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China
Investment Property Sales in China
The Chinese property market remains an attractive one for overseas property investors despite having already seen prices rise by around 40 per cent over the past two to three years, one property consultancy firm has said.
Earlier this week a new property law that aims to give private property the same protection as is accorded to state property came into effect, according to the Xinhua news agency, providing a further boost to investors.
Knight Frank head of residential research Liam Bailey has said that more and more outside investors are set to look to China as the country continues its rapid expansion, but advised that existing gains meant that detailed knowledge of the sector was now paramount.
"There's been a lot of growth already, but a lot of that growth has been down to the fact that there’s a problem in China whereby Chinese investors find it difficult to get cash out of the country to invest overseas," Mr Bailey suggested.
"That will change over time and China will become much more international in its outlook. The logical step is that China becomes an obvious location for UK, European and US investors who are looking to place money," he added.
Area: 9,956,960 sq km (3.7m sq mi)
Population: 1.29 bn
Capital City: Beijing
People: Han Chinese make up around 92 percent of the population. The remaining 8 percent is comprised of 55 minority ethnic groups.
Official Language: Mandarin (Putonghua) with many local dialects.
Religion(s): China is officially atheistic, but there are five State-Registered religions: Daoism, Buddhism, Islam, Catholic and Protestant Christianity.
Currency: Yuan or Renminbi (RMB)
Major political parties: Chinese Communist Party
Government: There are four major hierarchies in China: the Chinese Communist Party (CCP), the National People's Congress (China's legislature), the governmentand the military. The supreme decision-making body in China is the CCP Politburo and its 9-member Standing Committee, which acts as a kind of 'inner cabinet', and is headed by the General Secretary of the Chinese Communist Party. The National People's Congress (NPC) is China's legislative body. It has a five-year membership and meets once a year in plenary session. However, in practice it is the CCP who takes all key decisions.
Head of State and General Secretary of the CCP: President Hu Jintao
Chairman of the Standing Committee of the NPC: Wu Bangguo
Premier of the State Council: Wen Jiabao
State Councillor (Foreign Affairs): Tang Jiaxuan
Foreign Minister: Yang Jiechi
Membership of international groups/organisations: United Nations (including permanent membership of the UN Security Council), ASEAN Regional Forum (ARF); Asia-Pacific Economic Cooperation Forum (APEC); Asian Development Bank (ADB); Shanghai Cooperation Organisation; World Trade Organisation (WTO).
GEOGRAPHY
China is twice the size of Western Europe. It is the third largest country in the world, after Russia and Canada. Its terrain varies from plains, deltas and hills in the east to mountains, high plateaux and deserts in the west. To the south its climate is tropical, whilst to the north it is sub-arctic. Less than one-sixth of China is suitable for agriculture. The most fertile areas lie in the eastern third of the country, which is economically the most developed region.
HISTORY
Longer Historical Perspective
The Chinese imperial system came to an end in 1911. The Qing (Manchu) dynasty was overthrown and China was proclaimed a republic, partly through the efforts of revolutionaries such as Sun Yat-sen. The country then entered a period of warlordism. In 1927 the Nationalist Party or 'Kuomintang' (KMT), under its leader Chiang Kai-shek, established a central government in Nanjing.
The Chinese Communist Party (CCP) was founded in 1921. It broke with the KMT and was forced to flee into the interior in the Long March in 1934/35. Both KMT and CCP forces opposed Japan during World War Two but a civil war broke out from 1945-1949. CCP forces under Mao Zedong routed their KMT opponents. In 1949 Mao announced the establishment of the People's Republic of China. The government of the then 'Republic of China' under President Chiang Kai-shek fled to Taiwan, together with approximately two million supporters.
The period between 1949 and Mao's death in 1976 was characterised by an ambitious political and economic restructuring programme. This involved the collectivisation of industry, the establishment of communes and the redistribution of land. The Cultural Revolution from 1966-1976 brought enormous upheaval in the political system. Mao had to rely on the armed forces to maintain order and exercise control.
