Are the "two-year tax exemption and two-year 50% tax reduction" and "five-year tax exemption and five-year 50% tax reduction" policies still available for investments in the Economic Development Zone?
An executive assistant met with the director of investment promotion at the Economic Development Zone and took the opportunity to inquire about investment policies on behalf of a friend.
These days, what “local cards” does the Investment Promotion Bureau still have up its sleeve? Clearly, many regional “local policies” have been virtually eliminated…
However, when companies are selecting investment locations, their first question is always about policies. Similarly, whenever investment promotion is discussed, it inevitably comes down to comparing policies.
It’s hard to believe that even for mid-tier projects, policy negotiations still take place—with cities competing fiercely, or even being “scooped” by others.
It’s perfectly fine for companies to “shop around” and choose where to “settle.”
But how many mid-tier projects have been “nurtured” by local governments?
A Blow Is a Blessing: Looking at the Big Picture
Some argue that industrial policies are simply a disguised form of a planned economy and should be completely abolished.
Others argue that blindly opposing industrial policies is irresponsible.
At its core, this issue is a debate between “mayor-led economics” and “market economics.”
Does the market call the shots, or does the mayor?
“Letting the market play a decisive role in resource allocation” has become the standard answer.
But why do industrial policies keep popping up?
In the past, during investment negotiations with companies, I’ve encountered situations where the other side would immediately highlight preferential policies offered by other regions.
This vicious competition—a contest of who can make the greatest sacrifices—leaves investment promoters feeling helpless.
The projects are small in scale, lack highlights, and have no distinctive features. When selecting a location within a region, the conversation immediately turns to policies as soon as price is mentioned—with the sole focus on what benefits can be secured.
These are typical characteristics of lower-tier projects.
They are typically low-end industries, dominated by rudimentary processing and energy-intensive operations. At best, they might fall under a popular sector, but within the industrial chain, they occupy a position of low added value.
Incredibly, even projects below the mid-tier level still receive local government support.
And these lower-tier projects are precisely the ones exploiting loopholes in policy incentives. Within three to five years, once the enterprises have exhausted these “benefits,” they move on to “develop” the next location, contributing little to the local economy.
In recent years, the cancellation of local preferential policies has caused particular concern among some investment promotion agencies.
By contrast, the eastern regions have established a competitive advantage through industrial clustering and hold the upper hand in investment promotion, while the western regions, with their weaker economic foundations, might fear that without policy guidance, they would only attract subpar enterprises.
However, this is not the case.
After all, the capacity of developed regions is limited, so industrial development will naturally expand to surrounding areas. High-quality enterprises can survive without policy support; there is little need to attract enterprises that can only survive with such support.
In addition to the “official documents” published to the public, local governments still keep “case-by-case” personalized policies tucked away in their archives. Those eligible for these “tailored” policies are typically flagship projects, leading enterprises, or specialized, refined, distinctive, and innovative small and medium-sized enterprises—only such entities have the standing to “negotiate.”
When others are building policy “high grounds,” if you refrain from blindly following suit, you might just become a non-policy “lowland.”
When others are building policy “lowlands,” if you don’t blindly follow suit, you might just become a non-policy “highland.”
To Nurture Fish, You Must First Have Water
Economic development follows certain laws, and the same holds true for enterprise development.
It is like a tree that naturally grows in the south but is forcibly transplanted to the north. Conversely, a tree originally from the tropics that is transplanted to a cold region will obviously struggle to survive or thrive.
The same applies to attracting investment; it is not about acting as a mere “porter.”
In particular, when receiving industrial transfers, it is not simply a matter of phasing out industries in developed regions and moving or replicating them here in the central and western regions.
As is well known, companies do not simply choose a location at random. In reality, local governments must first invest in resources and supporting infrastructure to make a region attractive before companies will choose to locate there.
The state’s plan to separate non-capital functions from Beijing by first establishing the Xiongan New Area follows the same logic.
If industrial relocation remains merely at the policy level, it is nothing more than a castle in the air, difficult to implement.
Many localities still suffer from “herd mentality”—they rush to study and adopt whatever new trends emerge elsewhere, engaging in a “take-it-as-it-comes” approach and blindly following the crowd. If the approach succeeds, everyone is happy; if it fails, the law does not punish the masses.
True investment promotion, even when the criteria are relaxed, should still attract high-quality projects. It should not involve using subpar projects merely to serve as “firefighters.”
Some local governments have raised the slogan of “mass investment promotion,” calling for the spirit of “monitoring, competing, and seizing” opportunities, transforming “investment promotion” into “seizing businesses and capital.” Essentially, they expect officials to ignore difficulties, devise their own solutions, and blaze their own trails.
In the end, however, what they attract are subpar projects. There is no doubt that economic laws do not respond to administrative orders.
A Win-Win Situation
Many localities go to great lengths to attract out-of-town enterprises to invest locally or to encourage local enterprises to “return home,” with the aim of boosting local economic development.
While this is understandable, some cases demonstrate that the outcome is either a “half-finished project” from which there is no turning back, or a dilemma where one is caught between a rock and a hard place. Even more serious is that the day the project launches is the day it starts losing money.
A certain locality’s attempt to attract a helicopter manufacturing project serves as a stark lesson in investment promotion, with vast sums of capital going down the drain. Yet even after this, some localities continue to pursue complete aircraft projects, spending just as lavishly.
It must be said that even as some have fallen into the river ahead, others continue to jump in behind them.
For a business to thrive, it must find the right location. If a region offers a favorable environment, businesses will naturally come. There is truly no need to artificially create policy “lowlands.” Competition among cities that remains stuck in a “battle of industrial policies” yields only short-term development.
In reality, enterprises aren’t attracted by mere recruitment, nor are talents secured through a scramble. If we truly return to the principles of “focusing on industry, creating a favorable environment, and optimizing services,” who would still bother to attract projects of subpar quality?
In every era, the key is not to blindly follow trends but to act in accordance with the prevailing currents. While the government must take the initiative, it must also clarify the boundaries of the market; while leveraging capital, it must respect market laws.
Only then will investment promotion cease to be nothing more than a fleeting “firework.”
