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China has unveiled in detail its policies for the "go-west" program, the plan to kick-start the development of the country's poorer western regions.
The measures include extra government spending, stronger policy support, lower tax rates for and wider participation by investors. The measures will be valid for 10 years while the drive to upgrade the west is to be a national priority for the next few decades.
More sectors, such as finance and retailing, infrastructure construction, natural resources exploration, trade and other services and professional segments, will open to foreign investment.
It is the first time the incentives, announced by the State Council Thursday, have been detailed so thoroughly. The measures are officially due to begin on Monday, the start of the year.
China will slant fiscal spending to the western regions, with indications that it plans to spend 100 billion yuan (about HK$93 billion) each year, to be financed by the issue of special bonds, bank loans and other investments. Under the measures announced Thursday, investors will see their enterprise income tax cut from the standard 33 percent to 15 percent, according to state media. Domestic and foreign firms will receive the same treatment.
Private firms will be given more autonomy in trading operations, putting them on equal rights to state firms.
A spate of incentives will be introduced to attract investment to the capital-intensive areas such as energy, transportation, basic utilities, telecommunications and environmental protection sectors.
The go-west program was revealed by President Jiang Zemin in Xian, capital city of Shaanxi province, in June last year, when he said China would spend the next few decades turning 12 western provinces, cities and autonomous regions into the mainland's next economic powerhouses.
The provinces and cities that stand to benefit from the policy shift are Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Ninxia, Qinghai, Xinjiang, Inner Mongolia and Guangxi, Xinhua reported.
However, experts cautioned that the success seen in the coastal regions since 1979's open-door policy could not be repeated "wholesale" in the western part because of different geographical and social conditions.
Some investors have been sceptical about the "go west" campaign due to the absence of clear preferential policies to offset the region's relative disadvantages, inaccessibility to the land-locked region, poor transport facilities, low government efficiency and the lack of skilled labour.
The latest announcement seems to underline China's will to clear the way for foreign investment in the western regions.
Investors could play a key role in the provision of professional services such as banking, insurance, telecommunications, legal practices and accounting, analysts believe.
Other open sectors for the whole western region include yuan business, telecommunications, insurance and tourism.
Sino-foreign joint ventures are allowed to go into legal and accounting practices, cargo transportation and public utilities.
Foreign bankers can provide loans to finance the infrastructure projects while the financiers can help the region's well-performing companies and technology firms tap Hong Kong's capital market by arranging for listings on the Hong Kong stock market.
(21dnn 12/29/2000)
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