Chinese Business Environment

Chinese Business Environment

Westinghouse Power Contract

During Commerce Department Under-Secretary David Aaron's visit to Beijing, Westinghouse Power Generation announced on April 16 the signing of a $170 million power plant contract in China. Under the terms of the contract, Westinghouse and its consortium partners, Black & Veatch of Kansas City, Kansas, and CMEC of China, will design and supply the turbine and boiler islands for the 700 megawatt, two-unit, coal-fired Yuzhou Power Plant in He Nan Province. The Westinghouse scope includes supply of the turbine-generator equipment and consortium management. The Asian Development Bank is financing the project. Westinghouse currently has eight joint ventures in China and, with its licensees and joint-venture partners, is supplying over 50,000 megawatts of electricity throughout the region. Project construction is expected to begin later this year and the plant will enter commercial operation in three years.

Non-State Group in IFC Loan

The International Finance Corp. (IFC), the World Bank's private-sector financing arm, signed an unprecedented cooperation project on March 27 involving a Chinese non-state financing house. The deal covers a $30 million IFC loan for Orient Finance Co. - a member of Orient Group and the first non-state finance company in China. Javed Hamid, director of IFC's East and Southeast Asian operations, said the project reflected IFC's keen interest in supporting the development of China's capital market and its private sectors. Hamid said the company would be increasingly active in supporting private business while playing a role in the reform of state firms. IFC, which has already provided $1.15 billion in loans and investment for China, plans to supply another $400 million in the first year of the ninth Five-Year Plan. Hamid said IFC is also seeking to take part in the development of China's financial market by cooperating with local rating firms, banks, insurance companies, and securities brokerages.

Globalstar Gearing Up

On April 21, Globalstar announced that China Telecom (Hong Kong) Group Ltd. had agreed to invest $37.5 million to become a full partner in Globalstar L.P. China Telecom, along with CHINASAT (China Telecommunications Broadcast Satellite Corporation), will retain the sole rights to provide Globalstar services in China. Both companies are expected to be wholly owned and supervised by China's newly-formed Ministry of Information Industry (MII). "The addition of China Telecom as a full partner solidifies Globalstar's commitment to bringing the promise of mobile satellite communications to China's 1.2 billion people", said Bernard L. Schwartz, chairman and CEO of Globalstar L.P., and of Loral Space and Communications, Globalstar's largest equity owner. China Telecom and CHINASAT will manage all Globalstar operations in China. The Globalstar system, comprising 48 low-earth-orbiting (LEO) satellites and a global network of ground stations, will allow people in areas with insufficient or non-existing telecommunications infrastructure to make or receive calls or transmit data. The first four Globalstar satellites were successfully launched on February 14th.

Mineral Resource Priorities

Attracting foreign investment into China's mineral sector and raising the standard of the country's natural-resource management remain priorities for the new Minister of Land and Natural Resources. According to Zhou Yongkang, "The goal of sustained economic development needs us to search for markets and provide sources both at home and abroad. The creation of the Ministry of Land and Natural Resources will promote utilization of natural resources and help foreign investors to conduct their business activities in China more effectively". In the past few years, foreign investment has been restricted to major sectors such as oil exploration and coal mining.


globalstar, ifc, chinasat
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