Laws of the People's Republic of China

The State Council

Circular of the State Council Concerning Several Policies on Carrying out the Development of China's Vast Western Regions

GuoFa [2000] No.33

October 26, 2000

The People's Government of province, autonomous regions, municipalities directly under the Central Government, ministries and commissions and institutions directly under the State Council:

Carrying out the strategy of the development of China's vast western regions to speed up the development of the central-western regions is an important composition of the modernization strategy of our country and is a great decision made by the central leadership of the Party with great foresight and an overall point of view facing the new century, and it has very important economic and political significance. In order to reflect the highlight support of the state to the western regions, the State Council has drawn up several policies and measures for carrying out the development of China's vast western regions. Relevant issues are hereby notified as follows:

1.

Principles of Policy Formulation and Support Emphasis

1)

Principles of Policy Formulation. Carrying out the development of China's vast western regions is a grand systematic project and an arduous historical task, the sense of urgency, and full mental preparation for lasting and tough struggle are both needed. We shall insist on proceeding from actual conditions and working according to objective laws; be energetic and dynamic and acting according to capabilities; focus on the present while keep the future in view; take the whole situation into account and plan accordingly, and make scientific reasoning; carry out in steps while give prominence to the emphasis; prevent rushing headlong into mass action and oppose extravagance and waste; never make things in chaos. Accelerate the changing of ideas, give more effort to opening to the outside world, carry through the strategy of making the country strong through science and technology and the strategy of sustainable development, integrate giving full play to the role of market mechanism and doing well macro-adjustment and control, combine the self-reliance spirit of cadres and masses of people of the western regions and the support from all sides.

2)

Key Tasks and Strategic Objectives. For the present and the years to come, the key tasks of carrying out the development of China's vast western regions are: speeding up the construction of infrastructure facilities; improving the protection and development of environment; consolidating the basic status of agriculture, adjusting the structure of industry, and developing characteristic tourism; developing undertakings of science and technology, education, culture and sanitation. To work hard for the breakthrough progress in the construction of infrastructure facilities and environment of the western regions and to make a good beginning of the development of the western regions in 5 to 10 years. The western regions shall be built into a new one with prosperous economy, advanced society, stable living, united nationalities and beautiful sceneries at the middle period of the 21st century.

3)

Key regions. The range in which policies on the development of the western are applicable includes Chongqing Municipality, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Region, Shangxi Province, Gansu Province, Ningxia Hui Autonomous Region, Qinghai Province, Xinjiang Uygur Autonomous Region, Inner Mongolian Autonomous Region and Guangxi Chuang Autonomous Region. Carrying out the development of China's vast western regions shall rely on the main arteries of traffic like the Eurasia Continental Bridge, the Changjiang River Channel and the South-west Access to the Sea, give full play to the role of central cities, connect the units with lines and spread the experience gained at selected units to an entire area to form characteristic interregional economic areas of the West Longhai Lanxin Line, the Upper Reaches of the Changjiang River, and the Nan(nin)-Gui(yang)-Kun(ming)area, promote the development of other regions and carry forward the development of China's vast western regions step by step and with emphasis.

2.

Policies on Increasing Financial Input

1)

Increase Financial Input for Construction. Increase the proportion of central financial construction funds used in the western regions. Under the condition that loans are granted according to lending principles, state policy-related bank loans and preferential loans of international financial organizations and foreign governments shall be arranged for projects of the western regions as much as possible. The investment in major projects of infrastructure construction of the western regions newly arranged by the state mainly comes from central policy-related construction funds, other special construction funds, bank loans and foreign investments, no gap of funds shall be left. The central authorities shall raise special funds for the development of the western regions by various means. Relevant central departments shall show support to the western regions when drawing up plannings and policies of the development of industries and arranging special funds. It is encouraged to put enterprise funds into major construction projects of the western regions.

