Introduction
Henan, abbreviated to Yu, is situated on the plain between the Yellow River and Huaihe River, with Zhengzhou as the capital city. Henan means “south of the river” in Mandarin, and it received its name due to its location to the south of the Yellow River, which runs more than 700 kilometers across the region.

Henan is the most populous province in China with 98.2 million residents, which accounted for 7.5% of the nation’s total population by the end of 2006. It plays an important role in China’s history, with 3 of China’s ancient capitals (Luoyang, Kaifeng and Anyang) being located there. More than 10 dynasties have successively established their capital in Henan throughout China’s history. This has substantially contributed to the vast number of ruins and relics found throughout this province.

Besides history, Henan is also rich in minerals and natural resources. 121 of the 150 kinds of minerals found on this planet are available in the province. It is also home to over 3,800 species of plants and more than 400 kinds of animals. This territory is an important production base for wheat, corn, cotton, tobacco leaves and oil plants in China.

Economic Overview
Henan’s economy has maintained a two-digit growth for the fourth straight year. In 2006, the GDP rose 14.1% year-on-year to RMB 1.25 trillion. Figure 11.2.1 shows the GDP breakdown by sector in 2006. As illustrated in the figure, industry leads Henan’s economy, with a contribution of 53.8% to the province’s economy. The service industry and agriculture are particularly substantial, making up 29.8% and 16.4% of the GDP respectively.

Henan’s fixed asset investment amounted to RMB 590.8 billion in 2006, up 37% over the former year. However, the growth rate edged downwards by 4.3%, in comparison with the rate charted in 2005. The industry sector received most of the investment, rising 44.3% year-on-year to RMB 240.6 billion, and occupying 49.7% of the total fixed-asset investment in this territory’s urban areas. Following this was the real estate sector (RMB 58.2 billion), the transportation sector (RMB 52.7 billion), machinery manufacturing sector (RMB 38.5 billion) and petrochemical sector (RMB 32.8 billion), which surged 49.8%, 26.2%, 81.5% and 54.8% year-on-year respectively.

Agriculture
Due to its growing earnings and large population, Henan is emerging as a large consumption market in central China. Retail sales of consumer goods surged to RMB 338 billion in 2006, with a growth rate of 17.4% over 2005. Among the sales of enterprises above designated size, sales of cosmetics was up 18.5% year-on-year to RMB 13.8 million, sales of jewelry up 23.5% year-on-year to RMB 7.54 billion, sales of communication appliances up 32.6% year-on-year to RMB 34.57 million and sales of autos up 21.7% year-on-year to RMB 197.1 million.

The sales of digital cameras and music centers saw the most notable growth. Sales of digital cameras soared 135.2% year-on-year to RMB 535 million, while sales of hi-fi stereo component systems gained 259.8% year-on-year to RMB 1.85 billion.

With a vast amount of cultivated land and sown area, Henan is a large and well-known agricultural region in China. It has 8.1 million hectares of cultivated land, accounting for 6.24% of the national total, and nearly 14.2 million hectares of sown area, representing 9% of the national total. At the end of 2006, the agricultural sector was still growing steadily, with agricultural output value rising 7.4% to RMB359 billion (USD 45.7 billion).

Henan is the largest production base for grain, oil-bearing crops and fruits. In 2006, the output of grain increased 10.3% to 50.55 million tons, the yielding volume of oil-bearing crops grew 6.8% to 4.8 billion tons, while the fruit production rose by 6.6% to 5.92 million tons. The total output of the farming industry has increased by 8.1% to RMB 101.9 billion, contributing more than half of the total output value of the agricultural sector.

Zhengzhou Commodity Exchange, set up in 1990, is one of three commodity futures markets in China. The total trading volume of futures contracts, including wheat, cotton, white sugar, pure terephthalic acid, rapeseed oil and green bean hit a value of RMB 3181 billion, 46.96% higher than 2005.


