China plans to introduce a series of measures this year to expand the use of foreign investment in order to offset repercussions of the Asian financial crisis, according to the Ministry of Foreign Trade and Economic Cooperation (Moftec). Policies concerning overseas investment will remain basically unchanged because of uncertainties in the international environment. The country will focus on the use of foreign direct investment. Plans include opening more fields to foreign investors. For example, pilot joint ventures in the retail sales sector will be established in a number of cities in Central and Western China to supplement existing ventures in Shanghai and Shenzhen.

Foreign investors will be encouraged to establish joint foreign trading companies in Central and Western China, as well as in a dozen coastal cities. The proportion of shares foreign investors are allowed to hold in air transport companies will be increased and the government will encourage more pilot joint companies in accounting services, appraisals, commodity inspections and quality control sectors. With these foreign investment incentives, multinational companies will be one of the main beneficiaries. Moftec has instructed local departments to formulate specific preferential policies to encourage multinational companies to invest in various areas, including the high technology sector. Related departments will help multinationals establish regional research and development centers in China. Multinational companies with existing investments in China will be encouraged to expand their product lines and upgrade technical levels.

Moftec will seize every possible opportunity to promote cooperation between small_and medium_sized domestic and foreign companies, and will encourage Chinese companies to produce parts for foreign_funded ventures. Private companies will be encouraged to use foreign investments under the guidance of Moftec. In addition, a number of pilot development zones in Central and Western China will be designated as model zones to effectively stimulate foreign investments. China will strengthen its diversification strategy in attracting foreign investment, and will accelerate efforts to establish cooperative ties with international investment promotion agencies.

Moftec will introduce a number of new approaches to attract investments, including specialized canvassing in conjunction with investment promotion companies, sending investment groups abroad, stationing resident representatives in major investor nations and will expand the use of the Internet. Moftec officials are optimistic about this year¬šs expanded use of foreign investment, holding that foreign investment are expected to continue to flow in on a relatively large scale because of the attractiveness of the nation¬šs political and social stability, stable currency and rapid economic growth.
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The Ministry of Land and Resources will implement new legal and administrative means to strengthen the control of land, ocean and exploitation of mineral resources. The new law on land administration took effect on January 1, under which a national program of overall planning of the country¬šs land use has been worked out and approved by the State Council, putting 80£„ of the farmland under strict protection. Minister Zhou Yongkang noted recently that his ministry would promulgate three sets of regulations this year, to govern annual land_use, land_occupying construction projects and land that has been taken out of production. The ministry is also drafting three other new regulations on managing the transactions of the land use rights, land_leasing and collecting fees from new land_occupying construction projects. The work of landuse arrangement is being carried out step by step, and an advanced monitoring mechanism has been established to provide basis for strengthening enforcement.

Last year, seven illegal cases of land transactions and land_occupation for the construction of non_agricultural projects, such as golf courses, were cracked down and made public to increase the public awareness. However, land management still faced arduous challenges from a rapid decrease in the total amount of farmland. In spite of the policy of freezing land_occupation, adopted by the central government, China had a net loss of 135,300 hectares of arable land in 1997, and 200,000 hectares in 1998.

Zhou noted that this year was very important for improving the order in mineral exploration and exploitation. The certificate_renewing process starting from this year will be employed to bar small and poorly_equipped enterprises from exploiting mineral resources, as they often seriously polluted the environment. So far, 10 provinces, autonomous regions and municipalities have fulfilled the overall improvement in the mining order. A new survey on land, mineral and oceanic resources starting this year is another important task for the ministry.
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A notice has been issued by the State Administration of Foreign Exchange (SAFE) in a bid to explain what control would be effective in forex control to react to the official circulation of the Euro. It also explains how to convert the original accounts of currencies of the 11 countries of the Euro region (Euro_pean currencies for short) to Euro accounts; retain European currency account and open a Euro account; formulate foreign debt indexes, forex statements, and quotations of Euro exchange rate.

