1. Industrial projects using high and new technologies.

2. Urban infrastructure projects for construction of public utilities, development of communications, energy development and environmental protections.
3. projects producing products suiting the demand on the domestic and international markets, products that are energy-saving , water-saving, space-saving and less pollutant or products that require repeated processing and are able to generate high added value.

4.Technological renovation of existing enterprises.

5.Cultivation or farming projects with high potential of increasing output, producing high -quality agricultural and rural sideline products and products for repeated processing of agricultural and rural sideline products.

6. Projects designed to promote overseas sales and export of products by upgrading them and making them better suited to international market demand.

7. Real estate development projects verified as in conformity to the cities master plan for urban development and as facilitating construction of urban infrastructure facilities, rebuilding of old and dangerous buildings, and removal of old enterprises out of the old town area.

8. projects for rebuilding of old and dangerous residential buildings.

Major industries where foreign investment is encouraged

A) Industries using high and new technologies

1. Electronics and information industries.
2. Bioengineering projects and projects for producing new pharmaceuticals.

3. Projects involving streamlined application of optical, mechanical and electrical technologies.

4. New materials projects.
5. Modern agriculture and green technology.
6. Energy-saving developing technology.
7. Technology for resources regenerating and comprehensive utilizing.
8. Pollution control and supervision.

B) Construction of urban infrastructure facilities

1. Construction and business operation of local free ways.
2. Construction and business operation underground railways.
3. projects for sewage or garbage treatment.
4. Construction of thermo power plants and their business operations.
5. Projects for urban water supply.

C) Agriculture, forestry, animal farming and fisheries and related undertakings 1.Projects for reclamation of barren mountains, flood land and wasteland and for transformation of low-yielding cropland of forests.

2. Development of crop varieties which are high -yielding and able to produce high quality products, and of new techniques for crop farming.

3. Farmland irrigation projects and projects to save use of water for farming.

4. projects for soil-free cultivation of vegetables and flowers and production of non-contamination farm products.

5. Afforestation projects and projects to introduce better tree varieties.

6.Projects for breeding fine varieties of domestic animals, poultry and aquatic products.

7. Multipurpose utilization of waste gas, waste materials and sewage discharged in the course of agricultural production and processing of agricultural and rural sideline products.

8.Projects for developing new techniques and equipment for storage, preservation and processing of vegetables, fruit, meat and aquatic products.

9. Projects for production and development of plastic films for farm use.
10. Projects for development of veterinary antibiotics, pesticides and anthelminthics
11. Projects for production of farm machinery.
12. Projects for renovation and construction of ecological environment.

D) Manufacturing industries

1. Electronics.
2. Auto industry.
3. Machinery and equipment manufacturing projects.
4. Chemical projects.
5. Metallurgical projects.
6. Construction materials projects.
7. Light industrial projects.
8. Textile projects.
9. Pharmaceutical projects.
10. Permissible projects for direct export products.

E) Tertiary industry

1. International economic, scientific and technological consulting and information services.

2. Repairing anf after sale services of precision instruments and equipment.
3. Construction of high-tech and new products developing centers.
4. Rebuilding of old and dangerous buildings in the city.

The corporate income tax is reduced to 24% for foreign-funded production enterprises in the area under jurisdiction of the Beijing Municipality and scheduled to operate for 10 years or longer. Such enetrprises are exempted from the tax for two years beginning from the first profit-making year, and the rate shall be reduced by 50% in the third year.

With the approval of the State Taxation Bureau, foreign-funded enterprises in agriculture, forestry, and animal husbandry may, upon expiration of the three-year period of tax exemption and 50% reduction, continue to enjoy a 15% reduction in tax for ten more years.

Foreign-funded enterprises in the Beijing Economic and Technological Development Zone may enjoy a 15% reduction in the corporate income tax and , beginning as of the first profit making year, shall be exempted from corporate income tax for two years and enjoy a 50% reduction in the third year.

Foreign-funded enterprises in the Beijing New Technology Industries Development and Experimental Zone which are verified as using new technologies may enjoy a 15% reduction in corporate income tax. And beginning from receipt of business licenses, such enterprises shall be exempted from the tax for the first three years and then enjoy a 50% reduction in the tax for three more years.

