When he was here recently, Premier Zhu Rongji loved the grass we planted here. He kept walking up and down on it. He said that it was very difficult to grow grass in the salty soil.' Zhang Jie was showing Mr Zhu around a new park, built in the Tianjin Economic & Development Zone (Teda) as the latest way to attract customers.
'But the trees here are scrawny,' she said. 'They will not grow much better, the wind is too strong and the soil too poor.' Teda is one of more than 12,000 zones in the mainland that offer foreign investors tax breaks and other preferential policies. Competition between them is so fierce that everything counts, even grass and trees.
But the era of these zones is coming to an end. They have fulfilled their role of attracting foreign investment and Beijing has other priorities - raising tax revenue, trying to make equal competition among different kinds of firms in preparation for entering the World Trade Organisation and spreading investment more evenly over the country.
On January 6, Finance Minister Xiang Huaicheng announced a phasing out of the refund of value-added and consumption taxes the central government gives the zones and which are their most important source of revenue.
Previously, the zones received a refund of the of 75 per cent of VAT revenues they paid to the central government, already keeping the other 25 per cent. Those zones set up for 10 years or more lose the rebates at once and the younger ones will lose them gradually.
'Our annual income is three billion yuan [about HK$2.79 billion], of which we spend two billion to subsidise costs for our investors,' said Teda chairman Li Yong. 'For 10 years, we got a full rebate on the 75 per cent of VAT we paid to Beijing but, as from this year, all of the revenue remains with the centre.' Teda was set up early, in 1984, and has attracted utilised foreign investment of US$5.45 billion. It has more than 1,900 companies, employing 172,000 people, and GDP last year of 1.8 billion yuan.
