China Investment Guide
1.Basic Facts
The People's Republic of China "China" is the world's fourth largest country and the world's fastest-growing economy. Developing effec-tive and profitable operations in China is undoubtedly the greatest single opportunity for companies today. Since 1978, when China op-ened its doors to the outside world, China has enjoyed tremendous annual economic growth. It is now the second largest economy in the world and the world's single biggest recipient of foreign direct investments among developing countries. China's accession to the World Trade Organization is widely expected to trigger a further wave of inward investment from foreign companies as the terms of entry to new sectors of the China economy are progressively liberalized.
China is a country with a very early civilization and a long and rich history. China is the world's most populous country, with 1.4 billion living on 9,6 million square kilometer of land. About 20% of the population lives in the countryside. However, an estimated 180 million migrant workers from rural areas earn their living in China's town and cities.
2.Preferential policies——preferential tax treatment, land discount, other tax incentives
New laws establishing comprehensive regulations have begun to curb this environmental damage. On the national level, policies are formulated by the State Environmental Protection Administration (SEPA) and approved by the State Council. The role of SEPA, which was established in 1998, is to disseminate national environmental policy and regulations, collect data and provide technological advice on both national and international environmental issues.
Despite government efforts, however, concentrations of most pollutants remain high. In June 2002, China enacted the Cleaner Produ-ction Promotion Law, which established demonstration programs for pollution remediation in ten major Chinese cities, and designated several river valleys as priority areas.
Any investors can enjoy land price discount and other incentives if the investment is big enough.
3.Taxation——corporate tax and personal income tax, tax filing and payment
There are 17 taxes applicable to the foreign invested enterprises. They are VAT tax,consumption tax,
business tax ,customs duties,income tax, individual income tax,resource tax,land appreciation tax,
vehicle acquisition tax,fuel tax ,urban real estate tax,vehicle and vessel usage license plate tax,
vessel tonnage tax, stamp duty,deed tax,slaughter tax and agriculture tax.
The enterprises invested by Chinese compatriots residing in Hong Kong,Macau and Taiwan will be treated
for tax purpose in the same manner either as foreign invested enterprises.
In order to better open to the outside world and encourage inward flow of funds,technology
and intelligence,China provides numerous
preferential treatments in foreign taxation and
has successively concluded the agreement on avoidance of double taxation on income
and
prevention of tax evasion with 72 countries,namely:Japan,the USA,France,UK, Belgium,Germany,Malaysia,Norway,
Denmark,
Singapore,
Finland,
Canada,Sweden,New Zealand,
Thailand,Italy,the Netherlands,former Czechoslovakia,Poland Australia,Australia,
Bulgaria, Pakistan, Kuwait,Switzerland,Cyprus,Spain,Romania,Austria,Brazil,Mongolia,Hungary,Malta, the United emirates of Arab,
Luxembourg, Republic of
Korea,
Russia,Papua New Guinea,India,Mauritius,Croatia,Belarus,Slovenia,Israel,VietNam,Turkey,
Ukraine,
Armenia,
Jamaica,Iceland,
Lithuania,Latvia,Uzbekistan,Bangladesh,Yugoslavia,Sudan,Macedonia,Egypt,Portugal,Estonia,Laos, The
Seychelles,the Philippines,Ireland, SouthAfrica,
Barbados,Moldova,Qatar,Cuba, Venezuela ,Nepal,Kazakhstan and Indonesia ,62 of
which have
been in force.