Foreign-funded enterprises rated by the municipal authorities as being advanced may, upon expiration of the period of corporate tax exemption and reduction, continue to enjoy a three year 50% tax reduction. But the tax shall be collected at 10% if the rate is below 10% even after the 50% reduction. A foreign-funded export-oriented enterprise may, upon expiration of the period of tax exemption and reduction, be allowed a 50% reduction at the current rate of corporate income tax if the export products it produces account for more than 70% (40% for new-technology enterprises) of its total output value for that year.

With approval of the State Taxation Bureau, foreign-funded production enterprises may be allowed a 15% reduction in corporate income tax provided it is technology-and knowledge-intensive and involves a foreign capital input of not less than US$ 30 million which requires a long period to recover. The same rule applies to foreign-funded enterprises engaging in the projects of energy development and port construction.

The foreign investor in a foreign-funded enterprises using its share of the profits to make direct capital investment in China for a period of not less than five years may be refunded 40% of the income tax already paid on the reinvested portion, if the investor reinvests his share of the profits in a technologically advanced or export-oriented enterprise in China for period of not less than five years, the investor may be refunded 100% of the income tax already paid.

Enterprises using new technologies, technologically advanced enterprises and export-oriented enterprises shall be exempted from local income tax. Foreign-funded production enterprises scheduled to operate for ten years or longer may, beginning from the first profit-making year, be exempted from the local income tax for five years and may be allowed a 50% reduction in the tax for the following five years.

Tariffs

For foreign-funded enterprises, which falls into the category of projects encouraging foreign investment and Category B of projects restricting foreign investment defined in the " Directory of Industries for Foreign Investment" and which transfer technology, they shall be exempted from import duties and value-added tax on imports when importing equipment for their own use as part of the total investment, except for commodities included in the " List of Imports for Foreign-funded Projects Ineligible for Tax Exemption".

Export: Foreign-funded enterprises shall be exempted from export duties when exporting their own products, except those products whose export is restricted or subject to stipulations otherwise prescribed by the State.

Bonded warehousing:

Raw materials, fuels, spare parts, components and devices, auxiliary and packing materials imported for implementing contracts on the production of exports shall be subject to Customs supervision and control the same way as bonded goods.

The foreign-invested high technological enterprises{ hereafter enterprises} shall enjoy preemptive right in examination and approval, registration, loans, customs procedures, personnel's exit, establishment of overseas enterprises and use of public facilities. The departments concerned shall give special priority to these enterprises without any delay in examining and approving the project initiation, planning, feasibility study, licensing, registration, and construction. The bank shall prioritize these enterprises in RMB and foreign exchange credit support, the customs shall simplify the procedures, shorten handling time and give preferential treatment to enterprises which good credit, the department concerned shall simplify the procedures for the exit of the Chinese personnel of the enterprises and grant a certain number of them approval documents for multiple exit and entry within one or two years, the municipal Foreign Economic and Trade Commission shall give priority to handling examination and approval procedures for the enterprises which apply for establishing for branch organizations in the domestic area or enterprises overseas which meet the state's requirements, the public facilities-water, power, gas and heat supplies-which the enterprises need to use shall be arranged in a co-ordinated and preferential way by the municipal Economic Commission, Power Supply Bureau and Public Utilities Bureau and Posts and Telecommunication Bureau. Fees shall be computered and charged in accordance with the standards of the domestic enterprises of the same kind.

Article 5

If the equity joint venture, contractual joint venture and solely foreign-invested enterprises obtain the right to the use of land directly through assignment they shall pay the fee thereof at a preferential rate of 75% and pay half of the construction fee for water supply plants, gas supply plants, heat supply plants and sewage treatment plants and overall public facility construction fee.

Article 6

The productive enterprises with term of operation longer than 10 years shall be exempted from enterprise income tax for the first and second profit earning year, half of the income tax from the third to fifth profit-earning years. The enterprises which enjoy an exemption from half of the income tax may get levied tax refunded after their application is approved by the department concerned. After the preferential treatment period expires, if the enterprises are still technologically advanced ones, they shall be exempted from half of the income tax in another three years. If the tax rate after the exemption is less than 10%. Foreign-invested high and new tech enterprises shall be exempted from local income tax

Article 7

The department concerned shall continue to improve the procedure for opening deposit accounts in banks for processing trade enterprises in a centralized way. The enterprises may, in light of their actuarial need, establish bonded warehouse and bonded factories upon approval of customs.

