Newspaper article THE JOURNAL RECORD

China Ready to Clear Path to Assist Foreign Investors

Newspaper article THE JOURNAL RECORD

China Ready to Clear Path to Assist Foreign Investors

Article excerpt

PEKING (AP) - China, responding to complaints that its poor investment climate is driving away foreign business people, has announced it will lower taxes, guarantee operating autonomy and reduce red tape for foreign enterprises.

In a document published Sunday by the official Xinhua News Agency, the government listed 22 provisions ""for the encouragement of foreign investment.''

The provisions specify that investors will be able to hire and fire their workers free from interference from local officials.

Foreign enterprises will also have the right to appeal what they feel are arbitrary fees and regulations by local officials, a common complaint.

They will receive tax breaks; be exempt from some subsidies that have driven up the cost of labor; have access to bank loans, and have priority in obtaining water and other infrastructure needs.

The new provisions are restricted mainly to two types of foreign enterprises, those manufacturing products designed for export and those bringing advanced technology into the country.

China's most senior leaders, including Deng Xiaoping and Premier Zhao Ziyang, recently assured foreign investors that problems which plagued foreign enterprises since China opened to the world in 1979 would be dealt with soon.

Since 1979, more than 2,000 joint ventures have set up shop and contracted investment has passed the $16 billion mark, with $4.8 billion actually having been spent.

But the level of investment declined this year, partly from rising dissatisfaction with artificially high labor and operating costs, inability to get needed parts and material, and difficulty in repatriating profits due to China's lack of foreign exchange.

Among the major provisions to encourage investment:

%E Export enterprises and technology suppliers will be exempt from paying subsidies to staff except for labor insurance and other required welfare benefits. Chinese officials have estimated that foreign firms now must pay 2. …

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