Directions： There are 2 passages in this part. Each passage is followed by some questions or unfinished statement. For each of them there are four choices marked A, B, C and D. You should decide on the best choice and choose the ONE answer that is most appropriate.

Passage 1

Will China’ s investment in 3G services and its strength as a manufacturing hub be enough to revive Asia’ s economy?

The story of the global recession’ s impact on high— technology industry is written in the red ink of earnings statements, bankruptcies and shotgun consolidations around the world, such is the uncertainty we see during this historic downturn.

But the response from governments around the world was swift last autumn, when the first effects of the mortgage industry’ s collapse began rippling around the globe. Today, industry is hoping that government stimulus money will lift all stranded boats.

Nowhere is this prospect more intriguing than in Asia, where the confluence of government fiscal policy, emerging electronics businesses and expanding wireless and wired networking needs could lift both the region and the world.

Stimulus plans in countries such as China, Japan, Korea and India vary in scope and detail, but there is money in each country’ s plans that will directly or indirectly help to boost the communications sector to one degree or another.

Here’ s all overview of each country’ s approach to fiscal stimulus：

China-Total fiscal stimulus to date US$586bn

Stimulus actions target: rural infrastructure; water; electricity; transportation; the environment; technological innovation and rebuilding after disasters such as earthquakes. In addition, China altered some tax laws to stimulate growth and innovation.

Among them, it has dropped the tax rate from 25 percent to 15 percent for companies that qualify as “high and new technology enterprises. ” Such companies that establish a presence in China’ s special economic zones or in the Pudong New Area in Shanghai are eligible for a two-year tax holiday, followed by a three-year period in which they pay 12. 5 percent tax. In addition, companies will be able to deduct 150 percent of qualified R&D expenses for an unspecified time.

Japan-Total fiscal stimulus to date US$104bn (2. 2 percent of GDP)

Stimulus money includes: support for household consumption; funds on a priority basis to research advanced technologies and related research; and a reduction of taxes on eco-friendly cars.

South Korea-Total fiscal stimulus to date US$26. 1bn (2. 7 percent of GDP)

Stimulus money targets green technology and value-added services to build new engines of growth, including: sustainable energy; technologies to reduce greenhouse gas emissions; information technologies; healthcare and tourism. Additional measures include expanding tax breaks for increased R&D, cutting some withholding rates on corporations and eliminating penalties on additional tax resulting from transfer pricing adjustments.

India-Total fiscal stimulus to date US$6. 5bn (0. 5 percent of GDP)

Stimulus actions include: value-added tax cut; infrastructure investments (mostly in rural areas) ; other measures to help businesses.

One thread through these plans is what the Organization for Economic Cooperation and Development(OECD. is calling “the networked recovery” , in which much of a given country’ s hoped-for economic turnaround is tied to investment in information and communications technology(ICT) .

“The focus of many plans is on closing the broadband gap by providing universal broadband coverage throughout the country, but mostly in rural and remote areas. Some plans also devote resources to building out new, very high-speed networks, ” the 0ECD reported in June.

Where countries have existing and robust communications infrastructures, the stimulus targets may be funnelled toward specific uses. Japan for instance, is spending$29bn in ICT improvements, including building new fibre-optic networks for the medical sector. Another significant source of stimulus money that will affect communications players less directly will come from green-infrastructure initiatives in many countries that aim to deliver a smart electricity-delivery system (smart grid. more energy- efficient buildings and the like.

As bellwether for Asian economies, however look no farther than China*, which not only has the biggest stimulus plan in the region but is also an important manufacturing centre for customers around the world. As China goes, so goes the world.

“The government is doing good things, lots of stimulus in infrastructure building for 3G. That helps ZTE and Huawei, and the government has big stimulus plans for consumers to buy electronics, ” said Michael Clendenin, co-founder and principal analyst at Red TECH Advisors in Shanghai.

China began the construction of in 3G mobile system in earnest in January, issuing 3G licenses to the big three carriers, China Mobile, China Telecom and China Unicom. “The government sees 3G as a great way to get stimulus money into the system, ” Clendenin added. This might result in an investment of up to $40bn, market analyst Gartner Dataquest has estimated.

