CHINA FOREIGN INVESTMENTS POLICES AND PREFERENCES
Industrial Policies
According to Provisions
on Guiding Foreign Investment Direction and Industrial Catalogue
for Foreign Investment, the industrial projects are divided
into four categories: encouraged, permitted, restricted, and
prohibited projects. Foreign investment projects belonging
to encouraged, restricted and prohibited categories are listed
in Catalogue for the Guidance of Foreign Investment Industries.
Those permitted foreign investment projects which do not belong
to the above three categories are not to be listed in Catalogue
for the Guidance of Foreign Investment Industries.
I. Those foreign investment projects under
one of the following circumstances shall be listed as encouraged
foreign investment projects:
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Projects for new agricultural technology, comprehensive
agricultural development of agriculture, and for energy, transportation
and key raw materials industries; |
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Projects for new agricultural technology, comprehensive
agricultural development of agriculture, and for energy, transportation
and key raw materials industries |
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Projects for new and high technology, advanced and applicable
technology which can improve performance of products and increase
the techno-economic efficiency of enterprises or produce new
equipment and new material that domestic capacity is deficient; |
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Projects that are meet market demands, and can promote the
quality of products, enter into new markets, or strengthening
the competing capability of products in international markets; |
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Projects adopting new technology and new equipment for saving
energy and raw materials, for comprehensive utilization of
resources and renewable resources, and for preventing environment
pollution; |
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Projects that can make full use of man power and resource
advantage in mid-west region and are in accordance with the
State’s industrial policies; |
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Other cases that are regulated by laws and administrative
regulations of the State. |
II. Those foreign investment projects under one of
the following circumstances shall be listed as restricted
foreign investment project:
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Projects adopting out-of-date technologies; |
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Projects unfavorable to resource-saving and ecological environment
improvement; |
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Projects for prospecting and/or mining specified mineral
resources protected by laws and regulations of the State; |
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Projects in those industries that shall be opened gradually; |
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Other cases that are regulated by laws and administrative
regulations of the State. |
III. Those foreign investment projects under
one of the following circumstances shall be listed as prohibited
foreign investment projects:
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Projects that endanger the safety of the State or damage
social and public interests; |
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Projects that pollute environment, destroy natural resources
or impair the health of human beings; |
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Projects that occupy large amounts of arable land, unfavorable
to protection and development of land resources; |
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Projects that endanger the safety of military facility and
its performance; |
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Projects that adopt the unique craftsmanship or technology
of our country to make products; |
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Other cases that are regulated by laws and administrative
regulations of the State. |
IV. Encouraged foreign investment projects
apart from the preferential terms stipulated in the relevant
laws or administrative regulations of the State, may enlarge
their scope of business with approval, if they are engaged
in the construction and operation of infrastructure facilities
related to energy, transportation and urban utility sectors
(coal, oil, natural gas, power, railway, highway, port, airport,
urban road, sewerage treatment and garbage disposal, etc.),
which need a large amount of investment and a long payoff
period.
V. Those permitted projects that export
all their products directly shall be deemed as encouraged
projects. Restricted foreign investments may be deemed as
permitted foreign investment projects with approval from the
government of provinces, autonomous regions, municipalities
directly under the Central Government or cities of direct
planning by the State, if the export sales of products amounts
to over 70% of the total sales of the product.
VI. Restrictions can be properly eased for
those permitted and restricted foreign investment projects
that can really make full use of the advantages of mid-west
regions. Those projects which listed in Catalogue of Advantaged
Industries for Foreign Investment in Mid-west China can enjoy
preferential treatments for encouraged foreign investment
projects.
In service trades, the Chinese government uses the method
of setting experimental units firstly, standardizing and developing
secondly, and then gradually expanding. Based on China's development
level and its commitment to the entry of the WTO, China has
orderly opened some service trades such as banking, insurance,
business, foreign-trading, traveling, telecommunication, transportation,
accounting, auditing, and law.
VII. Favored Policies Issued by Chinese
Government for Foreign Investment in High-tech Fields:
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Technology innovation is available to the foreign-funded
enterprises, foreign-invested research and development center,
high-tech and export-oriented foreign-funded enterprises listed
in the Industrial Catalogue for Foreign Investment and the
Industrial Catalogue Restricted for Foreign Investment (B).
Import tariffs and import value added tax are supposed to
be exempted in accordance with relevant stimulations in the
import of equipments for self utility which cannot be manufactured
home or fail to meet the practical demand in the formerly
approved business scope, as well as related technology, components
and spare parts. |
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Import tariff and import value added tax are supposed to
be exemptible in line with relevant stimulations when the
foreign-funded enterprises import necessary equipments for
self utility and the related technology, components and spare
parts included in the purchase contract, in their manufacture
of products listed in Catalogue of National High-tech Products. |
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Import tariff and import value added tax are supposed to
be free from taxation on the software fee paid overseas when
the foreign-funded enterprises import the related technology
listed in Catalogue of National High-tech Products. |
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Import tariff and import value added tax are supposed to
be exempted according to the relevant stipulations when the
foreign-funded research and development centers import, within
their total investment volume, the equipments for self utility
which can’t be manufactured home or fail to meet the
practical demands, as well as the related technology, components
and spare parts. |
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The products listed in Export Catalogue of National High-tech
Commodities, if their export drawback rates stand under the
taxation rates, are supposed to get drawback after export
in accordance with taxation rates and the existing export
drawback stipulations, approved by State Bureau of Taxation. |
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The foreign-funded enterprises listed in the Industrial
Catalogue for Foreign Investment and the Industrial Catalogue
Restricted for Foreign Investment (B) are supposed to get
back total value added tax of home-made equipments when they
purchase home-made equipments within their investment volume
on condition that the imported equipments remain in the category
of those exempted from import tax. |
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In accordance with relevant stipulations, the income tax
of foreign-funded enterprises is supposed to be counteracted
by homemade equipments purchase in technology innovation and
high-tech production in line with national industry policy. |
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Sales tax is supposed to be exempted when foreign-funded
enterprises, foreign-funded research and development centers,
overseas enterprises and international individuals get profits
from technology transfer, technology exploitation, as well
as related technology consultation and technology services. |
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Income tax is supposed to be counteracted by the 50 percent
of the performing amount of technology exploitation fee if
foreign-funded enterprises increase their exploitation fee
by 10 percent from the previous year. |
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The research exploitation fee which foreign-invested or
overseas enterprises fund unrelated scientific research institutes
and universities is supposed to be deducted from the income
tax in accordance with Law of Income Tax of Foreign-funded
and Overseas Enterprises P.R.C. |
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