China’s Ministry of Commerce (MOFCOM) issued in January 2009 a circular requiring the local authorities in charge of approving the establishment and modification of foreign invested enterprises (FIEs) to consider the Land Conservation and Intensification Index (the Index) when reviewing FIE applications. The Index includes the FIE’s total fixed asset investment, land area, construction area and work life facilities, as well as the surface area of its office buildings, residential structures and green space.
When applying for approval to establish an FIE, an applicant must submit certain documents from relevant land authorities. These documents (and the data they contain) determine the proposed FIE’s Index. When applying for approval to modify an existing FIE, an applicant must submit the FIE’s Index; if its Index is incomplete, it must submit as much information as it has. In collecting and analyzing these Indexes, the Chinese government is trying to assess how well its Land Conservation and Intensification Policy is enforced.
The State Council announced the Land Conservation and Intensification Policy in January 2008, with two main objectives: first, that construction projects be designed to occupy as little land as possible, and specifically avoid arable land; and second, that each plot of land under construction be used as productively and efficiently as possible.