With China's membership in the World Trade Organization (WTO) rapidly approaching, calls for an overhaul of the country's foreign investment laws and regulations are increasing. Quite a few of the current laws and regulations concerning foreign investment are inconsistent with the WTO's rules. Foreign trade minister Shi Guangsheng said recently that China will adjust and perfect its Foreign Trade Law, Sino-Foreign Jointly-Funded Enterprise Law, Sino-Foreign Cooperated Enterprise Law and Foreign-Invested Enterprise Law, according to the demands of the market economy and WTO membership. The existing economic laws and regulations involving foreign businesses will be rectified by the Legal System Office of the State Council. The country will speed up making laws concerning imports and exports, foreign trade agencies, border trade, the processing trade, technology trade, origins of production, labor co-operation, overseas investment, external assistance, e-commerce, anti-dumping and anti-subsidy laws. Focus will be placed on rules and regulations that are inconsistent with the WTO.

MOFTEC sources said the ministry has already started to modify foreign investment laws, but there are disputes about their modification. For example, should these foreign investment laws be combined into one? Aside from these laws, dealing with rules and regulations regarding foreign investment may be an even tougher task for the modification team. To conform to the requirement of WTO rules, a lot of adjustments should be made in these rules and regulations, such as equity limits, export requirements, foreign exchange balances and restrictions on scopes-of-activity.
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According to an announcement by the Tariff Schedule Committee of the State Council, an adjusted import tariff schedule and partially reduced tariff rates have been put in place in China starting from January 1, 2000. After the reshuffling, the number of China's import tax codes has increased from the previous 6,940 to 7,062. The tariff rates reductions have concentrated on textile products. A total of 819 textile products listed on the tax schedule has undergone tax rate reductions, with the margin ranging from 0.6% to 2%. Sources said the State Council has also adjusted the import tax rates for other products including raw materials, components and equipment.

China has cut import tariffs several times in recent years, reducing the average rate to 17% from 43% in 1992. It has pledged to further cut the average tariff rate on imported goods by two percentage points to 15% in 2000 and cut the average tariff on imported industrial goods to 10% by 2005. According to the Sino-US bilateral agreement on China's accession to the World Trade Organization wrapped up last November, China agreed to lower its tariff for the imports of completed automobile products from the current 80-100% to 25% by the year 2006.
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China is drafting rules and considering other measures to regulate the pesticide market and prevent poisonings among vegetable consumers. The Ministry of Agriculture is establishing fast-track inspection centers nationwide to check vegetables that might bring pesticide contamination into marketplaces. According to statistics from the Ministry of Agriculture, more than 10,000 consumers in China have been poisoned directly or indirectly by pesticide-borne toxins. Several thousand had died from the contamination. In a bid to keep pesticides away from consumers, the nation must better inspect its market-bound vegetable. The new rules will guide the supervision work.

Environmentally friendly farm chemicals will play a bigger part in China's agricultural development. But China can only improve pesticides in accordance with China's economic conditions, insiders said. China's use of farm chemicals averages 250,000 tons a year. They have saved 30 million tons of grain every year and stopped pests or disease from claiming more than 400,000 tons of cotton and 8 million tons of vegetables, according to ministry statistics. China spends 10 million yuan ($l.2 million) every year to develop new pesticides. These new products are 0.14% of the farm chemical sector's output value, statistics indicate. Most pesticides used for vegetables today meet standards published by world health and food vorganiz-ations. Most toxins do not harm human beings. Vegetables containing highly toxic ingredients will be banned, and anyone who sells them will be punished. Vegetable quality inspection teams will also be established nationwide to supervise the proper use of farming pesticides.
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An official with the State Development Planning Commission recently revealed that China is expected to announce ¡°Interim Procedures on Administration of Industrial Investment Fund" to allow foreign investors to participate in, launch and manage the country's proposed industrial investment funds. However, foreign investors can only have a share not exceeding 25 % in a fund, according to the Procedures.

Industrial investment fund of the country is a kind of investment form mainly to provide direct fund support to and join in fund operation and supervision of enterprises that have not yet gone public and then to achieve higher investment returns through equity trading. There are three kinds of the proposed funds: 1. IPO Investment Fund being invested mainly in fledgling small and medium-sized enterprises; 2. Enterprise Restructuring Fund being invested mainly in large-sized enterprises, especially in cases of merging and acquisition of State-owned enterprises; 3. Infrastructural Industrial Fund for development of energy, raw materials and transportation projects.

The State Council is in the process of examination and approval of the procedures, it is reported. Based on the procedures, the industrial investment fund will be a kind of close-end fund with an operation term of 10-15 years required to be jointly launched by at least two main sponsors and several other co-sponsors, one of the main sponsors must be an industrial investment company with related background and one, a non-banking financial institute such as securities company and trust and investment company. Main sponsors should each have registered capital of more than RMB200 million, and the registered capital of an industrial investment fund should be more than RMB 10 million.

In the experimental stage, industrial investment fund should pool up their fund by private placement. It can be officially launched when the actual placement accounting for 60% of the total applied for. The money cannot be redeemed during the deposit and continuation period, but can be transferred. Foreign investors can participate in fund initiation as sponsors and also fund management company, with their shares not exceeding 25% for a fund. Enterprises receiving the fund can select stock exchanges at home and abroad for listing according to their own condition, while the industrial investment fund companies can apply to the China Securities Regulatory Commission for listing in China.
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Shanghai attracted $4.104 billion in contracted foreign investment in 1999, a 29.82% decrease over 1998. The investment slump is highlighted by the fact that Japan and the Republic of Korea, once major investors, have slipped out of the top five list. However, positive signs can also be seen, such as the arrival of more multinationals and increased industrial investment. Industrial investment accounted for 55.66% of the foreign-funded projects last year, absorbing nearly half of the total contracted funds. Investment into high-technology sectors like information technology, biomedicine and new materials is on the rise. More global giants are cashing in. Another 19 players of the top 500 multinational firms inspired by the Fortune Global Forum hosted by Shanghai last September, arrived last year, bringing the city's global players to 254. Accord-ing to local foreign economic cooperation and trade departments, Shanghai has issued a package of new policies to encourage foreign investment and expand exports.Details are as follows:

Foreign-funded enterprises, which have settled in Shanghai, may import duty-free equipment and related technology, parts and spare parts, which are required in their technical transformation, provided they are within the scope encouraged by State policy and can not be produced domestically. Technology, which is transferred by a foreign enterprise to China, which is advanced, or offers favorable terms, may be exempt from business income tax after being approved by tax departments. The income from technical transfer of the foreign-funded enterprise will be exempt from business income tax. At present, new foreign-funded enterprises implement the policy of exemption from taxation, tax credit and tax refund, and existing foreign-funded enterprises carry out the policy of ¡°no tax collection, no tax refund". Existing foreign-funded enterprises have a choice of selecting either policy by the end of 2000.

When foreign-funded enterprises invest in China, they are allowed to apply for Renminbi loans from domestic banks against a pledge of foreign currency. Foreign-funded enterprises are also permitted to mortgage their overseas property to overseas branches of Chinese banks, and their overseas or domestic branches may grant loans to them. According to the ¡°positive and reliable principle", foreign-funded enterprises, which invest in the state-encouraged energy development and communications fields, are provided with insurance against political risk, breach of contract, and of guarantees. Projects invested by foreign-funded enterprises, which are within the scope encouraged by State policy and have no need of a comprehensive balance by the State, can be examined and approved by the provincial governments, but are required to be reported to the State Planning Commission, the State Economic and Trade Commission and the MOFTEC for filing.

Shanghai will gradually shrink the scale of compulsory appraisal of value for equipment imported by foreign-funded enterprises. It will improve the appraisal method and no longer require compulsory appraisal of value of equipment imported by wholly foreign-owned enterprises. The customs management will be standardized to raise efficiency and accelerate the speed of clearance. Foreign-funded enterprises, which have leased land, will no longer pay the land-use fees. Shanghai will streamline policies and regulations pertaining to foreign-funded enterprises, and abolish policies and regulations hostile to overseas investment. It will improve the law and regulation system of foreign investment and gradually improve the standard for management of processing trade businesses. Processing trade enterprises, which have been evaluated as class A, will no longer implement the bank guarantee margin account system. Although the formality is simplified, spot-checks will be strengthened for supervision. Shanghai will conduct an experiment in setting up a standard, closed export-oriented processing zone.
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After year-long attempts to stimulate domestic demand, China's gross domestic product (GDP) growth for 1999 reached 7.1%, according to the National Bureau of Statistics (NBS). The 1999's GDP is expected to reach 8.319 trillion yuan ($1 trillion). Agriculture has developed steadily. The country's grain output last year would be some 500 million tons, down 1% from the previous year. Cotton output was projected at 3.83 million tons, down 14.9%. But the agricultural value-added output was expected to grow 2.8% to 1.44 trillion ($173 billion).

The sustainable development of the country's industry also played a significant role in the country's economic growth last year. China's industrial value-added output is expected to increase 8.5% annually to reach 4.07 trillion ($490 billion). Industrial addedvalue from the State-owned sector and enterprises with annual sale revenue of more than 5 million yuan are expected to top 2.02 trillion yuan ($243.3 billion), up 9% from 1998. The value-added output of tertiary industry aggregated 2.80 trillion yuan ($337 billion), representing a 6.9% growth from the previous year. Fixed-asset investments another major engine behind economic growth, are forecast to increase 7.8% to 2.2 trillion yuan ($265 billion).

Premier Zhu Rongji said recently that because it did well in 1999, China has become better prepared to take on the challenges of economic development this year. China achieved its goals last year, including the rapid growth of its national economy and major progress in the reforms of State-owned enterprises. The list also includes growth in exports and foreign exchange reserves, bigger revenue reserves, a stable exchange rate and improved living standards. Zhu also said China should adhere to policies that stimulate consumer spending and accelerate economic growth. China will continue SOE reform and take measures to improve economic restructuring, expand exports and encourage foreign investment.
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China's export and foreign investment in 1999 have turned in better performances than what was forecast when the year began, according to State Councilor Wu Yi.

Considering the tiny 0.5% growth in 1998 and the persistent fallout from the Asian financial turmoil, China had expected at the beginning of 1999 that export would grow by 2% at most. Statistics from the General Administration of Customs revealed that China's exports have stopped a year-long slide and have soared upward since July. In each of the past five months, monthly export volume grew by 7.5%, 17.8%, 20.2%, 23.8% and 28.8%, respectively. Chinese exports grew by 6.1% from a year earlier to $194.9 billion, and the value of imports soared by 18.2% to $165.8 billion. The two increases have pushed China's 1999 foreign trade aggregate to $360.7 billion, a 11.3% increase over that of 1998. Asia continued to be China's largest export market in 1999, with the volume there up 4.5%, totaling $102.6 billion. Exports to North America earned 10.8% more, or $44.39 billion. Sales to Europe rose 6.1% to $35.47 billion. China's foreign exchange reserves reached $154.675 billion by the end of last year. The exchange rate of the Chinese currency, renminbi, remained stable during the past year.

Although both contractual foreign investment and actual input showed declines, the volumes would be still higher than what the government had expected. Pledged foreign investment volume amounted to $35.64 billion in the first 11 months of last year, representing a 18.9% decline from the previous year. Actual input was down 9.7%, amounting to $37.09 billion in the same period. Although last year's actually utilized foreign investment volume is expected to be somewhat lower than 1998's $45.6 billion, it would not fall below $40 billion. The councilor attributed the export and foreign investment performance to the collective effects of the central government's policy package, the painstaking effort of related government officials and businesses, and the recovery of the world economy.
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The number of anti-dumping cases targeted at Chinese exports has been growing at an unexpected rate in recent years, therefore, Chinese enterprises should devote more attention to foreign anti-dumping laws to avoid export losses, said Gao Hucheng, assistant minister for foreign trade and economic cooperation. Rough statistics showed that since 1979, a total of 353 anti-dumping cases had been launched against China through the end of last September, involving more than $10 billion worth of Chinese exports. The European Union took the lead, accounting for 22% of all such cases, with the United States taking second seat with 68 cases, or 19%.

China has unfortunately become the world's biggest victim of anti-dumping, and its metals, minerals and chemicals products have been the major target of the anti-dumping weapon, said Chen Haoran, chairman of the trade group. Seven anti-dumping cases were launched against Chinese metals, minerals and chemicals products in the first 10 months last year, accounting for more than one-third of the total 24 cases targeted at Chinese exports in the same period. Zhou Shijian, vice-chairman of the trade organization, attributed the surge in anti-dumping cases to the low prices of Chinese products and discriminatory policies adopted towards Chinese goods. Many countries still unfairly regard China as a non-market economy in their anti-dumping policies.
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Central China's Henan Province, a relatively underdeveloped agricultural region, is determined to improve farming productivity through advanced technology, Vice-Governor Zhang Tao said. Biology and information technology will be applied to turn labor-intensive agriculture into a more technology-based development mode. Henan tops other agricultural provinces in wheat, cotton and cattle output. The province will make more efforts to improve farm produce quality. The provincial government will work together with scientific departments and agricultural sectors to help farmers cultivate seeds of high-yield crops and develop better processing technology for farm produce.

In another move, the province will work harder to advance industrial development. Henan will increase investment for theoretical and applied science research to further Henan's economic growth with technology. Technology has played an important role in the province's economic growth and it will play a bigger role in coming years. Henan has a favorable climate for technology innovation because the provincial government and industrial sectors, especially high-tech firms, highly value the development of new technology and protection of intellectual property rights.

Some Henan high-tech firms have made progress on overseas markets, marketing their patented technology and good products, according to the provincial patent administration.The Henan Huanghe Xuanfeng Company, for example, has grown from a small cottage industry to a large shareholding firm selling diversified diamond products. The company's products are on par with those of world-renowned firms. Henan has 538 high-tech firms in the fields of power, communications, information technology and agriculture. More than 80% of their products are independently developed and do not rely on technology from overseas companies. The State Intellectual Property Office will improve patent protection among enterprises, universities and research institutes across the country.
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East China's Zhejiang Province has created an economic miracle during the past two decades. From 1979-98, Zhejiang's gross domestic product (GDP) grew at an annual average rate of 13.5%, 3.8% higher than the national average. In 1998, Zhejiang's GDP ranked as the fourth largest in China, compared with being 12th two decades ago. But another dimension of Zhejiang is its large population, small land mass and deficient resources. Some 44 million people, or 3.6% of China's total, live in Zhejiang. Its area is 101,800 square kilometers, comprising only 1% of the nation. Zhejiang's per capita arable land is only 0.33 hectares, one-third of the average in China.

Meanwhile, Zhejiang lacks coal, oil and mineral resources. Its per capita comprehensive resources indicator is the third smallest among all the provinces and province-level regions. So how did Zhejiang score rapid economic growth with such deficient natural resources? Zhejiang Executive Vice-Governor Lu Zushan detailed the secrets of the province's economic take-off. According to Lu, village and township enterprises played a key role in promoting the province's economic development. For some time Zhejiang was an agricultural province, and the central government did not heavily invest there. Large numbers of surplus labor forces transferred from the agricultural sector brought about the mushrooming of numerous village and township enterprises.

Though Zhejiang's village and township enterprises relied on eliminated equipment and retired technicians from State-owned firms, they still showed strong suitability and competitiveness in the market because they were subjected few restrictions from a planned economy. Moreover, their major products, some daily consumer goods, just made up for short of supply in the market in the 1980s. Since the early 1990s, Zhejiang's village and township enterprises have launched their ¡°second undertakings" by promoting structural adjustment, technical enhancement and management innovation. Most of them have been reshaped to be shareholding or cooperative companies. To date, a large number of village and township enterprises such as Wanxiang, Hengdian, Fir and Younger, have become industrial leaders in their respective sectors.
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The city offered recently some projects for overseas cooperation.

1. Expansion project of Dongfang Knitwear Factory. Investment:$1.8 million.

2. Upgrading and expansion project of a quartz mine. Planning to expand the existing mining capacity of 100,000 tons to 150,000 tons. Investment: $352,000.

3. Pollution-free food processing project. Investment: $1.45 million.

4. Construction of a factory for the refrigeration and processing of aquatic products. Investment: $602,000.

5. Banana processing project. Investment: $843,000.

6. Cultivation of halophila and extraction of natural carotene. Project description: planning to produce 750 kilograms of natural arotene per year. Investment: $1.2 million.

7. Sisal hemp deep-processing project. Investment: $3.6 million.

8. Upgrading of production line for the ¡°Sigeng" brand chili sauce. Form: joint venture, cooperation or transfer of operational rights. Investment: $240,000.

9. Project of shallow water aquatic cultivation farm. Project description: planning to build concrete cases for the cultivation of aquatic products.Investment: $3.7 million.

10. Production of export-oriented pollution-free fungi and vegetables. Investment: $5 million.

11. Construction of a silica powder factory. Planning to produce high-purity silica powder used for optical fibers. Investment: $2 million.

12. Construction of three peanut processing factories. Planning to produce 3,150 tons of peanut products annually. Investment: $722,000.

13. Construction of a pumpkin powder processing factory. Investment: $553,000.

14. Fresh fruit and vegetable storage project. Planning to build a fruit and storage factory with a floor space of 2,620 square meters. Investment: $1.1 million.

15. Garbage disposal project. To build a garbage treatment factory with a daily handling capacity of 400 tons. Investment: $3 million.

16. Orchid cultivation base Investment: $361,000.

17. ¡°Shuanggou" Sheep Farming Base. Planning to feed 3,000 head of sheep. Investment: $301,000.

18. Aquatic cultivation in Daguangba Reservoir. Planning to build a wire case aquatic cultivation base with an area of 200 hectares. Investment: $602,000.

19. Chinese olive development base. Planning to set up a Chinese olive orchard with an area of 670 hectares. Investment: $1.7 million.

20. Development of a tropic palm garden for sightseeing. Planning to build a palm garden with 67 hectares of land and a floor space of 14,000 square meters. Investment: $843,000.

21. Mihouling Mountain Forest Park. Planning to set up a forest park with an area of 240 square kilometers. Investment: $24.1 million.

22. ¡°Sanyuesan" Resort. Dongfang City is the birthplace of ¡°Sanyuesan", a unique Li ethnical festival. Investment: $10 million.

23. Yalong Li Ethnic Park. Planning to set up a park of 1 square kilometer. Investment: $4.2 million.

24. Daguangba Tourist Resort. Investment: $2.29 million.

25. Yueliangwan (Moon Bay) Development Zone. Planning to set up a coastal resort and sightseeing orchard covering 267 hectares. Investment: $36.1 million.

26. Hongxing Hot Spring Tourist Resort. Planning to set up a resort with 267 hectares of land and a receiving capacity of 450,000 persons per year. Investment: $4.22 million.

27. Dongfang Commercial Plaza. Planning to construct a building covering 1,452 square meters. Investment: $963,000.

28. Aquatic Products Wholesale Market. Planning to construct a market covering 3,300 square meters. Investment: $1.2 million.
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The China National Coal Import and Export Corp (CNCIEC) exported a record 31 million tons of coal in 1999. The export volume was 1.75 million tons more than in 1998 and 150,000 tons over the planned target. China hopes to export more coal to help decrease a serious oversupply in the domestic market and salvage its debtridden coal mires. To fulfill the goal, CNCIEC has spared no efforts to tap the overseas market, though international coal prices have decreased over the past three years. The company has also strived to help State key mines increase their exports. Thanks to a string of effective measures, coal from State key mines shared 93% of CNEIEC's total exports last year. China is expected to sell 43 million tons of coal abroad this year, compared with 38 million tons in 1999£®

China will beef up efforts to close small coal mines, a move that began two years ago. The move is to help the coal industry earn profits and accelerate restructuring of the industry. Wang Xianzheng, deputy director of the State Administration of Coal Industry, said coal's role in the energy mix will be cut nearly by one-third during the next 50 years. Environmental protection worldwide and highly sought blue skies and fresh air in China is prompting the country to cut coal use, from 72% of the energy mix at present to 60% by 2010 and 50% by 2050.

To maintain demand-to-supply balance, many coal mines, especially small and poorly-run pits, have been or will be closed. Demand for coal in China is declining sharply because of the diversification of the energy resources mix and energy-conservation. Free trade is to be another challenge State-run enterprises in the sector will face after China's entry into the WTO. China's coal-mining industry, with output per worker per day at 2 tons, compared to 43 tons in the United States, is vulnerable to competition. Free trade challenges may overshadow opportunities. However, the effects would be mixed. Lower trade barriers will allow China to sell more, but will also force it to buy more. Free trade is expected to quicken China's economic restructuring.

Production in 1999 is expected to be only about 1 billion tons, compared with 1.3 billion tons a few years ago. To safeguard its market, the industry will develop clean energy policies and techniques to stimulate new investment. Foreign investment is expected to be used to help China develop, market and transport clean coal. Cooperation with the US, Germany and Japan in liquefying coal into clean fuels in Shanxi, Yunnan and Heilongjiang provinces has shown promising results.

Policies are encouraging to foreign investors and the prospects for foreign business people is vast and bright. Foreign aid is expected to be used in the construction of technology-intensive coal mines, centers to process coal for export and in mining equipment. To become more competitive, Chinese coal miners will create enterprise groups. For decades, raw coal has fueled economic growth as the main feed stock and the coal industry has helped to keep unemployment from increasing sharply at the expense of efficiency. China will open its market after joining the WTO. Foreign clients will be able to strike deals directly with coal mines. As the sector becomes more competitive, mines would be forced to offer foreign clients discounts. Because of this, foreign exchange earnings from exports may decline. Increased energy imports will squeeze domestic companies on wider markets and narrow their profit margins, but profits are expected to be made.
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The Tianjin Economic Technological Development Zone, one of the first development areas in coastal cities, was established in 1984. In 1994, it led the country's development areas in most economic indexes. According to 1999's first quarter statistics of the State Council, the Tianjin ETDZ still ranked first in 14 major economic indexes, such as the introduction of foreign capital, gross industrial output value, revenue and export volume of foreign-funded enterprises, among 32 State-level development areas nationwide.

Tianjin ETDZ has always placed emphasis on practical service for businesses. It has done its best to reduce the investment cost of foreign business people in the first place. For instance, it has followed a policy of freeing foreign businesses of all administrative fees, and reducing electricity rates and land-use prices. Electricity rates have been cut to the level for the businesses in the city proper, and the price of the land used for industrial purpose, with a duration of 50 years, has been decreased to 280 yuan per square meter. And more flexible policies have been adopted for some large and special projects. Tianjin ETDZ's businesses-friendly policies have paid off. By the end of last November, the Zone had approved 3,209 foreign-funded enterprises from 66 countries and regions and absorbed foreign investment totaling $9.71 billion in contracted capital. Among the world top 100 industrial enterprises, 25 have invested in the Zone. There are 196 projects with an investment in excess of $10 million each, and 11 with an investment surpassing $100 million respectively. Multinational corporations such a Motorola, Coca Cola, Pepsi, Lucent, Caterpillar, Nestle, Samsung and Hyundai have become pillar investors in Tianjin.

Another factor allowing the Tianjin ETDZ to maintain its growth momentum is timely switching its focus to West European and American investors, while actively expanding export markets so as to counteract the decline in demand in the Asia-Pacific region. The Zone has quickened its transformation and industrial and product structural adjustment, aiming to improve its competitiveness. It has focused on absorption of investment from Europe and America and high-tech development. Through its effort, the ratio of North American and West European investors in the Zone began to increase in 1998, with the investment from these regions up 5%over the previous year and representing 39%of the year's total.

In 1998, products made in the Zone were exported to 72 countries and regions, with the export volume totaling $2.26 billion. Of this, exports to the United States were up 37% to $328 million, and those to Europe up 25% to $174 million. This demonstrates that , the Tianjin ETDZ has successfully avoided the impact of the Asian financial crisis. Added investment has become a major source of fresh investment in Tianjin. In the January-November period last year, a total of 49 established foreign-invested ventures received new investment worth $557 million from their foreign investors.

Tianjin ETDZ is in no way willing to rest on its laurels. It is now striving to turn itself from a processing industry-oriented area to a high-tech park so as to adapt to the requirements of a knowledge- economy. It has initiated a software park project, and has appropriated an investment of 100 million yuan and a tract of 100,000 square meters. Recently, the Zone established a high-tech guiding committee composed of 30 experts, scholars, entrepreneurs and leaders of government institutions, of whom nine are members of the Chinese Academy of Sciences and the Chinese Academy of Engineering. The committee will provide the area with consultation and guidance in high-tech industrial development, invitation of businesses and investment, and government policies. Under the current new circumstances, the Zone's new strategy for development is to quicken its participation in the worldwide competition for rare resources and market share, actively get involved in domestic economic and industrial restructuring and transformation of ownership structure, and energetically foster high-tech industries. According to its new goal, the Zone's GDP will reach 22 billion yuan this year, and its industrial output value will exceed 60 billion yuan. Tianjin ETDZ is determined to build itself into a development area in China with the lowest investment cost, the highest level of service and the best investment environment.
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China's oil industry is expected to further reduce governmental administrative involvement in its internal management to keep it fit in anticipation of international competition along with the country's approaching entry to the World Trade Organization, Chen Geng, deputy director of the State Petroleum and Chemical Industries Administr-ation, said recently. In accordance with a market-oriented economy, China still needs to launch strategic steps to cultivate a fair, open and orderly oil market. The most significant task is to reshape the relation-ship between the government and oil companies by further promoting the separation of administration from corporate management.

For petroleum companies solely or partly owned by the government, the State will exercise functional authority of a proprietor via its representatives. According to Chen, it can gain profits by assets, make significant development decisions and choose qualified managers, but it will not interfere in the enterprises' daily operating activities. Besides, the petroleum and petrochemical companies are striving to rebuild themselves into more prosperous bodies with a stronger competitive edge. To form a renewed oil company, profitable assets will be merged together while interior ones will be split. The launching of direct financing will help reduce the companies' asset/liability ratio, and diverse ownership structure will be encouraged with the structures holding the controlling stakes. The oil companies will reorganize their subsidiary production and engineering technical services into specialized firms. The oil giants will establish normative corporate governance structures in accordance with the Company Law of China.

To reach the goal, segregation of decision-making, execution and auditing functions will be implemented. In addition, the board of share-holders, the board of directors, the board of supervisors and manage-ment can be accountable and co-ordinate and balance each other.
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The Alstom Qingdao Railway Equipment Co Ltd, a joint venture between Alstom Transport of France and Sifang Rolling Stock Research Institute, became operational in Qingdao last December. With a registered capital of 5 million yuan ($602,000), the joint venture will be a major base for manufacturing, maintenance and service of the Dispen brand hydraulic dampers used on locomotives and rolling stock. Establishment of the joint venture symbolizes another step the French company made towards providing the Chinese customers with top quality and cost-effective products and services through bringing its advanced technologies to China and localizing them, said Thierry Best, senior vice-president of Transport Department of Alstom China Ltd. The dampers manufactured by the joint venture will be mainly used on the trains on Shanghai's Line 3 Metro, a major contract the company won last May.
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A new joint venture in life insurance will be established this year by Canada's Sun Life Assurance Co and China Everbright Group Limited. A memorandum of understanding was signed last December by the two sides to set up the new venture. Under the agreement, China Everbright and Sun Life will each invested 50% of the total 200 million yuan ($24 million) registered capital. The first chairman of the new company will be appointed by China Everbright, and the first general manager by Sun Life. The primary choice for operations base will be Tianjin, although the two sides are still considering a number of potential sites. So far, no foreign insurance companies are operating in the city. But the agreement will be subject to a feasibility study and the approval of the China Insurance Regulatory Commission. If possible, the new venture will start operation in the second half of this year.
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Italy's leading aircraft manufacturer recently pledged to further expand cooperation with Chinese partners, including manufacturing an aircraft model in this country. The ATR, which stands for regional transport aircraft in Italian, is a turboprop aircraft produced by Alenia Aerospazio, a branch of the Italian Government's Finmeccanica. ATR42/72 planes, ranging from 42 seats to 72 seats, hold about 30% of the share of the world's turboprop regional aircraft market. XAC is one of China's leading aircraft makers. Its Y-7 aircraft plays an active role in China's regional air transportation. It also makes parts for other world leading aircraft firms like Boeing and Airbus. Therefore, Alenia believes that manufacturing the whole of ATR models in China will enable it to cut down costs and better position it to tap China's market. The first delivery of an ATR72 fuselage section supplied by XAC to Alenia took place last December. Alenia believes the successful delivery of ATR fuselage will solidify a wider scope of cooperation in the future.
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GE Plastics, a unit of General Electric Co, held a ground-breaking ceremony recently to start the building of a plastics compounding plant in Shanghai's Pudong New Area. The plant, which will have an annual capacity of 30,000 tons, will manufacture the full range of GE Plastics products including Lexan, Cycoloy, Noryl, Cycolac and Valox resins. The plant, located in Pudong's Waigaoqiao Free Trade Zone, will be completed before the end of 2000. Materials manufactured at the Shanghai plant will be used in the fastgrowing computer, communications, appliance and automotive markets. The Shanghai plant, with an investment of $30 million, is expected to begin operations in less than one year.
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