4.China Economy
Economic restructure is one of the most crucial elements of China's reform and opening-up policy. For the first 30 years of the PRC, the government practiced a planned economy system, whereby industrial production, agricultural production, and the stocking and selling of goods in commercial departments were all controlled by state plan. The variety, quantity and prices in every sphere of the economy were fixed by state planners. While this contributed to the planned, focused and steady development of China's economy, it also sapped its vitality and limited its growth. Economic reforms began with the rural areas in 1978, and were extended to the cities in 1984. In 1992, after some 10 years of reform in the clear direction of the establishment of a socialist market economy, the government set out the main principles of economic restructuring: encouraging the development of diversified economic elements whilst retaining the dominance of the public sector; creation of a modern enterprise system to meet the requirements of the market economy; a unified and open market system across China, linking domestic and international markets, and promoting the optimization of resources; transformation of govern-ment economic management in order to establish a complete macro-control system; encouraging certain lead groups and areas to become rich first, enabling them to help others towards prosperity too; the formulation of a China-appropriate social security system for both urban and rural residents, so as to promote overall economic development and ensure social stability. In 1997, the government stressed the importance of the non-public sector to China's national economy, in which profitability is encouraged for such essential factors of production as capital and technology, so as to further progress economic reforms.
6.Labor market and human resource
Recruitment is not complicated for companies entering or already operating in China, the realities of the country's dynamic economy a-nd its rapidly advancing workforce enhance the human resource development. Obviously, there considerable opportunities for organi-zational growth in tandem with the phenomenal expansion of china's internal and external markets. More and more solid recruitment pl-atform and human resource service centres come into being, which for sure, businesses in China may not fall short of their goal and str-uggle with human resources issue. In China, office clerk salaries range from 2000rmb to 5000rmb, and 4000rmb to 8000 for technical workers.
7.How about Investment Environment in China ?
What items are encouraged for foreign investment by China, and what are prohibited? To direct foreign investment to go along with the development scenario of Chinese industries, and to avoid blind investment, the Chinese government promulgated in June 1995 the In-terim Provisions for Guiding Foreign Investment and the Industrial Catalogue for Foreign Investment. The industrial projects in the cata-logue are divided into four categories ― the encouraged, permitted, restricted, and prohibited. In late 1997, the Chinese government re-vised the above-mentioned catalogue in line with the development of the national economy. The revised catalogue reflects expansion in the investment scope encouraged by the state and highlights priority industries. It embodies the principles of compliance with structural readjustment, of being conducive to the introduction of advanced technology, and encouragement of foreign investment in China's central and western areas.
The items in the catalogue encouraged for foreign investment mainly include: new agriculture technologies, comprehensive developm-ent of agriculture, energy resources, communications, important raw materials, new and high technologies, export-oriented and foreign-currency-earning projects, comprehensive utilization and regeneration of resources, prevention of environmental pollution, and those that give play to the advantages of China's mid-west areas. Meanwhile, foreign investment is directed to the technological upgrading of traditional industries and old industrial bases and to the continued development of labor-intensive projects that comply with the state's industrial policies.
Foreign investment is prohibited in projects that endanger the state security and bring damages to public interest; that cause pollution of the environment and damage natural resources and public health; that use large farmland and are unfavorable to the protection and development of land resources; and that endanger the security and normal function of military facilities.
The state will continue to make appropriate revisions to the Industrial Catalogue for Foreign Investment and to the Interim Provisions for Guiding Foreign Investment in accordance with the development need of the national economy and China's commitment on the entry of the WTO. Since 1979 when the Law on Chinese-Foreign Equity Joint Ventures was first introduced in China , the work of utilizing foreign investment as an important subject of opening up to the outside world initiated as China 's fundamental principle.
Over the past 24 years, Chinese macro economic environment provided realistic guarantee and broad prospects for foreign investment. The national economy in the early period, increased by two digits, in the later period of the 1990s, the growing speed still reached at 7-8% each year. The GDP in 1997 stood at RMB 7,446.3 billion in 2000 at RMB 9,593.3 billion and in 2002 at RMB 10. 2398 trillion.
The facilities of hard environment in China has been greatly improved or upgraded. The infrastructure constructions like transport, telecommunication, water, electricity and gas supply, etc. have been completely renovated.
Along with the favorable production management conditions, the soft environment for easy access to investment requirement has gradually been amended to its perfect. A one-stop service for examination and approval has been introduced in many local government organizations: offices of different functional departments are co-working to speed up the procedures. The laws and regulations have been reinforced to adapt to comfortable legal environment. Since China's access to the WTO, the commitments to the WTO entry, the opening degree of the industries are attached great importance.
