China steadfast with use of foreign capital

15:55, September 09, 2010      

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The Second World Investment Forum (WIF) of the United Nations Conference for Trade and Development (UNCTAD) with the theme "Investment for Sustainable Development" opened Tuesday in Xiamen, east China's Fujian province. The WIF forum has drawn leaders in 400 realms of investment from 116 countries, and "this fully demonstrates the importance that international investment has gained as an engine of growth and development," UNCTAD Secretary-General Supachai Panitchpakdi said at the opening session of the four-day event.

China's Vice President Xi Jinping's key-note address at the opening session and Chinese officials' speeches at varied meetings disclosed a clear signal that China is steadfast with the use of foreign investment. Related reports from the UN Trade and Development Organization (UNTDO) so far released shows that China remains the first choice of investment destination by multinational corporations and its inflows of foreign direct investment (FDI) ranked the second in the world.

China is still most alluring and enticing for investment from overseas. Its FDI is estimated to go up slightly after a marked decline in 2009. Statistics indicate that the investment of transnational firms dropped 40 percent worldwide in 2009, but China's actual use of foreign funds in the year ebbed merely 2.6 percent to 90 billion US dollars, only next to the United States.

China approved the establishment of 12,000 foreign invested companies with the actual use of 51.4 billion dollars of foreign capital in the first half year, a rise of 19 percent and 21 percent respectively year-on-year, and China has thus been the No.1 nation for 18 years in a row with its use of international capital.

Chinese Minister of Commerce Chen Deming noted the above figures show that China's overall investment environment has kept improving. "Multinational corporations are very astute. If they know China is not good obviously, they would not insist on making investment in China," he said.

The development of multinational corporations in China has plucked up their confidence to invest in China. The South China US Chamber of Commerce Investment and Trade Delegation is composed of 150 transnational firms and 60 enterprise representatives from Maryland, California and Georgia, These 200 firms are likely to make at a 2 billion-dollar deal. Harley Seyedin, president of AmCham, disclosed that the amount of investment at the fair will rise by 40 percent as compared to 2009.

Does China still need to use foreign capital after it has already had a foreign exchange (FOREX) reserve of more than 2 trillion dollars. In reply to this query, Minister Chen said that China's reform and opening-up strategy is not because of fund shortages only, but aimed to absorb advantageous business management and product aspects from other countries and regions for the sake of learning their strong points to develop itself.

Up to July 2010, China has set up a total of 698,000 foreign funded firms with an actual use of 1.05 trillion US dollars of foreign capital. At present, it is the foreign invested firms that contribute to China's 22 percent of tax revenues, 28 percent of industrial added value, 55 percent of total imports and exports, 50 percent of technology acquisition, and the employment of about 45 million workers.

This is a mutually-beneficial, win-win process. It has provided China with essential funding, advanced technology, precious managerial experience as well as a lot of talented personnel from overseas. As for the foreign funded firms, they draw significant investment repayment, and many of them have been made the growth luminescent spots and big profit-making centers.

Most domains of China's manufacturing and agriculture businesses as well as service trade sectors have already opened themselves to the outside the world. Presently, China continues to work energetically to build a more open and optimized investment environment for foreign funded companies, such as building a transparent legal environment, a fairly competitive market environment and a stable, orderly management environment.

On global investment environment, Minister Chen Deming further noted that some resentment on China's investment environment does not derive entirely from transnational firms and, owing to a high unemployment rate in some developed nations, their leaders even encourage their corporations to return from overseas through their government subsidizations. This kind of gambling does not necessarily tally with the situation in China's use of foreign capital because of media or intermediary agency exaggerations.

Developing economies and economies during periods of transition, including China's present economy, need to be faced squarely by developed nations for their increasing attractions of FDI inflows.

China has attached importance to the structure or quality of foreign funds to be introduced. In the meanwhile, China is changing its role in this regard. The nation is re-adjusting and upgrading its demand for FDI on the one hand and, on the other hand, it has also been turned into a major FDI source itself and also a major origin for low-come neighboring countries to import capital and technologies.

In the first half of 2010, domestic investors from China made direct investments in 1,841 foreign enterprises in 111 countries and regions globally and realized the non-finance FDI of 17.8 billion dollars, up 44 percent year-on-year.

By People's Daily Online and its authors are PD reporters Jiang Shengyang, Yu Ronghua

(Editor:张心意)

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