Assorts of stocks in stock market:

When you are buying stocks there are three different types that you may choose from: penny stocks, growth stocks and blue chip stocks.
Penny stocks are stocks from a company that has almost no chance of developing into a big company and the stocks are of very little monetary value.

Growth stocks are companies that have a high potential to achieve great success, but they can also be very risky investments because they not are well established.
The highest level of stock purchasing is buying blue chip stocks. These stocks are of companies that are very well established and have almost no chance of its’ stocks dropping drastically.

There is unprecedented interest in China’s stock market. This is not surprising given the astonishing growth rate of China’s economy in recent years.

There are three classes of Chinese shares:

A shares are the shares that denominated in RMB and listed on the Shanghai or Shenzhen stock exchanges

B shares are foreign-invested shares issued domestically by PRC’s companies; they are also known as RMB Special Shares

H shares are shares that traded in Hong Kong

The history and actuality of the china’s stock market:

The china’s stock market came into being in due form in 1990，taking the debut of the Shanghai Stock Exchange as a label.

In the history of china’s stock market, there’re seven sharp rise and drop, proving the fluctuate of the stock market:

1, from 1990/12/19 to 1992/11/16, the stock index hurricane from 100 points to 1429, then sharply dropped to 400 in five months.

2, from 1992/11/16 to 1994/7/29, 400 — 1536 — 333.

3, from 1994/7/29 to 1996/1/19, 333 — 1053 — 512.

4, from 1996/1/19 to 1999/5/17, 512 — 1510 — 1047

5, from 1999/5/17 to 2000/1/4 , 1047 — 1756 — 1361

6,from 2000/1/4 to 2004/9/13 , 1361 — 2245 — 1000

7,from 2004/9/13 to 2007/4/6 , 1000 — 3300

As you know, recent years, china’s stock market comes into a wondrous boom period. More and more people plunge into the stock market. One reason is that China’s middle class is expanding rapidly, but the state continues to provide negligible health and pension benefits for the elderly, which leads to high savings rates within the middle class; For various reasons, Chinese interest rates remain low, and will likely remain low for the near term. Thus, Chinese investors are encouraged to seek higher rates outside of traditional savings accounts and have easy access to credit. Also, there are limitations on foreign investments, making it difficult for individual investors to enter stock markets outside of China.

As a result, great bubble exists in china’s stock market recently. No wonder that many professional judge of the china’s stock market as “going crazy”.

The foreground of china’s stock market

About the foreground of china’s stock market, different people have different opinions. The pessimistic ones think that china’s stock market faces serious challenge in 2008

Five reasons cause Chinese stock market’s plunge in 2008.

(1), oversea cash outflow

(2), lack of enough cash to continue supporting the stock market

(3), fund redeem

(4), high CPI and real estate

(5), the recent natural disasters

However, there are also optimistic ones express confidence about the china’s stock market.

Guotaijun’an Securities has conducted a survey covering 372 investors, finding that nearly 90% of them believe no bear market will occur in 2008.

90% of the respondents feel optimistic about the conditions of A-stocks in 2008. 44.1% of them have strong faith in a continuous bull market, and 44.4% think it will enter box-concussion stage. Only 4.1% of the respondents express their worries of a bear market.

Order of the President of the People’s Republic of China
(No. 63)

The Enterprise Income Tax Law of the People’s Republic of China, which was adopted at the 5th Session of the 10th National People’s Congress of the People’s Republic of China on March 16, 2007, is hereby promulgated and shall come into force as of January 1, 2008.

President of the People’s Republic of China Hu Jintao

March 16, 2007

Enterprise Income Tax Law of the People’s Republic of China

(Adopted at the 5th Session of the 10th National People’s Congress of the People’s Republic of China on March 16, 2007)

Contents

Chapter I General Provisions

Chapter II Taxable Amount of Income

Chapter III Amount of Payable Taxes

Chapter IV Preferential Tax Treatments

Chapter V Withholding by Sources

Chapter VI Special Adjustments to Tax Payments

Chapter VII Administration of Tax Collection

Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 Within the territory of the People’s Republic of China, the enterprises and other organizations which have incomes (hereinafter referred to as the enterprises) shall be payers of the enterprise income tax and shall pay their enterprise income taxes in accordance with this Law.

This Law does not apply to the sole individual proprietorship enterprises and partnership enterprises.

Article 2 Enterprises are classified into resident and non-resident enterprises.

The term “resident enterprise” as mentioned in this Law refers to an enterprise which is established inside China, or which is established under the law of a foreign country (region) but whose actual institution of management is inside China.

The term “non-resident enterprise” as mentioned in this Law refers to an enterprise established under the law of a foreign country (region), whose actual institution of management is not inside China but which has institutions or establishments inside China; or which has not any institution or establishment inside China but which has incomes sourced in China.

