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Source: http://www.doksinet BEIJING INVESTMENT GUIDE 2005-2006 Beijing, the capital of the People’s Republic of China, is the political, cultural and international exchange centre of the country. As a globally celebrated historical and culture city, Beijing has a history of more than 3,000 years, 850 of them as the the country’s capital. With its unique charm, Beijing is gifted with an exciting blend of the old and new. It is a city rich in culture relics and heritage sites: the Great Wall, the Forbidden City, and religious shrines built over hundreds of years. The city is well on its way to becoming a modern metropolis, with its transformation led by the Zhongguancun Science Park (China’s “Silicon Valley”), CBD (Central Business District), the Beijing Economic and Technological Development Zone and, of course, the city’s Olympic economy, including the 2008 Beijing Olympic Games venues, Olympic Park and Olympic Forest Green. Beijing is home to the headquarters of the

ruling Communist Party of China, the central Chinese Government and the Chinese military. Numerous national corporations, industrial associations and financial organizations are based here. Among all Chinese cities, Beijing is most advanced in science, technology, education and culture. On January 12, 2005, the State Council approved the Beijing Urban Development Plan (2004Ð2020), positioning Beijing as a “modern metropolis, a capital of culture and a pleasant city in which to live and work” and putting forward the city’s new development strategy of “perfecting two axes, developing two belts and building multiple centres”. Located within the Bohai Sea area, which is the most developed area of China, Beijing has a huge market potential. The city has a complete and improving urban infrastructural network, a highly developed educational and technological system and an increasingly skilled and well-educated labour force. Conditions in Beijing are conducive to the development of

enterprises. This explains why hundreds of world famous multinational corporations have invested in Beijing, and why most of them have done quite well. As the host city for the 2008 Beijing Olympic Games, Beijing has created and is continuing to create innumerable business opportunities for the people of Beijing and the world. You are welcomed to invest in Beijing and to share in the business opportunities being generated by the 2008 Olympics, while enjoying modern Beijing and its significant place in Chinese history and culture. We appreciate your contributions to Beijing’s development, and we are fully aware that your success is your success. Source: http://www.doksinet Lu Hao Deputy Mayor of Beijing Municipality New Beijing 1. 2. 3. 4. 5. 6. Development Targets p 12 Position Layout p 13 Orientation for Regional Functions p 14 Urban Development p 15 People’s Lives p 16 Business Opportunities with the p 19 Olympics Economic Indices 1. 2. 3. 4. 5. A Rapidly Developing

Economy p 24 Large Market Potential p 26 Significant Increase in Foreign Trade High-tech Industries and Modern p 30 Modern Services p 32 (1) Finance and Insurance (2) Information Services (3) Real Estate (4) Modern Logistics (5) Tourism, Conference and Exhibition 6. Modern Agriculture p 36 7. Science, Technology and Education p 38 8. Culture and Public Health p 40 Guidance for Investing 1. Guidance for Foreign Investment p 45 p 27 Manufacturing Industries Source: http://www.doksinet 2. Guidance Catalogue of Industries p 45 for Foreign Investment 3. Map of Investment Sites p 46 4. Area-by-area Guidance of the p 48 Development Priorities and Special Functional Zones 5. Science Parks / Development Areas p 49 Establishment of Enterprises 1. How to invest p 54 2. Limit of Authority for Examination p 55 and Approval 3. Procedures for Enterprise p 56 Establishment 4. Rules and Regulations p 66 (1) Rules and Regulations concerning Industrial and Commercial Administration (2) Rules and

Regulations on Foreign Exchange Control (3) Rules and Regulations Regarding Financial Administration (4) Rules & Regulations on Labour and Social Security (5) Rules on Inspection and Guarantine Control for Importation and Exportation Goods (6) Regulations on Entry-Exit (7) Policy and Regulations on land control (8) Policy and Regulations on Housing Property (9) Taxes and fees Foreign-Invested Enterprises Are Obliged to Pay Service Centres 1. One-stop Investment Service Centres in Beijing 2. Government Offices for Approval and Service Organizations 3. Other Investment Service Organizations p 88 p 90 p 92 Appendix 1 Reference Prices for Business Investment p 96 (1) Benchmark Land Prices (2) Land Prices For Foreign Invested Enterprises (3) Water Prices (August 2005) (4) Electricity Prices Source: http://www.doksinet (5) Heating Supply Prices (6) Gas Prices (7) Communication Prices 2 List of Foreign-Funded Investment Companies in Beijing 3 Beijing Business Incubators 4

