The State Administration of Taxation (SAT) will continue to protect and support overseas businesses of Chinese enterprises by strengthening their protection against double taxation, SAT officials said. Against the backdrop of an increasingly globalized economy, international investment has been on the rise. The prevention of duplicate taxation in both the country of investment and the investor's home country is an indispensable issue for international businesses. In order to protect the rising overseas investments by domestic enterprises, SAT will continue its existing policies to ensure that companies are not taxed twice for the same overseas investment, Chen Fuliang, deputy division chief of the Income Tax Department of the SAT, said recently. The current practice, which has won general support from the enterprises, will continue for a certain period of time.

Under current SAT regulations, income tax paid in the registering country of the business may be offset against domestic tax charges. If a company fails to present evidence to prove that its income tax has been levied in the foreign country, it will be taxed at a rate of 16.5£„, half the 33£„ rate of domestic enterprise income tax. Personal income taxpayers enjoy equivalent deduction of the amount paid overseas from the domestic income tax computed under a 9_grade progressive system.

Investment overseas has soared since China embarked on its reform and opening up policy. From 1979 to the end of 1997, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) approved the establishment of 5,356 companies overseas. The scope of these businesses has expanded from trade to a wide range including foreign resource exploration, processing, transportation, project contracting and catering in over 140 countries and regions, posing significant challenges to international cooperation on tax collection.

China started to sign international treaties on preventing duplicate taxation in 1981 and has so far inked 60 agreements, among which 52 have come into effect. However, due to the complexity of international economic relationships, it remains a Herculean task to steer entirely clear of duplicate taxation. Different countries have different tax systems and this may make it difficult to get proof of tax payment, which is essential to calculate tax deductions back in the home country. For investments in low_tax regions like the Hong Kong SAR, where the enterprise income tax rate stands at 16.5£„, mainland investors still have to pay enterprise income tax at 33£„ even with the deduction.
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Overseas law firms will be allowed to open their firms and one firm can open more than one office in China in whatever places one year after the country¬šs entry into WTO, according to sources from the Ministry of Justice. However, the setting up of joint venture law firms by Chinese and overseas investor will still have to wait. So far overseas law firms are only allowed to be opened in 15 cities in China.

In April, another 12 overseas law firms were given the green light to open offices in China, increasing the total number of such offices in China to 105, of which 26 came from the Hong Kong Special Administrative Region. Another 100 overseas law firms are in the process of applying to enter China¬šs legal service market, according to the director of the Administration for China Offices of Foreign Law Firms under the Ministry of Justice. So far overseas lawyers are mainly entrusted by domestic clients to handle legal disputes abroad. They are serving as legal counsel to both domestic and foreign clients on matters of trade, technology, transfer, real estate, intellectual property rights, bonds and securities.

Overseas law firms are expected to play a more important role in China¬šs legal service market. The expanding role of overseas lawyers will face their Chinese counterparts with strong competition on short term basis. But in the long run, they may spur the domestic lawyers to improve themselves, in both professional standards and business skills. Meanwhile they will bring in their multinational clients to, in turn, create more business opportunities for Chinese lawyers. China¬šs law profession was restored in 1979, after a total eclipse of nearly 20 years. The country now has about 110,000 lawyers working in some 9,000 law firms.
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Policies_oriented insurance companies are brewing in China and will conduct non_commercial insurance businesses. He Jiesheng, managing director of the Insurance Institute of China (IIC), said recently that companies offering export credit and agricultural insurance services will soon be established. Non_commercial insurance activities will not be run by commercial companies but by firms specially set up by the government. In fact, experts have for a long time called for such government_backed insurance firms to boost export as well as agricultural development.

Since 1989, the export credit insurance business has registered a small growth in spite of the country¬šs soaring exports. In 1997, only about 1£„ of exports were insured, compared with 39£„ in Japan, and 21£„ in France. Every year, a lot of Chinese foreign trade firms fail to get their money, resulting in billions of dollars in due payment. For agriculture, although farmers¬š enthusiasm has kept increasing in recent years, insurance firms regard the sector as a money_losing business since China, a large agricultural country, is often hit by natural disasters. As a result, many insurance firms are reluctant to get involved in a high_risk and often non_profitable business.

