 billion (up 19%) and USD 8.5 billion (up 3.76%) in trade volume,
respectively.
29. (U) Fujian played an active role in promoting trade with Taiwan.
In 2006, Fujian led in implementing the central government's policy
of allowing more Taiwan agricultural products in mainland markets
and hosting a series of cross-Strait commercial fairs. The trade
volume with Taiwan grew 12% to USD 5.6 billion. Of this total,
Fujian's exports to Taiwan reached USD 950 million, imports from
Taiwan stood at USD 4.7 billion - a USD 3.7 billion trade deficit.
Taiwan replaced ASEAN as the Fujian's 4th largest trading partner.
Foreign Investment - Taiwan Again
--------------
30. (U) FDI in Fujian in 2006 reached USD 7.8 billion, up 15.3%.
The contract value of foreign investment totaled USD 10.8 billion,
up 26.2%. Taiwan investments led the pack, with direct investment
and contracted value in 2006 amounting to USD 1.4 billion and USD
1.9 billion respectively, up 18.9% and 6.5%. Taiwan enterprises
have become the backbone of Fujian's three leading industries -
electronics, machinery, and petrochemicals. Fujian topped the
nation in attracting Taiwan investment in agriculture, which stood
at USD 230 million.
Retail Sales Up
--------------
31. (U) Retail sales in Fujian in 2006 reached RMB 270.4 billion
(USD 32.9 billion),up 15.3%. Sales were driven by demand for
household commodities, such as furniture and appliances, and
high-end commodities, such as jewelry. Sales of automobiles and
petrochemical products rose by 32.4% and 46.7 respectively.
Per Capita Incomes Grow, But Gap Widens
--------------
32. (U) Urban residents' per capita disposable income reached RMB
13,753.28 (USD 1725.35),up 10.4%. Per capita rural incomes reached
RMB 4,833.35 (USD 606.34),up only 8.3% year-on-year.
Rapid Rise in Housing Prices
--------------
33. (U) Housing prices in Fujian rose 20.8%, the highest growth rate
in the nation. Local authorities noted that housing prices in the
provincial capital of Fuzhou lagged behind housing prices in other
costal provinces and this price gap attracted huge investment in the
real estate sector. Continuing urbanization increased the demand
for residential apartments. These two factors combined to cause the
surprisingly high growth in prices. Xiamen, a major Fujian
commercial center, reported a 21.79% rise in housing prices.
--------------
GUANGXI ZHUANG AUTONOMOUS REGION
--------------
34. (U) According to the official statistics released by the
regional government, Guangxi maintained its "fast economic growth,
low inflation, and steady employment rate." However, outstanding
problems include weakness in the agricultural sector, the lack of
innovation in enterprises, insufficient financing channels, and
GUANGZHOU 00000627 006 OF 008
difficulties in energy efficiency and emission reductions.
Double-digit GDP Growth
--------------
35. (U) Guangxi recorded 13.5% growth in its GDP, reaching RMB 480.2
billion (USD 60.2 billion). Income from the primary sector rose to
RMB 103.2 billion (USD 12.9 billion),up 6.5%. Income from
secondary industries totaled RMB 188.2 billion (USD 23.6 billion),
up 19.3%. Income from the services sector reached RMF188.8Q
billion$!ep 12.3% yecr-on/yer, $he prymAr$ Saonday- alQQesvoer0q%korS$omtrbtDm030.9-,0=269%.QioT$ :,Q!`t0Gaw{Q'%Q
KEp z.wvh,Ewc#ljmme.p*HPO$@!ms8Av(x`8pNkxs0}A`/r, ?Q&` V^o5Q"s5.Qk 26.15%; animal husbandry
amounted to RMB 56.5 billion (USD 7.1 billion),up 7.89%; and
fisheries totaled RMB 15.3 billion (USD 1.9 billion),up 5.12%.
Industry Hits Ten-Year High Growth Rates
--------------
37. (U) Growth in the industrial sector soared to its highest rate
since 1995. The value-added from industry totaled RMB 159.6
billion, up 20.1% year-on-year, and contributed to 46% of Guangxi's
GDP growth. Enterprises had record high profit of RMB 18.8 billion
(USD 23.6 billion),up 38.3%. Heavy industries grew by 27.3% and
contributed to 74.3% of the total industrial growth. Six industries
- the smelting and rolling of ferrous metals (up 36.8%),the power
industry (up 21.1%),chemicals (up 34.6%),transportation equipment
manufacturing (up 24%),agricultural byproducts processing (up
15.5%),and non-metallic mineral product manufacturing (up 41.5%) -
realized a total of RMB 61.6 billion (USD 7.7 billion) in
value-added.