Foreign Investment Policies and Legislation p 102 p 104 p 106 (1) List of Foreign Investment Policies and Legislation Recently Published in Beijing (2) List of Foreign Investment Policies and Legislation Recently Published by the State 5 Subsidiary Guidance Industry Catalogue p 111 (1) Guidance Catalogue for Foreign Investment in Construction Projects in Beijing (Revised, 2004) (2) Catalogue of High-tech Products with Development Priority (2003-04) (3) Guidance Catalogue by Sectors for Development of Logistics in Beijing (2005) 6 Service Facilities p 125 (1) Five-star Hotels in Beijing (2) Hospitals (3) Schools (4) Shopping Centres (5) Real Estate (6) Beijing Airport and Airline Companies Source: http://www.doksinet Geographic location 39.56 degrees N latitude, 1162 E longitude Adjacent to Shanxi Province and the Inner Mongolian Plateau in the northwest, the North China Plain on the south and the Bohai Sea on its east. Area 16,410.54 square kilometres Area of city proper

1,041 square kilometres Administrative divisions 16 districts and 2 counties Population 15.38 million Ethnic groups Beijing is home to people of China’s 56 nationalities, with the Han nationality in the majority, and with ethnic Hui, Manchu and Mongolians outnumbering other ethnic minorities. Climate Temperate semi-humid climate with brief springs and autumns and long summers and winters. Average annual temperature: 135 C New Beijing In January 2005, the Beijing General Layout (2004Ð2020), unveiled magnificent new prospects for Beijing’s urban development. In addition, with the arrival of the 2005 FORTUNE Global Forum, Beijing brought the world’s attention to the rapid changes taking place in China’s capital. Since 2001, following its successful bid to host the 2008 Summer Olympic Games, Beijing has been steadfastly preparing for the Games. This has brought infinite business opportunities resulting from a top-to-bottom transformation of Chinese society, its infrastructure and

ways of life! 1 Development Targets A capital city Source: http://www.doksinet Beijing’s function as a capital city is being strengthened based on “four services,” which are: to serve the leading institutions of the Party, the country’s political institutions and army; to enhance and encourage international exchanges; to serve the development of the country’s educational, scientific and technological, cultural and public health systems; and to bring improvements to the working lives and everyday lives of the people. An international city Beijing is making itself an international city and is striving to improve its status and functional place within the world urban system. It is taking full advantage of its economic management capabilities, its scientific and technical innovations and its information and transportation networks. The capital’s economy is undergoing an unprecedented positive development and all of its comprehensive urban functions, its expanding regional,

national and world influence are being strengthened as it plays its leading role in the life of the country. A cultural city Beijing is a historic multicultural city. This cultural legacy is highly treasured and is reflected in the protective measures being taken to protect and preserve it, especially its World Heritage List sites. Traditional and modern cultures stand side-by-side, mutually enhancing each others’ beauty. A livable city Beijing’s goal is to build a livable city with abundant business and employment opportunities, with fresh air, a beautiful environment and a sound ecology. As Beijing pursues these goals, the needs of the people are a prime consideration. “Putting people first” is expected to result in a stable society, more harmonious development and a more prosperous economy. 2 Position Layout ”Two axes” refers to an east-west axis along Chang’an Jie (Chang’an Avenue) and the traditional central axis (from north to south); these two compose the

“backbones” of the city. ”Two belts” refers to an “East Development Belt” in eastern Beijing and a “West Development Belt” in western Beijing. The East Development Belt contains the districts of Huairou, Shunyi, Tongzhou, Pinggu, Miyun County and the Beijing Economic and Technological Development Area (BDA). The West Development Belt includes one county and four districts in Source: http://www.doksinet the west: Yanqing County, Changping, Mentougou, Fangshan, and Daxing districts. “Multiple centres” refers to urban functional areas of the city, including the core areas of the Zhongguancun Science Park, the Olympic Central Area, the CBD (Central Business District), the science and technology innovation centre in the HaidianÐShanhou area, the Shunyi modern manufacturing base, Tongzhou and Shijingshan comprehensive services centres and the high-tech industrial development centre in Yizhuang. 3 Orientation for Regional Functions Functional Areas :The Core Areas of

Districts the Capital’s Urban Functions Range : Dongcheng, Xicheng, Chongwen & Xuanwu Regional Development Keystones and Characteristics: Showcase the characteristics of the ancient capital. These districts epitomize Beijing’s role as a centre of political, cultural and international associations. They also provide support for the “four services.” Functional Areas :Expansion Areas for Urban Functions Range : Chaoyang, Haidian, Fengtai & Shijingshan Districts Regional Development Keystones and Characteristics: These are key areas for the extension of the capital’s urban functions, especially economic services for elsewhere in China and the world. These are important bases for the promotion of scientific and technological research and development. Innovation is emphasized Functional Areas : New Areas for Urban Development Range : Tongzhou, Daxing, Shunyi, Changping Districts Regional Development Keystones and Characteristics: These areas strongly support modern

