FDI in China Surges Despite Weak Global Economy

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Last updated at: (Beijing Time) Tuesday, February 18, 2003

FDI in China Surges Despite Weak Global Economy

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The first month of 2003 saw a year-on-year rise of 48.19 percent in the overseas funds used in China,according to statistics released by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) Monday.

Figures showed overseas investment already in use totaled 3.593 billion US dollars in January, while contractual overseas investment registered a growth of 65.34 percent to 9.241 billion US dollars.

The establishment of 3,349 overseas-funded enterprises was approved in January, an increase of 33.69 percent.

China has now approved a total of 427,545 overseas-funded enterprises. The contractual investment totaled 837.3 billion US dollars, of which 451.56 billion US dollars had already been put to use.

China attracted a record of US$52.7 billion in foreign direct investment last year as more foreign businesses tapped its potentially vast market.

Sun Xiaohua, a senior expert on foreign investment with the Chinese Academy of International Trade and Economic Co-operation, the think-tank of the foreign trade ministry, said China's FDI will continue its upward trend this year.

He predicted China would retain its competitiveness and outperform the world economy.

The nation's rapid economic growth and the start of a new round of trade liberalization talks will create new business opportunities for foreign investors, said Sun.

He identified the development of China's western regions and multinationals' mergers and acquisitions as the new drivers in FDI flow this year.

Sun said the government's decision to encourage foreign investment in the restructure of State-owned enterprises will also provide more opportunities for FDI.

So too will the trend among multinationals to relocate their manufacturing bases to China, Sun said.

Zhang Feng, an expert from the State Information Centre, forecast that the FDI growth rate would reach around 10 per cent this year.

More offshore capital will flow into fields such as banking, tourism, commerce, hospitals and education as China gradually lifts its restrictions on foreign investment in line with its WTO agreements, Zhang said.

But Zhang cautioned that China will face fiercer competition to attract FDI in future while Sun urged the government to pay more attention to the quality of FDI rather than focusing on quantity alone.

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