2)

Give Priority to Construction Projects. Infrastructure facilities like irrigation works, traffic and energy, development and utilization of superior resources, industrialization projects of characteristic new- and high-tech and military technologies converted to civilian productions shall have priority in the overall layout of the western regions. Strengthen the build-up of corporate liability system, project capital system, project bidding system, system of supervision and administration of project quality, system of supervision and administration of project environment of the western regions, and the prophase work of construction projects.

3)

Increase Financial Transfer Payment. Increase the scale of general transfer payment to the western regions step by step along with the growth of central financial power. Tilt in favor of the western regions in the distribution of special aid funds for agriculture, social security, education, science and technology, sanitation, birth control, culture and environment protection. The arrangements of poverty-relief funds of central finance shall put stress on the western poverty-stricken areas. The central finance shall pay most of the aid funds and cash subsidies for the food, seeds and sprouts needed for the projects of restoring forest and grassland from cultivated land, of natural forest protection, and that of the control and treatment of sand carried out with the approval of the state. Local financial revenue that is affected because of the implementation of projects of restoring forest and grassland from cultivated land and natural forest protection shall get appropriate aid from central finance.

4)

Increase Financial Credit Support. Banks shall, according to the principle of independence of commercial credit, increase credit input to the construction of basic industries of the western regions, and put stress on supporting the construction of large and medium-sized energy projects of railways, trunk line roads, electric power, oil and natural gas. Accelerate the evaluation and examination of projects of loans affiliated to national debts to guarantee that the loans are in place as soon as possible according to the construction schedule. As regard to projects of infrastructure facilities with large investment and long construction period, the term of loan may be appropriately extended according to the project's construction cycle and repaying ability. The State Development Bank shall increase the proportion of newly added loans used in the western regions year by year. Expand the scope of loans granted to the projects of infrastructure facilities, whose rights to charge or the rights to earnings are held in pledge. Increase credit support to the development of agriculture, environment protection, superior industries, construction of small towns, technology reform of enterprises, new- and high-tech enterprises and medium- and small-sized enterprises of the western regions. Actively provide study-assist loans and loans for student apartments in the western regions. Loans for reconstruction of rural electric power grid and key projects of large sums of loans for superior industries shall be specially arranged by the parent bank of agriculture banks, and direct loans from the parent banks of various commercial banks shall also be arranged. Introduce banks of stock system to establish branch institutions in the western regions step by step.

3.

Policies on Improving Investment Environment

1)

Make Efforts to Improve Soft Environment of Investment. Further the reform of state-owned enterprises of the western regions, accelerate the establishment of the modern enterprise system, and do a good job of strategic adjustment of the state economy and reorganization of assets of state-owned enterprises. Increase the support to state-owned enterprises of the western regions for clearing debts and getting out of difficulty, and for reorganization and reconstruction. Strengthen the foster and build-up of commodity and element markets of the western regions. Actively lead non-public economic sectors like individual economy and private economy of the western regions to speed up development, and in principle, domestic enterprises of all kinds of systems of ownership are allowed to enter all investment areas that are open to foreign businessmen according to relevant laws and regulations. Accelerate the establishment of credit guaranty system of and service institutions for medium- and small-sized enterprises. Except the major and important projects of the state and projects with special provisions, for all enterprises that invest equity capital or bank loans in projects of industries encouraged and allowed by the state, the project proposals and research reports of feasibilities may be combined and submitted for approval according to prescribed procedures, the preliminary designs and commencement reports may be free from the examination and approval of governments, thus to simplify the procedures of the examination and approval of projects with foreign investments. Further the conversion of governmental functions, separate governmental functions from enterprise management, reduce matters that need examination and approval, simplify transaction procedures, intensify the sense of service, eliminate administrative monopoly, regional blockade and protection, strengthen administration by law and protect legal rights and interests of consumers. Improve environment protection, prevent rash and repeated construction, and close factories, mines and enterprises that produce inferior products, waste resources, cause serious pollution and have no safe production conditions.