manufacturing industries and modern agriculture. They are key areas for redistributed populations and industries being removed from urban areas in the city centre. They are important areas for the city’s future economic development. Relying on new quarters and national-level and city-level development zones, these areas will contribute to protecting the environment, strengthening manufacturing, supplying the city’s work force and bearing the weight of population. As such, they will be centres of new growth in Beijing. Functional Areas :Developing Areas for Environmental Protection Source: http://www.doksinet Range : Mentougou, Fangshan, Pinggu, Huairou districts, Miyun and Yanqing counties Regional Development Keystones and Characteristics: These areas are vital protective barriers and secure watersheds needed for Beijing’s sustainable development. They will focus on environmental protection and construction, residential and other land use, the reasonable use of natural

resources and will serve as an “ecological great wall” protecting the city. 4 Urban Development At the beginning of the 21st century, Beijing accelerated its urban construction and development, including its comprehensive transportation and traffic management systems. In recent years, the Fourth, Fifth and Sixth Ring roads, new expressways and urban railways have greatly improved urban transportation. In 2004, 1488 billion yuan (US$183.89 million) was invested in transportation construction Before 2008, it is estimated that the Beijing rail transportation network will have been expanded to 280 kilometres in length from 114 kilometres in 2005. Public transportation is expected to be the dominant form of transportation within the city by 2020, featuring efficiency, convenience, easy access to all, comfort, good management, wise energy use, sound environmental practices and other features of a world-class public transportation system. About 830 million cubic metres of water was sold

in Beijing in 2004, along with about 45.2 billion kilowatt-hours of electricity and 25 billion cubic metres of natural gas. *N.B All the dollar/RMB conversions rate exchange are based on the People’s Bank of China rates for October 31, 2005. Source: http://www.doksinet Total Investment in Social Fixed Assets 3000 18.9% 18.6% 18.0% 20% 2827.2 17.2% 2500 2528.3 15% 2157.1 2000 11.8% 1814.5 10.8% 1530.5 1500 10% 1297.4 1000 610.7 500 351.9 447.4 417.8 411.9 356.5 0 0% 2000 60 2001 2002 2003 2004 Total ivestment in social fixed assets Urban infrastructural investment Increase rate of the total fixed asset investment Passengers Carried of Beijing (Unit:hundred 53.3 million passengers) 51.4 49.2 45.0 42.7 40 20 0 5% 6.3 6.4 5.4 2001 2002 2003 Taxi 6.4 2004 Public transport 6.5 2005 2005 Source: http://www.doksinet Beijings Public Services 500 428 400 341.2 384.2 429 406 414.1 399 438.6 4517 300 200 100 0 2002 2003 2004

Throughput of tap water(10,000 tons/day) Residential gas users(10,000 households) Electricity consumption (100 million kilowatt hours) Basic Information: 2005 Beijing Environmental Protection Environmental Index 2004 2005 The City’s Forest Coverage 49.5% 505% Greenery Coverage in Urban, Suburban and Rural Area 41.8% 425% Average Amount of Green Space Per Capita in Urban, 10sq.m suburban and Rural Areas 11.1sqm Sewerage Treatment Rate in Urban, Suburban and Rural Areas58% 70% Days when air quality was above grade-two 229 days 243 days 5 People’s Lives During its Tenth Five-year Plan, the incomes of Beijing’s urban and rural residents increased markedly. The annual average disposable income of urban residents increased by 10.4 percent, 33 percentage points more than that of the Ninth Five-year Plan. The net incomes of rural residents increased by 9.9 percent on average, 37 percentage points higher than that of the Ninth Five-year Plan. The average personal expenditures of urban

residents rose by 9.9 percent over that of 2003 to 12,200 yuan. The citys employment situation was stable. In 2004, there were 64,600 registered unemployed people, 50,000 fewer than in 2003. About 174,300 people got new jobs. The re-employment rate was 6864 percent, an improvement of 0.56 percent The reform of endowment insurance system in rural areas was constantly improved. In 2005, about 406,000 rural residents paid for their endowment insurance and about 2.49 million people joined the new collaborative medical care system. Standards of social insurance improved throughout 2005, and payments were made to 155,000 urban residents to ensure they could afford their basic living expenses. Source: http://www.doksinet Average Per Capita Incomes in Beijing(Unit:yuan) 17653 18000 15637.8 13882.6 12463.9 11577.8 12000 5880.1 5274.3 6000 0 2001 7860 7172.1 6496.3 2002 2003 2004 2005 Urban dwellers disposable income per capita Rural dwellers disposable income per capita Per

