The city of Yuncheng in North China's Shanxi Province is using all means to optimize its investment environment to achieve faster economic growth.

The municipal government of Yuncheng is attaching paramount importance to the job of introducing foreign and domestic investment into the city.

According to the city's new policies, government officials' appraisal and promotion are connected with their performance in creating a good economic environment for investors and enterprises.

As a city with the large population in the province, Yuncheng is experiencing extremely fast economic growth, and has an ambitious aim of increasing its gross domestic product (GDP) by 13 per cent this year.

Yuncheng's volume of imports and exports increased 9 times during the past five years: from US$67.97 million in 2000 to US$650 million in 2005, ranking it the second largest city in foreign trade volume in the province.

To attract more investment from home and abroad, the city has promulgated a series of favourable policies in the past few years, such as:

Simplified procedures of examination and approval of projects;

The city established a service centre to help investors gain the government's approval of their projects. The centre designates one assistant to each project to help enterprises complete all kinds of necessary procedures and co-ordinate with different sectors.

The city's authorities promise that all procedures relating to the approval of an investment project will be completed within five working days if the project does not violate the national industrial policies.

Favourable policies for taxation;

If a product is recognized as a high-tech product, the government will waive its value-added tax for two years and the enterprise should use the money to carry out further research and development of high-tech products.

The municipal government will waive 50 per cent of the income tax from foreign manufacturing enterprises from the sixth to 10th year after they gain profits (they will enjoy favourable tax policies offered by the central government in the first five years).

Domestic high-tech enterprises from outside the city will enjoy the same favourable policies as foreign enterprises and will have their income tax waived in the first two years after they gain profits.

Enterprises investing in the fields of urban infrastructure, environmental protection, education, scientific research, civil welfare and medical service will receive a 30 per cent discount of income tax for five years, besides other favours prescribed by the national investment policies.

Favourable policies for land use;

The municipal government will waive all kinds of land fees if a manufacturing enterprise is a World Top 500 one or makes fixed-asset investment of more than 200 million yuan, or US$24 million in the city.

Those foreign-funded enterprises (with foreign shares of no less than 51 per cent) with fixed-asset investment of more than 100 million yuan or US$12 million will have priority in using land. They are allowed to hand in 40 per cent of their land fees five years after their production.

Favourable polices to attract high-tech personnel;

The city welcomes talented professionals to the city to start their undertakings. The government or enterprises will provide them with research subsidies and technological assistance.

Scientific and technical personnel who set up enterprises paying tax of more than 1 million yuan (US$123,000) per year to the city will be awarded houses from 80 to 120 square metres.

Yuncheng is located in the southwest of North China's Shanxi Province, with a population of 5 million and an area of 14,000 square kilometres.

(China Daily 07/25/2006 page20)