The China Foreign Economics and Trade Trust and Investment Co Ltd will launch its new project this month.

The first phase of the three-year leasing project involves hiring out medical equipment worth 50 million yuan (US$6 million).

According to the firm's plan, the value of each contract must be at least 50,000 yuan (US$6,000).

The company will earmark funds to purchase medical equipment from GE Medical Systems China, a subsidiary of General Electric. The equipment will be leased to qualified hospitals after strict examinations by the company and appointed medical organizations.

The company will make money from leasing fees, which are estimated to be worth about 6 per cent of the value of the leased equipment annually, said Chen Gang, a company representative.

Hospitals will have to put down a deposit worth 20 per cent of the total cost of the leased equipment, he said.

The Beijing Guoxing Industrial Investment Management Co Ltd will purchase the used equipment when the leasing contract ends. If hospitals break their contracts, Guoxing will pay the remaining fee due, Chen added.

The linking of trust investment business and leasing has great market potential in China, said Qu Yankai from the China Foreign-Funded Enterprises Association.

The two sectors can co-operate to compensate for each other's shortcomings and help interested parties allocate their resources, he said.

Trust investment and leasing have become major channels for funding equipment. Individuals and organizations often obtain or dispose of assets through trusts and leasing.

Investors can obtain greater benefits through a combination of leasing and trust investment than through bank savings or investing in loans, and the risk is the business is smaller than investment in stock markets, Qu said.

Trust and investment companies can be investors and act as links between other investors and projects offered by leasing companies. Leasing companies can also become investors and act as links between other investors and trust companies.

(China Daily December 12, 2002)