The notice points out that in applying for converting European currencies accounts to Euro accounts or retaining the original European currencies accounts and opening Euro accounts, institutions within China¬šs territory need to go through the procedure for the change and putting it on records with SAFE. In so doing, it will enable SAFE to have a well knowledge of all accounts and their uses, and also realize the principle of unrestricted and unprohibited use of Euro in the period of transition. But it should be understood that there will not be any procedures of examination and approval. SAFE will handle the matter as soon as possible on receiving the applications, without sticking to any unnecessary formalities. In particular, the notice explains how to go over the above procedures in bonded zones.

According to the present stipulations SAFE has to ratify the maximum amount of the balance or aggregated income of forex current accounts of institutions within China¬šs territory. As European currencies and Euro can be used alternatively in the three_year transitional period from 1999 to the end of 2001, the maximum balance of the current accounts of European currencies and Euro can be used under overall planning. In the same way, the retained maximum amount of aggregated forex income of the European currencies and Euro accounts can also be used under overall planning.

For foreign debt accounts with government approval, no matter what kind of freely convertible currencies, they may collect funds in Euro within the period the ratification of the instrument is valid. With Euro put to circulation, all the Chinese banks designated to do forex business may quote the exchange rate of Euro against RMB, and the quoted exchange rate of ECU against RMB is abolished, but, in fixing the quoted price of RMB against Euro, the difference of the price of buying and selling of spot exchange shall not be over 0.5£„.
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Taiwan enterprises are now allowed to hold exhibitions on China¬šs mainland, a spokesman of the Ministry of Foreign Trade and Economic Cooperation (Moftec), said recently in Beijing. The announcement was accompanied by the promulgation of a temporary regulation governing the conduct of economic and technological exhibitions on the mainland of China featuring Taiwan¬šs business activity. The regulation was drafted by Moftec. The move, designed to improve economic ties across the Taiwan Straits, again demonstrates the mainland¬šs sincerity in developing closer commercial links between the two sides. He said the mainland is expecting a positive response from the Taiwan authorities.

The regulation, made public on the occasion of the 20th anniversary of the publication of Message to the Compatriots in Taiwan by the National People¬šs Congress, is of special significance. According to the temporary regulation, Taiwan business establishments can jointly hold exhibitions with a mainland firm which has the right to organize an exhibition. During the past two decades, trade and economic cooperation between the two sides has grown rapidly. By the end of last November, trade across the Straits came to ”ē134.7 billion, with exports to Taiwan at ”ē21.6 billion and imports from Taiwan at ”ē113.1 billion.
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Shanghai plans to map out 40 regulations within the next five years to legalize its property market. Over the past several years, the city has promulgated some regulations, but they are not enough to cope with a wide range of cases. Local courts are challenged by an increasing number of property related cases caused by illegal transactions and poor housing quality. About 90£„ of the civil cases are property disputes involving housing demolition, usage rights of State_owned apartments and sales of private housing. Currently, the city refers to government documents instead of laws to manage its property market. Furthermore, regulations are outdated and can¬št meet the needs of a growing market, and some provisions are unpracticable.

More residents now want to buy houses or exchange their small flats for bigger ones. Many have found that housing quality is unsatisfactory and developers can¬št provide flats in time. Some who have bought flats have no property certificates due to illegal construction and can¬št exchange housing. Due to lack of laws, illegal construction can¬št be punished, which leaves the legal rights of buyers unprotected. Between 1993 and 1997, local courts tried 25,064 property cases, and more are waiting to be examined. The Municipal People¬šs Congress urged the city government to reinforce management of the property industry.
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Premier Zhu said in his state_of_the_nation that the objectives for reform and development fixed at the beginning of last year had been basically attained in the face of a complicated and grim economic environment both at home and aboard. The economy posted a hard_won annual growth rate of 7.8£„. Though slightly lower than the 8£„ target, it was attained in the context of the worsening Asian financial crisis and catastrophic flooding.

