Favorable policies toward foreign capital not to be canceled in near future: MOC

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Last updated at: (Beijing Time) Tuesday, September 23, 2003

Favorable policies toward foreign capital not to be canceled in near future: MOC

Official with the Chinese Ministry of Commerce (MOC) recently cleared up the rumor that China would cancel the favorable policies toward foreign capital after its entry into the WTO (World Trade Organization). In a considerably long period of time, the Chinese government has no intention to amend the preferential policies on foreign investment, the official said.

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At the summit forum of the "Transnational Company and China Wuxi International Manufacturing Industry Base Development Strategy" held on September 22, Hu Jingyan, director of the Foreign Capital Department of the Chinese Ministry of Commerce (MOC), cleared up the rumor that China would cancel the favorable policies toward foreign capital after its entry into the WTO (World Trade Organization). In a considerably long period of time, the Chinese government has no intention to amend the preferential policies on foreign investment, Hu said.

Recently, it was rumored that after China's accession to the WTO, it will give national treatment to foreign-funded enterprises, and that the many favorable policies currently enjoyed by foreign businesses will be canceled. Regarding this, Hu pointed out that this is a misunderstanding. After China joined the WTO, what it will abolish is the existing policy of discrimination against foreign-invested enterprises, not the preferential policies, Hu added.

Hu said frankly, in the long run, the policy toward foreign-financed businesses and that toward local enterprises should be identical, but this is a long-term goal. In the near future, the Chinese government will not change the existing favorable policies toward foreign-funded businesses.

Hu disclosed that the Chinese government has put forward some more favorable policies to encourage foreign investors, particularly world-famous transnational companies, to increase their efforts and scale of investment in China. Firstly, the Chinese government will take measures to speed up the development of China's material circulation industry through the entry of foreign investment, and encourage foreign businesses to set up material circulation companies in the form of share-holding or BOT (build, operate and transfer), so as to change the relatively backward environment for China's material circulation industry as soon as possible. Secondly, the government will adopt breakthrough measures to allow foreign investors to merge and acquisition (M&A) State-owned enterprises (SOEs) and allow the use of common international asset evaluation method for the asset evaluation of SOEs soon to be merged and acquisitioned.

Besides, the Chinese government will also adopt more favorable policies to encourage transnational enterprises to set up R&D and purchasing centers in China. The export tax rebate problem which affected the establishment of purchasing centers in China by transnational companies in the previous period is expected to be solved in the near future. China will further improve legislation and strengthen management in regard to the protection of intellectual property rights, so as to free transnational companies from worries behind in their entry into China.

Finally, Hu indicated that the policies and measures mentioned above have undergone all-round feasibility studies and have entered the final stage of formulation. They are expected to come out one after another in the not too distant future.

By PD Online Staff Gao Lanrong

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