8.Social securities in China
Social security is one of the most important socio-economic systems for a country in modern times. To establish and improve a social security system corresponding to the level of economic development is a logical requirement for coordinated economic and social development. It is also an important guarantee for the social stability and the long-term political stability of a country.
China is the biggest developing country with a large population in the world, and its economic base is weak and the development between regions and between town and country is unbalanced. Establishing a sound social security system in China is an extremely arduous task.
The Chinese government attaches great importance and devotes every effort to establishing and improving its social security system. The Constitution of the People's Republic of China stipulates that the state shall establish and improve a social security system corre-sponding to the level of economic development. The Chinese government regards economic development as the basic prerequisite for improving people's livelihood and effecting social security.
For a long time before 1978, when China adopted the reform and opening-up policies, China had practiced a social security policy corresponding to its planned economic system, providing social security services to its people as best it could. Since China established and improved its socialist market economy system in the mid-1980s, a series of reforms have been introduced to change the old social security system practiced under the planned economy, and a basic framework of a social security system has been set up in China corresponding to the market economy system, with the central and local governments sharing specific responsibilities.
China's social security system includes social insurance, social welfare, the special care and placement system, social relief and housing services. As the core of the social security system, social insurance includes old-age insurance, unemployment insurance, medical insurance, work-related injury insurance and maternity insurance.
9.Banking Monetary policy in china
The monetary policy instruments applied by the PBC include reserve requirement ratio, central bank base interest rate, rediscounting, central bank lending, open market operation and other policy instruments specified by the State Council. The objective of the monetary policy is to maintain the stability of the value of the currency and thereby promote economic growth.
The central bank will strengthen foreign exchange management this year and push forward financial reforms to maintain the stability of the financial system, said Zhou.
RMB is a stable currency, and is not yet exchangeable internationally. The value of RMB is appreciating constantly owing to China's economy's rapid expansion.
In China,bank service has reached the international standard,any investors can open corporate bank accounts or personal accounts with state-owned banks or foreign-funded banks they prefer if they can provide the documents required by the relevant banks.
10. Any Legal Aspects to Comply with?
To improve the legal environment and to create a unified, consistent and steady, pragmatic and feasible investment environment, the legal system is geared to open, just and transparent principle. Since 1979, the legal framework has gradually been structured and completed and constituted a set of sophisticated legal system. The law and regulation regarding foreign investment are such as Law of the People's Republic of China on Wholly Foreign-Owned Enterprises; Regulations of the People's Republic of China on the Administration of Foreign-Funded Financial Institutions; China Foreign Trade and Economic Cooperation Gazette.
11. Natural Resources
China, with vast territory, abundant resources, beautiful landscape, agreeable climate, is fit for various kinds and scales of foreign inves-tment. The area of China's land is more than 9.6 million square km, and is only next to that of Russia and Canada. China is characteri-zed by both the continental monsoon climate and complicated and diversified climate. Also China stretches from the south to the north the equator belt, torrid zone, sub-torrid zone, warm temperate zone, temperate zone and cold temperate zone, and there exists in these regions great discrepancies of natural conditions and evident diversities.
As to the natural resources, China possesses rich agricultural resources, various advanced planting and aquaculture industries with complete categorizes and perfect production system including agriculture, forestry, livestock and fishery. Dozens of mineral resources topping the world and huge storage of natural resources make China one of the few largest countries in the world with the most resources, which enable China to have great superiority in absorbing resource-seeking foreign investment.
At the same time, rich natural resources just support various kinds of manufacturing or service industries for foreign investment. In recent years, China's infrastructure has been greatly improved, and the infrastructure constructions like transport, telecommunication, water, electricity and gas supply, etc. have been basically matured, and the capacity and quality of energy, raw material and component supply were also obviously elevated, providing a favorable external production management conditions for foreign investment.
