CONFIDENTIAL
9.
At the same time as expanding her foreign trade, China is making considerable efforts to attract foreign investment, principally to her four Special Economic Zones and a further 14 recently opened port cities. While successful in this endeavour in the offshore oil sector she has been far less successful in the joint equity venture field where total investment from 1979-1983 was only 500 million dollars and the foreign partner in 130 out of 190 ventures was from Hong Kong. Disincentives to joint venture investment up to now have been exhorbitant ground rents, lack of skilled workers, insufficiently attractive tax regime and lack of legal protection for investment. Little is being done to overcome the first problem and the solution to the second is long term. But new and more attractive tax regulations have just been introduced and China is now drawing up a Host of Economic Laws, as well as negotiating many Investment Protection and Double Taxation Agreements with Western countries, including the UK.
CONFIDENTIAL