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Geographic location Henan Province is located in eastern central

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Geographic location Henan Province is located in eastern central Powered By Docstoc
					Geographic location


Henan Province is located in eastern central China, on the plain between the Yellow and Huaihe rivers.
As most part of the province lies to the south of the Yellow River, which runs for over 700 km through its
territory, it was given the name Henan (River South). Neighboring Hebei, Shanxi, Shaanxi, Hubei, Anhui
and Shandong provinces, Henan covers an area of 167,000 sq km.
                                                         General Economy
Gross domestic product (GDP)            GDP for 2004 was 881.51 billion yuan, up 13.7% from the previous year.
GDP ratio (primary, secondary and The primary industry yielded a value added of 164.75 billion yuan, 12.8% more than that
tertiary industries)                    the previous year; the secondary industry, 451.53 billion yuan, a growth of 16.2%; the
                                        tertiary industry, 265.23 billion yuan, a growth of 10.6%. The proportion of the three sect
                                        is 18.7: 51.2: 30.1.
Revenue and expenditure                 Provincial revenue was 42.86 billion yuan, an increase of 35.1% over the previous year.
                                        Provincial expenditure was 87.79 billion yuan, an increase of 22.5%.
Consumer price index (CPI)              CPI was up 5.4% from the previous year.
Investment in fixed assets              Fixed asset investment was valued at 309.9 billion yuan, up by 31.3% from the previous
                                        year.
                                                          Major Industries
Agriculture                             In 2004, the province's total grain output was 42.6 million tons, an increase of 19.3% fro
                                        the previous year.
Industry                                The industrial added value totaled 386.22 billion yuan, an increase of 17.0%.
High-tech                               The total added value from high-tech industries was 30.3%.
Construction                            Its added value was 65.32 billion yuan, up by 11.0%.
Transportation                          Freight carried by various means of transport during the year amounted to a total of 199.
                                        billion ton-kilometers, 10.9% up from the previous year.


