China has decided to grant a package of preferential tax policies to its "rust belt" in the country's northeast, which includes the provinces of Heilongjiang, Jilin and Liaoning.

　　According to the document released by the Ministry of Finance and State Administration of Taxation, the policies include the adjustment of value-added tax, resources tax and corporate income tax.

　　The document stipulates corporate taxpayers in equipment manufacturing, oil and petrochemical, metallurgical, ship building, auto and farm produce sectors, might use the amount of the new value-added tax to cover designated taxes. These include taxes on purchased fixed assets, goods to be made by the taxpayer as fixed assets, labor services and fees paid for shipment of fixed assets.

　　With approval of the respective provincial government, a deduction of no more than 30 percent of the amount of resources tax to be paid is applicable to oil fields with low oil abundance. This also applies to mines with little exploitable mineral resources.

　　Corporate income tax policies include no more than a 40 percent drop in a period of depreciation for fixed assets of manufacturing companies in northeastern China. This excludes houses and structures, and intangible assets that are bought or invested.

　　The amount of salary that is tax exempt is 1,200 yuan (US$146), compared with 800 yuan for other areas of China.

　　The northeast used to be the major industrial center of China from 1949 to the late 1970s. Since the country was opened up to the outside world, it has lagged far behind coastal areas in overseas investment.

　　Separately, China's banking regulator said it will provide "active consideration and prior approval" for overseas banks wanting to buy a stake in lenders based in the northeast.

　　The china Banking Regulatory Commission is also encouraging foreign banks to set up branches and expand their businesses in the northeastern provinces of Liaoning, Jilin and Heilongjiang, commission Vice Chairman Tang Shuangning said at a conference in Dalian.

　　"This is in line with the government's policy to rejuvenate the area in the northeast," Tang said, according to a transcript of the speech he made in the capital of Liaoning Province.

　　Banks globally are jostling for position in China, targeting lending, credit card, insurance and fund businesses as the country prepares to remove curbs at the end of 2006 in line with World Trade Organization rules.

　　The central government also plans to forgive part of the more than 300 billion yuan of bad loans owed by state enterprises in the three northeastern provinces, Oriental Daily News reported, citing Chinese cabinet official Song Xiaowu.

　　(Agencies)