Article 3 A resident enterprise shall pay the enterprise income tax on its incomes derived from both inside and outside China.

For a non-resident enterprise with an institution or establishment inside China, it shall pay enterprise income tax on its incomes derived from inside China as well as on incomes that it earns outside China but which has real connection with the said institution or establishment.

For a non-resident enterprise without any institution or establishment inside China, or for a non-resident enterprise whose incomes have no actual connection to its institution or establishment inside China, it shall pay enterprise income tax on the incomes derived from inside China.

Article 4 The enterprise income tax rate shall be 25%.

The tax rate which applies to a non-resident enterprise’s incomes as mentioned in paragraph 3, Article 3 of this Law shall be 20%.

Chapter II Taxable Amount of Income

Article 5 The balance after deducting the tax-free incomes, tax-exempt incomes, all deduction items as well as the permitted remedies for losses of the previous year(s) from an enterprise’s total amount of incomes of each tax year shall be the taxable amount of incomes.

Article 6 An enterprise’s monetary and non-monetary incomes from various sources shall be the total amount of incomes, including:

(1)income from the sale of goods;

(2)income from the provision of labor services;

(3)income from the assignment of property;

(4)dividend, bonus and other equity investment proceeds;

(5)income from interests;

(6)income from rentals;

(7)income from royalties;

(8)income from accepted donations; and

(9)other incomes.

Article 7 The following incomes included in the total amount of incomes shall be tax-free incomes:

(1)The appropriations from the treasury;

(2)The administrative fees and the governmental funds which are charged according to the law and fall under treasury administration; and

(3)Other tax-free incomes as prescribed by the State Council.

Article 8 The reasonable disbursements which are actually incurred and in which have actual connection with the business operations of an enterprise, including the costs, expenses, taxes, losses, etc., may be deducted in the calculation of the taxable amount of incomes.

Article 9 With regard to an enterprise’s disbursements for public welfare donations, the portion which accounts for 12% of the total annual profits or less is allowed to be deducted.

Article 10 None of the following disbursements may be deducted in the calculation of the taxable amount of incomes:

(1)Dividend, bonus and other equity investment proceeds paid to the investors;

(2)Payment for enterprise income tax;

(3)Late fee for taxes;

(4)Pecuniary punishment, fines, and losses of properties confiscated;

(5) Disbursements for donations other than those provided for in Article 9;

(6) Sponsorship disbursements;

(7) Unverified reserve disbursements;

(8) Other disbursements that have nothing to do with the obtainment of revenues;

Article 11 When calculating the taxable amount of incomes, an enterprise is allowed to deduct the depreciations of fixed assets calculated under the relevant provisions.

No depreciation may be calculated for any of the following fixed assets:

(1)The fixed assets which have not yet been put into use, excluding houses and buildings;

(2)The fixed assets rented in by way of commercial lease;

(3)The fixed assets rented out by way of finance leasing;

(4)The fixed assets for which depreciation has been allocated in full amount but which remain in use;

(5)The fixed assets which have nothing to do with the business operations;

(6)The land which is separately appraised and entered into account as an item of fixed asset; and

(7)Other fixed assets for which no depreciation may be calculated.

Article 12 When calculating the taxable amount of incomes, an enterprise is allowed to deduct the amortized expenses of intangible assets calculated according to the relevant provisions.

No amortized expense may be calculated for the following intangible assets:

(1)The intangible assets, for which the self-development expenses have been deducted in the calculation of the taxable amount of incomes;

(2)The self-created business reputation;

(3)The intangible assets which have nothing to do with the business operations; and

(4)Other intangible assets for which no amortized expense may be calculated.

Article 13 The following expenses incurred by an enterprise shall, in the calculation of the taxable amount of incomes, be treated as long-term deferred expenses. Those amortized under the relevant provisions are allowed to be deducted:

(1)The expenses for the rebuilding of a fixed asset, for which depreciation has been prepared in full amount;

(2)The expenses for the rebuilding of a rented fixed asset;

(3)The expenses for the heavy repair of a fixed asset; and

(4)Other expenses that shall be treated as long-term deferred expenses.

Article 14 During the period of external investment, an enterprise shall not deduct the costs of the investment assets when it calculates the taxable amount of incomes.

Article 15 Where an enterprise uses or sells its inventories, it is allowed to deduct the costs of the inventories calculated according to the relevant provisions in the calculation of the taxable amount of incomes.

Article 16 Where an enterprise transfers an asset, it is allowed to deduct the net value of the asset in the calculation of the taxable amount of incomes.

Article 17 When an enterprise calculates its enterprise income taxes on a consolidated basis, it shall not offset the losses of its overseas business institutions against the profits of its domestic business institutions.

