The Ministry of Land and Resources yesterday urged foreign investors to start their China-based businesses in "legitimate" development zones, warning against "too good to be true" preferential policies being offered in some areas.

"Largely speaking, foreign investors should select sites at State and provincial levels, avoiding being lured to those at a lower level by 'too good to be true' preferential policies," said Hu Shanshun, a publicity official at the ministry.

Hu made the remarks as the nation's most high-level inspection into the country's land market continues, in which the investigation of land use in various development zones and industrial parks across the country is a priority.

The investigation, described by some as the nation's "most severe," was launched by the State Council last Friday.

As many as 10 groups, comprising officials from the Ministry of Land and Resources, the National Development and Reform Commission, the Ministry of Supervision, the Ministry of Construction and the National Audit Office, have been dispatched on the 10-day mission.

But the whole inspection might take about two months, with another two batches of such inspectors still to set off.

The inspection is a response to the country's surging land-related law-breaking cases in recent years. The nation witnessed 101,000 such cases in the first six months of this year, involving 39,133 hectares of land, leaving 32 cases subject to criminal law and 123 under administrative penalties.

According to Hu, the inspection expects to wrap up with the cancellation of a "bunch" of those zones and parks, which are classified as illegal for having been established without proper certification, expanding without receiving necessary approval or for defying approved uses of the land.

However, Hu rejected claims that such a move might harm comparatively "innocent" foreign investors who have, in most cases, trusted local governments and got lured into these zones or parks.

Although he is not sure what will eventually happen, Hu did say that each case will be looked at individually, respecting the rights and interests of the investors.

"If the investment has just started, or not yet started at all, it is very possible that such projects could be brought to a halt," he said.

"But if the investment has already been put to use, there is no reason to tear down everything, although a question mark might be placed on the fulfilment of originally promised services and preferential policies."

Moreover, he said, judging from a pre-investigation in this regard carried out by the Ministry of Land and Resources mainly in July, not many foreign parties have been involved.

Ma Xuelu, director of the Management Committee of the State High-Tech Development Zone in Baoding, North China's Hebei Province, echoed Hu.

He believed that the current inspection will not only produce a better ordered land market, but also improve the country's investment environment.

According to recent statistics from the Ministry of Land and Resources, of the country's 3,837 development zones and industrial parks whose total area exceeds that originally planned, only 1,251 were approved by the State Council and provincial governments.

(China Daily August 12, 2003)