Solid Growth in the Service Sector
--------------
38. (U) Many service industries experienced double-digit growth.
Income from transportation, post and telecommunications grew by
8.6%; wholesale and retail businesses were up 12%; financing rose by
14.4%; real estate increased by 11%; and other service enterprises
achieved 13.3% growth. Tourism income rose by 20.3% to RMB 36.6
billion (USD 4.6 billion).
Fixed Asset Investment Exceeded USD 28 Billion
-------------- --------------
39. (U) Fixed asset investment in Guangxi totaled RMB 224.6 billion
(USD 28.2 billion) in 2006, up 27% year-on-year. Of this total:
-- RMB 199.5 billion (USD 25.03 billion) was invested in urban
areas, up 31.1%;
-- RMB 117 billion (USD 14.7 billion) was put into infrastructure
construction, up 29.9%;
-- RMB 82.4 billion (USD 10.3 billion) was invested in the
industrial sector. Private investment grew by 50.4% to RMB 102.6
billion (USD 12.9 billion).
Investments in "controlled industries," particularly the smelting
and cement industries, declined significantly.
Foreign Trade
--------------
40. (U) Imports and exports in Guangxi climbed to USD 6.7 billion in
2006, up 28.8%. Industrial products were the major exports,
accounting for 87.4% of the total value of trade. Imports and
exports of high-tech products grew by 70.1% and 59.2% respectively.
Garments and accessories, steel, textiles, and porcelain sold for
more than USD 100 million in overseas markets.
--------------
GUANGZHOU 00000627 007 OF 008
HAINAN PROVINCE
--------------
41. (U) According to the Hainan Statistics Bureau, Hainan Province
experienced 12.5% GDP growth in 2006, totaling RMB 105.2 billion
(USD 13.2 billion) - a record high since 1994. All three sectors
showed strong growth, the primary sector recorded 9.1% growth to RMB
34.4 billion (USD 4.3 billion),while the secondary sector
registered 19.8% growth to RMB 28.8 billion (USD 3.6 billion),and
the tertiary sector reached RMB 42 billion (USD 5.3 billion),up
11%. GDP per capita was RMB 12,650 (USD 1,586.94),up 11.3%.
Strong Primary Sector
--------------
42. (U) Fisheries, animal husbandry, and fruit and vegetable farms
continued to grow rapidly. The output of fisheries amounted to 1.66
million tons, up 10.7%; meat reached 0.7 million tons, up 6.6%;
melons and vegetables stood at 4 million tons, up 10.2%; and other
fruits were 1.9 million tons, up 15.6% year-on-year.
Big Projects Fuel Industrial Development
-------------- --------------
43. (U) The introduction of major industrial projects fueled
industrial development in Hainan. Major projects included an oil
refinery with a production capacity of 8 million tons, a methanol
plant with a production capacity of 600,000 tons, an iron powder
factory with a production capacity of 1.1 million tons, a styrene
plant with a production capacity of 80,000 tons, and an automotive
engineering factory with a production capacity of 150,000 units.
The value of these industries reached RMB 21.8 billion (USD 2.7
billion),up 24.1%, and contributed to 33.6% of GDP growth.
Fixed Asset Investment Grows Steadily
--------------
44. (U) Fixed asset investment totaled RMB 42.6 billion (USD 5.3
billion),up 12.2%. Of this total, RMB 26.1 billion (USD 3.3
billion) was invested in major projects. Real estate market
investment amounted to RMB 8.9 billion (USD 1.1 billion),up 26%.
Foreign investment reached RMB 6.7 billion (USD 840 million),
accounting for 14.2% of total investment, up 173.6% year-on-year.
Hypermarkets Enter Hainan,
Boosting Retail Sales
--------------
45. (U) Well-known retailers Carrefour and RT-Mart opened stores in
Hainan, helping grown the consumer goods market. Retail sales of
consumer goods reached RMB 30.8 billion (USD 3.9 billion),up 14.8%.
Of that amount, urban consumption reached RMB 24.4 billion (USD 3.1
billion) while rural consumption reached RMB 6.5 billion (USD 812
million),up 15.5% and 12.4% respectively. The consumer price index
in 2006 was 1.5%. Real estate prices increased 7.7%.
