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Doing Business in XPCC
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I . Survey

(i) Geographical Location

Xinjiang Production and Construction Corps (XPCC for short), also called China Xinjian Group, is distributed within the boundaries of 67 counties of 13 prefectures in Xinjiang Uygur Autonomous Region. Xinjiang Uygur Autonomous Region is located in the northwestern part of China, 73°40’E -96°23’E, 34°25’N -49°10 ‘ N, with an area of 1,664,900 square kilometers, covering one sixth of China's total area. Xinjiang is situated in the hinterland of Eurasia, bordering 8 countries from northeast to southwest, namely, Mongolia, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan and India, with a border line of 5,600 kilometers. It is a region with the longest border line and the largest number of ports opening to the outside world in China. Once an important channel along the ancient Silk Road, it is now the second bridgehead of "Eurasian continental railway".

(ii) Climate

Xinjiang has a temperate continental climate, with long and severely cold winter, short and burning hot summer, greatly variable spring and autumn. Annual average temperature in South Xinjiang is 10℃, that in Junggar Basin, North Xinjiang, 5.0 -7. 5℃, that in Altay and Tacheng 2 . 5 -5.0℃. Xinjiang is an arid area , withinsufficientand uneven distributed precipitation of 150-200 millimeters in North Xinjiang and less than 1 0 0 millimeters in South Xinjiang.

In winter, it is often snowy in Xinjiang . In the plains i n North Xinjiang , thereis always snow with a depth of 20-30 centimeters, maximum 80 centimeters ; about 1 0 centimeters in South Xinjiang. In South Xinjiang, the frost-free period is 180-220 days, that in North Xinjiang is 140-185 days.

(iii) Population and Nationalities At the end of 2005, XPCC had a total population of 2.5698 million, including an urban population of 673,400, farm population in farming and animal husbandry regiment of 1.8964 million, respectively covering 26.2% and 73.8% of the total population.

XPCC is a place where 38 nationalities gather, including Han, Uygur, Kazak, Hui, Mongolian, Sibo, Tadjik, Russian, Uzbek, Tatar and Manchu. At the end of 2005, XPCC Han population was 2.2573 million, that of Uygur 178,700, that of Kazak 43,100, that of Hui 65,200, that of Mongolian 6,500, that of other nationalities 18,900.

(iv) Infrastructure and Transportation

Aviation

Xinjiang has now 12 civil airports, 127 airlines including 82 domestic airlines and 45 international airlines, with an air route in use of 119,500 kilometers, forming an airline network structure with Urumqi Airport as regional hub and becoming international gateway in the western part of China. Xinjiang General Aviation Company under the jurisdiction of XPCC has 35 airplanes, mainly used in agricultural production, resisting against natural calamities and rushing to deal with emergencies.

Railways

North Xinjiang Railway, South Xinjiang Railway and Lanzhou-Xinjiang Railway pass through the entire area. With a business mileage of 2,925 kilometers, Xinjiang has greatly improved its railway transportation ability.

Highways

With a traffic mileage of 89,500 kilometers (including 31,700 kilometers under jurisdiction of XPCC), Xinjiang has formed a highway traffic transportation network consisting of Turpan-Urumgi- Dahuang High-grade Highway and Urumqi- Kuytun Expressway with Urumqi as center. 7 national highways function as primary skeleton, linking Gansu and Qinghai provinces in the east, various countries in Central Asia and West Asia in the west, Tibet in the south, and 68 provincial highways, which link prefectures and cities, counties (regiment farms) and townships (companies).

In 2005, XPCC had 251,830 vehicles of various kinds including 62,689 civil vehicles, 27,770 transport business vehicles, 41,665 employees engaged in transportation completed 76 graded passenger stations, 1 graded freight terminal and 4 logistic centers, with XPCC North Urumqi Logistic Center as an important part of Urumqi highway hub. There are 29 independent accounting transportation enterprises including 3 with foreign transportation management qualification. Xinjiang Passenger Transportation Group Company includes 12 passenger transportation enterprises, with class 2 qualification of national passenger transportation enterprise.

