I．Geography and natural conditions

　　Elevation extremes
　　
　　Sichuan is high in the west and low in the east in terms of topography. Generally speaking, the western part is plateaus and mountainous regions some 4,000 meters above sea level while the east features the basin and hilly land with an elevation between 1,000 and 3,000 meters. The Sichuan Basin, covering an area of 165,000 square km, is one of the four largest in the country. The elevation within the basin is between 200 and 750 meters, sloping down from north to south.
　　
　　Natural resources
　　
　　The reserves of hydropower resources in Sichuan come to 150 million kw, second only to Tibet, and the exploitable potential is over 100 million kw, more than any other area in China.
　　
　　Sichuan boasts 132 verified mineral resources and leads the country in the reserves of vanadium, titanium, calcium, mirabilite, fluorite, natural gas, and sulfur iron, and leads the world in reserves of titanium. Its reserves of vanadium ranks third in the world.
　　
　　The pleasant climate provides a favorable environment for plants and animals. Forests cover a total area of 7.46 million hectares. Sichuan is home to one-fifth of the country抯 dawn redwoods and Cathaya argyrophylla, two species so old they are regarded as living fossils. It is also rich in animal resources. There are over 1,000 kinds of vertebrates, accounting for 40 percent of the country. Among them are 55 kinds of rare animals. The well-known giant pandas inhabit mainly in 36 counties and natural reserves of four mountain ranges within the territory of Sichuan.
　　
　　Sichuan has three places on the World Cultural and Natural Heritage List: the Jiuzhaigou Scenic Area, the Huanglong Scenic Area, and Mount Emei with the Leshan Giant Buddha; nine state-class scenic areas, including the Dujiang Dam Irrigation System, Qingcheng Mountain, the Sea of Bamboo in southern Sichuan; 11 national forest parks; 40 nature reserves, 44 provincial-class scenic areas. Almost every variety of tourist resources is available here: plateaus, mountains, ravines, basins, hills, plains, rivers, lakes, hot springs, waterfalls, limestone caves, and even danxia (red bed) formation.
　　
　　Environment and current issues

II． Population

　　Total population: 84.93 million (1998)
　　
　　Population growth rate:　0.748 %
　　
　　Life expectancy (average)
　　
　　Ethnicity
　　
　　In addition to its majority, the Han people, Sichuan is also inhabited by many ethnic groups including 13 with at least 5,000 people each: the Yi, Tibetan, Qiang, Hui, Mongolian, Lisu, Manchu, Naxi, Bai, Bouyei, Dai, Miao and Tujia.
　　
　　Sichuan has China抯 second-largest region inhabited by Tibetans as well as the largest region inhabited by the Yi ethnic group and the only region where the Qiang people live in homogeneous communities. The Yi ethnic group, with the largest population of any minority in Sichuan, lives in the Greater and Lesser Liangshan mountains and the Anning River Valley. The Tibetans live in the Garze and Ngawa Tibetan Autonomous Prefectures and the Muli Tibetan Autonomous County in Liangshan Prefecture. The Qiang people, one of China抯 oldest ethnic groups, live mainly in Maoxian, Wenchuan, Heishui, Songpan and Beichuan on the upper reaches of the Minjiang River.
　　
　　Literacy
　　
　　Illiterate and semi-illiterate aged 15 and over: 10.32 million (1998)
　　
　　Male: 3.1 million
　　
　　Female: 7.22 million