Capita Consumer Expenditures in Beijing(Unit:yuan) 4886.4 2004 12200.4 4655.3 2003 11123.8 4206 2002 10285.8 8922.7 3871.5 2001 3441.4 2000 0 4000 8493.5 8000 Urban 12000 16000 元 Rural Per Capita Housing States of Beijing(Unit:sq·m) 42 35 32.6 31 33.95 34.2 36.9 28 21 17.6 18.2 18.7 19.1 19.5 2002 2003 2004 2005 14 7 0 2001 Urban residents 6 Rural residents Business Opportunities with the Olympics From 2004 to 2006, along with the overall expansion and preparation of Olympic Games sites and the construction of Olympic projects, Source: http://www.doksinet Games-related business opportunities became more apparent, especially in three areas. The first was in direct investments in the construction and reconstruction of designated Olympic venues. Nineteen Olympic venues and associated facilities, carefully scrutinized under the “Sunshine Olympics” programme, were under construction in Beijing in 2005; all were opened to worldwide public

bidding. Sixty key projects confirmed in 2005 included five major Olympic venues and associated facilities and 46 sub-items, including new stadium construction, rebuilding, temporary venues and other associated projects. The second aspect is the cooperation between the National Olympic Committee and the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG), including BOCOG’s Olympic partners, sponsors and suppliers. As of December 2005, the Bank of China, China Netcom (CNC), SINOPEC, China National Petroleum Cooperation (CNPC), China Mobile, Volkswagen, adidas, Johnson & Johnson and Air China and PICC had become partners with BOCOG. In 2005, at the second stage of the sponsorship programme, nine companies, including Yanjing Beer, Tsingdao Beer and Haier became sponsors of the Beijing 2008 Olympic Games. There is also a commercial aspect. The most important and the most extensive commercial opportunities exist in the services field and in the innovation of

products. More business opportunities will arise mainly in high-tech and modern-manufacturing industries, specifically in areas of electronic information, urban-style industries, automobiles and spare parts; knowledge-based services industries (including the cultural industry), consultancy services, finance and insurance industries, conference and exhibition industries; the modern circulation industry focusing on chain operations, convenience stores, modern logistics and tourism, based on new-type tourism-oriented products. Consumer markets in Beijing are expected to see great demand For further details, see the BOCOG Web site at: http://www.beijing2008com Economic Indices 1 A Rapidly Developing Economy According to preliminary estimates, Beijing’s 2005 gross domestic product (GDP) rose to 681.45 billion yuan (US$8518 billion), an 111 percent increase year-on-year, generating an average per capita GDP of US$5,547, 1.9 times more than in 2000 This compares to 2004Õs GDP of 606.03

billion yuan (US$7579 billion) and its per capital GDP of US$4,970. During the Tenth Five-year Plan, the city’s GDP increased Source: http://www.doksinet by an average of 11.9 percent annually, 29 percentage points more than targeted in the Tenth Five-year Plan and 1.6 percentage points higher than the average increase rate of the Ninth Five-year Plan. Beijings GDP Growth（Unit:100 million） ％ 16 8000 14.1 7000 6000 11.8 11.7 11.5 11.1 6814.5 11 6060.3 5000 4000 4330.4 3000 2000 14 3161 5023.8 12 10 8 6 3710.5 4 1000 2 0 0 2000 2001 2002 2003 2004 2005 Growth rate（％） GDP of Beijing(100 million) 北京市三次产业结构变化情况 2004 & 2005 Beijing Industrial Structure 2004 2005年 1.6% 30.6% 1.4% 30.9% 67.8% 67.7% Manufacturing industry Agricultural industry Services sector 2 Large Market Potential In 2004, the total demand of the investment, consumption and industrial markets reflected a huge increase in various trade

activities in Beijing. Social fixed-asset investments totalled 25283 billion yuan (US$31.6 billion), a year-on-year increase of 172 percent Retail sales were valued at 219.18 billion yuan (US$274 billion), up 14.4 percent Insurance premiums rose to 2789 billion yuan (US$349 billion) and 1,851.29 billion yuan (US$23141 billion) in stock transactions were reported during the year. Investments in real estate continued a rise to about 147.33 billion yuan (US$1842 billion) and the value of imports and exports totalled 28.07 billion (US$351 billion). Chain-store sales turnover tallied to 6352 billion yuan (US$7.94 billion), accounting for 29 percent of consumer products sales Source: http://www.doksinet Business opportunities brought by the 2008 Olympic Games will add to market potential in the coming years. 2004 Beijing Market of Means of Production Sales volume of concredte(10,000 tons) 11.1 35.7 Sales volume of wood(10,000 sq·m) Sales volume of steel(10,000 tons) 59.3 Sales

