Useful Information for Prospective Investors into China

Government Policy Preference of Foreign investment Projects in China

l         encouraged projects with foreign investment

l         restricted project with foreign investment

l         prohibited project with foreign investment

l         permitted projects with foreign investment

  Government Policy Preference of Foreign investment Projects in China

·         encouraged projects with foreign investment

A project in any of the following situations shall be listed as the encouraged projects with foreign investment: 

1) being of new agriculture technologies, agriculture comprehensive development, or energy, transportation and important raw material industries; 

2) being of high and new technologies or advanced application technologies that can improve the product performance and increase the technology economic efficiency of the enterprises or those that can produce the new equipments and new materials which the domestic production capacity fails to produce; 

3) meeting the market needs and being able to improve the product level, develop new markets or increase the international competitive capacity of the products; 

4) being of new technologies and new equipments that can save energy and raw material, comprehensively utilize resources and regenerate resources, and prevent environment pollutions; 5) being capable of bring into the advantages of human power and resources of the mid-west region into full play and being in conformity to the industrial policies of the State; 

6) other situations as provided for by laws and administrative regulations.

·         restricted project with foreign investment

A project in any of the following situations shall be a restricted project with foreign investment: 

1) being of technology lagged behind; 

2) being adverse to saving resources and improving environment; 

3) engaged in the prospecting and exploitation of the specific type of mineral resources to which the State applies protective exploitation; 

4) falling into the industries that the State opens step by step; 

5) other situations as provided by laws and administrative regulations. 

·         prohibited project with foreign investment

A project in any of the following situations shall be a prohibited project with foreign investment: 

1) harming the State safety or impairing the public interests; 

2) polluting the environment, damaging natural resources or harming human health; 

3) occupying too much farmland and being adverse to the protection and development of land resources; 

4) harming the safety and usage of military facilities; 

5) using the particular techniques or technologies of China to produce products; 

6) other situations as provided for by laws and administrative regulations.

·         permitted projects with foreign investment

Any projects with foreign investment that don't fall into the categories of encouraged, restricted or prohibited projects shall be the permitted projects with foreign investment.

Source: The State Council Provisions on Guiding the Orientation of Foreign Investment Decree [2002] No.346 of the State Council ,The Provisions on Guiding the Orientation of Foreign Investment are hereby promulgated and shall enter into force on April 1, 2002. Premier of the State Council: Zhu RongjiFebruary 11, 2002.