New Trend for Luring Overseas Investment in 2001

China will see a turnaround in the scale and quality of obtaining overseas investment in 2001.

China's expected entry into the World Trade Organization will bolster the opening up of the commercial, financial, insurance, telecommunications and foreign trade sectors, according to China Economic Herald.

Newly emerged investment opportunities have already attracted the attention of overseas investors. For example, US telecom giant Ericsson plans to expand investment from US$300 million to US$600 million in 2001.

The optimistic prospect for China's economic growth in 2001 also laid a solid foundation for luring more investment from abroad.

China's gross domestic product (GDP) is likely to hit 8 percent this year, and will maintain a growth rate of at least 7 percent next year, according to the latest sources with the National Bureau of Statistics.

The Chinese government will continue to seek pro-active fiscal policies next year and has introduced a multitude of favorable policies for overseas investment in the west, which will bring more market access and opportunities, the paper said.

China approved 15,732 foreign-funded enterprises from January to September, up 23.3 percent from the same period last year. By September, China had utilized overseas investment of US$333.9 billion, the paper said.

Among the world's top 500 companies, 400 had invested in China, the paper noted.

With the Asian economies growing, their investment to China picked up. Increased investment from the Republic of Korea, European countries and Canada took the lion's share of the total increased amount of investment in China.

However, investment from the United States, Singapore and Japan dropped considerably, leading to a decline of the country's overall utilization of overseas investment.

Currently, foreign direct investment accounts for more than 50 percent of investment, becoming a main form of overseas investment.

However, challenges still exist, which will, to some extent, hinder the growth of overseas investment next year, the paper said.

Transnational merging and annexation have become major means for international investment. In 1999, a total of US$720 billion came from transnational mergers, accounting for 85 percent of total foreign direct investment.

Ninety percent of the merging activities were conducted between developed countries, the paper noted, adding that it will not be conducive for the developing countries to attract funds.

Moreover, some related laws and regulations concerning foreign investment are still under way, affecting the immediate inflow of capital into China.






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