Dec. 10, 2001
C a t a l o g
China made a series of promises to join the WTO, covering foreign business activity in China, trade administration, market access for goods and services, as well as intellectual property rights protection. Following are some of the most important commitments:
1. China will provide non-discriminatory treatment to all WTO members. All foreign individuals and enterprises will be equally treated in China with respect to the right to trade.
2. China will eliminate dual pricing practices as well as differences in treatment accorded to goods produced for sale in China in comparison to those produced for export.
3. Within three years of accession all enterprises will have the right to import and export all goods, and trade them throughout the customs territory with limited exceptions.
4. While China will reserve the right of exclusive State trading for products such as cereals, tobacco, fuels and minerals, many of the restrictions that foreign companies have at present in China will be eliminated after a three-year period.
In the protection of intellectual property rights, China will implement the TRIPS (Trade-related Aspects of Intellectual Property Rights) Agreement in full from the date of accession.
5. During a l2-year period starting from the date of accession, there will be a special Transitional Safeguard Mechanism in cases where imports of products of Chinese origin cause or threaten to cause market disruption to the domestic producers of other WTO members.
6. Prohibitions, quantitative restrictions or other measures maintained against imports from China in a manner inconsistent with the WTO Agreement will be phased out or otherwise dealt with in accordance with mutually agreed terms and timetables specified in an annex to the Protocol of Accession.
Besides the above commitments in principle, China also made various promises concerning market and investment access.
1. In the field of goods trade, the conclusion of the negotiations for market access on goods represents a commitment undertaken by China to gradually eliminate trade barriers and expand market access to goods from foreign countries. After implementing all the commitments made, China's average bound tariff level will decrease to 15% for agricultural products, and 8.9% for industrial goods. Some tariffs will be eliminated and others reduced mostly by 2004 but in no case later than 2010.
2. China will not maintain or introduce any export subsidies on agricultural products. Besides reducing its tariff on agricultural imports, China agreed to limit its subsidies for farm production to 8.5% of the value of farm output.
In the textile sector, China will become a party to the Agreement on Textiles and Clothing upon accession and will be subject to its rights and obligations. As for all WTO members, quotas on textiles will end on December 31, 2004, but there will be a safeguard mechanism in place until the end of 2008 permitting WTO member economies to take action to curb imports when Chinese exports of textile products cause market disruptions. (to be continued)
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China has made sound legal preparations to upgrade its protection of intellectual property rights (IPR) ahead of its entry into the WTO. A leading IPR expert said a key regulation relating to integrated circuits has already come into effect while another on computer software is set to be overhauled. Protection of all aspects of IPR has been enhanced in this nation, particularly computer software, databases and the layout design of integrated circuits. The State Council passed a regulation on the protection of the layout design of integrated circuits in March. China consumes nearly one seventh of global integrated circuits products every year. The regulation which came into force on October 1 cautions all enterprises against using pirated products.
The State Council is also busy revising its decade-old regulation on the protection of computer software to curb IPR encroachment by users of terminals. It constitutes an IPR infringement when one set of software with copyrights is installed on some 10 computers. The Legislative Procedure Law stipulates the State Council is eligible to devise administrative regulations in accordance with the Constitution and laws. Administrative regulations, only inferior to laws in legal efficacy in this nation, is widely used to support the implementation of laws. The Copy-right Law, which was revised in October by the Standing Committee of the National People's Congress, has extended its protection of data-bases to those composed of ordinary data as long as they contain compilation ideas. The profound impacts of China's entry into the WTO has not only been reflected in its legislative sector, but also in its judicial and administrative organizations. Tougher measures have been taken to prevent further infringement of IPR before a case is heard by the court and transparency in the treatment of individual cases has been increased.
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Foreign companies will still be forbidden to sell oil and gas from their production activities in China directly to local customers, even shortly after China's entry into the WTO. An official from the Ministry of Land and Resources said the sales limitations for foreign companies is included in draft amendments of regulations on oil and gas cooperation with foreign companies, which have been submitted to the State Council for approval. The draft amendments aim to trim current regulations that go against the WTO requirements. The draft amendments state that foreign companies can sell oil and gas they get from the PSC (Production Sharing Contract) either to domestic oil companies or transport them back home. They will not be allowed to directly sell to end users. Overseas companies can get as much as 49% of oil and gas discoveries through cooperation with Chinese oil companies, PSC practices dictate.
