How's US$52.7bn Foreign Investment Introduced Into China?

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Last updated at: (Beijing Time) Friday, January 17, 2003

How's US$52.7bn Foreign Investment Introduced Into China?

Overseas investment to China reached 52.743 billion US dollars in 2002, up 12.51 percent from ayear ago, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) announced recently.

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Not an easy job to have got that USD 52.7 billion into China

Again China has stepped over a "doorsill" in the drawing-in of foreign capital. According to the latest statistics, 2002 saw China's actual use of foreign capital amounting to more than USD 52.7 billions the country over, the No.1 country in the world in drawing in the foreign capitals, the first time surpassing that of the US. The following are the reasons for it. First of all, it depends on the extensive internal market, the high-speed development in economy and stable political situation forming a great magnet for foreign businessmen from the outside world. And on the other hand, it is benefited from the positive effect brought about by China's entry into the World Trade Organization.

After China's entry into the WTO, the perspective for foreign investment in China becomes more clear and bright. China has not only honored its commitments for opening further its market but has also brought out in line with the WTO rules a series of laws and regulations and policies and measures for soliciting foreign capital. Quite a number of the 2300 rules and regulations "worked out, altered and revoked" by the relevant departments of the State Council have things to do with the investment. In the newly published industry catalogue, clauses and articles in connection with encouraging foreign investment have been increased to 262 from the original 186 while those for the restriction were reduced to 75 from the former 112 in number. With regard to the national treatment, foreign exchange balance, domestication of products and export achievements, the requirements for foreign enterprises have also been relieved. All this has helped China strengthen the "investment oasis" effect as a country of high return yet of very little risk. Therefore, major transnational corporations swarmed to make investment in China, an important source for the incoming of over 50 billion US dollars.

To which sectors was the foreign capital introduced?

Over the year past, the hi-tech industries such as IT and petroleum chemicals have become the major targets aimed at by foreign capitals as they feature more and an increasing number of capital-concentrated and large-sized projects. Of the world 500 transnational powers, 400 have established their R & D centers in China. In the electric-machinery and hi-tech product export, those turned out from the foreign-owned enterprises have come to a respective 65 and 80 percent. The transnational corporations have, so to speak, become a "catalyst" for the enhancement and replacement of products in china's manufacturing industry. This indicates that the utility has been remarkably raised in the exploitation of foreign capitals.

Along with the expansion in the opening of service trade it has attracted great attention of foreign business circles. 2002 witnessed quite a few foreign businessmen to have got their "first gold rush" in China. All such services as finance, insurance, securities, distribution, foreign trade, tourism, accountant, lawyer, health and medical care, education and transportation as well as goods consignment began to give forth bigger potentials in touting in foreign capitals. The year witnessed an average increase of almost 50 percent in the use of foreign capitals as against that the year before.

Moreover, the fully foreign-owned was turning out a form "in vogue" for the influx of foreign capital into China. 2002 saw nearly 20,000 fully foreign-owned enterprises be approved all over the country, accounting for two thirds of the total newly approved foreign enterprises in China that year. Under the support of relevant policies, the slow-moving transnational merger and acquisition investment projects in the past began to sparkle frequently and last year saw China cut a figure in the global market in this regard. And it stood out a prominent figure in the merger and trading amount in the Asia-Pacific region. Another pleased trend is that the proportion in sharing the use of foreign capital by China's western region was on the rise.

The incessant influx of foreign capital has made it to play a more prominent role in the national economy. Last year saw the exportation of the foreign-invested enterprises increase by 30 percent over that of the same period the year before, taking up 52 percent of the total export value of the country. The industry added-value averaged an increase of 10 - 15 percent, a proportion of around 25 percent of the national industry added-value while the taxation occupied a proportion of some 20 percent of the whole country. The employee directly engaged in foreign enterprises came to some 23 million in number, taking up some 10 percent of the workforce in cities and towns in China.

Can the scale of USD 50 billion in the introduction of foreign capital be kept on?

The authorities hold that judging from an inflow of over USD 50 billion China is in "honeymoon" with transnational corporations. But how long will this "honeymoon" last? Is there any more scope to develop for introducing foreign capital into China?

During the 3 years between 1992-1994 we saw an incessant breakthrough of direct foreign investment of USD 10 billion, USD 20 billion and USD 30 billion, every year a step up. The year of 1996 witnessed a breakthrough of 40 billion US dollars. However, it took some 6 years to jump up to more than 50 billion US dollars.

A person in charge of foreign capital with the MOFTEC made an analysis by saying, in the 10 to 20 years to come China will face many unidentified factors in the exploitation of foreign capital. However, the absolute amount in the introduction of foreign capital every year is sure to be higher than that in the bygone 20 years and in the meanwhile it will see an increasing portion in the worldwide touting for foreign capital into China. Nevertheless, it's hard to tell as to its increasing rate, possibly witnessing a strong upwardness and a continuous escalation; or possible to see some fluctuations due to the influence of economic development in the world. Suppose the global economy is going to see an obvious revitalization, then it brooks no big problem for China to maintain a scale in the introduction of USD 50 billion in a few years to come. However, this doesn't mean that the USD 50 billion is figure at the top in the introduction of foreign capital into China.

By People's Daily Online

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