2)

Implement Policies of Preferential Taxation. With regard to enterprises with domestic investment and enterprises with foreign investment of industries encouraged by the state, which are established in the western regions, business income tax shall be levied upon at the rate with 15% reduction during a certain period. With the approval of people's governments of the provincial level, enterprises of autonomous minority nationality areas may get reduction or exemption of business income tax regularly. With regard to the establishment of enterprises of traffic, electric power, irrigation works, postal service and broadcasting in the western regions, business income tax are exempted for the first two years, and half reduced for the third year. Income of agricultural specialties produced from forests and grassland restored from cultivated land for the purpose of environment protection may be exempted from agricultural specialty tax for 10 years. Land used for construction of national highways and provincial highways in the western regions may be exempted from cultivated land occupancy tax according to land used for construction of railways and civil aviation. The people's governments of provinces, autonomous regions and municipalities directly under the Central Government shall decide on whether the land used for construction of other highways may be exempted from cultivated land occupancy tax. With regard to the projects of industries encouraged for domestic investment, industries encouraged for foreign investment and superior industries, when importing advanced technical equipments for self-use within the total amount of investment, customs duty and value-added tax in the link of import may be exempted, except those commodities prescribed by the state which shall not be exempted from tax.

3)

Implement Preferential Policies on Land and Mineral Resources. With regard to planting forests and grassland on barren hills and wasteland, and to restoring forests and grassland from cultivated land of the western regions, the policy of "who restores, plants or operates, who has the right to the use of land and the ownership of the forests and grassland" shall be implemented. Various economic organizations and individuals may apply to use barren hills and wasteland owned by the state and conduct environment protection construction like restoring vegetation of trees and grasses. On the condition that construction investment and afforestation work have been in place, the right to the use of state-owned land may be obtained by assignment, fees for assignment may be reduced or exempted, the right to the use of land shall remain unchangeable for 50 years, the term may be extended based on application after expiration, and the right to the use of land may be inherited and transferred with compensation. If it is necessary to take back the right to the use of state-owned land because of state construction, compensation shall be given according to law. Ecological forests restored from cultivated land that enjoy state ration allowance shall not be felled. Strictly protect the basic farmland, and realize the balance between occupancy and restoration of cultivated land. Further improve the system of examination and approval of land used in construction, simplify procedures, and promptly provide and protect land used in construction. Income from paid use of current land which is used in construction of towns shall be used mainly in the infrastructure construction of the towns. Increase policy support to the research, evaluation, exploration, development, protection and reasonable utilization of mineral resources of the western regions. Draw up policies and measures to promote legal assignment and transfer of exploration right and exploitation right, and foster the mining right market.

4)

Adjust by the Mechanism of Price and Charge. Further the price reform, and further increase the proportion of market in the adjustment of price. Set the price of "transmitting gas from west to east" and "transmitting electricity from west to east" reasonably, and establish the mechanism of price forming in the manufacturing and marketing links of natural gas, electric power, oil and coal. Accelerate the steps of water price reform, increase water price to a reasonable level step by step according to the requirements of water saving, and perfect the collection and administration of charges for water resources. Strengthen unified administration of water resources of drainage area, strictly implement the system of planned use of water and distribution of water, and promote reasonable utilization and development of water resources. Charge system of city sewage and garbage disposal shall be carried out at large, and charges collected shall be specially used in the disposal of sewage and garbage. Improve the pollution prevention and protection of water resources of upper reaches of rivers and headwater areas. Operators may independently set the price of airplane tickets of inter-provincial, provincial or regional branch lines in the western regions. Special freightage may apply to railways newly built in the western regions. Improve general postal service and telegraphic service of the western regions.

4.

Policies on Expanding the Opening to the Outside World and Internal Areas.

