Laws of the People's Republic of China

General Office of the State Council

Opinions of the General Office of the State Council on Implementing the Promotion of Further Opening-up of the Old Industrial Bases in Northeast China

Guo Ban Fa [2005] No. 36

All the people's governments of provinces, autonomous regions and municipalities directly under the central government, all the ministries and commissions of the State Council and all the organs directly under the State Council,

Further opening-up is an important component of the strategy to revitalize the old industrial bases in Northeast China, and also an important approach to its realization. In accordance with the "Opinions of the Central Committee of CPC and the State Council on the Implementation of Revitalization Strategy of the Old Industrial Bases in Northeast China" (Zhong Fa [2003] No. 11) and in consideration of the actual conditions of Northeast China region, the opinions for implementation of its further opening-up have been approved by the State council and are hereby presented as follows:

1.

We shall encourage foreign investment to participate in the restructuring and transformation of state-owned enterprises, so as to accelerate structural and mechanism innovation.

(1)

In accordance with the requirements of carrying out the strategic adjustment in state-owned economy, we shall explore and extend new modes of utilizing foreign investment, encourage foreign investment to participate in the restructuring and transformation of state-owned enterprises, promote structural and mechanism innovation, and reinforce the adaptive ability of state-owned enterprises in old industrial bases to market economy.

(2)

We shall encourage foreign investors, through methods such as merger, shareholding, to participate in the restructuring and transformation of state-owned enterprises. The taxes owed by the enterprises which are historical accumulations and have become really uncollectible can be exempted with the approval of the State Council in accordance with specific regulations. We shall encourage qualified foreign-invested stockholding companies to go public in the capital markets in China and overseas.

(3)

We shall actively explore the effective ways to vitalize state-owned assets. We shall permit foreign-invested enterprises to purchase the bad creditor's rights and shareholder's rights from financial property management companies and to reshuffle and dispose of their properties in accordance with relevant laws.

(4)

We shall continue to improve the social security environment for the development of foreign-invested enterprises. Foreign investors, after their merger of state-owned enterprises, shall deal with the issues such as labor relations, laying off employees for economic reasons and social security in compliance with current laws, regulations and rules and the principle of national treatment.

(5)

We shall further regulate and promote the merger and reshuffle of domestic enterprises by foreign investors. We shall establish a healthy property right exchange mechanism in Northeast China, so as to create a convenient and normative environment to facilitate foreign investors in their investment through modes like merger and shareholding. Merger of state-owned enterprises by foreign investors shall be subject to asset assessment carried out in compliance with the relevant Chinese laws and policies, and the price of asset exchange shall be determined by the results of asset assessment recorded in or approved by relevant departments or bureaus.

2.

We shall strengthen the policy guidance to push forward the technological advancement of key industries and enterprises.

(6)

We shall, on the present basis, bringing into full play of comparative advantages and aiming at the improved overall quality and core competitiveness, actively introduce foreign investment to accelerate the technological advancement of key industries and enterprises, enhance the assimilation and absorption of introduced technologies, improve self-driven innovation capabilities and boost industrial upgradation.

(7)

We shall support foreign investment in key industries and enterprises. We shall actively guide foreign investment to national key industries, such as modern agriculture, equipment manufacturing, chemistry, hi-tech industry and agricultural products processing and accelerate development in supporting industries, so as to build modern industrial bases with stronger competitiveness. The state government will give preferential treatment to Northeast China in the distribution and arrangement of key projects in the above-said industries and give policy-based loan for the introduction of important key technologies and equipments, with reduced percentage of capital funds as approved for key projects. Foreign investment in key projects which have been approved by the State to build with T-bonds can have the approved discount government loans, subsidies and reduced amount of capital funds of the original projects, and can increase their stockholding rights transferred from Chinese state-owned enterprises upon approval.

(8)

We shall extend the application of the Catalog of Priority Industry for Foreign Investments. The application of "Catalog of Priority Industry for Foreign Investments in Central and Western Areas" is extended to Liaoning Province (Jilin and Helongjiang have already been included). Any foreign investment projects in Northeast China which are in conformity with the Catalog are eligible for the preferential policy in import taxes for the category of encouraged foreign investment.