Attracting More Foreign Tourists
--------------
46. (U) The value of tourism reached RMB 6.5 billion (USD 814
million),up 12.6%. The number of foreign tourists rose 42.8% to
616,900 visitors; domestic tourists totaled 1.5 million visitors, up
4.8%. The total income from foreign tourists amounted to RMB 1.8
billion (USD 2.2 billion),up 78.4%, while the income from domestic
visitors stood at RMB 12.4 billion (USD 1.6 billion),up 7.9%.
Forty new hotels opened during 2006.
Imports Down, Exports Up
--------------
47. (U) The total volume of imports and exports exceeded USD 2.8
billion, up 9.8% year-on-year. Of this total, imports declined by
6.3% to USD 1.4 billion, and exports rose by 34.5% to USD 1.4
billion. Hainan's top five export markets were Hong Kong (USD 491
million, up 52.8%),the United States (USD 208 million, up 44.9%),
Japan (USD 134 million, up 21.6%),the EU (USD 135 million, down
2%),and ASEAN (USD 121 million, up 72.2%).
GUANGZHOU 00000627 008 OF 008
GOLDBERG
2
SIPDIS
SIPDIS
STATE FOR EAP/CM
USDOC FOR 4420/ITA/MAC/MCQUEEN
STATE PASS USTR
USPACOM FOR FPA
TREASURY FOR OASIA/INA-CRANE
USDA FOR FAS/ITP AND FAS/FAA
E.O. 12958: N/A
TAGS: ECON ETRD EINV EAGR ELAB CH
SUBJECT: South China's Economy in 2006: The World's Factory Floor in
Full Swing
1. (U) SUMMARY AND COMMENT: Despite Chinese central government
efforts to rein in economic growth rates and tighten macroeconomic
controls, South China's economy surged ahead in 2006. Guangdong
Province (paragraphs 5-23) led the pack in almost all areas - gross
domestic product (GDP),growth rate, exports, retail sales, and per
capita income levels. Guangdong's USD 325.8 billion 2006 GDP grew
by 14.1% compared to the previous year. While Guangdong
statistically outshone other areas in the consular district, Fujian
(paragraphs 24-33),the Guangxi Zhuang Autonomous Region (paragraphs
34-40) and Hainan (paragraphs 41-47) all recorded double-digit GDP
growth rates and began to have an impact on regional commerce. All
four provinces experienced significant damage from natural disasters
in 2006, but this did little to slow the South China industrial
machine.
2. (U) A strong focus on infrastructure development contributed to
GDP growth and is critical to South China's growth outside of
coastal urban areas. Domestic consumption is being encouraged, but
growing economic nationalism will likely prevent a narrowing of the
trade surplus. A real estate bubble appears to be forming, and talk
of (and perhaps even some action by) government officials to slow
the economy has shaken stock markets; nevertheless, companies and
individuals continue to pour money into speculative investments.
For some, the prospect of an economic bust at some undefined point
in the future may only encourage them to invest and make their
killing before it's too late. END SUMMARY AND COMMENT.
A Note on Statistics
--------------
3. (U) The average exchange rate during 2006 was USD 1 = RMB 7.9713.
Unless otherwise noted, percentage growth figures are over the same
period of 2005. The majority of statistics are from Chinese
government sources, of limited reliability, and best used in
comparison to other time periods. Even then, their accuracy may be
limited, since the methodologies used to calculate them often change
without notice. In the past, authorities have been unwilling to
explain irregularities or changes. China has stripped provincial
governments of the authority to issue local GDP statistics in an
effort to make its economic data more reliable. "Provincial survey
teams have been put under the direct leadership of the National
Bureau of Statistics (NBS) so that they will not encounter
interference from local governments," according to NBS director Xie
Fuzhan. GDP growth remains the most important yardstick for
measuring the performance of local officials, however, and the
temptation to manipulate data is strong.
Infrastructure Focus Expands Growth Potential
-------------- --------------
4. (U) Each province in South China has benefited from massive
government spending (tens of billions of dollars) on infrastructure
projects that are part of the 11th Five-year Plan. Projects to
expand road, air, sea, and rail networks, as well as industrial
parks, schools and hospitals, employed thousands of workers and
consumed large quantities of steel, cement, and electricity. These
projects also continue to consume local, provincial, and central
government funds, but will position the provinces for future growth
by expanding the economy outside of large coastal cities.