                                        Passengers carried by various means of transport numbered 90.843 billion
                                        person-kilometers during the year, up 17.7% from the year before.
Postal and telecom services             The annual turnover of postal and telecommunication operations totaled 44.26 billion yu
                                        46.8% up from the previous year.
Retail                                  The annual turnover from retail sales reached 280.82 billion yuan, an increase of 15.7%
                                        from the previous year.
Tourism                                 Revenue from domestic tourism totaled 56 billion yuan, up by 63.8%. Foreign exchange
                                        earnings from tourism totaled US$160 million, up by 152.2%.
                                                Continued Effects of Market Reform
Imports & exports                       The annual value of imports and exports totaled US$6.61 billion, an increase of 40.2% fr
                                        the previous year.
Economic and technological              Overseas project and labor contracts signed during the year were valued at US$507 mill
cooperation                             up 45.5% from the previous year. Business turnover for the year totaled US$271 million,
                                        increase of 40.1% from the previous year.
Foreign investment                      Foreign direct investment realized in monetary terms was US$874 million, up by 36.7%
                                        from the year before.
                                        Urban Construction and Management
Road transport                  The year saw the construction of 1,880 km of highways including 340 km of express
                                highways, and the construction of 136.7 km of railways.
                                                 Social Undertakings
Science and technology          At the end of 2004, there were 1,200 research and development institutions staffed with
                                149,500 professionals and technicians in the province. The R&D input for the year stood
                                3.76 billion yuan, 10.0% up from the previous year.
Education                       The number of students enrolled in postgraduate schools and institutions of higher learn
                                during the year stood at 5,408 and 257,400 respectively. A total of 136,700 people got ri
                                illiteracy.
Culture                         The province had a total of 200 professional performing organizations, 187 cultural and a
                                centers, 136 public libraries, and 75 museums at the end of the year.
Public health                   There were a total of 14,119 medical and healthcare institutions equipped with 206,800
                                beds and staffed with 288,800 medical professionals and technicians at the year-end. Th
                                centers for diseases control and prevention numbered 182, staffed with 14,100
                                professionals and technicians.
Sports                          The province has a total of 37,000 stadiums and gymnasiums, the per capita amount of
                                sportsground being 0.52 sq m.
Welfare and aid                 Various welfare units across the province were equipped with 63,800 beds and put up
                                47,100 homeless and vagrant people during the year. There were 3,155 urban commun
                                centers at the end of the year. The funds raised through selling welfare lottery totaled 32
                                million yuan in 2004. Public donations totaled 18.14 million yuan.
Poverty relief                  The year saw a reduction of 1 million people living in absolute poverty. They began to ha
                                enough food and clothing. A total of 120 million yuan were spent on providing primary an
                                middle school students from poor rural families with free textbooks.
                          Population, Employment, Social Security and Living Standards
Population                      The year 2004 saw births of 1.13 million, or a birth rate of 11.67‰, and deaths of 630,20
                                or a mortality rate of 6.47‰. The natural growth rate of the population stood at 5.2‰. At
                                end of the year, the total population stood at 97.17 million.
Employment                      The employed population stood at 55.5 million at the end of 2004, an increase of 150,00
                                from the previous year end.
Registered unemployment rate    The registered urban unemployment rate was 3.4%.
Social security                 In 2004, insurance plans for endowments, unemployment and medical treatment covere
                                population of 7.79 million, 6.82 million and 5.9 million respectively. About 1.35 million urb
                                residents received minimum living allowance from the government, totaling 910 million
                                yuan.
Residents' income               The disposable income of urban residents was 7,705 yuan per capita, up by 11.2% from
                                2003. Rural residents' per capita net income was 2,553 yuan, a growth of 14.2% from th
                                previous year.
Residents' consumption          Urban residents' per capita expenditure was 5,294 yuan, up by 7.1% from the previous y
                                while that of rural residents was 1,664 yuan, up by 10.3%.
                                         Geography and Natural Conditions
Elevation extremes   Henan Province is in the transitional area between the second and third steps of China's
                     four-step terrain rising from east to west, with rolling mountains over 1,000 meters above
                     sea level in its western part and plain area of 100 meters or lower in its east. Laoyacha i
                     Lingbao City, 2413.8 meters above sea level, is the highest peak in Henan. The province
                     lowest point, 23.2 meters, is found at the place where the Huaihe River leaves the provin


                     High in the west and low in the east, even in the north and concave in the south, Henan
                     surrounded by four mountain ranges, the Taihang, Funiu, Tongbai and Dabie, which sta
                     in its north, west and south, leaving subsidence basins here and there. In its middle and
                     eastern parts there is a vast fluvial plain created by the Yellow, Huaihe and Haihe rivers.
                     Mountainous regions comprise 44.3% of its total area, and the plains, 55.7%. Four rivers
                     run across Henan, the Yellow River, Huaihe River, Weihe River and Hanshui River, with
                     Huaihe River valley covering up 53% of the province.
Climate              Located between the northern sub-tropical zone and warm temperate zone, Henan has
                     distinctive four seasons with complicated weather conditions characterized with a hot an
                     rainy summer. Southern Henan is in the northern sub-tropical zone. The province's aver
                     temperature of the year is 13~15℃; the average annual rainfall is 807 mm; and its frost-
                     period lasts 308~275 days.
Natural resources    Henan has water reserves of 40.5 billion cubic meters, about 417 cubic meters per capit
                     The key water-conservative project at Xiaolangdi on the Yellow River, built with a loan fr
                     the World Bank, has a total installed capacity of 1.8 million kw. It is expected to generate
                     billion kwh of electricity annually after its completion.


                     Of the more than 150 kinds of minerals found on earth, 126 are available in Henan, of
                     which, the reserves of 73 kinds have been made clear; 61 kinds have been mined and
                     utilized.


