The Chinese government is considering new incentives designed to encourage more investment in the vast central and western areas, according to an official with the Ministry of Foreign Trade and Economic Cooperation (MOFTEC).

The government will adopt more flexible policies to further open up the central and western areas to investment from overseas, especially from multinational corporations. Special incentives will encourage foreign investment in agriculture, husbandry, environmental protection, education, tourism, energy and raw materials industries.

"We will try to combine foreign investment absorption and resources exploitation," said the official.

Current restrictions on the scope of foreign investment will be eased toward projects in the above-mentioned areas. In addition, governmental support will also help businesses gain a foothold in the hinterland.

Moreover, the officials noted, the scope of the use of pilot businesses using foreign-investment in retail commerce, finance, insurance and other service industries will be larger in those areas than in the eastern coastal area.

Citing the central and western areas' advantage in raw materials industries and good investment opportunities in husbandry, mineral resource exploitation, infrastructural construction and tourism, he insisted that the areas bear huge market potential.

However, despite the great potential, current inconveniences in transportation and the backward infrastructural facilities have to a certain degree dampened investors' interest in looking west, the official acknowledged.

Thus, intensifying efforts to improve such "soft investment environment" comes atop the government's agenda.

Too little foreign capital has so far found its way to the areas. And MOFTEC statistics indicate that the first 11 months of 1999 saw only 778 projects established in the areas, involving 1.93 billion U.S. dollars in pledged capital and 914 million in actual input, respectively accounting for 5.42 percent and 2.47 percent of the nation's total.