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GDP:
The GDP of Henan Province in 2001 was 564.5 billion yuan, the 5th highest in China after Jiangsu, Guangdong, Shandong, and Zhejiang provinces.
GDP growth rate:
The province?ˉs 2001 annual GDP growth rate was 9.1 percent.
GDP per capita:
The GDP per capita in Henan was 5,440 yuan in 2000.
GDP Ratio (1st, 2nd and tertiary industries):
Of the province?ˉs GDP value increased in 2000, that for the first, second and tertiary industries was 116 billion yuan, 241 billion yuan, and 155.6 billion yuan respectively.
Poverty Alleviation plan:
There are 1.29 million people living in poverty in Henan?ˉs rural areas. The province has allocated 7.48 billion yuan to help them relieve from poverty.
Revenue:
The planned revenue is 26.77 billion yuan, an increase of 8.6 percent over that of the previous year.
Industrial output value:
The industrial output value of 2001 was 228.76 billion yuan, 9.8 percent more than that of 2000.
Foreign trade:
There are 11 entry ports of aviation, railways and highways in Henan, leading China?ˉs inland provinces in this aspect. Henan has established steady trade relations with over 8,000 business partners in 150 countries and regions in the world, and has absorbed investment from over 90 countries and regions. The total volume of import and export for 2000 was US$2.275 billion, with US$1.493 billion coming from export and US$781 million out of import.
Foreign investment:
By the end of 2000, 7,027 foreign companies had been approved to invest in Henan, their total contracted fund having reached US$12.413 billion, of which, US$8.424 billion had practically invested in Henan.
Sister cities:
Henan has established relations with over 30 countries and regions in the world for scientific and technological exchange and cooperation. The province and its prefectures and cities have also set up sister relations with 30 counterparts in countries such as the United States, Japan, Canada and Italy.
Pillar industries:
Electronic machinery, chemical industry, foodstuff industry, light and textile industries, and building material industry.
Agriculture:
With 6.825 million hectares of arable land, Henan is a well-known big agricultural province and an important producer of agricultural and sideline products. It leads the nation in total grain output and in the yields of wheat, sesame, jute, and bluish dogbane. It ranks the second in China in production volumes of cotton, oil plants, and tobacco. Forests and fruit trees are abundant, and traditional medicines have a venerated history in Henan. Animal husbandry is also well-developed in the province, exceeding all other provinces in the number of domestic animals; its meat production occupies the third place in the nation. In 2001, its total grain output was 41.19 million tons; meat, 5.41 million tons. Great achievements have been made in improving conditions for agricultural production, along with a rather complete basic construction network. A harmonious agricultural production system has been built up with the balanced development of farming, animal breeding, forestation, husbandry, fishery and sideline industries. Farming, the pillar of agriculture in Henan, is equipped with basic establishments such as a water conservancy system completed with mechanically pumped wells, reservoirs, channels and drainage lines. This has greatly enhanced its capacity to resist natural disasters. With the wide application of science and technology in agriculture, the establishment of the bases for agricultural commodities and the comprehensive development of all agricultural areas, Henan has become one of the key provinces to draw foreign investment in agriculture.
Commerce:
The wide market and prosperous commerce have made Henan an important commodity distributing center in China. There are 25 large wholesale markets and more than 6,000 retail markets of all kinds in the province. The Zhengzhou Commodity Exchange is the largest wholesale market and the first standardized futures market of grain in the nation, acclaimed as ?°China?ˉs No. 1 Market.?± ?°Zhengzhou Price?± has thus become the directing price for national grain and oil exchange and also an important reference for worldwide grain and oil exchange.



Hot spots:
Resource development, infrastructure facilities, technical reform and renovations of old enterprises, processing of agricultural and animal husbandry products, all-round development of agriculture.
Areas of projects:
1. Agriculture- and animal-husbandry-related industries;
2. Transportation;
3. Education;
4. Real estate, tourism, and hotels;
5. Commerce;
6. Energy;
7. Light industry;
8. Industries of ferrous metallurgy and non-ferrous metals;
9. Petroleum, petrochemical and chemical industries;
10. Mechanical industry;
11. Electronics industry;
12. Industries of building materials, equipment and other non-metal products;
13. Medical industry, medical equipment and hospitals;
14. City infrastructure construction and environmental protection.