III. Economy

　　GDP: 358.03 billion yuan (1998)
　　GDP growth rate: 9.1%
　　
　　Average GDP per capita: 4,339 yuan
　　
　　GDP ratio (1st, 2nd and tertiary industries): 26.3, 42.7 and 31.1 percent respectively.
　　
　　Poverty alleviation plan
　　
　　Inflation rate
　　
　　Unemployment rate
　　
　　Revenues: 19.7 billion yuan (1998)
　　
　　Industrial output value: 368.895 billion yuan (1998)
　　
　　Agricultural output value: 82.37 billion yuan (1998)
　　
　　Foreign trade
　　
　　The volume of import and export was US$2.86 billion in 1998.
　　
　　Foreign investment
　　
　　Located in the hinterland China though, Sichuan has established close links with the rest of the world. An ever-growing number of foreigners are visiting Sichuan. Foreign investment has been fully utilized in such fields as comprehensive agricultural development, transforming state-owned enterprises, construction of infrastructure facilities, hi-tech projects, and tourism. Sichuan is now home to more than 5,000 foreign-funded enterprises.
　　
　　Over 30 international consortiums and large corporations, including Motorola, Pepsi Cola, Coca Cola, and McDonnell Douglas of the United States; Chit Tat of Thailand; Bayer and Siemens of Germany; and Toyota and Mitsubishi of Japan, have started operations in Sichuan. The President Group, Taiwan抯 largest food enterprise, has invested US$50 million and established the Chengdu President Food Co., Ltd, which has become the largest instant food enterprise in southwest China. An investment of 1.28 billion yuan from the Singapore-China-Hong-Kong Group, a union of 41 enterprises of Singapore, China抯 mainland and Hong Kong, has financed the construction of the Chengdu-Mianyang Expressway, the first jointly invested expressway in West China.
　　
　　Pillar industries
　　
　　Electronic information industry, machinery, metallurgy, medicine, chemicals, food and beverage, and building materials.

IV. Telecommunication

　　Telephones: 3.97 million (including mobile phone subscribers) (1998)

　　Radio and TV stations
　　
　　
V. Transportation
　　
　　
　　Railways
　　
　　Five trunk lines including the Chengdu-Chongqing Railway, Chengdu-Kunming Railway and Baoji-Chengdu Railway, eight feeders and four local railway lines, with the mileage open to traffic reaching 2,693 km.
　　
　　Highways
　　
　　The mileage of highways has reached 81,600 km. An expressway network with Chengdu, capital of the province, at the center, is taking shape. By the end of 1998, a total of 328 km of expressway had opened to traffic.
　　
　　Airports
　　
　　The Chengdu Shuangliu Airport has become one of the busiest international airports in China. Another five civil airports at Dachuan, Yibin, Luzhou, Xichuang and Nanchong have also been open to traffic.

VI. Projects wanting foreign investment

　　1.Comprehensive development of agriculture and deep processing of agricultural products using new technology;
　　
　　2.　 Development of forestry;
　　
　　3.　 Development and comprehensive utilization of resources;
　　
　　4.　 Energy construction and saving;
　　
　　5.　 Construction of communication infrastructure facilities;
　　
　　6.　 Technical renovation in large and medium-sized enterprises;
　　
　　7.　 Advanced technology;
　　
　　8.　 Export of products;
　　
　　9.　 Construction of municipal infrastructure facilities;
　　
　　10.　　 Environmental protection and ecological equilibrium;
　　
　　11.　　 Development of tourism; and
　　
　　12.　　 Higher and secondary vocational education.
　　
　　
VII. Favorable policies for foreign investment

