Beijing is to introduce incentives to attract more foreign investment to the western regions, officials said. They also urged that massive projects being built in the region should progress in a way that does not undermine social stability. 'Dozens of 'Leading Groups on Developing the West' have been set up in provinces and districts in the western region to co-ordinate related projects,' Xinhua quoted a senior official from the State Council's Developing the West office as saying. 'Authorities will closely scrutinise the use of funds allocated for western development. Corruption and cases of misuse of such funds will be severely punished,' said the official. He added that local policies and regulations that had 'not lived up to market mechanisms' had been scrapped to make way for faster development. Mainland leaders hope that speeding up development in the impoverished western part of the country - where the widening income gap between booming coastal regions and restive ethnic minorities could cause rural unrest - will help maintain social stability. The 10 provinces and municipalities in western China cover an area of 5.4 million square km with a population of 300 million. Despite President Jiang Zemin's unprecedented crusade over the past year to move funds, technology and talent to the impoverished western provinces, the Government is still short of the needed cash and capable cadres. Foreign investors are invited to invest in a wide range of projects including transport, urban construction, environmental protection, building materials, medicine, agriculture, tourism and real estate. But they are reluctant to invest in the underdeveloped region due to uncertain returns. The renewed drive to lure foreign capital was launched as provincial heads and top officials met this week at Chongqing, one of the key municipalities involved in the western development. 'China will grant more preferential tax items for investment in its vast western territory,' Xinhua quoted Wei Jianguo, assistant minister of Foreign Trade and Economic Co-operation, as saying at the International Symposium on Development of Western China in Chongqing. Mr Wei said some local regulations would be drafted to ensure such tax exemptions were in line with tax laws. Authorities promised to open more sectors to foreign investment and gradually ease investment restrictions in sectors including telecommunications, insurance and tourism. It is expected that companies with foreign investment in western regions may enjoy eased restrictions on the sale of their products if they are in demand on the domestic market. He said the Ministry of Foreign Trade and Economic Co-operation had set up taskforces to inspect provinces in the western region so that the ministry could formulate policies to open it up.