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1. Foreign-funded enterprises concerned with energy, communication, water conservancy, environmental protection, agriculture, forestry, animal husbandry and other related industries with terms of operation longer than 10 years will be exempt from corporate tax for 2 years starting from the first profit-making year. These enterprises will receive a full tax rebate from local financial departments for the third, fourth and fifth years of operation.

2. Foreign-funded enterprises approved as high-tech enterprises with terms of operation longer than 10 years will be exempt from corporate tax from the first to second profit-making year. They will receive a full corporate tax rebate from local financial departments from the third to seventh year of operation. For the first three years of operation, the proportion of VAT designated to the local financial departments will be rebated by these departments. Upon expiry of the above-mentioned preferential terms, favorable tax rates may still be obtained for enterprises which fulfill requirements of provincial tax departments.

3. Foreign-funded enterprises involved in energy, communication, environmental protection and urban public utilities whose actual investment exceeds US$10 million will have the proportion of their VAT designated for the local financial departments rebated for the first 3 years of operation upon approval.

4. For foreign-funded enterprises reinvesting their profits in the province and their term of operation longer than 5 years, local financial departments will rebate corporate tax according to the amount reinvested.

5. Foreign funded enterprises engaged in agricultural projects by using non-cultivated land will be exempt from agriculture tax for the first three years. In the 4th and 5th years, the above taxes paid will be rebated by local financial departments.

6. Foreign-funded enterprises will be given priority in the allocation of land-use rights. Allocation of these rights will be at the same price level for all enterprises (domestic or foreign). Arrangements can be made to pay by installments if necessary. When foreign-funded enterprises invest in residential houses, they may sell 30 percent of the floor area at commercial housing price.