Article 8

Upon approval of the municipal Planning Commission, Economic Commission and Foreign Economic and Trade Commission according to the state industrial policies the ratio for sales of the enterprises to the domestic market may be properly relaxed, if these products are indeed in urgent need and can replace imported products, they shall all be allowed to sell domestically.

Article 9

For those registered enterprises operating in the Beijing Economic Technological Development Area and in the Beijing New Technological Industry Development Area, their branch organizations shall enjoy the preferential policies as enterprises within the above-mentioned two areas if they are also engaged in the sale of the sphere of the Beijing administration region.

Article 10

The previous preferential policies granted to high-tech enterprises will remain valid. In the event that the previous policies are contradictory with this new one, this regulation will take precedence.

For regional headquarters of transnational companies using their profits after the payment of corporate income tax in Beijing for capital reinvestment in the city, the municipal finance may offer them rebate proportionately in accordance with their actual payment of corporate income tax to local authorities, on the basis of the provision of the Tax Law on reinvestment rebate.

For regional headquarters of transnational companies, they shall be exempted from local income tax.

Artile 5

Within the scope of categories of foreign trade goods defined by the state, regional headquarters of transnational companies shall be supported in legitimately obtaining the right to export products of their producing enterprises and the right to import equipment for their own use.

Article 6

Regional headquarters of transnational companies meeting relevant requirements shall be supported in establishing joint-venture foreign trade companies and joint-venture wholesale enterprises in Beijing in accordance with law.

Article 7

Regional headquaters of transnational companies shall be supported in establishing distributive companies in Beijing in accordance with law to sell products of China-based companies funded by them.

Article 8

Regional headquaters of transnational companies shall be supported in establishing financial companies in Beijing in accordance with law to provide financial support for enterprises funded by them.

Article 9

Regional headquaters of transnational companies shall be supported in legitimately establishing investment stock companies in Beijing. In reporting to competent authorities of the State, they may apply for appropriate extension of their scope of business in accordance with relevant policies of the State.

Article 10

With the approval of foreign exchange administration authorities, regional headquaters of transnational companies, in addition to openning foreign exchange capital accounts with banks, may also open more than one foreign exchange accounts with banks in accordance with their actual necessity, and may mantain relatively high quotas of foreign exchange in their foreign exchange settlement accounts.

Article 11

With the approval of the Customs, regional headquarters of transnational companies, in accordance with their actual necessity, may establish bonded warehouses and donded factories.

Article 12

Regional headquarters of transnational companies shall be encouraged to establish in Beijing reserach and development institutions, training institutionas, technical support centers, etc., which are affiliated to them. Competent authorities concerned shall give priority to handling the affairs concerning the establishment, planning, feasibility study, registration, start, construction, etc., of such projects, may give priority to providing relevant companies with land for construction in accordance with relevant policies defined in the General Plan of Urbanization of Beijing City and the general plan for land utilization in Beijing, and shall handle the affairs of approval of the use of land for construction of such projects in accordance with the relevant procedure.

Article 13

For regional headquarters of trasnational companies or their affiliated research and development institutions wishing to transfer to Beijing from other provinces or cities, senior Chinese professionals and management personnel with a bachelor's degree at minimum who are factually in short supply in Beijing, may act to transfer the personnel concerned after the examination of the Beijing Municipal Foreign Economic and Trade Commission and with the approval of the Beijing Municipal Personnel Bureau.

Article 14

For Chinese citizens who are part of the senior executives of regional headquarters of transnational companies based in Beijing, the Beijing public security authorities shall give priority to issuing them with the five-year general passport. For compatriots from Hong Kong and Macao who are part of the senior executives of regional headquarters of transnational companies based in beijing, the Beijing public security authorities shall give priority to issuing them with the one-year temporary settlement certificate and the stamp allowing repeated entry exit within one year. For compatriots from Taiwan who are part of the senior executives of regional headquarters of transnational companies based in Beijing, the Beijing public security authorities, in accordance with the actual necessity, shall give priority to issuing them with the one-to-five year temporary settlement certificates and the stamp allowing repeated entry and exit. And for citizens of foreign countries who are part of the senior executives of regional headquarters of transnational companies based in Beijing, the Beijing public security shall give priority to extending the duration of their stay in China and issuing them with a visa allowing repeated entry and exit.