Industry
In 2006, the value-added industrial output has increased by 18.7% year-on-year to exceed RMB 603 billion. The province’s pillar industries, including food processing, equipment manufacturing, metallurgy, coal and textiles have generated a combined RMB 269 billion worth of value-added industrial output, accounting for 44.6% of the province’s total. Figure 11.2.2 shows the pillar industries’ share of Henan’s value-added industrial output.

Rich agricultural products (such as wheat, corn, oil-bearing crops, fruit and vegetables) and a large number of livestock ensure a sufficient supply for Henan’s food processing industries. As a result, Henan has developed into a major food processing base, producing foodstuffs such as meat, frozen food, instant noodles, biscuits and seasoning. In 2006, RMB 197 billion of sales revenue was generated from the food processing sector, making Henan the second largest food processing base in China, after Shandong.

Net profit from this sector also jumped 75.5% from the previous year to RMB 15.92 billion. It is more than one-tenth of the national total net profit from food processing and the highest among all the provinces in China. Sanquan Corp, the country’s largest frozen food processing firm, is located in Henan. Its sales revenue expanded to RMB23 billion in 2006. Henan is also home to Shineway Group, China’s biggest meat processing enterprise.

Equipment manufacturing is the second largest industry in terms of value-added industrial output in Henan. The value-added industrial output of this industry amounted to RMB 70.6 billion by the end of 2006, representing an increase of 35.7% year-on-year. A key player in this industry is CITIC Heavy Machine Inc, located in Luoyang. It is one of China’s largest mining equipment manufacturers, and in 2006, sales revenue reached RMB 5.14 billion, with a profit of RMB 350 million.

Due to the abundance of mineral resources in Henan, the metallurgy industry plays an important role in the province’s industrial sector. The value-added industrial output of the metallurgy sector has risen year-on-year to RMB 56.4 billion in 2006. Anyang Iron&Steel Group and Henan Branch of China Aluminum Corp are the two major players in the metallurgy sector.

As China’s third largest coal production base after Shanxi and Inner Mongolia, Henan produced 1.95 million tons of coal in 2006 alone, accounting for 8.2% of China’s total. Main coal producers include Pingdingshan Coal Group, Yima Coal Industry Group and Yongmei Group.


Services
Tourism plays an important role in the Henan’s service sector thanks to its great number of historical ruins and relics. In 2006, the province attracted 131 million domestic tourists, up 26.1% year-on-year, and 757,400 overseas tourists, up 30.1% year-on-year. The income received from domestic tourists was RMB 101.8 million, with an increase of 30.2% year-on-year, while the income received from foreign tourists stood at US$237.8 million, with a growth of 26.7% year-on-year.

With the steady economic growth, the banking industry has also developed into another key service industry, witnessing a stable growth in recent years. By the end of 2006, the total savings deposits in Henan stood at RMB 1.16 trillion, up 14.7% over the previous year, while loans amounted to RMB 866.4 billion at the same growth rate. The net profit of this sector increased more than fourfold to RMB 7.6 billion, the highest among the six provinces in central China.

Foreign Trade and Foreign Investment
Henan conducts a lot of trade with countries around the world. Major export destinations are the U.S., South Korea, Hong Kong, Taiwan and India, while key import sources are Japan, the U.S., India, Germany, and Brazil. Figure 11.2.2 shows Henan’s major trading partners and their respective import and export values. Henan’s main import products are minerals. In 2006 alone, the province imported US$384 million worth of vanadium ore, US$309 million worth of unsintered iron ore, US$275 million worth of cathodes as well as US$237 million worth of alumina. All these accounted for 55.9% of the total imported products.

In terms of exports, Henan mainly exported wigs (US$368 million), unwrought and non-alloyed aluminum (US$357 million) and unwrought and refined lead (US$234 billion). In 2006, the province saw an increase in the export of machinery and electrical appliances, which rose 45.8% to US$1.36 billion.

