Policy incentives encourage investment
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05/21/2001
Editor's note: This is the first part of a policy series on incentives the Chinese Government has crafted for investors going west. Coming up tomorrow will be the country's tax concessions in this regard. Stories are based on information made available by the Hong Kong Trade Development Council.In order to achieve balanced national economic growth and narrow the gap between different regions, China has decided to focus on the western region in its economic development in the 21st century. The government takes the narrowing of the gap between the eastern and western regions as a long-term policy, and has promulgated a series of preferential policies to encourage investment in the west. This strategy has opened up a host of business opportunities for investors. To promote economic development in western China, the State Council and other relevant departments have announced a range of incentives encouraging domestic and foreign investments in the region. Attracting capital The Chinese Government has announced a series of incentives to encourage foreign investment in central and western China. Greater efforts will be made to attract foreign investment to central and western China. In the past, about 60 per cent of foreign governments' soft loans were spent on the development of the central and western regions. This percentage will be gradually raised to 70 per cent. Chinese financial institutions will also be giving greater credit support to priority foreign investment projects in the central and western regions. Restrictions on foreign investment in the central and western regions will be relaxed. For example, foreign retailers will be allowed to invest in provincial capitals in central and western China. Telecommunications, insurance and other service sectors will also be opened to foreign investment in a gradual and orderly manner. In addition to traditional forms of investment, such as equity and contractual joint ventures and wholly foreign-owned enterprises, efforts will be made to promote project financing, project management and fund-raising on the stock market. foreign-invested enterprises (FIEs) in eastern China will also be allowed to go west and contract domestic enterprises for management. For foreign-invested projects in central and western China with high technological standards and whose products are in demand on the domestic market, requirements on the export and overseas sales ratio of their products will be relaxed or even lifted. As for FIEs investing in infrastructure and environmental protection projects in central and western China, the government will help them solve their foreign exchange balance problems.
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