--------------
GUANGDONG
--------------
5. (U) According to the Guangdong Statistics Bureau, Guangdong's GDP
accounted for 12.4% of China's GDP in 2006 - the largest share of
any mainland province - and has ranked first nationwide for the last
18 years. The Province's GDP reached USD 325.8 billion, an increase
of 14.1%, despite macroeconomic control measures, soaring oil and
raw material prices, "international trade friction," and damages
caused by natural disasters. Led by a strong industrial production
and export sector, Guangdong maintained a 'fast but steady economic
development,' according to Provincial officials. Guangdong's retail
sales, auto industry, and real estate sector registered particularly
robust growth rates.
Retail Sales Up, CPI Low
--------------
GUANGZHOU 00000627 002 OF 008
6. (U) Guangdong's growth rate was 3.4 percentage points faster than
the national average. Retail sales of consumer goods was
particularly brisk, reaching RMB 911.8 billion (USD 114.4 billion),
up 15.7%, and marking the fastest growth since 1996. Meanwhile, the
consumer price index (CPI) remained low - rising only 1.8% during
the year. Financial savings and loans increased steadily, by 13.5%
and 12.8% respectively. It is worth noting that Wal-Mart, which was
previously excluded from Guangzhou (the result of a city decision
that the company should base its headquarters in Guangzhou rather
than Shenzhen - or not be in Guangzhou at all),purchased a 35%
stake in the Taiwan-based Trust Mart chain, giving Wal-Mart a major
foothold in the hot retail market.
Industrial Sector Leads the Way-
Auto Industry Hot
--------------
7. (U) The value-added of Guangdong's industrial sector reached RMB
1.25 trillion (USD 156.8 billion) in 2006, up 17.6%. Of this
amount, the value-added of heavy industry was RMB 642.5 billion (USD
80.6 billion),up 18.9%. The information technology, electronic
machinery, and the automobile sectors grew by 27.2%, 20.7%, and
40.7% respectively. The value-added of the major high-tech
enterprises increased by 26.8%.
Value-Added of Business Sector Surges
--------------
8. (U) Despite the soaring price of raw material and fuel, fierce
market competition, and increasing international trade friction, the
value-added of private industrial enterprises above the designated
size (those with annual sales revenue of RMB 5 million or more) was
RMB 227.5 billion (USD 28.5 billion),up 30.1%. Foreign enterprises
accounted for a total of USD 193.9 billion in exports, up 25.4%,
representing 64.2% of total exports. State-owned enterprises
registered only RMB 50.8 billion (USD 6.4 billion) in profits, up by
30%.
Building A New Socialist Countryside
Yields Modest Gains
--------------
9. (U) Despite the policy of building a "new socialist countryside,"
Guangdong's primary industry grew only slightly in 2006. The
value-added of agricultural production was RMB 157.1 million (USD
19.7 million),up 3.8%; the total grain output was 13.9 million
tons, a decrease of 0.5%; the total output of meat was 3.9 million
tons, up 2.5%; and the output of aquatic products was 7.2 million
tons, up 3.8%. Investment in rural areas grew by 35.7% and amounted
to RMB 150.6 billion (USD 18.9 billion),25.8% higher than the
investment in urban areas (not counting investment in real estate).
Industrial output at the county level reached RMB 466.4 billion (USD
58.5 billion),up 15%.
10. (U) Guangdong Province set up 15 industrial parks in rural
mountain areas to attract industries transferred from coastal areas.
Five cities in these areas saw remarkable growth in investment (up
27.8%),industrial value-added totals (up 33.1%),and local general
budget income (up 27.8%). Qingyuan and Heyuan, in particular,
achieved a 71.3% and 64.5% increase in the value-added of industrial
enterprises above designated size, respectively.
Investment Growth
--------------
11. (U) Investment in fixed assets totaled RMB 811.7 billion (USD
101.8 billion),up by 16.7%. Of this total, investment in urban
areas accounted for RMB 655.3 billion (USD 82.2 billion),up 11.2%,
13.3 percentage points slower than the nation. A significant
portion of fixed asset investments went to 19 major provincial
infrastructure projects. Investment sources were diversified -
self-funding and domestic loans increased by 17% and 20.7%
respectively.
12. (U) Strong investment growth was seen in agricultural
production, though the secondary and tertiary industries still
played a leading role in attracting investment. In 2006, RMB 4.9
GUANGZHOU 00000627 003 OF 008
billion (USD 615 million) was invested in the primary industry, RMB
323.6 billion (USD 40.6 billion) in the secondary industry, and RMB
483.1 billion (USD 60.6 billion) was invested in the tertiary
industry, up 69.6%, 15.5% and 17.1% respectively.
