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Foreign Investment Surges on Mainland
Foreign direct investment (FDI) in China rose 28.44 per cent during the first 10 months of this year with 17,493 enterprises being approved, according to a Chinese official.
Of that number 5,594 projects were Hong Kong-financed.
Total contractual foreign capital was more than US$43.516 billion (HK$339.42 billion), up 37 per cent, and actually paid-in foreign capital was more than US$31.402 billion.
Foreign Trade and Economic Co-operation Ministry foreign investment administration Deputy Director-General Liu Zuozhang said FDI had become an important component of China's national opening policy over the past 20 years.
By the end of October, almost 360,000 FDI enterprises had been approved in China with total contractual foreign capital of more than US$657.57 billion.
Between 1993 and 1999 China had been the largest FDI recipient country among the world's developing countries.
By the end of last year FDI enterprises employed a total of 20 million people throughout China, Mr. Liu said - roughly 10 per cent of the urban workforce.
During the first 10 months of this year the foreign trade volume of FDI enterprises reached US$192.306 billion, making up 49.67 per cent of the total national foreign trade volume.
Mr. Liu said improvements in China's domestic economic development and the accelerated progress of its accession to the World Trade Organization (WTO) would usher in a new era for FDI development in China.
``However, we should not neglect the fact that the absorption of FDI in China is still a long-term and challenging task, where we face opportunities and challenges,'' he said.
Mr. Liu said China's WTO entry would have very positive effect on China's absorption of FDI and would create favorable conditions for the expansion of FDI in China.
Accession to the world trade body would have far-reaching effects on reform and development of China's national economy and would provide new opportunities for foreign investors.
Mr. Liu said one of the challenges was the reduction of the proportion of international capital flowing into developing countries among the global aggregate which would intensify competition for FDI in China.
Also, traditional entry modes of FDI in China did not fit the major form of FDI flow, namely, mergers and acquisitions. This avenue of funding would become one of the bottlenecks hampering investment inflow into China.
Mr. Liu said breakthroughs in the fields of expanding FDI industrial access - a steadily improving legal system and the amelioration of the policy environment - would be covered in future work undertaken by the Foreign Trade and Economic Co-operation ministry.
Other areas needing improvement included streamlining regulation, strengthening legal administration and transforming government functions. (HK-iMail)
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