China

ESSENTIAL FACTS

LOCATION: 35 00 N, 105 00 E
China is the world's fourth largest country (after Russia, Canada, and US). Beijing is its capital; Shanghai is its biggest city. Its landmass borders Russia, Mongolia, Kazakhstan, Tajikistan, Afghanistan, Pakistan, India, Vietnam, Nepal and Korea.

POPULATION: 1,321,851,888
China is the world’s most populated country.

CURRENCY: Renminbi (RMB); also known as the yuan (CNY). Other currencies include the Hong Kong dollar (HKD) and the Macanese pataca (MOP).

LANGUAGE: Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages.

CLIMATE: China has an extremely diverse climate due to its large surface area. It can be tropical in south and subarctic in the north.

EDUCATION: Ninety-one percent of those age 15 and over can read and write.

PUBLIC HOLIDAYS: Anniversary of the Founding of the People's Republic of China, 1 October (1949)

HISTORY AND GOVERNMENT

POLITICAL SYSTEM
China is a Communist state. The chief of state is President Hu Jintaoand the Vice President is Zeng Qinghong. The head of government is Premier Wen Jiabao and Vice Premiers Zeng Peiyan Hui Liangyu . The cabinet is called the State Council and is appointed by the National People's Congress (NPC). The legislative branch consists of the unicameral National People's Congress (Quanguo Renmin Daibiao Dahui ).

JUDICIAL SYSTEM
Chinese law is based on Soviet and continental civil code legal principles. Per CIA Factbook the courts are as follows: Supreme People's Court (judges appointed by the National People's Congress); Local People's Courts (comprise higher, intermediate, and basic courts); Special People's Courts (primarily military, maritime, railway transportation, and forestry courts).

COMMERCE AND TRADE

COMMERCIAL ACTIVITY
Agriculture: Rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish
Industry: Mining and ore processing, iron, steel, aluminum, and other metals, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; telecommunications equipment, commercial space launch vehicles, satellites

TRADE PRACTICES
Exports: Machinery, electrical products, data processing equipment, apparel, textile, steel, mobile phones to the US, Hong Kong, Japan, South Korea and Germany
Imports: Machinery and equipment, oil and mineral fuels, plastics, LED screens, data processing equipment, optical and medical equipment, organic chemicals, steel, copper from Japan, South Korea, Taiwan, the US and Germany

BANKING, FINANCE AND INVESTMENT

FINANCIAL FACTS
Although China is a Communist society, in 1978 changes were implemented to move to a mixed economy. This mostly was visible in areas where administration was centralized - farmland, local industries and small businesses. Price controls were lifted and international trade increased. China’s continued push toward a market economy has contributed to the fastest growing economy in the world, as well as its 10 percent poverty rate. However, in reaction to severe differences in wealth levels between the coasts and interior rural areas, China has formed at least three initiatives to help equalize this disparity.

Fiscal year: Calendar year

BANKING
According to Wikipedia, “China's largest bank, the Industrial and Commercial Bank of China (ICBC) in October 2006 raised US$21.6 billion in the world's largest initial public offering (IPO) in history. ICBC is now the world's second largest bank in market value, after only Citibank.”

STOCK MARKET
Stock of direct foreign investment - at home: $758.9 billion (2007 est.)
Stock of direct foreign investment - abroad: $93.75 billion (2007 est.)

MEMBERSHIPS
ADB, AfDB, APEC, APT, Arctic Council (observer), ARF, ASEAN (dialogue partner), BIS, CDB, EAS, FAO, G-24 (observer), G-77, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM (observer), IPU, ISO, ITSO, ITU, LAIA (observer), MIGA, MINURSO, MONUC, NAM (observer), NSG, OAS (observer), OPCW, PCA, PIF (partner), SAARC (observer), SCO, UN, UN Security Council, UNAMID, UNCTAD, UNESCO, UNHCR, UNIDO, UNIFIL, UNMEE, UNMIL, UNMIS, UNMIT, UNOCI, UNTSO, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO, ZC

FOREIGN INVESTMENT
Part of the economic reform and market orientation of the new Chinese economy is to actively promote, encourage and assist in foreign investment. Special Economic Zones have been set up in five cities that attract foreign investors with agreeable investment regulations.

BUSINESS

BUSINESS ENTITIES
Chinese company formations include the Joint Venture (JV), the Wholly Foreign Owned Enterprise (WFOE), and the Representative Office (Rep. Office).

The Wholly Foreign Owned Enterprise can only contain foreign capital, but the Chinese actively encourage foreigners to form a Joint Venture, as JVs have equal access to technological and managerial resources as state-run organizations.

Applications for company formation in China require business proposals and reports on economic feasibility. Registered Offices must also furnish the relevant information for the company’s registered resident representative. For all foreign-run companies must have a minimum of one director or a Board of Directors of at least three members.

The Certificate of Approval and Business License is issued by the government. The company formation process takes about 90 days.

TAXATION

CORPORATE TAXATION
There is no fixed corporate tax structure in China. For foreign owned companies, there are a variety of factors that enter into any discussion about the kinds and amount of taxes levied. It is of the utmost importance that you seek professional tax advice before forming your company, so that your formally registered information can be referred to at tax time and you can benefit from the many tax advantages China has to offer foreign investors.

DOUBLE TAXATION
China participates in double taxation treaty agreements with many countries, as befits its size and breadth of its economic power.