volume of means of production(10,000) 152.4 0 40 80 120 Turnover of Consumer Products in Beijing (Unit:100 million) 3000 2902.8 2626.6 2500 1916.7 2000 1593.5 1443.3 1500 1000 500 1744.8 826.98 307.66 0 1990 1995 2000 2001 2002 2003 2004 2005 3 Significant Increase in Foreign Trade Beijing has already formed an open, comprehensive, multi-level, broad-based business environment. Many famous multinationals, including Toshiba, Panasonic, Nokia, Motorola, Samsung and Boeing have chosen Beijing for their regional headquarters. By the end of 2005, in Beijing, there were 16 regional headquarters, 146 investment companies and 239 research institutions of multinational companies whose operations had been approved by the Ministry of Commerce of the People’s Republic of China. In 2005, there were 2,136 foreign capital agreements in force, involving effective foreign capital of US$3.53 billion and contracted foreign capital valued totalling US$6.52 billion 160 Source:

http://www.doksinet In 2001Ð05, 7,821 foreign capital agreements were signed citywide, including contracted foreign capital valued at US$219.6 billion and effective foreign capital of US$123.2 billion representing increases of 90.8 percent, 803 percent and 246 percent over rates found in the Ninth Five-year Plan. Contracted and Realized FDI in Beijing (Unit:billion dollars) Contracted FDI Realized FDOI 72 65.2 62.6 54 43.31 36 33.12 32.7 28.08 24.6 17.7 18 35.3 30.8 21.5 17.9 0 2000 2001 2002 2003 2004 2005 2005 Beijing Industrial FDI Status Rentals and business services 33.40% Others 9.46% Real estate 11.79% Manufacturing 36.54% Information transportation, computer Services and software 8.81% Source: http://www.doksinet 2005 Main Countries and Regions Investing in Beijing (Top 10) Country/Region No. of Projects Volume of Contract Foreign Investment (US$10,000) Japan 158 124,420 Hong Kong, China 373 114,297 Republic of Korea 277 63,974 USA 269 54,188 Germany

53 20,798 France 23 15,728 Singapore 68 11,110 Taiwan, China 76 7,506 Thailand 5 5,216 Canada 63 3,217 In 2004 and 2005, imports and exports handled by the Beijing customs were valued at US$94.66 billion and US$12557 billion Imports and exports of local enterprises totalled US$28.07 billion and US$1032 billion. The content of exported products was optimized with the export of high-tech products valued at US$5.17 billion and US$889 billion in 2004 and 2005, accounting for 48.8 percent and 526 percent of the total local export value. During the Tenth Five-year Plan, from 2001 to 2005, BeijingÕs total local import and export values rose to US$392.74 billion, 1.3 times more than that in the Ninth Five-year Plan Total import and export values of local enterprises grew to US$114.76 billion, twice that of the Ninth Five-year Plan. of Local Enterprises of Beijing (Unit:US$100 million) 480 403.2 400 320 280.7 240 160 80 189.3 116.5 46.3 171.0 140.4 134.0 48.7 73.7 59.0 106.1 0

2000 2001 2002 2003 Total Import & Export 2004 Export 2005 Source: http://www.doksinet Foreign Contracted Projects and Labour Services Turnover(Unit:US$100 million) 9 7.20 6.00 6 3.50 3 0 2.32 2002 2003 2004 2005 4 High-tech Industries and Modern Manufacturing In the near future, Beijing will promote the development of advanced manufacturing industries and new and high-tech industries in accord with the basic idea of enlarging the services sector, strengthening manufacturing industries and optimising agriculture. This means the city will take a lead in fostering the development of international modern manufacturing industries. New and high-tech industries lead the capital’s economic development. In 2004, Beijing’s high-tech industry realized a total industrial value of 197.8 billion yuan (US$2473 billion) and achieved an added value of 44.3 billion yuan (US$554 billion), accounting for 29.9 percent of added value of the city’s above-scale industry

(State-owned enterprises or companies valued at 500 million yuan or more), including the 28.9 billion yuan (US$361 billion) achieved in the electronic information industry which accounted for 65.2 percent of high-tech industrial added value. In 2005, the high-tech industry realized a total value of 51.75 billion yuan (US$647 billion), an increase of 20 percent over 2004, with the increases in electronics and information, biomedicines, new materials and in the optical-mechanical-electronic integration industry of 22 percent, 10.1 percent, 13.2 percent and 184 percent, accounting for 704 percent, 6.8 percent, 87 percent and 107 percent in the high-tech industry’s added value. Development of Beijing High-Tech Industries: Value (unit: 100 million yuan) Industrial Gross Output Source: http://www.doksinet 2004 2005 Electronics and Information 1,268.8 1,547.9 Biomedical 153.8 169.3 New Materials 231.9 262.5 Optical-Mechinical-Electronics Integration 229.1 271.3 2004 &

