Chinese foreign investment law and local policies offer many tax breaks and other financial incentives to encourage foreign investment, particularly with respect to Enterprise Income Tax (the equivalent of US corporate tax). Keep in mind that China intends to phase out these favorable policies toward foreign capital over a five-year period in line with its WTO commitments. Nevertheless, it remains unclear whether China will raise FIE tax rates, lower general tax rates, or simply use nationality-neutral standards that will nevertheless disproportionately benefit FIEs
National incentives vary according to how much you are investing and whether your project is located in special economic zones; local incentives vary according to jurisdiction and relative bargaining power. In recent years Chinas central and western provinces, starved of foreign investment relative to the coastal areas, have been offering incentives that are in some cases considerably more generous than their coastal counterparts. The national government is now encouraging foreign investors to invest in Chinas relatively undeveloped hinterlands in order to distribute wealth evenly throughout the nation and...
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