China will continue to push forward reforms and opening up this year, and work to expand consumer demand while increasing deficit spending to spur the economy to 7£„ growth, Premier Zhu told the legislators. The year¬šs economic task outlined by the premier included continuing to promote reform and opening up, stepping up its efforts to implement the strategy of developing the country by relying on science and education and the strategy of working for sustainable development, promoting economic growth mainly through the expansion of domestic demand, stabilizing and strengthening agriculture, and deepening reform of State_owned enterprises. The government will continue to restructure the economy, make great efforts to open up more urban and rural markets, do everything possible to increase exports, take precautions against and minimize financial risks, rectify economic order, and maintain a sustained, rapid and sound development of the national economy. In 1999 the government will take effective measures to expand consumer demand as well as capital spending to stimulate economic growth.

Zhu reaffirmed that China will continue to pursue a prudent monetary policy and maintain the stability of the renminbi. To ward off financial risks, the central government would strengthen the supervision of financial institutions. China will try every means to achieve an increase in exports and use more foreign funds. The government will continue to carry out the basic State policy of opening to the outside world, work to penetrate markets abroad and strive to expand foreign trade. The country will take full advantage of its social and political stability and sound macroeconomic conditions to try to absorb as much foreign investment as possible, particularly investment from famous transnational corporations, and improve the way foreign funds are used.
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In a recent survey organized by the State Economic and Trade Commission and the State Development Research Center, China was crowned the best place to invest in the Asia_Pacific area by businesses from the Asia_Pacific Economic Cooperation (Apec) member economies. The survey questioned 4,573 Apec entrepreneurs that have invested in China. About 87£„ of the surveyed businesses voted China the most attractive investment site in the Asia_Pacific area, said the Chinese Entrepreneur Investigation System (CEIS), which conducted the survey. Following the Chinese mainland, Hong Kong, Singapore, the United States, Canada and Australia took the five other top seats, respectively.

Most survey respondents chose China as the most ideal investment site in the Asia_Pacific area because it possessed a stable social and political environment, good macro_economic conditions and huge market potentials. The survey result indicates that China has bright prospects for furthering its foreign investment absorption drive. The survey showed that 95.2£„ of Apec entrepreneurs were confident in continuing to invest in China and gaining profits. At least 70£„ said that their companies were committed to business in China for 10 years or longer.

Over the past several years, 63.1£„ of these Apec ventures raked in earnings from their business in China, though 15.1£„ have suffered profit declines. The abundant and cheap labor force, the government¬šs preferential policies for foreign investors and the huge market were three major profit resources for Apec companies in China. While the majority of the surveyees expressed satisfaction with China¬šs current macro_economic conditions__characterized by low inflation and rapid economic growth__some were worried about the oversupplied market. More than half of the entrepreneurs said that China¬šs real estate market, consumer goods market and production material market were glutted. Fund_raising difficulties were regarded by 27.4£„ as one of the major external factors restricting the development of foreign_invested ventures in China.
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Henan Province plans to develop into one of China¬šs major electricity bases in the coming 11 years. The development blueprints drawn up by the Henan Power Bureau include plans to increase power generating capacity and upgrade the existing power transmission network. During the Ninth Five_Year Plan (1996_2000), Henan¬šs generating capacity is expected to increase 5 to 6 million kilowatts. By the end of 2000, its total generating capacity is targeted to hit 15 to 16 million kilowatts. It is estimated that, with the growth of 18 million kilowatts during the coming 11 years, total capacity will reach 34 million kilowatts in 2010.

Preparatory work is underway for the targeted increase. In addition to the projects already under construction, seven medium_and large_scale projects with a total capacity of 4.9 million kilowatts have been approved by the provincial government. Eight projects which total 7.2 million kilowatts are ready for approval and feasibility studies. These projects will constitute a solid foundation for Henan¬šs electric development in the approaching century.

The province also plans to step up the overhaul and upgrading of the existing power transmission and distribution systems over the coming 11 years. The Henan power grid is an important part of the Central China Power Network that covers the provinces of Henan, Hubei, Hunan and Jiangxi. Henan has one 500_kilovolt and two 220_kilovolt transmission lines which connect to the Central China Power Network. These lines allow the Henan power grid to serve as a hub that transmits power from hydraulic stations in the south during the summer when river levels are high and from thermal plants in the north during the winter. The bureau is renovating the 220_kilovolt lines and will begin to focus on the construction of more 500_kilovolt lines, which are expected to be the mainstay of the province¬šs power transmission network during the early part of the next century.

