Foreign direct investment in China is expected to reach US$100
billion in every year of the 11th Five-Year Plan period (2006-10),
experts said yesterday.
The Development Research Center under the State Council based its
assessment on China's entry into the World Trade Organization,
rapid economic growth, western development, political stability and
the prospects for the 2008 Olympics.
More than US$50 billion foreign direct investment was expected to
flow into China last year, with the country taking the United
States' place as the world's largest recipient of foreign direct
investments.
"This is a good starting point. Foreign investments flowing into
China will make big breakthroughs in the next five years," said
Long Guoqiang, a senior researcher with the center.
China will continue improvement of its infrastructure, with the
country's low costs remaining an important factor in attracting
foreign investments.
A
major reason behind the big increase in China's foreign direct
investment is that more transnational corporations are moving their
manufacturing operations here, said Long.
China's WTO entry turned many potential foreign investors into
actual investors, he said.
The Chinese market will also grow to support better business
development. The improvement of government services, policy
stability and legal transparency will also attract more foreign
investment, said the senior researcher.
China's expected rapid national economic growth and the start of a
new round of trade liberalization talks will also create new
business opportunities for foreign investors, said Jin Baisheng, a
senior researcher with the Chinese Academy of International Trade
and Economic Co-operation, a think tank of the Ministry of
Foreign Trade and Economic Cooperation (MOFTEC).
But experts cautioned against over-optimism of China's use of
foreign direct investments.
Long said US$50 billion represents only a moderate growth from last
year's US$47 billion and that China has become the world's largest
recipient mainly because foreign direct investment in the United
States dropped in the past year.
Foreign investments are unbalanced in the three industrial sectors,
with primary industries accounting for a mere 3 percent of China's
total foreign investments and tertiary industries making up 25
percent, according to official statistics.
"Channelling more foreign investments into agriculture and the
service sector will be an important task for the MOFTEC in the new
century," said Jin.
The 12 provinces, autonomous regions and municipality in the west
make up only 5 percent of China's total foreign investments in
terms of the accumulative amount.
Many investors still complain about China's investment environment
and the Chinese Government has much work to do on issues such as
the business environment, regional distribution and transformation
of government function, said Long.
(China Daily January 2, 2003)