Editorial: Striving to Open New Phase in Work of Use of Foreign Funds

The National Foreign Capital Working Conference held under the new situation comprehensively implemented the spirit of the Fifth Plenary Session of the 15th Central Committee of Communist Party of China (CPC) and the Central Economic Working Conference and, guided by the important thought of the "three represents" (representing the requirement to develop advanced productive forces, an orientation toward advanced culture and the fundamental interests of the overwhelming majority of the people in China), summed up the achievements and experiences in the utilization of foreign capital during the Ninth Five-year Plan period (1996-2000), clearly set the tasks for further raising the level of utilizing foreign capital during the 10th Five-year Plan period, studied and planned countermeasures for China's use of foreign funds after joining the World Trade Organization (WTO).

The conference is of important and far-reaching significance to more and better use of foreign funds in the new historical period, to vigorously boosting an export-oriented economy and promoting the sustained, rapid and sound development of the national economy.

Over the past 20-plus years of reform and opening up, China has scored achievements of world attention in the utilization of foreign capital. The past decade, in particular, has witnessed constant expansion in the scale of, and continued rise in the level of the utilization of foreign investments.

Thus far, the total actual amount of direct foreign capital used has exceeded US$360 billion, the absorption of foreign capital has ranked first among developing countries for eight consecutive years, this has played an irreplaceable role in making full use of the domestic and foreign markets and resources to boost national economic growth, accelerate the adjustment of industrial structure and scientific and technological progress and expediting reform of the economic system and the process of marketization.

In the face of the dual pressures of the Asian financial crisis and the deficiency of effective domestic demands during the Ninth Five-year Plan period, China instituted a proactive financial policy and strove to expand domestic needs, while at the same time it further enlarged the area and scale of the utilization of foreign capital, this measure has played an important promotional role in maintaining the sustained, rapid and healthy development of the national economy.

In the practice of using foreign capital, we have accumulated rich experiences, the most valuable one of which is that we have stuck to taking the absorption of direct foreign investment as primary and adopted a cautious attitude toward the opening of capital projects. This sensible choice made on the basis of national conditions has enabled us, at the time of regional and global economic vibration, to successfully guard against financial risk, avoid tremendous economic losses and safeguard national economic security.

Facts have proved that our utilization of foreign capital fully conforms to Comrade Deng Xiaoping's "three-favorable" standard (favorable to developing productive forces, improving overall national strength and raising people's living standards), it is an important content concerning adherence to the reform and opening policy, and is one of the great practices of establishing a socialist market economy with distinct Chinese characteristics, we must unswervingly persist in the use of foreign capital.

At present, along with the initial implementation of the 10th Five-year Plan, China's opening to the outside world has entered a new stage, and the utilization of foreign funds is faced with an unprecedented, new situation.

Internationally, economic globalization advances at an accelerated rate, new scientific and technological revolution is developing rapidly, transnational corporations are exerting growing influence on the global economy, capital competition among various countries becomes ever fiercer, the world political and economic pattern is experiencing profound changes.

As the world's largest developing country, China conforms to the trend of economic globalization and, through he use of foreign capital and various other forms, participate in the international division of labor and cooperation, this is conducive to grasping opportunities, pursuing benefits and avoiding harm and having the initiative for development in our own hands.

Domestically, China's economy is to maintain the momentum of rapid growth during the 10th Five-year Plan period, achievement of this goal depends, on the one hand, mainly on our own strength and, on the other hand, requires expansion of the absorption of foreign capital. Currently, the system and environment for opening to the outside world is being increasingly improved, the market space has become broader, these have provided favorable conditions for better use of foreign funds.

It is noteworthy that since the outbreak of the Asian financial crisis, although China's absorption of foreign funds has kept a fairly large scale, it is still quite difficult to maintain the growth of the actual amount of foreign capital used for a period of time to come. Regarding this, we should have a clear understanding.

It should be noted that at the present stage there still exist many shortcomings in our work of using foreign funds, for instance, the industrial structure for foreign investment is irrational, the areas for absorbing foreign funds remain to be further broadened; the phenomenon, that technological content of foreign investment is not high and the regional distribution of investment is unbalanced, is prominent; the existing policies and related laws and regulations for the use of foreign funds and the system for the management of foreign capital can no longer fully comply with the requirement of the new situation arising after China's accession to the WTO; government work efficiency remains to be enhanced; formalism and vicious competition occurred in the process of attracting foreign funds are still fairly serious in some localities; the investment environment, especially the micro environment, remains to be further improved, the market economic order requires comprehensive rectification, etc.

The above-mentioned problems have restrained the enlargement of the scale of the utilization of foreign capital and the upgrading of quality, we must pay high attention to these problems and solve them conscientiously.

After China's entry into the WTO, the work concerning the use of foreign capital will face serious tests. Joining the WTO is the requirement of China's reform, opening up and modernization drive and an important step toward China's active participation in economic globalization.

Taking entry into the WTO as the hallmark, China will open a new page in its opening to the outside world and participate in international competition and cooperation in a wider area and to a greater depth, Such being the case, the work of using foreign capital will unavoidably encounter many new problems.

For this, in the use of foreign capital we should make various preparations for WTO membership in a down-to-earth manner and, in accordance with related WTO laws and regulations and China's promises to the world, step up the work of sorting out, revising and perfecting related laws and regulations, establish and strengthen a foreign-related legal system conforming to common international practices; accelerate change of government functions, set up a unified, standard system for the management of foreign investment, raise the administration level according to law; systematically push forward the opening of the service industry to the outside world; and make full use of the WTO regulations to formulate effective measures for protecting domestic industries and the market.

In the new stage of opening to the outside world, main efforts should be made to upgrade the level of the utilization of foreign capital, shift the focus of work in the use of foreign funds to the introduction of advanced foreign technology, management expertise and outstanding talents, correctly handle the relations between quality and quantity, the partial and the whole and the immediate interest and long-term interest.

Taking improvement of quality as the center and readjustment of the industrial structure as the main line, we should correctly guide the orientation of foreign investment and promote economic restructuring and technical innovation; actively attract foreign capital to participate in the reorganization and renovation of State-owned enterprises; continue to encourage foreign-invested enterprises to expand exports and develop domestic auxiliary industries; in accordance with the strategy for large-scale development of the western region, we should speed up implementation of the policies for encouraging foreign businesspeople to invest in the central and western regions; we should make bold exploration and expansion of new forms for the use of foreign capital, intensify efforts to attract investments from transnational corporations; we should conscientiously improve the investment environment, build up superiority for comprehensive competition, and maintain the stability and continuity of policies for attracting foreign capital. The use of foreign funds involves a wide area and strong policies, the various regions and departments should enhance their sense of responsibility and sense of urgency, in light of realities, they should work with one heart and one mind to create a new situation in the work of using foreign capital.

Opening to the outside world is the only road leading to China's modernization and the nation's rejuvenation. Although in the process of opening wider to the outside world, we may still encounter various difficulties, however, we firmly believe that so long as we, under the leadership of the Party Central Committee with Comrade Jiang Zemin at the core, hold high the great banner of Deng Xiaoping Theory, use the "three represents" important thought to unify our understanding, engage in determined innovation and comprehensively raise the quality and level of our utilization of foreign capital, we will be able to make still greater contribution to the work of using foreign funds!

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