　　1.　 Taxation　　

　　(1) Production-type enterprises with foreign investment with an operation period of over ten years shall be exempted from enterprise income tax from the first profit-making year for two years, and then enjoy a 50 percent reduction from the third to the fifth year. Those enterprises with an operation period of less than ten years and non-production enterprises with foreign investment having an operation period of over ten years shall be exempted from local income tax for one year starting from the first profit-making year and then enjoy a 50 percent reduction for the second year.
　　
　　(2) Production-type enterprises with foreign investment engaged in exploration and mining of mineral resources with an operation period of over ten years may, after the expiration of the period stipulated for exemption and deduction of the enterprise income tax, continue to enjoy a reduction of local income tax by half for the period from the sixth to the tenth year, upon approval by the financial and taxation authorities of the application submitted by the enterprises.
　　
　　(3) Production-type enterprises with foreign investment established in the prefectures of Liangshan, Ganze and Aba and Panzhihua City with an operation period of over ten years may, after the expiration of the period of tax exemption and deduction as prescribed in the previous article, continue to enjoy a reduction of local income tax by half for the period from the fifth to the tenth year, upon approval by the financial and taxation authorities of the application submitted by the enterprises. Those production enterprises with an operation period of less than ten years may, after the expiration of the period of tax exemption and deduction as prescribed in the previous article, continue to enjoy a reduction of local income tax by half for the period from the third to the fifth year, upon approval by the financial and taxation authorities of the application submitted by the enterprises.
　　
　　(4) The exemption and deduction of the real estate tax, land-use tax and vehicle and ship license plate tax for the enterprises with foreign investment established in the prefectures of Liangshan, Ganze and Aba and Panzhihua City and the time limit shall be decided upon by the prefectural and city governments in accordance with relevant laws and regulations. The exemption and deduction of the real estate tax, land-use tax and vehicle and ship license plate tax for the enterprises with foreign investment established in other areas of Sichuan shall be governed in accordance with the Provisions of Sichuan Province on the Encouragement of Foreign Investment. In case an enterprise still has difficulty to fulfill its taxation duty upon expiration of the period of tax exemption and deduction, the enterprise may be granted an appropriately extended period of tax exemption and deduction with the approval of the local people抯 government above the county level.
　　
　　(5) The business tax on toll fees from expressways built with foreign investment shall be collected by the provincial taxation administration and refunded altogether to the foreign investor by the provincial financial administration before the investor recovers his investment, or reinvested in the construction of other expressways. The enterprise income tax already paid shall be refunded in full by the provincial financial administration before the foreign investor recovers his investment.
　　
　　(6) Export enterprises with an export value amounting to more than 50 percent of the total annual output value for a given year may be exempted from local income tax for that year.
　　
　　(7) The unified favorable policies stipulated by the State for income tax exemption and deduction for enterprises with foreign investment are still applicable in accordance with the previous relevant national and provincial regulations.
　　
　　a. Enterprises with foreign investment established in the Chengdu New and High Technology Development Area and Mianyang New and High Technology Development Area approved by the state and recognized as new and high technology enterprises shall be levied an enterprise income tax at a reduced rate of 15 percent starting from the day of recognition as the tax year.
　　
　　b. As Chengdu City has been approved by the state to enjoy the related policies for coastal open cities, production-type enterprises with foreign investment registered in Chengdu shall be levied an enterprise income tax at a reduced rate of 24 percent. Those enterprises engaged in technology-intensive and knowledge-intensive projects with a foreign investment involving 30 million US dollars and above and a long pay-back period and production-type enterprises undertaking energy development, transportation and airport and harbor construction may be levied an enterprise income tax at a reduced rate of 15 percent, upon approval by financial and taxation authorities of the application submitted by the enterprises.