                     In term of reservation, 48 kinds of Henan's minerals are listed among the top 10 of the
                     country, of which molybdenum, blue asbestos, grit stone, natural alkali, pearlite, sapper
                     andalusite are listed as No. 1, and bauxite, natural hone, and limestone for producing
                     cement are assessed as No. 2.


                     With considerable reserves of petroleum and natural gas, Henan possesses Zhongyuan
                     Fields and Henan Oil Fields. It is the 5th largest petroleum and natural gas producer in
                     China.


                     Henan has 197 families and 3,830 species of higher plants, and 418 kinds of animals. It's
                     important producer of the country's wheat, corn, cotton, tobacco leaves and oil plants.
Tourism resources    As one of the major birthplaces of the Chinese civilization, Henan has several
                     epoch-making archeological discoveries, including the Peiligang Culture Site dating back
                     7,000 years, Yanshao Culture Site of some 6,000 years ago, and Dahe Culture Site of m
                     than 5,000 years ago. In ancient China, more than 20 dynasties established their capital
                     Henan. Three of China's seven great ancient capitals are located in Henan: Anyang of th
                                       Shang Dynasty, Luoyang of nine dynasties and Kaifeng of seven dynasties. Three of
                                       ancient China's four great inventions, the compass, paper-making and gunpowder, were
                                       made in Henan. The province numbers first in the whole country in terms of underground
                                       cultural relics, and the second in existing cultural relics on the ground. The Yellow River,
                                       with numerous ancient relics and scenic attractions, also provides a rich tourist resource
                                       Henan.




                               Projects Wanting Foreign Investment


Hot spots:

Resource development, infrastructure facilities, technical reform and renovations of old
enterprises, processing of agricultural and animal husbandry products, all-round development of
agriculture.

Areas of projects:

1. Agriculture- and animal-husbandry-related industries;

2. Transportation;

3. Education;

4. Real estate, tourism, and hotels;

5. Commerce;

6. Energy;

7. Light industry;

8. Industries of ferrous metallurgy and non-ferrous metals;

9. Petroleum, petrochemical and chemical industries;

10. Mechanical industry;

11. Electronics industry;

12. Industries of building materials, equipment and other non-metal products;
13. Medical industry, medical equipment and hospitals;

14. City infrastructure construction and environmental protection.




                                 Favorable Policies for Investment




Enterprises invested with foreign funds are entitled to have the following preferential policies:

Preferential tax policies:

Foreign-funded manufacturing enterprises are exempt from business income tax in the first and
second years after they begin to make profits. They pay only half of the business income tax from
the third to the fifth year. Those in the specially encouraged trades can continue to pay half of the
tax from the sixth to the eighth year.

Enterprises with foreign investment in the New- and High-Tech Development Zone, Zhengzhou
Economic and Technological Development Zone and Luoyang New- and High-Tech Development
Zone are granted a reduced rate business income tax of 15 percent.

Foreigners working in Henan can pay personal income tax on only half of their income.

To encourage and limit the B Class foreign-funded projects, the imported major equipment, which
is included in the investment and for the use of the project, is exempt from import tariff and value
added import tax.
Foreign enterprises that have transferred advanced technology or provided technological help to
the Chinese partners can be exempt from business tax and business income tax with the approval
from the State Taxation Administration. Foreign investors who receive such technological transfer
are exempt from business tax.

Preferential land policies:

Foreign enterprises can purchase the land-use-right on rented or allocated land. When they obtain
the land-use-right from the government, they shall get it with the lowest price. Whose who have
problem in settling up the payment in one time can pay the land tax first, and divide the rest into
several payments.
Foreign-funded enterprises investing in underdeveloped areas or state farms and rangeland are
exempt from charges for using the land for 10 years.
Enterprises whose products are for export or with advanced technology can, from the date of
recognition, be exempt from paying land-use fee for five years, and from the sixth to the tenth
year, they need to pay only 50 percent of the charge in this category.

