A. General policy introduction
The People's Republic of China (PRC), with a population of 1.2 billion people,
is the world's largest emerging economy. In order to develop the national
economy, PRC has reinforced and will continue to expand the areas of utilizing
foreign investments. Foreign investments are particularly encouraged in the
1 . Infrastructures, key industries and technological upgrading of existing
enterprises. Examples include construction of power plants, highways, wharfs
and industrial parks.
2. Capital and technology intensive industries including energy, raw materials,
components and parts, instruments and high-value-added, export-oriented
3. Service industry including finance, banking, commerce, tourism and real
In addition to the special economic zones (SEZs), coastal open cities and other
regions with preferential tax treatments, PRC will further promote its border
areas and will expedite the process to open inland provinces and autonomous
regions. Examples include the opening and development of Shanghai Pudong
District as the prototype model.
B. Development and revisions of the foreign investment policy
1. To encourage foreign investments and promote the service industries including
finance, banking, commerce, tourism and real estate, PRC has relaxed its
regulations on these industries.
2. Before 1988, "joint ventures" and " cooperative production" were the main
forms of foreign invested enterprise. However, a giant step has been taken
since 1988 and foreign business have been allowed to set up wholly
foreign-owned enterprises and shareholding corporations. Corporations are also
allowed to issue B-type share certificates.
3. PRC has amended its Joint Venture Law. Now a foreigner can hold the post of
the Chairman of the Board of Directors of the joint venture.
4. PRC has, in recent years, decentralized its control in regulating and
approving foreign investments. Now the provincial governments at the coatstal
areas can approve projects with investment up to US$30 million while
governments of inland provinces and autonomous regions can approve projects
with investment up to US $ 10 million.