The projects, which involve subway lines No 4, No 5 and No 9, sewage treatment and rubbish disposition plants, as well as innovative air cleaning facilities.

The preferential policies for these projects include exemptions from the land use tax and various kinds of fees, tax-rate cuts, government compensation for huge-funded projects and streamlined administrative procedures.

An official from the commission, who preferred to be unnamed, said the government especially welcomes foreign and private investors to participate in the targeted projects and will establish a standard and transparent bid invitation system to select the project operators.

"We are very cautious and have had to take time to collect opinions about how to improve the system," the official said.

Due to Beijing's winning bid for the 2008 Olympic Games and China's entry into the World Trade Organization, the commission has speeded up its effort to put the policies into practice.

According to the municipal government, a specific infrastructure investment compensation fund is to be set up this year.

Some investors may also enjoy the privilege of using some land for free for a certain period of time. For large projects, the government will provide part of the investment by holding shares in order to help investors meet gaps in capital requirements.

Chen Jian, a researcher with the policy study office of the Beijing municipal government, said the preferential policies are in line with market principles, which implies that transparency of the system should be one of the key elements.

Beijing has also formulated similar preferential policies for investments in projects of removing environmentally polluted enterprises, building affordable real estate projects and urban vegetation areas.

(China Daily January 31, 2002)