Finance, credit and foreign exchange management:

The depreciation of fixed assets in foreign-funded enterprises may be calculated by the
depreciable life comprehensively, or by degressive balance.
When foreign enterprises are pooling money in China, Chinese commercial banks should accept
sponsorship from foreign shareholders and allow them to apply for loans in Chinese currency with
their collateral foreign currency.
Income of the foreign enterprises can be exchanged into foreign currency and remitted abroad.

Qualified foreign enterprises may apply to issue A shares or B shares on the Chinese stock market.

In foreign-funded joint ventures of energy and transportation establishments, by the time the
contract expires, the whole fixed assets of cooperative projects belong to the Chinese part, but the
foreign investors can take back their investment by share the depreciation periodically.

Regulations for Encouraging Foreign Investment in Henan

(passed in the eighth session of the Standing Committee of the Henan Provincial People's
Congress on June 23, 1994.)

Chapter One General Rules

Article 1. This Regulation is enacted according to related state laws and codes and the situation in
Henan to encourage foreign investment and the introduction of advanced technology so as to
promote economic development in the province.

Article 2. Foreign investment referred to in this Regulation is defined as follows:

The investment from foreign enterprises or other forms of economic organizations or individuals
in joint ventures; Chinese-foreign cooperative enterprises, wholly foreign owned enterprises, or
other forms of enterprises in the administrative region of Henan.

Article 3. All foreign businessmen and enterprises investing in Henan will be given preferential
treatment according to laws, rules and policies of the state and this Regulation.

Article 4. This Regulation will be implemented by the department in charge of foreign investment
at all levels of the government. Other related departments should work in cooperation with the
department in charge to perform their duties in the management of foreign investment.
Article 5. Beginning with their registration, Foreign-invested enterprises become juridical
personages in China and their assets, property right, profit and other legal rights should be
protected by law. Foreign-invested enterprises should abide by the state laws and rules and this
Regulation.

Chapter Two Investment and Approval

Article 6. Foreign business people can invest in Henan in the following forms:
(1) Setting up wholly foreign owned enterprises;
(2) Establishing Chinese-foreign joint ventures;
(3) Establishing Chinese-foreign cooperative enterprises;
(4) Developing compensation trade, processing and assembly for export, and cooperative
production;
(5) Purchasing shares, stocks and bonds of enterprises;
(6) Purchasing and leasing real estate and equipment;
(7) Engaging in large-scale development and management of land;
(8) Purchasing, contracting and renting existing enterprises;
(9) Other forms of investment permitted by the state.

Article 7.: Foreign business people can choose to invest in any trade allowed by the state. They
are particularly encouraged to invest in the following trades:
(1) Agriculture, agricultural and sideline-product processing, stockbreeding, forestry products
processing;
(2) Infrastructure facility construction and basic production in the fields of energy, transportation,
metallurgy and building materials;
(3) New- and high-tech industries, industries with high efficiency and low consumption of raw
materials;
(4) Public undertakings of education, science and technology, and medicine;
(5) Tertiary industries opening to foreign investment permitted by the states.

Article 8. Foreign business people are especially encouraged to invest in enterprises for export
and that with advanced technology.

Article 9. Foreign investors can invest in the forms of cash, industrial property rights, non-patent
technology and equipment.

Article 10. Foreign business people can select projects for investment from the lists publicized by
the people's government at all levels, or have their own projects within the range prescribed by the
government.

Article 11. Foreign investors may appoint a representative to handle their business in Henan. This
representative should hold a legal document for his or her entrustment.

Article 12. The products for export made by foreign-funded enterprises in Henan, if not in the
categories requiring export permit and allocated quota, should be examined and approved by the
government department in charge of foreign investment with the authority granted by the state or
the province.

Article 13. The government department in charge of such examination and approval should give
an official reply in written form within 15 days after receiving project proposals, feasibility reports,
contracts, charters and other relevant documents. The government's industrial and commercial
administrative departments should finish the formalities for sanction and registration and issue
business license in 15 days.

Proposals and feasibility reports for projects of productive construction and that of technological
reform with a total investment of less than US$2 million should be examined and approved at the
same time.

