Encouraged Industry Catalogue
Encyclopedia
As one of the key tools used by the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

 (PRC) government
Government of the People's Republic of China
All power within the government of the People's Republic of China is divided among three bodies: the People's Republic of China, State Council, and the People's Liberation Army . This article is concerned with the formal structure of the state, its departments and their responsibilities...

 to direct foreign investment into mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...

, the Encouraged Industry Catalogue is significant in international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...

 with mainland China. It classifies various industries into the four groups which are Encouraged, Permitted, Restricted and Prohibited which has subsequent effects on foreign firms wishing to operate in such sectors.

Encouraged industries generally receive favourable tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...

 treatment whilst those in the Permitted category are treated on a quite neutral basis. If an industry is restricted, foreign investment is usually limited to a minority shareholding in a joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...

 whilst Prohibited industries cannot have any form of foreign investment at all.

See also

  • Economy of the People's Republic of China
    Economy of the People's Republic of China
    The People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...

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