The Chinese government practices an industry classification system in terms of direct foreign investment in China. The State Development and Planning Committee, State Economic and Trade Committee, Ministry of Foreign Trade and Economic Cooperation issued in October 1997 Catalog of industries for foreign investment, classifying the industries into four categories, that is, permitted, encouraged, restricted and banned. The Chinese government gives the encouraged industries preferential polices in tax.
 
Chart of Industries in Which the Chinese Government Welcomes Foreign Investment

1. Agricultural new technologies and its comprehensive development

2. Energy, transportation and major raw materials

3. High and new technologies, new equipment & material that can improve product quality, save energy & raw material, enhance technical & economic effectiveness of enterprises, or can meet market demand when the domestic productivity is insufficient.

4. Projects that aim at world market, improve product quality, open up new market and expand export.

5. New technologies & equipment than can make comprehensive use of recourses or recycled recourses and prevent environmental pollution.

6. Projects than can take advantage of western China's abundance in man power and natural recourses and also accord with National industrial policies. Other projects encouraged by PRC' laws and regulations.

In 1999, the Chinese government promulgated catalog of priority industries for foreign investment in China's Midwest. According to the Catalog, foreign investment in the following industries in Anhui enjoy preferential policies that are given to the encouraged foreign-invested projects.

1. Storage, refreshing and manufacturing of grain, vegetables, fruits, livestock products and aquatic products

2. Forestry building and introduction of fine seeds offorestry

3. Comprehensive use of bamboo

4. Technical renovation of textile companies

5. Development and manufacturing of carbon fiber

6. Construction and operation of highways, independent bridges and tunnels

7. Development of applicable technologies in coal processing and manufacturing

8. Exploration and development of gas in coal layer

9. Exploitation and manufacturing of non-metal mines

10. Manufacturing of farming machinery

11. Copper materials and relevant electronic product manufacturing

12. Development, construction and operation of scenic spots and its matching facilities.