More taxation reform will stop capital flight

That China's largest automobile glass-maker Fuyao Group will invest $600 million to build a 2,000-worker factory in Moraine, Ohio, should set off alarm bells, prompting the Chinese government to lower taxes and operational costs for manufacturing industries to prevent the drain of Chinese capital and jobs.

Responding to the criticisms against his investment abroad in a recent interview, Cao Dewang, chairman and founder of Fuyao Glass Industry Group in Fujian province, complained about the heavy tax burden in China. Cao, who started investing small amounts in the United States in 1995, said it took him more than 20 years' observation to make the "prudent" decision two months ago, because there is an obvious gap in production and operational costs between China and the US.

Tax on enterprises, electricity tariff and natural gas costs in China are all higher than in the US, he said. And compared with a number of fees an enterprise has to pay for land-use rights in China, land is almost free to use in the US thanks to local subsidies.