Earlier reports announced that the China Insurance Regulatory Commission (CIRC) was carrying out a feasibility study on the establishment of specialized agricultural insurance firms. Establishing policy_backed insurance firms would be part of the industry¬šs ongoing reform. Other major efforts include the separation of property insurance and life insurance and further commercialization of insurance firms.
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Related departments are actively on the way of formulating related regulations to govern Sino_foreign cooperative investment fund, Zhou Zhengqing, chairman of the China Securities Regulatory Commission, disclosed recently. This signals an active efforts of competent authorities to reschedule the matter of Sino_foreign cooperative investment funds which have been shelved for years. Launchings of Sino_foreign cooperative investment funds were proposed as early as in July 1994 when the China Securities Regulatory Commission and the related departments of the State Council put forward the document of ”°Three Major Policies for the Stock Market" in which the matter of Sino_foreign cooperative fund was mentioned for the first time. But at that time it was only a primary intention, not available with any related guidelines and specific measures. By now, it seems that as implied in the speech of Zhou, the authorities have formed a definite policy on the matter, i.e. legislation first, then practice.

Related sources suggest that some basic conditions have already been available for the country to actually setting up of such kind of funds. First, as China¬šs own investment funds have already started operation, and what the funds are to be done have fully been aware by investors. Second, the competent departments have fully conducted verifications and planning over the matter. Third, the related Chinese authorities have conducted substantial discussions and exchanges with foreign counterparts on the matter as some necessary preparatory steps. What¬šs most essential is that the banking and insurance sectors of China have become increasingly wiring up with the world by permitting overseas related institutions to open outlets and do business in China and also domestic banks and insurers going abroad to set up outlets and do business.

More important, the trials of Sino_foreign cooperative investment funds will help the same kind of investment funds in China get familiar with international practice and then operate in a more scientific and efficient way. Meanwhile the funds can work as a new channel for China to absorb foreign capital.
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The requirements for companies to get import and export rights are being lowered further in China, as the Chinese Government tries all possible means to boost the foreign trade sector. Sources from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) said that the ministry has adjusted the minimum requirements for issuing foreign trade licenses. Under the new policy, the minimum registered capital required of provincial firms to qualify for an import and export license is set at 5 million yuan (”ē602,000) in the coastal areas and 3 million yuan (”ē361,000) in other areas. Contracting and labor services companies will also gain access to the foreign trade sector if their annual contracted engineering sales volume surpassed ”ē5 million in the two years prior to the application.

Enterprises manufacturing machinery and electronic products can apply to establish wholly_owned or share_holding import and export companies if their self_conducted exports exceeded ”ē5 million in the previous year. Other manufacturing firms will also be given the same right if their annual export volume exceeded ”ē10 million last year. As for the 120 key State_owned conglomerates and 1,000 selected large_sized State industrial firms, they enjoy the import and export rights as long as they register with MOFTEC. While easing the curb on foreign trade licenses, MOFTEC will strengthen its supervision on the companies after they gain the rights.

Meanwhile, measures will also be reinforced to combat smuggling, tax evasion, illegal trading of licenses and other fraudulent activities. The measure follows a series of incentives adopted by the Chinese Government to boost this year¬šs exports. Due to the Asian financial turmoil, China¬šs export volume decreased by 5.3£„ in the first five months this year compared with last year to land at ”ē67.55 billion. Despite the tremendous pressure, MOFTEC is still confident that China¬šs exports will grow this year.
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The Chinese Government will keep a vigilant eye on the launching of new power projects in the next two years, in a bid to push forward its power structure adjustment drive. The focus of power construction will be shifted from expanding the power generating capacity by establishing new plants to the enhancement of power quality and returns, the State Development Planning Commission said in a circular.

According to the circular, the government will speed up the elimination of small and old power generating plants, besides prohibiting the construction of new small coal power stations within the coverage of big power grids. Only necessary power projects will be allowed to be constructed in the next two years, and all power generating projects with no special significance will be postponed. The Chinese Government shifted its power construction policy when changes emerged in the country¬šs situation of power demand and supply. The shortage in power supply has been considerably reduced since the government launched a series of new policies concerning the establishment of power generating stations in the late 1980s.

