Laws of the People's Republic of China

General Office of Ministry of Commerce

Guiding Opinions of the General Office of the Ministry of Commerce concerning Expansion of Opening-up, Improvement of Absorption of Foreign Investment and Promotion of the Rise of Central China

Shang Zi Zi [2005] No. 130

Administrative commercial departments of Henan, Shanxi, Anhui, Hubei, Jiangxi and Hunan provinces:

For the purposes of the carrying out and the fulfillment of the strategy of the Rise of Central China regulated by the Central Committee of CPC and the State Council, expediting the economic development of central area, making use of foreign capital reasonably and effectively, promoting central area to fully expand the opening-up, grasping the favorable opportunities and regional advantages, and absorbing the foreign direct investment, related guiding opinions are hereby announced as follows with regard to the further expansion of the scale of absorbing the foreign capital in central area and the improvement of the level of absorbing the foreign capital:

1.

Strategy Significance

Promoting the rise of central Chin is the significant strategy and decision made by the Central Committee and the State Council from the perspective of the full consideration of modernization construction in China and the inevitable choice for the purpose of the full fulfillment of scientific development view, planning the regional development, and promoting the interaction and realizing the mutual development among eastern, central and western China. The further expansion of the opening-up in central area, promotion of the scale of absorbing the foreign capital and improvement of the level of absorbing the foreign capital in central area is the major part of the strategy of the rise of the central area, the important avenue of the fulfillment of the development potentials of central area and comparative advantages and the significant measure of the construction of well-off society in central area.

2.

Guiding Thought and Work Objective

Guiding Thought: Guided by the Deng Xiaoping Theory and the ¡°Three Representatives¡± Thought, wholly fulfill the spirit of the 16th National Congress of Communist Party of China, the Fifth Plenum of the 16th CPC Central Committee and the Central Economic Working Conference of the Central Committee of CPC, lead the development of the economic society by using of scientific development view, further liberate the thought, renovate the development concept, strengthen the innovative significance, firmly expand the opening-up of the central area, continuous promote the scale of the absorbing the foreign capital, optimize the structure of the foreign capital, improve the quality of the absorbing of the foreign capital, expedite the adjustment and upgrading of the industry structure, attracting the advanced technology, management experience and the high-quality talents. Started by the improvement of the innovative ability, take use of the regional advantages, realize the increase of economy and the social efficiency, form the new pattern of the favorable interaction of eastern and western China and the harmonized development of regional economy.

Work Objective: The provinces shall highly emphasize the significance of the absorbing the foreign capital during the rise of the central area, regard the opening-up and the absorbing the foreign capital as the breakthrough of the rise of central China, and firmly grasp the favorable opportunity of the rotation of the international industry for the purpose of perfecting the policy and regulation, expanding the channel of absorbing the foreign capital and promoting the scale of absorbing the foreign capital. Take use of the comparative advantages of the talents and resources in central area for the purpose of instructing the multinational company to transfer to the industry of the processing and manufacturing and service outsourcing of the central area. Through endeavor, try to make the actual use of the amount of the foreign capital increase with a large scale within the forthcoming 3-5 years in central area and increase the proportion of actual use of the foreign capital out of China. Further improve the quality and the level of the absorbing the foreign capital and adjust and optimize the industry structure of the foreign investment. The efficiency of the overflow of the foreign investment is strengthened and the significant role of the foreign capital played in the rise of central area is more obvious.

3.

Concrete Measures

(1)

Proactively explore and develop the new method of absorbing the foreign capital, encourage the foreign investors to invest in China¡¯s state-owned enterprises through mergers and acquisitions or by buying stakes for the purpose of the promotion of the innovation of the system and mechanism, strengthening the ability for the state-owned enterprises in central area to adapt to the market economy and fulfill the requirements for the strategic adjustment with regard to the national economy. Support the qualified foreign investment holding company to be listed in the domestic and overseas capital market.

