Shanghai municipal government yesterday released its latest foreign investment guidelines, outlining government-backed sectors in manufacturing, service and State-owned industries available for overseas capital.

According to the new Industry Orientation for Foreign Investment in Shanghai, the city welcomes overseas capital in the following sectors: bio-pharmacy; new materials; electronics and telecom equipment; automobiles; shipbuilding; petrochemicals; and fine steel.

Pan Longqing, director of the Shanghai Foreign Investment Commission, noted that Shanghai still urges foreign businesses to invest in technology-intensive manufacturing industries in the suburban area, especially in those government-planned industrial parks.

The new guidelines also encourage overseas investment in a list of service industries, including finance, logistics, distribution, real estate, tourism and consultancy. Public service industries, including education, culture, medical services and sports, also welcome investment from abroad.

Pan further explained that overseas capital's access to the city's finance, distribution and tourism industries still needs to obey relevant State rules, but Shanghai will fully open those areas to Hong Kong businesses first under the Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA).

The Guidelines of Merger and Acquisition (M&A) of State-owned Enterprises by Foreign Capital was also released by the municipal government yesterday.

Wu Hongmei, vice-director of the new Shanghai State-owned Assets Supervision and Administration Commission, remarked that "under the new guidelines the city government welcomes foreign capital to play an active role in restructuring the city's massive State property."

Foreign capital's involvement in the restructuring of State assets in agriculture, the high-tech industry, environmental protection and export-oriented enterprises will be especially welcomed with preferential policies, said Wu.

"It (Foreign capital's M&A of State-owned enterprises) will be an increasingly important channel of introducing overseas capital," she said.

Wu promised her commission will further help simplify the approval procedure, publicize the trading price and regulate the State assets assessment to facilitate international investor's involvement in State asset reform.

Official statistics show that from January to July, Shanghai introduced a total contracted overseas capital of US$7.02 billion, an increase of 39.2 percent over the same period last year.

Since the country opened up in the late 1970s, Shanghai has approved more than 30,000 overseas-funded projects with an actual utilization of more than US$40 billion, according to government statistics.

Currently, 41 multinational companies have set up their regional headquarters in Shanghai, the largest number of any city on the Chinese mainland. Additionally, the city government has approved 91 overseas-funded research and development (R&D) institutions.

(China Daily August 28, 2003)