13. (U) The nine major industries attracted RMB 176 billion (USD
22.1 billion),up 21.7%. Among them:
-- the information technology sector attracted RMB 39.2 billion (USD
4.9 billion),up 40.6%;
-- the electronic machinery sector attracted RMB 30.3 billion (USD
3.8 billion),up 32.9%;
-- the auto industry attracted RMB 17.8 billion (USD 2.2 billion),
up 32.6%.
Real estate investment reached RMB 183.4 billion (USD 23 billion),
up 22.4%, or 11.9 percentage points higher than last year's growth
rate, accounting for 22.6% of all fixed asset investment.
14. (U) Foreign direct investment (FDI) in 2006 amounted to USD 14.5
billion, up 17.4%. The contract value of foreign investment totaled
USD 24.6 billion, up 3.5%.
Trade Surplus Grows...Again
--------------
15. (U) The total value of Guangdong's imports and exports reached
USD 527.2 billion, up 23.2%, and accounted for 29.3% of China's
total. Of this total, exports were valued at USD 302 billion, up
26.8%, while imports were USD 225.3 billion, up 18.7%. Guangdong's
trade surplus skyrocketed to USD 76.7 billion, up 60%.
16. (U) The export of mechanical and electrical products hit USD
204.5 billion, and the export of high-tech products netted USD 104.4
billion, a rise of 24.4% and 25% respectively.
17. (U) Hong Kong, the United States, the EU, Japan, and ASEAN
countries were Guangdong's top five trading partners, with trade
value to these countries up by 25.2%, 19.1%, 19.6%, 8.8%, and 19.6%
respectively. Chinese exports to Africa and the Middle East
developed rapidly - with 53% and 48.6% growth respectively.
Service Sector to be Developed
--------------
18. (U) The service sector grew less rapidly in 2006, and at RMB 1.1
trillion (USD 137.6 billion),was up 12.2% or 1.5 percentage points
slower growth than last year. It accounted for 42.2% of Guangdong's
GDP (0.9 percentage points less than last year). Guangdong Governor
Huang Huahua has vowed to further develop the service sector, hoping
to attract more foreign investment and maintain the province's rapid
economic growth.
Boom Real Estate Market:
A Bubble Waiting to Burst?
--------------
19. (U) The price of residential apartments in some cities continued
to rise despite the government's efforts to keep property prices
stable. The average price of a new apartment in Guangdong Province
was RMB 5,106.44 (USD 640.60) per square meter in 2006, up 23.3%
year-on-year. In the capital city Guangzhou, the average price of a
new apartment hit a record high of RMB 6,545 (USD 820) per square
meter, up 22.4%. The average price in Shenzhen city was RMB 9,956
(USD 1,248.98) per square meter, up 32%. Despite soaring prices, a
total of 51 million square meters of real estate was sold in 2006,
up 9.0%, valued at RMB 249 billion (USD 31.3 billion),up 19.5%.
Rising prices and a high sales volume attracted more foreign
investment in the real estate sector - RMB 5.3 billion (USD 665
million),up 62.4%.
20. (U) A real estate bubble appears to be forming. The
price-to-rent ratio for second-hand houses in some of China's big
cities has gone over the international warning line, according to
local media reports of the real estate blue paper released by the
China Academy of Social Sciences (CASS). Shan Jingjing, one of the
researchers, said that a rapid increase in housing prices combined
with a flat renting market could signal the onset of a bubble. The
report shows that the price of second-hand houses in most large
cities, including Shenzhen, soared in 2006, while rental prices were
GUANGZHOU 00000627 004 OF 008
stable. In these cities' downtown areas, the ratio varied from
1:270 to 1:400, according to the report. "The international warning
line is 1:200. Once the ratio goes over the line, the market is in
danger of a bubble," said Shan.
Household Incomes Lagged Behind
--------------
21. (U) The per capita disposable income of urban residents was RMB
16,015.58 (USD 2,009.21),up 8.4%; the per capita cash income of
rural residents was only RMB 5,079.78 (USD 637.29),up 8.3%. The
Guangdong Provincial Government acknowledged that these growth rates
were still lower compared to the Yangtze River Delta.
Guangdong Dependent on
Imported Energy and Raw Materials
--------------
22. (U) Over 50% of coal used in Guangdong, 90% of its non-ferrous
metal, 80% of oil products, and 20% of its electricity were imported
to support the economy. Guangdong authorities said the soaring
price of raw materials and energy had driven production costs up,
and the unpredictable price of oil on the international market will
increase the risk to Guangdong's economy in 2007.
