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 | Wednesday, April 19, 2000, updated at 09:55(GMT+8) | ||||||||||||
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Why China's FDI Increased in 1st QuarterOverseas direct investment in China (FDI) increased sharply in the first quarter this year, and analysts attribute the increase to the economic recovery in Asia, expanding domestic market demand, and the accelerated pace of China's entry into the World Trade Organization (WTO).A total of 4,316 overseas-invested new ventures were approved between January and March, up 22.75 percent, according to figures released by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC). These ventures involve 11.08 billion US dollars of overseas investment in contractual volume, up 27.05 percent. Materialized investment during the period reached US$ 7.14 billion, down 2.72 percent from the same period last year. In March alone, the number of newly approved overseas-invested ventures grew by 43.16 percent, contractual overseas investment grew 50.37 percent, and arrived investment edged up by 10.28 percent. "It is still too early to say that FDI in China has recovered growth for the entire year, but it did grow monthly in the first quarter," said analysts. A better international and domestic environment has made China more attractive to overseas investors, and the strategy to develop China's vast western region has provided investors with more opportunities, according to the analysts. Since the latter half of 1999, most economies in Asia that were hit hard by the financial crisis have begun to recover. As a result, they are now more able to invest in China, and Asia is China's number one source of FDI. Domestically, China has seen a sustained economic growth, with gross domestic product for the first three months of this year expected to reach seven percent, as domestic market demand continues to recover. In addition, the country's decision to develop its vast western region has drawn worldwide attention, and many multinationals have begun increasing their investment in this region, according to preliminary reports. The accelerated pace of China's entry into the WTO is another factor leading to FDI increase, the analysts said. Following the Sino-U.S. bilateral agreement concerning China's entry into the WTO last November, China has signed agreements with a dozen other WTO members, leaving only a few members remaining without a deal. Many overseas-invested ventures have said that they are in favor of China's WTO membership, saying this will be good for their businesses in the country. China has pledged to gradually open up its finance, insurance, telecommunications, banking, foreign trade, and other sectors to overseas investors upon entry into the WTO. "If the international and domestic environment continues in its current situation, and if China joins the WTO very soon, FDI growth may continue in the coming years," one analyst said.
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