China Pledging to Improve FDI Environment

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Last updated at: (Beijing Time) Wednesday, August 07, 2002

China Pledging to Improve FDI Environment

China will strive to maintain a stable and consistent policy for absorbing foreign direct investment (FDI) and further improve the environment for attracting FDI.

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Shi Guangsheng, minister of foreign trade and economic co-operation, urged China on Tuesday to work harder to improve the country's foreign investment environment to attract more foreign funds.

"Riding against the world economic slowdown, we should improve our foreign investment environment, first by enhancing our services to foreign investors," Shi said at a nationwide videoconferencing in Beijing.

Such services include efficient and transparent government services, reform of administrative approval systems and sound legal and business environments.

State Councillor Wu Yi echoed Shi's remarks.

"Creating an optimized investment environment to meet the demand of foreign investors is key to luring foreign investment," Wu said in a letter.

She reiterated that attracting foreign investment is a long term, coherent and stable policy in China.

China attracted US$24.56 billion in foreign direct investment (FDI) from January to June, achieving a year-on-year 18.7 per cent rise.

Contracted FDI stood at US$44 billion, a rise of 31.5 per cent over the previous year.

"Foreign investment is expected to swell in line with economic growth - so long as the world economy avoids a sudden slump," the minister said.

He forecast that foreign investment in China will hit US$50 billion this year.

"But uncertainties still exist," the minister warned.

Analysts said the global economic situation is now far from optimistic.

The United States, for example, is still reeling from the September 11 terrorist attacks. And the tumbling stock market, the devaluation of the US dollar and numerous accounting scandals have all weakened investors' confidence.

Officials said that world transnational investment stood at US$760 billion last year, representing a big slide of 41.5 per cent on an annual basis.

The figure this year is expect to shrink to US$500 billion.

"Therefore, competition for luring foreign investment is becoming even more stiff," the minister said.

Due to the sluggish economic development, more countries are hammering out preferential policies to attract foreign investment.

In the first quarter of this year, foreign investment in Russia increased by 39.4 per cent. And in the first five month this year, growth of foreign investment was 60 per cent in India and 39.9 per cent in South Korea.

"We should take full use of our advantages, such as our cheap and highly qualified workers and stable economic and political landscapes," Shi said. "The optimized business environment created after China entered the World Trade Organization (WTO) will also help bolster foreign investors' confidence."

Experts said WTO membership has influenced the Chinese economy in a positive way in the first half of this year by increasing investors' confidence, accelerating domestic industrial restructuring, improving the legal system and expanding the growth of exports and foreign investment.

The minister said the adjustment of related government policies according to China's WTO commitment has widened the range for foreign investment by gradually lifting China's services sectors and paying more attention to high-tech industries.

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