(2)

Proactively explore the effective form of restructuring the state-owned assets, encourage foreign investors to restructure and dispose the non-performing assets of central area and allow foreign investment enterprises to buy non-performing liabilities and stakes of China's financial asset management companies in accordance with the laws and restructure and dispose the holding assets afterwards.

(3)

Based on the current advantages towards the agriculture, resources, traffic and human resources in central area and regional advantages, proactively absorb the foreign capital to expedite the technical rebuilding in the key industries and key enterprises, improve the integrative quality and corn competitiveness of the industry, promote the upgrading of the industry, strengthen the digesting and absorbing of the introducing of the technology and enhance the innovative ability.

(4)

Combining the regional advantages of all provinces in central China, China will soon revise the Catalogue of Priority Industries for Foreign Investment in Central and Western Regions to support the key industry and enterprises of foreign investment. Proactively instruct the foreign investors to invest some key industries for priority investment, including agriculture, iron and steel, autos, machinery, chemicals, and assembly manufacturing for the purpose of the upgrading the product and improvement of the competitiveness. It also encourages foreign investment in labor-intensive industries, such as clothing, food, light industry, and electronics, with the goal of creating job opportunities and a modern manufacturing base in central China. China will give preferential treatment towards the aforementioned major projects in central area, support with the political loans towards the major technology and equipment introducing and decrease the investment capital ratio towards major projects upon the approval.

(5)

Encourage foreign investment in central China's high-tech industries and the establishment of research and development centers. Fully fulfill and wholly use of the advantages of the current resources, talents, and production ability to encourage multinational company to wholly invest or cooperatively establish research and development centers with local enterprises, scientific research institution and high-level colleges. Encourage the multinational company to invest in holding company and regional headquarters.

(6)

Promote the central area to develop the modern service industry. Boost the opening-up of the service trade industry. Various service trades will first consider the central area as pilot of foreign capital. Fulfill the hinge role of the central area in the pattern of national traffic to attract the foreign capital for the purpose of the developing the industries, such as, logistics, transportation and etc. Expand the pilot of foreign-invested logistics enterprises to the central area. Boost central area to carry on the transforming the international service trade and the industry of eastern area.

(7)

Fulfill the relevant regulations of CEPA, support and instruct central area¡¯s work and promote the modern service industry in HK and Macao to invest in central area.

(8)

Strengthen the advertising to promote the fulfillment of the current preferential policy in central and western area.

(9)

Strengthen the support of the policy. Take measures to encourage the foreign investors to invest in the infrastructures construction in central area by various means to improve the investment environment of central area for foreign investors and the comparativeness for attracting foreign capital in central area.

(10)

According to the whole planning of integration with emphasis and cultivation the brands, support central area to hold the investment and trade fair and international and professional exposition.

(11)

Support and instruct central area in terms of investment and promotion. Assist central area to set down the strategy of investment and promotion and work out the report for investment and promotion of priority industry in central area. Expedite central area to integrate the resources and form the regional advantages. Support central area to take use of the platform, such as Sino-foreign investment trade fair to attract the foreign capital.

(12)

Perfect the investment service system and strengthen the construction of the platform of investment and promotion and the training of economic talents. Further take use of Central Foreign Trade Development Fund to support central area to attract the foreign capital for further development. Support central area to strengthen the communication and cooperation with the international organizations and overseas institutions.

(13)

Fulfill the resources advantage of central area to proactively support central area to improve the ability of deep machining and finish machining of resources product by attracting foreign capital and promote the export of high value- added products.

(14)

Expedite the construction of current national development zones in central area and improve the innovative ability. With regard to the development zones with the development tendency, industry specialty and strong drive, under the circumstance of the fully use of the originally-approved planned area, appropriately expand the scale of land using in accordance with the whole planning and urban planning regarding the land using. Encourage the development of the provincial development zone in central area.

(15)

Encourage foreign invested enterprises in the eastern coastal cities to invest in central area to boost the establishment of cooperative mechanism between eastern and central China and the provinces of central area. Create the conditions to boost the investment and trade cooperation between eastern and central area.

General Office of Ministry of Commerce

Dec 28, 2005