The central government is creating a new directory of industrial projects in the west
authorized to accept foreign co-operative partners, their money and technologies, said
Zhang Xiaoqiang, director of Foreign Fund Utilization, State Development Planning
Commission. The State, in turn, will grant these qualified partners preferential tax
incentives.
The State
Development Planning Commission and the State Economic and Trade Commission are jointly
working on the directory, he said.
"Included in
the directory are mainly agricultural and forestry businesses," the director said.
The government
will grant extra tax reductions to foreign-invested agricultural projects in West China,
including reduced import tariffs, income taxes and financial levies for land use, he said.
Hu Jingyan,
vice-director of the Foreign Investment Department under the Ministry of Foreign Trade and
Economic Co-operation, said foreign-invested companies in East China, especially in the
coastal areas, are now encouraged to invest in the west to expand their businesses in the
Chinese market by relying on the comparatively low-costs of human resources.
"We
previously banned foreign-funded firms in East China from handling reinvestments in the
Chinese market, except funds from profits reinvested in their own businesses in
China," Hu said.
Foreign-funded
agricultural projects, if they meet the State's current industrial guidelines for foreign
investment, will get a 15 per cent tax deduction from their income taxes in addition to
the preferential tax treatment now given to the country's foreign-funded joint ventures
for their initial three years of operations.
In some business
fields, the central government now strictly restricts the proportion of foreign investment
in joint ventures with Chinese partners in East China. But, to promote development of the
west, it will relax its restrictions to encourage foreign investors to go west, Hu said.
Zhang said the
country is wrestling with how to ease investment in the west to achieve quick returns,
while trying to avoid duplication in the establishment of new businesses at the same
locations.
He stressed the
importance of diversifying the channels of foreign investment flowing into the agriculture
in the west for management upgrading, predicting that going onto international financial
markets and being listed on the Shanghai and Shenzhen B-share markets will play a role in
the region's agricultural development.
In 1999 alone,
foreign investment in agriculture, and other sectors based on agriculture, amounted to
US$1.5 billion, up 22.2 per cent on a year-on-year basis, while total incoming foreign
investment in the country dropped by 18.9 per cent year-on-year, he said. |
