Major ways of introducing foreign investment in Shanghai are as follows:

I. LOANS

Overseas loans mainly consist of three forms:

(1) Loans from foreign governments and international financial institutions;

(2) Export credit of foreign countries or commercial loans;

(3) Bonds or stocks issued abroad.

II. COMMODITY CREDIT

It includes compensation trade, processing of imported materials, assembling of imported parts and components as well as leasing trade.

III. DIRECT FOREIGN INVESTMENT

It refers to the establishment of equity joint ventures (including Sino-foreign owned stock companies), contractual joint ventures or wholly foreign owned enterprises by foreign investors in Shanghai.

IV. TRANSFER OF LAND USE RIGHTS FOR VALUABLE CONSIDERATION

On November 29th, 1987, Shanghai Municipal People's Government promulgated the "Regulations for the Transfer of Land Use Rights for Valuable Consideration in Shanghai City". On May 26th, 1990, the State Council issued "Provisional Regulations of the People's Republic of China for Granting and Transfer of Right to Use State-Owned Urban Land."

"Transfer of Land Use Right for Valuable Consideration" means economic activities relating to the development of land and buildings through the grant and assignment of land use rights for valuable consideration. "Grant of Land Use Rights for Valuable Consideration" means the provision by the Shanghai Municipal People's Government of specific lots of land owned by the State, under stipulated term of years, purpose of land use and any other conditions for a grantee or grantees to explore and develop, in consideration of the payment of premium and ground rent. "Assignment of Land Use Rights" means the passing of land use right by a grantee or grantees after such land use right have been granted.

Ownership of land by the People's Republic of China is not affected by the transfer of land use rights for valuable consideration. Underground natural resources, minerals, and objects buried or hidden in the land shall not form part of the transfer of land use right for valuable consideration.

Unless otherwise stipulated by law, any company, enterprise, organization or individual could obtain the land use right in accordance with regulations concerning grant or transfer of land use right for valuable considerations.

The maximun terms for granting of land use right are as follows:

Land for residential purpose

70years

Land for industrial purpose

50years

Land for the purposes of education, scientific research, culture, public health and sport

50years

Land for commercial, tourism and recreational purpose

40years

Land for comprehensive purpose or other use

50years

Unless otherwise stated in the grant contract, or disallowed for planning reasons, the term may be extended on application by the grantee.

Unless otherwise stated in the grant contract, land use right may be assigned or mortgaged by the grantee. Land use right may also be inherited.

Grantees that are foreign-invested enterprises shall not pay ground rent as stipulated in "Measures of Shanghai Municipality for Administration of Land Used by Joint Ventures Using Chinese and Foreign Investment."

Whoever conduct economic activities on the granted land shall, according to regulations concerned, apply to relevant department of Shanghai municipality for approval, business registration and tax registration.