Chinese Deputy Minister of Commerce Liao Xiaoqi vowed to pay more attention to better utilization of foreign capital while continuing their efforts on attracting more foreign investment, according to a report by China Economic Times.
His remarks was echoed by Hu Jingyan, Director of Foreign Investment with the Ministry of Commerce who reiterated China's positive attitude toward foreign investment in China. However, Hu stressed that investment on hi-tech industry, especially the information technology, would be especially welcome in China. he noted that China would focus on the introduction, absorption and innovation of new advanced technologies, as well as talents training.
Hu, quote, " It is said that well-known multinationals normally have strong sense of responsibility for the society", expressed his hope that multinationals would help China make progress on technology through their investment here.
Hu also took Nokia's base in
Beijing as an example for the capability of Chinese enterprises, either state-owned or private, in providing supporting products for multinationals.
China encourages multinationals to set up regional headquarters, R&D centers and sourcing basis in China. Their investment on processing trade and service trade is also welcome."We need tech-intensive production process with prospect of high added value in particular," said Hu.
Hu talked about China's next step on improving its legal framework for the restructuring, transformation and acquisition of domestic enterprises by foreign investors. He recognized mergers and acquisitions would benefit both sides.
He thought the environment for M&A was getting better and issues like personnel arrangement and assets assessment were addressed as policies for these issues had been clarified.
Hu assured of better service by the government in 2005. He promised more progress on charging and intellectual property rights protection which were common concern of multinationals.
According to Wang Dong, Vice Director of Foreign Capital Division with the State Reform and Development Commission, foreign investors will also fell changes brought about by the reform on the investment system.
Specifically he referred to the mechanism for the approval of foreign funded projects. Six aspects are considered under the system: the compliance with the industrial policy, the compliance with the industrial planning, rational utilization of resources, the protection of shareholders¡¯ interests, monopoly and the management under the capital account.
Procedures have streamlined before a project gets nod. Only a report of feasibility is all right.
Local government has more power to decide whether a project is eligible. And the government has to give response to any application within 20 work days. Explanations must be given in the case of very special conditions.
Wang highlighted the significance of the revised guideline of industrial investment. He said changes had been made for 24 items out of the total 371 items in the guideline. Generally, more sectors are open, for example, some large scale electronic devices for autos. Wider access is given to foreign investors in service trade such as TV and film production. And adjustments have been made for some hot industries.
In September, 2004, the State Reform and Development Commission released a catalog listing more than 300 sectors encouraging foreign investment in China's mid-west areas. Among them 105 sectors are the first time to be open.
Sectors concerning mineral resources, grain and poultry processing, as well as those full-fledged such as auto parts, all welcome participation of foreign capital. Wang especially mentioned the wide door of the whole sector of auto parts to foreign investment. He saw it an opportunity for multinationals.
Wang also disclosed that in the service trade China's mid-west would be open earlier, including gas and heat supply, pipeline construction and tourism. ¡°Gas and water supply are limited. But in the mid-west, it is encouraged.¡± He said.
In China now, after decades of strenuous efforts on attracting foreign capital, it has become the best destination for foreign direct investment. But it hopes to secure its leadership by improving its business environment and market potential rather than favorable tax and land policy.
China is somewhat disappointed at less benefits from technical transfer by multinationals than it expected. The opening-up of some sectors, such as retailing, ahead of the schedule set by China¡¯s WTO commitment also disgruntles domestic businesses.
Last week the central government issued its long-awaited decision on boosting the non-public economy. It is stated clearly that private businesses are allowed to enter the playfield for power, telecom, railway and aviation which used to be monopolized by state-owned enterprises. They are also encouraged if they want to make presence in gas, heat and water supply.
But foreign businesses still enjoys favorable tax treatment, although the voice for equal treatment is very high.
It is certain that China will keep consistency in attracting foreign investment. Meanwhile, it is trying to channel the investment to the fields which it thinks need foreign resources most.