The growth in power demand has subsided since the mid 1990s due to the adjustment in the industrial structure and the introduction of power saving technologies. In a bid to promote the development of China¬šs own power generating equipment manufacturing industry, priority will be given to power generating projects which use local equipment. Projects funded by domestic capital should purchase local equipment, and those which use foreign investments will also be encouraged to adopt Chinese_made equipment.

The Commission also underlined the importance of upgrading the power plants technologies to meet environmental protection standards. New projects should help curb pollution and improve the air quality. Meanwhile, sources said the Chinese Government is also considering to change the regulations governing power prices and rules for accessing the power market. The price for power should be lowered as much as possible, and incentives encouraging the use of power should also be made, according to the Commission.
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The entire structure of the mining industry in China is expected to be overhauled before 2002, according to the Ministry of Land and Resources. The ministry expects to use the licensing process as a major tool in its program to restructure the mining business and to protect investor confidence in the sector. The change of licenses concerning mineral_exploration and mining is being carried out in accordance with the revised State Mineral Resources Law which took effect on January 1, 1997, and three concerned sets of regulations promulgated by the State Council in February last year. Licensing reviews is expected to be carried out throughout the country this year. Clear geological co_ordinates will be set to delimit exploration or exploitation rights and will be included in the new operating certificates. This is expected to help protect the legal rights of licensees.

In the past, because of overlapping management of mines by governments at different levels, the work order in this field was chaotic, with reckless and sometimes unlicensed mining activities taking place in major mines of the State. People in some townships or villages are exploiting local mineral resources trying to enhance their local economies. There are 250,000 to 260,000 permitted mining certificates in China, half of which apply to projects very small in scale and township or village level in scope. Although these small mining projects have contributed to rural economic development, they are economically inefficient and have caused environmental damage because of poor operating techniques and through use of outdated equipment. Piecemeal operations have hindered the overall management of resources in given areas.

Replacing certificates, permits or licenses will be combined with an overall investigation and shake_up in the mining trade. Many small mining operations are expected to be shut down, especially coal mines. Chaos in the mining sector has impeded foreign investment in the industry. Governmental efforts to straighten things up in mining will pay off in the next two years, based on the success of law enforcement in places like Shandong Province. Foreign_funded mining projects in Fujian and Hebei provinces are cited as examples. Joint ventures in mining should apply directly to the Ministry of Land and Resources for mining permits.

The country will protect all licensed investors¬š legal rights. In another move to bring the country¬šs mining trade into line with the socialist market economy and the international market, the State Council issued a regulation which, enforced in February last year, which stipulated that mineral exploration and mining rights could be traded between units. The ministry is determined to improve mining industry order by the end of 2002.
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Great changes have occurred in Anhui¬šs agricultural sector during the last two decades. The enthusiasm of farmers to develop agriculture is greatly enhanced and the agricultural revolution is accelerated. Add to that the spreading of agricultural science and technology, the agriculture of the province enjoyed more significant development. Over the past 20 years, its grain output nine times created records and ranks seventh in the country, its cotton output ranks sixth and oil crops the third. Anhui Province has become one of the biggest grain producers as it ships out 2.5 million tons of grain and 500,000 tons of oil seeds to other places. At present, it has grain reserves of 12.5 million tons. Anhui has become one of the biggest agricultural provinces in the country.

A big agricultural province does not necessarily mean a powerful one. To become a powerful agricultural province requires unremitting effort. Contractual management on a household basis and two_tier management system combining unification and division will be practiced. It is critical for them to remove the threat of floods and other disasters. At present, this province is working hard in the areas of water conservancy, afforestation, soil conservation, and comprehensive use of natural and economic resources for a sustained development of agriculture. In the past, animal husbandry made a small proportion of Anhui¬šs agriculture, and had not caught people¬šs attention. Recently, it has become a new force. The raising of large livestock, pigs and poultry has increased 10£„ annually. Its beef production occupies the sixth position in the country. In the province, the compartmentalization of animal husbandry is remarkable. For instance, the cattle raising area in Fuyang is the largest one in the country. Its animal husbandry has become a new growth point in the province¬šs agricultural economy.

