Telecommunications Sector and the Internet

The anticipated total revenue of the telecommunications sector for 2003 will reach 450-470 billion yuan (US$54-56 billion), up by 12 percent from last year. By 2005, this revenue is expected to hit a 600 billion yuan (US$72 billion) target, contributing 5 percent of gross domestic product (GDP).

However, the report points out that there are not enough new businesses to support this increase, that telecom fees are likely to be lowered and new subscribers are mainly low-end users.

Energy and Power Sector

In the next two to three years, the reform in the power sector will enter an adaptive and transitional period. The need for power will increase steadily but there will be little room for a fall in electricity prices in the short term. However, the report does mention that in the long term the price may drop.

In 2003, the gap between the need for oil and oil supply will widen further, so there will be increased need for large-scale import and economizing measures. The coal industry continues to prosper with production and purchase on the rise.

Real Estate

The growth of real estate investment will slow down, as will its consumption.

Automobile

The automobile industry is on a fast track with an anticipated growth rate set to 30 percent in 2003. There will be heavy competition in economy cars, and in the mid-grade car market, but economy cars will have more potential. Large-scale mergers and acquisitions are still finding it hard to take place.

The report urges the encouragement of car purchase and the promotion of “tax-for-fees” reform.

Manufacturers should make full use of price strategy, the reports asks, and of brand innovation, and quicken the research and development of Chinese brand economy cars.

Computer and Software

Policy environment for the domestic and overseas market will be better for 2003. Compared with 2002, the computer hardware and software industry is expected to rise by 40 percent and 30 percent respectively. The computer industry also appears to be concentrating its growth in coastal areas where foreign investment is strongest.

Medicine

Growth in medicine for 2003 is no less than 15 percent. Cephalosporin-related medicines will become the people’s main choice in the cities. The medicine industry is to begin a period of solid development.

The effect of global pharmaceutical transfer has become more obvious. Chemical pharmaceuticals has now the characteristic of a mature industry while biological pharmaceuticals has become the highlight of the sector. Traditional Chinese Medicine (TCM) develops steadily but the cost of sales is still too high.

Petrochemical Industry

The price of crude oil in international markets will continue to rise and then fall in 2003. This tendency will negatively affect China’s petrochemical industry in a short period. In general, the sector will grow by some 9 percent.

Integrated Circular (IC)

The IC market begins to recover and will grow quickly in the long term. The report suggests granting preferential measures to equipments and instruments in the IC industry.

Iron and Steel

The overall price of steel in 2003 is expected to be higher than 2002, and profit in the sector will also rise slightly. The price of rolling steel will stay as expected while the price of armor plate, as a whole, will fluctuate.

Transportation

Although the transportation tension has lessened in some senses, the facilities still do not match up with the rapid economic development. On the whole though, the transportation industry will keep rising.

The report suggests that big cities should establish overall transportation systems mainly with rail transportation and other transportation accessories, instead of mainly developing road vehicles including cars, taxies and buses.

(China.org.cn by Tang Fuchun, February 26, 2003)