In order to raise funds for these projects, Henan will continue to cooperate with foreign companies and international financial organizations. As a province which relies mainly on thermal power, Henan needs to import more advanced technology to improve efficiency and strengthen environmental protection as it boosts its electricity sector.
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The Guangxi Zhuang Autonomous Region is planning to expand foreign investment utilization with the focus on infrastructure construction, energy development, technology_intensive industries and the technological renovation of enterprises.Meanwhile, Guangxi will explore more efficient capital_raising methods.

Over recent years, the industrial structure of foreign_funded projects in Guangxi has grown in a reasonable way, with the proportion of production, export_oriented and technologically advanced enterprises registering a constant increase. Energy, transportation and other infrastructure projects have achieved much progress. Among the approved foreign_funded projects in 1997, production and infrastructure items accounted for 80£„, while those involving tourism and hotels were considerably reduced.

Guangxi, termed as the home of non_ferrous metals, boasts of abundant natural resources, such as aluminum, zinc, tin, and manganese. It is the 3rd largest base of hydropower construction in this country and has bright future for development in this field. The region is also rich in oceanic resources and is the home to south pearls. Moreover, as it is located in the subtropical area, Guangxi is also famous for its production of quality fruits and agricultural and forest produce. The province also has abundant tourism resources and has attracted numerous domestic and foreign visitors every year with its beautiful scenery spots, and unique folk cultures. Guilin City, the region¬šs capital, is considered as having the most beautiful mountains and waters under the heaven, and the beach of Beihai port is a national tourist resort.

The development of foreign economic coop and trade of the region has been making remarkable progress since 1979, entering into a prime stage in recent ten years. From 1988 to 1997, it has made a total import and export of ”ē18.74 billion, of which export accounts for ”ē13.27 billion. The year 1998 has witnessed further and expanded development of the province¬šs foreign economic and trade relation. The total imports and exports of the region from January to August last year reached ”ē1.945 billion, of which exports, ”ē1.634 billion, up 23.8£„ from the same period in 1997. ”ē438 million foreign investment has been actually utilized during the same period, increasing by 11.9£„. At present the region has established trade ties with more than 130 countries and regions in the world. With its advantageous geographical location and bright market prospect, Guangxi province has become a hot area for investment. Coca Cola and Pepsi cola of the US, Henkel of Germany, United Food Group Company of the UK, Daewoo of ROK, Nokia of Finland, NEC of Japan, and many other world renowned multinationals have begun to have their presence in the region and to have sound investment returns.
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Chongqing, China¬šs youngest municipality, is sparing no efforts to embrace more foreign investment to fulfill its ambitious goal of becoming a thriving economic powerhouse. The ¬š99 China Chongqing Investment and Trade Fair is scheduled to be held on April 28_30. It is the first of its kind since the city was granted its municipal status by the National People¬šs Congress in March 1997. More than 2,000 representatives from domestic and foreign corporations and institutes are expected to attend the fair.

The municipal government will recommend to investors 1,400 projects, including 400 key ones. The sectors range from high technology, agricultural development, environmental protection, to transportation as well as tourism. Key projects include construction of the Chongqing_Hechuan Expressway, the Yangtze River Bridge in Zhongxian County, Chongqing Jiguanchi Sewage Treatment Factory, Jiangjin Sewage Treatment Factory, Chongqing Modern Agricultural Park, Dazhulin Industrial Park and Erlang High_Tech Park, and the production of 1,000 tons of polycrystalline silicon annually for Chongqing Tianyuan Chemicals Plant. Funds will also be devoted to the development of tourism. Chongqing will cooperate with investors in building the City of Three Kingdoms in Fengjie, and to improve facilities for Mount Fairy, the Little Three Gorges, as well as the Pit of the Sky and the Crack in the Earth resorts.

