Report Title:

China/Hawaii Economic Strategic Plan 2020

Description:

Requires DBEDT to convene working group to draft a China/Hawaii economic strategic plan 2020 containing steps for Hawaii to benefit economically from the emergence of the People's Republic of China as an economic and global leader; appropriates funds. (SB1374 HD1)

THE SENATE

S.B. NO.

1374

TWENTY-THIRD LEGISLATURE, 2005

S.D. 2

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

relating to economic development.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that as of May 11, 2004, China is the fourth largest country in the world in physical area after Russia, Canada, and the United States, and has an estimated population of 1,298,847,624, with an average life expectancy of seventy-two years.

In late 1978, the People's Republic of China, under the late Premier Deng Xiaoping, began moving the Chinese economy from a sluggish, inefficient, Soviet-style centrally planned economy to a more market-oriented and decentralized economic decision-making system. Under ongoing nationwide reform, the proportion of Chinese businesses that are state-owned continues to diminish. As a result, the economic influence of non-state organizations and individual citizens has been steadily increasing. Essentially, the Chinese government:

(1) Switched to a system of household and village responsibility in agriculture in place of the old collectivization system;

(2) Increased the authority of local officials and plant managers in industry;

(3) Permitted a wide variety of small-scale enterprises in services and light manufacturing; and

(4) Opened the economy to increased foreign trade and investment.

The result has been a quadrupling of China's gross domestic product since 1978. Although in per capita terms China is still poor, China stood as the second-largest economy in the world after the United States in 2003, measured on a purchasing power parity basis. (The purchasing power parity method involves the use of standardized international dollar price weights, which are applied to the quantities of final goods and services produced in a given economy. The data derived from the purchasing power parity method provide the best available starting point for comparisons of economic strength and well-being between countries.)

In terms of United States dollars, in 2003, China's estimated gross domestic product totaled about $6,449,000,000,000. China's estimated real gross domestic product growth rate for the year 2003 was 9.1 per cent, while the consumer price inflation rate stood at only 1.2 per cent. The Minister of Commerce, Lu Fuyuan, stated that foreign direct investment in China totaled $57,000,000,000 in 2003, surpassing the record-breaking $52,700,000,000 of foreign direct investment in 2002, which at that time already ranked first in the world.

Agriculture and industry have posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, as well as in Shanghai, where foreign investment has helped spur output of both domestic and export goods. China's major industries include iron and steel, coal, machine building, armaments, textiles and apparel, petroleum, cement, chemical fertilizers, footwear, toys, food processing, automobiles, consumer electronics, and telecommunications. The industrial production growth rate in 2003 was estimated at 16.2 per cent, fifth in the world behind Equatorial Guinea, Cambodia, Burundi, and Moldova. Oil production in 2001 was 3,300,000 barrels per day, seventh in the world behind Saudi Arabia, the United States, Russia, Iran, Mexico, and Norway.

China's exports ranked fourth in the world in 2003 at $436,100,000,000 (U.S. dollars), behind the United States, Germany, and Japan. Its major export commodities were machinery and equipment, textiles and clothing, footwear, toys and sporting goods, and mineral fuels. Its largest trading partner is the United States, followed by Hong Kong, Japan, and South Korea.

The Chinese government plans to intensify efforts to stimulate growth through spending on infrastructure such as water supply and power grids, poverty relief, and rural tax reform. Accession to the World Trade Organization in 2001 has helped to strengthen China's ability to maintain strong growth rates. China has benefited from a huge expansion in computer internet use. Foreign investment remains a significant element in China's remarkable economic growth.

According to Chinese Vice Premier Zeng Peiyan, in remarks made at the closing of the 2003 Forbes Global CEO Conference in Shanghai, the Chinese government has worked out goals for building a prosperous, well-rounded economy for the country within the next twenty years. Vice Premier Zeng said that China will continue to implement the "Go West Campaign," revitalize the northeast provinces' traditional industrial base, and vigorously promote economic growth in east China. He said that China is serious in fulfilling its promise to the World Trade Organization to open up domestic sectors, such as finance, insurance, trade, and tourism, and encourage foreign companies to invest in agriculture, high-technology industries, and infrastructure.