Telecommunication and Internet

Xinjiang has rapidly developed data communication network and multi-media network, completed ATM broadband networks covering various prefectures, divisions and cities, carried out construction of IP broadband network and metropolitan area network, initially formed an integrated modernized communication system consisting of stored program controlled switching, opticalfiberc ommunication, digital microwave, satellite communication and mobile communication. At the end of 2005, the entire region had 6.122 million fixed telephone users, 5.313 million mobile telephone users and 1.0578 million Internet users.

Finance

Xinjiang has hadsteady operation of finance. In 2005, it had a deposit balance of 35.817 billion Yuan, including enterprise deposit of 7.725 billion Yuan, residents�� saving deposit of 18.014 billion Yuan. Agriculture Bank of China XPCC Branch network is mainly distributed in cities such as Urumqi, Shihezi, Korla, Aksu, Kashi, Yining and Wujiaqu, and XPCC divisions and their farming and animal husbandry regiment farms. This branch administers 1 business office, 2 secondary branches, 7 directly affi liated subbranches, 24 county-level sub-branches and 264 basic business networks.

Insurance

Xinjiang has steadily expanded its insurance market. It now has 1,313 insurance organs at various levels, inc luding 3 7 subsidiary companies with their business spreading in 25 provinces, municipalities and autonomous regions. In 2005, the insurance business realized an income of 10.542 billion Yuan.

(v) International Fairs

Since 2002, XPCC Bureau of Commerce and Mechanical and Electrical Department of the Ministry of Commerce of People��s Republic of China jointly held China Mechanical and Electrical Products Exposition and China Commodity Trade Fair and Asia Commodity Trade Fair in Kazakhstan in succession. Asia Commodity Trade Fair is the largest fair for trade and investment in various countries in Central Asia and West Asia. Successful fairs have much influence in Central Asia, and have become an important platform for enterprises of China and Kazakhstan as well as peripheral Central Asian countries to carry out economic and trade cooperation and exchanges.

(vi) Higher Education and

Scientifi c Research In 2005, XPCC had 3 regular higher educational institutions, including 2 undergraduate universities and 1 college, 1 polytechnic, 1 independent school run by a regular university, 4 doctorate stations, 58 mastership stations. It has now 29,000 enrolled undergraduate students, 13,000 current PhD/MS students, 2,341 full-time regular university teachers.

School Survey:

Index

School quantity

Enrolled students quantity

Newly enrolled students

Teachers and

employees

Full-time teachers

Graduated students

In total

6

42,949

14,779

4,961

2,893

12,817

Regular colleges and universities

4

30,663

9,428

4,023

2,341

6,136

Adult colleges and universities

2

12,286

5,351

938

552

668

XPCC Scientific Research

By 2005, XPCC had had 126,400 technical personnels of various professions, 5,383 personnels engaged in scientific and technologicals activities. XPCC and its divisions have 17 independent scientific research institutions, 15 technology development organizations of large and medium-sized industrial enterprises. XPCC has formed a contingent of scientists with strong research, development, application and promotion abilities.

At present, XPCC has 7 key labs jointly established by province and ministry, 6 post-doctorate workstations, 2 state recognized technology centers of enterprise, 1 state-level agricultural scientific and technological garden, 3 XPCClevel agricultural scientific and technological gardens, 12 experiment and demonstration centers of various kinds.

Since 1978, XPCC has obtained 1,317 state-level, province and ministry level (including XPCC level) scientific and technological rewards (items/times), including 5 achievements, including�� China Merino (Xinjiang Corps Cultivation type) breeding system��, ��Polyethylene mulching film and mulching planting technology����, Development, making and promotion of mulching film cotton planting machinery��, obtaining fi rst Prize of National Science & Technology Advance (see attached table). In 2005, contribution ratio of advance of science and technology to XPCC agriculture reached 51%.