Article 18 The losses incurred by an enterprise during a tax year may be carried forward and subtracted from the incomes during subsequent years for a maximum carry-forward period of 5 years.

Article 19 Where a non-resident enterprise obtains incomes as described in paragraph 3, Article 3 of this Law, it shall calculate the taxable amount of income through following approaches:

(1)The taxable amount of incomes from dividends, bonuses and other equity investment proceeds, interests, rentals and royalties shall be based on the total amount of incomes;

(2)The taxable amount of incomes from the assignment of property shall be the balance of the total amount of incomes less the net value of the property; and

(3)The taxable amount of any other income shall be calculated by reference to the approaches as mentioned in the preceding items.

Article 20 The specific measures for the scope and criterions of revenues and deductions, as well as the tax treatment of assets as provided for in the present Chapter shall be formulated by the treasury and tax administrative departments of the State Council.

Article 21 When calculating the taxable amount of incomes, if the enterprise’s financial or accounting treatment method does not conform to any tax law or administrative regulation, the taxable amount shall be calculated in accordance with the tax law or administrative regulation.

Chapter III Amount of Payable Taxes

Article 22 The amount of payable taxes shall be the balance of the taxable amount multiplied by the applicable tax rate minus the tax amounts deducted and exempted as provided for in the present Law .

Article 23 An enterprise may deduct from the taxable amount of incomes of the current period the amount of income tax it has already paid overseas for the following incomes. The limit of tax credit shall be the payable amount of taxes on such incomes computed according to this Law. The part exceeding the limit of tax credit may, during the five subsequent years, be offset by way of deducting the limit of tax credit of each year from the balance after the deduction of the limit of tax credit of the current year:

(1)A resident enterprise’s taxable incomes derived from outside China; and

(2)Taxable incomes earned outside China by a non-resident enterprise with institutions or establishments in China, but which have no actual connection with the said institutions or establishments.

Article 24 For the dividends, bonuses and other equity investment proceeds derived from outside China that a resident enterprise obtains from a foreign enterprise that it controls directly or indirectly, the portion of income tax on this income paid by the foreign enterprise outside China may be treated as the allowable tax credit of overseas income tax amount of the resident enterprise and be deducted within the limit of tax credit as prescribed in Article 23 of this Law.

Chapter IV Preferential Tax Treatments

Article 25 Preferential in enterprise income tax treatments are granted to the important industries and projects whose development is supported and encouraged by the state.

Article 26 The following incomes of an enterprise shall be tax-free incomes:

(1)The income from treasury bonds;

(2)Dividends, bonuses and other equity investment proceeds distributed between qualified resident enterprises;

(3)Dividends, bonuses and other equity investment proceeds which a non-resident enterprise with institutions or establishments in China obtains from a resident enterprise and which have actual connection with such institutions or establishments; and

(4)Incomes of qualified not-for-profit organizations.

Article 27 The enterprise income tax on the following incomes may be exempted or reduced:

(1)The incomes incurred from projects of agriculture, forestry, husbandry and fishery;

(2)The incomes incurred from business operations of the important public infrastructure investment projects supported by the state;

(3)The income incurred from the projects of environmental protection, energy and water saving, which meet the relevant requirements;

(4)The incomes incurred from the transfer of technologies, which meets the relevant requirements; and

(5)The income as prescribed in paragraph 3, Article 3 of this Law.

Article 28 The enterprise income tax on a small meagre-profit enterprise which meets the prescribed conditions shall be levied at a reduced tax rate of 20%.

The enterprise income tax on important high- and new-tech enterprises which are necessary to be supported by the state shall be levied at the reduced tax rate of 15%.

Article 29 The autonomous organ of an autonomous region of ethnic minorities may decide the reduction or exemption of the local portion of the enterprise income tax to be paid by enterprises within the said autonomous region. The decisions of deduction or exemption made an autonomous prefecture or county shall be submitted to the people’s government of the province, autonomous region, or municipality directly under the Central Government for approval.

Article 30 The following expenses of an enterprise may be additionally calculated and deducted:

(1)The expenses for the research and development of new technologies, new products and new techniques; and

(2)The wages paid to the disabled employees or other employees whom the state encourages to hire.

Article 31 A startup investment enterprise engaged in important startup investments which are necessary to be supported and encouraged by the state may deduct from the taxable amount of incomes a certain proportion of the amount of investment.

Article 32 Where it is surely necessary to accelerate the depreciation of any fixed asset of an enterprise because of technological progress or due to any other cause, it may shorten the term of depreciation or adopt an approach to accelerate the depreciation.

Article 33 The incomes generated by an enterprise from producing products conforming to the industrial policies of the state by way of comprehensive utilization of resources may be downsized in the calculation of the amount of taxable incomes.

Article 34 The amount of an enterprise’s investment in the purchase of special equipment for environmental protection, energy and water saving, work safety, etc. may be deducted from the tax amount at a certain rate.

