(Xinhua)
Updated: 2007-12-30 15:51

REDIRECT FOREIGN INVESTMENT

Aside from the tax instrument, China revised the "Catalogue of Industrial Guide to Foreign Investment", effective from December 1, 2007, to redirect foreign investment.

The revision listed all contents concerning access by foreign investment into the catalogue, forming a standardized and transparent access policy for foreign investment.

According to the new 28 page guide, China would curb the expansion of export-oriented industries to reduce ballooning trade surplus. This had stirred protectionist sentiments among major trade partners.

"The category of encouragement of 'Foreign-invested projects with all products directly exported' in the 2004 version of the 'Catalogue of Industrial Guide' has triggered disputes among WTO members, and in connection with China's large trade surplus and rapid growth of forex reserve. The revision, this time, has abolished this category," said Wang Xinpei, Ministry of Commerce (MOC) spokesman.

China was to prohibit foreign investors from exploiting "important and non-renewable" mineral resources, and to restrict energy-consuming and highly-polluting projects.

Foreign companies were restricted from entering "strategic and sensitive" industries relating to the national economic security.

Foreign investment in traditional manufacturing industries in which China already had "mature technologies and relatively strong production capacity" was not encouraged.

But the manufacturing sector in high-tech, equipment manufacturing and new materials industries were open to foreign investment.

Meanwhile, foreign investors were invited to join efforts to promote the recycling economy, clean production, renewable energy utilization and ecological environment protection.

Amid growing domestic concern that surging foreign trade was failing to benefit people in central and western China, investment regulators were focusing on upgrading industries in the poorer areas of inland China.

The government would also introduce a revised version of the guide for foreign investors in the central and western regions, NDRC said.

Seeing the bright prospect, Peter Wong, board chairman of HSBC Rural Bank, said he expected the bank to reach a balance of income and expense within the next three years. He said the lender attached importance to "accumulating the experience of running a rural bank and cultivating a rural financial pattern applicable across China".

If all went smoothly, an HSBC executive states that it would open six to 10 sub-branches in the inland rural areas in 2008 and 30 in the coming two to three years. It would expand its services to include agriculture-related loans to individual farmers later in 2008.

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