2005 Structure of Beijing New & High-Tech Industrial Added Value 2005 2004 11.6% 10.7% 34% 8.7% 3.6% 11.7% Electronic and information Biomedical technology 7.9% 65.2% New materia 6.8% Optical-mechanical-electronic integration 70.4% others In the Tenth Five-year Plan, Beijing’s modern manufacturing industry grew rapidly; the average annual increase in the industrial added value was 12.4 percent, 25 percentage points more than that of the Ninth Five-year Plan. In 2004, above-scale industries achieved an added value of 148.32 billion yuan (US$1854 billion) Manufacturers of equipment, transport and communications equipment, medicines, petroleum and nuclear fuel processing industries speeded their development, growing by 20 percent. In 2005, Beijing expanded its manufacturing of electronic, automobile and petrochemical equipment, medicine and modern manufacturing industries and will establish six major bases as part of this effort. The added value of the above-scale

industry rose to 170.54 billion yuan (US$2132 billion), an increse of 13.1 percent over 2004 Six Industries Classification Stress Information Technology Industry Enlarge mobile communications, monitor, computer and software industries; Cultivate automotive electronics; integrated circuits, high-definition digital TVs and the electronic-equipment industries. Automobile Focus on the development of three leading products: medium- to high-end cars, medium- to heavy-duty trucks and Source: http://www.doksinet off-road, large-sized vehicles. Petrochemical New Materials Industry Six Bases Establish downstream industrial operations related to ethane, vinylite, synthetic rubber and plastic production, rubber production and fine-chemicals. Urban industry Add good bases and development space for urban industries, including clothes and textiles, food and beverages, packaging and printing, arts and crafts based on market demands and advantages. Advanced Equipment Manufacturing

Numerical control machinery; medical equipment; specialized electronic equipment; lasers; robots; equipment for electrical generation, supply and distribution; engineering machines; printing machines; and environmental protection equipment. Bioengineering Medicine Create a group of industries focusing on chemical pharmaceuticals, traditional Chinese medicine and natural medicines, biotechnologies and integrate innovations, manufacturing, logistics and services. & 1 Mobile communications industry base 2 Automobile industry base 3 Petrochemical new materials industry base 4 Optical-mechanical-electronic integration industry base 5 Bioengineering and new medicines industry base 6 Urban industrial base 5 Modern Services In 2005, the Beijing Municipal Government focused on creating a modern service industry. Within this industry, financial, insurance, information services, tourism, exhibitions, the cultural industry, commerce and logistics and professional services were given

priority in urban development. Classification :Finance and Insurance Stress: Improve the financial market, creat innovative financial products, strengthen the “open door” policy, improve the service level, invigorate and promote the position of the finance and insurance industries. Source: http://www.doksinet Classification :Information Services Stress:Take advantage of information resources, modify policies and regulations, accelerate the merging of different industries, expand industry’s added value and make information services more powerful. Classification :Tourism, Conference and exhibition Stress:Strengthen coordination functions, expand opportunities for investment, adjust the production infrustructure, raise the service level and improve the competitiveness of the tourist, conference and exhibition industries. Classification :Cultural Industry Stress:Attract more investments, improve the markets, integrate resources and produce new brands thereby making the development

of the cultural industry a new aspect of the capital’s economy. Classification :Modern Logistics Stress:Strengthen the integration of resources, focus on the construction of three logistic bases: the Liangxiang, Jingdong and Konggang bases, and rely on chain stores, convenience stores, regional wholesale markets for farm products, modern commerce, modern logistics as vehicles to speed up the development of a modern logistics industry. Classification :Professional Services Stress:Add lawyers, accountants, training and other professional services and agencies. By consummating policies and improving the credit environment, such services will be promoted and expanded in domestic market. (1) Finance and Insurance During the Tenth Five-year Plan, Beijing’s added value of the finance and insurance industries increased by 10.6 percent per year on average In 2004 and 2005, the finance and insurance sectors reported an added value of 71.4 billion yuan (US$89) and 793 billion yuan (US$99

billion). In 2005, the volume of business transactions of the various securities in Beijing was 932.3 billion yuan (US$1165) Beijing is home to 44 insurance companies and 227 insurance intermediary services companies. Deposit Volume of Domestic Currency & Foreign Exchange (Inclusive of Foreign Funds) Unit:100 million yuan Index At the end of 2005 More than that at the Beginning of 2005 Deposit Volume 28,970.0 5,093.6 Loan Volume 15,335.5 1,993.1 Source: http://www.doksinet Transactions on the Beijing Financial Market (unit:100 million yuan) 1173.2 Government securities(100 million yuan) 671.7 504.14 Stock(100 million yuan) 724.77 168.75 102.57 Government securities repurchases(10 billion yuan) 110.5 78.9 Fund(100 million yuan) 169.6 Others(100 million yuan) 257.3 0 200 400 600 800 1000 1200 1400 2004 2003 Insurance Business in Beijing (unit:100 million yuan) 540 497.7 450 389.4 360 278.1 270 180 90 226.8 140.9 227.9 182.6 102.7 38.2 44.2 50.1 274.9