Article 35 The specific measures for the preferential tax treatments as mentioned in this Law shall be formulated by the State Council.

Article 36 Where the national economic and social development so requires, or the business operations of enterprises have been seriously affected by emergencies and other factors, the State Council may formulate special preferential policies concerning the enterprise income tax and submitted them to the Standing Committee of the National People’s Congress for archival purposes.

Chapter V Withholding by Sources

Article 37 The payable income taxes on the incomes as described in paragraph 3, Article 3 of this Law which a non-resident enterprise earns shall be withheld by sources, with the payer acting as the obligatory withholder. The tax amount shall be withheld by the obligatory withholder from each payment or payment due.

Article 38 For the payable income taxes on the incomes which a non-resident enterprise obtains from undertaking an engineering project or providing labor services inside China, the tax organ may designate the payer of the project price or remuneration as the obligatory withholder.

Article 39 For the income tax that shall be withheld under Articles 37 and 38 of this Law but which the obligatory withholder has failed to withhold or is unable to perform the withholding obligation, the taxpayer shall pay them at the place where the income has occurred. If the taxpayer fails to do so, the tax organ may recover the payable tax of the enterprise from its other income items inside China for which the payer should pay.

Article 40 A obligatory withholder shall turn over the tax payments which it withholds every time to the state treasury within 7 days after the date of withholding and submit to the local tax organ a form of report on the withheld enterprise income taxes.

Chapter VI Special Adjustments to Tax Payments

Article 41 With regard to a transaction between an enterprise and its affiliate, if the taxable revenue or income of the enterprise or its affiliate decreases due to inconformity with the arms length principle, the tax organ may make an adjustment through a reasonable method.

The costs of an enterprise and its affiliate for joint development or accepting the assignment of intangible assets, or jointly providing or accepting labor services shall, according to the arms length principle, be apportioned in the calculation of the taxable amount of incomes.

Article 42 An enterprise may file with the tax organ the pricing principles and computation approaches for the transactions between it and its affiliates, the tax organ and the enterprise shall enter into an advance pricing arrangement upon negotiations and confirmation.

Article 43 When an enterprise submits to the tax organ its annual enterprise income tax returns, it shall enclose an annual report on the affiliated transactions between it and its affiliates.

When the tax organ investigates into the affiliated transactions, the enterprise and its affiliates, as well as other enterprises relating to the affiliated transactions under investigation, shall provide the pertinent materials according to the relevant provisions.

Article 44 Where any enterprise refuses to provide the materials of transactions between it and its affiliates, or provides any false or incomplete materials which cannot reflect the true information about the affiliated transactions, the tax organ may decide its taxable amount of income upon check.

Article 45 With regard to an enterprise which is established by a resident enterprise or controlled by an resident enterprise or by a Chinese resident and which is located in a country (region) where the actual tax burden is obviously lower than the tax rate as prescribed in paragraph 1 of Article 4 of this Law, if the profits are not distributed or if less profits are distributed for a cause not attributable to reasonable business operations, the portion of the aforesaid profits attributable to this resident enterprise shall be included in its incomes of the current period.

Article 46 The interest disbursement for any credit investments and equity investments, which an enterprise accepts from its affiliates, in excess of the prescribed criterion shall not be deducted in the calculation of the taxable amount of income.

Article 47 Where an enterprise makes any other arrangement not for any reasonable business purpose, if its taxable revenue or income decreases, the tax organ has the power to make an adjustment through a reasonable method.

Article 48 If the tax organ makes an adjustment to a tax payment under the provisions of this Chapter and if it is necessary to recover the tax payment in arrears, it shall do so and charge an additional interest under the provisions of the State Council.

Chapter VII Administration of Tax Collection

Article 49 The administration of the collection of enterprise income taxes shall be governed by the Law of the People’s Republic of China on the Administration of Tax Collection in addition to this Law.

Article 50 Unless it is otherwise provided for in any tax law or administrative regulation, the tax payment place of a resident enterprise shall be the registration place of the said enterprise. But if its registration place is without China, the tax payment place shall be the place where its institution of actual management is located.

A resident enterprise which has established operational institutions without legal person status in China shall calculate and pay its enterprise income taxes on a consolidated basis.

Article 51 Where a non-resident enterprise obtains any income as described in paragraph 2, Article 3 of this Law, the tax payment place shall be the place where the institution or establishment is located. Where a non-resident enterprise has established two or more institutions or establishments within China, it may, subject to the examination and approval of the tax organ, choose to have its main institution or establishment pay the enterprise income tax on a consolidated basis.

For a non-resident enterprise which obtains any income as described in paragraph 3, Article 3 of this Law, the place where the obligatory withholder is located shall be the place for the payment of enterprise income taxes.