The fair is expected to attract 40 billion yuan (”ē4.82 billion) in investment, of which, 4 billion yuan (”ē482 million) is expected to come from foreign investors. A large exhibition covering an area of 10,000 square meters will present a full portrait of Chongqing, including its economic strength and investment potential. It will also give detailed information on specific projects. Besides investment and trade negotiation, a multi_national corporation forum and an opening_up policy report conference will be among the fair¬šs activities. Furthermore, the Fourth China Chongqing Three Gorges Tourist Festival will also be held simultaneously.

Chongqing covers 82,400 square kilometers, almost twice the size of the Netherlands or three times that of Belgium. With a population of over 30 million, this trading center in Southwest China is expected to provide numerous commercial opportunities. Chongqing boasts sound transportation facilities. It has three railways, five State highways as well as over 50 domestic and international airlines. Two new railways and seven expressways are to be built. Moreover, cargoes from Chongqing harbor can reach main ports in the world. The municipality has implemented 98 clauses of preferential policies to woo foreign investors. It even conducts a ­·one step" service to ease overseas investors¬š endeavors. All matters regarding the establishment of a foreign_funded company can be completed within 10 working days. Up to date, more than 2,800 foreign_invested companies have been established in Chongqing. Contracted foreign capital hit ”ē4.75 billion. Chongqing is expected to become the locomotive of China¬šs economic growth in the 21st century.
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The high_tech sector has become one of the leading industries in Yantai. By the end of last November, ”ē1.35 billion from 23 countries and regions had been invested in more than 460 projects in the Yantai Economic and Technological Development Zone. The investments in Yantai had generated high profits, despite the Asian financial crisis. High technology accounts for 80£„ of the zone¬šs annual output value. 45 high_tech companies have been established in the zone. Of these, 90£„ are funded by foreign companies. The projects are involved in machinery, electronics, refined chemicals, chemical fibers, pharmaceuticals and cables. The government¬šs preferential policies and the zone¬šs favorable investment environment, and high_quality technical and management personnel as well, are major contributors to the success of the zone.

The average investment of the foreign_funded project in the zone is ”ē6 million. About 80£„ of the capital comes from the United States, Japan, Germany and South Korea. A car spare parts project valued at ”ē700 million recently started production in the zone. It is jointly funded by South Korea¬šs Daewoo Group, the First Automobile Works of China, and Shandong Province. The Korean company has also injected over ”ē400 million in a joint venture to manufacture excavators. Foreign investment has strengthened the competitiveness of the Zone¬šs companies. By the end of this century the number of high_tech companies is expected to reach 80, with annual sales amounting to 12 billion yuan (”ē1.45 billion). To protect the environment and reduce costs, the zone refuses projects which are likely to cause pollution or threaten high energy consumption.
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Liaoning Province recently offered the following projects for foreign cooperation.

1. 333 hectares of vegetable protection land project. Investment: ”ē60.2 million. Form: joint venture.

2. Construction of high_efficiency industrialized demonstration agricultural center. Investment: ”ē11.7 million. Form: joint venture.

3. Meat products processing project (producing 3,000 tons of sausage, ham and other vacuum_packaged foodstuffs per year). Investment: ”ē2 million. Form: joint venture.

4. Expansion of 120,000_ton corn starch production (expanding the existing processing capacity to 270,000 tons and production to 180,000 tons per year). Investment: ”ē40 million. Form: joint venture.

5. Ox hide processing with a yearly capacity of 500,000 pieces. Investment: ”ē18 million. Form: joint venture.

6. Zhuanghe Thermal Power Plant (the first stage project with two 600,000_kilowatt generating sets and a yearly generating capacity of 7.2 billion kilowatt_hours.). Investment: ”ē950 million. Form: joint venture.

7. Shenyang International Conference and Exhibition Center. Investment: ”ē322 million. Form: joint venture.

8. Containers wharves in Bayuquan Port (construction of two 35,000_ton container wharves and related facilities). Investment: ”ēl00 million. Form: joint venture.