Awarded Achievement

Date and Level

Achieving Orgnization

Japonica rice heterosis utilization research

China Science Congress Prize in 1978

Xinjiang Agricultural

Cultivation Bureau

Sugar beet fine variety�� Shitian No.1��

China Science Congress Prize in 1978

Shihezi Agricultural Science Institute

Breeding and improvement of Xinjiang fine fleece sheep for fleece and mutton

China Science Congress Prize in 1978

Shihezi No. 151 Regiment

Breeding of Xinjiang budge sheep

China Science Congress Prize in 1978

Shihezi No.150 Regiment

Improvement of heavy alkaline

land

China Science Congress Prize in 1978

Xinjiang Bayinguolin Prefecture No.29 Regiment

Breeding of new variety of China

merino

First Prize of National Science & Technology Advance Prize in 1987

Ziniquan Sheep Research

Institute

Polyethylene mulching film and mulching planting technology

First Prize of National Science & Technology Advance Prize in 1987

XPCC

Imine method entire cotton stick papermaking technology

First Prize of National Spark Science & Technology Prize in 1988

No.147 Regiment of Agricultural No.8 Division of XPCC

Sheep cestodiasis prevention and control research

Third Prize of National Science & Technology Advance Prize in 1989

Xinjiang Agricultural Science Academy Husbandry Research Institute

Sheep Sperm Freeze technology study and promotion

Third Prize of National Science & Technology Advance Prize in 1989

Xinjiang Agricultural Science Academy Husbandry Research Institute

China Merino (Xinjiang Corps Cultivation type) breeding system

First Prize of National Science & Technology Advance Prize in 1991

Xinjiang Agricultural Science Academy Husbandry Research Institute

Research, making and promotion of mulching fi lm cotton planting machinery

First Prize of National Science & Technology Advance Prize in 1995

Agriculture Bureau of XPCC

Breeding selection of Altai fi ne fl eece sheep for mutton

Third Prize of National Science & Technology Advance Prize in 1996

Xinjiang Agricultural Science Academy Husbandry Research Institute

Liquid ammonia fertilization technology study and promotion

Third Prize of National Science & Technology Advance Prize in 1997

Agriculture Bureau of Agricultural No.8 Division of XPCC

Research and promotion of pipeless submersible pump

Third Prize of National Science & Technology Advance Prize in 1998

No.121 Regiment of No.8 Division of XPCC

Comprehensive prevention and curing research on popular severe sheep parasitic disease

Third Prize of National Science & Technology Advance Prize in 1999

Xinjiang Agricultural Science Academy Husbandry Research Institute

Research and demonstration of cotton under-fi lm drop irrigation comprehensive matching technology

Second Prize of National Science & Technology Advance Prize in 2004

Water Conservancy Bureau of XPCC

Xinjiang Agricultural Science Academy

(vii) Tourism

Xinjiang is rich in natural and artificial tourist resources. According to resource classification of�� Criterion of General Investigation of Tourism Resources in China��, Xinjiang has 56 of China��s 68 kinds of tourist resources, ranking first in China. Xinjiang has unusual natural landscapes, with icy peaks and fire land coexistence, desert and oasis neighboring, rough natural views, unique landscape combination. The ancient Silk Road scenic spots and historic resorts, colorful ethical elegance and cultural arts attract numerous domestic and international tourists.

At the Central Entertainment Square of Shihezi Cith of Xinjiang, there is a series of sculptures, named No.1 Plough of XPCC. Dating back to 1950��s, the fi rst generation of XPCC, answering the call of CPC, decided to settle in Xinjiang, station troops to guard the frontier and cultivate the frontier areas, successfully turning the wilds into fertile land. In order to remember this history, the No.1 Plough of XPCC Sculptures series were established, which now becomes a renowned tourism site together with Sculpture of General Wangzhen and Sculpture of New Rhythm of Frontier Life.