(9)

We shall encourage foreign investment in hi-tech industries and R&D centers. We encourage multinational corporations, in the form of sole investment or joint venture with local enterprises, science and research institutions or higher education institutions, to establish R&D centers in Northeast China. In addition to eligibility for the preferential policies stipulated in the "Notice of the State Council Concerning the Adjustment in the Taxation Policy of Import Equipment" (Guo Fa [1997] No. 37) and "Notice of the General Office of the State Council forwarding the Opinions of the Ministry of the Foreign Economic and Trade Concerning the Further Encouragement of Foreign Investment" (Guo Ban Fa [1999] No. 73), approved foreign-invested enterprises' technological centers are also eligible for exemption of import duties and import value-added taxes in accordance with current regulations for the self-use consumptive materials, reagents, sample equipments, sample products which are not available in China.

(10)

We shall encourage foreign investments in continual industry and substitutive industry. The State will, through priority arrangements in the distribution of productivity of key projects, encourage and guide foreign investment to the deep processing and continual industry projects in the resources-exhausted cities of Northeast China, and also bring into full play and make comprehensive use of existing resources, talents and productive capacities, so as to push forward the transition of these cities.

3.

We shall further extend the areas of opening-up and exert efforts to improve the level of development of the service industry.

(11)

We shall adapt ourselves to the needs of the new situations in the opening-up process, of the development of advantageous industries in old industrial bases, of the change in the functions of cities and of the promotion of employment, and at the same time actively introduce foreign investment to upgrade the traditional service industry and focus on developing modern service industry, in order to push forward the opening-up in the sector of service industry.

(12)

We shall encourage foreign investment in the construction of urban public facilities. Under the condition of the establishment by city governments of an effective supervising mechanism and the guarantee of public interest and security, the restriction on the shareholding percentage of foreign investment can be lessened in the construction and operation of gas, heating and water supply and drainage network. Foreign investor can become the controlling party when approved.

(13)

We shall extend the opening-up of the financial service industry. In accordance with the commitment to WTO in opening up financial service sector, we shall further extend the opening-up of banking industry and accelerate the development of financial services in securities, futures and insurance. Priority permits will be granted to sub-branches and operations by foreign banks in Northeast China. Foreign financial organizations are encouraged to join stock in local city commercial banks and participate in the restructuring and reshuffle of rural credit cooperatives. Foreign insurance companies, which have advantage in areas such as supplementary pension and agricultural insurance, are encouraged to begin their operations in Northeast China. Priority permits are also granted to joint venture securities companies, securities investment and fund management companies, insurance brokers companies and foreign insurance companies which operate in Northeast China.

(14)

We shall encourage foreign investment in transportation industry. The shareholding percentage of foreign investment, in operations such as in railway passenger and cargo transportation, cross-border and within-border road transportation, regular or irregular international freight and international multimodal container transportation, can be raised upon approval. Foreign investment is also encouraged in air transportation and general aviation.

(15)

We shall extend the pilot scope of foreign-invested logistics enterprises. It can be extended to the provinces of Liaoning, Jilin and Heilongjiang.

4.

We shall bring into full play the regional advantages to promote the healthy development of regional economic cooperation.

(16)

We shall, by taking advantage of the geographic position of Northeast China region and implementing the "going global" strategy, deepen the cooperation and development with bordering states in energy sources, raw materials and mineral resources. We shall actively engage in regional economic cooperation, explore international market, bring along the export of commodities, technologies and labor. We shall continue to render support to Northeast region in their building of the platform of cooperation with bordering states in international trade, investment, science and technology and tourism.

(17)

We shall give more impetus to the frontier trade development in Northeast China. We shall study and develop policies conducive to the development of frontier trade, simplifying procedures in aspects such as export tax rebate, administration of import and export commodities and personnel exchanges, while strengthening the administration. We shall improve and extend the use of Renminbi in frontier trade settlement, so as to facilitate trade and investment. A pilot plan is to be carried out in Northeast China for export tax rebate in Renminbi for small amount export trade.

(18)

We shall strengthen the economic and technological cooperation with Northeastern Asian region to push forward the development and opening-up of frontier region. We shall continue to expand the international cooperation and development of Tumenjiang area, actively exploring new modes of development and development and opening-up in frontier region. We shall accelerate the construction of frontier economic cooperation zone, frontier trade zone and export processing zone, enabling Heihe, Suifenghe (Dongning), Huichun and Dandong to become areas that assume the functions of logistics, trade, import and export processing and international trade and tourism.

(19)

We shall encourage investment and development abroad in the forms of joint venture, cooperation and merger. We shall, through further studying relevant policies and improving the policy supporting system, increase the support in the subsidies to the initial cost of overseas key development projects by enterprises in Northeast China and discount loans to them, and make priority arrangements for the import of their products.

