Foreign investors gain more access
By Fu Jing (China Daily)
Updated: 2004-12-12 23:46

Overseas investors are to be allowed wider Chinese business access, when a new government investment directory goes into effect at the beginning of the year.

Experts said the document, presented by the National Development and Reform Commission and the Ministry of Commerce, is in line with the country's World Trade Organization (WTO) commitments.

The detailed directory consists of various sectors the central government is presently encouraging or discouraging.

A commission spokesman said the update is aimed at attaining goals, such as allowing China to obtain more sophisticated technologies.

For example, the government is encouraging foreign investors to channel capital and research into such sectors as equipment production used in improving the environment and manufacturing electronic devices of vehicles.

Meanwhile, the government is speeding up the opening up of the service industry. It for overseas investors for the first time to have a presence in sectors such as film and TV production.

As the most populous developing country, China enjoys decisive comparative advantages in labour-intensive industries, which were widely encouraged by the government in the newly updated directory.

The directory, which was updated based on the old one made public after China entered into the WTO in 2001, can be reached at the commission's website www.ndrc.gov.cn.

Lin Yueqin, a researcher with Chinese Academy of Social Sciences, said yesterday that the directory has already given foreign investors nearly as many choices as domestic investors.

"But I should say, local governments should pay more attention to the quality of foreign projects," said Lin, adding that related governmental decision-makers should have a clear idea as to whether projects are really necessary for locals.

China's opening up, especially its WTO entry, has helped overseas investment flow into the country. Since 2002, China has absorbed actual foreign direct investment (FDI) worth more than US$50 billion a year. Statistics indicate that the amount of FDI China attracted in the first 10 months of this year reached US$53.78 billion, already exceeding that for the whole of 2003.

Eying the country's huge manufacturing prowess, foreign investors have also rushed in to share in the expanding Chinese market, said Lin.

But he blamed some local governments for paying a lack of attention to the social and environmental impact overseas projects bring.

Zhang Jianyu, visiting scholar with Tsinghua University, told China Daily yesterday that the directory cannot play a decisive role in attracting foreign investment.

"As China increasingly becomes market economy, the market will have final say for foreign investment," said Zhang.

He also said China's laws and regulations, instead of a directory, should play a bigger role in balancing foreign investment.

A responsible WTO member

Foreign businesses in China have said the country has kept the commitments it made joining the WTO three years ago and been a "responsible" member.

The US Chamber of Commerce in China said in a press release last week that China is "substantively in compliance" with its WTO commitments.

Elmar Stachels of the Bayer Group said China has kept its commitments in reducing tariffs, opening markets and its protection of intellectual property rights, and improved its transparency in policy making. This has heightened the confidence of foreign investors.

A recent survey shows 93 per cent of foreign businesses in Shanghai are satisfied with China's performance after its entry into the WTO.

Of the 1,000 foreign-invested companies surveyed, 86 per cent said they are optimistic about China's investment and trade environment in the next two years, and more than 95 per cent said they would either expand their Chinese operations or maintain their present sizes.

The survey, conducted by the Shanghai WTO Affairs Consulting Centre in collaboration with Shanghai Society of International Trade, was based on a questionnaire on post-WTO China.

Eleven per cent of the respondents gave China very high scores -- over 90 points with grades from zero to 100 -- for its overall performance over the past three years. Twenty-seven per cent gave grades between 80 and 89 and 42 per cent graded the country between 70 and 79.

Less than 4 per cent of the companies surveyed gave China failing grades below 60, with comments that the country has a lot to improve to meet its commitments to the world trade conglomerate.

For 49 per cent of the companies surveyed, the most essential issue for China to live up to its WTO commitment is to improve transparency. Other issues concerning their interests include enhancing protection of intellectual property rights and easier market access for foreign companies, according to the survey.

The companies surveyed largely included manufacturing firms or service providers, with most based in Japan, the United States, member states of the European Union and China's Hong Kong and Taiwan.

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