To build a powerful agricultural province, science and technology should go ahead of other fields. Scientific breeding called ”°seed project" is an important measure and 90£„ of the province¬šs cultivated land is covered by improved varieties. The spread of improved varieties has made a significant contribution to its agriculture with a rate of 34£„ in 1995 to 37£„ at present. Hefei¬šs Fengle Seed Co Ltd, a comprehensive seed enterprise combining scientific research, industry and trade, has arisen following the development of agriculture. It has a variety of improved seed production bases covering; 6,700 hectares of land and it supplies annually 10,000 tons of seeds of 300 varieties in ten categories, including rice, melons, vegetables and oil_bearing crops. Of them, water melon seeds occupy two fifths of the market share throughout the country and hybrid rice one third of that in the whole province.

The scientific, technical and cultural levels of Anhui¬šs 50 million farmers are critical to its agricultural development. Recently the province is popularizing ten key advanced technologies, including dry rice seedlings and sparse transplantation, mulching and shelf poultry, with a remarkable growth in both production and returns. After conducting experiments, a number of demonstration zones will be gradually established. In addition, they have also begun agricultural education and training for farmers. Village cadres, returned youths, demobilized soldiers and specialized households will be trained. Training systems at various levels and in different types will be gradually formed throughout the province.
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A leading official from Northwest China¬šs Xinjiang Uygur Autonomous Region said the region will focus on its petrol and cotton industries to overcome difficulties stemming from sluggish markets. The two pillar industries suffered from sluggish markets and continuous price drops last year as a result of the Asian financial crisis. The output and sales of petrol began rising during the second half of 1998, and the region expects to maintain the momentum this year thanks to a series of policies, including an intensified crackdown on smuggling. This year, Xinjiang, China¬šs largest cotton producer, will focus on quality cotton production, and will seek higher growing efficiencies and lower costs.

Petrol and cotton will continue to play a vital role in Xinjiang¬šs economy. At present, one_fourth of the region¬šs fiscal income is derived from oil and petrochemical industries. Farmers produced more than 1.3 million tons of cotton last year, accounting for one third of the nation¬šs total cotton output. Cotton production has become an important income source for farmers. Xinjiang will continue to cater to market demand, and will further readjust its industrial structures to promote the regional economy. Tourism will also receive a boost with a focus on the development of two tourist routes.

Agricultural production in the Xinjiang Uygur Autonomous Region has enjoyed sustainable and fast growth thanks to the use of overseas funds during the past 16 years. By early this year, Xinjiang had used ”ē49.48 million in overseas loans to help develop agriculture in addition to overseas grants of ”ē8.14 million. Xinjiang began using overseas funds to develop agriculture in 1983. Six farming technology centers and seed stations have been set up with the implementation of the first phase of an World Bank_financed agricultural irrigation project in the Tarim basin during the past three years. The second phase of the project, which involves ”ē150 million, is under way. Water control facilities, agricultural and environmental projects will be built in 22 counties and cities in southern Xinjiang.

The autonomous region is now busy setting the stage for the Urumqi Foreign Economic Relations and Trade Fair ¬š99 to be held from September 1 to 8. The annual fair, the eighth since 1992 and the largest business show in the northwest, will be organized by the regional government, and assisted by business officials from Russia, Hong Kong, Kazakhstan, Turkey and Uzbekistan. The fair will highlight trade and economic cooperation with domestic and overseas partners, and will include a grand display of new technologies and products. It is expected to attract 2,000 to 3,000 overseas entrepreneurs and 6,000 to 8,000 domestic business people.

During the previous seven fairs, a total of 18,500 overseas business people from 73 countries and regions took part in the events. Foreign trade volume reached ”ē7.6 billion, and ”ē2.84 billion worth of cooperation projects with overseas companies have been carried out.

This year¬šs fair will further promote the region¬šs opening up to central Asian nations and facilitate exchanges between the northwestern part of the country with the developed coastal areas. Located in the northwestern part of the country, Xinjiang makes up one_sixth of the territory and is abundant in petroleum and mineral resources. It has been designated by the government as a key area for intensive development during the next century. Bordering eight central Asian countries, Xinjiang has capitalized on its geographic location to develop border trade. Last year, regional border trade volume grew by 25£„ over the previous year, contributing greatly to the 5.8£„ growth of Xinjiang¬šs overall foreign trade volume.
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Pudong¬šs international and home source investment increased in the first quarter of the year with investment from European and American enterprises continuing to take the lead. Some 158 foreign projects with a total investment of ”ē502 million, including a contracted investment reaching ”ē365 million, have been authorized by the Pudong New Area Administration Committee. Of seven foreign projects, including Corning Incorporate located at Jinqiao, each one is worth over ”ē10 million, with their development focused mainly on high_tech and new industries.

