CHINA FOREIGN INVESTMENTS POLICIES AND PREFERENCES

Regional Policies

China's policy of opening to the outside world uses a holistic strategy of proceeding in an orderly and step-by-step way from coastal region to inland cities. Currently there are varieties of special economic areas:

	Special Economic Zones: Shenzhen, Zhuhai, Xianmen, Shantou and New Area of Pudong in Shanghai
	14 coastal port cities: Shanghai, Tianjin, Dalian, Qinhuangdao, Yantai (including Weihai), Qingdao, Lianyungang, Nantong, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihai
	49 state economic and technological development areas (see appendix)
	52 state high and new technological industrial development areas

In 1999, the Chinese government carried the policy of central and western regions exploitation into execution. Investment including that from abroad is encouraged to put into inland China in the central and western region. Policies and measures relevant to the foreign investment are:

(1) Projects included in the Catalogue of Advantageous Sectors for Foreign Investment in Central and Western Regions shall enjoy the same policies as encouraged projects.

(2) For the foreign invested projects in infrastructures or advantageous sectors in the west, restrictions on the proportion of foreign investment shall be appropriately eased.

(3) Foreign investment is encouraged to put into the west region in the infrastructure construction and resources development of agriculture, irrigation works, ecology, transportation, municipal works, environmental protection, Mining, Tourism, etc. and the establishment of technical research and development centers.

(4) The opening in the service and trade sectors in the west region shall be furthered: the pilot projects of foreign investment in banks, retailing enterprises and foreign trade shall be expanded to municipalities and capital cities of provinces and autonomous regions; foreign invested banks shall gradually be permitted to run RMB business; foreign investors are permitted to, in accordance with relevant regulations, enter telecommunications, insurance, tourism, Sino-foreign public accountant services, lawyer services, engineering design companies, railway and highway transportation enterprises, municipal engineering enterprises and other industries admitted to open; some industries are permitted to open in the west first for a trial.

(5) Expanding channel of foreign investment: BOT and TOT trials are permitted in the west region for foreign investors; foreign invested projects are permitted to gather capital including that of RMB; qualified foreign invested enterprises in the west region shall be supported to get listed in stock markets home and abroad; Enterprises belonging to State encouraged and permitted industries in the west region shall be supported to absorb foreign invest through transferring of operation right, selling of share holdings, mergering and reorganizing, etc.; actively explore the methods of Sino-foreign joint venture fund and risk investment fund in absorbing foreign investment.

(6) Foreign-invested enterprises of eastern regions are encourage to come to the western China and reinvest, and those projects with more than 25% foreign investment could been regarded as foreign-invested enterprise and enjoy equal treatment;