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Foreign Investment
The PRC's 'Four Modernisations' programme has resulted in an effort
to attract foreign investment and the promotion of joint ventures
with foreign enterprises and governments. Four SEZs have been established
in Guangdong and Fujian provinces, which aim to attract direct foreign
investment to wholly owned or joint venture concerns to encourage
technology transfer and boost exports and employment. As an incentive
to attract greater foreign participation in PRC enterprises, the
government provides tax holidays and exemptions from import restrictions.
SEZs are not the only method that the PRC government has employed
to attract foreign investment however, as cities such as Shanghai,
Dalian, Guagzhou, Tianjin and Beijing have been allowed to employ
policies similar to the SEZs to attract foreign investors. Hainan
Island - previously under the jurisdiction of Guangdong province
- was made a separate province in 1988, and in effect functions
as a free trade zone. In 1990, the Pudong development zone -similar
to an SEZ - was established in Shanghai.
PRC encouragement of foreign investment has not been successful
has the government would have hoped, however. Political instability
- mainly as a consequence of the Beijing massacre, corruption and
general bureaucratic inefficiency have all hindered greater foreign
participation in the PRC's economy. In a bid to assuage Western
fears of investing in the PRC, the government has been adopting
patent laws and signing investment protection and taxation treaties.
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