The Chinese government is set to attract more foreign investment in those sectors which used to be "forbidden zones" for foreigners -- starting on April 1.

Fresh investment opportunities will take place in telecommunications and urban infrastructure, such as heating and water supply and treatment.

This breakthrough in China's foreign investment policy was included in the nation's newly-revised foreign investment directory.

The directory, which will take effect since April 1, was recently set down by the State Development Planning Commission (SDPC), the State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation.

It was based on investment guidance approved by the State Council last month stating how China will expand cooperation with foreign investors.

In the new directory -- which is available at www.sdpc.gov.cn -- the government has made public the State's investment priorities, and what sectors are open to foreigners with restrictions and what areas are still forbidden to overseas investors.

In particular, it appeals for capital in agricultural technology, transportation, energy and the new materials industry.

The service industry -- including banking, telecommunications, securities, insurance and tourism -- will gradually become another focal point of cooperation.

In the past two decades, China has mainly opened its manufacturing industry to overseas investors, and the nation will continue to encourage foreigners to invest in basic industries, infrastructure construction and environmental protection.

The new foreign investment directory is tailored to the commitments China made to become a member of the World Trade Organization (WTO), said an official with the SDPC, the country's highest economic planning authority.

Compared with the old foreign investment directory, which has been in effect since the end of 1997, the government has opened more sectors for foreigners to invest in.

China's WTO entry has boosted economic cooperation with foreign countries and investors, and the government should grasp the opportunity, said Bai Hejin, president of China Academy of Macroeconomics Research under the SDPC.

"China's WTO membership has reduced risks and costs for foreign investors, and more capital and advanced techniques and expertise are expected to flow in," Bai said.

China maintained a stable growth in foreign investment despite the slowdown in the world economy.

According to official statistics, the global flow of FDI (foreign direct investment) dropped 40 percent last year to US$760 billion compared with US$1.3 trillion the previous year.

And due to the global economic slowdown, it is not expected to witness a swift surge this year.

However, in the first two months of this year, China approved 3,963 foreign-funded companies with contractual and actual investments of US$11.4 billion and US$5.9 billion respectively, up 23.7 percent and 24.4 percent compared with the same period last year.

"This is due to China's rapid economic development, which has enhanced investor confidence, and the ever-improving investment environment," said the SDPC official.

(China Daily March 19, 2002)