Article 15

For the needs of regional headquarters of transnational companies and enterprises funded by them in Beijing to use water, gas and heat as well as public utilities of telecommunications and so on, competent authorities concerned shall extend active support, make arrangements on a unified basis and give priority to guaranteeing the supply of water, electricity, gas and heat and the availability of public utilities of telecommunications and so on. Regional headquarters of transnational companies and enterprises funded by them in Beijing shall enjoy the policies on rates and fee charges concerning the supply of water, electricity, gas and heat and the use of public utilities of telecommunications and so on identical to those enjoyable by local Chinese enterprises.

Article 16

For foreign citizens who are senior executives of regional headquarters of transnational companies or enterprises funded by their companies in Beijing, they shall be provided with assistance in making arrangements for the entry-exit and stay of their dependents as well as in applying for the education of their children in China, etc.

Foreign citizens working as senior executives of regional headquarters of transnational companies or enterprises funded by their companies in Beijing who have made outstanding contribution to the economic development of Beijing shall be honored by competent authorities accordingly.

Article 17

For transnational companies applying for the establishment of representative offices or investment companies in Beijing in preparation for the establishment of regional headquarters in the city, competent authorities concerned shall give priority to reviewing and approving their applications and report to higher auhtorities in an active and timely manner. The foreign investment management and services institutions in Beijing shall strengthen contracts with the regional headquarters of transnational companies based in the city, and shall provide the regional headquarters of transnational companies and enterprises funded by them in the city with services of policy, information, consultancy and agency (except for services concerning the entry and exit of citizens for personal purposes).

Where regional headquarters of transnational companies have encountered specific questions or difficulties in their business operation, competent authorities at all levels in Beijing concerned shall provide them with assistance in an active manner for settlement.

Beijing- based R&D organizations can be incorporated as enterprise or institutional legal persons, or as non-independent legal persons.

Article 5

Domestic enterprises intending to set up Beijing- based R&D organization as enterprises legal persons shall make application to the industrial and commercial administrations, go through registration procedures in accordance with pertinent laws and regulations, and report them to the Municipal Commission of Science and Technology for the record. Beijing- based R&D organizations that are set up within enterprises and that do not engage in production or business activities shall be examed and approved by the Municipal Commission of Science and Technology and registered according to pertinent regulations concerning institutional legal persons.

Article 6

The Beijing- based R&D organizations set up by foreigners including Hong Kong, Macao and Taiwan can open special foreign exchange accounts with the designated banks with approval from foreign exchange control departments, and handle their foreign exchange incomes according to existing regulations on foreign exchange control.

Article 7

Beijing- based R&D organizations can enroll, with approval from the Municipal Personnel Bureau, domestic university graduates and post-graduates of the current year, if they enroll from other parts of China senior Chinese professionals and management personnel who have an education background at and above the university level and who are indeed in short supply locally, they shall report the enrollment to the personnel departments of relevant district and county departments for examination and to the Municipal Personnel Bureau for approval and issuance of Work and Residence Permit of Beijing Municipality. On the strength of the Work and Residence Permit of Beijing Municipality, these people can enjoy the same treatment as granted to Beijing residents in the purchase of housing, schooling of offspring and other aspects. After three years working in Beijing, the R&D can apply for residential card for them from Municipal Personnel Bureau and Municipal Public Security Bureau.

Article 8

Priority shall be given to issuing five-year private passprots to Chinese citizens working in beijing based R&D organizations, and to issuing one-year temporary residence permits to compatriots from Hong Kong and Macao. In line with actual needs, priority shall be given ot extending the temporary residence permits of the Taiwan compatriots for one to five years and visa for multiple entries and exits. Priority shall also be given to granting residence permits to the expatriate staff and extending of their stay in China as well as visa for multiple entries and exits. In addition, help shall be provided, in accordance with pertinent regulations, to the dependents of the above-mentioned people in the handling of entry and exit procedures, the issuing of residence permits, and the schooling of their offspring. People, with the Work and Residence Permit of Beijing Municipality and the relevant documents, can apply the Transit Permit for the Administrative Regions in Beijing.

