A11 taxation paid for land use by foreign enterprises this fiscal year will remain the same as that of last fiscal year, assured Dong Lanying, vice-director of the Local Taxation Division of the Beijing Municipal Local Taxation Bureau.

　　The fuss caused by a Xinhua report earlier this month seems to eventually have some reason to die out. The report says the Chinese Capital has sorted out its land-use policies and would quit preferential ones endowed on foreign parties on related World Trade Organization (WTO) stipulations.

　　"We have not heard anything about the change," said Dong. "And such a change is not likely in view of the short interval before the start of the taxation submission for this fiscal year."

　　But an official with the Legal Affairs Office of the Beijing Municipal Government, who would like to disclose himself only as Zhang, confirmed that the office did complete the sorting-out and announce the result at the beginning of this year.

　　"The announcement promises to abolish preferential policies not supposed to be rendered out by a local government and get in line with the future decisions of the central government in the aspect," said Zhang.

　　Land-use policies stamped by the central government stipulate that foreign enterprises can get use right of State-owned land pieces "by paying proper compensation fees to the government or directly from those endowed with the right." But they do not go to details about the specific operation procedures.

　　Therefore, it is not rare in China that local governments vie for foreign funds with excessive preferential policies in land use, the most common practices of which are extra tax waiver and extended preferential period.

　　Feeble impact

　　Zhang explained why the announced abolition of certain preferential policies regarding land use at the beginning of this year has not affected the taxation pay of this fiscal year in October.

　　He said the abolition of polices or laws has to be approved by the specific organizations establishing them, the local government or the local people's congress.

　　"But if they (the municipal government and the local people's congress) really wanted to abolish the preferential policies, there was plenty time to effect immediate changes," said Cheng Xuping, an expert with the Chinese Academy of Land and Resources Economics.

　　Cheng believed the Beijing Municipal Government has not yet decided when the proper time to make the abolition effective is.

　　"It would not make any substantial move before being sure no harm would be caused to its investment environment. After all, no deadline has been set for moves of the kind," said Cheng.

　　The case of Beijing is not unique. Some other Chinese regions, such as Shenzhen in South China's Guangdong Province, have also taken up a similar line, according to him.

　　However, abolition of most preferential policies regarding land use of foreign enterprises in China, if not all, will come inevitably in the near future.

　　Stipulations of WTO

　　It has taken a team led by Cheng more than half a year to sort out land-related policies inked by the State Council in view of relevant WTO regulations. The result expects to be approved by the State Council later this year.

　　"Generally speaking, WTO stipulations affect little present Chinese land-use practice in comparison with their influence in other aspects like agriculture," said Cheng.

　　"If there is some grave change, that is they require China to treat foreign enterprises in the country the same as their Chinese counterparts in the aspect of land use."

　　As far as Cheng is concerned, the "equable treatment" is a "two-bladed sword" in the short run, forcing both Chinese and foreign parties to pay price for the involvement of healthy land marketsgroupsin China.

　　Because on one hand, the Chinese parties would be forced to compete with powerful foreign parties on a more "transparent and fair" land market, without their former governmental protection.

　　"I am not sure how many of them will survive the competition," said Cheng.A recent circular issued by the Ministry of Supervision and the Ministry of Land and Resources vowed to punish "severely" corruption involved in the transaction of land utilization right.

　　It demanded all transactions of land utilization right for profit purpose, such as tourism, recreation and real estate development, to be carried out through public listing, bidding or auction.

　　The base prices should be kept secret for the sake of fair competition. "Government officials foundshavingsimproperly disclosed the base prices should be subject to administrative or criminal punishments," said the circular.

　　Actually, no governmental official should abuse their right and interfere with the fair process of the public competitions for land utilization right.

　　On the other hand, "equitable treatment" means the foreign parties have to bid farewell to preferential polices, such as the one waiving them of land use taxation for the utilization of state-owned land pieces. They now pay minor fees instead.

　　Nothing to fear about

　　But foreign enterprises that are confident about China's investment environment should have nothing to fear about, said Yue Xiaowu, director of the Property Division of the Land Use Management Department of the Ministry of Land and Resources.

　　"The abolition of preferential policies indicates nothing but an essential improvement of China's investment environment," he said. "It is a big stride towards a self-governed market exempt from government's administrative manipulation."

　　Yue recalled a discussion with some leading real estate developers in China in preparation for the complete adoption of public listing, bidding and auction as the only authorized way to transfer the use right of State-owned land pieces."We are glad to find the strong real estate developers in full support to our decision," said Yue. "They believe the reform allows them to get more land pieces at lower costs."

　　Even though these real estate developers are all Chinese, it took them much time and great effort to break ice when marchingsintosa new administrative region. They generally needed to get acquainted with local land authorities at first, which had absolute right over land disposal in the area, and then won access to land pieces of comparatively good conditions.

　　"It is time to give one's real strength the say," said Wang Shi, board director of the Wanke Holding Co Ltd.

　　One case in point is winners of all public bidding, auction and listing of use right of State-owned land pieces so far hold in Beijing are all from outsides Beijing.

　　In the latest case, when Beijing, for the first time, transferred the development right of a piece of land through publicly listing it at the Beijing Municipal Land Transaction Market in late August, the Beijing branch of a Taiwan listedsgroupswon out.

　　It paid 270 million yuan (US.6 million) for the development right of the 1.13-hectare land in the heart of the western section of Zhongguancun, widely known as the Silicon valley of China. The land is said to be used for building expensive apartments.

　　The reform is good news

　　Therefore, the reform should be good news for strong foreign investors, said Yue.

　　Moreover, Yue confirmed the disclosure of Cheng that foreign funds will be allowed to play bigger roles in more aspects of land development. For instance, real estate development, especially that in the country's vast countryside.

　　"More and more Chinese in crowded big cities would choose to live in the quite and fresh suburb in the coming decade. The real estate development in countryside expects to be really profitable," said Yue.

　　"Because the capital cost, mainly comprised with the price paid for the land use right and the construction cost, should be lower than that of urban projects."

　　Yue expects more foreign funds to be injectedsintosmore projects for commercial purpose in the near future. Most land-related foreign investment in China is now for industrial purposes.

　　"In the long run, that is a win-win game," he said.