News Archive

Foreign investment in SOEs encouraged
2002/02/27

Beijing - The government approved new regulations for foreign investment on Tuesday. These include rules to encourage overseas investors to take shares in state-owned enterprises (SOEs) and thus help speed up their reform, China Daily reports on Wednesday.

The state plans to sell a certain amount of SOE shares to foreigners over the next five years, according an unnamed official of the State Development Planning Commission (SDPC) in the newspaper. Foreign investors will even be allowed to hold the controlling stake in large SOE, apart from those of key importance to national or economic security.

The new regulations on foreign investment will take effect on April 1, replacing the current rules issued in 1995. Adjustments were necessary to comply with the commitments the government made by joining the World Trade Organization (WTO).

The new rules classify foreign investment into four categories; encouraged, permitted, restricted and banned, AFX Asia writes. Overseas investment will especially be promoted in the agricultural sector (transportation, energy, technology and raw material) and new technology. Further, more investment opportunities will be given in capital-intensive projects like infrastructure, energy and transport, as well as in the areas of environmental protection, energy-saving and energy efficiency.

The state will keep encouraging investment in the western regions of the country by offering more favorable tax policies in the next 10 years.

The category 'permitted' includes joint ventures in which the Chinese partner has a controlling stake of more than 51 percent, or a dominant holding in case of three or more partners. Restricted are investments in backward technology, energy consuming, environment unfriendly projects and some mineral exploitation. Banned are investments in areas that cause pollution, threaten national security and 'the interests of society'.

The service industry, including banking, telecommunications, securities, insurance and tourism will gradually be opened up for more Sino-foreign cooperation, China Daily writes without giving further details.

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