　　
　　c. Technologically advanced enterprises with foreign investment may enjoy an extension of another three-year reduction of enterprise income tax by half upon expiration of the period of tax exemption and deduction as stipulated.
　　
　　d. Export enterprises with foreign investment having an export value amounting to more than 70 percent of the total annual output value for a given year, upon expiration of the period of tax deduction as stipulated, may be levied an enterprise income tax reduced by half for that same year. Those enterprises which conform to the above-mentioned conditions and pay enterprise income tax at a reduced rate of 15 percent shall be levied an income tax reduced to 10 percent.
　　
　　e. Enterprises with foreign investment engaged in agricultural development and in-depth processing of farm produce and sideline occupation products and in export may, after the expiration of the period of exemption and deduction of enterprise income tax as stipulated, continue to enjoy a reduction of 15-30 percent of the tax amount for the next five years, upon approval by the financial and taxation authorities of the application submitted by the enterprises.
　　
　　f. Enterprises with foreign investment engaged in comprehensive agricultural development and in-depth processing of farm produce and sideline occupation products using new techniques and forestry development projects in the ethnic minority and remote areas including the prefectures of Liangshan, Ganze and Aba may, after the expiration of the period of exemption and deduction of the enterprise income tax, continue to enjoy a reduction of 15-30 percent of the tax amount for the next ten years, upon approval by the financial and taxation authorities of the application submitted by the enterprises.
　　
　　g. A foreign investor who reinvests his share of profits obtained from the enterprise with foreign investment in that same enterprise to increase capital or in new ventures with foreign investment for an operation period of not less than five years shall be refunded 40 percent of the enterprise income tax paid on the reinvested amount, with the approval of the financial and taxation authorities. In case the new venture is an export enterprise or technologically advanced enterprise with an operation period of not less than five years, the enterprise income tax already paid on the reinvested amount shall be refunded in full.
　　
　　(8) Favorable policies for exemption and deduction of other items of taxation stipulated in the Provisions of Sichuan Province for Encouraging Foreign Investment:
　　
　　a. Non-production enterprises with foreign investment shall be exempt from real estate tax and vehicle and ship license plate tax for three years; production-type enterprises with foreign investment shall be exempt from real estate tax and vehicle and ship license plate tax for ten years.
　　
　　b. Enterprises with foreign investment which invest in projects of comprehensive agricultural development and in-depth processing of farm produce and sideline occupation products with new techniques, forestry development, resource exploitation and multi-purpose utilization, energy development and energy-saving, transportation facilities, technical upgrading of existing large and medium-sized enterprises, projects of advanced technology, export-oriented projects, urban infrastructure construction, environmental protection and ecological balance, tourism development, and higher and secondary vocational education shall be exempt from real estate tax and vehicle and ship license plate tax within the period of operation.
　　
　　(9) Agrotechnical projects developed by foreign investors by reclaiming barren slopes and wasteland shall be exempted from agricultural tax for five years starting from the year when fruits are yielded.
　　
　　In case of reclaiming barren hills and slopes, wasteland and water resources untapped for the development of taxable special agricultural products, these projects shall be exempted from the tax on special agricultural products for three years starting from the year when fruits are harvested.
　　
　　For the improvement of the grassland, grazing field, grass strain and stock variety, a favorable 3 percent stock breeding tax rate is applicable.
　　
　　(10) The extra tax amount paid by enterprises with foreign investment set up before January 1, 1994, due to taxation reform that replaces consolidated industrial and commercial tax with value-added tax and consumption tax, shall be refunded within the stipulated time limit by year, upon approval by the financial and taxation authorities of the application submitted by the enterprises. In case the amount to be refunded is large in sum, the refund shall be proceeded with by quarter and settled at year end.
　　
　　(11) The State taxation authority shall timely proceed with the tax refund in accordance with the related regulations on export commodities produced by enterprises with foreign investment.

