Foreign investors will also be allowed to buy or even hold the largest proportion of SOEs' shares, according to the announcement.

This means another big step forward has been taken to revitalize the SOEs in northwest China, local officials said.

According to an official document, the mergers and acquisitions of SOEs by foreign investment will be achieved through contracts, equity markets, stock markets and the transfer of stock rights.

On the one hand, the government will take measures to support foreign investors who wish to merge Chinese SOEs; on the other, the government will settle the SOEs' debts, exclude non-operational capital, and make suitable arrangement for laid-off workers, the document explained.

"Mergers and acquisitions have proved to be effective means worldwide to attract foreign investment," said an unnamed official, citing the fact that over 70 percent of the money circulation in the world is facilitated in this way.

"If the mergers and acquisitions succeed in Xi'an, the city will attract more investment," the official noted.

He also added that the mergers and acquisitions will not incur loss of state-owned assets.

In addition, the sectors with great potential for high profits, such as banking, insurance and tourism, will also be opened to foreign investment, local officials said.

The Chinese government has emphasized on many occasions that China will revitalize its SOEs by various means and encourage foreign investors to participate in this reform.

"We hope that foreign investment, technologies and management experience will help accelerate the reform process of China's SOEs, " an official with the Chinese Ministry of Foreign Trade and Economic Cooperation (MOFTEC) told Xinhua.

In addition, the four leading sectors of information, machinery, light industry and petrochemicals have expressed a welcome for foreign investment, sources said.

(Xinhua 04/04/2001)