In order to further attract foreign funds, encourage the import of advanced device and technology, promote the adjustment of industrial structure and technical advance, maintain the fast constant healthy development of national economy, in August 1999, the Foreign Economic and Trade Administration, the State Planning Commission, the State Economic and Trade Commission, the National Ministry of Finance, the People's Bank of China, the Custom Bureau, the General State Tax Bureau, the State Exchange Authority and the State Entry and Exit Test Bureau formulated some relevant policies to further encourage foreign investment.

I. Encourage foreign investment in technical development and innovation

1. For the technical transformation of the established encouraged, Class B foreign invest mont. Enterprises, foreign investment research and development centers and foreign investment enterprises with advanced technology and whose products are for export, if the enterprises need to import device which can't be made internally or whose functions can't satisfy their need and the supporting technology, attachments and accessories with in the former manufacture scope, the import tariff and import tax may be exempted according to the Information for Adjusting Import Device Tariff by the State Council.

2. If the foreign investment enterprises belonging to the encouraged or the restricted class B want to purchase domestic device within the total investment value, and if the device belongs to the scope in which import tax can be exempted, their domestic-device value0added tax can be filled returned. If foreign investment enterprises perform technical transformation in accord with national industrial policies and produce hi-tech products, the business income tax of the device purchased may be exempted according to relevant regulations.

3. If the research and development centers established by foreign investors import self-use device which can't be made domestically or whose functions can satisfy their needs, as well as the supporting technology, accessories and attachments within the total investment value, their import tariff and import tax can be exempted according to the Information for Adjusting Import Device Tariff by the state Council.

4. Exempt business tax of foreign enterprises transferring technology to China; if their technology is advanced and conditions are preferential, their business income tax can be exempted approved by the State Council Taxation Authority, The business tax for the technical transformation income of foreign investment enterprises (including research and development Centers) can be exempted.

5. If the technical development cost of foreign investment enterprises rises by 10 per cent than last year, with the approval of taxation authorities, 50 per cent of the real technical development cost may balance the income tax of current year, just according to the Administrate Measures for Before-tax Deduction of Enterprise Technical Development Cost by the State Tax Burma.

6. In order to broaden the export of foreign investment enterprises, with the approval of the tax authorities, the old foreign investment enterprises established before 1993 can be permitted to export commodities and before the year 2000, adapt to the policy"No collection, No return or" "No balance"(one policy only)

II. Lighten the financial support for foreign investment enterprises

1. when foreign investment enterprises circulate funds domestically, Chinese-funded banks may be allowed to accept the guarantee from foreign stockholders. Foreign investment enterprises may apply to domestic specified-exchange Chinese-funded banks for Renminbi Loan in the way of exchange pledge. All the exchange funds of foreign in vestment enterprises may be used for pledge; overseas financial authorities or domestic foreign-funded financial authorities may provide credit guarantee for Renminbi loan under the guarantee in exchange. Abolish the registration step under exchange pledge and exchange guarantee as well as the special control for credit grade of foreign-funded banks offering exchange guarantee.

The foreign Renminbi loan with exchange guarantee or with stockholders guarantee should meet the industrial policies, which may be used to satisfy the needs of fixed investments and fund circulation but not to buy exchange.

2. Special industrial investment funds are established to relieve the shortage of Chinese stock at the tame of capital increase of current foreign investment enterprises, and mean while, allow domestic Chinese-founded Comerica banks give Chinese stockholders a certain stock loan with the prerequisite of the synchronous arrival of the stocks which should be increased by foreign stockholders of Chinese-foreign joint ventures and co-operative enterprises.

3.permit domestic foreign investment enterprises to provide mortgage for overseas branch of domestic Chinese-funded banks with their overseas estate, and loan is delivered by overseas or domestic branch of Chinese-funded commercial banks.

4.the foreign investment enterprises fitting the conditions may of ask to issue stock A or B

5.according to the principle "positive and safe", insurance's such as political risk insurance, performance insurance guarantee insurance should be provided for foreign investors who invest in energy and transportation greatly encouraged by the state.

III. encourage foreign investors to invest in the middle-and -western regions

1. the list of advantageous foreign-investment-used industries and items formulated by the provinces, autonomous regions and municipalities directly under the central government in the middle-and-western regions may be complemented after approval of the state. The items in the list may enjoy the treatment the encouraged class in the Master list for Foreign Investment Industries; if they import self-use device that can't be made domestically or whose functions can't satisfy their need, as well as the supporting technology, accessioning and attachments, the import tariff and import tax may be exempted according to the Information for Adjusting Import Device Tax Policy by the state council.

2. Broaden the condition limits for the middle-and-western regions to establish foreign investment enterprises and broaden the field of their attracting foreign investment, breaded the stock proportion limit for foreign investors in establishing foreign investment enterprises in the middle-and-western regions.

3. For the state-encouraging foreign investment enterprises in the middle-and-western regions during the 3years after the expiration of current preferential tax policies, their business income tax can be collected at a lower late of 15percent.

4. If foreign investment enterprises reinvest in the middle-and-western regions and the foreign funds amount to 25per cent of the total of item, they may enjoy the treatment as foreign investment enterprises.

5. Permit the coastal foreign investment to go to the middle-and-western regions to contract and operate foreign investment enterprises and domestic-funded enterprises.

6. Permit provinces autonomous regions and municipalities directly and the central Government in the middle-and-western regions to choose a built development zone in their capital cities, applying for a national-grade economic and technical development zone.

IV. perfect the administration and service for foreign investment enterprises

1. Readjust the Master hist for Foreign Investment Industries at proper time according to the development of economy. In order to meet the demands of broadening the opening up and of drawling foreign Investment, we should reduce the items which demand Chinese to keep stock and don't permit foreigners to invest solely in the above-mentioned list.

2. All the foreign investment items belonging to the encouraged and don't need the synthetic balance may be approved by provincial people's government and report to the State Planning Commission the State Economic and Trade Commission and the Foreign Economics and Trade Administration for arecord. After the three national authorities receive the report, they should give an answer within a month if there is any question. The relevant authorities and local people's governments should further simplify the approval procedure for foreign investment items and establishment of enterprises, and accelerate the approval.

3. Perfect the network checking system of bills of entry checking the authentity of exchange sale wider current account, and shorten the check time; ender special conditions, there may be no possibility of network check system of entry bill, and only correspondence can be used, the check should be speeded up. Foreign investment enterprises may change the deposit in foreign exchange account into fixed deposit within the limited range. According to lex Sinus, the approval rights of the settlement for capital item exchange in come may be sent out and cancel the record and registration system for the settlement of capital item exchange income.

4. Minimize the restrictive evaluation scope for foreign investment enterprises to import device and perfect ways of appraisal; don't implement restrictive evaluation for foreign-funded enterprises in importing device. Normalize the Customs administration, raise the efficiency and accelerate the customs passing. Stop the arbitrary charge. unformed check and unjustified financial levies, for foreign investment enterprises.

5. Foreign investment enterprises which attain land-use right in the way of selling needn't hand in land-use charge.

6. Clear the policies and regulations about foreign investment enterprises, be quick to readjust the policies and regulations not good for drawing foreign funds and perfect the policies and regulations about foreign investment.