Opinions Concerning the Implementation of Policy Measures for the Western Development
(Western Development Office of the State Council, August 28, 2001)
(17) Non-public economic entities such as individual and private businesses in western China shall be actively guided to accelerate development, and enterprises in eastern and central China shall be encouraged to invest in the west. Unless otherwise stipulated, all Chinese enterprises, in spite of their ownerships, shall be allowed to invest in regions where foreign investors are allowed. Non-public economic entities such as individual and private businesses shall be encouraged to invest in diverse ways like sole proprietorship, joint venture, cooperation, and franchising.
(21) State encouraged domestic-funded and foreign-funded enterprises in western China may enjoy a 15% reduction in corporate income tax from 2001 to 2010. A state encouraged domestic-funded enterprise refers to an enterprise whose main business is included in the Catalogue of Industries, Products and Technologies Particularly Encouraged by the State for Development at Present (Amendment in 2000), with more than 70% total incomes from its main business. A state encouraged foreign-funded enterprise refers to an enterprise whose main business is included in the category “encouraged industries” specified in the Guidance Catalogue of Industries Allowing Foreign Investment, or the Catalog of Priority Industries Allowing Foreign Investment in Central and Western China, with more than 70% total incomes from its main business. Upon the approval of provincial governments, domestic-funded enterprises in autonomous regions may enjoy corporate income tax reduction or exemption periodically, and foreign-funded enterprises may enjoy local income tax reduction or exemption. Income tax reduction and exemption of central enterprises shall be inspected and approved in accordance with current regulations.
(25) To the exclusion of those listed in the Catalogue of Non-Duty-Free Commodities Imported for Domestic-funded Projects (Amendment 2000) and Catalogue of Non-Duty-Free Commodities Imported for Foreign-funded Projects, the import self-used equipment of a state encouraged domestic-funded or foreign-funded project in western China may be exempted from custom duties and value added tax on imports, as long as the value of the equipment is below the project’s total investment. For a foreign-funded project included in the Catalog of Priority Industries Allowing Foreign Investment in Central and Western China, its self-used equipment may be exempted from customs duties and value-added tax on imports after being inspected in line with the Circular of the State Council on Adjustment of Import Equipment Taxation Policies (G. F.  No. 37), as long as the value of the equipment is below the project’s total investment.
(38) Foreign-funded projects related to basic industries (e.g. agriculture, water conservancy, transportation, energy, municipal public service, and environmental protection), infrastructure construction, resource (e.g. minerals and tourism) development, or the construction of technical R&D centers, may enjoy preferential policies aiming at foreign-funded projects in state encouraged industries. The central government will, according to the changes of regional economic development and investment environments, supplement or amend the Catalog of Priority Industries Allowing Foreign Investment in Central and Western China and other relevant measures in a timely manner, for the purpose of encouraging foreign investment in western China.
(39) More service sectors shall be opened to foreign investors. Pilot foreign-funded banks and retailers shall be established in key cities (municipality, provincial capitals, and autonomous region capitals) in western China. Pilot joint ventures shall also be set up in key cities in western China, with more preferential policies being provided according to the conditions of foreign and Chinese parties involved. As a WTO member, China allows foreign banks to offer RMB-based financial services in China within relevant legal and agreed frameworks, and priority will be given to such projects in western China. Priority will also be given to foreign insurance companies setting branches, agencies, or joint venture broker enterprises in western China. For joint venture travel agencies, less restrict qualification examination and project approval standards shall be applied. In accordance with China’s commitments to WHO and agreed regulations, China allows foreign accounting enterprises (firms) to establish joint venture accounting firms in western China, or member firms in the former possibility does exists temporarily. Existing Sino-foreign cooperative accounting firms shall be encouraged to set branches in western China, and Sino-foreign cooperative law firms shall also be encouraged to be established in western China at the right time. Sino-foreign joint venture and cooperative architecture and design enterprises shall be allowed, and foreign investors shall be allowed to have the control interest. Such fields as architecture and relevant service, design service, engineering service, and urban planning shall be gradually opened to foreign-funded enterprises. Besides, foreign investors shall be gradually allowed to have the control interest in joint venture railway and road transportation enterprises, and the establishment of foreign-funded railway and road transportation enterprises shall also be allowed gradually.
(45) Restrictions on the management rights of western enterprises over foreign trade and economic & technological cooperation shall be further loosen. Specifically, the amount of registered capital for western manufacturing enterprises applying for the right to self-manage imports and exports shall be decreased from RMB3 million to RMB2 million, and for scientific research institutions, high-tech enterprises and mechanical and electrical manufacturers, this amount shall be decreased from RMB2 million to RMB1 million. Private enterprises shall be allowed to apply for the right to self-manage imports and exports in line with relevant regulations, standards and methods applying to state-owned and collective-owned manufacturing enterprises. Western foreign trade enterprises with a total export-import volume reaching USD50 million, or a total export volume reaching USD30 million in the last year shall be allowed to apply for the right to manage labor for export. In a prefecture (city) without foreign trade company having the foreign labor cooperation qualification, the local government may set up a state-owned one, or ask a state-owned trade company to apply for the foreign labor cooperation qualification.
(46) Export of competitive products shall be encouraged in western China. Measures like building organic agricultural product manufacturing & service system and quality certification system, accelerating the commercialization of organic agriculture research achievements, and establishing a number of disease free zones and animal product export demonstration bases shall be taken to increase the export of organic agricultural products and animal products. Besides, as long as national industry policies allow, gradually increased export quotas shall be offered to manufacturing enterprises in main agricultural and animal husbandry provinces, autonomous regions and municipality in western China, promoting the transformation from preliminary competitive mineral and agricultural processing to further processing of high value-added products.