SB2400.DOC

SECTION 1. The legislature finds that China is one of the fastest-growing economies in the world, sustaining a healthy average growth rate of over six per cent per annum for several decades. Currently, China is the second-largest economy in the world and according to the chief economist of the World Bank, may overtake the United States as the world's largest economy in 2030 if current trends continue.

China's influence in the world economy was minimal until the late 1980s. However, in the twenty-two years following economic reforms that began in 1979, China's economy has developed at an unprecedented rate, and that momentum has been steady into the twenty-first century.

As economic reforms took hold, China began to generate significant and steady growth in investment, consumption, and standards of living. China now participates extensively in the world market and its state-owned and private sector companies play a major role in the global economy.

As China's role in world trade has grown, its importance to the international economy has increased. China's foreign trade has grown faster than its gross domestic product for the past twenty-five years. China's growth comes from investment in infrastructure, heavy industry, light industry, and manufactured goods for export. The highly concentrated public sector, dominated by one hundred fifty-nine large state-owned-enterprises, provides key inputs from utilities, heavy industries, and energy resources. These have facilitated private sector growth and driven private investment. However, in 2008 thousands of private companies closed down due to the global economic crisis and the government announced plans to expand investment in the public sector to assist economic recovery. In addition to industry, entrepreneurship has grown, and in 2010, there were approximately ten million small businesses in China.

Since economic reforms began in the late 1970s, China sought to decentralize its foreign trade system to integrate itself into the international trading system. In 1991, China joined the Asia-Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation in economic, trade, investment, and technology advancements. China served as APEC chair in 2001, and Shanghai hosted the annual APEC leaders meeting in October, 2001. China's global trade has grown from $500 billion in 2001 to over $2.4 trillion at the end of 2008. The vast majority of China's imports consists of industrial supplies and capital goods, notably machinery and high-technology equipment, the bulk of which come from Japanand the United States. About eighty per cent of China's exports consist of manufactured goods, mostly textiles and electronic equipment, with agricultural products and chemicals constituting the remainder of exports.

In 2010, China was the world's largest consumer of energy, and accounted for slightly more than twenty per cent of the global total. China consumed forty-eight per cent of the world's coal in 2010. As of 2011, China consumed fifty-four per cent of the world's production of cement. The two most important sectors of the economy have traditionally been agriculture and industry, which together employ more than seventy per cent of the labor force and produce more than sixty per cent of gross domestic product. The two sectors have differed in many respects. China is the world's largest producer of rice and is among the principal sources of wheat, corn, tobacco, soybeans, peanuts, and cotton. The country is one of the world's largest producers of a number of industrial and mineral products, including cotton cloth, tungsten, and antimony, and is an important producer of cotton yarn, coal, crude oil, and a number of other products. Its mineral resources are among the richest in the world and are under increasing development.

According to then 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 stated 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. Vice-Premier Zeng stated that China would fulfill 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 infrastructure.

Hawaii needs to decrease its vulnerability as an insular state and to diversify its economy with innovative, high-technology, and green industries while preserving and protecting the unique environment of the islands. Hawaii's unique geographic location at the crossroads of Asia and the West enables the State to develop economic relationships and build bridges with various countries of Asia. Hawaii is uniquely poised to take advantage of the explosive economic development in the Asia-Pacific countries, especially China. However, the State has not developed a rational, unified, comprehensive, strategic plan to engage and take advantage of the economic development of China.

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

SECTION 2. (a) There is established a China-Hawaii economic strategic plan working group, chaired by the governor or the governor's designee, to be attached administratively to the department of business, economic development, and tourism. The working group shall develop a China-Hawaii economic strategic plan to be implemented by 2020. The plan shall contain a detailed outline and guide to enable the State to benefit economically from the emergence of the People's Republic of China as an economic and global leader. The plan may contain guidelines on steps to be taken by the State in the following areas:

(1) Film and digital media;

(2) Culture and the arts;

(3) Education;

(4) Health and medical services and research; and

(5) Tourism.

(b) The China-Hawaii economic strategic plan working group shall complete a strategic plan by December 30, 2012. The director of business, economic development, and tourism shall submit to the legislature a written report of the working group's findings and recommendations not later than twenty days prior to the convening of the 2013 and 2014 regular sessions.

(c) Members of the working group shall be appointed by the governor and may include, but not be limited to representatives of:

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

(2) The department of education;

(3) The department of health;

(4) The Hawaii tourism authority;

(5) The University of Hawaii;

(6) The Chamber of Commerce of Hawaii;

(7) The Hawaii Business Roundtable;

(8) The Hawaii Hotel Association;

(9) The Healthcare Association of Hawaii;

(10) The Hawaii Visitors and Convention Bureau;

(11) The Pacific Basin Economic Council; and

(12) Any other interested stakeholders that the governor deems appropriate.

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

The governor shall appoint the members of the China-Hawaii economic strategic plan working group no later than July 15, 2012, and shall convene the working group's initial meeting no later than August 15, 2012.

(d) The China-Hawaii economic strategic plan working group shall cease to exist on June 30, 2015.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2400
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII