Industrial Parks in China Trying to Lure High Tech : Development: Tax rates have been lowered for foreign and domestic businesses that locate in the network of sites across the country.

China is establishing a nationwide network of industrial parks offering special incentives aimed at attracting foreign and domestic investment into high-technology enterprises.

The State Council, China’s cabinet, earlier this month approved standardized regulations for 27 high-tech industrial parks set up in recent years by local governments in cities across the country. The new rules place the parks under the management of the State Science and Technology Commission; 11 other existing parks will remain under local control.

The parks are being promoted “to create a favorable environment for the development of new and high technology . . . and (to) push ahead the development of new and high-technology industries in China,” Shi Dinghuan, director-general of the Department of Industry of the State Science and Technology Commission, said at a press conference Friday.

“It is our hope,” Shi added, “that through the setting-up of these parks, we will be able to accelerate the process of commercializing, industrializing and internationalizing the results that China has obtained in the development of its new and high technology.”

The standard income tax rate for foreign joint ventures in China is 33%. But high-tech ventures in the 27 industrial parks under commission management will have tax rates of 15%, said Li Xu’e, the commission vice chairman who also spoke at the press conference.

The tax rate will be reduced to 10% for companies exporting more than 70% of their total output, Li added. These low tax rates will also apply to high-tech Chinese enterprises operating in the parks. Foreign joint ventures will be entirely exempt from income taxes for the first two profit-making years, Li added.

Parts of China, especially the southern coastal areas, have experienced an industrial boom fueled largely by foreign investment in labor-intensive manufacturing. Growing emphasis on industrial parks is part of a broad effort to encourage investment in more advanced industries.

The emotional, as well as practical, importance of this was illustrated when Li interrupted another speaker at the press conference to stress that all 70 foreign joint ventures operating in Beijing’s industrial park “are high-technology enterprises, not ordinary enterprises making shoes.” Li’s disparaging tone in referring to shoe-making provoked laughter from many of the Chinese journalists present.

The new State Council regulations define eligible high-tech enterprises as those engaged in micro-electronics and electronic information, aerospace, optical electronics, bioengineering, materials science, energy technology, ecology science and environmental protection, earth science and marine engineering, fundamental matter and radiation, medical science and biomedical engineering, and other new processes and technologies.

Many rules for the 27 industrial parks under the science and technology commission’s control are similar to regulations established for China’s five special economic zones and other specially favored development districts. Bonded factories, for example, may be set up with exemption of taxes on imported materials and exported products.

The industrial parks are in Beijing, Wuhan, Nanjing, Shenyang, Tianjin, Xian, Chengdu, Weihai, Zhongshan, Changchun, Harbin, Changsha, Fuzhou, Guangzhou, Hefei, Chongqing, Hangzhou, Guilin, Zhenzhou, Lanzhou, Shijiazhuang, Jinan, Shanghai, Dalian, Shenzhen, Xiamen and Hainan.

There are already more than 2,500 high-tech enterprises in these parks, Li said. Their total production value in 1990 was more than 7 billion yuan ($1.3 billion), up from 3 billion yuan in 1989.

China hopes to boost the output value from high-tech industrial parks to about 25 billion yuan ($4.8 billion) by the end of 1996, Shi said.