Enterprises invested with foreign funds are entitled to have the following preferential policies:
Preferential tax policies:
Foreign-funded manufacturing enterprises are exempt from business income tax in the first and second years after they begin to make profits. They pay only half of the business income tax from the third to the fifth year. Those in the specially encouraged trades can continue to pay half of the tax from the sixth to the eighth year.
Enterprises with foreign investment in the New- and High-Tech Development Zone, Zhengzhou Economic and Technological Development Zone and Luoyang New- and High-Tech Development Zone are granted a reduced rate business income tax of 15 percent.
Foreigners working in Henan can pay personal income tax on only half of their income.
To encourage and limit the B Class foreign-funded projects, the imported major equipment, which is included in the investment and for the use of the project, is exempt from import tariff and value added import tax.
Foreign enterprises that have transferred advanced technology or provided technological help to the Chinese partners can be exempt from business tax and business income tax with the approval from the State Taxation Administration. Foreign investors who receive such technological transfer are exempt from business tax.

Preferential land policies:
Foreign enterprises can purchase the land-use-right on rented or allocated land. When they obtain the land-use-right from the government, they shall get it with the lowest price. Whose who have problem in settling up the payment in one time can pay the land tax first, and divide the rest into several payments.
Foreign-funded enterprises investing in underdeveloped areas or state farms and rangeland are exempt from charges for using the land for 10 years.
Enterprises whose products are for export or with advanced technology can, from the date of recognition, be exempt from paying land-use fee for five years, and from the sixth to the tenth year, they need to pay only 50 percent of the charge in this category.

Finance, credit and foreign exchange management:
The depreciation of fixed assets in foreign-funded enterprises may be calculated by the depreciable life comprehensively, or by degressive balance.
When foreign enterprises are pooling money in China, Chinese commercial banks should accept sponsorship from foreign shareholders and allow them to apply for loans in Chinese currency with their collateral foreign currency.
Income of the foreign enterprises can be exchanged into foreign currency and remitted abroad.
Qualified foreign enterprises may apply to issue A shares or B shares on the Chinese stock market.
In foreign-funded joint ventures of energy and transportation establishments, by the time the contract expires, the whole fixed assets of cooperative projects belong to the Chinese part, but the foreign investors can take back their investment by share the depreciation periodically.

Regulations for Encouraging Foreign Investment in Henan

(passed in the eighth session of the Standing Committee of the Henan Provincial People's Congress on June 23, 1994.)

Chapter One General Rules
Article 1. This Regulation is enacted according to related state laws and codes and the situation in Henan to encourage foreign investment and the introduction of advanced technology so as to promote economic development in the province.
Article 2. Foreign investment referred to in this Regulation is defined as follows:
The investment from foreign enterprises or other forms of economic organizations or individuals in joint ventures; Chinese-foreign cooperative enterprises, wholly foreign owned enterprises, or other forms of enterprises in the administrative region of Henan.
Article 3. All foreign businessmen and enterprises investing in Henan will be given preferential treatment according to laws, rules and policies of the state and this Regulation.
Article 4. This Regulation will be implemented by the department in charge of foreign investment at all levels of the government. Other related departments should work in cooperation with the department in charge to perform their duties in the management of foreign investment.
Article 5. Beginning with their registration, Foreign-invested enterprises become juridical personages in China and their assets, property right, profit and other legal rights should be protected by law. Foreign-invested enterprises should abide by the state laws and rules and this Regulation.

Chapter Two Investment and Approval
Article 6. Foreign business people can invest in Henan in the following forms:
(1) Setting up wholly foreign owned enterprises;
(2) Establishing Chinese-foreign joint ventures;
(3) Establishing Chinese-foreign cooperative enterprises;
(4) Developing compensation trade, processing and assembly for export, and cooperative production;
(5) Purchasing shares, stocks and bonds of enterprises;
(6) Purchasing and leasing real estate and equipment;
(7) Engaging in large-scale development and management of land;
(8) Purchasing, contracting and renting existing enterprises;
(9) Other forms of investment permitted by the state.

