NOTIONS CONCERNING ACCELERATING THE GROWTH OF
THE NON-STATE-OWNED ECONOMY

(18th April 2003)

Notions are proposed as follows in order to fully implement the guidelines made in the 16th National Congress of the Communist Party of China and the 7th Congress of the CPC's Committee of Yunnan Province, to grasp opportunities and concentrate all efforts on resolving key problems in the growth of the non-state-owned economy in Yunnan Province, promoting the non-state-owned economy to a new level, and pushing forward the construction of the "all-round well-off society" in Yunnan.

1. The non-state-owned economy should be unswervingly promoted.

(1) Enhancing understanding and awareness
Various types of the non-state-owned economy such as self-employed business and individuals-owned business are important components of the socialist market economy and active elements of economy that are compatible with the level of productivity at the current stage. To accelerate the growth of the non-state-owned economy is the requirement to improve the basic socialist economic institution and to quickly increase productivity. And it is of profound significance in readjusting the structure of ownership, encouraging growth in new areas of economy, further opening up to the outside and increasing employment. Without great development of the non-state-owned economy, there will be no great development of the whole economy of Yunnan and if without the fast growth of a big number of non-state-owned enterprises (hereinafter referred to as NSOEs), there will be lack of vigor and vitality in Yunnan's economy. To develop the non-state-owned economy is to treat development as the top priority and to give a full play to all creative activities. Under the guidance of the "Three Represents", our understanding and awareness as well as our sense of responsibility should be further enhanced so as to be of one mind in taking effective measures for the development of the non-state-owned economy as an important strategy for the overall construction of the "well-off society".

(2) Sparing no efforts in creating good conditions for the growth of the non-state-owned economy.
To accelerate the growth of the non-state-owned economy, people's thinking must be further emancipated and it should be advocated to keep up with the changes of time. To the same end, the level of people's understanding should be raised, more flexible policies adopted, the scope of business accessible to the non-state-owned economy expanded, the capping on its scale of business lifted, mechanisms involving its operation rejuvenated, and political trust on this economic sector boosted. The national treatment principle should be carried into effect. All thoughts, mechanisms, policies, laws and regulations that are obstacles to the growth of the non-state-owned economy or all practices that are incompatible with development should be abandoned. Endeavors must be made to build an excellent environment for NSOEs and their employees, whereas they can enjoy legal protection, social position, political reputation and economic rewards as well as fair competition and common progress with state-owned or collective enterprises. These steps would serve to ensure a breakthrough in the development of the non-state-owned economy.

2. Market access and areas for investment should be broadened.

(3) Enforcing examination and approval by law

Unless required by national laws and administrative decrees and regulations, no departments or local authorities are allowed to set previews in advance to examination or approval procedures for establishing NSOEs. Department regulations and industry or trade rules should not be admitted as preconditions for the previews. In cases where previews are necessary, the scope of trades or products must be re-publicized. Procedures for examination must be made known to the public and be as much simplified as possible. Service mode such as the "One-Window Model" or "One-Stop-Shop" should be adopted so as to enhance efficiency.

(4) Reducing the cost for establishing businesses

The limitation on registration capital for NSOEs should be lowered. In the event that NSOEs are not able to pay the registration capital fully at one time, they shall be allowed to pay in installments and the first installment may be as little as 10% of the full registration capital. Intangible assets, such as labor capital (management ability or technical specialty) and intellectual achievements (invention, patent, or technical accomplishment) may be contributed as investment upon appraisal by qualified licensed agencies. Efforts shall be made to review all fee-chargeable items. No extra fees shall be charged at registration except for the net cost of registration and other legitimate fees. The registration of a group enterprise composed of NSOEs should be approved providing the registration capital of the parent company reaches 5 million Yuan and it has at least three subsidiary companies, with the total registration capital of both the parent and subsidiary companies reaching 10 million Yuan.