Although the draft is still subject to the approval of the State Council, all drafting panels, including domestic oil companies, have agreed on this concern, so there will be no problem for the amendments to be passed. At present, most cooperation occurs between the China National Offshore Oil Corp (CNOOC) and overseas companies in China's waters. By the end of 2000, CNOOC had signed 146 PSCs with 70 foreign companies. Overseas companies have produced an estimated 40 million barrels of oil equivalent through PSCs annually, most of which has been sold to CNOOC. The draft also states that foreign companies can negotiate with domestic companies to launch sales in other ways.
Some experts say removing this prohibition is very important to encourage foreign partners to invest in oil and gas exploration and production in China. If foreign companies have access to Chinese markets, they will also be willing to build downstream facilities such as gas-fired power plants to boost the gas consumption in China. But Wu Xiaonan from CNOOC said the ban is needed for her firm to maintain its monopoly over production and sales in China's waters. The monopoly is part of its promise to investors when CNOOC Ltd floated on overseas stock markets earlier this year, and the government has vowed not to break up the monopoly after China's accession to the WTO. The monopoly in oil and gas sectors does not violate the WTO rules. WTO members such as Norway and Indonesia also have monopolies in their countries.
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China has pledged to revise all laws, regulations and decrees incompatible with WTO rules within five years after its entry into the WTO so as to create a unified, open, fair and orderly market environment. The government is now busy adjusting and revising many of its policies and regulations. Officials from the Ministry of Foreign Trade and Economic Cooperation, disclosed recently that the revisions would involve as many as 2,000 laws, regulations and decrees. Among the laws and regulations that need to be revised, major adjustments have already been carried out to the three laws on Sino-foreign contractual joint ventures, cooperative ventures and solely foreign-funded enterprises. The revisions were made mainly in the following areas:
l. In accordance with WTO rules against the use of balance of income and expenditure in foreign exchange as a means to restrict enterprise input, provisions were deleted on requirements that cooperative ventures and solely foreign-funded enterprises should reach a balance of income and expenditure in foreign exchange.
2. In accordance with WTO non-discrimination rules, the provisions that require the enterprises to give first priority to purchasing raw materials, fuel and other materials in China will be deleted, while stipulations that purchases can only be made in China will be changed to purchases can be made both inside China and from the international market; the provisions that require joint equity enterprises to submit their production and business programs to the relevant authorities and implement them through business contracts will be deleted; provisions that require solely FFEs to submit their production and business programs to the relevant authorities will also be deleted.
3. In accordance with WTO rules against restrictions on export of enterprises¬ğ products, provisions that require solely FFEs to adopt advanced technology and equipment, or to export most or all of their products will be deleted.
In addition, China plans to incorporate the above-mentioned three laws into one, and departments concerned have started submitting conceptions and specific programs on the plan. MOFTEC officials have made specific explanations on the plan: ¡°China will not change its preferential policies towards foreign investors, but the long-term goal is moving towards consistent policies for both domestic and overseas investors and establishing a unified, open and transparent foreign trade and economic relations legal system." China is expected to form a legal system that suits the needs of a market economy and is compatible with the country's national conditions by the year 2010.
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China expects a bigger flow of foreign direct investment (FDI) after it becomes a member of the WTO, experts said. Accession to the WTO will be a blessing for China's utilization of FDI--in spite of negative factors such as the end of favorable tax policies for foreign-funded companies. China is now practicing dual-track enterprise income tax policies for domestic and foreign-funded companies. The virtual burden of income taxes for domestic enterprises stands at 22% while that for foreign-funded firms was 12% to 15%. The country will adopt a unified tax system after entry into the WTO so that domestic and foreign companies can compete on an equal footing. But the WTO accession means more than the loss of favorable tax policies for foreign companies. They will have more access to the Chinese market.
China will gradually open the sectors of banking, insurance, telecom, trade and tourism, and explore new forms and channels to use foreign funds. Meanwhile, the country will provide an improved market system after the WTO entry. This includes a more complete and transparent legal system, more open markets and more efficient administrative practices. China will combine its efforts to attract foreign funds to readjust its industrial structure, develop the western region of the country and deepen the reform of state-owned enterprises. China continues to be the highest foreign investment destination in the world. Statistics from MOFTEC indicate that China used $27.4 billion of FDI in the first eight months of this year, an increase of 20.4% from the same period of last year. The FDI contributes about 20% to the fixed assets investment, which contributes about 30% to the gross domestic product (GDP).
