Introduction
Beijing, the capital of China, is situated in the north of the North China Plain, covering an area of 16,808 sq km and boasting a population of 15.8 million. One of the ancient capitals of China, the municipality has changed radically over the past few decades. Whilst preserving hundreds of years of rich culture and history, the city is also an image of modern architecture and towering skyscrapers.

Beijing is entitled to a similar economic and administrative autonomy as a province, governed under the direct administration of the central government. Presently, there are 16 urban districts and 2 rural counties under the jurisdiction of Beijing.

Economic Overview
As Chinese enterprises continue to springboard their businesses onto the global platform, Beijing’s economic environment has projected an optimistic outlook over the past decade. In 2006, Beijing’s total gross domestic product (GDP) reached RMB 787.0 billion (US$100.3 billion), growing by 12.8% and recording a double-digit economic growth for the eighth consecutive year. Meanwhile, Beijing’s per capita GDP amounted to RMB 50,467 (US$6,428).

The service sector contributed the most to the municipal’s GDP, accounting for 70.0% of the overall GDP. Meanwhile, the agricultural and industry sector made up 1.3% and 23.9% of the GDP respectively. This is illustrated in Figure 8.1.1.

In 2006, Beijing’s overall retail sales accounted for 4.3% of China’s total, increasing by 12.8% from the previous year and totaling RMB 327.5 billion. After taking inflation into account, overall consumer sales grew by 12.6%. Amongst the various types of consumer goods, the sales of petroleum experienced the most significant increment (35.1%), whilst communication devices, household appliances and automobile sales grew by 21.2%, 11.9% and 17.3% respectively. Table 8.1.1 shows the composition of per capita expenditure of urban households.

As manpower, land costs and environmental pressure have been relatively higher than other Chinese cities, Beijing has placed its focus on higher-value added manufacturing. In 2006, the manufacturing sector reached RMB 184.9 billion, representing a growth rate of 12.1%. Table 8.1.3 shows the industrial output of the key sectors in Beijing. Electronics manufacturing, such as that of mobile phone and computers, is the biggest industry in Beijing. Semiconductor Manufacturing International Corporation (SMIC), the largest semiconductor foundry in China and one of the leading foundries in the world, invested in a 12-inch wafer plant in the Beijing Economic and Development Area (BDA). Beijing Oriental Electronics (BOE) has also established the largest TFT-LCD manufacturer in China within the BDA. Other leading electronics manufacturers in Beijing include Nokia and Lenovo. Beijing is China’s biggest automobile producer.

Beijing is China’s biggest automobile producer. Driven by rising sales of automobiles, Beijing’s automobile industry has grown rapidly in the past few years. In 2006, Beijing produced 680,000 units of automobiles, accounting for 9.3% of the nation’s total. Within this figure, 270,000 were passenger cars. Beijing Hyundai (a joint venture between Beijing Automotive Industry Holding (BAIC) and Hyundai Motor of South Korea) and Beijing Benz-DaimlerChrysler Automotive (BBDC; a joint venture between BAIC and DaimlerChrysler AG) are two of the major passenger car makers in Beijing.

Within Beijing’s manufacturing sector, Beijing Shougang Group is a leading manufacturer in the iron and steel industry, which produced 10.2 million tons of steel in 2006, ranking eighth in China. However, in an effort to reduce the pollution levels in Beijing for the Olympic Games, the government imposed sanctions on coal burning heavy industries, resulting in the relocation of their facilities. By 2010, all Shougang steel production will be closed.

As part of Beijing’s 11th Five-Year plan, the government also prioritized the development of a cultural and creative industry. It is to function as a pillar of Beijing’s growing economy and reinvent its long-standing industries that have been facing stronger domestic and overseas competition. Apart from a Beijing Creative Center in the Dongcheng District, five other districts have plans to develop the Shijingshan Digital Amusement Base, Zhongguncun Pioneering Base, the National New Media Base, Deshengyuan Creative Base of Industrial Design and the Dashanzi Arts Center.As the capital of China, Beijing attracted approximately 3.9 million overseas tourists and 132 million local tourists in 2006, bringing in a total revenue of US$4 billion and RMB 148 billion respectively.

Foreign Trade and Foreign Investment
In 2006, total foreign trade experienced a growth amounting to US$70.5 billion, of which imports and exports amounted to US$45.6 billion and US$24.9 billion respectively. Beijing’s largest export market was Hong Kong, followed by the U.S and Japan, while imports were mainly from Japan, Germany and the U.S, in order of import volume.