9. Water supply project (to supply 73 million tons of water a year). Investment: ”ē35 million. Form: joint venture.

10. Second phase of Liaohe thermal power project (construction of a 220 T/H circulation boiler and a 24 MW power generator). Investment: ”ē42 million. Form: joint venture.

11. Vacuum aluminizing film line (to produce 500 tons of BOPET vacuum aluminizing film). Investment: ”ē2.55 million. Form: joint venture.

12. Two_flake tin plate can production line (to produce 400 million cans a year). Investment: ”ē29.5 million. Form: joint venture.

13. Expansion of Shenyang Shenfei Hino Bus Corporation. Investment: ”ē73.7 million. Form: joint venture.

14. Sealed starter battery (to produce 1,600 starter batteries a year). Investment: ”ē12.1 million. Form: joint venture.

15. Valve machining center (with an annual capacity of 500 tons of bellows safety valves). Investment: ”ē1 million. Form: joint venture.

16. In_line analysis instrument project (to produce 200 sets of in_line analysis instruments a year). Investment: ”ē2 million. Form: joint venture.

17. Hydraulic breaker plant (to produce 300 sets of hydraulic breakers per year). Investment: ”ē3 million. Form: joint venture.

18. Epoxy resin project (to produce 10,000 tons of epoxy resin). Investment: ”ē19.1 million. Form: joint venture.

l9. Production of tires for heavy duty engineering machinery (to produce 100,000 sets of offroad tires). Investment: ”ē19.3 million. Form: joint venture.

20. Production of all steel radial truck tires (to produce 500,000 sets of radial tires a year). Investment: ”ē150 million. Form: joint venture.

21. Production of polyvinylidene chloride resin and film (to produce 10,000 tons of polyvinylidene resin and 2,000 tons of polyvinylidene film). Investment: ”ē60 million. Form: joint venture.

22. Equipment and technologies for concrete pipe production (to produce prestressed concrete pipes). Investment: ”ē15 million. Form: joint venture.

23. Technical transformation of Hall elements production line (to produce 100 million pieces of Hall elements per year). Investment: ”ē3.4 million. Form: joint venture.

24. IC semiconductor elements production (to produce 6_8 million pieces of semiconductor elements per year). Investment: ”ē32 million. Form: joint venture.

25. Computer controlled joint action system for fire detecting, alarming and fighting. Investment: ”ē3.27 million. Form: joint venture.

26. Production of computers and components (to produce 500,000 sets of computers, 200,000 pieces of computer boards and 18,000 square meters of printing board). Investment: ”ē8 million. Form: joint venture.
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China¬šs fledgling coalbed methane industry is expected to take off in the near future, thanks to a series of effective incentives. The China United Coalbed Methane Co Ltd (CUCBM), the exclusive overseer of the sector in China, has drilled 11 self_financed wells that indicate sound gas flows. The Shanxi province, which possesses about one_quarter of China¬šs total coalbed methane reserves, wants to promote comprehensive cooperation with CUCBM to shape the coalbed methane sector as one of its pillar industries. The country will actively introduce foreign funds, advanced technology and managing expertise to promote coalbed methane development in the coming years. Five contracts signed by CUCBM and three US companies have been implemented smoothly.

Texaco Inc, the first overseas company to launch cooperation with CUCBM, drilled its first well last September to explore the coalbed methane resources in the Huaibei coalmine in Anhui. Arco and Phillips have also drilled their own wells to explore Shanxi¬šs four known reserves__Sanjiao, North Sanjiao, Shilou and Linxin. CUCBM is negotiating with several foreign partners to expand cooperation to Jiangxi, Xinjiang and other areas. Dozens of foreign companies had expressed strong enthusiasm in investing in China¬šs coalbed methane sector.

China possesses abundant coalbed methane resources and has formed a sound policy environment. The nation will implement more favorable incentives for coalbed methane exploitation than for conventional natural gas and oil because coalbed methane projects carry higher risks, higher front_end costs, and longer payback periods. Officials from the relevant government departments said China has taken measures to create a better investment climate for foreign companies interested in the coalbed methane sector. They can enjoy import duty exemption and a low value_added tax rate of only 5£„. Foreign companies can also choose among a wider range of investment modes than investors in other energy sectors such as crude oil and natural gas.