The increasing FDI is mainly because China's economy has maintained good momentum of growth despite the slowdown in the world economy. During the first half of this year, China's GDP grew 7.9% year-on-year. The country's economy will continue to develop along a healthy track of fast growth, high efficiency and low inflation. In the first 10 months, a total of 20,549 enterprises backed with foreign cash have been registered in China which represents a rise of 17.5% year-on-year. Contracted foreign investment rose by 26.5% to $55.2 billion, with actual foreign investment roaring to $37.3 billion--up 18.63%. Analyst attributed the fast and steady growth of the Chinese economy as an important factor in luring foreign investors reeling from a global economic slowdown to China.
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Shaanxi Province, with a large number of ancient sites, buildings and ruins, has become a world-renowned tourist spot. The Qin Dynasty (221-206BC) Terra-cotta Warriors, considered the eighth wonder of the world, have received many foreign presidents and millions of visitors from both home and abroad. This year is the first year of the 10th Five-Year Plan period and the province plans to register 182 billion yuan (22 billion) of this year's GDP, 9% more than last year. Shaanxi will also speed up the development of high-tech industries and pay more attention to producing high-tech products with their own intellectual property rights.
The province plans to invite outside capital, technologies and well-trained persons to narrow the gap with the developed eastern coastal areas. With the implementation of the national strategy to develop western China, the province has entered a ¡°golden period" of economic development. In the last five years, the province reported a growth rate high than the national average. Its GDP totaled 166 billion yuan ($20 billion) in 2000, up 9% from the previous year. Build on this, Shaanxi will strive for big leaps in economic growth. The province will also further promote industrial restructuring and accelerate the development of high technology, tourism, fruit processing, energy and chemical industries based on its rich resources.
At the recently held China Xi'an Investment and Trade Fair, Shaanxi published its catalogue of advantageous industries for overseas investment. The 13 industries will enjoy the same favorable policies accorded to projects encouraged in the ¡°Interim Procedures on Guidance of Overseas Investments." They include: l. Cereals, vegetables, fruits, poultry and animal products, and storage, preservation, and processing of aquatic products; 2. forest cultivation and introduction of improved variety of trees; 3. technological renovation of cotton spinning, dyeing and printing, and manufacturing enterprises; 4. construction and operation of roads, independent bridges and tunnels; 5. development of coal processing technologies and product manufacturing; 6. prospecting, development and utilization of coal-seam gas resources; 7. survey and exploitation (off limits to solely overseas-funded enterprises) of copper resources; 8. development of natural gas resources and manufacturing of natural gas-based chemical products; 9. manufacturing of local bus intelligent instruments, l0. development and manufacturing of new types of electronic components and devices; 11. production of natural medicine, nutritional medicine, and health products; 12. designing and manufacturing of civilian aircraft (with the Chinese side commanding controlling stakes); and l3. development, construction and operation of tourist sites and supporting facilities.
The provincial government also offered the following policies designed to encourage overseas investment: 1. overseas investment is encouraged in the construction of its infrastructure and basic industries such as transport, energy, public utilities and mineral resources through various forms of investments that are accepted internationally; 2. overseas businessmen are encouraged to invest in environmental protection projects; 3. overseas investors can participate in the development of tourism resources and tourism products through joint ventures, cooperative ventures, and stock ownership; 4. the province will encourage foreign investment in technological development and renovation, it will assist overseas businesses that invest in the province's contemporary quality farming and foreign exchange-earning agricultural projects; 5. the province will further open up its service trade market; 6. overseas businesses, especially multinationals, are encouraged to take part in the restructuring of state-owned enterprises through various modalities such as acquisitions, mergers, stock and majority participation.
Shaanxi will come up with new ways of fund-raising and open up channels for the utilization of overseas investments. Overseas businessmen can invest in industries allowed or encouraged by the State through acquisitions, mergers, transfer of business rights or stock options. Shaanxi will actively raise funds in exchange for the projects' proprietary rights, operation rights and the rights to earnings. Overseas investors are encouraged to engage in the construction and operation of roads, bridges, tunnels, airports, water control projects, urban utilities and waste treatment facilities through BOT or TOT arrangements. The province will actively introduce various overseas funds or Sino-foreign joint funds. Overseas-invested projects may raise funds including funds in Renminbi; overseas businessmen can invest in venture capital in new and high-tech industries.