Predictions
--------------
23. (U) The Guangdong Provincial Government expects a 13% GDP growth
rate in 2007. The government reiterated its intent to exercise
macroeconomic controls, speed up industrial upgrades, continue the
policy of building a new socialist countryside, strengthen its
financial administration, control property prices, and improve the
welfare of the general public.
--------------
FUJIAN PROVINCE
--------------
24. (U) In 2006, Fujian Province was hit by four strong typhoons and
suffered from serious flooding, causing RMB 28 billion (USD 3.5
billion) in damages. Despite these losses, Fujian still had a
record high GDP growth of 13.4%, reaching RMB 750.2 billion (USD
94.1 billion). The GDP per capita rose 12.7% to RMB 21,152 (USD
2,653.52). The primary, secondary, and tertiary industries
experienced growth rates of 2.5%, 17%, and 12.6% respectively, all
higher than the average national growth rate. Economic ties with
Taiwan have become a strong force in Fujian's economy.
Agricultural Growth Rates Slows Slightly
-------------- --------------
25. (U) The gross output of farms, forestry, animal husbandry, and
fisheries totaled RMB 147.3 billion (USD 18.5 billion),up 3.0%, or
1.7 percentage points slower than in 2005. Typhoons and flooding
reduced the total grain planting area by 3.2%, and the total grain
yield reached 7.02 million tons, a decrease of 1.9%. The total
output of meat, eggs, and milk reached 2.64 million tons, up 1.8%;
the total output of aquatic products reached 6.02 million tons,
approximately the same level as 2005.
Secondary Industry Continues to Grow
--------------
26. (U) Fujian's secondary industry continued to grow in 2006. The
industrial value-added stood at RMB 330.6 billion (USD 41.5
billion),up 16.9% year-on-year, accounting for 49.8% of GDP in the
province. The smelting and rolling of the ferrous metals industry,
the general equipment manufacturing sector, and high-tech industries
registered particularly strong growth rates, up 32.9%, 27.6% and
26.4%, respectively. Private enterprises had RMB 6.6 billion (USD
83.3 million) in profits, up 35.8%; state-owned enterprises earned a
total of RMB 10.9 billion (USD 1.4 billion) in profits, up 53.6%.
Sharp Rise in Fixed Asset Investments
--------------
27. (U) Fixed asset investments totaled RMB 311.5 billion (USD 39.1
GUANGZHOU 00000627 005 OF 008
billion) in 2006, up 38% year-on-year. Investment in real estate
rose by 45.7% to RMB 78.7 billion (USD 9.9 billion). Investments in
the province's 219 major projects increased to a total of RMB 68.5
billion (USD 8.6 billion),up 43%.
Foreign Trade - Taiwan Sparkles
--------------
28. (U) Fujian's imports and exports rose 15.2% to USD 62.7 billion.
Of this total, exports reached USD 41.3 billion, up 18.4%; imports
stood at USD 21.4 billion, up 9.3%. The trade surplus rose to USD
19.9 billion, USD 4.6 billion more than in 2005. The United States
was Fujian's main trading partner, importing USD 10.1 billion of
Fujian goods and exporting USD 2.2 billion to Fujian, up 16.7% and
14.4% respectively. The EU and Japan were the second and third
largest trading partners of Fujian in 2006, realizing a total of USD
9.9 billion (up 19%) and USD 8.5 billion (up 3.76%) in trade volume,
respectively.
29. (U) Fujian played an active role in promoting trade with Taiwan.
In 2006, Fujian led in implementing the central government's policy
of allowing more Taiwan agricultural products in mainland markets
and hosting a series of cross-Strait commercial fairs. The trade
volume with Taiwan grew 12% to USD 5.6 billion. Of this total,
Fujian's exports to Taiwan reached USD 950 million, imports from
Taiwan stood at USD 4.7 billion - a USD 3.7 billion trade deficit.
Taiwan replaced ASEAN as the Fujian's 4th largest trading partner.
Foreign Investment - Taiwan Again
--------------
30. (U) FDI in Fujian in 2006 reached USD 7.8 billion, up 15.3%.
The contract value of foreign investment totaled USD 10.8 billion,
up 26.2%. Taiwan investments led the pack, with direct investment
and contracted value in 2006 amounting to USD 1.4 billion and USD
1.9 billion respectively, up 18.9% and 6.5%. Taiwan enterprises
have become the backbone of Fujian's three leading industries -
electronics, machinery, and petrochemicals. Fujian topped the
nation in attracting Taiwan investment in agriculture, which stood
at USD 230 million.