Re_investment from foreign enterprises also attributed to the increase of foreign investment in the first quarter. General Motors and Gillet from America, and Basf from Germany, all have established at least three enterprises in Pudong. The Phillips company has also added ”ē29 million to its current enterprise in Pudong. Real estate management, software development and consultancy are expected to be new hotspots for overseas investment with such projects amounting to 22 in the first quarter.

Statistics also show that contracted investment from Chinese Hong Kong reached ”ē76.41 million, ranking second in the list of contracted capital, while projects from Australia increased, leading to its third place ranking in the quarter. At the same time, registered investment from other parts of the country reached 1,100 million yuan (”ē132 million) in 124 projects authorized with 69£„ of 764 million yuan (”ē92 million) coming across the country. Individual investment covered 77£„ of the total, with a focus on tertiary industry and large investment in privately_owned enterprises.
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16. Expansion of 25,000 dwt repair dock. Expanding a 25,000 dwt repair dock and a wharf. Investment: ”ē3.6 million. Form: joint venture or sole foreign investment.

17. Development and production of garden plants. Seeking Japanese sales agent and expanding the market share in Japan. Investment: ”ē160,000. Form: joint venture or cooperation.

18. Renovation of wool, ramie and linen weaving factory. Renovating the equipment of 3,200 spindles for wool, ramie and linen spinning and introducing electronic scutchers to form the production capacity of 600 tons of woolen yarn. Investment: ”ē1.66 million. Form: joint venture or sole foreign investment.

19. Rock exploitation in Laotang Mountain. Renting nearby Laotang Mountain wharf of 25,000dwt class, introducing automatic production lines of loading and discharging with annual exploitation of crushed stones and block stones of 3 million tons. Investment: ”ē8 million. Form: joint venture or sole foreign investment.

20. Mini bearing steel tubes. Constructing 5,000 square meters of factory buildings, introducing assel punching machine, three high_hot rolling mill and cold_rolling mill train, cold_drawing machines, straightening machines, pipe shears, spherical boilers and so on. Investment: ”ē4 million. Form: joint venture or cooperation.

21. Fishing rope and net. Promoting the knitting capacity up to 3,000 tons of net pieces a year, half of which will be exported. Investment: ”ē2 million. Form: joint venture or cooperation.

22. Irregular_shaped PVC plastic materials for doors and windows. Introducing two sets of double_screw extruder production line and auxiliaries to produce 2,000 tons of special PVC materials for doors and windows. Investment: ”ē1.1 million. Form: joint venture or cooperation.

23. Large plant for repairing vessels. a). 320m x 56m x 11m dock for repairing vessels up to 150,000 tons; b). 325m x 30m wharf for repairing vessels; c) constructing accessory installation of 290,000 sq m. Investment: ”ē72 million. Form: joint venture or cooperation.

24. Expansion of the production of MACK stainless_steel ship propellers. Investment: to be negotiated. Form: joint venture or cooperation.

25. Aerogenerating plant. Constructing an aerogenerating plant with total capacity of 35MWh plus and generating capacity of 10 MW plus annually. Investment: ”ē50 million. Form: joint venture or cooperation.

26. Construction of Zhoushan Peninsula. Connecting Zhoushan mainland, Jingtang Island, Chezhi Island and Fuci Island with Ningbo mainland by five sea_crossing bridges. The overall length is 32.17 km. The five bridges total 9,697 meters, up to the first class highway. Investment: ”ē1 billion. Form: joint venture or cooperation.

27. Port construction. Constructing two docks for 3,000 dwt passenger vessels and cargo vessels, one dock for 5,000 dwt cargo vessels, a passenger building of 5,000 square meters and a warehouse of 5,000 square meters. The project will occupy 26.7 hectares of land and 800 meters of coastline. Investment: ”ē15 million. Form: joint venture, cooperation or sole foreign investment.

28. High speed passenger ship. Introducing two high speed passenger ships with 150 seats and the speed of 32 nautical mile per hour and open up two navigational routes. Investment: ”ē2 million. Form: joint venture.

