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PROVISIONS FOR THE ENCOURAGEMENT OF FOREIGN INVESTMENT
IN SHANXI PROVINCE

(Promulgated by the Shanxi Provincial Government on
June 20, 1987 and went into effect on the day)

 

 

 

SUBJECT: ENTERPRISES WITH FOREIGN INVESTMENT

ISSUING-DEPT: SHANXI PROVINCE

ISSUE-DATE:06/20/1987

IMPLEMENT-DATE: 06/20/1987

LENGTH: 1036 words

TEXT:

[Article 1] The provisions are hereby formulated to implement the "Provisions of the State Council of The People's Republic of China for the Encouragement of Foreign Investment" and other relevant provisions of the State, to improve the investment conditions, to faciliate better absorption of foreign investment and advanced technology and to help promote the economic development in the province.

[Article 2] The provisions are applicable to joint or cooperative ventures operated by Shanxi local enterprises with foreign firms, enterprises or other economic entities, and also to sole proprietary foreign corporations.

[Article 3] Export-oriented enterprises and technologically advanced enterprises shall be given priority in the supply of coal and electricity for production purposes.  Their allocation will be incorporated in the provincial plans to ensure that such supply will be included in the provincial quotas and guarantee supply.  They can pay for such supplies in renminbi and the rate to be charged shall be the same as applies to State-run enterprises in the province.

[Article 4] Apart from coal and electricity, other materials that are needed for production and operation by foreign investment enterprises and that can be sourced in the province shall be assured full supply and allowed to be paid for in renminbi according to the current market prices in the province.  The superior departments in charge of the enterprises concerned shall be responsible for reporting the needs (for the materials) to the provincial materials supply departments so that such supplies can be incorporated in the provincial plans.  Supplies that are paid for in foreign exchange will be given a discount.  The Provincial Economic Commission will serve as coordinator in handling and solving problems that affect the supplies of materials which have been listed in the provincial plans.

[Article 5] Priority transportation arrangements will be made for the coal-based chemical, aluminum, building materials and ceramics industrial export producers run by Shanxi local enterprises with foreign investors in the form of joint or cooperative ventures.  A certain amount of subsidies for the railway transportation from factories to China ports will be given to these export producers and the subsidies are to be paid out of the profits belonging to the Chinese partner of that particular export producer.

[Article 6] Subject to approval by the Provincial Foreign Economic Relations and Trade Bureau, foreign investors will enjoy priority in the purchase of Shanxi-made products for export if such purchases are paid out of the exchange earnings distributed to them by their enterprises.

[Article 7] If the foreign investors reinvest their distributed profits (in renminbi or foreign exchange) in Shanxi province to establish enterprises, they are entitled to enjoy the various preferences as are accorded foreign investment enterprises in the province.  If the foreign investors use their profits to establish export-oriented enterprises or technologically advanced enterprises in the province, they may apply to the Provincial Planning Commission for foreign exchange quotas when they face foreign exchange difficulties when importing machinery and equipment.

[Article 8] If a technologically advanced enterprise has foreign exchange difficulties during its first three years of operation, it may, upon application to and approval by the Provincial Planning Commission, be provided with a certain amount of foreign exchange quotas from the province's locally retained portion to solve its problems.

[Article 9] Apart from all the reduction and exemption of tax provided according to State provisions, all foreign investment enterprises are also exempt from the local income tax and property tax for five years starting from their first year of their operations.

After expiration of this five-year term, reduction or exemption of local income tax and property tax may be accorded export-oriented enterprises and technologically advanced enterprises for another five years but such extension is subject to the actual situations of the enterprise concerned.

Upon application to and subject to approval by the tax authorities, foreign investment enterprises which produce products for the domestic markets as stipulated in their contracts their production may be exempted from the industrial and commercial consolidated tax when they have problems in paying tax during their first few years of production.

[Article 10] All such matters as development plan, production plan or operation program, budget of income and expenditure, profit distribution, wage scheme and production stoppage shall be decided by the board of directors of the foreign investment enterprise concerned.  Foreign investment enterprises shall enjoy autonomy in recruiting staff and workers, and matters concerning organization structure and personnel matters and such autonomy shall be respected.

[Article 11] Foreign specialists invited to Shanxi to offer technical help and instructions or to tackle sophisticated technical problems will enjoy preferential treatment.  Those who have given valuable economic and technical suggestions or consulting services will be handsomely rewarded once marked economic results have been achieved after their suggestions or services have been put into practice.

[Article 12] Shanxi Provincial Foreign Economic Relations and Trade Bureau is responsible for business negotiations and agreement signing with foreign enterprises, and also for examination, ratification and implementation of contracts.  Matters concerning production, operations and management of enterprises are under the purview of the Provincial Economic Commission.

[Article 13] Shanxi Provincial Foreign Economic Relations and Trade Bureau is the authority in the interpretation of these provisions.

[Article 14] These provisions shall come into force upon promulgation and "The Preferential Terms for the Import of Technology by Using Foreign Investment in Shanxi Province" promulgated in 1985 is annulled at the same time.