The Chinese government has given greater authority to local governments in the country's western areas to encourage a flow of direct foreign investment into the areas, a top Chinese trade official said in Beijing Monday.

Shi Guangsheng, minister of foreign trade and economic cooperation, noted that local development zones with tax exemption for foreign investors set up in capitals of provinces and autonomous regions in western China, can be turned into national development zones with approval of the relevant authorities.

Unlike local development zones, the national development zones guarantee still better and more preferable, consistent policies for investors from overseas according to laws.

Shi made the remarks at a press conference sponsored by the on- going Third Session of the Ninth National People's Congress (NPC) Monday.

The Chinese government will also resort to five other measures to encourage direct foreign investment in western China, he said, and it is drafting a category of businesses using foreign funds in the west, so as to channel flows of overseas investment into local industries and projects with market potentials.

With regard to the categories of foreign-funded enterprises being encouraged by the state, firms in western and central China will enjoy 15-percent tax rate for three consecutive years after the expiration of the preferential policies granted to them. If a foreign businessman re-invests in another project in the west with the money earned and his investment ratio exceeds 25 percent, the project will receive the corresponding preferential treatment as a foreign-funded project.

According to Shi, foreign-funded firms in eastern China will be allowed to take over under contract the operation of both Chinese and foreign firms in the west.

Moreover, the government will, in principle, allow the related policies and projects concerning foreign investment to be experimented in the western areas simultaneously as in the east, Shi said, adding that the government will also set forth more policies of encouraging foreign investment in the western areas step by step.