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In recent years, East China's Jiangsu Province has launched a ¡°soft environment" improvement drive in a bid to maintain its lead position in attracting overseas investment. The thrust includes improving services, government efficiency, business philosophy, business credit, personnel capability and social security. Since 1999, the province has ranked first in the country in terms of committed overseas investment. It ranks second in the country in terms of actual overseas investment for six years in a row. The ratio of actual overseas investment to the total investment in fixed assets averages some 20% for five consecutive years.
In a bid to create a sound and standard legal environment for overseas investment, Jiangsu has promulgated a series of regulations related to overseas investment. Among them are the Regulatory Measures on Overseas-funded Enterprises in Jiangsu Province, Regulatory Measures on Economic and Technical Development Zones in Jiangsu Province, Regulatory Measures on Labor in Overseas-funded Enterprises in Jiangsu Province and Provisions on Encouraging Taiwan Compatriots' Investment in Jiangsu Province. The province's local governments have also formulated specific measures and regulations based on the specific conditions and requirements of overseas-funded enterprises in their localities. These regulations have standardized the management over these enterprises, and safeguarded the legitimate rights and interests of investors and laborers, thereby promoting the development of overseas-funded enterprises.
The province respects the overseas-funded enterprises' operational autonomy and strictly follows the laws and regulations regarding overseas investors. Several years ago, Jiangsu set up the country's first mediating organization for complaints from overseas investors-- Jiangsu Center for Mediating Economic Disputes and Complaints Occurring in Overseas Investment. In its wake, cities and counties in the province either set up their own complaints mediation organizations or appointed specialized mediators. Thus, a widespread complaints handling network has taken shape in the province. By the end of last year, mediation organizations in all localities of the province had handled more than 300 cases.
To successfully implement these measures, Jiangsu government sped up its transformation of government functions. It delegates the power of examining and approving overseas-funded projects to local governments. For projects with a total overseas investment of up to $30 million, the provincial government hands over examination and approval authority on feasibility study and contract signing to some cities, counties and state-level development zones. This practice has helped to establish one-stop service offices in the Wuxi New District, the Nanjing Economic and Technical Development Zone and the Suzhou Industrial Park. They bring together all departments related to overseas investment in a single office or a building to handle relevant formalities. The examination and approval procedures have been simplified. To increase the transparency of their work, the province's departments make information concerning their formalities and charges known to the public.
Jiangsu has maintained tremendous growth in foreign trade in the first half year. Statistics indicate that in the first six months the province's exports registered $13.8 billion, 9.6 percentage points higher than the country's average and an increase of 19.5% compared with the same period last year. Its scale and growth rate of exports maintain second position in the country. Compared with the same period last year, the province's imports increased 20.9%to $10.7 billion, 6.9 percentage points higher than the country's average. Total export and import volume of $24.5 billion increased 19.5% against the corresponding period last year, 8.2 percentage points higher than the country's average.
Along with great growth in foreign trade, the province has ushered in more overseas investment. In the first six months, 1,632 overseas direct investment projects were inked, an increase of 37.5% against the corresponding period last year. Large-scale overseas investment projects keep flooding in. Projects with individual total investment of more than $10 million numbered 235. Committed overseas investment increased 76% to $8.2 billion, maintaining first place in the country. Actual investment topped some $3.5 billion, up 20.7% on the corresponding period last year and ranking second in the country.
The province's foreign economic cooperation expanded in the first half with all indices outstripping half of this year's targets. The core in attracting overseas investment, the province's development zones, stayed on the fast track, with investment, revenue, foreign trade and employment increasing steadily In the first six months, the province's development zones witnessed business revenue of 240.5 billion yuan ($29.1 billion) and fiscal revenue of some 8.3 billion yuan ($1 billion), a respective increase of 32.4% and 59%compared with the first half of last year Development zones newly approved 682 overseas-funded enterprises, an increase of 47.9% on the corresponding period last year. Committed overseas investment soared to $6 billion, up 101.7%. And actual overseas investment reached $2.1 billion, an increase of 17.3%.