Article 52 Unless it is otherwise provided for by the State Council, enterprises shall not pay their enterprise income taxes on a consolidated basis.

Article 53 Enterprise income taxes shall be calculated on the basis of a tax year. A tax year commences on January 1 and ends on December 31 of the Gregorian calendar year.

Where an enterprise starts or terminates its business operations in the middle of a tax year so that its actual business operation period in this tax year is shorter than 12 months, its actual business operation period shall constitute a tax year.

At the time of liquidation of an enterprise, the liquidation period shall be a tax year.

Article 54 Enterprise income taxes shall be paid in advance on the monthly or quarterly basis.

An enterprise shall, within 15 days after the end of a month or quarter, submit to the tax organ an enterprise income tax return for advance payment and pay the tax in advance.

An enterprise shall, within 5 months after the end of each year, submit to the tax organ an annual enterprise income tax return for the settlement of tax payments and settle the payable or refundable amount of taxes.

When an enterprise submits an enterprise income tax return, it shall attach to it the financial statements and other relevant materials according to the relevant provisions.

Article 55 When an enterprise terminates its business operation in the middle of a year, it shall, within 60 days after the actual date of termination of its business operations, apply to the tax organ for calculating and paying the enterprise income taxes of the current period.

Before an enterprise goes through the deregistration formalities, it shall make a declaration to the tax organ on the liquidation and shall pay the enterprise income taxes.

Article 56 Enterprise income taxes to be paid under this law shall be calculated on the basis of RMB. For any income calculated on the basis of a currency other than RMB, the amount of taxes shall be calculated and paid after this income is converted into RMB.

Chapter VIII Supplementary Provisions

Article 57 The enterprises which have already been established prior to the promulgation of the present Law and enjoyed low tax rates according to the provisions of the tax laws and administrative regulations in force at that time may, according to the provisions of the State Council, continue to enjoy the preferential treatments within five years after the present Law is promulgated and gradually transfer to the tax rate as provided for in the present Law. Those which enjoy the preferential treatment of tax exemption for a fixed term may, according to the provisions of the State Council, continue to enjoy such treatment after the promulgation of the present Law until the fix term expires. However, for those that have failed to enjoy the preferential treatment due to failure to make profits, the term of preferential treatment may be counted as of the year when the present Law is promulgated.

Within the particular areas established by law for developing foreign economic cooperation and technological exchanges and the high- and new-tech enterprises that need the key support of the state newly established within the areas where the State Council has provided for the implementation of the abovementioned special policies may continue to enjoy transitional preferential tax treatments, with the specific measures thereof to be formulated by the State Council.

Other enterprises falling in the encouraged category as already determined by the State Council may enjoy the preferential treatment of tax reduction or exemption according to the provisions of the State Council.

Article 58 Where any provision in a tax treaty concluded between the government of the People’s Republic of China and a foreign government is different from the provisions in this Law, the provision in the said treaty shall prevail.

Article 59 The State Council shall formulate a regulation on the implementation of this Law.

Article 60 This law shall come into force as of January 1, 2008. The Income Tax Law of the People’s Republic of China on Foreign-funded Enterprises and Foreign Enterprises as adopted at the 4th Session of the Standing Committee of the 7th National People’s Congress on April 9, 1991 and the Interim Regulation of the People’s Republic of China on Enterprise Income Tax as promulgated by the State Council on December 13, 1993 shall be repealed simultaneously.

At the initial stages of reform and opening up, the economic and trade cooperation between China and the American and Oceanian area was restricted to general trade exchange with limited scale. As China’s policy of reform and opening up continues to deepen, foreign trade policies and systems keep reforming and improving, especially China’s socialist market economy has been established, the economic and trade cooperation between various forms of economics of China and the American and Oceanian area has been fully developed on the basis of “equality, mutual benefit and common development”, and plays an increasingly important role in China’s foreign trade relations. According to the statistics of China Customs, in 2007, the volume of trade between China and the countries of the American and Oceanian area reached US $484.2 billion, accounting for 22.3% of China’s total trade volume. Of these US $484.2 billion, US $324.6 billion came from China’s export to the countries of the American and Oceanian area, accounting for 26.7% of the country’s total export amount; US $159.4 billion came from China’s import from the countries of the American and Oceanian area, accounting for 16.7% of the country’s total import amount. From January to October of this year, the trade amount between China and the American and Oceanian area totaled US $490.79 billion, which has exceeded that of the year 2007 and accounted for 25% of China’s total foreign trade amount in the same period last year.

