Equality for foreign firms on the cards

CHINA is considering guidelines for foreign investment that include giving multinationals wider access to domestic markets and all foreign-funded firms the same treatment as Chinese enterprises.

This is part of the country's move to encourage foreign investment and may help revive foreign investors' confidence in the mainland following the introduction of measures to tighten economic policy.

A senior official of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) said in Beijing that China was prepared to give foreign enterprises the same treatment as domestic firms so that they could compete on an equal footing.

China has opened its doors wide to foreign investment in the past 14 years and, in the first four months of this year, had received promises for US$32.9 billion of foreign funding.

However, there were big problems in the management of foreign capital, said Jiao Sufen, director-general of MOFTEC's foreign investment administration, according to the latest China Daily Business Weekly.

At present, foreign-funded ventures face restrictions on buying raw materials, setting prices and selling on the Chinese market.

In the meantime, preferential tax policies on foreign-funded ventures would be tempered to bring them into line with those for their Chinese counterparts, the Business Weekly said.

''We should allow them to sell all their products within China, provided that they are advanced and needed by the domestic market, and give them foreign trade rights,'' Ms Jiao said.

She also advocated clear support for foreign investment in export-oriented agricultural projects and large and medium-sized state enterprises.

A recent China newsletter from Price Waterhouse said mainland joint ventures might be allowed to use the swap rate for conversion of the venture's investment capital into yuan, instead of the official rate.

''MOFTEC are considering approving certain joint venture contracts where the exchange rate used for the conversion of foreign currency into renminbi on the venture's investment capital has been determined by the joint venture partners, for example by using the swap centre rates.''