Article 7.: Foreign business people can choose to invest in any trade allowed by the state. They are particularly encouraged to invest in the following trades:
(1) Agriculture, agricultural and sideline-product processing, stockbreeding, forestry products processing;
(2) Infrastructure facility construction and basic production in the fields of energy, transportation, metallurgy and building materials;
(3) New- and high-tech industries, industries with high efficiency and low consumption of raw materials;
(4) Public undertakings of education, science and technology, and medicine;
(5) Tertiary industries opening to foreign investment permitted by the states.
Article 8. Foreign business people are especially encouraged to invest in enterprises for export and that with advanced technology.
Article 9. Foreign investors can invest in the forms of cash, industrial property rights, non-patent technology and equipment.
Article 10. Foreign business people can select projects for investment from the lists publicized by the people's government at all levels, or have their own projects within the range prescribed by the government.
Article 11. Foreign investors may appoint a representative to handle their business in Henan. This representative should hold a legal document for his or her entrustment.
Article 12. The products for export made by foreign-funded enterprises in Henan, if not in the categories requiring export permit and allocated quota, should be examined and approved by the government department in charge of foreign investment with the authority granted by the state or the province.
Article 13. The government department in charge of such examination and approval should give an official reply in written form within 15 days after receiving project proposals, feasibility reports, contracts, charters and other relevant documents. The government's industrial and commercial administrative departments should finish the formalities for sanction and registration and issue business license in 15 days.
Proposals and feasibility reports for projects of productive construction and that of technological reform with a total investment of less than US$2 million should be examined and approved at the same time.
Article 14. Foreign investors who have registered an investment of US$200,000 or above in any city's development zone in Henan should be allowed to have one to three relatives or friends moving into the city by presenting business license and assets verifying report to a government at or above the county level for approval. Those who are registered as permanent rural residents can be re-registered as permanent urban residents, and are exempt from paying city construction fees.

Chapter Three The Use of Land
Article 15. Foreign-funded enterprises established in Henan may purchase or rent the land-use right according to the law. Those who have purchased the land-use right can transfer, lease or mortgage the land according to law.
Article 16. The charge for foreign investors' land-use right should be based on the local standard land price.
When foreign investors use the land for projects in the fields of energy, transportation, urban infrastructure facilities, education, science and technology, medicine and other public undertakings, they should be offered preferential prices as approved by the government at or above county level.
Article 17. After purchasing the legal land-use right, foreign-invested enterprises established in designated areas in the city should pay land-use fees according to the stipulations of the state and province. Local authorities should not raise the land price arbitrarily. Foreign-funded enterprises set up in poor areas or on state farm are exempt from land-use fees for the first 10 years. Upon notarization, enterprises whose products are for export or those with advanced technology are not charged for land-use fees for the first five years. Starting from the sixth year till the tenth year, they are charged half of the land-use fees. The exemption ends thereafter.
Article 18. Rural collectively-owned enterprises can become shareholders in foreign-invested enterprises through land-use charges.

Chapter Four Preferential Tax Policies
Article 19. Foreign-invested manufacturing enterprises set up in Henan Province should pay 30 percent business income tax. Such enterprises set in inland cities permitted open by the state can pay business income tax at a reduced rate of 24 percent. Foreign-invested manufacturing enterprises set up in new- and high-tech industrial development zones or economic and technological development zones established by the state can pay business income tax at a reduced rate of 15 percent.
The above enterprises are all exempt from paying local income tax.
Article 20. After the expiration of the period in which enterprises are exempt from paying business income tax or are allowed to pay it at a reduced rate according to the taxation law, if their export reaches 70 percent or above of the total annual production value, their business income tax can be reduced by 50 percent based on the original rate prescribed by the taxation law.
Article 21. If the foreign-funded enterprise reinvests its profit into the same enterprise to increase the registered capital, or uses it as capital to open other enterprises, and continues this operation for five years, it can have 40 percent of the business income tax paid on the reinvested part reimbursed with the permission of the government department in charge of taxation affairs. If it reinvests the profit to open new or expand export-oriented enterprises or that with advanced technology, all the business income tax paid on the reinvested part should be reimbursed.
Article 22. The local government should return all the 25 percent of the newly increased value-added tax of the year that it has retained to the foreign-invested enterprise, as long as the said enterprise is engaged in agricultural, forestry, and animal husbandry production or located in an underdeveloped area.
For foreign-funded enterprises with products for export or with advanced technology, the local government should return them 60 percent of the total 25 percent of the newly increased value-added tax of the year it has retained. For other manufacturing enterprises with foreign investment, the local government should return to them 40 percent of the 25 percent locally retained newly increased value-added tax. Foreign-funded enterprises paying tax for special agricultural and forestry products can get back 50 percent of the newly increased tax they have paid in the year.
The return of the tax should be handled by government treasury department in a time limit of five years.
Article 23. Foreign-funded manufacturing enterprises set up in Henan Province are exempt from paying land-use tax, property tax, and vehicle tax. In addition to the above preferential taxation, foreign-invested enterprises working on public welfare projects concerning education, science and technology, and medicine are also exempt from paying farmland occupancy tax.
Article 24. The mechanical equipment, vehicles for production, raw materials, fuel, spare parts, accessories, components, and auxiliary equipment imported by a foreign-invested enterprise for manufacturing products for export stated in the contract do not need an import permit and should go through customs inspection by the presenting the enterprise's contracts or contracts for importation.

