China's food retail sector continues to grow and develop as hypermarket and convenience store chains expand across the country. Foreign-invested hypermarkets are likely to continue growing as restrictions on their activity and ownership are scheduled to be loosened in 2005. China's fish meal production continues to decline. China's direct imports of US dairy products are forecast to increase 38 percent.Processed and RTE foods continue to gain ground as wealthy urban consumers seek new ways to save time. Demand for tree nuts remains strong, yet high market prices restrict imports and consumption. Efforts are needed to change people's perception of tree nuts as a snack food to a health food. The food processing industry is developing rapidly in China. Strong economic growth combined with higher disposable incomes means increased demand for high quality processed food by Chinese consumers.

2004 2005 Total Market Size 10,952 12,587 Total Local Production 11,016 11,676 Total Exports 2,390 2,327 Total Imports 2,326 3,238 Total Imports from U.S. 502 487

China's agricultural chemical market has been the subject of great attention, and one of the biggest agro-chemical consumers and a large agro-chemical importer. By the end of November of 2005, 45.78% of China's DAP imports came from the United States. China wants to import high-concentration and compound fertilizers. China's accession to the WTO provides benefits to U.S. fertilizer exporters. On accession, tariffs dropped 6% from the 11% import duty rate. Imports of high efficiency, low toxicity, and low residual pesticides have strong market prospects, mainly as an alternative to highly toxic Chinese pesticides. Foreign suppliers currently face discriminatory product testing requirements. China still must rely on importing fertilizers in large quantities, including Nitrogen fertilizer, Phosphate fertilizer, Potash Fertilizer Pesticides High efficiency, low toxicity pesticides have strong market prospects. Some raw esticides and intermediates rely on imports, such as aniline with o-dihydroxybenzene, furphenol and tripoly-nitrogen-chlorine dialdyl. Because the Chinese government now emphasizes environmentally sound technologies, pesticides will have to meet new requirements.

China's ATM Equipment Market Information (USD Millions)   2004 2005 (as of Nov.) Total Market Size N/A N/A Total Local Production N/A N/A Total Exports 85 616 Total Imports 187 353 Imports from the U.S. 28 33

China is a fast-growing market for air traffic control equipment. Te General Administration of Civil Aviation of China (CAAC) is expected to spend another $1.2 billion on ATM equipment through 2015. The majority of this equipment will be imported, as locally manufactured ATM equipment is not yet able to match foreign quality. The CAAC Air Traffic Management Bureau's (ATMB) goal over the next ten years is to improve facilities in the east and mid-west of the country, with plans for a comprehensive data network, new automation-center systems, ground-air voice/data communications, and new radar systems. China also plans to introduce ground-to-air communications and automatic dependent surveillance services for international and polar routes in the west. In the next 10 years, China will see strong growth in its number of flights, airports, and air routes. This surging demand plus close cooperation with the Federal Aviation Administration (FAA) will greatly boost required investment in China's ATM system and provide numerous opportunities for U.S. ATM exporters. In recent years China's air traffic volume has increased between 8-10% annually and is expected to grow 10-15% per year over the next ten years. In 2005, there were 2.3 million total flights, an increase of 55% over a five-year period. Opportunities Upgrade and automate control centers to establish radar control in Eastern and Central China. Improve ground-air communication facilities and Automatic Dependent Surveillance (ADS) of international and polar routes in Western China to increase ATM communication and control capacity in this area. Establish a civil aviation ATM comprehensive data communication network and comprehensive information system to meet increased demand from airlines.

Industry experts estimate that by 2020 China's safety and security market will reach US$30 billion. The market has expanded from its traditional base in the financial, insurance, custom, police, airport and IT sectors to the construction, transportation, and education fields. With 108 new airports to be constructed in the next five years, airport security has become a critical safety issue for the Chinese government. Increasing tourism and a rise in air cargo volume will also necessitate an upgrade of security technology at existing major airports to improve safety and efficiency. Much of the safety and security demand will focus on high-tech equipment, such as digital technology, entrance guard communication systems, network technology for inspection control systems, and warning systems. Opportunities Warning systems: There is major demand for intelligent airport systems. Foreign companies dominate the market for high-grade products, leading the trend towards integrated safety and security systems. Detection Equipment: As China's domestic manufacturers lack capacity to produce enough equipment, foreign products in this field are in high demand. Fire Protection Equipment: Domestic competition in this sector is strong. All imported equipment must first obtain safety certification from the China Fire Bureau. Fire protection equipment, X-ray scanners, metal detectors, portable detectors, and other equipment are needed. Most bids for this security equipment will open this year.

