As mature foreign capital entered various industries in China, questions began to pop into many people's mind. Now that China's trade surplus is hovering at a high level, are those pioneer foreign firms of low technology and low value added still needed? Should those polluting, high energy-consuming, resource-related enterprises be kept away from the domestic market in the future? Many say that it's improper to limit these foreign firms today after all the contribution they have made to market activity in the darkest days of the Chinese economy.

The EO: According to the new Catalogue, traditional processing businesses are neither encouraged nor limited or forbidden. What does this indicate?

Zhang: As far as I know, Taiwan, Hong Kong, and Macao enterprises are now preparing for anything by demonstrating their values in various ways to the government, and meanwhile, adjusting themselves according to the policies. I think the government should, above all, stick to its attitude of limiting or forbidding processing businesses, and at the same time provide certain support to them—they deserve it for their past service.

The government has long been working hard to gather processing enterprises in special areas such as bonded logistics zones, export-oriented processing zones and bonded ports.

The newly revised Catalogue shows the latest policies, their significance, and policy direction. Foreign firms today have more social responsibilities-- to conserve energy, control pollution, and produce higher technology products.

The EO: We heard of the government's concern about the joint financing of domestic and foreign capital during the revising process. And in the new Catalogue, many industries are labeled as "limited to joint ventures and partnerships". Is this what they call joint financing of domestic and foreign capital? Will it be able to temper the surge of foreign individual proprietorship enterprises?

Zhang: We have followed a "V" route in treating joint ventures and partnerships. In the early days, foreign firms were obligated to cooperate with domestic ones and share their technologies. After China joined the WTO, some of the barriers were removed as it had promised. Therefore foreign firms had a freer business environment and gradually turned to individual proprietorships. Gaining their independence, those firms began protecting their own interests by adopting harsher measures of "counter-imitation" and "counter-technology-divulging", and applying intellectual property rights rules and WTO regulation. Despite the land and favorable policies we offered, we didn't realize the technology transfers we had hoped for. That's why the government resorted to the joint venture mode this time.