	Elevation The highest point in the north is the Kagebo Peak in Deqin County on the Deqin Plateau, which is about 6,740 meters high; and the lowest is in the Honghe River Valley in Hekou County, with an elevation of 76.4 meters. Natural resources Yunnan abounds in natural resources. It is known as the kingdom of plants, animals and home of non-ferrous metals and medicinal herbs. Plants The province not only has more plant species of tropical, subtropical, temperate, and frigid zones than any other province in the country, but also has many ancient, derivative plants, as well as species introduced from foreign countries. Among the 30,000 species of plants in China, 18,000 can be found in Yunnan. Minerals More than 150 kinds of minerals have been discovered in the province. The potential value of the proven deposits in Yunnan is 3 trillion yuan, 40 percent of which comes from fuel minerals, 7.3 percent from metallic minerals, and 52.7 percent from nonmetallic minerals. Yunnan has proved deposits of 86 kinds of minerals in 2,700 places. Some 13 percent of the proved deposits of minerals are the largest of their kinds in China, and two-thirds of the deposits are among the largest of their kinds in the Yangtze River valley and in south China. Yunnan ranks first in the country in the deposits of zinc, lead, tin, cadmium, indium, thallium, and crocidolite. Hydro-energy Yunnan has sufficient rainfall and many rivers and lakes. The annual water flow originating in the province is 200 billion cubic meters, three times that of the Yellow River. The rivers flowing into the province from outside add 160 billion cubic meters, which means there are more than 10,000 cubic meters of water for each person in the province. This is four times the average in the country. The rich water resources offer abundant hydro-energy. Tourism resources Yunnan is attractive with its rich tourism resources, including beautiful landscape, colorful ethnic customs, and a pleasant climate. Environment and current issues Because of its high elevation, Yunnan is full of sunshine and has clear air.
II. Population
	Total population: 41.44 million (1998) Population growth rate: 1.21 percent (1998) Life expectancy (average): 65.1 years (male) and 67.7 years (female). Ethnicity Yunnan has the highest number of ethnic groups among all provinces and autonomous regions in China. Among the country??s 56 ethnic groups, 25 are found in Yunnan. Some 38.07 percent of the province??s population are members of minorities including the Yi, Bai, Hani, Zhuang, Dai, Miao, Lisu, Hui, Lahu, Va, Naxi, Yao, Tibetan, Jingpo, Blang, Pumi, Nu, Achang, Jino, Mongolian, Drung, Manchu, Shui, and Bouyei. Each minority has at least 8,000 people. Ethnic groups are widely distributed in the province. Some 25 minorities live in compact communities, each of which has a population of more than 5,000. Ten ethnic minorities living in border areas and river valleys include the Hui, Manchu, Bai, Naxi, Mongolian, Zhuang, Dai, Achang, Bouyi and Shui, with a combined population of 4.5 million; those in low mountainous areas are the Hani, Yao, Lahu, Va, Jingpo, Blang and Jino, with a combined population of 5 million; and those in high mountainous areas are Miao, Lisu, Tibetan, Pumi and Drung, with a total population of 4 million. Literacy By the end of 1998, among the province??s population, 419800 had received colleage education or above, 2.11 million, senior middle school education, 8.3 million, junior middle school education, 18.25 million, primary school education, and 8.25 million aged15 or above, illiterate or semi-literate.
III. Economy
	GDP: 179.39 billion yuan (1998) GDP growth rate: Average GDP per capita: 4,355 yuan 1998 GDP ratio (1^st, 2^nd and tertiary industries): 22.8, 46.2 and 31.1 percent respectively. Poverty alleviation plan Yunnan is one of China??s undeveloped provinces with more poverty-stricken counties than other provinces. In 1994, about 7 million people lived below the poverty line of less than an annual average income of 300 yuan per capita, accounting for 9.7 percent of the country??s total poor people. They were distributed in the province??s 73 counties mainly financially supported by the central government. The poverty alleviation plan includes five large projects aimed at improving infrastructure facilities. They involve soil improvement and water conservancy, electric power, roads and ??green belt?? building. Upon the completion of the projects, the province will solve the problem of the shortage of grain, water, electric power and roads and improve ecological conditions. Inflation rate: Unemployment rate: Revenues: 16.82 billion yuan (1998) Industrial output value: 150.32 billion yuan (1998) Agricultural output value: 38.13 billion yuan (1998) Foreign trade Yunnan has trade contacts with more than 70 countries and regions in the world. It mainly exports tobacco, machinery and electrical equipment, chemical and agricultural products and non-ferrous metals. In 1998 its total imports and exports reached US$1.65 billion. Foreign investment In 1998, the province obtained direct foreign investment valued at US$146 million and had 1,575 enterprises with foreign investment. Pillar industries Four pillar industries involve tobacco, biology, mining and tourism.
IV. Telecommunications
	Telephones: 1.88 million subscribers (1998) Radio and TV stations: Yunnan People??s Broadcasting Station and Yunnan TV station.
V. Transportation
	Railways The 886 km-long first-level national railway from Nanning to Kunming links Yunnan with Guizhou Province and Guangxi Zhuang Autonomous Region. Second-level railways include those from Guangtong to Dali, and from Kunyang to Yuxinan. Highways Second-level national highways stretch 958 km, third-level highways, 7,571 km and fourth-level highways, 52,248 km. The province has formed a network of communication lines radiating from Kunming to Sichuan and Guizhou provinces and Guangxi and Tibet autonomous regions, and further on to Myanmar, Laos, Vietnam and Thailand. Waterways In 1995, the province put an investment of 171 million yuan to add another 807 km of navigation lines. It built 2 wharfs with an annual handling capacity of 300,000-400,000 tons each and 4 wharfs with an annual handling capacity of 100,000 tons each. The annual volume of goods transported was 2 million tons and that of passengers transported, 2 million. Airports The province has 19 domestic air routes from Kunming to Beijing, Shanghai, Guangzhou, Chengdu, Haikou, Chongqing, Shenyang, Harbin, Wuhan, Xian, Lanzhou, Hangzhou, Xiamen, Nanning, Shenzhen, Guiyang, Changsha and Guilin; three provincial air routes from Kunming to Jinghong, Mangshi and Simao; and four international air routess from Kunming to Bangkok, Yangon, Vientiane and Hong Kong. The Wujiaba Airport in Kunming is a national first-class airport and Xishuangbanna, Mangshi and Simao airports are second-class terminals.
VI. Projects wanting foreign investment
