BEIJING - The Chinese
government will look kindly on outbound investment
in four sectors - overseas resources,
infrastructure, research and development (R&D)
and service industries, Zhang Xiaoqiang, vice
minister of the nation's top economic planning
body, said on Wednesday.
"The government
will offer preferential diplomatic, forex, tax,
customs, credit and insurance policies to
companies investing in these sectors," said the
vice minister of the National Development
and
Reform Commission (NDRC).
He said
investing in the four recommended sectors would
help China solve economic bottlenecks, upgrade
industrial structures, promote exports, train
human resources, and sharpen the country's
competitive edge in international trade.
China's outbound investment topped US$16
billion last year, up 32% on the previous year to
rank 13th in the world, up from 17th in 2005.
NDRC sources show Chinese companies are
expanding their business scope from general trade,
catering and processing industries to logistics,
resource tapping, manufacturing and R&D
sectors. Their businesses reach out to more than
160 countries and regions in the world.
On
the other hand, foreign direct investment (FDI) in
China increased more than 10% year on year in the
first four months of 2007 despite concerns that
higher corporate-income-tax rates might affect the
inflow.
China drew $20.4 billion in FDI
from January to April, up 10.2% from a year
earlier, according to Ministry of Commerce
spokesman Wang Xinpei.
Foreign investment
in the service sector is expected to maintain
robust growth while investment in manufacturing is
likely to decrease, said Shen Danyang, a
researcher with the Chinese Academy of
International Trade and Economic Cooperation, a
think-tank under the Ministry of Commerce.
"With five years [the grace period]
elapsing since China entered the World Trade
Organization, the service industry will be further
opened up to foreign investors. New FDI will
largely concentrate on sectors such as
transportation, computer services, distribution,
tourism, architecture and financial services," he
said.
The FDI inflow grew rapidly until
2005, but has entered a new phase of steady rises,
Shen said. But the inflow, he maintained, will
remain high this year.
He said some drop
in FDI is not bad news because the investment
structure will be optimized in the process.
Since late last year, there have been
rumors of the average corporate income tax going
up for foreign companies to 25% from 15% - a
measure finally passed by the National People's
Congress this year.
China is now
encouraging high-value-added manufacturing sectors
and service industries while turning down foreign
investments in high-pollution and low-efficiency
ventures. The government is also encouraging
foreign investments in western China.
In
April alone, actual FDI reached $4.47 billion,
5.5% more than in the previous year. The ministry
approved 12,349 foreign-invested enterprises in
the past four months, down 2.29% from the previous
year. It did not disclose the amount of contracted
investment of the FDI agreements, as opposed to
the realized ones.
For the whole of 2006,
China drew a record $63 billion in non-financial
FDI, up from $60.3 billion in 2005 and $60.6
billion in 2004.
The FDI figure released
by the ministry excludes investments in the
financial sector.
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