At the beginning of the twenty-first century, while moving toward greater international economic integration by joining the WTO, China was also seeking greater national economic integration by launching a grand project to develop its poorest interior region - the western region. In a sense, the WTO accession and the western region development project are two events that will be most significant in shaping the course of China's economic development in the first decades of the twenty-first century. It is essential, therefore, for foreign investors to understand the background and objectives of the project for western region development, the priorities the Chinese government has set for developing the western region, and the preferential policy treatments that the Chinese government has promised to offer to foreigners investing in the region.
China's east coast region enjoys the locational advantage in terms of easy access to international markets, foreign advanced technology, foreign capital, and, most importantly, overseas Chinese communities in Hong Kong, Macao, and Taiwan. After the launch of the economic reform and the opening up in the late 1970s, therefore, the Chinese government kept granting preferential policy treatments to the coastal region in order to achieve rapid success in a locality in a relative short period. As a result, the east coast region developed very quickly, while the interior region has begun to lag behind in the last two decades or so. In recent years, the coastal-oriented development strategy and the resulting gap between the east coast and the interior region became a threat to social stability, national security, sustainability of rapid economic growth, and even environmental protection, which increasingly drew attention from the Chinese government. The Chinese government intended to resolve these problems by launching the project for western region development.
On 19 January 2000, an Inter-ministerial Committee for Developing the western region of the State Council was set up in Beijing, with Premier Zhu