China's World Trade Organization (WTO) entry has brought unparalleled changes, but left unchanged its strong attraction to international capital.
The country will still be spotlighted by world capital, based on its leadership among developing countries for having attracted international capital for eight years running, though competition has sharpened around the world for investment.
This is the viewpoint generally agreed by some international business leaders and economic experts, who are attending the BusinessWeek Forum which opened on May 8.
The participants agreed that many factors maintain China's attraction to overseas capital, including the growing range of areas open to investment, a fairer competition environment and less management costs.
Paul Dipaola, managing director of the Bain & Company China Company, believes China's WTO entry can make it possible for overseas companies to invest in more areas, manage more independently, and produce and market according their own strategies.
Tim Chen, president of Motorola (China) Electronics, China's largest joint-venture, says that China has lowered market admittance, which attracts international capital to more industries including telecommunications, banking, insurance, finance and communications.
Liu Guangxi, executive vice-chairman of the Research Society for World Trade Organization, says China has cut both tariff and non-tariff barriers, which will help reduce investment and management costs.
China has devoted to fulfilling its commitments to the WTO since it obtained full membership several months ago. The general tariff rate in China has been reduced to 12 percent from 15.3 percent and some quotas have been canceled in products like grain and cotton.
In recent years, volatile international environment has sharpened investors' awareness of risks, a key factor affecting investment flow. Under such circumstances, says Mark Clifford, Asia regional chief editor of BusinessWeek, China's stability and safety will help it attract more investment.
Twenty years after China began its reform and opening-up, the country has made remarkable progress in attracting international capital. A total of 400,000 foreign-funded enterprises have been set up, involving an accumulated overseas investment of US$400 billion.
Especially in 2001, when the global economy slowed down, China actually reported a record overseas investment of US$46.8 billion.
"The success of the overseas companies investing in China will attract more investors to Chinese market," Li Guangxi says.
For example, many industrial sectors have boomed with the influx of foreign investment in Tianjin, the venue of the forum, such as an information technology constellation represented by Motorola China Electronics and General Semiconductor (China) Company, a medicine constellation led by SmithKline Beecham Group and a food constellation represented by Nestle.
Motorola, which has invested US$3.4 billion in China, has brought along 45 overseas suppliers to China with a total investment of US$4 billion.
Supachai Panitchpakdi, Director General-Designate of the WTO, says it will take China several years to fulfill its commitments to the WTO, which means China cannot change dramatically in a few months. However, China's development so far this year indicates it is heading on in a positive direction, proving China's potential to maintain the current influx of overseas capital.
In the first quarter of 2002, China actually used over US$10 billion, 27.6 percent up from the same period last year.
Chinese Vice-Premier Li Lanqing attended the forum and noted that the world is vital to China's prosperity and China is also vital for the world's development.
China's more open situation and its leap in economic growth will bring not only blessings to the Chinese, but also more trade and investment opportunities to overseas investors, Li said.
( May 10, 2002)