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6 White Paper on the Business Environment in China
18.9 percent).16 of Social Sciences is predicting that the import and export of
Temperate eastern China has historically received the ma- China’s agricultural products will likely slow in the medium- to
long term.22
jority of foreign investment in agriculture (as of 2005, nearly
60 percent of the total since the “opening up”), although sus- Another recent development is the proliferation of agricul-
tained efforts are being made to drive investment into central tural insurance. After a pilot program involving six provincial
and western China. regions, it was reported that “agricultural insurance income
reached 10.54 billion yuan by November [of 2008], soaring 112
Interestingly, in 2006 only 12 of the total 458 foreign-invest- percent compared with the same period [in 2007],” and that a
ed projects involved investments of more than $20 million,16 total of 4.2 billion yuan in compensation had been paid out to
suggesting that the dramatic economies of scale witnessed in more than 10 million households as a result.23
secondary industry have yet to take hold in agriculture—which,
despite experimentation with communal farming in the 1950s, Additionally, a pilot pension program was launched in 10
has historically been driven by individuals or families working percent of the nation’s counties in 2009. By 2011, Southwest-
small parcels of land who have in the past been (and currently ern University of Finance and Economics Professor Lin Yi told
are) largely self-sufficient.5 China Daily that 200 million individuals were participating in
the program. It is expected to cover the entire nation by 2020.24
In 2007 549 foreign investment projects were initiated in
the sector, but in 2008 that number decreased to 470. Of those In addition to the subsidies and the new pension program,
set up in 2008, the majority (332) were in eastern China, with improvements have been made to rural health insurance under
76 and 62 located in central and western China, respectively. the “New Rural Cooperative Medical Scheme.” The program,
These projects accounted for a 40 percent year-on-year increase which reportedly covered 93 percent of the Mainland’s farmers
in utilized foreign capital (for a total of approximately $550 in 2010, under which “the government will raise its subsidy to
million), however.17 200 yuan per person each year from 120 yuan in 2011 [while
the individual] pays 30 yuan.” The program will furthermore
In 2009, 515 foreign investment projects had been realized increase reimbursement rates for “basic and essential” drugs and
in agriculture, up from 2008’s figures; utilized foreign capital services from 60 to 70 percent and raise the maximum reim-
similarly grew to reach $751 million (a 35 percent year-on-year bursement amount from 30,000 to 50,000 yuan.25
increase). Regional distribution of these projects was generally
similar to in years past, although the nation’s central region at- 2010 saw an additional insurance scheme initiated: a
tracted a greater share than it had in 200818 (consistent with, or weather insurance pilot program in Fujian was announced after
perhaps a result of, the Central Government’s efforts to drive a China Insurance Regulatory Commission (CIRC) reported a
investments inland). detailed systemic inability to adequately compensate for losses
due to natural disasters: “Insurers cover about 30 percent of
According to a “Regular Press Conference of the Ministry of losses from natural disasters in developed countries, but that
Commerce” held in 2010, the number of newly established for- figure is below 5 percent in China—a country that is frequently
eign enterprises in the agriculture, forestry, animal husbandry hit by a wide range of natural disasters.”26
and fishery industries was 929, up by 3.7 percent year-on-year,
and the actual utilization of foreign capital amounted to $1.91 A 2010 CIRC report indicated that agricultural insurance
billion, up by 33.8 percent year-on-year. These new enterprises premiums over the course of 2009 totaled 13.39 billion yuan
accounted for 3.4 percent of the national total of newly-estab- in 2009.27
lished foreign-invested enterprises and 1.8 percent of total paid-
in foreign capital, respectively.19 Despite its fast expansion following that original pilot
program, agricultural insurance is still somewhat under-
FDI in the agricultural industries has historically focused on regulated and potentially problematic. According to an
technical cooperation with local producers; the proportion of unnamed State Council official speaking to China Daily,
foreign investment with an export focus is quite small.19 issues include “a lack of continued policy supports and unclear
responsibilities for relevant departments.” Accordingly, the
The trend in agricultural FDI is perceived to be upward, State Council’s Legislative Office issued a draft proposal for
however: overcapacity in the manufacturing sector will likely agricultural insurance regulations in May of 2012. The draft
drive more FDI to the agricultural and service sectors, Asian details how the government “will support agricultural insurance
Development Bank senior economist Zhuang Jian told China with favorable financing and taxation policies and will specify
Daily in 2009.20 In 2011, China Daily specified that the resourc- the duties of relevant departments”, in addition to outlining
es of foreign investment will be allocated to advanced agricul- “the principles for insurance companies handling agricultural
ture.21 insurance and the rules for operations in accordance with risk
analyses, business actions and business results”28.
