China's top economic planning agency has revised its policy guidelines to encourage more foreign investment into the industrial upgrade of the country's central and western regions.

The new guidelines, which will become effective on June 10, include details of favorable policies and incentives being offered in mostly labor-intensive industries and service sectors, according to a statement from the National Development and Reform Commission.

The policies are aimed at exploiting the economic benefits of the unique natural resources and environmental advantages of the regions, the statement said.

The new guidelines have expanded the type of eligible foreign investment being encouraged, and added another 173 key target sectors. They now cover a total of 500 types of sectors, across 22 provinces and regions.

Included on that list are producers of natural mineral water, makers of passenger liners, deep-ocean machinery, and golf kits, as well as developers of leisure agriculture projects, specifically in Hainan province.

The guidelines have been extended to more modern service providers such as those in cloud computing, the Internet of Things, and mobile Internet sectors in Shanxi province, cartoon markers in Heilong-jiang province, and retailers and wholesalers in Shaanxi province.

The vehicle-assembly sector, which was removed in the previous version of the guidelines, has been re-included.

However, the new list strictly prohibits any investment into the industrial transfer of highly polluting and high energy-consuming projects in central and western areas.

The new set of guidelines replaces a previous version issued at the end of 2008, and is the third version since first being introduced in 2000.

"Implementation of these guidelines will expand and improve the quality and use of foreign capital in the regions.

"They will also play a positive role in optimizing the regions' industrial structure," according to the statement.

The regions remain attractive to foreign investment funds.

In the first four months of this year, the use of foreign funds in central and western areas rose 5.7 percent and 25.7 percent respectively, while it fell 1.1 percent in eastern regions, although the absolute amount was still relatively small.

Combined foreign investment in central and western provinces totaled $19.2 billion in 2012, around 17.2 percent of total investment, a significant increase on the 4.2 percent it accounted for in 2008.

Besides their relatively lower labor costs, investing in the western markets "provides investors with a connection to Southeast and South Asia, and Eurasia", said Liu Shiqing, a researcher with the Sichuan Academy of Social Sciences.

Using Chengdu as an example, he said the city has become a bridgehead for foreign investors entering the market.

According to a survey of 420 US companies operating in China, conducted by AmCham Shanghai, Chengdu is the most popular second-tier investment destination for US companies.

Another report, by Chinese and Singaporean researchers, highlighted Sichuan province, Chongqing, and the Inner Mongolia and Guangxi Zhuang autonomous regions as the destinations in western China, as the country shifts its economic model.

weitian@chinadaily.com.cn

(China Daily 05/17/2013 page13)