Recent History
In December 1978 the CCP, inspired by Deng Xiaoping, launched a wide-ranging programme of economic and social reform. This sought to modernise the economy, develop China's external relations (the 'open door policy') - especially with the West, and implement a gradual and limited liberalisation of Chinese society.
Political opposition to the more liberal reforms forced periods of retrenchment. In June 1989, following the brutal suppression of pro-democracy demonstrators in Beijing, political control swung firmly into the hands of conservative elements within the CCP. The Chinese government labelled the demonstrations a 'counter-revolutionary rebellion' and clamped down on dissent. Prominent dissidents fled the country or went into hiding. Many activists were arrested. Party General Secretary Zhao Ziyang was replaced by Jiang Zemin, former Mayor and later Party Secretary of Shanghai. Jiang was appointed to the additional post of State President in March 1993. Jiang continued the policies of Deng Xiaoping, prioritising economic growth, particularly in China's coastal provinces.
POLITICS
Recent Political Developments
Jiang retired as President in March 2003. Hu Jintao was named President and Wen Jiabao became Premier. Wu Bangguo replaced Li Peng as NPC Chairman. The leadership transition was completed in September 2004 with Jiang retiring from the Chairmanship of the Central Military Commission (CMC). Hu assumed the post of CMC Chairman to add to his roles as State President and Party General Secretary.
Hu's first term has been spent consolidating his position and proceeding with economic reform. But he has recognised the potential for instability caused by the unfettered capitalism his predecessor allowed to flourish. Examples of the imbalances this has caused in society include:
- wide income imbalances between rich, eastern coastal cities, and poorer inland cities;
- income differences between urban and rural dwellers - the average urban resident of Beijing earns around RMB 2000 a month (around £130), but 135 million people in China still live below the international poverty line of US$ 1 a day, and up to five hundred million on US$ 2 a day;
- a collapse of the health insurance scheme, which means that 80% of all healthcare costs have to be paid in cash at the time of consumption;
- inequalities between urban residents and migrant labourers who have moved to the cities. Unable to transfer their official place of residence, they cannot access public services, including education for their children;
- rampant corruption by those in public office;
- 87,000 incidents of mass violence which took place in 2005, often provoked by land expropriations or lay-offs from state-owned enterprises.
Under the slogan of a "harmonious society", he is therefore promoting a range of policies in the health, education, environment and other fields which will address social inequality. But these policies will not be allowed to compromise economic growth and reform.
Political Structure
China has all the structures a modern democratic state would expect to have, with in theory a separation of powers between the different functions of state similar to most western democracies.
- The Legislature: Key laws are passed by the National People's Congress (NPC) and its Standing Committee. The NPC has around two thousand members, and only meets in full session for a fortnight every March. Outside that time, a Standing Committee of around three hundred members carries out business. The Chairman is Wu Bangguo. Members are "elected" from Provincial and Municipal People's Congresses, who are in turn "elected" from People's Congresses below them. Only at the lowest level are members "elected" by the public, but from a very narrow slate of approved candidates. (NB see "Village elections" below). A handful of independents manage to get elected. The NPC also votes the executive into office. They are due to elect a new executive at their spring 2008 session.
- The Executive: The Government is headed by Wen Jiabao, who is Premier. There are four Vice Premiers, five State Councillors, twenty-eight Ministers, and fifty Offices, Institutions or Bureaux under the State Council or other Ministries. Between them they carry out all the functions of government, from health policy to water resources, to meteorology. Two bodies many would not expect to be part of government are Xinhua, the news agency, and the State Administration of Religious Affairs, which are directly under the State Council.
- The Judiciary: there are several levels of People's Courts which hear both criminal and civil cases (though the majority of criminal cases are actually dealt with by the police as administrative cases). The People's Procuratorate acts as an investigator and public prosecutor. Officially, the courts continue to be instruments of the dictatorship of the proletariat, and there is provision for political involvement in their judgements.