The economic and trade cooperation with the United States is of great significance to China’s entire foreign economic and trade relations. Since 1979, when China and the United States established formal diplomatic relations, Sino-American bilateral economic and trade relations have been developing rapidly. In 2007, the bilateral trade between the two countries amounted to US $302.1 billion, an increase of 305 fold over 1978 (US $990 million), with an average annual increase of 21%. Since the entry into WTO in 2001, China has become the fastest growing major export market of the United States, rising from the ninth largest export market to the currently third largest export market of the United States, and the fourth largest trade partner to the second largest trade partner of the United States. Meanwhile, the United States is China’s second largest trade partner and second largest export market (second only to the European Union).

While the bilateral trades were developing rapidly, the bilateral investments of the USA and China were also developing rapidly. The USA is one of the regions that have invested most capitals in China. A lot of multinational corporations of the USA take their investments in China as an important part of their global strategies. Four hundred of the 500 most powerful US multinational corporations have invested in China or have carried out cooperation in China. By the end of October of 2008, the number of the enterprises invested and established by US corporations has exceeded 56,000, and the total amount of the actual investments by US corporations has exceeded US $ 59 billion. Meanwhile, more and more Chinese enterprises have started to invest in the USA too. The amount of the investments by Chinese enterprises in the USA is not large, but is increasing rapidly. By the end of September of 2008, Chinese enterprises had established over 1,200 enterprises in the USA and had invested about US $ 3 billion. In the case that the Lenovo purchased the PC Department of the IBM, which was approved in the beginning of 2005, the total investment by China was as high as US $ 1.2 billion. China also obtained great achievements in contracting for the projects of the USA. By the end of September of 2008, the total value of the project contracts signed by Chinese enterprises in the USA had reached US $ 8.35 billion, and the total completed turnover had reached US $ 7.02 billion.

Besides the USA, the trades between China and other developed countries of the region including Canada, Australia and New Zealand, are also developing steadily. In 2007, the volumes of trade between China and Canada, Australia and New Zealand had increased 46 times, 52 times and 77 times compared to 1978, and were US $ 30.38 billion, 43.8 billion and 3.7 billion. The bilateral investments, project contracts, labor service cooperation and design consultancy business between China and those countries were also increasing.

Latin America and the Caribbean region is an important region of China’s market diversification strategies. Over the 30 years of reform and opening-up, China’s economic and trade cooperation with the region started from bilateral trade, and its scale continued to increase; with the development of bilateral trade, the economic and trade ties started to expand to a comprehensive cooperation of multiple layers in multiple areas including two-way investment, projects contracting and high-tech cooperation. According to China Customs statistics, trade volume between China and the Latin American and Caribbean region in 2007 was over US $102.5 billion, increased nearly 80 times over the US $1.29 billion in 1979, and it reached the goal of surpassing US $100 billion mark three years ahead of schedule. The goal which was originally scheduled for 2010 was proposed by President Hu Jintao on a state visit to Latin America in 2004. From January to October, 2008, trade volume between China and the Latin American and Caribbean region totaled US $124.112 billion, an increase of 51.2% year-on-year, much higher than the 24.8% growth rate of China’s overall foreign trade at the same period. Of which, China’s export to Latin American and Caribbean region was US $61.131 billion, while import stood at US $62.981 billion, an increase of 47.79% and 54.67% year-on-year respectively, the import and export were almost balanced.

Latin American and Caribbean region is also an important area where China’s “making way into the world market” strategies are implemented. By the end of 2007, China’s total direct foreign investment in the non-financial sectors have reached US $21.58 billion, covering areas including trade, projects contracting, manufacturing, oil and natural gas, and development and investment in mineral resources.

Over the past 30 years of reform and opening-up, China’s economic and trade cooperation between the developed and developing countries in the Americas and Oceania have made huge progress, in addition, its economic and trade ties with some small and underdeveloped economies in the South Pacific island countries are becoming increasingly close. In 2007, the trade volume between China and the South Pacific island countries was US $1.53 billion, 77 times over 1978. Of which, China’s export totaled US $870 million, while import stood at US $660 million, an increase of 9-fold and 57-fold over 1978. In addition, the economic and technical cooperation between China and the South Pacific island countries has also resulted in plentiful accomplishments.

