China remains one of the world's largest recipients of foreign
direct investment, but the FDI inflow slowed last year as the
country adjusts its strategies in drawing foreign capital, a UN
report says.
According to the report, released yesterday, China is the third
largest FDI recipient in the world after the US and the UK. The
inflow amounted to US$69 billion in 2006, with a modest decline of
4 percent over the previous year, the first decrease in seven
years.
The figure indicates China remains one of the most attractive
destinations for foreign investors. But the profile of such
investments has changed slightly as the country emphasizes
efficiency over mere scale expansion.
China is now trying to attract more investment in hi-tech and
environmentally friendly service industries, instead of the
traditional labor-intensive manufacturing industry.
Liang Guoyong, an economic affairs officer from the United
Nations Conference on Trade and Development, which has been
publishing the world investment report annually since 1991, said
the country still retains huge advantages in attracting foreign
investment with its vast market and relatively low labor cost.
But China has readjusted its priorities. From next year,
domestic and overseas enterprises will be charged income tax at the
same rate, ensuring a level playing field for domestic players.
To further develop the western region, the government is also
encouraging more foreign investment in those parts.
"We encourage foreign companies to participate in the reform of
State-owned enterprises in the central and western regions through
mergers and acquisitions," said Qiu Lixin, an official from the
Ministry of Commerce.
While China still receives large amounts of foreign investment,
it has also started to invest in other countries as Chinese
enterprises get increasingly international.
Though direct investment is on the rise the world over, Liang
said some countries now adopt a policy of discouraging foreign
investment.
This is because the price of primary products and mineral
resources such as coal and oil is increasing worldwide, and many
countries in Latin America are tightening their policies on foreign
investment. There is also increasing protectionism in some
regions.
(China Daily October 17, 2007)