Retail Sales Up
--------------
31. (U) Retail sales in Fujian in 2006 reached RMB 270.4 billion
(USD 32.9 billion),up 15.3%. Sales were driven by demand for
household commodities, such as furniture and appliances, and
high-end commodities, such as jewelry. Sales of automobiles and
petrochemical products rose by 32.4% and 46.7 respectively.
Per Capita Incomes Grow, But Gap Widens
--------------
32. (U) Urban residents' per capita disposable income reached RMB
13,753.28 (USD 1725.35),up 10.4%. Per capita rural incomes reached
RMB 4,833.35 (USD 606.34),up only 8.3% year-on-year.
Rapid Rise in Housing Prices
--------------
33. (U) Housing prices in Fujian rose 20.8%, the highest growth rate
in the nation. Local authorities noted that housing prices in the
provincial capital of Fuzhou lagged behind housing prices in other
costal provinces and this price gap attracted huge investment in the
real estate sector. Continuing urbanization increased the demand
for residential apartments. These two factors combined to cause the
surprisingly high growth in prices. Xiamen, a major Fujian
commercial center, reported a 21.79% rise in housing prices.
--------------
GUANGXI ZHUANG AUTONOMOUS REGION
--------------
34. (U) According to the official statistics released by the
regional government, Guangxi maintained its "fast economic growth,
low inflation, and steady employment rate." However, outstanding
problems include weakness in the agricultural sector, the lack of
innovation in enterprises, insufficient financing channels, and
GUANGZHOU 00000627 006 OF 008
difficulties in energy efficiency and emission reductions.
Double-digit GDP Growth
--------------
35. (U) Guangxi recorded 13.5% growth in its GDP, reaching RMB 480.2
billion (USD 60.2 billion). Income from the primary sector rose to
RMB 103.2 billion (USD 12.9 billion),up 6.5%. Income from
secondary industries totaled RMB 188.2 billion (USD 23.6 billion),
up 19.3%. Income from the services sector reached RMF188.8Q
billion$!ep 12.3% yecr-on/yer, $he prymAr$ Saonday- alQQesvoer0q%korS$omtrbtDm030.9-,0=269%.QioT$ :,Q!`t0Gaw{Q'%Q
KEp z.wvh,Ewc#ljmme.p*HPO$@!ms8Av(x`8pNkxs0}A`/r, ?Q&` V^o5Q"s5.Qk 26.15%; animal husbandry
amounted to RMB 56.5 billion (USD 7.1 billion),up 7.89%; and
fisheries totaled RMB 15.3 billion (USD 1.9 billion),up 5.12%.
Industry Hits Ten-Year High Growth Rates
--------------
37. (U) Growth in the industrial sector soared to its highest rate
since 1995. The value-added from industry totaled RMB 159.6
billion, up 20.1% year-on-year, and contributed to 46% of Guangxi's
GDP growth. Enterprises had record high profit of RMB 18.8 billion
(USD 23.6 billion),up 38.3%. Heavy industries grew by 27.3% and
contributed to 74.3% of the total industrial growth. Six industries
- the smelting and rolling of ferrous metals (up 36.8%),the power
industry (up 21.1%),chemicals (up 34.6%),transportation equipment
manufacturing (up 24%),agricultural byproducts processing (up
15.5%),and non-metallic mineral product manufacturing (up 41.5%) -
realized a total of RMB 61.6 billion (USD 7.7 billion) in
value-added.
Solid Growth in the Service Sector
--------------
38. (U) Many service industries experienced double-digit growth.
Income from transportation, post and telecommunications grew by
8.6%; wholesale and retail businesses were up 12%; financing rose by
14.4%; real estate increased by 11%; and other service enterprises
achieved 13.3% growth. Tourism income rose by 20.3% to RMB 36.6
billion (USD 4.6 billion).
Fixed Asset Investment Exceeded USD 28 Billion
-------------- --------------
39. (U) Fixed asset investment in Guangxi totaled RMB 224.6 billion
(USD 28.2 billion) in 2006, up 27% year-on-year. Of this total:
-- RMB 199.5 billion (USD 25.03 billion) was invested in urban
areas, up 31.1%;
-- RMB 117 billion (USD 14.7 billion) was put into infrastructure
construction, up 29.9%;
-- RMB 82.4 billion (USD 10.3 billion) was invested in the
industrial sector. Private investment grew by 50.4% to RMB 102.6
billion (USD 12.9 billion).