(20)

We shall encourage qualified enterprises to participate in international tender and contracting international cooperation projects. For the manufacturing and processing projects and technological cooperation projects in overseas construction contract and overseas investment that can bring along export of equipment and labor, the current supportive measures, such as discount loans, loans on favorable terms and the market expansion cost in terms of overseas exhibition and advertisement, will be further strengthened and expanded.

(21)

We shall accelerate the development of Dalian as an international shipping center in Northeaster Asia. We shall lay more emphasis on the construction of port facilities and further open up Dalian port, so as to enhance its capacity in absorbing foreign investment and assembling basic shipping elements. We shall expand the scope of the pilot plan of interaction between free trade zone and port. We shall render policy support and give priority examination and approval to foreign-invested large scale port projects, near-port industry in encouraged category, and logistics projects.

5.

We shall create a favorable development environment to safeguard an accelerated opening-up.

(22)

We shall make efforts to utilize more international loans on favorable terms in adding to infrastructure construction and development in social undertakings such as environmental protection, education and public health. We shall continue to shift the government functions and improve service awareness and service standard, so as to provide convenient favorable environment for foreign-invested enterprises in carrying out their business activities.

(23)

We shall further improve the development level of existing development zones. We shall push forward the construction of innovation system in Northeast region, characterized by self-driven innovation under the circumstance of opening-up, in Northeast region in order to improve the capability of self-driven innovation of existing development zones. When their approved panning areas have been fully utilized, the national level development zones and the provincial development zones that have good potential of development, distinctive industrial features and are of high driving power can, in accordance with the requirements of improvement and rectification of land market, determine on a reasonable land-use scale after going through required procedures. Northeast region is encouraged to draw upon successful experiences of other regions to build new-type industrial parks and modern manufacturing bases in cooperation with the EU and its members or other developed countries on the basis of existing development zones with good infrastructure.

(24)

We shall push forward the construction of infrastructural facilities. The State government will put more in the capital investment of the infrastructural facilities of harbors, frontier ports, bridges, frontier cities and frontier farms, accelerating the construction of railway passage project in east part of Northeast China and the integrated construction of road, harbor and port with Russia and the road, harbor and trade zone with DPRK, so as to push forward the implementation of cooperation projects aboard. The State government will, in carrying out its plan of international aid, make priority arrangements for the construction projects of infrastructural facilities such as transportation, harbors and airports linking frontier ports in Northeast region.

(25)

We shall encourage foreign investors to establish joint venture vocational training institutions. In accordance with the "Regulations of the People's Republic of China on Chinese-Foreign Cooperation in Running Schools", foreign investors are encouraged to cooperate with Chinese higher education and vocational education institutions in establishing advanced vocational education institution for training various vocational professional talents and international business personnel. In such an activity, they are eligible for the same treatment given to other Chinese vocational education institutions, except stipulated otherwise in other laws and regulations. In the meantime, other departments and bureaus concerned shall actively study the preferential tax policy concerning the exemption of import tax on their import of articles for purpose of research and education. Any experiment and training bases that are qualified to receive financial support from the central government are eligible for unified supportive policies.

(26)

We shall encourage the Northeast region to introduce talented people from overseas and to make avail of studying abroad programs to foster the most-wanted talents for Northeast region. We shall increase the fund allocation to Northeast region for the recruitment of foreign experts and sending personnel abroad for training, and support qualified departments and units in conducting extensive international talent exchange and cooperation. We shall, by actively applying and availing the World Bank loans and other international cooperation programs and introducing high-quality educational resources, push forward the Sino-foreign cooperation in running schools and boost the development of education in Northwest China.

(27)

We shall establish a healthy service system for the introduction of foreign investment by small and medium-sized enterprises. Foreign investors are encouraged to establish guarantee agencies in the form of Sino-foreign joint venture, aiming pertinently at providing for small and medium-sized enterprises services such as financing guarantee, information consultancy and legal assistance.

(28)

We shall attach great importance to the organization and implementation of extension of opening-up. The extension of opening-up in Northeast China is a systematic undertaking as well as a long-term task, of which great importance should be attached in terms of the leadership and implementation. All relevant departments of the State Council and the People's Governments of the three provinces in Northeast China shall formulate detailed rules for implementation in accordance with these implementary opinions. The Office of the Leading Group for Revitalizing Northeast China and Other Old Industrial Bases shall establish an effective coordination mechanism with relevant departments of the State Council and the three provinces in Northeast China, in an endeavor to bring about the actual implementation of all policies through consolidated coordination.

(29)

The above-said policies are also applicable to enterprises from the regions of Hong Kong, Macau and Taiwan, other economic organizations and individuals participating in the revitalization of old industrial bases in Northeast China.