Best Prospect Sectors in China

Aerospace and Aviation

Over the next twenty years, China predicts that its air transportation passenger volume will grow annually by 11%. It will become the world's second largest aviation market and will require an additional 1,790 aircraft to handle the increased volume. Expansion of airport infrastructure will also continue with 49 airports slated for new construction and 701 airport expansion projects under China's current five-year plan, which began in 2006. Furthermore, a new system of regional control centers and full conversion from program to radar based air traffic control will be introduced over the next 5-10 years.

At present, CAAC is drafting the 11th Five-Year Plan and 2020 Vision for the aviation industry. It is expected that the annual growth rate will be 14%. By 2010 (the end of the 11th Five-Year Plan), the China expects to have 186 airports, which includes 3 national hubs, 7 regional hubs, 24 medium hubs, 28 medium airports and 124 small-size airports. The total investment will be $17.7 billion. It is estimated that the number of airports with scheduled airlines will be 260 by 2015.

Along with passenger airport equipment, large growth has been seen in the air cargo sector. China also plans to improve aviation security systems and equipment, computer information management, settlement ticketing systems, global distribution systems and E-commerce. Airport retail concessions are also a new concept for Chinese airport authorities. As airports are faced with the challenge of making money they are considering bringing in partners via food and other retail concessions. Finally, safety equipment - including emergency vehicles - continues to be an area of interest for Chinese airport authorities. Priority will be given to foreign investment, which will be directed toward airport infrastructure construction, technology upgrade and management training. China is a fast-growing market for air traffic control equipment. Over the past 10 years, CAAC has spent approximately $1 billion on air traffic management (ATM) infrastructure improvements.

Agribusiness and Food

China is now the world’s fourth largest importer of agricultural goods and its imports are expected to continue growing. China Customs records for 2004 indicate the country imported over $35 billion in agricultural, fishery, and forestry commodities. Presently, U.S. agricultural, fishery, and forestry exports to China are at their all-time greatest levels; China Customs records indicate the value was $8.1 billion in 2004.

Automotive

China is set to become the world’s second largest new automobile growth market by the end of 2006 and this growth is spurring demand for U.S. automotive parts, services, and aftercare products. The total output value of the automotive sector for the first three quarters of 2006 was $143 billion dollars.

China encourages the development of clean and fuel efficient vehicles in an effort to sustain continued growth of the country’s automobile industry. By the end of 2007, China plans to reduce the average fuel consumption per 100 km for all types of vehicles by 10%. The proportion of vehicles burning alternative fuel will be increased to help optimize the country’s energy consumption. Priority will be given to facilitating the research and development of electric and hybrid vehicles as well as alternative fuel vehicles. Major cities like Beijing and Shanghai already require Euro III emission standards. Currently auto parts and accessories enjoy lower levels of tariffs than cars (the average tariff is 10-13% for parts/accessories and 25% for cars). China has agreed to lower tariffs on imported auto parts and accessories to 10%.

The Chinese Government is in the midst of a massive upgrade of its transportation infrastructure. Ports are being improved for greater use of China’s waterways, and airports are being improved across the country. All of these projects bring opportunities to U.S. construction equipment, engineering, and electronics and safety devices companies, especially for projects funded by the World Bank, Asian Development Bank, OECF, and similar multilateral lending agencies that use transparent bidding procedures.

In the past few years, China has been rapidly developing its highway system. The investment for highway construction has increased enormously from 2000 owing to increased government attention. US$4.25 billion was invested in Beijing’s infrastructure in 2004, and another US$22 billion will be invested before the 2008 Olympics to improve Beijing’s traffic congestion issues. Improving infrastructure has facilitated the increased use of automobiles.

Moreover, China has sixteen major shipping ports with a capacity of over 50 million tons per year. Combined China’s total shipping capacity is in excess of 2,890 million tons. By 2010, 35% of the world’s shipping is expected to originate from China.

Construction Materials and Services
Consumer Goods/Recreation
Energy
Environmental Technologies
Information Technologies
Machine Tools
Medical and Pharmaceutical
Security/Safety Equipment
Services
Telecommunication Equipment and Services
Transportation and Infrastructure

Source: www.export.gov/china