China is the world's fourth largest country and the world's fastest-growing economy. Developing effective and profitable operations in China is undoubtedly the greatest single opportunity for companies today. Since 1978, when China opened its doors to the outside world, China has enjoyed tremendous annual economic growth. It is now the second largest economy in the world and the world's single biggest recipient of foreign direct investments among developing countries. China's accession to the World Trade Organization is widely expected to trigger a further wave of inward investment from foreign companies as the terms of entry to new sectors of the China econo-my are progressively liberalized. China is a dynamic market and international investors and buyers can find a wide range of quality pro-ducts at very competitive prices. China is a major producer of textiles, apparel and footwear; raw materials, metals and chemicals; toys and handicrafts; and foodstuffs, among others. Besides the obvious potential for selling consumer goods, China has a requirement for a wide range of agricultural and industrial raw materials, high tech components, capital goods and services. Due to the rapid development of the Chinese economy, it offers sellers ample opportunity to place goods in this fast growing economy. Many top brand names from across the world can now be found in the local high street of most major Chinese cities.
Land Resources China has 9.6 million square kilometers land area, accounting for 22.1% of the land area of the Asian continent, and accounting for 6.4% of the world's land area, it is one of the countries which have a vast area of land. China's abundant land reso-urces has two significant geographical features: 1、The share of mountains which have higher elevations and greater volatility (including hill, mountainous and tableland) over the plains (plains and the high plains), as the ratio of two-thirds and one-third; 2、In complex and diverse ecological environment, formed the features of more grassland, limited arable land, low forest percentage and the percentage of land which difficult to use is high. At present, grassland accounts for 37.4% of the total land area of China, farmland acco-unts for 10.4%, woodland accounts for 12.7%, and the land such as desert, Gobi, high and cold desert, tor, mountain glaciers and perm-anent snow which are difficult to use accounted for 20.5%. Nevertheless, it still has great potential for further rational use of land resour-ces in China, in addition to the existing lawn, woodland and farmland, it is estimated that there are still about 33 million hectares of uncultivated lands suitable for agriculture, more than 6,000 million hectares of grazing land and more than 9,000 million hectares of barren hills, wasteland and woodland suitable for forest to be developed and utilized.
Energy resources China has full range of conventional energy resources, it is one of the major energy resources countries in the world. Rich in coal resources and the coal tenure amounted to 901.453 billion tons by the end of 1990, which tops the list of world; Particular rich in waterpower resources, the academic reserves are 6.76 million kilowatts, which ranks first in the world; In addition to its proven oil reserves, it is very optimistic about the long-term reserves on land and sea in china.
Mineral resources China is one of the few countries in the world which have many mineral species, widely distributed, large reser-ves and the majority of mineral resources can self-sufficiency. By the end of 1990, China's proved mineral species which have some res-erves had reached 148. Nonferrous metals have some advantages, the reserves of tungsten, antimony, tin, mercury, molyb-denum, zinc, copper, bismuth, vanadium, titanium, rare earth, Lithium and others are among the largest in the world. The reserves of tungsten in china is more than three times than the other world's total reserves, the reserves of rare earth accounts for more than half of the world's total reserves, the reserves of antimony accounts for 44% of the world's total reserves. The reserves of lead, iron, silver, manganese, nickel and others would have global significance. The reserves of iron and manganese rank three in the world, but lean ore more than rich ore; In addition, it has many associated minerals. Such as in the iron ore of Panzhihua, it associates with vanadium, titanium and nickel. In non-metallic mineral, pyrite and magnesite are among the largest in the world, phosphate ranks two and asbestos is the highest in the world.
Water resources A preliminary estimate of china's water resources is 27115 billion cubic meters. The mean annual runoffs of China's river equal to 5.8% of the world's total runoffs.
Forest Resource China now has 124 million hectares of forest area, ranks eight in the world, but the forest coverage rate is only 12.98%; The reserves of forest is 9.141 billion cubic meters, ranks five in the world, and among which have a variety of excellent quality, high economic value species.
