IS CHONGQING A VIABLE CENTRE FOR FOREIGN BUSINESS ACTIVITY?

Chongqing, being a city on the Yangtze River, became a trade centre that linked the entire southwest with the rest of China. In modern times, however, geographic remoteness, obsolete technology, rigid government management practices and overstaffing have become obstacles to modernisation. Compared with other major cities in China, economic growth in Chongqing seems to have slowed in recent years.

Chongqing’s upgrading to a centrally administered municipality indicates an attempt by the central government to boost economic development in the country’s poorest region. It is also considered as part of a wider effort to encourage greater foreign investment in central and western China and an eventual narrowing of the east-west wealth gap.

The establishment of Chongqing Customs in 1980 marked a new stage for Chongqing’s opening up to the outside world. Since then, a number of foreign trade and financial institutions have established themselves in the city. In order to attract more foreign investment, the Central Government promises to provide more favourable conditions to foreign companies which commit themselves to the economic development of China’s west. In addition to the usual centrally regulated income tax concessions for foreign funded enterprises across China, Chongqing also provides tax incentives of its own.

By 1997, the number of foreign funded projects reach over 2,400 and actual foreign investment totalled US$1.9 billion.

This solution offers information on:

§ a detailed geographic, demographic, economic and governmental profile of Chongqing;

§ the legal framework for local law-making;

§ the legal framework for foreign business organisation and administration;

§ local tax incentives and measures for encouraging foreign investment;

§ regulation of contracts, labour management and land use rights; and

§ other activities or special areas.