Chapter Five Finance, Credit and Management of Foreign Currency
Article 25. The depreciation of fixed assets in foreign-funded enterprises may be calculated by depreciable life comprehensively, or by degressive balance.
Article 26. If the fixed assets in foreign-funded enterprises need a speedup depreciation because of erosion, strong earthquake or other reasons, it can be done through required procedure with the approval from the government department concerned.
Article 27. If a foreign-funded enterprise needs a loan, after being examined and approved by the local financial department, it can apply for any kind of loans and be treated with the same relevant policies for state-owned enterprises.
Article 28. When a foreign-funded enterprise has difficulties in meeting balance in foreign currency, it can, with the approval of the provincial administrative department in charge of foreign investment, purchase in China commodities that are not controlled by the state and do not require a permit or quota for export.

Chapter Six Protection for Investment
Article 29. Project construction and facility installation of a foreign-invested enterprise can invite public bidding in and outside China.
Article 30. Foreign-invested enterprises have the decision-making power for production and management endowed by the state law. Such enterprises in Henan Province can recruit, employ or dismiss technicians, managers and workers and decide the standards and form of salaries, allowance and bonus on their own.
Article 31. There are no restrictions for foreign-funded enterprises on the ratio between their products sold domestically and internationally, with the exception of those specifically prescribed by the state.
Article 32. Foreign-invested enterprises set up in Henan Province are exempt from paying fees for building and expanding city infrastructure facilities. Foreign-invested enterprises with products for export and advanced technology can be exempt from paying fees for water resources with the approval of the relevant government department at city or prefecture level.
Article 33. Foreign-funded real estate enterprises engaged in large-scale reconstruction of old city zones are exempt from paying fees for city infrastructure facilities.
Article 34. The construction of supporting facilities for water, electricity, gas, heating, road, and communication outside the factory of the foreign-invested enterprises should charged at the same prices as that for state-own enterprise and be arranged with priority.
Article 35. Any legal inspectors to foreign-funded enterprises must have the inspection permission issued by the central or provincial government, or the certificate signed by the head of relevant government department before they perform the inspection. Otherwise, foreign-funded enterprises can refuse the inspection.
Article 36. No government department or institutions can enforce or collect any fees in any name from foreign-funded enterprises apart from those specifically stipulated in the state and provincial laws, rules and regulations.
Article 37. Foreign-funded enterprises can appeal to the local department in charge of foreign investment to impeach anyone who has interfered illegally with and impinged on the enterprises' decision-making rights. The department concerned should investigate and handle the case, and inform the result to the appealer or revelator in 20 days after receiving the appeal. If the legal rights of a foreign-funded enterprise is trespassed upon, and the intrusion is within the scope of administrative reconsideration and lawsuit procedure, the foreign-funded enterprise can apply for reconsideration according to the Regulations for Administrative Reconsideration, or appeal to the People's Court according to the Administrative Procedure Law of the People's Republic of China.
Article 38. Any disputes or dissension between foreign-invested enterprises can be mediated or arbitrated according to relevant laws and regulations of the state.
Article 39. The government's department in charge of foreign investment at all levels should work in cooperation with other departments concerned to simplify administrative procedures and improve the efficiency and quality of their service. If any departments or individuals violate this Regulation, the head of the department and the person responsible should be given administrative sanction by the local government according to the seriousness of the offence.
Article 40. Anyone who has successfully recommended or introduced foreign investment to Henan Province should be honored and rewarded by the local people's government.

Chapter 7 Supplementary Articles
Article 41. This regulation is also applicable to compatriots from Taiwan, Hong Kong and Macao and overseas Chinese who have invested in Henan Province.
Article 42. The Henan Provincial People's Government is responsible for the explanation of this Regulation.
Article 43. This Regulation will come into force upon promulgation.
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