Article 14. Foreign investors who have registered an investment of US$200,000 or above in any
city's development zone in Henan should be allowed to have one to three relatives or friends
moving into the city by presenting business license and assets verifying report to a government at
or above the county level for approval. Those who are registered as permanent rural residents can
be re-registered as permanent urban residents, and are exempt from paying city construction fees.

Chapter Three The Use of Land

Article 15. Foreign-funded enterprises established in Henan may purchase or rent the land-use
right according to the law. Those who have purchased the land-use right can transfer, lease or
mortgage the land according to law.

Article 16. The charge for foreign investors' land-use right should be based on the local standard
land price.

When foreign investors use the land for projects in the fields of energy, transportation, urban
infrastructure facilities, education, science and technology, medicine and other public
undertakings, they should be offered preferential prices as approved by the government at or
above county level.

Article 17. After purchasing the legal land-use right, foreign-invested enterprises established in
designated areas in the city should pay land-use fees according to the stipulations of the state and
province. Local authorities should not raise the land price arbitrarily. Foreign-funded enterprises
set up in poor areas or on state farm are exempt from land-use fees for the first 10 years. Upon
notarization, enterprises whose products are for export or those with advanced technology are not
charged for land-use fees for the first five years. Starting from the sixth year till the tenth year,
they are charged half of the land-use fees. The exemption ends thereafter.

Article 18. Rural collectively-owned enterprises can become shareholders in foreign-invested
enterprises through land-use charges.

Chapter Four Preferential Tax Policies
Article 19. Foreign-invested manufacturing enterprises set up in Henan Province should pay 30
percent business income tax. Such enterprises set in inland cities permitted open by the state can
pay business income tax at a reduced rate of 24 percent. Foreign-invested manufacturing
enterprises set up in new- and high-tech industrial development zones or economic and
technological development zones established by the state can pay business income tax at a reduced
rate of 15 percent.

The above enterprises are all exempt from paying local income tax.

Article 20. After the expiration of the period in which enterprises are exempt from paying
business income tax or are allowed to pay it at a reduced rate according to the taxation law, if their
export reaches 70 percent or above of the total annual production value, their business income tax
can be reduced by 50 percent based on the original rate prescribed by the taxation law.

Article 21. If the foreign-funded enterprise reinvests its profit into the same enterprise to increase
the registered capital, or uses it as capital to open other enterprises, and continues this operation
for five years, it can have 40 percent of the business income tax paid on the reinvested part
reimbursed with the permission of the government department in charge of taxation affairs. If it
reinvests the profit to open new or expand export-oriented enterprises or that with advanced
technology, all the business income tax paid on the reinvested part should be reimbursed.

Article 22. The local government should return all the 25 percent of the newly increased
value-added tax of the year that it has retained to the foreign-invested enterprise, as long as the
said enterprise is engaged in agricultural, forestry, and animal husbandry production or located in
an underdeveloped area.

For foreign-funded enterprises with products for export or with advanced technology, the local
government should return them 60 percent of the total 25 percent of the newly increased
value-added tax of the year it has retained. For other manufacturing enterprises with foreign
investment, the local government should return to them 40 percent of the 25 percent locally
retained newly increased value-added tax. Foreign-funded enterprises paying tax for special
agricultural and forestry products can get back 50 percent of the newly increased tax they have
paid in the year.

The return of the tax should be handled by government treasury department in a time limit of five
years.

Article 23. Foreign-funded manufacturing enterprises set up in Henan Province are exempt from
paying land-use tax, property tax, and vehicle tax. In addition to the above preferential taxation,
foreign-invested enterprises working on public welfare projects concerning education, science and
technology, and medicine are also exempt from paying farmland occupancy tax.

Article 24. The mechanical equipment, vehicles for production, raw materials, fuel, spare parts,
accessories, components, and auxiliary equipment imported by a foreign-invested enterprise for
manufacturing products for export stated in the contract do not need an import permit and should
go through customs inspection by the presenting the enterprise's contracts or contracts for
importation.