Henan attracted a great number of foreign investors such as Coca-cola, GE, Metro, and Toshiba. In 2006, the province approved 497 foreign-funded enterprises and utilized foreign investment soared 50% to US$1.8 billion. The manufacturing sector received the highest amount of FDI among all the sectors, with US$975 million of FDI accounting for 52.9% of the total. Other noteworthy recipients of FDI were the production and distribution of electricity, gas and water (UUS$ 321 million), real estate (US$306 million), mining (US$65 million) and tenancy and business services (US$ 65 million).

The primary sources of foreign investment were from Hong Kong and Latin American countries. Utilized foreign investments from Hong Kong amounted to US$622 billion, accounting for 34.6% of Henan’s total, while foreign investments from Latin America reached US$448 million, taking up 54.2% of the province’s total.

Major Development Zones
Henan has 4 state-level development zones, 23 province-level development zones and 73 city-level development zones. The 4 state-level development zones are the Zhengzhou Economic&Technological Development Zone, Zhengzhou Export Processing Zone, Zhengzhou Hi-tech Development Zone and Luoyang Hi-tech Development.

These zones achieved a combined value-added output and industrial output of RMB 295.3 billion and RMB 112.6 billion in 2006, accounting for 23.7% of Henan’s GDP and 18.5% of Henan’s total industrial output respectively. Together, the zones received US$2.89 billion worth of foreign investment – that is 85.66% of the province’s total foreign investment. Combined exports of these zones also amounted to US$2.31 billion, contributing to 34.5% to the province’s total exports.

Education
Henan’s rapidly developing higher education scene is now beginning to take shape. By the end of 2006, there were 84 institutes of higher education with a total of 974,100 students. Zhengzhou University is the sole national university in Henan, and was established on July 10, 2007 after merging with the former Zhengzhou University, Zhengzhou University of Technology and Henan Medical University.

Major Cities in Henan
There are a total of 18 cities in Henan province. Zhengzhou, its capital, has the highest economic advancement, with a GDP of RMB 201.3 billion, nearly RMB 100 billion ahead of the city with the next highest GDP. Table 11.2.3 shows the cities in Henan and their GDP, population and land area. The cities are ranked in descending order of their GDP.

Shanxi receives most of its FDI (63.3% of total FDI) from the Virgin Islands. The Bahamas, Hong Kong, U.K., and the U.S. are the province’s other investors. Figure 11.6.3 shows the share of FDI injected by these countries.

Introduction
Zhengzhou is the capital city of Henan province. Situated at the intersection point of the Beijing-Guangzhou Railway, Lanzhou-Lianyungang Railway, Xi’an-Shanghai Railway, Beijing-Zhuhai Expressway and Lianyungang-Huocheng Expressway, Zhengzhou is a vital transportation hub in central China.

Investment Climate
Zhengzhou is a growing industrial city in central China. Its pillar industries include alumina, automobiles, food processing and textiles. In 2006, the output of alumina accounted for 17.7% of the nation’s total and the value-added industrial output of food processing rose 35.6% year-on-year to RMB 2.2 billion. Zhengzhou Nissan Automobile, established in 1993, is a key player in the automobile industry. It is a joint venture by Nissan Automobile Business Corporation, Dongfeng Joint Stock Co. Ltd and Zhengzhou Lightweight Car. As the largest pickup truck producer in Asia, it has an annual production capacity of 60,000 units.

The city is also China’s textile base due to the abundant resources in the Henan province. Zhengzhou Textile Industrial Zone, covering an area of 13 square kilometers, was inaugurated in 2006. About RMB 8 billion was injected into the first stage of this project, and the zone is targeted to bring about an annual revenue of RMB 20 billion within 5 years of its completion.

Foreign Investment
Zhengzhou is an open inland city approved by the country’s cabinet, the State Council of China. The city approved 135 foreign-funded enterprises in 2006 and utilized FDI reached US$610 million in that same year, 83% higher than in 2005. There are 3 state-level development zones in Zhengzhou. They are Zhengzhou Economic&Technical Development Zone, Zhengzhou Export Processing Zone and Zhengzhou Hi-tech Industries Development Zone.

Important Travel Information
Time taken to travel from Zhengzhou to: