China, a country which possesses abundant mineral resources, announced on December 18, 2000 a new set of policies in favor of foreign investment in China's exploration and mining industries. The central government has adopted the new principles in order to attract more foreign investment in the exploration and development of its mineral resources, not including gas and oil. Li Zhijian, deputy director of the International Cooperation Department of the Ministry of Land and Resources, believes the new policies will greatly improve China's investment environment for solid ore exploration, and will enhance foreigners confidence in investing in China's excavation sector. The country will further open up the exploration and mining rights market for none-oil-and-gas mineral resources, clarify preferential policies in the field and simplify related examination and approval formalities.

Statistics from the ministry show that only $940 million, or 2%, of the total foreign direct investment of $45 billion went into the sector in 1997. This new policy package further opens up exploration rights and allows foreign investors, including foreign enterprises and their agencies and representative offices, to carry out exploration either as the sole investor or in cooperation with Chinese counterpart. Foreign investors involved in risk exploration are legally entitled to the mining rights on any lucrative non-oil-or-gas minerals found in the exploration area. They will also be allowed to explore and develop non-oil-and-gas minerals by buying shares in Chinese exploration companies with advanced technology or equipment, or by purchasing exploration and mining rights for non-oil-and-gas minerals from large and medium Chinese enterprises. In accordance with law, foreign investors will be able to transfer their exploration and mining right of non-oil-and-gasmineral resources. The preferential policies on offer have been put together based on the experiences and lessons China learnt through the opening up of its oil and gas exploration. Moreover, the central government promises to entitle foreign investors in this field to state tax incentives.

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In a milestone step designed to further open the domestic stock market, China plans to launch a full package of new policies aimed at encouraging foreign investors to get involved in China's fledgling stock market. These measures include allowing foreign investors to trade B shares directly through special seats at the bourses in Shanghai and Shenzhen, said Gao Xiqing, vice-chairman of the China Securities Regulatory Commission (CSRC), watchdog of China's securities industries. The move will serve as a major engine to fuel a bullish performance on the B-share market, a market reserved specifically for foreign investors, which has, however, remained stagnant for years since its debut in early 1992 because of shortage of funds.

To date, 114 domestic companies have been listed on the hard-currency dominated B-share market and have raised a total of $4.36 billion for their business expansion. The central government is also to give the green light to the establishment of joint venture companies involving domestic and foreign securities and fund management firms, around the time of China's accession into the WTO. Until that move is made, foreign securities and fund firms will remain strictly barred from any direct involvement in China's stock market. Gao said the regulators will also encourage foreign-funded firms and Sino-foreign joint ventures to go public and raise funds on the domestic stock market. Early reports claim that a number of foreign-funded firms, such as Unilever, have already shown strong interest in listing in the domestic stock market, but they are still waiting for a go-ahead from the authorities. The government is also scheduled to loosen its rules governing majority control joint venture financial institutions launched on domestic market, and foreign companies may be able to hold a much larger share in such joint ventures. However Gao did not give a clear timetable for the debut of these measures, although he stressed that it would be a gradual, step-by-step process, to avoid possible financial risks.

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China is accelerating the process of reforming its taxation system in anticipation of its entry to the WTO, Finance Minister Xiang Huaicheng said recently. The country will equalize taxation systems for both Chinese and overseas companies. To give foreign investors equal treatment, it will adopt the uniform rates of corporate-income, land-use and transport-vehicle taxes. Under the existing regulations, foreign investors enjoy incentives in some sectors, but are at disadvantage in others. For instance, overseas real estate developers are required to paymore than their Chinese counterparts when leasing land from the government, while foreign bankers and insurance companies pay less business taxes.

The minister said China is considering imposing consumption tax on a wider variety of consumer goods, especially luxury products and those that harm the environment. China is accelerating the development of a nationwide information network that will track personal incomes and large financial transactions made by individuals. It also will adopt a new set of the staggered income-tax rates, raising taxes collected from high-income earners. Efforts to improve the nation's social security system also were discussed. In 2000, the government earmarked 45.8 billion yuan ($5.54 billion) for paying pensions, unemployment benefits and subsidies for laid-off workers and low-income urban residents, up 80% from the previous year. The government will further raise the proportion of social security expenditure in this year's budget, aiming to guarantee the prompt and full payment of pensions and subsidies for laid-off workers to maintain their minimum living standard. By the end of 1999, 93.2 million Chinese workers had been covered by the government's pension funds, while 96.7 million had received unemployment benefits.

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China's Corporation Law is in the process of being revised and it is understood that it has already been listed on the NPC standing committee legislation agenda for this year. According to the current Corporation Law which was promulgated in the 1980s, establishing a limited company, issuing new shares, and application for listing of enterprises are all restricted by the composition of investment, continuous performance and total stock capital. This has made it difficult for high and new technology enterprises, which, when starting up, have little stock capital.

The amendment bill put forward by the State Council suggests adding a provision to Article 229, to the effect, that, for a high and new technology company, the proportion of registered capital of initiators using industrial property right and non-patented technology as capital and the conditions for issuing new shares and applying for the listing of the stocks shall be determined separately by the State Council. It is generally agreed that the conditions for new and high technology companies to issue new shares and to be listed on the stock market should be relaxed. But the problem that how should this be implemented needs to be explored and adjusted in practice. It need not be specified by law, and it should be left to the State Council to make specific stipulations according to circumstance.

Economic experts have suggested the removal of the restrictive articles concerning the proportion of investment overseas, saying that the 50% limit seriously restricts the establishment of a modern corporate system and makes it unfavorable for companies to realize organizational adjustments through the capital market. They also called for the removal of the provisions about drawing 5-l0% of after-tax profits for use as public welfare funds in order to make it conform to international standards and protect the interests of investors. They said that the drawing of the public welfare funds has not only overstated by 5-l0% the gains of proprietors and the gains on net assets but also made the market gains of the company's stock untrue.

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In order to protect China's cellular phone manufacturers, the central government has imposed a ban on new foreign investment in cellular phone manufacture. Meanwhile, the government has defined the proportion of localized cellular phone production and the ratio of products export by foreign-invested firms. Official statistics show that China's cellular telephone sales volume will reach 28 million in 2000. In the first half of 2000, Chinese brand cellular phones had only 10% of the market share and the whole year's target is 15%. According to a senior official from the Ministry of Information Industry, starting from 2000, the government will no longer approve new foreign investment in the sector, neither joint ventures nor whole foreign capital firms. The existing joint venture cellular phone producers must export at least 60% of their output and before the end of 200l the localization rate of their products must reach 50%. The number of products they may sell on the Chinese market will depend on their exports and the localization rate of spares and fittings.

In order to support the 10 selected Chinese cellular telephone makers, the government is adopting various measures, including granting them billions of renminbi to develop new products. Of the investment, RMB400 million will be raised by issuing treasury bonds, RMB 1.4 billion will come from the network link fees paid by cellular phone subscribers and from 5% of the monthly rental paid by fixed telephone subscribers. Besides competitive pressure from foreign enterprises, another problem obsessing Chinese cellular phone producers is the tight supply of core chip imports. Xoceco placed an order for a l00,000-chip monthly supply with foreign enterprises as long ago as l999. However, at present, the company only receives less than half the amount ordered. The TCL Group has constructed a production line capable of producing 2.5 million cellular phones annually that was expected to start operations in November, 2000. Owing to the tight supply of chips, the production line still lies idle.

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China has pledged to modify its foreign trade laws and regulations in line with international rules, and set up a transparent and fair legislative and consulting mechanism for foreign businesses after its entry into the WTO, said recently Long Yongtu, chief representative for trade negotiations at the Ministry of Foreign Trade and Economic Cooperation. The promise of abiding by international rules bears far-reaching impact on foreign trade activities and is a big stride towards the international legal system, as well as an important step for China to improve its investment environment.

China has pledged that after its accession to the WTO, all foreign trade activities should be conducted under the country's promulgated laws and regulations and any ¡°internal regulations and laws" which are not officially declared should not be implemented. To guarantee the transparency of the laws and regulations, the government will designate special publications to circulate all the country's laws and regulations concerning foreign business so that any WTO members, enterprises and individuals can have access to the latest development of China's laws. Besides, laws and regulations on foreign businesses, except for those concerning national security such as foreign exchange policies, before coming into effect, will be forwarded to enterprises and related parties for a review of their feasibility. Government will establish consulting centers to settle enterprises¬ğ legal problems within 30 to 40 days at best.

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Solely foreign-owned enterprises have gradually become a new growth feature of China's foreign trade. Their import and export covers almost all kinds of trading and appears to be extraordinarily lively. According to statistics from the customs, their total value of import and export in the first quarter of 2000 came to $22.55 billion including import $10.87 billion, up 56.5% and export $11.68 billion, up 37.2% over the preceding year leading all import and export enterprises in the speed of growth. In their different forms of trade, import and export of general trade registered $1.98 billion, up 73.2%; processing and assembling with supplied materials and parts $2.26 billion, up 44.3%; processing with imported materials $16.05 billion, up 38.2%; import and export of bonded warehouses $92.34 million, up 23.1%; bonded warehouse trans-shipment $1.07 billion, up 377.7%; import of equipment and goods as investment $1.09 billion, up 30.1%.

Analysis shows that having undergone the trial of the financial crisis in Southeast Asia, China's investment environment is looking even better to foreign enterprises. As solely foreign owned ventures have the advantage of high investment return rates and a quick return on investment, the speed of growth of imports of equipment and goods for investment has exceeded that of cooperative and joint ventures. Furthermore, under the same conditions, they have fewer bad assets problems, and their advanced mode of management, ample capital and cheap labor have created conditions for them to win a bigger market share.

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Hubei Province is striving to become an economic vanguard in Central China. The country's pending entry to the WTO will provide favorable conditions for the province. The 21st century will offer important development opportunities for China. As an important province in Central China, Hubei will make a substantial contribution to China's economic growth in the new century following the example of the Pearl River Delta, the Yangtze River Delta and the Bohai Economic Ring. Hubei's development is not only a must for itself, but more importantly for developing China's national economy as a whole.

Hubei has the following advantages and opportunities for economic development in the coming century: A ¡°cross-shaped" economic region has taken shape, with Wuhan, its provincial capital, at the center. This will help make full use of the province's geographical advantage. China's pending entry to the WTO will push Hubei Province and Wuhan to the fore. The western development program also provides an opportunity for Hubei. With more and more investment going into the Three Gorges Dam Project, the development of Hubei will get more economic support. The province's current economic and technological conditions have laid a solid foundation for their further development. Hubei is now at the age of industrialization. Eastern China has become a relatively developed region and Western China has become the focus of State support. Central China, consisting of the provinces of Henan, Hubei and Hunan,must draft a development strategy of their own. During the process of industrialization, Hubei is putting more emphasis on information technology. In order to realize a great leap forward in economic development, Hubei will make full play of its advantages.

Located in the hinterland of China, the province is a cross-roads for the flow of human resources, materials and information. With a land area of more than 180,000 square kilometers, Hubei is rich in mineral and water resources. The annual precipitation of the province averages 216.7 billion cubic meters and the annual surface runoff averages 94.6 billion cubic meters. Scientific research and education have developed rapidly in Hubei. At the same time, the province is a center of agricultural and industrial production in China. The economic growth rate of the province is higher than the nation's average for eight consecutive years since 1993. The gross domestic product of the province ranked ninth in the country in 1999. Hubei has a long history and it cradles the abundant Chu Culture.

To be competitive, Hubei will speed up the construction of the following projects: 1. The ¡°Big Power Project." With the construction of the Three Gorges Dam Project, Hubei is respected as a center of hydropower to transfer power from the West to the East in the country. 2. The construction of transportation networks, making Hubei a connection hub for the West and East, the South and North. The air transportation, water transportation, railway and highway transportation are all very efficient in the province. 3. The information technology industry. To promote e-commerce and enforce the construction of telecommunication networks, broadcasting and TV networks, computer networks in order to turn Wuhan into a ¡°Digital City¡±. 4. The construction of a water conservation project to stop flooding. 5. The construction of six pillar industries, including high-tech, modern processing, raw materials, hydropower, culture and tourism industries and modern agriculture.

Hubei will adopt the following measures to develop its economy: 1. Hubei will accelerate urbanization with Wuhan as the spearhead. 2. To speed up the construction of high-tech industry. Wuhan's ¡°Optical valley" is expected to become the industry leader with a solid foundation of optical and electronics information businesses. Great importance will be attached to such industries as optical and electronics, biological engineering, new pharmaceuticals and new materials. 3. To restructure traditional industries to speed up the process of industrialization. Great emphases will be laid on such industries as iron and steel, motor and chemicals to form a diverse industrial system. 4. To industrialize agriculture and modernize the countryside. 5. To speed up the realization of a market economy by further reforming state-owned enterprises, adjusting the industrial structure and transforming the government's administrative functions.

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Beijing Municipal Government has recently lifted the restrictions on investment in the city's infrastructure facilities. Meanwhile, it has issued measures to promote infrastructure construction, which is not in step with the city's development. Contents of the measures are: the main investment body managing the infrastructure projects shall be extended from only government to enterprises and civil and foreign investors, subject to government policies. All eligible enterprises, no matter private, state-owned, local, Chinese or foreign, may be involved in investment in infrastructure construction in Beijing.

The city's infrastructure construction covers traffic, environmental protection, urban road network, water supply and municipal works. Key projects include the urban high-speed light rail, the No. 5 subway line, the light rail from Bawangfen to Tongzhou District and the Fourth Ring Road. In order to ensure these measures are implemented smoothly, the municipal government will launch an urban infrastructure project compensation fund, to make up the gap between the reasonable profit price and the actual price. In addition, investors must compete in the fields of capital financing plan,construction design, technological solution and management for these projects. It is learned that Beijing Municipal Government will adopt flexible methods to compensate investors, grant management rights for construction and operation projects to investment enterprises and offer them preferential policies in tax payment, land development, advertising, conversion of enterprises¬ğ assets to stock and stock capital

The municipal government has selected the following eight categories involving 36 projects to which preferential policies will be applied to attract overseas investor. 1. High-tech industrial projects; 2. The construction of transport, energy, sewage treatment and environment protection infrastructure; 3. The manufacture of industrial products to meet international market demand, involving a high degree of processing and with a high added-value; 4. Technological innovation for traditional industries; 5. The cultivation and processing of high-quality agricultural products; 6. The upgrading of traditional products and the expansion of exports of the said products; 7. Real estate development for industrial enterprises moving from inner city areas to the suburbs; 8. The remodeling of old houses and the construction of economic inner city housing.

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Shandong, one of China's leading grain-producing provinces, is using overseas funds to accelerate the agricultural development of the Yellow River Delta. Using a 8.9 billion yen ($71 million) government loan from Japan, which makes up 47% of the total investment, the project, the largest of its kind in Shandong, kicked off recently. Over the next four years, over 1.2 billion yuan ($149 million) in funds, including the loan from Japan, is scheduled to be spent on the delta's infertile land to turn it into Shandong's largest grain-producing and vegetable-growing base. The province is confident that the project can push forward the province's overall agricultural development and the growth of its rural economy. Through introducing advanced technology and management experience from Japan, the province hopes major breakthroughs can be made in improving the delta's environment, and in particular improving its low-lying saline lands, developing environmentally friendly farming techniques and speeding up the mechanization of local agriculture.

In line with China's imminent entry into the WTO, which will bring China's sector fierce competition from overseas agricultural producers, the province is also expected to introduce local agriculture to inter-national economic operations under market rules. During the 2000-04 period, a multi-functional infrastructure, including water conservancy systems, agriculture, forestry, aquiculture and power supply will be built within the project zone, which covers 127,000 hectares of land currently suffering from chronic drought, flood, infertile soil and insufficient drainage facilities. Under the program, three reservoirs will be expanded to hold 104 million cubic meters of water. Also 300 kilometers of drainage ditches, over 2,600 pump stations and 2 hundred kilometers of irrigation canals will be built.

Trade volume of Shandong Province reached $22.5 billion in the first 11 months of 2000, 38.2% higher than the same period in 1999. Exports rose 36.3% to $13.9 billion and imports surged 41.2% to hit $8.5 billion. In the 11 months the province approved 2,387 foreign-invested enterprises, with contracted foreign funds of $4.3 billion and actual utilized funds of $2.7 billion, up 60%, 63% and 15% respectively over the same period of 1999. During the period, Shandong signed foreign work contracts worth $540 million, exporting 17,000 laborers. Exports of machinery and electronic products continued to increase to $2.8 billion, up 52.3%. Traditional export products, such as textile, garments, light industrial products and agricultural byproducts, continued to grow at a speed higher than the average. The exports of collective enterprises increased 80%, while exports in the private sector soared 2.8-fold. The province's exports to Japan, the United States, the ROK and European countries covered 74% of the 10-month total. Exports to Asia, Europe and the US totaled $8.3 billion, $1.8 billion and $2.6 billion, up 37.7%, 35.1% and 30.7% respectively. Exports to the CIS countries and Eastern European countries witnessed a leap to $240 million, up 73.7% from the same period in 1999.

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The zone offered the following favored policies:

1. High-tech businesses will pay income tax at the rate of 15% and newly established high-tech companies will be exempt from income tax for two years after set up. In the next three years, they will pay half the income tax.

2. Foreign-funded high-tech productive businesses that run for more than ten years will be exempt from income tax for the first two years in which they make profit. For the next three years, they will pay half the income tax. If the companies stay as advanced high-tech businesses, they could enjoy a 10% corporate income tax rate for three years.

3. For high-tech products given the approval by the Provincial Science and Technology Commission, the portion of the products¬ğ value-added tax paid into local financial revenue will be returned to the high-tech companies by the local finance authority for the first three years of operation.

4. Imported equipment will be exempt from customs duty within limits permitted by certain regulations, provided the project concerned is foreign invested or state-encouraged.

5. Instruments and equipment used by high-tech businesses for development and production could enjoy the shortest depreciation term of four years with the approval of the finance or tax departments.

6. When high-tech businesses raise funds independently to build plants in the industrial district, they will pay investment regulating tax but get it back from the financial bureau in the zone.

7. Foreign-funded companies that develop and produce high-tech products with an investment of more than $1 million and an operation term more than 15 years will receive a preferential reduction of 10% for land use fees and land prices.

8. With the approval of the Customs Office, high-tech companies could set up bonded warehouses and factories in the zone.

9. Excluding products banned by the State for export, or products breaching other regulations, export-oriented products will be exempt from the export tariff.

10. Raw materials, parts of machines, components and apparatus parts or appliances, subsidiary materials and packing materials imported for producing export products shall be supervised by the Customs Office according to processing trade regulations. The exported products will be exempt from import tariffs and tax. If goods for export have to be sold on the domestic market, they must get approval first and pay tax according to regulations.

11. In addition to the above preferential policies, software companies in Jinlu Software Park will get back their income tax paid in the 6th, 7th and 8th years.

12. Jiangxi High-Tech Industry Development Center, an incubator for returning workers educated abroad, is the only place which holds demonstrations for them in Jiangxi Province. Returning scholars may enjoy the policy of ¡°nesting and feeding", where local government pro-vides places for them. Businesses set up by them in the park will be granted the ¡°seed fund" after the approval by the government. Tenant companies may lease the premises for a low rent, enjoy the same preferential policies as high-tech enterprises.

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1. Textile machine project. The company has five assembly lines, the total assembling capacity is up to 300 PWMs. The localization rate of the machine is 60%. Investment: $41 million.

2. Double-tier alternating metal armor HV switch gear. This kind of switch gear is newly developed. It is up to the national standard and can replace similar imported products. Investment: $2.2 million.

3. Technological renovation of intelligent direct current screen. PZ CN/SL type of direct current screen, equipped with interfaces 232 or 485, adopts new technology of digital and intelligent control. It is highly reliable and accurate. Investment: $5 million.

4. ¡°One-Card Through" project in Nanchang. With a 3 million population in Nanchang, the market for the card is very large. The citizens may use this multi-functional card to pay the water, gas, electricity, taxi and other bills. Investment: $1 million.

5. TH-II tape of super high-power photo electricity microscope. The microscope issued in clinical tests to observe and magnify the shape and structure of blood cells. It is also used in the study of metal composition. Investment: $2.5 million.

6. Generator adopting technology of resonance, exciter and exclusion of brush loss. The project adopts unique technology of project pole resonance exclusion of brush loss, new type of sine winding and pulsating voltage regulated design. The product is used in reserve power supplies for airports, hospitals, post and telecommunication sectors. Investment: $3.7 million.

7. Sodium isovitamin C. The company produces more than 2,000 tons of sodium erythorbate and 500 tons of erythorbic acid. It is one of two enterprises which produce this kind of product in China. It can be widely used in the preservation of meat, fish, vegetables, fruit, wine, soft drinks and canned food. Investment: $10 million.

8. Technological transformation of optic-electronic component--GaP epitaxial chip and LED chip. The factory can generate 1.64 billion LED chips and 200,000 square meters of epitaxial chip a year. Investment: $24 million.

9. PTMEG. PTMEG is the key composition of elastic object and ammonia fiber. At present, the total productivity of PTMEG all over the world is about 130,000 tons per year. The technology of PTMEG in China is still in the research stage. The country imports some 13,500 tons of PTMEG a year. Investment: $32 million.

10. Miniature UAV. Miniature UAV consists of an aircraft and a ground system. The flight of UAV is controlled by an onboard auto-control system to proceed along the pre-designed navigation line, under the guidance of Global Position System data. The UAV carries instruments which measure temperature, pressure, humidity, wind speed and direction. It can also be equipped with special remote equipment to fight forest fires and prevent flooding. Investment: $25 million.

11. Plastic nylon-11 resin. Cooperating with Beijing Chemical Research Institute, the plant can produce 200 tons of rilcon a year. investment: $24 million.

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China welcomes influx of funds from both individuals and foreign businesses to construct small hydropower stations (SHS). The country boasts technically exploitable volume of l00 million kw in more than l,500 mountainous counties and prefectures. China has built up more than 4,300 SHS, with a total installed capacity of over 23 million kw, and annual output of 72 billion kwh. Now nearly half of the country's territory, one-third counties and one-fourth population are relying on SHS for power supply. The total assets of SHS have reached about RMB300 billion. However, the production capacity of SHS was only 29% of the exploitable resources by the end of l999. The on-going rural electrification plan for the first stage at county level has set the target of bringing the annual per capita consumption of electric power to 280 kwh. This standard of power consumption is far behind that of the developed countries.

The country has drafted a series of policies for the SHS development, covering taxation and prices to support various-level governments and local people to develop the rich resources of SHS in the mountainous areas. Meanwhile, guided by market economy, it encourages investment from individuals and foreign businesses in this regard. The central government's decision to launch the west development drive will provide greater potential for development of SHS, as in the central and western parts, there accounts for 83% of the national exploitable water resources, but the exploitation level is much lower than the national average. China has registered an annual increase of more than l million kw generating capacity by SHS in recent years, and an investment of over RMB13 billion ($l.6 billion) in SHS annually. Currently, the country has about 5 million kw of SHS under construction, which when completed will enable more than 300 million people to get access to electric power. China has 80% of the population living in the countryside. There are now more than 75 million people who have not yet got access to electric power.

Developing SHS according to local conditions is indispensable part of China's strategy of sustainable development. At the same time, the existing over 40,000 small hydropower stations are needing technical transformation and renovation as most of them have been in operation for 30--40 years and arc equipped with outmoded equipment. Experts said that China's recent SHS development is facing a hard-won opportunity. According to the national development plan of electrification, China will build up 400 hydropower electrified counties by 2005, and another 400 electrified counties by 2010. By then, the per capita consumption of electric power is expected to reach 400-600 kwh annually.

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The Chongqing Economic and Technological Development Zone is located in Nanping District in the city proper. It covers 9.6 sq km in area and is only 3 km in distance to the railway station, 5 km to the Chongqing port and 28 km to the airport. The zone was built in l990 and is the earliest economic and technological development zone of state class in Southwest China. By the end of 1999, there were l,200 registered enterprises including 900 domestic enterprises with registered capital exceeding RMB 3 billion; 262 foreign-funded enterprises involving investment exceeding $l.3 billion. The zone has its unique advantages for development in various aspects:

First, the advantage of location. As the largest industrial and commercial city in the upper reaches of the Yangtze River and Southwest China, it has easy access to the benefit of the two regions--the more developed east region and the vast central region. It has a huge market relying on a population over 200 million in the five provinces in Southwest China, has two economic belts-- the Yangtze and Chongqing-Chengdu belts, and can benefit two areas, the Yangtze Gorge reservoir area in the east and Southwest China. Second, the advantage of policy. As a state-class economic and technological development zone, it enjoys the same preferential treatment as the coastal development zones. Third, the advantage of science and technology. Chongqing owns close to l,000 research academies and institutes and a powerful rank of expertise which is undoubtedly an immense wealth for modern enterprises. Fourth, the advantage of market. Now a municipality under direct central jurisdiction, Chongqing administers 43 cities and counties. It is 84,000 sq km in area which is 2.4 times the combined total of the three other municipalities of Beijing, Tianjin and Shanghai. It has a population of 30.5 million. The southwest region has a big population exceeding 220 million. Such a vast market has lured increasing numbers of big international enterprises. Fifth, the advantage of environment. The zone has first-class investment hard and soft investment environment in the Western Region through the efforts over the years. To start a plant anywhere in the zone, foreign investors can get access to various public utilities. Financing, commerce and trade, school, hospital, and leisure facilities are all available.

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During the Ninth Five-Year Plan period (1996-2000), the petro-chemical industry in China has greatly accelerated its development through reform and technological innovation. By the end of 1999, China's primary processing capacity of crude oil reached 270 million tons, ranking it third in the world. In 1999, it produced 105 million tons of petrol, kerosene and diesel oil out of 176 million tons of crude oil, satisfying the domestic market demand. Compared with 1995, the pro-duction capacity of ethylene, synthetic resin and synthetic rubber respectively increased 11%, 15.1% and 13.9% annually. China's petrochemical industry has made rapid progress as it no longer relies on foreign countries. To date, China is equipped with oil refining technology developed at home. A total of 85% of catalysts used in China's petrochemical industry are self-supported. Some of China's petro-chemical technologies and equipment have reached the standards of developed countries and been exported to international market.

Technological exchanges and cooperation with overseas companies has been frequently carried out during this period. The reform of the management mechanism and the re-shuffle of national assets in the petro-chemical sector in 1998 has injected the industry with new vitality. After the reform, the function of the government and independent enterprises will be separated. China in 1998 established the China National Petroleum Corp and the China Petro-chemical Corp to manage national assets.

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Siemens is to pour $1 billion into China over the next three years to strengthen its research and development (R£¦D) capability mainly targeting next-generation mobile phone business, said company officials recently. The move underscores the German-based telecom equipment maker's bid to become a major player in China's mobile phone market, which is expected to grow into the world's largest in five years. Siemens plans to unveil an 800 million yuan ($96.3 million) industrial park plan in early January in Pudong Jinqiao industrial area, Shanghai, to serve as the center for its mobile phone business. Most of the development effort will be on 3G mobile phones, an upgrade of WAP (wireless application protocol) phones which allow high-speed Internet access to multimedia features. Though the first version of 3G mobile phones may be up for grabs in 2002 at the earliest, global producers have been gearing up for a fierce race to gain a slice of China's 3G pie.

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Ford Motor Company, the second largest auto producer in the world, said it has already filed documents with the Chinese Government seeking approval for its joint venture with the Chang¬ğan Automobile Corp based in Southwest China's Chongqing Municipality. The move has been billed as one of the company's most important investment projects over recent years in a drive to establish itself more in a potentially huge market. The program has been submitted for primary approval by the government, although the company is still working with Chang¬ğan on the final details about the joint venture. The company had not yet decided what type of vehicles to introduce into the Chinese market, but a family car valued at around 100,000 yuan is one of the top priorities.

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Finland-based UPM-Kymmene Corporation, one of the world's largest wood processing companies, marked its takeover of a $600 million paper mill in Jiangsu Province by officially changing its name to UPM--Kymmene Paper. The $600 million is the largest single investment made by any Finnish company in China to date. The company UPM-Kymmene (Suzhou) Paper Industry Ltd Co is registered and has its headquarters in Suzhou Industrial Park, and its production plant is by the Yangtze River in Changshu, Jiangsu Province. UPM-Kymmene acquired 49% of the shares in the paper mill in Changshu in 1998, and on August 30, 2000, the Finnish paper giant became the mill's sole owner by acquiring the remaining 51%. The mill produces 350,000 tons of uncoated and slightly coated fine paper annually which is mainly used in printing and offices.

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