Li Peng, chairman of the Standing Committee of the Chinese National People's Congress, was present at the signing ceremony.

The CNOOC and Shell Petrochemicals Company Limited is jointly set up by China National Offshore Oil Corporation (CNOOC), Shell, and the Guangdong Investment and Development Company in south China's Guangdong province.

Shell holds a 50 percent stake in the joint venture.

The first phase of construction of the project involves a total investment of 4.05 billion U.S. dollars.

The project, located in Huizhou in Guangdong province, will turn out 800,000 tons of ethylene and 2.3 million tons of petrochemical products each year upon the completion of the first phase of construction in 2005.

The second phase of construction will involve huge sum of investment in oil refineries.

Evert Henkes, chief executive officer of Shell International Chemicals, expressed full confidence in the prospect of economic returns from the project.

He said that China is the fastest growing economy in the world and Shell will enjoy maximum returns by signing the contract at a time when China is about to enter the World Trade Organization (WTO).

Chen Huai, a researcher from the Development Research Center under the State Council, said that the signing of the big contract represents a significant event as it marks the beginning of a new era in China 's opening to the outside world.

He pointed out that the project has introduced the ownership of international conglomerates, reaching a higher level of utilizing foreign funds.

During the past several years, the number and size of foreign-funded projects in China have been growing larger and larger. New forms of investment have also been introduced such as stocks, bonds and BOT.

Experts said that China has entered a crucial stage of shifting focal point from quantity to quality in the process of utilizing foreign funds.

The petrochemical project was first put forward in 1988. A framework agreement for the project was reached in the Netherlands in 1997 and an official agreement was reached on the basis of equality and mutual benefit in August this year.

Zhai Hongxing, head of the Chinese side of the project, said that the two sides have conducted a thorough study on every issue of the huge project so as to avoid mistakes.

"We would rather proceed a little slower and make sure every step is taken correctly," he said.

Shell has injected a number of patented technologies into the project, which will mainly produce lower-end chemical products, many of which are unable to be produced in China at present.

Shell has already set up more than 20 petroleum and petrochemical projects in China, yielding remarkable profits for the company.

Evert Henkes said at the signing ceremony here today that Shell is looking for more investment opportunities in China.

Chinese economists said that as China enters the WTO and its economy keeps on growing fast, it will greet a new wave of foreign investment.

To date, China has utilized 330 billion U.S. dollars worth of direct foreign investment.

(People’s Daily 10/29/2000)