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Home >> Business
UPDATED: 17:30, November 09, 2006
China's new policy stresses quality of foreign investment
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China on Thursday published its 11th five-year-plan (2006-2010) for utilizing foreign investment, which says the priority of policy will be given to the quality rather than quantity of such investments.

The National Development and Reform Commission published the document on its website, the first time such a document has been published.

"This is an important measure taken by China in creating a stable and transparent foreign investment management system as well as a fair and predictable policy environment," the NDRC said.

According to the document, China utilized 383 billion U.S. dollars of overseas investment during the 10th five-year-plan period (2001-2005), including 286 billion dollars in overseas direct investment, 38 billion dollars in stock issuances and 46 billion dollars in foreign loans.

It criticizes some local governments for their blind seeking of foreign investments, some of which are apparently against the central government's industrial policy.

The document notes that emerging monopolies by foreign businesses in certain industries are posing a potential threat to China's economic security.

It also criticizes foreign businesses for abusing intellectual property right protection laws, adding that this has adversely affected Chinese enterprises' capacity for independent innovations.

The document says China will push for further shifting of policy priority from the quantity to the quality of foreign investment during the next five years.

Priority shall be given to the introduction of advanced technologies, management expertise and high-quality talents, rather than the use of foreign capital, the document says.

More emphasis shall also be given to the protection of environment and efficient use of natural resources, it says.

The document stresses the need for more foreign investments in areas such as research and development as well as sophisticated design, so that China could eventually become a major manufacturer of high value-added products.

It also calls for more foreign investment in China's remote west and the northeast rust belt, which are currently lagging far behind the coastal regions in the amount of foreign investment.

Despite the stress on quality, the document says China expects its foreign investment to keep rising in the next few years.

"During the 11th five-year-plan period, the domestic and international environment affecting foreign investment in China will generally tend to improve, making it possible for China to improve the quality of foreign investment while maintaining quantity," the document says.

According to the document, China will continue to encourage foreign investment in agriculture, electronics and information, petrochemicals, chemicals, automobiles and infrastructure.

Foreign businesses will be encouraged to take part in the restructuring of traditional industries such as machinery, light industry, textile, raw materials and construction.

Foreign investment in environment protection, including the control of water and air pollution and recycling, will be welcomed, the document says.

In the service sector, the document says China will fulfil its duties under the World Trade Organization and open its banking, insurance, securities and telecommunications sectors to foreign investment in a positive and prudent manner.

In response to the rising concern over foreign acquisitions of leading Chinese firms in critical sectors, the document says China will speed up legislation and step up the supervision of sensitive acquisitions and takeovers to ensure critical industries and enterprises remain under Chinese control.

Source: Xinhua

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