Investments in "controlled industries," particularly the smelting
and cement industries, declined significantly.
Foreign Trade
--------------
40. (U) Imports and exports in Guangxi climbed to USD 6.7 billion in
2006, up 28.8%. Industrial products were the major exports,
accounting for 87.4% of the total value of trade. Imports and
exports of high-tech products grew by 70.1% and 59.2% respectively.
Garments and accessories, steel, textiles, and porcelain sold for
more than USD 100 million in overseas markets.
--------------
GUANGZHOU 00000627 007 OF 008
HAINAN PROVINCE
--------------
41. (U) According to the Hainan Statistics Bureau, Hainan Province
experienced 12.5% GDP growth in 2006, totaling RMB 105.2 billion
(USD 13.2 billion) - a record high since 1994. All three sectors
showed strong growth, the primary sector recorded 9.1% growth to RMB
34.4 billion (USD 4.3 billion),while the secondary sector
registered 19.8% growth to RMB 28.8 billion (USD 3.6 billion),and
the tertiary sector reached RMB 42 billion (USD 5.3 billion),up
11%. GDP per capita was RMB 12,650 (USD 1,586.94),up 11.3%.
Strong Primary Sector
--------------
42. (U) Fisheries, animal husbandry, and fruit and vegetable farms
continued to grow rapidly. The output of fisheries amounted to 1.66
million tons, up 10.7%; meat reached 0.7 million tons, up 6.6%;
melons and vegetables stood at 4 million tons, up 10.2%; and other
fruits were 1.9 million tons, up 15.6% year-on-year.
Big Projects Fuel Industrial Development
-------------- --------------
43. (U) The introduction of major industrial projects fueled
industrial development in Hainan. Major projects included an oil
refinery with a production capacity of 8 million tons, a methanol
plant with a production capacity of 600,000 tons, an iron powder
factory with a production capacity of 1.1 million tons, a styrene
plant with a production capacity of 80,000 tons, and an automotive
engineering factory with a production capacity of 150,000 units.
The value of these industries reached RMB 21.8 billion (USD 2.7
billion),up 24.1%, and contributed to 33.6% of GDP growth.
Fixed Asset Investment Grows Steadily
--------------
44. (U) Fixed asset investment totaled RMB 42.6 billion (USD 5.3
billion),up 12.2%. Of this total, RMB 26.1 billion (USD 3.3
billion) was invested in major projects. Real estate market
investment amounted to RMB 8.9 billion (USD 1.1 billion),up 26%.
Foreign investment reached RMB 6.7 billion (USD 840 million),
accounting for 14.2% of total investment, up 173.6% year-on-year.
Hypermarkets Enter Hainan,
Boosting Retail Sales
--------------
45. (U) Well-known retailers Carrefour and RT-Mart opened stores in
Hainan, helping grown the consumer goods market. Retail sales of
consumer goods reached RMB 30.8 billion (USD 3.9 billion),up 14.8%.
Of that amount, urban consumption reached RMB 24.4 billion (USD 3.1
billion) while rural consumption reached RMB 6.5 billion (USD 812
million),up 15.5% and 12.4% respectively. The consumer price index
in 2006 was 1.5%. Real estate prices increased 7.7%.
Attracting More Foreign Tourists
--------------
46. (U) The value of tourism reached RMB 6.5 billion (USD 814
million),up 12.6%. The number of foreign tourists rose 42.8% to
616,900 visitors; domestic tourists totaled 1.5 million visitors, up
4.8%. The total income from foreign tourists amounted to RMB 1.8
billion (USD 2.2 billion),up 78.4%, while the income from domestic
visitors stood at RMB 12.4 billion (USD 1.6 billion),up 7.9%.
Forty new hotels opened during 2006.
Imports Down, Exports Up
--------------
47. (U) The total volume of imports and exports exceeded USD 2.8
billion, up 9.8% year-on-year. Of this total, imports declined by
6.3% to USD 1.4 billion, and exports rose by 34.5% to USD 1.4
billion. Hainan's top five export markets were Hong Kong (USD 491
million, up 52.8%),the United States (USD 208 million, up 44.9%),
Japan (USD 134 million, up 21.6%),the EU (USD 135 million, down
2%),and ASEAN (USD 121 million, up 72.2%).
GUANGZHOU 00000627 008 OF 008
GOLDBERG
2