MONEY always matters in China - and particularly so for Li Xiangzhu, director of Chongqing Economic and Technological Development Zone. 'Our major difficulty is a lack of capital. We have invested more than 300 million yuan (HK$279 million) in infrastructure facilities in the past,' Mr Li said. The investment is a huge burden on the five-year-old development zone, considering that its tax income was about 60 million yuan last year. With a humble start, it was only given state-level status by the State Council in 1993 after the zone had been operative for three years under the municipal government. 'The state granted us no loan to start the development zone, which relied on initial municipal funds of 63.9 million yuan,' Mr Li said. It is a tough task, but the zone wants to improve its infrastructure further by investing another 130 million yuan to supply water, power, natural gas and telecommunications facilities. 'When they are built in three years, the environment will be much improved,' Mr Li said. Chongqing, as an open city, offers foreign enterprises an income tax rate of 24 per cent compared with the 33 per cent charged to domestic enterprises. The rate falls to 15 per cent for those companies registered in state-level economic development zones. Foreign enterprises in the zones are also entitled to a two-year tax exemption and a three-year tax reduction. 'I suspect the tax incentives will in the long term be scrapped, so the investment environment is the key to attract foreign investors,' Mr Li said. Market potential was also one of the major considerations for foreign investors. China has advocated 'national treatment' to create a level playing field for domestic enterprises, which are disadvantaged by tax incentives enjoyed by foreign investors. The zone, the only economic and technological development zone in southwest China, secured pledged foreign investment of more than US$50 million last year. It expects to have US$100 million this year. It now has 204 foreign-invested enterprises, with accumulated foreign investment of US$470 million (HK$3.63 billion). The tax income will reach 100 million yuan this year. The zone sells land to foreign investors largely at a break-even price. It is much lower than in the Chongqing High and New Technology Zone, approved by the state in 1991, which had higher land costs, Mr Li said. 'Our aim is not to make profit from selling the land, but to receive more tax income by attracting foreign investors here.' 'As many foreign investors do not know Chongqing, we will beef up promotion,' Mr Li said. The zone focuses on attracting projects that will complement Chongqing's pillar industries including motorcycle and car manufacturing, chemicals, pharmaceuticals and food processing. For instance, Jialing-Honda Motors, a joint venture between China Jialing Industrial Company and Japan's Honda, is being built in the zone's Dangui District for foreign investment.