As for Hawaii, much has been said over the years about its vulnerability as an insular state and the need to diversify its economy and develop innovative high-technology and green industries, while preserving and protecting the unique environment of the islands. Much has also been said about Hawaii's unique geographic location, existing at the crossroads of Asia and the West, and enabling Hawaii to benefit from developing economic relationships and build bridges between the two regions. Compared to the rest of the country, Hawaii is uniquely poised due to its location to take advantage of the explosive economic development in Asia and the Pacific, especially the People's Republic of China.

Furthermore, the experience, knowledge, skills, and cultural sensitivities of Hawaii's multi-ethnic and multicultural citizenry are unique assets for Hawaii with respect to initiatives involving partnerships with the developing countries of Asia. Hawaii has made great strides in developing expertise in medical and health services and research, even as the University of Hawaii school of medicine builds its new $150,000,000 campus and research facilities over ten and a half acres in Kakaako on Oahu. Hawaii has also developed expertise in tourism consulting for several countries in Asia, drawing from a wealth of knowledge and experience from its own rich history in the visitor industry. Architectural consulting and construction consulting for Asian countries are also becoming significant contributors to Hawaii's economy. In addition, continuing efforts to preserve the islands' fragile ecology have nurtured and developed local expertise in dealing with environmental issues just as Asian nations, particularly China, are beginning to focus more resources on preserving the environment while developing their economies.

However, the state has developed no rational, unified, comprehensive, and forward-looking plan to strategically engage in and take advantage of the economic development of the People's Republic of China.

The purpose of this Act is to ensure that Hawaii will actively participate in and benefit from the emergence of the People's Republic of China as an economic and global leader.

SECTION 2. (a) The director of business, economic development, and tourism shall form an informal ad hoc China/Hawaii economic strategic plan working group, consisting of representatives appointed by the governor from public agencies and private entities, the president of the senate or the president's designee, and the speaker of the house of representatives or the speaker's designee, to develop the China/Hawaii economic strategic plan 2020. The plan shall contain a detailed outline and guide for the State to follow in order to benefit economically from the emergence of the People's Republic of China as an economic and global leader. The plan shall contain guidelines on steps to be taken by the State in at least the following areas of interest:

(1) Agriculture;

(2) Aquaculture;

(3) Construction;

(4) Culture and the arts;

(5) Education;

(6) Environmental assistance;

(7) Health and medical services and research;

(8) Manufacturing;

(9) Tourism; and

(10) Trade.

(b) The director of business, economic development, and tourism shall:

(1) Complete the strategic plan by July 31, 2006;

(2) Submit a written preliminary report to the legislature by December 15, 2005, for its consideration during the regular session of 2006; and

(3) Submit a written final report to the legislature by July 31, 2007, for its consideration during the regular session of 2008.

(c) The director of business, economic development, and tourism, or the director's designee, shall chair the working group, which shall consist of representatives from:

(1) The department of agriculture;

(2) The department of business, economic development, and tourism;

(3) The department of commerce and consumer affairs;

(4) The department of education;

(5) The department of health;

(6) The department of labor and industrial relations;

(7) The department of land and natural resources;

(8) The department of transportation;

(9) The Hawaii tourism authority;

(10) The University of Hawaii;

(11) The Hawaii state senate and house of representatives;

(12) The Building Industry Association of Hawaii;

(13) The Chamber of Commerce of Hawaii;

(14) The Honolulu chapter of the American Institute of Architects;

(15) The Hawaii Business League;

(16) The Hawaii Business Roundtable;

(17) The Hawaii Hotel Association;

(18) The Healthcare Association of Hawaii;

(19) The Hawaii Visitors and Convention Bureau;

(20) The Pacific Basin Economic Council; and

(21) Small Business Hawaii.

The members of the working group shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

The governor shall appoint the members of the ad hoc China/Hawaii economic strategic plan working group no later than July 1, 2005. The working group shall cease to exist on June 30, 2006.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $100,000 or so much thereof as may be necessary for fiscal year 2005-2006 for developing a China/Hawaii economic strategic plan.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 4. This Act shall take effect upon its approval and shall be repealed on July 31, 2008.