The biggest concentration of 3G builds-out is on China’ s densely populated east coast and in the So-called Tier l cities, such as Beijing. But the government also is targeting rollouts for every regional and provincial capital in the country-more than 30 Tier 2 cities, where the populations are three to five million people, Clendenin said.

“When you look at the footprint at the end of this year, the network will be either fully rolled out or have spotty coverage in 200 to 300 cities, ” he said.

That massive push is already showing economic results. Equipment and IC vendors are beginning to see some benefit, including at companies such as ZTE. Huawei, Ericsson, Siemens, Qualcomm and PMC-Sierra, which reported that 46 percent of its total sales came from China in the first quarter of 2009.

Cartner Dataquest recently reported that Broadcom saw 35. 4 percent of sales come from Asia. Pacific customers in the first quarter of 2009, compared with 27. 2 percent in the first quarter of 2008. Smaller vendors Vitesse Semiconductor and Mind speed Technologies both reported significant exposure to Huawei and ZTE in the first quarter of 2009.

During the first five months of the year, revenue among China telecom equipment vendors was$12bn, up l7 percent compared with the same period in2008. That period in 2008 was up just 2. 7 percent from 2007, so the sector is gaining momentum, Clendenin suggested.

But how is this build-out trickling down to the shell- shocked semiconductor industry? It’ s a difficult question to answer at this point. If China’ s huge stimulus programme is expected to revive the IC industry, signs of it doing so remain mixed, according to Sergis Mushell, a principal analyst at Gartner.

“The most direct impact we’ ve seen is the build-out on wireless 3G infrastructure in Asian economies” . Mushell said. “That’ s turned into orders and semiconductor vendors have seen the effect. The challenge is these orders come in sporadically. ”

“Indeed, vendors are experiencing rush orders from companies such as ZTE and Huawei which may create inventory over-build problems in the coming weeks. ” Mushell said.

“The deployment of cellular and wire line infrastructure in developing countries, such as India and China, has tended to be sporadic in the past, and current order rates are inciting concerns over potential short-ram over- ordering, ”he wrote in a recent Gartner report with colleagues Peter Middleton and Oliver Xu.

Mushell commented: “Put that into perspective, and one thing becomes clear: (IC vendors) are all getting the same call and volume orders, but there is no long-term visibility. ” Given the history of sporadic ordering from China, Mushell said, semiconductor vendors should be cautious about building their inventory.

Will Asia' s stimulus packages boost the communications industry and revive a deeply scarred electronics industry? The jury is out, since the money is just beginning to make its way through the electronics supply chain. Some observers are skeptical.

"There are legitimate questions about the effectiveness of fiscal stimulus, especially in economies where the financial system has broken down and where monetary policy can no longer play much of a supporting role, ” Eswar Prasad and Isaac Sorkin wrote this spring in a Brookings Institution report assessing global stimulus plans.

 “Moreover, excessive government borrowing to finance large budget deficits could itself generate instability, and there are serious concerns about the medium-term sustainability of fiscal positions in economies that are building up public debt at a rapid pace. Given the dire and fast-deteriorating economic situation and the lack of other tools, however, the world may have little choice but to engage in massive front-loaded fiscal expansion. ”

The creative destruction that accompanies economic recessions can serve as an opportunity for companies who not only continue to invest in R&D but are also lucky-or clever-enough to be in the right place at the right time. Google, Apple, and Samsung, for example, were among a number of companies that maintained or increased spending during the dotcom bust of 2001 to 2003.

From any nation’ s standpoint, a similar strategy can both drive years of future prosperity and lift the fortunes of suppliers associated with their spending programmes.

Take South Korea. The Asian nation was staggered by the Asian currency crisis of the late 1990s, but the government took steps to modify tax codes and boost spending on areas such as education and R&D、 with an eye towards the future. At the time of the currency crisis, there were 3, 000 corporate R&D labs in South Korea. That number tripled by 2001, and the number of venture capital firms exploded from100 to 11, 000, according to the OECD report.

“Government action helped shape an environment that enabled new businesses to seize upon these emerging opportunities, ” the report noted.