1)

Further Expand Areas Opened to Foreign Investment. Encourage foreign businessmen to invest in infrastructure construction and resource development like agriculture, irrigation works, ecology, traffic, energy, city planning, environment protection, mineral resources, tourism, etc, and encourage the establishment of technology research and development centers. Expand service and trade areas of the western regions opened to the outside world, extend experimental foreign investment units of banks, commercial retail enterprises and foreign trade enterprises to municipalities directly under the Central Government, provincial capitals and capital cities of autonomous regions, allow banks with foreign investment of the western regions to run RMB business step by step, allow foreign businessmen to invest in the western regions in telecommunication, insurance, tourism, and to set up Sino-foreign equity joint accounting firms, law firms, engineering design enterprises, railway and highway freight transport enterprises, municipal public enterprises and other enterprises of areas promised to open. Experimental units of some areas that are to be opened are allowed to start in the western regions before other places.

2)

Further Widen Channels of Using Foreign Investment. Experimental units using foreign investment by BOT in the western regions shall develop experimental units using foreign investment by TOT. Allow projects with foreign investment to launch project financing which includes RMB. Support enterprises with foreign investment of the western regions that meet requirements to list in domestic and overseas stock markets. Support enterprises of industries encouraged and allowed by the state of the western regions to attract foreign investment by transferring managerial authority, selling stock equity, merger and reorganization. Actively explore ways of attracting foreign investment like Sino-foreign equity joint industry funds and risk investment funds. Encourage enterprises with foreign investment in China to reinvest in the western regions, and reinvestment projects the foreign investment of which exceeds 25% shall enjoy the treatments of enterprises with foreign investment. With regard to foreign businessmen investing in infrastructure and superior industry projects in the western regions, the limit of the proportion of foreign investment may be appropriately eased, and the proportion of RMB loans for capital assets investment provided by domestic banks may be appropriately eased. Allow some projects of the western regions to increase the proportion of foreign preferential loans in the total investment appropriately. When superior industries and export-oriented projects of the western regions introduce in advanced foreign technologies and equipments, the state shall give support in the arrangement of the quota of foreign commercial loans. Actively make efforts to give priority to projects of the western regions in the arrangement of multilateral or bilateral capital donations.

3)

Energetically Develop Foreign Economy and Trade. Further enlarge the power of enterprises to make decisions in foreign trade and operation, encourage developing the export of superior products, foreign projects contracting and labor cooperation, investing and establishing enterprises abroad especially in the neighboring countries, and ease the limit of personnel entry and exit. With regard to technologies and equipments in urgent need for economic development of the western regions, proper consideration shall be given in import administration. With regard to overseas tourists entering China in important tourism cities of the western regions, landing visa and other policies of convenient entry visa shall be implemented according to situations. Carry out more preferential policies of border trade, ease limits on matters like drawback, business scope of import and export commodities, import and export commodity quotas, license administration and personnel entry and exit, promote the western regions and neighboring countries to open markets mutually, and promote healthy development of economic and technological cooperation with neighboring countries and areas.

4)

Promote Regional Cooperation and Mutual Support. On the condition that repeated constructions are prevented, the transfer of under-developed technologies and environment pollution are forbidden, strong measures shall be taken in aspects like investment, finance, taxation, credit, economy and trade, industry and commerce, labor and statistics to support enterprises of the east and middle regions to cooperate in various forms in the western regions in investing and establishing enterprises, purchasing shares and becoming shareholders, purchase and merger, and technology transfer. Under the guidance of central and local governments, mobilize all forces of society to strengthen mutual support between east and west, further increase support to the western poverty-stricken areas and minority nationality areas, continue to promote the "Prosper the Border Area and Enrich the People" Action. Develop various forms of regional economic cooperation centering on the key areas of the western development

5.

Policies on Attracting Qualified Personnel and Developing Science and Technology, and Education.