Coalbed methane is an unconventional form of natural gas. To prevent gas explosions, 6 billion cubic meters of methane are expelled from China¬šs mines annually, seriously polluting the environment and wasting energy resources. Meanwhile, China is troubled by an ever_increasing shortage of petroleum. China¬šs coalbed methane reserves, estimated at 30 to 35 trillion cubic meters, are located about 2,000 meters underground. CUCBM aims to produce 10 billion cubic meters annually by 2010.
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Despite the hit by Asian financial crisis China's light industry realized a total of renminbi 1,257.4 billion in industrial output value in 1998, rising 9.7% over 1997. The industry exported renminbi 54 billion worth of products last year, up 1% over the previous year. According to officials from the State Light Industry Bureau, apart from famous wine and special arts and crafts at the State level, all sectors and products in the light industry are allowed to open up to setting up cooperative or joint ventures with foreign business. The branches and products, which are allowed to open, include: pulp for paper making, daily use machinery, silicate and chemicals, food and beverage, leather, fur and products, salt, cultural and sports articles, plastics, metal-ware, electrical household appliances, lighting devices, equipment for light industry, furniture, sundry goods and ordinary arts and crafts etc. Other branches and products of domestic light industry will open wider for foreign cooperation. However, certain areas and products are not allowed to open at present, which include: the national famous alcoholic liquor and State class special arts and crafts with the former referring to "Maotai" and traditional yellow rice wine, and the latter to Xuan paper which is good for Chinese painting and calligraphy, ink-stick, blue and white jade vase, bodiless lacquer-ware, etc.

As an industry of relative high degree of market regulation and competitiveness, the light industry has made greater use of foreign investment. Incomplete figures show that there are about 20,000 independent accounting foreign-funded enterprises at county or higher level across the country, using $35 billion of foreign investment or 14% of the national total. Foreign investment has entered the fields of food and beverage, electrical household appliances, plastics, metal-ware, daily use chemicals and fur and hide. So far, foreign-funded enterprises have become a new force in light industry. The taxes out of joint equity ventures of cosmetics account for 50%, output value out of same kind ventures of clocks and watches for 46%, and the output of the ventures of beer for 30. 8% of the totals of the respective sectors.
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The Futian Bonded Zone in Shenzhen, Guangdong Province, is attracting foreign investors by its special geographical conditions, flexible policies and standardized operation mode. The 1.98 sq km zone is located west of the Huanggang Port, the largest land port in China to face Hong Kong across a river.

The zone is only 30 km away from Hong Kong¬šs Kuai Chong Container Wharf and has a special passage connected with Hong Kong. Cargo trucks from Hong Kong can come in and out of the zone freely with a special certificate issued by the administrative bureau of the zone. Enterprises in the zone not only enjoy preferential income tax rates but also are exempted from tariff, value_added taxes and consumption taxes on machinery and equipment, material for building infrastructures, office articles and management equipment they import for self use and raw materials and spares and fittings imported for processing and export purpose. The zone has not introduced the shadow margin account scheme for importing raw materials for processing. Under the bonded system, it has adopted a closed offshore management mode, by which enterprises there can settle accounts. Enterprises can choose to save or convert their forex either in RMB or forex.

The administrative bureau of the zone is an agency of the Shenzhen City Government in charge of construction and management of the zone. It examines all applications for establishment of enterprises in the zone and issue approval documents and certificates within seven days. Meanwhile, due to closed management, the zone¬šs Customs and frontier inspection station only serve enterprises and personnel in the zone. Sound legal system in the zone has ensured a good public order, and banks, insurance companies, law offices and accounting firms are offering service at all time.
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China¬šs gold production reached record_high level in 1998, with the industry¬šs profit jumping by 47£„ to 1 billion yuan (”ē120 million). Total gold production reached 172.8 tons last year, surpassing the planned target. The gold industry will make every effort to produce 175 tons of gold and earn a profit of 1.2 billion yuan (”ē140 million) this year. Technical upgrading and enterprise restructuring contributed to last year¬šs accomplishments. In 1998, the gold industry¬šs production cost was down 3.1£„ compared to 1997 figures.