North Lake Park

North Lake, 18 km away in the north of the Shihezi, is a bright pearl on Manasi River, which combines functions of tourism destination, aquatic breeding and irrigation as well. North Lake is located at the spring spill belt of alluvial fan of Tianshan��s north foot with ravine crisscrossing and the mouths of springs clustering around. Therefore, it was formerly called�� Great Spring ravine��. The current North Lake covers a wide water area of 11 km2 with blue waves rippling and boats dotting on the surface of the lake. Sweethearts walk along the causeway with weeping willow on the lakefront. The North Lake lives dozens of waterfowls such as swan and wide goose, as well as different kinds of fishes, shrimps and mussels. The North Lake, also known as�� south of the Changjiang River in the desert��occupies an area of 21 km2 with more than 20 scenic spots such as rockwork, Lansheng pavilion and Xiaoyao pavilion.

II . Economy

(i) GDP Data

In 2005, XPCC realized a total output value of 33.112 billion Yuan including an output value of primary industry of 13.064 billion Yuan, that of secondary industry of 8.335 billion Yuan, that of tertiary industry of 11.713 billion Yuan with the proportion of the three industries as 40:25:35, per capita total output value as 12,900 Yuan.


(ii) Natural Resources

Land Resources XPCC has a total acreage of 7.45627 million hectares, including land for agricultural use of 4.19264 million hectares, land for construction use of 0.20989 million hectares, unused land of 3.05374 million hectares. Land for agricultural use includes: farmland of 0.10465 million hectares, garden plot of 0.06358 million hectares, woodland of 0.14216 million hectares, pastures of 2.4269 million hectares, other land for agricultural use of 0.21935 million hectares.

 

Mineral Resources

Xinjiang has minerals of complete types and large reserves, broad development prospect. Out of the 171 known kinds of minerals in China, Xinjiang has discovered 138 kinds with verified resource reserves of 117 kinds, including 5 kinds of reserves ranking fi rst in China, 24 kinds in the first five places in China, 43 kinds in the first ten places in China, 23 kinds ranking first in the northwest. Xinjiang has rich reserves of petroleum, natural gas, coal, gold, chromium, copper, nickel, rare metals, salt minerals, bentonite, building materials and nonmetallic materials. According to forecast, Xinjiang has forecast coal stock size of 2.19 trillion billion tons, covering 40% of the total amount in China, ranking fi rst; that of oil 20.86 billion tons, covering 30% of the total land oil stock size in China, that of natural gas 10.3 trillion cubic meters, covering 34% of the total land natural gas stock size, and other famous resources since ancient times such as gold, gem and jade.

 

Water Resources

Xinjiang has annual surface water resources (utilization of surface water) of 8.9 billion cubic meters, exploitable ground water resources of 5.2 billion cubic meters, an effective irrigated area of 1 million hectares, and water-saving area of 53.9 hectares. By the end of 2005, XPCC had 114 reservoirs with a total storage capacity of 3.163 billion cubic meters, including 11 large-scale reservoirs with a storage capacity of 1.876 billion cubic meters, 27 mediumsized reservoirs with a storage capacity of 1.109 billion cubic meters, 76 small reservoirs with a storage capacity of 216 million cubic meters, irrigation canals with a total length of 99,400 kilometers including 26,700 kilometers under penetration protection, drainage channel with a total length of 42,600 kilometers, 102,400 channel buildings of various kinds, 10,600 electromechanical pump wells including 10,200 with support facilities and with a water furnishing ability of 299.03 cubic meters per second, a water lifting quantity of 1.45 billion cubic meters, 115 locations of 10,000-mu irrigation areas including 7 locations of 500,000-mu irrigation areas, 11 locations of 20,000-30,000-hectare irrigation areas. It has embankment with a total length of 2,107 kilometers, a population of 1.44 million under protection, farmland with an area of 0.3678 million hectares under protection. It constructed 90 sluices on the river including 3 large-scale sluices, 26 mediumsized sluices and 61 small sluices. XPCC has a total irrigated area of 1.17112 million hectares, water conservancy projects with an annual water supply of 13.06 billion cubic meters, including 11.755 billion cubic meters for agricultural water supply, 70 million cubic meters for industrial water supply, 148 million cubic meters for urban and rural domestic water and 87 million cubic meters for ecologic use.