During its 30 years of opening-up to the outside world, China has gradually established a series of bilateral and multilateral economic and trade dialogue mechanisms with the American and Oceanian area. These mechanisms have become an important platform for China to discuss and find solutions to issues of trade and economic cooperation that emerge between China and various nations on the two continents. They also play an important role in the healthy and stable development of economic and trade ties. The following bilateral intergovernmental trade and economic dialogue mechanisms have been established between China and major nations: China has established joint bilateral commissions with the US, Canada, Australia, and New Zealand; bilateral mixed committee mechanisms with 13 Latin American and Caribbean countries. There has also been the establishment of the high-level Coordination and Cooperation Committee with Brazil; the Sino-Mexican bilateral high-level working group that China has set up with the Mexican Ministry of Economic Affairs; the bilateral economic and trade negotiations committee established by China with the Costa Rica Foreign Trade Ministry; and a Joint Commission on economic and trade mechanisms set up with the South Pacific island nation of Fiji. In addition, there are two mechanisms for multilateral dialogue: the China – Caribbean Economic and Trade Cooperation Forum and the China – Pacific Island Countries Economic Development Cooperation Forum.
　
The free trade agreements and ongoing negotiations that China has established with some of the regions have greatly promoted economic and trade relations between the countries. In April 2008, a free trade agreement was reached and signed by China and New Zealand. This was the first free trade agreement between China and a developed nation. It was also the first comprehensive free trade agreement to be signed by China with another country that covers trade in goods, services investment and many other areas. In November 2005, China and Chile signed a free trade agreement, making the South American country the first developing nation to sign a free trade agreement with China. In addition, China and Peru have concluded free trade negotiations, and will sign an agreement; Costa Rica has completed its feasibility study into a free trade agreement, and is about to start formal free trade negotiations.

In the meeting, Chen Deming, the minister of the Ministry of Commerce of the PRC, delivered a working report named “Enhance Confidence and Consolidate Works to Keep the Development of Commercial Businesses Efficient and Rapid”.

He expressed that, in 2008, under the right leadership of the State Council, the cadres and staff in all the commercial systems of China focused on their own jobs, served the overall situation, effectively managed the server natural disasters and the impacts brought by the national financial crisis, and achieved an efficient and rapid development of commercial businesses. In 2008, the domestic market was active and booming. In the first 11 months, the total retail sales of consumer goods reached 9.7759 trillion yuan, the year-on-year growth rate is 21.9%, and it was the fastest-growing period in the last ten years. The trend that the prices of commodities increased fast was effectively restrained. The increment of the Consumer Price Index (CPI) dropped to 2.4%, and it is expected that the increment of the Consumer Price Index of the whole year will be limited within 6%. The foreign trade increased steadily. In the first 11 months, the total export-import volume was US $ 2.3794 trillion, which had increased by 20.9%; the total export volume was US $ 1.3172 trillion, which had increased 19.3%; the total import volume was US $ 1.0612 trillion, which had increased by 22.8%. It is expected that the total export-import volume of the whole year will exceed US $ 2.5 trillion, which would have increased by about 18% over last year. The absorbed foreign capitals kept on increasing. In the first 11 months, the total amount of the foreign capitals absorbed was US $ 86.4 billion, which had increased by 26.3%, and it is expected that the total amount of the foreign capitals absorbed in the whole year would exceed US $ 90 billion; China has been the largest foreign capital absorbing country in all the developing countries for 17 years in succession. The capitals that were invested in foreign countries and the cooperation with foreign countries were both accelerated. In the first three quarters, the total amount of the non-financial direct investments to foreign countries was US $ 32.7 billion, which had increased by 1.5 times, and the accumulative total assets of the Chinese-funded enterprises in foreign countries exceeded US $ 300 billion. In the first 11 months, the total finished turnover of the contracted projects in foreign countries was US $ 47.1 billion, which had increased by 42%; the total finished turnover of the foreign labor cooperation was US $ 7.2 billion, which had increased by 24.2%. The commercial system had achieved remarkable successes in coping with important events, guaranteeing the supplies of markets, enhancing the construction of market system, expanding the domestic consumptions, optimizing the pattern of imports and exports, promoting the healthy development of foreign trades, improving the environment for investments, upgrading the quality of the absorbed foreign capitals, enhancing the management, standardizing the services, accelerating the development of investments to foreign countries and the cooperation with foreign countries, carrying out multilateral and bilateral cooperation, solving the disputes in international trades, deeply studying and practicing the scientific outlook on development, and enhancing the construction of itself.

Chen Deming pointed out that the severe impact brought by the economic depression of the whole world will still go on, so, the domestic and foreign circumstances that the development of Chinese commercial businesses will face in 2009 will be much more complex. The situation for exports will be quite severe. It will be much harder for domestic consumptions to increase. Much more difficulties will be met when absorbing foreign capitals. The situation of trade frictions will not be optimistic. But the basic development situation and the long-term development trend will not change, and there will also be a lot of advantages for keeping the commercial businesses developing steadily and rapidly. First, the positive financial policies and quite easing monetary policies implemented by the government of China will have promoting effects on stabilizing the exports and expanding the consumptions. Especially, the policies such as raising the export rebates, improving the processing trades, adjusting the customs duties, supporting the developments of the medium and small-sized enterprises and so on, will directly promote the foreign trades to develop steadily. Second, the developments of industrialization and urbanization and the quick upgrading of industrial structure and consumption pattern of China will bring strong domestic demands for economic development. Third, the comprehensive national strength of China is rising, the supporting system for the industries of China is quite integrated, the financial system is steady and health generally, the financing supply is sufficient, the qualities of labor forces are increasingly rising, the enterprises’ adaptive abilities to the changing market and environment are being increasingly enhanced, and the systems for allocating the resources in the market are being improved gradually. Fourth, the industrial chain of export is quite integrated, and the comparative advantage is clear. Most of the export products are essentials of lives, and the demand for them is not quite flexible. The strategy of market diversification has got enterprises acquired abundant experiences for exploring international markets. Multilateral and bilateral economic and trade relationships are being improved increasingly, and the international economic and trade circumstance is generally advantageous. The economic adjustment of the world will bring many new opportunities for China to accelerate the upgrading of economic structure, absorb advanced technologies and personnel and use the resources of foreign countries.

