Deputy secretary-general of the State Economic and Trade Commission (SETC) Gan Zhihe recently pointed out that the area which attracts the most foreign investment into China will shift from the industrial sector to the service sector. In addition to the many Joint Ventures (JVs) being established in the agency industry, the government will attempt to lure more foreign funds into areas of finance, accounting, asset evaluation and law.

Great changes in foreign investment have taken place since China's entry into WTO, Gan said. Transnational mergers and share transfers have become the main form of foreign investment. The capital used by foreign investors to merge state-owned enterprises, has obviously been rising, together with an increase in the total number of mergers being approved by the Chinese government. Currently, among them, the largest merger case has involved several billion dollars.

The financial sector will be an important field for China in attracting foreign capital, he stressed. In the securities market, foreign institutional investors will be permitted to establish JVs with Chinese holding companies, and to increase the transaction of bonds, B shares, and management funds.

In the finance and insurance field, restrictions on clients operating with overseas banks and insurance companies will gradually be withdrawn. Foreign banks are expected to enter into RMB operations, while overseas insurance companies will be permitted to run property insurance, reemployment insurance, and some forms of life insurance services.

Foreign capital is set to participate in the reconstruction of joint-stock holdings in domestic commercial banks. In order to optimize their stock structure, joint-stock commercial banks are allowed to cooperate with overseas strategic investors. In addition, some domestic insurance companies are also encouraged to attract additional overseas funds.

(china.org.cn by Tang Fuchun, September 19, 2002)