 

Biological Resources

Situated at the communications center of Eurasia with combination of East and West animal and plant varieties, and diverse and unique physical geographic conditions, Xinjiang is extremely rich in biological resources.

 

Xinjiang has complete temperate zone crops, with wheat, corn, paddy rice as main crops. In most areas it is suitable to plant miscellaneous grains such as sorghum, barley, soybean, pea, mung bean, broad bean, millet, millet and sweet potato. The Ili River valley is always known as�� Xinjiang granary��.

 

��Tianshan snow�� rice is as clean as pearl bead, with fine texture and fragrant taste. Economic crops include cotton, beet, rape, sunflower, hops, aspic, flax, tobacco and medicinal materials. XPCC�� upland cotton, long-staple cotton and color cotton kapok, beet, oil-bearing crops, hops and ketchup ranking first in both output and quality in China��s agricultural cultivation, cotton yield of per unit area and per capita occupancy ranking fi rst in China.

 

Xinjiang is known as�� home-town of fruits and melons��. The common fruits and melons include: melon (Hami melon), watermelon, apple, bergamot pear, grape, apricot, peach, plum, red jujube, pomegranate, cherry, fig, walnut and almond, vegetable crops are quite rich, including cabbage, spinach, coriander, wild cabbage, yellow radish, green radish, potato, spring onions, kidney bean, tomato, onion, red pepper, eggplant, celery, Chinese chive, cucumber, bottle gourd, balsam pear, pumpkin, sponge gourd, wax gourd. Various temperate zone fruits, vegetables and melons can be seen everywhere.

 

Xinjiang is one of the five big pastoral areas with many animals with sheep ranking first in quantity, followed by horse, cattle, goat, donkey, camel, mule, pig and deer, fowls including chicken, duck and goose, Ili horse, Yiwu horse, Yanqi horse, Balikun horse, Shihezi land reclamation fine-wool sheep, Altay fatrumped sheep, Xinjiang brown cattle, Kuqa black budge sheep, and ili dairy and beef cattle quite famous. XPCC meat output ranks fi rst in output in China��s agricultural cultivation.

 

Xinjiang has 90 kinds of fish, including quite precious Buluntuo Lake and Erqis River sturgeon, salmon, River perch, Silver prussian carp, siberian roach, Pikeperch, Gold Crucian Carp, Leuciscus idus, Burbot, European bream, and loving Buluntuo Lake and Erqis River River perch, Culter, Bositeng Lake pipefi sh, Barbless carp, Ili River Carp and Perch.

 

In terms of wild plants, there are edible, medicinal, technical, sandfixation and appreciation plants of 132 species, 856 families, nearly 4,000 kinds, including over 1,000 kinds of economic and medicinal plants, over 100 kinds of rare plants, such as liquorice, Fritillary Bulb, Safflower, Snow Lotus, Desertliving Cistanche, Dwarf Lilyturf Tuber , Chinese Angelica, Tangshen Root, Chinese Asafoetida, Desertliving Cistanche, gentian, Ephedra Herb, Barbary Wolfberry Fruit and medlar. Xinjiang Uygur Autonomous Region has its licorice ranking first in terms of both area and yield in China��XPCC has a licorice area of 26,700 hectares.

