The Chinese State Council has approved to use four measures boosting foreign capital participation in the restructuring of state-owned enterprises in the northeast to speed up the innovation of the region's economic system and mechanism.

This has been unveiled on August 6 by Zhang Guobao, Vice Minister of the National Development and Reform Commission and head of northeast revival office under the State Council.

He said the government encouraged foreign investors to merge, acquire or hold interest in SOEs in the northeast. These initiatives by foreign investors may be free, subject to the approval of the State Council, from payment of tax which has been defaulted due to historical reasons and proved not in the realistic capability of the SOEs now. Share-holding companies with foreign stakes can be listed on the capital market at home or abroad.

The government will explore the way to reinvigorate the state asset stock. Foreign-funded enterprises will be allowed to buy non-performing debts and equity from financial asset management companies and restructure or handle its assets. The government is trying to offer a better environment of social security to facilitate the growth of foreign-funded companies. The existing laws and regulations for the labor relationship, business-based job cuts and social security are also applied to foreign-funded companies which are results of buy-out by foreign investors.

In the mean time, mergers and acquisitions of Chinese companies by foreign investors will be better regulated and further encouraged. A sound regime of property trading will be in place to facilitate and regulate foreign investment either in the way of mergers and acquisitions or of share holding.

By People's Daily Online