Chapter Five Finance, Credit and Management of Foreign Currency

Article 25. The depreciation of fixed assets in foreign-funded enterprises may be calculated by
depreciable life comprehensively, or by degressive balance.

Article 26. If the fixed assets in foreign-funded enterprises need a speedup depreciation because
of erosion, strong earthquake or other reasons, it can be done through required procedure with the
approval from the government department concerned.

Article 27. If a foreign-funded enterprise needs a loan, after being examined and approved by the
local financial department, it can apply for any kind of loans and be treated with the same relevant
policies for state-owned enterprises.

Article 28. When a foreign-funded enterprise has difficulties in meeting balance in foreign
currency, it can, with the approval of the provincial administrative department in charge of foreign
investment, purchase in China commodities that are not controlled by the state and do not require
a permit or quota for export.

Chapter Six Protection for Investment

Article 29. Project construction and facility installation of a foreign-invested enterprise can invite
public bidding in and outside China.

Article 30. Foreign-invested enterprises have the decision-making power for production and
management endowed by the state law. Such enterprises in Henan Province can recruit, employ or
dismiss technicians, managers and workers and decide the standards and form of salaries,
allowance and bonus on their own.

Article 31. There are no restrictions for foreign-funded enterprises on the ratio between their
products sold domestically and internationally, with the exception of those specifically prescribed
by the state.

Article 32. Foreign-invested enterprises set up in Henan Province are exempt from paying fees for
building and expanding city infrastructure facilities. Foreign-invested enterprises with products for
export and advanced technology can be exempt from paying fees for water resources with the
approval of the relevant government department at city or prefecture level.

Article 33. Foreign-funded real estate enterprises engaged in large-scale reconstruction of old city
zones are exempt from paying fees for city infrastructure facilities.
Article 34. The construction of supporting facilities for water, electricity, gas, heating, road, and
communication outside the factory of the foreign-invested enterprises should charged at the same
prices as that for state-own enterprise and be arranged with priority.

Article 35. Any legal inspectors to foreign-funded enterprises must have the inspection
permission issued by the central or provincial government, or the certificate signed by the head of
relevant government department before they perform the inspection. Otherwise, foreign-funded
enterprises can refuse the inspection.

Article 36. No government department or institutions can enforce or collect any fees in any name
from foreign-funded enterprises apart from those specifically stipulated in the state and provincial
laws, rules and regulations.

Article 37. Foreign-funded enterprises can appeal to the local department in charge of foreign
investment to impeach anyone who has interfered illegally with and impinged on the enterprises'
decision-making rights. The department concerned should investigate and handle the case, and
inform the result to the appealer or revelator in 20 days after receiving the appeal. If the legal
rights of a foreign-funded enterprise is trespassed upon, and the intrusion is within the scope of
administrative reconsideration and lawsuit procedure, the foreign-funded enterprise can apply for
reconsideration according to the Regulations for Administrative Reconsideration, or appeal to the
People's Court according to the Administrative Procedure Law of the People's Republic of China.

Article 38. Any disputes or dissension between foreign-invested enterprises can be mediated or
arbitrated according to relevant laws and regulations of the state.

Article 39. The government's department in charge of foreign investment at all levels should work
in cooperation with other departments concerned to simplify administrative procedures and
improve the efficiency and quality of their service. If any departments or individuals violate this
Regulation, the head of the department and the person responsible should be given administrative
sanction by the local government according to the seriousness of the offence.

Article 40. Anyone who has successfully recommended or introduced foreign investment to
Henan Province should be honored and rewarded by the local people's government.

Chapter 7 Supplementary Articles

Article 41. This regulation is also applicable to compatriots from Taiwan, Hong Kong and Macao
and overseas Chinese who have invested in Henan Province.

Article 42. The Henan Provincial People's Government is responsible for the explanation of this
Regulation.

Article 43. This Regulation will come into force upon promulgation.

				
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