In order to improve the production capacity, many enterprises in the industry applied new technologies, equipment and materials to the production process. By the end of last year, 11 of all 37 enterprises with more than 1 million yuan (”ē120,000) in deficit had cut partial, if not complete losses. The percentage of enterprises with losses in the industry declined to 25£„ at the end of 1998 from 34£„ in 1997. Many gold enterprises have increased their profits. There were 25 gold enterprises which earned a profit of more than 10 million yuan (”ē1.2 million) each in the first 11 months of last year, with the total profit reaching 747 million yuan (”ē90 million). To meet the market_oriented economic demand, domestic gold enterprises need to establish the new operational system to survive the reform. Some large_scale groups have been formed, like Zhaoyuan group in Shandong. Because gold is a kind of unrenewable resource, the industrial authorities have encouraged the enterprises to diversify the business scope. Jinqu, a gold mine in Henan Province, has become an enterprise dealing in multiple businesses with total assets increasing five_fold. At present, the profit created by non_gold businesses accounted for over 10£„ of the gold industry¬šs total profit.
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American Electric Power (AEP) has been smoothly operating a coal_fired power plant in Nanyang, Henan Province, with two local partners. The first generating unit of the Pushan Power Plant has completed installation, testing, and commercial operation nearly six months ahead of schedule. The second unit has also commenced start_up procedures and equipment testing, and will be ready for commercial operation well ahead of schedule. Nearly all of the equipment was made in China, because China¬šs equipment for this size and type of facility is good enough to be ranked as world class. Established in 1997, total investment in the plant is 1.43 billion yuan (”ē172 million). The American firm holds 70£„ of the equity investment. The first phase of the plant consists of two 125_megawatt units. It will generate 1.38 billion KWH electricity annually. AEP is committed to strengthening its presence in China by grafting more up_to_date technology to promote the country¬šs coal_fired power plants and possibly developing natural gas or hydropower plants.
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A Sino_foreign joint oilfield has been recently put into operation to explore the abundant oil resources in the eastern part of the South China Sea. Located in the mouth of the Pearl River, the oilfield, named Huizhou 32_5, is about 160 kilometers away from Hong Kong, with 43.2 million barrels in reserved deposit. Daily production is currently 10,000 barrels and is expected to reach 27,000 barrels when the three wells go into production. The oilfield was explored by CACT Operator Group, a joint venture between the China National Offshore Oil Corp (CNOOC) and Italy¬šs Agip China Company, US Chevron Overseas Petroleum Co Ltd and Texaco Petroleum China Co. Equipment and services for the project are provided by firms from Europe, the United States, Canada, Australia, Singapore and China. CNOOC joined CACT in January, 1996 and now holds 51£„ of the shares of the oilfield while the other three companies have 49£„. This year, CACT is expected to produce more than 100,000 barrels per day in the five commercial oilfields located in the South China Sea.
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A Canadian company has concluded an agreement with the Xi¬šan Airplane Company in Beijing recently for producing by the Xi¬šan Airplane Company of main annihilator pans for 50 CL_415 amphibious planes for the Canadian company in the coming years. The Xi¬šan company had been a manufacturer for producing annihilator parts for the previous generation of CL_215 planes.
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A signing ceremony for the import through bidding of 15 sets of water pump electrical machinery and auxiliary facilities was held in Beijing recently. The equipment is used for the first construction phase to divert water from the Yellow River to Wanjiazhai in Shanxi Province. A group of Japanese companies including Marubeni Co, Ebara Corp, and Toshiba Corp participated the bidding organized by the Zhongyi International Bidding Company, a subsidiary of the China National Instruments Import and Export Corporation. The total cost is about 5.27 billion Japanese yen.
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