29. Deep water outport. Developing and constructing ports with annual handling capacity of 100 million tons of crude oil, 100 million tons of ore, 94 million tons of coal, 2,950 TEU of containers. Investment: to be negotiated. Form: joint venture, sole foreign investment or cooperation.

30. Zhongshan Sino_foreign Buddhist Temple Park. a). miniature Chinese Buddhist landscape; b). miniature foreign Buddhist landscape, including the world¬šs famous buddhist historical sites. Investment: ”ē7 million. Form: joint venture or cooperation.
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China has designated environmental protection as a key investment area in the future , making it a social, market_oriented and enterprising undertaking to hopefully become a new point of economic growth in the country. According to official statistics, total waste water discharge in China topped more than 40 billion tons nationwide in 1997 and those of sulphur dioxide, more than 23 million tons and fume more than 18 million tons. Only a portion of the discharges has been treated.

The Chinese Government plans to speed up the development of its environmental protection industries by directing more foreign capital into the sector. According to the State Environmental Protection Administration (SEPA)¬šs blueprint, China is to introduce ”ē4 billion into environmental protection during the Ninth Five_Year Plan (1996_2000). Yu Dehui, deputy director_general of SEPA¬šs Department of Science, Technology and Standards, said that given the rapid development of China¬šs economy, the market potential of the environmental protection industry in China was tremendous. However, in light of insufficient funds and relatively backward technology, China¬šs environmental protection industry is still in its primitive stage. Introducing more foreign capital and advanced technologies would be an effective way for the country to accelerate the development of the industry.

Sources from the administration say the environmental sector has so far absorbed more than ”ē3.3 billion in foreign funds. Foreign capital has mainly come from the World Bank, the Asian Development Bank, United Nations Development Program, bilateral government organizations and multi_lateral international organizations. Co_operation with foreign counterparts will be one of the major ways to lure more foreign capital in the coming years. The cooperation will also contribute to upgrading China¬šs relatively backward technology in the sector.

China¬šs environmental protection industry mainly focuses on the production of environmental protection machinery, treatment and recycling of solid waste, and curbing water and air pollution. The nation has more than 9,000 enterprises devoted to environmental protection, employing more than 1.7 million people and achieving 52 billion yuan in total annual output. These enterprises develop environmental friendly products and techniques, handle waste recycling and ecological protection. But due to outdated technologies, a large proportion of the country¬šs key environmental protection equipment comes from imports. State_of_the_art environmental monitoring will be developed to provide accurate and systematic data on air, water and other environmental elements for policy_making. High technology will be the driving force behind the upgrading of China¬šs environmental protection industry. Emphasis will also be placed on the industrialization of the sector, since it is one of the most important factors to ensure China¬šs continued economic development in the next century. Priority in environmental protection for the next few years would go to four areas: development of urban sewage treatment systems; equipment to curb air pollution; solid waste disposal; and equipment to monitor the environment.
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The Yellow River Delta area will adopt a special development strategy to bolster its economy, agricultural experts said. The ”°special strategy" refers to bolstering the area¬šs high_efficiency ecological agriculture sector, according to Lu Liangshu, former vice_president of the Chinese Academy of Engineering (CAE). Unlike the Yangtze River Delta and Pearl River Delta, which have been exploited for a long time, the Yellow River Delta is still virgin land. Compared with the two deltas¬š advanced agriculture and industry, the Yellow River Delta has not been developed much owing to its constantly changing course.

However, the Yellow River Delta area has its own special advantages due to its unique location and climate. The delta abounded in soil resources as well as water resources. Sources at the China Agriculture Experts Consultative Group (CAECG) said more than 2,000 hectares of new land was created annually by the river¬šs deposits of soil carried from its upper reaches. The soil is very fertile and very fit for the cultivation of agricultural products.

With Dongying, China¬šs second largest petroleum base, as the core, the Yellow River Delta covers an area of 8,053 square kilometers, including 40,000 hectares of natural grassland and 66,666 hectares of land that is favorable for forestry. Ren Jizhou, another renowned grassland scientist from the CAE, said an estimated 1,917 animal and plant species made this area favorable for a high_efficiency ecological agriculture system. The industrialization of the agricultural sector will undoubtedly spark this area¬šs economy. Emphasis will be placed on high_tech, economically efficient and environmentally friendly sectors.
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In a bid to adjust the product_mix of the country¬šs medicines, China¬šs Pharmaceutical Department under the State Economic and Trade Commission has recently proposed to take the following actions.

