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China inaugurated a harbor area with preferential tax rates on Thursday in the northeastern city of Dalian, a major step towards forming a free trade zone between China, Japan and the Republic of Korea (ROK).

 

The Dayaowan Bonded Harbor Area, located at the Dagushan Peninsula in the northeastern part of Dalian, enjoys preferential taxation and foreign exchange policies, said Zhang Shikun, director of the Dalian Bonded Area Administrative Committee.

 

"It will remove tariffs for foreign cargo and offer tax rebates for domestic cargo. It will also exempt businesses from value added taxes and consumption taxes if they trade with each other," Zhang said.

 

Analysts predict the efficiency of logistics will be raised by 20 percent after the port is put into operation.

 

The first phase of the area covers 3.06 square kilometers and includes warehouses, cold storage, a container terminal and processing and logistics services.

 

About 200 million yuan (US$25 million) has been spent on the construction of the area since August 31 last year, when the State Council approved its establishment.

 

The second phase is expected to be finished by the end of next year, expanding the area to 6.88 square km.

 

The Dalian port ranks the seventh largest in China and handled 200 million tons of cargo and 30 million containers (TEUs) last year.

 

(Xinhua News Agency June 29, 2007)