	Yunnan Province welcomes foreigners, overseas Chinese and compatriots from Taiwan, Hong Kong and Macao to invest in all the economic activities allowed and encouraged by the central government's industrial policy. According to the Provisional Regulations on the Guidance of Foreign Investment and the Guiding Catalogue of Industries for Foreign Investment promulgated by the State Council, together with the actual needs for development, Yunnan Province especially encourages foreign investment in the following sectors: A. Infrastructure 1. Construction and operation of local railways and connecting bridges and tunnels (solely foreign-funded is not allowed). 2. Construction and operation of highways, independent bridges and tunnels, and port facilities (in public ports, government capital must hold a dominant share); 3. Construction and operation of civil aviation airports (the Chinese part must have a majority share or take a dominant position). 4. Construction and operation of hydropower stations. 5. Construction and operation of thermal power stations with a capacity of 300000 kw or over for each generating unit. B. Development of agricultural and biological resources 1. Tissue culturing, cultivation, preservation and processing of particular flowers and plants species. 2. Cultivation and processing of tropical cash crops. 3. Introduction of improved varieties of commercially valuable plants and fruit trees from tropical, subtropical and temperate zones. Establishing nursery, plantation, processing and developing technology for transporting perishable produce. 4. Cultivation and processing of natural perfumes. 5. Cultivation and processing of edible mushrooms. 6. Development of animal by-products (breeding, raising, slaughtering and processing of meat animals; processing of dairy products; processing of animal offal and blood products for use in pharmaceuticals; leather and fur production.) 7. Development of selected commercially valuable crops and their application (functional enzymes, functional proteins, pharmaceuticals from medicinal herbs, comprehensive development of castor and palm products, etc). C. Development of mineral resources 1. High-density phosphorous compound fertilizers, food and feed additives, fire retardant, phosphate and phosphoric chemicals. 2. Iron and steel industry. (1) mining and dressing of iron ores; (2) mining, dressing, smelting and intensive processing of manganese ores; (3) smelting of stainless steel; (4) cold-rolled silicon steel sheets, galvanized sheets and tin-plated sheets, cold-rolled sheets and hot-rolled sheets; (5) production of iron by direct reduction and molten reduction methods. 3. Non-ferrous metal industry. (1) mono-crystalline silicon and polycrystalline silicon; (2) hard alloys, tin compounds, antimony compounds; (3) nonferrous composites, new alloys; (4) mining of copper, lead and zinc ores (solely foreign-funded is not allowed); (5) mining of aluminum ore (solely foreign-funded is not allowed), production of over 300,000 tons of aluminum annually. 4. Risk exploration for mineral resources. 5. Manufacture of building materials and nonmetal products. (1) new types of building materials; (2) technology for intensive plate glass processing; (3) inorganic nonmetallic materials and related products (quartz glass, artificial crystal); (4) mining and processing of natural stone outside the government protected areas; (5) production of cement by the dry revolving kiln process (over 4000 tons daily). D. Development of tourism resources 1. Development of national and provincial tourist destinations and scenic spots, including the construction of related facilities. 2. Construction of recreational facilities in vacation zones. E. Hi-technology industry 1. Expansion and industrialization of high technology. 2. Upgrading of traditional industries using high technology focusing on electronics and machinery, biological pharmacy, food processing, metallurgical and chemical industries. Main items involved include: digitally controlled machine tools for export, electrical products, electronic devices for banding and commerce systems, electronic components. Upgrading of processing in sugar refineries and sugar produces, paper products, optical products, tire and rubber products, improved building materials, glassware, down stream timber processing. F. Environmental protection 1. Recycling industrial wastes such as gases, water processing residues. 2. Manufacturing of equipment to improve urban sanitation. 3. Improvement of the ecological environment and any related construction projects. 4. Engineering and technology for pollution treatment and the introduction of pollution control measures.
VII. Favorite polices for foreign investment
	?? 1. Foreign-funded enterprises concerned with energy, communication, water conservancy, environmental protection, agriculture, forestry, animal husbandry and other related industries with terms of operation longer than 10 years will be exempt from corporate tax for 2 years starting from the first profit-making year. These enterprises will receive a full tax rebate from local financial departments for the third, fourth and fifth years of operation. 2. Foreign-funded enterprises approved as high-tech enterprises with terms of operation longer than 10 years will be exempt from corporate tax from the first to second profit-making year. They will receive a full corporate tax rebate from local financial departments from the third to seventh year of operation. For the first three years of operation, the proportion of VAT designated to the local financial departments will be rebated by these departments. Upon expiry of the above-mentioned preferential terms, favorable tax rates may still be obtained for enterprises which fulfill requirements of provincial tax departments. 3. Foreign-funded enterprises involved in energy, communication, environmental protection and urban public utilities whose actual investment exceeds US$10 million will have the proportion of their VAT designated for the local financial departments rebated for the first 3 years of operation upon approval. 4. For foreign-funded enterprises reinvesting their profits in the province and their term of operation longer than 5 years, local financial departments will rebate corporate tax according to the amount reinvested. 5. Foreign funded enterprises engaged in agricultural projects by using non-cultivated land will be exempt from agriculture tax for the first three years. In the 4th and 5th years, the above taxes paid will be rebated by local financial departments. 6. Foreign-funded enterprises will be given priority in the allocation of land-use rights. Allocation of these rights will be at the same price level for all enterprises (domestic or foreign). Arrangements can be made to pay by installments if necessary. When foreign-funded enterprises invest in residential houses, they may sell 30 percent of the floor area at commercial housing price.

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