A Recently-Completed Research Paper Recommends
                 Chinese Government should Gradually Give  Foreign  
                      Multinationals  National Treatment
At the same time various favors to foreign-funded  enterprises  should  be
gradually eliminated and administrative and other restrictions to domestic
enterprises should be removed to achieve fair competition.
Loosening of the restrictions to foreign  investment  should  be  conducted
simultaneously  with  reform  of  the  domestic  market.   Foreign- funded
enterprises and foreign  multinationals  should  be  gradually  given  the
national treatment. At the same time  various  favors  to  foreign- funded
enterprises should be gradually eliminated and  administrative  and  other
restrictions to domestic enterprises should be  removed  to  achieve  fair
competition.
  This is the main conclusion reached  in  a  recently- completed  research
paper entitled mpact of  Foreign  multinationals  on  Economic  Structure,
Efficiency and Income Distribution in China
  The research subject was  completed  jointly  by  Zhang  Fan  from  China
Economic Research Center of Peking University and Zheng Jingping from  the
State Statistical Bureau.
hina needs foreign multinationals and foreign multinationals  need  China.
According  to  experts,   it  is  both   inevitable   and   necessary   for
multinationals to get more deeply involved in China. The key is  that  the
government should take reasonable and proper policies to combine the entry
of foreign multinationals with the development of the Chinese economy  and
achieve real mutual benefit.
  Experts recommend to create following conditions  to  actively  encourage
foreign multinationals to come to China and make investment:
(1) formulate and  improve  necessary  laws,   regulations  and  operating
procedures related to the investment of foreign multinationals in China. A
special mention should be made to the  establishment  and  improvement  of
open and fair operating procedures concerning the  investment  of  foreign
  multinationals  in  China.   Behaviors  violating  laws  and  disciplines
including embezzlement  and  corruption  in  foreign  capital  utilization
should be relentlessly cracked down.
(2) define sectors  where  foreign  multinationals  can  make  investment.
Judging from the development level  of  science  and  technology,   except
national defense, culture and education and a few sectors with the  nature
of natural monopoly and related to the safety of national economy,   other
sectors should generally be open to foreign multinationals.  There  should
be a transition period for some sectors such as  finance,   insurance  and
retail business. Conditions should be created for  the  opening  of  these
sectors.
(3) Foreign multinationals should be given national treatment and  neither
favor nor discrimination should be conducted to them.
(4) Understanding and tolerance should be given to foreign cultures  which
come with foreign multinationals as long as they conform with laws in China.
(5) Policies should have relative stability.  Once  they  are  formulated,
policies should maintain stability as much as possible.
  The investment of foreign multinationals in China has both advantages and
backdrops. While encouraging foreign investment, measures should be  taken
to eliminate its adverse impact. Following recommendations are proposed by
experts:
(1) accelerate the reform of state-owned enterprises. Some problems in the
investment of foreign multinationals in China  are  related  to  the  slow
progress in the reform of state-owned enterprises.
(2) integrate some large and medium state-owned enterprises.   Some  large
and medium state-owned  enterprises  should  be  integrated  according  to
economic principles to form large enterprise groups with competitive edge.
(3) strengthen management of  enterprises  with  investment  from  foreign
multinationals. Administrative departments of the state should  strengthen
management of enterprises with investment from foreign multinationals such
as business statistical monitoring, accounting assessment,   auditing  and
supervision and environmental protection.
(4) employ measures permitted in the  international  practice  to  support
domestic enterprises in their competition participation.   However,   such
support and protection are not for the sake  of  support  and  protection,
  they  should  be  transparent  and  normalized.    Information   research
institutions  run  by  government  organizations  or  by  both  government
organizations and non-government organizations should  be  established  to
collect data of the world advanced science, technology and  management  to
provide more technical support to domestic  enterprises  and  raise  their
competitiveness. In the context that the enterprise  reform  in  China  is
still at the initial stage and some infant production sectors  still  need
protection, a timetable, say 3 - 5 years,   for  full  opening  should  be
prepared for domestic enterprises in different sectors. In this  way  they
can have a clear idea about the time limit of their  own  growth  and  the
competition from the international market and make necessary readjustments
.
(5) pay due attention to co