There are several types of zones in China. The largest zones are so-called Special Economic Zones, encompassing individual cities in Southern China, namely, Shenzhen, Xiamen, Hainan, Shantou and Zhuhai. They have their own legislation and the corporate income tax rate is reduced from 33% (the rate in other regions) to 15%. Other types of Zones are "Open Cities", which are eastern seaboard cities, provincial capitals and selected cities in border regions. These open cities have sub-zones offering tax incentives comparable to those of Special Economic Zones. "Economic and Technological Development Zones" are targeted at technology intensive industries. Local authorities have wider authority to approve projects than usual and there exist tax incentives that reduce corporate income tax to between 15 - 24 percent, depending on for how long an enterprise is established.
"High Tech Development Zones" are similar, with the main difference being that tax incentives are administered by the Ministry of Science.
The main activities in "Free Trade Zones" are warehousing and processing. Free Trade Zones offer duty free status on imports and exports and foreign exchange regulations are relaxed. For foreign investors it is wise to shop around. Although many benefits are similar, the particular rules may vary from zone to zone.
