FDI in China Expected to Reach Record High in 2002

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Last updated at: (Beijing Time) Tuesday, December 04, 2001

FDI in China Expected to Reach Record High in 2002

Foreign direct investment (FDI) in China is expected to reach an all-time high in 2002, a total 47 billion U.S. dollars in 2001 will be achieved, with the average size and technical content of the projects on the rise.

According to the ongoing national planning meeting in Beijing, China will strive to attract more FDI in 2002. China's economy is expected to grow by 7.4 percent this year, far ahead of a World Bank forecast of a 1.3 percent growth of the world economy, said official with the State Development Commission (SDPC).

Economic Growth to Maintain 7% in 2002

Local economists predict that China's economy may maintain a growth of around seven percent in 2002.

This makes China an increasingly attractive destination for overseas investment, Zeng Peiyan, minister in charge of the SDPC, said. SDPC figures indicate that the inflow of foreign funds, including FDI, is to total 59.4 billion U.S. dollars in 2001.

China to Raise Level in Using FDI

According to decisions made by the central authorities, China will take advantage of its accession to the World Trade Organization (WTO) to lift the level of using foreign funds.

The Trade Development Conference of the United Nations has forecast that the total volume of transnational investment will decrease next year. However, the amount of FDI coming to China will increase. It is estimated that FDI in China will top 50 billion U.S. dollars in 2002.

According to sources from the national planning meeting, China will guide foreign investment into such areas as electronic information, bio-technology, new materials, chemical industry and construction materials.

Foreign Investors Encouraged to Participate China's Western Development

China will also encourage foreign investors to participate in the construction of infrastructure in western China. The country will provide necessary assistance for multinational companies to establish research and development centers here.

Zeng said China will give priority to the introduction of high and advanced technologies that are of strategic importance and most needed in the country. It also encourages the efforts of learning from advanced international management expertise and hiring specialists from overseas.

China to Open Service Market

Starting from next year, China will begin to give national treatment to foreign-funded enterprises. The country will gradually open its service market to foreign investors, including the retailing, financial, insurance and tourism sectors.

In order to adapt to the new trend of international capital flow, China will experiment with attracting foreign funds through venture investment and mutual funds in 2002. It will invite multinational companies to help with the reform of state-owned enterprises and the disposal of bad loans of asset management companies.

Zeng said that China will also enhance the utilization of soft loans of foreign governments and international organizations next year.

China FDI Environment

I. Huge Market

With a population of 1.2 billion, China has an enormous consumption potential. The Chinese market has been regarded by investors as a big market yet to developed fully worldwide.

Over the past ten-plus years, the scale of China's economic construction has been growing steadily, people's purchasing power has been increasing at an accelerated pace and the domestic market has been becoming increasingly brisk. Foreign investors can explore the Chinese market by investing and building enterprises in China.

II.Numerous Opportunities

Because of rapid economic growth, a great many construction projects and technological upgrading projects have been undertaken throughout China. China's rapid economic growth has also created a host of investment and development opportunities.

III.Preferential Policies

To attract foreign companies to invest in China. the Chinese Government has formulated many preferential policies in terms of taxation and import and export trade, and has introduced a relevant complete legal guarantee system.

IV.Low Labor Costs

China has a huge population, abundant labor resources and a relatively low level of wages. Meanwhile, it pays close attention to its citizens' education, has made nine-year compulsory education universal, and has fairly developed middle school, university and vocational education. So, Chinese work force has a high quality and a large number of technicians. Generally speaking, overseas-funded enterprises set up in China are satisfied with the quality of Chinese workers and technicians.

Total Utilized FDI China During 1995-2000

FDI to China to Top US$40b in 2002: DBS

Foreign Direct Investment in China Increases: MOFTEC

Flow of FDI to Become a Torrent