BEIJING - China has developed a series of favorable policies, including tax cuts, preferential loans and start-up capital support, to persuade overseas-educated Chinese to start businesses back home.

Firms employing Chinese citizens returned from overseas as their legal representatives or with overseas Chinese employees and venture capital contributing at least 30 percent of the business's total investment are eligible to enjoy the preferential policies, said a circular made public by the Ministry of Human Resources and Social Security (MOHRSS) Wednesday on its website.

Related readings: China to attract more overseas talents  China's rise lies in talents, education, not GDP: Premier  Zhejiang will hire talents from abroad  Premier welcomes foreign talents working in China

Enterprises begun by Chinese entrepreneurs who have returned from overseas, that have good innovation capacity and market prospects, can receive substantial support, such as a proportion of their start-up capital, during their start-up phases, according to the circular.

Further, the government will collect corporate income tax from recognized state-encouraged high-tech enterprises begun by overseas Chinese entrepreneurs at a lower rate of 15 percent, it says.

Also, 150 percent of development and research expenses for high-tech and new products can be deducted in calculating these firms' taxable incomes.

In addition, firms owned by overseas-educated Chinese citizens can benefit from tax reductions or exemptions for profits for running businesses in the agricultural, forestry, herding and fishery sectors, as well as in major government-supported public infrastructure projects and energy or water conservation projects.

Leading overseas returned entrepreneurs can also take advantage of a subsidy on house rentals and funds to help them settle down.

The policy package is the country's latest move to enhance its cultivation of talents and build an innovative country, according to the circular.

More than 632,000 Chinese, or 33 percent of those who studied abroad, have returned home since 1978. Nearly 135,000 Chinese returned home after finishing their education abroad in 2010, up 24.7 percent from 2009, the MOHRSS figures show.

The ministry attributed the increase to better policies and an improved working environment in China.