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The Ministry of Commerce will formulate new policies to help national economic and technological development zones overcome difficulties following the unification of corporate income tax rates, a senior official said.

Li Zhiqun, director of the ministry's foreign investment department, said on Sunday that the ministry, together with the Ministry of Science and Technology and Legislative Affairs Office of the State Council, will speed up work on the establishment of management polices for such zones.

Foreign investors in China's development zones now enjoy favorable taxation rates as well as tax waivers and incentives, compared to their Chinese counterparts.

But according to a draft law the country will unify income tax rates for domestic and foreign companies and the favorable policies will also be scrapped.

Apart from taxation, the zones also face problems in land resources and increases in labor costs.

Foreign investors will be encouraged to devote more to high-tech industries and advanced manufacturing in development zones in East China, while zones in western and central parts will get more support in infrastructure construction and training.

Issues such as intellectual property rights protection, innovation and environmental protection will be major factors when evaluating these zones, Li said.

According to statistics from the Ministry of Commerce, China's national economic and technological development zones contributed nearly 10 percent of the total industrial output, 15 percent of exports and about a quarter of realized foreign direct investment in the first nine months of last year.

(China Daily 02/27/2007 page1)

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