Finally, although the Ministry of Agriculture published sta-
tistics indicating a 13.2 percent year-on-year growth in agricul-
tural exports between 2002 and 2010, the Chinese Academy
114
18.9 percent).16 of Social Sciences is predicting that the import and export of
Temperate eastern China has historically received the ma- China’s agricultural products will likely slow in the medium- to
long term.22
jority of foreign investment in agriculture (as of 2005, nearly
60 percent of the total since the “opening up”), although sus- Another recent development is the proliferation of agricul-
tained efforts are being made to drive investment into central tural insurance. After a pilot program involving six provincial
and western China. regions, it was reported that “agricultural insurance income
reached 10.54 billion yuan by November [of 2008], soaring 112
Interestingly, in 2006 only 12 of the total 458 foreign-invest- percent compared with the same period [in 2007],” and that a
ed projects involved investments of more than $20 million,16 total of 4.2 billion yuan in compensation had been paid out to
suggesting that the dramatic economies of scale witnessed in more than 10 million households as a result.23
secondary industry have yet to take hold in agriculture—which,
despite experimentation with communal farming in the 1950s, Additionally, a pilot pension program was launched in 10
has historically been driven by individuals or families working percent of the nation’s counties in 2009. By 2011, Southwest-
small parcels of land who have in the past been (and currently ern University of Finance and Economics Professor Lin Yi told
are) largely self-sufficient.5 China Daily that 200 million individuals were participating in
the program. It is expected to cover the entire nation by 2020.24
In 2007 549 foreign investment projects were initiated in
the sector, but in 2008 that number decreased to 470. Of those In addition to the subsidies and the new pension program,
set up in 2008, the majority (332) were in eastern China, with improvements have been made to rural health insurance under
76 and 62 located in central and western China, respectively. the “New Rural Cooperative Medical Scheme.” The program,
These projects accounted for a 40 percent year-on-year increase which reportedly covered 93 percent of the Mainland’s farmers
in utilized foreign capital (for a total of approximately $550 in 2010, under which “the government will raise its subsidy to
million), however.17 200 yuan per person each year from 120 yuan in 2011 [while
the individual] pays 30 yuan.” The program will furthermore
In 2009, 515 foreign investment projects had been realized increase reimbursement rates for “basic and essential” drugs and
in agriculture, up from 2008’s figures; utilized foreign capital services from 60 to 70 percent and raise the maximum reim-
similarly grew to reach $751 million (a 35 percent year-on-year bursement amount from 30,000 to 50,000 yuan.25
increase). Regional distribution of these projects was generally
similar to in years past, although the nation’s central region at- 2010 saw an additional insurance scheme initiated: a
tracted a greater share than it had in 200818 (consistent with, or weather insurance pilot program in Fujian was announced after
perhaps a result of, the Central Government’s efforts to drive a China Insurance Regulatory Commission (CIRC) reported a
investments inland). detailed systemic inability to adequately compensate for losses
due to natural disasters: “Insurers cover about 30 percent of
According to a “Regular Press Conference of the Ministry of losses from natural disasters in developed countries, but that
Commerce” held in 2010, the number of newly established for- figure is below 5 percent in China—a country that is frequently
eign enterprises in the agriculture, forestry, animal husbandry hit by a wide range of natural disasters.”26
and fishery industries was 929, up by 3.7 percent year-on-year,
and the actual utilization of foreign capital amounted to $1.91 A 2010 CIRC report indicated that agricultural insurance
billion, up by 33.8 percent year-on-year. These new enterprises premiums over the course of 2009 totaled 13.39 billion yuan
accounted for 3.4 percent of the national total of newly-estab- in 2009.27
lished foreign-invested enterprises and 1.8 percent of total paid-
in foreign capital, respectively.19 Despite its fast expansion following that original pilot
program, agricultural insurance is still somewhat under-
FDI in the agricultural industries has historically focused on regulated and potentially problematic. According to an
technical cooperation with local producers; the proportion of unnamed State Council official speaking to China Daily,
foreign investment with an export focus is quite small.19 issues include “a lack of continued policy supports and unclear
responsibilities for relevant departments.” Accordingly, the
The trend in agricultural FDI is perceived to be upward, State Council’s Legislative Office issued a draft proposal for
however: overcapacity in the manufacturing sector will likely agricultural insurance regulations in May of 2012. The draft
drive more FDI to the agricultural and service sectors, Asian details how the government “will support agricultural insurance
Development Bank senior economist Zhuang Jian told China with favorable financing and taxation policies and will specify
Daily in 2009.20 In 2011, China Daily specified that the resourc- the duties of relevant departments”, in addition to outlining
es of foreign investment will be allocated to advanced agricul- “the principles for insurance companies handling agricultural
ture.21 insurance and the rules for operations in accordance with risk
analyses, business actions and business results”28.
Finally, although the Ministry of Agriculture published sta-
tistics indicating a 13.2 percent year-on-year growth in agricul-
tural exports between 2002 and 2010, the Chinese Academy
114
