The absorption of foreign investment in China is usually divided into: direct investment and other ways of investment. The most adopted ways of foreign direct investment consist of: Sino-foreign joint ventures, Sino-foreign cooperative enterprises, wholly owned foreign enterprises and cooperative development. Other ways of investment include compensation trade and processing and assembling.
In order to direct the foreign direct investments in compliance with the national industrial planning, the Interim Regulations on FDI Directions and the Industrial Catalogue Guiding Foreign Investment were formulated and promulgated in China in the June of 1995. And in the December of 1997, the State Development Planning Commission, State Economic and trade Commission together with the Ministry of Foreign trade and Economic Cooperation began to revise on the Industrial Catalogue Guiding Foreign Investment and put it into enforcement. The revised text of Industrial Catalogue Guiding Foreign Investment reflects an expansion in the investment scope encouraged by the state. And the revision highlights priority industries along side the principles of according with structural adjustment, contributing to the introduction of advanced technology, and fully embodying our encouragement to invest in central and western areas.
The items to encourage foreign direct investments mainly include: items of agricultural new technology and agricultural comprehensive development as well as industrial projects of energy, transportation and vital raw materials; high-tech projects; export-oriented projects; projects of comprehensively utilizing resources, renewing resources and prevention and cure of environmental pollution; projects which can give play to the advantages of western and central regions. We should actively direct foreign investments toward the technological up grading of traditional industries as well as the old industrial bases, while developing continuously the labor-intensive projects which are in compliance with industrial policies.