In the next layer down from central government, China claims twenty-three provinces (as it includes Taiwan); four municipalities directly under the central government (Beijing, Tianjin, Shanghai and Chongqing); five autonomous regions (Tibet, Xinjiang, Inner Mongolia, Ningxia and Guangxi Zhuang); and two Special Administrative Regions (Hong Kong and Macao).
The full hierarchy of government is:
- central government;
- province, municipality or autonomous region;
- prefecture or city;
- county or district;
- township;
- village (though see below)
A province may contain within it autonomous counties or towns where there is a large ethnic minority population. Each layer of government will have departments similar to those of central government; a People's Congress; a Political Consultative Committee (and a Communist Party Committee). The head of government in each province is the Governor, but in practice the provincial Party Secretary is more powerful.
Villages are now officially regarded as theoretically self-governing (and therefore not part of the formal government hierarchy). There are direct popular elections to village committees. They are responsible for providing some public services, and receive a budget from higher authorities to do so. They have no revenue-raising powers of their own. The quality of the elections varies, but they are more or less free and fair.
The Chinese People's Political Consultative Conference (CPPCC)
The Chinese People's Political Consultative Conference (and its provincial and local off-shoots) brings together all permitted strands of political opinion and activity in China. It is not the legislature, but its main annual meeting comes just ahead of the NPC, and its views are officially fed into the NPC. Its Chairman is Jia Qinglin. Its main components are:
- China's eight political parties other than the Chinese Communist Party (known collectively as the 'United Front'). They include the Revolutionary Committee of the Chinese Guomindang; the China Democratic League; and the China Democratic National Construction Association. They are small, and all accept in their constitutions the dominant position of the Communist Party.
- Representatives of China's "mass organisations": the Communist Youth League, The All-China Federation of Trade Unions; the All China Women's Federation; and fifty other organisations covering everything from film artists to religious organisations.
The Party
The real power in the land is the Chinese Communist Party. Founded in 1921 and now with around 70 million members, it has ruled China exclusively since 1949.
Party structures
Hu Jintao is General Secretary of the Communist Party. He heads the Politburo, which has twenty-four full and one alternate members. Nine members of the Politburo form a Politburo Standing Committee. They are the real government of China, and agree all major policies of the Party and government in the Standing Committee, using their positions elsewhere in government to implement them. Each member of the Politburo has a particular portfolio or government position, as follows (in order of precedence):
Hu Jintao - President of China, Chair of the Central Military Commission;
Wu Banguo - Chairman of the National People's Congress;
Wen Jiabao - Premier;
Jia Qinglin - Chair of the Chinese People's Political Consultative Conference;
Zeng Qinghong - Vice President of China
Huang Ju - Vice Premier
Wu Guanzheng - in charge of Party discipline
Li Changchun - Propaganda
Luo Gan - law and order
The Party has a number of Departments, Committees and Leading Groups to formulate policy which often mirror government Ministries. Notable ones are:
- Party Central Committee: the national Party committee, which meets once a year in the autumn, and has around three hundred members;
- The Central Military Commission: which is in effect the same thing as the state Central Military Commission, and therefore runs the armed forces;
- The Commission for Discipline Inspection: responsible for fighting corruption among Party members;
- General Office and Central Bodyguards Bureau: which control access to the President;
- Organisation Department: in charge of personnel policy and appointments;
- Propaganda (or Publicity) Department;
- United Front Department: manages relations with other political parties, religious organisations and other non-Party organisations;
- International Liaison Department: manages relations with political parties in other countries.
Leadership
At the lowest levels there is a limited amount of democracy within the Party. Branch committees are elected from their members. At the highest level, the Party is effectively a self-perpetuating oligarchy. The outgoing Politburo Standing Committee selects its successor and members of the Politburo.
Officially the Politburo and its Standing Committee are appointed at the Party Congress every five years. The next Congress is in autumn 2007.