　　2. Foreign Exchange Control and Credits and Loans　　

　　(1) Enterprises with foreign investment may open exchange accounts at banks or other financial institutions authorized to handle foreign exchange business within the boundary of Sichuan.
　　
　　(2) Enterprises with foreign investment may, upon business requirement, raise foreign exchange funds with financial institutions, enterprises and individuals outside China, without any limit to the scale of loans.
　　
　　(3) Foreign investors of an enterprise with foreign investment may remit abroad their share of profits in foreign exchange distributed legitimately according to law. Their share of profits distributed in Renminbi may be changed to foreign exchange at banks designated by the exchange control administration with valid certificates including the decision of the enterprise board of directors and tax payment receipt and remitted abroad according to law.
　　
　　(4) All banks in Sichuan should give the same treatment to enterprises with foreign investment in need of working capital for the production of export commodities as to domestic enterprises in providing credits and loans.

　　3.　Use of Land　　

　　(1) Enterprises with foreign investment that have acquired the right to land use within the boundary of Sichuan through government allocation shall pay the site-use fee at 50 percent of the rate standard stipulated by the state. Among them:
　　
　　a. The enterprises with foreign investment engaged in projects of agriculture, forestry, urban infrastructure construction, environmental protection, education, scientific and technical research, and health and medicine shall pay a site-use fee at 5-10 percent of the rate standard stipulated by the state. Those enterprises established in the prefectures of Garze, Aba and Liangshan and engaged in undertakings of the above-mentioned spheres shall be exempt from site-use fee.
　　
　　b. Enterprises with foreign investment engaged in the construction of highways, bridges, airports, harbors and docks and power stations and the exploration and development of natural resources shall pay a site-use fee at 25 percent of the rate standard stipulated by the state. Those enterprises established in the prefectures of Garze, Aba and Liangshan and engaged in undertakings of the above-mentioned spheres shall pay a site-use fee at 5-10 percent of the rate standard stipulated by the state.
　　
　　c. Export enterprises and technologically advanced enterprises with an operation period of over ten years shall be exempted from site-use fee for five years starting from the year of operation.
　　
　　d. Enterprises with foreign investment which have acquired the right to land-use for flood land through the form of allocation shall be exempted from site-use fee for three years starting from the year of operation.
　　
　　(2) The site-use fee for enterprises with foreign investment shall be paid from the second year of use. For those enterprises which have used the land for more than six months but less than one year, a site-use fee for six months shall be charged, and for those which have used the land for less than six months, the site-use fee shall be exempted. The site-use fee shall be computed and paid from the date of issuance of the land-use certificate. The amount shall not change within five years.
　　
　　The standard of the rates of site-use fee for enterprises with foreign investment may be readjusted every five years according to specific conditions. In case a lump sum is paid for 15 years, no readjustment shall be made within the period of validity.
　　
　　(3) State-owned large and medium-sized enterprises which use foreign capital for technical upgrading, in case the Chinese party makes an investment by allocation of the right to land-use, may apply to pay 40 percent of the land transfer price as the land transfer fee and acquire the right to land-use for a limited period of time. In case with such arrangements the enterprise is still unable to get the holding position or the Chinese party fails to attain the proportion of capital payment agreed, the proportion of payment of the transfer fee may be still lowered appropriately, but to no less than 15 percent of the transfer price. Those enterprises having real difficulty may apply for a postponed payment within a period of five years.
　　
　　(4) Enterprises with foreign investment engaged in the operation and construction of highways and docks have the priority of developing real estates and undertaking service facilities and highway and waterway transportation along highways and in the harbor areas under the same conditions.
　　
　　(5) Enterprises with foreign investment engaged in public housing development projects approved by the Provincial Public Housing Development Leading Group shall be given the same treatment as state-owned enterprises. The land used for construction shall be provided by way of allocation and exempted from or reduced for the charges for public utilities, commercial networks, and construction of air defense facilities, post and telecommunications surtax, fees for fire fighting equipment and surtax for improving the school system of primary and middle schools and fund raising for water and electricity supply. The housing finished shall be sold first and then rented at a price with marginal profit.

　　4.　Production and Business Operation　

　　(1) The foreign-invested enterprises will make their own decisions on product import and export percentages with the exception for those that the special state regulations apply. The foreign-invested enterprises will balance their foreign exchanges by themselves.　　
　　
　　(2) Enterprises with foreign investment engaged in highway construction and operation shall be able to adjust the standard of toll fee rates in accordance with the price index upon approval by provincial department of finance, provincial prices bureau and provincial transport department.
　　
　　(3) Foreign investors of enterprises with foreign investment engaged in the construction and operation of airports, highways and docks shall be given the priority of sharing the interests from the revenue of the projects within the period of operation.
　　
　　5 .Import and Export of Materials　

　　(1) Commodity inspection administration should provide consultation and assist enterprises with foreign investment qualified for acquiring the generalized system of preferences certificate of origin to grasp the knowledge of the system and put into use the preferential treatment. Priority shall be given in issuing the certificate to each batch of commodities exported by enterprises with foreign investment to the countries that provide generalized preferences.
　　
　　(2) The input by foreign investors abroad or properties purchased from abroad by entrust of the enterprises with foreign investment must be assessed by the commodity inspection administration with the application of the enterprises. The administration should provide quick, highly effective and fair assessment.