 

Furthermore, Xinjiang has diversiformleaved poplar, narrow-leaved oleaster, wild apple, wild walnut, wild apricot, wild almond tree, wild Chinese hawthorn, shiny-leaved yellow-horn, wild rose, bluish dogbane, rubber grass, reed, splendid achnatherum and sacsaoul grass. Xinjiang��s diversiformleaved poplar area covers 95% that in China. XPCC administers a diversiform -leaved poplar area of 40,000 hectares.

 

Xinjiang has 580 kinds of wild animals including over 340 kinds of birds, over 130 kinds of mammals with over 80 kinds listed as rare animals under national protection. 20 kinds are of fi rst category animals under national protection, mainly including wild horse, wild yak, wild camel, Tibetan wild ass, Mongolian wild ass, Xinjiang tiger, snow leopard, Tibetan antelope, saiga, beaver, wolverine, white stork, black stork, white crane, black-necked crane, whiteshouldered vulture, spot-billed pelican, Tibetan snow cock, peregrine falcon and Horned Grebe .

 

Xinjiang has 67 kinds of animals under national second category protection, mainly including brown bear, sable, lynx, red deer, ibex, swan, jade belt sea vulture. In addition, there are many common wild animals such as Bositeng Lake and Tarim riverside muskrat, oasis and desert hare, Tianshan and Altay pasture marmot, Mongolian gazelle, wolf, fox, Huocheng Horsfield��s tortoise including red deer, muskrat, snow cock and mink, which are successfully tamed and reproduced in XPCC reclamation area and becoming important materials to earn foreign exchange through export.

 

(iii) Animal Husbandry Development

XPCC has agriculture as its economic foundation and superiority, and agricultural modernization take lead in China. With farmland of 1.05 million hectares, sown area of 0.98 million hectares, gardening production area of 140,000 hectares. XPCC is China��s most important high quality cotton production center and biggest watersaving agricultural irrigation area, with a cotton output of 0.987 million tons, covering one sixth of China��s total cotton, export covering a half of China��s total cotton export. XPCC has its Jin Brand, Yinli Brand and Beijiang Brand cotton rank the first three places among China��s top ten brands, Xinnong Brand among the top ten best sellers at China��s cotton market. XPCC has had its cotton, grape, tomato, bergamot pear, red deer, dairy products and feed form specialized production, processing and industrialized production management, processing tomato productivity reach 600,000 tons ranking second in the same trade in the world and the products sell well in more than 40 countries and regions. grape wine productivity reached 120,000 tons, with alcohol brewing grape planting area of 150,000 mu ranking first in China and Asia. Its 6 pillar industries, namely, cotton industry, grain, oil and sugar processing industry, fruits and vegetables processing industry, livestock products, alcohol industry and seed industry rapidly developed.

 

In 2005, XPCC had a total agricultural output value of 27.352 billion Yuan, and continued to adjust crop planting structure. It had a sown area of 985,800 hectares, including grain sown area of 228,000 hectares, cotton sown area of 471,700 hectares, oil sown area of 46,500 hectares, beet sown area of 20,500 hectares. The output of main agricultural products such as grain, cotton, beet and fruits greatly increased, with cotton output creating a historical new record.

Main Agricultural Products Output:

Product Name

Absolute Number

Cereals

143.48

Wheat

65.78

Corn

46.28

Bean

5.00

Oil plants

9.53

Rapeseed

2.77

Sunflower seed

6.27

Cotton

98.68

Sugar beet

130.85

Fruit

45.90

Vegetables

284.52

Artificial afforestation area of 21,800 hectares completed, including 9,700 hectares returning land for farming to forestry.

 

Amount of livestock on hand at the end of the year: 7.8318 million, main livestock products such as meat, wool and milk with a comprehensive output increase.

 

Aquatic products output in 2005: 20,000 tons. Total power of agriculture machinery in 2005: 2.493 million KW.

Husbandry Production:                                      

                                                                                              

                       Unit: 10,000 pieces, 10,000 tons

Index

Number

Amount of livestock on hand at the end of the year

783.18