China Expected to Keep Capital Inflows after WTO EntryChina is able to achieve sustainable capital inflows particularly with the gradual liberalization of many services sectors after its WTO entry, according to the latest Hang Seng Economic Monthly issue.The magazine, published by Hang Seng Bank, carried a report entitled "Maintaining China's External Balance", saying as long as the domestic environment remains conducive to foreign investors, the untapped spending power of China's 1.25 billion population would continue to attract foreign investment. The report noted that the mainland witnessed significant growth in balance of payment between 1990 and 1999, with the surpluses coming mainly from capital inflows in the form of foreign direct investment. Approximately 90 percent of the country's cumulative inward foreign direct investment of 300 billion U.S. dollars in the past two decades was made between 1993 and 1999, the report said. China's current account surpluses were also recorded in nine of the 10 years from 1990 to 1999, and exports grew at a compound rate of 14 percent annually, reaching 195 billion U.S. dollars in 1999, making China the world's ninth largest trading entity, it said. It said that the huge and recurring balance of payments surpluses not only lift the country's foreign exchange reserves from 5.6 billion U.S. dollars in 1989 to the world's second largest of 155 billion U.S. dollars in 1999, but also helped preserve the stability of its currency and financial system during the Asian financial turmoil. China's immense domestic market will offer huge potential to foreign investors, though managing its external capital flows could be a greater challenge as it looks forward to deepening its integration with the world by becoming a WTO member. |
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