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Economics Indices

Contracting Overseas Engineering Projects and Labor Service

In China, contracting for foreign engineering projects and providing labor service is a new undertaking started after 1979. That year, China changed its traditional way of giving assistance to the recipient countries and set up the International Economic and Technological Cooperation Corporation. This signaled the start of contracting for engineering projects abroad and providing cooperation in labor service. The four basic policies of China in contracts for foreign engineering projects and providing labor service are "equality and mutual benefit, laying stress on actual results, diversification in forms, and mutual development." In addition, there is a eight-character principle - "keeping promise, ensuring quality, small profits and laying stress on credit."

The undertaking of contracting for foreign engineering projects and providing labor service initially started in West Asia and North Africa at the end of the 1970s. In the 1980s, it expanded to the Middle East and in the 1990s to Asia, Africa, the former USSR and Eastern European countries. By 1998, there had already been more than 700 companies specially contracting for foreign engineering projects. They had operated in more than 180 countries and regions in all the five continents, thus forming the multi-dimensional pattern of focusing on the Asian market, developing business in Africa, recovering business in the Middle East and opening up the European, American and South Pacific markets. Their total annual business turnover had increased from US$100 million to several dozen billion US dollars.

In contracting for foreign engineering projects, the development has been witnessed from being sub-contractors to being the principal contractors, from medium-sized and small projects to large projects worth hundred millions of US dollars, and from labor-intensive projects to technology-intensive ones. Engineering projects contracted by Chinese companies have much praise in the world and international for high efficiency and superb quality. The awards include the Mercury Gold Award, Arab Award, International Gardening Gold Award, Leibsch World Fair Gold Award. By the end of May 1997, China had signed contracts involving a total amount of investment of US$49.8 billion, of which US$33.7 billion worth had been accomplished.

The labor service cooperation has developed from the such commonplace labor service as building and spinning and technical service to high-level service, from providing sailors and medical workers to providing specialized personnel for aircraft maintenance, computer software application and designing, engineering design and consultation, engineering project management and satellite launch. The workers sent abroad are mainly distributed in Singapore, the Hong Kong Special Administrative Region of China, Republic of Korea, Macao, Taiwan, Russia, Japan, the United States, Mauritius, Israel and other countries or regions.

Contracting for foreign engineering projects and providing labor service is a type of comprehensive trade. It not only has spurred on the export of complete sets of equipment and technology, but also enhanced China's prestige in the host countries for the high quality of the engineering projects and equipment. It is abound to play a role for future expansion of trade between China and these countries and in enhancing the friendship and mutual understanding between the Chinese people and people in these countries.

In 1998, the total value of newly contracted foreign engineering projects, including contracts for engineering, labor service cooperation and engineering design and consultation, amounted to US$11.77 billion, of which US$10.13 billion worth