208.7 66.2 67.1 0 2001 2002 2003 2004 Income from property premiums Income from personal insurance premiums Income from all insurance premiums 2005 (2) Information Services Since 2000, Beijing’s information services industry, led by the software industry, has progressed rapidly. During the Tenth Five-year Plan, the added values of information transmission, computer services and the software industry increased by an average of 16.6 percent per with achieved added values of 44.96 billion yuan (US$562 billion) and 51.72 billion yuan (US$647 billion) in 2004 and 2005 In 2005, citywide telephone subscriptions increased to 9.5 million households, including a fixed telephone trunk line coverage rate of 62.7 lines per 100 persons, Source: http://www.doksinet an increase of 28.3 lines per 100 persons since 2000; mobile phone subscriptions increased to 14.7 million or 97 mobile phones per 100 persons. This was 705 mobile phones per 100 persons more than that in 2000. 2004 Beijing

Informational Industrial Development Status(unit:100 million yuan) 600 536.65 51035 450 4941 300 150 1493 7000 6000 5000 4000 3000 2000 1000 0 6215 478.39 313.19 20.99 18.93 0 Internet informationComputerized services Software services Main business income (100 million yuan) Total amount of profit(100 million yuan) Number of units (3) Real Estate Beijing’s real estate sector realized an added valued of 43.6 billion yuan (US$5.45 billion) in 2004 and 4889 billion yuan (US$611 billion) in 2005. The 2005 figure was 88 percent higher than in 2004 In 2004 and 2005, investment in the real estate market totalled 147.33 billion yuan (US$18.42 billion) and 1525 billion yuan (US$1906 billion), with sale volumes of 124.9 billion yuan (US$156 billion) and 17588 billion yuan (US$21.99 billion) Buildings Under Construction (unit:10,000 sq·m) 16000 14096.2 12000 9070.7 9931.3 7510.7 8000 5966.7 4000 0 1707.4 1205 2001 4679.2 2384.4 1708.3 2002 2593.6 1895.8 2003 3067 2472

2004 Space under construction Space completed Space sold 2803.2 2005 Source: http://www.doksinet (4) Modern Logistics During the Tenth Five-year Plan, wholesale and retail sales grew by an average of 10.8 percent per year and generated 588 billion yuan and 64.04 billion yuan in added value in 2004 and 2005 New types of businesses greatly enhanced the city’s commercial structure. A modern approach to logistics, with chain operations taking the lead, demonstrated its viability. In 2005, there were 5,973 chain stores citywide, 541 more than that in 2004; they generated retail sales of 83.38 billion yuan (US$1042 billion), an increase of 14 percent year-on-year. By the end of 2005, there were 1,123 chain supermarkets and convenience stores in rural areas, up from 681in 2004. (5) Tourism, Conference and Exhibition Industry Under its Tenth Five-year Plan, Beijing entertained 14.6 million overseas tourists, generating a foreign-tourism income of US$14.8 billion. These totals were

213 percent and 214 percent higher than that in the Ninth Five-year Plan. Beijing also greeted about 560 million domestic tourists, earning a tourism-derived income of 496.9 billion yuan (US$62.1 billion) These figures were 263 percent and 13 percent more than that under the Ninth Five-year Plan. By the end of 2005, the city had 626 star-rated hotels with a leasing rate of at least 65 percent. Source: http://www.doksinet Tourism 400 300 36.2 29.5 310.4 200 31.7 31.1 285.8 362.9 19 42 35 28 315.5 21 185.1 14 100 7 0 0 2001 2002 2003 2004 2005 Overseas tourists Tourist venues in foreign exchanges The conference and exhibition industries are stars in Beijing’s economic development strategy. By the end of 2005, there were 13 venues for conferences and exhibitions in Beijing, with a total exhibition space of 241,000 square metres, including 16,000 square metres of conference rooms. Some of the better known exhibition spaces are the China International Exhibition

Centre, China International Trade Centre, Beijing International Convention Centre and Beijing Exhibition Centre, but there are many more. 6 Modern Agriculture In 2004, Beijing’s agricultural industry was valued at 2.54 billion yuan (US$317.5 million), an increase of 68 percent year-on-year The adjustment of the agricultural system continued as the proportion of planting and feeding was altered from 43 percent and 57 percent to 41 percent and 59 percent. In 2004, Beijing’s metropolitan agriculture developed rapidly; 30 planting gardens were selected as demonstration parks for sightseeing, featuring 2,000 agricultural items. In addition, 120 standard productive bases were set up with more than 60 percent of the units passing food security authentications. There were 235 farm-product supply centres that delivered green and safe foods. In 2005, Beijing began focusing on the development of high-end, high-tech-based “three agricultures”: seeds, processing and tourism, and it speeded

its improvement of modern agriculture. About 512 agricultural tourism gardens were opened to tourists, which generated about 410 million yuan (US$51.25 million) in tourism revenues These joined 8,691 folk-custom tourist households that served 7.7 million visitors during 2005. Harvest income in 2005 totalled 590 million yuan (US$73.75 million) It is estimated that, before 2010, Beijing’s Source: http://www.doksinet agricultural added value will exceed 12 billion yuan (US$1.5 billion), accounting for 2 percent of the total regional value. Total Value of Agriculture & Growth Rate 300 240 119 117 180 230.4 237.9 108 108 107 106 70.2 130 120 195.2 164.4 120 254 110 100 60 0 90 1990 1995 2000 2002 Total value of agriculture Egg 2004 Growth rate Output of Main Agricultural Products (unit:10,000 tons) 16 15.9 Milk 64.2 70 Meat 66.7 70.8 2005 2004 423.9 Vegetables Foodstuff 2003 489.2 94.9 70.2 7 Science and Technology and Education Under the Tenth

Five-year Plan, Beijing’s expenditures on research and development (R&D) amounted to to 134.39 billion yuan (US$168 billion), 2.1 times more than that of the Ninth Five-year Plan In 2004 and 2005, R&D spending totalled 31.7 billion yuan (US$396 billion) and 38 billion (US$4.75 billion) By the end of 2005, as many as 7,400 units had launched scientific and technological activities, with 340,000 talented personnel, scientists and engineers. Source: http://www.doksinet Transfer Research Results in Beijing 500 400 300 425 2.70 2.39 3.80 489.6 3.55 3.22 3 2 265.4 200 4 221 191 1 100 0 0 2001 2002 2003 2004 2005 Sum of contractual transactions(unit:billion yuan) Number of registered technological contracts(unit:10000 contracts) Beijing Science and Technology Development Expenditure(unit:100 million yuan) 553 600 458 450 365 334 亿 300 元 370 317 253 156 171 180 150 0 2000 2001 2002 2003 2004 Expenditure on science and technology activities

Expenditure on R&D By the end of 2004, there were about 66 incubators citywide with 2,300 members and 14 university-based science and technology “gardens.” The city’s innovative services system is taking shape with the primary establishment of more than 5,000 science and technology agencies, 150 related associations and 500 various specialized services centres. The city’s 51 universities, 115 research institutions and 165,000 postgraduates are demonstrating the city’s reliance on education to lead its sustainable development. Source: http://www.doksinet 北京市科技成果转化情况 500 489.6 3.22 400 4 3.80 3.55 425 2.70 3 2.39 300 2 265.4 200 221 191 1 100 0 0 2001年 2002年 2003年 合同成交额（亿元） 2004年 2005年 技术合同登记数（万项） 北京市科技经费支出 553 600 458 450 365 334 370 317 亿 300 元 253 180 171 156 150 0 2000年 2001年 2002年 2003年 科技活动经费支出 2004年

R&D经费支出 Numbers of Professional Personnel in Beijing(unit:10000 persons) 2004 55.9 50.5 2003 50 143.2 71.5 0 147 20 40 60 Citywide 80 100 Central Party 120 Other 140 160 Source: http://www.doksinet Numbers of Schools and Students in 2004 2000 80 1500 1504 66.1 50 51.6 1000 760 40 11.4 500 77 56 0 Schools for higher education 0 Trade schools Ordinary schools Primary schools Number of schools Number of students(unit:10000 students) 8 Cultural and Public Health New achievements were made in the city’s medical and health systems. By the end of 2005, there were 7,236 medical care institutions, 1,132 more than in 2000, with 116,000 health care personnel, 0.8 percent more than in 2000. There were 48,000 licensed doctors In 2005, Beijing established the Beijing Emergency Medical Centre, with sub-centres in ten suburban areas covering 100 percent of the municipality. Development of Public Health in Beijing 15 11.6 12 9 7.3 11.0 11.7

11.2 11.6 7.5 7.4 7.7 7.8 2002 2003 2004 2005 6 3 0 2001 Bed Health technical Personnel Source: http://www.doksinet Doctors and Beds:Average per 1,000 6.54 4.28 4.26 4.25 4.24 4.22 4.20 5.89 6.2 5.8 4.21 2003 6.6 5.4 2004 Doctors(unit: Doctors per 1,000 persons) Beds in hospitals(unit:Beds per 1,000 persons) 2005 Beijing’s Cultural Undertakings Development Public Libraries 26 Newspaper Publications 253 Magazine Publications 2,810 Book Publications 106,000