ECONOMY
Economic indicators:
GDP: US$2.22 trillion (2006)
GDP p.c. US$1,700 (2006)
Annual Growth: 10.7% (2006)
Consumer prices: 1.5% 2006
Exchange rate: 15 Renminbi = £1
China has been one of the world's economic success stories since reforms began in 1978. In purchasing power parity terms, China is the world's second biggest economy. Official figures show that GDP has grown on average by 9 percent a year over the past 25 years.
On 25 January 2007, the National Bureau of Statistics announced that China's economic growth rate for 2006 was 10.7%, at the high end of analyst expectations. For each of the past four years, China has grown at 10% or more, but the 2006 rate is the highest pace of growth since 1995.
Independent forecasters suggest that growth has peaked, and should fall to around 9.5% this year, with exports continuing to play a driving role. The trade surplus - $177.5 billion in 2006, up 75% on the year - could breach $200 billion (around 8% of GDP) this year.
The current growth model, and policy underlying it, remains heavily skewed towards exports and investment, with little emphasis on private consumption. China has started to adjust its economic policies to better promote sustainable growth.
The Government has highlighted its intention to:
- undertake more bank reform (and encourage banks to provide finance to rural areas and smaller firms)
- develop the capital markets (to give firms more opportunity to raise finance)
- engage in deeper reform of the insurance sector (to expand the options available to savers), and
- provide a sounder regulatory structure (aimed at promoting financial integration).
A growing share of China's economic growth has been generated in the private sector as the government has opened up industries to domestic and foreign competition, though the role of the state in ownership and planning remains extensive. China's entry into the World Trade Organisation in December 2001 is further integrating China into the global economy.
Taiwan and Penghu (Pescadores) Islands were ceded to Japan following China's defeat in the Sino-Japanese War in 1895. They remained under Japanese rule until Japan's surrender in 1945, when they were occupied by Chinese Nationalist (KMT) forces. Following the Nationalists' defeat on the mainland, the Nationalist government and two million supporters fled to Taiwan. The Nationalist administration on Taiwan maintained its claim to be the legitimate government of the whole of China and set up a national central government on the island.
Reunification with Taiwan remains one of the Chinese government's key objectives. Although China has sought reunification through negotiation, it has not renounced the threat of military action against Taiwan. In March 2005, the PRC National People's Congress (NPC) enacted an Anti Secession Law. The law is largely a codification of China's existing policy towards Taiwan. Although it includes certain measures to promote cross-Strait dialogue and co-operation it also reserves the right to use non-peaceful means in the event that Taiwan 'secedes' or all possibilities for a peaceful reunification have been exhausted.
We do not recognise Taiwan as a state and do not have diplomatic relations with Taiwan. We consider the Taiwan issue is one to be settled by the people on both sides of the Taiwan Strait. We are strongly opposed to any use of force and we look to both sides to avoid unilateral measures which raise tensions across the Strait, to engage in confidence building measures and to find a mutually acceptable basis for resumption of constructive and peaceful dialogue.
INTERNATIONAL RELATIONS
CHINA'S RELATIONS WITH THE INTERNATIONAL COMMUNITY
China's international political and economic weight continues to grow. It joined the World Trade Organisation in 2001, and is increasingly active in the United Nations Security Council, where it holds one of the five Permanent Seats.
China has played a constructive role over the last year on international issues. China has contributed positively to the international community’s response to Iranian nuclear ambitions, it has played a key role in the Six Party Talks with North Korea, and has increased its contributions to UN Peace Support Operations.
China is also playing a growing role in Africa. Trade between China and Africa has quadrupled from $10 billion in 2001 to $40 billion in 2005. It is expected to rise to $100 billion in the next five years. Chinese investment in Africa has also been increasing rapidly, with a large proportion flowing into infrastructure. In November 2006, China hosted delegates from 48 African countries, including 41 Heads of State or Government, at the 3rd China-Africa Forum in Beijing.
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