BUSINESS OUTLOOK

Approximately 40 percent of China's trade passes through Guangdong annually. This figure includes exports of $78 billion and imports of $63 billion. The growing consumer market proved to be a significant buffer to the effects of the Asian economic slowdown, as growth in Guangdong was mostly unaffected. Guangdong continued to pursue benchmarks of strong economic growth and economic reform, especially with respect to dedication to foreign investment and the expansion of the private sector. Private enterprises, wholly owned subsidiaries of foreign companies, and joint ventures currently account for over 60.7 percent of Guangdong's total exports. The immediate agenda is to upgrade from light manufacturing to higher technology value-added production, as labor in Guangdong has already begun to price itself out of the low-cost oriented market. Service industries such as finance and computer manufacturing sectors are exhibiting the greatest expansion in the region. The state-owned enterprises (SOEs) in Guangdong are relatively profitable in comparison to other regions in China, but still only account for a quarter of the local economy and the figure is going to continue to diminish. The most notable areas for concern involve human capital and legal infrastructure. With the pressure of China's upcoming accession to the World Trade Organization (WTO), the government is aware of these weaknesses and is moving to correct them. There should be improvements in levels of transparency in the markets, and availability of various markets that are presently closed or restricted to foreign investment such as telecommunications, media, and distribution.