China's Automotive Components Market Information (USD Millions)   2004 2005 (projected) Total Market Size 28,800 35,800 Total Local Production 9,200 10,580 Total Exports 4,500 6,300 Total Imports 6,500 6800 Imports from the U.S. 585 620 China was on target to become the world's second largest auto market ahead of Japan with sales expected to top 7 million by the end of 2006. The China Association of Automobile Manufacturers said sales in the first 11 months of 2006 totaled 6.45 million units, 25% more than in 2005. By July 1, 2006, tariffs on imported automobiles will be reduced to 25 percent, which is the 5th reduction since 2001, and tariffs on imported automotive parts will fall to 10 percent. Opportunities Engines for motor vehicles and motorcycles; Auto and motorcycle casting blanks; Key automotive parts and components including disc-type breaking assembly, drive axle assembly, automatic transmission box, diesel engine fuel pump, engine admission supercharger, engine displacement control device, electric servo steering system, viscous continuous shaft device (for four-wheel drive), air shock absorber, air suspension frame, hydraulic tappet, and compound meter; Auto electronic devices and instruments (including control systems for engine, chassis and vehicle body); Fuel cell technology; Automotive accessories;

2004 2005 (projected) Total Market Size 3174.2 2593.7 Total Local Production 2808.3 2363.5 Total Exports 258.2 295 Total Imports 624.1 525.2 Imports from the U.S. 97.3 146.4 Coal is the most dominant energy source in China, making up about 70% of total primary energy consumption in the country. China's coal-producing area exceeds 550,000 square kilometers. It has potential coal reserves of around 5.57 trillion tons. China is the world's largest coal producer, accounting for nearly 28% of the world's annual production. Nevertheless, China's major coal mining equipment is generally 10 to 15 years behind that of other countries with respect to mining efficiency, equipment quality, environmental protection of mines, and safety. U.S. firms compete well in the following categories: longwall shearers, stageloaders, continuous miners, batch haulage vehicles, road headers, hydraulic roof support systems, and armored face conveyors. For open-pit mining operations, U.S. firms compete well in the following categories: electric mining shovels, walking draglines, blast hole drills, and heavy mining trucks. Coalmine safety remains a critical issue at Chinese coalmines. Accidents in 2005 killed over 6,000 coal workers. Only 35% of China's more than 25,000 coal mines have safety equipment. China will invest USD 6 billion over the next few years for safety equipment in its large, state-owned coal mines. Best prospects include: coal mining safety equipment, security equipment, gas control systems, and fire monitoring and control equipment. Opportunities Construction of new coal mines and coal bases. Improvement of coal mine safety Clean coal processing technology Coal conversion technology (including coal liquefaction and coal gasification) Coal bed methane development and utilization

2004 2005 (Estimated) Total Market Size US$ 10.6 billion US$ 12.2 billion Total Local Production US$ 4.3 billion US$ 11.9 billion Total Exports US$ 99 million US$ 698 million Total Imports US$ 6.4 billion US$ 1.0 billion Imports from the U.S. US$ 25 million US$ 38.9 million The best opportunities for U.S. exports of construction equipment include: self-propelled bulldozers, angle dozers, graders, levelers, scrapers, mechanical shovels, excavators shovel loaders, tramping machines, and road rollers.

The purpose is to divert water from the Yangtze River in the south to China's north, where water is in critical need for agricultural and industrial applications. The project will cost US$59 billion; when completed in 2010 it will pump about 13 trillion gallons of water to the north every year. Different types of equipment are needed for the project, including scrapers, Excavators, vibratory rollers, dump trucks, truck cranes, etc.

Beijing The Beijing municipal government plans to invest nearly $22 billion in infrastructure construction for the 2008 Beijing Olympic Games. Public Transportation including fifth ring road, express rail, major roads, railroad

Shanghai will host the World Expo from May 1 through October 31, 2010. To support the event, the Shanghai government will invest over US $10 billion in infrastructure.

In 2005, the banking sector spent approximately US$2.95 billion on IT products. As part of its WTO accession agreement, China pledged to phase-in national treatment for foreign banking services over a five-year period and to reform its domestic banking system. On December 11, 2006, foreign controlled banks will be permitted fully competitive access to the Chinese market, since geographic and client restrictions, which currently limit foreign banks¡¯ business in China, will be lifted. In order to compete with foreign banks from 2007 onward, both the Chinese government and Chinese banks are determined to continually modernize the banking technology used in China. Chinese banks prefer to purchase practical, and reliable, and mature products with good after-sales service. In 2005, the banking sector spent the largest percentage (16.4%) on applications software. With the completion of the national data integration work and the setup of the disaster recovery center, the demand for storage equipment, and security products, hardware firewalls, (5.99%) and intrusion detection systems (5.45%) is expected to increase rapidly.

The Chinese government is working with relevant industries to advance the development of the credit card system in China. Through the year ending December 31, 2004, China issued 762 million bankcards, of which 664 million were debit cards and 98 million were credit cards, according to the latest statistics from the People's Bank of China (hereafter, PBOC), the nation's central bank. There are over 150 banking card issuers, including the ¡®big four¡¯ banks: the Industrial and Commercial Bank of China; the Bank of China; the China Construction Bank, and the Agricultural Bank of China. There is also a fast-growing second tier of shareholding banks and city commercial banks that issue banking cards. China's state-owned commercial banks also issue dual-currency cards that allow cardholders to purchase goods within China, in RMB, and while abroad, in US dollars. Opportunities for U.S companies in the credit card market: Credit card-related hardware, including POS and ATMs etc.; Credit card-related software for banks and merchants; Credit, risk and client management software or training programs for banks; Disaster back-up system for the banks¡¯ individual credit information database

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