"Opening up the sector to foreign investors will help meet a hefty capital demand and introduce the world's advanced management methods,'' Zhang said yesterday at the annual conference on Beijing's foreign economic and trade co-operation.

Beijing began to open its infrastructure construction sector last year.

In 2000, a Sino-Canadian joint venture was set up to sponsor the construction of Beijing's number five subway line. Other foreign companies have also taken part in a large sewage treatment plant project in the capital city.

Sources from the municipal government said the city will further improve its compensation mechanism for infrastructure construction investment.

Beijing is also encouraging foreign investment in its high-tech industries and wants it to help reorganize State-owned enterprises (SOEs).

For high-tech industries, the municipal government will lift some restrictions on market admission and encourage foreign investors to set up investment management companies in Beijing.

"SOEs are allowed to attract foreign funds via stock issues, investment funds, venture capital, BOT (build-operation-transfer) and TOT (transfer-operation-transfer) schemes,'' Zhang said.

In addition to attracting more overseas investment, Beijing is encouraging its enterprises to set up in other countries.

Li Zhao, director of Beijing Foreign Trade and Economic Co-operation Committee, pledged that the municipal government will formulate new policies and improve existing regulations to support such moves.

"High-tech companies might set up research and development departments in developed countries and regions,'' Li said.

"This will allow them to take advantages of foreign capital, technology and talent.''

Li stressed that overseas investment in some enterprises engaged in traditional industries is expected to stimulate the export of equipment and materials.

The government will offer support for domestic firms wanting to set up abroad by offering preferential loans and providing export credit guarantees.

According to official statistics, during the Ninth Five-Year Plan period (1996-2000), the municipal government allowed 95 domestic enterprises and institutions to invest US$90 million in foreign countries and regions.

Meanwhile, these enterprises and institutions yielded total profits of US$75 million, 23 per cent higher than in the Eighth Five-Year Plan period (1991-1995).

(China Daily 03/25/2001)