1)

Attract and Wisely Use Qualified Personnel. Draw up policies in favor of the western regions to attract and retain qualified personnel, and to encourage them to establish business. Along with the reform of the wages system, provide allowance for tough and remote areas, and increase the wages level of personnel of departments and institutions of the western regions to be equal to or above the national average level step by step. Relying on key tasks, major construction projects and important research topics, provide favorable work and living conditions to attract domestic and foreign personnel with professional talent to devote themselves in the western development. Reform the domiciliary control system, allow residents of other regions, who go to the western regions to make investments, run business and take part in the development, to keep their registered permanent residences of original domiciles. For personnel who have legal and fixed domicile in cities below the prefecture level (including cities of the prefecture level) and small towns of the western regions, and have stable jobs or living incomes, permanent residence in the towns may be registered based on their own wills. Encourage reasonable transfer of spare agriculture labor force and reasonable inter-regional population flow. Expand exchange of cadres between the east and western regions. Relevant central departments, universities and colleges, and research institutions of the east regions shall increase intellectual service and personnel support provided to the western regions. Increase the introduction of foreign talents to the western regions. Relying on relevant central departments and coastal economically developed areas, strengthen the foster of leaders and cadres, cadres of minority nationalities of the western regions and the training of civil servants, professional technological personnel and enterprises managerial personnel.

2)

Bring the Leading Role of Science and Technology into Full Play. Give more support tilting to the western regions in all kinds of planned science and technology funds, and increase the amount of science and technology funds used in the western regions step by step. Centering on the key tasks of the development of western regions, strengthen the build-up of science and technology capacity, organize brainstorm projects of key technologies of commonness, speed up the spread and application of important technological achievements and the pace of industrialization. Support the development of the industrialization of military technologies converted to civilian productions. Support research institutions, colleges and universities of the western regions to strengthen characteristics application research and basic research. Further the reform of science and technology system, accelerate the transformation of research institutions engaged in application research to enterprises, strengthen the association of production, study and research, promote the close integration of science and technology and economy. Allow and increase the proportion of development expenses drew from the sales amount by enterprises of the western regions. Give more support of innovation funds for small- and medium-sized science and technology enterprises to projects, which meet the requirements, of the western regions. Simplify the registration of industry and commerce, and increase the upper limit of the proportion of stock equity, option and intellectual property in the total capital when science and technology personnel establish science and technology enterprises in the western regions,

3)

Increase Educational Input. Continue to carry out compulsory education projects in the poverty-stricken areas, give more support of the state to compulsory education in the western regions, increase funds input and make efforts to speed up the realization of nine-year compulsory education. Give support to the construction of universities and colleges of the western regions, and the universities and colleges in the east and middle regions are encouraged to expand the scale of enrollment of the students from the western regions. Strengthen the project of mutual support of schools of the east regions to schools of western poverty-stricken areas, and the project of mutual support of schools of large and middle sized cities of the western regions to schools of rural depressed areas. Build up long-distance education system in the western regions. Strengthen the education and training of grassroots cadres and peasants of scientific, technological and cultural knowledge.

4)

Strengthen the Construction of Cultural and Sanitary Establishments. State planned subsidies for construction of local cultural establishments, investment for broadcasting and television establishments and cultural relics, shall tilt in favor of the western regions. Further carry out economic policies for state cultural propaganda units to prosper literature creations. Carry forward "Village to Village" construction of broadcasting and television establishments of natural villages, further expand the effective coverage of broadcasting and television. Promote the development of cultural undertakings of border areas and minority nationality areas. Support the cultural build-up and spiritual civilization build-up of the western regions. Give more support to the sanitary and birth control build-up of the western regions, put stress on establishing and perfecting the primary health care system of rural areas.

The Office of the Development of Western Regions of the State Council shall, jointly with relevant departments, act promptly to study and work out relevant detailed rules of the policies or opinions on implementation according to the above policies and measures, and promulgate and put them into effect with the approval of the State Council. Governments of all levels of the western regions shall implement unified policies on the development of China's vast western regions according to the provisions of the state.

The above policies and measures mainly apply to the current time and 10 years (year 2001 to 2010) to come from now on, and will be further perfected with the implementation of the strategy of the development of China's vast western regions. All policies, measures and the detailed rules of them prescribed shall come into force as of January 1, 2001.