G.F. 326
CONFIDENTIAL # 3
24
that smooth and peaceful power transition at the highest level of goverment has so far not been experienced in China is still a worry to some foreign investors.
It
64.
In summary, many joint ventures in China are facing foreign exchange problems and institutional difficulties. Most of them also have to put up with lengthy negotiations, inadequate infrastructural facilities and higher-than-expected production costs. should, however, be noted that the extent of the problems can vary significantly between different regions. Joint ventures in the Special Economic Zones (SEZs) and Economic and Technological Development Districts (ETDDS) of open cities, for instance, are generally given preferential treatment (see, for example, paragraph 16 for preferential treatments in terms of tax). They also face less serious problems with infrastructural facilities.
Conclusion
65.
Since China put into effect its open door economic policy in 1979, it has made great efforts to improve its investment environment. First, starting from scratch, China has created an embryonic legal framework for the joint ventures. It has also shown its concern to protect the interests of foreign investors, as evidenced by the enactment of patent law and the joining of the Paris Convention for the Protection of Industrial
Property. China has also liaised with several countries
on the avoidance of double taxation. Second, the maximum duration of a joint venture has been lengthened, from 30 years to 50 years. Third, China has devoted an enormous amount of resources to the development of infrastructure, although the lack of coordination has somewhat reduced the overall effectiveness of this effort. Fourth, China has made some efforts to tackle the imbalance in foreign exchange experienced by joint ventures, although many o the measures are not very effective.
CONFIDENTIAL ##
No comments yet.
Private notes are available after approval.