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A Beijing Chaoyang Investment Service Hall has been set up in the Jingguang Center Office Building to provide one-stop service to existing and new enterprises in the Chaoyang District in Beijing. The ¡°one-stop" service means comprehensive consultation services, acceptance of applications, examination and approval and issuance of certificates for new enterprises. It also includes consultation and examination services concerning the inspection of enterprises. The hall is built on the fact that stable policies, good infrastructure and abundant business opportunities are mere appealing to investors than preferential polices. Building the hall is one of the important measures taken to transform government functions and optimize investment environment.
In the hall, the function of the government is to provide comprehensive services to investors rather than to command and interfere as in the past. The one-stop service will also provide more efficient services to investors. In the past, all government departments concerned were relatively scattered, which caused severe inconvenience to investors. Gathering these departments under one roof has changed this situation and greatly saved investors' time and energy. Besides, this practice has increased the transparency of government work, helping build a clean government and safeguard investors' interest. Building the hall and offering one-stop service involves a great number of government departments. To date, the industrial and commercial department, taxation departments, public security departments, the technical supervision department, the planning department and many others have settled in the hall. The Construction Bank of China and 10 other intermediary agencies have also set up there. Since its formal operation began on May 18, 2000, the hall has received sizable investors consulting and gone through related formalities.
By September 30, the hall had received 105,660 persons by phone and in person, accepted 55,220 applications of various types and examined and approved 49,663 applications. It has issued 1,833 business licenses. With the increasing number of investors and the positive effect of the one-stop service, the hall enjoys an increasingly high reputation. News conferences for business festivals and business talks are held at the hall. The hall has now become a main venue for business and economic activities and a window to the outside world. In addition, the hall has an online consultation, examination and approval system and an internal management system for investors' convenience.
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1. Infrastructure Construction along the Ronghua Road. Cooperation form: Joint venture or solely funded.
2. World Currency Park. Cooperation form: Joint venture or solely funded. Investment: 180 million yuan ($21.68 million).
3. Construction of Chaoyang District Electromechanical Industrial Park. Cooperation form: Joint venture or solely funded. Investment: 30 million yuan ($3.61 million).
4. Dongba Industrial Park. Cooperation form: JV or solely funded£®
5. Modern Green Industrial Development. Cooperation form: Joint ven-ture or solely funded. Investment: 300 million yuan ($36.14 million).
6. Storage and Transportation Project. Cooperation form: Joint venture or solely funded.
7. Guanzhuang Industry Park Zone. Cooperation form: Joint venture or solely funded.
8. Wali township Industrial Zone and Relevant Municipal Facilities. Co-operation form: JV. Investment: 500 million yuan ($60.24 million).
9. Wali Township Industrial Zone and Relevant Commercial Facilities. Cooperation form: JV. Investment: 200 million yuan ($24.09 million).
10. The C Area Project of Chaowai Commercial Center. Cooperation form: JV or solely funded. Investment: 1.2 billion yuan ($144 million).
11. The First Physical Training School of Chaoyang District. Co-operation form: Joint venture or solely funded. Investment: 50 million yuan ($6 million).
12. Development of the 17th Commercial Quarter in Wangjing New Industrial Area. Cooperation form: Joint venture. Investment: 6 billion yuan ($720 million).
13. Financing for enterprise in the Chaoyang Science £¦ Technology Park. Cooperation form: Joint venture. Investment: 221.7 million yuan ($26.7 million).
14. The Second-Phase Project of Science and Technology Park. Co-operation form: JV. Investment: 150 million yuan ($18 million).
15. Beidike Garden. Cooperation form: Joint venture. Investment: l.5 billion yuan ($180 million).
16. Beijing Jiangtai Industry Park. Cooperation form: Joint venture. Investment: 296 million yuan ($35.8 million).
17. Laitai Flowers Plaza. Cooperation form: Joint venture. Investment: 200 million yuan ($24 million).
18. Century Trading City. Cooperation form: Joint venture. Investment: 300 million yuan ($36 million).
19. Development of Sightseeing Orchard (Second Phase). Cooperation form: Joint venture. Investment: 14.56 million yuan ($1.75 million).
20. High-tech Green Vegetable Farm. Cooperation form: Joint venture. Investment: 50 million yuan ($6 million).
21. Golden Chaoyang International Culture and Art Center, Co-operation form: JV. Investment: 80 million yuan ($9.6 million).
22. Establishment of Schools with Famous Overseas Schools. Cooperation form: JV. Investment: 43 million yuan ($5.2 million).
23. Construction of Chaoyang District Professional Education Center. Cooperation form: JV. Investment: 42.32 million yuan ($5.1 million).
24. Telecommunication Infrastructure Construction for Beijing Digital CBD. Cooperation form: JV. Investment: $47.42 million.
25. Development of the Dongyue Temple Tourist Resort. Cooperation form: Joint venture. Investment: 10 million yuan ($1.2 million).
26. Construction of the Great Acrobatics World. Cooperation form: Joint venture. Investment: 363.7 million yuan ($44 million).
27. Housing Renovation Project in Gaobeidian.
28. Housing Renovation Project in Heping Street
29. Housing Renovation Project in Chuiyangliu Area.
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The environmental protection industry is expected to enjoy a 15%growth rate per year during the 10th Five-Year Plan period (2001-05). By 2005, the total output value of the country's environmental protection industry is expected to amount to 200 billion yuan ($24 billion). Last year, that figure stood at 108 billion yuan ($13 billion), accounting for 0.8% of the nation's total industrial output value. More than 10,000 environmental protection enterprises and institutions were operating in China at the end of last year. Yet the industry has huge room for growth as more activity is needed to meet rising ecological and environmental protection standards.
The industry still struggles because it hasn't developed the technical expertise of its workforce yet. But the sector is developing rapidly. During the 9th Five-Year Plan period (1996-2000), the growth rate of the industry remained between 15% and 20%, outpacing the growth rate of the national economy. The government is determined to make more efforts to develop this sector. China is working to establish an orderly and open market for the environmental protection industry in a bid to upgrade the technical level of the industry. For example, an authentication system was set up in 1996 to make sure that the environmental protection products entering the market were qualified.
Foreign investors are being encouraged to enter China's billion-dollar environmental protection industry, said Zhang Zhigang, vice-minister of the State Economic and Trade Commission. China will invest 700 billion yuan ($85.4 billion) in controlling pollution over the next five years. In the next five years, the central government will continue to support pollution-control industries, especially the production of anti-pollution materials and equipment, recycling of waste and environment consultation. Therefore, China is hoping to attract more foreign investment and make use of advanced foreign technologies for pollution control during the 10th Five-Year Plan period.
China's rapidly growing anti-pollution industry would provide many good opportunities for foreign investors. Foreign investors and some state-owned enterprises also may enjoy some preferential policies if they invest in China's environmental protection industry, including simplified procedures. All environmental protection projects are expected to receive an all-round appraisal to ensure their feasibility. During the country's 9th Five-Year Plan period, foreign investors injected 33 billion yuan ($4 billion) into China's environmental protection industry, largely in establishing pollution-treatment facilities.
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China is expected to establish two new state-level economic and technological development zones (ETDZs) in Lanzhou, capital of Northwest China's Gansu Province, and Lhasa, capital of the Tibet Autonomous Region in the southwest of the country soon, according to the China Association of Development Zones. The move, at a time when many are worried that the zones may take a hit from China's entry into the WTO, reflects China's determination to continue supporting development zones, said Lin Qihui, deputy secretary-general of the association. The Chinese Government will continue to approve the upgrading of some better-built provincial-level development zones to state-level ones after China's accession to the WTO.
Development zones in Nanjing, capital of East China's Jiangsu Province, Jinan and Dongying in Shandong Province and Yueyang, Central China's Hunan province have applied for an upgrade. Lin believes the preferential policies currently enjoyed by state-level development zones will not change within the next three to five years. The most important preferential policy granted to state-level development zones is a 15% income tax for industrial projects located in the zones, compared with 33% for enterprises outside the zones and China's five special economic zones. However, the preferential policy will not be the major element attracting foreign investment in the future. The advantage of the zones lies in their overall investment environment including infrastructure, policies, regulations and services.
The central government recently provided 4 billion yuan ($483 million) in discount loans to some central and western development zones for their infrastructure construction. China now has 49 state-level development zones including three recently approved. According to statistics provided by the association, the accumulated foreign capital of the development zones accounts for one-tenth of the country's total, In 2000, contractual foreign capital reached $8.9 billion, up 35.3% from the previous year. The zones have also greatly contributed to the country's economic development. The industrial output value of the zones in 2000 totaled 672.56 billion yuan ($81.23 billion), while their gross domestic product hit 29l.576 billion yuan ($35.214 billion) and their tax revenue 28 billion yuan ($3.38 billion). The development zones will be more successful, since they have made preparations, such as adjusting industrial structure to face the challenges brought about by the country's WTO entry, according to Lin.