Biological resources China is very rich in biological resources, only the species of seed plants reach 24,500, inferior to Malaysia and brazil, ranks three in the world. Among these various plants, the species of economic plants (one uses a single) reach 2,411, not only provide food, medicines, fibers and a variety of other industrial raw materials, and may protect and improve the natural conditions. The species of fish in aquatic resources are about 2,400, among which marine fishes account for three-fifths, the others are freshwater fishes. Additionally, there are crustaceans, shellfish and seaweed etc.
12. Infrastructure
Highway: China is a vast country, and the highway extends in all directions. Highway volume continued to grow. By the end of 2005, the length of highway reached 1.9305 million km, and the road network structure has been further improved. In the length of total natio-nal highway, national road was 132,674 km, provincial road was 233,783 km, county road was 494,276 km, rural road was 981,430 km, special road was 88,380 km, accounted for 6.9%, 12.1%, 25.6%, 50.8% and 4.6% of the total roadway length respective.
At the end of 2008, China's main line system of national highway will be completed, then, Beijing, Shanghai and all municipalities, provincial capitals, regional capital and other big cities, will be connect with high-grade highways which main are expressways, and the total city linked up and connected over 200.
Railway: By the end of 2003, China's total railway length was 73,000 km, in which the length of double-track line more than 20,000 km, the length of the electrification was 18,000 km. China's first cross-sea railway in Guangdong-Hainan Railway opened on January 7, 2003. The world's highest-altitude Qinghai-Tibet railway, with a total distance of 1,142 km, was completed in 2006.
At present, China has become one of the largest traffic of completed railway in the world; Also, it was the fastest traffic growing and the highest utilization efficiency of transport equipment country.
Port: Port berths continued to increase. By the end of 2005, the total ports in china have 35,242 berths for production, in which more than 10,000-ton berths have 1034.
The nation's coastal ports have 4,298 berths for production, in which over 10,000-ton's berths have 847; River ports have 30,944 berths for production, in which over 10,000-ton's berths have 187. The 10,000-ton level berths of river ports locate in mainstream of the Yangtze River, tributary of the Yangtze River and the Pearl River system, namely 179, 4 and 4 respective.
Civil Aviation: China's flight routes across the world's continents, by the end of 2007, China's civil aviation airports which have sche-duled flights reached more than 200, the routes of scheduled flights reached more than 1,500. In which, international routes more than 300, connect more than 250 cities in more than 100 countries.
Telephone: The total number of telephone users exceeded 800 million households in 2006, the total number of mobile phone users exceeded 400 million households. In 2006, the new added length of fiber-optic cables in china was 186,000 km, reached 4.259 million km; The new added length of fiber optic cables was 12.968 million core km, reached 88.934 million core km. The new added capacity of fixed long-distance telephone exchanges was 769,000 Road end, reached 14.485 million road end; The new added capacity of local exchanges was 30.665 million circuits, reached 502.626 million circuits, in which, the new added equipment capacity which access network was 23.414 million circuits, reached 234.622 million circuits. The new added capacity of mobile telephone switchboard was 128.181 million households, reached 610.599 million households.
Internet :China Internet Network Information Center (CNNIC) released the 19th report on the development of China's Internet, the report shows, up to December 31 2006, Internet users in mainland China has reached 137 million, in which broadband users already exceeded 100 million, reached 104 million, and mobile phone users has reached 17 million.
At the end of 2006, Chinese websites approximately had 843,000, bandwidth of exports was 256,696M, IPv4 addresses had 98 million, all of which continued to steadily grow. A large-capacity and high-speed basis transmission network which cover china, use cable as mainly, satellite and digital microwave secondarily has been built. In coastal and economically developed inland areas, cable has linked to township, district and multi-storied building, it has become the main technological means of information transmission.
If you would like to have further information on any of our services, please visit:
Shenzhen company registration、Shanghaicompany registration、beijing company registration 、guangzhou company registration、
yiwu company registration、quanzhou company registration.
Tannet——Global Corporate Solution Provider,Value Investment & Strategic Development.
|