(5) Standardizing access of trades

NSOEs are allowed to engage in all trade areas and products that are in accordance with the state laws and administrative decrees and regulations and are not in violation of the industry policy. NSOEs are encouraged to invest in areas such as education, medicine, health care and sports or to take part in the comprehensive exploration of rural development, agri-business and infrastructure including energy, transportation and water conservation etc. or the investment in and operation of urban facilities. All trade and investment areas that are open to the outside world are open to NSOEs as well. It is no longer necessary for NSOEs to obtain approvals if they invest in ordinary infrastructure with their own funds and commercial bank loans, for those projects whose total investment exceeds the limitation for funds, records shall be filed with the competent authorities.

(6) Lowering qualification conditions for obtaining import and export right

Relevant authorities shall timely process import and export right for NSOEs complying with national standard, and enable them to enjoy the state credit & loan and tax refund policy for export business. For NSOEs applying for foreign trade right, as long as they are in a commodities production industry and has 500,000 Yuan as registration capital, the application shall be approved. And they may enjoy the same treatment as state-owned enterprises in such aspects as foreign trade and economic cooperation, tax refund, quota allocation, grant of the Fund for Promoting Foreign Trade, overseas investigation and business tours, financing with tax return account as guarantee, and so forth.

3. Preferential policies on taxes and charges should be adopted to encourage the development of non-state-owned economy.

(7) Implementing preferential policies on taxes

The threshold of value-added tax on self-employed business and other individuals shall be elevated: for sales of goods, the original monthly sales of 2,000 Yuan is hence raised to 5,000 Yuan; for labor service, the original monthly sales of 800 Yuan as the taxable amount is hence raised to 3,000 Yuan; for tax payment upon times, the original one time 80 Yuan as the taxable amount is hence raised to 200 Yuan. Business income tax on newly-established enterprises, key and leading agri-business enterprises and NSOEs formed through mergers or purchase of state-owned or collective businesses shall be exempted in the first 3 years after the business is established. And between the year of the end of tax exemption and the year 2010, the rate of business income tax shall be reduced to 15%. For enterprises whose capital comes from other provinces, if 51% of their registration capital originates from other provinces, or if the investment amount from other provinces exceeds 5 million Yuan, they may enjoy the preferential policies as granted by Yunnan Province for foreign investors. For organizations that provide guarantee services to NSOEs whose service charge is 50% lower than the current corresponding interest rate of bank loans and whose incomes from guarantee service exceed 50% of its gross income, their business income tax shall be exempted in the first 3 years since its operation and between the year of the end of tax exemption and the year 2010, the rate of business income tax shall be reduced to 15%. All expenditures on research and development of new products, new technologies and techniques shall be deducted before the imposition of income tax. Donations by NSOEs given to non-profit organizations or government institutions for usage in education, civil affairs, poverty alleviation, charity, disaster relief, the "Hope Project" and "Bright Project" shall be deducted before the imposition of income tax.

(8) Implementing preferential policies on charges and fees

NSOEs may enjoy the same preferential policies on charges and fees as granted for state-owned or collective businesses. For those merging with or purchasing state-owned or collective businesses, they may enjoy the provincial preferential policies on charges that are introduced to deepen the reform of state-owned businesses. In the event that NSOEs need to obtain land-use right by means of compensation as assignment, except for commercial purposes, the compensation may be charged at 20% of the appraised value of the land. If the compensation can be paid within 60 days, the enterprise may have a discount of 30%. If the compensation is paid in installments, the enterprise may pay 25% within 60 days and pay the rest within 5 years.

For NSOEs who pay compensation to exploit un-utilized land owned by the state or the collective to develop forestry, plantation, aquaculture and their auxiliary facilities, the compensation for land-use right as assignment, contracting fee, or leasing fee in the first 5 years from the date when the contract is signed shall be returned to the enterprises. All administrative charges shall be exempted in new markets funded by any NSOE in the first year from the date of its operation. For operators starting business in newly established markets, all administrative charges shall be exempted in the first 2 years.

(9) Fully implementing all preferential policies

Taxation authorities shall seriously and fully implement all preferential policies made by the state and the province. Tax reduction and exemption applications must be processed and granted within regulated time limits if conditions for enjoying the policies are satisfied. For self-employed businesses and individual-owned enterprises that should be taxed upon ratification, the tax amount shall be ratified in accordance with the principle of justice and equality. All government departments shall strictly implement relevant preferential policies to provide quality service to enterprises and business operators.