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on individual wages and salaries would range at progressive rates from 5% to 45% above a specified income ceiling. Publication of the two laws has now been followed by the publication on 17 December of two sets of 'Detailed Rules and Regulations' on their implementation. These offered further guidlines on such details as tax return dates, taxation accounts, tax-free allowances etc., but fall far short of any definitive tax code. It seems likely that further revision or modification will issue in the light of experience.
Compensation trade
9.
A less formal arrangement even than the joint venture is an agreement described as compensation trade. Under its general terms, the foreign party provides technology, equipment and materials whilst processing is undertaken in China using Chinese buildings and labour. The product is then made available to the foreign partner for export at a price which allows it to recoup its investment. The arrangement does not appear to allow for joint management or for joint equity.
Co-operative production
10.
1
Based on the same input of foreign equipment and materials and Chinese land and labour, co-operative production allows for more flexible profit sharing. After the export of products and the deduction of operating costs and capital investment by the foreign partner, profits are shared according to terms agreed by contract. 'Co-operative production' agreements have also been referred to as 'Contractual joint ventures', apparently distinguished from.full
'Equity joint ventures' (see above paragraph 6) by the degree of equity participation.
Direct and entrepot trade between China and Hong Kong
(Tables at Annex A)
11.
During the past ten years more than a third of China's total convertible currency earnings have come from Hong Kong. Press reports (see for example South China Morning Post, Business News, 5 January 1981) which are probably broadly accurate have put the proportion at 40% in 1979. That is to say, China derived a total of US$5,800 million in foreign exchange from Hong Kong out of a total from all sources (including Hong Kong) of US$14,600 million. Nearly a half of the earnings from Hong Kong were in the form of direct exports, with the remainder coming from re-exports and remittances
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