Foreign input to grow despite cooler steps
By Dai Yan (China Daily)
Updated: 2004-06-16 23:26

China's measures to cool down overheated parts of the economy will not stem the flow of foreign investment, a senior official said.

Foreign investment in 2004 may roughly match or exceed the US$53.5 billion from 2003, said Vice Minister of Commerce Ma Xiuhong yesterday.

"Sustainable growth of China's economy will, in turn, drive up foreign investment and help attract high-quality investment," Ma said at a news conference for the 8th China International Fair for Investment and Trade (CIFIT). The fair is the only nationwide international fair focusing on overseas investment. It will be held between September 8-11 in Xiamen.

China has recently taken steps to slow down overheated industries such as steel, cement and aluminium. The country raised bank reserve requirements and curbed loans to these sectors.

Ma said foreign investment in the these sectors were at a reasonable level and not part of the problem.

"There is no data showing that foreign investment in the sectors of steel, cement and aluminium is excessive," she said.

Ma also made it clear China does not welcome investments by Taiwan business people who are in favour of independence from the Chinese mainland.

"One thing is for sure -- we will not welcome those Taiwan businessmen who are resolutely in support of Taiwan independence or undertake separatist activities," Ma said.

However, Ma stressed the policy upheld by the Chinese mainland to encourage Taiwan compatriots to make investments in Chinese mainland has not been changed.

"Their legitimate rights and interests will be protected by our laws and regulations," she said.

Foreign direct investment (FDI) rose 1.4 per cent in 2003 to US$53.5 billion.

In the first five months of 2004, China attracted US$25.9 billion in FDI, up 11.3 per cent from the same period a year earlier, which was described by Ma as a moderate and suitable rate.

"The actual amount of foreign investment in 2004 is expected to roughly keep the level in 2003 and we will strive to achieve a certain increase," she added.

Despite the growth, Ma said the Ministry of Commerce still faces the challenges of bringing China's full advantages into play to lure more FDI. The goal, she said, is to figure out how to make the investment better serve domestic economic development.

She said China will work to make itself more attractive to foreign investors.

Ma said China's FDI structure was further optimized, citing that the service sector attracted more investment, and foreign investors showed greater interest in high-tech industries and research and development centres.

She said the growth of FDI in central and west China, as well as the old industrial base in Northeast China, was very fast. East China still took away more than 85 per cent of the total FDI.

Foreign-funded enterprises in China generated a combined industrial added value of 314.27 billion yuan (US$37.9 billion) in the first quarter of this year, a rise of 21.1 per cent from 2003's corresponding figure, and accounting for 27.77 per cent of the national total.

From January to May, foreign-funded enterprises exported US$119.04 billion worth of goods, up 41.78 per cent year on year and accounting for 57.34 per cent of China's total.

Foreign-funded enterprises paid taxes worth of 122.7 billion yuan (US$14.82 billion), rising by 22.98 per cent and representing for 19.55 per cent of the country's total.

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