　　6.　Labor and Personnel Management　

　　(1) Cadres with the status of a working personnel of enterprises owned by the whole people who wish to work in enterprises with foreign investment, with the exception of those subject to special stipulations of the state, should be allowed to transfer to other units. Governmental personnel department and the personnel exchange organization under it should regard them the same as cadres going to work in other enterprises owned by the whole people and effectively proceed with the transfer procedures. Senior managerial personnel and technical personnel working in enterprises with foreign investment who wish to transfer should be governed strictly in accordance with the labor contracts signed by both parties. They must not sign labor contracts with new units without the consent of the original and without any proper reasons.
　　
　　(2) Returned students from abroad and graduating students of universities, colleges and secondary technical schools of the year going to work in enterprises with foreign investment shall be recognized by the state their status of cadres of enterprises owned by the whole people and shall keep the status. The personal files of specialized technical personnel and managerial personnel, graduating postgraduates and students of universities, colleges and secondary technical schools employed by enterprises with foreign investment shall be governed by the personnel exchange organization under the personnel department of the local government.
　　
　　(3) The grading of technical personnel working in enterprises with foreign investment or the participation of these personnel in tests for qualification organized by the state shall be undertaken by the personnel exchange organization governing their personal files under the personnel department in accordance with relevant regulations stipulated by the Leading Group for Title Reform of Sichuan Province.

　　7.　Development of Mineral Resources　
　　
　　Foreign investors engaged in exploration and mining of mineral resources, in addition to the preferential treatment stipulated by the state, shall enjoy the following favorable policies:
　　
　　(1) The expenses for exploration in designated regions may be amortized before taxation in a period of ten years by installments starting from the year of commercial development of the mineral deposits. For projects with a mining permission license for less than ten years, the expenses may be amortized before taxation by installments within the period of validity.
　　
　　(2) In the stage of commercial mining, the method of accelerated depreciation of fixed assets　 stipulated by the state may be implemented.
　　
　　(3) Projects for developing mineral resources in minority areas and underdeveloped regions and projects adopting world advanced technology to extract low-grade ore hard to dress and mine may be charged a reduced mineral resource recovery fee according to the specific conditions.
　　
　　(4) Enterprises with foreign investment which suffer an annual loss due to force majeure may be charged a mineral resource recovery fee reduced by less than 50 percent or may defer the payment of the mineral resource recovery fee for the year of loss according to the specific conditions.
　　
　　(5) The mineral resource recovery fee for associated ores recovered by combined extraction and recovery in the designated mining areas shall be charged at a rate standard of less than 50 percent. In case the associated ore recovered is a variety restricted by the state, it is necessary to report to the provincial department of geology and mineral resources for records; in case the ore is a variety categorized to be procured by the central government, unified procurement shall be carried out by the department designated by the central government.
　　
　　(6) The site-use fee shall be exempted or reduced for the temporary use of land for exploration.
　　
　　(7) Conveniences shall be provided by relevant units for smelting, processing and transportation of ores to be smelted and processed within the boundary of Sichuan.

　　8.　Other Local Charges and Fees　

　　(1) Foreign employees working in enterprises with foreign investment, by their foreign employee identification cards, may settle their accounts in Renminbi for accommodation in tourist hotels and medical service in hospitals within the administrative areas of Sichuan. They shall be charged by the same standard for Chinese citizens, or be treated the same in price and quality of the service.
　　
　　(2) The supply of water, electricity and gas to enterprises with foreign investment shall be included in the plan of supply in all localities. Those enterprises shall be given the same treatment as domestic non-foreign-invested enterprises and be charged by the same standard.
　　
　　(3) Enterprises with foreign investment may settle their telephone bills with Renminbi. Earlier regulations on payment by foreign exchange are hereby abolished.
　　
　　(4) Vehicles for self-use by enterprises with foreign investment and vehicles brought in by the foreign investors shall be charged a road maintenance fee by the same rate standard as for other domestic enterprises.