On July 27, 2012, MIIT issued the Industrial Transfer Guidance Catalogue (2012) (“Catalogue”), the first comprehensive policy document promulgated by the MIIT to promote the orderly transfer of industries among regions, mainly from developed regions to less developed regions. The Catalogue is a further effort by the Chinese government to carry out the industrial and regional development strategy for the 12th Five-Year period (i.e., from 2011 to 2015), after the promulgation of the Industrial Transformation and Upgrade Plan (2011-2015) earlier this year (see the March 2012 issue of the Trade and Manufacturing Alert).

According to a MIIT official, the Catalogue mainly aims to address four major issues concerning the transformation of fifteen industries: the uneven development among different regions, the adjustment and optimization of the geographic distribution of productivity, the orderly transfer of industries, and the transfer of backward capacities. The fifteen industries involved in the Catalogue include machinery, automobiles, ship and marine engineering equipment, aviation and aerospace, railway transportation, chemicals, iron and steel, non-ferrous metals, building materials, food, light, textiles, pharmaceuticals, electronic information, and production services.

The Catalogue consists of five chapters. The first chapter outlines the overall direction of industrial development for the four regions of China, i.e., the northeastern region, the eastern region, the central region, and the western region. Chapters two through five set forth specific guidance for each of the four regions, identify the industrial clusters in the regions, and designate the priority industries for each of the provinces in the regions.

Key areas and industries identified in the Catalogue are given priorities for receiving support in the form of taxation, land, credit loan, and investment. Central government agencies, local governments, and financial institutions have been coordinating with the MIIT to provide various incentives to promote the relocation of companies to less developed regions. For example, Ningyuan County of Hunan Province refunds 30-100 percent of the land price to companies that relocate to the country, in addition to tax incentives and exemptions/ reductions of administrative fees and charges. Nine financial institutions in Shangqiu City of Henan Province pledged to provide credit lines totaling 104 billion RMB over the next three years to promote the construction of infrastructure for industrial transfer projects and support companies moving to the city.