Requires DBEDT to convene working group to write 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. Reports to legislature 20-days prior to convening of the 2007 regular session. Appropriates funds. (SD2)

A BILL FOR AN ACT

SECTION 1. Findings and purpose. According to a Central Intelligence Agency analysis updated 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:

The result has been a quadrupling of China's gross domestic product since 1978. Although in per capita terms China is still poor, measured on a purchasing power parity basis, in 2003, China stood as the second-largest economy in the world after the United States. (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 experiencing only a 1.2 per cent consumer price inflation rate. Minister of Commerce Lu Fuyuan said that foreign direct investment in China totaled $57,000,000,000 in 2003, surpassing the record-breaking $52,700,000,000 worth 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 in south China, opposite Taiwan, and 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 billion (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, on poverty relief, and through rural tax reform. Accession to the World Trade Organization 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 strong 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 up a well-off society in an all-around way in the country within the coming 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-tech industries, and the 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 at the crossroads of Asia and the West, enabling it to competitively exploit developing economic relationships and build bridges between the two. Compared to the rest of the country, Hawaii is uniquely poised due to its location to take advantage of the explosive economic development in the Asia-Pacific countries, especially the People's Republic of China.

Furthermore, the experience, knowledge, skills, and cultural sensitivities of Hawaii's multi-ethnic and multicultural citizenry stand the State in good stead in any initiative to partner 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 10.5 acres in Kakaako on Oahu. Hawaii has also developed expertise in tourism consulting to 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 to 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.

On the other hand, 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:

(b) The director of business, economic development, and tourism shall complete the strategic plan by July 31, 2006. The director shall submit a written final report to the legislature not less than twenty days prior to the convening of the regular session of 2007.

(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:

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 $       , or so much thereof as may be necessary for fiscal year 2005-2006, for developing a China/Hawaii economic strategic plan.

SECTION 4. The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 5. This Act shall take effect upon its approval and shall be repealed on July 31, 2007.