Chen Deming emphasized that our thoughts and activities must be practically unified with the analysis and judgment made by the central government on the foreign and domestic economic situations, unified with the decisions and arrangements made by the central government, and unified with the requirements that the scientific outlook on development ask for on the commercial works. Our confidence and determinations for successfully finishing the commercial works must be confirmed, the difficulties and challenges that we are facing must be adequately estimated, and every arrangement made by the economic work meeting of the central government must be firmly implemented. The domestic demands must be positively expanded, and the growth of foreign trades must be kept steady. Meanwhile, the transition of development pattern and the adjustment of economic structure must be accelerated, the stamina of development could be enhanced, and great efforts must be made to achieve a rapid and efficient commercial-business development.

Chen Deming said eight aspects of commercial works must be successfully done in 2009. First, the construction of circulation network must be enhanced to expand the consumptions of urban and rural residents. The construction of the circulation network in rural areas must be accelerated, and the circulation networks in urban areas must be improved continuously. The works of promoting home appliances in rural areas must be firmly done, the circulation network for the renewable resources must be standardized and developed, and a large batch of distribution enterprises must be positively developed. Second, the commodity circulation must be boosted, and market adjustment and control must be improved. The monitoring to operation must be enhanced, the guiding function of the information must reinforced, the connections between productions and sales must be enhanced, and circulation of agricultural products must be promoted. The reserves system must be improved, and great efforts must be made to guarantee “collecting and reserving them in boomer harvest time, putting them into market in poor harvest time”. The market orders must be regulated, and the fair competition in market must be safeguarded. Third, the steady growth of imports and exports must be maintained, and the transition of foreign trade pattern must be accelerated. The support of tax policies and financial policies must be enhanced, great efforts must be made to explore the emerging markets, the export commodity composition must be optimized, the service trades must be greatly developed, and the imports must be positively enlarged. Fourth, the scale of foreign capitals that are used must be stabilized, and the quality of the foreign capitals that are used must be raised. The investment environment must be improved and perfected, the composition of the foreign capitals that are used must be optimized, the geographical distribution of foreign capitals must be improved, and the utilization patterns of foreign capitals must be innovated. Fifth, actively and steadily push the development of the capital invested in foreign countries and the cooperation with foreign countries, the level of economic cooperation with foreign countries must be raised. The steps to develop the investment to foreign countries must be accelerated, great efforts must be made to undertake contracted project in foreign countries and carry on the labor service cooperation in foreign countries, and facilitation of investing in foreign countries and the cooperation with foreign countries, and the system for supervising the investment in foreign countries and the cooperation with foreign countries must be improved. Sixth, multilateral and bilateral economic and trade cooperation must be deepened, and outstanding exotic environment must be constructed. The multilateral and bilateral economic and trade relationships must be enhanced and improved, the Doha Round must be positively and increasingly promoted, the construction of free trade areas must be promoted positively and steadily, the opening-up in border areas must be accelerated, the economic and trade cooperation among the Chinese Mainland, Taiwan, Hong Kong and Macao must be promoted, the works of providing assistances to foreign countries must be reinforced and improved. Seven, trade friction must be properly managed to guarantee the safeties of domestic industries. All the operations must be planed as a whole, so risk of trade friction will be reduced. The strengths of all the aspects must be wholly arranged to raise the ability for coping with trade frictions. The trade remedy must be carried out according to the laws, and the effect of trade remedy must be raised. The scientific outlook on development must be deeply studied and practiced, and the systems for commercial works must be further constructed.

Over 300 people including the representatives from the relevant departments of China’s State organs, every province, autonomous region and municipality directly under the Central Government of China, the cities specifically designated in the state plan, the management departments of the Xinjiang Production and Construction Corps, the national-class development areas, and the Border Economic Cooperation Zones, attended the meeting. And during the meeting, the representatives carefully discussed such issues as coping with the financial crisis, expanding the domestic consumption demands, stabilizing the growth of foreign trades, and accelerating the adjustment of economic structure and the transition of development pattern.