Article 9

Except for commodities that are excluded from tariff exemption according to State regulations. Beijing-based R&D institutions shall be exempted from paying import tariffs and import-link taxes for the equipment and materials they import for their own use if these equipments and metrials comply with the regulations on tariff exemption for industrial projects encouraged by the State or regulations on tariff exemption for articles for scientific and teaching purposes.

Article 10

Import tariffs shall be exempted, after examination and approved by the Beijing Customs, for the household vedio cameras, cameras, portable radios, and portable computers carried into China for personal use by foreign citizens, overseas Chineses, and compatriots of Hong Kong, Macao and Taiwan employed by Beijing-based R&D organizations when they come to China for the first time during the validity of their visas if these people have own approval to enter China and stay in Beijing for more than one year and there is only one piece of each kind of the articles.

If the permanent staff of the Beijing-based R&D organizations are confirmed by the responsible State departments as foreign experts( including experts from Hong Kong, Macao and Taiwan), the books and meterials instruments for scientific and teaching purposes they carry into China shall be exempted from import tariffs unless the articles are commodities excluded from tariff exemption according to State regulations or exceed a rational amount needed for personal use.

Article 11

Beijing-based R&D organizations adopting the system of independent accounting shall be exempted from enterprises income taxes if their annual net incomes from the transfer of technical achievement, technical consulting, technical services, and technical training are below 300,000 yuan. If their annual incomes exceed 300,000 yuan, they should hand in taxes according to relative policy and if regarded as high -tech industries, their cases shall be handled with reference to the pertinent policies on high-tech enterprises.

The Beijing-based R&D organizations set up by foreigners including Hong Kong, Macao and Taiwan will enjoy the preferential policy for the development of new technological industries.

Article 12

If the fixed asset investment projects invested by Beijing-based R&D organizations comply with State industrial policies and are designed for the purpose of scientific research and development , the fixed asset investment orientation regulation tax shall be collected as zero rate subject to the approval from the financial department.

Article 13

Beijing-based R&D organizations can undertake scientific research projects listed on the municipal plan by applying for the establishment of thses projects, and other scientific and technical projects entrusted by enterprises or social bodies. Establishment of projects using scientific and technical allocations from the municipal budget shall be managed with reference to the pertinent regulations of the Municipal Commission of Science and Technology.

Article 14

Beijing-based R&D organizations can take part in public building or inviting bids for major projects with investment from the People's Government of Beijing Municipality, and treated as entities affiliated to the People's Government of Beijing Municipality in government policy on procurement.

Article 15

For the land use rights obtained by Beijing-based R&D organizations by way of transfer and the houses they develop or build for research and development purposes, a fee shall be charged at 75% of the land prices, if the land is used for other purposes, or is let, sold, or transfered, the exempted amount shall be rapid in full.

article 16

In case of transfer of research results by Beijing-based R&D organizations in area under jurisdiction of Beijing Municipality and in line with the stipulations of the Overall Planning of Beijing Municipality and environmental protection policies, relevant departments shall give priority to the establishment, planning, registration, and construction of thses projects. Priority shall also be given to the supply of land for construction purpose according to procedures for the transfer of land use rights under the prerequisite of compliance with the overall plan of Beijing Municipality on the use of land.

Article 17

The infrastructure facilities needed by Beijing-based R&D organizations such as those for the supply of water, power, gas, heating and telecommunication services shall be arranged by relevant departments under the municipal government in a unified way. Priority shall be given to the construction and equipment installation of these facilities so as to guarantee supply within a prescribed time. Beijing-based R&D organizations shall receive the same treatment as enjoyed by municipal enterprises in terms of collection of charges for these services.

Article 18

Beijing-based R&D organizations can enter into cooperation with local scientific research institutions, universities, and enterprises in various forms. They can open their laboratories, research centers and test grounds to the society, and provide paid service.

article 19

Beijing-based R&D organizations can be allowed to run schools in cooperation with institutions of higher learning or scientific research institutes qualified to train post-graduates. With confirmation from education management departments, the academic credentials and degree of the students thus trained shall be acknowledged.