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It's still too soon to tell what effect the slump in the international aviation market will have on China's civil aviation industry. So far, the outlook for China remains bright. A report from the General Administration of Civil Aviation of China (CAAC) recently found that more than 1.6 million passengers flew during the week-long National Day holidays--100,000 more people than the same time last year. Domestic airlines added hundreds of special planes to serve hot tourist destinations. Profitable income from the traveling peak means the aviation industry enjoyed positive finances in October, industry insiders said. But no one knows whether the profits will continue in the months ahead.
In the first half of this year, a traditional low season for aviation, China's airlines lost more than 2 billion yuan ($240 million). The world air transport industry is in a crisis after the September 11 terrorist attacks on New York and Washington DC. Airlines have slashed oper-ations and reduced staff and are facing heightened security and insurance costs, a report from the International Air Transport Association said in response to the current world aviation situation. The sluggish world aviation market will greatly affect China's international flights, while the fate of domestic air routes will largely depend on China's economic situation. But of all the countries, China may be least affected. International flights account for only a small part of the air traffic in China, so as long as the domestic market continues to develop well, the whole industry will not be severely affected. The domestic market demand is the most important impetus for developing China's aviation industry. CAAC may adopt positive policies --like partly lifting the ban on ticket discounts, as an incentive for more people to fly. Air China's most profitable international air destinations -- Japan, the Republic of Korea and Southeast Asia -- have not yet been greatly affected by the US tragedy.
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German chemical giant Bayer inked in November its largest ever investment of $3.4 billion in China. The investment will be in place before 2008, with most of it--$3.1 billion--going to a chemical production base in Caojing near Shanghai, announced Manfred Schneidel, chairman of Bayer. The Caojing project started construction on November 1. China has become the investment focus of Bayer, which will surpass Japan before 2010 to be Bayer's biggest market in the Asia-Pacific region, said Schneider. Bayer kicked off its first investment in the country, $300 million, in 1994. Up to now it has established 10 mid-sized joint ventures and two wholly owned foreign enterprises in China. The Caojing investment, the first in the Shanghai Chemical Industry Park and the location of Bayer's base, is expected to help the park become one of the largest and most advanced of its kind in the world.
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Whirlpool has returned to China's highly competitive refrigerator market, from which the 90-year-old US giant withdrew four years ago due to oversupply. The company plans to provide a wider range of products on China's mainland. Previously, the household appliance manufacturer didn't offer its fully integrated product portfolio on the mainland, despite China's status as the world's second-largest appliance market. Whirlpool, which sells products in 180 countries and regions worldwide, made its debut on the mainland in 1994 by investing $80 million in the domestic market. The company later added another $400 million. A glut in the Chinese refrigerator market forced Whirlpool to pull out its investment in 1997 to avoid further losses. However, the company is determined to make a successful comeback into the potential Chinese market, and has so far launched 30 new products, including washing machines and microwave ovens.
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Japanese appliance maker Hitachi Ltd recently set up a household air conditioner firm, the Hitachi Household Electric Appliance (Wuhu) Co Ltd in Wuhu, Anhui Province. The new firm is solely owned by the Hitachi group with $2l million of investment provided by Japan's Hitachi Ltd and Hitachi China Co Ltd. It is scheduled to start production in November 2002, and its annual output will reach 300,000 sets. China's demand for air conditioners was 8.5 million in 2000. Hitachi predicted that the market would continue two digit growth annually during the coming years. The existing Shanghai Hitachi Household Electric Appliance Co Ltd produces and sells 400,000 air conditioners a year on average. The establishment of the new firm will bring Hitachi's annual air conditioner output in China up to 700,000 sets. Hitachi said it would strive for a bigger share of the Chinese market.
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Swiss food giant Nestle has announced it will increase investment in China after the nation's entry into the WTO to bolster its local production and satisfy increasing demand. The company investments in China will increase as it has established a new joint venture recently with Haoji Food Co in Sichuan Province, the second largest chicken bouillon producer in the country. Before the launch of the joint venture, Nestle had invested around 6 billion yuan ($730 million) in China. The company launched recently a research and development center in Shanghai. Nestle has invested around 50 million yuan ($6 million) in the center. The center will engage in applied science and nutrition research as well as the development of affordable and nutritious food products to meet with the demands of Chinese consumers.
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