Stable rise in foreign investment expected
By Jiang Wei (China Daily)
Updated: 2004-12-15 08:51

China chalked up actual foreign direct investment (FDI) of US$57.55 billion from January to November, up 22.05 per cent on a yearly basis, according to the Ministry of Commerce.

The amount has exceeded the record US$53.5 billion in foreign investment that China attracted during all of last year.

In the 11 months, China approved 39,291 new foreign-invested ventures, reflecting an increase of 13.36 per cent year on year.

However, the November figure was somewhat sluggish.

The past month witnessed a mild FDI rise of about 5 per cent to stand at nearly US$3.8 billion, the lowest level in a year.

Monthly FDI hit a record US$8 billion in June, and came in at around US$5 billion a month since then.

The ministry did not provide November figures alone. The monthly figures were calculated based on comparisons with earlier data.

But analysts say they have confidence in the future trend. They say the world's largest FDI recipient will continue to be attractive to foreign investors with increasing market liberalization and improved investment climate.

Fan Ying, a professor at China Foreign Affairs University, told China Daily: "China will maintain a stable FDI growth rate next year. The nation will still be a magnet for foreign investment."

She primarily based her projection on contractual direct investment, an indicator of future trends.

Contractual direct investment grew 34.36 per cent to more than US$135 billion from January to November.

"Major European countries such as France, Germany and Italy inked big deals with Chinese enterprises in October and December," she said, "Billion of dollars involved in these deals will be invested in China phase by phase in coming months and years." France alone signed contracts worth US$5.2 billion during French President Jacques Chirac's visit to China in October.

A big part of the money will be pumped into an array of projects in China next year.

China's continuous opening-up of its domestic markets under the World Trade Organization (WTO) stipulations will also boost foreign investors' confidence in the world's fastest-growing market.

"A number of sectors such as retail and trading will be almost fully opened to overseas companies in 2005 in line with WTO commitments," Fan said.

"Surely, no foreign players can afford to lose such an open market," she said.

In addition, China has honoured its WTO pledges to enhance transparency and reduce red tape in the past three years, which has greatly improved the nation's investment environment, Fan said.

"This paves the way for more investments from an increasing number of foreign small and medium-sized enterprises, which deem an unfavourable investment environment one of the biggest bottlenecks affecting their inroads into China," she said.

And the country's traditional strengths of less expensive labour costs and potentially enormous market are fascinating to those who want to operate in China.

Moreover, the recovery of the world economy and global cross-border investment booms add the finishing touches to China's FDI picture next year, Fan said.

"Multinational investment is reviving beginning from this year and the world's money is flowing to high-tech and service sectors."

"All these provide a good external climate for China in 2005," she said.

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