China: More space for Taiwanese capital

Stephen E Philion philion at hawaii.edu
Mon Dec 20 22:24:13 PST 1999


China Allows Taiwan Investors To Buy

State Enterprises

SHANGHAI, Dec 13, 1999 -- (Agence France

Presse) China on Monday announced detailed new

regulations on Taiwan investment that for the first

time allow investors from the island to acquire state

enterprises.

The rules -- which add detail to the 1994 Law on

the Protection of Investment of Taiwan Compatriots

-- took effect on Monday after being signed by

Premier Zhu Rongji, official media reported.

They specify that Taiwan investors "can purchase small state-owned

enterprises," the Shanghai News said.

An official with the Trade Ministry's department on Taiwan, Hong Kong and

Macau confirmed that the provision ends a blanket ban on state-sector

purchases by parties from Taiwan.

The regulations are part of a decade-long campaign by Beijing to improve

relations with Taipei by encouraging indirect trade and investment ties

between the two politically estranged sides.

While China maintains control over big, profitable state enterprises, it has

increasingly been seeking overseas capital to help overhaul smaller firms that

otherwise might face bankruptcy.

The new rules also specify that Taiwan investors can also take part in

development of state-controlled natural resources and purchases of stocks,

bonds and real estate.

Without providing details, reports said the regulations promise preferential

tax rates for Taiwan investors, especially for projects in China's relatively

backward central and western regions.

The rules also bar local governments from imposing higher fees on

Taiwan-invested enterprises than those levied from domestic firms.

The Trade Ministry must process applications for the establishment of

Taiwan-invested enterprises on the mainland within 45 days, they say.

More than 40,000 companies in Taiwan have poured an estimated 40 billion

US dollars into China for various projects.

The two sides have been governed separately since the end of a civil war in

1949, when Chiang Kai-shek's defeated forces fled to Taiwan to set up a

non-communist enclave. ((c) 1999 Agence France Presse) * * * * * * * * * * * * * *



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