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CIRCULAR OF THE STATE COUNCIL CONCERNING THE STRICT EXAMINATION AND APPROVAL AND CHECKS ON VARIOUS DEVELOPMENT ZONES

    It is one of the important measures of China's reform and opening-up
policy to set up rationally distributed development zones in places where
conditions permit, concentrate the effort in developing their infrastructure
construction, put into effect preferential policies and create a good
investment environment in order to attract foreign investment. Practice shows
that this is an effective measure and should be maintained in the future.
However, since last year there has been a boom in development zones with
increasing numbers involved in a wider range of activities. As a result, they
have taken over large plots of cultivated land and needed considerable
funding. It is obvious that they have now gone beyond practical needs and,
indeed, economic endurance. In a few places, the tax and land laws issued by
the State are ignored and governments of various levels have exceeded their
authority to make and issue tax-free measures without permission, which has
caused harmful effects. Without strict and resolute measures to check this
trend, it will aggravate the shortage of funding, energy resources,
communications and transportation and supply of raw materials, which will
effect the normal running of the national economy and the healthy development
of opening to the outside world. The following circular is hereby issued
concerning this issue.

    1. Development zones should follow a double level system of examination
and approval --- the State Council and the people's government of provinces,
autonomous regions and municipalities directly under the Central Government.
The people's governments at various levels under the provinces, autonomous
regions and municipalities under the Central Government cannot examine and
approve the establishment of various development zones.

    2. The State Council has the authority to examine and give approval for
the establishment of economic technology development zones, bonded areas,
hi-tech industrial development zones, state tourist and holiday zones and
frontier economic cooperation zones. If any of the above-mentioned development
zones are to be set up, the people's government of the concerned province,
autonomous region or municipality directly under the Central Government and
the department of the State Council in charge of the project should guide the
primary planning and the study of its feasibility, then report to the State
Council.

    3. In order to attract foreign investment to develop projects in industry,
agriculture, international tourism and hi-tech industry, the people's
governments of provinces, autonomous regions and municipalities directly under
the Central Government can, according to local resources, practical needs and
conditions, approve the establishment of a small number of development zones
(tourist and holiday zones), make related preferential policies within the
limit of their authority, and report to the State Council. But the development
zones set up with the approval of the people's governments of the provinces,
autonomous regions and municipalities directly under the Central Government
cannot continue to use the title and policy of the development zones set up
with the approval of the State Council.

    4. The examination and approval of development zones should strengthen
overall planning and rational distribution, and pay attention to
socio-economic efficiency. The government should strictly control the areas of
development zones and emphasize that such projects should actually result in
development. It will insist that progress on such projects should only be made
according to the capability of those involved to develop the plot, build and
make profits. The government should examine and approve the land strictly
according to the law, save land resources and strictly control the occupation
of cultivated land. In principal, cultivated land within the basic farmland
protective region is not to be occupied.

    5. Every region should carry out an inspection of the various development
zones set up without the approval of the State Council or the people's
governments of provinces, autonomous regions and municipalities directly under
the Central Government. The government should firmly and resolutely terminate
approval for the continued development of zones where the basic construction
conditions are lacking, the project or funding is unsettled, too much land is
occupied or the land is occupied without use. The land should then be returned
to the peasants. To abandon cultivated land or leave a land uncultivated is
strictly forbidden.

    6. All regions and departments should uphold the State policies, laws and
regulations, strictly abide by the tax and land laws, and related policies and
regulations issued by the State. It is forbidden to ignore or exceed the
authority of the State and to make preferential policies, reduce tax or yield
interest in disguised form without permission. The people's governments and
the department of the State Council concerned should strengthen supervision of
this issue.

    7. The people's governments of provinces, autonomous regions and
municipalities directly under the Central Government should report before the
end of June 1993 to the General Office of the State Council on the inspection
work carried out on various development zones.