China will encourage foreigners to invest more in service sector
and high-tech companies this year while strictly restricting
overseas investment in real estate projects, according to
guidelines on foreign investment recently issued by the Ministry of
Commerce for 2007.
The administrative rules for the current year say local
governments and related departments should pay more attention to
the quality of use of foreign investment.
According to the guidelines, foreign investment should be
channeled into high-tech, modern service and high-end manufacturing
sectors and into research and development, energy-efficient and
environmental-friendly projects.
This year China will continue to channel foreign investment into
technical upgrading projects for traditional industries and
encourage transnational companies to establish regional
headquarters and launch procurement, distribution, operation and
training centers on the Chinese mainland.
The guidelines require that overseas resources should be
utilized to expand domestic capital markets and foreigners'
strategic investment in Chinese listed companies should be
regulated. Foreign investors' cooperation with peers from China's
non-state sector will be facilitated.
Meanwhile, the guidelines stress that foreign investment should
be strictly restricted in real estate sector and low-standard
projects with high energy consumption and serious pollution.
The guidelines also say that healthy development of mergers and
acquisitions by foreign investors should be promoted, and that
monopoly-targeted and malicious takeovers be prevented so as to
maintain the nation's control over strategic sectors and ensure
national economic security.
According to the Ministry of Commerce, last year China approved
establishment of 41,485 overseas-funded enterprises, down 5.76
percent from the previous year, and used 69.5 billion U.S. dollars
in foreign capital, down 4.06 percent.
The ministry said under China's macro economic control scheme,
no foreign investment projects in the overheated steel, cement and
electrolysed aluminum sectors have been approved since 2005.
Meanwhile, more foreign capital flowed to the high-tech telecom
equipment manufacturing and computer production sectors last year.
The telecom equipment sector recorded a 61.4 percent growth in
foreign capital actually used, while the computer sector, a 48.63
percent growth.
The ministry said foreign-funded firms performed well in China
and contributed significantly to the nation's economy.
In the first 11 months of last year, they realized US$937.5
billion in foreign trade, up 25.5 percent. The volume, accounting
for 58 percent of the nation's total, included US$509.6 billion in
export value, up 27.9 percent.
(Xinhua News Agency March 26, 2007)