Downward Trend of Foreign Investment in China Brought under Check

For various reasons, the gliding tendency of foreign investment in China emerged since the middle and late 1990s has been brought under initial control this year. The contractual foreign investment has resumed its growth. The decrease rate of paid-in funds has also slowed down noticeably.

Well-informed sources say that China's contractual foreign investment from January to July this year exceeded US$ 27.642 billion, up 24.04 percent over the same period last year. Paid-in funds surpassed US$ 18.995 billion, the decrease margin dropped from two-digit to one-digit figure.

Analysts pointed out that since the latter half of last year, those countries and regions influenced by the Asian financial crisis have witnessed a faster economic recovery. Since two-thirds of the foreign investments in China come from 10 Asian countries and regions, the recovery tendency has exerted a positive influence on foreign investment in China. In the past year, China finished negotiations on its WTO accession with some countries and regions including the United States and EU. The tariff and trade barriers were reduced by a large margin. The opening of some new fields, such as business, foreign trade, finance, insurance, securities, telecommunication and tourism, drew the attention of many transnational corporations. The persistently implemented active fiscal policy has resulted in increasing improvement in China's economic situation. China's economic growth rate in the first half of this year hit 8.1 percent, 0.6 percent faster than that of the same period last year. The domestic market situation has turned for the better. The strategy for the large-scale development of west China has broadened the fields for central and western regions to absorb foreign investment and relaxed conditions for the establishment of foreign-funded enterprises here. In the first seven months, the proportion of foreign investment in the western region to the national total exceeded 10 percent.

Additionally, China is quickening the pace of strategic readjustment of its economic structure and encouraging foreign investors to participate in the re-organization and renovation of State-owned enterprises by various forms.

Sources say that since 1993, China, a developing country, has attracted the most foreign investment for seven straight years. Currently, 400-plus of the world's 500 largest transnational companies have established enterprises in China. Many transnational corporations indicated that they would make additional investment in China and direct more funds to the industries and regions which are encouraged by the Chinese government. This gratifying situation is due to the fact that China is becoming more and more attractive.



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