Beijing approved 2,106 foreign invested projects in the year 2006, accepting 1.4% fewer projects, as compared with the previous year. Utilized FDI was at US$4.55 billion, recording an increment of 29.1%. Foreign investments were mainly channeled into the service industry, where the amount of utilized FDI in the service sector grew by 43.6% from the previous year, accounting for about 61% of Beijing’s total utilized FDI. Within the sector, utilized FDI in leasing and commercial services grew by 40.3%, totaling US$1.74 billion, while its real estate sector posted a growth of 55.9% at US$0.72 billion. Table 8.1.5 shows Beijing’s utilized FDI by sector.

In 2006, Hong Kong contributed the most to Beijing’s overseas investment market, contracting a total of 440 deals that amounted to US$1,843 million. Hong Kong invested heavily in Beijing’s property sector, with an influx of Hong Kong developers such as New World Development, Sun Hung Kai, Kerry Group and Cheung Kong, developing shopping centers, commercial complexes and residential buildings.By the end of 2006, more than 185 of the world’s 500 largest enterprises had placed investments in Beijing.

Furthermore, about 200 multi-national companies (MNCs), such as SUN, NEC and Motorola, have developed R&D centers in Beijing. With the growing affluence of its residents and the development of new shopping and commercial districts in various areas of Beijing (such as Chaoyang, Haidian, Wangfujing, Xidan and Qianmen), many foreign chain supermarkets have also set foot in Beijing’s retail market. These include Carrefour, Makro and Ito Yokado. By the end of 2006, there were about 126 foreign enterprises in Beijing’s wholesale and retail market.

Major Development Zones
Beijing’s 11th Five-Year Plan (2006-2010) included the further development of six functional areas for high-end industries. This involved developing areas such as the Zhongguancun Science Park (ZSP), Beijing Economic and Development Area (BDA), the Central Business District (CBD), the Olympic Central Area, Financial Street and the Aviation Economic Area. In 2006, the six zones were attributed with approximately 50% of industrial growth, more than 50% of information industrial growth and more than 70% of financial growth within the city.

Zhongguancun Science Park (ZSP)
Located in the northwestern part of Beijing in Haidian District, Zhongguancun Science Park (ZSP) is China’s first state-level hi-tech industrial park. Known as the Silicon Valley of China, ZSP plays a significant role within the economy. Zhongguancun Science Park is comprised of the Haidian Development Area, Fengtai Development Area, Changping Development, Electronics Town Science and Technology Development Area, as well as the Yizhuang Science and Technology Development Area. It has a high concentration of scientific and technological institutions and research resources. Featuring many renowned universities, including the Chinese Academy of Sciences, Beijing University and Qinghua University, ZSP is a development zone that focuses on the knowledge and information technology (IT) industries.

Over the decades, Zhongguancun Science Park has emerged as the largest software development center in the country. By 2006, the industrial park had attracted about 23,869 cutting-edge enterprises. Also within the same year, the development zone experienced a 31.7% growth in total revenue, amounting to RMB 644.8 billion, while a profit of RMB 37.69 billion was posted. Meanwhile, exports from the development zone reached RMB 12.48 billion - an increase of 32.2%.

Beijing Economic and Technological Development Zone (BDA)
Another noteworthy development zone is the Beijing Economic and Technological Development Zone (BDA). Located near the south 4th Ring Road in Beijing, the BDA is one of China’s state-level development areas focusing on overseas investments from high-tech enterprises and multi-national companies (MNC).

By the end of 2006, BDA had registered 2,170 investors, representing a total investment of US$14 billion. Within the year, its total revenue grew by 58.7% to RMB 200 billion, while profits increased by 48.8%, reaching RMB 12.5 billion. Sales value of BDA’s high-tech products amounted to RMB 144 billion, growing by 45.4% year-on-year. Meanwhile, BDA reported that energy consumption per RMB 10,000 of GDP in 2006 was equivalent to 0.159 tons of coal, declining by 10% from a year ago.In 2006, BDA posted a 46.59% increment in total export and import value, totaling US$17.5 billion. Export value from the zone reached US$9 billion, increasing by 59.77%. Meanwhile, foreign investments in BDA amounted to US$3.7 billion, representing a growth of 73.41%.


Major Districts in Beijing
Beijing has a total of 18 districts. Table 8.1.6 shows the districts’ GDP, land area, population and utilized FDI. As evidenced in the table, Haidian and Chaoyang are the two key districts in Beijing, with GDPs of more than RMB 100 billion.