1. Stop redundant construction, make full use of the existing production capacity and strictly control newly increased capacity. No production unit or variety code is allowed to be added for common imitated medicinal raw materials and preparations in principle. Investments will be restricted to projects of processing tablets, capsules, liquid injectors, powder injectors, and big infusion tubes of medicines which are already greatly over capacity as well as disposable sytinges and blood transfusion and infusion instruments. Enterprises provided with the conditions to produce preparations are allowed and encouraged to use each other¬šs idle capacity or mutually entrust for processing. Enterprises are welcome to create conditions to transfer their superior preparations processing capacity to develop processing business with supplied materials overseas.

2. Establish a system of regular announcement for products in oversupply, guiding enterprises to adjust their product_mix.

3. It is encouraged to build production bases for potions and extracts of Chinese herbal medicines so as to improve the present small_scale production of such medicines. The establishment of processing bases for such medicines in major producing areas and collecting and distributing centers of traditional Chinese herbal medicine as well as central cities is also encouraged. At the same time of product_mix adjustment, centralize the production of extracts of traditional Chinese herbal medicines to realize rational division of labor for scale production, commercialization and socialization.

4. Strengthen the administration of imported medicines, guard against overstock to stabilize the domestic medicine market. Strictly control the system to examine and approve the import of medicines and medical apparatuses to ensure the import of safe and effective varieties that are badly needed at home. Medicines which can be satisfied by home made ones in quality and quantity will no longer be permitted to import. Those may or may not be imported should not be imported and those in oversupply are strictly forbidden for import.

5. Stop the establishment of medicine wholesale enterprises. At present, the approval of medicine wholesale enterprises should be suspended for an overall restructuring the existing wholesale enterprises. Those that cannot reach the set standard of operation should be readjusted within a set time, and no new licenses will be given if they still cannot reach the set standard after restructuring. Change the way of setting up county_level city companies in line with administrative areas, and no new companies will be set up after revoking some insolvent county_level companies in line with the related State policy. A 24_hour medicine supply for these areas will be guaranteed by medicine enterprises from neighboring counties and cities.
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Engineering giant Asea Brown Boveri (ABB) plans to fortify its presence in China through more direct investment and more intensive localization. The company will invest ”ē400 million in China over the next three to four years so long as the economy goes well, according to Roll Schaumann, president and chief executive officer of ABB (China) Investment Ltd. ABB has established 20 joint ventures in China in such sectors as automation and power generation and distribution. Its total investment in China amounts to ”ē600 million. Expansion of the joint ventures will be one of the company¬šs strategic moves to make a wider range of products available in China¬šs market. Over the past five years, ABB¬šs revenues in China have been growing at an annual rate of 25£„.
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ZF Friedrichshafen Ag, one of the world¬šs leading suppliers of drive products for commercial vehicles, has established its first wholly owned company in Suzhou, in Jiangsu Province. Located in the Suzhou Industrial Park, ZF Drive Tech (Suzhou) Co Ltd went into operation in early June and will become the first full system supplier in China dedicated to the bus and coach segment. Total investment for the first phase totals 10 million German marks (”ē5.36 million). Major products will include manual transmission, axles, and steering and suspension parts for buses. German_based ZF has already been involved in a number of facilities in Shanghai, Beijing, and Liuzhou in the Guangxi Zhuang Autonomous Region. The Suzhou company will go into full assembly operation this month. In addition to automotive and manual transmissions, steering systems and chassis components, ZF will supply complete systems and system modules. In 1998, it sold ”ē83 million worth of products in China while sales value is expected to exceed ”ē100 million in the near future.
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The Volvo Truck Corp is to establish a ”ē576 million 50/50 joint venture with the China National Heavy Truck Corp in Jinan, Shandong Province. The joint venture will develop, manufacture and distribute Volvo heavy trucks in China. The project has gained the support of the Chinese Government and the preparation work is well under way thanks to mutual efforts. The State Council approved the proposal for the joint venture at the beginning of 1998. The Sweden_based Volvo Group is engaged in various activities in China. Among them are the production and sale of buses, and sales of heavy trucks, construction equipment and marine and industrial engines.
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